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Here are some more selected news articles for the week ending 10 July 2021. Go here for Oil, Gas, And Fracking News Read 18July 2021 – Part 1.
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MPCA investigating Enbridge Line 3 nontoxic spill – – The Minnesota Pollution Control Agency is investigating a drilling fluid spill that occurred on the Willow River in Aitkin County at one of Enbridge’s construction sites for its new Line 3 oil pipeline. Drilling was halted after the nontoxic spill was discovered early July 6 and “containment and cleanup activities were started,” MPCA spokeswoman Cori Rude-Young said Monday. “The MPCA has been in regular communication with the on-site, independent environmental monitors and Enbridge Energy, and we have inspected the site cleanup,” she said. The new pipeline will replace the Enbridge’s current Line 3, which is deteriorating with age and can now only carry about half of its capacity. It is more than 60% completed. The site where the spill occurred is one of several along the 340-mile route where Enbridge is undertaking horizontal directional drilling to bury its $3 billion pipeline below waterways. The drilling method involves sending a pressurized mud mixture into a tunnel beneath a stream bed before pulling the pipe through. Between 80 and 100 gallons of drilling mud were released, according to the MPCA. “There were no impacts to any aquifers nor were there downstream impacts because environmental control measures were installed at this location,” Enbridge spokeswoman Juli Kellner said in a statement. “The drilling operation was immediately shut down, and crews followed the procedure for managing containment and cleanup of material as specified in project permits.” The company will need clearance from the MPCA before resuming drilling at the site, which is outside of Palisade in Aitkin County.
State regulators investigate release of drilling fluid into Willow River during Line 3 construction The Minnesota Pollution Control Agency is investigating a spill of drilling fluid into the Willow River in Aitkin County last week during construction on the Line 3 oil pipeline. About 80 to 100 gallons of drilling fluid, or mud, were inadvertently released on July 6 at a construction site near the town of Palisade, Minn., the MPCA said.Enbridge Energy is drilling beneath the Willow River to install a new crude oil pipeline to replace the existing Line 3. It’s one of several river crossings along the 340-mile pipeline corridor across northern Minnesota.The MPCA said the drilling mud was a combination of bentonite clay, water and xanthan gum, which it says is not toxic and commonly used as a food additive.Enbridge spokesperson Juli Kellner stated in an email that the company immediately shut down the drilling operation, and crews began containment and cleanup.“There were no impacts to any aquifers nor were there downstream impacts because environmental control measures were installed at this location,” Kellner stated.Environmental groups opposed to the Line 3 project criticized the release, which they call a “frac-out.” They voiced concern that the fine particles in drilling mud could impact aquatic life.The MPCA said it’s been in regular communication with independent environmental monitors on site and has inspected the cleanup. Enbridge must consult with the agency before it an resume drilling at the site. Enbridge says construction on Line 3 is more than halfway complete. It expects the pipeline to be operating by the fourth quarter of this year.
‘We’re here to ask for help’: Tribal leaders urge Walz to block Line 3 – White Earth Nation leadership traveled to the state Capitol Wednesday, calling on Gov. Tim Walz, Lt. Gov. Peggy Flanagan and President Joe Biden to meet with them, government to government, about Enbridge’s Line 3 pipeline. The Capitol rotunda was draped with signs reading “honor the treaties” and echoed with chants of “stop Line 3″ from the 100-plus people in attendance. As the new Line 3 nears completion, tribal leaders are increasing pressure on Walz and Biden to block the project. The 337-mile pipeline is more than 60% complete and expected to carry oil by the end of the year. “We’re not here to cause trouble. We’re here to ask for help,” said Ray Auginaush, a White Earth representative. “Remember our generations ahead of us – this is why we’re here today. My great-grandkids are here. That’s who I’m looking out for.” Walz spoke with White Earth Chairman Michael Fairbanks before the rally Wednesday, according to a spokesperson from Walz’s office. They discussed “a commitment to an ongoing government-to-government dialogue,” the spokesperson said. White Earth and Red Lake say the state didn’t sufficiently engage with them as sovereign nations throughout the pipeline permitting and construction process, which the state disputes. Another tribe, the Fond du Lac Band of Lake Superior Chippewa, agreed to let Enbridge build the new pipeline through its land in exchange for compensation and removing the existing Line 3 pipeline there. “Government-to-government relations and tribal-state relations are important to the governor and a priority of his administration,” Walz’s spokesperson said. The calls for Walz and Flanagan to act also highlighted a rift in the governor’s office: Walz supports the project, while Flanagan opposes it. Walz, a first-term Democrat-Farmer-Labor governor, announced in 2019 that he would not block the project because he felt doing so would defy the checks and balances between the branches of government. He has publicly said little about the project since.
Line 3 pipeline opponents appeal to Minnesota Supreme Court — Tribal and environmental groups opposed to Enbridge Energy’s Line 3 oil pipeline project asked the Minnesota Supreme Court on Wednesday to overturn a lower court decision affirming the approvals granted by independent regulators that allowed construction to begin last December. The legal move came as protests continue along the route in northern Minnesota. More than 500 protesters have been arrested or issued citations since construction on the Minnesota leg of the project began in December, but they have failed so far to persuade President Joe Biden’s administration to stop the project. Meanwhile, opponents have been demanding more transparency about a spill last week of drilling mud into a river that the pipeline will cross. The White Earth Band of Ojibwe, the Red Lake Band of Chippewa, the Sierra Club and Honor the Earth petitioned the state’s highest court to hear the case after the Minnesota Court of Appeals last month ruled that the Public Utilities Commission correctly granted Calgary, Alberta-based Enbridge a certificate of need and route permit for the 337-mile (542-kilometer) Minnesota segment of a larger project to replace a crude oil pipeline built in the 1960s that can run at only half capacity. Two other groups – Friends of the Headwaters and Youth Climate Intervenors – made similar but separate filings. The state Commerce Department was part of that earlier appeal but decided not to ask the Supreme Court for further review. One of the central issues in the earlier appeal was the Commerce Department’s contention that Enbridge’s long-range oil demand projections failed to meet the legal requirements. But the appeals panel ruled 2-1 that there was reasonable evidence to support the PUC’s conclusion that the forecasts were adequate. The department said that while the Court of Appeals disagreed with its position, the court’s opinion provided clarity for similar future proceedings. The remaining parties still argue that the PUC failed to demonstrate the need for the oil that Line 3 would transport. And they said in their petition that the appeals court should have considered whether there was enough evidence to back up the PUC’s finding that the existing Line 3 poses a real and immediate safety risk. The Commerce Department’s involvement had posed a thorny political problem for Democratic Gov. Tim Walz. The Republican-controlled Minnesota Senate expressed its displeasure last summer by firing then-Commerce Commissioner Steve Kelley. And the Senate GOP reaffirmed its readiness to fight the Walz administration on environmental disputes last week when it forced out Minnesota Pollution Control Agency Commissioner Laura Bishop over other matters. The Line 3 replacement would carry Canadian tar sands oil and regular crude from Alberta to Enbridge’s terminal in Superior, Wisconsin. The more than $7 billion project is nearly done except for the Minnesota leg, which is more than 60% complete. Opponents say the heavy oil would accelerate climate change and risk spills in lakes, wetlands and streams where Native Americans harvest wild rice, hunt, fish, and claim treaty rights. But Enbridge says the replacement, made of stronger steel, will better protect the environment while restoring capacity and ensuring reliable deliveries to refineries.
