Oil, Gas, And Fracking News Read 16May 2021 – Part 1

Written by rjs, MarketWatch 666

Here are some selected news articles from the week ended 15 May 2021. Part 2 is available here.

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

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Oil exports drop by the most on record to least since October 2018; global oil shortage at 1.73 million barrels per day

Oil prices again ended slightly higher this week, as markets gyrated after a major oil product pipeline was hacked and shut down…after rising 2.1% to $64.90 a barrel last week as traders anticipated higher demand for fuel as global economies eased Covid-related restrictions, the contract price of US light sweet crude for June delivery opened more than 1% higher Monday after the Colonial Pipeline had to shut fuel pipelines to the East Coast due to a cyberattack, but faded to end just 2 cents higher at $64.92 a barrel on expectations that the U.S. would have to slow refining activities and boost imports of gasoline….oil prices fell early Tuesday as the prospect that the East Coast pipeline would remain shut for the rest of this week led some U.S. Gulf Coast refiners to cut output, but rallied late finish the session 36 cents higher at $65.28 a barrel as a weaker dollar lent support to prices and offset the burgeoning pile up of crude in the Gulf Coast states…however, oil prices slid again overnight after the API reported the largest increase in gasoline inventories in over a year, but recovered on Wednesday to end 80 cents higher at $66.08 a barrel, after the EIA reported just a modest increase in gasoline inventories while a second straight weekly decline in U.S. crude supplies underscored the progress made in draining last year’s record supply glut built up…oil prices then tumbled early Thursday after data showed that the U.S. annual inflation rate jumped to the highest in 13 years, and finished $2.36, or more than 3% lower at $63.82 a barrel after the Colonial pipeline reopened and India’s festering Covid situation, which was killing more than 4,000 people a day, added to the downward pressure on prices…but oil prices recovered two-thirds of those losses on Friday, rising $1.55 to $65.37 a barrel, as prices garnered support from a recovery in US equities and a softer US dollar and thus managed to finish the week 0.7% higher, as traders positioned for higher inflation and weaker-than-expected macroeconomic data in the US…

Natural gas prices also inched up this week, as strong LNG exports and lower production offset moderating weather forecasts….after rising 0.9% to to $2.958 per mmBTU last week on near record exports and on forecasts for a cooling trend, the contract price of natural gas for June delivery opened higher on Monday, but quickly eased on forecasts for milder weather and a small decline in exports, with prices settling down 2.6 cents, or 0.9%, $2.932 per mmBTU…however, prices reversed course on Tuesday, rising with oil prices and settling 2.3 cents higher at $2.955 per mmBTU, as export demand and other key fundamentals held strong…natural gas prices then rose 1.4 cents to an 11 week high of $2.969 per mmBTU on Wednesday as field production dipped and all indications pointed to continued strong demand for LNG…prices ticked up four-tenths of a cent to another 11 week high on Thursday, as a natural gas storage report in line with expectations provided no catalyst for a change…but June gas contracts slipped 1.2 cents on Friday as exports declined and production edged up, and on forecasts for mild weather and lower demand next week, but still finished the week three-tenths of a cent or 0.1% higher at $2.961 per mmBTU…

The natural gas storage report from the EIA for the week ending May 7th indicated that the amount of natural gas held in underground storage in the US rose by 71 billion cubic feet to 2,029 billion cubic feet by the end of the week, which left our gas supplies 378 billion cubic feet, or 15.7% below the 2,407 billion cubic feet that were in storage on May 7th of last year, and 61 billion cubic feet, or 3.4% below the five-year average of 2,101 billion cubic feet of natural gas that have been in storage as of the 7th of May in recent years….the 71 billion cubic feet that were added to US natural gas storage this week was in line with the average forecast of a 70 billion cubic foot addition from an S&P Global Platts survey of analysts, but was below the average addition of 82 billion cubic feet of natural gas that have typically been injected into natural gas storage during the first week of May over the past 5 years, as well as well below the 104 billion cubic feet added to natural gas storage during the corresponding week of 2020…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending May 7th showed that despite a reoord drop in our oil exports, we still needed to withdraw oil from our stored commercial crude supplies for the fifth time in twelve weeks and for the 27th time in the past forty-two weeks….our imports of crude oil rose by an average of 37,000 barrels per day to an average of 5,488,000 barrels per day, after falling by an average of 1,164,000 barrels per day during the prior week, while our exports of crude oil fell by a record average of 2,326,000 barrels per day to an average of 1,796,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,692,000 barrels of per day during the week ending May 7th, 2,363,000 more barrels per day than the net of our imports minus our exports during the prior week…over the same period, the production of crude oil from US wells was reportedly 100,000 barrels per day higher at 11,000,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production appears to total an average of 14,692,000 barrels per day during this reporting week…

US oil refineries reported they were processing 15,020,000 barrels of crude per day during the week ending May 7th, 223,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA’s surveys indicated that a net of 261,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US….so based on that reported & estimated data, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from storage, and from oilfield production was 67,000 barrels per day less than what our oil refineries reported they used during the week….to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (+67,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or errors of that size in this week’s oil supply & demand figures that we have just transcribed….while that’s not off by much, last week’s EIA fudge factor was at (+1,722,000) barrels per day, which means there was a 1,655,000 barrel per day balance sheet difference in the unaccounted for crude oil figure from a week ago, rendering the week over week supply and demand changes we have just transcribed meaningless….however, since most everyone treats these weekly EIA reports as gospel and since these figures often drive oil pricing and hence decisions to drill or complete wells, we’ll continue to report them as they’re published, just as they’re watched & believed to be accurate by most everyone in the industry….(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 5,740,000 barrels per day last week, which is still 7.6% more than the 5,336,000 barrel per day average that we were importing over the same four-week Covid impacted period last year… the 261,000 barrel per day net withdrawal from our crude inventories included a 200,000 barrel per day withdrawal from our Strategic Petroleum Reserve, space in which has been leased for commerical purposes, and a 61,000 barrel per day withdrawal from our commercially available stocks of crude oil….this week’s crude oil production was reported to be 100,000 barrels per day higher at 11,000,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 10,500,000 barrels per day while a 6,000 barrel per day decrease in Alaska’s oil production to 451,000 barrels per day had no impact on the rounded national total….our prepandemic record high US crude oil production was at a rounded 13,100,000 barrels per day during the week ending March 13th 2020, so this reporting week’s reported oil production figure was 16.0% below that of our production peak, yet still 30.5% above the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…

Meanwhile, US oil refineries were operating at 86.1% of their capacity while using those 15,020,000 barrels of crude per day during the week ending May 7th, down from 86.5% the prior week, and below normal for the month before the summer driving season…while the 15,020,000 barrels per day of oil that were refined this week were 21.3% higher than the 12,383,000 barrels of crude that were being processed daily during the pandemic impacted week ending May 8th of last year, they were still 9.9% below the 16,676,000 barrels of crude that were being processed daily during the week ending May 10th, 2019, when US refineries were operating at a still lower than seasonal 90.5% of capacity…

Even with this week’s decrease in the amount of oil being refined, the gasoline output from our refineries increased by 442,000 barrels per day to 9,588,000 barrels per day during the week ending May 7th, after our gasoline output had decreased by 483,000 barrels per day over the prior week…and while this week’s gasoline production was 27.9% higher than the 7,497,000 barrels of gasoline that were being produced daily over the same week of last year, it was still 3.9% lower than the March 13th 2020 pre-pandemic high of 9,974,000 barrels per day, and 3.3% below the gasoline production of 9,912,000 barrels per day during the week ending May 10th, 2019….meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 157,000 barrels per day to 4,655,000 barrels per day, after our distillates output had decreased by 128,000 barrels per day over the prior week… but since the onset of the pandemic last year didn’t appear to impact distillates’ production, this week’s distillates output was still 4.8% lower than the 4,892,000 barrels of distillates that were being produced daily during the week ending May 8th, 2020…

With the increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the twentieth time in twenty-six weeks, and for 24th time in 44 weeks, rising by 378,000 barrels to 236,189,000 barrels during the week ending May 7th, after our gasoline inventories had increased by 737,000 barrels over the prior week...our gasoline supplies managed to increase again this week even though our exports of gasoline rose by 439,000 barrels per day to 994,000 barrels per day while our imports of gasoline fell by 85,000 barrels per day to 936,000 barrels per day, as the amount of gasoline supplied to US users decreased by 64,000 barrels per day to 8,800,000 barrels per day….but even after six straight inventory increases, our gasoline supplies were still 6.6% lower than last May 8th’s gasoline inventories of 256,407,000 barrels, and about 1% below the five year average of our gasoline supplies for this time of the year…

However, even with the increase in our distillates production, our supplies of distillate fuels decreased for the 11th time in 21 weeks and for the 25th time in thirty-seven weeks, falling by 1,734,000 barrels to 134.419,000 barrels during the week ending May 7th, after our distillates supplies had decreased by 2,896,000 barrels during the prior week….our distillates supplies fell by a bit less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 157,000 barrels per day to 3,968,000 barrels per day, while our imports of distillates rose by 39,000 barrels per day to 109,000 barrels per day, and while our exports of distillates rose by 187,000 barrels per day to 1,143,000 barrels per day….after five consecutive inventory decreases, our distillate supplies at the end of the week were 13.3% below the 155,001,000 barrels of distillates that we had in storage on May 8th, 2020, and about 3% below the five year average of distillates stocks for this time of the year…

Finally, in spite of the big drop in our oil exports, our commercial supplies of crude oil in storage fell for the 15th time in the past twenty-six weeks and for the 27th time in the past year, decreasing by 426,000 barrels, from 485,117,000 barrels on April 30th to 484,691,000 barrels on May 7th, after our crude supplies had decreased by 7,990,000 barrels the prior week….after this week’s decrease, our commercial crude oil inventories remained about 2% below the most recent five-year average of crude oil supplies for this time of year, but were still about 37% above the average of our crude oil stocks as of the the first week of May over the 5 years at the beginning of this decade, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels….since our crude oil inventories had jumped to record highs during the Covid lockdowns of last spring, our commercial crude oil supplies as of May 7th were 8.8% less than the 531,476,000 barrels of oil we had in commercial storage on May 8th of 2020, but still 2.7% more than the 472,035,000 barrels of oil that we had in storage on May 10th of 2019, and also 12.1% more than the 432,354,000 barrels of oil we had in commercial storage on May 11th of 2018…

OPEC’s Monthly Oil Market Report

Tuesday of this past week saw the release of OPEC’s May Oil Market Report, which covers OPEC & global oil data for April, and hence it gives us a picture of the global oil supply & demand situation for the 4th month after OPEC, the Russians, and other oil producers agreed to increase their oil production by 500,000 barrels per day starting January, from their prior 2020 commitment to cut production by 7.7 million barrels a day from an October 2018 peak, which had been earlier reduced from the 9.7 million barrels a day cuts they had imposed on themselves during May, June and July of 2020, and after the Saudis unilaterally committed to cut their own production by a million barrels per day during February, March, and then later during April of this year…before we start, we want to again caution that the oil demand estimates made herein, while the course of the Covid-19 pandemic still remains uncertain, should be considered as having a much larger margin of error than we’d expect from this report during stable and hence more predictable periods..

