Written by rjs, MarketWatch 666
Here are some more selected news articles for the week ending 13 February 2021. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening or Tueday morning.
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Out of spotlight, two-member panel spent $475K on consulting contracts last year for Line 5 project ⋆ A two-member panel with full, independent authority to oversee the intensive project to replace Enbridge’s controversial Line 5 pipeline and keep oil flowing under the Straits of Mackinac has been quiet and out of the news for the past year, as Line 5-related court cases heat up and focus has largely been on the regulatory agencies permitting the project. The Mackinac Straits Corridor Authority (MSCA) did not meet publicly for 11 months until Wednesday. In the meantime, the panel spent hundreds of thousands of dollars held in trust by the MSCA to secure significant consulting contracts meant to guide Enbridge’s tunnel project forward, according to documents obtained by the Michigan Advance. The statute creating the MSCA was rushed through the 2018 Lame Duck session by the GOP-controlled Legislature, then swiftly signed into law by former Gov. Rick Snyder, who had negotiated the deal with Enbridge shortly before leaving office. While three state regulatory bodies are in charge of granting Enbridge the construction permits necessary for the tunnel – the Michigan Department of Environment, Great Lakes and Energy (EGLE), Michigan Public Service Commission (MPSC) and the U.S. Army Corps of Engineers – the MSCA was entrusted specifically to oversee all aspects of the tunnel project and ensure it comes to fruition. The MSCA approved two contracts worth a total of $475,689 – with the Chicago-based McMillen Jacobs Michigan, Inc. for “advisory tunnel engineering services,” and the Lansing-based CDM Smith Michigan, Inc. for “structural design support services.” Both were already signed in October, according to Michigan Department of Transportation (MDOT) documents attained by a Freedom of Information Act (FOIA) request, but both members of the MSCA met virtually Wednesday to publicly “approve” the contracts. Both contracts were secured by MSCA Chair Mike Nystrom, a registered lobbyist for the construction industry and executive vice president/secretary of the Michigan Infrastructure and Transportation Association (MITA). He didn’t respond to an inquiry for the story. MSCA Member Tony England, a professor of electrical and computer engineering at the University of Michigan, did not appear to be included in the decisions. England’s name is not on the documents, and at Wednesday’s meeting he asked when they were signed. But he approved the contracts during the meeting anyway. The two 2020 contracts make four total consulting contracts entered into by the independent panel. On Dec. 28, 2018, the MSCA signed three-year agreements with the Colorado-based Michael Mooney Consulting, LLC for up to $452,805.33 and with the Grand Rapids-based HT Engineering, Inc. for up to $309,452.70.
Should future plans for Line 5 consider climate change? –The plan to dig a nearly four-mile tunnel underneath the Straits of Mackinac and replace the Line 5 oil and gas pipelines continues to move forward.Last week, Michigan’s Department of Environment, Great Lakes, and Energy said the plan complies with environmental laws on wetland protection, cultural resources, and wastewater discharge.But other state and federal agencies still need to weigh in on the project. And one big sticking point is climate change and whether carbon emissions from burning the oil and gas that flow through Line 5 should be a factor in deciding if the tunnel project gets greenlit.That question is before a Michigan judge right now, and could ultimately determine the tunnel’s fate. For most energy projects that are proposed on public lands, like drilling for oil and gas or installing a solar farm, the government has to review the resulting environmental impacts, including greenhouse gas emissions.That’s true for pipelines too, explains Pete Erickson, who studies climate policy at the Stockholm Environment Institute.”There is a clear causal link between a pipeline being built or not built and both the production and consumption of that oil, and therefore carbon dioxide emissions, and therefore climate change,” he says.And a project’s impact on climate can be the deciding factor in whether or not it goes forward. A high-profile example is the Keystone XL Pipeline, which would have carried oil and gas from Alberta to Nebraska. The main reason the federal government didn’t grant a permit for the project was because of climate change, according to the Obama administration. And there have been other examples, like recently in Washington, where state agencies have rejected fossil fuel projects because of their projected carbon emissions. For the Line 5 tunnel project, Enbridge, the company behind the proposal, requested that government agencies make an exception in this case.That’s because the company argued this is not a new pipeline – it would justreplace the old one and make it safer. And Judge Mack agreed with Enbridge. Back in October, he said public agenciesshould not consider greenhouse gas emissions with this tunnel project at all.
Line 5 pipeline shutdown adds urgency to Michigan’s propane heating debate – Shutting down the pipeline would cut off the Upper Peninsula from its supply of cheap propane, but clean energy advocates say there are better alternatives for heating. The impending shutdown of the Line 5 pipeline is bringing new urgency to the debate over transitioning Michigan’s Upper Peninsula from fossil fuel heating. Since 1996, Line 5 has supplied propane to about 15,000 homes in the U.P., a sparsely populated region separated from the rest of the state by Lake Michigan and Lake Huron. Gov. Gretchen Whitmer issued an executive order in December to shut down the pipeline this spring where it crosses the Straits of Mackinac between the two lakes. Enbridge is challenging the order and pursuing permits for a tunnel to carry a rebuilt line under the straits, but either of those efforts fails it could force propane companies to import the fuel by rail or truck, increasing household prices by up to $500 per year in a place with a high number of low-income residents who already struggle to pay heating bills without assistance. “It’s interesting with the whole propane question – immediately people are like, ‘How do we get more propane?'” said Jim Lively, an organizer behind the Upper Peninsula Clean Energy Conference, a monthly series of virtual events spotlighting heat pumps, geothermal and wood alternatives. “All these ideas are better alternatives to being tethered to a pipeline that’s controversial at best.” Conference sessions scheduled for Friday focus on propane delivery options and financing for clean energy in buildings. The events have been organized by a coalition of about 15 groups with representation from environmental, trade, tribal, academic and industry groups. Separately, Gov. Whitmer’s U.P. Energy Task Force is expected to present its own report on propane alternatives next month, while the National Resources Defense Council and consulting firm 5LakesEnergy have also produced a report. Among the proposals are increasing the use of heat pumps, which run on electricity and require dramatically less energy consumption than propane heating systems. Heat pump technology has improved in recent years to the point that geothermal and other systems can heat a home during the winter’s coldest days, said Douglas Jester, a partner at 5LakesEnergy who helped create the NRDC report and sits on the U.P. Energy Task Force. Propane heating systems have around a 15-year life, and the region could gradually transition to heat pumps as residents’ old systems need to be replaced, Jester said. He noted that several utility cooperatives already provide incentives for homeowners to switch, but state regulators would likely have to restructure electric rates before a switch would make economic sense for its customers. “It’s doable, but there’s still work that needs to be done,” Jester said.
Motion Seeks To Dismiss Lawsuit Against Pipeline Company – A motion has been filed to dismiss a lawsuit brought by an environmental activist against the company that installed a controversial natural gas pipeline through Livingston County. The suit was filed last October in U.S. District Court in Detroit by Michigan resident Matthew Borke against Texas-based Energy Transfer Partners, the company behind the ET Rover pipeline, and its Chairman Kelcy Warren. The company’s security contractor, Leighton Security, was also named in the suit, along with that company’s CEO Kevin Mayberry and Operations Manager Gary Washburn.Energt Transfer constructed the 42-inch diameter pipeline which carries 3.25 billion cubic feet of natural gas per day up from the Marcellus and Utica Shale through West Virginia, Pennsylvania and Ohio, crossing into Michigan in Lenawee County, then proceeding north through Washtenaw and Livingston counties before joining the Vector Pipeline in Fowlerville, where it crosses the state into Ontario, Canada. The suit alleges the companies engaged in a conspiracy to deprive Borke of his civil rights. Borke says he began attending meetings of Michigan Residents Against the ET Rover Pipeline in March of 2017, around the same time the Livingston County Sheriff’s Office began providing security at the ET Rover pipeline sites for $60 an hour, utilizing deputies in uniform and departmental vehicles. Borke claims that over the next several months, he and other members of the group were subjected to harassment and intimidation by employees of Leighton Security, which the lawsuit alleges was supported in its activities by the Sheriff’s Office through its contract. On Monday, attorneys for Energy Transfer filed a motion to dismiss the lawsuit, claiming it had failed to establish jurisdiction over the defendants nor that a conspiracy existed. Borke tells WHMI he isn’t surprised the firms are seeking to dismiss his lawsuit on jurisdictional grounds. “Large companies routinely use sub-contractors to do the work, which creates a wall of liability that protects the actual company. The reverse of that however is that anyone working for the company represents that company’s interest and therefore represents them.” He adds that the motion is “attempting to separate the employees from the company it does actually work for.”
Federal court declines to halt construction on northern Minnesota oil pipeline — A federal court on Sunday denied a request to halt construction on Enbridge’s Line 3 oil pipeline across northern Minnesota and upheld a key water quality permit granted to the project by the U.S. Army Corps of Engineers last year. The decision stems from a Dec. 24 lawsuit filed in U.S. District Court in Washington, D.C., by the White Earth and Red Lake nations and environmental groups Sierra Club and Honor the Earth that sought to stop construction as the groups argued the Army Corps had failed to consider environmental impacts like climate change and a potential oil spill. In an opinion filed Sunday, Judge Colleen Kollar-Kotelly wrote the groups and bands did not meet the burden of proof necessary for the injunction and said the harm of stopping construction, which began Dec. 1, outweighs the environmental risks of the new Line 3. She noted “most of the environmental effects stemming from the construction of Line 3 will not be ‘permanent or irreversible, as the preliminary injunction standard requires.'” “Overall, the court finds the balance of harms and public interest considerations to be a close call,” Kollar-Kotelly wrote. “Plaintiffs offer numerous examples of potential environmental harms stemming from the project’s construction. But the Corps presents persuasive evidence that delaying construction – and in doing so, continuing to rely on existing Line 3 which Enbridge is required to decommission pursuant to its consent decree – also causes ongoing environmental harm and safety risks. Top Articles Tim Walz weighing next round of COVID-19 dial turns, offers few detailsCold weather drags on for Twin Cities, with frigid temperatures to last into the weekend READ MORE New Vikings receivers coach Keenan McCardell was part of a dynamic duo. Now he’ll coach another one.Senate agrees to hear Trump case, rejecting GOP argumentsVikings’ new offensive coordinator Klint Kubiak stepping out of his father’s shadowMisdemeanor assault allegation against Inver Grove Heights city administrator now in prosecutor’s hands Cold weather drags on for Twin Cities, with frigid temperatures to last into the weekend SKIP AD “The court cannot ignore the potential financial losses and harmful economic effects on the local community if construction on the project were to be delayed. Taking into account all these considerations, the court finds that plaintiffs have not definitely tipped the scale in their favor,” Kollar-Kotelly wrote.
Another court blocks attempt to stop Line 3 construction | MPR News –A federal judge says Enbridge Energy can proceed with construction on its contentious Line 3 oil pipeline, less than a week after a state appellate court panel also denied a request from Minnesota tribes and environmental groups to temporarily block work on the project.The Red Lake Band of Chippewa, White Earth Band of Ojibwe, the Sierra Club, and the Native American-led environmental group Honor the Earth filed suit in federal court in December, seeking to overturn a key permit issued by the U.S. Army Corps of Engineers.At the same time, the groups asked the court for an injunction to suspend construction on the pipeline until their lawsuit could be heard, citing “irreparable harm” if work on the project was allowed to proceed.U.S. District Court Judge Colleen Kollar-Kotelly denied the request yesterday, writing the plaintiffs failed “to demonstrate a likelihood of success on the merits and that they will suffer irreparable harm.” The judge agreed that the construction of the 340-mile Line 3 across northern Minnesota will destroy wetlands and could result in other environmental harms.But she said delaying construction also causes safety risks, because that would result in the continued operation of the existing Line 3, which is corroding and requires extensive maintenance. Enbridge Energy is seeking to replace the old line with a new, larger one along a different route across the state. “Overall, the Court finds the balance of harms and public interest considerations to be a close call,” Kollar-Kotelly wrote.”Plaintiffs offer numerous examples of potential environmental harms stemming from the project’s construction. But the Corps presents persuasive evidence that delaying construction … also causes ongoing environmental harm and safety risks.” The judge cited an estimate from Enbridge that delaying construction for six months would result in a $322 million economic hit. The company says more than 5,000 people are currently working on the project.
