Written by rjs, MarketWatch 666
Here are some selected news articles from the week ended 03 March2019.
This article is a feature every Monday evening on GEI.
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Natural gas supplies 21.6% below seasonal average & falling; another US oil output record; oil imports drop to 23 year low
Oil prices ended the week lower for the first time in three weeks as concerns about global economic weakness overwhelmed the OPEC-led supply cuts that had been driving prices higher…after rising $1.67 or 3% to $57.26 a barrel on those OPEC cuts and optimism for a US-China trade deal last week, prices for US crude for April delivery fell $1.78 to $55.48 a barrel on Monday after Trump tweeted “Oil prices getting too high” at OPEC, triggering a selloff that sent prices tumbling more than 3%…oil then traded in a narrow range on Tuesday on indications that OPEC planned to maintain their production cuts despite Trump’s pressure, with April US crude finishing up 2 cents at $55.50 a barrel….oil prices rose early on Wednesday, after the Saudis brushed off Trump’s tweet, with the Saudi Energy Minister responding to Trump by saying “We are taking it easy.” and spiked higher later that day after the EIA reported the largest drop in US crude inventories in seven months, with oil closing $1.44 higher at $56.94 a barrel…that inventory rally continued into Thursday, but prices came under pressure from weak economic data from China and diminished expectations for a resolution to the US China trade dispute, but still ended 28 cents higher at $57.22 a barrel, even after the Energy Department announced it would pull 6 million barrels from the Strategic Petroleum Reserve and sell them into the market for delivery between April and May…after opening higher on Friday, the stream of weak economic reports from the US and Asia finally caught up with prices, as demand worries pushed oil down $1.42 or 2.5 percent to settle at $55.80 a per barrel, thus finishing the week roughly 3% lower than the prior Friday close, as even data showing a drop in OPEC output to its lowest in four years failed to support prices.
Meanwhile, natural gas prices rose for a third straight week as weather forecasts continued to indicate winter like temperatures would continue into March…the contract for March natural gas spiked 11.9 cents or 4% on Monday as weather model guidance indicated even colder temperatures for the first third of March and added another 1.9 cents to end at $2.855 per mmBTU as trading in March natural gas expired…natural gas for April delivery, meanwhile, which ended last week at $2.739 per mmBTU, concurrently rose 7.6 cents higher on Monday and fell 1.9 cents on Tuesday, was little changed on Wednesday, and was trading nearly 3 cents higher at $2.827 on Thursday before the natural gas storage report came in weaker than expected and cut the day’s increase to 1.3 cents…a cold-related spike in cash prices then pulled the April contract higher on Friday, topping $2.87 before it settled back to close at $2.859 per mmBTU, an increase of 4.7 cents on the day..
The natural gas storage report for the week ending February 22nd from the EIA indicated that the quantity of natural gas held in storage in the US fell by 166 billion cubic feet to 1,539 billion cubic feet over the week, which meant our gas supplies ended the period 154 billion cubic feet, or 9.1% below the 1,693 billion cubic feet that were in storage on February 23rd of last year, and 424 billion cubic feet, or 21.6% below the five-year average of 1,963 billion cubic feet of natural gas that have typically remained in storage after the third week of February….this week’s 166 billion cubic feet withdrawal from US natural gas supplies was a bit less than the median 171 billion cubic feet withdrawal of stored gas that a Reuters poll of 19 market analysts expected, but was quite a bit more than the average of 104 billion cubic feet of natural gas that have been withdrawn from US gas storage during the same winter week over the last 5 years….
To put this week’s natural gas storage report into perspective, we’ll include the summary table that heads up the Weekly Natural Gas Storage Report page at the EIA below..
As mentioned, the above table comes from Weekly Natural Gas Storage Report for February 22nd, and it shows the amount of natural gas in storage as of February 22nd in billions of cubic feet in each of 5 major US regions and in total in the first column, the amount of natural gas in storage on February 15th in the 2nd column, and the difference between the two in the third or “net change” column, with negative numbers in that column representing a natural gas withdrawal during the week…then, the 4th and 5th columns show the amount of natural gas in storage as of February 22nd of last year, and the percentage change from last year to this year, while the last two columns show the five year average amount of gas in storage on February 22nd for the years 2014 to 2018, and again the percentage change from that 5 year average to this year’s natural gas inventory on the same date…
Hence, you can see from that table that natural gas storage facilities in the Eastern US saw a 41 billion cubic feet draw from their supplies over the week, which turns out to be more than their average 35 billion cubic foot withdrawal during the same week over the past five years, and hence the region’s gas supply deficit rose to 12.2% below average for this time of year, up from the 9.8% shortfall shown last week….meanwhile, natural gas supplies in the Midwest fell by 51 billion cubic feet, also higher than their normal 39 billion cubic feet pull for that date, as their supply deficit increased to 17.7 below the average for the third weekend of February, up from 14.0% below normal last week…the South Central region saw a 55 billion cubic feet drop in their supplies, way above their normal 19 billion cubic foot withdrawal, as their natural gas storage deficit increased from 16.1% to 20.8% below their five-year average for this time of year…at the same time, 8 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region, which has only averaged a 4 billion cubic feet withdrawal during this same week over the last 5 years, and hence their gas supply deficit from normal rose to 37.3%, up from 33.1% a week ago…finally, 16 billion cubic feet of natural gas were withdrawn from storage in the Pacific region, in contrast to the 5 billion cubic feet normally withdrawn in those western states during the same week of February, and hence their natural gas supply deficit rose to 42.7% below normal for this time of year, up from 36.7% a week ago….
The forecasts continue to show colder than normal weather for the next two weeks for most of the US, and colder than normal for the next month for the south central states, so the supply deficits will get worse before they get better….however, April is rapidly approaching, and natural gas withdrawals should no longer be needed once it gets here…after that, the amount of gas that’s in storage compared to a year ago – now 154 billion cubic feet less – will be the number that we’ll be watching, because sometime between now and the Fall we will have to improve on last year’s storage numbers, or we’ll start next winter in the same fix that we started this one..
The Latest US Oil Supply and Disposition Data from the EIA
This week’s US oil data from the US Energy Information Administration, reporting on the week ending February 22nd, indicated a big drop to a new 23 year low in our crude oil imports, while our oil exports continued near last week’s record high pace, and hence our commercial supplies of crude oil saw their largest drop in 7 months….our imports of crude oil fell by an average of 1,605,000 barrels per day to an average of 5,917,000 barrels per day, after rising by an average of 1,312,000 barrels per day the prior week, while our exports of crude oil fell by an average of 248,000 barrels per day to 3,359,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,558,000 barrels of per day during the week ending February 22nd, 1,357,000 fewer barrels per day than the net of our imports minus exports during the prior week…over the same period, field production of crude oil from US wells was estimated to be 100,000 barrels per day higher at a record 12,100,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 14,658,000 barrels per day during this reporting week…
Meanwhile, US oil refineries were using 15,890,000 barrels of crude per day during the week ending February 22nd, 179,000 more barrels per day than the amount of oil they used during the prior week, while over the same period 1,235,000 barrels of oil per day were reportedly being pulled out of the oil that’s in storage in the US….so for once, this week’s crude oil figures from the EIA indicate that our total working supply of oil from net imports, from oilfield production, and from storage was close to what refineries reported they used during the week, and hence the figure on line 13 of the weekly U.S. Petroleum Balance Sheet, representing “unaccounted for crude oil”, was only 3,000 barrels per day, the smallest error we’ve seen in years…
Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports fell to an average of 6,699,000 barrels per day last week, 10.9% less than the 7,521,000 barrel per day average that we were importing over the same four-week period last year…. the 1,235,000 barrel per day decrease in our total crude inventories was all pulled out of our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged….this week’s crude oil production was reported to be 100,000 barrels per day higher at a record 12,100,000 barrels per day because the rounded estimate for output from wells in the lower 48 states rose by 100,000 barrels per day to 11,600,000 barrels per day, while the 4,000 barrel per day increase in Alaska’s oil production to 491,000 barrels per day was not enough to make a difference in the rounded national total…last year’s US crude oil production for the week ending February 23rd was at 10,283,000 barrels per day, so this reporting week’s rounded oil production figure was 17.7% above that of a year ago, and 43.6% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…
Meanwhile, US oil refineries were operating at 87.1% of their capacity in using 15,890,000 barrels of crude per day during the week ending February 22nd, up from 85.9% of capacity the prior week, which had been the lowest capacity utilization rate in 16 months….the 15,890,000 barrels per day of oil that were refined this week was still the highest on record for the last full week of February, but little changed from the 15,882,000 barrels of crude per day that were being processed during the week ending February 23rd, 2018, when US refineries were operating at 87.8% of capacity…
With the increase in the amount of oil being refined, the gasoline output from our refineries was also higher, rising by 64,000 barrels per day to 9,553,000 barrels per day during the week ending February 22nd, after our refineries’ gasoline output had decreased by 130,000 barrels per day the prior week….with that increase in this week’s gasoline output, our gasoline production was 1.7% higher than the 9,391,000 barrels of gasoline that were being produced daily during the same week last year….meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 57,000 barrels per day to 4,816,000 barrels per day, after that output had decreased by 5,000 barrels per day the prior week….after that increase, this week’s distillates production was almost 7.8% above the 4,469,000 barrels of distillates per day that were being produced during the week ending February 23rd, 2018….
Despite the increase in our gasoline production, our supply of gasoline in storage at the end of the week fell by 1,906,000 barrels to 254,941,000 barrels by February 22nd, after falling by 1,454,000 barrels over the prior week….our gasoline supplies fell again this week in part because the amount of gasoline supplied to US markets increased by 181,000 barrels per day to 8,981,000 barrels per day, after increasing by 152,000 barrels per day the prior week, even as our imports of gasoline rose by 53,000 barrels per day to 473,000 barrels per day and as our exports of gasoline rose by 3,000 barrels per day to 815,000 barrels per day…after having set a record high five weeks ago, our gasoline inventories are now just 1.2% higher than last February 23rd’s level of 251,817,000 barrels, and roughly 3% above the five year average of our gasoline supplies at this time of the year…
Even with the increase in our distillates production, our supplies of distillate fuels fell for the 16th time in twenty-three weeks, but just by 303,000 barrels to 138,379,000 barrels during the week ending February 22nd, after our distillates supplies had decreased by 1,517,000 barrels over the prior week…our distillates supplies decreased less this week than last because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 149,000 barrels per day to 4,076,000 barrels per day, and because our exports of distillates fell by 77,000 barrels per day to 1,114,000 barrels per day, while our imports of distillates fell by 100,000 barrels per day to 131,000 barrels per day….with this week’s small decrease, our distillate supplies ended the week fractionally above the 137,985,000 barrels that we had stored on February 23rd, 2018, but remained roughly 2% below the five year average of distillates stocks for this time of the year…
Finally, with the big drop in our oil imports forcing refineries to pull oil out of storage to meet their needs, our commercial supplies of crude oil in storage decreased for the first time in 6 weeks, falling by 8,647,000 barrels over the week, from a 15 month high of 454,512,000 barrels on February 15th to 445,865,000 barrels on February 22nd…however, with weekly increases in 16 out of the last 23 weeks, our crude oil inventories are still roughly 3% above the recent five-year average of crude oil supplies for this time of year, and more than 35% above the prior 5 year (2009 – 2013) average of crude oil stocks for the middle of February, with the disparity between those figures arising because it wasn’t until early 2015 that our oil inventories first rose above 400 million barrels…since our crude oil inventories have mostly been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of February 22nd were still 5.3% above the 423,498,000 barrels of oil we had stored on February 23rd of 2018, while falling to 14.3% below the 520,184,000 barrels of oil that we had in storage on February 24th of 2017, and 8.4% below the 486,699,000 barrels of oil we had in storage on February 26th of 2016…
This Week’s Rig Count
US drilling rig activity slowed for the second week in a row and is now several dozen rigs below the levels of this past Fall, when both oil prices and natural gas prices were somewhat higher….Baker Hughes reported that the total count of rotary rigs running in the US fell by 9 rigs to 1038 rigs over the week ending March 1st, which was still 57 more rigs than the 981 rigs that were in use as of the March 2nd report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market…
The count of rigs drilling for oil fell by 10 rigs to 843 rigs this week, which was still 43 more oil rigs than were running a year ago, while it was well below the recent high of 1609 rigs that were drilling for oil on October 10th, 2014…at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 1 rig to 195 natural gas rigs, which was also 14 more rigs than the 181 natural gas rigs that were drilling a year ago, but way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008…
Drilling activity offshore in the Gulf of Mexico increased by a total of 3 rigs to 22 rigs this week, as 2 more platforms offshore from Louisiana started drilling this week while one more rig was added offshore from Texas, where there are now three rigs drilling in state waters…the 19 rigs running offshore from Louisiana is up from the 13 rigs active there a year ago, while the 3 Texas offshore rigs are also an increase from the single rig active in Texas waters last year at this time, and the most drilling activity offshore from Texas since March 2016..
The count of active horizontal drilling rigs decreased by 5 rigs to 911 horizontal rigs this week, which was still 64 more horizontal rigs active than the 842 horizontal rigs that were in use in the US on March 2nd of last year, but was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014…..in addition, the vertical rig count decreased by 3 rigs to 60 vertical rigs this week, which was still up by 1 rig from the 59 vertical rigs that were in use during the same week of last year….likewise, the directional rig count decreased by 1 rig to 67 directional rigs this week, which was also down from the 75 directional rigs that were operating on March 2nd of 2018…
The details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of March 1st, the second column shows the change in the number of working rigs between last week’s count (February 22nd) and this week’s (March 1st) count, the third column shows last week’s February 22nd active rig count, the 4th column shows the change between the number of rigs running on Friday and those running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 2nd of March, 2018…
As you can see, the drop in this week’s rig count was anchored by the 7 rigs that were pulled out of the Permian basin, with most of the other changes in large producing states other than California and Alaska more on the order of statistical noise that we’d expect to see as rigs are in transit from one location to another…changes in the Permian included 8 rigs being pulled out of Texas Oil District 8, or the core Permian Delaware, which still has 309 rigs drilling there, while 1 rig was added back in Texas Oil District 8A, which would correspond to the northern Permian Midland…those Texas changes strongly suggest that the rig that was shut down in New Mexico was in an ‘other’ basin among those not included in Baker Hughes’ summary…the only evident change among natural gas rigs was the single rig added in the Haynesville of northern Louisiana; the rig that was added in the Ft Worth area Barnett shale was an oil rig, joining the natural gas rig that was already operating there…and other than the changes in the major producing states you see above, Mississippi drillers also added a rig this week and now have 4 rigs deployed, which is up from 3 rigs running in the state during the same week of a year ago…
Plastics: The New Coal in Appalachia? – Along the banks of the Ohio River here, thousands of workers are assembling the region’s first plastics manufacturing plant. It’s a conspicuous symbol of a petrochemical future looming across the Appalachian region.More than 70 construction cranes tower over hundreds of acres where zinc was smelted for nearly a century. In a year or two, Shell Polymers, part of the global energy company Royal Dutch Shell, plans to turn what’s called “wet gas” into plastic pellets that can be used to make a myriad of products, from bottles to car parts.Two Asian companies could also announce any day that they plan to invest as much as $6 billion in a similar plant in Ohio. There’s a third plastics plant proposed for West Virginia. With little notice nationally, a new petrochemical and plastics manufacturing hub may be taking shape along 300 miles of the upper reaches of the Ohio River, from outside Pittsburgh southwest to Ohio, West Virginia and Kentucky. It would be fueled by a natural gas boom brought on by more than a decade of hydraulic fracturing, or fracking, a drilling process that has already dramatically altered the nation’s energy landscape – and helped cripple coal. But there’s a climate price to be paid. Planet-warming greenhouse gas emissions from the Shell plant alone would more or less wipe out all the reductions in carbon dioxide that Pittsburgh, just 25 miles away, is planning to achieve by 2030. Oil consumption for petrochemicals and plastics may account for half the global growth in petroleum demand between now and 2050. Increased drilling for natural gas, another plastics feedstock, leaks methane, a potent climate pollutant. Despite the climate and environmental risks, state and business leaders and the Trump administration are promoting plastics and petrochemical development as the next big thing, more than three decades after the region’s steel industry collapsed and as Appalachian coal mining slumps.”We have been digging our way out of a very deep hole for decades,” said Jack Manning, president and executive director of the Beaver County Chamber of Commerce. “When Shell came along with a $6-to-$7 billion investment … we were in the right spot at the right time,” he said.