The first table from this monthly report that we’ll check is from the page numbered 50 of this month’s report (pdf page 60), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate…for all their official production measurements, OPEC uses an average of estimates from six “secondary sources”, namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures…

As we can see from the above table of their oil production data, OPEC’s oil output increased by a rounded 26,000 barrels per day to 25,083,000 barrels per day during April, up from their revised March production total of 25,057,000 barrels per day…however, that March output figure was originally reported as 25,042,000 barrels per day, which therefore means that OPEC’s March production was revised 15,000 barrels per day higher with this report, and hence OPEC’s March production was, in effect, a 41,000 barrel per day increase from the previously reported OPEC production figure (for your reference, here is the table of the official March OPEC output figures as reported a month ago, before this month’s revision)…

From the table above, we can see that an increase of 75,000 barrels per day in Nigeria’s output, a 73,000 barrels per day increase in Iran’s production, and a production increase of 34,000 barrels per day from the Saudis were the major factors in OPEC’s March output increase; , and that those increases we mostly offset by a decrease of 81,000 barrels per day in the output from Venezuela and a decrease of 67,000 barrels per day in the output from Libya, coincidentally two of the countries that have remained exempt from any of the quotas imposed on other members by these output cuts….recall that last year’s original oil producer’s agreement was to cut production by 9.7 million barrels per day from an October 2018 baseline for just two months early in the pandemic, during May and June, but that agreement had been extended to include July at a meeting between OPEC and other producers on June 6th….then, in a subsequent meeting in July, OPEC and the other oil producers agreed to ease their deep supply cuts by 2 million barrels per day to 7.7 million barrels per day for August and subsequent months, which was thus the agreement that covered OPEC’s output for the rest of 2020…the OPEC+ agreement for January’s production, which was later extended to include February and March and then April’s output, was to further ease their supply cuts by 500,000 barrels per day to 7.2 million barrels per day from that original baseline…however, war torn Libya and US sanctioned OPEC members Iran and Venezuela have been exempt from the production cuts imposed by these agreements, and as we can see above, they all had significant production changes this month…

For those OPEC members that do fall under the output quotas imposed by that series of revised agreements, we have below a table of the output levels they were “voluntarily” required to adhere to in April, reflecting the extension of the production levels designated for March through the month of April:

The table above was provided as a downloadable attachment to the press release following the press release following the 13th OPEC and non-OPEC Ministerial Meeting on January 5th of this year, and it includes the reference production and expected production levels for the 10 members of OPEC that are expected to make cuts and for the other major oil producers who are party to what the press calls the “OPEC + agreement”….the first column in the above table shows the reference oil production baseline, in thousands of barrel per day, from which each of the oil producers was to cut from, a figure which is based on each of the producer’s October 2018 oil output, ie., a date before last year’s and the prior year’s output cuts took effect, and coincidently the highest monthly production of the era for most of the producers who are party to these cuts…the remaining columns show the adjustment, or cut, from that reference production level and then the oil output allowed for each producer under the agreement for the months of January, February and March, which were extended to include April at the March level at the 14th OPEC and non-OPEC Ministerial Meeting on March 4th…OPEC arrived at these figures by adjusting the 23% cut from the October 2018 baseline originally agreed to for May and June 2020 for subsequent agreements to “ease” that 23% cut by agreed to fractions, and it applied to all participants except for Mexico, who already had their oil production hedged to profit from lower prices…the OPEC member output quota is identical for each of the three months covered above; however, the ongoing agreements from the OPEC and non-OPEC Ministerial Meetings have subsequently allowed Russia and Kazakhstan to incrementally increase their oil output over February and March to meet seasonal increases in domestic demand, and again in April at the March 4th meeting cited above….in April, both Iraq, with an oil output of 3,920,000 barrels per day, and Nigeria, with an output of 1,548,000 barrels per day, were producing more than their quota, but that excess output was more than covered by the Saudis unilaterally keeping their production a million barrels per day below their quota…

The next graphic from this month’s report that we’ll highlight shows us both OPEC and world oil production monthly on the same graph, over the period from May 2019 to April 2021, and it comes from page 51 (pdf page 61) of OPEC’s April Monthly Oil Market Report….on this graph, the cerulean blue bars represent OPEC’s monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale….

After this month’s reported 26,000 barrel per day increase in OPEC’s production from what they produced a month earlier, OPEC’s preliminary estimate indicates that total global liquids production decreased by a rounded 150,000 barrels per day to average 93.06 million barrels per day in April, a reported decrease which apparently came after March’s total global output figure was revised down by 20,000 barrels per day from the 93.23 million barrels per day of global oil output that was reported for March a month ago, as non-OPEC oil production fell by a rounded 180,000 barrels per day in March after that revision, with a decrease of 500,000 barrels per day, due to planned maintenance, in the oil output from Canada and Norway accounting for the non-OPEC production decrease in April…

After that decrease in April’s global output, the 93.06 million barrels of oil per day that were produced globally in April were still 6.45 million barrels per day, or 6.5% less than the revised 99.51 million barrels of oil per day that were being produced globally in April a year ago, which was the month that the first Saudi-Russian agreement to cut production to support prices broke down, resulting in oil prices briefly falling below zero (see the May 2020 OPEC report (online pdf) for the originally reported April 2020 details)…with this month’s modest increase in OPEC’s output, their April oil production of 25,083,000 barrels per day was at 27.0% of what was produced globally during the month, an increase of 0.1% from their revised 26.9% share of the global total in February….OPEC’s April 2020 production was reported at 30,412 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 5,329,000, or 17.5% fewer barrels per day of oil this April than what they produced a year earlier, when they accounted for 30.6% of global output…

With the modest decrease in global oil output that we’ve seen in this report, the amount of oil being produced globally during the month again fell short of the expected demand, as this next table from the OPEC report will show us…

The table above came from page 29 of the OPEC May Oil Market Report (pdf page 39), and it shows regional and total oil demand estimates in millions of barrels per day for 2020 in the first column, and OPEC’s estimate of oil demand by region and globally quarterly over 2021 over the rest of the table…on the “Total world” line in the third column, we’ve circled in blue the figure that’s relevant for April, which is their estimate of global oil demand during the second quarter of 2021… OPEC is estimating that during the 2nd quarter of this year, all oil consuming regions of the globe will be using an average of 94.79 million barrels of oil per day, which is a rounded 300,000 barrels per day downward revision from the 95.09 million barrels of oil per day of demand they were estimating for the second quarter a month ago (note that we have encircled this month’s revisions in green), which still reflects quite a bit of coronavirus related demand destruction compared to 2019, when global demand averaged 99.98 million barrels per day….but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world’s oil producers were only producing 93.06 million barrels million barrels per day during April, which would imply that there was a shortage of around 1,730,000 barrels per day in global oil production in April when compared to the demand estimated for the month…

Note that in green we have also circled a downward revision of 140,000 barrels per day to OPEC’s previous estimates of first quarter demand…for March, that means that that the 200,000 barrels per day global oil output shortage we had previously figured for March would be revised to a shortage of just 80,000 barrels per day, after the downward revision of 20,000 barrels per day to March’s global oil output that’s implied in this report is also taken into account… similarly, the downward revision to first quarter demand means that the 1,430,000 barrels per day global oil output shortage we had previously figured for February would now be revised to a shortage of 1,290,000 barrels per day, and that the 210,000 barrels per day global oil output shortage we had previously figured for January would be revised to a shortage of 70,000 barrels per day, in light of the 140,000 barrel per day downward revision to first quarter demand…note, however, that despite this year’s output shortfalls, the quantities of oil produced globally in 2020 still averaged well over 3 million barrels per day more than anyone wanted…

This Week’s Rig Count

The US rig count rose for the 31st time over the past 35 weeks during the week ending May 15th, but is still down by 42.9% from the pre-pandemic rig count….Baker Hughes reported that the total count of rotary rigs running in the US was up by 5 to 453 rigs this past week, which was also up by 114 rigs from the pandemic hit 339 rigs that were in use as of the May 15th report of 2020, but was still 1,476 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in their first attempt to put US shale out of business….

The number of rigs drilling for oil was up by 8 to 352 oil rigs this week, after rising by 2 oil rigs the prior week, thus giving us 94 more oil rigs than were running a year ago, but still just 21.9% of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014….at the same time, the number of drilling rigs targeting natural gas bearing formations was down by 3 to 100 natural gas rigs, which was still up by 21 natural gas rigs from the 79 natural gas rigs that were drilling a year ago, but still just 6.2% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….meanwhile, a so-called “miscellaneous” rig continued to drill into the Permian basin in Midland county Texas this week, compared to the “miscellaneous” rig count of two a year ago..

The Gulf of Mexico rig count was up by 2 to 15 rigs this week, with all 15 of those rigs now drilling for oil in Louisiana’s offshore waters….that was 3 more Gulf of Mexico rigs than the 12 rigs drilling in the Gulf a year ago, when again all 12 Gulf rigs were drilling for oil offshore from Louisiana….since there are no rigs operating off of other US shores at this time, nor were there a year ago, this week’s national offshore rig totals are equal to the Gulf rig counts…meanwhile, in addition to those rigs offshore, a rig continues to drill through an inland lake in St Mary parish Louisiana, while there were no “inland waters” rigs running a year ago…

The count of active horizontal drilling rigs was up by 2 to 410 horizontal rigs this week, which was also up by 103 rigs from the 307 horizontal rigs that were in use in the US on May 15th of last year, but less than a third of the record of 1372 horizontal rigs that were deployed on November 21st of 2014….at the same time, the directional rig count was up by 5 to 29 directional rigs this week, which was also up by 8 from the 22 directional rigs that were operating during the same week a year ago….on the other hand, the vertical rig count was down by 2 to 15 vertical rigs this week, but those were still up by 5 from the 10 vertical rigs that were in use on May 8th of 2020….

The details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of May 14th, the second column shows the change in the number of working rigs between last week’s count (May 7th) and this week’s (May 14th) count, the third column shows last week’s May 7th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 15th of May, 2020..

Louisiana’s rig count was up by three with the addition of three rigs offshore, but there was also a natural gas rig added in the Haynesville shale of northwestern Louisiana, while a vertical rig was shut down in the southern part of the state…the Haynesville shale was still down a rig, however, with the removal of two Haynesville natural gas rigs from Texas Oil District 6…with those, the natural gas rig count was down by three nationally, with the additional removal of two other natural gas rigs in basins that Baker Hughes doesn’t track…elsewhere in Texas, we find that that two oil rigs were added in Texas Oil District 8, which is the core Permian Delaware, and that another oil rig was added in Texas Oil District 8A, which includes the northern counties of the Permian Midland, but that at the same time, an oil rig was pulled out Texas Oil District 7C, which encompasses the southern counties of the Permian Midland, thus accounting for the national Permian basin 2 rig increase….we also had a rig added in Texas Oil District 1, and a rig pulled out of Texas Oil District 2, which could have been offsetting Eagle Ford rigs, even as the Eagle Ford remained unchanged…the Texas count was still down by one, however, because the last rig that had been drilling in the state’s offshore area was removed this week…meanwhile, other rig additions nationally include a rig added in North Dakota’s Williston basin, and another added in Oklahoma’s Cana Woodford, and an oil rig added in an Alaska basin that Baker Hughes doesn’t name…

Feds appeal court order that stalls gas drilling in Ohio national forest (Reuters) – The U.S. Forest Service (USFS) and the Bureau of Land Management (BLM) have appealed to a federal appeals court rulings in Columbus federal court that prohibit them from issuing new permits to drill on oil and gas leases in Ohio’s only national forest until they re-assess the environmental effects of fracking on that land. The federal agencies on Monday appealed rulings that they violated the National Environmental Policy Act (NEPA) when they failed to take a “hard look” at the environmental impacts, including on air quality, of eventual hydraulic fracturing, or fracking, of underground shale when they offered for lease about 40,000 acres of land in the Wayne National Forest in southeast Ohio. Plans to open up Wayne Forest to fossil fuel extraction go back more than a decade predating former President Donald Trump’s push to open up federal lands to oil and gas exploration. Taylor McKinnon, a campaigner with co-plaintiff the Center for Biological Diversity (CBD), said: “There’s a wide and dangerous chasm between the Biden administration’s climate rhetoric and its defense of unlawful fracking.” CBD and others made NEPA claims against USFS and the BLM in 2017, months after the agencies opened up the land for fracking. About 1,800 acres of land were leased during auctions held in 2016 and 2017. Last year, U.S. District Judge Michael Watson sided with the plaintiffs, saying that BLM’s conclusion that leasing of the forested land would not significantly impact the environment, and that further analysis could wait until developers applied for drilling permits, violated NEPA. In March, Watson asked BLM and the USFS to revise their NEPA analysis and prohibited them from issuing new drilling permits in the meantime.

Biden Admin Seeks to Restart Drilling in Wayne Natl Forest — The executive branch of the federal government, including the U.S. Forest Service (USFS) and the Bureau of Land Management (BLM), is appealing, to a federal appeals court, a Columbus federal court ruling that prohibits their respective agencies from issuing new permits to drill on oil and gas leases in Ohio’s Wayne National Forest (WNF). Talk about mixed signals! We thought old Joe had shut down and wants to keep shut down all drilling on federal land, which includes WNF (see How Biden’s Drilling Ban on Federal Lands Affects the M-U). Now Biden’s own USFS and BLM are suing to allow it!

