Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 26 September 2020. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening.
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Texas oil regulator exceeds state’s annual goal for plugging abandoned wells – For the fourth straight year the Railroad Commission of Texas has exceeded its performance target of plugging abandoned oil and gas wells throughout the state. With the fiscal year ending on Aug. 31, the agency plugged 1,477 orphan wells in Fiscal Year 2020, which exceeded the target of 1,400 set by the Legislature. “The State Managed Plugging Program is an important part of our critical mission to protect public safety and the environment.” said Danny Sorrells, RRC’s Assistant Executive Director and Director of its Oil and Gas Division. “Given the current energy industry downturn, the program also helps to employ oilfield service company workers throughout Texas. These employees are contracted and supervised to plug abandoned orphan wells by the Railroad Commission of Texas.” The State Managed Plugging Program is paid through industry fees rather than by taxpayers. This program addresses wells that are no longer productive and are considered orphaned in accordance with state laws and regulations. Railroad Commission staff prioritizes which orphan wells to plug based on potential risks to public safety and the environment. The work done in the most recent fiscal year continues a positive trend in the RRC’s work in exceeding performance targets. In Fiscal Year 2017, the goal was to plug 875 wells, and the agency plugged 918 wells. In Fiscal Years 2018 and 2019 the performance goal was to plug 979 abandoned wells each year, and the agency plugged 1,364 and 1,710 respectively.
Drilling Gaining Steam in Texas as US Rig Count Rises – Spurred by an uptick in drilling activity in Texas, the U.S. rig count climbed six units to finish at 261 for the week ending Friday (Sept. 25), according to the latest tally from oilfield services provider Baker Hughes Co. (BKR).Four oil-directed rigs and two natural gas-directed units returned to action in the United States, offering perhaps a hint of recovery amid a profoundly challenging stretch for the industry. As of Friday, BKR’s combined domestic tally still lagged year-ago levels by nearly 600 units.All of the gains occurred on land in the United States, with the Gulf of Mexico count unchanged at 14. Horizontal units increased by nine, while directional units declined by two and vertical units eased lower by one overall.The Canadian rig count gained seven units for the week to end at 71, down from 127 a year ago. Gains there were split between three oil-directed units and four gas-directed.The combined North American count rose 13 units for the week to end at 332, down from 987 at this time last year.Among the major plays, it was not the Permian Basin but the Eagle Ford Shale that led the charge during the week. The Eagle Ford added three rigs, upping its total to 12, versus 62 a year ago. The Permian, meanwhile, picked up to two rigs to end with 125, off from 414 a year ago.Also among plays, the Marcellus and Utica shales in the Northeast each added one rig to their respective totals.Broken down by state, the gains in the Permian and Eagle Ford helped lift the rig count in Texas by seven week/week. The Lone Star State ended up with 113 overall, versus 418 a year ago. New Mexico dropped two rigs from its total, falling to 41, versus 109 at this time last year. Elsewhere among states, Ohio and Pennsylvania each added a rig during the week, while Alaska and West Virginia each dropped one, BKR data show.
Exclusive: U.S. shale producer Devon in talks to acquire peer WPX – sources (Reuters) – U.S. shale producer Devon Energy Corp is in talks to acquire rival WPX Energy Inc in an all-stock transaction that would create a company worth around $6 billion, people familiar with the matter said on Saturday. The deal talks show how consolidation in the oil and gas industry is picking up, as low energy prices drive some independent producers to seek scale through mergers. In July, Noble Energy Inc agreed to be acquired by Chevron Corp for $5 billion in stock. The deal, which would value Tulsa, Oklahoma-based WPX at a small premium to its current share price, could be announced as soon as next week, according to one of the sources. The sources, who requested anonymity to discuss the private talks, cautioned that an agreement was not guaranteed. Devon and WPX did not immediately respond to requests for comment. Buffered by reduced demand for hydrocarbons amid coronavirus lockdown measures, which helped push U.S. crude prices briefly into negative territory for the first time earlier this year, U.S. oil and gas producers are seeking out combinations. Such mergers allow companies to remove duplication and create economies of scale, while structuring them at a small premium or none to existing valuations to retain as much cash as possible.
State, Enbridge resolve Straits of Mackinac oil pipeline injunction – Canadian oil transport giant Enbridge will create new safety guidelines for its contracted vessels operating near twin underwater oil and gas pipelines in the Straits of Mackinac, as part of a stipulated agreement with the state of Michigan in a court case stemming from damage to the 67-year-old pipelines. Ingham County Circuit Judge James Jamo announced the agreement Thursday. State Attorney General Dana Nessel on June 22 sought a preliminary injunction and temporary restraining order against operation of the Straits pipelines, known as Line 5, after Enbridge days earlier reported to the state “significant damage” had occurred to an anchor support holding one of the twin pipelines along the lake bottom. Later inspection showed an exterior striking of the other, westernmost pipeline as well by an object, suspected of being a cable hanging from a passing vessel. Nessel sought all of the information Enbridge had on the incident, and to keep the underwater pipelines out of operation until the state conducted a full review of the information with the help of independent experts. Ingham County Circuit Judge Jamo granted the temporary shutdown, then on July 1 allowed the westernmost of the underwater pipelines to resume operation following inspections, keeping the eastern line shut down as its damage was further investigated and awaiting response from the federal Pipeline and Hazardous Materials Safety Administration, or PHMSA, which regulates interstate oil and gas pipelines. In a Sept. 4 letter to Enbridge, PHMSA officials gave approval for the eastern line to resume operations, and those flows resumed Sept. 10.
Nessel joins coalition backing DAPL shutdown ⋆ Attorney General Dana Nessel has joined a coalition supporting the federal court order shutting down the Dakota Access Pipeline (DAPL). Michigan joins 18 other states, territories and countries urging the D.C. Circuit Court of Appeals to affirm strict enforcement of the National Environmental Policy Act (NEPA). Nessel has previously sued Enbridge – which owns Line 5 and also is a partial owner of the DAPL – on behalf of the state of Michigan due to environmental concerns about that pipeline running through the Straits of Mackinac. A court decision was announced in July that the DAPL must shut down due to an environmental review. That pipeline runs from North Dakota and has been opposed by environmental groups and Native American tribes, including the Standing Rock Sioux. President Trump has been a staunch supporter. “The U.S. Army Corps of Engineers failed to comply with legal requirements by neglecting to fully consider the consequences of a breach of the Dakota Access Pipeline, and my colleagues and I urge the Court of Appeals to affirm the lower court’s ruling,” Nessel said in the press release on Thursday. “This oil and gas pipeline could potentially impact the environment and has climate change implications we cannot overlook. Moreover, we must join our Indigenous partners who have led the way in raising the alarm about the environmental threat this project poses. As they have advocated from the beginning, shutting down this project is essential to protecting the environment.”
Judge denies key permit for Monroe County sand project; Meteor Timber sought to fill rare wetlands – A judge has declined to reinstate a key permit for a Georgia company seeking to build a controversial frac sand operation in Monroe County.Monroe County Circuit Judge Todd Ziegler ruled Monday that the state Department of Natural Resources violated the law when it granted Meteor Timber a permit to fill 16.25 acres of wetlands for the $75 million project.Ziegler’s oral ruling affirms an administrative law judge’s decision to revoke the permit, finding that Meteor failed to demonstrate its project would not result in significant adverse impacts to the environment.“The application was not complete. That requires the application to be denied,” Ziegler said. “The law as interpreted by the (administrative law judge) is correct in this regard.”Environmental advocates and the Ho-Chunk Nation, who had challenged the permit, applauded Ziegler’s decision as a victory “for all those who value our natural resources and the public’s role in protecting them.”Ho-Chunk lawmaker Rep. Conroy Greendeer Jr. said the nation is “relieved that the law can balance economic development and the harmful impacts of environmental exploitation.”“The homelands of the Ho-Chunk Nation and our people are being defaced by each of these frac sand operations,” Greendeer said. “Every truckload and train full of sand that comes out of Wisconsin leaves behind scars on our landscape, upon this habitat, and in our lungs.”“We must listen to the science, and to scientists, when making decisions that permanently affect the environment in Wisconsin,” said Evan Feinauer, staff attorney for Clean Wisconsin. “Today’s ruling also makes clear that all permit applicants must meet the same legal standards, irrespective of their wealth or political influence.”Attorneys for Meteor Timber did not immediately respond to requests for comment. The decision marks the end of another chapter in Meteor’s four-year effort, which has spanned two administrations, multiple courts and a boom-and-bust cycle for Wisconsin’s frac sand industry, which supplies silica used to extract oil and gas from deep rock formations.