New Campaign Targets Wall Street Funding to Stop Line 3 Tar Sands Pipeline -A coalition of climate groups ramped up their fight to stop Enbrige’s Line 3 pipeline Monday with a new campaign to put a “deluge” of pressure on the financial institutions funding the tar sands project.”Funding Line 3 is an unconscionable act at any time, but especially during a time when there is but a small window for us to move toward a zero-carbon economy in a way that ensures a future for the next generation simply because some JP Morgan or Bank of America executive prioritize profits over people is sickening,” said Alec Connon, co-coordinator at Stop the Money Pipeline, in a statement.”We won’t let them take our future-not without a fight,” Connon said.Canadian company Enbridge’s plan to replace a corroding pipeline with a larger one totransport an estimated 760,000 barrels of tar sands oil per day from Alberta, Canada to Wisconsin, via North Dakota and Minnesota, has been met with strong opposition. Recent direct actions included water protectors locking themselves to an excavator at a work site in Minnesota earlier this month.The new campaign focuses on major U.S.banks including JP Morgan Chase, Citigroup, and Bank of America, as well as international banks such as HSBC, Credit Suisse, and Deutsche Bank, all of whom the Stop the Money Pipeline says (pdf) are underwriting the project. The climate activists have got their eyes on an upcoming deadline when the institutions must decide whether or not to renew Enbridge’s loan for the pipeline replacement. Rainforest Action Network, a member of the Stop the Money Pipeline coalition, said the crucial role of the banks is clear. “Without any project finance associated with the pipeline construction, the banks providing Enbridge’s general corporate financing are the supporters of this destructive project,” RAN said in a December briefing.”Less than two months from now, on March 31st, 18 banks have a $2.2 billion loan to Enbridge due for renewal,” Stop the Money Pipeline co-coordinator Amy Gray said Monday. “Between now and then, we are going to do everything in our power to make it loud and clear to bank executives: They must walk away from Line 3―or there will be consequences.”
Tribes, faith leaders petition Biden to end Enbridge Line 3 pipeline – Native tribes and faith leaders are together calling on President Joe Biden to intervene in the ongoing construction of the long-contested Line 3 pipeline in northern Minnesota. Nearly 3,800 people have signed a petition organized by Interfaith Power & Light. The petition, along with a separate letter signed by 345 faith leaders and organizations, asks that the president use executive actions to stop the $2.6 billion Enbridge Energy project – a 1,097-mile replacement pipeline that, once complete, would transport daily 915,000 barrels of Canadian tar sands oil, which produces larger quantities of greenhouse gas emissions than typical crude oil. Opponents of the Line 3 pipeline say it will exacerbate climate change – estimating its emissions will be the equivalent of pollution from 50 coal-fired power plants – and is unnecessary at a time when infrastructure investments should shift toward clean energy. Indigenous tribes, led by the White Earth Band of Ojibwe and the Red Lake Band of Chippewa Indians, add that Line 3, which would span 337 miles in Minnesota, violates their land rights under treaties and endangers wetlands where wild rice grows, and other places they consider sacred. Appealing to Biden’s Catholic faith, the petition quotes Pope Francis’ 2015 encyclical “Laudato Si’, on Care for Our Common Home,” where he wrote that the Earth “now cries out to us because of the harm we have inflicted” through irresponsible use of the planet’s resources. “In your inaugural address, you said ‘a cry for survival comes from the planet itself.’ We hear that cry,” the interfaith petition reads, “it is being sung by our Indigenous siblings standing in the cold Minnesota winter against this destruction of the sacred. Join their prayer and stand against Line 3.” The petition and letter are part of an ongoing campaign that has united the faith community with Indigenous tribes and environmentalists against the oil pipeline. In the six years since the fight against Line 3 began, faith groups and clergy have been present at prayer circles, public hearings and demonstrations where some have been arrested.
Minnesota Police Want a Pipeline Company to Pay for Weapons Claimed as PPE -A MINNESOTA SHERIFF’S OFFICE has requested that the tar sands pipeline company Enbridge reimburse the department for nearly $72,000 worth of riot gear and more than $10,000 in “less than lethal” weapons and ammunition, including tear gas, pepper spray, bean bag and sponge rounds, flash-bang devices, and batons. The sheriff’s office of Beltrami County, which sits at the center of an Indigenous-led fight to stop the construction of Enbridge’s Line 3 pipeline replacement project, labeled the weapons as “personal protective equipment.” The invoices, some of which were first described by the blog Healing Minnesota Stories, await review by the Minnesota Public Utilities Commission. The agency maintains an escrow account set up so that Enbridge can reimburse public safety agencies for expenses associated with Line 3 construction, especially costs for policing protests. In its construction permit, the utilities commission clarified that the fund “may not be used to reimburse expenses for equipment, except for personal protective gear for public safety personnel.” The commissioners did not define the term “personal protective gear.””I don’t think by any stretch of the imagination batons could be considered PPE – or grenades,” said Tara Houska, an organizer with the anti-Line 3 Giniw Collective. “Those are obviously militarized equipment to be used to subdue and oppress the Indigenous people and allies that are resisting this project from going through our territory.”
Environmental Activists, Unions Conflict Over Oil Pipelines – Environmental activists and labor unions have worked together in the past, but are now on opposite sides of a heated dispute. The disagreement partly involves the building of an oil pipeline between Canada and the United States. The U.S. is currently the world’s largest producer of oil and gas. However, the administration of President Joe Biden aims to bring the country’s release of carbon gasses to net-zero by 2050. One of Biden’s first acts was to cancel the permit for the Keystone XL oil pipeline. The administration also said it is reducing the amount of oil and gas production permitted on federal land. The reactions to the administration’s moves show the difficulties of forming policy that affects many different groups. Climate activists celebrated the cancellation of the Keytone XL pipeline. But labor unions want to keep projects from being stopped. Mike Knisely is secretary and treasurer of the Ohio State Building and Construction Trades Council. He said he has been asking state officials to talk to the president about the effects of his climate policy on union members. “I tell them they need to get back with Biden and ask if this all really has to happen on Day Two of the new administration,” Knisely said. He said he is unhappy that “there’s almost no common ground (on pipelines) with the environmental community.”Climate groups have had successes in recent years. They have persuaded large investors to reduce financial holdings in the fossil fuel industry. They also have sought to get banks to avoid financing oil drilling in Arctic areas of the United States. But a number of important labor unions have members who work on pipelines, in oil refineries and in industries tied to the energy industry. That includes the International Teamsters and North America’s Building Trades Unions. Those unions opposed the move to cancel the Keystone XL pipeline. They also are moving against threats to other pipelines. Environmental groups want to block oil imports from Canada’s oil sands. They also are intensifying efforts to close three other pipelines. Two pipelines, known as Line 3 and Line 5, are operated by the Canadian company Enbridge. The company Energy Transfer’s Dakota Access Pipeline, or DAPL, is the other. Unlike the Keystone XL, the three other pipelines are currently operating. The Enbridge lines bring oil and fuel from Canada. The DAPL sends oil from North Dakota to the Midwestern states and Gulf Coast. Legal cases and government rules threaten all three pipelines. A White House spokesman said the Biden administration is considering a recent court decision that called for an environmental study of the DAPL.
Senator Manchin urges Biden to reverse opposition to Keystone XL pipeline (Reuters) – The head of the U.S. Senate energy committee, Joe Manchin, on Tuesday urged President Joe Biden to reverse his opposition to the Keystone XL pipeline, saying the project provides union jobs and is safer than transporting the oil via trucks and trains. Biden revoked a permit for the pipeline which would transport 830,000 barrels a day of carbon-intensive heavy crude from Canada’s Alberta to Nebraska. It was part of a flurry of Biden’s executive orders aimed at curbing climate change. In a letter to fellow Democrat Biden, the West Virginia senator said that even without the pipeline, the oil would still find its way to the United States by rail and truck, and pointed to U.S. data showing those methods result in more spills than pipelines. “Pipelines continue to be the safest mode to transport our oil and natural gas resources and they support thousands of high-paying, American union jobs,” Manchin said. Opponents of TC Energy Corp’s pipeline project say building such infrastructure would lock in decades of dependence on oil, making it harder to transition to clean energy. Manchin said he supports “responsible” energy infrastructure development including the Mountain Valley pipeline, which would take natural gas from Manchin’s state to Virginia. Manchin’s support for big pipelines underscores the difficulty that Biden could have moving wide-ranging climate legislation through Congress given Democrats have only the slimmest possible majority in the Senate.
Alberta oil’s U.S. allies try long-shot measures to get Keystone XL built | CBC News – Pipeline proponents write letters, try procedural tactics in U.S. Congress. Do they have any hope of success? Some American politicians are still making long-shot efforts to revive the Keystone XL pipeline project, cancelled last month by U.S. President Joe Biden. On Tuesday, Biden received letters from several parties urging him to reconsider, including state-level Republicans and the powerful Democrat who leads the Senate energy committee.In addition, a pipeline measure, sponsored by Republican Steve Daines of Montana a few days ago looked like it would pass in the U.S. Senate but ultimately failed.In a marathon all-night voting session last week, the Senate approved a budget amendment that called for the creation of a fund to improve relations with Canada, related to Keystone XL.The cancelled 1,897-kilometre pipeline was to have carried 830,000 barrels of crude a day from the storage terminal in Hardisty, Alta., to Nebraska, where it would connect to the original Keystone pipeline to U.S. Gulf Coast refineries.The budget amendment was an attempt to stick pipeline construction into the massive COVID-19 stimulus bill. Democrats are preparing a pandemic recovery plan via a fast-track process known as budget reconciliation, which requires just a 51-vote majority to pass instead of the 60 votes required for most bills in the U.S. Senate.The catch with reconciliation: it’s only allowed for budget bills. So the reference to a Canada-U.S. budget fund was a procedural gambit to get it tacked onto the spending bill. In any case, it didn’t last long: the Democratic majority removed Daines’s measure in a subsequent vote. Now, Republicans are talking about other legal options. Fourteen attorneys general from Republican-led states sent Biden a letter on Tuesday saying they were reviewing legal options in the pipeline battle. Written by Montana Attorney General Austin Knudsen, the letter accused Biden of cancelling the project without explaining why his move was in the national interest or offering evidence that it will lower carbon emissions or create green-energy jobs.
Local businesses and people impacted by the loss of Keystone XL Pipeline voice their concerns (KELO) – South Dakota Congressman, Dusty Johnson, and two of North Dakota’s State Representatives gathered Monday with local businesses affected by the cancellation of the Keystone XL Pipeline.TransCanada Energy first proposed the $8 billion Keystone XL Pipeline in 2008. Phillip is one of many communities along the 1,200-mile project’s proposed path. Last month, President Joe Biden signed an executive order halting the construction of the pipeline which would have delivered crude oil from Western Canada to Midwest refineries.Today more than a dozen people from the Black Hills area came to share their concerns with State Representatives. “I don’t want it to end here. I’ve been fighting for this and making phone calls, I won’t give up, it’s what we need,” Jeff Birkeland, West Central Electric, said.Owner Tricia Burns says the Ignite Wellness Studio has potentially lost 165 memberships which is about $10,700 in revenue.”There’s no certainty at all with anything it seems anymore. So what does the future hold? If we continue to lose jobs and people continue to leave, will we have enough locals to support our business? It’s some difficult conversations,” Burns said. Even more than the lost revenue, Burns believes the town has lost some great community members.”It’s not just the money but it’s the lives too,” Burns said. Not everyone opposes the President’s executive order, in fact some celebrated it. Environmentalists and many tribal leaders don’t want the project to move forward because there could be oil spills and it could make climate change worse. The Cheyenne River Sioux Tribe is so opposed to the project, in 2019 the tribe issued a resolution saying all Keystone XL trucks must immediately turn around and leave the reservation.
Did Biden’s Order To Halt Keystone XL Pipeline ‘Destroy’ 11,000 Jobs? – Snopes.com – Claim: U.S. President Joe Biden’s Jan. 20, 2021, executive order to halt construction of the Keystone XL pipeline “destroyed” 11,000 jobs. In October 2020, TC Energy, the firm behind the pipeline, projected that it would hire 11,000 people to work on the pipeline in the coming year. Additionally, two union leaders said 1,000 members would immediately lose their jobs and another 10,000 future positions will no longer exist, totaling 11,000, as a result of Biden’s order. However, there was no evidence to definitely prove if, or to what extent, 11,000 positions would have been filled without Biden’s order, considering multiple hurdles for pipeline proponents. The exact number of jobs eliminated, or employment opportunities that were planned for but won’t be created because of Biden’s decision, remained unknown.
Cold as Ice – Frigid Weather Blasting into Propane Country. Markets Brace for Supply Disruptions – A blast of Arctic air plunges the Midwest and Northeast into deep freeze. Already-low propane inventories result in supply shortages in local markets. Propane transport trucks move product hundreds of miles from storage hubs to replenish regional terminals as markets scramble to meet surging propane demand. Are we talking about the nightmarish polar vortex winter of 2013-14, when regional propane inventories were sucked down dangerously low and Conway, KS, propane prices skyrocketed to almost $5.00/gal? No. We are talking about now. This is a description of what is happening today in U.S. propane country — that belt of northern states that depend heavily on propane for heating. But this is not 2013-14. Things have changed. So in today’s blog we’ll explore how the latest polar vortex could be quite different than that weather-driven crisis seven years ago. We’ve been particularly interested in the propane market this winter, starting with Now You See It, where we warned of the possibility of a coming propane price squeeze. The big issue was exports, which were running at all-time highs and had the potential to deplete inventories at record rates. We worried that average days-supply, when calculated using both domestic demand and exports, had dropped to a five-year low, and that the market could get very tight. By January, as we detailed in Big Panama With A Purple Hat Band, that was just how things were playing out, with markets further complicated by long delays at the Panama Canal and, as a consequence, skyrocketing shipping rates. Then, a couple of weeks ago in It’s All Over Now, we looked at how frigid weather in Asia had pulled even more U.S. propane into export markets, and how that resulted in a Mont Belvieu price spike up to 95 cents/gallon (c/gal), and over a dollar per gallon at the Conway hub in Kansas. We wrapped up that blog by stating the blindingly obvious: “The short term is all in the hands of Mother Nature.”