Elected officials should stand against fossil fuels- Jill A. Hunkler — It was an honor to testify before the House Subcommittee on the Environment on the role of federal fossil fuel subsidies in preventing action on the climate crisis. However, I was disappointed by the response from state and local government leaders who I believe misrepresented the issue, citing research published by the oil and gas industry to back up false claims of economic growth and “clean” emissions. In a recent news article, state Sen.Frank Hoagland, R-Mingo Junction, stated: “Far left attempts to vilify the significant economic opportunities brought by the oil and gas industry are patently false …” This argument is futile, as the statistics mentioned in my testimony came directly from the Bureau of Labor Statics and Bureau of Economics. It is the irrefutable truth, based on governmental data, that Appalachian fracking counties have lost 6,500 jobs and 13,000 residents since the fracking boom began.Sen. Hoagland also stated, “Additionally, other sectors and small businesses have grown with Ohio and the gas industry.”This may have been true for a short period of time, but now you can see the evidence to the contrary. The hotels and campgrounds are virtually empty, and some of the other small businesses that surfaced, like industry supply shops, are gone.[…] Commissioner Jerry Echemann stated he had faith that the oil and gas industry is alive and well. His faith is misplaced and not based on fact. The industry is still present, but activity has slowed, and companies including Gulfport, a heavy player in the county, are filing for bankruptcy. According to a 2020 study from the Institute for Energy Economics and Financial Analysis, Appalachian fracking companies have failed to produce positive free cash flow each year for the past decade.The officials are claiming that the industry has done a lot for Belmont County and that they are behind them. Why do they not acknowledge all the harms brought by this same industry? Can they still be unconcerned, or are they afraid to face the truth based on fact? This industry is polluting our air and water and causing negative health impacts to residents of Belmont County. Are we to assume that Sen. Hoagland and the Belmont County Board of Commission are willing to sacrifice the health of the people for corporate wealth?

Self-congratulatory op-ed on Ohio fracking industry glosses over health, climate impacts – cleveland.com– Congratulations to Jill Hunkler (“Ohio anti-fracking activist joins Greta Thunberg to decry fossil fuel subsidies at Earth Day congressional hearing,” cleveland.com, April 22). It takes real courage to speak truth to power, especially when that “power” is an industry that has for decades controlled a false narrative about the connection of their products to climate change. Regarding David Hill’s May 7 op-ed (“The truth on how the oil and gas industry helps communities thrive“), few full-time Ohio residents will benefit from employment in the industry. However, many of us will deal with the negative impacts. A simple search of peer-reviewed studies will provide Mr. Hill with a plethora of information about the carcinogenic health effects of petrochemicals that will profoundly impact citizens’ health in southeast Ohio. The increase in methane emissions alone counteracts any decrease in carbon-dioxide value. Much of the fracked gas will become a feedstock for single-use plastics, even though the world is drowning in plastics. We are finding out from recent research that our very ability to reproduce is being affected by plastics, plasticizers and fracking chemicals. It is time to move into the future and stop subsidizing an industry that cares nothing about the truth. Randi Pokladnik, Uhrichsville

Ohio lawmakers include language promoting oil and gas in budget bill – The Ohio House version of the 2022-23 state operating budget includes language that would make it state policy to “promote” oil and gas development, exploration and production. The House also added in provisions to make it easier to lease mineral rights under state lands. The state’s oil and gas industry welcomed these small, but significant, changes. Environmental groups are concerned about what it means for public transparency and protecting the state’s public lands. “It’s a thumb on the scale,” said Nathan Johnson, director of public lands at the Ohio Environmental Council. “It slants the playing field dramatically in favor of the industry.” Until now, it’s been basically impossible for any state agency to lease its mineral rights for oil and gas development, said Matt Hammond, president of the Ohio Oil and Gas Association. It’s not that it was illegal. There was just no process for it to happen. The law, signed in 2011 under then-Gov. John Kasich, created the Oil and Gas Leasing Commission. The commission was supposed to oversee any leasing activity on state lands. The problem, for the oil and gas industry, is that no one was appointed to the commission until 2017. That only happened after the legislature tried, through the budget bill, to take away the governor’s power to control appointments to the commission. Even after the commission was staffed, the Ohio Department of Natural Resources never promulgated any rules to govern the commission. Hammond said Gov. Mike DeWine’s administration seems more friendly toward oil and gas, so they took the opportunity to push for some of these changes. Under the language put in the House budget bill, the commission would create its own rules, including setting a standard lease to be used by state agencies. State agencies could then lease public land parcels without consulting the commission. Johnson said these changes basically render the commission obsolete and takes the leasing process out of the public eye. “It robs the public of those protections,” he said. “If we’re basically announcing a policy of drill, baby, drill in those places that Ohioans really rely on today more than they ever have, for getting out there, getting away, breathing clean air, I think that’s a sad state of affairs that we’re dealing with in Ohio right now.” According to the bill, the commission would still accept nominations for parcels to be leased and approve bids. The provisions would allow state leasing revenue to be used more broadly. The current law says those funds need to be reinvested into the public lands. The budget bill would have that money be put into a general administrative fund.

House passes bill blocking cities from banning natural gas – The state House of Representatives passed legislation last week that would block Ohio cities from limiting or banning residents from obtaining natural gas or propane services for their homes.All House Republicans and two Democrats voted in favor of House Bill 201, which would undercut potential efforts from cities taking a go-at-it alone approach to climate change when the state won’t act.No Ohio cities have undertaken any such effort, though some like Cleveland and Cincinnati have passed resolutions aimed at operating exclusively on renewable energy by 2025.The bill would prevent cities from enacting any law or building code that “limits, prohibits, or prevents” residential, commercial, or industrial consumers within their boundaries from obtaining natural gas service.Ohio is one of 23 states considering legislation to preempt cities from limiting new or existing gas hookups, a sweep of efforts backed by the natural gas industry. The state proposals follow a trend of progressive cities limiting gas distribution or incentivizing the electrification of buildings.The bill’s lead sponsor, Rep. Jason Stephens, R-Kitts Hill, described natural gas in a floor speech as an “affordable, reliable, and environmentally friendly” source of energy. The legislation, he said, would stave off attempts from Ohio cities following the lead of places like Berkeley or San Francisco which have adopted some form of a new natural gas ban. Democrats mostly sided with environmental advocates against the bill. Several pointed out that no city in Ohio is proposing any sort of ban on natural gas. Rep. Mary Lightbody, D-Westerville, said Ohio already gutted its clean energy portfolio mandates via House Bill 6 in 2019 (now the subject of a federal pay-for-play prosecution).

Thousands of abandoned Ohio oil and gas wells may be hidden. Drones could help find them – After successful trials using drones to discover abandoned oil and gas wells, Ohio authorities are looking to expand their use and to speed up remediation at hundreds of sites across the state.Ohio has roughly 1,000 sites on its orphan well inventory. There likely are “many more,” said Eric Vendel, chief of the Ohio Department of Natural Resources’ Division of Oil and Gas Resources Management. The hope is that drones equipped with magnetometers could help locate wells that are not yet on the state’s radar.Orphan wells matter because they can continue to emit methane, a health and fire risk if not properly contained. Methane also is 84 times more potent as a greenhouse gas than carbon dioxide is over a 20-year time span. Abandoned oil and gas wells have also contaminated soil and groundwater.Orphan wells in Ohio are a subset of the larger group of abandoned oil and gas wells, where no legally responsible owner can be found. Until wells are identified, however, it’s unclear whether they should be fixed by the state under its orphan well program.Until now, there haven’t been good tools to systematically identify which of the quarter-million wells drilled in the state since the mid-19th century have been properly plugged or should be deemed orphan wells. In many cases, wells have come onto Ohio’s orphan well list only after people reported problems. In one case, for example, a well was found under the gym floor at a Lorain County grade school. Nor has any systematic on-the-ground survey been done to check whether recorded wells were properly plugged.Magnetometers have been used to find wells and other geological anomalies for decades. The equipment looks for specific changes in the ground’s magnetic field that signal the presence of a vertical well casing. Walking sites with equipment is time-consuming, however, so it hasn’t been done in a systematic manner statewide. The growing popularity of remotely piloted aerial vehicles, or drones, within the last 20 years has paved the way for surveys to be done efficiently over larger areas. The magnetometer itself looks like a yard-long white surfboard. It hangs from a remote-controlled drone with a wingspan of 4 to 5 feet. “It’s a pretty big piece of equipment,” said Rob Lowe, a survey section manager at the Ohio Department of Natural Resources’s Division of Oil and Gas Resources Management. His section was formally established in 2016.Work by a team from the National Energy Technology Laboratory, ODNR and others confirmed the technology’s viability at last June’s Unconventional Resource Technology Conference. The team’s report showed that the drones found known wells and some that hadn’t been reflected in official records.

Ascent Resources Utica Holdings, LLC Reports First Quarter Operating And Financial Results —First Quarter Highlights:

• Averaged net production of approximately 1.8 bcfe per day for the quarter, of which 89% was natural gas
• Adjusted EBITDAX(1) of $240 million and net cash provided by operating activities of $210 million
• Decreased average well cost(2) to approximately $564 per lateral foot during the quarter, resulting in capital expenditures incurred of $148 million
• Generated $54 million of free cash flow(1) during the quarter
• Eliminated all debt maturities until Q2 2024 with the retirement of our Convertible Notes in March 2021 and the redemption of our Senior Notes due 2022 in April 2021
• Borrowing base reaffirmed at $1.85 billion in April 2021
• Reiterating annual production, free cash flow and capital guidance for 2021

Verde Bio Holdings, Inc. Announces Acquisition of Tri-Shale Portfolio of Mineral and Royalty Interest Verde Bio Holdings, a growing oil and gas Company, today announced that it has agreed to the purchase of a portfolio of mineral and royalty interests held by a private seller for a purchase price of $1,097,000 in cash. The interests to be acquired by Verde currently produces combined revenue of approximately $24,000 per month and Verde is entitled to the cash flow from production attributable to the acquisition beginning on or after May 1, 2021. The acquisition is expected to close on or before May 18, 2021.Acquisition Highlights:

• Oil rich Mineral Interest in Larimer County, Colorado operated by Petro Operating and Extraction Oil and Gas, who just announced a $2.6 Billion merger with dynamic DJ Basin pureplay operator, Bonanza Creek, to become Colorado’s first Net-Zero Oil and Gas Producer.
• 13 wells currently in production across the acquired acreage producing approximately $20,000 per month in revenue.
• Significant upside of expected, untapped revenue with two wells currently shut-in.Utica Shale producing Mineral Interest in Belmont and Monroe Counties in Eastern Ohio, operated by Gulfport Oil and Gas which has more than 205,000 net acres under lease in the Utica.
• Nine wells currently producing revenue of approximately $1500 per month with significant upside of three drilled uncompleted wells (DUC’s).

Coalition calling for pipeline scrutiny – Residents and members of some environmental groups near the path of the Falcon Pipeline are asking federal regulators for more answers and for more scrutiny of the Shell Pipeline project. The pipeline consists of two segments that both end at Shell’s facility in Monaca. One segment goes from the MarkWest facility in Cadiz, up to a facility in Scio and then through northern parts of Harrison and Jefferson counties. The pipeline crosses beneath the Ohio River and over to northern Hancock County before reaching its final destination. The second line goes from MarkWest’s Houston Plant in Washington County, Pa., and due north to Monaca. During Tuesday’s Zoom conference meeting, officials with the People Over Petro Coalition requested the federal agency in charge of oversight hold a public hearing to answer the group’s questions and to reconsider the permits already in place.Various members pointed out that in 2019, a whistleblower claimed there were defects in the pipeline construction and records were altered. “As residents, we need to be protected,” Heaven Sensky, a community organizer with the Center for Coalfield Justice who serves Washington and Greene counties in Southwestern Pa., said during the meeting. “We deserve to know that our government at all levels is working to keep us safe after they permitted this pipeline to come into our region.”Sensky went on to add that, “We need to know that Shell’s money and political influence won’t let them off the hook if they did something that puts us all in jeopardy. We need to know that the information they’re submitting is independently verified.” Others participating in the meeting included Tucker Harris, an Ohio landowner who said the pipeline runs 1,000 feet from his house. During a drilling operation, Harris said crews “blew out the end” of the pipeline. “Shortly thereafter, when we knew this was going on, I started getting a gray sludge in my well water,” Harris said. “I have water filters and we do have a well. I’ve actually saved my water filters and you pull the filters, it’s like a grey slime, which is what they actually use on the directional bores.”

ENERGY TRANSITIONS: ‘Responsibly sourced’ gas grows despite green washing claims — Monday, May 10, 2021 — Some of the biggest natural gas companies are moving to brand their product as low-emissions – a plan that could transform the industry even as it spurs accusations of green washing.

