Written by rjs, MarketWatch 666
Here are some more selected news articles for the week ending 13 March 2021. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening or Tueday morning.
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Geologists Share Their Concerns With Drilling For Oil In Big Cypress – By all regards, the Tamiami Trail that streaks from Naples on the west coast of Florida to Miami on the east was an engineering wonder when it was built a century ago. Today, of course, the state and federal governments are spending billions of dollars to restore the watery flow of the Everglades, and part of that work involved lifting up sections of the Tamiami Trail — U.S. 41 — and placing them on bridges to allow the water to flow on south unimpeded towards the bay. You can see the successes by driving along the Trail as it cuts right through the heart of Big Cypress National Preserve, a 720,000-acre watery slice of natural wonderment, a wild landscape lurked by Florida panthers, bobcats and black bear and festooned in spring with Cardinal airplants, a species considered endangered by the state, that clutch onto dwarf cypress trees.Against the costly work of what is known as the Comprehensive Everglades Restoration Plan, there are ongoing efforts to seek oil beneath Big Cypress that could result in construction of miniature “dams” that could impact the river of grass as well by altering the flow of water. The damage would not be equal to that done by the Tamami Trail when it was built, but there would be impacts just the same.While the actual practice of drilling oil out from under the national preserve does not greatly concern two geologists well-familiar with the underpinnings of South Florida, the surface infrastructure needed to drill for oil is a concern when risks to the preserve are explored, they told the Traveler in separate interviews.”The issue, at least in my opinion in terms of hydrology and groundwater contamination and those kinds of issues, relates to the surface facilities around the well,” said Tom Missimer, who spent 34 years consulting on oil drilling before heading into academia at Florida Gulf Coast University a little more than a decade ago. “The key to me is really not the construction of the well. The issue is if they’re maintaining surface facilities.”Those facilities might include large tanks to store the recovered oil before it’s trucked it off to a refinery, or a pipeline system to pump the oil away. Also involved are containment systems for the briny water that is separated from the oil. “Your potential points of contamination are around the site where they collect the oil and water,”
Valero crude oil leak heightens concerns over proposed pipeline | Southern Environmental Law Center —Reports of an 800-gallon crude oil leak last year at a storage site near the terminus of a proposed high-pressure oil pipeline by Valero Energy Corp’s have heightened concerns about the risks the project poses to the Memphis Sand Aquifer, which supplies drinking water to the city.Automated monitoring systems failed to detect the leak, caused by corrosion in 37-year-old pipes, at Valero’s Marshall County storage site in Mississippi. This is just couple counties away from Shelby County, Tennessee, where Memphis is located. Even though pipeline companies are now required to install leak detection systems, these do not always work as planned. In a study of 4,000 oil and fuel spills reported to the Pipeline and Hazardous Materials Safety Administration since 2010, only about seven percent were discovered because of leak detection systems.Valero and Plains All American Pipeline have proposed building a high-pressure crude-oil pipeline through southwest Memphis, home to a number of Black neighborhoods, and directly through the wellfield that provides the local neighborhoods’ drinking water. Community groups have risen in opposition to the dangerous proposal.”This latest leak just proves what we’ve been saying about this all along: There is no such thing as a safe oil pipeline,” said Justin J. Pearson, of Memphis Community Against the Pipeline. “Pipelines leak, almost inevitably. It’s not an abstract risk of harm, it’s something that will almost certainly happen if this project goes through.”The Memphis Sand Aquifer supplies clean, reliable drinking water to Memphis and Shelby County- the largest metropolitan area in the United States that relies exclusively on groundwater for its municipal water supply. see: Hydrogeologic report warns of pipeline threats to Memphis drinking water source.
Pipeline from Memphis to Byhalia draws opposition | MS Business Journal A planned 49-mile pipeline to carry oil from a refinery in Memphis and connect two pipelines at Byhalia (Marshall County, Mississippi) has gotten all its permits – but it has drawn opposition.U.S. Rep. Steve Cohen, a Democrat who represents Memphis, has asked President Joe Biden to rescind the permission the Plains All American project has gotten.On his first day in office, Jan. 20, Biden rescinded the permits for the 1,200-mile Keystone XL pipeline as part of his “transition” to “green energy.”And the effects on the oil industry are already being felt, including in Mississippi.Yak Access, based in Columbia, which lays hardwood mats to create roads in remote areas that need to be reached, such as for oil pipelines, has already taken a major hit because of Biden’s order. Same for Jones Lumber Co. which produces the mats in Hazlehurst and Natchez.Neither business responded to messages left to ascertain whether they have contracts or bids on the project.Activists in Memphis and Cohen cite what they say are concerns about the potential contamination of the city’s drinking water drawn from the Sand Aquifer located deep below the surface.The city’s drinking water, first drawn from “artesian wells” in the late 1800s, is still a point of civic pride for Memphis because of its purity.And the opponents say that the decision to route the 24-inch-diameter pipeline through industrialized areas and low-income minority neighborhoods reflects “environmental racism.”
Refiners Are Emerging from Deep Freeze and Buying U.S. Oil Again – — Physical oil prices in the U.S. are rebounding to levels seen before a deep freeze hit Texas last month, showing fuel-making plants are thirsty for crude again. Seven of 18 refineries affected by the cold blast — making up over 2 million barrels a day of crude processing capacity — were operating normally as of Monday. Mars Blend, a regional sour crude benchmark, traded this month at the largest premium to Nymex oil futures in nearly three weeks, while other key grades also firmed. Another reason for the strength is due to increased demand for U.S. crude from overseas buyers after OPEC+’s surprise decision to continue limiting supply. As much as 5.5 million barrels a day of crude processing capacity was suspended when arctic temperatures in the U.S. south halted power supply and damaged equipment at refineries in America’s energy hub in February. Crude inventories piled up by a record 22 million barrels as a result. Since then, plants including those operated by Motiva Enterprises LLC and Valero Energy Corp. have restarted, and the rest of the sites will likely resume operation this week. Buying is popping up from South Korea, India, Canada and Europe, although interest from China has been muted because of high inventories. With OPEC producers keeping supply cuts in place in April, some customers that were expecting available supply from Middle East producers, especially of medium-high sulfur crudes, may have to seek alternatives like Mars Blend or Poseidon. Saudi Arabia’s decision to increase official selling prices for its April supply to Asia and the U.S. could also spur additional purchases of U.S. sour crudes.
Texas Output Returning with Caution -Texas fuel makers are racing to restore operations knocked out by mid-February’s brutal winter storm, but they’re also casting a wary eye on improvements in the market and may be reluctant to come back at full throttle. Refiners are gun-shy after 12 months of losing money in a market that was hit hard by Covid-19, prompting several plants to close or slash production. So, even as the market beckons with fatter profit margins, tighter inventories and signs of rising demand, they are weighing the risk of being stuck with a glut of fuel supplies again. It’s easy to see why they would be tempted, though. Gasoline inventories on the Gulf Coast plunged by 11 million barrels in the week ended Feb. 26 as the region’s refining capacity sank to a record low of less than 41%, while gasoline demand rose the most since May. The theoretical profit margin for refining crude oil into gasoline and diesel, known as the crack spread, is trending near its highest since February of 2020. But demand for this time of the year remains significantly lower than in March 2019, when there was no pandemic, and no one can say for sure when life will come back to normal. Refiners are also facing rising costs for tradeable credits known as RINs that are used to show compliance with the nation’s Renewal Fuel Standard. “Margins have improved a lot, especially FCCs,” said Robert Campbell, head of oil products research for Energy Aspects Ltd., in a reference to gasoline-making units. “But RINs are a killer! Adjusting for that, margins are not so great.” As of Friday, seven of 18 refineries impacted by the storm, including those that shut all or some units, were able to operate normally. Most of the rest will likely restore operations by the end of this week.
Trader Says USA Shale Producers Unlikely to Ramp Up Output — Oil’s surge following OPEC+’s surprise move to maintain cuts in supply shows the producers’ group is in charge of the market, Vitol Group said. The Organization of Petroleum Exporting Countries and its allies shocked the market on Thursday when they opted to keep output curbs largely in place, belying expectations that they would pump more crude to meet rising demand. Benchmark Brent futures jumped toward $70 a barrel at the end of the week. “The market is telling us that OPEC+ have control,” Mike Muller, Vitol’s head of Asia, said Sunday in an online forum hosted by consultant Gulf Intelligence. “We’re going to get a stock-draw that is going to accelerate through the second quarter and that’s why the market is doing what it’s doing.” Oil producers and traders were left reeling last year after the coronavirus pandemic wiped out a third of energy demand, dragging down prices. Surplus crude flooded into storage, swelling stockpiles to the point where U.S. futures dropped below zero. OPEC+ has since implemented unprecedented production cuts, returning prices to pre-pandemic levels. Its decision to maintain output restrictions to support prompt prices — the cost of barrels sold in the coming months — indicates the group aims to cut into that mass of stored oil by undersupplying the market. Key OPEC+ member Russia previously voiced concerns that such a move would allow rival drillers in the U.S. to seize market share. Yet shale producers are unlikely to ramp up output, Muller said. “U.S. rig counts are still nowhere close to supporting the U.S. returning to anywhere like the 13 million barrels a day we closed 2019 at,” he said. Muller spoke Sunday before Saudi Arabia said it had thwarted drone and missile attacks on some of its facilities. Brent crude surged past $70 a barrel in early trading on Monday before erasing gains. Further increases in demand could still push prices higher, according to Muller.
Oil and gas pipelines plague US property owners – Some years ago, David Howell got a call from a landowner in Central Texas who had 300 feet of an old oil pipeline buried under his property. It was clearly no longer in use. The area around the pipeline was overgrown and the signage had faded or fallen away. The landowner wanted to build there now, and was wondering if Howell could come remove it.Howell, who owns a pipeline salvage business, thought he could do the work for as little as $1,000. There was no clause in the landowner’s agreement with the pipeline company regarding abandonment, so the company had no responsibility to remove the pipeline. But the landowner nevertheless needed the pipeline company’s permission, as the company still owned the line. The company acquiesced, but it insisted that the landowner use a contractor of its choosing, who was quoting the work at $50,000. The landowner ultimately sold the property rather than deal with the pipeline.”I get a call a week from some landowner who says, ‘I got an abandoned pipeline, can you come take it out?'” Howell said. “Basically [pipeline workers] are putting a pipeline on some schmuck’s property and leaving it there, and that’s happening all over the United States. Hundreds of thousands of miles of pipeline have been just abandoned on peoples’ property.”It’s a familiar story for Howell, who has been salvaging and recycling abandoned pipelines for more than 20 years, and it’s one that could become increasingly common as renewables outcompete oil and-in particular-natural gas pipelines age out of service.There are some 3 million miles of natural gas pipelines buried in the US, shuttling the fuel between drilling sites, storage facilities, power plants, and homes. More than half of all gas transmission lines in the country were installed before 1970, according to data from the Pipeline and Hazardous Material Safety Administration. Those pipelines have an average lifespan of 50 years. And it’s not just old pipelines that are set to go out of service. Younger pipelines are also at risk of falling into disuse as the power sector comes to rely less on natural gas in favor of wind, solar and batteries. Not so long ago, natural gas was heralded as a bridge from fossil fuels to renewables. No clearer sign exists that that bridge has been crossed than the cancellation of several high profile natural gas pipeline projects in the last year, including theAtlantic Coast Pipeline and the Constitution Pipeline. What does that mean for the millions of miles of gas pipelines that are already in the ground?