Plastic & Health: The Hidden Costs of a Plastic Planet — The Center for International Environmental Law (CIEL) last week released a report, Plastic & Health; The Hidden Cost of a Plastic Planet. Its conclusion: “Plastic is a Global Health Crisis Hiding in Plain Sight.” The principal contribution of the report: it takes a comprehensive look at the health impacts of plastic throughout its life cycle. This begins with the extraction and transport of fossil feedstocks for plastic, continues onto refining and production of plastic, creating consumer products and packaging, fostering toxic releases from plastic waste management. Waste disposal isn’t the final stage either, as afterwards, there’s the fragmentation and creation of microplastics to consider, as well as cascading exposures as plastic degrades, and finally, ongoing and continuing environmental exposures over the hundreds of years plastic remains before it disintegrates completely.. This report breaks new ground, as thus far, there’s been little systematic attention to the collective problems created by the ubiquitous and increasing use of plastic throughout its lifecycle – from when the fossil fuel is extracted from the ground, to final waste disposal – and what happens to plastic that finds its way into the environment: To date, discussions of the health and environmental impacts of plastic have usually focused on specific moments in the plastic lifecycle: during use and after disposal. However, the lifecycle of plastic and its related human health impacts extends far beyond these two stages in both directions: upstream, during feedstock extraction, transport, and manufacturing, and downstream, when plastic reaches the environment and degrades into micro- and nanoplastics. Increasing research and investigation are providing new insights into the hidden, pervasive impacts of micro- and nanoplastics on human health and the environment (report, p.6).
TransCanada gets OK to put part of WV Mountaineer natgas pipe in service Feb 25 (Reuters) – U.S. energy regulators on Monday approved TransCanada Corp’s request to put part of the company’s $3.2 billion Mountaineer XPress natural gas pipeline in West Virginia into service:
- * Specifically, the U.S. Federal Energy Regulatory Commission (FERC) authorized TransCanada to commence service on about 21 miles (34 kilometers) of pipeline in Marshall and Wetzel Counties, among other things.
- * TransCanada said earlier this month that the Mountaineer pipeline was about 45 percent complete and expected to finish the rest of the project in February and March.
- * When TransCanada started work on Mountaineer early last year, it estimated it would complete the project by the end of 2018 at a cost of $2.6 billion.
- * The company boosted that cost estimate to $3.0 billion in April 2018 and $3.2 billion in February 2019 due to delays of various regulatory approvals, increased contractor construction costs, and inclement weather throughout construction, among other things.
- * In addition, the company has also said it plans to put its $600 million Gulf XPress gas pipeline into service along with Mountaineer.
- * The Mountaineer and Gulf projects are two of several pipes designed to connect growing output in the Marcellus and Utica shale basins in Pennsylvania, West Virginia and Ohio with customers elsewhere in the United States and Canada.
- * The 2.6-billion cubic feet per day (bcfd) Mountaineer project includes 170 miles of new pipeline in West Virginia, while the 0.88-bcfd Gulf project includes seven new compressor stations in Kentucky, Tennessee and Mississippi.
- * One billion cubic feet is enough gas to power about 5 million U.S. homes for a day.
- * New pipelines built to remove gas from the Marcellus and Utica have enabled shale drillers to boost Appalachia output to a record 31.6 bcfd in February versus 26.9 bcfd in the same month a year ago.
- * That represents about 38 percent of the nation’s total dry gas output of 83.3 bcfd in 2018. A decade ago, Appalachia produced just 1.6 bcfd, or 3 percent, of the country’s total output.
Energy Transfer CEO: ‘We’ve made mistakes’ in building Mariner East – Sunoco’s parent company admitted it made mistakes in building the Mariner East pipelines through Pennsylvania, and told investors that it will do better in future, but its assurances failed to persuade critics that the project will become any safer for the public or more protective of the environment. During a Feb. 21 conference call with financial analysts to discuss results for the fourth quarter of 2018, Energy Transfer’s chief executive, Kelcy Warren, appeared to acknowledge the succession of spills, shutdowns and sinkholes that have bedeviled the project during the two-year construction.“We’ve made mistakes and we are correcting those mistakes and will not make those mistakes again,” Warren said, in answer to an analyst’s question on whether the company has any “learnings from the past to execute better.”Warren acknowledged the problems the project has faced in Pennsylvania, and said that going forward, the company will “complete good projects” in a way that will control costs.“We’ve learned so much,” he said in a recording of the call on the company’s website. “We’re going to take our medicine and fix those mistakes and complete good projects going forward. We’ve made some mistakes we’re not proud of, so you’ll see that improve and when we don’t make those mistakes again then our costs are going to improve and the predictability of those costs are likewise going to improve.”He also implied that the company faces stricter regulation in Pennsylvania than in its home state of Texas, saying: “Every place is not Texas.” Warren did not specify any of the mistakes, describe the corrective action, or say what prompted his decision to admit the company’s mistakes during the construction project.
Mariner East 2 construction to restart in area of Chester County where water damage occurred — Energy Transfer, parent company of Sunoco Pipeline, plans to restart drilling in an area of Chester County where previous Mariner East 2 construction activity damaged 15 private drinking water wells in July 2017. The company sent letters to residents near the Shoen Road drill site informing them that horizontal directional drilling could begin as soon as March 6. The notifications are required under a consent order agreed to by the Pennsylvania Department of Environmental Protection and Sunoco officials in July 2017. Residents living along Valley View Drive in West Whiteland Township, Chester County, first noticed cloudy water flowing from their taps over the July 4 holiday weekend in 2017. It turned out Sunoco’s drilling operations had broken through the aquifer, and disrupted the flow of clean drinking water to about 15 households at the time. They lost drinking water, as well as the ability to bathe. The company temporarily housed several residents in hotels, and some households permanently lost access to their private well water. On July 13, Sunoco stopped drilling at the site and has not drilled there since. The DEP laid out conditions for re-starting construction, which Sunoco had met in February last year. Given the notification requirements laid out in the original order, DEP spokeswoman Virginia Cain said the agency still has to confirm residential notices before the company can begin drilling in the Shoen Road area. Valley View Drive homeowners David Mano and Diane Salter say that although they received notification of the drilling activity, they did not receive information about how the company will protect their water.
Mariner East pipeline target of possible Chester County Commission legal action – The Chester County commissioners said Thursday that they are seeking to join a legal challenge against Sunoco’s Mariner East pipeline and also are ending an agreement to grant the company access to some county land.“Time and again, Sunoco has been severely lacking in effective communication and transparency and we have no choice but to take these formal measures,” said Michelle Kichline, chair of the commissioners. “Even with the groundswell of activity and appeals from elected officials, grassroots organizations and residents affected by the pipeline, the company is not playing ball. We have no confidence that they ever will and we are done with trying to get answers on our own.”The Mariner East is planned to bring natural gas liquids from the Marcellus and Utica Shale via a 20-inch pipeline. Natural gas liquids are defined as propane, ethane and butane. Plans call for new pipeline to be buried, as well as upgrades made to existing pipelines. Chester County commissioners had already notified the Pennsylvania Public Utility Commission (PUC) earlier this year about their “growing concern” over issues such as a lack of communication and failed repeated attempts by the county to get information related to Mariner East, specifically about a sinkhole. The PUC has regulatory authority regarding the pipeline.
Route modifications push one mile of PennEast pipeline into Monroe County – Modifications to the Pennsylvania portion of PennEast’s natural gas pipeline reduced the project’s length by about a mile, but now place Monroe County in its path. The four proposed route changes require less land and call for shallower drilling in certain areas, causing less harm to the environment, PennEast officials said. But one mile of the 116-mile pipeline will extend into Eldred Township, crossing two properties there, one of which is owned by the Pennsylvania Game Commission. Pipeline opponents took issue with the changes announced Feb. 15, mainly because the public has only three weeks to comment on them. In a Feb. 20 filing, the Delaware River Keeper Network urged the Federal Energy Regulatory Commission to extend the March 8 deadline for public comment. The network also made a similar request of the Pennsylvania Department of Environmental Protection, which is reviewing permits for the pipeline. Delaware Riverkeeper Maya Van Rossum said it’s not clear to her organization whether the DEP is reviewing the modified route or the original one given preliminary approval by FERC last January. A spokesperson from the DEP did not immediately respond to a request for comment.
Woman who sued natural gas driller Range Resources testifies before grand jury – Stephanie Hallowich, a Washington County woman who sued Range Resources and two other companies in 2010 over alleged air and water contamination at her Mt. Pleasant, Pa. home, testified before an investigative grand jury in Pittsburgh on Tuesday, said her attorney, Peter Villari. Attorney General Josh Shapiro recently empaneled a grand jury to investigate “environmental crimes” in Washington County. A letter from one of his deputies, obtained by The Allegheny Front and StateImpact Pennsylvania, refers to an investigation involving Range Resources, one of the state’s leading natural gas drilling companies. The existence of the grand jury was first reported by the Pittsburgh Post-Gazette. One woman, June Chappel of Washington County, told the Post-Gazette that she testified about health problems she’d experienced because of noise and odors from a waste impoundment and flaring from gas wells built by Range Resources near her home. The letter from Shapiro’s office asked attorneys in a different lawsuit involving Range Resources to preserve documents and evidence in their case. The letter, signed by Courtney M. Butterfield, deputy attorney general, said the Attorney General’s office had “assumed jurisdiction over several criminal investigations involving environmental crimes in Washington County” and that “one of the potential criminal investigations involves your respective clients.” The letter is headlined “Stacey Haney/Range Resources Investigation.” In 2012, Stacey Haney, an Amwell Township woman, sued Range Resources, claiming the company and its contractors polluted the air, water and soil at a location near her home known as the Yeager site. The suit claimed the pollution resulted in health impacts for her family and the deaths of a family dog and goat. In addition, the suit alleged Range Resources and two contracted laboratories committed fraud and conspiracy by manipulating test results to obscure their findings from the Haneys and their neighbors. The case was settled in September. The settlement is sealed, but the Post-Gazette is suing to have the agreement made public. In 2014, the DEP imposed a $4.15 million penalty on the company for violations at six waste water impoundments in Washington County, including one at the Yeager site. The case was detailed by journalist Eliza Griswold in the book “Amity and Prosperity.”
Economy Residents Putting Up Fight As Fracking Company Trying To Turn Residential Road Into Access Road (KDKA) – “I bought a house in a residential neighborhood. It was never intended to be in an area where there is an industrial site whatsoever.” That is the feeling among many Economy residents as a drilling company is threatening to move in. Not only does the company want to put a drill pad next to the neighborhood, it also wants to take over a residential road and turn it into an access road. As drilling increases across Beaver and Butler countries so does the opposition. At the Chestnut Ridge housing development in Economy folks are organizing against a proposed drilling pad just beyond their own backyards. “This is the reason we live up here it’s nice and quiet and the peaceful existence here and to have this industry come in is going to overturn all of that,” said Steve White, the group’s organizer. PennEnergy Resources plans to build the pad off of narrow and twisting Amsler Ridge Road and residents fear the noise of heavy truck traffic and the attendant danger. Photo Credit: KDKA “It doesn’t belong here,” said Laurel Beitsinger. “We have families, children walking the road, bicycling whatever. It isn’t right.” The borough has already issued a permit for the pad, but for PennEnergy to use Amsler Ridge for an access road, council must also lift the weight restrictions. And these folks have been showing up en masse at council meetings to urge members to vote no. For its part, PennEnergy says it will repave the road, station flagmen to regulate traffic and erect sound barriers if the noise becomes a nuisance.
One Pennsylvania Town Shows How to Properly ‘Zone’ Fracking – Pennsylvania is home to more than 10,000 fracking wells, which forces communities to live with air pollution, water contamination and an array of health problems linked to drilling. The frackers want to drill more wells, and the state’s Democratic governor is not going to do anything to slow it down. But local communities are finding ways to fight back – and win. Residents of Oakmont Borough, a small suburb of Pittsburgh along the Allegheny River have waged a years-long battle against the fracking industry, which has been making a determined push into Allegheny County. The fracking industry has problems turning a profit. The only way out for these financially stretched corporations is to double down – and that means moving to areas of the state that aren’t as heavily fracked as some parts of western Pennsylvania.Residents in Allegheny County have seen the havoc that fracking has created elsewhere, and they are determined to fight to keep it away from their schools and homes. Their tool of choice has been municipal zoning codes. Every city or municipality creates a set of rules about what you can build, and where you can build it. Unfortunately, drilling companies often take advantage of the fact that many towns have not developed zoning ordinances that regulate fracking, or have outdated ordinances that do not address the issues facing their municipalities today. But if residents and local leaders get organized, they can put serious limits on the fracking industry before a well is approved.That’s what Food & Water Watch’s Municipal Ordinance Project (MOP) is set up to do. We know that local officials in Allegheny County are the ones who should make the decisions about how to protect their own communities, and that safety and environmental concerns are front and center.
BL England decision may doom N.J. pipeline but natural gas projects still on – The demise of the B.L. England power plant appears to doom a 22-mile gas pipeline through the Pinelands to the facility, an outcome widely welcomed by opponents, many of whom favor a moratorium on all new fossil-fuel projects in New Jersey.“By stopping the fossil fuel plant and rendering the unwarranted pipeline moot, it sets the right course for 100 percent renewables by 2050,’’ said Amy Goldsmith, state director for Clean Water Action, referring to a Murphy administration goal.Perhaps so. But on the day after RC Cape May Holdings announced it was abandoning plans to repower its coal units with natural gas, New Jersey Natural Gas asked the state to allow it to invest $507 million over five years to enhance the reliability of its gas system.South Jersey Gas, which had waged a long and expensive battle to build the pipeline to supply fuel to the B.L. England plant, announced it would seek alternative solutions to back up 142,000 customers in Atlantic and Cape May counties with supplies of natural gas, part of the rationale behind the 22-mile pipeline project.Elizabethtown Gas, also owned by South Jersey Industries, the parent of South Jersey Gas, also wants to spend $500 million to replace old cast-iron gas mains in its system. The decision to shut down B.L. England all but kills off the justification for the pipeline’s approval by the Pinelands Commission and New Jersey Board of Public Utilities, according to a letter from the New Jersey Attorney General’s office.
