Oil, Gas, And Fracking News Reads: 31January 2021 - Part 2

Written by The Conversation, The Conversation

Here are some more selected news articles for the week ending 30 January 2021. Go here for Part 1.

This is a feature at Global Economic Intersection every Monday evening or Tueday morning.

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Barrasso says Biden climate orders are a ‘de facto fracking ban’ – Fox News – Fracking advocates are fighting mad at President Biden’s new executive orders aimed at curbing oil and gas drilling, with some believing the new measures effectively break his promise not to ban fracking.Biden on Wednesday signed an order to pause oil and gas leases on federal land, and the White House announced it would begin a “rigorous review” of all existing fossil fuel leases and permitting practices.”Let me be clear, and I know this always comes up. We’re not going to ban fracking,” Biden said signing the order. It was a promise he’d peddled in swing states like Pennsylvania and Ohio that led him to victory. Some critics aren’t buying it. “It is a de facto ban on fracking,” Sen. John Barrasso, R-Wyo., told Fox News in an interview about the new order, noting that his state stands to lose 30,000 jobs. A top energy industry official agreed. “He explicitly said he wasn’t going to ban fracking,” American Petroleum Institute CEO Mike Sommers told Fox News in an interview. “That rings a little bit hollow.” Sommers agreed that the combination of Wednesday’s order issuing a moratorium on new oil and gas leases on federal land combined with last week’s order from the Interior Department to freeze leases to drill for 60 days amounted to a “de facto fracking ban.” Banning fracking outright, as environmentalists have called for, would take an act of Congress and be subject to various lawsuits. Others say that the Biden orders will do little to hurt the fracking industry since many big oil and gas producers already have existing leases they haven’t drilled on.”Right now, the oil and gas industry has existing leases on enough federal land and ocean water to cover the state of Georgia. Those leases aren’t affected,” Bob Dean, spokesman for the National Resources Defense Council, told Fox News. “The industry hasn’t yet drilled on more than half of that land. In other words, the industry has enough untapped federal land and ocean acreage right now to cover two-thirds of South Carolina. That’s enough, industry executives have said, to keep the industry busy for years.”

INTERIOR: Republican opposition to Haaland grows more vocal — Wednesday, January 27, 2021 — When President Biden picked Rep. Deb Haaland to be his Interior secretary, the positive response to the historic choice was so enormous, it virtually overshadowed any meaningful dissent. Supporters who had been lobbying for the New Mexico Democrat cheered the selection of a staunch progressive and environmental defender, while news stories played up the groundbreaking nature of her appointment: the first Native American to ever lead the federal agency with direct oversight of tribal interests. But now that Haaland could be on track for confirmation hearings to begin next month – perhaps as soon as next week – the fierce opposition is starting to make itself known. Sen. Bill Cassidy (R-La.), who sits on the Senate Energy and Natural Resources Committee, which will oversee Haaland’s confirmation proceedings, appears ready to hold Haaland to account for the Biden administration’s plans to stop issuing new leases for oil and gas drilling on federal lands. “It won’t hurt the people who are sitting around congratulating themselves on ‘leave it in the ground’ policies,” Cassidy told E&E News. “It will hurt a family who was able to send their children to a better school, take a nice vacation in the summertime. … It will destroy their livelihoods.” Rep. Pete Stauber (R-Minn.), who as a House member does not get a vote on whether Haaland is installed at the Interior Department or not, is nonetheless seeking to use his platform to call attention to what he says are worrisome elements of her record. “The nomination of Representative Haaland as Interior Secretary embodies clear support for the Green New Deal and a rejection of even the potential of high-wage jobs,” Stauber wrote yesterday in a letter to Biden co-signed by 14 fellow House Republicans. The members added, “We implore you in the strongest terms to withdraw [her] nomination … and instead nominate a consensus-driven individual who will not implement policies that will kill jobs and increase the country’s reliance on foreign adversaries.”

No, Joe Biden still isn’t banning fracking – President Joe Biden is cracking down on the oil-and-gas industry, but he is not taking the extreme steps the Trump campaign claimed he would last fall.Last week, the Biden administration imposed a 60-day suspension of new oil and gas leasing and drilling permits on federal lands unless the Interior Department’s leaders approved them.Biden is expected to go a step further Wednesday, by ordering a moratorium on new oil and gas leaseson federal land and water areas. However, this is a far cry from the more dramatic step climate activists are calling for (and that the oil industry fears): a full-blown federal ban on fracking.During the campaign, Biden explicitly opposed a nationwide ban on the controversial oil-and-gas technique, although the Trump campaign repeatedly suggested otherwise. And it’s not even clear that a president has the legal power to ban fracking on private lands — that would likely take an act of Congress.Rather, Biden’s moratorium on oil and gas leases applies only to federal land, which accounts for less than a quarter of total US oil production and much less for natural gas. And the freeze does not impact existing leases.In other words, ExxonMobil and Chevron can continue to frack away.”We do not think Biden has the authority to ban fracking and if he did, he wouldn’t go that far,” said Bob McNally, founder and president of consulting firm Rapidan Energy. “Biden remains a centrist with strong links to unions, who would oppose such a step.”

Killing Keystone XL pipeline might not be bad for Oklahoma according to some in the oil industry -On Thursday, President Joe Biden signed an order that stopped construction of the Keystone XL pipeline. Some Oklahoma politicians and oil and gas professional immediately pushed back saying it would cost Oklahomans jobs and money, but now some in the industry say not so fast. One former Oklahoma oilman says the news about the pipeline made him smile because its good for the state’s energy industry. Others say it will hurt consumers and it’s the beginning of the Biden administration’s fight against oil and gas. “We do not need 800,000 barrels a day of anybody’s crude oil to come to Cushing, Oklahoma and sit there,” said Mickey Thompson, former head of the Oklahoma Independent Petroleum Association.President Biden recently signed an executive order to stop building the northern leg of the Keystone Pipeline.The massive pipeline project has been in the works for years and if finished, would transport oil from Canada through Oklahoma on its way to the Gulf Coast for refinement.On Thursday, Oklahoma U.S. Senator James Lankford firing out a statement saying,“The Keystone XL is the physical embodiment of Democrats’ crusade against traditional energy. President Biden wasted no time turning back years of Americans’ hard work developing, ironing out the route, and building this trans-border pipeline,” said Lankford. “The southern leg of Keystone, which begins in Cushing, Oklahoma, has been complete for more than six years, but the northern leg of the pipeline-under the strictest pipeline safety standards ever implemented-has faced countless delays. Pipelines are the safest way to transport oil. Yesterday’s irrational denial of the Keystone XL permit damages our relationship with Canada and will lead to higher prices at the pump for consumers. While Oklahomans want to see the US continue to pursue an all-of-the-above energy policy, we also understand that currently our cars and trucks run on oil. Limiting access to an oil pipeline kills jobs and limits our energy supply. Kicking people who work in the energy sector on day-one may help progressive politics, but in Oklahoma, we know our jobs and livelihoods are next. ” But Thompson says the Pipeline would bring millions of gallons of Canadian oil to Cushing, OK , driving down demand and prices for Oklahoma oil, ultimately hurting oil prices and jobs far more than what would be caused by stopping the Pipeline.”The loss of job argument holds no water in Oklahoma,” said Thompson.

Millions of Americans, Hundreds of Groups Support Halting Fossil Fuel Leasing, Permitting on Public Lands, Oceans – Center for Biological Diversity– Environmental justice, Indigenous, climate and conservation groups from across the country announced today that in recent years they’ve delivered millions of petitions and public comments, and letters from hundreds of organizations, supporting a halt on new fossil fuel leasing and permitting on public lands and oceans.The Biden administration is expected to order a leasing ban on Wednesday.President Biden has promised to ban new leasing and permitting activities. Calls to ban fracking on federal lands ramped up in 2013 and expanded to oppose all new fossil fuel leasing in 2015. Nearly every acre of federal lands leased for oil and gas by the Trump administration is under some form of legal challenge, and many lease sales have been overturned by the courts.Millions of people have spoken out from all corners of the United States where federal fossil development is harming public health and worsening the climate and extinction crises. In December nearly 600 groups, representing millions of Americans, sent the Biden transition team a draft executive order outlining how the next Interior secretary could implement the president’s directive. “Too many federal lease sales have already sacrificed the Greater Chaco region for short-term profit,” said Daniel Tso, Navajo Nation Council delegate and chair of the Health, Education and Human Services Committee. “Local Navajo communities, through little or no ‘meaningful consultation,’ have consistently borne too much of the environmental and social impacts from federal oil and gas leasing. As a result, Navajo Nation communities in northwestern New Mexico have suffered increased coronavirus morbidity, a methane cloud visible from space, and some of the worst air quality in the U.S. There has to be a balance point: people over money. I welcome an end to federal fossil fuel leasing and the necessary transitions to more sustainable economies for the Navajo Nation.” “The waters of the Gulf of Mexico are being polluted, which is throwing all life out of balance. Rapid expansion by the fossil fuel industry threatens our coastal communities and our ways of living,” said Juan Mancias, tribal chairman of the Carrizo Comecrudo Tribe of Texas. “The Deepwater Horizon disaster showed the damage even a single spill can do to our waters and the environment – it’s time to end new leases for oil and gas.””We need to end Arctic oil drilling, both offshore and on federal lands,” said Dune Lankard, executive director of Native Conservancy in Alaska. “Like many Alaskans who were devastated by the Exxon Valdez oil spill, as an original Native inhabitant, commercial and subsistence fisherman, I intimately understand how dirty and dangerous all oil drilling is. Here we are 30-plus years later and our fisheries and wildlife have never fully recovered from the Exxon spill. It’s time that we as a human race unite and come together, and take care of our planet, including our communities, wildlife, climate and keep this oil in the ground.”