Oil Industry’s Fight to Roll Back Tribal Sovereignty in Oklahoma – IN A LANDMARK decision last summer, the U.S. Supreme Court confirmed that the eastern half of the state of Oklahoma is reservation land, legally “Indian Country.” Although Oklahoma officials spent acentury ignoring treaties signed by leaders of the Muscogee (Creek) Nation, the justices asserted that the treaties remain the law of the land – meaning, most likely, that the reservations of four other tribal nations that share a distinct legal and political history in Oklahoma also stand.McGirt v. Oklahoma, a major victory for Indigenous nations, is now having legal consequences well beyond the state. The Supreme Court ruling, however, was only the beginning of a new battle to redefine Oklahoma’s identity.On its face, the McGirt case had nothing to do with the oil and gas industry. Jimcy McGirt, convicted to life in prison for child sex abuse, argued that the land where he committed the crimes qualifies as a reservation. Thus, he successfully argued that his conviction should be overturned since he should have been tried in federal, not state, court.The problem for the oil and gas industry is that McGirt’s push to reconsider jurisdiction on the band of territory where the alleged crime took place meant also reconsidering the status of around half of Oklahoma. The decision upended the state’s authority over a swath of land that produces 40 percent of Oklahoma’s total monthly oil and gas production and is home to the global oil pricing hub of Cushing, a town known as the “pipeline crossroads of the world.”Almost immediately after the court ruled, Republican Gov. Kevin Stitt placed representatives of the oil and gas industry at the head of a key commission deciding what the state’s post-McGirt future will look like. Fossil fuel representatives are also moving to deploy a complex legal strategy aimed at forcing the courts to resolve uncertainty about what it now means to produce oil in Oklahoma. Half a year after the landmark ruling, both of these efforts show the central role the oil and gas industry has played in the state, as Oklahoma responds to the Supreme Court.
Energy companies have left Colorado with billions of dollars in oil and gas cleanup – High Country News – When an oil or gas well reaches the end of its lifespan, it must be plugged. If it isn’t, the well might leak toxic chemicals into groundwater and spew methane, carbon dioxide and other pollutants into the atmosphere for years on end. But plugging a well is no simple task: Cement must be pumped down into it to block the opening, and the tubes connecting it to tanks or pipelines must be removed, along with all the other onsite equipment. Then the top of the well has to be chopped off near the surface and plugged again, and the area around the rig must be cleaned up. There are nearly 60,000 unplugged wells in Colorado in need of this treatment – each costing $140,000 on average, according to the Carbon Tracker, a climate think tank, in a new report that analyzes oil and gas permitting data. Plugging this many wells will cost a lot -more than $8 billion, the report found. Companies that drill wells in Colorado are legally required to pay for plugging them. They do so in the form of bonds, which the state can call on to pay for the plugging. But as it stands today, Colorado has only about $185 million from industry – just 2% of the estimated cleanup bill, according to the new study. The Colorado Oil and Gas Conservation Commission (COGCC) assumes an average cost of $82,500 per well – lower than the Carbon Tracker’s figure, which factors in issues like well depth. But even using the state’s more conservative number, the overall cleanup would cost nearly $5 billion, of which the money currently available from energy companies would cover less than 5%. This situation is the product of more than 150 years of energy extraction. Now, with the oil and gas industry looking less robust every year and reeling in the wake of the pandemic, the state of Colorado and its people could be on the hook for billions in cleanup costs. Meanwhile, unplugged wells persist as environmental hazards. This spring, Colorado will try to tackle the problem; state energy regulators have been tasked with reforming the policies governing well cleanup and financial commitments from industry. “The system has put the state at risk, and it needs to change,”
What’s next for Biden’s freeze on new oil drilling leases – President Biden’s decision to halt new oil drilling leases on federal lands will have very minor effects on U.S. production through at least the end of 2022, per the Energy Information Administration’s first analysis of the policy change. The leasing freeze is among the most controversial energy decisions from the nascent administration, drawing strong attacks from Republicans and the oil industry. “No effects will likely occur until 2022 because there is roughly a minimum eight-to-ten month delay from leasing to production in onshore areas and longer in offshore areas,” EIA’s latest monthly outlook states.The change will reduce production by an average of less than 100,000 barrels per day next year compared to what’s expected without the freeze. EIA expects continued recovery from the depths of pandemic. Their latest projections show production rising from an average of 11.1 million bpd in Q2 of this year to 12.41 million bpd in Q4 of 2022. What we don’t know: The long-term effect of the administration’s leasing policy on U.S. production.That’s partly because the policy itself is in flux. Yesterday Interior announced a “virtual forum” on March 25 as part of its review. It will help inform an interim report slated for completion this summer. EIA data shows that about 22% of U.S. oil production and 12% of natural gas production in 2019 came from federal lands and waters, Bloomberg notes. It’s pretty clear that Biden, who vowed major new restrictions during the campaign, won’t revert to prior leasing practices. Interior said in yesterday’s announcement that it wants to “put our public lands’ energy programs on a more sound and sustainable conservation, fiscal and climate footing.”
In bid to shift oil workers to clean energy, Biden faces pay gap – Texans have found their way to oil and gas fields and refineries for generations, heading to places such as Midland and Beaumont, where, with little more than a capacity for strenuous and dirty work, they could earn incomes that offered entry into the middle class. But as governments shift from fossil fuels to solar panels and wind turbines, hoping to hold off the worst effects of climate change, that way of life is expected to wind down in the decades ahead. President Joe Biden envisions the nation’s oil workers and coal miners finding new jobs in a clean energy economy, building solar farms and manufacturing batteries, and applying their experience to harness other forms of energy. It’s a tall order, requiring not only hundreds of thousands of workers to start new careers but also a massive expansion of the nation’s clean energy industries. Most of the world’s renewable energy technologies, from lithium ion batteries to wind turbines, are produced in China and other East Asian nations, which offer low labor costs. In addition, clean energy jobs in the United States, such as working on wind turbines or installing solar panels, don’t pay nearly as well as those in the oil and gas industry, where even workers in the lower ranks can earn six-figure salaries. “Someone working in a refinery leaving to go install solar panels, they’re probably going to take a 75 percent cut in pay,” said Rick Levy, president of the Texas AFL-CIO, the state’s largest labor union. “What do we do for the folks that have been powering this country for the last 100 years? How do we shape this new economy so jobs can be sustaining in the same way jobs in the fossil fuel industry have been?” It’s a conundrum plaguing communities from Appalachian coal country to Wyoming’s natural gas fields, and perhaps nowhere more than Houston, which has long reigned as the “energy capital of the world.” Oil and gas made Houston’s economy hum, and now civic leaders are starting to ask whether they can take the capital and knowledge built over a century of drilling and refining and use it to create well-paying jobs in new industries such as advanced battery manufacturing and offshore wind farms. Unlike oil, however, clean energy technology can be produced anywhere, regardless of the rocks, minerals and geological formations that lie beneath the surface. China and other East Asian nations have steadily come to dominate global manufacturing, developing supply chains and amassing an expertise in producing the equipment that enables clean energy. More than 70 percent of the world’s solar panels are made in China, according to the research and consulting firm IHS Markit. China now is looking to dominate the market for advanced batteries that will power the coming wave of electric vehicles.
As climate fight shifts to oil, Biden faces a formidable foe (AP) – President Joe Biden’s bid to tackle climate change is running straight through the heart of the U.S. oil and gas industry — a much bigger, more influential foe than Democrats faced when they took on the coal industry during the Obama years. Coal dominated U.S. power generation for decades, with the bulk of that fuel coming from the massive strip mines of Wyoming’s Powder River Basin – a market that collapsed in recent years as utilities switched to natural gas. Fast forward to 2021 – and oil and gas have eclipsed coal to become the biggest human source of greenhouse gas emissions from public lands and waters, federal production data indicates. That’s made government fuel sales an irresistible target for Democrats as they try to rein in climate change. Biden’s election has put big oil companies on the defensive after largely having their way in Washington under President Donald Trump. But in taking on petroleum companies with a moratorium on oil and gas lease sales, Biden picked a foe that spent lavishly over decades to secure allegiance from Republican lawmakers. The industry is also deeply enmeshed in local economies — from Alaska and the Gulf Coast to the Rocky Mountain drilling hub of Casper, Wyoming — posing a challenge to the Democrat as he tries to navigate between strong action on the climate and recovering from the pandemic’s financial devastation. “You’re not hurting the big guys that are doing all the development. You’re hurting these little guys that are dreaming up where no one else thought there was any oil and gas,” said Steve Degenfelder, land manager for family-owned Kirkwood Oil & Gas in Casper, a community of about 60,000 known as The Oil City. Trump’s final months in office saw a huge spike in new drilling permits after his administration sped up approvals. As a result, some companies with the biggest presence on public lands have announced that they are ready to weather changes under Biden. An executive from Devon Energy told investors last month that the company was “ready to roll with the punches” and has about 500 drilling permits in hand. That will last the company for years in Wyoming and New Mexico. “They expected this….They prepared for it,” “But the difference now is going to be stark. (Oil and gas companies) don’t get to run energy and environmental policy in the way they once did.” Gone from power in Washington are former industry lobbyists including Trump’s Interior Department secretary, David Bernhardt, who oversaw a loosening of rules for drilling. They’ve been replaced in many instances with environmentalists and industry critics. Biden’s nominee for Interior secretary, New Mexico Rep. Deb Haaland, has a history of anti-oil activism. Just a week after his inauguration, Biden announced the sales moratorium while officials review potential climate impacts and whether energy companies are paying enough. He’s following a familiar template — a 2016 Obama-era moratorium on federal coal sales that Trump and other Republicans seized on as evidence of a “war on coal” by Democrats. That last “war” was against a retreating army: Coal production in Wyoming peaked in 2008 – and by the time of the moratorium, most major coal companies had gone bankrupt and scuttled plans for major expansions. The oil industry stumbled last year during the coronavirus pandemic and a price war, but now companies such as Devon, EOG Resources and Occidental Petroleum are poised to expand their presence on public lands, including in the Powder River Basin. Less insulated against the policy changes are smaller companies such as Kirkwood Oil & Gas, operating in downtown Casper since it was founded by William Kirkwood in 1965. It’s now run by his sons with about 40 employees and drilling in several western states.