Company fined $6,100 for Naugatuck River oil spill – (AP) – The Environmental Protection Agency has fined a Connecticut company $6,100 for an oil spill that left the Naugatuck River covered in a sheen for days last year.The Republican-American reports that Global Brass and Copper agreed to pay the fine and take measures to prevent another spill.The January 2018 spill came from the company’s Somers Thin Strip plant inWaterbury.EPA spokesman John Senn says a valve on an external cooling tank ruptured, likely from extreme cold. He says the company has since remodeled so the valve is no longer outside and updated its spill prevention plan.A company attorney says the ruptured valve was noticed within 30 minutes and workers took “immediate action” to address the problem. Naugatuck River Revival Group founder Kevin Zak called the fine “shameful.”
Update On Natural Gas Hook-Ups In New England — February 27, 2019 – From Chesto over at The Boston Globe: The municipal utilities that serve Holyoke and Middleborough just imposed separate moratoriums on new natural gas hookups, citing supply constraints. The two biggest gas providers in Massachusetts, National Grid and Eversource, say their supplies are adequate for now. But some in the industry speculate that we’re approaching a major inflection point, as the region’s strained pipeline system shows signs of failing to keep up with demand. Pipeline expansions get more difficult to build politically every year. To the anti-gas forces in the environmental community, the moratoriums reaffirm their arguments about the need to wean Massachusetts off the fossil fuel.That won’t be easy. Natural gas remains a dominant fuel source for New England’s power plants. It also remains the preferred heat source for any new developments — except in the growing list of communities with moratoriums in place. These bans on new hookups started popping up in Western Massachusetts about four years ago. Berkshire Gas imposed moratoriums in an eight-town region stretching from Greenfield to Amherst; Columbia Gas did the same next door, in Easthampton and Northampton. Northeast Energy Direct, the controversial Kinder Morgan pipeline proposal, could have helped ease the pain there. But resistance was too strong, and Kinder Morgan nixed it. Berkshire informed its waiting list of 300-plus potential new customers last fall that no help would be coming soon.The capacity issues in that area eventually caught up with Holyoke Gas & Electric, which imposed its own moratorium on new service on Jan. 28. Columbia Gas is pursuing projects to increase circulation in the Springfield area. But those, too, face formidable opposition.
U.S. Approves $3.2B Appalachian Natural Gas Pipeline – TransCanada said on Friday that the U.S. Federal Energy Regulatory Commission (FERC) had approved the full in-service of the Mountaineer XPress natural gas pipeline project, which will help link the Appalachian basin’s natural gas supplies and growing markets in the U.S. and beyond.The Mountaineer XPress (MXP) project includes a 170-mile natural gas pipeline in West Virginia that will increase natural gas capacity by 2.7 billion cubic feet per day and together with related infrastructure – new compressor stations and modifications to existing compressor stations – represents a total investment of US$3.2 billion.The approval of the full in-service of Mountaineer XPress will allow TransCanada to start partial in-service of its Gulf XPress Project, a network of seven new compressor stations in Kentucky, Tennessee, and Mississippi, which will significantly increase the reach of low-cost, U.S.-produced natural gas from the Appalachian Basin. Investment in Gulf XPress is some US$600 million, according to TransCanada. The start of the Gulf XPress project includes placing into service four new compressor stations located in Kentucky, Tennessee, and Mississippi, which are expected to provide additional capacity of 530,000 million cubic feet of natural gas per day on the Columbia Gulf Transmission System. Gulf XPress is expected to begin full service in the coming weeks, TransCanada said in a statement. Both the Gulf XPress and the Mountaineer XPress are underpinned by long-term contracts with customers, the Canadian pipeline operator noted. “Mountaineer XPress and Gulf XPress are extremely important to TransCanada as they provide much-needed takeaway capacity for our customers, while also growing our extensive footprint in the Appalachian Basin,”
MVP asks state board to discontinue process aimed at stopping pipeline construction – Facing another snag in a complex permitting process, the developers of the largest natural gas pipeline ever built in Southwest Virginia are pushing back. In a Feb. 12 letter to state regulators, an attorney for the Mountain Valley Pipeline asked the State Water Control Board to discontinue a process it started last year that could lead to the revocation of a water quality certification for project, which has been cited repeatedly for violating environmental standards. The water board is scheduled to meet Friday to discuss the details of a future revocation hearing. “Mountain Valley accepts that this project has been, and continues to be, perhaps the most heavily scrutinized construction project in Virginia’s history,” the company said in a letter to David Paylor, director of the Virginia Department of Environmental Quality and executive secretary of the water board. With so much scrutiny already, and with the project more than halfway done, it would serve little purpose to consider revoking the certification at this point, wrote Todd Normane, deputy general counsel for Equitrans Midstream Corp., an affiliated company in the joint venture. And even if the board were to reverse its earlier approval, Normane wrote, Mountain Valley would still hold a valid license from the Federal Energy Regulatory Commission, the lead agency overseeing construction of the 303-mile pipeline through the two Virginias. “Unilateral action by the board at this time cannot amend or invalidate that license or otherwise block construction,” his letter stated. A spokeswoman for FERC declined to comment.
Bills to protect landowners in pipeline cases fail – Landowners fighting to keep their property from being taken by pipeline building companies will continue footing the legal bills after two bills failed in the House. Sen. Chap Petersen, D-Fairfax, said he introduced the bills to give landowners who don’t want pipeline construction on their land a fair chance against Dominion, Duke Energy, Piedmont Natural Gas, Southern Gas and other companies involved in the Atlantic Coast Pipeline. SB 1404 would have required pipeline companies to pick the costs incurred by homeowners in eminent domain legal battles. SB 1403sought to amend state law and require the entities acquiring the property to pay all costs of court proceedings. It also would have required pipeline companies to provide compensation for homeowners. The compensation would have been at least 25 percent more than the company’s initial offer for the land. Because the pipeline project was approved by the Federal Energy Regulation Commission, the companies may invoke eminent domain – a right given to the government to take property for public use – if landowners refuse to accept compensation for their property. “The pipeline companies have all the power, in the General Assembly and in condemning the property of small landowners,” Petersen stated after the bills failed. “My bills would have leveled the playing field in a small way. The House just missed it. We’ll be back.” The Atlantic Coast Pipeline is a 600-mile underground pipeline that would deliver natural gas from West Virginia to the southwest region of the state and North Carolina. Over 85 percent of affected landowners have entered into easement agreements to allow construction, according to the project website. Those landowners received compensation. The remaining easements needed to begin construction are being challenged in court.
Court won’t revisit ruling that tossed Atlantic Coast Pipeline’s permit to cross Appalachian Trail– A federal appeals court on Monday denied a request to reconsider a ruling throwing out a permit for the Atlantic Coast Pipeline to cross two national forests, including parts of the Appalachian Trail. The 4th U.S. Circuit Court of Appeals rejected a request from lead pipeline developer Dominion Energy and the U.S. Forest Service to hold a full-court rehearing. In December, a three-judge panel of the 4th Circuit sharply criticized the Forest Service, saying the agency lacked authority to authorize the pipeline’s crossing of the trail. The panel also said the agency “abdicated its responsibility to preserve national forest resources” when it approved the pipeline crossing the George Washington and Monongahela National Forests, and a right-of-way across the Appalachian Trial. “We trust the United States Forest Service to ‘speak for the trees, for the trees have no tongues,’ ” the judges wrote in December’s ruling, quoting the Dr. Seuss classic “The Lorax” to summarize their decision. The ruling came in a lawsuit filed by the Southern Environmental Law Center on behalf of the Sierra Club, Virginia Wilderness Committee and other environmental groups. Representatives for Dominion Energy and the Forest Service declined immediate comment.
Dominion to ask Supreme Court to hear pipeline appeal (AP) – Dominion Energy said Tuesday it will ask the U.S. Supreme Court to hear its appeal after a lower court refused to reconsider a ruling tossing out a permit that would have allowed the Atlantic Coast Pipeline to cross two national forests, including parts of the Appalachian Trail. Lead pipeline developer Dominion said it expects the filing of an appeal in the next 90 days. On Monday, the 4th U.S. Circuit Court of Appeals rejected a request for a full-court rehearing from Dominion and the U.S. Forest Service. A three-judge panel ruled in December that the Forest Service lacks the authority to authorize the trail crossing and had “abdicated its responsibility to preserve national forest resources” when it approved the pipeline crossing the George Washington and Monongahela National Forests, as well as a right-of-way across the Appalachian Trial. The 605-mile (974-kilometer) natural gas pipeline would originate in West Virginia and run through North Carolina and Virginia. The appellate ruling came in a lawsuit filed by the Southern Environmental Law Center on behalf of the Sierra Club, Virginia Wilderness Committee and other environmental groups. The denial “sends the Atlantic Coast Pipeline back to the drawing board,” the law center and Sierra Club said in a joint statement on Monday. The groups said they believe it is impossible to build the pipeline “without causing massive landslides and threatening the Appalachian Trail and our clean water.” Dominion said it is pursuing “legislative and administrative options” in addition to seeking Supreme Court review. “We are confident that the U.S. Departments of Interior and Agriculture have the authority to resolve the Appalachian Trail crossing issue administratively in a manner that satisfies the Court’s stated objection,” the company said in its statement.
The Atlantic Coast Pipeline Fight Could Go to the Supreme Court – The fight over the controversial Atlantic Coast Pipeline may be headed to the Supreme Court.Dominion Energy, the lead developer of the project that would carry fracked natural gas for 605 miles through West Virginia, Virginia and North Carolina, said Tuesday it would appeal to the nation’s highest court after an appeals court refused to reconsider its decision to throw out a crucial permit for the project on Monday, The Associated Press reported.Dominion and the U.S. Forest Service had asked the fourth U.S. Court of Appeals for a re-hearing of the court’s December 2018 decision to toss the U.S. Forest Service permit allowing the pipeline to cross the George Washington and Monongahela National Forests as well as part of the Appalachian Trail. The court refused.The court had ruled in December that the U.S. Forest Service did not have the authority to grant the pipeline company permission to cross the Appalachian Trail. “The Fourth Circuit’s decision, now final, confirmed that this pipeline has to play by the same rules as everybody else,” Southern Environmental Law Center (SELC) Senior Attorney D.J. Gerken said in a press release. “The Forest Service has never approved a new pipeline across the Appalachian Trail – but, under intense political pressure, it did for Atlantic, while ignoring routes that would avoid the forest. Atlantic could reroute, but instead it should scrap this boondoggle and stop running up a bill it wants to stick to customers.”The SELC brought the lawsuit that resulted in December’s decision on behalf of the Sierra Club, the Virginia Wilderness Committee and other environmental groups. Dominion said it would file an appeal with the Supreme Court within 90 days, The Associated Press reported. It is also seeking “legislative and administrative options” in case the Supreme Court refuses to hear its case, thought it did not specify what those might be.
Need for Atlantic Coast Pipeline (ACP) Under Suspicion Now – The demand the huge Atlantic Coast Pipeline was intended to meet is disappearing, according to documents from the corporations behind the project. Dominion and Duke Energy own almost all of the pipeline, as well as the electric utilities it would supply with natural gas. When applying for a federal permit, they argued it was needed to meet rising electricity demand in North Carolina and coastal Virginia. But Cathy Kunkel, an energy analyst with the Institute for Energy Economics and Financial Analysis, said utility filings in those states now show the outlook has changed dramatically – in part because of competition from cheap, renewable energy. “Dominion is not projecting any increase in natural-gas demand until 2032,” Kunkel said. “Duke is still planning to build some natural-gas plants, but most of that has shifted to the late 2020s.“ The energy companies say they need more pipeline capacity to move fracked gas out of the Marcellus and Utica fields of northern West Virginia, where the price for it is artificially depressed by a transportation bottleneck. Dominion is now telling regulators in Virginia that it expects demand for electricity from natural gas to stay essentially flat for the next decade and a half. The 600-mile pipeline across the three states has faced a number of setbacks, including lawsuits by landowners and conservationists. It was recently announced that the total cost of the project would rise to $7.5 billion, and its opening would be delayed until 2021. If the builders can get state utility regulators’ approval, they can shift the full expense of the line onto ratepayers, along with a guaranteed profit. But Kunkel said investors in the utilities may be starting to worry about the financial risks. “The project has been delayed by these court challenges, it’s also over-budget,” she said. “And if the state regulators say, ‘You clearly don’t need all of the gas capacity that you signed up for here; we’re not going to let you charge it to your ratepayers,‘ then that would be a very significant blow.“
Extreme cold in the Midwest led to high power demand and record natural gas demand – Extreme cold weather in the Midwest at the end of January led to high – but not record-setting – electricity load on Wednesday, January 30, 2019, the coldest day of the period, on the Midcontinent Independent System Operator (MISO) grid. However, consumption of natural gas, the main fuel used for heating in the region, reached estimated record levels on the same day. Natural gas and electricity prices were elevated but did not reach levels seen during previous cold weather events in recent years. Compared with the 2018 bomb cyclone and the 2014 polar vortex weather events, the January 2019 polar vortex was significantly colder, with Upper Midwest temperatures dropping to as low as -20 to -45 degrees Fahrenheit. However, hourly electricity load in MISO peaked at 100.9 gigawatts (GW) on January 30, 2019, based on preliminary data, compared with 100 to 104 GW during the 2018 bomb cyclone and MISO’s all-time winter peak of 109.3 GW reached during the 2014 polar vortex. Peak electricity loads during the 2019 event were lower than expected because of the deployment of load-modifying resources in MISO (which includes demand response and behind-the-meter generation), other voluntary load management actions, and the wide closure of schools and businesses, which reduced non-residential sector electricity demand. In contrast to electricity demand, an estimated record amount of natural gas was consumed by the residential/commercial sector (26.1 billion cubic feet (Bcf)) and overall (37.9 Bcf) in the Midwest on January 30, 2019, when many people stayed home. Natural gas is the main fuel used in the region for residential and commercial space heating. Midwest natural gas withdrawals from storage for the week ending February 1, 2019, contributed to the largest net withdrawal of working natural gas in the Lower 48 states so far during the 2018 – 2019 heating season.
Prices End Higher As Winter Lingers On – Highlights of the Natural Gas Summary and Outlook for the week ending February 22, 2019 follow. The full report is available at the link below.
- Price Action: The March contract rose 9.2 cents (3.5%) to $2.717 on a 12.6 cent range ($2.726/$2.600).
- Price Outlook: After posting both a new high and low last week, a miniscule 12.6 cent range left prices within last week’s 20.1 cent range ($2.744/$2.543) for a rare inside week. Considering the bullish weather forecasts and a still relatively low price level, it seems more likely that a new high is made next week. CFTC data indicated a (13,735) contract reduction in the managed money net long position as longs liquidated and shorts added. Total open interest fell (317)to 3.511 million as of February 05. Aggregated CME futures open interest fell to 1.167 million as of February 22. The is the lowest open interest since January 25, 2017.
- Weekly Storage: US working gas storage for the week ending February 15 indicated a withdrawal of (177) bcf. Working gas inventories fell to 1,705 bcf. Current inventories fall (55)bcf (-3.1%) below last year and fall (379) bcf (-18.2%) below the 5-year average.