Country’s 8th-largest natural gas producer to seek responsible certification – Pittsburgh Business Times – Another major Appalachian natural gas producer plans to seek environmental certification of its natural gas, joining other companies in the basin including EQT Corp., Chesapeake Energy and Southwestern Energy. Ascent Resources Utica Holdings LLC, the country’s eighth-biggest natural gas producer, made the announcement Thursday during its first-quarter earnings call with financial analysts. “We are working on several projects that will lead to certification of our Utica gas,” said Jeff Fisher, chairman and chief executive officer of the Oklahoma City, Oklahoma-based driller. It didn’t provide details. Ascent Resources is a privately held natural gas driller with assets in the Utica Shale, with about 340,000 net acres in southern Ohio. It produced 1.8 million cubic feet of natural gas, oil and natural gas liquids in the first quarter. It operated four drilling rigs and a hydraulic fracturing crew in the first quarter. Fisher said Ascent saw growing interest in the market for responsibly sourced natural gas, a designation that is being certified through third parties including MiQ and Equitable Origin and Project Canary. EQT and Chesapeake Energy are working through Project Canary, while EQT is also working with MiQ and Equitable Origin. Ascent also announced it had been invited to join the American Exploration & Production Council (AXPC), a trade association of independent oil and natural gas producers that is working to provide a voice on issues including methane reduction, corporate social responsibility and other issues. Other members include EQT, Cabot Oil & Gas Corp., Antero Resources Corp. and Encino Acquisition Partners. Fisher said that it had placed several of its executives in key committees at AXPC, which will provide what he called “a seat at the table” when it comes to issues of interest to the natural gas industry. Ascent has established a board committee on ESG issues and it plans to expand upon its current and new ESG initiatives later in the second quarter with its annual ESG report.

Pa. bill seeks to block towns from banning natural gas connections –Pennsylvania is joining a host of states in considering bills promoted by natural gas utilities that would prohibit local governments from restricting or banning utility hookups based on the type of energy they supply.The bill is part of a nationwide effort by the natural gas industry to prevent more towns from following the example of communities in California, Washington and Massachusetts that passed local ordinances to restrict new gas connections to buildings as a tool for combating climate change.There is no sign that any community in Pennsylvania is considering such a ban, officials representing Pennsylvania township, borough and city governments said at a hearing of the state Senate’s local government and environmental resources committees Tuesday.Both critics and supporters of the bill said municipalities are already prevented by other state laws from regulating utility service.But local government officials are concerned that the bill, Senate Bill 275, is so broad and ambiguous it could be read to limit local governments from using their existing power to incentivize energy efficiency upgrades, for example, or regulate outdoor wood-fired boilers.“In our reading of the bill, any local action in the form of programs, policies, regulations, codes or ordinances that favor and encourage one type of energy over another would be prohibited,” said Amy Sturges, director of governmental affairs for the Pennsylvania Municipal League.The exact impacts of the bill are unclear, in part, because it uses generic terms that make it appear that the bill’s language “was not crafted specifically for Pennsylvania,” said Joe Gerdes, director of government relations for the Pennsylvania State Association of Township Supervisors. Pennsylvania is one of about 20 states to introduce similar legislation.

Drilling group notes delays in DEP’s reviewing key earthmoving permit – The wait time has expanded for a key permit for natural gas producers to begin work on drilling wells in the Pennsylvania Department of Environmental Protection southwestern region, which the Marcellus Shale Coalition says is making it difficult and more expensive for drillers to carry out their work. An analysis of permitting delays by the Marcellus Shale Coalition finds the two major DEP regional offices responsible for the majority of the oil and gas permits in Pennsylvania vary widely when it comes to the time it takes to review the erosion and sediment control general permit. The ESCGP, as it’s called, doesn’t involve drilling per se. It’s more elemental to the process, the approval drillers need before they can start to push dirt around to build the roads, pads and other infrastructure. No ESCGP, no wells. The southwest regional office, based in Pittsburgh, took an average of 143 days to review 30 of the permits, up 22% in time while reviewing 55% fewer permits than in 2015, the analysis found. The southwest regional office handled 68 permits with an average review time of 117 days in 2015. The northcentral office in Williamsport, on the other hand, reviewed 124 permits in an average 84 days. That compared to 74 permits and an average 42 days to review in 2015. A third office, in Meadville and covering the northwest region, reviewed 10 permits in an average 98 days in 2020, compared to 23 permits in 93 days in 2015. “We’ve seen an erosion on how DEP is processing these general permits,” said David Callahan, president of the Marcellus Shale Coalition. The general permits are designed to address stormwater runoff and prevent erosion, managing the changes to the land during the construction of well pads, roads to and from the pad, and pipeline rights of way. There are other permits that drillers have to get from the DEP but the ESCGPs start the process. Callahan said the coalition has raised concerns about how long it has taken to review these permits in the past and the DEP has taken steps to address them. But he said that the time has increased since then. “We need to be rather adept to react to pricing, and waiting longer and longer certainly has detrimental impacts,” Callahan said.

Rep. Otten reintroduces pipeline early-warning proposal – – State Rep. Danielle Friel-Otten, D-155th, of Uwchlan, has reintroduced legislation that would place the costs of early detection and warning systems on pipeline operators rather than taxpayers and ensure that these systems are in place prior to pipeline operation. Pennsylvania law requires school districts, municipalities, and local emergency management agencies to implement disaster response and emergency preparedness plans consistent with guidelines developed by the Pennsylvania Emergency Management Agency.However, a recent ruling by the Pennsylvania Public Utility Commission found that pipeline operators have too often failed to provide any reliable means of monitoring pipelines for leaks or alerting communities of pipeline incidents, leaving local officials unable to fulfill their state-mandated emergency preparedness requirements. House Bill 1364, which Otten introduced as H.B. 1735 during the 2019-20 legislative session, seeks to address that failure by establishing a pipeline early detection and warning board. This board would collect fees from pipeline operators and distribute those funds to municipalities, school districts, or county governments for the development of early detection and warning systems to alert communities and emergency responders in the event of a pipeline incident. “For too long, Pennsylvania taxpayers and our local communities have borne all the risks and all the costs of pipeline operation,” Otten said. “My legislation properly places those costs on pipeline operators rather than taxpayers and helps to mitigate safety risks by ensuring that our municipalities, school districts, and emergency responders have the ability to develop emergency response plans and fulfill their statutory emergency preparedness requirements.”

Seneca Reports Big Jump in Natural Gas Production From New Pennsylvania Assets Seneca last July closed on a deal to acquire 450,000 net acres across the state including 350 producing Marcellus and Utica shale wells in Tioga County. Seneca, a subsidiary of National Fuel Gas Co. (NFG), said fiscal 2Q2021 production increased 43% year/year to 85.2 Bcfe.The bulk of the production gain came from the Eastern Development Area (EDA), which includes Tioga County. Net production increased by 21.2 Bcf year/year to 50.2 Bcf in the EDA, while volumes from Seneca’s Western Development Area in northwest Pennsylvania increased 4.6 Bcf to 31.3 Bcf over the same time. The company was most active on the western side of the state, however, bringing online 13 wells in the WDA during its second quarter. “Our operations team did a great job turning these recent wells online a few weeks ahead of schedule, allowing us to accelerate production during the winter months, capturing premium winter pricing,” said Seneca President Justin Loweth. He took over for John McGinnis, who retired earlier this month. Loweth said Seneca’s production would decline over the remainder of the fiscal year, which ends in September. The company drilled 14 new wells during the second quarter, but both NFG’s FM100 expansion project and Transcontinental Gas Pipe Line Co.’s Leidy South project are expected to come online by the end of the year. “As we approach the online date for Leidy South and the winter heating season, we expect to accelerate our completion operations, and we plan to delay turning in line most of these new wells until early fiscal 2022 coinciding with the expected in-service date of our new capacity,”

Are Fossil Fuels Impoverishing Middle America? – IEEE Spectrum – The African nation of Equatorial Guinea is rich in oil and gas reserves, yet poor in most other ways. It has over a billion barrels of proved crude oil and over a trillion cubic feet of proved natural gas reserves. On key measures, through – life expectancy, education, per-capita income – it ranks near the bottom of the world – 144th out of 189 countries, according to a 2019 United Nations Development report. I said Equatorial Guinea is rich in oil and gas reserves, and poor in most other ways, but I could have said it’s poor in most other ways precisely because it’s rich in oil and gas. Its economy has grown rapidly, but almost entirely on the back of oil revenues that have funded a luxurious lifestyle for the nation’s political elite, while diseases like malaria still haunt the land. In fact, much of the country lacks access to clean water and healthcare. Only one of four babies is immunized against polio and life expectancy and infant mortality are not only low by world standards, they’re below average for sub-Saharan Africa. Equatorial Guinea is, it turns out, a prime example of what’s called the Resource Curse. The economy underperforms, in every other way, not just despite, but because of, this one natural resource. The country also has lots of arable land, and an abundance gold, uranium, and diamond deposits. But those have gone largely unexploited. There’s no need on the part of the elite to expand the economy beyond the windfall of oil and gas royalties, and no opportunity to do so by everyone else. I suppose it’s elitist and maybe even nationalistic of me, but imagine my surprise to hear the phrase “resource curse,” which I associate with the developing world, used recently in a webinar in the context of a region of the United States. The region is northern Appalachia, comprising 22 counties in eastern Ohio, western Pennsylvania, and northern West Virginia. And the curse is, as it so often is in the third world, a surfeit of oil and especially natural gas, in this case extractable largely through the relatively new process of fracking. Here to explain how the resource curse is impoverishing communities in the middle of the U.S. in the middle of the 21st century is Sean O’Leary. He’s a senior researcher at the Ohio River Valley Institute and the author of its recent report, “Appalachia’s Natural Gas Counties: How dreams of jobs and prosperity turned into almost nothing.”

NJ lawmakers ask Biden administration for new PennEast pipeline study – Two Central Jersey members of the House of Representatives have asked the Biden administration to revisit the environmental studies of the proposed PennEast pipeline.In a letter this week to President Joe Biden, Reps. Tom Malinowski, D-Hunterdon, and Bonnie Watson Coleman, D-Mercer, expressed “grave concern” over the $1 billion, 116-mile natural gas pipeline from Luzerne County, Pennsylvania, that would cross the Delaware River north of Milford, then parallel the river through western Hunterdon County before ending at Transco’s trans-continental pipeline near Pennington in Mercer County.”For several years now, landowners in our New Jersey districts have been living in fear that their property will be taken or irreparably altered to make way for a pipeline that our state doesn’t want or economically need,” the representatives wrote. “We have been meeting with constituents who live up and down the pipeline’s proposed route through western New Jersey and have seen firsthand the farms it would decimate, the waterways it would pollute, and the rural way of life it would destroy.”The representatives told Biden that that the Federal Energy Regulatory Commission’s approval of the pipeline is “a blatant example” of disregard for the National Environment Protection Act and environmental regulatory agencies. “The EPA gave PennEast’s Environmental Impact Statement a failing grade; citing significant concerns with the release of arsenic into the soil and groundwater, and noting unacceptable threats to 56 acres of wetland, and 633 acres of forest currently essential to the management of toxic runoff,” the representatives wrote. “That failing grade should have been enough to halt PennEast’s certification process until those environmental impacts had been addressed.”

Proposed Natural Gas Plant In Peabody On Hold, For Now – The Massachusetts Municipal Wholesale Electric Company (MMWEC) paused plans to build a natural gas power plant in Peabody to address concerns raised by local residents and advocacy groups.In a statement released Tuesday, the company called 30-day pause “an unusual step,” noting that the project has been in development and open to public review for more than three years, and has already secured permits from the state.Get the news Boston is talking about sent to your inbox every weekday morning.Sign up now.Company CEO Ron DeCurzio, calling MMWEC “a proven leader in carbon-free technology,” said in the statement that technology has changed since the project – officially known as 2015A – was first proposed more than five years ago, necessitating a pause and design review.The announcement comes after 87 Massachusetts health care professionals, many from the North Shore, released a letter opposing the plant on Monday, expressing concern over air pollution and climate change.”The air pollution associated with the new plant will increase mortality within the Peabody community,” said the letter. It also says the project, by expanding natural gas infrastructure in the state, is “antithetical” to the commonwealth’s new climate law.