Republicans put procedural delay on Haaland’s nomination – Two GOP Senators have put holds on Rep. Deb Haaland’s nomination to be Interior Secretary, putting up a procedural hurdle that will delay the New Mexico Democrat’s final confirmation vote. Sens. Steve Daines (Mont.) and Cynthia Lummis (Wyo.) said they will force debate on Haaland’s nomination, which would last for 30 hours. Despite the delay, Haaland, a New Mexico Democrat, is still expected to be confirmed since she’ll need just a simple majority to eventually get to the floor. A statement from Daines’s office said the senator thinks it’s important to have a floor debate on Haaland’s record. “I will be forcing debate on Rep. Haaland’s nomination to Interior,” Daines said in a statement. “Her record is clear: she opposes pipelines & fossil fuels, ignores science when it comes to wildlife management & wants to ban trapping on public lands. Her views will hurt the Montana way of life and kill Montana jobs. We must consider the impact she will have on the West.” Lummis, in a statement, cited President Biden’s energy policies in her statement. “Congresswoman Deb Haaland will be a champion of this and even more radical policies, and I am committed to doing anything I can to fight the Biden and Haaland job-killing agenda,” she said. Haaland stressed during her Senate confirmation hearing that she’ll be implementing Biden’s agenda, not her own, and said fossil fuels will still play a role in the country’s energy mix.”There’s no question that fossil energy does and will continue to play a major role in America for years to come. I know how important oil and gas revenues are to fund critical services,” she said at the time. “But we must also recognize that the energy industry is innovating, and our climate challenge must be addressed.”
Senate confirms Michael Regan to lead EPA – –The Senate confirmed Michael Regan to lead the Environmental Protection Agency on Thursday, putting the North Carolina regulator in charge of restoring the climate and water pollution regulations that the Trump administration had weakened. Regan spent four years as secretary of the North Carolina Department of Environmental Quality, where his record of fixing environmental problems faced by low-income residents and communities of color drew national attention. It also propelled him to the Cabinet-level position above more prominent state regulators, such as California’s Mary Nichols. “Michael Regan is the kind of person who can help unite us in common purpose as we respond to the climate crisis we face, as well as to clean our air, clean our water and strive to make sure that we don’t leave some of our communities, some of our neighbors behind in our efforts to do so,” Sen. Tom Carper (D-Del.), chair of the Senate Environment committee, said on the Senate floor ahead of the vote. Regan was confirmed by a 66-34 vote, with 16 Republicans joining all 50 Democrats in support of him. He will be the first Black man to run the EPA, and the second African-American person to do so after Obama’s first-term administrator Lisa Jackson. In North Carolina, he won plaudits from environmentalists for blocking an extension of the Mountain Valley natural gas pipeline and for securing a blockbuster deal with Duke Energy to clean up waste ponds containing coal ash from the state’s power plants. He also won a major settlement to address contamination of toxic “forever” PFAS chemicals with manufacturer Chemours. As administrator of the EPA, Regan will lead an agency that will play a major regulatory role in President Joe Biden’s aggressive climate agenda. Topping his to-do list will be crafting a new climate rule for power plants now that a federal court struck down the Trump EPA’s version, strengthening tailpipe emissions limits for cars and light trucks, and reducing methane leaks from the oil and gas sector. The power plant rule that’s expected to curb carbon dioxide emissions will be a key driver in Biden’s plans to eliminate greenhouse gases from the nation’s electricity grid by 2035, and set the country on course to achieve net-zero emissions by mid-century.
The Petroleum Industry May Want a Carbon Tax, but Biden and Congressional Republicans are Not Necessarily Fans – The largest U.S. oil industry trade group is considering an endorsement of carbon taxes for the first time. But the biggest news may be how little that is likely to matter, as U.S. climate policy moves decisively in an entirely different direction.The American Petroleum Institute confirmed that its member companies are trying to arrive at a consensus about carbon pricing-a position that almost certainly will involve trade-offs, including less government regulation, in exchange for the industry’s support of taxes or fees.Economists have long favored making fossil fuels more expensive by putting a price on carbon as the most simple and cost-effective way to cut carbon dioxide emissions. Most big oil companies, including ExxonMobil, BP, Shell, and Chevron, endorse carbon pricing, although they have done little to push for it becoming policy. But API’s move for an industry-wide position comes just as the Biden administration has made clear that it is moving forward with regulation, investment in clean energy research and deployment and a broad suite of other government actions to hasten a transition from energy that releases planet-warming pollution.Unsurprisingly, many view the API move as a cynical effort to stave off a looming green onslaught. “The American Petroleum Institute is considering backing a carbon tax – but only to prevent ambitious regulation of greenhouse emissions,” tweeted the Center for Biological Diversity.The White House had no immediate comment on the news. But for now, anyway, there is little sign that the Biden administration is prepared to surrender regulatory authority on climate in exchange for a tax. Biden’s team includes avowed advocates of carbon taxes-most notably, Treasury Secretary Janet Yellen. But the unmistakable message from the White House is that it will pursue a government-led drive for action on climate change, not a market-driven approach where taxes or fees do most of the work of weaning the nation off fossil fuels. The administration clearly has been influenced by political and economic thinkers who argue that pricing carbon may be necessary for reaching the goal of net zero emissions, but it would be more politically savvy-and ultimately, more effective-to start with other action to mandate or incentivize cuts in greenhouse gas pollution.
President Biden, please stop Enbridge Line 3 | Opinion – Minnesota Reformer – Another egregious betrayal of Indigenous people’s rights and a cynical betrayal of the U.S. legal process are currently taking place in northern Minnesota over Enbridge Energy’s Line 3 oil pipeline out of Alberta, Canada. The line will carry what’s known as tar sands oil – the dirtiest, most polluting and most expensive-to-extract oil anywhere on the planet. It also is nearly impossible to clean up because it sinks to the bottom of waterways. Already, nearly 150 people (aka “Water Protectors”) have been arrested since construction began Dec. 1, 2020. Line 3 is the pollution equivalent of 50 new coal-fired power plants, and shows us how oil and water don’t mix in our territorial lands of 10,000 interconnected lakes, rivers and aquifers. Oh, and there is also a global pandemic in the plot, where Enbridge is the ongoing, super-spreader threat. Line 3 is yet the latest chapter in the scorched earth history of the many treaty betrayals and genocidal atrocities committed by state and federal governments in Indian Country, and it must be stopped. It is sometimes referred to as the “pandemic pipeline” because of the perfect storm created by COVID-19: A depressed economy, a fearful public, a set of Line 3 hearings that were conducted remotely and did not constitute a public process. Like the Minnesota Pollution Control Agency hearings, which were billed as “telephone town halls” that no one could get on. And if you did, you had only two minutes to tell them why the permits should not be issued. Consequently, for metro agencies, the pandemic also suppressed resistance and meaningful public participation in any form during the final phase of the regulatory process. Then under cover of the pandemic, with all this economic despair and hospitals full with COVID-19 patients, the pipeline becomes an economic lifesaver. For whom? Not those of us who live up north! And it was all shoved through at the end of the Trump administration. The now-$3.7 billion, 337-mile pipeline through Minnesota will cross more than 200 water ecosystems, including the Mississippi River twice, source of drinking water for millions of people. The biting irony about Line 3 is that Enbridge is using Minnesota largely as a pass-through state to flush Line 3 oil to foreign users – not Minnesota consumers, despite what many Line 3 supporters still believe. Probably because in 2018 alone, Enbridge spent $11 million in lobbying (and contributions) to the state, cities, counties, our often gullible Legislature and the Public Utilities Commission (PUC). A big part of Enbridge spending was creating an expensive but phony grass-roots – or “astro-turf” – front called “Minnesotans for Line 3,” a marketing campaign that was eventually exposed for the Enbridge-funded sham that it is.
‘A Climate Time Bomb’: 370+ Groups Urge Biden to Immediately Halt Line 3 Pipeline -A diverse coalition of more than 370 environmental and tribal rights organizations demanded Monday that President Joe Biden act immediately to halt construction of Enbridge’s Line 3 pipeline, a multi-billion-dollar crude oil project that the groups called “an urgent threat” to Minnesota waters and the global climate. In a letter (pdf), the coalition representing more than 10 million people in the U.S. and Canada urged Biden to “take swift action to revoke the Line 3 tar sands oil pipeline’s permits and stop its construction,” pointing to the president’s January decision to pull the plug on the Keystone XL pipeline as a model for future action. “We urge you to direct the Army Corps of Engineers to immediately reevaluate and suspend or revoke the Line 3 project’s Clean Water Act Section 404 permit,” the groups wrote. “Additionally, we urge you to revoke or amend Line 3’s presidential permit, as you did for Keystone XL, to make it clear that the permit does not authorize this massive expansion.” “Line 3 is a threat to water, Indigenous rights, and our global climate,” the groups warned, “and its rushed construction in the midst of the Covid-19 pandemic is an extreme danger to Minnesotan communities and energy workers alike.” With the approval of the state government, Enbridge-a Canada-based energy giant-began construction of the Minnesota portion of its Line 3 replacement project in December despite vocal opposition from Indigenous leaders, who warned the pipeline endangers local waters and tribal lands. If completed, the pipeline would have the capacity to transport more than 750,000 barrels of crude oil per day along a more than 1,000-mile route stretching from Alberta, Canada to Wisconsin, crossing hundreds of lakes and rivers along the way.
Shelter reports assaults, harassment linked to Line 3 pipeline workers – — Multiple people allegedly assaulted by workers on Enbridge’s Line 3 pipeline in northern Minnesota have sought help from a nonprofit shelter near the construction, according to state government documents obtained by the Reformer through a public records request. Violence Intervention Project in Thief River Falls has seen an increase in calls for service and heard reports of sexual harassment at local businesses since pipeline construction started in December, according to the documents. “We can all agree everyone should be treated respectfully and expect that they can live and work in a safe environment. We are taking these claims very seriously and have an investigation underway,” Enbridge wrote in a statement provided to the Reformer. The assaults and reports of harassment were described in a request for reimbursement from Enbridge’s public safety fund, submitted last month by the anti-violence and anti-human trafficking nonprofit Violence Intervention Project. State permits for pipeline construction stipulated that Enbridge had to create the fund to cover some law enforcement costs and anti-human trafficking efforts associated with the project. Violence Intervention Project requested roughly $250 for hotel rooms for two women allegedly assaulted by pipeline workers. The nonprofit offers hotel rooms for victims when its emergency shelter is full. Finding hotel rooms has been increasingly difficult as pipeline workers fill up local lodging, said Staci Reay, executive director. The cost of hotel rooms has doubled in recent months, she wrote in the reimbursement request. In addition to the assaults, Violence Intervention Project staff members’ daughters have reported being sexually harassed at a gas station near the “Enbridge campground” – where some pipeline workers stay – and receiving sexually explicit messages on their phones when they’re near the gas station, Reay wrote in the request. At a local restaurant, women workers have been moved to the kitchen to avoid harassment from men during their shifts, the request says.
North Dakota gas plant to pay $195K after alleged Clean Water Act violations – Alleged violations of the Clean Water Act at the Hess Corp. gas plant here have resulted in the company agreeing to pay a $195,000 settlement, the U.S. Environmental Protection Agency announced Thursday, March 11. The EPA inspected the western North Dakota gas plant in 2015 and found problems with its ability to contain potential spills of hazardous substances, such as oil, as well as inadequate plans for preventing spills. Hess has since remedied the problems, the EPA said in a statement. Spills from the plant could impact an unnamed tributary of Paulsen Creek, which is a tributary to the White Earth River. The EPA’s analysis shows that a worst-case spill from the plant could extend 61 miles to White Earth Bay on Lake Sakakawea. “Adequate spill prevention and response plans include important requirements and measures that protect public health and the environment,” said Suzanne Bohan, director of EPA Region 8’s Enforcement and Compliance Assurance Division. The $195,000 penalty will go to the Oil Spill Liability Trust Fund, a fund that federal agencies use to respond to oil and hazardous substance spills.