Colorado draws 2,000-foot statewide oil and gas drilling setback. But it comes with a big “however.” – Colorado is poised to impose the biggest statewide oil and gas drilling setback in the nation – 2,000 feet from homes and schools – after state regulators unanimously backed the measure in an informal vote Thursday. A final, formal vote will be held Nov. 6. But while setting the buffer for even a single home, many members of the commission made clear that there would be “offramps” allowing oil and gas operators to site their drill pads closer. “This is a good place to be,” Colorado Oil and Gas Conservation Commission Chairman Jeff Robbins said during a meeting held on Zoom. “2,000 feet is necessary and reasonable” to protect public health and safety Environmental and community groups had pushed for the 2,000-foot buffer from drilling, while industry advocates said it would severely hamstring companies and might lead to a lawsuit. Twelve other states have statewide setbacks, but the largest is 1,000 feet, according to the National Conference of State Legislatures. California is also considering a 2,000-foot setback. The setback rule is part of a comprehensive revision of regulations to reflect COGCC’s change in mission, from promoting oil and gas development to protecting public health, safety and welfare, and the environment. The change is the result of Senate Bill 181, which was passed in 2019.
This month’s oil and gas lease sale still on, but numerous parcels deferred – A federal auction of public land scheduled this month for oil and gas companies will move ahead, albeit at a significantly smaller scalethan initially announced. The Bureau of Land Management confirmed it will defer the vast majority of parcels from the Thursday sale in response to a federal court decision to vacate leases located on sage grouse habitat.Of the 290 parcels the agency originally intended to lease during two sales this month, only eight parcels covering about 4,000 acres will be available to oil and gas developers in Wyoming.The federal government offers a selection of nominated parcels to oil and gas companies in an online bidding process, typically four times a year. The agency usually hosts the competitive sales in March, June, September and December, but the pandemic has made this year an anomaly. The agency postponed the June sale in Wyoming, along with sales in several other Western states, in response to COVID-19. And the September sale will be notably smaller in response to a court order. In May, a Montana judge ruled the U.S. Interior Department had failed to properly prioritize leasing public land outside sage grouse core habitat for energy development during several quarterly lease sales. The U.S. District Court for Montana’s order effectively struck down the sale of 440 leases, encompassing 336,000 acres auctioned during a June 2018 lease sale. It marked the second ruling in a single year from the 9th Circuit vacating oil and gas lease sales in Wyoming. Wyoming is home to the world’s largest sage grouse population, forcing public officials to walk a fine line between preserving the imperiled bird’s limited sagebrush habitat and not infringing on the state’s economic backbone – oil and gas. Nearly half of sage grouse habitat nationwide falls on public land managed by the BLM.
North Dakota’s Natural Gas Production Increased 17% Month-Over-Month; State Still Hit Capture Target Guidelines; NDIC Tweaks Policy — September 23, 2020 – Big headline in Bismarck, but, wow, talk about trivial. The NDIC simply tweaked some rules and regulations after consulting with the oil companies. Link to Houston Chronicle:North Dakota’s Industrial Commission on Tuesday approved a revised gas capture policy that aims to encourage investment in infrastructure but doesn’t change targets for burning excess natural gas at well heads.State Mineral Resources Director Lynn Helms said the Oil and Gas Division has “relaxed the policy slightly in a few places and tightened it significantly in other places” after months of consultation with industry and environmental groups, The Bismarck Tribune reported.Helms said future gas capture requires “a monumental effort” and billions of dollars in infrastructure such as natural gas processing plants and pipelines. North Dakota’s gas production is projected to hit 5.3 billion cubic feet a day 18 years from now. The state produced a record of more than 3.1 billion cubic feet per day in November 2019.Companies have met or exceeded gas capture goals in recent months, largely due to decreased production amid the coronavirus pandemic and several new processing facilities and expansions coming online in the last year, North Dakota Pipeline Authority Director Justin Kringstad said.The policy includes several exceptions for companies that flare natural gas under certain circumstances, such as gas plant outages or delays securing a right-of-way for pipeline construction. Mineral Resources spokeswoman Katie Haarsager said the revised policy should clarify how the variances in the calculation are applied. In fact, natural gas production increased by 17% month-over-month in most recent data and North Dakota still reached its natural gas capture target. Link here.
North Dakota Industrial Commission approves revisions to gas capture policy North Dakota’s Industrial Commission on Tuesday approved a revised gas capture policy that aims to encourage investment in infrastructure but doesn’t change the gas capture targets.Current gas capture policy requires companies to capture 88% of the Bakken natural gas they produce. The target increases to 91% on Nov. 1.State Mineral Resources Director Lynn Helms said the Oil and Gas Division has “relaxed the policy slightly in a few places and tightened it significantly in other places” after months of consultation with industry and environmental groups.The changes approved unanimously Tuesday aim to ensure industry compliance with gas capture regulations amid future gas production growth.”We believe that the revisions that we’ve made to the gas capture policy are the right step at the right time, but I do think every two or three years, we are going to have to look at this thing and modify it as time goes on,” Helms told the three-member, all-Republican panel chaired by Gov. Doug Burgum. Helms said future gas capture requires “a monumental effort” and billions of dollars in infrastructure such as natural gas processing plants and pipelines amid projections that see North Dakota’s gas production hitting 5.3 billion cubic feet a day 18 years from now.North Dakota produced nearly 2.3 billion cubic feet per day in July, the most recent figure available. The state produced a record of more than 3.1 billion cubic feet per day in November 2019.Companies have met or exceeded gas capture goals in recent months, largely due to decreased production amid the coronavirus pandemic and several new processing facilities and expansions coming online in the last year, North Dakota Pipeline Authority Director Justin Kringstad said.The policy includes several variances, or exceptions, for companies that flare natural gas under certain circumstances, such as gas plant outages or delays securing a right-of-way for pipeline construction. Mineral Resources spokeswoman Katie Haarsager said the revised policy aims to clarify how the variances in the calculation are applied. Attorney General Wayne Stenehjem, who sits on the commission, praised Helms for developing “a North Dakota-centric plan.”
Lightning strike causes oil spill near McKenzie County creek – – An estimated 10,000 gallons of oil and produced water spilled into the tributary of a creek in McKenzie County, according to a news release from the state Department of Environmental Quality. Produced water, or brine, is a mixture of saltwater, oil and sometimes, drilling fluids, that is created during oil and gas production. The spill occurred Wednesday, Sept. 24, at a saltwater disposal well about eight miles north of Alexander due to a lightning strike at a saltwater injection facility operated by Environmentally Clean Systems, according to the release. Initial inspection found that the oil and brine spilled into a tributary of Camp Creek. It’s the second spill in McKenzie County this summer caused by a lightning strike. Department officials will continue inspecting the site and monitoring remediation efforts, the release said.
Oil Companies Are Profiting From Illegal Spills. And California Lets Them. – ProPublica – In May 2019, workers in California’s Central Valley struggled to seal a broken oil well. It was one of thousands of aging wells that crowd the dusty foothills three hours from the coast, where Chevron and other companies inject steam at high pressure to loosen up heavy crude. Suddenly, oil shot out of the bare ground nearby. Chevron corralled the oil in a dry streambed, and within days the flow petered out. But it resumed with a vengeance a month later. By July, a sticky, shimmering stream of crude and brine oozed through the steep ravine. Workers and wildlife rescuers couldn’t immediately approach the site – it was 400 degrees underground, and if the earth exploded or gave way, they might be scalded or drown in boiling fluids. Dizzying, potentially toxic fumes filled the scorching summer air. Lights strobed through the night and propane cannons fired to ward off rare burrowing owls, tiny San Joaquin kit foxes, antelope squirrels and other wildlife. Over four months, more than 1.2 million gallons of oil and wastewater ran down the gully. California had declared these dangerous inland spills illegal that spring. They are known as “surface expressions,” and the Cymric field was a hot spot. Half a dozen spills and a massive well blowout had occurred there since 1999. This time, faced with news headlines and a visit by Gov. Gavin Newsom to the site, officials with the California Geologic Energy Management Division, or CalGEM – the main state agency overseeing the petroleum industry – ordered Chevron to stop the flow. Regulators later levied a $2.7 million fine on the company.Instead, Chevron profited.Amid the noise and heat, trucks arrived daily to vacuum out the oil from a safe distance. It was refined, sold and shipped to corner gas stations, bringing the company $399,000, according to state records. Chevron appealed the fine, saying while “we fully accept – and take responsibility for – our actions,” it does not believe the spill, known as Cymric 1Y, posed a threat to human health. The company has yet to pay, and CalGEM has not moved forward with an appeal hearing. Along with being a global leader on addressing climate change, California is the seventh-largest producer of oil in the nation. And across some of its largest oil fields, companies have for decades turned spills into profits, garnering millions of dollars from surface expressions that can foul sensitive habitats and endanger workers, an investigation by The Desert Sun and ProPublica has found.