Oil-producing Native American tribe seeks exemption from Biden drilling pause (Reuters) – An oil-producing Native American tribe on Friday asked the U.S. Interior Department for an exemption from the recent temporary suspension of oil and gas leasing and permitting on federal and tribal lands, saying the move would hit its economy and sovereignty. The pushback from the Ute Indian Tribe reflects the financial strain some communities will face from a freeze of the government’s fossil fuel leasing program. The new administration of President Joe Biden announced the move this week as part of a raft of measures intended to combat global climate change. “The Ute Indian Tribe and other energy producing tribes rely on energy development to fund our governments and provide services to our members,” Luke Duncan, chairman of the Ute Indian Tribe Business Committee in Utah, said in a letter to acting U.S. Interior Secretary Scott de la Vega. The tribe produces about 45,000 barrels of crude oil per day in the Uintah basin, along with about 900 million cubic feet per day of natural gas, according to a document it filed with the Bureau of Indian Affairs in 2017. The secretarial order issued on Jan. 20 – Biden’s first day in office – suspended the authority of Interior Department offices to issue new fossil fuel permits and leases – a move that could be a first step in delivering on Biden’s campaign promise to ban all new federal drilling permits. While some Native American tribes have been vocal opponents of fossil fuel development others are drilling the vast oil and coal reserves on their land. The Mandan, Hidatsa and Arikara nation in North Dakota, for example, are also big producers of oil and gas. MHA Nation Tribal Chairman Mark Fox did not comment on whether his tribe would also seek an exception but said: “We will do what is necessary to protect the treaty rights and trust interests of the Mandan, Hidatsa and Arikara Nation.” Biden’s pick to lead the Interior Department, Deb Haaland, is poised to become the first Native American to head a cabinet agency once she is confirmed in Congress. She has said she would prioritize climate change and conservation as secretary and has previously opposed drilling in ecologically and culturally sensitive areas. A spokesman for the Interior Department declined to comment.

Tribes exempt from pause in U.S. federal drilling program -official (Reuters) – Native American tribes are exempt from the Biden administration’s temporary suspension of U.S. oil and gas leasing and permitting on federal lands, a spokesman for the U.S. Department of Interior said on Monday. The clarification comes after an oil-producing tribe in Utah last week asked Interior for an exemption from the 60-day pause, saying it would hit its economy and sovereignty. “The approval process for oil and gas activities does not apply to tribal and individual trust lands,” Interior spokesman Tyler Cherry said in an email, referring to the secretarial order issued on Jan. 20, President Joe Biden’s first day in office. The order, which strips Interior Department agencies and bureaus of their authority to issue drilling leases and permits, appeared to be a first step in delivering on Biden’s campaign pledge to ban new drilling on federal acreage permanently. But the immediate backlash from the Ute Indian Tribe reflects the financial strain some communities will face from a freeze in the government’s fossil fuel permitting program. While some tribes opposed fossil fuel development, others are drilling the vast oil and coal reserves on their land. In a letter to acting U.S. Interior Secretary Scott de la Vega last week, the Ute tribe said energy development was critical to providing services to its members.

Bureau of Land Management exodus: Agency lost 87 percent of staff in Trump HQ relocation – After the Trump administration announced its plans to relocate the Bureau of Land Management (BLM) headquarters to Colorado, more than 87 percent of Washington-based employees decided to leave the agency, according to new numbers released by the Biden administration. The figures show that following a July 2019 announcement the Department of the Interior would uproot the majority of BLM employees, just 41 agreed to relocate, while a staggering 287 either retired or left the agency before the end of 2020. The flight of employees came after Trump’s BLM rolled out a plan that would leave just 60 of the agency’s 10,000 employees in Washington, D.C., establishing a new headquarters in Grand Junction, Colo., while spreading the majority of Washington-based staff to various offices across the West. “The bureau lost a tremendous amount of expertise; those were very seasoned people,” said Steve Ellis, who held the highest-ranking career position at the BLM under the Obama administration. “The numbers confirmed my worst fears. I hope we can get some of them back.” Critics saw the move as a way to dismantle an agency that at times stands in the way of development on public lands, particularly for the fossil fuel industry. Previous reporting from The Hill found the move would split apart a key public lands team, spreading across seven states those who review the environmental impacts of government decisions. A senior policy analyst, several legislative affairs specialists and a public affairs specialist were among the positions of note shown in the documents to be heading to Reno, Nev. Democrats frequently questioned why Grand Junction – a town of 60,000 four hours away from any major airport – would be the site of the BLM’s top officers. The move was first announced by then-Sen. Cory Gardner (R-Colo.) as he prepared for a tough reelection campaign. But as the Biden administration puts its own stamp on the BLM, it’s not yet clear what it plans to do with the Grand Junction headquarters, where 40 employees currently work, or the rest of the employees based out West. “The Interior Department’s new leadership will work with BLM career staff to understand the ramifications of the headquarters move and determine if any adjustments need to be made,” the agency said in a statement. “We are committed to engaging with a number of stakeholders through this process, including Tribes and Members of Congress.”

Biden Issues Dozens of Oil Drilling Permits in First Few Days – The Biden administration has issued at least 31 new drilling permits authorizing operations on federal land and coastal waters, despite an order putting political appointees in charge of the decisions. The move signals those drilling authorizations are continuing to flow, despite President Joe Biden’s plan to pause oil and gas leasing — and a Jan. 20 order temporarily putting decisions about oil and gas permits, mining operations, hiring and other matters in the hands of top Interior Department officials. The order provoked alarm across the oil industry, as energy companies worried they wouldn’t get approval to drill new wells or swift approval to amend permits for ongoing drilling operations. So far, there’s no sign of that blockade. Offshore, the Bureau of Safety and Environmental Enforcement has issued 22 drilling permits to eight companies since Jan. 20, when President Joe Biden was inaugurated. Recipients have included BP Exploration and Production Inc., Arena Offshore, Shell Offshore Inc.and a BHP Billiton Petroleumsubsidiary, according to a Bloomberg News review of an Interior Department database. The Interior Department said in a statement that permits for valid, existing leases “are continuing to be reviewed and approved.” The agency has maintained that the order, which is set to expire March 20, does not equate to a drilling permit freeze and does not apply to tribal lands.

Cheney offers bill to prohibit suspension of oil, gas, coal leases – Rep. Liz Cheney (R-Wyo.) introduced two bills Thursday seeking to block the White House plan to pause leases for oil, gas or coal on federal lands, a key part of its expansive climate change platform. Cheney, the No. 3 House Republican and the representative of a major fossil fuel-producing state, said the Safeguarding Oil and Gas Leasing and Permitting Act and the Safeguarding Coal Leasing Act would force the Biden administration to obtain a joint resolution of approval from Congress before implementing any federal moratorium on oil and gas leasing or permitting or coal leasing. The bills are similar to one from Wyoming Sen. Cynthia Lummis (R), which is also likely to be formally introduced Thursday. “The executive actions from the Biden Administration banning new leasing and permitting on federal land endanger our economy and threaten our national security. The legislation I am introducing today would safeguard against these damaging orders, and prevent the job loss, higher energy costs, and loss of revenue that promises to come with them,” Cheney said in a statement. “These bills will defend the interests of the people of Wyoming and our nation, and I will work with partners in Washington to push for their consideration.” Cheney touted 21 co-sponsors for the Safeguarding Oil and Gas Leasing and Permitting Act and 14 for the Safeguarding Coal Leasing Act, as well as support from a number of industry groups. “The Petroleum Association of Wyoming applauds Congresswoman Cheney’s common-sense bill that will give voice to those elected offices with a constitutional responsibility to represent the people and lands affected by these misguided attempts to wreak havoc on economies across the West,” said Petroleum Association of Wyoming President Pete Obermueller. The introduction of the bills follows President Biden’s signing of executive orders laying out an array of climate goals, including conserving 30 percent of public lands and waters by 2030, halting the granting of leases on public lands or offshore waters and putting the U.S. on a path to reaching net-zero emissions by 2050. The move by Cheney could play well among her constituents in Wyoming, which is a major producer of coal, natural gas and crude oil, but could also serve as a way to tap into a popular issue within the GOP at a time when she faces withering criticism from conservatives over her vote this month to impeach former President Trump.