- Supply Trends: Total supply fell (1.4) bcf/d to 82.7 bcf/d. US production rose. Canadian imports fell. LNG imports fell. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count fell (4). Oil activity decreased (4). Natural gas activity was unchanged +0. The total US rig count now stands at 1,047 .The Canadian rig count fell (12) to 212. Thus, the total North American rig count fell (16) to 1,259 and now trails last year by (25). The higher efficiency US horizontal rig count rose +1 to 916 and rises +74 above last year.
- Demand Trends: Total demand rose +11.2 bcf/d to +106.2 bcf/d. Power demand rose. Industrial demand rose. Res/Comm demand rose. Electricity demand rose +1,604 gigawatt-hrs to 77,789 which exceeds last year by +2,477 (3.3%) and exceeds the 5-year average by 994 (1.3%%).
- Nuclear Generation: Nuclear generation fell (1,625)MW in the reference week to 91,544 MW. This is +1,230 MW higher than last year and +1,386 MW higher than the 5-year average. Recent output was at 90,094 MW.
The heating season has begun. With a forecast through March 8 the 2018/19 total heating index is at (2,554) compared to (2,243) for 2017/18, (1,985) for 2016/17, (2,075) for 2015/16, (2,524) for 2014/15, (2,733) for 2013/14, (2,459) for 2012/13 and (2,331) for 2011/12.
March Gas Spikes On Early March Cold And Strong Cash Into Options Expiry -The March natural gas contract shot over 4% higher on the day today as cash prices traded over $2.85 and afternoon model guidance trended even colder for the first third of March. The role of cash and the March options expiry was apparent in how much more the March contract ran out relative to the rest of the futures strip. The result was a flip positive in the March/April H/J spread. Our Morning Update highlighted a significant cold trend over the weekend that let prices gap up last evening. Afternoon model guidance trended even colder in the medium-range too, helping prices run up into the settle (images courtesy of Tropical Tidbits). Our mid-day Note of the Day for subscribers which went out a bit before 11 AM Eastern warned of bullish short-term data that would keep the March contract strong into tomorrow’s expiry. This verified well, as prices shot higher today. Part of this has been due to continued tight balances, with LNG exports at record levels playing a role. It should be an exciting day tomorrow as volatility has returned to the natural gas market and the March contract heads towards expiry.
Winter Gas Is Off The Board – The March natural gas contract expired up half a percent on the day at 2:30 PM Eastern, and with that the last contract of Winter 2018/2019 went off the board. The March contract was the only one up on the day, with April selling off the most on warmer mid-day model guidance. The result was the strongest March/April spread expiration since 2014. Yet other spreads, such as April/October, actually tried to put in a short-term high today. Meanwhile, cash was incredibly strong, trading over $2.9 through the morning session and propping the front of the strip up. Afternoon weather model guidance then moderated quite a bit, with the 12z GEFS far warmer in the 12-16 Day time period (images courtesy of Tropical Tidbits). In our Morning Update today we held a “Neutral” sentiment as despite strong cash prices and the potential for a March bounce into expiry we highlighted risks that forecasts into Week 3 would warm with 12z model guidance being less impressive. This worked out well, and we also released our weekly Seasonal Trader Report with our long-range gas forecast that looked at just how much March may be able to warm. In it we dove deeper into an increasing El Nino signal upstream. The April contract now takes over as traders turn to March weather forecasts and Thursday’s EIA number to see where natural gas prices should head from here.
EIA Reports 166 Bcf Storage Draw, April Natural Gas Gains Trimmed – The Energy Information Administration (EIA) reported a 166 Bcf withdrawal from storage for the week ending Feb. 22. The reported draw compares to the year-ago draw of 85 Bcf and the five-year average draw of 104 Bcf. The print was on the lower end of a rather tight range of estimates that ranged from a 160 Bcf to 180 Bcf pull. NGI’s model predicted a withdrawal of 167 Bcf. Natural gas futures traders responded immediately to the slightly lower-than-expected draw, trimming early-morning gains. The Nymex April gas futures contract was trading nearly 3 cents higher at $2.827 just before the storage report’s 10:30 a.m. ET release, but then slid to around $2.81 in the minutes after the print hit the screen. By 11 a.m., the prompt month was trading at $2.816, up 1.7 cents. “This was at the lower end of expectations and indicates slightly more holiday impact last week than expected,” said Bespoke Weather Services, which had called for a 174 Bcf withdrawal. A Reuters poll of 19 market analysts showed a withdrawal range of 160 Bcf to 179 Bcf, and a median of 171 Bcf, while a Bloomberg survey of 13 analysts showed a withdrawal range of 165 Bcf to 180 Bcf, with a median draw of 173 Bcf. Broken down by region, the EIA reported a 51 Bcf withdrawal in the Midwest, a 51 Bcf draw in the South Central, a 41 Bcf pull in the East and a 16 Bcf pull in the Pacific. Genscape Inc., which had predicted a 169 Bcf withdrawal, said its daily supply and demand estimates showed a 0.6 Bcf/d production increase week/week for the period, along with a 0.3 Bcf/d increase in imports from Canada. “Demand was relatively flat week on week, with a modest uptick in power burn,” and liquefied natural gas sendout “somewhat offset by lower residential/commercial demand and flat industrial demand and exports from Mexico,” Genscape said. While the overall 166 Bcf draw was not all that surprising to market observers, the large pulls in the South Central region and Pacific did give some pause to market observers on Enelyst, a social media platform hosted by The Desk. The Pacific region specifically has seen significant storage drawdowns in recent weeks as wet, chilly conditions continue to drive up demand at the same time that import restrictions have been in place. Working gas in storage as of Feb. 22 stood at 1,539 Bcf, 154 Bcf below last year and 424 Bcf below the five-year average of 1,963 Bcf, according to EIA.
Exploding Cash Pulls April Gas Higher – What started seemingly like a relatively slow day in the natural gas space quickly turned exciting as physical gas prices shot higher through the morning. Next day Henry Hub cash spent much of the morning over the $3.2 level, pulling the April contract slightly over $2.87 before it pulled back slightly. The cash-led nature of the rally was clear with the April contract leading through the day with winter eventually catching a bid later in the day. The result was that the April/May contract approached flat levels, which it has not been at since late January. This spread is far stronger than it has been at any point in the last several years besides 2014. In our Morning Update we highlighted that with “near term cold likely keeping cash firm, and stronger prices for next winter, we can test the 2.85 level…” which played out well this morning on cash strength. This was more on our reading of balance and spreads versus overnight GWDD additions, which were not particularly impressive. Afternoon model guidance was mainly mixed too, showing some lingering cold risks Week 2 despite warmth being able to return in the Southeast. This came as the market shook off what was a slightly unimpressive EIA number yesterday. Now, traders are positioning for the weekend after this cash move pulled prices higher. The Climate Prediction Center sees mixed risks in their long-range forecast; this forecast would look for colder risks in the center of the country with some warmer risks in the East.
Bills Criminalizing Pipeline Protest Arise in Statehouses Nationwide – The oil and gas industry has started its 2019 lobbying efforts with a bang. Eight different statehouses across the nation are considering bills criminalizing protests on property owned by the the oil and gas industry which critics say could squelch pipeline protesters and others calling attention to climate change-causing infrastructure.The bills offer steep criminal penalties for trespass onto oil and gas industry-owned private property defined as “critical infrastructure” under state law. The legal definition of “critical infrastructure,” which incorporates essentially all assets serving as the bedrock of the current economic system, has greatly expanded in the post-September 11 era. With that expansion came increasingly harsh criminal enforcement mechanisms available to prosecutors in the name of protecting national security. It is no coincidence that the bills are rolling out simultaneously with nearly identical language, in various states. The Real News has traced these bills back to model bills emanating from two organizations, the American Legislative Exchange Council (ALEC) and the Council of State Governments (CSG), both of which receive generous financial backing from the oil and gas industry. In turn, the organizations serve as facilitators for doling out model legislation to state legislators. In the first month of the year, Indiana, Wyoming, Illinois, Mississippi, Pennsylvania, North Dakota, Idaho, and Ohio have all taken this template-based model legislation under consideration, which mirrors two bills passed in Oklahoma in 2017. Sandwiching them together as one, ALEC created the Critical Infrastructure Protection Act at one of its annual meetings held in December 2017. And the lobbyists and legislators involved in the organization in the room that day gave it a “yes” vote.
U.S. House passes bill funding conservation via drilling royalties (Reuters) – The House of Representatives on Tuesday easily passed a public lands bill on Tuesday, as the Senate did earlier this month, that permanently reauthorizes a fund that has funneled billions of dollars into land conservation, paid for by revenues from offshore oil and gas drilling. The bill passed 363-62, representing a rare moment of bipartisan agreement in Congress, with lawmakers eager to see money go to outdoors projects in their states. It permanently reauthorizes the Land and Water Conservation Fund, which was created by Congress in 1964 but which has occasionally been allowed to expire, most recently last September. The Senate voted 92-8 earlier this month on the bill, and President Donald Trump is expected to sign it. Each year about $900 million in royalties paid by energy companies drilling on the U.S. outer continental shelf go to the fund that pays for items from improving ball fields to expanding national parks and wildlife refuges. Representative Raul Grijalva, a Democrat and chairman of the House Natural Resources Committee, called the bill “one of the biggest partisan wins for this country I’ve ever seen in Congress” and thanked Republican colleagues, including Representative Rob Bishop and Senator Lisa Murkowski for compromises on it. Trump is expected to sign the bill even though he has pursued a policy of energy dominance and opening public lands to coal mining and oil and gas drilling. His administration shrunk the Bears Ears National Monument in Utah and has pushed to open part of Alaska’s Arctic National Wildlife Refuge to drilling. The bill creates four national monuments, including the Medgar and Myrlie Evers Home in Mississippi, and prevents industrial mining around others. Medgar Evers was an African-American veteran and civil rights leader who was assassinated in 1963 by a white segregationist.
Groups ask a court to block tests that could harm imperiled Atlantic whales – Conservation groups fighting the Trump administration’s bid to open the Atlantic Ocean to offshore drilling asked a federal court Wednesday to block companies from conducting seismic tests to determine the location of oil and gas deposits. Five companies are awaiting the approval of final government permits allowing them to start what the environmentalists call “ear piercing” tests that can be disruptive to marine life, particularly mammals such as whales and dolphins that use echolocation to communicate and feed. Claiming the issuance of those permits is imminent, as soon as March 1, the groups asked a judge in South Carolina to issue an injunction that would bar seismic testing until a lawsuit they filed against the administration in December can be decided. The December lawsuit claims the National Marine Fisheries Service, a division of the Commerce Department, departed from its mission to protect marine life by issuing permits allowing the five companies to kill fish and mammals as they conduct the tests. The service, also known as NOAA Fisheries, part of the National Oceanic and Atmospheric Administration, said the permits are a procedural step and that it does not expect any animals to be harmed. According to the lawsuit, which relies on scientific studies, “at least 34 marine mammal species” swim in the area where testing would be allowed, south of New Jersey to Florida. They include the North Atlantic right whale, an imperiled species with about 400 remaining and about 100 breeding couples. “Coastal waters from South Carolina to Florida provide the species’ only known calving grounds, and much of its migratory route lies within the survey area,” the lawsuit says.
Saudi Arabia’s Crude Supply to U.S. Gulf Falling Fast and Hard — Saudi Arabia sliced its crude supply to plants located on the U.S. Gulf Coast, the world’s largest refining center, by more than half from a year ago. And shipments may grind to a complete halt soon. The Middle East’s largest producer is making good on its pledge to reduce deliveries to its biggest American customers in an effort to comply with OPEC’s deal to cut output. Saudi Aramco shipped just 1.6 million barrels of its oil to U.S. Gulf Coast buyers this month compared with 5.75 million a year ago, according to U.S. Customs data compiled by Bloomberg. In January, shipments were at 2.69 million. “We could see Saudi oil imports declining to zero into the U.S. Gulf Coast,” said Andy Lipow, president of Lipow Oil Associates in Houston. U.S. President Donald Trump’s recent comment via Twitter that oil prices are too high won’t stem the current declining trend, as “OPEC and non-OPEC members feel prices are too low, and they will do what it takes to put the market back in balance.” Government data showed Wednesday that total Saudi crude imports to the U.S dropped to 346,000 barrels a day last week, the lowest in data going back to 2010. However, total Saudi oil flows to America won’t likely flatten out completely because there will be demand from U.S. West Coast refiners, who are faced with limited supply options, Lipow said.
Geopolitical disruptions slash US Gulf crude imports — OPEC’s reduced oil production and US sanctions on Venezuela and Iran have translated into a considerable fall in crude imports into the Louisiana Offshore Oil Port so far this year. January to date, 8 million barrels of crude have been delivered at LOOP’s delivery point in Morgan City, Louisiana, down 66% from the 24 million barrels recorded in the same period of last year, according to the latest S&P Global Platts Analytics and US Customs Bureau data. In early January, OPEC members committed to cut production levels in line with 1.2 million b/d in the first six months of 2019. As a result, volumes exported by some of its members to the US have diminished to historic levels. In January and February, for example, there have been no imports of Saudi crude to LOOP. The last Saudi cargo it received, some 1.6 million barrels of Arab Light, was unloaded December 19. However, LOOP has gone longer stretches without receiving Saudi crude in the past: none was received from that country for the first five months of 2018. The lack of Saudi crude coming into LOOP – and the US Gulf Coast more broadly – is a stark contrast to previous years, when Saudi Arabia was a major supplier. Some 7 million barrels of Saudi crude was imported at LOOP in 2018, a steep fall compared with 42 million barrels imported in 2017 and 81 million barrels in 2016, the US Customs data showed. Iraq was the main exporter of crude delivered at the port of Morgan City with 60 million barrels in 2018, which is 6 million barrels higher from 2017. Andeavor, which was later bought by Marathon, was the buyer of most of those Iraqi barrels. However, so far in 2019, the volume imported at LOOP from Iraq amounted over 5 million barrels, which is below the 16 million imported in the same period of 2018. A similar situation can be seen with Kuwait, the second-largest exporter to LOOP in 2018, after delivering 11 million barrels in 2018. However, in the first two months of 2019, only one cargo with 963,443 barrels of Kuwait crude has been reported, below 6 million imported in the same period of 2018, the US Customs data showed. In addition to the fewer Saudi barrels available in the US, there have also been dwindling crude imports from Venezuela and Mexico as production has stagnated.Imports of Mexican Maya crude into LOOP amounted to about 6 million barrels in 2018, flat from 2017. However, only 1 million barrels have been recorded in 2019 at the Morgan City area, according to the US Customs data. Mexico is the top crude exporter to the USGC in general.Separately, US refiners in the LOOP region imported nearly 3 million barrels of Venezuelan crude in 2018, down sharply from 8 million barrels recorded in 2017. The last cargo of a Venezuelan grade delivered at the LOOP was October 12, 2018, with Marathon Petroleum as the buyer. As a result of the short supply, sour crude prices along the USGC have skyrocketed in recent months. Front-month Gulf Coast medium sour crude Mars reached its strongest differential in recent history on February 14, when it was assessed at an $8.10/b premium to WTI cash. The differential has not been higher since January 22, 2014, when it was at WTI plus $9.30/b.