Energy executives say U.S. oil production has peaked: Dallas Fed survey (Reuters) – Nearly two-thirds of U.S. energy company executives polled by the Federal Reserve Bank of Dallas believe U.S. crude oil production has peaked, according to a survey released on Wednesday. The COVID-19 pandemic has knocked global oil demand and prices, prompting deep cuts in drilling this year by shale oil producers. The United States last pumped 12.2 million barrels per day, taking top spot in global crude oil output. Survey results said 66% of 154 oil and gas firm executives contacted by the Dallas Fed this month believe U.S. crude oil production has peaked. The survey includes executives from Texas, Louisiana and New Mexico. The Dallas Fed did not say if the peak was considered temporary or permanent as major oil firms have been discussing. Global demand destruction during the COVID-19 pandemic, work from home policies and the continued growth of electric vehicles has energy companies looking to a prolonged downturn in crude oil and fuel consumption. Earlier this year, BP Plc BP.L said the pandemic would reduce demand by 3 million barrels per day (bpd) through 2025 and forecast a peak in demand between 2019 and 2050, according to the company’s energy outlook. Nearly three-quarters of executives from 148 oil and gas firms told the Dallas Fed that the Organization of Petroleum Exporting Countries (OPEC) would have a bigger role in determining the price of crude oil going forward. Executives surveyed, on average, expect the price of West Texas Intermediate (WTI) crude oil CLc1 to be $43.27 a barrel by the end of 2020. On Wednesday, WTI was up 36 cents at $40.16 a barrel.
Energy transition could spur $111 billion in oil divestments, report says – A societal shift from fossil fuels to renewable energy could force the largest oil companies to sell $111 billion worth of oil and gas assets in the coming years, according to a new report. Rystad, a Norwegian energy research firm, on Tuesday said oil companies will need to streamline their oil and gas portfolios significantly to address low oil prices and falling demand for fossil fuels, particularly in advanced countries concerned about climate change.
It’s time for states that grew rich from oil, gas and coal to figure out what’s next – These are very challenging times for U.S. fossil fuel-producing states, such as Wyoming, Alaska and North Dakota. The COVID-19 economic downturn has reduced energy demand, with uncertain prospects for the extent of its recovery. Meanwhile, rising concern about climate change and the declining cost of renewable energy are precipitating a sharp decline in demand for coal in particular. As a result, fossil fuel-dependent states and communities face the prospect of budget shortfalls and lower employment for the next several years. As researchers who study energy from economic, cultural and public policyperspectives, we believe that it is time for these states to develop long-term plans to diversify their economies and help ensure just and equitable transitions. The idea of a just transition emerged from North American labor law, and has become part of international discussions about making societies more environmentally sustainable. It centers on protecting workers’ rights and livelihoods as they move out of declining industries. In our view, just transition programs likely are the best way for these states to build more sustainable and diverse economic bases, reducing their reliance on fossil fuel production as a revenue source. To support secure, family-sustaining jobs as global fossil reliance declines, they will need to create new, lower-carbon economies. The states that are most reliant on energy are Alaska, where it accounted for 70% of state revenues ($1.1 billion) in fiscal 2019; Wyoming, where energy and other minerals yielded 52% of state revenues ($2.2 billion) in FY2017; and North Dakota, which reaped 45% of its revenues ($1.6 billion) from energy production in fiscal 2017. Production declines and workforce reductions can have major economic impacts in fossil fuel states. For example, Wyoming is forecasting that it will have 29% less money in its General Fund than it previously expected in fiscal years 2021-22. Alaska is projecting an estimated 18% budget deficit in fiscal 2021. Even assuming that oil and gas production recovers from FY2020-2021 lows, these states expect to be forced to close the funding gap for the next several years.
Exclusive: Shell launches major cost-cutting drive to prepare for energy transition – (Reuters) – Royal Dutch Shell is looking to slash up to 40% off the cost of producing oil and gas in a major drive to save cash so it can overhaul its business and focus more on renewable energy and power markets, sources told Reuters. Shell’s new cost-cutting review, known internally as Project Reshape and expected to be completed this year, will affect its three main divisions and any savings will come on top of a $4 billion target set in the wake of the COVID-19 crisis. Reducing costs is vital for Shell’s plans to move into the power sector and renewables where margins are relatively low. Competition is also likely to intensify with utilities and rival oil firms including BP and Total all battling for market share as economies around the world go green. “We had a great model but is it right for the future? There will be differences, this is not just about structure but culture and about the type of company we want to be,” said a senior Shell source, who declined to be named. Last year, Shell’s overall operating costs came to $38 billion and capital spending totalled $24 billion. Shell is exploring ways to reduce spending on oil and gas production, its largest division known as upstream, by 30% to 40% through cuts in operating costs and capital spending on new projects, two sources involved with the review told Reuters. Shell now wants to focus its oil and gas production on a few key hubs, including the Gulf of Mexico, Nigeria and the North Sea, the sources said. The company’s integrated gas division, which runs Shell’s liquefied natural gas (LNG) operations as well as some gas production, is also looking at deep cuts, the sources said. For downstream, the review is focusing on cutting costs from Shell’s network of 45,000 service stations – the world’s biggest – which is seen as one its “most high-value activities” and is expected to play a pivotal role in the transition, two more sources involved with the review told Reuters. “We are undergoing a strategic review of the organisation, which intends to ensure we are set up to thrive throughout the energy transition and be a simpler organisation, which is also cost competitive. We are looking at a range of options and scenarios at this time, which are being carefully evaluated,” a spokeswoman for Shell said in a statement.
Oil Springs Eternal – EXXONMOBIL WAS ONCE the most valuable company on earth. The product of a Clinton-era merger between the rebranded progeny of Standard Oil Company of New Jersey and Standard Oil Company of New York – reuniting, respectively, as Exxon and Mobil, nearly a century after a Supreme Court antitrust ruling cleaved their parent company apart – it has long benefitted from the worldwide neoliberal retreat of government in the face of swelling corporate power. The corporation’s influence ran deep, especially in regard to the public perception of climate change. “Those with power create knowledge,” wrote Emily Plec and Mary Pettenger in a 2012 study of ExxonMobil’s marketing practices. At the time, ExxonMobil was aggressively marketing its latest low-emission energy initiative, a venture into algae biofuels. Do not fear climate change, such ads, which carry on today, seemed to suggest. Our engineers are hard at work. As Plec and Pettenger saw it, ExxonMobil’s greenwashing coached “acceptance of a particular attitude toward history,” effectively resigning the mainstream public to the incumbent energy regime, constraining efforts to imagine a future that does not, like the present, orbit around “ideologies of consumption” – and companies like ExxonMobil. If ExxonMobil ever did stand eternal, its public messaging certainly did not. In his day, one-time CEO Lee R. Raymond was famously loathe to concede an inch to the company’s rabid environmentalist adversaries – even on the public relations front. In 2000, with regard to global warming, he could be heard telling shareholders: “If the data were compelling, I would change my view. Ninety percent of people thought the world was flat. No?” As the journalist Steve Coll noted in his 2012 epic, Private Empire: ExxonMobil and American Power, some ExxonMobil executives “took pride in their self-image as a corporation that did not try to pretend to be something it was not.” In this, the company differed from fellow oil and gas giant BP Amoco, which rebranded in 2000 as just “BP,” unveiling a new sun logo and marketing slogan: Beyond Petroleum. ExxonMobil took a different tack. Raymond dismissed the company’s earlier ventures into renewable energy as moments of weakness, in which its former leaders made reactionary concessions to ephemeral political fads, eroding the business’s core identity. “In hindsight it appeared that we were abdicating who we were,” Raymond told Coll, referring to the company’s adventures in solar during the seventies. “Presidents come and go; Exxon doesn’t come and go.”