PSC sets hearing for pipeline project in McKenzie County — The North Dakota Public Service Commission will hold a public hearing on March 22, regarding a proposal to covert an existing pipeline to a transmission line and construct a new portion of pipeline in McKenzie County. Bridger Pipeline LLC is proposing to convert about 27 miles of existing pipeline from a crude oil gathering line to a transmission line, along with constructing about 2.4 miles of new eight-inch crude pipeline. No new installations will be required to convert the existing line. Maximum capacity of the pipeline will be 25,000 to 50,000 barrels per day. Estimated cost of the project is $21 million. The project would transport crude oil from an existing terminal at Johnson’s Corner to Bridger’s existing Wilson Station, about 7 miles south of Watford City. The hearing will be held at 8 a.m. in Teddy’s Residential Suites, Watford City. View the hearing online: https://psc.nd.gov/public/meetings/live.php or by phone at 1-888-585-9008, Room Code 259-316-322. Testimony can be given in person during the hearing or by phone by calling 328-4081 to be placed on a list. Following the testimony by the company on March 22, the commission will call back individuals on the list for testimony. Documents or photographs for reference should be provided in advance to [email protected] with a note expressing the intended use.
DAPL has reached a crucial crossroads. Here’s a guide to North Dakota’s bitter pipeline dispute | INFORUM– In the last four years, the Dakota Access Pipeline has become a defining conflict, not only in North Dakota but for a national reckoning over America’s climate and energy future. But in the years since the smoke of protest clashes near the Standing Rock Sioux Reservation has cleared, the pipeline dispute has carried on more quietly, with many of the biggest decisions being hashed out in courtrooms in Washington, D.C. With a new president in the White House, DAPL backers and opponents alike have felt that the embattled project may be at another decisive moment. But after a tumultuous year for the pipeline, what has changed, and what is still undecided? If you haven’t followed every twist and turn in the federal courts, we’re here to catch you up with a guide to the latest in the years-long pipeline saga.
Weather woes cause Bakken oil production to fall – High winds led to power outages in parts of the Bakken in January, causing oil production to fall, the state’s top regulator said Thursday upon releasing North Dakota’s latest oil figures. The state’s daily crude output for January was 1.147 million barrels, a 4% drop from December. Oil data reported to the state lags by several months. “We had a day of 90 mph winds in the oil patch, so electric power was lost through significant portions of oil and gas fields,” State Mineral Resources Director Lynn Helms said. “It took about 10 days to fully restore the power.” The outages knocked about 50,000 barrels per day offline during that time, he said. North Dakota Pipeline Authority Director Justin Kringstad said February could be “another tough month.” Western North Dakota faced bitterly cold temperatures for a number of days, as well as blackouts caused by extreme cold in the southern United States. The U.S. oil pricing benchmark, West Texas Intermediate, has risen above $60 per barrel, where it sat at the start of 2020 before the coronavirus pandemic hit and sent prices crashing. Experts view the current price as a blip and expect it to drop as the year progresses, Helms said. As a result, he does not anticipate companies drilling a significantly greater amount in the Bakken than already planned. Instead, they are likely to bring any remaining wells idled during the pandemic back online, in addition to wells that were drilled during the pandemic but never fracked due to poor economics, he said. Natural gas production fell by just over 1% during January, to 2.848 billion cubic feet per day, and flaring figures held steady. Statewide, oil companies captured 94% of the gas they produced and burned off the rest. North Dakota is meeting its 91% gas capture target that aims to reduce wasteful flaring that results at times from a lack of pipeline and processing infrastructure.
Plan to allow thousands of California oil wells faces vote (AP) – A plan to fast-track drilling of thousands of new oil and gas wells over the next 15 years in California’s prime oil patch was approved Monday by Kern County officials over objections by environmental groups. The Kern County Board of Supervisors voted 5-0 to approve a revised ordinance supported by the influential petroleum industry that creates a blanket environmental impact report to approve as many as 2,700 new wells a year. The revision was necessary after a state appeals court ruled last year that a 2015 ordinance violated the California Environmental Quality Act by not fully evaluating or disclosing environmental damage that could occur from drilling. New drilling permits were not issued while the county returned to the drawing board. County Planning Director Lorelei Oviatt said the new plan, which now fills 72 binders of documents, made 87 revisions, including creating larger buffers between homes and wells, muffling noise during drilling and putting a stricter limit on the number of new wells. The 2015 ordinance would have allowed up to 72,000 wells, but with a lower cap on annual approvals, that number is now reduced to about 43,000 new wells in the 20-year period ending in 2035. “What we project is the worst case scenario on many issues,” Oviatt said, adding that actual permit numbers in recent years were below the cap. Hundreds of people spoke by phone in favor of or against the ordinance or in voicemails played during a daylong public hearing livestreamed from the board’s Bakersfield chambers. Petroleum producers, oil company workers and industry and business groups spoke in favor of the measure, saying it would support high-paying jobs and produce oil under some of the most stringent environmental laws, instead of relying on dirtier imports. Catherine Reheis-Boyd, president of Western States Petroleum Association, said the group supported the plan because it provided certainty by streamlining the process even though it had “introduced many new restrictive and costly requirements and mitigation measures.” Environmentalists, residents and one farmer opposed the ordinance, saying it would clear the way to rubber stamp permits and does not address concerns spelled out by a unanimous 5th District Court of Appeal in Fresno.
‘Kern runs on oil’: as California confronts climate crisis, one county is ready to drill — Kern county, which sprawls more than 8,000 square miles, connecting the Sierra Nevada slopes and the Mojave Desert to the counties on the Central Coast, is the oil capital of California. Thecounty produces about 70% of the state’s oil and more than 90% of its natural gas – and it has plans to ramp up production.This week the county approved an ordinance that would allow thousands of new wells to be drilled over the next 15 years. The decision comes despite deep opposition from local farmers and environmental groups, and it puts the county directly at odds with a state that has branded itself as a trailblazer on climate and set ambitious goals to reduce greenhouse gas emissions.In doing so, Kern has become a microcosm of a debate happening across America – and around the world – about how to tackle the climate crisis in communities that are built on fossil fuels.”Kern county runs on oil,” as the county chairman, Phillip Peters, concisely puts it.The debate has been going on for years, according to Ethan Elkind, a director at the Center for Law, Energy and the Environment at University of California, Berkeley, School of Law. “What you are seeing here is the main oil and gas producing county in California is going one direction and the state is trying to go a different direction,” he explains, “and it’s so far unwilling to override the county on the issue of local oil and gas production. It’s a complicated problem. Kern is also a leader in renewable energy production, accounting for roughly 25% of California’s supply, but officials argue there is not yet enough revenue from the new industries. For Kern, a county where nearly 20% live below the poverty line, expanding oil production means expanding the budget. “This is a fiscal imbalance that has to be resolved before you start talking about a just transition,” said Lorelei Oviatt, the director of the Kern county planning and natural resources department, during Monday’s vote to approve the new ordinance. “We are looking at the difference between $1.5m a year and $80m a year. Until that is resolved, the idea of banning fossil fuel extraction does not seem realistic.” Roughly one in seven workers in Kern are employed by the industry or tied to it. A county analysis done last year found that the oil and gas industry funded the county to the tune of almost $200m a year. Roughly half of that, $103m, went to Kern county schools.
Not A Fracking Frenzy: What The New Shale Oil Boom Will Look Like – Moving into the next boom time for the domestic U.S. oil and gas business doesn’t necessarily mean you will be repeating the outcomes of the last one. That’s a point of confusion my previous piece from last week – “The Next U.S. Oil And Gas Boom Suddenly Looms On The Horizon” – appears to have created.One reader pointed out that Vicki Hollub, CEO of Occidental Petroleum OXY -1.1%, had told last week’s CERAWeek conference that she didn’t think the U.S. industry would ever get back to producing 13 million barrels of oil per day. That’s where, according to the U.S. Energy Information Administration (EIA), total U.S. production peaked back in November/December of 2019, before 2020 and the COVID-19 pandemic dawned and threw the industry into its deepest depression in 35 years. It’s a risky proposition to ever say “never” where the the oil industry is concerned, given its 170-year penchant for pretty much always surprising the experts. But I would agree that this nascent new boom does not currently appear likely to create a replay of the 2017-2019 boom, with its 1,100 active rig counts, drilling and fracking bonanzas, crowded highways in the Permian/Delaware Basin, small towns playing host to massive “man camps,” low profits and poor returns on investments. That was a classic production boom in which a series of major new resource plays had simultaneously formed, creating a natural competition among upstream companies to acquire prime acreage positions at often wildly exorbitant per-acre costs and begin the exploitation process. But that initial leasing/exploitation phase that has always characterized any new play area in the business had largely already been completed when last year’s bust hit in earnest, as the Permian/Delaware region had already moved well into the development and infrastructure buildout phase. Other oily shale basins like the Eagle Ford, the Bakken and the DJ Basin are more mature than the Permian, and with no new shale formation discoveries in recent years, the days of the classic leasing/exploitation booms appear to be in the rear view mirror, at least where U.S. shale development is concerned.
Marin County officials investigating oil spill – Officials in Marin County are looking into a potential oil spill from a grounded boat at Dillon Beach. The incident happened early Saturday morning when the 90-foot vessel, the American Challenger, was being towed to Sausalito. The Coast Guard saw the ship become grounded on rocks near Estero de San Antonio. Officials say that overflights saw a light sheen from the ship, but it is unknown if the fuel tanks were damaged in any way. Multiple county agencies, including state environmental officials, are investigating the incident.
Coast Guard says it has concluded tracking Alaska oil spill (AP) – The Coast Guard said it has concluded its monitoring of a diesel fuel leak caused by a fishing boat that sank in Alaska. A 52-foot seiner was reported to have sunk Feb. 27 about three miles southeast of Sitka, the Coast Guard said. About 1,550 gallons of diesel fuel and oily water mixture were removed from the vessel’s fuel tanks, the Coast Guard said. An additional 275 gallons of oil were recovered from the water. The residue was transferred and will be disposed of properly, according to the Coast Guard. “After Hanson Maritime removed the fuel from the vessel’s fuel tanks, and removed the oiled fishing net, all significant threats from the Haida Lady have been removed or mitigated,” “We will continue to work with the owner and our Port partners to monitor the vessel.” The Coast Guard said that the effects on the environment were currently unknown.