Mineral owners seek lawmakers’ help in addressing oil, gas royalty concerns — Some North Dakota mineral owners report they have seen as much as two-thirds of the oil and gas royalties they expect to receive in a given month disappear as Bakken producers take deductions to move the products down the processing chain, and they’re asking for lawmakers to help stop the practice. The oil industry is pushing back, saying that such change might cause oil development to dry up and would discourage companies from investing in pipelines and other infrastructure needed to accommodate gas produced alongside oil in the Bakken. The issue is complex and garnered numerous questions Monday from legislators on the Senate Finance and Taxation Committee when they heard from supporters and opponents of Senate Bill 2217, whose lead sponsor is Rep. Brad Bekkedahl, R-Williston. The Williston Basin Royalty Owners Association, led by former Rep. Bob Skarphol, R-Tioga, is backing a bill to address the deductions, which are sometimes taken from royalties to help pay for post-production costs. The expenses have to do with transporting oil or gathering gas from wells, compressing it and moving it to a processing plant where its various components are separated out into more marketable products. Skarphol said royalty owners familiar with deductions “will express their disdain” whenever the topic comes up. “Disdain is a polite way to say it,” he said. “Many royalty owners find the royalties statement so complex they do not even make the effort to decipher what is happening. They simply deposit the check and stick the statement in a drawer. Some royalty owners are afraid if they complain, their wells could be shut down and their royalties would end.” Deductions for post-production costs are not applied consistently across the Bakken — some oil and gas companies take them at a variety of rates, and others don’t. Whether a mineral owner sees deductions also depends on the specific language of the lease he or she signed with the company developing the minerals. The bill would prohibit the deductions unless a lease explicitly allows for the practice. It also would give mineral owners the right to audit the records of the oil and gas company paying them royalties and require the business to comply. Violators could be punished with a Class B misdemeanor and a $10,000 penalty.
Equinor Sells Bakken Position as Production Fades – Equinor has agreed to sell its Bakken Shale operation for $900 million, ending a decade long struggle to make money in the US shale oil business. The Norwegian oil company is exiting assets in North Dakota and Montana after a decade of development. A Houston-based private equity producer will take over the shale fields. The buyer, Grayson Mill Energy, is acquiring wells producing around 48,000 BOE/D and 242,000 operated and non-operated acres in North Dakota and Montana. The Norwegian oil company’s remaining shale holdings are in the gas producing Marcellus and Utica Shale formations in the eastern US, which it has been paring in recent years. “We are taking action to improve the profitability of Equinor’s international oil and gas business,” said Al Cook, executive vice president of development and production international at Equinor. He added that Grayson Mill agreed to hire Equinor’s Bakken field team and a “significant number of the support teams.” “By divesting our Bakken position, we are realizing proceeds that can be deployed towards more competitive assets in our portfolio, enabling us to deliver increased value creation for our shareholders,” said Anders Opedal, president and chief executive officer of Equinor. Equinor is selling for a fraction of the $4.4 billion price it paid to enter the Bakken in 2011, when it bought Brigham Exploration at a premium during the early shale boom. The Bakken sale completes is retreat from which began with the sale of its Eagle Ford Shale operation in 2019 for $325 to Repsol.
More than 20,000 gallons of oil spill near Williston – An estimated 21,000 gallons of crude oil spilled Tuesday, Feb. 2, at an oil well in Williams County, N.D., according to a news release from the state Department of Environmental Quality.Norwegian firm Equinor Energy reported the spill about two miles east of Williston occurred due to a valve failure. By the time the spill was reported, all but 420 gallons of oil had been recovered on-site. The department reports no impact to nearby farmland. Department officials will continue inspecting the site and monitoring remediation efforts, according to the release.
More than 10,000 gallons of oil spill from pipeline in Dunn County, North Dakota – An estimated 10,500 gallons of crude oil spilled Tuesday, Feb. 2, from a pipeline in Dunn County, N.D., according to a news release from the state Department of Environmental Quality. Wyoming-based Bridger Pipeline reported the spill due to a pipeline fracture about 11 miles northwest of Killdeer, N.D. About 420 gallons of oil flowed onto nearby rangeland, which can render the land temporarily unusable for agriculture. Department officials will continue inspecting the site and monitoring remediation efforts, according to the release.
Equinor sells U.S. Bakken shale assets, posts record loss for 2020 (Reuters) – Norway’s Equinor has agreed to sell its assets in the U.S. Bakken shale oil province after a decade of multibillion-dollar losses and criticism for poor investment decisions. Equinor will sell the assets in the states of North Dakota and Montana to Grayson Mill Energy, a company backed by private equity firm EnCap Investments, for around $900 million. The Bakken region was developed during last decade’s U.S. shale boom, and currently produces more than a million barrels of oil a day, roughly half the peak reached in late 2019. The region has a high per-barrel cost of production and investor demands for capital discipline have caused producers to throttle back output since the coronavirus pandemic erupted. “Equinor is optimising its oil and gas portfolio to strengthen profitability and make it more robust for the future,” CEO Anders Opedal said in a statement. “We are realising proceeds that can be deployed towards more competitive assets in our portfolio,” he added. Opedal declined to say whether Equinor planned to sell more foreign assets, but added it was happy with its remaining U.S. operations. “We still have a good position in the Marcellus and also in the U.S. Gulf of Mexico,” he told Reuters. “We will also focus on our operations in Brazil and Britain, and seek to improve our international business as operators or partners.”
Equinor Exits The Bakken Shale As It Books Record Loss –Equinor is selling all its assets in the Bakken shale play as part of a strategy to boost the profitability of its international upstream business, the Norwegian major said on Wednesday, while the oil major records a net loss for 2020.Equinor has agreed to sell its assets in the Bakken, including all operated and non-operated acreage and midstream infrastructure, to Grayson Mill Energy, which is backed by EnCap Investments, for only US$900 million. It paid $4.7 billion for the assets in 2011.“Equinor is optimising its oil and gas portfolio to strengthen profitability and make it more robust for the future. By divesting our Bakken position we are realising proceeds that can be deployed towards more competitive assets in our portfolio, enabling us to deliver increased value creation for our shareholders,” Equinor’s president and CEO Anders Opedal said in a statement. The Bakken sale is the latest Equinor divestment of onshore U.S. assets following the sale of its assets in the Eagle Ford in Texas in 2019.Equinor commissioned a report on its U.S. business to PwC last year, and that report showed in October that “Equinor has recorded large financial losses in the US. These were mainly driven by an ambitious growth strategy and investments that were based on overly optimistic price assumptions,” Equinor’s board chair Jon Erik Reinhardsen said at the time. Apart from the Bakken sale, Equinor announced on Wednesday its Q4 and full-year 2020 results, reporting a record net loss of US$5.5 billion for 2020, compared to a net income of US$1.85 billion for 2019. The fourth-quarter loss soared to US$2.4 billion from a loss of US$230 million for Q4 2019. For this year, Equinor expects free cash flow before capital distribution at around US$6 billion, assuming $50 oil, chief financial officer Svein Skeie said in a presentation. The company is cutting its capex plans by around 15 percent compared to previous guidance, with annual capex expected at US$9 billion-US$10 billion this year and next.
US Army Corps asks for two-month delay to decide whether to shutter DAPL | S&P Global Platts – The US Army Corps of Engineers requested a two-month delay until April 9 to decide whether to shutter the Dakota Access Pipeline, triggering a further strengthening in Bakken crude differentials as traders considered the possibility of the Bakken Shale’s primary crude oil artery closing. Fresh off of canceling the controversial Keystone XL Pipeline, a federal judge agreed to postpone a Feb. 10 court hearing until April 9 in a move that could give the Biden administration an ample timetable to consider how it might take the unprecedented step to close the 4-year-old, 570,000 b/d pipeline, at least temporarily, while a more stringent, court-ordered Environmental Impact Statement, or EIS, review is conducted that could easily extend into 2022. Bakken crude differentials, which had already strengthened ahead of the hearing, continued moving higher Feb. 9. S&P Global Platts assessed Bakken barrels at Williston, North Dakota, that are injected into DAPL, at WTI CMA minus $1.25/b, up 10 cents from the Feb. 8 assessment and the strongest in eight months. Bakken crude at Clearbrook, Minnesota, was assessed at WTI CMA minus 35 cents/b, up 15 cents from Feb. 8 and the strongest in six months. A federal appeals court ruling in January essentially confirmed the Dakota Access Pipeline is operating illegally without the necessary legal permitting, and that it is up to the Biden-led Corps of Engineers to determine whether it will let the Energy Transfer-operated pipeline continue to flow crude oil while the environmental review determines whether the needed easement is deserved. The plaintiffs, led by the Standing Rock Sioux Tribe, supported the requested delay. The DAPL case is closely watched by industry and environmental observers alike because it could potentially set a standard for attempting to close existing pipelines and other fossil fuel infrastructure. Biden has never publicly weighed in on DAPL, but Vice President Kamala Harris and Biden’s nominee for Interior secretary, US Rep. Deb Haaland, a Democrat from New Mexico, have both supported shutting the pipeline. Accord to the motion in court requesting the delay, “Department of Justice personnel require time to brief the new administration officials, and those officials will need sufficient time to learn the background of and familiarize themselves with this lengthy and detailed litigation.”
Indigenous Youth Embark on Sub-Zero, 93-Mile Run to Protest Dakota Access Pipeline — Despite sub-zero temperatures, group of Indigenous youth on Tuesday kicked off a 93-mile run to protest the Dakota Access Pipeline and demand that the Biden administration #BuildBackFossilFree. The run began shortly after 8am CST from a drill pad in Timber Lake, South Dakota-where the youth braved a wind chill of -26 degF (-32 degC)-and will end at the Oceti Sakowin Camp site, the center of heated resistance to the pipeline in 2016. Standing Rock youth are sharing a live stream of the event. “In 2016 a group of us youth from the Standing Rock and Cheyenne River Nations had the courage and were brave enough to stand up to the Dakota Access Pipeline (DAPL) that was going to cross our lands, threatening not only our drinking water supply but the land we have called home for generations. Millions of people from all walks of life stood with Standing Rock,” Annalee Rain Yellowhammer, Standing Rock Sioux Youth Council vice president, said in statement last week announcing the run. “Mr. President Joe Biden,” she said, “you have the opportunity to be brave and take courage; shut down the Dakota Access Pipeline.” The group is encouraging people to show support by taking actions Tuesday including making “some noise on social media” and calling the White House to pressure Biden to shut down the pipeline, which is operating without a federal permit. “They are running because of one simple fact,” Dallas Goldtooth of the Indigenous Environmental Network wrote in a Wednesday email to supporters. “DAPL IS AN ILLEGAL PIPELINE.” That legality is set to come under further legal scrutiny at a hearing Thursday. Last month, a federal appeals court sided with the Standing Rock Sioux Tribe by upholding a lower court’s ruling that the U.S. Army Corps of Engineers (USACE) violated federal law in granting an easement for DAPL to cross a federal reservoir along the Missouri River. According to the Associated Press: U.S. District Judge James Boasberg has set a status hearing for Feb. 10 to discuss the impact of [the] opinion by the D.C. Circuit of the U.S. Court of Appeals that upheld Boasberg’s ruling ordering the Corps to conduct a full environmental impact review. Opponents of the pipeline want it shut down immediately. Boasberg said in his one-sentence order that the Corps needs to show how it “expects to proceed” without a federal permit granting easement for the $3.8 billion, 1,172-mile (1,886 kilometer) pipeline to cross beneath Lake Oahe, a reservoir along the Missouri River, which is maintained by the Corps.
Judge delays hearing on permit for Dakota Access pipeline (AP) – A federal judge on Tuesday agreed to push back a hearing about whether the Dakota Access oil pipeline should be allowed to continue operating without a key permit while the U.S. Army Corps of Engineers conducts an environmental review on the project. The Corps filed a motion Monday to postpone the Wednesday hearing in order to allow Biden administration officials more time to familiarize themselves with the case, including the 2016 lawsuit filed by the Standing Rock Sioux Reservation in an attempt to stop construction. The pipeline began operating in 2017 after Donald Trump took office. U.S. District Judge James Boasberg reset the hearing for April 9. Neither the tribes nor Texas-based Energy Transfer, which owns the pipeline, objected to the delay. Boasberg said he wants the Corps to explain how it “expects to proceed” without a federal permit granting easement for the $3.8 billion pipeline to cross beneath Lake Oahe, a reservoir along the Missouri River that is maintained by the Corps. Boasberg in April 2020 ordered further environmental study after determining the Corps had not adequately considered how an oil spill under the Missouri River might affect Standing Rock’s fishing and hunting rights, or whether it might disproportionately affect the tribal community.
