Written by rjs, MarketWatch 666
Here are some more selected news articles for the week ending 21 November 2020. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening or Tueday morning.
Please share this article – Go to very top of page, right hand side, for social media buttons.
Closure of Louisiana’s Shell Convent Refinery will impact 1,100 jobs and create economic hardship – On November 5, oil giant Shell announced that it will be shutting down the Convent Refinery in Saint James Parish, Louisiana, after failing to find a buyer for the massive complex. The refinery is located on 4,400 acres of land between Ascension and St. James parishes and is expected to begin the shutdown process starting in mid-November. As of now Shell is continuing to seek a buyer for the idled refinery, which can process up to 240,000 barrels of crude oil a day and employs over 1,100 workers, including 400 contract workers, making the operation a key part of the local economy. The news of the closure comes after a $500 million investment in 2015 by the previous owner of the refinery, Motiva, to connect the Convent Refinery to the Norco Refinery down river by a pipeline, integrating their productive capacities and creating the Louisiana Refining System. After sharp contractions in the demand for oil due to the impact of the COVID-19 pandemic on energy use by both private business and individuals, Shell has decided that the refinery is no longer financially viable. Shell spokesperson Curtis Smith stated in the announcement: “Despite efforts to sell the asset, a viable buyer was never identified. After looking at all aspects of our business, including financial performance, we made the difficult decision to shut down the site.” Though the decision was sparked by the pandemic, Shell and other oil companies have long been preparing for large-scale restructuring measures. In fact, Shell is planning on consolidating its assets into just six energy and chemical parks internationally. Other refineries under review for potential sale or closure include Puget Sound, Washington, and Mobile, Alabama, along with others in Canada and Denmark. The fate of those refineries has not been decided yet, according to the company. The international scope of such restructuring measures means they will impact workers all across the globe. The turn by Shell toward consolidating its business, as well as to focus on the integration of its remaining assets to allow the production of more chemically based products such as biofuel, hydrogen and synthetic fuels, is due to major changes in the financial viability of shale well drilling. The overall decline in the productivity of shale, as well as the future focus on lower carbon sources of energy, means the continued reliance on financialization to fuel the industry’s rapid growth is no longer feasible.
The Worst May Be Over for Louisiana’s Oil & Gas Industry: LSU Report – The worst is likely over for Louisiana’s struggling oil-and-gas sector, though employment is unlikely to rebound to levels seen before the 2015 crash or even to pre-COVID-19 levels, according to a new report. The LSU Center for Energy Studies projects Louisiana will regain about 2,600 jobs in the upstream oil and gas extraction and services sectors by the end of next year relative to the low point in September. Louisiana refining and chemical manufacturing employment is expected to increase by about 300 jobs by the end of 2021, or about a 0.8% increase. The authors of the center’s 2021 Gulf Coast Energy Outlook, LSU CES director and professor David Dismukes and associate professor Greg Upton, assume that presumptive President-elect Joe Biden’s campaign proposal to ban new oil and gas permitting on public lands and waters is not implemented anytime soon. They also assume that trade talks with China will not deteriorate, leading to new tariffs, and that the COVID-19 pandemic is brought under control. “Embedded in this outlook is the assumption that COVID-19 will gradually subside, and that a second wave of shutdowns will be avoided,” the authors say. “Yet, within days of sending this [report] off to print, the likelihood of a second wave of infections and associated reduced economic activity has increased substantially.” Other factors to watch include a potential re-engagement with Iran, which could add to the global oil supply, and industry efforts to reduce carbon emissions. Ironically, regulatory changes that make it harder to develop oil-and-gas resources could benefit certain sectors of the industry by increasing prices for fossil fuels.
Oil industry and Edwards at odds over vetoed tax break – Oil interests are criticizing Gov. John Bel Edwards’ decision to veto a tax break he says was unlikely to deliver the jobs the industry and its supporters suggested. House Bill 29, passed by the Legislature during a special session last month, would have cost the state about $38 million over five years, officials said. It would have cut the taxes companies for drilling new wells or bringing old ones back into production. “This legislation would have stimulated some critically needed economic activity in our state, and while it did not pass, we remain hopeful and optimistic,” Mike Moncla, interim president of the Louisiana Oil & Gas Association, said in a news release Tuesday. “We believe Gov. Edwards gave strong consideration to the merits of the issue, and it is our job over the next few months to illustrate to the governor, the Department of Natural Resources and key legislators why this bill is so important.” In his veto message, issued last week, Edwards questioned the job claims. “During a legislative session wrought with limited access for the public to meaningfully comment on bills, proponents of this new exemption averred that the exemption would increase oil production and create jobs,” Edwards wrote. “Yet no legitimate evidence or testimony supports this assertion, other than the testimony of those with a vested interest through enactment of a new exemption.” The bill also included no requirement that drilling operators who benefit from the tax break employ Louisiana residents. “Further, any potential benefits of this legislation must be balanced against the resulting 38-million-dollar hole left in the state’s budget for the current and next four fiscal years,” Edwards said. The governor also noted that the bill was one of several introduced during a special session legislative leaders had claimed they convened to deal with COVID-19 response and hurricane recovery. “There will be a fiscal session of the Legislature in the spring of 2021 where this plan and other tax measures can be fully debated and considered,” Edwards wrote. “I look forward to continuing discussions with industry representatives about ways that we can continue to make Louisiana competitive for our oil and gas partners.”
Gulf of Mexico oil drilling interest remains low despite recent uptick — Oil industry interests expressed optimism after Wednesday’s Gulf of Mexico lease sale attracted more winning bids than the last one. Companies submitted $121 million in high bids, up from the $98 million the federal government received in March, when the COVID-19 pandemic sparked a global decline in demand for oil and gas. “Today’s lease sale shows industry interest remains strong in the Gulf of Mexico despite the challenges of an uncertain economic environment, and this basin will continue to be an important player in providing energy for America,” Tyler Gray, president of the Louisiana Mid-Continent Oil and Gas Association, said in a prepared statement. Nonetheless, the 23 companies submitting bids sought drilling rights on less than 1% of the more than 79 million acres offered, according to the federal Bureau of Ocean Energy Management. Total winning bids were also down from the $159 million received in August 2019. On Wednesday, companies submitted 105 bids on 98 tracts, a tiny fraction of the nearly 15,000 tracts offered. Results have been similar for the past several lease sales as the pandemic, global production wars and an inland shale boom helped make the Gulf less attractive to drillers. The downturn has cost Houma-Thibodaux’s oil-based economy thousands of jobs. Analysts had expressed skepticism that Wednesday’s lease sale would attract any significant increase in drilling interest. “At a time of fiscal austerity forced by lower oil demand, ample global supply and the next lease sale likely to occur just a few months from now in March 2021, many observers are betting on lower participation in the Nov. 18 auction,” S&P Global Platts, an energy consulting and analytics firm, said Monday. Oil company budgets are limited, and many operators already have leases in reserve, The latest lease sale was the last for the Trump administration, which has touted itself as a friend of the oil industry and a catalyst for American energy dominance. Industry executives and others have expressed concern about Democratic President-elect Joe Biden’s campaign pledge to ban new drilling permits on federal land and in federal waters, including the Gulf.
Oxy Taking ‘Contrarian Approach’ to Net-Zero Emissions by Developing Oil Resources, Reusing CO2 –Houston-based Occidental Petroleum Corp. is aiming for net-zero carbon emissions, but rather than investing in renewables, it plans to capture and then reuse the carbon from its global oil developments, CEO Vicki Hollub said Tuesday. During a third quarter conference call, Hollub and the executive team offered details about the sweeping strategy to boost oil production while working toward a goal of net-zero carbon dioxide (CO2) emissions. The plan is to be emissions free in the direct operations by 2040, with emissions from other sources, including by customers down to zero by 2050.The European majors, all of which aim to be emission free in 30 years or less, are charting growth in renewables and alternative fuels to reduce their carbon footprints. Oxy, as it is better known, has a simpler approach, said Hollub.“We are doing a contrarian approach in that we believe that using our core competence of CO2-enhanced oil recovery expertise is the best way to go, rather than trying to go learn a new business.” Enhanced oil recovery, aka EOR, is “going to be a huge industry going forward,” she said. “Globally, there’s only 40 million metric tons of CO2 per year that’s sequestered or used.” CFO Rob Peterson told investors that “Oxy’s approach to this is we also believe that fossil fuels have a role in the energy portfolio of the world long term. And this is a way to take the carbon footprint of those fossil fuels, keep them part of the portfolio, and still generate a low-neutral, even negative-carbon fossil fuel molecule.” Oxy’s U.S. portfolio extends across the Permian, Denver-Julesburg (DJ) and Powder River basins, and into the deepwater Gulf of Mexico. It also has an extensive base of oil-rich development overseas. To date it is the only U.S.-based producer aiming to be net-zero for both direct and indirect (customer) emissions. Houston-based ConocoPhillips recently set a goal to be emissions-free for its direct operations, and many U.S. energy operators, including utilities, also are aiming to be emission-free.Oxy may have a step up on almost everybody. And it’s willing to share the technology, Hollub said.First up is a massive direct air capture (DAC) project in the works for the Permian under the purview of Oxy Low Carbon Ventures LLC (OLCV). OLCV in August partnered with private equity firm Rusheen Capital to create 1PointFive to advance financing and develop the long-awaited Permian project using DAC technology created by Carbon Engineering Ltd. Emissions from Oxy’s oil production are to be stored and then reused in the EOR operations to draw more resources from old wells.