‘Your Invisible Friend’: Parents outraged by pro-gas booklets made by Eversource used in Mass. school – (AP) – The father of a Cambridge, Massachusetts, elementary school student said Monday he was shocked when he pulled two activity booklets from his son’s backpack that had been distributed at his school, including one titled: “Natural Gas: Your Invisible Friend.” Both were published by the energy utility Eversource and paint a rosy picture of the fossil fuel. An inside page of one of the booklets declares “Natural Gas Is Great,” and encourages students to connect speakers like a popcorn plant manager and a bus rider to statements like “it’s a safe, clean, efficient fuel to use in our plant,” and “I like the fact that while I commute to work I am using a natural gas vehicle that reduces harmful air pollutants.” Both booklets carry the Eversource logo on their covers and also include natural gas safety tips, like keeping paper towels away from gas stoves. Gleb Bahmutov, a 41-year-old software engineer, said he was disturbed to learn that the booklets in his nine-year-old son’s backpack had been distributed to him and other students attending the Tobin Elementary School. Bahmutov said he was not only surprised the school was giving out material from a company, but was angered that the booklet painted natural gas in such glowing terms with no mention of the wider impact of fossil fuels on the climate or of the option of renewable forms of energy. “Eversource is not a company that should be publishing activity books,” Bahmutov said. “It sounds like propaganda and I was born in the Soviet Union, so I don’t use that term lightly.”

Living Near Fracking Wells Is Linked to Higher Rate of Heart Attacks, Study Finds – Living among fracking wells is linked to higher rates of hospitalizations and deaths due to heart attacks, according to a new study.The study, published in the Journal of Environmental Research, compared heart attack rates in Pennsylvania counties with fracking to demographically similar counties in New York where fracking is banned.”There’s a large body of literature linking air pollution with poor cardiovascular health and heart attacks, but this is really the first study to look at this from a population level related to fracking,” Elaine Hill, a researcher at the University of Rochester Medical Center and one of the study’s co-authors, told EHN.Hill and her colleagues looked at hospitalization and mortality records in 47 counties in New York and Pennsylvania from 2005-2014 (the most recent data available at the time the study was initiated) and found that heart attack hospitalization rates were higher on the Pennsylvania side of the border by 1.4 – 2.8 percent, depending on the average age and density of fracking wells in a given county. Living near a higher density of wells translated to a greater risk of heart attacks.They also found that middle-aged men living on the Pennsylvania side of the border were 5.4 percent more likely to die of a heart attack than their counterparts in New York. The authors speculate that this link may be stronger in middle-aged men because they’re more likely to work in the industry and have higher levels of exposure as a result.The researchers were not able to control for lifestyle factors like smoking and drinking due to a lack of data, but they did assess demographics at the county-level to ensure they were looking at communities with similar economic and racial makeups on both sides of the border. They analyzed different age groups separately across the counties, and also adjusted for coal production in each county (another factor that can increase heart attack risk) and for rates of access to health insurance, which may influence whether people go to the hospital when having a heart attack.While numerous studies have compared economic differences between the two states, this is the first to use this “natural experiment” to compare human health outcomes on both sides of the border. A 2020 study conducted by veterinarians similarly found that horses raised near fracking wells on the Pennsylvania side of the border had higher rates of a rare birth defect than horses raised by the same farmer on the New York side.Fracking and the increased truck traffic created by the industry raise levels of air pollution significantly, and exposure to air pollution raises heart attack risk. Living near fracking wells is also linked to heightened stress levels, which is another contributor to cardiovascular disease.Alina Denham, the study’s lead author, said their findings are in line with previous research. She pointed to a2019 paper that found higher levels of physical markers associated with heart attack risk in people who live near fracking. Still she said, “Additional research is needed to figure out exactly how exposure to fracking wells leads to increased heart attack risk.”

Marathon Refinery Near Ashland Exceeds EPA Levels For Cancer-Causing Pollutant – 89.3 WFPL News Louisville – A Marathon oil refinery in eastern Kentucky is one of 13 refineries across the country that released harmful levels of a cancer-causing pollutant, according to a report from the nonprofit Environmental Integrity Project.Fence line readings for benzene jumped 233% between 2019 and 2020 at the Catlettsburg Marathon refinery near Ashland, and were 11% above action levels designated by the U.S. Environmental Protection Agency.Benzene is a common pollutant found in oil and a known human carcinogen. The increase in benzene levels at the Catlettsburg Marathon refinery is likely the result of two leaks from March and October, said Eric Schaeffer, Environmental Integrity Project executive director. “When you get concentrations that high, you really need to get in gear and get on top of it and try and fix it,” Shaeffer said. Communities living near the fence lines of heavy industry bear a disproportionate pollution burden compared to those who live farther away. Nearly 12,000 people live within 3 miles of the Catlettsburg refinery, 44.6% of whom live in poverty, according to theEIP report. The Catlettsburg refinery was one of two Marathon refineries included in the report. The other was a refinery in Port Arthur, Texas. A Marathon spokesman said the releases were the result of “one-time events” that have since been addressed. The EPA measures air pollution at the fence lines of oil refineries under the Clean Air Act. The benzene levels were measured under the 2015 Clean Air Act rule, which requires refineries to investigate and clean up sources of benzene emissions when air monitoring shows annual concentrations exceeding EPA action levels of 9 micrograms per year.

Private land taken for a pipeline: At what price? –For the first time since a natural gas pipeline used its power of eminent domain to take private property three years ago, a jury is being asked to determine a fair price.A trial began Tuesday to decide just compensation for James and Kathy Chandler, whose 111-acre rural property and custom-built home atop Bent Mountain will be bisected by the Mountain Valley Pipeline.U.S. District Judge Elizabeth Dillon ruled in 2018 that Mountain Valley had a right to begin construction on 8.6 acres of the land – over the objections of the Chandlers, who see it as a nightmare to their dream home.“You’ll see the ugly scar the pipeline is cutting across the Chandler property, and how it is forever altering their use of the property,” Stephen Clarke, an attorney for the Chandlers, told the jury.When Dillon granted Mountain Valley immediate possession of an easement through the land, it was part of a giant case that involved about 300 properties in Southwest Virginia that the 303-mile pipeline needed to pass through.Since then, each landowner has had a separate proceeding to determine how much they should be paid by the Pittsburgh-based joint venture of five companies building the pipeline.Many of the cases have been settled, either through voluntary agreements struck between landowners and Mountain Valley or after a judge’s ruling on evidentiary issues forced a resolution. About a dozen cases remain open, according to court records.Although a key part of the opposition to Mountain Valley has been the way it took private land for its own profit, that will not be in question during the trial. Under the Natural Gas Act, the power of eminent domain was a given once it was established that the pipeline would serve a public good. Rather, the jury will be asked to determine a fair market value of a landowner’s loss – putting a highly emotional issue largely in the hands of appraisers.In his opening arguments, Clarke did not delve into the numbers. Instead, he told the jury about how the Chandlers had long dreamed of moving to the Bent Mountain community in Roanoke County. They found the perfect piece of land and decided to build a luxury home that “would look old but feel new,” Clarke said. Parts from a historic barn and a log cabin were used as furnishings, and the Chandlers hauled rocks from their mountain land to construct beautiful stone fireplaces.When it was done, “they knew they could come home and be at peace,” Clarke said.Then, about seven years ago, Mountain Valley announced plans for a buried pipeline that would transport natural gas at high pressure from northern West Virginia to Pittsylvania County, where another pipeline would take it to markets in the Mid-Atlantic and Southeastern regions of the country. “It cuts through the heart of their property,” Clarke said. “For the last three years, they’ve lived next to a construction zone.”

U.S. natgas futures ease on milder weather forecast (Reuters) – U.S. natural gas futures eased on Monday on forecasts for milder weather and lower heating demand next week than previously expected. Traders also noted prices were down with a small increase in output and a small decline in exports. Front-month gas futures NGc1 fell 2.6 cents, or 0.9%, to settle at $2.932 per million British thermal units. But with cooler weather expected this week, speculators last week boosted their net long gas futures and options positions on the New York Mercantile and Intercontinental Exchanges to their highest since early March. Data provider Refinitiv said gas output in the Lower 48 U.S. states averaged 91.0 billion cubic feet per day (bcfd) so far in May, up from 90.6 bcfd in April, but well below November 2019’s monthly record of 95.4 bcfd. Refinitiv projected average gas demand, including exports, would fall from 88.0 bcfd this week to 82.7 bcfd next week as the weather turns seasonally warmer. That forecast for next week was lower than Refinitiv estimated on Friday. The amount of gas flowing to U.S. LNG export plants averaged 11.4 bcfd so far in May, down from April’s monthly record of 11.5 bcfd. Buyers around the world continue to purchase near-record amounts of U.S. gas because prices in Europe and Asia remain high enough to justify the cost of buying and transporting the U.S. fuel across the ocean.

June Natural Gas Futures Reverse Course, Climb with Exports Steady, Cyberattack Resolution in View –Natural gas futures on Tuesday bounced back from the prior session’s losses, as export demand and other key fundamentals held strong, while a critical oil pipeline signaled it could restore operations this week following a ransomware attack.The June Nymex contract advanced 2.3 cents day/day and settled at $2.955/MMBtu. July gained 2.1 cents to $2.999.Each had declined 2.6 cents on Monday amid worries about the cybersecurity breach involving Colonial Pipeline Co. The company operates a key delivery system spanning from the Gulf Coast to the East Coast for transportation fuels and other refined petroleum products.Cash prices on Tuesday ticked lower. NGI’s Spot Gas National Avg. declined 2.0 cents to $2.725.Liquefied natural gas (LNG) levels again topped 11 Bcf on Tuesday. Feed gas volumes have held above the 11 Bcf and near record levels for eight consecutive days as European and Asian demand for U.S. exports of the super-chilled fuel are holding strong.EBW Analytics Group estimated that LNG feed gas demand has averaged 2.2 Bcf/d higher year-to-date when compared with the same period in 2020, “with comparisons only projected to grow further into mid-summer.”

Rosy LNG Outlook Helps June Natural Gas Futures Extend Gains — Natural gas futures advanced for a second straight day on Wednesday as production dipped and all indications pointed to continued strong demand for U.S. liquefied natural gas (LNG). The June Nymex contract settled at $2.969/MMBtu, up 1.4 cents day/day. July rose 1.9 cents to $3.018. NGI’s Spot Gas National Avg., however, declined 2.0 cents to $2.705 amid waning weather-driven demand. While always subject to revisions, production estimates at the start of trading Wednesday hovered around 89 Bcf, roughly 1 Bcf below recent averages and well below pre-pandemic levels. At the same time, LNG feed gas volumes hung near 11 Bcf, far above year-earlier levels. Both Asian and European demand for U.S. exports of the super-chilled fuel is expected to hold strong through the summer cooling season. European gas storage was depleted over a freezing winter and chilly spring, driving demand and higher prices for U.S. LNG. Elevated needs in Europe are boosting prices – and near-term demand – in Asia as well, as traders pay up to attract shipments, according to analysts. U.S. LNG export terminals “are running at their operationally available and contracted levels and will continue to do so, with no economically driven cargo cancellations anywhere on the horizon,” RBN Energy LLC analyst Lindsay Schneider said Wednesday. “Global gas prices are well supported by low storage levels in Europe, and it will take time to refill inventories, which means these high prices are not going away anytime soon.

US EIA reclassifies gas in South Central region resulting in 71 Bcf storage injection | S&P Global Platts –US natural gas storage volumes expanded by 71 Bcf, or 1 Bcf more than an S&P Global Platts’ survey expected, as 4 Bcf of working gas stocks in the South Central region were reclassified to base gas. Storage inventories increased to 2.029 Tcf for the week ended May 7, the US Energy Information Administration reported May 13. The build measured less than the five-year average of 82 Bcf and the 104 Bcf addition reported in 2020. Storage volumes now stand 378 Bcf, or 15.7%, less than the year-ago level of 2.407 Tcf and 72 Bcf, or 3.4%, less than the five-year average of 2.101 Tcf. The South Central region is driving the largest portion of the mounting deficit, with stocks 197 Bcf lower year over year. This is due in part to substantial demand growth that has accrued in the area. Total demand for the week ended May 7 averaged 8 Bcf/d higher than a year earlier, according to S&P Global Platts Analytics. Much of the growth stems from higher feedgas deliveries to Gulf Coast LNG facilities and stronger exports to Mexico. The NYMEX Henry Hub June contract was static at $2.97/MMBtu in trading on May 13. The balance-of-summer averaged $3.01/MMBtu, or 14 cents below the upcoming winter strip, November through March. Platts Analytics’ supply and demand model currently forecasts a 55 Bcf injection for the week ending May 14, which would measure 31 Bcf less than the five-year average. Residential and commercial loads are up by roughly 3 Bcf/d week over week. The spike in home heating demand was softened somewhat by a 1.9 Bcf/d drop in power burn demand. Overall, total demand is up 1.3 Bcf/d week over week, averaging 87.1 Bcf/d. Upstream, supplies have been notably flat, with the largest change coming from a 200 MMcf/d increase in net Canadian imports to meet rising res-comm demand, followed by a 100 MMcf/d increase in onshore production, bringing total supplies up by about 400 MMcf/d on the week to an average 95.1 Bcf/d. Lower US gas yields have tightened supply just as Mexico and LNG exports have been rising resulting in tighter balances and increased gas-to-coal switching. With stocks heading into summer on the low side the outlook looks bullish especially if the weather turns hot. However, Platts Analytics believes the current forward curve is a little overdone and production will grow at these prices as wind and solar will increasingly offset gas-fired power demand.