North Dakota oil prices surge and output stalls as pipeline’s fate awaited (Reuters) – Crude prices in North Dakota’s Bakken shale region have surged to their highest levels in about six months as producers in the region rein in output and amid doubt over the fate of the Dakota Access Pipeline, the main artery running oil out of the region.North Dakota is the second only to Texas in terms of U.S. oil producing states, with about 1.2 million barrels per day (bpd) of output. Harsh weather in the region is restraining production and well completion, which had already been hampered by poor demand in 2020 caused by coronavirus. Concern about how U.S. President Joe Biden’s administration will handle the Dakota Access Pipeline (DAPL), which can transport more than 550,000 bpd out of the Bakken, is also boosting prices. The possibility that the line could be shut down is prompting some producers to ask for higher premiums for their oil, fearing buyers may renege on agreements, dealers said. Crude output in North Dakota is still about 20% lower than the historic high of 1.5 million bpd hit in late 2019. While production from wells more than one year old has recovered, output from newer wells has not, because of a lower rate of completions. Bakken crude in Clearbrook, Minnesota strengthened to trade just 35 cents under benchmark futures on Tuesday, the strongest since early August, dealers said. The state’s rig count has been flat at around 11 since October, according to Baker Hughes data. Output is expected to slide by nearly 20,000 bpd, the biggest decline since May, to about 1.2 million bpd in February, according to the U.S. Energy Information Administration. Prices have risen in part due to the frigid temperatures that have plunged below 0 degrees Fahrenheit in recent days. Cold weather can cause equipment to freeze and cut production further, traders said. Meanwhile, DAPL has been embroiled in legal battles over the past five years, and faces new threats from the Biden administration. The latter has already taken several steps to restrict new oil and gas development, though it has not yet tried to shut a pipeline currently in operation.
Burgum says Corps should argue for keeping pipeline running (AP) – North Dakota Republican Gov. Doug Burgum is asking the U.S. Army Corps of Engineers to argue for keeping the Dakota Access oil pipeline operating while it conducts an environmental review on the project. A federal judge has asked the Corps to explain how “it expects to proceed” now that court rulings have determined that the pipeline is operating without a permit to cross beneath Lake Oahe, a reservoir along the Missouri River that is maintained by the Corps. A hearing on the matter originally scheduled for Wednesday has been postponed to April 9. Burgum’s letter to the Corps said that shutting down the pipeline during the review “would have devastating consequences for the state” and a “chilling effect on infrastructure investment” across the country. U.S. District Judge James Boasberg in April 2020 ordered further environmental study. He said the Corps had not adequately considered how an oil spill under the Missouri River might affect fishing and hunting rights for the Standing Rock Indian Reservation, which straddles the North and South Dakota border, or whether it might disproportionately affect the tribal community. Burgum said to stop the flow of oil after more than three years would be a blow to a country that is in “desperate need of infrastructure upgrades, jobs and economic activity to accelerate recovery from the COVID-19 pandemic.”
West Coast lawmakers try again for drilling ban – U.S. senators from the West Coast, looking to build on the Biden administration’s pause on new offshore oil leases, are again pushing for a ban on drilling off Washington, Oregon and California. At the end of January Sens. Patty Murray and Maria Cantwell, both D-Wash., introduced the “West Coast Ocean Protection Act” to permanently ban offshore drilling in federal waters off the West Coast. Cantwell is a senior member of the Senate Energy and Natural Resources Committee and in a position to push the measure there. Murray and Cantwell say their intent is to make permanent an existing moratorium on drill leasing in those federal waters, to prevent a repeat of the Trump administration’s attempt to reopen them for oil and gas exploration. “The Pacific Ocean provides vital natural resources for Washington state, and offshore drilling puts everything from local jobs and ecosystems at risk,” Murray said in a Jan. 29 joint statement with Cantwell. “We need this permanent ban to safeguard our coastal environment and our state’s economy, including fisheries, outdoor recreation, and so much more.” “Washington’s $30 billion maritime economy supports over 146,000 jobs from fisheries, trade, tourism and recreation-but it could all be devastated in an instant by an oil spill,” said Cantwell. “We must permanently ban offshore drilling on the West Coast to protect our coastal communities, economies, and ecosystems against the risk of an oil spill.” Meanwhile, the federal Bureau of Ocean Energy Management is considering potential offshore wind energy areas that could be mapped out for leasing to developers. Compared the relatively shallow outer continental shelf off the U.S. East Coast – where up to 16 wind energy project are already planned – the deeper Pacific Ocean waters would need floating wind turbine technology to advance before wind power arrays are constructed.
Chevron Refinery Dumps Oil Into San Francisco Bay -A Chevron oil refinery in Richmond, California dumped an estimated 600 gallons of petroleum into San Francisco Bay Tuesday.The leak was not detected until an oil sheen on the water near the refinery was noticed around 3 p.m. Many local residents complained of the fumes from the spill, which eventually washed up on shore.”It smelled like somebody spilled gasoline in front of my house. It smelled very very badly for [the] whole day,” Margaret Berczynski, told ABC7-KGO. “I’m really devastated. I cannot take my kids to the water… I’m really scared,” she added.Officials warned the fumes could cause ear, nose, and throat irritation. Contra Costa County Supervisor John Gioia harshly criticized the refinery. “It is unacceptable to have this happen in our community,” he said. “It causes harm to people’s health. It causes harm to bird life, wildlife and marine life.” The cause of the spill is still unknown.As reported by the San Francisco Chronicle:The investigation into the spill is a multi-agency effort involving Chevron, the U.S. Coast Guard, California Office of Spill Prevention and Response, California Department of Fish and Wildlife, and Contra Costa County, Chevron officials told The Chronicle. Other state and federal agencies “may elect to join the investigation,” said Tyler Kruzich, a Chevron spokesperson.Kruzich told The Chronicle that Chevron officials are “developing an estimate of how much hydrocarbon was released, in addition to testing the hydrocarbon to determine its composition.”County Supervisor John Gioia – who said on Facebook that there was a 5 gallon-per-minute leak of a petroleum product at the Chevron Richmond Long Wharf – said the leak started around 2:40 p.m. and continued until about 4:30 p.m. For a deeper dive: ABC-7 KGO News, East Bay Times, KTU, SFGate, KCRA Sacramento, KPIX-CBS5, San Francisco Chronicle
Oil spill at Chevron refinery in Contra Costa County prompts public health warning – Contra Costa County authorities issued a public health advisory Tuesday afternoon after a Chevron refinery in Richmond began spilling a petroleum product into the San Francisco Bay. Tyler Kruzich, a spokesman for Chevron, said refinery employees first noticed a sheen in the water about 3 p.m. The company immediately started working to contain the leak and notified the various state and federal agencies that respond to oil spills, he said. A spill report from the state’s Office of Emergency Services said a refinery pipeline was leaking roughly five gallons per minute of an oil and gasoline mixture into the bay. Footage from the Bay Area ABC7 helicopter showed an iridescent sheen hugging the coastline and extending into the bay. AdvertisementThe leak was stopped about 5 p.m., according to Chevron and Contra Costa County officials. It remained unclear what caused it, the spill report said. The extent of the spill was unclear Tuesday evening. The state report, which was generated at 4 p.m., said about 100 gallons had been spilled. The Bay Area Air Quality Management District, a regulatory agency that dispatched inspectors to the scene, wrote on Twitter that about 600 gallons of a “petroleum and water mixture” had leaked. Eric Laughlin, a spokesman for the California Department of Fish and Wildlife, said it was too early to say how much petroleum had entered the bay. Officials were working Tuesday night to contain the spread of the oil and identify delicate habitats at particular risk, he said. State authorities were weighing whether to issue a fisheries closure for the area.
Oil May Not Be Chevron’s Largest Business In 20 Years – While oil and gas will certainly be needed for decades to come, the oil and gas division may not be Chevron’s top business in 20 years, although it will still be a very big part of the U.S. supermajor’s operations, chief executive Michael Wirth told CNN Business in an interview published on Monday.Big Oil, especially the European majors, have rushed to announce increased investments in renewable energy, and some even plan to reduce their overall oil and gas production. BP, for example, said last year that it would boost its investment in low-carbon energy ten times to US$5 billion a year and reduce oil and gas production by 40 percent by 2030. The biggest oil corporations in the Americas, including U.S. supermajors Exxon and Chevron, have not promised to become net-zero emission businesses by 2050, unlike all major oil firms in Europe-BP, Shell, Eni, Equinor, Total, and Repsol, which have raced to announce green strategies over the past year.In the Americas, Occidental Petroleum became the first major U.S. oil firm to announce a net-zero emissions goal at the end of last year.For Chevron, “Oil and gas will still be a very big part. Will it be the biggest part? Time will tell,” Wirth told CNN Business in the interview.Chevron will not be investing in solar and wind power, Wirth told CNN. This is in contrast with European oil majors, who are building solar and wind power portfolios as they look to capture larger shares of the electricity market.Chevron’s bet is on carbon utilization technologies, renewable natural gas, and reducing emissions from its operations. “We increased actions to advance a lower carbon future, abating emissions in our operations, starting up our first renewable natural gas plant and investing in low-carbon technologies like our recent announcement with carbon utilization start-up, Blue Planet,” Wirth said on the Q4 earnings call last month.Oil and gas will still be a large part of the energy system, and “somehow demand will need to be met. And we think it should be met by those that can do it in a way that has the lowest carbon impact,” the executive said on the call.
Shell Hits Its Own Peak Oil, Plans to Reduce Output – WSJ – Royal Dutch Shell said it would start reducing oil production, calling an end to a decades-old strategy centered on pumping more hydrocarbons as it and other energy giants seek to capitalize on a shift to low-carbon power. The move marks a historic shift for the company, which after starting out importing seashells began selling kerosene in the 19th century and had sought to grow its oil business ever since. Until recent years, it pursued expensive, environmentally challenging projects in Canadian oil sands and Alaska, driven by fears the world could run out of oil. Now, it sees demand faltering long before oil runs out. Shell said Thursday its oil production had already peaked and it expects output to decline 1-2% a year, including from asset sales, reducing its exposure to commodity prices over the longer term. The company plans to cut its production of traditional fuels such as diesel and gasoline by 55% in the next decade. At the same time, the company said it would double the amount of electricity it sells and roll out thousands of new electric-vehicle charging points. The strategy follows similar plans from rivals BP PLC and Total SE to reduce their dependence on fossil fuels while expanding in renewable power such as wind and solar, partly in response to growth in regulatory and investor pressure. By contrast, U.S. companies Exxon Mobil Corp. and Chevron Corp. don’t plan to invest substantially in electricity and both say the world will need vast amounts of fossil fuels for decades to come. Exxon does, though, plan to invest in technology to reduce carbon emissions. However, the pivot to low-carbon energy is seen by analysts as challenging because it requires investments in areas where major oil companies don’t necessarily have a competitive advantage and that have lower returns. Renewables projects typically generate returns of around 10%, compared with the traditional 15% targeted on oil-and-gas projects. As such, major oil companies’ green ambitions have so far failed to ignite enthusiasm among investors, at a time when the energy industry is grappling with the fallout from the pandemic, which prompted BP and Shell to cut their dividends. The share prices of Europe’s three largest oil companies have fallen dramatically since Covid-19 sapped demand and sent oil prices lower, with Shell down 35% over the past year, BP 45% lower and Total down 24%. Shell shares traded 2% lower Thursday. Shell sought to allay any concerns about its new strategy Thursday, saying fossil-fuel production would remain a material source of revenue into the 2030s, while reiterating its policy to increase its dividend by 4% each year. “By accessing the enormous opportunities that the future of energy holds we will create the conditions for future share price appreciation,” said Chief Executive Ben van Beurden. “We expect to radically transform Shell over the next 30 years.”
USGS Estimates 1.4 Tcf of Conventional Natural Gas in Alaska’s Western North Slope — The U.S. Geological Survey (USGS) said Friday it estimates 1.4 Tcf of conventional natural gas resources are technically recoverable in formations west of Alaska’s National Petroleum Reserve (NPR-A), the first time such an assessment has been released for the area. Despite the North Slope’s abundant petroleum resources, the region is not believed to contain any recoverable oil deposits. The North Slope’s Prudhoe Bay field, for example, remains the most prolific in U.S. history, with more than 12 billion bbl produced, according to BP plc. The USGS study suggested that while oil deposits were formed in the NPR-A area, they were transformed when geologic temperatures increased and turned them to natural gas. “This new assessment shows that we still have much to learn about Alaska’s North Slope,” said USGS’s Sarah Ryker, associate director for Energy and Minerals. “There has been speculation for decades that this area west of the NPR-A might be rich in oil. However, the limited geologic data we have indicate the rocks assessed contain modest natural gas, but likely no oil. “That finding helps the Bureau of Land Management, the U.S. Fish and Wildlife Service, the State of Alaska and the Alaska Native Corporations understand the natural resources that they manage.”The latest assessment was one in a series ordered by the Department of the Interior under the Trump administration in 2017. President Biden has sincetemporarily frozen leasing and permitting on federal lands and offshore waters. The USGS had not previously assessed areas west of the NPR-A for conventional resources. Other formations in the region were included in both a 2017 assessment of conventional resources of the Cretaceous Nanushuk and Torok formations in the NPR-A and adjacent areas, and a 2012 assessment ofunconventional resources of the entire North Slope. The USGS also released an assessment of conventional resources of the Central North Slope in 2020. The latest assessment only included areas adjacent to the NPR-A, not any formations that lie within it. However modest, the new assessment shows more natural gas resources could be tapped on the North Slope at a time when developers are working to rejuvenate liquefied natural gas (LNG) exports from the state.