BP CEO Dudley- U.S. Shale Is A Market Without A Brain – The U.S. shale industry responds only to oil price signals and is like “a market without brain”, BP’s chief executive Bob Dudley said on Tuesday. “The U.S. is the only country that completely responds to market signals … like a market without a brain. It just responds to price signals,” Reuters quoted Dudley as saying at the ongoing International Petroleum Week conference in London.“Unlike Saudi Arabia and Russia, which adjust their output in response to gluts or shortages in oil supplies, the U.S. shale market responds purely to oil prices,” said the CEO of the UK oil supermajor, which completed last year a US$10.5-billion deal to buy U.S. shale assets from BHP in what was BP’s biggest acquisition this century, and one that BP will rely on for boosting production and margins. The acquisition adds oil and gas production of 190,000 barrels of oil equivalent per day (boe/d) and 4.6 billion oil equivalent barrels (boe) of discovered resources in the liquids-rich regions of the Permian and Eagle Ford basins in Texas and in the Haynesville natural gas basin in East Texas and Louisiana, BP says.The U.S. shale sector is sensitive to oil prices and drillers respond to them by adding or reducing working rigs, also because shale production is shorter-cycle and easier to switch on and off than complex conventional oil projects. While OPEC and its Russia-led allies have been looking for two years now at supply and demand and adjusting production to avoid another oil glut similar to the one that crashed oil prices in 2014, U.S. shale has been benefiting from the OPEC/non-OPEC coordinated market action and the increase in oil prices over the past two years. Producers have been pumping record amounts of crude oil in the United States, which is already the world’s top oil producer ahead of Russia and Saudi Arabia.
The Permian Is A Double-Edged Sword For Oil Majors – The oil majors are scrambling to scale up their shale operations, and they are quickly becoming the most dominant producers in the shale sector, despite having arrived late to the party.The early days of shale drilling was done by small and medium-size drillers. Over the last few years, the oil majors like ExxonMobil and Chevron are taking on a much greater role in U.S. shale, particularly in the Permian basin.Chevron’s Permian production shot up to 377,000 bpd in the fourth quarter of 2018, up 172,000 bpd from a year earlier. The company’s production was up 70 percent on an annual basis.Looking forward, Chevron expects to keep its spending mostly flat in the Permian while ramping up in other basins. “We’ve seen significant reductions in development costs in the Marcellus, in the Duvernay and in the Vaca Muerta, as we’ve shared the learnings and improvements that are emanating from the large-scale activity we have in the Permian, the economics on each of these are compelling,” Wirth said.But even as Chevron boasted of achieving production growth in the Permian as well as transferring the lessons learned to other basins, there are still questions about the profitability of the company’s assets in West Texas. “In the Permian, we remain focused on returns. We’re not chasing our production target, nor are we altering our plans based on the price of the day,” Chevron’s CEO Michael Wirth told analysts on an earnings call. Chevron maintains that it will be cash flow positive in the Permian by 2020 and that the company would allocate much of additional cash flow to shareholder distributions. The company appears confident about the path that it is on in West Texas.
Texas Oil Production Is High, So Why Are Gas Prices On The Rise, Too?Last week, prices at Texas gas pump spiked by 14 cents on average – the highest weekly average in about two years. At a time when the headlines are full of news about plentiful oil in the Permian Basin, shouldn’t gasoline prices in Texas be on the decline? Matt Smith, director of commodity research at ClipperData says oil’s market price, not the amount being pumped, determines how much gas at the pump costs. “Well the reason for it. . . is because of the recent rise in oil prices,” Smith says. “The oil price move has the biggest impact on the underlying price of gasoline. And we’ve seen oil prices rise about a third since Christmastime, and so this is getting priced into the pump.” But the rise isn’t over. “The unfortunate thing is that it works on a lagged basis, so the bad news is we have higher prices ahead of us,” Smith says. And oil prices in Texas aren’t being influenced by the flood of oil from the Permian.“A lot of U.S. refiners are still paying that global benchmark price for oil,” Smith says. “We still import about 8 million barrels a day. . . even though we’re hitting record production levels of 12 million barrels a day. The rising oil price on a global basis is due to a number of factors, including OPEC production cuts, the turmoil in Venezuela, and the sanctions on Iran. And then this global price is hitting the pump on a regional basis.”And the oil being produce in the Permian Basin is not “the right type of oil.” “In the Permian Basin, [it’s] light, sweet, domestic crude which is high-quality stuff. The issue is that the U.S. Gulf refiners are geared towards refining heavier, more sour, low-quality crude. . . that we get from the Middle East, from Venezuela, from these other OPEC members. Even though we may be seeing production continue to rise, U.S. refiners cannot use all of that,” Smith says.
Oil field boom comes with an increase in deadly and serious accidents, study says – The booming Texas energy production has increased jobs in oil field communities across Texas. But it has also led to a rise in traffic fatalities and injuries, according to TXDOT. In 2017, the state’s five main oil and gas production regions saw a rise in traffic fatalities (1,614) and injuries (7.422) According to a press release from the Texas Department of Transportation, there are several factors that contribute to these numbers, including weather and road conditions.TxDOT officials say speeding and driver inattention are the main reasons we are seeing a rise in traffic crashes in areas such as the Barnett Shale, Eagle Ford Shale, Granite Wash, Haynesville/Bossier Shale and Permian Basin. The release says alcohol is also a major part of the problem.The title of the release itself states “Traffic Fatalities, Injuries Edge Higher in Energy-Producing Areas of Texas.”The statistics are compiled from data collected by the Texas Department of Transportation. This includes many counties in the Eagle Ford Shale, which covers a large part of central and southwest Texas.
Pipeline company paying to relocate residents near spill – The owner of the pipeline that ruptured in December near Berino, spilling 294,000 gallons of gasoline into an irrigation ditch, is now hoping to permanently relocate three residents located near the spill site. Officials of Kinder Morgan, owner of the pipeline, told the Doña Ana County Board of County Commissioners on Tuesday that negotiations have been completed to relocate two renters of houses adjacent to the spill site. Negotiations are continuing with the third resident, who owns all three homes and which sit on a single parcel. Kinder Morgan representatives said those negotiations are progressing and could be completed as soon as this week. The company is seeking to buy the property. Residents were evacuated after the Dec. 13 spill. They have been housed for much of the time since then at hotels. Company officials said it made more sense to relocate them permanently rather than requiring them to continue to stay in hotels until cleanup efforts are complete. “It’s not required by any regulation,” Allen Fore, Kinder Morgan’s vice president of public affairs, told commissioners on Tuesday. “But for the extended inconvenience that it has been to residents, to us this seemed like a better long-term resolution.”
Conservationists fight oil shale plan in eastern Utah (AP) – A coalition of environmental groups objected Tuesday to the U.S. government’s approval of the early stages of an oil shale project near the Utah-Colorado border by a company with ties to Estonia. An intent to sue filed by a coalition including Earthjustice and the Center for Biological Diversity challenges the Bureau of Land Management’s September decision to allow Enefit American Oil to build transmission lines and pipelines on a 19-mile corridor on federal lands. It is the first step required by law before being able to sue. The BLM now has two months to respond. The project “would drain billions of gallons of water from the Green River, threaten endangered species and generate enormous amounts of greenhouse gas pollution,” the coalition said in a news release. Bureau of Land Management spokesman Ryan Sutherland said the agency doesn’t comment on pending lawsuits. Enefit American Oil CEO Ryan Clerico said in an email that production is years away and will require additional government approvals. The company cooperated with officials during the environmental review process, Clerico said. The approved plan is the “best environmental option,” Clerico said. The Utah-based company is a subsidiary of Eesti Energia AS, Estonia’s national energy company. Estonia, a country of 1.3 million people, gets a major chunk of its electricity needs from oil shale. The company has invested $60 million to date in the Utah project, which would produce an estimated 50,000 barrels a day if the site is fully built out, Clerico said. It took six years to get the first governmental approval. Oil shale mining involves higher operating costs than traditional drilling but can be profitable when crude prices are high. That’s not currently the case. The price of crude oil was $55 a barrel Tuesday, down from a peak of $147 in 2008. Oil shale comes from crumbly rock that contains a material called kerogen, which can be heated and separated from the rock and then processed and turned into liquid oil. Utah has been targeted before by oil companies for oil sands mines, but no company has made it all the way through the permitting process and to production. Low oil prices in recent years have reduced the financial incentive.
Weld County oil and gas spill report for Feb. 24 – The following spills were reported to the Colorado Oil and Gas Conservation Commission in the past two weeks. Information is based on Form 19, which operators must fill out detailing the leakage/spill events. Any spill release that may impact waters of the state must be reported as soon as practical. Any spill of five barrels or more must be reported within 24 hours, and any spill of one barrel or more, which occurs outside secondary containment, such as metal or earthen berms, must also be reported within 24 hours, according to COGCC rules. Spills and leaks typically are found during routine maintenance on existing wells, though some actual “spills” do occur among the 24,000-plus wells in the county.
- • HIGHPOINT OPERATING CORPORATION, reported Feb. 21 a hauling spill about 10 miles northwest of Wiggins, near Weld County roads 89 and 87. Between five and 100 barrels of drill cuttings and associated mud spilled. A truck driver hauling drill cutting from the rig to the spreadfield lost some of the load on the surface of Weld road 89. The cuttings were loaded too wet, causing the curve to shift when the truck drove around a curve, spilling materials over the side of the side-dump trailer. Materials, which were frozen, were scraped up and removed.
- • NOBLE ENERGY INC, reported Feb. 19 a historical tank battery spill about 2 miles east of LaSalle, near Weld roads 50 and 43. Less than one barrel each of oil, condensate and produced water spilled. Waters of the state were impacted or threatened. Crews found impacts after dismantling the tank battery.
- • NGL WATER SOLUTIONS DJ LLC, reported Feb. 16 a well spill about 5 miles southeast of Galeton, near Colo. 392 and Weld road 61.75. About 200 barrels of produced water spilled. Company officials do not know the details of the spill, but will continue to supplement the initial report.
- • KERR MCGEE OIL & GAS ONSHORE LP, reported Feb. 15 a historical tank battery spill about 4 miles south of LaSalle, near Weld roads 38 and 39. Less than five barrels of oil, condensate and produced water spilled. Crews found impacts after abandoning the production facility.
- • NOBLE ENERGY INC, reported Feb. 15 a historical tank battery spill about 5 miles south of Kersey, near Weld roads 46 and 55. Between one and five barrels each of oil, condensate and produced water spilled. Waters of the state were impacted or threatened. Crews found the spill after dismantling the tank battery.
- • KERR MCGEE OIL & GAS ONSHORE LP,reported Feb. 14 a centralized waste management facility spill about 3 miles northwest of Fort Lupton, near Weld roads 18 and 21. About 30 barrels of tank bottom fluids spilled. A third-party trucking company released the fluids on the ground.
Fracking Reforms Are Coming to the Capitol – and So Is a Climate Bill – Anticipation is mounting at the State Capitol as Democrats prepare to unveil a major package of reforms to Colorado oil and gas law – but as contentious as that fight will undoubtedly be, it might not be the most ambitious energy legislation that lawmakers take up this year.Alongside the long-awaited fracking bill, Democratic leadership is crafting what will likely be Colorado’s most significant piece of climate-change legislation to date: a proposal that would, among other things, dramatically increase the state’s goals for reducing carbon emissions. Details of both efforts are still being kept under wraps, but oil and gas legislation could be introduced as early as next week, with a climate bill following soon afterward. “We hope to introduce legislation in the next few weeks because the time for climate action is now,” House Speaker KC Becker, a Democrat from Boulder, said in a statement on Thursday, February 21. “The administration in Washington is failing to address this challenge, and the broader contours of legislation are still being worked out.” Activists from 350 Colorado and other climate advocacy groups visited the Capitol on Thursday to urge lawmakers to support a wide range of aggressive climate actions, including a halt to new oil and gas drilling, divesting the state’s pension funds, and rapid decarbonization of transportation and agriculture. “We’re really pushing hard for what we believe is in line with climate science,” says Micah Parkin, 350 Colorado’s executive director. “Future generations are dependent on what we do right now, so we’re calling for really bold, science-based action.”
Government: Highway shutdown not aimed at tribe, media (AP) – Government officials say the five-month shutdown of a North Dakota highway during protests against the Dakota Access oil pipeline was not aimed at manipulating the media or the American Indian tribe that has led the protracted fight against the project. Authorities had justifiable cause for closing the stretch of state Highway 1806 that included limiting disruptions to a project deemed by President Donald Trump to be in the national interest, attorneys for Morton County and state officials, including former Gov. Jack Dalrymple, argued in recent court filings in a lawsuit over the shutdown. State Deputy Solicitor General James Nicolai said people he called violent criminals “had infiltrated the protest and turned it from a peaceful protest into a criminal riot.” Their argument comes in response to a lawsuit by Standing Rock Sioux tribal members and others who say the closure was aimed not only at protesters but also at influencing the tribe’s position and the media coverage. The protest in 2016 and 2017 resulted in 761 arrests in six months, most of them near protest camps between the pipeline construction route and the reservation. Two of the camps, including one that morphed into a small city with at times thousands of people, were bordered on another side by the highway. State officials blocked off a stretch of the highway in October 2016 after fires were set on a bridge and didn’t reopen it until March 2017, after repairs and the shutdown of the camps . The $3.8 billion pipeline began moving North Dakota oil to Illinois three months later. A reservation businesswoman, two pipeline opponents and a reservation church priest sued last October over the highway shutdown, seeking unspecified monetary damages from Morton County, its sheriff, several state officials and a company that oversaw private security for Texas-based pipeline developer Energy Transfer Partners.
Injured pipeline protester argues for lawsuit to proceed (AP) – A New York City woman severely injured while protesting the Dakota Access oil pipeline in North Dakota says she deserves an opportunity to gather more evidence from the government to prove her claim in federal court that she was intentionally targeted with a concussion grenade. Attorneys for Sophia Wilansky are fighting a government effort to have her lawsuit thrown out for lack of proof that her civil rights were violated due to excessive force by law enforcement. Wilansky suffered a left arm injury in an explosion during a violent November 2016 clash between police and opponents of the $3.8 billion pipeline that Texas-based Energy Transfer Partners built to move North Dakota oil to Illinois. She maintains she has limited use of the arm despite five surgeries and seeks millions of dollars for alleged excessive force, assault, negligence, emotional distress and defamation. Wilansky sued local and state law enforcement officials and Morton County in November, alleging that an unknown law officer threw a flashbang device directly at her. Government officials maintain the explosion was caused by a propane canister that protesters rigged to explode, and last month they asked a federal judge to dismiss the lawsuit , saying there is no evidence officers violated her rights through excessive force. Wilansky’s attorneys in their response filed Monday note that the two sides have not yet exchanged evidence and also assert that the government’s claims fall flat. “The law is unambiguous that intentionally targeting a peaceful protester with a flashbang constitutes excessive force in violation of the United States Constitution,” attorney Edward Barnidge wrote. “Every reasonable officer knows that hitting someone with a flashbang will likely cause serious harm, or even death. Thus, it is only reasonable to infer that Officer (John) Doe intended to injure Sophia,” Barnidge said. “If Sophia’s injury had been unintended, Officer Doe’s co-workers would have gasped in horror, not cheered.”