Enerplus doubles down on U.S., buys North Dakota producer for US$465M – Enerplus Corp. is doubling down on its shift to the United States from Canada, announcing it will buy privately-held oil and gas producer Bruin E&P HoldCo LLC for US$465 million in an all-cash deal. The deal will add about 24,000 barrels of oil equivalent (BOE) per day to Enerplus’ production out of North Dakota’s Williston Basin with Bruin’s properties near Enerplus’ current operations in the area. The deal is expected to close in early March. In a release, Enerplus President and Chief Executive Officer Ian Dundas highlighted the geographic proximity between the two companies as a key driver behind the deal. “With immediately adjacent acreage offering strong operational synergies, Bruin’s assets are highly complementary to our existing Tier 1 position in the Bakken and will enable us to accelerate free cash flow growth and further support our focus on providing long term sustainable shareholder returns,” he said in a statement. The American acquisition fits within a trend for Enerplus, which has been increasingly shifting its operational focus away from Canada and into the United States. Dundas has repeatedly pointed to the Canadian energy regulatory regime as a key driver of that shift. The company’s U.S. operations now account for nearly 90 per cent of its total production. Enerplus will finance the acquisition through a new US$400 million term loan and a concurrent US$115 million bought deal offering as it sells shares for $4 apiece, a seven per cent discount to the closing price of the company’s shares on Monday. Enerplus will not assume any of Bruin’s debt after the deal closes. As a result of the deal, Enerplus raised its 2021 production forecast to as much as 108,500 BOE per day, up from the earlier view of about 86,000 BOE per day. The company also raised its full-year capital spending plan to a range of $335 million to $385 million, up from $300 million.

D.C. Circuit Court of Appeals: Standing Rock Sioux Tribe v. U.S. Army Corps of Engineers – Indianz.Com – The D.C. Circuit Court of Appeals has issued a ruling in Standing Rock Sioux Tribe v. U.S. Army Corps of Engineers.The 36-page decision, released Tuesday morning, confirms that the U.S. Army Corps of Engineers acted “unlawfully” in approving the final portion of the pipeline near the Standing Rock Sioux Reservation. The action occurred in the early days of the Donald Trump administration, back in 2017, over the objections of tribal nations. “The tribes’ unique role and their government-to-government relationship with the United States demand that their criticisms be treated with appropriate solicitude,” Judge David S. Tatel wrote in the decision.But the appeals court won’t require the illegal pipeline to be shut down. Tatel said it would be up to the new administration of President Joe Biden to take action, though the ruling also left the door open for further litigation to stop the oil from flowing on Sioux Nation treaty territory.”It may well be – though we have no occasion to consider the matter here – that the law or the Corps’s regulations oblige the Corps to vindicate its property rights by requiring the pipeline to cease operation and that the tribes or others could seek judicial relief under the APA should the Corps fail to do so,” Tatel wrote in reference to the Administrative Procedure Act (APA), the U.S. law that governs how federal agencies develop and carry out actions. “But how and on what terms the Corps will enforce its property rights is, absent a properly issued injunction, a matter for the Corps to consider in the first instance, though we would expect it to decide promptly,” Tatel concluded for the court. Since becoming operational in June 2017 thanks to the Trump administration, the Dakota Access Pipeline has transported up to 500,000 barrels of oil per day. The 1,172-mile path runs through North Dakota, South Dakota and Iowa before ending in Illinois. The portion of the pipeline at issue in the litigation crosses the Missouri River at Lake Oahe. The site, which is managed by the U.S. Army Corps of Engineers, falls within Sioux Nation treaty territory and is less than a half-mile from the northern border of the Standing Rock Sioux Reservation.

Court upholds order for Dakota Access environmental review (AP) – A federal appeals court on Tuesday upheld a district judge’s order for a full environmental impact review of the Dakota Access pipeline, but declined to shut the line down while the review is completed. Following a complaint by the Standing Rock Sioux Tribe, U.S. District Judge James Boasberg said in April 2020 that a more extensive review was necessary than the environmental assessment conducted by the U.S. Army Corps of Engineers. The $3.8 billion, 1,172-mile (1,886 kilometer) pipeline crosses beneath the Missouri River, just north of the the Standing Rock Sioux Reservation that straddles the North Dakota-South Dakota border. The tribe, which draws its water from the river, says it fears pollution. The U.S. Court of Appeals ruling does not require the pipeline to stop operating or be emptied of oil, as Boasberg had initially ruled. The appellate court blocked that order last summer. “This pipeline is now operating illegally. It doesn’t have any permits,” said Jan Hasselman, the EarthJustice attorney representing Standing Rock and other tribes. “The appeals court put the ball squarely in the court of the Biden administration to take action. And I mean shutting the pipeline down until this environmental review is completed.” EarthJustice said in a release Dakota Access should not be allowed to operate until the Corps decides after its review whether to reissue a federal permit granting easement for the pipeline to cross beneath Lake Oahe. The group said Biden has the discretion to shut the pipeline down; last week, the leaders of the Standing Rock Sioux Tribe, Cheyenne River Sioux Tribe, Oglala Sioux Tribe, and Yankton Sioux Tribe wrote to the president asking him to do so. North Dakota Republican Sen. Kevin Cramer said the court was right to reject the shutdown and wants Biden to stay out of it. “The Army Corps of Engineers should be allowed to proceed as they are without political interference from the Biden administration,” Cramer said. “This is not another opportunity to wage war on North Dakota’s energy producers.”

Biden Holds Key to Dakota Access Pipeline Fate After Ruling (1) President Joe Biden has an opening to move quickly against Energy Transfer LP’s Dakota Access pipeline in the wake of a new court decision affirming the need for more review.The U.S. Court of Appeals for the District of Columbia Circuit on Tuesday refused to revive a key pipeline easement, which a lower court tossed last year due to inadequate environmental analysis. The D.C. Circuit didn’t order Dakota Access to shut down, but its ruling provides fresh legal cover for Biden to step in and halt operations-if he chooses to.”The D.C. Circuit has given the Biden administration a great out on this,” ClearView Energy Partners analyst Christine Tezak told Bloomberg Law, saying the president could frame the court decision as forcing his hand on the issue.Other legal observers say Biden might opt to stand down to save political capital, especially because Dakota Access opponents could instead secure a shutdown order in separate, ongoing proceedings in federal district court.The district court on Wednesday morning shifted the pressure to the president, scheduling a Feb. 10 status hearing for government lawyers to explain how they play to proceed.The White House didn’t respond to questions Tuesday about its plans. The president is set to unveil a suite of climate-focused policies, including a freeze on federal oil and gas leasing, on Wednesday. Dakota Access, unlike other highly contentious pipeline projects, has been in service, shipping oil from North Dakota to Illinois since 2017. Without a valid easement, the pipeline is trespassing on federal land. While the Trump administration declined to bring an enforcement action to address the encroachment, the Biden administration could change course.The D.C. Circuit briefly addressed shutdown prospects in its opinion, which says “it may well be” that federal law or regulations require the Army Corps to “vindicate its property rights” by halting operations. But the court declined to answer the question, calling it “a matter for the Corps to consider in the first instance, though we would expect it to decide promptly.”