What are the treaties being invoked by Line 3 opponents? Tribal council representatives and members of the White Earth Band of Ojibwe will be gathering at the Minnesota Capitol today to request a “nation-to nation” dialogue with Gov. Tim Walz and President Joe Biden in an effort to stop construction of Enbridge’s Line 3 pipeline. Last Friday, leaders of the tribe gathered in a press conference to raise concerns about the pipeline’s effects on surrounding resources and waters, most notably the treaty-protected wild rice, and said continued efforts to build the pipeline was in violation of the tribe’s treaty rights. As the pipeline nears completion, with the project estimated to be 60% finished as of June, opponents of the pipeline have been advocating for upholding treaty rights as a means to try to halt construction. The White Earth Band is currently suing in federal court, arguing the Army Corps of Engineers can’t issue a permit without tribal approval. Another lawsuit against the Minnesota Pollution Control Agency (MPCA) over a water crossing permit is in the Minnesota Court of Appeals. Meanwhile, in June the Minnesota Court of Appeals reaffirmed state regulators’ key approvals of Line 3 permits, with a three-judge panel ruling 2-1 that the state’s Public Utilities Commission correctly granted a certificate of need to the Canadian oil company. “Manoomin (wild rice) is our most important spiritual, sacred, central part of our culture. This is part of the American Indian Religious Freedoms Act and our rights,” said Frank Bibeau, tribal attorney for the White Earth Band, during the press conference. “Manoomin grows everywhere right now in northern Minnesota. And it’s being starved out from water. It’s being starved out for its nutrients.” During the press conference, Bibeau and Allan Roy, secretary treasure for White Earth, spoke of the 1855 Treaty Authority and others. Here are the relevant treaties and what they mean: A series of 19th-century treaties While the U.S. government signed a series of treaties with the Anishinaabe people, including the Ojibwe, between 1825 and 1867, the most significant are those of 1837, 1854 and 1855. The treaty of 1837 coincided with the collapse of the fur trade, the dominant source of commerce at the time, and the transition to logging as the dominant industry. The treaty is notable for being the first major land cession involving the Ojibwe people, and more importantly specifies the rights of the tribes to gather wild rice, hunt and fish. An estimated 12 million acres of land in central and eastern Minnesota and western Wisconsin was sold to the U.S. government in exchange for payments of $35,000 a year over the course of 20 years.
DNR suspends some water permits for Line 3 construction amid drought – The drought is having an impact on construction of Enbridge’s Line 3 pipeline.The Minnesota DNR suspended water permits for dust control, drilling and line testing in some locations where surface water is in low supply.The project has been stop-and-go in Minnesota since work began on the pipeline in December. The DNR will continue to monitor water levels and will allow water use to resume once supplies are back to more sustainable levels.
Susan Rice to sell $2.7M stake in oil pipeline company after project upheld – President Biden’s adviser Susan Rice is being ordered to sell a $2.7 million stake in the oil pipeline company Enbridge – after the Biden administration decided to allow the firm’s Line 3 pipeline project. The Office of Government Ethics ordered Rice to divest from the company on July 9, according to filings first reported by The Daily Poster. Although Biden has broadly taken action against oil pipelines, most notably canceling the Keystone XL oil pipeline, his administration has continued to allow the Line 3 project, which would bring Canadian oil through Minnesota to Wisconsin. Environmental activists oppose the Line 3 project, but the cause has received far less national attention than other pipelines. Last month, Biden administration officials indicated they would not withdraw permission for Line 3 in a major boon for the company. The Office of Government Ethics also ordered Rice, who is director of the Domestic Policy Council, as well as her husband and family trust to divest from smaller holdings that may present a conflict of interest.
Undocumented oilfield workers struggle in New Mexico. Heinrich pushes for energy transition – Pedro Espinoza, an undocumented worker from Mexico, was leaving the Permian Basin for the second time as an operator in the busy oil and gas region. Lower pay and poor conditions, Saucedo said, meant her husband would travel from their home in Hobbs to another prolific oil-producing area thousands of miles north in the Bakken of North DakotaShe said Espinoza left the family and headed north when the Permian Basin last busted in 2016 but was able to return when the industry boomed again a year later. Saucedo said her family is divided not by the boom and bust cycle of the oil and gas industry in the Permian, but rather the treatment he received from his employer as an undocumented laborer. “He came back when there were more jobs available in Hobbs, but then he noticed the big pay difference,” she said in an interview facilitated by a translator. “In North Dakota they pay way more and when he came, he noticed the drop in pay he was getting in Hobbs working the same jobs in the oilfield.” Saucedo expressed concern for worker conditions in New Mexico to Sen. Martin Heinrich during a recent meeting in Roswell where the senator met with members of Somos Un Pueblo Unido – a statewide organization dedicated to racial and worker issues.Aside from a lack of adequate pay, Saucedo said her husband was not provided safety equipment or housing during his time in the Permian, amenities provide to workers in the Bakken.She said she believed this treatment was because of his citizenship status. “This is because companies are choosing to hire undocumented workers and treat them this way,” Saucedo said. “If he was a U.S. citizen, companies wouldn’t be treating him this way.”There are lower standards for undocumented workers in southeast New Mexico because there are more of them, Saucedo said, and companies can hire from a larger pool of undocumented workers.“Lea County is experiencing a lot of Hispanic and Latino people moving to the region,” she said. “They’re hearing about great paying jobs, but they don’t know the dangerous conditions they have to work in. It’s very shocking to people.”
198 oil and gas wells found abandoned near Carlsbad Caverns National Park -Almost 200 oil and gas wells sit abandoned within a 30-mile radius of Carlsbad Caverns National Park.The caverns, which contain a complex system of underground caves, filter local groundwater sources and could be susceptible to contamination from industrial sources like orphaned wells.A study conducted by the National Parks Conservation Association ranked Carlsbad Caverns as the national park or monument with the second-most nearby abandoned wells in New Mexico.Azetc Ruins National Monument in northwest New Mexico was ranked second with 260 abandoned wells within 30 miles of its boundary, and Chaco Culture Historical Park in the same region was third with 44 wells.Manhattan Project National Historical Park near Los Alamos was fourth with seven nearby orphaned wells and Valles Caldera National Preserve just north of Albuquerque was fifth with two wells, per the study.Carlsbad Caverns’ location in southeast New Mexico just outside Carlsbad places it within the oil-rich Permian Basin – New Mexico’s most active oilfield.Aztec Ruins and Chaco Culture in the northwest San Juan Basin are in New Mexico’s other active but less production natural gas field known for one of the densest methane clouds every discovered hovering over the Four Corners region.Nationwide, the study showed there were more than 30,000 orphaned wells within a 30-mile radius of national parks, which could bring pollution in the air and groundwater to the federal public lands.America Fitzpatrick, energy program manager at the Association said the abandoned wells could harm public lands set aside for conservation while also worsening the impacts of climate change.“It is shocking to learn how many orphaned oil and gas wells are leaking dangerous pollutants into the air and water, harming not only our national parks but also local communities,” Fitzpatrick said. “This is an urgent problem that needs to be addressed by Congress to protect parks and public health, and prevent oil and gas companies from skipping town without cleaning up after themselves again in future.”