Tribe says Corps’ pipeline findings preordained (AP) – The Native American tribe leading the fight against the Dakota Access oil pipeline said Thursday that an Army Corps of Engineers document shows the agency concluded the pipeline won’t unfairly affect tribes before it consulted them. Standing Rock Sioux officials say the document, which they shared with The Associated Press, bolsters the tribe’s claim that the Corps disregarded a federal judge’s order to seriously review the pipeline’s potential impact on the Standing Rock Sioux and three other Dakotas-based tribes and to not treat the study as a “bureaucratic formality.” “This was a rigged process intended to justify a dangerous and illegal pipeline,” Standing Rock Chairman Mike Faith said in a statement to the AP. The Justice Department declined to comment Thursday. The Corps has said previously that the four tribes suing to shut down the pipeline that began delivering North Dakota oil to a shipping point in Illinois two years ago have been difficult to work with. And the agency did meet with the tribes before it presented its study findings to U.S. District Judge James Boasberg. The tribes fear the pipeline could spill oil into the Missouri River and pollute water they rely on for drinking, fishing and religious purposes. Boasberg said the Corps “largely complied” with environmental law when permitting the pipeline, but he also ordered it to further study the pipeline’s impact on the tribes. Boasberg later said he “expects the Corps not to treat (this) as an exercise in filling out the proper paperwork” after the fact, though he also said he thought there was a “serious possibility” that the agency would be able to substantiate its prior conclusions.
North Dakota energy bill criticized as ‘flat-out taking’ of private property rights – Attorneys who represent landowners are raising concerns about an energy bill that sailed through the North Dakota Senate, with one calling it a “wolf in sheep’s clothing” that takes away private property rights. Senate Bill 2344 follows a study that found it may be economically viable to temporarily store natural gas underground as an alternative to flaring. Supporters of the bill say it removes uncertainty related to mineral developers’ ability to use pore space, or the cavity or void underground where gas would be injected and temporarily stored. But Steve Easton, an attorney who represented landowners in a case upheld by the North Dakota Supreme Court, said oil and gas companies already have the right to use pore space, and the bill is not needed. The bill would take away the option for compensation for landowners. Ownership of the pore space belongs to the surface owner, not the mineral owner. In addition to gas storage, the bill also has implications for underground storage of carbon dioxide, enhanced oil recovery operations and saltwater disposal wells. “This is the oil and gas industry saying we should be able to take the property rights of a farmer and rancher in North Dakota without even paying for them,” said Easton, who served as U.S. attorney for the District of North Dakota in the early 1990s. The bill also adds a definition of land, specifying that land “means the solid material of earth, regardless of ingredients, but excludes pore space.” Easton said the words “but excludes pore space” seem innocuous, but is a major shift in North Dakota law.
Dakota Access developer sues Greenpeace in state court (AP) – The developer of the Dakota Access oil pipeline is going after the environmental group Greenpeace in state court in North Dakota, after a judge tossed the company’s $1 billion racketeering claim out of federal court. Texas-based Energy Transfer Partners on Thursday sued Greenpeace and several activists it also had targeted in the federal lawsuit that U.S. District Judge Billy Roy Wilson dismissed on Feb. 14. Wilson said he found no evidence of a coordinated criminal enterprise that had worked to undermine ETP and its pipeline project. ETP had made claims under the federal Racketeer Influenced and Corrupt Organizations Act and also under North Dakota laws. Wilson did not address the merits of the state claims. ETP seeks “millions of dollars of damages” in the state lawsuit, which makes similar claims to its federal lawsuit – that Greenpeace and activists conspired to use illegal and violent means such as arson and harassment to disrupt pipeline construction and damage the company, all the while using the highly publicized and prolonged protest to enrich themselves through donations. “Defendants thus advanced their extremist agenda … through means far outside the bounds of democratic political action, protest, and peaceful, legally protected expression of dissent,” company attorney Lawrence Bender wrote in the complaint. Greenpeace on Friday had not yet been served with the lawsuit and declined to comment on its specifics. However, Greenpeace attorney Deepa Padmanabha said ETP “is clearly still trying to bully Greenpeace through the legal system.”
Protesters blast gas fracking needed for Kalama methanol plant – In a plea to Washington Gov. Jay Inslee to stop projects like the proposed $2 billion Kalama methanol plant, about 100 people gathered at the state Capitol on Thursday to oppose manufacturing facilities that use fracked natural gas. Speakers and organizers specifically called out the Tacoma LNG project and the proposed $2 billion methanol plant that Northwest Innovation Works (NWIW) aims to build at the Port of Kalama. Environmentalist group Columbia Riverkeeper, which organized the rally, said it also delivered 130,000 public comments to the Governor’s Office opposing “fracked” gas projects. Fracking is the controversial process of drilling into the ground and then injecting a high-pressure water mixture into the rock to release the natural gas inside. DesRosier said she was concerned about potential environmental, health and tourism impacts of the plant on the community. “We have new businesses coming to town,” DesRosier told the crowd. “We should be encouraging this movement, not putting in a business that would be a negative when people investigate moving to or visiting our community.” NWIW plans to convert natural gas into methanol, a key ingredient in plastics manufacturing, which would then be shipped to Asia. Chief Commercial Officer and General Counsel Kent Caputo said the rally was a form of communication that NWIW wants to be a part of. Over time, Caputo said, it’s necessary to find alternatives to natural gas. But the methanol plant is a step in the right direction, he said.
Sumas natural gas leaps $23 to trade at $40/MMBtu – Volatility returned to the Sumas, Washington, pricing point on the US-Canadian border as cash prices there jumped Tuesday on continued constricted flows into the location. Flows at Enbridge Westcoast Energy Station 4B South were 1.5 Bcf Tuesday, down from an average 1.7 Bcf for the rest of February. Flows were slated to fall to 1.4 Bcf/d from Wednesday through March 6 for a scheduled tool run and digs. As a result, gas at Sumas settled at $39.43/MMBtu a $22 day-on-day jump and the second-highest daily change so far this year, trading between $25/MMBtu-$50/MMBtu in the day. Further upstream, Westcoast Station 2 settled at negative C 3.5 cents/Gj, down 64 Canadian cents day on day as gas remains stranded in production areas. Cash prices jumped $28 February 9, when cash prices settled at $48/MMBtu as demand surged in Canada and the western US, pushing up prices. Further down the line, the maintenance work is expected to restrict inflows to the Pacific Northwest through Sumas as flows are expected to total to 722 MMcf Tuesday, according to S&P Global Platts Analytics data. On February 1, Sumas flows were 941 MMcf. Looking ahead, demand is likely to rise near term as the National Weather Service forecast calls for below-average temperatures across much of the western US for the next two weeks. Market participants seem to be expecting the spot market to come off from the $40/MMBtu level. In Inside FERC March bidweek action over the past two days, Sumas has averaged $6.65/MMBtu, some $33.35 below the current cash price.
One million litres of oil spilled in Manitoba train derailment – The Transportation Safety Board confirmed that at least one million litres of oil was spilled during a train derailment on Feb. 16. The TSB said the train was travelling east at 79 km/h, when it experienced a “train-initiated emergency brake application,” which prompted 37 out of 110 railcars to go off the tracks near St. Lazare, Man. The fifth and sixth cars stayed upright and weren’t damaged, while the other 35 piled up over a distance of about 300 to 400 feet. Around 16 cars broke open and spilled at least 1 million litres of oil onto a small area on top of deep ice and snow on a pond. The TSB said the spill was “mostly contained in a low-lying area adjacent to the track.” There were no fires, no one was hurt and there were no evacuations. The TSB has finished their on-site work, and said seven of damaged cars are going to be further examined further for a tank car performance evaluation. Some parts of the track and wheels are being sent to an engineering lab in Ottawa for further analysis as well.
Trans Mountain pipeline gets energy regulator support – Canada’s national energy regulator has recommended the Trans Mountain pipeline project receive federal approval. The National Energy Board (NEB) says the project is in the public interest despite posing “significant” harm to the local killer whale population. It said the oil project is justified based on its economic benefits. The regulator was asked last year to revisit its recommendations of the controversial project after a federal court quashed an earlier approval. The NEB issued 156 binding modified conditions and 16 non-binding recommendations it says could mitigate the harmful environmental impacts to the region’s endangered killer whales and the Salish Sea, a busy inland network of waterways ranging from just north of Vancouver to Puget Sound in Washington. The recommendations include offsetting underwater noise, oil spill response, and reducing greenhouse gas emissions from increased shipping. Critics of the pipeline project on Friday called the NEB report “a rubber stamp” and vowed continued opposition. A new round of consultations with the 117 indigenous groups affected by the project is ongoing and it still needs to received approval from the federal government. The expansion project would triple the existing pipeline’s capacity, increasing its capacity from 300,000 barrels per day to 890,000 per day from Alberta, the heart of Canada’s oil industry, to Burnaby, British Columbia (BC). It would increase oil tanker traffic on BC’s coast from five to up to 34 tankers a month, tankers that would carry the oil along from Pacific coast refineries to world markets.
Feds in ‘very strong position’ to wrap Indigenous Trans Mountain consultations within 90 days: Sohi – The federal government is well-placed to wrap up consultations with 117 Indigenous communities over the Trans Mountain expansion within 90 days. But Natural Resources Minister Amarjeet Sohi says they will stay at the table if talks take longer. In an interview with the West Block’s Mercedes Stephenson, Sohi said the recommendation of the National Energy Board on Friday that the controversial pipeline expansion go forward – with conditions – marks a “major milestone” and that he is hopeful a separate stream of consultations with impacted Indigenous communities will also conclude within the next three months. “The work that we have done so far and the work we will continue to do in the coming months, I can tell you that I feel that we are in a very strong position to conclude these consultations within the next 90 days,” he said. “But we must get it right.” Last summer, the Federal Court of Appeal slapped an injunction on work for the Trans Mountain expansion. At issue was what the ruling described as an inadequate review by the National Energy Board (NEB) of marine impacts of the expansion on the West Coast, as well as a failure by the Liberal government to adequately consult with Indigenous stakeholders along the pipeline route. The first prompted a new review by the NEB that recommended on Friday that the project proceed, subject to 156 conditions and recommendations including reducing the amount of emissions from tankers passing through the terminal area and decreasing underwater noise to reduce impacts on nearby whales. There is now a 90-day time frame for the federal cabinet to decide how and if the project should go forward.
Oil, natural gas sector project approvals seen tripling in 2019- Rystad – Project approvals for conventional oil and gas projects could almost triple this year in terms of volumes as operators catch up on delayed spending, new LNG projects move forward and Saudi Arabia greenlights major offshore projects, according to researchers at Rystad Energy. Excluding spending on shale and tight oil and gas prospects, collective FIDs were expected to unlock more than 46 billion barrels of oil equivalent in 2019, the Norwegian research group said, up from about 16 billion boe in 2018. Years of tough capital discipline by operators, lower industry costs and firmer prices are fueling an uptick in upstream spending after billions of dollars in projects were shelved in the wake of the 2014 oil price collapse. Most of the new planned projects are giant, capital-intensive LNG plants with multi-billion boe developments, such as Mozambique LNG and the Russian Arctic. LNG expansions in Qatar and Papua New Guinea are also eyeing FIDs, while those for deepwater oil off Brazil, Guyana, and Norway are also on the cards. “The only supply segment likely to shrink this year is the oil sands, whereas deepwater, offshore shelf and other conventional onshore developments are all poised to show substantial growth,” Rystad upstream research analyst Readul Islam said in a statement. Saudi Arabia was also expected to approve three major offshore shelf expansion projects that would collectively account for nearly one-fifth of global FID volumes this year, Islam said. He said, however, there were downside risks to the FID forecast, noting that potential delays to just a few mega-projects expected in 2019 could significantly affect total volumes approved. In spite of the expected surge in big FIDs this year, Rystad also cautioned that growth opportunities for the oilfield service sector will remain limited, given that the actual FID count is only seen growing by 12% on 2018. Almost all the expected FIDs this year are for fields of 25 million boe and above.
Frackers Face Harsh Reality as Wall Street Backs Away – Key lifeline for smaller operators fades, as losses pile up and prospects dim for big investment returns. The once-powerful partnership between fracking companies and Wall Street is fraying as the industry struggles to attract investors after nearly a decade of losing money. Frequent infusions of Wall Street capital have sustained the U.S. shale boom. But that largess is running out. New bond and equity deals have dwindled to the lowest level since 2007. Companies raised about $22 billion from equity and debt financing in 2018, less than half the total in 2016 and almost one-third of what they raised in 2012. The loss of that lifeline is forcing shale companies – which have helped to turn the U.S. into an energy superpower – to reduce spending and face the prospect of slower growth. More than a dozen companies have announced spending reductions so far this year, even as crude-oil prices have rallied more than 20% from December lows. More are expected to tighten budgets as they release earnings in coming weeks. Shares of Continental Resources Inc. fell 5.4% Tuesday after the shale company, founded by billionaire Harold Hamm, disclosed that fourth-quarter spending was almost 10% higher than analyst expectations. Wall Street support allowed shale companies to persevere through a plunge in oil prices that began in 2014, eventually helping the U.S. surpass Saudi Arabia and Russia as the world’s largest producer of oil, with 11.9 million barrels a day in November, according to the U.S. Energy Information Administration.
Wall Street Loses Faith In Shale –To Wall Street, the shale industry has lost a lot of its allure. A decade’s worth of promises have failed to materialize, and Big Finance is cutting some of its ties with smaller shale drillers who have not delivered. The Wall Street Journal reports that the shale industry only saw $22 billion in new bond and equity deals, down by more than half from 2016 levels, which was a much worse time for the market.The steep decline in new debt and equity issuance is a sign that major investors are no longer rushing to finance unprofitable shale drilling. It’s worth noting that this is a new development. For years Wall Street financed unprofitable drilling, holding out on the promise that rapid production growth would eventually pay off.Shale wells suffer from precipitous decline rates, with as much as three quarters of a well’s total lifetime production coming out in the first year or two. After an initial burst of output, shale wells enter a steep decline.Of course, this has been known since the beginning and Wall Street has long been fully aware. But major investors hoped that shale companies would scale up, achieve efficiencies and lower breakeven prices to the point that they could turn a profit.However, that has not been the case. While there are some drillers that are profitable, taken as a whole the industry has been cash flow negative essentially since its beginning in the mid-2000s. For instance, the IEA estimates that the shale industry posted cumulative negative free cash flow of over $200 billion between 2010 and 2014.The red ink has narrowed since then, but so too has the patience from Wall Street. In 2018, even as oil prices hit their highest levels in years, new debt and equity issuance plunged. That makes it harder for small and even medium-sized companies to finance growth. It’s not all that surprising, then, that a wave of spending cuts have cropped up in the last few months.The WSJ notes that the credit environment also worsened when the market hit its nadir in 2016. Regulators tightened lending requirements, raising the cost of capital for indebted drillers. That, of course, made it even more difficult for these drillers to turn a profit. To top it off, all of these pesky investors are much more demanding than they used to be, calling on companies to stop spending so much and instead return cash to shareholders. That leaves less capital available to inject back into the ground. Taking a step back, explosive shale growth was only possible because in the context of the post-2008 financial crisis and the response by the Federal Reserve to drop interest rates close to zero, something Bethany McLean argues in her book, “Saudi America.” Cheap money financed the debt-fueled shale revolution.