Biden administration to launch review of future of federal oil leasing program (Reuters) – The U.S. Interior Department announced Tuesday it will launch its review of the federal oil and gas leasing program on March 25, a key step that will determine whether the Biden administration will permanently halt new leases on federal land and water. The review will kick off with a public forum on oil and gas leasing on federal land and water, with participants representing industry, environmental conservation and justice groups, labor and others, and commence an online comment period. This input would inform an interim report to be released in early summer outlining next steps and recommendations on the future of the program and what can be done to reform how leases are managed, how much revenue should go to taxpayers and other issues. Biden, a Democrat, in January signed an executive order pausing new oil and gas drilling leases on federal lands in what is widely viewed as the first step to delivering on a permanent ban promised during his presidential campaign and has triggered heavy criticism from the oil industry and Republican lawmakers. Interior did not comment on how long the leasing pause would last. “The federal oil and gas program is not serving the American public well,” said Laura Daniel-Davis, principal deputy assistant secretary of land and minerals management. “This forum will help inform the Department’s near-term actions to restore balance on America’s lands and waters and to put our public lands’ energy programs on a more sound and sustainable conservation, fiscal and climate footing.”
U.S. senators introduce bipartisan oil and gas leasing reform bill – (Reuters) – Two U.S. senators on Wednesday said they have introduced a bipartisan bill aimed at boosting taxpayer returns from federal oil and gas leasing, the latest in a string of moves in Washington seeking to reform drilling on public lands. The bill, authored by Senators Jacky Rosen, a Democrat from Nevada, and Chuck Grassley, a senior Republican from Iowa, would increase the minimum bid price per acre during lease auctions and raise the royalty rate companies must pay on oil and gas produced from the leases. The Biden administration said on Tuesday it would launch a review of federal oil and gas leasing later this month to address widespread criticism that the program is not yielding adequate public revenue as well as contributing to climate change. While the bill proposed on Wednesday would not deliver on President Joe Biden’s campaign promise to stop issuing new leases to fight global warming, it could be applied to existing leaseholders if passed into law. The legislation’s backing by Grassley could be critical to winning support for the reforms in the closely-divided Senate. Similar bills introduced in the House last week did not include any Republican sponsors. Like the House bills, the Senate bill would increase royalty rates for onshore development for the first time in a century to 18.75% from 12.5%, bringing them in line with those paid by offshore drillers. It would also raise the minimum bid for federal acreage to $5 an acre from $2 and lift other fees and costs. “Big Oil continues to take advantage of low royalty rates on federal lands,” Grassley said in a statement. “Congress has not addressed this issue for over 100 years and since then, these oil companies have deprived the Treasury and the American people of billions of dollars.”
Biden wants to end oil subsidies. First he has to find them — Tuesday, March 9, 2021 — The Biden administration has vowed to end federal subsidies to fossil fuel companies, but even supporters of the effort say it will be hard to shut off the spigot.
The Nord Stream 2 dilemma: Why a transatlantic dispute is likely to go from very bad to even worse -A simmering geopolitical dispute over an undersea pipeline that would bring gas from Russia to Germany is widely expected to intensify in the coming weeks, with pressure building on President Joe Biden to do more to halt the nearly-complete project. If finished, the 1,230-kilometer (764-mile) Nord Stream 2 pipeline will become one of the longest offshore gas pipelines in the world. It is designed to deliver Russian gas directly to Germany under the Baltic Sea, bypassing Ukraine. Alongside several European countries, the U.S. opposes the pipeline, calling it a “bad deal” for European energy security. Critics also argue the pipeline is not compatible with European climate goals and will most likely strengthen Russian President Vladimir Putin’s economic and political influence over the region. Led by Russia’s Gazprom, the state-owned gas giant has claimed Nord Stream 2 is “particularly important” at a time when Europe sees a decline in domestic gas production. Advocates of the pipeline also condemn attempts “to influence or stop the project for political reasons.” A bumpy road ahead for the project includes the threat of further targeted sanctions led by the U.S., Germany’s federal election in late September and an ongoing backlash over the poisoning and arrest of Russian opposition politician Alexei Navalny. “The reason it is so geopolitically contentious is not necessarily about the pipeline or the molecules themselves. It has everything to do with timing and what it says about Europe’s relationship with Russia, Germany’s relationship with Russia and trans-Atlantic relations,” said Kristine Berzina, a senior fellow at the Alliance for Securing Democracy, a national security advocacy group. “The pipeline will either be built or it will not be built. Germany has a role in potentially killing it. Russia is finding alternatives getting around sanctions so that it can be completed but not very much of this pipeline remains,” Berzina told CNBC. The project is 94% complete, with over 1,000 kilometers of the pipeline in place and less than 150 kilometers to go before Gazprom can then turn on the taps. One potential stumbling block, analysts say, could be the prospect of a German government that’s opposed to the pipeline. The next general election, due to be held on Sept. 26, will determine who will succeed Angela Merkel as the country’s chancellor. The problem, however, is the project is so close to completion that September may be too late to scrap the pipeline. “We could well be done with the pipeline by September and, if the pipeline’s done, the gas will flow and I think it will be especially difficult to cut off the gas once you actually finish the pipeline. So, we’re at a very critical few months, weeks even, to determine whether this product is going to continue or not,” Berzina said.
Norilsk Nickel- Mining firm pays record $2bn fine over Arctic oil spill – The world’s biggest producer of palladium and a leading player in nickel set aside money to cover the potential fine months before the court ruling. Print contentPrint with images and other mediaPrint text onlyPrintCancelNorilsk Nickel has confirmed it has paid Russia $US2 billion ($2.5 billion) for damage caused by a fuel spill last year which caused the country’s worst Arctic environmental disaster. The leak of 21,000 tonnes of diesel into rivers and subsoil from a rusty-looking storage tank at the mining firm’s Norilsk power plant in Siberia angered Russian President Vladimir Putin. Norilsk is a remote city of 180,000 situated 300km inside the Arctic Circle. It is 2,900 kilometres north-east of Moscow. The fuel and lubricants spilled into the Ambarnaya River, which feeds a lake from which springs another river that leads to the environmentally-delicate Arctic Ocean. The penalty, by far the biggest fine for environmental damage in Russia, sent a message to companies to modernise their production, Russian officials said. Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume.WatchDuration: 43 seconds43s
Russia reports oil spill at processing station in Far East — The emergency ministry of Russia’s far eastern Amur region on Sunday reported an oil spill at an oil processing station but said the spill has been contained. The second stage of Russia’s East Siberia – Pacific Ocean oil pipeline is working as usual, the ministry added. Oil pipeline monopoly Transneft and the Russian emergency ministry’s task force are tackling the accident, the ministry said, without disclosing further detail. The scale of the spill was not immediately clear. Meanwhile, a fire broke out on Russia’s Ob river in Siberia on Saturday due to an accident on an underwater pipeline, Russia’s Rosprirodnadzor state environment watchdog said. Petrochemicals producer Sibur said the fire near the city of Nizhnevartovsk in the oil-rich region of Yugra was quickly localised and that there was no risk to local people or the environment. The accident occurred on a pipeline carrying light hydrocarbons, it said in a statement. Large flames could be seen from a distance belching up smoke into the night sky with snow in the foreground in footage circulated by the RIA news agency.
Burst pipeline causes oil spill at Gazprom Neft field in Siberia(Reuters) – A burst pipeline at an oilfield operated by a subsidiary of Russia’s Gazprom Neft has led to an oil spill on Monday, the subsidiary said, while the pipeline has been repaired on the same day. Gazpromneft-Noyabrskneftegaz said there is no danger to the forestry or water bodies from the spill. RIA news agency, citing the local branch of the emergency services earlier on Tuesday as saying, that oil spilled over an area of 1,100 square metres The incident occurred at the Yarainerskoye oilfield in the Yamal-Nenets region of western Siberia. The emergency services said no oil was spilled into any bodies of water and that clear-up operation had begun.
Gantz says no evidence found so far that oil spill was deliberate – Defense Minister Benny Gantz on Friday said that there was currently no evidence to conclude that the oil spill off Israel’s coast that polluted most of the country’s beaches was a deliberate act of “environmental terrorism.” Speaking to supporters of his Blue and White party, Gantz was asked about Environmental Protection Minister Gila Gamliel’s assertion that Iran deliberately caused the spill of Israel’s coast. “I can’t completely rule out that it was deliberate, but at this stage, we can’t determine that it was done on purpose,” Gantz said. Get The Times of Israel’s Daily Edition by email and never miss our top stories Free Sign Up Israeli TV reported Thursday that Israel’s security establishment is investigating the alleged Iranian link to the oil spill. Defense Minister Benny Gantz during a visit to the Druze village of Julis in northern Israel, February 23, 2021 (David Cohen/Flash90)The network said the Environmental Protection Ministry had handed over its report on the matter to security bodies, which were reviewing its findings. Sources in the defense establishment, however, were quoted as saying there was no indication the spill was deliberate. The report added that Israel’s intelligence apparatus has now also been recruited to look further into the claim of Iranian sabotage. A Libyan-owned ship, the Emerald, was smuggling crude oil from Iran to Syria at the time of the spill, the Environmental Protection Ministry said in a statement Thursday, citing satellite images by the TankerTrackers monitoring group. The ship has since returned to Iran and is currently anchored there. In an interview with Channel 12 on Thursday evening, Gamliel again insisted, without providing proof, that the spill constituted an Iranian terror attack on Israel. “There are people who do not look at the risks properly,” she said when challenged on her claim, pointing the finger at Opposition Leader Yair Lapid and saying that “only Netanyahu knows how to deal with the Iranian threat properly.” The environmental group Greenpeace blasted Gamliel for her claims, saying the assertion of a terror attack “is outrageous and factually baseless at this stage.” The group said that in making the claim, the minister “is minimizing the well-known and widespread phenomenon of marine pollution by ship oil spills. The minister’s conduct on the matter smells of electioneering and an attempt to score political points over an ecological disaster.”
Vessel with 130 tonnes of oil runs aground off Mauritius – Mauritius has deployed its coastguard and armed forces after a Chinese-flagged trawler carrying 130 tonnes of oil ran aground off the Indian Ocean archipelago nation. It is the second shipwreck in less than a year off Mauritius after a tanker struck a reef in July last year with 1,000 tonnes of fuel leaking in the country’s worst environmental disaster. The captain of the Lurong Yuan Yu issued distress calls late on Sunday afternoon and sent up flares after becoming stranded off Pointe-aux-Sables, in the northwest of the main island not far from the capital Port Louis. On Monday, Fisheries Minister Sudheer Maudhoo said divers had found “no leak, no breach” in the hull of the ship and that efforts would be made to safely remove the fuel from the hold. “The pumping operation will start tomorrow, and will last four to five days. The authorities will also try to refloat the fishing vessel,” he said. The trawler carries 130 tonnes of fuel oil and five tonnes of lubricants, according to authorities. Traces of oil earlier spotted around the vessel were not “heavy oil” but possibly lubricants, he said. Drone footage showed dark patches in the Indian Ocean waters near the boat. Residents told the AFP news agency they saw fuel lapping at the shore. Floating containment lines have been deployed as a precaution while the coastguard and soldiers have been mobilised.