U.S. natgas eases from 11-week high as exports decline (Reuters) – U.S. natural gas futures slipped on Friday from an 11-week high in the prior session as exports declined and production edged up, as well as on forecasts for mild weather and lower demand next week. Traders noted that price decline came even though the weather was expected to warm up in two weeks, which should prompt power generators to burn more gas as homes and businesses crank up their air conditioners. Front-month gas futures NGc1 fell 1.2 cents, or 0.4%, to settle at $2.961 per million British thermal units. On Thursday, the contract closed at its highest since Feb. 19 for a second day in a row. Despite the small daily decline, the contract gained less than 1% during the week, putting it up for a fifth week in a row for the first time since October 2020. Data provider Refinitiv said gas output in the Lower 48 U.S. states averaged 90.8 billion cubic feet per day (bcfd) so far in May, up from 90.6 bcfd in April, but still well below November 2019’s monthly record of 95.4 bcfd. Refinitiv projected average gas demand, including exports, would fall from 87.2 bcfd this week to 80.8 bcfd next week as the weather turns milder before rising to 85.4 bcfd in two weeks with the start of air conditioning season. The amount of gas flowing to U.S. LNG export plants averaged 11.1 bcfd so far in May, down from April’s monthly record of 11.5 bcfd. That’s because U.S. LNG feedgas was on track to hold near 10.1 bcfd for a third day in a row on Friday, its lowest since early March when the plants were recovering from the February freeze in Texas, according to preliminary data from Refinitiv. The decline was due to reductions at Cameron in Louisiana and Corpus Christi in Texas.

Largest U.S. fuel pipeline remains mostly closed days after cyberattack with no timeline for reopening -Colonial Pipeline is working to restore service and has some smaller lateral lines between terminals and delivery points operating again, the company announced Sunday afternoon. The company, the operator of the country’s largest fuel pipeline, temporarily suspended all operations due to a ransomware attack on Friday. Its four mainlines remain offline. Colonial said it’s developing a restart plan, but provided no timetable as to when full service will be restored. “We are in the process of restoring service to other laterals and will bring our full system back online only when we believe it is safe to do so, and in full compliance with the approval of all federal regulations,” Colonial said in a statement. The federal government is working to avoid supply disruptions after the company suspended operations, U.S. Commerce Secretary Gina Raimondo said Sunday morning. “This is what businesses now have to worry about,” Raimondo said during an interview on CBS’ “Face the Nation.” “Unfortunately, these sorts of attacks are becoming more frequent. They’re here to stay.” President Joe Biden has been briefed on the ransomware attack and the F.B.I. said it’s working closely with Colonial Pipeline and government partners to address the situation. The Department of Energy is leading the federal response, according to Colonial. The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency is coordinating with the company. Colonial said it learned Friday that it “was the victim of a cybersecurity attack” and has since shut down 5,500 miles of pipeline that carry nearly half of the fuel supplies on the East Coast, raising fears of spot shortages of gasoline, diesel and jet fuel. The pipeline is the largest refined products pipeline in the nation, according to Colonial. “It’s an all hands on decks effort right now,” Raimondo said. “We’re working closely with the company, state and local officials to make sure that they get back up to normal operations as quickly as possible and there aren’t disruptions to supply.”

US Declares State Of Emergency To Keep Gasoline Flowing After Colonial Fails To Restart Hacked Pipeline –Just in case the US didn’t already have a “transitory hyperinflation” problem, gasoline futures soared more than 4% – and are likely to jump much more – late on Sunday after the Colonial Pipeline announced that while some smaller lateral lines between terminals and delivery points are now operational, its mainlines (Lines 1, 2, 3 and 4) remain offline since late Friday after the company suffered a crippling cyberattack that affected its key IT systems. Colonial operates Line 1 for gasoline and Line 2 for diesel and jet fuel from Pasadena, Texas, some 15 miles from the nation’s largest refineries, to Greensboro, North Carolina, at a combined 2.5 million barrels a day. They merge at Greensboro to feed a line carrying about 900,000 barrels a day into New York Harbor, and other East Coast pipelines. Colonial said that it is “in the process of restoring service to other laterals and will bring our full system back online only when we believe it is safe to do so, and in full compliance with the approval of all federal regulations.” Full statement below: Meanwhile, downstream customers, which includes pretty much the entire Eastern seaboard, are starting to freak out as they face a new week without the primary source of gasoline supply for hundreds of millions of customers. Update 9:00pm ET: The US government declared a state of emergency late on Sunday, lifting limits on the transport of fuels by road in a bid to keep gas supply lines open as fears of shortages spiked after the continued shutdown of the Colonial Pipeline. “This Declaration addresses the emergency conditions creating a need for immediate transportation of gasoline, diesel, jet fuel, and other refined petroleum products and provides necessary relief,” the Department of Transportation said. White House Press Sec Jen Psaki added that “as the Administration works to mitigate potential disruptions to supply as a result of the Colonial Pipeline incident, @USDOT is taking action today to allow flexibility for truckers in 17 states.” The move lifted limits on the transport of fuels by road to ease the fallout from the continuing closure of the Colonial pipeline, which carries almost half the fuel consumed on the US East Coast, following a ransomware cyber attack on Friday. The decision comes as the government scrambles to deal with the fallout from the closure of Colonial, the biggest refined products pipeline in the US, transporting 2.5m barrels of fuel a day from refineries on the Gulf Coast to markets such as Atlanta, Washington and New York (see more below). If the pipeline is not quickly reopened the impact on prices could become more severe in the coming days, said Patrick De Haan, head of petroleum analysis at data provider GasBuddy. “We’re realizing the gravity of it is maybe worse than what we’d expected,” said De Haan. “There’s still a little breathing room, we’re starting to run low on it. But Monday, Tuesday if there’s no news, you know we’re dealing with something fairly significant.”

US Scrambles to Transport Gasoline After Colonial Pipeline Hack – In an attempt to stave off a potential gasoline shortage and price spike on the East Coast, the Biden administration has issued an order allowing some truck drivers transporting gasoline to work overtime. The move follows the shutdown of one of the nation’s most crucial pipelines after it was hit by one of the biggest cyberattacks against oil and gas infrastructure in U.S. history.On Friday, the owners of Colonial Pipeline announced that the company was victim to a ransomware attack, and that it had temporarily halted all operations as it worked to secure its IT system in response. While some of the smaller lines have since come back online, as of Monday, the pipeline’s main arteries remained shut down for an indeterminate amount of time.The Department of Transportation declared a state of emergency in response to the shutdown in 17 states and the District of Columbia, waiving certain requirements for motor carriers and drivers who are working to address the shutdown. They can now drive beyond the normal 11-hour-per-day limit. That’s an attempt to help stave off fuel shortages given that the Colonial pipeline network provides around 45% of the gasoline used in the region.Despite the catastrophes that pipeline spills can pose to public health and the environment (look no further than the 1.2-million-gallon-plus spill the Colonial pipeline unleashed in August in North Carolina, as well as explosions along the main line in Alabama that killed one worker and injured several others in 2016), freight transport of oil and gas is a much riskier prospect. Trucks and trains are some of the least safe ways to transport oil and gasoline, and, accordingly, account for only a small percentage of the petroleum products moved around the country each year. Road and rail transport are also much more expensive than pipeline transport. If the shutdown keeps more tankers on the road ferrying gasoline, that could alsocontribute to a rise in prices at the pump. Just keeping drivers on the road longer – especially given the fact that the trucking industry said a few weeks ago that it’s lacking qualified tanker drivers to meet demand in normal times – isn’t enough of a solution to the looming shortage. The East Coast has access to fuel supplies imported from Europe, but those are more expensive than domestic sources. The region also can tap into some hundreds of thousands of barrels of oil in storage, but those supplies would be “little more than a Band-Aid” in an extended shutdown, ClearView Energy Partners, a research firm, said in a statement to clients. And while the U.S. has access to foreign-flagged vessels it could tap to help transport fuel to the East Coast, it would require that the president waive the Jones Act, a 100-year-old law that requires only U.S.-produced boats and barges be used to transport goods between domestic ports.

Gasoline futures turn lower following earlier surge due to pipeline cyberattack – Futures for fuel prices turned lower after jumping to their highest levels in nearly three years overnight. The pullback came even as much of one of the largest pipelines in the U.S. remains closed following a cybersecurity attack.The owner, Colonial Pipeline, said Sunday evening that some of its smaller lateral lines between terminals and delivery points are once again online, so traders may be reassessing the risk of a longer shutdown that would boost prices.Gasoline futures gave up most of their gain and fell into the red, retreating by 0.2% to $2.122 per gallon. At one point in the overnight session, gasoline futures jumped as high as $2.216, levels not seen since May 2018.Colonial, which operates the largest pipeline carrying fuel from the Gulf Coast to the Northeast, “halted all pipeline operations” on Friday night as a proactive measure following the ransomware cyberattack. A criminal group known as Dark Side may be responsible for the attack, NBC News reported, citing two sources familiar with the matter.While tank farms typically have a few days of stored fuel supply, a prolonged outage could lead to a spike in fuel prices. Analysts say a shutdown beyond five days could translate to higher prices.On Monday, Cybereason provided CNBC with a new statement from DarkSide’s website that appears to address the Colonial Pipeline shutdown. DarkSide said it’s an apolitical organization and only wants to make money without causing problems for society.In an attempt to maintain fuel supplies along the Eastern Seaboard, the U.S. declared a state of emergency in 17 states and the District of Columbia on Sunday evening.

East Coast motorists finding offline fuel pumps. — Gas stations along the U.S. East Coast are starting to run out of fuel as North America’s biggest petroleum pipeline fights to recover from a cyberattack that has paralyzed it for days. From Virginia to Florida and Alabama, fuel stations are reporting that they’ve sold out of gasoline as supplies in the region dwindle and panic buying sets in. The White House said it was aware of shortages in the Southeast of the country and was trying to alleviate the problem. Four days into the crisis, Colonial Pipeline Co. has only managed to manually operate a small segment of the pipeline — as a stopgap measure — and doesn’t expect to be able to substantially restore service before the weekend. The risk is that by that point drivers or airlines may already be suffering severe fuel shortages, while refineries on the Gulf coast could be forced to idle operations because they have nowhere to put their product. U.S. average retail gasoline prices have risen to their highest since late 2014 due to the disruption, almost touching $3 per gallon. That could add to broader inflationary pressures as commodity prices from timber to copper also surge. The Colonial pipeline is the most important conduit to distribute gasoline, diesel and jet-fuel in the U.S., moving the products from the refiners based on the Gulf coast into urban areas from Atlanta to New York and beyond. Each day, it ships about 2.5 million barrels — more than the entire oil consumption of Germany — connecting more than 20 refineries with about 200 distribution centers. The vital conduit has been shut down since late Friday. Without the Colonial pipeline, many cities and airports must seek alternative supplies, either fuel imported by tanker or, if landlocked, relying on trucks. In the first sign of the potential disruption to air travel, American Airlines Group Inc. said it was adjusting two long-haul routes that originate in Charlotte, North Caroline, to add fuel stops. Flights to Hawaii will call in at Dallas-Forth Worth airport, while London-bound aircraft will make a stop in Boston. Airlines flying out of Philadelphia International Airport are burning through jet-fuel reserves and the airport has enough to last “a couple of weeks,’ a spokeswoman said. The U.S. East Coast is losing around 1.2 million barrels a day of gasoline supply due to the disruption.