Shale Growth Is Nearing An Inflection Point – Drilling activity has plateaued in much of the U.S., with the rig count zig-zagging well below the peak from last November.The rig count often rises and falls in response to oil prices, but on a several-month lag. It takes some time before oil companies make drilling decisions in response to major price movements. As such, the price meltdown in the fourth quarter of 2018 is still working its way through the system. But the U.S. shale industry has already begun to tap the brakes. Total U.S. oil rigs are stood at 853 for the week ending on February 22, down from a peak of 888 in November. In particular, the Permian – often held up as the most profitable and prolific shale basin – has seen the rig count decline to a nine-month low.Production continues to rise, to be sure, but the growth rate could soon flatten out. “We estimate that the y/y change in US oil drilling will, for the first time since 2016, turn negative by late May, should the current trend of gentle declines continue,” Standard Chartered analysts led by Paul Horsnell wrote in a note. At the same time, oil prices are rising again, and are up roughly 25 percent since the start of the year. If WTI tops $60, many shale drillers could find themselves feeling confident all over again, and could pour money and rigs back into the field.That said, multiple drillers have laid out more conservative and restrained drilling programs, facing pressure from shareholders not to overspend. According to Bloombergand RS Energy Group, U.S. E&Ps have trimmed their spending plans by 4 percent on average, while at the same time they still expect production to grow by 7 percent.
Have We Already Passed World Peak Oil And World Peak Coal? – Gail Tverberg – Most people expect that our signal of an impending reduction in world oil or coal production will be high prices. Looking at historical data (for example, this post and this post), this is precisely the opposite of the correct price signal. Oil and coal supplies decline because prices fall too low for producers. These producers make voluntary cutbacks because the prices they receive fall below their cost of production. There often are supply gluts at the same time. This strange situation arises because prices must be high enough for the producers at the same time that goods and services made by oil (and other energy products) are inexpensive enough for consumers to afford. There is a two way battle taking place:
- (1) Prices producers require tend to rise over time, because of depletion. The easiest to extract portion of any resource (such as oil, coal, copper, or lithium) tends to be removed first. What is left tends to be deeper, lower quality, or otherwise more difficult to extract cheaply.
- (2) Prices consumers can afford for discretionary goods (such as cell phones and automobiles) tend to fall for a combination of reasons:
- Wages of many workers fall because of competition from lower cost labor in other countries.
- Some jobs are eliminated through the use of computers or robots.
- Young people are increasingly being required to pay for higher education (beyond that which is provided free), leaving many with loans to repay, reducing their discretionary income.
- Changes to US healthcare law (mostly starting January 1, 2014) lead to required health insurance premiums. While some citizens find cost savings in this approach, healthy young people often experience cutbacks in discretionary income as a result.
- Rents and home prices keep rising faster than incomes.
When the discretionary income of the many non-elite workers of the world falls, they buy fewer finished goods and services. Finished goods and services are manufactured using commodities of many kinds, including oil, coal, copper, iron ore, and fresh water. When discretionary demand falls, commodity prices tend to fall. This is the problem we are encountering now. It tends to cause the prices of many commodities to fall below the cost of production. Eventually, producers decide to quit because production is no longer profitable. This is the issue that leads to peak oil, coal or copper.
The $32 Trillion Push To Disrupt The Entire Oil Industry — Global oil and gas companies are increasingly facing an uphill battle as global warming policies are taking their toll. Most analysts and market watchers are focusing on peak oil demand scenarios, but the reality could be much darker. International oil companies (IOCs) are likely to face a Black Swan scenario, which could end up being a boon for state-owned oil companies (NOCs).Increased shareholder activism, combined with global warming policies of institutional investors and NGOs, are pushing IOCs in a corner, constricting financing options for oil companies. The first signs of a green revolution in the shareholder-investors universe are there, as investors have forced Dutch oil and gas major Shell to officially change its strategy, investing in more renewable energy and energy storage. The Dutch IOC wasn’t forced by to do so because of mismanagement or a lack of reserves but due to a well-orchestrated investor/stakeholder offensive. Several other peers, such as BP, ENI or Total, are expected to experience comparable situations. And it has become clear that not only oil and gas giants are being targeted, after one of the world’s largest mining and commodity trading companies, Glencore, decided to put a limit on its thermal coal investment. The group stated that this was done after it was confronted by a largely unknown shareholder network called Climate Action 100+, which claims to be backed by more than 300 investors, managing assets of around $32 trillion. The group was founded a little over a year ago but has already forced oil majors’ boardrooms to take radical decisions. For Climate Action 100+, which includes investors such as Calpers, Allianz SE, and HSBC Global Asset Management, making profitable investments remains a top priority, but they will no longer look accept a passive stance towards climate change. Without complying with the demands of NGOs and socially engaged investors, access to new capital for new oil and gas upstream projects will be reduced. To force IOCs, such as Shell or BP, to comply with policies that would halve their “net carbon footprint” by 2050 could result in a death-wish for these companies in the long-run.
Marathon Oil Exits UK North Sea In Continued Focus On U.S. Shale – Marathon Oil said on Monday that it would be exiting the UK North Sea as it continues to focus on high-return U.S. shale oil operations.Houston-based Marathon Oil has signed an agreement with independent UK company RockRose Energy to sell its UK businesses Marathon Oil U.K. LLC (MOUK) and Marathon Oil West of Shetland Limited (MOWOS), which hold interests in fields in the Greater Brae Area, in Foinaven Field unit, and in Foinaven East. RockRose Energy will assume all obligations associated with MOUK and MOWOS operations in the UK, including decommissioning liability, Marathon Oil said.The price of the sale – subject to customary adjustments – would be around US$140 million, the U.S. company said.The transaction is expected to close in the second half of 2019, with an effective date of January 1, 2019. As of the end of 2018, Marathon Oil carried 21.4 million barrels of oil equivalent of proved reserves in the UK, and 2018 production averaged around 13,000 barrels of oil equivalent per day.“Today’s announcement to divest our U.K. business represents our continued commitment to portfolio management and further concentrates our portfolio on high margin, high return U.S. resource plays,” Marathon Oil chairman, president, and CEO Lee Tillman said in a statement. In March last year, Marathon Oil sold its 16.33 percent non-operated interest in the Waha concessions in Libya to France’s Total for US$450 million, exiting Libya. Earlier this month, Marathon Oil said that it would be spending US$2.4 billion in 2019, with more than 95 percent of that capital budget being allocated to its four key U.S. resource plays – the Eagle Ford, the Bakken, STACK/SCOOP in Oklahoma, and Northern Delaware in the Permian. Marathon Oil’s U.S. resource play production averaged 295,000 net boed in the fourth quarter of 2018, with oil production averaging 174,000 net bopd, up 22 percent from Q4 2017. For this year, the company expects its total oil production to rise by 10 percent, with U.S. oil growth at 12 percent.
Spain’s Enagas expects 2.40 million cu m LNG imports in March – Spanish shippers have increased their scheduled March LNG intake by 500,000 cu m, or 26%, compared with initial nominations, according to data published by gas grid operator Enagas. The country is set to receive 18 tankers, or 2.40 million cu m, of LNG, up from nominations a month ago of 14 tankers, or 1.90 million cu m. The additional cargoes will be spread across the ports of Barcelona, Huelva, Sagunto and Mugardos. As a result, LNG send-out in March will be 2.9 TWh, or 20%, higher at 17.2 TWh (1.55 Bcm) compared with nominations at the end of last month. By contrast, pipeline flows were seen dropping 22% to 17.9 TWh, driven by a 24% fall in Algerian imports. The imports schedule at Tarifa has been reduced by 0.8 TWh to 3.0 TWh, while volume through Almeria has been revised down by 1.9 TWh to 5.3 TWh, according to the schedule. Trade flows within Europe were also seen lower in March, as imports from France were scheduled to be down 1.1 TWh to 5.7 TWh and exports to Portugal down 670 GWh. The demand forecast for March was revised slightly higher, by 0.2 TWh to 33.6 TWh, with storage withdrawals also increasing by 1.1 TWh compared with initial nominations. As a result, natural gas stock inventories at the end of March were seen at 18.8 TWh or 57% full, while LNG stock inventories were seen at 10.4 TWh or 49% full, according to Enagas. For April, Spanish shippers have nominated 2.5 million cu m aboard 18 vessels. That is 20%, or 421,000 cu m, higher than the amount delivered in April 2018 and also 6% higher than Enagas’s initial forecast requirement.
ExxonMobil makes world’s third-biggest natural gas discovery in two years off the coast of Cyprus – Exxon Mobil announced on Thursday that it has made the world’s third-biggest natural gas discovery in two years off the coast of Cyprus in the Eastern Mediterranean at the Glaucus-1 well. The region is already know for some of the world’s largest such discoveries. It wants to become an alternative energy source for Europe.Based on preliminary interpretation of the well data, the discovery could represent a natural gas resource of approximately 5 trillion to 8 trillion cubic feet (142 billion to 227 billion cubic meters). Further analysis in the coming months will be required to better determine the resource potential.”These are encouraging results in a frontier exploration area,” said Steve Greenlee, president of Exxon MobilExploration Co. “The potential for this newly discovered resource to serve as an energy source for regional and global markets will be evaluated further.”Glaucus-1 was the second of a two-well drilling program in Block 10. The well was safely drilled to 13,780 feet (4,200 meters) depth in 6,769 feet (2,063 meters) of water. The first well, Delphyne-1, did not encounter commercial quantities of hydrocarbons.Block 10 is 635,554 acres (2,572 square kilometers). In 2017, Exxon Mobil and state-owned Qatar Petroleum won the rights to explore for oil and gas in offshore areas south of Cyprus. The east Mediterranean island is located in the Levant basin, where both Israel and Egypt have found some of the largest reserves of natural gas in the past decade.In 2017, Exxon Mobil and state-owned Qatar Petroleum won the rights to explore for oil and gas in offshore areas south of Cyprus. Exxon Mobil owns a 60 percent stake in the block, while Qatar Petroleum holds the rest. At a press conference in Nicosia, Cyprus Energy Minister George Lakkotropis said he is excited about the findings. “It is an amazing development for all of Cyprus. This is the greatest discovery within our Exclusive Economic Zone (EEZ). In the coming months, the amount of natural gas will be more accurately estimated,” he said.
Britain’s blocked fracking pipeline – Fracking in Britain is once again on hold after the first exploratory testing for seven years, at Cuadrilla’s single well at Little Plumpton in Lancashire, went badly – and then the government compounded the firm’s misery by turning down planning appeals on a second site with four more wells. Under the terms of Cuadrilla’s licence, it is required to stop work if earth tremors exceed 0.5 ML on the Richter scale – a level imperceptible to humans. Alas, that limit was hit so often that the firm says it was only able to frack 5% of its well. The firm complains the rules are so overcautious that they risk “strangling” the UK’s fracking industry “before birth”: no one will ever be able to do enough tests to work out whether fracking is really economically viable, or what a “safe” seismic limit is given the particular geology of these precise sites.Jim Ratcliffe of Ineos, which holds as yet unexploited fracking rights at other sites, has weighed in too, claiming the “unworkable” rules had no basis in science. But the government, so far, is holding firm. And if the standoff isn’t resolved, fracking in Britain will indeed be a non-starter. Why does it arouse such passions? Because its proponents think it could revolutionise Britain’s energy mix and make us self-sufficient for decades; whereas opponents think it is unsafe, could presage environmental catastrophe, and think it’s nuts to extract more fossil fuels when we urgently need to stop burning carbon. To fracking’s supporters, the example of the US provides a clear economic case for getting on with it: fracking has boosted its oil production, transformed it into the world’s biggest producer of natural gas, and boosted its energy security in the face of geopolitical uncertainty. Britain is a net importer of gas with decades of North Sea experience in the industry it could put to good use onshore. “Fracking in the US has cut energy bills, created jobs and rejuvenated depressed regions,” said a recent Times editorial. “It could do the same for Britain, as well as helping low-income families with fuel costs. Frack on!”
What is causing the Surrey earthquakes, and is it related to fracking – In a surprising turn of events, this morning saw parts of Surrey and West Sussex affected by an earthquake. The 3.7 magnitude and struck at 3.40am near Southwater, around 10 miles away from Gatwick airport, and was felt the most strongly in the Crawley, Reigate and Horley regions. David Welch told MailOnline: ‘My wife and I were watching TV and I heard what I thought was a rumble of thunder. ‘Next thing, she says the sofa is shaking. I’ve never known anything like it in my entire life. My wife is about to have kittens.’ It’s certainly not a regular occurrence to see earthquakes in this part of the world, but it isn’t the first time. The area around Gatwick Airport experienced a series of earthquakes last summer. There were three tremors in eight days in July with some describing experiences similar to ‘two huge explosions’. Why do earthquakes happen in the UK, and is it anything to do with fracking? According to the British Geographical Society, it’s not completely clear why we get earthquakes, although they tend to happen on geographical fault lines in the earth.What they also say is that reasons for quakes can ‘include regional compression caused by motion of the Earth’s tectonic plates, and uplift resulting from the melting of the ice sheets that covered many parts of Britain thousands of years ago.’In this particular instance, anti-fracking activists have surmised that it may be down to recent drilling in the area. Frack Free Surrey said it was ‘time to reopen the inquiry into the link with drilling at Horse Hill’.
China county suspends fracking after earthquakes kill 2 – – A county in western China has suspended drilling for shale gas after a protest by residents who suspected fracking work was the cause of a series of earthquakes that led to two deaths.The first quake hit Sichuan province’s Rongxian county on Sunday morning, followed by two more, including a magnitude 4.9 temblor on Monday afternoon that caused the two fatalities. Twelve people were injured, the county government said in a message on its microblog.Mining activities and handling of dangerous chemicals were also suspended but would be gradually restored, it said. It didn’t directly link the quakes to fracking, but acknowledged residents’ “suspicions.”Those measures were taken after about 1,000 area residents accompanied by 2,000 onlookers rallied outside a local government headquarters to demand that fracking be stopped, the government said in its statement. It said the crowd later dispersed without incident. Street protests over pollution and other environmental hazards are increasingly common in China, often organized over social media. The government statement said quakes were occurring “frequently” but gave no other details. The U.S. Geological Service said the 4.9 magnitude quake struck at a relatively shallow depth of 10 kilometers (6.21 miles). Sichuan is regularly shaken by earthquakes, including a 7.9 magnitude quake in its mountainous western region on May 12, 2008 that killed nearly 90,000 people in China’s worst natural disaster in recent decades.
Deadly quakes in Chinese town trigger anti-fracking protest – Inkstone A Chinese county has suspended fracking operations after a series of deadly quakes triggered protests against the natural gas project.Three earthquakes of magnitude 4.7, 4.3 and 4.9 occurred in Rongxian county in the southwestern province of Sichuan between Sunday and Monday, causing two deaths and 12 injuries.Earthquakes touch a particularly sensitive nerve in Sichuan, where a magnitude-8 earthquakeleft 87,000 dead in 2008. On Sunday and Monday afternoon, more than 1,000 residents gathered at the local government building, demanding the fracking projects be halted, the Rongxian government said on its official website. The protesters left after talking with local officials, the government said. Industrial pollution and accidents regularly lead to public outcry in China, where residents are often kept in the dark about the potential harm that installations such as energy or chemical plants may cause.