How will Biden XL’s latest setback impact Canadian crude oil producers? — Sure, there was at least some hope among Keystone XL’s supporters that President Biden might back away from his promise to kill the much-maligned crude oil pipeline project. After all, KXL developer TC Energy had done all it could to make the 1,210-mile project more palatable to the incoming administration by making Canadian First Nation groups partners in the project, reaching a favorable labor agreement with the four U.S. unions that would build the pipeline, and, most recently, committing to invest in renewable energy to power KXL’s pumps and other equipment. But it wasn’t enough, and now, with Biden’s decision to revoke the project’s Presidential Permit, it appears that the Alberta-to-Nebraska pipeline is all but dead, and that Western Canada will need to get by without its 830 Mb/d of southbound capacity. The looming question now is, what does that mean for Alberta’s producers – particularly those that have signed up for more than 500 Mb/d of space on KXL? Today, we discuss what’s ahead. As we blogged about earlier this month in Oil From the North Country, crude oil production in the Western Canadian Sedimentary Basin (WCSB) – including the all-important Alberta oil sands – has roughly doubled since 2010, from about 2 MMb/d at the beginning of the last decade to ~4 MMb/d today. TC Energy, then known as TransCanada, fully (and correctly) anticipated the coming boom in WCSB production when it and then-partner ConocoPhillips announced in 2008 that they would build Keystone XL (dashed green line in Figure 1) to supplement their planned 590-Mb/d Keystone Pipeline (dark-green line), which in 2010-11 started transporting crude from Hardisty, AB, to Steele City, NE, and from there to hubs in Patoka, IL, and Cushing, OK. (TransCanada bought out ConocoPhillips’s Keystone and Keystone XL stakes in 2009.) The plan was for KXL to provide 830 Mb/d of additional capacity from Hardisty to Steele City starting a year or two after the original Keystone Pipeline came online, and thereby supporting increasing flows of Western Canadian crude oil and diluted bitumen (dilbit) from the oil sands to U.S. refineries.

LNG Imports for Alaska’s Kenai Terminal Clear Another Hurdle – Plans to convert an Alaska liquefied natural gas (LNG) export terminal, the oldest in the United States, to allow imports moved ahead this week after clearing another regulatory hurdle. The National Marine Fisheries Service (NMFS) found a Marathon Petroleum Corp. subsidiary’s plans to import four cargoes a year of the super-chilled fuel at the Kenai LNG terminal won’t adversely affect endangered whales and sea lions. FERC in December approved Trans-Foreland Pipeline Co. LLC’s application to import natural gas at Kenai. The Federal Energy Regulatory Commission had requested a consultation from NMFS on whether those plans would impact Cook Inlet beluga whales or their critical habitat, and other species of gray whales, humpback whales, sei whales or sea lions. “The proposed LNG facility upgrades will occur entirely on land, therefore the construction of the upgrades is not expected to impact water resources, fishes, marine mammals, and/or threatened and endangered species,” wrote NMFS in a letter to FERC earlier this week. The agency added that because the “project proposes no change in vessel operations compared with current conditions, no additional adverse effects from vessel operations are expected as a result of this action.” Kenai began operating in 1969 and for more than 40 years was the only LNG export terminal in the United States. The terminal has a liquefaction capacity of 200 MMcf/d, but the plant hasn’t exported LNG since 2015. It’s been idled since Marathon Petroleum acquired it from ConocoPhillips in 2018. Trans-Foreland wants to construct facilities, return two 35,000 cubic meter storage tanks and other equipment to service to import LNG. Liquefaction would remain out of service under current plans.

Biden’s energy moves strengthen Russia, US rivals, undermine national security | Fox Business – President Biden’s executive orders that put the U.S. on a course to transition away from fossil fuels are a boon for U.S. competitors Russia, Saudi Arabia and other adversaries and pose a threat to national security. Biden on Wednesday signed an executive order that temporarily bans the issuance of new permits and leases for drilling and fracking on federal lands. He also ordered federal agencies to eliminate fossil fuel subsidies. The actions followed other executive orders that called on the U.S. to rejoin the 2016 Paris climate agreement and to temporarily halt drilling in the Arctic, among other things. “Anything that blunts U.S. production growth and potentially blunts the ability of the U.S. to pursue a coercive sanctions regime tied to American energy dominance” would benefit Russia, said Helima Croft, managing director and global head of commodity strategy at RBC Capital Markets. She noted the orders, while telegraphed by Biden on the campaign trail, may have taken people by surprise due to the speed at which they were implemented. Biden has promised to “transition” the U.S. away from oil. Deregulation implemented by the Trump administration helped the U.S. in 2017 become a net exporter of natural gas for the first time since the 1950s. In 2019, the U.S. became a net exporter of energy. Being energy independent allowed the Trump administration to levy sanctions against the Russian oil company Rosneft for its support of the Maduro regime in Venezuela.Additionally, Russia’s stronghold on liquefied natural gas exports to the European market was threatened as a strong U.S. presence gave those countries purchase optionality.Other potential winners from Biden’s executive actions include the Gulf state producers like Saudi Arabia, United Arab Emirates and Kuwait, which produce the cheapest and cleanest oil. Just this month, the U.S. for the first time in 35 years did not import a single barrel of crude oil from Saudi Arabia.

Big Oil hits brakes on search for new fossil fuels (Reuters) – Top oil and gas companies sharply slowed their search for new fossil fuel resources last year, data shows, as lower energy prices due to the coronavirus crisis triggered spending cuts.Acquisitions of new onshore and offshore exploration licences for the top five Western energy giants dropped to the lowest in at least five years, data from Oslo-based consultancy Rystad Energy showed. The number of exploration licensing rounds dropped last year due to the epidemic while companies including Exxon Mobil, Royal Dutch Shell and France’s Total also reduced spending, Rystad Energy analyst Palzor Shenga said. “Acquiring additional leases comes with a cost and it demands some work commitments to be fulfilled. Hence, companies would not want to pile up on additional acreages in their non-core areas of operations,” Shenga said. Of the five companies, BP saw by far the largest drop in new acreage acquisition in 2020. Bernard Looney, who became BP’s CEO in February, outlined a strategy to reduce oil output by 40% or 1 million barrels per day by 2030. BP has rapidly scaled back its exploration team in recent months. Exxon, the largest U.S. energy company, acquired the largest acreage in 2020 in the group, with 63% in three blocks in Angola, according to Rystad Energy.Total was second with two large blocks acquired in Angola and Oman. Acquiring exploration acreage means companies can search for oil and gas. If new resources are discovered in sufficient volumes, the companies need to decide whether to develop them, a costly process that can take years. As a result, the drop in exploration activity could lead to a supply gap in the second half of the decade, analysts said.

Half-million barrels unloaded from oil-storage vessel in the Gulf – ABOUT half of the 1.3 million barrels of crude oil stored in the troubled Nabarima floating storage and offloading (FSO) facility, moored off Guiria, Sucre, Venezuela, have been transferred to an oil tanker, a Reuters report said on Thursday. After the alarm was first raised last October about the listing ship posing the risk of an oil spill in the Gulf of Paria, the US State Department said an intervention would not violate US sanctions against Venezuela.The sanctions are aimed at ousting President Nicolas Maduro over alleged election-rigging. The Nabarima has been idle for two years as a result. Italian oil company Eni, which has a 26 per cent stake in the Petrosucre joint venture with PDVSA (Venezuela’s state-owned oil company) prepared to help. PDVSA also prepared its own offload using a sanctioned oil-tanker, the Icaro. On December 15, the Reuters news agency said PDVSA had begun to transfer oil from the offshore facility. On Wednesday, Reuters reported in a story headlined: Venezuela completes first tranche of oil transfer from offshore facility: “PDVSA in December began offloading crude from the Nabarima floating storage and offloading facility (FSO), after images of the facility listing earlier last year raised alarms among workers, activists and governments of neighbouring countries about a possible environmental disaster.” Reuters said satellite images showed 570,000 barrels were moved from the Nabarima to the Icaro, a PDVSA-owned vessel anchored nearby, according to TankerTrackers.com, a service that monitors satellite data for the oil industry. A barge, the Inmaculada, was used to ferry the Nabarima’s crude to the Icaro.