EPA, DOT move to boost gasoline availability after Colonial Pipeline cyberattack – The Environmental Protection Agency and the Department of Transportation announced separate actions Tuesday to make more gasoline available for sale on the East Coast, in hopes of averting fuel shortages as the Colonial Pipeline remains almost entirely shuttered by last week’s cyberattack.The steps included an EPA fuel waiver issued Tuesday morning allowing retailers in D.C. and parts of Pennsylvania, Maryland and Virginia to sell dirtier-burning gasoline than ozone pollution regulations would normally allow. It expanded the waiver Tuesday night to add all or part of nine additional states, including Alabama, Delaware, Georgia, the Carolinas and Florida.Separately, DOT said it is considering a “temporary and targeted” waiver of the Jones Act, a much-debated law that forbids foreign-owned, operated or built ships from carrying goods between U.S. ports. That waiver would also be aimed at helping fuel supplies get where they’re needed.States including Virginia have also issued emergency declarations allowing their own agencies to waive rules to ease fuel backlogs.The moves came as the Biden administration made repeated assurances that it is trying to forestall fuel shortages, while warning that some may occur anyway.”These states who are impacted, even with the turning on of the pipeline system, they still may feel a supply crunch as Colonial fully resumes,” Energy Secretary Jennifer Granholm said during a briefing with reporters. “But the American people can feel assured that this administration is working with the company to get it resumed as soon as possible.”EPA’s action: The Energy Department agreed with the agency’s waiver, EPA Administrator Michael Regan wrote Tuesday, calling the cyberattack an “extreme and unusual” occurrence “that could not reasonably have been foreseen and is not attributable to a lack of prudent planning on the part of suppliers of the fuel to these areas.”

U.S. pipeline outage spurs refiners to book tankers to store fuel – (Reuters) -Refiners booked at least five tankers to store gasoline stranded at U.S. Gulf Coast plants following a cyberattack that crippled the biggest fuel pipeline in the country, according to sources and shipping data on Tuesday. The attack on the Colonial pipeline network, which supplies half of the fuel consumed along the East Coast, has forced Gulf Coast refineries to scale back operations due to lack of storage space. North Carolina suspended restrictions on fuel shipments to combat gasoline shortages. The tankers, booked by Marathon Petroleum, Valero Energy, Phillips 66 and PBF Energy, can hold around 350,000 tonnes of fuel. Two of them were booked for up to a month, and three were provisional bookings that could be cancelled, according to data and shipbroking sources. Colonial on Friday shut its 5,500-mile (8,850-km) pipeline network, which moves fuels including gasoline, diesel and jet fuel, to protect its systems. It has restarted some smaller lines. In the wake of the outage, traders also booked several tankers to ship gasoline and diesel from Europe to the U.S. East Coast. French oil major Total SE and commodities trading houses Vitol and Trafigura each booked 90,000-tonne tankers to ship diesel on the transatlantic route, shipping data showed, a relatively rare route as Europe consumes more diesel than it produces. Several Gulf Coast refiners that rely on Colonial for shipments have cut output. Total and Motiva Enterprises cut gasoline production at their Port Arthur, Texas refineries and Citgo Petroleum pared back at its Lake Charles, Louisiana, plant, sources told Reuters.

In the Colonial Pipeline Mess, Tanker Trucks Come to the Rescue –ON WEDNESDAY NIGHT, the Colonial Pipeline Company, which operates the country’s largest pipeline system for refined oil, reported that the 5,500-mile system was finally up and running again, with service slated to return to normal by week’s end. It had been four days since the pipeline went down in a historic – and frightening – ransomware attack. And yet, as of Thursday morning, cars continued to snake around gas stations up and down the Eastern seaboard, waiting their turn to fill up at the tank. Turns out that if you tell people something is threatening their petroleum supply, they will freak out and buy a lot of it. The National Association of Convenience Stores reported Wednesday that stations are doing two to four times their usual business, with some retailers clearing several days’ worth of gas – around 16,000 gallons per station – in a few hours. It’s the kind of purchasing behavior the industry usually sees around hurricanes, says Jeff Lenard, the association’s vice president of strategic industry initiatives. The panic buying has spilled into areas that don’t even get their gas from the Colonial Pipeline: On Wednesday, the association reported elevated sales as far south as Naples, Florida, a region that gets its gasoline off of cargo ships. The pipeline shutdown did lead to some supply issues, industry executives say. But many of the gas shortages at retail locations are happening because petroleum is simply in the wrong place. Mostly unable to use the pipeline the past few days, the oil and gas industry has turned to other modes of transportation: rail, vessels, and, most of all, tanker trucks. A lot of tanker trucks. Usually, tanker trucks are the last element of oil’s long journey from refinery to fuel tank. Ships, rail lines, and pipelines do the bulk of the work, delivering gas to distribution terminals scattered around the country. Trucks finish up the journey, from distribution terminal to one of the country’s 150,000 gas stations. Because of the pipeline slowdown and the uptick in demand everywhere, truckers are now having to make faster turnarounds and sometimes longer trips – as much as an extra 80 to 180 miles each time, according to Ryan Streblow, the interim president of National Tank Truck Carriers, an industry group.

The hackers behind the Colonial Pipeline cyberattack said they didn’t mean to cause problems and will ‘introduce moderation’ in future targets – The group accused of carrying out the Colonial Pipeline cyberattackhas said it never intended to cause disruption to society, and would approach targets differently in the future. A ransomware group compromised the pipeline on Friday and demanded money in exchange for its release. The pipeline was shut down by its operators as a result.The pipeline network, which runs from Texas to New York, is one of the country’s largest, transporting about 45% of the East Coast’s fuel, the operator said.The FBI said on Monday that DarkSide ransomware was responsible for the hack. DarkSide appeared to claim responsibility for the hack, saying in a Monday statement its goal was not to cause disruption, and that it would approach targets differently in the future.”Our goal is to make money and not creating problems for society,” the group said in a statement. “From today, we introduce moderation and check each company that our partners want to encrypt to avoid social consequences in the future.”

Colonial aims to ‘substantially’ restore pipeline operations by end of week –The Colonial Pipeline Company said that it hopes to “substantially” restore the operations of its pipeline by the end of the week following a ransomware attack that led to its shutdown. It said in a statement that segments of the Colonial Pipeline, which transports oil from Texas to the East Coast, are being “brought back online in a stepwise fashion” and that its plan will take a “phased approach” for returns to service. “This plan is based on a number of factors with safety and compliance driving our operational decisions, and the goal of substantially restoring operational service by the end of the week,” the statement said, noting that the company will provide updates on its progress. The company also said that the federal government’s moves to exempt motor carriers and drivers from hours limitations is expected to “help alleviate local supply disruptions.” Colonial announced over the weekend that it would shut down the 5,500 mile-pipeline after a ransomware attack breached its IT system. It did so to prevent the attackers from accessing its operational technology. The pipeline supplies about 45 percent of the East Coast’s fuel supply. Analysts told The Hill on Monday that the impacts of the shutdown would depend on how long the pipeline’s main segment remains offline.

Colonial Pipeline starts limited shipments amid fears of fuel shortages – The Colonial Pipeline resumed limited shipments on Monday, delivering fuel from North Carolina to a terminal in Maryland, in the first stage of what still could be a slow restarting of the main pipeline from Houston’s refineries to the East Coast after a cyberattack forced its shutdown last week. The announcement fell far short of a return to service for Colonial’s entire 5,500-mile line, which supplies 45 percent of gasoline, diesel and jet fuel to the East Coast is back in operation. And even if the pipeline resumes service by the weekend, as Colonial promised Monday, that may not be enough to prevent fuel shortages in parts of the country. The White House said late Monday that it was actively prepping for possible disruptions. “We are monitoring supply shortages in parts of the Southeast and are evaluating every action the Administration can take to mitigate the impact as much as possible,” press secretary Jen Psaki said in a statement. Colonial shut the pipeline on Friday after the company’s corporate computer systems were hit by a ransonware attack, raising fears of a spike in gasoline prices going into the peak summer driving season. News earlier Monday that the pipeline company was planning a phased restart helped tamp down an early jump in wholesale prices, but the attack on the crucial energy infrastructure has left energy markets on edge. The company late Monday statement did not disclose what type of fuel Colonial is shipping in the stretch of pipe that runs from Greensboro, N.C., to Maryland, but it said the main lines from the refining hub near Houston to North Carolina remained shut.

Colonial announces pipeline restart, says normal service will take ‘several days’ — Colonial Pipeline, operator of the largest U.S. fuel pipeline, said Wednesday it is restarting operations after being shut down for five days due to a cyberattack.The company shut down its entire operation Friday after its financial computer networks were infected by a Russia-tied hacker gang known as DarkSide, fearing that the hackers could spread to its industrial operations as well.The shutdown led to widespread gasoline shortages and caused temporary price spikes. The U.S. saw the problem as serious enough to issue an emergency order that relaxed restrictions for drivers carrying fuel in affected states.”Colonial Pipeline initiated the restart of pipeline operations today at approximately 5 p.m. ET,” the company said in a statement on its website. “Following this restart, it will take several days for the product delivery supply chain to return to normal.” Jennifer Granholm, the U.S. energy secretary, tweeted that she had spoken to Colonial’s CEO about the restart. The company hired Mandiant, an Alexandria, Virginia, cybersecurity firm, to deal with the incident.

Spot gas shortages could worsen if Colonial Pipeline doesn’t reopen by the weekend –If the Colonial Pipeline is not back in business by the weekend, prices could continue to rise at the pump and there will be broader localized fuel shortages across the southeast and mid-Atlantic regions. Gasoline stations that could not get enough fuel were already closed in some states, and prices jumped overnight, by as much as 10 cents or more per gallon in some areas. “This turns into a crisis by the end of the week, if it’s not resolved, particularly with Memorial Day coming,” . “People are going to start topping off their tanks.” It’s not that there’s not enough fuel. There’s plenty in the refining centers on the Gulf Coast. The issue is that gasoline, jet fuel and diesel are stuck in the wrong places. Moving it requires a hodgepodge of solutions, and analysts say it will be impossible to meet demand without the pipeline. Colonial Pipeline stopped operations Friday and notified federal officials that it was the victim of a ransomware attack. The attack, carried out by a criminal cyber crime group known as DarkSide, resulted in the shutdown of 5,500 miles of pipeline. The artery supplies half of the gasoline to the east coast and runs from Texas to New Jersey. The pipeline company said it expects to restore a substantial amount of operations by the end of the week, but how much is not clear. U.S. Energy Secretary Jennifer Granholm said federal agencies are working around-the-clock to help the pipeline return to normal operations. The shutdown arrives at an inopportune time: The beginning of what could be a record summer driving season as Americans make up for last year. “Given the size and the direction of the pipeline and the market that it feeds, the Colonial Pipeline is the single most important artery moving refined products in the country,” “This is already an earthquake and the magnitude of the earthquake just grows by the day.”

Colonial Pipeline paid $5 million ransom to hackers — Colonial Pipeline paid a ransom to hackers after the company fell victim to a sweeping cyberattack, one source familiar with the situation confirmed to CNBC. A U.S. official, who spoke on the condition of anonymity, confirmed to NBC News that Colonial paid nearly $5 million as a ransom to the cybercriminals. It was not immediately clear when the transaction took place. Colonial Pipeline did not immediately respond to CNBC’s request for comment. The ransom payment was first reported by Bloomberg. Earlier on Thursday, President Joe Biden declined to comment when asked if Colonial Pipeline paid the ransom. White House press secretary Jen Pskai told reporters during a briefing that it remains the position of the federal government to not pay ransoms as it may incentivize cybercriminals to launch more attacks. Last week’s assault, carried out by a criminal cybergroup known as DarkSide, forced the company to shut down approximately 5,500 miles of pipeline, leading to a disruption of nearly half of the East Coast fuel supply and causing gasoline shortages in the Southeast. Ransomware attacks involve malware that encrypts files on a device or network that results in the system becoming inoperable. Criminals behind these types of cyberattacks typically demand a ransom in exchange for the release of data. On Monday, White House national security officials described the assault as financially motivated in nature but would not say if Colonial Pipeline agreed to pay the ransom. “Typically that’s a private sector decision,” Anne Neuberger, deputy national security advisor for cyber and emerging technologies, told reporters at the White House when asked about the ransom payment. Deputy National Security Advisor for Cyber & Emerging Technologies Anne Neuberg speaks about the Colonial Pipeline outage following a cyber attack during the daily press briefing at the White House in “We recognize that victims of cyberattacks often face a very difficult situation and they have to just balance often the cost-benefit when they have no choice with regards to paying a ransom. Colonial is a private company and we’ll defer information regarding their decision on paying a ransom to them,” Neuberger said. She added that the FBI has previously warned victims of ransomware attacks that paying a ransom could encourage further malicious activity.