Shell says Nigeria Delta oil spill dropped by 40% in 2020 (Reuters) – Royal Dutch Shell said on Thursday the volume of crude oil spills caused by sabotage in Nigeria’s oil-rich Delta dropped by 40% in 2020 to 1,400 tonnes.The total number of major spills caused by theft and sabotage also dropped to 122 incidents in 2020 from 156 incidents the previous year, Shell said in its annual report. Shell is the operator of Nigeria main onshore oil and gas joint venture SPDC which has struggled for years to contain spills in the Delta caused due to operational incidents, theft and sabotage.
Gas Imports Surge As China Sees Coldest Winter In Decades – Natural gas imports to China jumped by 17.4 percent on the year in the first two months of the year to 28.68 billion cubic meters thanks to the coldest winter in decades, according to Platts data. The harsh winter in Asia drove a huge spike in demand for natural gas in the region, which led to a surge in spot market LNG prices. Now, this demand isretreating, and prices are down to more normal levels.China is among the world’s top natural gas importers, along with Japan and South Korea, and therefore a prime target for gas exporters. PetroChina, for example, doubled the amount of Russian gas it receives via the Power of Siberia pipeline to 28.8 million cu m daily over the first two months of the year. Sinopec, for its part, ordered 30 cargos of liquefied natural gas for the period to make sure there was an adequate supply of the fuel.China is dependent on imports for a solid portion of its gas consumption, so the country is making an effort to also boost domestic production to reduce this dependence. Last year, despite the pandemic, it made progress in that respect, with natural gas production jumping 15 percent on the year, according to Fitch Ratings. The agency noted domestic production was likely to continue growing thanks to robust demand and efforts to decarbonize the Chinese economy.Yet self-sufficiency in gas is still a dream-and it may remain a dream. China has massive shale gas reserves but exploiting them is challenging because of the complex geology of the deposits and difficulties in attracting foreign investors who could help fund such an endeavor.This means China will remain a huge natural gas importer for the observable future, driving intense competition in the energy industry.
Column: Oil price spikes and permanent consumption losses (Reuters) – Promises by U.S. shale producers to pursue a more restrictive approach to capital investment and production seem to have emboldened Saudi Arabia and its allies in OPEC+ to test the room for higher oil prices. If shale firms respond to higher prices and revenues by returning capital to lenders and investors, rather than increasing output, there may be an opportunity for OPEC+ to let prices rise without losing market share. “Drill, baby, drill is gone for ever. Shale companies are now more focused on dividends,” the Saudi energy minister said in an interview on March 4. “It’s the shale companies which are themselves changing. They have had their fair share of adventure and now they are listening to the call of their shareholders.” The kingdom’s interest in testing support for higher prices comes when many investors are expecting a strong upward cycle, or even supercycle, in oil and other commodity prices. Strong economic growth after the COVID-19 pandemic, coupled with expansionary fiscal and monetary policies, is expected to accelerate consumption growth for oil and other commodities. At the same time, production of oil and other commodities will be constrained by lack of investment during the price slump in 2020 and early 2021 as well as the newfound enthusiasm for “capital discipline”. In the case of oil, some analysts are forecasting one last supercycle over the next few years before widespread deployment of electric vehicles in the late 2020s and through the 2030s starts to hit consumption. Bond investors, too, are anticipating a period of above-average inflation, if not a commodity supercycle, as governments and central banks try to reverse employment and income losses stemming from the epidemic. Yields for U.S. Treasury Inflation-Protected Securities imply traders expect an average all-items U.S. inflation rate of about 2.2% over the next decade. Expected 10-year inflation rates peaked at 2.25-2.5% during the 2007/08 commodity supercycle and a similar level during the period of high oil prices from 2011 through 2014. By comparison, realised consumer price inflation in the United States has averaged about 1.75% per year over the past decade.
Top Energy Trader Vitol Says OPEC+ Has Control of Oil Market — Oil’s surge following OPEC+’s surprise move to maintain cuts in supply shows the producers’ group is in charge of the market, Vitol Group said.The Organization of Petroleum Exporting Countries and its allies shocked the market on Thursday when they opted to keep output curbs largely in place, belying expectations that they would pump more crude to meet rising demand. Benchmark Brent futures jumped toward $70 a barrel at the end of the week.”The market is telling us that OPEC+ have control,” Mike Muller, Vitol’s head of Asia, said Sunday in an online forum hosted by consultant Gulf Intelligence. “We’re going to get a stock-draw that is going to accelerate through the second quarter and that’s why the market is doing what it’s doing.”Oil producers and traders were left reeling last year after the coronavirus pandemic wiped out a third of energy demand, dragging down prices. Surplus crude flooded into storage, swelling stockpiles to the point whereU.S. futures dropped below zero.OPEC+ has since implemented unprecedented production cuts, returning prices to pre-pandemic levels. Its decision to maintain output restrictions to support prompt prices — the cost of barrels sold in the coming months — indicates the group aims to cut into that mass of stored oil by undersupplying the market.Key OPEC+ member Russia previously voiced concerns that such a move would allow rival drillers in the U.S. to seize market share. Yet shale producers are unlikely to ramp up output, Muller said.”U.S. rig counts are still nowhere close to supporting the U.S. returning to anywhere like the 13 million barrels a day we closed 2019 at,” he said. Muller spoke Sunday before Saudi Arabia said it had thwarted drone and missile attacks on some of its facilities. Brent crude surged past $70 a barrel in early trading on Monday before erasing gains. Further increases in demand could still push prices higher, according to Muller.
No Roaring USA Shale Industry to Respond to OPEC+ –Even though North American production can pick up due to current price levels, there is not a roaring U.S. shale industry to respond to OPEC+ and balance out global supply. That’s according to Rystad Energy Oil Markets Analyst Louise Dickson, who made the statement in a comment sent to Rigzone on Monday. In the statement, Dickson noted that, after oil shot above $100 per barrel in 2014 and triggered the 2015-2016 downturn, U.S. shale sprang back almost immediately, but outlined that things would be different this time around. “We do not anticipate U.S. oil production to return to pre-pandemic levels of 12.8 million barrels per day (in February 2020) until the end of 2023, a much more prolonged recovery driven by capital discipline from shale drillers, as well as natural base decline,” Dickson said in the statement. In the U.S. Energy Information Administration’s (EIA) February Short Term Energy Outlook (STEO), the latest STEO at the time of writing, the EIA estimated that U.S. crude oil production averaged 11 million barrels per day in January, which it highlighted was down slightly from 11.1 million barrels per day in November. The EIA said in its February STEO that it expected production would continue to decline slightly in the coming months, reaching 10.9 million barrels per day in June. “EIA expects production from newly drilled wells will be more than offset by declining production rates at existing wells in the first half of 2021,” the EIA stated in the February STEO. “However, based on EIA’s forecast that West Texas Intermediate crude oil prices will remain near or higher than $50 per barrel during the forecast period, EIA expects drilling will continue to increase. As a result, production from new wells will exceed the declines from legacy wells, and overall crude oil production will increase in the second half of 2021 and in 2022,” the STEO added. According to its February STEO, the EIA estimates that U.S. crude oil production will average 11 million barrels per day in 2021 and rise to 11.5 million barrels per day in 2022. At OPEC+’s latest meeting, the group approved a continuation of the production levels of March for the month of April, excluding Russia and Kazakhstan, who will be allowed to increase production by 130,000 and 20,000 barrels per day, respectively. Saudi Arabia also decided to extend its additional voluntary cut of one million barrels per day for the month of April. Commenting on OPEC+’s move, Dickson said the group’s roll-over was far more conservative than the market expected and that traders were still pricing in the stock draws that will follow in coming months. “We do not expect the price fever to cool down, in the short-term,”
Saudi raises April crude official prices to Asia (Reuters) – Saudi Arabia’s state oil producer Aramco set its April official selling price (OSP) for its Arab Light crude to Asia at plus $1.40 per barrel versus the Oman/Dubai average, up $0.40 from March, according to a statement issued on Sunday. It set its Arab Light OSP to Northwest Europe at minus $2.20 per barrel against ICE Brent compared with minus $0.50 in March. The OSP to the United States was set at plus $0.95 a barrel over Argus Sour Crude Index (ASCI) for April, $0.10 above March’s premium.
Oil Flirting With $70 Challenges World’s Economic Recovery – The spike in oil prices has focused attention on how the steady rise in energy costs is threatening to create a drag on the global economic recovery and stoking fears of inflation.After surging more than 30% this year on coordinated supply constraints by major exporters and demand returning from the depths of Covid-19 crisis, a missile attack Sunday on a key Saudi Arabian export facility sent Brent crude, the internatio nal benchmark, above $70 a barrel for the first time since January 2020.While prices have since pulled back, the impact on inflation and the overall global recovery depends on how sustained the underlying rally proves to be. For economists, the cause of higher prices is what matters, rather than the price itself. Rising energy costs on the back of strong demand normally indicate robust and resilient growth, while a surge from crimped supply could weigh on a recovery. Morgan Stanley economists estimate that oil would need to average $85 a barrel for the global oil burden to rise above longer-term averages.”For context, the global oil burden last rose above its long-term average in 2005, but with the backdrop of strong global growth, economies were able to withstand the impact of higher oil prices until 2007, when global growth momentum was already weakening and yet oil prices shot up rapidly,” the bank’s economists wrote last week.The run-up in oil prices comes against the backdrop of a global inflation debate that has heated up over the past month. With spikes in bond yields, investors continue to test policy makers, including Federal ReserveChairman Jerome Powell, on their insistence that inflation isn’t a threat this year, even with trillions of dollars of stimulus being pumped into the global economy.Oil and food costs are both bubbling, though as the two most volatile categories of consumer prices they’re easier for policy makers to look past as transitory. And while costs for homes and semiconductors also are on the rise, the prevailing trend worldwide is still one of damped price growth While energy is a prominent component of consumer-price gauges, policy makers often focus on core indexes that remove volatile components such as oil. If the run-up in prices proves to be substantial and sustained, those costs will filter through to transportation and utilities. That scenario would pressure central banks to rein in their support for the economy, though for now officials continue to stress that high unemployment will offset any inflation pressure.