Gulfport Energy Corp. files for bankruptcy protection in Houston with $2.5B in debt – Oklahoma City-based Gulfport Energy Corp. is the latest out-of-town energy company to bring billions of dollars of debt to Houston’s bankruptcy court. Gulfport and 10 affiliated companies filed Chapter 11 petitions with the U.S. Bankruptcy Court for the Southern District of Texas on Nov. 13. The main petition lists nearly $2.38 billion of assets and $2.52 billion of debt as of Sept. 30. The company has between 10,000 and 25,000 creditors. Gulfport is an independent natural gas and oil exploration and production company and one of the largest producers of natural gas in the contiguous United States, according to the company. It holds significant acreage positions in the Utica Shale of Eastern Ohio and the SCOOP Woodford and SCOOP Springer plays in Oklahoma, plus noncore assets. The bankruptcy filing comes after Gulfport took several steps in 2020 to improve its balance sheet and preserve liquidity amid decreased demand for oil and natural gas due to the Covid-19 pandemic. Although those steps helped, “continued macro headwinds, including the depressed state of energy capital markets and the extraordinarily low commodity price environments, present significant risks to the company’s ability to fund its operations going forward,” the earnings report states. Additionally, Gulfport’s borrowing base under its revolving credit facility was reduced for the second time during 2020 on Oct. 8, dropping from $700 million to $580 million. On Oct. 15, Gulfport elected not to make a $17.4 million interest payment on its 6% senior unsecured notes maturing 2024. On Nov. 2, the company skipped a $10.8 million interest payment on its 6.625% senior unsecured notes maturing 2023. The company had a 30-day grace period for both payments and said it was continuing “constructive discussions with its lenders and certain other stakeholders regarding a potential comprehensive financial restructuring,” according to filings with the U.S. Securities and Exchange Commission. Late last year, the New York Times reported that Gulfport was among several gas-focused companies that would need to refinance billions of dollars of debt between 2021 and 2023. “If low natural gas prices persist beyond 2020,” said a Moody’s Investor Service report, per the Times, “companies may need to reduce debt to maintain compliance with financial covenants or amend covenant levels.” Gulfport reported total revenue of nearly $136.18 million in the third quarter of 2020, a 60% drop from nearly $341.75 million in the third quarter of 2019. However, the company’s net loss of $380.96 million, or $2.37 per share, was less than its Q3 2019 net loss of $484.8 million, or $3.04 per share.
Oklahoma Natural Gas Producer Enters Restructuring – Oklahoma City-based Gulfport Energy plans to shed nearly $1.25 billion in debt as it enters a court-supervised Chapter 11 bankruptcy process, according to a company statement on 14 November. Gulfport operates in the Oklahoma’s SCOOP and Ohio’s Utica Shale and as of the second quarter of this year was operating a single rig in each play. The company formed a new executive team in 2019 which was tasked with trimming costs and improving cash flow. However, Gulfport’s large debt load combined with long-term pipeline contracts meant it was on an unsustainable footing given current natural gas prices, ultimately driving its decision to enter bankruptcy, David Wood, president and CEO of Gulfport, said in the announcement. “We expect to exit the Chapter 11 process with leverage below two times and rapidly delever thereafter due to a much-improved cost structure driven by reduced legacy firm transport commitments and costs,” he added. A prepackaged restructuring agreement was reached with most of the natural gas producer’s credit lenders and senior noteholders. The restructuring package includes more than $262 million in debtor-in-possession financing from existing credit lenders, $105 million that will be dispersed imminently, pending court approval. After exiting bankruptcy, the company also expects to have access to $580 million in new financing available. The agreement also notes that common shareholders may see their equity cancelled during the process. Gulfport was founded in 1997 and acquired its current unconventional positions after 2012. The company also owns a 22% nonoperating interest in noncore assets operated by Oklahoma City-based Mammoth Energy and a 25% stake in Canadian operator Grizzly Oil Sands.
Minnesota Pollution Control Agency advisers quit over pipeline permit – A citizen advisory group at the Minnesota Pollution Control Agency (MPCA) has collapsed following the regulator’s decision to issue a water-quality permit to Enbridge Energy for its Line 3 oil pipeline cutting through Minnesota. The bulk of the agency’s Environmental Justice Advisory Group has resigned in protest over the permitting decision, saying in a letter Tuesday to MPCA Commissioner Laura Bishop that “we cannot continue to legitimize and provide cover for the MPCA’s war on Black and brown people.” A dozen of the board’s 17 members signed the letter, which called the water-quality permit the “final straw” in a series of MPCA actions that they said sidelined the advisory group. Among those resigning is Winona LaDuke, a member of the White Earth Band of Ojibwe and executive director of Honor the Earth who strongly opposes the pipeline. In an interview, LaDuke called the decision “a slap in the face.” “The people who are most impacted are Indigenous people, and for seven years we have tried to make the system work,” she said. “If the MPCA actually valued Indigenous people and environmental justice they would not have issued that permit.” LaDuke called her four years on the advisory group “a waste of time.” Commissioner Bishop issued a statement praising the board for making a “significant” difference at the state agency. “I recognize the disappointment of some advisory group members regarding the Line 3 decision,” Bishop said. “The MPCA will continue to eliminate and reverse environmental and health inequities and disparities in overburdened communities and ensure engagement remains at the forefront of our decisionmaking.” The environmental justice advisory group was created in 2016 by former MPCA Commissioner John Linc Stine, with unpaid members appointed by the commissioner. Many members work for advocacy groups or nonprofits. The group currently meets with the commissioner every other month for about 1 ½ hours, it said.
Enbridge Line 3 Construction Blocked by Protesters in Northern Minnesota – Early this morning, two people locked themselves to equipment used for Enbridge’s Line 3 tar sands oil pipeline in northern Minnesota. The action was organized by the Giniw Collective and comes days after various permits were granted in the state of Minnesota, pushing the highly controversial pipeline closer to construction. “Gov. Walz said we need to act boldly on climate,” Tara Houska (Ojibwe), founder of the Giniw Collective, told Native News Online. “Then he approved the largest tar sands infrastructure project in North America through Anishinaabe territory.” “Having grown up on occupied Anishinaabe and Dakota land, I feel a responsibility to defend that land and the rights of the people who have a relationship to it,” Mira Grinsfelder, 24 of Saint Paul, Minn., said in a statement prior to locking herself up to Enbridge equipment. “If the US government won’t defend Anishinaabe treaty rights, we will. If the Minnesota government won’t protect the water, we will,” added Grinsfelder. Native News Online reported on Thursday, Nov. 12, the Minnesota Department of Natural Resources and the Minnesota Pollution Control Agency (MPCA) approved various permits for Enbridge’s Line 3. The result brought hundreds of people in protest at the Governor’s Mansion on Saturday, clashing with a pro-Trump rally with people voicing they support pipelines.Yesterday, Minnesota Public Radio (MPR) News reported that 12 out of 17 MPCA advisory group members resigned in protest over the approval of MPCA Commissioner Laura Bishop approval for a key water permit that pushes Line 3 closer to construction. White Earth tribal member and former Green Party Vice-Presidential candidate Winona LaDuke is one of the twelve that resigned. “We cannot continue to legitimize and provide cover for the MPCA’s war on black and brown people,” their resignation letter stated. Enbridge’s Line 3 is the largest project in the company’s history and would be one of the largest crude oil pipelines in the continent, according to a statement on the company’s website. Line 3 is expected to transport up to 760,000 barrels a day through northern Minnesota, passing through treaty lands of several Ojibwe bands.