Colonial Pipeline restarts after hack, but supply chain won’t return to normal for a few days –Colonial Pipeline restarted operations Wednesday at approximately 5 p.m. ET after a ransomware attack last week forced the entire system offline on Friday evening. The company did warn, however, that its pipeline would not be fully functional immediately. “Following this restart it will take several days for the product delivery supply chain to return to normal,” Colonial said in a statement. “Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period. Colonial will move as much gasoline, diesel, and jet fuel as is safely possible and will continue to do so until markets return to normal,” the company added. Most of the pipeline, which is the largest fuel transmission line from the Gulf Coast to the Northeast, has been offline since Friday. The company shut down its systems as a proactive measure after it fell victim to a ransomware attack by a criminal group known as DarkSide. The pipeline is a critical part of U.S. petroleum infrastructure, transporting around 2.5 million barrels per day of gasoline, diesel fuel, heating oil and jet fuel. The pipeline stretches 5,500 miles and carries nearly half of the East Coast’s fuel supply. The system also provides jet fuel for airports, including in Atlanta and Baltimore. Given the importance of the pipeline, there was swift action from Washington, in what officials called a “comprehensive federal response.” The Department of Energy led the federal government response in coordination with the FBI, Department of Homeland Security and Department of Defense. Energy Secretary Jennifer Granholm previously said that the company would make a restart decision by the end of the day on Wednesday. “So far there is no evidence from our intelligence people that Russia is involved although there is evidence that the actor’s ransomware is in Russia. They have some responsibility to deal with this,” Biden said from the White House on Monday. Officials warned that gas supplies remained at reasonable levels, but panicked consumers headed to the pump as the pipeline shutdown stretched on for days. As of Wednesday afternoon 68% of gas stations in North Carolina were out of gas, according to data from GasBuddy. In South Carolina and Georgia 45% of stations were dry, while 49% of stations across Virginia reported outages.

John Kerry Believes Pipelines Are More Efficient, Contradicting the Biden Admin — John Kerry, the U.S. Special Presidential Envoy for Climate, contradicted the Biden administration Wednesday by admitting pipelines are a more efficient way of transporting fuel than train or truck after the administration has revoked pipeline permits, including Keystone XL.During an appearance in front of the House Foreign Affairs Committee on Thursday, Kerry said pipelines are better than the alternates. This is after President Joe Biden canceled the permits for the Keystone XL pipeline earlier this year.Republican Rep. Darrell Issa (CA) posed the question, Kerry, “Isn’t it true the pipelines are more carbon-delivery efficient than trains or trucks or other forms of delivery if you could answer just that limited question.”“Yeah, that is true,” he immediately responded.Kerry continued, “I think that is true, but it doesn’t mean necessarily want to be adding another line when there are other alternatives.” “But is it better than train, is it better than that, yes, it is,” he added.

Goodrich Ramping Haynesville Natural Gas Production on High Prices, Productive Wells – Goodrich Petroleum Corp. plans to ramp up natural gas production in the resurgent Haynesville Shale this year, citing strong commodity pricing and high productivity from recently completed wells in northwestern Louisiana. “The core of the Haynesville continues to offer low development and lifting costs, top-tier cash margins and returns on invested capital, as well as the ability for us to both grow and deliver free cash flow at current commodity prices,” CEO Gil Goodrich said Thursday during an earnings call to discuss first quarter results. He added that “numerous new well additions late in the first quarter and subsequent to the end of the quarter have us very well-positioned to deliver strong results in the second quarter.” The company expects production to average 150,000-160,000 Mcfe/d during the second quarter, and is maintaining full-year guidance of 160,000 Mcfe/d at the midpoint, up 20% year/year. Guidance was revised downward slightly due to the impacts of Winter Storm Uri in February and curtailment of nonoperated volumes. The company expects to fetch a 15-25 cent premium to Henry Hub prices for its production. Management is forecasting $15-30 million of free cash flow for the year, assuming natural gas prices of $2.50-3.00/Mcf. If current strip pricing is an indicator, “we’re obviously going to be at the high range of that free cash flow guidance range, and then we’re doing our best to control our operating cost,” said COO Rob Turnham. Production averaged about 125,000 Mcfe/d for the first quarter, of which 98% was natural gas. This compares to 137,000 Mcfe/d, also 98% natural gas, in the year-ago period. Oil and natural gas revenues totaled $31.9 million, up from $23 million in 1Q2020. Goodrich reported average realized natural gas prices of $2.72/Mcf and $57.88/bbl for oil, up from $1.73/Mcf and $47.64/bbl a year ago.

3 arrested in Bayou Bridge protest can challenge trespass law — Monday, May 10, 2021 — Protesters from New Orleans and Mississippi and a journalist from New York arrested during a protest against pipeline construction may continue their challenge of a Louisiana law carrying a possible five-year prison sentence for anyone convicted of trespassing in the area of a pipeline, a federal judge has ruled.

Oil from abandoned Louisiana wells would be exempt from tax under House-passed bill The Louisiana House of Representatives has unanimously passed a bill to exempt oil production from abandoned wells from severance tax Tuesday. Rep. Jean-Paul Coussan, R-Lafayette described House Bill 662 as a win-win for the industry and the environment, but environment advocate Cynthia Sarthou, executive director of Healthy Gulf, called it a “real gift to the oil industry.”The Department of Natural Resources has designated more than 4,000 oil wells in the state as orphaned or abandoned. Wells typically become abandoned when a small oil company buys a previously drilled well and goes bankrupt without properly plugging and abandoning it. When this happens, the liability falls to the state, which uses revenue from a fee on oil and gas production to pay for the cleanup. But the program lacks adequate funding, according to a 2014 legislative auditor’s report.Coussan’s bill would incentivize new oil producers to take over the liability of the well by eliminating the severance tax on oil production, which is typically 12.5%. The tax exemption would last for two years or until production of the well surpasses the cost of operation, whichever comes first.

Enbridge Sees ‘Renewed Interest’ in US Gulf Crude, LNG Exports as Pandemic Fears Fade –Canadian pipeline giant Enbridge Inc. said Friday it was seeing an uptick in interest for crude and liquefied natural gas (LNG) exports from the U.S. Gulf Coast amid an anticipated global economic recovery from the Covid-19 pandemic. “Our solid regional footprint and premier North American integrated pipeline networks are ideally positioned to capitalize on these opportunities and we continue to advance several export pipeline and crude oil terminal opportunities,” President Al Monaco said in the Calgary firm’s first quarter earnings report. Enbridge is developing the Cameron Extension Project to transport feed gas to Venture Global LNG Inc.’s under-construction Calcasieu Pass LNGterminal in Louisiana. It also plans to build a feed gas pipeline to the NextDecade Inc.’s proposed Rio Grande export site in South Texas. On the oil side, the company has partnered with Enterprise Products Partners LP to build a deepwater crude oil export terminal off the Texas coast.Enbridge also shared the latest developments on its closely watched Line 5 project. Designs are complete and a construction contractor is being recruited for the disputed plan to save the 540,000 b/d Line 5 with a new $500 million tunnel under the Straits of Mackinac, Monaco said. Ebridge’s natural gas business segment reported volumes of 671 Bcf on its systems in the first quarter, compared to 638 Bcf in the same period one year ago. On the oil side, the company reported volumes of 2.75 million bbl on its Mainline system compared to 2.84 million bbl in 4Q2020. It also reported first quarter volumes of 1.95 million bbl on its Regional Oil Sands System compared to 1.87 million bbl in the same period one year ago.

Governor Edwards and Senator Cassidy request end on oil and gas lease ban – – As the moratorium on offshore oil and gas leases lingers, Governor John Bel Edwards is calling on President Biden to lift the ban by summer. Governor Edwards wants the Biden administration to know a prolonged drilling halt would be devastating to Louisiana’s economy. Edwards testified before the U.S. Senate Committee on Energy and Natural Resourses. He’s calling on Biden to take a balanced approach to climate change and oil and gas exploration. On Capitol Hill, Edwards joined forces with republican U.S. Senator Bill Cassidy. Both are concerned about the President’s pause on oil and gas leases. “Federal oil and gas production must continue in the Gulf and well into the future,” Edwards said. Cassidy said, “Solutions are needed which move us in the right direction.” In February, President Biden signed an executive order stopping new permits on federal lands and federal waters. He wants to reach net-zero greenhouse gas emissions by 2050. Governor Edwards said, “We are committed to addressing climate change responsibly and to an orderly energy transition. Environmentally responsible oil and gas production must be allowed to continue on the outer continental shelf in the Gulf of Mexico.” According to Edwards, revenue from offshore drilling helps fund climate change goals. “The goal of net-zero carbon emissions by 2050 is an ambitious goal, but it is what the global scientific community says is necessary if we want to avoid the most severe impacts from climate change,” said Edwards. Senator Cassidy said, “The current posture of the Biden administration threatens our longterm ability to fund these projects while putting tens of thousands of jobs at risk.”

Winter storm crisis: Texas natural gas industry opposes new oversight –Advocates for the Texas natural gas industry have spent much of the 11 weeks since February’s deadly power blackouts downplaying the sector’s culpability in the crisis and working to stop lawmakers from requiring winterization of far-flung wells and pipelines. But new data suggest failures by natural gas producers and suppliers to keep the commodity flowing might have triggered as much as a fifth of the freeze-related power outages near the peak of the calamity. What’s not up for debate is that statewide production of natural gas – a major source of fuel for electricity generation – slumped dramatically amid the historic winter freeze and prices for it soared. Production fell by nearly half at one point during the emergency, compared with levels earlier in February, according to IHS Markit, a company that aggregates information about the energy sector. Natural gas spot prices climbed from an average of about $2.80 per million British thermal units at the main West Texas trading hub to a high of $206.19 – a 73-fold increase. At least 151 people, including 12 in Travis County and three in Williamson County, died statewide for reasons related to the frigid temperatures and others lost limbs to frostbite, as many power plants faltered just when needed most. Property damage from the power outages has been estimated at over $200 billion, while water service to more than 12 million people across the state also was disrupted because pipes froze and burst. Proponents of the state’s natural gas industry – in addition to its regulator, the Texas Railroad Commission – have largely deflected blame for the overall crisis, saying freeze-related outages at power plants exacerbated issues at natural gas production and supply facilities because they rely heavily on electricity to operate and to resolve their own weather-induced problems.

TEXAS: Gas lobbying raises fears of another blackout crisis — Wednesday, May 12, 2021 — Texas’ powerful fossil fuel industry is lobbying to exempt parts of the natural gas system from legislation aimed at preventing a repeat of blackouts that left millions of people in the cold and dark in February.

Apache Nabs $4-Plus for Permian Natural Gas, Boosted by Prescient Hedging Strategy – — After fetching $4.61/Mcf for its Permian Basin natural gas in the first quarter, APA Corp. is stepping up its activity in some prospects and extending its exploration in Texas, executives said Thursday.The gassy Alpine High development in the Permian Delaware sub-basin of West Texas had been the Houston-based explorer’s No. 1 global play. As gas prices stagnated and oil prices strengthened, more capital was moved to Egypt, the North Sea and offshore Suriname. Still, with prices on the rise early this year, CEO John Christmann IV had said in February the Alpine High and other U.S. prospects were likely to see more love in 2021. “We made excellent progress during the first quarter with regard to our top priority of free cash flow generation and net debt reduction,” Christmann said during the quarterly conference call Thursday.“We performed well relative to our production expectations,” with “good capital and cost discipline,” even with the “challenging weather events” during February’s deep freeze.The challenging weather, however, proved a boon for Apache, which in March became an APA subsidiary. What happened was fortuitous, as the marketing team revamped the gas hedging strategy at the end of January, which led to a $147 million gain. APA’s exposure to the gas spot market was increased, as marketing entered into financial contracts that boosted exposure for the month of February to daily gas pricing, while reducing exposure to first-of-month pricing. Spot electricity and gas prices in Texas then hit record highs in February on the extreme weather.CFO Stephen Riney during the conference call explained that all of the Permian gas production is sold “and then we manage our long-haul transport obligations separately. We optimize those obligations through the purchase, transport and sale of gas from various receipt points in the Permian Basin and in the Gulf Coast areas. “Our common practice, as we contract for the purchase and sale of gas, is to maintain a relatively balanced exposure between gas daily and first-of-month pricing. As the end of January approached, we had a portfolio of purchase-and-sales contracts that were heavily skewed to February first-of-month pricing. As we commonly do, when this is the case, we use financial contracts to rebalance that exposure closer to 50-50.”

Go to Part 2.

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