Oil Industry’s Shift to Plastics in Question as Report Warns $400 Billion in Stranded Assets Possible – Aldabra is a UN World Heritage Site that’s home to a stunning array of wildlife, including tens of thousands of wild giant tortoises, far more tortoises than in the Galapagos Islands. This wild, protected place is also, according to newly published research from Oxford University, littered with over 500 tons of plastic waste.That’s the amount remaining after the Oxford team itself removed 25 tons of plastic debris, a manufactured mountain of plastic trash that included 360,000 used flip flop sandals and literal tons of plastic nets, ropes and other fishing industry trash. “This is the largest accumulation of plastic waste reported for any single island in the world,” Oxford noted as the findings were announced. Since the 1950’s, the world has produced over 8.3 billion tons of plastic, according to UN Environment, virtually all of it derived from fossil fuels. During the 1970’s and 80’s, plastic waste generation rates more than tripled, causing growing concern among consumers.“The image of plastics is deteriorating at an alarming rate,” Larry Thomas, a former president of a plastics industry association, wrote in records obtained by NPR from that meeting. “We are approaching a point of no return.”The solution the gathered executives arrived at, NPR found, was to advertise a solution that industry officials knew was unworkable: recycling.The campaigns resulted in very little actual plastic being recycled. Less than ten percent of the plastic ever made has been recycled even once, a 2017 peer-reviewed scientific paper found – and global recycling ran further aground the following year, when China banned imports of most used plastics after that nation’s attempts at processing and recycling the world’s plastic scrap became inescapably overwhelmed. But from the plastic and oil industries’ perspectives, pro-recycling campaigns proved to be extraordinarily effective – not just because advertising plastic recycling helped to insulate the industry from public concern, but also, as NPR noted, because recycled plastic was always actually a poor and expensive substitute for new plastics – which meant less competition for oil companies and plastics manufacturers. This past year has brought massive disruptions for fossil fuel producers, who saw oil prices briefly dip far below $0 a barrel in some places amid pandemic lockdowns and witnessed ExxonMobil, once the king of blue chip stocks, unceremoniously bootedfrom the widely-watched Dow Jones Industrial Average. But executives with major oil giants have said that even if oil demand grown dries up, they expect they’ll still be able to sell an increasing amount of their products as petrochemicals. “Unlike refining, and ultimately unlike oil, which will see a moment when the growth will stop, we actually don’t anticipate that with petrochemicals,” Andrew Brown, a Royal Dutch Shell official,told the San Antonio Express News in 2018. This strategy, according to a report published this month by the Carbon Tracker Initiative, carries significant financial risks, putting $400 billion of petrochemical industry investments at risk of becoming stranded assets. That’s nearly an entire year’s revenue for the worldwide plastics industry, based on 2018 figures from the Plastics Industry Association, potentially down the drain.
Pompeo: We are Building A Coalition Against Nord Stream 2 – The United States is building a coalition aimed at preventing the completion of the Nord Stream 2 pipeline that will substantially increase the flow of Russian gas into Europe, the U.S. Secretary of State told German daily Bild in an interview. “From the US point of view, Nord Stream 2 endangers Europe because it makes it dependent on Russian gas and endangers Ukraine – which in my opinion worries many Germans,” Pompeo said. “We hope Nord Stream 2 will not be completed and we are working on a coalition to prevent this from happening. We hope that the German government will also come to this assessment, be it because of what happened to Mr. Navalny or because of the security implications that dependence on Russian gas brings.” The interview comes days after another report in German media said the German government had tried to appease Washington about Nord Stream by offering to build two liquefied natural gas import terminals worth $1.2 billion if the U.S. stopped opposing the pipeline. Germany will be the receiver of most of the gas that will flow through the expanded Nord Stream pipeline amid an expected surge in demand for natural gas as it closes coal and nuclear power plants. The U.S., however, is against it, claiming it will only increase Russia’s influence in the energy supply of the EU, which would be unwise. Of course, there are also the U.S. gas interests as a major LNG exporter. The alleged poisoning of Putin critic Alexey Navalny recently raised the temperature of the issue, with critics of the Nord Stream project calling for the German government to punish Moscow by withdrawing its support for the infrastructure. On the other hand, a group of local primer minister from eastern German regions declared their support for Nord Stream 2, saying in a joint document that it was important for the energy future of both Germany and Europe and its completion would be “right and justified”.
Trinidad to inspect Venezuela oil storage vessel – Trinidad and Tobago is concluding arrangements with Venezuela to allow its inspectors to access a damaged oil storage vessel in the Gulf of Paria, the Caribbean state’s energy ministry told Argus. The inspection of the Venezuela-flagged Nabarima is meant to “independently verify reports that the vessel has been stabilized and that leaking oil does not pose a threat to our waters,” Trinidad’s energy ministry said. The inspection will not violate US sanctions on Venezuela, the ministry added. The Trinidadian and Venezuelan governments have exchanged the required protocols to clear the way for the inspection that will happen by the end of September, the ministry said. “We have been told arrangements are being made to offload the cargo and we are relieved that this is happening,” the ministry said, adding that the inspection will deliver the assurance that Trinidad’s waters are not in danger of a major oil spill. The Nabarima, which is holding around 1.2mn bl of crude, has been moored at the offshore Corocoro field in the Gulf of Paria for 10 years. The field, which is not currently in production, belongs to PetroSucre, a joint venture operated by Venezuelan state-owned PdV. The company’s minority partner is Italy’s Eni. The vessel had been listing in recent weeks, but PdV and Eni have since said the vessel is upright after problems were corrected. The Corocoro field had been producing around 11,000 b/d of medium-quality crude before it was suspended in August 2019. Trinidad has a bilateral oil spill contingency plan with Venezuela, but transferring the oil off of the Nabarima has been delayed by the sanctions. Eni has said it awaiting a green light from the US before proceeding to help deploy a dynamic positioning tanker to drain the vessel. How the crude is handled after it is unloaded is unclear in light of the sanctions.
Chilean regulators file charges against state-run ENAP over Quintero pollution crisis (Reuters) – Chile´s top environmental regulator on Thursday filed charges against state energy company ENAP over allegations its Quintero port facilities emitted air pollution that may have sickened hundreds during an incident in 2018. The Environmental Superintendent (SMA) said recent studies linked high levels of air contaminants to the company´s operations in Quintero at a time when it was offloading a shipment of heavy Iranian crude oil. At the time, hundreds of people in the port town reported nausea, headaches and vomiting. ENAP told Chile´s financial regulator in a filing Thursday “it has the necessary technical background to demonstrate…that the alleged infractions have not caused any effect in the health of the population.” Environmental activists have long labeled the town of Quintero and its surroundings a “sacrifice zone” for the successive pollution episodes that have caused public health emergencies. The coastal port city is home to coal-burning power plants, an oil refinery, and a copper smelter, some of which operate very close to residential areas. ADVERTISEMENT The SMA said in a statement that the company had eluded regulators by failing to inform them of their activities and use of potentially high-risk and closely regulated chemicals. The infractions continued during the SMA´s earlier investigation of the incident, the agency said. The regulator said some of the seven charges it filed against ENAP are serious enough to lead to the revocation of the company´s environmental permits at Quintero. It has given the state energy company 10 days to provide the agency with a compliance plan or 15 days to contest the charges. ENAP is the main oil refiner in Chile, which imports nearly all the fuel it consumes.