Corps, Users and Opponents Take Sides on Project Permit Makeover – Slammed by a federal court in April over lack of environmental protection in its blanket water-crossing construction permit for the Keystone XL oil pipeline, the U.S. Army Corps of Engineers is closing in on key changes to its Nationwide Permit program. With public comment ended Nov. 16, the Corps is weighing revisions that would affect Keystone XL and other projects. The proposal should streamline the permitting process for the controversial Nationwide Permit-12, a target of fossil fuel project opponents, and help permits withstand new lawsuits, says Sarah Soard, a Burns & McDonnell environmental services manager.But in yet another legal tussle over a pipeline using that permit, known as NWP-12 – a Richmond, Va., U.S. appeals court said Nov. 18 that the $6-billion Mountain Valley natural gas line could continue clearing, grading, and other earth-disturbing construction – rejecting opponents’ call for an emergency halt until it rules on a broader permit challenge.Even so, the same court did halt in a separate Nov. 9 decision, any water-crossing work under its NWP-12 permit on the 303-mile line in Virginia and West Virginia, pending the bigger final ruling next year. The much-challenged project, already about two years behind schedule, is further pushed back until late 2021, its builder has said. In a statement, a project spokeswoman said the Nov. 18 decision to allow some work “is evidence that [the project] has taken the right steps to ensure that its planned construction activities will continue in a manner that best protects the environment.”The Corps has 52 NWPs based on project type. NWP-12 allows dredge-and-fill work and building structures in, over or under water bodies for most oil, gas, electric transmission, water/wastewater, cable and other projects. Project activity with minimal site disturbance can get an NWP permit for the entire work scope rather than approvals for each crossing. NWP process time averaged 45 days, compared to 264 days for an individual permit, said the Corps. It generally updates NWPs every five years. Current rules expire on March 2022 but it is unclear if the proposed changes would go into effect before then, possibly even by year end. With NWP-12 permits for oil and gas pipelines targeted, the Corps has proposed that the permit be limited to those projects. The agency would create separate NWPs for electric and telecom transmission, utility water and wastewater lines, and for water reuse and reclamation plant work. Other proposed NWP changes include permits required for road access to land-based renewable projects or utility substations, raising the size cap on hydropower projects covered, and lowering limits for stream-bed losses in those NWPs that now have them. The proposal adds a required preconstruction notification to build energy pipelines longer than 250 miles, but removes many utility project notification “triggers” the Corps now mandates. The agency would also close a loophole for projects with more than one NWP whose requirements differ, and increase the size of “minor dredging.” A federal district court in Montana had struck down the NWP-12 – initially invalidating it nationwide – but later narrowed its ruling to oil and gas lines only. The U.S. Supreme Court then stayed that revised decision, except for Keystone XL, until a San Francisco appeals court case ruling, which is expected next year or possibly later.
Colorado Agency Mistakenly Sends Email To Oil & Gas Companies Calling Them Derogatory Names, Including ‘Snake Oil Inc’ – CBS Denver – The Colorado Oil and Gas Conservation Commission is apologizing after sending an inappropriate email ridiculing the very companies it regulates. CBS4 has learned that staff members at COGCC were testing a new e-filing system when they inadvertently sent an email to hundreds of oil and gas workers across the state. The email called the companies they work for names that you don’t expect from people who are supposed to be fair and unbiased. The email arrived early Sunday morning with a list of oil and gas companies that had upcoming hearings. The names of the companies included “Snake Oil Inc.,” it’s law firm “Blah Blah Blah” and its cause or case number “666″ – a designation for the devil. Other names included “Acme Company,” “Bad Oil and Gas,” “Really Rich,” “Here We Go Again,” and “The Lorax” – a Dr. Seuss character that warns about environmental destruction. “As our entire economy is struggling, that they have time to make jokes and horrible comments about the hard working women and men in our industry, it’s just sad,” said Chelsie Miera, who represents oil and gas companies on the Western Slope. She says if state employees thought it was a joke, operators and workers don’t find it funny. The email comes in the middle of hearings to overhaul the regulatory framework for industry. “There’s been no acknowledgement that this even happening in those meetings,” said Miera. A follow up message said only that “the emails were sent in error.” Miera says she’s concerned that they came from people who control the fate of the industry.
Utah lawmakers push to block cities from banning natural gas – Some California cites have enacted rules that prohibit new homes from connecting to natural gas, a fossil fuel whose emissions contribute to climate change. That won’t happen in Utah under a bill that a legislative committee advanced Tuesday on a straight party-line vote. “We should have customer choice when it comes to energy,” bill sponsor Rep. Stephen Handy, R-Layton, told the Public Utilities, Energy, and Technology Interim Committee. “As policymakers, we should allow for customer choice, whatever the market dictates, whatever that is. We shouldn’t prohibit customer choice.” But Democratic committee members failed to see the point of the bill since no Utah city has proposed restricting utility customers’ access to natural gas, although Handy contended “there are conversations.” “I worry that when we start getting into this prohibition language, it really hamstrings municipalities from exploring any sort of innovative policy,” said Sen. Derek Kitchen, D-Salt Lake City. “I just think that it’s a very heavy-handed approach for the state of Utah when we haven’t even seen any negative consequences.” Titled “Utility Permitting Amendments,” the bill simply states “a municipality [or county] may not enact an ordinance, a resolution, or a policy that prohibits, or has the effect of prohibiting, the connection or reconnection of a utility service to a customer based upon the type or source of energy to be delivered to the customer.” By a 12-4 vote, the committee advanced the measure for consideration in the upcoming legislative session.
Natrona Trump administration must weigh climate change when leasing land to oil and gas, court rules –A federal judge admonished the Trump administration yet again in a court opinion on Friday for failing to adequately assess how leasing public land to oil and gas developers could negatively affect the climate. The U.S. District Court for the District of Columbia ruled the Bureau of Land Management neglected to properly weigh the impacts of climate change when conducting its environmental review tied to 304,000 acres of leased land in Wyoming. In the decision rendered Friday, U.S. District Judge Rudolph Contreras called on federal regulators to conduct its environmental analysis again before drilling could be occur. According to the judge, the BLM’s analysis once again fell short and did not comply with the National Environmental Policy Act when it leased public land in Wyoming to oil and gas developers. The judge moved to enjoin, or block, drilling applications from being approved on 282 lease parcels of federal land, an area amounting to 303,995 acres in Wyoming. This isn’t the first time the court has struck down the Trump administration’s environmental analysis related to leasing public land for oil and gas development. In 2016, two non-profit organizations, WildEarth Guardians and Physicians for Social Responsibility, filed the lawsuit against the BLM. In March 2019, the court sided with the plaintiffs and concluded the BLM had not fully considered the cumulative impacts of climate change before leasing the land to energy companies. The judge ordered the agency to conduct additional analysis before development could move forward. After the BLM submitted the supplemental environmental reviews, the agency was met with yet another challenge from the same pair of nonprofit groups. WildEarth Guardians and Physicians for Social Responsibility called the BLM’s new analysis “error-riddled,” “arbitrary” and “capricious.” The federal court agreed on Friday, calling the BLM’s additional analysis “a sloppy and rushed process.”
Oil and gas production rising in North Dakota, but future is murky – North Dakota posted a solid hike in petroleum output in September, while the industry now races to start new wells before pro-oil President Donald Trump leaves office.Still, the oil and gas outlook in North Dakota – and the rest of the U.S. – is murky as oil prices remain depressed and COVID-19 continues to sap the economy.“September production was up 5% on the oil side – good news there,” Lynn Helms, director of North Dakota’s Department of Mineral Resources told reporters Tuesday. But “this might be as good as it gets for a while.”North Dakota, the nation’s second-largest oil and gas producer, churned out 1.22 million barrels of oil per day in September, up from 1.17 million the previous month. Natural gas production jumped 7% during the same time.North Dakota’s oil output hit a seven-year low in May of 858,400 barrels per day before rallying over the summer.The recovery, though, was driven by the reopening of wells that had been shut-in during the spring when oil hit historic low prices. It has now largely played out, Helms said.For production to keep rising, oil companies must frack new wells to compensate for old wells petering out. But oil prices are too low to spur such activity anytime soon.In August and September, North Dakota saw a steady rise in permits for new wells, and drilling activity – while still historically low – hasn’t fallen off. The trend has continued since.“That is attributed to [concerns] over changing federal policy,” not economics, Helms said.President-elect Joe Biden has proposed banning oil and gas drilling on federal lands. Almost one-quarter of North Dakota’s oil lands could be “severely impacted” by a federal drilling moratorium, Helms said.Hence, the rush to get new permits and drill new wells on federal land. However, even after a well is drilled, oil producers aren’t likely to turn on the spigot until oil prices rise appreciably.And Helms noted that federal energy forecasters don’t see oil demand returning to 2019 levels until 2022.
Living Near Drilling Is Deadly. Why Don’t California Lawmakers Care? – The New York Times – video – California famously prides itself on environmental leadership – but what about when its lawmakers overlook problems in their own constituents’ backyards? It’s still legal to drill for oil there right next to schools and hospitals – despite well documented health risks to anyone nearby. In the video op-ed above, Josiah Edwards explains what it was like to grow up breathing in the toxic chemicals expelled by drilling. He traces the asthma that plagues his entire family to decades of redlining in Los Angeles County, which consigned Black and brown communities like theirs to live next to active oil wells. Even today, politicians keep rejecting legislation that would help protect Californians from these poisonous emissions. You may not have an oil drill in your backyard now, but if you live in California, there’s nothing stopping one from moving in tomorrow.