Brent crude breaks $70 after Saudi Arabia’s oil facilities attacked by Yemen’s Houthis -International benchmark Brent crude futures jumped above $70 for the first time in more than a year on Monday, before giving back those gains to trade in the red. The surge in prices came after Saudi Arabia said its oil facilities were targeted by missiles and drones on Sunday. A Houthi military spokesman claimed responsibility for the attacks. Brent traded as high at $71.38 per barrel, the highest level since Jan. 2020, while U.S. crude futures rose to $67.98 per barrel, a level not seen since Oct. 2018. However, at 12:30 p.m. on Wall Street both contracts were in the red. Brent shed 97 cents, or 1.37%, to trade at $68.41 per barrel, while WTI was 93 cents, or 1.41%, lower at $65.16 per barrel. Saudi Arabia’s ministry of energy said a petroleum tank farm at one of the world’s largest oil shipping ports was attacked by a drone and a ballistic missile targeted Saudi Aramco facilities, according to state news agency SPA. Such acts of sabotage do not only target the Kingdom of Saudi Arabia, but also the security and stability of energy supplies to the world, and therefore, the global economy. A spokesman said neither attack caused any injury or loss of life or property, but shrapnel from the intercepted missile fell near residential areas in the city of Dhahran, SPA reported. “Such acts of sabotage do not only target the Kingdom of Saudi Arabia, but also the security and stability of energy supplies to the world, and therefore, the global economy,” the ministry said via state media. “They affect the security of petroleum exports, freedom of world trade, and maritime traffic.” Yahya Sare’e, a spokesman for Yemen’s Houthis, said it carried out a “broad joint offensive operation” involving 14 drones and eight ballistic missiles. He said on Twitter that other military sites were also targeted with four drones and seven ballistic missiles, adding that “the hit was precise.” “We promise the #Saudi regime painful operations as long as it continues its aggression and blockade on our country,” he said in another post. A Saudi-led coalition intervened in Yemen’s civil war in 2015 and has continued to fight against the Houthis in what is seen as a proxy war with Iran. The Houthis have reportedly stepped up attacks on Saudi Arabia in recent weeks. The Biden administration last month said it would remove the Iran-backed Houthi rebels in Yemen from the Foreign Terrorist Organization and Specially Designated Global Terrorist lists, according to NBC News. John Driscoll, director at JTD Energy Services, told CNBC that the primary effect of the attacks is psychological. “They serve as a reminder that the Mideast is vulnerable and rife with tensions and rivalries that could overheat at any time,” he said in an email. However, he said the run up in prices could be short lived, noting that the Saudis said there was no significant damage to infrastructure. Driscoll also said the timing is “noteworthy,” given that the U.S. took military action against Iran and Iraq targets last week. “One senses [that] lines are being drawn in the sand,” he said.
Oil Reverses Gains Following Attack on Key Saudi Crude Terminal –Oil slipped in London as the dollar strengthened and investors shrugged off an attack on the world’s largest crude terminal in Saudi Arabia. Global benchmark Brent futures earlier surged above $71 a barrel, the highest since January 2020, before falling as much as 1.5%. The assault on a storage tank farm at the Ras Tanura terminal on Sunday was intercepted, Saudi Arabia said, and oil output appeared to be unaffected. Meanwhile, the Bloomberg Dollar Spot Index rose as much as 0.5% on Monday, reducing the appeal of commodities priced in the currency. .A much stronger U.S. dollar is “likely adding pressure to oil prices,” . “The recent trend higher in the dominant currency is becoming increasingly difficult to ignore.”Oil has surged more than 30% this year as OPEC+ keeps a lid on production and demand is seen recovering with economies emerging from the coronavirus crisis. The rally quickened last week after the producer alliance made a surprise pledge to leave output steady in April, prompting a raft of investment banks to raise their price forecasts. Forward oil prices point toward further strength, with the Brent strip for 2022 rising as much as over $62 a barrel Monday to its highest intraday level since April 2019.Brent’s rally north of $70 earlier Monday may cause a headache for Asian refiners, which are warning that the rapid surge and spike in volatility will hurt demand and whittle away still-tight processing margins. Saudi Arabia has also boosted its official selling prices to buyers in the region for April.Saudi Arabia said the Ras Tanura site on the country’s Gulf coast was targeted by a drone from the sea. The terminal is capable of exporting about 6.5 million barrels a day — almost 7% of demand — and, as such, is one of the world’s most protected facilities. It’s the most serious attack on Saudi oil installations since a key processing facility and two oil fields came under fire in September 2019.
Oil logs first loss in 4 sessions, as buying after attack on Saudi oil facilities fades – Oil futures pulled back Monday, posting their first loss in four sessions after an attack on Saudi oil facilities briefly lifted global benchmark Brent crude prices above $70 a barrel for the first time since early last year.Warplanes from a Saudi-led coalition dropped bombs on Yemen’s rebel-held capital San’a on Sunday, following attacks on Saudi Arabia’s oil and military facilities. The coalition blamed the administration of President Joe Biden for the attacks by Iran-backed Houthi rebels after a decision to remove them from U.S. terror lists.Saudi Arabia, however, said its largest oil export terminal at Ras Tanura in the Persian Gulf was unscathed after a drone attack, S&P Global Platts reported Sunday.”Production appears to have been unaffected,” though the market’s concern “seems to be more the frequency of attacks rather than their severity,” said Marshall Gittler, head of investment research at BDSwiss, in a Monday note.The price of the front-month May Brent crude BRNK21, +0.01% contract fell $1.12 or 1.6%, to settle at $68.24 a barrel, after hitting a high of $71.38 a barrel on Sunday. It was the first time the global benchmark traded above $70 since January 2020, according to FactSet data. April West Texas Intermediate crude CLJ21, -0.70%, U.S. benchmark, lost $1.04, or 1.6%, at $65.05 a barrel after hitting a higher near $68 overnight.Both contracts are up more than 30% year to date, adding more than 7% last week following a surprise move by the Organization of the Petroleum Exporting Countries and its allies to rollover current production cuts through end-April. Meanwhile, prices fell despite the weekend attack on Saudi oil facilities, suggesting that investors aren’t responding to supply disruptions, Cieszynski said. “This may be due to the market being well supplied, with major oil producers, who decided last week to keep production curbs in place, able to easily “backfill any disruptions.”
Oil slips below $68 as rally fizzles before U.S. supply report (Reuters) – Oil fell to around $68 a barrel on Tuesday in a choppy session, pressured as concerns faded of a supply disruption in Saudi Arabia, which countered a pause in the dollar’s rally and prospects for tighter supply due to OPEC+ output curbs. On Monday, crude hit its highest level since the start of the coronavirus pandemic, a day after Yemen’s Houthi forces fired drones and missiles at Saudi oil sites. Saudi Arabia said it thwarted the strike, however, and prices slipped as supply fears eased. Brent crude settled down 72 cents, or 1.06%, at $67.52 a barrel. The contract pulled back after trading as high as $69.33. It reached $71.38 on Monday, the highest since Jan. 8, 2020. U.S. West Texas Intermediate (WTI) fell $1.04, or 1.6% to settle at $64.01 a barrel. The contract hit its highest on Monday since October 2018. In post-settlement trade, U.S. crude extended losses. U.S. crude oil stockpiles rose sharply in the most recent week, according to trading sources, citing data from industry group the American Petroleum Institute released after settlement. Crude inventories rose by 12.8 million barrels in the week to March 5, compared with analysts’ expectations in a Reuters poll for a build of 816,000 barrels, sources said. [L1N2L72S5] “This is more of the same as refineries remain shut down,” said Phil Flynn, senior analyst at Price Futures group, speaking after the API data was released. Last week’s record decline in U.S. inventories came after the shutdown of Gulf Coast refineries due to the recent winter storm in Texas. “The market seems to be softening on those concerns. It’s had an incredible run, and it’s due for a correction,” Flynn said.
WTI Holds Losses After Huge Surprise Crude Build —After surging to its highest since 2018 (on Saudi oil terminal explosions), oil prices have tumbled for the second straight day with WTI back below $64 as EIA forecast U.S. crude oil production in 2022 at 12.02m b/d, up from the 11.53m b/d projected in February.“Then we had the OPEC surprise and the Saudi attack, triggering the last key surge where now a lot of the recovery and demand expectations due to the vaccines’ success has already been priced in.”After last week’s utter chaos in the inventory data (due to Texas storm impacts), this week is likely to be just as noisy as things switched back on.API
- Crude +12.792mm (-833k exp)
- Cushing +295k
- Gasoline -8.499mm (-4.167mm exp)
- Distillates -4.796mm (-3.667mm exp)
And as expected, this week’s data is chaotic too – a huge crude build for the second week in a row and major product draws… WTI hovered just below $64 ahead of the print, dropped and popped after but maintained its losses… Further price gains from output cuts “have pretty much run their course,” Doug King, RCMA Group Chairman, said in a Bloomberg Television interview.“You can tighten as much as you want, but if you destroy the refining margins and product demand isn’t there, then effectively you don’t really get much further up the chain.”In its monthly Short-Term Energy Outlook, the EIA said that while the price Brent oil, the global benchmark, is currently high due to OPEC+ supply restrictions, it expects it to average US$58 per barrel in the second half of the year.
WTI Extends Gains Despite 2nd Week Of Massive Crude Builds, Gasoline Demand Spikes —Oil prices are higher this morning, despite last night’s API-reported massive crude build, but trading has been chaotic to say the least amid Russia production headlines and ‘fake’ CPI data. Aditionally, an improved OECD forecast for global economic recovery helped buoy crude prices.”When it comes to lifting market sentiment, there is very little that can rival an upgrade to the post-COVID economic recovery,” said Stephen Brennock of broker PVM.We suspect the effects of the storm driven demand and production issues will remain in this week’s data. DOE:
- Crude +13.789mm (-833k exp)
- Cushing +526k
- Gasoline -11.869mm (-4.167mm exp)
- Distillates -5.504mm (-3.667mm exp)
After last week’s chaotic swings in inventories (and API’s overnight), with crude stocks rising by the most on record, this week is expected to see some normalization. It didn’t… crude stocks soared as product stocks plunged once again…Graphs Source: BloombergThese two weeks have pushed up US crude stocks to their highest since early December… Gasoline demand jumped significantly as more states reopened (and Texas thawed out) While higher prices are expected to bring more U.S. supplies back online, US crude production has merely rebounded to pre-storm levels… WTI puked briefly this morning amid headline on Russian production but that was panic-bid right back up on clarifications. But prices were tumbling ahead of the official inventory data then reversed after the print – preumably on the gasoline draw?!
Oil rises as recovery optimism outweighs U.S. inventory build –Oil prices rose on Wednesday despite a large jump in U.S. crude inventories in the aftermath of last month’s Texas winter storm. An upbeat forecast for global economic recovery supported prices. Brent crude gained 38 cents, or 0.56%, to settle at 467.90 per barrel and U.S. West Texas Intermediate crude settled 43 cents, or 0.67%, higher at $64.44 per barrel. U.S. crude oil stocks jumped 13.8 million barrels last week, far exceeding forecasts for a 816,000-barrel rise, as the nation’s oil industry continued to feel the effects of a winter storm mid-February that stalled refining and forced production shut-ins in Texas. Producers appear to be coming back online faster than refiners, swelling inventories, analysts said. Crude production rose to 10.9 million barrels per day, rebounding to near levels before the freeze, while refinery utilization rates jumped 13 percentage points, but that only brought overall capacity use to 69%, far below seasonal averages for this time of year. “This could be a little bit of a headwind for prices because the production number is coming up faster than people thought,” The pandemic-hit global economy is set to rebound with 5.6% growth this year and expand 4% next year, the Organisation for Economic Cooperation and Development (OECD) said in its interim economic outlook. Its previous forecast had been for growth of 4.2% this year. “When it comes to lifting market sentiment, there is very little that can rival an upgrade to the post-COVID economic recovery,” . Oil prices have been steadily rallying for several months as OPEC+ – consisting of the Organization of the Petroleum Exporting Countries and allies – kept supply curbs in place. After briefly touching $70 per barrel earlier this week, Brent crude has edged off. OPEC+ agreed last week to largely maintain production cuts in April. Saudi Arabia’s foreign minister said that the kingdom and Russia were keen for fair oil prices and will continue their cooperation in the framework of the OPEC+ group.