Investors Are Pulling The Plug On Argentina’s Prized Shale Play Much ink has been spilled about the downfall and dubious recovery of the United States shale oil sector. The West Texas Intermediate (WTI) crude benchmark’s dramatic rock bottom in April, which saw oil prices plunge to nearly $40 dollars below zero in a jaw-dropping first, a flurry of think pieces about the sector’s future poured forth and has never fully stopped. While the Brent international crude benchmark never went negative, it also suffered, and there have been no shortage of headlines about OPEC and their ill-planned actions that sent prices tumbling in the first place or their redoubled efforts to recover after the crash. But there are plenty of other oil producing countries in the world who have also seen massive market failures due to COVID-19’s destruction of oil demand and which have not received even a fraction of the attention. One such country is Argentina, home to one of the largest oil and gas fields in the world, the Vaca Muerta shale basin, which contains approximately 927 million barrels of proven reserves. Way back in April, even before the historic WTI crash, Bloomberg (via World Oil) published one of relatively few reports of the shale play. More than a report, it was an obituary. “Oil crash kills Vaca Muerta’s potential as the next shale hotspot,” the headline read. Now, nearly half a year later, is Vaca Muerta fully dead? The short answer is no. The full answer, of course, is a lot more complicated. According to the Argentinian energy minister of Neuquen province, where the vast Vaca Muerta field is located, resurrecting the shale play will take more than a year. Achieving pre-COVID-19 production levels, he said, will take an estimated 12-18 months due to a lack of market demand, which may not be bouncing back any time soon. “We believe it will take a while for fuel demand to fully recover,” Monteiro told listeners on Monday in an industry webinar. Before COCID-19, Vaca Muerta had been in a state of rapid expansion, as Bloomberg’s “next potential shale hotspot” description would indicate. The novel coronavirus, however, stopped this expansion in its tracks, leaving many projects half-completed. “Many wells have been drilled but not connected, but even when demand fully recovers it will take even longer for drilling activity to return to pre-pandemic levels because of storage constraints,” MercoPress reported this week, summing up the energy minister’s announcement. This is exemplified by YPF, Argentina’s largest shale producer, which is controlled by the state. YPF “has said it has 71 shale oil wells and 10 shale gas wells in Neuquen that have been drilled but not completed.” “In mid-2019, companies had said they would invest a total of more than US$ 6bn in upstream projects in Neuquen in 2020,” MercoPress reports. “Now the number is closer to US$ 3bn, the lowest since 2016, according to provincial data.”
Seventeen dead dolphins wash ashore on island of Mauritius – Seventeen dead dolphins washed up on the Indian Ocean island of Mauritius after a wrecked oil tanker precipitated an ecological disaster within the space – sparking anger from residents, in line with studies. Some of the animals had bloody accidents once they have been found Wednesday and others touring within the pod appeared severely sick, researchers from the island nation advised Reuters. “The dead dolphins had a number of wounds and blood round their jaws, no hint of oil nevertheless,” mentioned Jasvin Sok Appadu of the nation’s fisheries ministry. “Those that survived, round ten, appeared very fatigued and will barely swim.” Some residents have been livid over the heartbreaking discovery. “Waking up this morning to witness so many dead dolphins on our seashore is worse than a nightmare,” Nitin Jeeha, who lives on the island, advised the BBC. The lifeless mammals have been taken to the Albion Fisheries Analysis Centre for an animal post-mortem however outcomes hadn’t been launched Thursday. They have been discovered roughly a month after the Japanese-owned MV Wakashio tanker struck a coral reef on July 25 and commenced to leak a whole lot of tons of oil. Some scientists mentioned the dolphins seemingly died from being poisoned by the gasoline. A person holds open the mouth of a dead Melon-headed whale, also called Electra dolphin, after the oil spill.EPA“I feel there are two potentialities: Both they died from tons of gasoline spilled within the sea, or they have been poisoned by the poisonous supplies on the bow of the ship that was sunk offshore,” mentioned environmental marketing consultant Sunil Dowarkasing.
Oil leak from ONGC pipeline damages samba crops – Oil spill from the underground pipeline of Oil and Natural Gas Corporation (ONGC), conveying crude oil extracted from the ground has damaged an agricultural land cultivated with samba crops at Keezha Erukkattur village in Tiruvarur district. The oil seepage into agricultural land, reportedly due to a crack in the ONGC pipeline, owned by a farmer Dhanasekaran was noticed on Wednesday morning. Due to the oil leakage, a portion of the land was inundated with the crude oil damaging the samba crops raised in one acre. The oil seepage was spreading to the nearby agricultural lands in the village, the locals alleged.
Arab ministers warn of oil spill disasters in the Red Sea – Arab ministers have warned of oil spill disasters in the Red Sea and called on international and regional bodies to maintain maritime security in the area. An Arab League video conference session on Monday brought together ministers responsible for environmental affairs. The session was held at Saudi Arabia’s request to discuss ways of avoiding a disaster in the Red Sea because of an oil tanker that has been anchored off Yemen’s Ras Isa port since 2015. The Houthis have prevented international engineers from boarding the vessel to carry out essential repairs and there are fears that the oil it contains will start to seep out as the tanker’s condition deteriorates. Ambassador Kamal Hassan Ali, assistant secretary-general and head of the economic affairs sector at the Arab League, said that the meeting concluded with foreign ministers being requested to take political action as the oil disaster threat was a matter of politics and security. The meeting also requested that the league’s general secretariat communicate with the regional and international bodies of countries bordering the Red Sea and Gulf of Aden to preserve the environment and provide technical support in order to submit a report on spillage risks. Hassan said that finding an appropriate solution to avoid an environmental catastrophe was of major regional and global importance because the scale of such a disaster would threaten marine life, biodiversity, international shipping lines and ports in that location. He said that the region was facing major challenges that demanded solidarity and unity in all fields, including the environment.
Saudi warns of oil spill from tanker stranded off Yemen coast for five years – Saudi Arabia warned the UN Security Council on Wednesday that an “oil spot” had been seen in a shipping transit area 31 miles (50km) west of a decaying tanker that is threatening to spill 1.1 million barrels of crude oil off the coast of Yemen. The Safer tanker has been stranded off Yemen’s Red Sea oil terminal of Ras Issa for more than five years. The United Nations has warned that the Safer could spill four times as much oil as the 1989 Exxon Valdez disaster off Alaska. In a letter to the 15-member body, Saudi Arabia’s UN Ambassador Abdallah Al Mouallimi wrote that experts had observed that “a pipeline attached to the vessel is suspected to have been separated from the stabilisers holding it to the bottom and is now floating on the surface of the sea.” The United Nations has been waiting for formal authorisation from Yemen’s Houthi movement to send a mission to the Safer tanker to conduct a technical assessment and whatever initial repairs might be feasible. The Security Council and UN Secretary-General Antonio Guterres have both called on the Houthis to grant access. Al Mouallimi wrote that the tanker “has reached a critical state of degradation, and that the situation is a serious threat to all Red Sea countries, particularly Yemen and Saudi Arabia,” adding “this dangerous situation must not be left unaddressed.”
OPEC In Trouble As Oil Outlook Worsens -Just when they thought they had rebalanced the oil market, OPEC members were served an unpleasant surprise from exempted fellow Libya. The country’s warring factions reached a ceasefire, and some long-shuttered oil ports have been reopened, along with the fields that feed them. By the end of the month, the National Oil Corporation plans to boost the average daily output of the nation from less than 100,000 bpd to 260,000 bpd. Meanwhile, OPEC+ has relaxed its production cuts by 2 million bpd. The market, according to Mercuria chief executive Marco Dunand, cannot handle this.In an interview for Bloomberg, Dunand said demand was still weaker than previously expected, and any additional oil flowing into markets would fail to be absorbed. This means a looming build in floating storage as this month, global inventories rose by between 500,000 bpd and 1 million bpd – and that’s excluding the Libyan restart – while drawdowns over the final quarter were seen at 1 million bpd.In his bearish outlook for the immediate term, Mercuria’s head is in sync with the head of another commodity trading major, Trafigura. The third super trader, however, is surprisingly optimistic. Also in an interview with Bloomberg, Vitol’s chief executive said earlier this month he expected global crude oil inventories to shrink considerably by the end of the year. While both the heads of Trafigura and Mercuria expect stocks to build first before starting to decline, Vitol’s chief said he expected a drawdown of some 250-300 million barrels by the end of the year.Reports emerged earlier this month that commodity traders – including the Big Three – were chartering more tankers to store crude oil offshore, sparking concern we could see something like a repeat of this spring when hundreds of millions of barrels of unsellable oil had to be dumped on tankers because onshore storage was full. After the lockdowns ended, demand began improving. This moderate demand boost, however, fell short of pretty much all expectations. One particularly worrying trend is the slow rate of economic recovery among emerging countries – the main drivers of oil demand growth. Except for China, most are still battling the coronavirus and its effects on their economies. India is a good case in point: its oil demand is seen to be the worst affected by the coronavirus as the country itself suffers the second-highest total case count in the world. Some analysts believe, however, that demand in China is about to start slowing down soon. It will be a long-term trend, according to the Oxford Institute for Energy Studies, and a result not just of Covid-19 but of Beijing’s emission-reduction goals. Over the next 20 years, the energy research organization said, China’s oil demand was likely to grow at an annual pace of 3 to 4 million bpd, after growing by double-digit rates in the past few years.According to Mercuria’s Dunand, oil demand during the fourth quarter will average 95 million bpd. That’s down from a market consensus of 97 to 98 million bpd, made in spring. And the rate at which excessive inventories will be drawn is seen weaker than previously expected. Add to this a dramatic build in diesel inventories because refiners, Dunand noted to Bloomberg, are dumping jet fuel into the diesel pool, and Libya’s restart of production and the outlook for prices once again becomes grim.