Trump administration pushes to sell Alaska oil leases pre-Biden inauguration – The White House will be sending out a call for nominations in coming days, according to a spokeswoman for the U.S. Bureau of Land Management in Anchorage, Alaska. The call is a request to energy companies on what specific land areas should be offered for sale. That would start the clock on a 60-day period before sales could take place in ANWR, where drilling had been banned for decades before a Republican-led tax legislation signed in 2017 removed that ban. Biden opposes drilling in ANWR, while lawmakers in Alaska have long pushed to open up the ecologically sensitive area for oil and gas exploration. “Development in ANWR is long overdue and will create good-paying jobs and provide a new revenue stream for the state – which is why a majority of Alaskans support it,” said Frank Macchiarola, senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute, an industry group. Following a 30-day period after the call for nominations, the government would have to issue a notice for an impending sale of leases. Thirty days after that, the sale would take place, just before Biden’s inauguration on Jan. 20. Alaska produces roughly 500,000 barrels per day of crude oil, far below its peak of 2 million bpd in the late 1980s. “This lease sale is one more box the Trump administration is trying to check off for its oil industry allies before vacating the White House in January,” said Adam Kolton, executive director at the Alaska Wilderness League, which opposes drilling in ANWR. The White House finalized a plan to allow drilling earlier this year. The 19 million acre (7.7 million hectares) refuge is home to Native tribes and wildlife populations including caribou and polar bears. In recent months, several big U.S. banks have said they would not finance oil and gas projects in the Arctic region. “This administration has consistently ignored our voices and dismissed our concerns. Our food security, our land and our way of life is on the verge of being destroyed,” said Bernadette Demientieff, executive director of the Gwich’in Steering Committee. The Gwich’in tribe lives in scattered villages in the reserve and across the national border in Canada.
Trump Rushes To Sell Oil Drilling Leases in Arctic National Wildlife Refuge — The lame duck Trump administration is making a rushed last-minute push to sell leases to oil companies in the long-protected Arctic National Wildlife Refuge before Inauguration Day, numerous outlets reported.On Monday, the Interior Department issued a “call for nominations” asking oil companies to request specific parcels of land to be made available for drilling. Completing the lease sales before President-elect Joe Biden takes office on Jan. 20. would make it harder, though not necessarily impossible, for the Biden administration to prevent oil drilling in ANWR.”Any company thinking about participating in this corrupt process should know that they will have to answer to the Gwich’in people and the millions of Americans who stand with us,” said Bernadette Demientieff, executive director of the Gwich’in Steering Committee, in a statement. Despite the Trump administration’s efforts, oil companies may still struggle to drill in ANWR, given substantial logistical costs and recent moves by major financiers to stop funding drilling there.As reported by The Washington Post: It’s unclear if drillers will even want to take on the legal, political and engineering challenges of extracting oil and gas from the pristine, frozen landscape. Some major banks have already announced they will not fund oil and gas activities in the Arctic in response to environmental pressure.But in other cases, the Biden administration will have to go through an entirely new process all over again to stop the Trump rules from taking effect. That could potentially siphon time and energy away from other environmental protection efforts – including heading off the disastrous rise in temperatures because of global warming.For a deeper dive:For a deeper dive: NPR, The New York Times, Politico Pro, The Hill, Axios, The Washington Post
Trump Plan to Sell Arctic Oil Leases Will Face Challenges –New York Times – If lease sales happen in the final days of the Trump administration, they may face disputes in court or could be reversed by the Biden administration.Even if in its waning days the Trump administration succeeds inselling oil and gas leases in the Arctic National Wildlife Refuge in Alaska, the leases may never be issued, legal and other experts said Tuesday.The leases would face strong and likely insurmountable headwinds from two directions: the incoming Biden administration and the courts, they said.Under new leadership, several federal agencies could reject the leases, which even if purchased at an auction a few days before Inauguration Day would be subject to review, a process that usually takes several months.Mr. Biden vowed during the campaign to oppose oil and gas development in the refuge, a vast expanse of virtually untouched land in northeast Alaska that is home to polar bears, caribou and other wildlife. “President-elect Biden has made it clear that protecting the Arctic refuge from drilling is important to him,” said Brook Brisson, a senior staff attorney with Trustees for Alaska, a nonprofit public-interest law firm. “We trust that means his administration will use its executive authority to do just that.”But if for some reason after those reviews the new administration did not reject the leases, they could also be overturned in court. There are already four lawsuits against the Trump administration’s actions relating to oil and gas development in the refuge, including one filed by Ms. Brisson’s group on behalf of Alaska Native and environmental organizations. “Whoever wins these leases will walk into a minefield of litigation,” . With the publishing of a “call for nominations” in the Federal Register on Tuesday, the Bureau of Land Management officially initiated the lease-sale program for the refuge. The document seeks comment from oil companies and other parties as to their interest in leasing specific parts of the refuge’s coastal plain, which covers 1.5 million acres along the Arctic Ocean.The area is thought to overlie reserves containing billions of gallons of oil. For decades it was protected by law from drilling, but it was opened to potential development in 2017 by the administration and the Republican-led Congress. The decision to start the lease-sale program was hailed by oil industry groups and by members of Alaska’s Congressional delegation, who have long pursued drilling in the refuge for the jobs and revenue it could bring. The Interior Department, which includes the Bureau of Land Management, said it had “taken a significant step in meeting our obligations by determining where and under what conditions the oil and gas development program will occur.”
Big oil and gas have a lot invested in Trump’s attack on the election system —Calmer heads may yet talk Donald Trump down from caps-locked denial to lower-case concession, but the longer the defeated presidentflirts with a coup, the more the oil and gas industry must take a share of the blame. Fossil-fuel firms are among the biggest donors to the defeated US president and the Republican party leaders who have endorsed his legal challenge to overturn the election result. They also have the most to lose if Joe Biden carries out his campaign promise to rejoin the Paris climate agreement and enact a $2tn Green New Deal that would make wind, solar and other clean technologies far cheaper than petroleum. Trump’s presidency was made possible by the rise of a far-right wing in the Republican party characterised by white supremacist messaging and fossil-fuel funding. Oil and gas companies, led by Energy Transfer Equity, Koch Industries and Chevron, give about 80% of their political donations to Republican and conservative candidates. The biggest beneficiary by far is Donald Trump, who directly received more than $2m from this sector in the past year, not including money funnelled through secretive political action committees. High on the list are other supporters of his attempt to overturn the ballot box in the courtroom, such as Mitch McConnell, with $490,000, and Graham, with $143,000. Trump’s refusal to concede can be dismissed as the tantrum of a sore loser. But his support from prominent Republicans resembles a more serious attempt to hold back history: in particular, the two intertwined trends – climate and race – that drove Biden to victory. Climate campaigns are increasingly intertwined with social justice movements. The tighter they bind, the more powerful they become. This is the alliance that pushed Biden to victory. In the future it is likely to strengthen as demographic trends advance and fossil fuel dependency retreats. This may be why some Republicans are so spooked that they are toying with rejecting democracy outright. Lindsey Graham, the Senate Judiciary Committee chair who was re-elected as senator for South Carolina, has made little secret of why he believes Trump’s challenge is an existential political issue for his party. “If Republicans don’t challenge and change the US election system, there will never be another Republican president elected again,” he told Fox News. In a subsequent interview, he clarified this. “If we don’t do something about voting by mail, we are going to lose the ability to elect a Republican in this country.” Of course, it is not the postal votes he fears, but who is making them and why. The massive Covid-driven increase in mail-in votes is likely to have helped to enfranchise many black and indigenous people who were previously excluded by voter-suppression tactics. This, and the dynamism of black women activists such as Stacey Abrams, appears to have been decisive in the democratic victory in Georgia and could yet end the Republicans long control of the Senate, depending on the result of a run-off vote in January.
Oil and gas lobbyists optimistic about 2021 – Energy and business lobbyists are shifting focus to influencing an administration that isn’t President Donald Trump’s, and some see the potential for a divided Congress to benefit industry even with voters concerned about climate change. The Texas Energy Museum hosted a virtual symposium Thursday that featured expert analysis of energy markets and policy goals from one of the top political advisers for the U.S. Chamber of Commerce and the executive director of the American Petroleum Institute. Speakers addressed the biggest challenges and next steps for the energy sector but mostly painted a rosy picture for the oil and gas industry moving forward into the next presidential administration. Mike Sommers, chief executive of the American Petroleum Institute (API), said it became clear on Nov. 7 – the day statistical projections for President-elect Joe Biden’s electoral college votes exceeded 270 – that there would be a new presidential administration to deal with, but the Election Day outcomes for industry were more complicated than one man. “When you dig deeply into the House and Senate results, this election was actually an overwhelming victory for U.S. energy leadership and the millions of jobs and economic benefits our industry provides,” he said. API is one of the largest energy associations in the nation, made up of more than 600 companies in both the oil and gas sectors. It also helps establish industry standards and practices for a wide swath of the industry. Based on the House races that have been called so far and the leanings of outcomes in races yet to be called, lobbyists are preparing for Democrats to have one of the smallest majority margins in the chamber since 2000.