Will Venezuela Go To War Over Oil? — January 2021 is still far from over yet the pages of Oilprice already boast 6 articles about Guyana being the hottest drilling spot in the world. This is hardly surprising, considering the hot streak that ExxonMobil had over the past 5 years, with new companies coming in and stepping up the drilling game. The interest globally attributed to Guyana has aggravated Venezuela’s long-standing grievances over the disputed Essequibo province – before 2015 the Venezuela vs Guyana oil standoff was akin to a David vs Goliath story but now, with Guyana building up its oil reserves tally and continuing to attract new investors, the balance has become a lot more nuanced. Amidst all of this, Venezuelan President Nicolas Maduro has pledged to reconquer Essequibo. At first glance, the proposition that Venezuela should go to war over a disputed territory, let alone with Guyana, seems rather dubious. Venezuela boasts the world’s largest proven oil reserves, totalling roughly 304 Bbbls (see Graph 1), i.e. more than all of North America combined, more than Iraq and Iran combined. Guyana’s reserves are a fraction of that, barely reaching 3% with its 9-10 Bbbls. However, behind the dry facade of data and statistics, there lies an entire universe of human emotions, oftentimes led astray due to their subjective nature and in this particular realm, Caracas is the one frustrated and concerned. Guyana is adding one major discovery after another (the recent failure of Hassa-1 notwithstanding), whilst the Venezuelan national oil company PDVSA keeps on struggling to make ends meet. The dispute over Guayana Esequiba (alternatively dubbed the Essequibo Region) is one of the most complex remaining, mixing colonial legacies with modern-day grievances. It all began in 1840 when the British Empire demarcated the heretofore undisputed and unsettled frontier between British Guiana and Venezuela, by means the “Schomburgk Line”. To no one’s surprise Venezuela rejected the British claim, however, unwilling as they were to get mired in a protracted conflict, both sides agreed to disagree in 1850 and vowed not to colonize the then-largely uninhabited region. Despite arbitrations and negotiations, the question of who should control the Essequibo Region remained unsolved by the time of Guyana declaring itself independent in 1966. Caracas recognized the independent Guyana, however only its territories located to the east of the Essequibo River, maintaining its claim that all the territories to the west are part of Venezuela. One of the most protracted territorial disputes globally, the discovery of oil offshore Guyana might have been the factor missing to propel the issue forward. ExxonMobil, the operator of Guyana’s Stabroek offshore block, was subject to maritime harassment by the Venezuelan Navy and had one of its surveying vessels detained in 2013. However, when Exxon discovered the Liza field in 2015, closer to the Guyanese-Surinamese frontier and hence were beyond the Venezuelan maritime claim, the stakes turned really high. Guyana had official proof that its offshore was not sub-commercial as was previously thought (initially companies appraised the shallow waters of Guyana and found no commercial deposits) and with the help of a US major could now count on high-level backing for its border case.

ScotGov Proposes Halting Overseas Oil Support – The Scottish government has announced a new proposal to end all its overseas trade backing and promotion activities solely focused on fossil fuel goods and services by COP26. The government, which said it will consult with the industry on its proposal, noted that there will be legitimate exceptions to the withdrawal of support where it is clear that the work is essential for a fair and just energy transition, such as decommissioning. “Scotland’s vision for trade sets out our stall for the future and is clear about the kind of country we want to be,” Trade Minister Ivan McKee said in a government statement. “How we trade is as important as what we trade and our values-based approach will guide how we do business around the world and ensure that people, businesses and other governments know who we are and what we represent as a nation,” he added. Commenting on the Scottish government’s latest energy proposal, OGUK chief executive Deirdre Michie said, “we are requesting an urgent meeting with Scottish ministers so that we can highlight the effect this policy may have on members, particularly our SME members, who are still reeling from the impact of the Covid-19 pandemic and the downturn with its volatile commodity prices”.”In order to ensure our shared net-zero objectives become a reality, we will need to deliver a fair and managed transition at pace; one which deals with the realities of a competitive market while at the same time offering exciting new prospects for the future of our industry,” Michie went on to state.

Oil spill at Chevron’s oilfield pollutes Bayelsa – Crude oil spill has reportedly occured at Funiwa oilfield operated by Chevron Nigeria Limited (CNL) in Koluama, Southern Ijaw Local Government Area of Bayelsa State. Fishermen operating in the shallow waters of the Atlantic Ocean near Bayelsa coastline on Sunday reported the leak from the oilfield. The fishermen said they noticed crude on the waters near the oil facility as helicopters were seen overflying the area. A fisherman from the coastal settlement, Mr Tombra Ebitimi, said he noticed the incident on Saturday night and subsequently reported the development to the community leadership. He claimed several helicopters had been deployed to the area for assessment as response efforts had yet to commence. Ebitimi said: “Some of us who went for fishing sailed into the oil contaminated area near the Funiwa oilfield and got our nets and fishing gear soaked with crude on Saturday. “By today (Sunday), we noticed some helicopters overflying the facility. “It could be that community leaders have informed the company but our concern is that they should not apply toxic chemicals from the sky to dissolve the oil. “Those chemicals used to disperse and break down crude is unfriendly to fishes and marine life generally.” He said fishermen in the area had temporarily suspended fishing to avoid catching contaminated fishes that could jeopardise public health. First Exploration and Production Company, an indigenous oil firm, operates Oil Mining Leases (OMLs) 83 and 85, acquired from Chevron following its divestment from some of its assets in the area where it still retains interests in some fields. Officials of Chevron and FEPC have yet to respond to requests for comments on the incident.

Chevron denies responsibility as oil spill is reported in Bayelsa – Chevron operates in the area. Chevron Nigeria Limited (CNL) said on Friday that reported leaks near its operational areas at Funiwa offshore facilities off the Atlantic coast were not from its facilities. It pledged to support regulators in tracing the source. The News Agency of Nigeria (NAN) reports that fishermen around the Atlantic Ocean coastline reported an oil leak suspected to be from the Funiwa fields on Sunday. Esimaje Brikinn, General-Manager, Policy, Government and Public Affairs, Chevron, said the oil firm remained committed to tracing the source of the spill, as part of a joint effort by operators in the area to investigate the leakage. “The observed spill has been reported by CNL to the appropriate regulatory agencies. “For spills found within an operator’s operational area, the operator is required to contain the spill, followed by a Joint Investigation Visit by all stakeholders for assessment and further action. “No spill has been observed within CNL’s operational area, but we are monitoring this incident. “CNL operates in strict compliance with the relevant laws and regulations governing the Nigerian petroleum industry and remains committed to the safety of people and the environment,” he stated. Chevron and two other companies operate near the spill location. NAN gathered that the National Oil Spills Detection and Response Agency (NOSDRA) had summoned all the oil firms operating in the shallow waters near Koluama in Bayelsa in a bid to identify the source of the leaks.

Dutch court rules on Shell Nigeria oil spill case — A Dutch court will hand down its verdict on Friday in a long-running case pitting oil giant Shell against four Nigerian farmers who accuse it of causing widespread pollution. After 13 years of legal wrangling, an appeals court in The Hague will rule on the farmers’ demands for the Anglo-Dutch firm to clean up devastating oil spills in three villages in the Niger Delta and pay compensation. The case, backed by the Netherlands arm of environment group Friends of the Earth, is the first time a Dutch company has been held liable for actions by its foreign subsidiary. The case has dragged on so long that two of the Nigerian farmers have died since it was first filed in 2008, as Shell argued that the matter should not be heard in the Netherlands. “After almost 13 years, we will hear whether Nigerians will finally receive justice or whether Shell has succeeded in completely shirking its responsibility for the pollution,” Donald Pols of Friends of the Earth Netherlands said in a statement. “For the inhabitants of the Niger Delta it is crucial that their land is cleaned up and their lost crops and livelihoods are compensated by the guilty party: Shell,” he added. Shell has always blamed the spills on sabotage and said it has cleaned up with due care where pollution has occurred. The farmers first sued Shell in 2008 over pollution in their villages Goi, Ikot Ada Udo and Oruma, in southeastern Nigeria. A lower court in the Netherlands found in 2013 that Shell should pay compensation for one leak, at Ikot Ada Udo, but ruled that Shell’s parent company in the Netherlands could not be held liable in a Dutch court for the actions of its Nigerian subsidiary. But in 2015 the Hague appeals court ruled that Dutch courts did indeed have jurisdiction in the case. The appeals court will on Friday decide on the substance of the case: whether Shell is to blame for the oil leaks and did it do enough to prevent them and future spills.

China Oil Demand at Risk -The Lunar New Year travel rush — which starts on Jan. 28 this year — runs for 40 days and is normally the biggest mass movement of people on the planet as hundreds of millions of Chinese jump on planes, trains and automobiles to see their extended families. It also provides an annual boost to transport fuel consumption in the world’s biggest oil importer. That seems unlikely this year as China discourages travel amid a resurgence of Covid-19 that’s threatening the nation’s reputation for controlling its spread. There will be around 1.7 billion trips over the LNY period, the Ministry of Transport has estimated. While that’s potentially 15% higher than last year, when movement was restricted to try and stop the initial coronavirus outbreak spreading from Wuhan, it’s down a massive 40% from 2019. The comeback in Covid-19 has been most severe in Hebei, where Tian’s hometown is, with authorities isolating the provincial capital of Shijiazhuang, a city of 11 million people. However, there have also been restrictions put in place in Beijing, Shanghai, northeast China and Hong Kong, where a densely populated neighborhood was locked down over the weekend. People traveling to rural areas will have to present a negative Covid-19 test result before leaving this year. Local governments are also offering incentives to stay home, including rent rebates in Zhejiang province and free meals and tickets to tourist attractions in Guangdong province. Concern that they could face quarantines when they get home may also stop people from traveling. China was a global bright spot for oil consumption last year as its economy rebounded rapidly from Covid-19’s first wave. The resurgence is now “casting a pall on that,” said Michal Meidan, director of the China Energy Programme at the Oxford Institute for Energy Studies. “The question now though is how steep of a demand impact and how long restrictions will last for.” It’s possible that some Chinese will ignore the travel warnings. The government ordered travel agencies to suspend sales of domestic and international package tours and imposed transport curbs before LNY last year. Many people still traveled anyway, however, helping to spread the virus.