Oil prices rise on economic outlook, drawdown in fuel stocks(Reuters) – Crude oil prices rose on Thursday as vaccine rollouts bolstered the economic outlook and U.S. fuel stocks fell sharply, although gains were capped by a surge in crude oil inventories after last month’s Texas storm. Brent crude oil futures for May rose 40 cents, or 0.6%, to $68.30 a barrel by 0105 GMT, while U.S. West Texas Intermediate crude for April was up 48 cents, or 0.7%, at $64.92. “Gasoline stocks fell… (which) provided the bullish offset and eventually sent oil prices higher on the strong demand for end products, hence an economic recovery,” said Stephen Innes, Chief Global Markets Strategist at Axi. “Given the powerful signals from the U.S. re-opening narrative, it still suggests that the path of least resistance for oil prices is higher.” U.S. gasoline stocks fell by 11.9 million barrels in the week to March 5 to 231.6 million barrels, the Energy Information Administration (EIA) said, compared with expectations for a 3.5 million-barrel drop. Crude inventories, however, rose by 13.8 million barrels in the week to March 5 to 498.4 million barrels, compared with analysts’ expectations in a Reuters poll for an 816,000-barrel rise, as the nation’s oil industry continued to feel the effects of a winter storm mid-February that stalled refining and forced production shut-ins in Texas. Globally, stocks also remain ample with crude oil in storage at major land and sea hubs rising last week, according to analysts and ship trackers. Meanwhile, the U.S. House of Representatives gave final approval on Wednesday to one of the largest economic stimulus measures in American history, a sweeping $1.9 trillion COVID-19 relief bill that gives President Joe Biden his first major victory in office. Saudi Arabia’s foreign minister on Wednesday said the kingdom would take deterrent action to protect its oil facilities, following attacks by Yemen’s Iran-aligned Houthi movement on energy sites
Oil prices climb 2% as dollar slips (Reuters) – Oil prices rose more than 2% on Thursday on a weaker dollar and expectations that a crude glut would be short-lived due to a steep fall in U.S. fuel stocks and a resumption of operations by Texas refiners.Brent crude oil futures for May settled up $1.73, or 2.6%, to $69.63 a barrel while U.S. West Texas Intermediate crude for April ended the session $1.58 or 2.5% higher, at $66.02.”The complex has recovered back to above yesterday’s highs with major assistance from a weak dollar/strong equity combo,” Jim Ritterbusch, president of Ritterbusch and Associates said.”We feel that the energy complex could remain in a stall well into next week with WTI bounded roughly by parameters of about $63 to $68 before any renewed up-spike.”U.S. Treasury yields fell on Thursday as concern about a strong pick-up in inflation eased and focus turned to an auction of 30-year government debt. The dollar fell for a third straight day and was at its lowest level in a week against a basket of currencies.
Oil settles near $70/bbl on hopes of recovering demand (Reuters) – Oil settled near $70 a barrel on Friday, supported by production cuts by major oil producers and optimism about a demand recovery in the second half of the year. Benchmark Brent settled down 41 cents, or 0.6%, to $69.22 a barrel. U.S. West Texas Intermediate crude also ended down 41 cents to $65.61 a barrel. Brent and U.S. crude ended the week roughly flat after prices touched a 13-month high on Monday, following seven straight weeks of gains. “Demand for risky assets such as oil continues to be buoyed by the White House relief package and an almost daily flow of optimistic vaccine headlines,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois. The Organization of the Petroleum Exporting Countries forecast a stronger oil demand recovery this year, weighted to the second half. OPEC, Russia and its allies decided last week to maintain its output curbs almost unchanged. U.S. drillers are also holding back, cutting the number of oil and natural gas rigs operating for the first time since November, according to data from energy services firm Baker Hughes Co. “The stronger-than-expected rebound in the second half of this year implies that the global economy and hence oil demand outlook is close to shaking off its COVID woes,”
Oil ends lower, contributing to a loss for the week Oil futures ended lower Friday, pulling back a day after a rally led by optimism over U.S. gasoline demand helped push the global crude benchmark to its highest close since May 2019.West Texas Intermediate crude for April delivery fell 41 cents, or 0.6%, to settle at $65.61 a barrel on the New York Mercantile Exchange. May Brent crude also declined by 41 cents, or 0.6%, to $69.22 a barrel on ICE Futures Europe, after posting on Thursday (link) the highest finish for a front-month contract since May 28, 2019.For the week, front-month U.S. benchmark crude prices finished 0.7% lower, according to Dow Jones Market Data. Global benchmark Brent crude lost 0.2% to snap a seven-week winning streak.Despite the decision earlier this month by the Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, to extend the production cuts (link)through April, “oil prices haven’t spiked further this week due to the presence of substantial global oil inventory that cushions short-term imbalances,” “Traders are aware that the current high price is primarily due to throttling of production by OPEC+ members and that such measures are temporary.” he told MarketWatch. However, “the current price is very comfortable and quite frankly, generous, for most producers and therefore nobody wants to spoil the party.”Raj also said that even though Saudi Arabia agreed to extend its voluntary output cut of one million barrels a day through April, the kingdom is “free to draw from its “massive oil storage and enjoy the uptick in oil prices.””As Saudi Arabia continues to draw oil from its storage, the physical market has been cushioned and price spikes have been dampened,” News earlier this week of attacks on Saudi oil facilities (link), blamed on Iran-backed Houthi rebels, didn’t provide any lasting support to oil prices.”Given substantial spare capacity among all major producers at the present time, supply side concerns such as the Middle-East tensions or geo-political risks are irrelevant, since any production outage can easily be met by capacity elsewhere,” Gasoline futures led the way higher on Thursday, with the April contract ending at a 2 1/2-year high, boosted by concerns over tightening U.S. inventories. April gasoline rose 0.6% Friday to $2.15 a gallon, settling at the highest since July 2018. It also gained 4.1% for the week. April heating oil also climbed 0.4% at $1.9675 a gallon to tally a weekly climb of 1.2%.. April natural gas settled at $2.60 per million British thermal units, down nearly 2.6% for the session and down 3.7% for the week.
Biden and Europe allies worry Israel is preparing a substantial attack on Iran -Israel suspects Iran intentionally dispatched a ship to dump hundreds of tons of crude oil onto its beaches, the area’s worst ecological disaster in decades, in revenge for the November assassination of the country’s top nuclear scientist, according to Israeli officials and media.But Israeli officials tell Insider the statement from the environmental minister directly blaming Iran released Wednesday was premature as the military and intelligence services have yet to make a final determination on both Iranian culpability and the appropriate level of response to what would be the most brazen act of environmental terrorism in recent history.”That statement should have never been made,” a former Israeli intelligence official, who still consults for the government and therefore cannot be named, told Insider. “The IDF and Mossad are responsible for investigating attacks on the Israeli homeland, determining the responsibility and suggesting a course of action to respond. That process is underway and it is not the portfolio of the environmental minister to start wars with Iran.”For the past two weeks, tons of crude oil have washed ashore on Israel and Lebanon’s beaches destroying wildlife and causing ecological damage that could take years to restore, according to environmental experts. But after the minister directly accused Iran of a complex operation to drop the oil offshore, the issue took on a new dimension as fears in Washington ands Europe rose over the possibility of an Israeli response.When pressed on whether Israeli military and intelligence services suspect an Iranian operation as described by the minister – who said a Libya-flagged ship sailed from Iran to Israel and dumped the oil offshore before stopping in Syria and returning to Iran – the former official conceded that was the case.
Iranian investigator says Israel likely behind container ship attack (Reuters) – Israel is highly likely to have been behind an attack in the Mediterranean this week that damaged an Iranian container ship, an Iranian investigator said on Saturday, Iran’s media reported.The Shahr e Kord vessel was hit by an explosive object which caused a small fire, but no one on board was hurt, Iran said on Friday. Two maritime security sources said initial indications suggested the ship was intentionally targeted by an unknown source.”Considering the geographical location and the way the ship was targeted, one of the strong possibilities is that this terrorist operation was carried out by the Zionist regime (Israel),” an unnamed member of the Iranian team investigating the incident was quoted as saying by semi-official Nournews. Israeli Defence Minister Benny Gantz declined to comment directly about the incident when addressing a webinar on Saturday hosted by his Blue and White party, but he said Iran regularly sent weapons to its proxies in the region.
Iran cracks down on contentious pop music video with arrests (AP) – Iranian authorities have arrested multiple music producers connected to a California-based Iranian pop singer, his management company and Iranian media said Thursday, in Tehran’s latest effort to halt what it deems decadent Western behavior.The arrests come as Iranian social media has been awash with criticism of popular underground Iranian singer, “Sasy,” or Sasan Heidari Yafteh’s, new music video. Called “Tehran Tokyo,” the video features actresses, including an American porn star, gyrating in kimonos and short bodycon dresses atop cars and inside bars. The clip racked up 18 million views within a week. Over the years, Sasy has become known for contentious lyrics that Iranian conservatives see as tainting the country’s moral probity. In a previous song also featuring a porn actress, he instructed teenagers to take alcohol shots if they can’t fall asleep and to scroll through Instagram instead of finishing their homework.
U.S. Aircraft Carrier Deploys In Mediterranean As Damascus Prepares To Push On The Northwest –The USS Dwight D. Eisenhower aircraft carrier and its Carrier Strike Group have entered the Mediterranean Sea. This makes it, currently, the closest aircraft carrier to the Middle East. It has been quite a while since the US hasn’t had one of its super warships deployed in or near the Persian Gulf. Starting in the spring of 2019, the U.S. Navy has been publicly ordered to keep a near-constant presence in the region, as if this were something new. US Secretary of Defense Lloyd Austin announced that a global posture review is taking place, and it would be reconsidered whether a carrier was even needed in the region. Still, the Mediterranean Sea is quite nearby, and the removal of the Carrier Strike Group (CSG) from the Persian Gulf was a political move. It’s Lloyd Austin’s dream to have a CSG in every hotspot in the world, but resources don’t allow for that. Still, the US has the amphibious warship USS Makin Island (LHD-8) in the Persian Gulf with a detachment of F-35B fighter jets, so it still has a hefty presence. In Syria itself, as the primary US competitor, alongside Iran, Russian forces are preparing to set up a permanent military base near the city of Palmyra in the Badia Desert. This is not yet confirmed, but according to satellite photos it has a helipad as a runway. This base is likely planned to support the Syrian Arab Army (SAA) further in their push against both ISIS and Turkish proxies. On March 9th, the SAA carried out heavy shelling on the positions of Turkish proxies in the village of Jabal Al-Zawiya, in southern Idlib. Separately, Pro-Turkey opposition factions reportedly thwarted an attempt by the SAA to advance on the Qalaat front in the northern countryside of Latakia. In the days leading up to this, the SAA has been preparing for a large push in the province of Aleppo.This is likely an attempt to form a uniform front, which can exert equal pressure along the frontline and thin the enemy’s forces to provide opportunity for a breach. Turkey and its proxies are sure to offer heavy resistance to any advance by the SAA, but so far it appears that this may not be enough.
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