Coast Guard works to contain oil leaking from boat in lagoon – The U.S. Coast Guard is working to clean up oil leaking from an abandoned tugboat in Krause Lagoon on St. Croix’s south shore. The owner of St. Croix Renaissance Group made a report on Nov. 12 and placed a containment boom around the partially sunken Cape Lookout, Coast Guard spokesman Ricardo Castrodad told The Daily News on Tuesday. While at least some of the oil was not captured by the boom, that initial containment effort likely kept the vast majority of oil from drifting throughout the lagoon, and crews started work Tuesday to capture and dispose of the oil, Castrodad said. “While the maximum potential discharge based on the size of the vessel fuel and lube oil tanks is approximately 48,000 gallons of fuel and 2,000 gallons of lube oil. It is unknown how full both tanks are at this time,” according to information from a Coast Guard news release. “At this time, approximately 85% of the discharged oil remains contained within the absorbent and containment boom that is surrounding the vessel, while the remaining material remains within an area that extends approximately 50 yards from the vessel.” “Due to the immediate pollution threat this vessel represents to the environment and surrounding area, the Coast Guard is working to open the Oil Spill Liability Trust Fund to hire an Oil Spill Removal Organization to conduct clean-up operations,” Lt. Cmdr. Alberto Martinez, Sector San Juan Incident Management Division chief, said in a statement. Castrodad said that has happened and a crew was dispatched Tuesday to clean up the site. The 97-foot tugboat “remains tied to a concrete platform at the facility partially sunk with its bow sticking out of the water,” according to the news release, and Castrodad said it’s unclear when exactly the vessel was abandoned. Castrodad said while the tugboat’s owners are ultimately responsible for the vessel’s maintenance and the spill, the priority now is to clean up the environmental hazard, and then the Coast Guard will continue working to identify the responsible individuals.
US Coast Guard manages oil cleanup from Sunken tugboat – The US Coast Guard responded to reports of an abandoned tugboat that was sinking in the harbor of an industrial park on the island of St. Croix in the US Virgin Islands. Coast Guard pollution teams are monitoring cleanup operations to recover discharged oil from the sunken vessel. The incident began on November 12 when the owner/operator of the business park, St. Croix Renaissance Group, reported to the Coast Guard that the abandoned tugboat Cape Lookout was sinking at Krause Lagoon on St. Croix. Coast Guard personnel from the Resident Inspections Office St. Croix, working in coordination with the Sector San Juan Incident Management Division, responded to the scene. The Coast Guard found that the tugboat, which remained tied to a concrete platform at the facility, had partially sunk with its bow sticking out of the water Oil was leaking from the 97-foot tugboat. Based on the size of the vessel, the Coast Guard estimated that the maximum potential discharge was approximately 48,000 gallons of fuel and 2,000 gallons of lube oil. However, it was not known how full the fuel and lube oil tanks were at the time the vessel sunk. An oil containment boom was placed around the vessel and according to the Coast Guard, approximately 85 percent of the discharged oil remains contained within the absorbent and containment boom that is surrounding the vessel. The remaining material remains within an area that extends approximately 50 yards from the vessel the Coast Guard estimated. The Coast Guard assisted in establishing a liability trust fund to hire an oil spill removal organization to conduct cleanup operations. “The National Response Corporation in the US Virgin Islands has been hired as the oil spill removal organization that will be conducting oil recovery and cleanup operations for the Cape Lookout,” said Lt. Cory Woods, Coast Guard Resident Inspection Office St. Croix supervisor. “Our primary objective is to remove this pollution threat and help the affected area and environment return to its pristine state as soon as possible.” Since oil recovery operations began, cleanup crews have recovered approximately 1,500 gallons of oily water of the material discharged from the vessel using an oil waste vacuum truck and oil skimmers to recover the oil from the water. Also, a new containment and absorbent boom was placed around the vessel to keep the discharged oil contained and facilitate its recovery.
Heritage continues oil spill clean-up, air quality testing – The Heritage Petroleum Company Limited is continuing its clean-up efforts in response to the oil spill at the Godineau River, South Oropouche. The Company first received reports of the spill on Wednesday and initiated its response protocols. In an update on Friday, Heritage said it is committed to minimising the impact of the spill. According to the release, many of the people supporting the clean-up efforts live in the area with several fishermen utilising their boats in the process. Ambient air quality testing is ongoing as well as pipeline assessment and repairs along the 16″ line. The release added that the relevant authorities are being regularly updated to ensure all operations are conducted in a safe, efficient, and timely manner. Furthermore, Heritage Petroleum once again reminded the public to avoid the affected area from La Fortune Pluck Road to the river’s mouth at Mosquito Creek since this may put them at unnecessary risk and hamper the clean-up activities.
Ban oil drilling in Bahamas – EDITOR, The Tribune:. Government enacted lockdowns during the COVID-19 pandemic have forced Bahamians to stay home, crushed the economy, and destroyed Bahamian businesses. Meanwhile, Bahamas Petroleum Company (BPC) – which is not Bahamian – has been allowed to forge ahead with its plans to drill for oil in The Bahamas. This blatant act of discrimination by the government against Bahamians is unconscionable and unacceptable. It is also a slap in the face by the government and BPC because oil drilling will not create significant jobs for Bahamians, and drilling is an assault on the precious ecosystem that our lives and countless other forms of life depend on. Numerous letters have been written to the media to express disapproval of drilling in The Bahamas. Requests have also been made to the Prime Minister to stop BPC from drilling. And the petition “Help Save The Bahamas From Oil Drilling” has gained international attention and support. Despite public outcry against BPC, top government officials who opposed drilling have been silent, and BPC representatives have tried to convince Bahamians that oil drilling is safe and great for The Bahamas. A lot has been written about the perceived benefits and the real risks of oil drilling in The Bahamas. So let’s discuss comments made by high-ranking politicians when they were not shy about voicing their opinions about drilling.
Sempra’s Mexico LNG Plant — Update — November 17, 2020 —Just the other day, November 13, 2020: SRE: Mexico will give LNG conditional export permit — Sempra Energy’s local IEnova unit likely will receive an export permit for a proposed liquefied natural gas facility in northwest Mexico, as long as the company helps offset an oversupply of gas in the area, Mexican Pres. Lopez Obrador says.
- The President says he is inclined to approve the permit but stresses what he considers excess natural gas in the area around the northern Pacific coast, given that state-owned power company Comision Federal de Electricidad does not use the fuel to generate electricity.
- Lopez Obrador says supply contracts signed by the previous government obliged CFE to buy natural gas that is not needed.
- The comments appear to walk back the government’s interest in requiring IEnova to build a second LNG export facility before approving the pending plant in Ensenada, which was reported in August.
Today: TechnipFMC wins $1-billion-plus contract for Sempra’s Mexico LNG plant..
- TechnipFMC after-hours on news it received a notice to proceed for a major Engineering, Procurement and Construction contract by Sempra Energy and IENova at the Energ’a Costa Azul liquefied natural gas facility in Mexico; for TechnipFMC, a “major” contract exceeds $1B.
- The Costa Azul project, which won a final investment decision today, will add a natural gas liquefaction facility with nameplate capacity of 3.25M metric tons/year to the existing regasification terminal using a compact and high efficiency mid-scale LNG design.
- TechnipFMC has been involved in the project since 2017, including the delivery of the front end engineering design.
- Earlier this month, TechnipFMC reportedly was set to win a “huge” offshore engineering contract from Qatargas.
In its press release, Sempra refers to the Costa Azul (blue coast) project as a “landmark” project.
Australia LNG regas projects face scrutiny amid domestic gas policy changes –Australia’s LNG regasification projects are facing scrutiny after a drilling moratorium in the state of Victoria was lifted earlier this year, and with more acreage recently opened up for exploration by the federal government to boost domestic energy security.The easing of upstream restrictions has made the race for LNG receiving terminals more competitive in South Australia and the eastern states of Victoria, Queensland and New South Wales, and not all the projects will make it to the finish line. But experts said there is still a strong case for some of the projects because of looming gas shortages, slow upstream progress and the terminals serving as an alternative to pipelines from gas-producing regions in the west. There has been limited progress in resolving medium and long-term east coast gas supply challenges, and by 2030 supply constraints will become increasingly evident with declining production offshore Victoria and no major gas discoveries, energy consultancy EnergyQuest said in an Oct. 16 report. “Any developments onshore Victoria or NSW will provide some supply increments but are unlikely to materially shift the long-term demand-supply imbalance,” it said. “We expect one and possibly two of the Gladstone LNG trains to be closed as increased gas volumes are diverted from the LNG projects to the domestic market. The gap between demand and supply will also increasingly rely on LNG imports at international prices,” the consultancy added.The Gladstone terminals in Queensland are the 9 million mt/year Origin-ConocoPhillips’ Australia Pacific LNG, 7.8 million mt/year Santos-led Gladstone LNG and Shell’s 8.5 million mt/year Queensland Curtis LNG. Actual output is below combined capacity of 25.3 million mt/year due to insufficient gas. Earlier this year, S&P Global Platts Analytics noted that individual issues had delayed final investment decision for each regas project.It said AGL’s Crib Point LNG terminal faced environmental issues, EPIK’s Newcastle project required an extensive and costly pipeline, and Australian Industrial Energy’s Port Kembla FSRU struggled to find buyers as gas imports were only feasible during peak demand periods. On Oct. 20, AIE’s Japanese shareholders sold their stakes to Squadron Energy. Victoria also has a second project, by Vitol-backed Viva Energy, near its Geelong refinery.”Australian Industrial Energy’s Port Kembla Gas Terminal is the only new project that can deliver substantial quantities of natural gas to market as early as 2022 and address the east coast’s predicted short-term gas supply challenges,” a spokesman for AIE told S&P Global Platts in early October. “The 14-16 month construction window is relatively short and the project will then have the capacity to supply more than 75% of NSW’s gas needs,” he said, adding that gas imports and domestic production can co-exist.