Oil prices steady as third storm in month takes aims at U.S. – Oil prices edged higher on Monday as a tropical storm took aim for the U.S. Gulf of Mexico region halting some production, though price gains were capped by the potential return of oil output in Libya and a continued rise in coronavirus cases. Brent crude was up 9 cents, or 0.2%, at $43.24 a barrel by 0230 GMT, while U.S. crude was up 10 cents, or 0.2%, to $42.21 a barrel. Royal Dutch Shell Plc halted some oil production and began evacuating workers from a U.S. Gulf of Mexico platform, the company said on Saturday. Tropical Storm Beta was predicted to bring 1 foot (30 centimetres) of rain to parts of coastal Texas and Louisiana as the 23rd named storm of this year’s Atlantic hurricane season moves ashore on Monday night, the National Hurricane Center said. Oil and gas producers had been restarting their offshore operations over the weekend after being disrupted by Sally. Some 17% of U.S. Gulf of Mexico offshore oil production and nearly 13% of natural gas output went offline on Saturday in the face of Hurricane Sally’s waves and winds. Elsewhere, Libya’s National Oil Corp lifted force majeure on what it deemed secure oil ports and facilities on Saturday, but said the measure would remain in place for facilities where fighters remain. “The market can ill afford more crude hitting the market,” ANZ analysts said in a note on Monday. A resurgence of virus cases globally is also acting as a brake on crude demand. More than 30.78 million people have been reported to be infected by the novel coronavirus globally and 954,843? have died, according to a Reuters tally. “It is hard to get excited about a pickup in crude demand as the virus is surging in France, Spain, and the UK, along with concerns the U.S. appears poised for at least one more cycle in the fall and winter,” said Edward Moya, senior market analyst at OANDA. “Even if energy markets don’t see Libyan production return or if Hurricane season eases, oil prices can’t shake off the dwindling demand outlook.”
Oil Prices Fall Amid Broad Selloff — Oil declined the most in almost two weeks as U.S. equities slid on mounting worries over prolonged coronavirus restrictions, while the prospect of Libya resuming exports added to supply concerns. Crude futures in New York fell 4.4%. At the same time, the S&P 500 slumped to the lowest intraday level since July. Libya is moving closer to reopening its battered oil industry after it told companies to resume production at some fields that are free of foreign mercenaries and fighters. This will add to already rising supply from OPEC+ nations. There was a “dramatic selloff in equity markets and other commodity markets, and petroleum markets took part in it,” said Andrew Lebow, senior partner at Commodity Research Group. U.S. benchmark prices jumped 10% last week after Saudi Arabia, the most influential member of the Organization of Petroleum Exporting Countries, sought to defend the market. But a troubling demand picture continues to weigh on the market. China National Petroleum Corp. — the country’s biggest oil company — see demand for refined petroleum products peaking around 2025. BP Plc last week became the first supermajor to call the end of the era of oil-demand growth. As U.S. deaths related to Covid-19 approached 200,000, former Food and Drug Administration Commissioner Scott Gottlieb said he expects the nation to experience “at least one more cycle” of the virus in the fall and winter. “There are legitimate demand concerns,” said Peter McNally, global head for industrials, materials and energy at Third Bridge. “If we go into another lockdown, we are going to see inventories build.” Meanwhile, the U.S. Gulf Coast is preparing for another storm, with companies shutting production or evacuating staff at some platforms and the Houston Ship Channel closing due to Tropical Storm Beta. The storm has unleashed flooding on southeastern Texas and will hammer the Gulf Coast into eastern Louisiana with heavy rain, even as the storm loses power on its approach to shore. West Texas Intermediate for October fell $1.80 to settle at $39.31 a barrel. Brent for November dropped $1.71 to end the session at $41.44 a barrel. The plunge was the steepest daily loss since Sept. 8. Libya’s National Oil Corp. is ending force majeure — a legal status protecting a party that can’t fulfill a contract for reasons beyond its control — at “secure” facilities in the conflict-ridden nation and has told companies to resume production. The country’s overall oil production is set to reach 310,000 barrels a day in a few days from the current 90,000 a day, according to a person with direct knowledge of the situation.
Oil rises as U.S. storm eases, but demand worries linger – Oil rose in early trade on Tuesday, paring sharp overnight losses, as the latest tropical storm in the Gulf of Mexico lost strength, but worries about fuel demand persisted with flare-ups around the globe in coronavirus cases. Brent crude futures rose 27 cents, or 0.65%, to $41.71 a barrel. U.S. West Texas Intermediate crude futures for October, due to expire on Tuesday, rose 15 cents, or 0.38%, to $39.46 a barrel. The more active November contract rose 13 cents, or 0.3%, to $39.67. Crude prices, which fell about 4% on Monday, steadied as Texas refineries stayed open despite forecasts of heavy flooding, with Tropical Storm Beta expected to keep losing strength, allaying worries about U.S. refinery demand for feedstock. “The recovery in sentiment after the rout in risk assets seen a fortnight ago was clearly fragile,” “This week, the market is recalibrating to a likely stalling of the economic recovery in Europe as several countries in the region impose fresh restrictions to contain a surge in the coronavirus.” Monday’s price slump was spurred by concerns that an increase in coronavirus cases in major markets could lead to fresh lockdowns and hurt demand. That raised the possibility that Libyan oil could return when it isn’t needed. “We had a pretty punchy risk-off session (overnight) … on fears around the risk that a COVID resurgence starts to have negative impacts on demand again,” Markets are nervous about demand in places like the United Kingdom, where fresh restrictions are being imposed. U.S. health officials are also warning of a new wave in the coming winter. “When the virus resurges, governments lock down, impose restrictions, and individuals and businesses start to retreat. It’s all bad for demand,” Traders will be watching out for the American Petroleum Institute’s data on U.S. oil inventories due later on Tuesday. U.S. crude oil and gasoline stockpiles likely fell last week, while inventories of distillates, including diesel, were seen climbing, a preliminary Reuters poll showed.
WTI oil futures climb, but hold below $40 a barrel – Oil settled higher on Tuesday, finding support from expectations for a second weekly decline in U.S. crude supplies. Prices scored a partial rebound from the sharp decline in oil seen a day earlier, when the rise of COVID-19 cases and potential for renewed activity restrictions in Europe fed a global equity selloff reported MarketWatch. Tuesday’s oil-price rise was modest. Energy traders struggled “to assess the uncertainty with U.S. production as we approach the last two months of hurricane season [and] how bad the demand outlook will get following the winter wave of the coronavirus,” as Libyan oil production slowly bounces back, said Edward Moya, senior market analyst at Oanda. West Texas Intermediate crude for October delivery on the New York Mercantile Exchange edged up by 29 cents, or 0.7%, to settle at $39.60 a barrel after a decline of 4.3% on Monday. The contract expired at the day’s settlement. The November WTI contract , which is now the front month, settled at $39.80, up 26 cents, or 0.7%. Global benchmark November Brent crude, meanwhile, rose 28 cents, or 0.7%, at $41.72 a barrel on ICE Futures Europe.