Oil prices fall for 2nd session as Covid-19 lockdown concerns cast pall over demand prospects – Oil prices slipped for a second straight session on Monday as renewed Covid-19 lockdowns raised fresh concerns about global fuel demand. Brent crude futures for March fell 15 cents, or 0.3%, to $55.26 a barrel by 0158 GMT, while U.S. West Texas Intermediate crude for March was at $52.19 a barrel, down 8 cents, or 0.2%. “Signs of weaker demand weighed on the market,” ANZ analysts said, pointing to lockdowns in Hong Kong, China and possibly France as COVID-19 cases rise, restricting business activity and fuel consumption. China reported a climb in new Covid-19 cases on Monday, casting a pall over demand prospects in the world’s largest energy consumer, the main pillar of strength for global oil consumption. Last Friday prices came under further pressure after data from the U.S. Energy Information Administration showed U.S. crude inventories surprisingly rose by 4.4 million barrels in the week to Jan. 15, versus expectations for a draw of 1.2 million barrels. The number of oil and natural gas rigs added by U.S. energy firms rose for a ninth week in a row in the week to Jan. 22, but are still 52% below this time last year, data from Baker Hughes showed. Some support for prices has come in recent weeks from additional production cuts from the world’s top exporter, Saudi Arabia. But investors are watching for a resumption of talks between the United States and Iran on a nuclear accord which could see Washington lifting sanctions on Tehran’s oil exports, boosting supply. Iran’s oil minister said on Friday the country’s oil exports have climbed in recent months and its sales of petroleum products to foreign buyers reached record highs despite U.S. sanctions. On Sunday, Indonesia said its coast guard had seized the Iranian-flagged MT Horse and the Panamanian-flagged MT Freya vessels over suspected illegal fuel transfers off the country’s waters.

Oil rises 1% on U.S. stimulus hopes, supply concerns (Reuters) – Oil prices rose about 1% on Monday as optimism around U.S. stimulus plans and some supply concerns boosted futures, but demand worries prompted by coronavirus lockdowns limited gains. Brent crude futures rose 47 cents, 0.9%, to settle at $55.88 a barrel. U.S. West Texas Intermediate crude ended 50 cents, or 1%, higher at $52.77 a barrel. Officials in U.S. President Joe Biden’s administration on a Sunday call with Republican and Democratic lawmakers tried to head off Republican concerns that his $1.9 trillion pandemic relief proposal was too expensive. “Newly inaugurated President Biden seems to be pushing for a quick approval of his proposed $1.9 trillion pandemic relief package, a development interpreted by the market as a clear indication that the new U.S. administration aims to kick-start an economic recovery, which will naturally benefit fuel consumption,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets. On the supply side, the Organization of the Petroleum Exporting Countries and its allies’ compliance with pledged oil output curbs is averaging 85% so far in January, tanker tracker Petro-Logistics said on Monday. The data suggest the group had improved its adherence to pledged supply curbs. In Indonesia, the country said its coast guard seized an Iranian-flagged tanker over suspected illegal fuel transfers, raising the prospect of more tensions in the oil-exporting Gulf. Output from Kazakhstan’s giant Tengiz field was disrupted by a power outage on Jan. 17. Meanwhile, European nations have imposed tough restrictions to halt the spread of the virus, while China reported a rise in new COVID-19 cases, casting a pall over demand prospects in the world’s largest energy consumer. Barclays raised its 2021 oil price forecasts, but said rising cases in China could contribute to near-term pullbacks.

Oil prices tick up with European shares amid Saudi blast reports – Oil prices ticked up on Tuesday alongside rising European shares and amid reports of a blast in Saudi Arabia, trading near 11-month highs. Brent crude was up 32 cents, or 0.6%, at $56.20, while U.S. West Texas Intermediate crude rose 22 cents, or 0.4%, to $52.99. Both contracts rose nearly 1% on Monday and are set to post the third monthly rise in a row. Prices edged up after reports of a blast in the Saudi Arabian capital Riyadh, although the cause remains unclear. In Europe, gains in financial services and chemical sectors helped stocks rise. Risk assets such a equities and oil often move in tandem. Raising the prospect of higher oil demand later in the year, the International Monetary Fund predicted global growth of 5.5% in 2021, an increase of 0.3 percentage points from the October forecast, citing expectations of a vaccine-powered uptick. On the supply side, the Organization of the Petroleum Exporting Countries and its allies’ compliance with pledged oil output curbs is averaging 85% in January, tanker tracker Petro-Logistics said on Monday, suggesting the group has improved compliance with supply curb commitments. Also, output from the giant Tengiz field in Kazakhstan, disrupted by a power cut on Jan. 17, will be restored over the next few days, according to Tengizchevroil. “It appears that market players are cautiously sanguine about the producer group’s market management strategy and therefore about the imminent depletion in global oil inventories,” PVM analysts said. Dampening bullish sentiment, U.S. Democrats are still trying to convince Republican lawmakers of the need for more stimulus, raising questions over when and in what form a package will be approved. China is reporting rising COVID-19 cases, casting a pall over demand prospects in the world’s largest energy consumer. Elsewhere, Indian crude oil imports in December rose to their highest in more than two years.

Oil prices steady as virus deaths rise, demand worries persist (Reuters) – Oil prices were little changed on Tuesday as rising coronavirus deaths fed worries about the global demand outlook, but losses were capped by reports of a blast in Saudi Arabia. Brent crude ended the session up 3 cents, or 0.05%, at $55.91 while U.S. crude fell 16 cents, or 0.3%, to settle at $52.61. U.S. crude futures pared losses and Brent crude inched higher in post-settlement trade after data from the American Petroleum Institute showed U.S. crude inventories fell by 5.3 million barrels in the week to Jan. 22 to about 481.8 million barrels, compared with analysts’ expectations in a Reuters poll for a build of 430,000 barrels. [API/S] Indonesia, the world’s fourth-most-populous country, surpassed a million confirmed coronavirus cases on Tuesday while the death toll in Britain passed 100,000 people as the government battled to speed up vaccination delivery and keep variants of the virus at bay. The number of cases in the United States crossed 25 million on Sunday, a Reuters tally showed. Further dampening bullish sentiment, U.S. Democrats are still trying to convince Republican lawmakers of the need for more stimulus, raising questions over when and in what form a package will be approved. “Big COVID numbers, vaccine struggles and uncertainty surrounding the Biden stimulus plan, are all conspiring to pressure prices,” said Robert Yawger, director of energy futures at Mizuho Securities USA. Compared to some other countries, vaccine roll-outs in the European Union have been slow and fraught with problems, not least interruptions to supply chains. Prices edged up briefly after reports of a blast in the Saudi Arabian capital Riyadh, although the cause was unclear.

Oil Up After Report Points to Drop in US Stockpiles | Rigzone — Oil in New York rose toward $53 a barrel as an industry report pointed to a drop in U.S. crude stockpiles, adding to signs of easing supply. Futures climbed 0.7% after slipping on Tuesday. The American Petroleum institute reported inventories fell by 5.27 million barrels last week, according to people familiar. If confirmed by government data on Wednesday, that would be the sixth draw in seven weeks. Broader financial markets are also awaiting the Federal Reserve monetary policy decision after its first meeting this year. Prompt timespreads for the U.S. benchmark and global Brent are in a bullish market structure and firming, indicating shrinking supplies. With the market switching to backwardation, “we are hopeful that 2021 will be a good year,” OPEC Secretary-General Mohammad Barkindo said. Oil has jumped almost 50% since the end of October but the rally has faltered recently on concerns about the near-term demand outlook due to Covid-19. China is facing a resurgent outbreak, there are fears about virus variants, while the U.K. became the first nation in Europe with 100,000 deaths. “With U.S. supplies shrinking and OPEC+ still keeping a tight rein on the other part of the supply equation, the market is expected to be in a deficit despite the reduced demand from the resurgent virus,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. West Texas Intermediate for March delivery gained 34 cents to $52.95 a barrel on the New York Mercantile Exchange at 7:41 a.m. London time after losing 0.3% on Tuesday. Brent for March settlement added 0.6% to $56.26 on the ICE Futures Europe exchange after ending the previous session little changed. Russia plans to cut exports next month to keep crude for domestic use, Iraq and Saudi Arabia are trimming output, and Libyan shipments are being affected by internal turmoil. Brent’s prompt timespread was 29 cents in backwardation — where near-dated contracts are more expensive than later-dated ones — compared with a 7-cent contango at the start of the month. U.S. fuel stockpiles, meanwhile, expanded last week, the API reported. Gasoline inventories rose by 3.06 million barrels, while distillates — a category that includes diesel — increased by 1.4 million barrels.