IMO and Arctic states slammed for endorsing continued Arctic pollution – The Clean Arctic Alliance today slammed the decision by the International Maritime Organization (IMO) to approve a ban ridden with of loopholes on the use and carriage of heavy fuel oil in the Arctic (HFO), saying that it would leave the Arctic, its Indigenous communities and its wildlife facing the risk of a HFO spill for another decade [1]. The ban was approved during a virtual meeting of the IMO’s Marine Environment Protection Committee (MEPC 75), despite widespread opposition from Indigenous groups, NGOs and in a statement release this week, the Catholic Church [2]. At the IMO’s PPR 7 subcommittee meeting in February 2020, the IMO agreed on the draft before sending it to MEPC. Following PPR7, the Clean Arctic Alliance called the inclusion of loopholes – in the form of exemptions and waivers – in the draft regulation “outrageous” as they mean a HFO ban would not come into effect until mid-2029. With the ban now scheduled to go forward for adoption at MEPC 76, the Clean Arctic Alliance – a coalition of 21 non-profit organisations, called for waivers to not be granted by Arctic coastal states and for the deadline beyond which exemptions would not apply to be brought forward. “By taking the decision to storm ahead with the approval of this outrageous ban, the IMO and its member states must take collective responsibility for failing to put in place true protection of the Arctic, Indigenous communities and wildlife from the threat of heavy fuel oil”, said Dr Sian Prior, Lead Advisor to the Clean Arctic Alliance. “In its current form, the ban will achieve only a minimal reduction in HFO use and carriage by ships in the Arctic in mid-2024, when it comes into effect. It is now crucial that Arctic coastal states do not resort to issuing waivers to their flagged vessels”. Heavy fuel oil is a dirty and polluting fossil fuel that powers shipping throughout the world’s oceans – accounting for 80% of marine fuel used worldwide. Around 80% of marine fuel currently carried in the Arctic is HFO; over half by vessels flagged to non-Arctic states – countries that have little if any connection to the Arctic. As Arctic heating drives sea ice melt and opens up Arctic waters further, even larger non-Arctic state-flagged vessels running on HFO are likely to divert to Arctic waters in search of shorter journey times. This, combined with an increase in Arctic state-flagged vessels targeting previously non-accessible resources, will greatly increase the risks of HFO spills in areas that are difficult to reach, and that lack any significant oil spill containment equipment.
Russia should get behind Arctic ban on dirty fuel – In recent years, Russia has emerged as a global leader in the production and transportation of liquefied natural gas (LNG). The projects are highly innovative, mighty impressive, and very expensive. However, Russia’s strides in switching to LNG in the Arctic will be hindered by their reliance on heavy fuel oil (HFO). HFO, known also as bunker fuel or mazut, is a thick, tar-like substance – a dangerous pollutant, packed full of contaminants. While much of the Russian business community seems to understand that it has no place in Arctic waters, the Russian government has spearheaded diplomatic efforts to water down a proposed international ban on the use of mazut in the Arctic. That could be a dangerous mistake. The Russian government, scientists, and civil society should take heed of these cues from some of the country’s largest businesses and support the transition away from mazut. Shipping along the Northern Sea Route – an Arctic passage which cuts naval journey times from Europe to Asia, but is only accessible in warmer summer months – is booming. Since 2017, volumes have gone up by more than 430%, eclipsing records set in the Soviet era. LNG already makes up most of the transported cargo volumes, but despite investments in gas infrastructure, Russia continues to rely on heavy fuel oil in the Arctic. In November 2019, then-Prime Minister Dmitry Medvedev called on the Murmansk Governor Andrey Chibis to find a “systematic solution” to the problem of growing expenses for heavy fuel oil – the issue of mazut had been elevated to the highest-levels of decision-making in the country. Russia’s business leaders understand that the future of mazut is kaput and are shifting their rubles to LNG.
Oil climbs higher on China, Japan rebound, hopes of OPEC+ supply curb – Oil prices climbed on Monday, recouping some losses from the previous session as hopes that OPEC+ will hold current output curbs offset concerns about weaker fuel demand due to rising Covid-19 cases and higher production from Libya. Figures showing a rebound in the world’s second and third largest economies, China and Japan, also supported prices, along with data that Chinese refineries processed the most crude ever in October on a daily basis. Brent crude futures for January rose $1.70, or 3.97%, to trade at $44.48 per barrel, while U.S. West Texas Intermediate crude for December was up $1.61, or 4%, at $41.74 per barrel. “Fundamentally China’s numbers do support why oil prices can keep at these levels,” OCBC economist Howie Lee said. Both contracts gained more than 8% last week on hopes of a Covid-19 vaccine and that the Organization of the Petroleum Exporting Countries (OPEC) and their allies including Russia will maintain lower output next year to support prices. The group, also known as OPEC+, has been cutting production by about 7.7 million barrels per day, with a compliance rate seen at 101% in October, and had planned to increase output by 2 million bpd from January. OPEC+ is due to hold a ministerial committee meeting on Tuesday which could recommend changes to production quotas when all the ministers meet on Nov. 30 and Dec. 1. However, the speedy recovery of oil production in Libya, an OPEC member, back to above 1.2 million bpd presents a challenge to OPEC+ cuts, while a slowdown in traffic across Europe and the United States dampened fuel demand recovery hopes this winter. “European motorway traffic is down almost 50% in recent weeks in some countries (such as France) as lockdown measures are increased,” ANZ analysts said. People movement on highways in the United States was also slowing based on vehicle mileage data despite authorities’ reluctance to implement new restrictions, they added. While fuel demand is slowing, Baker Hughes’ data showed that the U.S. oil and natural gas rig count rose last week to its highest since May as producers, spurred by higher crude prices, return to the wellpad. ANZ analysts expect the oil surplus to increase to between 1.5 million and 3 million bpd in the first half next year with a vaccine only boosting demand in the second half.
Oil futures finish sharply higher on vaccine news – Oil futures finished with a sharp gain on Monday as news of another promising vaccine helped to ease concerns about COVID-19 economic restrictions that could lead to lower energy demand. December West Texas Intermediate crude rose $1.21, or 3%, to settle at $41.34 a barrel on the New York Mercantile Exchange.
Oil prices edge higher ahead of OPEC+ meeting, vaccine hopes – Oil prices edged higher on Tuesday on expectations OPEC and its allies will extend oil production cuts for at least three months, while sentiment was bolstered by news of another promising coronavirus vaccine. Brent crude futures for January rose 26 cents, or 0.6%, to $44.08 a barrel by 0535 GMT and U.S. West Texas Intermediate crude for December added 18 cents, or 0.4%, to $41.52 a barrel. Equity markets rose on hopes of a quicker economic recovery after Moderna said its experimental Covid-19 vaccine was 94.5% effective in preventing infection based on interim late-state data. “Moderna’s vaccine announcement had probably its largest effect on oil out of the main asset classes,” said Jeffrey Halley, senior market analyst at OANDA, adding that positive vaccine news has “almost certainly put a long-term floor under oil prices.” Moderna’s results came after Pfizer reported last week that its vaccine was more than 90% effective. “If we judge economic recovery, particularly through the lens of oil markets … with multiple high efficacy vaccines in the pipeline, there is good chance mobility will return close to pre-pandemic levels later in 2021,” OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, is set to hold a ministerial committee meeting on Tuesday that could recommend changes to production quotas when all the ministers meet on Nov. 30 and Dec. 1. The group is leaning towards postponement of a planned January increase in oil output for at least three months to support prices as the Covid-19 pandemic continues its second wave, sources told Reuters on Monday. In the United States, oil output from shale formations in December is expected to decline to the lowest level since June, according to the Energy Information Administration. China’s crude oil throughput in October rose to its highest-ever level, underpinning a fast demand recovery in the world’s second largest oil consumer. “Oil demand in China is exceeding pre-COVID-19 levels which suggests oil demand is not permanently impaired,” analysts from Bernstein Energy said. “This is in line with mobility data and supports the view that oil demand has not been structurally damaged by changes in behavior post COVID-19 for countries which emerged successfully from COVID-19.”