WTI Extends Gains After Official Inventory Data Shows Big Draws – Oil prices have chopped around overnight, rallying hard as Europe opened after weakness following last night’s surprise crude build reported by API. “The API was positive I’d say, with draws in gasoline and distillates” . “A large drawdown in the fourth quarter or not is the big question.” Additionally, as Bloomberg reports, in the near term, the demand outlook looks troubled. In Europe, the profit from turning crude into diesel slipped toward $2 a barrel earlier, a record low in data going back to 2011. That curbs demand for crude from refineries. The head of Russia’s Gazprom Neft PJSC said that the recovery in global oil consumption has indeed slowed down. DOE:
- Crude -1.64mm (-4.0mm exp)
- Cushing +4k
- Gasoline -4.03mm (-1.9mm exp)
- Distillates -3.364mm (+1.2mm exp) – biggest draw since March 2020
Dramatic draws in crude, gasoline, and distillates… This is the 7th weekly draw in gasoline in a row and biggest distillates draw since March. Between Hurricanes and Tropical Depressions, there is still some lingering noise in the production data, which showed a small drop in the last week… Graphs Source: Bloomberg. WTI hovered around $40 ahead of the official inventory data and extended gains on the draws…
Oil posts slight gain as U.S. inventory declines – Oil rose more than 1% on Wednesday, supported by U.S. government data that showed crude and fuel inventories dropped last week, although concerns about the ongoing coronavirus pandemic capped gains. Brent crude rose 53 cents, or 1.3%, to $42.25 a barrel. U.S. West Texas Intermediate crude settled 13 cents, or 0.3%, higher at $39.93 per barrel. U.S. crude, gasoline and distillate inventories all fell last week, Energy Information Administration data showed. Crude inventories fell by 1.6 million barrels, less than forecast; gasoline stocks dropped more than expected, sliding by 4 million barrels; while distillate stockpiles posted a surprise drawdown of 3.4 million barrels. “The distillate overhang that we’ve seen most of this year has been a primary bearish consideration to the energy complex and as that begins to adjust lower that can be viewed as supportive,” said Tony Headrick, energy markets analyst at CHS Hedging. Elsewhere, better-than-expected German manufacturing data lifted some risk appetite on Wednesday. But COVID-19 infections in countries including India, France and Spain and new restrictions in Britain have renewed worries about demand, just as more supply may come from Libya. In the United States, the death toll has passed 200,000. Oil collapsed as the pandemic decimated demand, with Brent falling below $16, a 21-year low, in April. A record output cut by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, has helped revive prices. OPEC faces a new challenge in that Libya, an OPEC member exempt from the supply cut, is aiming to boost supply after an easing of the country’s conflict. An oil tanker is expected to load crude at Libya’s Marsa el-Hariga terminal this week, the first since January.
Oil falls as demand growth concerns outweigh U.S. stock drawdown – Oil prices dropped on Thursday, weighed down by concerns that U.S. economic recovery is slowing as the coronavirus outbreak lingers, while a renewed wave of COVID-19 cases in Europe have led to reimposed travel restrictions in several countries. The jitters over demand and economic outlook due to the coronavirus resurgence have prompted a rally in the dollar as investors turned to safer assets, adding pressure to oil prices. A stronger dollar makes oil, priced in U.S. dollars, less attractive to global buyers. U.S. West Texas Intermediate (WTI) crude futures fell 60 cents, or 1.5%, to $39.33 a barrel at 0445 GMT, while Brent crude futures dropped 47 cents, or 1.1%, to $41.30 a barrel. Both benchmarks climbed slightly on Wednesday after government data showed U.S. crude and fuel stockpiles dropped last week. Gasoline inventories fell more than expected, sliding by 4 million barrels, and distillate stockpiles posted a surprise drawdown of 3.4 million barrels. Still, fuel demand in the U.S. remains subdued as the pandemic limits travel. The four-week average of gasoline demand was 8.5 million barrels per day (bpd) last week, the government data showed, down 9% from a year earlier. Prices turned down after data showed U.S. business activity slowed in September, U.S. Federal Reserve officials flagged concerns about a stalling recovery, and Britain and Germany imposed restrictions to stem new coronavirus infections — all factors affecting the fuel demand outlook. “Oil prices are wilting as product for immediate delivery remains plentiful,” “Consumption outlook concerns are rising as COVID-19 restrictions return in Europe, and the clamour from the Federal Reserve for more U.S. fiscal stimulus, undermines the global recovery case, the lynchpin for oil’s price recovery.” On the supply side, the market remains wary of a resumption of exports from Libya, although it is unclear how quickly it can ramp up volumes. Libya’s National Oil Corp (NOC) seeks to boost output to 260,000 bpd by next week. “That clearly is going to be something the oil market doesn’t need right now,”
Oil prices end higher, buoyed by signs of tighter supplies – Oil futures finished higher on Thursday, supported by signs of tighter U.S. crude supplies, despite persistent concerns that rising cases of COVID-19 will lead to weaker energy demand. The commodity tallied a third climb in a row, but the gains have been modest and prices still remain lower for the week. “Oil prices need a shot of something,” The U.S. Federal Reserve “wants it to be another shot of stimulus and perhaps a shot of a coronavirus vaccine,” he said. “Perhaps it’s another shot of compliance by the OPEC plus cartel, or maybe it just needs to get past September where hurricanes and storms impacted both supply and demand.” West Texas Intermediate crude for November delivery edged up by 38 cents, or nearly 1%, to settle at $40.31 a barrel on the New York Mercantile Exchange after tapping a low at $39.12. November Brent crude, the global benchmark, added 17 cents, or 0.4%, to trade at $41.94 a barrel on ICE Futures Europe. “Lifeless crude prices and frightful refining margins present a faltering demand recovery, especially with COVID cases rising again. But fortunately, OPEC’s supply constraint and a further fall in U.S. supply in 4Q and 2021 will provide the offset,” Oil rose Wednesday after the Energy Information Administration reported that U.S. crude inventories fell for a second straight week, by 1.6 million barrels for the week ended Sept. 18. That was much less than the average forecast from analysts polled by S&P Global Platts for a decline of 4 million barrels, but the American Petroleum Institute on Tuesday had reported an increase of 691,000 barrels. Also, gasoline inventories fell by a larger-than-expected 4 million barrels, while distillate stocks unexpectedly declined by 3.4 million barrels. On Thursday, October gasoline rose 1.2% to finish at $1.1957 a gallon, while October heating oil settled at $1.1167 a gallon, up 0.8% “The continued drop in U.S. oil supply and refinery challenges suggests a balancing of supply,” “It also indicates that we should see oil bottom and rally as we head into winter and out of the [refinery] maintenance season.” Also, “despite gridlock in Washington, oil demand should recover, and we face a balanced market globally that will add higher prices,” he said, though “the risk to this forecast is a massive” COVID-related shutdown.
Oil gains but heading for weekly fall over coronavirus demand concerns – Oil prices fell on Friday and were set for a weekly decline due to mounting worries about the impact on fuel demand of a widespread resurgence in coronavirus infections, as well as some concern about the likely return of exports from Libya. Brent crude was down 23 cents at $41.71 a barrel, while West Texas Intermediate crude fell 38 cents to $39.91. Brent is heading for a drop of more than 3% this week with U.S. crude on track for a decline of nearly 3%. Both benchmarks are also heading for a monthly decline, which would be the first for Brent in six months. “This month has not been kind to the oil market,” “Rising virus infections, renewed lockdowns, slowing economic recovery and stalled U.S. stimulus talks have put the brakes on the fragile revival in fuel demand.” In the United States, which has the highest death toll from the coronavirus pandemic and is the world’s biggest oil consumer, unemployment claims unexpectedly rose last week suggesting an economic recovery is flailing and pushing down fuel demand. U.S. fuel demand remains in the doldrums as the pandemic constrains travel. The four-week average of gasoline demand last week was 9% below a year earlier, government data showed on Wednesday. In other parts of the world, daily increases of coronavirus infections are hitting records and new restrictions are being put in place that will likely limit travel and fuel demand. In India, throughput by crude oil refiners in August fell 26.4% from a year ago, the most in four months, as fuel demand ebbed because surging coronavirus cases hindered industrial and transport activity. In Libya, Shell has provisionally booked a tanker to load a crude cargo at Libya’s Zueitina terminal on Oct. 3, potentially the first since January at the recently reopened port. However, analysts have questioned how quickly the country could ramp up supply. “Fundamentally, nothing has changed to the supply side of the equation that is weighing on oil prices in the bigger picture,”
Oil falls on mounting COVID-19 cases, supply concerns (Reuters) – Oil edged lower on Friday, falling more than 2% on the week as COVID-19 cases surged globally and oil supply is set to rise in coming weeks. FILE PHOTO: the sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019. Picture taken November 24, 2019. REUTERS/Angus Mordant/File Photo Brent crude futures LCOc1 settled at $41.92 a barrel, down 2 cents, while U.S. West Texas Intermediate (WTI) crude futures CLc1 lost 6 cents to $40.25 a barrel. Brent dropped 2.9% for the week and WTI sunk 2.1% “There is this second wave of fear overhanging the oil market at this point and that’s holding us back,” In the world’s top oil consumer the United States, infections are rising in the Midwest, while New York City, which was hit hardest in the spring, is considering renewed shutdown mandates. More than 200,000 people have died of the virus in the nation. U.S. fuel consumption remains sluggish as the pandemic constrains travel and hampers economic recovery.. The four-week average of gasoline demand last week was 9% below a year earlier. In other parts of the world, daily increases of coronavirus infections are hitting records and new restrictions are being put in place to limit travel. In India, throughput by crude oil refiners in August fell 26% from a year ago, most in four months, as demand ebbed because the pandemic is hindering industrial and transport activity. At the same time, more crude oil entering the global market threatens to beef up supply and push prices lower. The U.S. oil and gas rig count rose by six to 261 in the week to Sept. 25, energy services firm Baker Hughes Co BKR.N said. [RIG/U] Libya has recently boosted production and Shell RDSa.L has provisionally booked the first crude tanker to load at Libya’s Zueitina terminal since January. Iranian oil exports, meanwhile, have risen sharply in September in defiance of U.S. sanctions, three assessments based on tanker tracking showed.