Alaska LNG Project Lands Private Partner, Plans to Seek Federal Funding to Launch $5.9B First Phase – Alaska is pursuing federal funding and partnering with a private firm to jumpstart a long-simmering pipeline project to export North Slope natural gas. Tim Fitzpatrick, spokesman for the state-owned Alaska Gasline Development Corp. (AGDC), told NGI that Alaska aims to begin the first phase of the state’s liquefied natural gas (LNG) pipeline and export plant by partnering with an as-yet unnamed private firm and by applying for federal pandemic stimulus and infrastructure funds.AGDC may also seek defense funding because a large military installation in the state would be able to switch from coal to natural gas if the project is completed, Fitzpatrick said. AGDC anticipates that federal funds would cover approximately 75% of costs of the first phase, he said, with the private partner paying the rest and taking the lead on the project once funded.AGDC said it and the private firm would build a $5.9 billion natural gas pipeline from the North Slope to Fairbanks. It would span about 500 miles and could begin delivering gas to the Fairbanks area by 2025, AGDC said.Frank Richards, AGDC president, said that by breaking the project into phases, AGDC hopes to complete the key first portion of the pipeline largely with federal investments. With that work underway, he said, the overall project would gain momentum and likely be viewed as lower risk, opening a door for more private investments to complete the overall project.”We’re calling strategic parties right now,” Richards told NGI. “That’s ongoing.”
Court order delays construction at ConocoPhillips’ Alaska project (Reuters) – A weekend court ruling has temporarily blocked winter construction at a huge ConocoPhillips oil project on Alaska’s North Slope. U.S. District Court Judge Sharon Gleason issued an order Saturday barring ConocoPhillips from starting planned gravel mining and gravel-road construction at its Willow project. With an estimated 590 million barrels of oil and the potential to produce 160,000 barrels per day, Willow would be the westernmost operating oil field in Arctic Alaska. First oil is planned as early as 2024, according to ConocoPhillips. Gleason’s injunction came in response to an environmental lawsuit claiming the Trump administration’s Willow approval failed to properly consider wildlife and climate-change impacts. The judge last week rejected environmentalists’ request for a more sweeping injunction. Her new order halts gravel-related work until at least Feb. 20, giving the 9th Circuit Court of Appeals time to weigh in. ConocoPhillips had intended to start blasting gravel on Feb. 12, according to Gleason’s order. The plaintiffs have shown “there is a strong likelihood of irreparable environmental consequences once blasting operations commence,” the order said. Additionally, the plaintiffs’ arguments concerning climate change “could well be likely to succeed on the merits” at the appeals court, Gleason said. Gleason’s order does not stop construction of seasonal ice roads, which melt away in summer. Plaintiff representatives noted that Biden is reviewing Trump administration oil policies, including the approval of Willow. “We’re hopeful this terrible project can be stopped, either by the courts or the Biden administration’s review,” Kristen Monsell, an attorney with the Center for Biological Diversity, said in a statement on Sunday. ConocoPhillips Alaska spokeswoman Rebecca Boys said by email that the company does not comment on pending litigation.
‘Invisible killer’: fossil fuels caused 8.7m deaths globally in 2018, research finds –Air pollution caused by the burning of fossil fuels such as coal and oil was responsible for 8.7m deaths globally in 2018, a staggering one in five of all people who died that year, new research has found.Countries with the most prodigious consumption of fossil fuels to power factories, homes and vehicles are suffering the highest death tolls, with the study finding more than one in 10 deaths in both the US and Europe were caused by the resulting pollution, along with nearly a third of deaths in eastern Asia, which includes China. Death rates in South America and Africa were significantly lower.The enormous death toll is higher than previous estimates and surprised even the study’s researchers. “We were initially very hesitant when we obtained the results because they are astounding, but we are discovering more and more about the impact of this pollution,” said Eloise Marais, a geographer at University College London and a study co-author. “It’s pervasive. The more we look for impacts, the more we find.”The 8.7m deaths in 2018 represent a “key contributor to the global burden of mortality and disease”, states the study, which is the result of collaboration between scientists at Harvard University, the University of Birmingham, the University of Leicester and University College London. The death toll exceeds the combined total of people who die globally each year from smoking tobaccoplus those who die of malaria.Scientists have established links between pervasive air pollution from burning fossil fuels and cases of heart disease, respiratory ailments and even the loss of eyesight. Without fossil fuel emissions, the average life expectancy of the world’s population would increase by more than a year, while global economic and health costs would fall by about $2.9tn.The new estimate of deaths, published in the journal Environmental Research, is higher than other previous attempts to quantify the mortal cost of fossil fuels. A major report by the Lancet in 2019, for example, found 4.2m annual deaths from air pollution coming from dust and wildfire smoke, as well as fossil fuel combustion. This new research deploys a more detailed analysis of the impact of sooty airborne particles thrown out by power plants, cars, trucks and other sources. This particulate matter is known as PM2.5 as the particles are less than 2.5 micrometers in diameter – or about 30 times smaller than the diameter of the average human hair. These tiny specks of pollution, once inhaled, lodge in the lungs and can cause a variety of health problems.
Feds release report on crude oil leak near Herschel – A Transportation Safety Board investigation has found several factors contributed to an oil spill at an Enbridge pumping station near Herschel, Sask. The TSB released the final report on its investigation into the spill on Wednesday. The equivalent of about 300 barrels of crude oil leaked on April 30, 2020, including about 60 barrels’ worth that seeped off the Enbridge property into a ditch running along a road near the pumping station. The report found that the problem originated with a ruptured hose in a system that injects chemicals meant to ease the flow of oil through several of the company’s pipelines, including Enbridge Line 3, which moves crude to Eastern Canada and the U.S. Midwest. A heat tracing system failed, which is believed to have allowed the hose to freeze overnight. This likely caused a buildup of pressure, leading the hose to fail, the report stated. The leak was too small to be detected by remote monitoring systems in Edmonton, so it wasn’t found until workers arrived at the site in the morning. A piece of hose that failed at an Enbridge pumping station near Herschel, Sask., contributing to an April 2020 spill of about 300 barrels’ worth of crude oil. Annotations on the photo were done by staff from the Transportation Safety Board. TSB investigators noted the spill was a result of overlapping failures in various systems. Enbridge’s own hazard assessment for the pumping station noted the potential for freezing to cause the hose to rupture. However, the TSB investigation found the company only saw the potential for a chemical leak and failed to identify a design flaw allowing crude oil from Line 3 to back up into the hose. Lastly, the investigation found that, despite a network of berms, ditches, control valves and containment ponds meant to handle spills orders of magnitude larger than the one that occurred, a worker failing to close a control valve in the station’s storm water release system at the end of the day on April 29 allowed spilled oil to get off the property.
Ng Spurns Keystone XL Nafta Challenge — Prime Minister Justin Trudeau is rejecting calls for a more combative response to U.S. protectionism, hoping a conciliatory approach will mend relations damaged during Donald Trump’s presidency. Trade Minister Mary Ng said in an interview this week she is focusing her efforts with the new Biden administration on mutual U.S.-Canada interests despite early policy hiccups that risk further fracturing ties between the two nations, whose commercial relationship is worth $725 billion a year. The rocky start began when President Joe Biden canceled permits for the Keystone XL pipeline, a move that prompted the leader of oil-rich Alberta to threaten a challenge under the old North American free-trade pact. Tensions grew when the new administration strengthened “Buy American” provisions for government procurement contracts. “I don’t think that getting into a trade war with the U.S. is in the best interests of Canadian workers or the energy sector,” Ng said Wednesday. “What we’ve got to do is find that common ground where Canadian interests are viewed and seen as American interests as well.” The trade minister’s comments highlight Trudeau’s decision to sidestep flashpoints with Biden and instead channel energy into goals such as fighting climate change and fostering an economic recovery. Trudeau’s officials welcomed Biden’s arrival at the White House after the Trump era, which upended years of relative stability with Canada’s largest trading partner. The two countries exchanged almost $2 billion in goods and services every day in 2019. Their economies are so integrated that the average automobile manufactured in North America crosses the U.S.-Canada border seven times before being sold, Ng said. Biden’s “Buy American” rules are intended to boost the U.S. economy by pushing federal agencies to source goods and services from domestic businesses. The government spends nearly $600 billion annually on such contracts. “Canadian contributions — our business contributions, our exporter contributions — into those supply chains and value chains are absolutely important to American workers and American businesses,” Ng said when pressed on how the government will push back against the president’s plan.
Oil Company Caves Under Pressure to Cut ‘Draconian’ Injunction | DeSmog UK — Campaigners are celebrating after an oil and gas exploration company was forced to scale back a “draconian” injunction against protesters.Activists have posed a series of legal challenges to an interim injunction granted to UK Oil and Gas (UKOG) in 2018, that apply to three of its sites in West Sussex and Surrey.In a dramatic climbdown just days before the next court hearing, the company yesterday announced it planned to remove the ban on “slow-walking” – a tactic used by activists to delay deliveries to oil and gas sites by walking in front of lorries. “This is a massive victory,” said Lorraine Inglis, from Weald Action Group. “We’ve been fighting for three years to cut down this draconian injunction – at every court hearing we’ve made progress.” Campaigners initially challenged the High Court injunction just a fortnight after it was granted. Five women put themselves forward as the named defendants, enabling a challenge to be mounted, and the case was adjourned for a trial in 2022.Initially, the injunction applied to the company’s sites in Broadford Bridge and Markwells Wood in West Sussex, Horse Hill in Surrey and its headquarters in Guildford The named defendants have successfully reduced the injunction’s power in both size and scope, but the injunction still applies to activity at Horse Hill, where UKOG has secured oil drilling rights. However, activity on the site – known as the “Gatwick Gusher” for its extensive hydrocarbon resources – is yet to start.”This has been an abuse of the injunction process which should only be used to prevent real and immediate threats of unlawful action,” said Ann Stewart, from residents’ campaign group Markwells Wood Watch. “UKOG have basically had an injunction over an empty field for two and a half years.”The initial injunction followed years of protests at UKOG’s different oil and gas drilling sites, which were predominantly peaceful. In a statement, the company said it would request that the High Court leave the monitoring of the Horse Hill site to local Surrey police.
Oil major Total’s full-year profit falls 66% as Covid pandemic hits fuel demand – France’s Total on Tuesday reported a massive drop in full-year profit, following a tumultuous 12 months in which commodity prices collapsed amid the coronavirus pandemic. The energy major said full-year 2020 net profit came in at $4.06 billion, beating expectations of $3.86 billion from analysts polled by Refinitiv. It compared with $11.8 billion for the 2019 fiscal year, reflecting a drop of 66% year-on-year. Total also posted fourth-quarter net profit of $1.3 billion, beating analyst expectations of $1.1 billion. Shares of Total are up around 0.8% year-to-date, having tumbled more than 28% last year. “Total faced two major crises in 2020: the Covid-19 pandemic that severely affected global energy demand, and the oil crisis that drove the Brent price below $20 per barrel in the second quarter,” Total CEO Patrick Pouyanne said in a statement. “In this particularly difficult context, the Group implemented an immediate action plan and proved its resilience thanks to the quality of its portfolio,” he added. Total said it would propose a fourth-quarter dividend payout of 0.66 euros ($0.8) per share, in line with previous quarters, and set the dividend for 2020 at 2.64 euros per share. The oil and gas industry was sent into a tailspin last year, as the coronavirus pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented write-downs and tens of thousands of job cuts. Last week, U.K.-based oil and gas major BP reported its first full-year net loss for a decade, while U.S. oil giant Exxon Mobil reported its fourth consecutive quarter of losses. The Anglo-Dutch oil giant Royal Dutch Shell also reported a sharp drop in full-year profits.
Merkel Offered Trump $1BN For US To Drop Sanctions Against Russia-Germany Pipeline – Fresh Nord Stream 2 pipeline controversy has erupted in Germany as Angela Merkel’s government stands accused of attempting to arrange a quid pro quo with top American officials to get them to call off the sanctions regimen that’s aimed at thwarting construction and completion of the project. Berlin reportedly offered to spend $1 billion on American gas if Washington would stop piling on sanctions and allow the Russia to Germany pipeline to be finished, which under normal circumstances would be just months away. The US position which hardened under the Trump administration and its sanctions on any companies or their executives working on NS-2 was that it would made Europe more energy-dependent on Russia and thus more susceptible to its geopolitical influence, while at the same time “punishing” Ukraine. However, critics have pointed out the US has economic interests as well, namely the desire to sell its own LNG to Germany.It appears Merkel government tried to tap into this clear economic motive, knowing this might be the most direct ‘opening’ with then President Trump.The details of the brewing scandal, according to UK’s The Telegraph, are as follows:Lobbying group Environmental Action Germany (DUH) this week published a leaked letter from Olaf Scholz, the German finance minister, to Steve Mnuchin, the then US treasury secretary, dated last August. In it, Mr Scholz offered to invest $1bn on new infrastructure to import American liquefied natural gas (LNG) at German ports if the US dropped the planned sanctions.And now thrown into the mix and adding to the scandal is the Alexei Navalny affair. The United States and Ukraine have used Russia’s arrest of the Russian opposition activist who was allegedly poisoned by nerve agent last August to put pressure on Merkel over the Nord Stream 2 project. Earlier this month even after Russia expelled diplomats from Germany, Sweden and Poland for allegedly taking part in pro-Navalny rallies, which the embassies for the most part denied, Berlin said it’s sticking with cooperation with Russia on Nord Stream 2 “for the time being”.