Antsy Industry Awaits Interior Oil Lease Sale After Court Order — Oil and gas industry-aligned lawyers say the Interior Department could be held in contempt of court if it doesn’t soon comply with a Louisiana federal judge’s order to restart federal oil and gas leasing. The department paused quarterly oil and gas leasing nationwide in January while it reviewed the leasing program. But Louisiana U.S. District Judge Terry Doughty on June 15 issued a preliminary injunction enjoining and restraining Interior from implementing the pause in Louisiana v. Biden. Interior Secretary Deb Haaland said Tuesday that the department is complying with Doughty’s order and will follow the law, but she declined to say how exactly it’s doing so. If Interior doesn’t conduct a quarterly lease sale soon, “the secretary risks a contempt citation from Judge Doughty,” said John Martin, an oil and gas lawyer and Wyoming-based partner at Holland & Hart LLP. “One would expect that those lease sales would have to go forward forthwith.” Interior Communications Director Melissa Schwartz said Thursday that the department is still reviewing Doughty’s preliminary injunction and declined to comment on whether a lease sale announcement is imminent. Interior needs to resume quarterly lease sales in most Western states where land is available for leasing to comply with the order. But it doesn’t need to “offer all of the lands” that are available, said Mark Squillace, a natural resources law professor at the University of Colorado-Boulder. “I’m expecting that we’re going to see both on shore and offshore lease sales soon,” Martin said. “I do believe that Judge Doughty will be watching those closely.”Some of Interior’s oil and gas activity is moving ahead despite the leasing pause. Interior’s Bureau of Land Management, which is in charge of onshore oil and gas leasing, is actively issuing drilling permits on existing leases nationwide. The pause applies only to new leases. The land bureau approved 616 drilling applications for federal leases nationwide in May – 418 of which were in New Mexico, according to its most recent data. It has approved a total of 3,994 drilling applications during FY2021. The bureau’s oil and gas permitting activity shows that its leasing pause hasn’t adversely affected oil and gas production on federal lands, said Bob Abbey, a former land bureau director in the Obama administration.
U.S. drilling approvals increase despite Biden climate pledge – Approvals for companies to drill for oil and gas on U.S. public lands are on pace this year to reach their highest level since George W. Bush was president, underscoring President Biden’s reluctance to more forcefully curb petroleum production in the face of industry and Republican resistance.The Interior Department approved about 2,500 permits to drill on public and tribal lands in the first six months of the year, according to an Associated Press analysis of government data. That includes more than 2,100 drilling approvals since Biden took office Jan. 20.Biden campaigned last year on pledges to end new drilling on federal lands to rein in climate-changing emissions. His pick to oversee those lands, Interior Secretary Deb Haaland, adamantly opposed drilling on federal lands while in Congress and co-sponsored the liberal Green New Deal.But the steps taken by the administration to date on fossil fuels are more modest, including a temporary suspension on new oil and gas leases on federal lands that a judge blocked last month. Further complicating Biden’s climate agenda is a recent rise in gasoline prices to $3 a gallon or more in many parts of the country. Any attempt to limit petroleum production could push gasoline prices even higher and risk souring economic recovery from the pandemic. “He is definitely backing off taking drastic action that would rock the market…. What you’re going to see is U.S. oil production is going to continue to rebound.”Haaland has sought to tamp down Republican concern over potential constraints on the industry. She said during a House Natural Resources Committee hearing last month that there was no “plan right now for a permanent ban.”“Gas and oil production will continue well into the future and we believe that is the reality of our economy and the world we’re living in,” Haaland told Colorado Republican Rep. Doug Lamborn.
Industry Calls the Climate Shots in the Biden Administration –Don’t miss the fact that millions of gallons of poison (“chemicals”) are pumped into the ground in order to force other poisons (methane and fracked oil) out of it. In contrast to the praise Biden is getting from people like Maureen Dowd (the essence of her latest column is “See, Bernie likes Biden and he likes Bernie”), Biden’s actual deeds, especially on climate, are deadly.(The other essence of Dowd’s latest column is, “Continue to hope; Bernie can still save us.” She writes, “Sanders … and Biden have a bond that could have a profound effect on the lives of Americans,” whitewashing Biden with Sanders’ remaining cred. No mention of Sanders’ ultimate powerlessness.)Food And Water Watch (FWW), a group that’s always excellent on climate and environmental issues, has put together a list of Biden’s actions that contradict his promises. It’s an easy read. Taken together, these are deadly indictments.If Biden wanted to fix the increasingly urgent climate problem, he’d be doing that now and we’d be seeing him do it. Instead he fed us nice words when he wanted our vote, then contradicted those words with his constant and ongoing deeds once he gained power. There can be no question that industry calls the shots in his administration. Read and weep. The following is excerpted and adapted from the FWW article. Read it in full for additional detail on each of these points.
The UN needs stricter resolutions to stop fracking – It is quite ironic that the US wants to play a leading role in the fight against climate change, yet the country continues to use harmful and environmentally hazardous fracking to extract shale gas, resulting in emissions of greenhouse gases into the atmosphere and chemicals into water and soil. Proponents of hydraulic fracturing and horizontal drilling are credited with turning unproductive shales into the largest natural gas. Good for business. But protagonists of this dangerous technology of hydraulic fracturing stand accused of putting profits before the environment and humanity. Combating environmental degradation remains one of the UN’s key Millennium Development Goals. Hence initiatives such as the annual World Environment Day during which a conscious effort is made to educate the international community about the wisdom of protecting and preserving our environment. The use of plastic is currently facing extinction. Examples of the negative impact of plastic manufacturing and usage are abound, with images of sea population suffocating on plastic dominating the world stage. Leading global powers such as the US carry on their shoulders the responsibility to take a front role in preserving the environment and indeed our universe. Efforts aimed at fighting climate change have become a collective objective of multilateral organisations. But what is sadly evident is the display of double standards in climate policy of Washington in particular. The international community was left aghast when former US president Donald Trump pulled his country out of the Paris Declaration and prioritised his “America First” foreign policy. Pretty swiftly, though, Trump’s successor President Joe Biden enchanted the world with his decision to return his country to the multilateral institutions where its absence had been felt during Trump’s four years in the Oval Office, particularly with Washington’s crucial monetary contributions and general aid.
Berkshire Hathaway scraps pipeline purchase because of antitrust concerns – CNN – Buffett’s Berkshire Hathaway announced Monday it was scrapping plans to buy a big natural gas pipeline for more than $1.7 billion because of antitrust concerns.Oil Giant Dominion Energy (D) already completed the sale of gas transmission assets to Berkshire Hathaway’s energy subsidiary in November. But Dominion said the plan to sell its Questar Pipelines business to Buffett’s firm was canceled because of “ongoing uncertainty associated with achieving clearance from the Federal Trade Commission” for that part of the deal.Questar operates mainly in Utah, Wyoming and Colorado. So there may have been FTC concerns about overlap with the Berkshire Hatahway Energy subsidiary PacifiCorp, which owns the Rocky Mountain Power energy company that serves customers in Utah, Wyoming and Idaho. Dominion said in November when the initial part of the deal was finalized, it had already received approximately $1.3 billion in cash from Berkshire in anticipation of the full sale being completed. Dominion also said it was planning to transfer about $430 million in Questar debt to Berkshire once the deal closed.Now that the Questar sale is off the table, Dominion said it will begin a competitive process to sell the business to another bidder, adding that it hopes to complete a deal by the end of this year.
Four operators’ wells declared abandoned, another’s bonds revoked at WOGCC hearing – More than four years after Bearcat Energy filed for bankruptcy, the Wyoming Oil & Gas Conservation Commission on Tuesday voted to require the natural gas operator to forfeit $2.25 million in bonds for the plugging and reclamation of its abandoned wells. Bearcat, which bid close to $1.2 million for approximately 100 Wyoming coal-bed methane wells in 2010, ceased known operations in 2016. It failed to provide nearly $200,000 in additional bonds requested by the commission in 2016 and stopped submitting production reports in 2017, violating commission requirements for well monitoring during bankruptcy. The company filed for chapter 11 bankruptcy – known as “reorganization” bankruptcy – in early 2017. Corporations that successfully undergo this type of bankruptcy often continue to operate throughout the proceedings, retain many of their existing assets and emerge with reduced debt. Wyoming’s regulators prefer to wait to revoke reclamation bonds from oil and gas companies undergoing chapter 11 bankruptcy until they can determine whether the companies will resume operations at idle wells. “Oftentimes, we try to let the dust settle in some of these cases, because something might emerge from bankruptcy, or a purchaser may come and be able to turn these wells back on,” said Micah Christensen, the assistant attorney general representing the commission staff, during the hearing. In Bearcat’s case, the bankruptcy filing was converted last year from chapter 11 to chapter 7 – liquidation – leaving the company with no chance of revival. But another operator is attempting to take over some of the company’s wells prior to its dissolution. “If we give ourselves a window of time where the forfeiture of the bonds takes place, that will probably be the best for all parties, including the state, to make sure that we go forward with an abandonment for these wells that clearly need to be forfeited, but also provide an opportunity for that other operator,” Christensen said. The commission will require Bearcat to surrender up to $2,250,430 in bonds by Oct. 15. But that’s unlikely to cover the full costs of reclamation, according to Lottie Mitchell, an organizer with the Powder River Basin Resource Council.