WTI Erases Overnight Weakness, Surges On Biggest Crude Draw Since July -After a strong overnight session following API’s big crude draw, oil prices tumbled this morning, alongside a broader market dump, as lingering demand concerns weigh on crude’s recovery outlook, and liquidation threats ripple across every asset class.“There’s liquidation across the board and a flight to safety,” said John Kilduff, a partner at Again Capital LLC.“There’s also a nice snapback in the dollar, so some of the support the weak dollar had lent to the commodities complex and crude is being removed as well here.”The possible saving grace for this downside move in crude is a DOE confirmation of API’s bigger than expected crude draw. API

Crude -5.272mm (-1.7mm exp)
Cushing -3.575mm
Gasoline +3.058mm (+1.2mm exp)
Distillates +1.39mm

DOE

Crude -9.91mm (-1.7mm exp) – biggest draw since July
Cushing -2.281mm
Gasoline +2.469mm (+1.2mm exp)
Distillates -815k

After the prior week’s surprise crude build, analysts expected a modest draw but official data showed a huge 9.91mm barrel drop in stocks…

Oil rises as larger-than-expected U.S. crude draw outweighs Covid-19 demand concerns – Oil prices ticked up on Wednesday as a massive drawdown in U.S. crude inventories countered persistent concerns about the coronavirus pandemic continuing to hurt fuel demand. U.S. crude oil stocks dropped by nearly 10 million barrels last week to their lowest since March at 476.7 million barrels due to a sharp drop in imports, the Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a build. Stocks at the U.S. storage hub and delivery point for crude futures in Cushing, Oklahoma, plunged by 2.3 million barrels. Brent crude gained 34 cents to $56.25 a barrel. U.S. West Texas Intermediate (WTI) crude settled 24 cents, or 0.5%, higher at $52.85 per barrel. “The market was led up by a significant draw in crude oil,” said Andrew Lipow, president Lipow Oil Associates in Houston. Oil prices have recovered from record lows in April due to rising demand from the early months of the pandemic, particularly in China, and huge supply cuts by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+. “Oil continues consolidating,” said Jeffrey Halley of brokerage OANDA. “The Saudi Arabian cuts, OPEC+ compliance above 85% and an insatiable demand from Asia means that oil has seen its cyclical lows for 2021.” Prices could also benefit from lower U.S. oil production as a result of stricter industry regulations by the Biden administration, which is set to pause new oil and gas leases on federal land and cut fossil fuel subsidies as he pursues green policies. “We’re going to be watching these production numbers to see if U.S. oil producers can overcome a tougher regulatory environment and a tougher funding environment and raise output,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. The number of global coronavirus cases has surpassed 100 million as infections rise in Europe and the Americas, while Asia scrambles to contain fresh outbreaks, weighing on oil demand and prices. China, the second-largest oil consumer, has recently seen a coronavirus resurgence, but official Chinese data showed 75 new confirmed cases of COVID-19 on Wednesday, the lowest daily rise since Jan. 11. After the U.S. oil inventory report, the market’s focus shifts to the results of the U.S. Federal Reserve’s two-day policy meeting. Analysts expect the Fed to stick to its dovish tone to help speed the economic recovery.

Oil falls on demand fears, strengthening dollar – Oil slid on Thursday as the impact of a weaker dollar and big U.S. crude inventory couldn’t offset concerns that delays to vaccine rollouts and fresh travel curbs to prevent new coronavirus outbreaks could depress demand. Brent futures for March delivery fell 27 cents, or 0.48%, to $55.54 per barrel. U.S. West Texas Intermediate (WTI) crude settled 51 cents, or 0.96%, lower at $52.34 per barrel. The premium of the Brent front-month over the second month rose to its highest level since February 2020 for a fourth day in a row. The U.S. 3-2-1 crack spread , a measure of the profit margin for refining crude into gasoline and distillate, was on track for its highest close since May 2020, while the gasoline crack spread was on track for its highest close since June 2020. Oil prices were supported earlier by Wednesday’s data that showed a huge 10 million-barrel drawdown in U.S. crude inventories last week, which analysts said was because of a pickup in U.S. crude exports and a drop in imports. “The draw was a big relief for inventories, especially as it followed a week of builds, putting traders at ease that supply doesn’t overwhelm demand for the time being,” Rystad Energy’s Louise Dickson said. In addition, the U.S. dollar index flipped into negative territory after earlier gains, which also helped support oil prices. Buyers using other currencies pay less for dollar-priced oil when the greenback falls. Demand concerns, however, weighed on sentiment and prevented oil prices from holding those earlier gains. The U.S. economy contracted at its deepest pace since World War Two in 2020 as the COVID-19 pandemic depressed consumer spending and business investment, pushing millions of Americans out of work and into poverty. A separate report showed 847,000 more people likely filed U.S. jobless claims last week, strengthening views of persistent labor market weakness. Stricter vaccine checks by the European Union and delivery hold-ups from AstraZeneca Plc and Pfizer Inc have slowed the rollout of shots. In China, the world’s second-largest oil consumer, a surge in coronavirus cases has led to travel restrictions ahead of the Lunar New Year, normally the busiest travel season of the year.

Oil Prices Decline Under Virus Variant Cloud — Oil declined the most in nearly a week with the spread of new Covid-19 variants and tighter lockdown measures weighing on nascent hopes of a demand recovery. Futures in New York fell nearly 1% after choppy trading earlier on Thursday. The coronavirus variant identified in South Africa is reported to have reached the U.S. At the same time, worries over vaccine shortages in Europe continued to emerge, with Germany casting doubt on the effectiveness of AstraZeneca Plc’s shot for the elderly. “Concerns about the new Covid variants causing shutdowns in Europe and Asia, China especially,” are stoking worries over consumption, said Michael Lynch, president of Strategic Energy & Economic Research. “The market was balanced and inventories were coming down,” but now “people are worried demand may weaken even further.” Oil has struggled to break far above $53 a barrel in New York over the past few weeks as increased coronavirus lockdowns remain a risk to crude’s demand recovery. In Europe, air traffic could be down 70% this summer if travel curbs remain, according to Eurocontrol. “The vaccine and virus news remain ever-present as an issue,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. The crude market “needs a much larger tailwind in terms of demand and travel is not coming as quickly as people would hope.” Still, global supply curbs are helping push crude into a bullish structure called backwardation, when nearer contracts are more expensive than later-dated ones. Supply reductions could supersede the drag on demand from the virus and send Brent crude past $70 a barrel by the end of this year, according to JPMorgan Chase & Co. West Texas Intermediate for March delivery fell 51 cents to settle at $52.34 a barrel. Brent for the same month slipped 28 cents to end the session at $55.53 a barrel, posting the biggest daily decline since Jan. 22. Brent’s nearest timespread is at its strongest level since late February ahead of the expiry of its March contract on Friday. Meanwhile, continued declines of U.S. crude stockpiles at the nation’s key storage hub in Cushing, Oklahoma, is helping drive a similar firming in WTI’s forward curve. The U.S. benchmark crude’s so-called prompt spread is also in backwardation.