Oil prices down for the week on new coronavirus concerns -Oil fell this week amid growing concerns that another wave of the coronavirus pandemic will spark tighter lockdown measures and further stifle crude demand. New York futures edged lower Friday and fell 2.1% on the week. The number of U.S. coronavirus cases rose above 7 million, according to data from Johns Hopkins University. Meanwhile, a second governor tested positive for Covid-19 as cases surge around the country. At the same time, the market is contending with returning supply. Oil traders have reported a sharp increase in Iraqi exports for next month, while output from Libya has shown signs of rising this week. “There are concerns about the stalling economic recovery,” said Phil Streible, chief market strategist at Blue Line Futures LLC in Chicago. When the world gets a vaccine, widespread reopenings and a meaningful increase in travel, “that’s when you’re going to start to see demand pick up” and prices rally. U.S. crude’s gradual climb since May has come to a halt in September, with futures on track to drop about 5.5% this month. Still, Goldman Sachs Group Inc. said oil consumption is currently just above 93 million barrels a day and may rise 1.8 million a day to the end of the year. Yet, any meaningful recovery in consumption has so far been held back by the lingering pandemic. “We’re going to be range-bound for a while until there’s the perception that the bulk of the Covid impact on demand is behind us,” said Michael Lynch, president of Strategic Energy & Economic Research. Additionally “if the OPEC+ deal starts to fall apart and we get a lot more crude, that would send prices down.” West Texas Intermediate for November delivery edged 6 cents lower to settle at $40.25 a barrel. Brent for November dipped 2 cents to end the session at $41.92 a barrel. The contract lost 2.9% this week. In a sign of just how damaging the virus has been to oil demand, the industry’s largest tankers next year will earn 8% less than they were anticipating back in May, according to a survey of shipping analysts by Bloomberg. That comes as nations including Saudi Arabia and Russia have drastically scaled back output, draining the hoard at sea and diminishing the flow of cargoes. The spread between Nymex gasoline futures and WTI rallied over 9% on Friday toward $10 a barrel. Still, the so-called crack remains at its lowest seasonally since 2013. At the same time, Gulf Coast gasoline climbed to a one-month high as refiners snapped up winter-grade fuel and on dwindling fall stockpiles.
The Debt Crisis Is Mounting For Oil Economies – Dubai. Abu Dhabi. Bahrain. And, of course, Saudi Arabia. The two emirates this year issued debt for the first time in years. So did Bahrain. Saudi Arabia stepped up its debt issuance. The moves are typical for the oil-dependent Gulf economies. When the going is good, the money flows. When oil prices crash, they issue debt to keep going until prices recover. This time, there is a problem. Nobody knows if prices will recover. In August, Abu Dhabi announced plans for what Bloomberg called the longest bond ever issued by a Gulf government. The 50-year debt stood at $5 billion, and its issuance was completed in early September. The bond was oversubscribed as proof of the wealthiest Emirate’s continued good reputation among investors.Dubai, another emirate, said it was preparing to issue debt for the first time since 2014 at the end of August. Despite the fact the UAE economy is relatively diversified when compared to other Gulf oil producers, it too suffered a hard blow from the latest oil price crash and needed to replenish its reserves urgently. Dubai raised $2 billion on international bond markets last week. Like Abu Dhabi’s bond, Dubai’s was oversubscribed.Oversubscription is certainly a good sign. It means investors trust that the issuer of the debt is solid. But can the Gulf economies remain solid by issuing bond after bond with oil prices set to recover a lot more slowly than previously expected? Or could this crisis be the final straw that tips them into actual reforms?No economy, especially not the ones dependent on a single export for most of its budget revenues, can rely on borrowing for long-term survival, let alone growth. In fact, the growth prospects of the Gulf economies are dimming, Reuters’ Davide Barbuscia wrote in a recent analysis of the region. Gulf governments are doing what they have always done: cut public spending and borrow. This time, however, the crisis is like no other before it, and these governments may find themselves in a tight spot while they wait for prices to bounce back. The problem is that public spending is the main growth driver in the Gulf economies, Barbuscia wrote, quoting the chief economist of Abu Dhabi Commercial Bank. If public spending falls, so will consumption and, therefore, growth. This is already happening and, what’s worse, it is happening across industries. Earlier this month, IHS Markit said, as quoted by Arabian Business, that non-oil private sector activity in Saudi Arabia and the UAE had fallen in August below 50 – the figure that separates growth from contraction. That was after this indicator had registered improvement in the previous month despite still low oil prices. All Gulf economies – except Qatar – are expected to stay or swing into budget deficits this year, according to the International Monetary Fund. Saudi Arabia, the biggest economy in the region, is seen faring the best, with a deficit of 11.4 percent of GDP, and Oman faring the worst, with a deficit of 16.9 percent. Deficits happen. There is nothing extraordinary about them. What is extraordinary is the lack of wiggle room for the local governments. Investor interest in their new bonds may have been strong, but how likely would it be to remain strong for further debt issues if prices continue hovering around $40 a barrel? This is much below the Gulf economies’ breakeven levels, even the lowest ones. Saudi Arabia’s breakeven alone, according to the IMF, is $76.10 per barrel this year. It could fall to $66 next year, but this will still be too high for comfort with Goldman optimistically projecting Brent to hit $65 a barrel next year. In what is perhaps a cruel twist, this unprecedented situation is stifling the Gulf economies’ attempts to diversify their economies away from oil. This is incredibly obvious in Saudi Arabia, which had the ambitious goal of becoming a diversified economy by 2030. The goal, however, was to be financed with money from oil sales, and these collapsed this year as the pandemic spread globally.
US Sends M2A2 Bradleys To Challenge Russian Forces In Northern Syria – The US military has reinforced its troops, supposedly mostly withdrawn from Syria, with a new batch of military equipment, this time M2A2 Bradley infantry fighting vehicles. In an official comment released on September 18, the US-led coalition said that mechanized infantry assets, including Bradley IFVs, were positioned to Syria in order to “ensure the enduring defeat of ISIS”, “ensure the protection of Coalition forces” and “provide the rapid flexibility needed to protect critical petroleum resources”.The M2A2 Bradley is armed with a 25 mm chain gun, a 7.62 mm coaxial machine gun and a dual TOW anti-tank guided missile launcher. This makes the IFV the heaviest weapon deployed by the US on the ground in Syria.As of September 21, the newly deployed armoured vehicles were already spotted during a coalition patrol in al-Hasakah province, where the US has a network of fortified positions and military bases. US forces regularly conduct patrols in the area. Another area of US interest in Syria’s northeast are the Omar oil fields on the eastern bank of the Euphrates. Washington reinforced its troops deployed there with M2A2 Bradley IFVs in October 2019.The main difference is that, according to local sources, the vehicles deployed in al-Hasakah province will most likely be involved in patrols in the area and thus regular confrontations with the Russian Military Police and the Syrian Army. Just a few days ago, Russian attack helicopters chased US Apaches after they had tried to harass a Russian Military Police patrol. Earlier, the US military claimed that US troops sustained “mild injures”, when a Russian vehicle rammed a US MRAP in the al-Hasakah countryside.The US-led coalition regularly tries to limit the freedom of movement of Russian and Syrian forces in the northeast of the country and faces an asymmetric response. Now, US forces will have an additional argument in securing what they see as their sphere of influence.Syrian government forces have suffered even more casualties from ISIS attacks in the provinces of Homs and Deir Ezzor. On September 19, at least five members of Liwa al-Quds, a pro-government Palestinian militia, died in an explosion of an improvised explosive device near the town of al-Shumaytiyah. On September 20, an explosion hit a vehicle of the Syrian Army near al-Mayadin reportedly injuring several soldiers. Also, a field commander of the National Defense Forces was killed in clashes with ISIS terrorists west of Deir Ezzor.
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