Nornickel must pay euro 1.62 billion for its huge oil spill – Judges at the Krasnoyarsk Court of Arbitration on the 5th of February announced their verdict in the case against the Norilsko-Taymyrsky Energy Company.The company that is owned and managed by mining and metallurgy giant Nornickel will have to pay 146,18 billion rubles (euro 1.62 billion) for the grave environmental damage inflicted on nature in the Taymyr region.It was Russia’s environmental protection agency Rosprirodnadzor that sued the company after more than 21,000 tons of diesel fuel in late May 2020 leaked from aruptured oil reservoir near the city of Norilsk. Rosprirodnadzor and its leader Svetlana Radionova originally demanded almost 148 billion rubles. Nornickel and its subsidiary, however, soon disputed the claim and argued that damage was worth only 21,4 billion rubles (euro 238 million).The court case started in early October. Svetlana Radionova is content with the verdict.”I am confident that this money will be spent on solving environmental problems,” she says in a statement. According to newspaper Kommersant, practically the whole sum (145,5 billion rubles) will included in the federal budget, while the minor sum of 685,000 rubles will be included in the budget of Norilsk.In a statement, Nornickel says it will “carefully study the verdict.” It is not clear if the company will file and appeal.Previously, the company has argued that the fine must be included not in the federal treasury, but rather in the regional budget of Krasnoyarsk. The fine is unprecedented in Russia and must be seen as a strong signal to the country’s powerful producer of nickel, copper, palladium and platinum. It is a strike against the company. But company shareholder and CEO Vladimir Potanin will have no major problems finding the required money.
NDMO responds to oil spill reports – THE Solomon Islands Government through the National Disaster Management Office, NDMO, has deployed a Multi-Sectoral Technical Assessment Team on an oil spill operation in Graciosa Bay in Temotu Province, on Friday 05th February 2021. The deployment of the team followed oil spill reports on MV QUEBEC, a foreign bulk carrier anchored at Graciosa Bay, discharging Heavy Oil Fuel, (HFO) when it arrived on 20th January 2021. The National Emergency Operations Centre (NEOC), received a report from Lata Police Temotu Province that there has been an Oil Spill with potential damage to the environment observed by Solomon Islands Government, SIG, Border Agencies whilst conducting routine vessel clearance on MV Quebec. The NEOC elevated the initial report to the Solomon Islands Maritime Authority (SIMA), Environment and Conservation Division (ECD) of the Ministry of Environment, Climate Change, Disaster Management and Meteorology, the Ministry of Fisheries and Marine Resources, and the Royal Solomon Islands Police Force (RSIPF). Based on the technical assessment and recommendations on maritime, environmental, and disaster risks, the Multiâ€Sectoral Technical Assessment Team aimed to provide further information on the oil spills and the impacts to the communities and environment, whilst identifying the drivers to determine appropriate actions for the Government to take. Whilst on the ground, the Team will also assess the oil leakage from the wreckage of MV Tremax, a sunken vessel at the Lata wharf in 2014. NEOC received oil leakage reports on the sunken vessel from some individuals, Temotu Provincial Government, and the Lata Fisheries Centre on 03rd February 2021. Coordinated by NEOC, the team is spearheaded by the Solomon Islands Maritime Authority, SIMA, and comprised of other technical agencies including the Environment, Fisheries, Disaster, Police, and Temotu Provincial Government Officers. Under the National Marine Spill Contingency Plan (NATPLAN), SIMA is the SIG lead agency on marine pollution and oil spill in the country.
Court orders Shell to pay for Nigerian oil spills – Between 2004 and 2007, oil spilled out from pipelines owned by a Shell subsidiary, polluting the fields and fish ponds in three Nigerian villages.1 So four Nigerians teamed up with Milieudefensie/Friends of the Earth Netherlands to sue Shell over the leaks in 2008. Now, nearly 13 years later, a Dutch court has largely ruled in their favor. “Finally, there is some justice for the Nigerian people suffering the consequences of Shell’s oil,” plaintiff Eric Dooh said in a press release. “It is a bittersweet victory, since two of the plaintiffs, including my father, did not live to see the end of this trial. But this verdict brings hope for the future of the people in the Niger Delta.” The case involved three leaks: two from pipelines near the villages of Oruma and Goi and one from a well near the village of Ikot Ada Udo. The Court of Appeal in the Hague issued its decision on the first two spills January 29, ruling that Shell Nigeria must compensate the villagers for the damage done. Further, it ruled that both Shell Nigeria and its parent company, Royal Dutch Shell, must install a warning system in the Oruma pipeline so that leaks can be detected and stopped before they cause significant environmental harm. The compensation will be life-changing for the plaintiffs. Dooh hopes to use it to invest in his home village of Goi and create jobs, Milieudefensie climate justice campaigner Freek Bersch told Treehugger in an email. Another plaintiff, Fidelis Oguru of Oruma, wants to use it for an operation to recover his eyesight. However, it is the second half of the ruling that is especially significant. It marks the first time that a Dutch company has been held responsible for the actions of one of its subsidiaries abroad, Friends of the Earth explained. Campaigners say this could set an important precedent for the Netherlands, Nigeria, and the wider world. “This is also a warning for all Dutch transnational corporations involved in injustice worldwide,” Milieudefensie director Donald Pols said in the press release. “Victims of environmental pollution, land grabbing or exploitation now have a better chance to win a legal battle against the companies involved. People in developing countries are no longer without rights in the face of transnational corporations.” Bersch said that more lawsuits would likely be brought against other oil companies acting in Nigeria. “But,” Bersch added, “we hope that this judgment will also be a stepping stone for court cases for victims in other countries, against other multinationals, in other courts.” The ruling could also help with the growing movement to hold fossil fuel companies liable for the effects of climate change.
Nigerian farmers win hollow legal victory against Shell for oil spillages -In a case that has taken 13 years to reach a conclusion, the Dutch Court of Appeal has ruled that the Nigerian subsidiary of Royal Dutch Shell-the Anglo-Dutch oil giant is headquartered in the Netherlands-is liable for oil spills in the Niger Delta in Nigeria between 2004 and 2007. While Shell had argued that saboteurs were responsible for leaks in underground oil pipes that have polluted the delta, the court ruled that while sabotage was the most likely cause in two of the villages, this had not been established beyond reasonable doubt. By allowing the leaks to occur and failing to clean up the contaminated area, Shell’s Nigerian subsidiary had acted unlawfully and was liable for the damage. The court ordered Shell Nigeria to pay compensation for the massive oil spills that have caused widespread pollution and ruined Nigerian farms, with the amount of compensation to be decided later. It ordered the company to start purifying the contaminated water within weeks and to install a leak detection system to a pipeline that caused one of the spills. Shell may yet appeal to the Dutch Supreme Court. Environmental and human rights activists have hailed the decision as ground-breaking, enabling cases to be brought against transnational corporations in the country where they are headquartered and making it harder for the parent company to “walk away from trouble” caused by overseas subsidiaries. Such optimism is belied both by Shell and other oil corporations’ record in Nigeria and the outcome of previous court rulings that, without any mechanisms to enforce their decisions, have achieved little in practice. Shell, with its deep pockets, have long sought to evade responsibility via lengthy legal proceedings, many of them in UK courts, for their part in regular oil spills on the Niger Delta that have ruined the livelihoods of local people. Even when courts find against Shell, the oil giant manages to manoeuvre its way out of its obligations. In 2015, Shell accepted responsibility for the oil spills of Bodo, Ogoniland, in 2008 and 2009 and agreed to pay the people of Bodo $83.4 million, far less than their original demand of $454.9 million, but the oil spills have yet to be cleaned.
Qatar Sanctions Massive $30B North Field East LNG Project – State-owned Qatar Petroleum (QP) is moving ahead with the largest liquefied natural gas (LNG) export project ever to be sanctioned, staking a claim to the world’s projected future demand. QP announced a positive final investment decision (FID) Monday for the North Field East (NFE) Project, which has been in the works for years and would produce 33 million metric tons/year (mmty). The project would boost Qatar’s overall LNG production capacity to 110 mmty from 77 mmty. The new facilities would receive 6 Bcf/d from the North Field, considered the world’s largest non-associated gas field. Qatar is already the world’s largest LNG exporter. The NFE project is expected to cost $28.75 billion. CEO Saad Sherida Al-Kaabi said QP is in discussions with other energy majors to take a stake in the project as they have in the country’s other LNG trains over the years. The FID comes at a time when sanctioning export projects of any size has been rare given a LNG supply glut that’s plagued the market in recent years and the pandemic’s economic fallout. “This event is of particular importance as it comes at a critical time when the world is still reeling from the effects of a global pandemic and related depressed economies,” he said. “This investment decision is a clear demonstration of the steadfast commitment by the state of Qatar to supply the world with the clean energy it needs.” QP awarded the engineering, procurement and construction (EPC) contract to a joint venture of Chiyoda Corp. and Technip Energies. Chiyoda has built 12 of Qatar’s 14 existing LNG trains. The EPC award covers four mega liquefaction trains each with a capacity of 8 mmty, associated utility facilities and a carbon capture and sequestration (CCS) facility to cut greenhouse gas emissions (GHG) from the export terminal by 25% compared to similar plants, Chiyoda said. Al-Kaabi said the CCS system would be the largest of its kind in the LNG industry. The project would also tap solar power, utilize a boil-off gas recovery system to limit GHG emissions, as well as conserve water and cut nitrogen oxide emissions. The measures come as buyers and the countries they serve are increasingly demanding responsibly produced and delivered LNG. The cost of feed gas would be offset in part by condensate, propane, ethane, sulfur and helium production. “At a long-term breakeven price of just over $4.00/MMBtu, it’s right at the bottom of the global LNG cost curve, alongside Arctic Russian projects,” Qatar has been dominant in the global LNG trade for decades. According to Kpler, about two-thirds of its exports go to Asia, which is projected to drive the market’s growth in the years ahead.
Exxon Exits Kurdistan License – DNO has announced the acquisition of ExxonMobil’s 32 percent interest in the Baeshiqa license in the Kurdistan region of Iraq. The deal, which is pending government approval, doubles DNO’s operated stake to 64 percent and sees ExxonMobil exit the asset. DNO said it plans to continue an exploration and appraisal program on the license while fast tracking early production from existing wells in 2021. “By increasing our stake in the Baeshiqa license now, we demonstrate our belief in its ultimate potential,” Bijan Mossavar-Rahmani, DNO’s executive chairman, said in a company statement. “Following the stabilization of oil prices and export payments in Kurdistan, DNO is stepping up spending on new opportunities,” he added in the statement. Following the completion of the deal, the remaining partners in the license would comprise TEC, with a 16 percent stake, and the Kurdistan Regional Government, with a 20 percent carried interest. DNO previously bought a 32 percent interest in the Baeshiqa license from ExxonMobil, and assumed operatorship of the asset, back in 2018. The 125 square mile Baeshiqa license is said to contain two large structures, Baeshiqa and Zartik, which have multiple independent stacked target reservoir systems, including in the Cretaceous, Jurassic and Triassic, DNO pointed out. In addition to the Baeshiqa license, DNO operates the Tawke license, containing the Tawke and Peshkabir fields, in Kurdistan. Gross operated production from the Tawke license averaged 110,300 barrels of oil per day in 2020, DNO highlighted.
Analysis: Iran oil output faces race against time as U.S. sanctions linger (Reuters) – Iran’s oil reserves risk becoming stranded assets unless the new U.S. administration eases sanctions that have left the country lagging rivals in output capacity and losing a race against time as the transition to low carbon energy gathers pace. Iran, which sits on the world’s fourth-largest oil reserves, relies heavily on oil revenue, but sanctions have prevented it from pumping at anywhere near capacity since 2018. The penalties were tightened under former U.S. president Donald Trump and although the new President Joe Biden is more conciliatory, top officials in his administration have said Washington would not take a quick decision on any deal with Iran. Iran’s leadership says sanctions have only delayed the moment when it will produce the oil in its vast reserves – and that the world will eventually need it. But the increasing pace of the global energy transition to lower carbon fuels, combined with the impact of the COVID-19 pandemic on energy demand, have brought forward forecasts for when the world will hit peak demand – the point beyond which consumption will permanently fall. Some Iranian officials, including the oil minister Bijan Zanganeh, have said repeatedly Tehran needs to maximise production rapidly – before oil demand disappears and rival producers take what’s left of market share. That idea, however, has been pushed back by factions who see it as a betrayal of future generations. “The dominant narrative is still to keep production optimal long-term – without realising time is running short – and to avoid exporting oil as raw material – without appreciating the refining business may not be a profitable business in the long-term anyway,” said Iman Nasseri, managing director for the Middle East with FGE energy consultancy.