Oil prices end mixed as traders weigh next move for OPEC+, upcoming EIA supply data – West Texas Intermediate crude for December delivery rose 9 cents, or 0.2%, to settle at $41.43 a barrel on the New York Mercantile Exchange. January Brent crude the global benchmark, fell by 7 cents, or 0.2%, at $43.75 a barrel on ICE Futures Europe. WTI jumped 3% and Brent rose more than 2% on Monday after Moderna Inc. announced its COVID-19 vaccine candidate was more than 94% effective in preventing infections. That came a week after Pfizer Inc. and BioNTech SE said their vaccine candidate was highly effective. The JMMC Tuesday also said it “welcomed the positive performance in the overall conformity level” for participating members and nonmembers of OPEC at 101% in October. Including voluntary adjustments to make up for past overproduction, those producers have cut global supply by about 1.6 billion barrels between May and October. The committee was expected to recommend delaying, by three to six months, a relaxation of output curbs set to take effect on Jan. 1, said analysts at UniCredit, in a note. OPEC+ is set to make a final decision at the Nov. 30 and Dec. 1 meetings. The failure to announce a recommendation was “surprising,” Marshall Steeves, energy markets analyst at IHS Markit, told MarketWatch. However, Arabic news and satellite TV channel Al Ekhbariya reported that OPEC+ unanimously agreed to an extension of output cuts by three months starting in January, according to translated tweet from the Saudi government owned network. “The global demand outlook remains precarious given the second wave of the pandemic and resulting lockdowns in Europe and the U.S.,” Steeves said. “This will likely remain the case through the first quarter of 2021 if not the second, thus OPEC+ needs to face the reality that demand for their oil will remain muted.” For now, “the oil market remains broadly rangebound between the pressure of travel restrictions and rising COVID cases, vs. supply constraints and optimism around vaccines,” he said. Traders also await weekly data on U.S. petroleum supplies due out from the American Petroleum Institute late Tuesday and Energy Information Administration early Wednesday. On average, analysts expect the EIA to report an increase of 100,000 barrels in domestic crude supplies for the week ended Nov. 13, according to a survey from S&P Global Platts. They also forecast a supply climb of 300,000 barrels for gasoline, but expect to see distillate stocks down by 1.8 million barrels for the week. .
WTI Slides After Bigger Than Expected Crude Build – Oil prices ended flat on the day, bouncing back above $41 (after weak retail sales) on the back of OPEC+ headlines: “All participating countries need to be vigilant, proactive and be prepared to act, when necessary, to the requirements of the market,” the panel said in its closing statement after Tuesday’s video conference.Saudi Energy Minister Prince Abdulaziz bin Salman said he could see a light at the end of the tunnel, but the market had some way to go before getting there (and we worry that is the oncoming train of global lockdowns crushing demand once again).“There is still a way to go before we reach the other side of the long-awaited pandemic tunnel,” Prince Abdulaziz said at the opening session of the OPEC+ Joint Ministerial Monitoring Committee’s virtual meeting.“The good news was counterbalanced by a surge in cases in the second wave of infections” and a rush of additional supply from Libya. But for now, the algos will focus on short-term inventories… API:
- Crude +4.174mm (+100k exp)
- Cushing +176k
- Gasoline +256k (+300k exp)
- Distillates -5.024mm (-1.8mm exp)
After the prior week’s surprise crude build, analysts expected a very small rise in stocks in the last week (and a small build in gasoline stocks). However, crude stocks rose 4.174mm barrels (notably more than the 100k bump expected)… Graphics Source: Bloomberg “There’s the overhanging doom and gloom of a Covid resurgence and growing concerns about a long-term impact on jet fuel demand,” said Gary Cunningham, director of account management and research at Tradition Energy.“All of it is going to affect overall global consumer demand and that’s a big hit on the economy and a big hit on outlooks for petroleum demand.”WTI bounced back above $41 intraday, hovering around $41.40 ahead of the API print, and slipped lower after the data…
Oil falls as big build in U.S. crude stockpiles raises specter of supply glut – Oil mixed as hopes OPEC+ delays supply increase offset demand concerns Oil prices were mixed on Wednesday as a bigger-than-expected build in U.S. crude stocks and weaker U.S. retail sales stoked fears over fuel demand, although hopes that OPEC and its allies will delay a planned rise in oil output lent support. Brent crude futures for January rose 3 cents, or 0.1%, to $43.78 a barrel by 0430 GMT, while U.S. West Texas Intermediate crude for December eased 3 cents, or 0.1%, to $41.40 a barrel. The American Petroleum Institute (API) said on Tuesday that U.S. crude stockpiles rose by 4.2 million barrels last week, well above analysts’ expectations in a Reuters poll for a build of 1.7 million barrels. “The API crude inventories rose much higher than expected, which added to pressure,” Disappointing U.S. retail sales also raised concerns over weaker U.S. consumption in light of the Covid-19 resurgence,. U.S. retail sales increased less than expected in October, restrained by spiraling new Covid-19 infections and declining household income as millions of unemployed Americans lose government financial support. To tackle weaker energy demand amid a new wave of the Covid-19 pandemic, Saudi Arabia called on fellow members of the OPEC+ grouping – OPEC and other producers including Russia – to be flexible in responding to oil market needs as it builds the case for a tighter production policy in 2021. “Hopes that OPEC+ will keep existing cuts further into 2021, or even increase the cuts, underpinned prices,” OPEC+ held a ministerial committee meeting on Tuesday that made no formal recommendation. The group will hold a full ministerial meeting on Nov. 30 and Dec. 1 to discuss policy. OPEC+ members are leaning towards delaying a previously agreed plan to boost output in January by 2 million barrels per day (bpd), or 2% of global demand, sources told Reuters early this week. Supporting the case for a tighter supply policy next year, OPEC and its allies have revised oil demand scenarios for 2021 with demand seen weaker than previously anticipated, a confidential document seen by Reuters shows.
Oil jumps to 11-week high on hope of OPEC+ supply increase delay – Oil prices firmed by more than 1% on Wednesday on hopes OPEC and its allies will delay a planned increase in oil output and after Pfizer said its COVID-19 vaccine was more effective than previously reported. Brent crude rose 70 cents, or 1.6%, to $44.45 a barrel, while U.S. West Texas Intermediate crude settled 39 cents higher at an 11-week high of $41.82 per barrel. Prices were also supported by a smaller-than-expected increase in U.S. crude stockpiles last week. Both contracts jumped by about $1 after Pfizer Inc said that final results from late-stage trial of its vaccine showed it was 95% effective. Last week it had put the efficacy at more than 90%. Moderna Inc on Monday said that preliminary data for its vaccine also showed it was almost 95% effective. “Oil prices today are modestly rising on hopes that OPEC+ will decide to postpone its planned production increase in January and on the latest vaccine euphoria,” To tackle weaker energy demand amid a second wave of the pandemic, Saudi Arabia called on fellow members of the OPEC+ group to be flexible to meet market needs and to be ready to adjust their agreement on output cuts. OPEC+, comprising the Organization of the Petroleum Exporting Countries, Russia and other producers, met on Tuesday but made no formal recommendation. The group is due to discuss policy at a full ministerial meeting to be held on Nov. 30 and Dec. 1. Members of OPEC+ are leaning towards delaying the current plan to boost output in January by 2 million barrels per day (bpd), sources have said. They are considering a possible delay of three or six months. In the United States, crude inventories rose 768,000 barrels last week, compared with analyst expectations in a Reuters poll for a 1.7 million-barrel rise. Distillate stockpiles, which include diesel and heating oil, fell by 5.2 million barrels, far exceeding expectations. “There’s concern about gasoline demand, but overall inventories, including diesel stocks, fell, giving credence to the efforts of OPEC+ and reduced overall crude production,”
Oil Prices Decline As Virus Restrictions Mount – — Oil edged lower with growing virus restrictions and signs the labor-market recovery may be slowing in the U.S. dampens the near-term demand outlook. Futures fell as much as 1.8% in New York before closing little changed as the dollar erased gains late in the trading session, boosting the appeal for commodities priced in the currency. U.S. equities also staged a rally. Oil’s upward momentum seen earlier this week was zapped Thursday after U.S. jobless claims rose for the first time in five weeks, presenting yet another obstacle to a sustained rebound in consumption. With coronavirus cases rising across the U.S., many states are increasing restrictions, while the Centers for Disease Control and Prevention urged Americans not to travel for Thanksgiving.. “This is probably going to be a disappointing travel holiday coming up, and that’s going to weigh on demand.” Oil is still headed for a weekly gain after vaccine developments and signs of demand recovering in Asia boosted optimism over the outlook for consumption in the longer-term. However, as virus cases surge from the U.S. to Europe, the ongoing recovery in oil product global trade flows is slower than previously expected, according to Maersk Tankers Chief Executive Officer Christian M. Ingerslev. West Texas Intermediate for December delivery declined 8 cents to settle at $41.74 a barrel. Brent for January settlement fell 14 cents to end the session at $44.20 a barrel. The shaky demand picture poses a challenge to the Organization of Petroleum Exporting Countries and its allies as they struggle to manage the market. The United Arab Emirates tried to ease a spat with its OPEC+ partners on Thursday, after officials privately questioned the benefit of its membership of the group. The producer group is also dealing with the recent surge in Libyan oil output, which has surpassed 1.25 million barrels a day according to state-run National Oil Corp. Amid the rise in production, France’s Total SE is in talks to increase energy investment in the North African nation.