Goldman Sachs caught in flareup over natural gas pollution in North Dakota -David Solomon’s bid to rebrand Goldman Sachs as environmentally green is going up in flames – courtesy of a bankrupt oil and gas company in North Dakota. That’s the charge from critics – and creditors – who claim that Goldman, as a key lender of debtor-in-possession financing to Nine Point Energy, has failed to curb the driller from flaring natural gas into the atmosphere as part of what looks like hard-knuckle Chapter 11 negotiations. In April, Nine Point flared over 155 million cubic feet of the greenhouse gas from its North Dakota wells. That’s more than two-and-a-half times what they emitted prior to the company’s February bankruptcy filing, and equates to more than 21 million miles driven by passenger vehicles, according to the Environmental Protection Agency. That also amounted to a whopping third of its production – well north of the 9-percent limit allowed by environmental regulators, who cite emissions of carbon dioxide, as well as nitrogen oxides that cause acid rain, ozone and smog. Goldman – whose CEO Solomon pledged in March to detail this year how “climate-risk considerations” figure into the bank’s business strategy – is in a lending group led by Alliance Bernstein that’s poised to take ownership of Nine Point to forgive $250 million in debt. But the deal has hit a snag over a lawsuit from Caliber Midstream, a pipeline company whose contracts to safely transport the gas Nine Point rejected in Chapter 11. Caliber is suing for $150 million in construction costs. Nine Point’s gas flaring provoked a befuddled response from a Caliber attorney at the start of the bankruptcy. Alfredo Perez of white-shoe law firm Weil Gotshal noted that Nine Point was “literally flaring the natural gas that would otherwise come into our system for some reason, in an effort to … put pressure on us, I’m not quite sure exactly why, but it’s part of our theory,” according to a March 17 court transcript.
‘Black Snake’ tells saga of Dakota Access Pipeline protests – The protest against the Dakota Access Pipeline by the Standing Rock Sioux was one of the most important news stories of 2016 – and rightly so, as it touched on issues related to climate change, fossil fuel dependence, Indigenous rights, and environmental justice. The protest spanned nearly a year, straddled two presidential administrations, and drew thousands to the protest camp site in North Dakota. It caught the world’s attention and starkly illuminated the nation’s long, shameful history of mistreatment of its Indigenous peoples. In “Black Snake: Standing Rock, the Dakota Access Pipeline, and Environmental Justice,” human rights lawyer Katherine Wiltenburg Todrys takes a deep dive into the protest against the oil pipeline, whose proposed route threatened the Standing Rock Sioux’s water source and sacred sites. Although Todrys makes extensive use of sources and documents from both sides of the dispute, there is no doubt that her sympathies lie with the protestors. The Dakota Access Pipeline (DAPL) was a mammoth, $3.8 billion project that would carry up to 570,000 barrels of crude oil from the shale oil fields of the Bakken formation in northwest North Dakota to an oil terminal in south-central Illinois. Dakota Access and its parent company Energy Transfer Partners argued that a pipeline would be safer and more efficient than transporting oil by rail. (Train cars full of oil are known to derail and even explode, but pipelines are also problematic; they’re notorious for producing spills large and small, leaving behind poisoned land and water.)Even with the environmental risks inherent in a pipeline, Dakota Access had little difficulty in securing voluntary easements from property owners along its proposed 1,170-mile route. Little difficulty, that is, until the company had to deal with the Standing Rock Sioux. Despite widespread poverty on the reservation and an unemployment rate of 70 percent, as the author puts it, “the Standing Rock Sioux would not be bought off.”In April 2016, a small group of “water protectors,” many of them teenagers, gathered on land owned by a tribe member and established the Sacred Stone Camp to protest the DAPL, which they called the “black snake,” referring to an ancient Lakota prophecy about a snake that would one day devour the earth. The camp quickly drew Indigenous people from across the country, as well as non-native supporters. Their efforts gained attention through social media campaigns as well as acts of civil disobedience, in which protestors locked themselves to heavy machinery on the construction site and were subsequently arrested. In time, the camp swelled to an eclectic mix of some 10,000 protestors, including representatives of 300 federally recognized tribes, possibly the largest alliance of native tribes in U.S. history. Politicians and celebrities joined in, and the effort caught the attention of the international press and organizations like Amnesty International. The eyes of the world were focused on the Standing Rock Sioux Reservation. In the meantime, work on the pipeline continued. In the fall of 2016, peaceful protestors were met with violent opposition from local law enforcement, which used rubber bullets, water cannons, and attack dogs against them. Videos showing dogs with bloody mouths, similar to images of violent crackdowns during the civil rights movement, went viral and were replayed by major news networks. “The whole world also saw what had happened to the water protectors,” Todrys writes.
Permafrost thaw threatens Alaska’s largest oil pipeline – Thawing permafrost is compromising part of the Trans-Alaska Pipeline System, which connects crude oil drilled in the Arctic to tankers in the Port of Valdez, highlighting how a warming climate is reshaping the oil industry in Alaska. While there is no immediate threat of an oil spill, Alyeska Pipeline Service Co., the pipeline operator for TAPS, discovered buckling supports that hold the pipe above ground. Alyeska, a consortium of oil and gas companies, will install underground coolers as a solution “to protect the integrity of TAPS from permafrost degradation” in addition to replacing the supports, according to an update from the Alaska Department of Natural Resources this winter. The finding was first reported by Inside Climate News. State regulators approved driving 100 hundred pipes 50 to 60 feet deep. They will be equipped with passive cooling systems to draw heat away from the ground, according to the state. Alyeska will also use wood chips and other measures as insulation on the surface. “TAPS was designed and built to manage changing environmental conditions, including permafrost zones,” Michelle Egan, a spokesperson for TAPS, said in an email, noting that cooling systems to stabilize the permafrost are not new for the pipeline. “Alyeska has operated TAPS for more than 44 years with commitment and respect for its dynamic environment. As part of that commitment, thermal units and the VSMs are regularly monitored and when needed, Alyeska repairs or reinforces them,” she said. Bill Caram, executive director of the Pipeline Safety Trust, said the pipeline does not appear to be in immediate danger of a severe failure, such as a collapse that could lead to an oil spill. But he said this finding, and the necessary remediation, could be a “harbinger” of things to come as temperatures rise. “The pipeline was designed to handle the dynamic nature of permafrost, but not in a rapid climate change environment,” he said.