State oil firms risk wasting $400 billion as energy transition speeds up (Reuters) – National oil companies (NOCs) risk squandering $400 billion on expensive oil and gas projects over the next decade that may only break even if the world fails to meet the Paris climate goals, a non-governmental organisation said on Tuesday. In a new report called Risky Bet, the Natural Resource Governance Institute (NRGI) estimated that NOCs could invest $1.9 trillion over the next ten years, meaning one-fifth of those investments would be unviable unless the oil price stayed above $40 a barrel. Major oil companies like BP, Total and Royal Dutch Shell have already progressively lowered their long term price estimates, now in the $50-60 a barrel range, while some analysts see even lower levels depending on the energy transition scenario. The result could worsen inequalities as funds that could have been better spent on healthcare, education or diversifying the economy might instead create an economic crisis. Many of these NOCs are based in countries where 280 million people live below the poverty line. “State oil companies’ expenditures are a highly uncertain gamble,” “They could pay off, or they could pave the way for economic crises across the emerging and developing world and necessitate future bailouts that cost the public dearly.”
Hedge funds bet on oil’s ‘big comeback’ after pandemic hobbles producers (Reuters) – Hedge funds are turning bullish on oil once again, betting the pandemic and investors’ environmental focus has severely damaged companies’ ability to ramp up production. Such limitations on supply would push prices to multi-year highs and keep them there for two years or more, several hedge funds said. The view is a reversal for hedge funds, which shorted the oil sector in the lead-up to global shutdowns, landing energy focused hedge funds gains of 26.8% in 2020, according to data from eVestment. By virtue of their fast-moving strategies, hedge funds are quick to spot new trends. Global oil benchmark Brent has jumped 59% since early November when news of successful vaccines emerged, after COVID-19 travel curbs and lockdowns last year hammered fuel demand and collapsed oil prices. Last week it hit pre-pandemic levels close to $60 a barrel. U.S. crude has climbed 54% to around $57 per barrel during the same period. “By the summer, the vaccine should be widely provided and just in time for summer travel and I think things are going to go gangbusters,” said David D. Tawil, co-founder at New York-based event-driven hedge fund, Maglan Capital, and interim CEO of Centaurus Energy.
Brent approaches $60 per barrel as supply cuts, stimulus hopes lift prices – Oil prices rose on Monday to their highest in just over a year, with Brent nudging past $60 a barrel, boosted by supply cuts among key producers and hopes for further U.S. economic stimulus measures that can boost demand. Brent was up 87 cents, or 1.47%, at $60.21 a barrel, and U.S. West Texas Intermediate rose 90 cents, or 1.58%, to $57.75 a barrel. Both contracts were at their highest levels since January 2020. “Oil prices are back close to pre-pandemic levels,” “Support seems robust and the narrative sees the oil market swiftly burning through the remaining crisis-surplus, potentially running into tightness later this year,” The oil market continues to tighten‮ ‬with deeper cuts from Saudi Arabia who pledged extra supply cuts in February and March on the back of reductions by other members of the Organization of the Petroleum Exporting Countries and its allies. In a sign that prompt supplies are tightening, the six-month Brent spread hit a high of $2.54 on Monday, its widest since January last year. OCBC’s economist Howie Lee said the world’s top exporter Saudi Arabia sent a “very bullish signal” last week when it kept monthly crude prices to Asia unchanged despite expectations of small cuts. “I don’t think anybody dares to short the market when Saudi is like this,” he added. A weaker dollar against most currencies on Monday also supported commodities, with dollar-denominated commodities becoming more affordable to holders of other currencies. Investors are also keeping a close watch on a $1.9 trillion COVID-19 aid package for the United States that is expected to be passed by lawmakers as soon as this month. Hopes that Iranian oil exports would soon return to the market have been dampened, supporting oil prices. Stronger crude prices are, meanwhile, encouraging U.S. producers to increase output. The U.S. oil rig count, an early indicator of future output, rose last week to its highest since May, according to energy services firm Baker Hughes Co.
Oil rises 2% to more than one-year high on supply cuts, stimulus hopes (Reuters) – Oil prices rose 2% on Monday to their highest in over a year, with Brent nudging past $60 a barrel, boosted by supply cuts among key producers and hopes for further U.S. economic stimulus. Brent rose $1.22, or 2.1%, to settle at $60.56 a barrel, while U.S. West Texas Intermediate rose $1.12, or 2%, to settle at $57.97 a barrel. Both benchmarks were at the highest since January 2020. “Managing to breach $60 again feels like the market is finally resurfacing after the long struggle and (taking) a proper breath,” Brent and WTI have risen more than 60% since the start of November due to optimism around coronavirus vaccine distributions as well as production cuts from OPEC+ members. “There is a sense that the glut of oil supply is disappearing more rapidly than anybody thought possible.” Saudi Arabia pledged extra supply cuts in February and March following reductions by other members of the Organization of the Petroleum Exporting Countries and its allies. In a sign that prompt supplies are tightening, the six-month Brent spread hit a high of $2.54 on Monday, its widest since January last year, a signal of demand for current supply. OCBC economist Howie Lee said the world’s top exporter Saudi Arabia sent a “very bullish signal” last week when it kept monthly crude prices to Asia unchanged despite expectations for small cuts. “I don’t think anybody dares to short the market when Saudi is like this,” he added. Investors are keeping watch on a $1.9 trillion COVID-19 aid package for the United States that is expected to be passed as soon as this month. Hopes that Iranian oil exports would soon return to the market have been dampened, supporting oil prices. U.S. President Joe Biden said the United States would not lift sanctions on Iran simply to get it back to the negotiating table, while Iran’s Supreme Leader Ayatollah Ali Khamenei said all sanctions should be lifted first.
Oil climbs to 13-month highs, as supply cuts, demand optimism support – Oil prices edged up on Tuesday to their highest in 13 months as supply cuts by major producers and optimism over fuel demand recovery support energy markets. Brent crude futures for April gained 29 cents, or 0.5%, to $60.85 a barrel by 0246 GMT. U.S. West Texas Intermediate crude (WTI) for March was at $58.25 a barrel, up 28 cents, or 0.5%. Both Brent and WTI are at their highest since January 2020. Front-month prices for both contracts are up for the seventh session on Tuesday, the longest win streak since January 2019. Additional supply reductions by top exporter Saudi Arabia in February and March, on top of cuts by producers in the Organization of the Petroleum Exporting Countries and their allies, are tightening supplies and balancing global markets. Investors are also pinning hopes on oil demand recovery when COVID-19 vaccines take effect. A weak dollar has also helped shored up prices of commodities. “Progress on U.S. stimulus and optimism around the roll-out and effect of vaccines across the remainder of 2021 and a slightly weaker USD help the view (for a recovery) albeit there was mixed news on the impact of the current vaccines formulated on the emerging South African variant,” He cautioned, however, that both Brent and WTI are in overbought territory on technical charts. “While I remain a bit cautious at current levels, the medium and longer-term outlook for demand is healthy, and one can understand a willingness to look through some of the near-term uncertainty that remains for oil,”
Oil gains, with Brent prices up an 8th session as traders spot signs of better energy demand – Oil futures moved up on Tuesday, shaking off earlier weakness, as signs of improving energy demand prompted global benchmark prices to tally an eighth consecutive session gain. “With supply dynamics of the global oil market as clear and steady as they have been in years, trader focus has turned to demand in recent sessions, and with the continued vaccine distribution efforts, falling COVID case counts, and another huge stimulus package working its way through Congress, demand expectations are rising,” analysts at Sevens Report Research wrote in a Tuesday newsletter. The U.S. benchmark West Texas Intermediate crude for March delivery rose 39 cents, or 0.7%, to settle at $58.36 a barrel on the New York Mercantile Exchange, with front-month prices scoring a seventh consecutive session of gains. That is the longest streak of gains since the eight-session rise ended Feb. 22, 2019, according to Dow Jones Market Data. April Brent crude tacked on 53 cents or 0.9%, to end at $61.09 a barrel on ICE Futures Europe. Tuesday’s rise marked its eighth in a row, the longest run since February 2020. Both WTI and Brent crude futures logged their highest settlements since January of last year. “After losing momentum through much of January trading, the crude complex has posted a strong rally over the past two weeks,” bringing Brent above the $60 a barrel level, said Robbie Fraser, manager of global research and analytics at Schneider Electric, in a daily note. “That rally has been aided by longer-term optimism and expectations of broader market strength, but current prices are likely to generate some anxiety that the rally is near overextended territory,” he said. Oil rallied Monday as equities continued their surge, helping to lift major U.S. benchmarks to another round of all-time highs. Broad-based market optimism remains tied to expectations for another large round of government aid under President Joe Biden’s $1.9 trillion proposal, as well as progress on vaccine rollouts around the world. Meanwhile, Saudi Arabia’s decision to unilaterally cut output by 1 million barrels a day in February and March is seen helping to keep supplies in check, analysts said.
Oil prices extend rally after surprise fall in U.S. stocks – Oil extended its rally for a ninth day on Wednesday, its longest winning streak in two years, supported by producer supply cuts and hopes that vaccine rollouts will drive a recovery in demand. The American Petroleum Institute said on Tuesday crude inventories fell by 3.5 million barrels, versus expectations for a 985,000-barrel build. Brent crude was up 41 cents, or 0.67%, at $61.51 after touching a 13-month high of $61.61 earlier in the session. U.S. crude was up 33 cents, or 0.57%, to $58.68, having touched $58.76, also a 13-month high. “One can only wonder whether there’s further to go in this week’s rally,” said Stephen Brennock of broker PVM. “However, as things stand, oil has yet to lose its shine.” Brent has now risen for nine sessions in a row, its longest sustained period of gains since December 2018 to January 2019. It is the eighth daily rise for U.S. crude. Some analysts say prices have moved too far ahead of the underlying fundamentals. “The current price levels are healthier than the actual market and entirely reliant on supply cuts, as demand still needs to recover,” said Bjornar Tonhaugen of Rystad Energy. Crude has jumped since November as governments kicked off vaccination drives for COVID-19 while putting in place large stimulus packages to boost economic activity, and the world’s top producers kept a lid on supply. Top exporter Saudi Arabia is unilaterally reducing supply in February and March, supplementing cuts agreed by other members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+. Some analysts forecast supply will undershoot demand in 2021 as more people get vaccinated and start going away on trips and working in offices.