Oil rises about 1%, posts third week of gains on vaccine hopes – (Reuters) – Oil prices rose about 1% higher on Friday and posted a third consecutive weekly rise, buoyed by successful COVID-19 vaccine trials, while renewed lockdowns in several countries to limit the spread of the coronavirus capped gains. Brent crude futures rose 76 cents, or 1.7%, to settle at $44.96 a barrel. The more active U.S. West Texas Intermediate (WTI) January crude contract gained 52 cents, or 1.2% to $42.42 a barrel. The WTI contract for December, which expired on Friday, rose 41 cents, or 1%, to settle at $42.15 a barrel. Both benchmarks gained about 5% this week. Prospects for effective COVID-19 vaccines have bolstered oil markets this week. Pfizer Inc said it will apply to U.S. health regulators on Friday for emergency use authoritization of its vaccine, the first such application in a major step toward providing protection against the new coronavirus. “Despite the fact that in reality it will take time for a global vaccine campaign to be implemented, time during which oil demand will suffer, positive news are breaking daily about the vaccine deliveries,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets. Also boosting sentiment was hope that the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers will keep crude output in check. The group, known as OPEC+, were expected to delay a planned production increase. OPEC+, which meets on Nov. 30 and Dec. 1, is looking at options to delay by at least three months from January the tapering of their 7.7 million barrel per day (bpd) cuts by around 2 million bpd. “An assumed roll-over of current cuts by OPEC+ to Q1 2021 is probably in today’s price of $44 per barrel,” Nordic bank SEB said. Still, smaller Russian oil companies are planning to pump more crude this year despite the output deal as they have little leeway in managing the production of start-up fields, a group representing the producers said.
Aramco Plans U.S. Dollar Bond to Plug Funding Gap – WSJ – Saudi Aramco said Monday it aims to issue a U.S. dollar-denominated bond, as the cash-strapped oil giant cuts jobs, considers asset sales and reviews its expansion plans. Saudi Arabian Oil Co., as the company is officially called, is selling debt even as low oil prices hurt its ability to generate cash for its biggest shareholder, the Saudi government. It is seeking to meet a pledge made last year to pay $75 billion in annual dividends. Aramco in a statement said it hired Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley, among others, to arrange investor calls on Monday ahead of a debt sale. The oil company, which didn’t disclose pricing or how much it will raise, said it plans a multi-tranche bond offering with potential maturities of three, five, 10, 30 and 50 years. The bond issue is likely to raise billions of dollars, and the pricing and size would depend on market conditions, Aramco added. It could be well timed. Investors are hopeful of a global economic recovery after Pfizer Inc. last week said its coronavirus vaccine was 90% effective in trials. Oil prices have rallied since then. Aramco made its debut in the bond markets last year, raising $12 billion and giving global investors access to the world’s biggest oil company for the first time. The sale prospectus also opened the books on Aramco’s once-secretive financials, showing it was then the world’s most profitable company and whetting the appetite for equity investors ahead of last December’s share offering. The company announced the dividend commitment in a bid to lure investors to the initial public offering. But the pledge, combined with low oil prices caused by the pandemic, has forced a restructuring at Aramco and a scramble to raise cash. The IPO also failed to attract international buyers, many of whom were discouraged by what they perceived to be an expensive valuation. On top of raising debt, Aramco is now cutting jobs and reviewing plans to expand at home and abroad, The Wall Street Journal has reported. The company is also considering a sale-and-lease-back agreement for some of its pipeline assets in a deal that could also raise billions of dollars, according to people familiar with the deal. The plan, dubbed “Project Seek,” could involve Aramco selling a stake in its infrastructure to investors who would receive a regular payout from the company as it leases the asset, these people said. Aramco didn’t immediately respond to a request for comment on the project.
Yemeni officials repeat warnings over Safer oil tanker Iran-backed Houthi’s use of naval mines and bomb boats, and the group’s resistance to maintaining the Safer tanker are serious threatens to international maritime traffic and ecological life in the Red Sea, senior Yemeni officials warned on Monday. The officials repeated concerns about the collapse of the tanker, urging the international community to act now to avert a major disaster in the Red Sea. Yemeni Vice President Ali Mohsen Al-Ahmer said that the Yemeni government is still open to all peace initiatives, but the Houthi’s continuing use of land mines and their refusal to allow UN experts to visit the decaying tanker show that they are not serious about peace, state news agency SABA reported. During a meeting with Gov. of Hodeidah Al-Hassan Ali Taher, Al- Ahmer said that the Houthis pose an “increasing” threat to maritime navigation in the Red Sea through their mines and explosive-laden boats that target commercial ships. For months, Yemeni government officials and Western diplomats have pressured the Houthis to allow a team of UN experts access to the tanker to conduct vital maintenance, warning the rebels that they would be held responsible if the tanker crumbled and caused a predicted environmental and humanitarian catastrophe. Loaded with more than 1 million barrels of crude oil, the stranded ship off the western city of Hodeidah has decayed over the last five years due to lack of maintenance. Yemeni Minister of Planning and International Cooperation Dr. Najeeb Al-Ouj on Monday echoed the same concerns about the crumbling of the tanker and potential environmental disaster. SABA quoted the minister as saying that the international community has an “ethical and moral” responsibility to keep pressure on the Houthis until they allow UN experts to board the tanker and assess the damage.
Rockets Target US Embassy In Baghdad Just As Trump Ordered Troop Draw Down — Coming less than within an hour of President Trump announcing his troop draw down order in Iraq and Afghanistan Tuesday afternoon, a hail of rockets fell near the US embassy in Baghdad. Local and regional reports say at least five rockets were fired on the fortified Green Zone in Iraq’s capital and that four struck near the American compound. The US embassy’s C-RAM system, or “Counter rocket, artillery, and mortar” defense weapon, was activated in response to the inbound rocket fire. The timing seems clearly intentional, given international headlines at that very moment circulated the US announced plans to reduce its troop levels in Iraq.Trump ordered the Pentagon to accelerate a drawdown of US troops in Afghanistan and Iraq to 2,500 , as the president works to deliver on his longtime pledge to exit from “endless wars” before he leaves office January 20. Current estimates put US troop levels in Iraq at over 3,000. In both Iraq and Afghanistan Trump’s advisers have reportedly been urging the commander-in-chief to avoid pulling everyone out, reducing US presence down to ‘zero’.
Shocking Images: Fleeing Armenians Burn Own Homes Rather Than Leave Them To Azerbaijan –The Russia-brokered peace deal signed last week between the leaders of Armenia and Azerbaijan at a moment Azerbaijan appeared to have the military upper-hand has held firmly as nearly 2,000 Russia peacekeeping troops are also on the ground in Nagorno-Karabakh.But it’s come at a huge cost for the Armenian side in terms of possession of the disputed territory following six weeks of fierce fighting that has left thousands dead and wounded. As part of the truce terms Armenia and Nagorno-Karabakh must return the Armenian ethnic districts of Aghdam, Kalbajar and Lachin to Azerbaijan according to a timeline negotiated under the Russians. It’s expected to be completed by December 1, with Armenian armed forces and what Azerbaijan has dubbed “illegal Armenian settlers” initially given just days to withdraw.However, in at least one district Baku has agreed to extend the date for complete handover: “Azerbaijan agreed to prolong the deadline for the withdrawal from Kalbacar of Armenian armed forces and of illegal Armenian settlers until November 25,” the office of Azerbaijani President Ilham Aliyev told a news conference this weekend. But Aghdam, Kalbajar and Lachin districts will ultimately see all Armenians gone by Dec. 1, according to the terms.Over the days international media correspondents have observed Armenians living in the Kalbajar district setting fire to their homes as they flee, in order to prevent any Azeri from ever occupying them.The New York Times reported of the shocking scenes: The cars, trucks and vans jamming the mountain roads deep into the night on Saturday brimmed with all the possessions that the fleeing Armenians could rescue: upholstered furniture, livestock, glass doors.As they left, many set their homes on fire, enveloping their exodus in acrid smoke and illuminating it in an orange glow. Near some of the burning houses stood older ruins: the remains of homes abandoned a quarter-century ago, when Azerbaijanis fled and Armenians moved into the region.
Fighting erupts between Morocco and Polisario in Western Sahara – Fighting between Moroccan military forces and the Polisario Front (Popular Front for the Liberation of Saguia el-Hamra and R’o de Oro) has broken out after Rabat sent troops to reopen a highway linking Morocco, the Western Sahara and Mauritania that was occupied by protesters. The fighting puts an end to a 1991 ceasefire, risking war between Morocco and Algeria in a region that is a powder keg after US and European imperialism started wars in Libya and Mali. For the past three weeks, dozens of Sahrawi protesters had blocked the Guerguerat border crossing, cutting trade and traffic between Morocco and Mauritania to the south. They were demanding Morocco close a road in the U.N.-patrolled buffer zone and calling for the release of political prisoners. Rabat reacted instead by deploying a brigade of 1,000 men accompanied by 200 vehicles to the region, violating the terms of the ceasefire. This deployment took place hours after US Major General Andrew Rohling met in Agadir with Lieutenant General Belkhir El Farouk, Commander of the Southern Zone of Morocco’s Royal Armed Forces, which includes occupied Western Sahara. They were to discuss preparations for next year’s African Lion military exercise, the largest training exercise involving US troops in Africa. “War has started, the Moroccan side has liquidated the ceasefire,” senior Polisario official Mohamed Salem Ould Salek told AFP. Sidi Omar, the Polisario Front’s representative to the U.N., said of Rabat’s action: “For us, it is an open war.” The Sahara Press Service claimed Polisario had launched attacks for five consecutive days against the Royal Moroccan Army in the Western Sahara, “causing loss of lives and equipment and disrupting its military plans.” In an official statement, King Mohammed VI warned that Morocco “remains firmly determined to react, with the greatest severity, and in self-defence, against any threat to its security.”
.