‘Wake Up Call’: Rapidly Thawing Permafrost Threatens Trans-Alaska Pipeline – Alaska’s thawing permafrost is undermining the supports that hold up an elevated section of the Trans-Alaska Pipeline, putting in danger the structural integrity of one of the world’s largest oil pipelines.In a worst-case scenario, a rupture of the pipeline would result in an oil spill in a delicate and remote landscape where it would be extremely difficult to clean up.“This is a wake-up call,” said Carl Weimer, of Pipeline Safety Trust, a nonprofit pipeline watchdog group based in Bellingham, Washington. “The implications of this speak to the pipeline’s integrity and the effect climate change is having on pipeline safety in general.”A slope where an 810-foot long section of the pipeline is secured has started to slip due to the melting permafrost, in turn, causing the braces holding this section of the pipeline to twist and bend. According to NBC News, the pipeline supports have been damaged by “slope creep” caused by thawing permafrost, records, and interviews with officials involved with managing the pipeline show.To combat the problem, the Alaska Department of Natural Resources has approved the use of about 100 thermosyphons – tubes that suck heat out of the permafrost – to keep the frozen slope in place and prevent further damage to the pipeline’s support structure.“The proposed project is integral to the protection of the pipeline,” according to the department’s November 2020 analysis.There is some concern in using these cooling tubes – They have never been used as a defensive safeguard once a slope has begun to slide, and the permafrost is already thawing.The Arctic and Alaska are heating twice as fast as the rest of the globe because of global warming. And global warming is driving the thawing of permafrost that the oil industry must keep frozen to maintain the infrastructure that allows it to extract more of the fossil fuels that cause the warming.Permafrost is ground that has remained completely frozen for at least two years straight and is found beneath nearly 85 percent of Alaska. In the last few decades, permafrost temperatures there have warmed as much as 3.5 degrees Fahrenheit.The state’s average temperature is projected to increase 2 to 4 degrees more by the middle of the century, and a study published in the journal Nature Climate Change projects that with every 2-degree increase in temperature, 1.5 million square miles of permafrost could be lost to thawing.
Oil prices are up, but Alaska is America’s bottom state for business in 2021 – In a normal summer, Skagway, Alaska, population 1,183, would be teeming with tourists from the cruise ships sailing the Inside Passage. Residents could drive 15 miles up the Yukon Highway into Canada to run their basic errands, or they could hop on a state-run ferry to the next town over, Haines.But this year, the cruise ships have just started running again. Cremata is hoping Skagway will see 100,000 passengers this year; in 2019 they had 1.1 million. The border to Canada remains closed to non-essential traffic, and the ferries, part of the Alaska Marine Highway System, are plagued by budget cuts.”Just getting your family down to go see a dentist or doctor, when that becomes burdensome or overly expensive, there’s a point where people have just had it and move away,” Multiply Skagway’s situation by thousands of communities and more than 700,000 Alaskans, and you can begin to understand why The Last Frontier finds itself in last place in CNBC’s 2021 America’s Top States for Business rankings. It is the sixth bottom-state finish for Alaska in 14 years. The state previously achieved the dubious distinction in the first four years of the study between 2007 and 2010, hitting bottom again in 2018. Alaska met the pandemic with the best-funded public health system in the nation, according to the United Health Foundation, spending $289 per person per year. That is more than three times the national average. Earlier this year, the state was setting the pace for Covid-19 vaccinations, even in its most remote regions. As the national economy struggled to regain its footing, Alaska offered a generally business-friendly regulatory climate – its legal system tilts toward business, and the number of state laws and regulations is manageable. The conservative-leaning Tax Foundation ranks Alaska’s tax climate the third-best in the country. So how did Alaska manage to finish No. 50 again in 2021 despite so many advantages going in? In a word: cost.Cost of Doing Business carries the most weight in this year’s study. As the recovery builds, states are touting low business costs more than any other factor, according to CNBC’s analysis. Alaska is an extremely expensive place to do business.Even Alaska’s competitive tax climate, which earns points for relatively low property taxes and no personal income tax, includes a top corporate tax rateof 9.4%, among the highest in the country.
Arctic oil spill cleanup costs could reach $9.4B over 5 years, says risk analyst | CBC News – As global temperatures rise, ice in the Canadian Arctic is melting at an unprecedented rate. This means the Northwest Passage will see more ship traffic – which increases the potential for an oil or fuel spills in the region.A new risk assessment on the consequences of a hypothetical oil spill in the Rankin Inlet region of Nunavut posits that the cleanup and socioeconomic costs of such a disaster could limb to $9.4 billion ($7.5 billion US) in five years under a worst case scenario.The worst case scenario is where no attempt is made to clean up or otherwise mitigate the spill. While non-intervention is unlikely, the report says considering such a worst case situation is “the best scenario to use in making decisions for insurance, resource allocation, and contingency planning.”The Arctic can also be a harsh environment which gives only a short window for open-water response to an environmental disaster. As such, a delayed response to a fuel spill in the Arctic is plausible. The study, as part of the GENICE project, also showed that the impacts of an Arctic oil spill would be devastating for Inuit and the environment. “It’s a low probability, high consequence event, which means that it happens once in a while, but when it does happen, the consequences are really, really high,” To estimate the consequences of a spill, Afenyo and his colleagues simulated the Exxon Valdez oil spill of 1989, in which 11 million gallons of crude oil were spilled into an inlet on the Gulf of Alaska. The simulated spill in their analysis took place in the Rankin Inlet coastal region. Using a “unique” method they developed for this research, the researchers determined that each year, there is a gradual increase in socioeconomic impact – such as damage to flora and fauna, disruption of hunting and negative psychological effects – as well as cost.
Troubled Caribbean refinery seeks bankruptcy as lenders balk at injecting more cash –(Reuters) -The owners of Limetree Bay, a refinery on the U.S. Virgin Islands that was once the largest in the Western Hemisphere, filed for bankruptcy on Monday after lenders balked at putting new cash into a project dogged by environmental violations, cost overruns and regulatory troubles. The St. Croix refinery overhaul was the most expensive effort in nearly a decade to expand refining capacity in the hemisphere. Investors plunged more than $4 billion into the project, aimed at taking advantage of its prime location along shipping routes in the Caribbean. The plan fizzled after construction delays and the COVID-19 pandemic, which slashed demand for fuel worldwide. The refinery finally restarted in February – only to shut three months later when Limetree Bay ran afoul of U.S. environmental regulators who ordered it shut after a series of fires and noxious gas releases. “Severe financial and regulatory constraints have left us no choice but to pursue this path, after careful consideration of all alternatives,” Jeff Rinker, Limetree Bay’s chief executive, said of the bankruptcy filing in a statement. The U.S. Environmental Protection Agency (EPA) in May ordered the plant to shut temporarily after the gas releases contaminated local drinking water, shut a school and led residents to complain of breathing problems and foul odors. The EPA order, and subsequent investigations by U.S. officials, made investors wary of investing the additional money needed to get the refinery restarted, the company said in court filings.
Investors balk as bankrupt St. Croix refinery needs $1 bln to be viable (Reuters) – The Limetree Bay refinery, which landed in U.S. bankruptcy court on Monday, needs at least $1 billion to finish a massive overhaul to continue as a viable operation, according to bankers, lawyers and restructuring specialists involved in the case, stacking the odds against the Caribbean facility resuming operations. The St. Croix-based facility’s owners burned through $4.1 billion to resurrect what was once the largest refinery in the Western Hemisphere, hoping to take advantage of rising global demand. Instead, the refinery only operated for three months before U.S. environmental regulators shut it in May due to foul odors and noxious releases that harmed nearby communities. Limetree filed for Chapter 11 bankruptcy protection with no clear path to restructure some $1.8 billion in debt. It says it needs “at least $150 million” to restart, but restructuring specialists familiar with the operation put that figure at an additional $1 billion. That grim assessment comes from interviews with several Wall Street bankers, lawyers and restructuring specialists involved in the bankruptcy case or closely familiar with it. These sources did not want their names used in this story because they are not authorized to speak publicly about the matter. The facility also now faces the specter of ongoing investigations by the U.S. Environmental Protection Agency and the U.S. Justice Department. Even if Limetree were to restart, it faces several challenges. The refining market is already weak after fuel demand was hit by the coronavirus pandemic, and heavy crude oil favored by Limetree is in short supply due to reduced production out of Mexico and Venezuela, putting its price near three-year highs, which hurts potential margins. The refinery’s oil supplier, BP, is among the largest unpaid trade suppliers to Limetree and has shifted investment to wind and solar from fossil fuels. Limetree also has higher fuel expenses because it burns fuel oil or refinery gases to power operations, according to analysts at Morningstar, compared with U.S. refineries that power themselves with cheaper natural gas. That extra cost is enough to shave $1 to $2 per barrel off refining margins, analysts say.