Oil leaked from Petrobras P-58 platform off Brazil – company (Reuters) – An estimated 188 cubic meters of oil leaked from Petroleo Brasileiro’s offshore P-58 platform in the early hours of Saturday, the Brazilian state-run oil company said. According to a securities filing, the leak occurred because of the failure of a hose as the oil was being transferred from the platform to an offtake tanker. The oil firm, known as Petrobras, said the transfer process was stopped immediately. The platform is in safe condition, there was no impact on operations and no one was injured, the statement said. The P-58 is located in the Campos basin, about 80 kilometers from the coast of Esp’rito Santo state. Two vessels are in place for containment of the leak, and initial studies indicate there is no risk of the spilled oil reaching the Brazilian coast, Petrobras said.
Brazil oil regulator to investigate Petrobras oil spill – (Reuters) – Brazil’s oil regulator said on Monday that is has started an investigation into an oil spill at an offshore platform owned by Petroleo Brasileiro SA. On Saturday, about 188 cubic meters of oil leaked from the offshore P-58 platform, which is located in the Campos basin, some 80 kilometers of the coast of Esp’rito Santo state.
Colombias Cano Limon pipeline bombed for 9th time in 2019 (Reuters) – A bomb attack on Colombia’s Cano Limon pipeline caused an oil spill in eastern Arauca province, state-run oil company Ecopetrol said on Thursday. The spill, which took place in the Saravena municipality near the border with Venezuela, was contained in and around the crater left by the explosion, the company said in a statement. The pipeline was not pumping at the time of the bombing. There have been at least a dozen attacks on Colombian pipelines so far in 2019, nine of them on Cano Limon. There were more than 80 attacks on the 485-mile (780-km) pipeline in 2018, which kept it offline for most of the year. Although Ecopetrol did not name the group responsible, oil infrastructure bombings are regularly carried out by leftist National Liberation Army (ELN) rebels, considered a terrorist organization by the United States and the European Union. The ELN opposes multinational companies – saying they seize natural resources without benefiting Colombians.
Shell facing multiple charges over corruption, emissions, and an explosion – Shell will be prosecuted for criminal charges relating to a $1.3 billion settlement for an oil exploration licence in Nigeria, and has also been summoned by prosecutors to face charges over chemical emissions and an explosion. The Dutch Public Prosecutor’s Office (DPP) informed Shell it is nearing the conclusion of an investigation into the case and is preparing to prosecute the oil giant, the company said in a statement on its website Friday. Shell and Italian oil firm Eni were accused of bribery in 2017 over a $1.3 billion payment that secured an exploration licence for an oil block, known as OPL 245, in 2011. It was alleged that although the funds were paid to the Nigerian government, the money actually went to Malabu Oil and Gas – a company linked to former oil minister Dan Etete. Eni CEO Claudio Descalzi and four ex-Shell managers are also facing charges of international corruption in Italy, where prosecutors allege they were aware that payments would be pocketed by individuals rather than the Nigerian government. Shell and Eni have both denied any wrongdoing. In an emailed statement, the DPP told CNBC Friday: “On the basis of the ongoing criminal investigation, the Public Prosecution Service concluded that there are prosecutable offenses. We are not yet able to make any announcements about the further course of the case.” In November, a report from campaign group Global Witness said that Nigeria would lose $6 billion in oil revenue because of the terms of the allegedly corrupt deal. Shell declined to comment when contacted by CNBC about the DPP’s decision to prosecute.
Crude oil spill in river – A stretch of the Umgeni River in Howick has been polluted with crude oil. Crude oil – spilled from a Transnet depot – was spotted by community members and reported to Transnet earlier this month. The oil has flowed into a tributary of the Umgeni at a point about two kilometres from the Umgeni itself. Local environmental activists and concerned citizens fear that the spill has compromised animals and plantlife around the river. The area is also popular for walking dogs and swimming. The Witness on Tuesday visited the site, which is alongside the N3 near Howick, not far from the railway bridge. Clean-up crews were on site to soak up the oil with wood pulp, which was then scooped out of the river. The crews have also inserted material into the water to stop the oil from flowing further downstream. Eve Hughes, who serves on the area ward committee’s environmental portfolio and has worked for the Wildlife and Environment Society South Africa (Wessa), was concerned for nearby animals. “People bring their cattle to graze here and drink from the river. Plants, frogs, insects and aquatic life are all in danger. What worries me is that the public was never notified about this pollution. “People come here to walk their dogs and people play in the water. Why was nothing said?” Another concerned citizen, Pam Haynes, who is also a volunteer for the Duzi Umngeni Conservation Trust, said she was notified about the spillage two weeks ago by cyclists who smelled oil in the area. “Cyclists were going past Tweedie and when they saw the spillage they called me. The question is: how long has this spill been sitting there? Would they be attending to it if we didn’t report it?
Solomon Islands oil spill threatens World Heritage site – A salvage operation is underway more than three weeks after the MV Solomon Trader ran aground on a reef in the Solomon Islands while loading bauxite on the remote island of Rennell during tropical cyclone Oma. People are being warned to stay away from the “toxic” oil spill. Sixty tonnes of oil is estimated to have already spilled with another 600 tonnes still in the tanks of the leaking ship. Australia is assisting the Solomon Islands government with the salvage and clean-up after a plea for help from care-taker prime minister Ric Hou. “Australia is extremely concerned at the scale of this disaster, the impact of this oil spill will have a devastating effect on the surrounding environment, including potentially on a protected UNESCO World Heritage site, as well as the livelihood of the people of Rennell,” Australian High Commissioner Rod Brazier in the capital Honiara told a local briefing of journalists. A Solomon Island National Disaster Council situation report said there is a “lack of in-country capacity to deal with a potential environmental disaster of this magnitude” and that “the primary responsibility to salvage and mitigate any spill rests with the charterer of the ship and the ship owners”. Australia’s Department of Foreign Affairs and Trade (DFAT) has updated its travel advice for Solomon Islands warning “reconsider your need to travel” to Rennell because “heavy fuel oil is a toxic substance and you should avoid exposure to it”. Island residents fear the complex salvage operation means Rennell will suffer serious long-term damage. “Oil spill makes it impossible to fish or bathe in the sea, oil is still leaking, people are worried, “ Derek Pongi from the Tehakatuu tribe on Rennell told SBS. “Loading of bauxite is still on in the bay. (We’re) calling on the company to halt loading.”Australian Maritime Safety Authority (AMSA) experts deployed to assist have confirmed oil contamination has spread into the surrounding waters and along the shoreline. The 225m long bulk carrier hit a reef on February 4 on Rennell, the largest raised coral atoll in the world with the largest freshwater inland lake in the Pacific, about 250 kilometres south of the capital Honiara.
New Zealand joins Solomons oil spill response – New Zealand joined an international effort Friday to limit damage from oil spilling out of a ship that ran aground near World Heritage-listed waters in the Solomon Islands almost a month ago. The MV Solomon Trader became stranded on a coral reef on February 5 while loading bauxite at remote Rennell Island, about 240 kilometres (150 miles) south of the capital Honiara. Efforts to salvage the 225-metre bulk carrier have so far failed and experts estimate about 75 tonnes of heavy fuel oil has leaked into the sea, with another 600 tonnes still on board. “Australia remains extremely concerned by the ongoing risk of a major oil spill,” Canberra’s High Commission in Honiara said in a statement. Rennell Island is the largest raised coral atoll in the world and includes a UNESCO World Heritage site which extends kilometres (miles) out to sea. The Australian Maritime Safety Authority is providing regular aerial surveillance of the stricken ship to monitor the unfolding environmental disaster. Pictures taken during the flyovers show a large oil slick running from the ship into the aquamarine waters and thick clumps of petrochemical sludge on the shore. New Zealand dispatched two oil spill containment specialists to the disaster zone on Friday and said they would help implement a response plan. Maritime New Zealand said more specialists may be needed as the situation evolved. The UNESCO World Heritage Centre has expressed concerns about the grounding said says it is working with local officials on mitigation measures. Australia has advised its citizens to reconsider travelling to Rennell Island, warning the heavy fuel oil leaking from the ship is a toxic substance and exposure to it should be avoided.
Limited output disruption from fire at Malaysia’s Bintulu LNG plant- sources – Limited output disruption from fire at Malaysia’s Bintulu LNG plant: sources – Malaysia’s Bintulu LNG plant is expected to experience limited production disruptions or cargo loading delays after a fire broke out at the plant on Friday morning, industry sources told S&P Global Platts. Authorities at the Petronas facility have gotten the situation under control and there is little likelihood of a significant production impact as a result, according to two sources familiar with the matter. Other market sources confirmed that there was minimal damage to plant facilities and substantial cargo loading delays are not to be expected. One northeast Asian end-user told Platts Monday that they had not received any communication from Petronas regarding a delay in their shipments. However, no vessels have left the Bintulu port since February 22, Platts trade flow software cFlow showed. LNG Lerici, a 35,760 dwt vessel, was scheduled to enter the Bintulu port on February 24, but has been anchored partially laden outside the port since February 23, cFlow showed. Another LNG carrier, Seri Alam, a 83,824 dwt vessel, has been anchored partially laden outside Bintulu’s LNG complex since February 24, according to cFlow. The Bintulu LNG facility also sparked supply concerns before the fire broke out, with the monthly loadings in February dropping by about 28% to 57,270 mt, Platts Analytics data showed. Petronas was heard to have bought four LNG spot cargoes for end-February to early-March delivery, following slower loadings from the Bintulu LNG complex, market sources said.
Even China may not be able to soak up all 2019’s new LNG: Russell (Reuters) – Not even China’s voracious appetite for liquefied natural gas may be enough to absorb the additional supplies hitting the market this year, with the price of the super-chilled fuel potentially a casualty. While China’s LNG imports got off to a rollicking start in 2019, it’s unlikely that will match the 41-percent growth experienced in 2018. Imports were 6.58 million tonnes in January, a record-high and up 27.8 percent from the same month in 2018, according to customs data released on Feb. 23. But the sharp rise in January imports is likely to unwind in coming months as much of the LNG is being used in coal-to-natural gas switching projects that run out of steam as the northern winter ends. Some 3 million Chinese homes were switching from coal heating to natural gas this winter, boosting demand for LNG. However, this demand drops sharply after the winter heating period ends on March 15. China will likely increase its LNG demand by about 8 million tonnes in 2019, not the 15.7 million tonne jump seen in 2018 from 2017. The problem for the LNG market is that it’s likely that more than 30 million tonnes of additional LNG supply will be available in 2019. Poten & Partners head of business intelligence Jason Feer told the LNGgc Asia event that his company expected 33 million tonnes of new supply in 2019, but only 16 million tonnes of extra demand. Wood Mackenzie’s Browne said a total of about 70 million tonnes of new LNG would reach the market this year and next, driven by the full ramp-up of the last of the eight new Australian plants and by the start of new U.S. projects, including Kinder Morgan’s Elba Island and Sempra’s Cameron venture. While there is some potential for India and other emerging buyers in Asia to take more of the fuel, the outlook for traditional big buyers Japan and South Korea is more muted.
US oil is trickling back into China after export boom goes bust – The ongoing U.S.-China trade dispute stopped a surge in American oil exports to the Middle Kingdom, but as Washington and Beijing inch toward a deal, a trickle of U.S. crude appears to be making its way to Chinese shores. The development comes as U.S. and Chinese negotiators recently wrapped up talks that prevented tariffs on hundreds of billions of dollars in goods from rising sharply on March 1. The dispute has disrupted once robust trade in energy products such as crude oil and liquefied natural gas between the world’s two biggest economies. China emerged as a major buyer of U.S. crude after President Barack Obama and Congress lifted the 40-year ban on exporting crude oil in 2015. During some months last year, China surpassed Canada as the top importer of American oil. Beijing has declined to slap an import tax on U.S. crude in retaliation against the Trump administration’s tariffs on Chinese goods. But Chinese buyers nevertheless stopped purchasing American supplies last year as the trade dispute with Washington escalated. After the long pause in trade, China recently offloaded its first shipment of U.S. crude oil this year, although in a roundabout way. About 468,000 barrels of U.S.-origin crude oil was pulled from storage at Yeosu, South Korea, and shipped to China, according to tanker-tracking firm ClipperData. Hongrun Petrochemical, an independent refiner, received the shipment of Eagle Ford crude at Qingdao Port on Sunday, according to S&P Global Platts, which reported the transfer overnight. There are also signs that China may soon receive direct shipments of crude oil from the United States. According to ClipperData, a ship called the Hong Kong Spirit recently loaded almost 2 million barrels at Moda Midstream’s Ingleside terminal near Corpus Christi, Texas, and in the U.S. Gulf. The VLCC – or very large crude carrier – is currently declaring for Yantai, China. “This destination may, however, change en route, but for now signals optimism on the trade war front. By the time the VLCC makes it to China in April, trade war concerns may have dissipated,” said Matt Smith, director of commodity research at ClipperData.
China plans new state pipeline company in massive energy reshuffle (Reuters) – China will announce a plan this year to form a national oil and gas pipeline group combining the long-distance pipeline assets of the country’s state-owned energy companies, in the sector’s largest reshuffle in two decades, said three persons with knowledge of the plan. The change is designed to open access to China’s pipeline infrastructure to private and foreign energy producers as a way to spur oil and gas exploration. The open pipeline network will allow companies to focus on exploration without any additional costs to move the fuel to market. China’s economic planner, the National Development and Reform Commission (NDRC), approved the plan for the group last month, including details of assets to be incorporated, and final approval from China’s State Council is still pending, said one of the sources. The initiative is considered the biggest energy market reshuffle since 1998 when Beijing restructured the entire sector and established China Petroleum and Chemical Corp (Sinopec) and PetroChina. The new entity will effectively become a fourth state-controlled energy company next to Sinopec, China National Petroleum Corp, the parent company of PetroChina, and China National Offshore Oil Corp. It is unclear when Beijing will officially announce the plan or when the new firm will be launched, but companies have been making preparations for the move, said a second source, an executive at a state-owned oil company. That includes PetroChina relocating its pipeline segment’s management team to a separate office tower in Beijing, the source said. The sources declined to be named due to the sensitive nature of the matter. The NDRC did not respond to Reuters request for comment. “It’s the largest-ever step in (the oil and gas) sector reform. At the core of it, it’s about removing a key bottleneck in the market and allowing producers and consumers equal access to infrastructures,” said Dong Xiucheng, director of energy policy research at University of International Business and Economics in Beijing.
Oil spill spreads panic in Paradip – Leakage of oil from a pipeline of IOCL refinery here has led to panic among fishermen. IOCL has pressed a team into service to ascertain the cause of oil spill. Sources said leakage of oil was detected by some fishermen on the pipeline on Atharbanki- Neherubangla road. The oil had spilled into Kaudia river at Atharbanki. Locals alleged that it is the handiwork of some miscreants involved in stealing oil from the IOCL pipeline. Lack of security at isolated locations and absence of in-built automatic alert system in the pipeline is leading to theft of petroleum products in Paradip area. Assistant Engineer of Odisha State Pollution Control Board (OSPCB) Twinkle Mohanty said a joint team of OSPCB and IOCL had visited the spot and started inquiry to ascertain the cause of the oil spill. The official said the source of leakage has been located and no harm to marine species has yet been reported. In July last year, oil leakage was reported from the pipeline. It had resulted in deaths of several marine species. In 2015, oil pilferage from the pipeline of refinery of IOCL had occurred while some miscreants were trying to steal petroleum products.
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