Oil Prices Decline with Broader Market | Rigzone — Oil edged lower on Friday alongside a broader market decline as the recovery in consumption remains uncertain. The dip capped a third straight week with New York futures stuck near $52 a barrel. U.S. equities weakened amid lingering concerns over volatile retail trading. While Johnson & Johnson’s Covid-19 vaccine breakthrough allayed some worries about the deterioration of consumption, it’s clear the demand environment remains tepid. Chevron Corp. posted a fourth-quarter loss after weak fuel consumption hit its refining business. “There’s a lot of issues out there when it comes to demand going forward,” said Tariq Zahir, managing member of the global macro program at Tyche Capital Advisors LLC. “A massive amount of the population still is not going out anywhere. Demand will definitely see a big snapback, but who knows when that’s going to be?” But while headline prices have been treading water, the futures curve is pointing to a more balanced market as OPEC+ output curbs and restrained U.S. shale production help further draw down inventories accumulated during the pandemic. The nearest contracts for both Brent and West Texas Intermediate have moved further into a premium relative to the next month, a pattern known as backwardation that signals tighter supplies and strong demand. At the same time, low processing rates from refiners are keeping fuel supplies more or less in check. The incentive for processing a barrel of oil is growing, with the combined refining margin of gasoline and diesel back near levels last seen in May. Once vaccines are widely distributed, “we’re probably going to have the biggest surge in demand ever, at least year-over-year, and we’re not going to get the supply response we normally got” from U.S. shale producers, said Jay Hatfield, CEO at InfraCap in New York. “So price is going to have to be the moderating variable.” Prices West Texas Intermediate crude for March delivery dipped 14 cents to settle at $52.20 a barrel Brent for April settlement lost 6 cents to $55.04 a barrel The March contract, which expires Friday, increased 35 cents to $55.88 a barrel

U.S. oil futures edge lower for the session, but end the month over 7% higher – U.S. oil futures settled lower on Friday (link), weighed down by ongoing concerns over energy demand, but prices ended the month with a more than 7% gain, with Saudi Arabia set to implement a unilateral production cut (link) of 1 million barrels a day starting in February. March West Texas Intermediate crude fell 14 cents, or 0.3%, to settle at $52.20 a barrel on the New York Mercantile Exchange. Based on the front-month contract close on Dec. 31, prices posted a climb of about 7.6% for the month of January, FactSet data show.

Mysterious Group Claims Responsibility For Recent Attack On Saudi Capital – An armed group calling itself the Righteous Promise Brigades [Alwiyat Al Wa’ad Al Haq] has claimed responsibility for the recent attack on the Saudi capital of Riyadh.In a statement released late on January 23, the group said it had attacked Riyadh with a number of kamikaze drones. According to the group, the attack targeted several positions in the Saudi capital including the Al Yamamah Palace, the official residence and office of the King of Saudi Arabia and the seat of the royal court.Early on January 23, the Saudi-led coalition announced the interception of a hostile aerial object over Riyadh, holding the Houthis responsible. The Yemeni group, however, denied responsibility for the attack.The Righteous Promise Brigades said the attack on Riyadh was a response to the January 21 Baghdad bombings, which claimed the lives of 34 people. The attack was carried out by ISIS, which receives support from Saudi Arabia, according to the group.“The second blow will be on the dens of evil in Dubai, with the help of the Almighty, if the crimes of Bin Salman [Saudi Crown Prince] and Bin Zayed [UAE Crown Prince] are repeated,” the group said in its statement. The newly-formed group may be affiliated with Iran. According to a recent report by Kuwait’s al-Qbas, the Islamic Revolutionary Guard Corps deployed precision-guided rockets and drones in southern Iraq.

Game-changing Iranian Pipeline Set To Launch In March – The geopolitically game-changing Goreh-Jask pipeline project saw a major advance last week with the commencement last week of offshore pipe-laying operations. The implementation of this operation markets the first stage of the offshore development of the Jask Oil Terminal and, according to the Pars Oil and Gas Company, this offshore section of the early-production phase of the project will be completed with the construction of two 36-inch offshore pipelines running for around 12 kilometres and a single buoy mooring with ancillary equipment. Overall, the company added, the early-production phase of the Jask Oil Terminal Development Project is 70 per cent complete, allowing the project to come online by late March. After the completion of this first phase of offshore pipeline laying, the Goreh-Jask pipeline will begin full pumping tests aimed at ascertaining its capacity to transfer 350,000 barrels per day (bpd) of light, heavy, and ultra-heavy crude oil through the 1,100 km-long, 46 inch diameter pipeline that runs from the Goreh oil terminal in the north-west Bushehr Province to Mobarak Mount in the western Jask region along the Sea of Oman. This will involve the construction and deployment of 83 42-inch valves relating to the gate, control and emergency shut-off functions in the pipeline project, six smaller pipelines, five pump houses, three stations for receiving and sending pipeline pigs, 10 power stations, 400 kilometres of transmission lines, three single point moorings, subsea pipelines, and a stilling basin. The initial focus of the oil-transfer chain across the Goreh-Jask pipeline will be the huge oil fields cluster in the West Karoun region, which are the current focus of plans between Iran and China to boost short-term oil production as part of the two countries’ 25-year plan. The starting point of the transmission route in this first phase is the West Karoun pumping station, the middle point is the Omidieh pumping station, and the end stage is the Bahregan and Jask terminals. After the initial testing of the first phase infrastructure has been completed, with 350,000 bpd transferred, the figure will be increased to a daily delivery capacity 460,000 bpd of heavy crude oil and 254,000 bpd of light crude oil to export terminals. Phase 2 will involve the transfer more than one million barrels of crude oil to export terminals. Over and above the technical details involved in the Goreh-Jask pipeline project, the key point is that the pipeline will allow Iran another method by which it can export huge amounts of oil without being prey to U.S. sanctions and it will also allow Iran to do this whilst at the same time causing chaos for a third of the rest of the world’s oil shipments through blockading the Strait of Hormuz, should it wish to do so again. “The logistical model Iran has at present is not sustainable in the current circumstances, with around 90 per cent of all of its oil for export currently loaded at Kharg Island – with most of the remaining loads going through terminals on Lavan and Sirri – making it an obvious and easy target for the U.S. and its proxies to cripple Iran’s oil sector and therefore its economy,” a senior oil and gas industry source who works closely with Iran’s Petroleum Ministry told OilPrice.com. “Conversely, Iran wants to be able to use the threat – or reality – of closing the Strait of Hormuz for political reasons without also completing destroying its own oil exports revenue stream,” he said.

Indonesia seizes Iranian and Panamanian tankers over illegal oil transfer – A statement from coast guard spokesman Wisnu Pramandita said the tankers, seized in waters off Kalimantan province, were escorted to Batam island in Riau Island Province for further investigation.”The tankers, first detected at 5:30 a.m. local time (2130 GMT on Jan. 23) concealed their identity by not showing their national flags, turning of automatic identification systems and did not respond to a radio call,” the statement said.”There was an oil spill around MT Frea.” The International Maritime Organization requires vessels to use transponders for safety and transparency. Crews can turn off the devices if there is a danger of piracy or similar hazards. But transponders are often shut down to conceal a ship’s location during illicit activities.Iran, which not commented on the seizure, has been accused of concealing the destination of its oil sales by disabling tracking systems on its tankers, making it difficult to assess how much crude Tehran exports as it seeks to counter U.S. sanctions.In 2018, former President Donald Trump pulled Washington out of Iran’s 2015 nuclear deal with six major powers and reimposed sanctions aimed at cutting Tehran’s oil exports to zero.Iran sent the MT Horse vessel to Venezuela last year to deliver 2.1 million barrels of Iranian condensate.

Iran asks Indonesia to explain seizure of tanker accused of illegal oil transfer – Iran has asked Indonesia to provide details about the seizure of an Iranian-flagged vessel, Iranian Foreign Ministry spokesman Saeed Khatibzadeh said on Monday, a day after Jakarta said it had seized Iran and Panama-flagged tankers in its waters. Indonesia said on Sunday its coast guard had seized the Iranian-flagged MT Horse and the Panamanian-flagged MT Freya vessels over suspected illegal oil transfer in the country’s waters. Khatibzadeh said that the seizure was over a “a technical issue and it happens in shipping field”. “Our Ports Organisation and the ship owner company are looking to find the cause of the issue and resolve it,” Khatibzadeh told a televised weekly news conference. Coast guard spokesman Wisnu Pramandita said the tankers, seized in waters off Kalimantan province, will be escorted to Batam island in Riau Island Province for further investigation. Wisnu told Reuters on Monday that the ships were “caught red-handed” transferring oil from MT Horse to MT Freya and that there was an oil spill around the receiving tanker. He added that 61 crew members onboard the vessels were Iranian and Chinese nationals and had been detained. Indonesia’s foreign and energy ministries did not immediately comment on the matter. Both the supertankers, each capable of carrying 2 million barrels of oil, were last spotted earlier this month off Singapore, shipping data on Refinitiv Eikon showed. Very Large Crude Carrier (VLCC) MT Horse, owned by the National Iranian Tanker Company (NITC), was almost fully loaded with oil while VLCC MT Freya, managed by Shanghai Future Ship Management Co, was empty, the data showed. Asked to comment on the seized tanker, Iran’s Oil Minister Bijan Zanganeh told reporters : “It was carrying oil … the issue is being followed up by Iran.” The International Maritime Organization requires vessels to use transponders for safety and transparency. Crews can turn off the devices if there is a danger of piracy or similar hazards. But transponders are often shut down to conceal a ship’s location during illicit activities.

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Oil, Gas, And Fracking News Reads: 31January 2021 – Part 2

The Economic Legacy Of The Holocene

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