Oil cleanup complete at historic shipwreck off Vancouver Island— The Canadian government says the removal of oil from a shipwreck off Vancouver Island is complete after oil was spotted leaking from the wreck in December. On Monday, Fisheries Minister Bernadette Jordan said roughly 60 tonnes of heavy fuel oil and diesel had been removed from the MV Schiedyk, which sunk off Bligh Island in 1968. After oil was seen leaking from the shipwreck in December, federal, provincial and local First Nations began containing the materials. The U.S.-based Resolve Marine Group was contracted tohelp remove the fuel in the spring. Much of the oil was coming from the ship’s four fuel tanks after the vessel had sunk to a depth of roughly 122 metres.To remove the fuel, Resolve used drones to drill holes into the fuel tanks, then attached drainage valves and hoses to pump out the oil. Hot water was also injected into the tanks to help liquefy the oil to make it easier to pump, according to the federal government.The oil and water mix was pumped onto a Canadian-registered ship, the Atlantic Condor, where the oil and water was then separated.This pumping technique was used until oil was no longer detected in the fuel tanks, according to the federal government.
Why Russia Is Refusing To Send Europe More Natural Gas – Rising commodity prices have strengthened the economic outlook of resource-rich countries. Russia is taking advantage of this in a major way, with a particular focus on crude oil and natural gas. As Europe’s most important supplier of gas, Gazprom is well-positioned to reap major dividends. However, the state-controlled energy behemoth’s lukewarm response to sending additional volumes to Europe could be a sign that the company’s strategy has changed. In 2020, Gazprom’s exports decreased from 199 bcm in 2019 to 170 bcm. The majority of this gas transits through Soviet-era pipelines from Russia to Belarus and Ukraine. Another 55 bcm capacity was added in 2011 with Nord Stream’s completion and will be double to 110 bcm when the heavily contested Nord Stream 2 pipeline starts pumping gas at some point in the next two years.The restart of the European economy has increased demand for commodities and led to substantially higher prices. Although LNG imports have increased over the years, the bulk of the natural gas is still transported through pipelines. Of these exporters, Russia is by far the largest and most influential country due to its sizeable energy industry and excess capacity. Although prices are favorable, Gazprom doesn’t seem to be in a hurry to send extra volumes on top of the running contracts with European customers. After an exceptionally cold heating season, European storages are historically low which further boosts demand to prepare for the coming winter. Also, some parts of Europe are experiencing an unusually warm summer leading to higher demand for electricity to run air-conditioners. Under normal circumstances, coal-fired powerplants would fill the gap, but the price of CO2 on Europe’s ETS has doubled to €52 since November. Therefore, natural gas-fired powerplants, which emit almost 50 percent less, are in higher demand.In the past, Gazprom would have quickly ramped up exports to satisfy additional needs with the ultimate goal of increasing market share. However, the Russian company has held off from booking extra transit capacity through Ukraine’s pipeline system. According to Nick Campbell, director at consultancy Inspired Energy, “so far this summer Gazprom has yet to purchase any capacity in the (Ukraine’s) monthly auctions. Therefore, one could see this as a strategy to push Nord Stream 2 to completion.”
Shell Abandons Push for Oil Spill Case to Be Heard in Nigeria — Royal Dutch Shell Plc has abandoned its final attempt to argue that a major lawsuit brought by thousands of Nigerians over an oil spill in the West African country should be heard in Nigeria rather than the U.K. Shell’s legal team declined to return to England’s High Court with arguments that the five-year-old case would be better heard in Nigeria, according to the parties in the case, conceding that the Nigerian subsidiary will now be joined to claims made in England against the parent company. The U.K. Supreme Court said in a landmark ruling in February that Shell’s parent company could be sued in English courts for the actions of its Nigerian subsidiary. The court, however, left the door open for Shell to argue that it was more appropriate to leave any action against the local unit to Nigerian courts. By including the subsidiary in the U.K. proceedings, more documents about Shell’s work in Nigeria are likely to be made public. The decision follows a pair of recent legal defeats for Shell. A Dutch court in January ordered the company to pay compensation to villagers in the Niger Delta over an oil spill decades ago. In a separate trial in The Hague in May, Shell lost a key case in which it was told to slash emissions by 45% across all its international operations by 2030.
Shell confirms another oil spillage at an oil field in Bayelsa State – Shell Petroleum Development Company of Nigeria (SPDC) has said that there was an oil spillage at its facility in Ekeremor Local Government Area of Bayelsa State. This is as the Nigerian subsidiary of the Anglo-Dutch oil and gas giant noted that the spill clean-up is progressing while the Joint Investigation report is at the conclusion stage. This disclosure is contained in a statement issued by the Media Relations Manager of SPDC, Mr Bamidele Odugbesan, saying that the spill, which discharged a yet to be ascertained volume of crude into the environment, occurred on June 15. According to a report from the News Agency of Nigeria (NAN), Odugbesan dismissed claims by residents that the oil firm was yet to respond to the spill and said that the leak was promptly contained within SPDC’s right of way. Odugbesan in his statement said, “On June 15, a leak was reported at a facility of the Shell Petroleum Development Company of Nigeria Ltd.’s Joint Venture at Opukushi in Ekeremo Local Government Area of Bayelsa. SPDC’s Emergency Response Team was promptly mobilised and it stopped and contained the spill within the SPDC JV right of way. “Spill clean-up is progressing while the Joint Investigation report is being finalised for sign-off by the team comprising representatives of regulatory and relevant government agencies, the community and SPDC.’’ Meanwhile, residents of the host communities have expressed their reservations at the pollution caused by the oil spill and claimed that clean-up was yet to be carried out.
Nigeria loses 21,300 barrels of oil to spill – NOSDRA – Nigeria suffered losses amounting to 21,291.673 barrels of oil, an equivalent of 3,364,084.375 litres, due to spill in 2020, according to the latest data obtained from the National Oil Spill Detection and Response Agency, NOSDRA. This showed a 50 per cent decline, compared to 2019, when 42,076.492 barrels of oil (6,648,085.706 litres) were spilled. NOSDRA, while noting that the spill could be attributed to several factors, explained that the bulk of the spill was caused by sabotage and theft. According to the agency, much of the spill in 2020 was recorded in February, when 6,327 barrels were lost, followed by 4,676 barrels recorded in January, while July took the third position by recording 2,174 barrels. In August, 1,815 barrels of spill were recorded, followed by 1,596 barrels in April, while 1,262 barrels were spilled in June. December, November, October, September, May and March had 846, 572, 401, 321, 235 and 229 barrels of spill, respectively. Interestingly, in 2019, February also recorded the highest spill with 9,148 barrels, followed by June with 6,404 barrels, while January made the third position with 5,559 barrels. November, August, July, October and April had 4,113, 2,620, 1,978, 1,338 and 1,230, barrels, respectively, while September, March, May and December recorded 1,113, 1,015, 993 and 879 barrels, respectively.