WTI Rebounds, Shrugging Off Another Big Gasoline Stock Build – Oil prices have pumped and dumped overnight, back to unchanged, after API reported a bigger than expected crude draw and much bigger than expected gasoline build that confused the algos. API:
- Crude -3.5mm (-994k exp)
- Cushing -378k
- Gasoline +4.81mm- biggest build since April 2020
- Distillates -487k
DOE
- Crude -6.645mm (-994k exp, -2.5mm whisper)
- Cushing -658k
- Gasoline +4.259mm
- Distillates -1.732mm
Crude stocks fell more than expected (for the 3rd week in a row) but gasoline inventories continued their almost 6-week streak of builds.. Source for graphs: Bloomberg Gasoline Demand weakness lingers… Crude production has been flat to slightly lower as prices and rig counts have risen recently suggesting some capital discipline among drillers. WTI was hovering near the lows of the day around $58.20 ahead of the data drop and spiked on the bigger than expected crude draw…
Oil Is Soaring Amid “Supercycle” Chatter Just days after one of our favorite macro strategists, Dylan Grice, predicted that the stage is set for “a bull market in oil”, and JPM quant Marko Kolanovic said a new oil and commodity supercycle has begun, oil is starting to get the message, and has jumped more than 2% on Friday… … rising to the highest intraday level in more than a year as output curbs from top producers whittle down global inventories, while JPM predicts that an epic systematic short squeeze is about to be unleashed next month in oil (we discussed this earlier this week, and will touch on this shortly again). Oil was set for a second straight weekly gain, as OPEC+ continued to slash output and the group expects a stronger second half of the year, which to Bloomberg indicates “that global inventories will face sharp declines unless the cartel boosts supply.” Indeed, Iraq said OPEC+ is unlikely to change its output policy at a March meeting. Meanwhile, in the U.S., crude stockpiles are at the lowest in nearly a year. “This time of year, there’s usually builds,” said Bill O’Grady, executive vice president at Confluence Investment Management in St. Louis. “The draws we’ve been getting are pretty surprising, setting up a really bullish backdrop.” As a result of the rally, WTI futures’ 14-day Relative Strength Index (RSI) rose to the most overbought since 1999 this week and remains above 70 in a sign that the commodity may be due for a pullback, which however has yet to come. “Based on fundamental analysis, the case for further price gains is hard to make, although we are seeing optimism in financial markets in general,” said Hans van Cleef, senior energy economist at ABN Amro. “We think that much higher oil prices are not sustainable and that oil producers will then start to increase production.”Oil in longest rally in two years as vaccines boost demand hopes (Reuters) – Oil prices rose on Wednesday, extending its rally for a ninth day, its longest winning streak in two years, supported by producer supply cuts and hopes vaccine rollouts will drive a recovery in demand. Falling U.S. crude inventories were also supportive. Crude stocks last week fell for a third straight week, dropping 6.6 million barrels to 469 million barrels, their lowest since March, according to the Energy Information Administration. Analysts in a Reuters poll had forecast a 985,000-barrel increase. [EIA/S] “A combination of higher refining activity and lower imports resulted in a third consecutive draw to oil inventories, and a chunky one at that,” said Matt Smith, director of commodity research at ClipperData. He cautioned that a build to gasoline inventories offset the bullish draw. Brent crude settled up 38 cents, or 0.6%, at $61.47 a barrel, after touching a 13-month high of $61.61. U.S. crude closed 32 cents, or 0.6%, higher at $58.68 a barrel, also after touching a 13-month high at $58.76. Brent has now risen for nine sessions in a row, its longest sustained period of gains since December 2018 to January 2019. It is the eighth daily rise for U.S. crude. Some analysts say prices have moved too far ahead of the underlying fundamentals. “The current price levels are healthier than the actual market and entirely reliant on supply cuts, as demand still needs to recover,” said Bjornar Tonhaugen of Rystad Energy. Crude has jumped since November as governments kicked off vaccination drives for COVID-19 while putting in place large stimulus packages to boost economic activity, and the world’s top producers kept a lid on supply. Top exporter Saudi Arabia is unilaterally reducing supply in February and March, supplementing cuts agreed by other members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+. Some analysts forecast supply will undershoot demand in 2021 as more people get vaccinated and start going away on trips and working in offices. “It should be a strong second half of the year and oil prices are a reflection of that,”
The Most Fragile Oil Price Rally In History – Brent crude could hit $70 or even $80 a barrel by the end of this year, one hedge fund manager says. It could top $100 next year, an energy analyst forecasts. Oil is on a tear, and suddenly, everyone is bullish. But this is probably the most fragile oil price recovery in history. Something as tiny as a virus could kill it.Herd immunity is the big factor for hedge funds, according to a recent Reuters report. According to them and several banks, the United States-the world’s biggest oil consumer-will reach herd immunity by the middle of the year, which will coincide with summer driving season to the benefit of oil producers.”By the summer, the vaccine should be widely provided and just in time for summer travel and I think things are going to go gangbusters,” one hedge fund manager, David D. Tawil of Maglan Capital, told Reuters.Government stimulus will also help. In fact, it could even push prices to $100 and over, accordingto Energy Aspects’ Amrita Sen.”We’ve always called for $80 plus oil in 2022. Maybe that is $100 now given how much liquidity there is in the system. I wouldn’t rule that out,” Sen told Bloomberg this week.Central banks and governments have been more than generous with stimulus to weather the effects of the crisis caused by the pandemic, and while some are skeptical about the long-term benefits of some measures, the overall sentiment towards them is positive. There are some flies in the stimulus ointment, however. In Europe, some analysts are warning that government support for businesses is creating so-called zombie companies that will collapse the moment the stimulus end, which it will eventually have to do. In the United States, some analysts have questioned the need for President’s Biden $1.9-trillion stimulus program saying the economy is already picking up, however slowly, and a stimulus package as huge as this one could lead to excessive inflation, which could have unexpected consequences. And then there are the oil producers, many of which have been struggling to stay afloat since the pandemic hit the global scene. With rising oil prices, the struggle will end, but it will also tempt many to start producing more, especially as demand recovers thanks to mass vaccinations. This is the dominant expectation: that by the summer, there will be enough people vaccinated for life to begin to return to normal, including in oil demand. Analysts and financiers note that oil companies are much warier about production growth this time and will hold off returning to growth mode for longer. This may or may not be the case, but what most analysts and financiers seem to be brushing off is the possibility of a resurgence in Covid-19 infections.
Oil drops after strong rally, demand hopes limit losses – Oil prices fell on Thursday, giving up some of the recent strong gains, although losses were curbed by production cuts and hopes that rollouts of vaccines will drive a recovery in demand. Brent crude fell 39 cents, or 0.6%, to $61.08 a barrel, as of 0231 GMT, after touching its highest since January 2020 on Wednesday. U.S. crude slid 35 cents, or 0.6%, to $58.33 a barrel. “Crude oil futures rallied following a bigger than expected fall in inventories in the U.S.,” ANZ said in a note. “However, sentiment was curtailed by a rise in gasoline inventories.” Crude stocks last week fell for a third straight week, dropping 6.6 million barrels to 469 million barrels, their lowest since March, according to the Energy Information Administration. Analysts in a Reuters poll had forecast a 985,000-barrel increase. Brent has risen for the previous nine sessions, its longest sustained period of gains since January 2019. On Wednesday, was the eighth daily rise for U.S. crude. However, some analysts say prices have moved too far ahead of the underlying fundamentals. Stocks were flat in early trading in Asia on Thursday as investors kept tapping the brakes on runs in asset prices after taking in tepid U.S. inflation data and comments from the Federal Reserve chief affirming the outlook for a slow recovery. Crude has jumped since November as governments kicked off vaccination drives for COVID-19 while putting in place large stimulus packages to boost economic activity, and the world’s top producers kept a lid on supply. Top exporter Saudi Arabia is unilaterally reducing supply in February and March, supplementing cuts agreed by other members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+.
Oil prices snap an eight-day run as IEA cuts demand outlook – Oil capped its longest winning streak in two years following the International Energy Agency’s bleaker outlook for global demand and signs that futures were overbought. Prices in New York slid 0.8% on Thursday, the biggest decline in two weeks, after rising for eight straight sessions. The IEA said the re-balancing of the global oil markets remains “fragile” and slashed its forecasts for world oil consumption in 2021 as the pandemic continues to limit travel and economic activity. Still, the agency said the market’s prospects look stronger in the second half of the year, and swollen oil inventories will drop sharply as fuel use picks up. “Crude has shown some really strong gains,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy. But “there’s some questions as to whether or not these levels can be maintained” amid uncertainty over the demand recovery and the ability for producers to limit supplies. While crude is up more than 11% this month, the recent stretch of price gains had pushed its 14-day Relative Strength Index this week to the most overbought level since 1999, signaling the rally was due for a correction. But the underlying setup for oil remains firm. Citigroup Inc. predicted the global benchmark Brent will likely reach $70 a barrel by the end of the year, while JPMorgan Chase & Co. called a new supercycle for commodities. Oil’s rebound accelerated after Saudi Arabia pledged to deepen output cuts and the premium on the nearest contract firmed in a bullish backwardation structure, helping to unwind global stockpiles built up during the outbreak. There are still concerns that the virus may curb near-term fuel demand, with China’s air traffic falling sharply ahead of the Lunar New Year holiday after a resurgence in some areas. “It’s an ideal time for profit-taking” following the recent streak of price gains, said Edward Moya, senior market analyst at Oanda Corp. Yet, “there’s optimism that a lot of Americans are going to get vaccinated in these next couple months, which means they’re going to be more willing to travel.” West Texas Intermediate for March delivery fell 44 cents to settle at $58.24 a barrel. Brent for April settlement slid 33 cents to end the session at $61.14 a barrel, posting the largest daily loss since Jan. 22. Along with the IEA’s expectation for a brighter second half of the year, OPEC also said demand for its crude will be higher than previously expected, on a weaker outlook for rival supply and stronger global consumption in the second half.
Oil Prices Surge As Inventories Decline | Rigzone — Oil in London climbed for a fourth straight week as efforts to clear an oil surplus are seen holding the market over until demand comes back in force. Global benchmark Brent futures on Friday surged the most since early January, while West Texas Intermediate crude flirted with $60 a barrel for the first time in more than a year. Signs of inventories declining in the U.S. and elsewhere point to the success OPEC+ has had in draining a surplus left in the wake of an historic demand slump due to the pandemic. OPEC expects a stronger second half of 2021, indicating this week that global inventories will face sharp declines unless the cartel boosts supply. Iraq said OPEC+ is unlikely to change its output policy at a March meeting. In the U.S., crude stockpiles are at the lowest in nearly a year. “OPEC is showing a lot more nimbleness and practicality in their approach,” said Vikas Dwivedi, a global energy strategist for Macquarie Group in Houston. “It looks like U.S. shale is going to be a lot more measured and not just completely collapse the supply/demand balance.” One of the most dramatic moves in the market this week has been in Brent’s futures curve. So-called backwardation between the first and third futures contract, which indicates tight supplies, soared to its strongest level since January 2020. At the same time, brokers reported a frenzy of bullish trading in the key Dated-Frontline swap, which is tied to physical North Sea markets, flipping to a premium for the first time in a year. There are further signs of supply being constrained in the near term. A frigid Arctic blast spreading across America’s largest shale oil patch has caused crude flowing from wells to slow or halt completely. Traders say several hundred barrels a day of output in the Permian Basin could be impacted by well shutdowns that began Thursday. Crude prices “can still go higher from here,” said Ryan Gorman, market strategist at Blue Line Futures LLC in Chicago. “With Saudi Arabia’s production cut and some progress toward the end of the tunnel here for the virus, there’s still some room for this market to go.” Prices West Texas Intermediate gained $1.23 to settle at $59.47 a barrel, rising the most in nearly two weeks. Brent for April settlement rose $1.29 to end the session at $62.43 a barrel. Both benchmarks are at the highest since January 2020. Still, concerns remain over whether crude’s rally is sustainable. WTI futures’ 14-day Relative Strength Index rose to the most overbought since 1999 this week and remains sharply above 70 in a sign that the commodity is due for a pullback. Meanwhile, the Covid-19 pandemic continues to crimp fuel consumption from China to the U.S., with the International Energy Agency cutting its demand forecast for 2021 and describing the market as fragile.
Oil Futures at Fresh Highs on Saudi Attack (DTN) — Oil futures nearest delivery on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange reversed higher in late morning trade and rallied to fresh highs Friday afternoon after the Iranian-aligned Houthis militia claimed responsibility for a drone attack on a Saudi Arabian airport and airbase earlier this week, heightening the risk of supply disruption in the world’s largest crude oil exporter amid tightening global oil market.Further bolstering the oil complex, the U.S. dollar faded earlier gains to finish below 90.50 level after University of Michigan reported its consumer sentiment index unexpectedly declined in early February, with the souring sentiment concentrated in the expectations index among households making less than $75,000 a year. At 76.2, the consumer sentiment index dropped to a four-month low and missed analyst expectations for an improvement to an 80.9 reading.”Households with incomes in the bottom third reported significant setbacks in their current finances, with fewer of these households mentioning recent income gains than any time since 2014,” said Richard Curtin, chief economist of the consumer survey. Even more surprising was the finding that despite the expected passage of a massive $1.9 trillion stimulus bill, consumers viewed prospects for the national economy less favorably in early February than last month.On the session, West Texas Intermediate for March delivery futures rallied $1.23 to settle at $59.47 barrel (bbl), while international crude Brent April contract advanced $1.29 to finish at $62.43 bbl. Both benchmarks finished this week at their highest points on the spot continuous charts in 13 months.NYMEX March ULSD futures added 2.68 cents to $1.7714 gallon and March RBOB futures surged 4.23 cents to $1.6925 gallon. Friday’s gains came despite Baker Hughes data released early afternoon showing the number of oil-drilling rigs in the United States increased for the twelfth consecutive week through Friday, reaching the highest level since May 2020. At 306, the number of active oil rigs rose seven from the prior week but are down 372 from the comparable week a year ago. During the fourth quarter 2020, the number of rigs increased a total of 84 while gaining 39 so far in the current quarter.
International Criminal Court ruling paves way for legal proceedings against Israel for war crimes – The International Criminal Court (ICC) has ruled that it does have jurisdiction over war crimes and crimes against humanity in the Palestinian territories of the West Bank, Gaza and East Jerusalem. This paves the way for investigations into Israel and Hamas’ conduct during Israel’s murderous assault on Gaza in 2014 and Israel’s response to the weekly protests held under the banner of the Great March of Return that started in March 2018 and lasted for more than a year. According to United Nations figures, Israel’s bombardment of Gaza in 2014 killed 2,251 Palestinians, including 1,462 civilians, and injured 11,231. Of the Palestinians who lost their lives, 521 were children and 283 were women. The civilian death toll was far higher than that of the estimated 400 fighters belonging to Hamas, the Islamist group that controls Gaza and the ostensible target of the war. Just 67 Israeli soldiers, along with six civilians, were killed, and 1,600 soldiers were injured. The UN’s Human Rights Council (UNHRC) concluded that the mass killing and destruction were deliberate, not accidental, resulting from explicit decisions taken at the highest level of the Israeli government. Israeli forces responded to the largely peaceful Great March of Return protests, held in Gaza near its border with Israel, by firing tear gas canisters, some of them dropped from drones, rubber bullets and live ammunition, mostly by snipers. As a result, 214 Palestinians, including 46 children, were killed, and over 36,100, including nearly 8,800 children were injured. One in five of those injured (over 8,000) were hit by live ammunition. In contrast, just one Israeli soldier was killed and seven others injured during the demonstrations. The ICC ruling constitutes a potential legal barrier to Israel’s plans to extend and/or build new settlements and Prime Minister Benjamin Netanyahu’s plans, now on hold, to annex the Jordan Valley in breach of the ban on an occupying power settling civilians in or annexing occupied territory.
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