Commercial vessel detained following oil spill in Hambantota – A commercial vessel has been detained following an oil spill in Hambantota. The cleanup operation of the minor oil spill at the Hambantota Port has been completed, the port authorities said. The minor oil spill occurred during bunkering at the Hambantota International Port (HIP). The oil has been successfully cleaned up by the Emergency Response Unit of the port. The oil spill occurred at approximately 6 pm on Sunday, 11th of July 2021 whilst a bunkering barge was refueling a commercial vessel that had called at the port. “Minimal chemicals were utilized in the cleaning operation, keeping the environment in mind by using ecofriendly means- including manual oil retrieval was carried out. This method took more time but it’s a more effective and thorough way of cleaning up smaller oil spills,” says Ravi Jayawickreme, CEO of Hambantota International Port Services. Meanwhile, the commercial vessel has been detained until costs incurred are accepted and settled by its owners.
Hydraulic oil spills in Melaka Straits after bulk carrier collides with containership | Hellenic Shipping News – The Panamax bulk carrier Galapagos has spilled hydraulic oil in the Melaka Straits after colliding with the 15,000 Teu mega container ship Zephyr Lumos over the weekend, Malaysia’s maritime authority said July 12. “A team each is onboard the two ships and investigating the matter and, based on the information, there was a thin sheen of oil spill from the hydraulic crane on the Galapagos,” a senior executive at Malaysia’s Marine Department told S&P Global Platts. There has been no spill of bunker fuel, and the hydraulic oil leakage that was within a 50- to 100-meter radius of the ship has mostly evaporated, the executive added. Preliminary investigations show that the 2010-built and Malta-flagged Galapagos experienced a steering gear failure and suddenly turned swiftly after losing control, the senior executive said. The marine gasoil or MGO in the Galapagos has been transferred to another tank space, the marine department said in a statement. The part of the ship that is open as a result of the breach does not store MGO and the oil spilled into the sea is hydraulic oil, the department added. The collision resulted in both ships being dragged together for a short distance before coming to a halt, it said. The Malaysian executive said that the 2021-built, Zodiac Maritime’s UK-flagged Zephyr Lumos was overtaking the Galapagos and, after the Panamax bulk carrier lost control, the container ship hit it on the starboard side from behind. The Zephyr Lumos was asked to anchor outside the traffic separation scheme or TSS in the straits; its destination is Suez from Singapore. The Galapagos is anchored near the collision site; it had been en route to India’s Vizag port. The Straits of Melaka is one of the world’s busiest waterways, with a ship moving through every few minutes and daily cargo movement worth billions of dollars.
Oil Spill After Containership and Bulk Carrier Collide in Strait of Malacca – A containership and a bulk carrier collided early Sunday in the Strait of Malacca, causing major damage and resulting in an oil spill. The Malaysian Coast guard reports that the containership MV Zephyr Lumos and bulk carrier MV Galapagos collided at 14.1 nautical miles southwest of Kuala Sungai just after midnight. The agency said the Galapagos reportedly suffered a rudder failure that resulted in the ship crossing in from of the Zephyr Lumos. Photos published by the Coast Guard show an oil spill from the breached hull of the Galapagos. Zephyr Lumos is a new 2021-built containership registered in the United Kingdom. It measures 366-meters-long and 15,000 TEU capacity. AIS ship tracking shows it is underway from Singapore to the Suez Canal. MV Galapagos, registered in Malta, measures 225-meters-long and is 76,000 DWT. It was built in 2010. AIS shows it is sailing from Gladstone, Australia to Visakhapatnam, India. The cause of the accident is under investigation. Some photos published by the Malaysian Coast Guard are below:
OPEC+ deadlock is bad news for oil producers, consumers and energy transitions, IEA warns – The International Energy Agency on Tuesday warned that world oil markets are likely to remain volatile following a breakdown in talks between OPEC members and their non-OPEC allies, creating a no-win situation. In its latest monthly oil market report, the IEA said energy market participants were closely monitoring the prospect of a deepening supply deficit if a deal was not reached by the Organization of the Petroleum Exporting Countries and its oil-producing allies, a group known as OPEC+. “Oil markets are likely to remain volatile until there is clarity on OPEC+ production policy. And volatility does not help ensure orderly and secure energy transitions – nor is it in the interest of either producers or consumers,” the IEA said. OPEC+ abandoned talks last week that would have boosted oil supply. Most delegates tentatively agreed to increase oil production by around 400,000 barrels per day in monthly installments from August until the remaining supply cuts were unwound. This was likely to extend supply cuts through to the end of 2022. The UAE rejected these plans, however, insisting on a higher baseline from which cuts are calculated to better reflect its increased capacity. It means no agreement has been reached on a possible increase in crude production beyond the end of July, leaving oil markets in a state of limbo just as global fuel demand recovers from the ongoing coronavirus crisis. OPEC+, which is dominated by Middle East crude producers, agreed to implement massive crude production cuts last year in an effort to support oil prices when the coronavirus pandemic coincided with a historic fuel demand shock. The energy alliance has since met monthly to try to decide on the next phase of production policy. OPEC+ has not made progress in resolving the dispute between OPEC kingpin Saudi Arabia and the UAE, Reuters reported on Tuesday, citing unnamed OPEC+ sources. It makes the prospect of another policy meeting this week less likely. The IEA said it expects global oil demand to rise by 5.4 million barrels per day this year and by a further 3 million barrels in 2022, largely unchanged from last month’s forecast. Meanwhile, the “remote” possibility of a market share battle between producers is hanging over energy markets, the IEA said, warning that higher fuel prices and rising inflation could damage a fragile economic recovery. The uncertainty over the potential global impact of the highly transmissible Covid-19 delta variant was also likely to temper market sentiment in the coming months, the group said.
Oil prices slip as economic worries offset tightening supplies – Crude futures slipped on Monday as concerns over slowing global growth outweighed the prospect of tightening supply after talks among key producers to raise output in coming months stalled. Brent crude for September fell 0.52% to settle at $75.16 per barrel while U.S. West Texas Intermediate crude for August settled at $74.10 a barrel, for a loss of 0.62%. Both benchmarks fell around 1% last week but still hover near highs last reached in October 2018. The spread of coronavirus variants and unequal access to vaccines threaten the global economic recovery, finance chiefs of the G20 large economies warned on Saturday. A Reuters tally of new COVID-19 infections shows them rising in 69 countries, with the daily rate pointing upwards since late-June and now hitting 478,000. “The market has been a bit negative as of late amid the growing sense that the latest OPEC+ impasse could be a precursor to a pump-and-grab scenario, meaning a lot more oil potentially gets put on the market,” said Stephen Brennock of oil broker PVM. Oil prices slumped last Tuesday after the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, did not reach an agreement to increase output from August. This was because the United Arab Emirates rejected a proposed eight-month extension to OPEC+ output curbs. The world’s top oil exporter Saudi Arabia met full contractual demand for crude oil from five buyers in August, but turned down at least two requests for additional volumes. Front-month WTI crude futures posted their sixth weekly gain last week after a bullish report from the U.S. Energy Information Administration showed U.S. crude and gasoline stocks fell while gasoline demand reached its highest since 2019. In response to higher oil prices, U.S. energy firms added oil and natural gas rigs for a second week in a row, data from Baker Hughes showed.
Oil Prices Settle Lower in Early Week Trading – — Oil dipped as traders grappled with the demand implications of a Covid-19 resurgence in several regions and slowing economic growth in China. Futures in New York fell 0.6% on Monday. New mobility restrictions have been introduced in parts of Japan, South Korea and Vietnam to curb the spread of the delta variant, clouding the demand outlook for oil. Confirmed Covid-19 cases in the U.S. soared 47% in the week ending Sunday, the largest weekly rise since April 2020. Meanwhile, China’s economic rebound is reported to have slowed. A stronger U.S. dollar also weighed on prices, making commodities priced in the currency less attractive. “As the Covid-19 variant continues to hit Asia hard, which is really the key swing demand center, that’s a big, big negative for the complex,” Rebounding fuel consumption in economies such as the U.S. and China has boosted oil prices this year amid tight global supplies. Now, the spread of the delta variant is threatening the demand recovery, while OPEC+ remains in a stalemate over near-term production. China’s growth eased in the second quarter to 8% from the record gain of 18.3% in the first quarter, according to a Bloomberg poll of economists. Retail sales and industrial production are expected to moderate, too. The delta variant continues to spread around the world. In Europe, officials in the U.K. and France are issuing warnings about new cases and reopenings. Anthony Fauci, the top U.S. infectious disease specialist, said “ideological rigidity” is preventing people from getting Covid-19 shots and voiced frustration at the struggle to boost vaccination rates in parts of the country. West Texas Intermediate for August delivery lost 46 cents to settle at $74.10 a barrel on the New York Mercantile Exchange. Brent for September settlement slid 39 cents to end the session at $75.16 a barrel on the ICE Futures Europe exchange. On the supply side, OPEC and its allies have been unable to agree on an output increase, creating swings in the market and pushing crude to its first weekly loss since May last week. The OPEC+ alliance abandoned meetings last week after a dispute between members over production cuts, and one week later, no deal is in sight.
Oil Rises Nearly 2% As Investors Size Up Tight Market – Oil prices gained almost 2 percent on Tuesday after the International Energy Agency said the market should expect tighter supply for now due to disagreements among major producers over how much additional crude to ship worldwide. The market has been generally stronger as demand has rebounded and the Organization of the Petroleum Exporting Countries and their allies have held millions of barrels of supply from the market. OPEC+, as the group is known, was expected to boost supply, but discussions broke off without an agreement. Brent crude rose $1.33, or 1.8 percent, to settle at $76.49 a barrel, while US West Texas Intermediate crude rose $1.15, or 1.6 percent, to settle at $75.25 a barrel. The Paris-based IEA said global storage drawdowns in the third quarter were set to be the biggest in at least a decade, citing early June stock draws from the United States, Europe and Japan. “You’re still not going to have enough crude oil on the market to avoid a supply deficit by the end of the year. That was definitely a tailwind for the market,” said Bob Yawger, director of energy futures at Mizuho. Oil prices will be volatile, the IEA said, until differences are resolved among members of OPEC+. The group has been unwinding record output curbs agreed last year to cope with the pandemic. But a dispute over policy between Saudi Arabia and the United Arab Emirates put plans to pump more oil on hold. Nuclear talks between world powers and Iran are not likely to resume until after the Islamic Republic installs its new president next month, restricting another potential source of supply. Industry data on US stockpiles on Tuesday showed that oil and gasoline inventories fell last week, according to two market sources, citing American Petroleum Institute figures. Crude stocks fell by 4.1 million barrels for the week ended July 9, the sources said, which would be their eighth consecutive weekly decline. US government data is expected on Wednesday. Still, coronavirus infections are surging in some parts of the world, which could sap demand if outbreaks become more pronounced. The World Health Organization warned the Delta COVID-19 variant was becoming dominant and many countries had yet to receive enough doses of vaccine to secure their health workers.
WTI Slides From 33-Month Highs After Inventory Data – Despite ongoing uncertainty over US-Iran talks (supply increase), Delta variant fears (demand concerns) and Saudi-UAE (OPEC+) malarkey (cartel breakup fears), oil prices managed gains on the day (to 33-month highs) as IEA said global storage drawdowns in the third quarter were set to be the biggest in at least a decade, citing early June stock draws from the United States, Europe and Japan. “You’re still not going to have enough crude oil on the market to avoid a supply deficit by the end of the year. That was definitely a tailwind for the market,” said Bob Yawger, director of energy futures at Mizuho. Will inventory data provide support for today’s rebound? API:
- Crude -4.079mm (-4.4mm exp)
- Cushing -1.585mm
- Gasoline -1.545mm
- Distillates +3.699mm
Analysts expected an 8th straight week of drawdowns in crude stocks but the draw was smaller than expected and less than the prior week. Gasoline stocks also dropped again but far less than last week. Distillates stocks unexpectedly rose…
OPEC reportedly reaches compromise on oil production after dispute with UAE – The Organization of Petroleum Exporting Countries on Wednesday arrived at a deal after a nearly two-week standoff over its future oil production levels, according to reports by the Wall Street Journal and Reuters. The temporary but unprecedented gridlock that began in early July saw the United Arab Emirates reject a coordinated oil production plan for the group spearheaded by its kingpin, Saudi Arabia.Abu Dhabi had demanded that its own “baseline” for crude production – the maximum volume it’s recognized by OPEC as being able to produce – be raised because this figure then determines the size of production cuts and quotas it must follow as per the group’s output agreements. Members cut the same percentage from their baseline, so having a higher baseline would allow the UAE a greater production quota.The UAE initially called for its baseline to be raised from 3.2 million barrels a day to 3.8 million barrels a day. According to sources cited by the Wall Street Journal, the compromise reached between Saudi Arabia and its smaller neighbor will raise the UAE’s baseline to 3.65 million barrels per day from April 2022. The reports have not been officially confirmed, and OPEC and the Saudi energy ministry did not reply to CNBC requests for comment.The initial agreement supported by most OPEC delegates set out a plan for the group to collectively bring production up to 400,000 barrels of crude per day monthly through to the end of 2022. This would end the remaining limits that were set in the spring of 2020, as economic recovery and growing demand for oil have brought crude prices up to their highest level since late 2018.
UAE Denies Reports That OPEC+ Deal Has Been Reached, Oil Slides – Oil algos are unsure what to make of the latest headlines for now as Bloomberg reports that UAE has resolved its standoff with OPEC and agreed on a new higher baseline production level of 3.65m b/d (versus the UAE’s prior 3.16m b/d output level). Additionally, the OPEC+ deal is to be extended until the end of 2022 (vs the original April 2022), according to a source. Reminder, OPEC+ talks were postponed early July after the UAE dissented on OPEC’s August proposal, prompting some concerns over the future of OPEC, especially as reports were doing the rounds that the UAE was mulling a unilateral increase in production.. WTI tested up to to $75 and tumbled down to $74 on the headline, then rebounded rapidly back up to test $75 again… Update (1000ET): Not so fast! Reuters is reporting that the UAE Energy Minister has confirmed that no agreement has been reached yet with OPEC+ and that deliberations continue. And that headline removed all the earlier gains from oil prices…
WTI Extends Losses After (Delayed) Inventory Data – After tagging 33-month highs yesterday, oil prices have been chaotic overnight as API inventory data mixed with reports and denials from UAE/OPEC+ over a deal have left WTI lower so far. However, even if a deal is done, timing will remain an issue.“Even if OPEC decides to raise output in August, that crude will not reach refineries until after the August peak-demand period will be over,” Ed Morse, head of commodities research at Citigroup Inc., said in an email.The next $1 one way or the other may be driven by the official inventory data, as industry watchers would consider API’s report of a nearly 5m bbl build in diesel bearish, if the U.S. government confirms it. DOE
- Crude -7.897mm (-4.4mm exp)
- Cushing +1.04mm
- Gasoline -2.489mm
- Distillates +3.657mm
Expectations for an 8th straight week of crude draws were met with a bigger than expected 7.897mm drop in stocks. US gasoline demand is back at its highest since Oct 2019 and back above its 5y average for this time of year (and last week we saw seasonal demand for petroleum products reach a high in data going back three decades)…
Oil Prices Falter with USA Fuel Build – — Oil’s rally fizzled as a build in U.S. fuel inventories and a potential OPEC+ agreement to increase supply cooled a buying spree that had pushed the market above $75. Futures in New York fell 2.8%, the most since May. Both gasoline and distillate inventories rose last week, according to a U.S. government report. Meanwhile, Saudi Arabia and the United Arab Emirates were said to resolve the standoff that has prevented OPEC+ from satisfying growing demand for extra barrels. Technical indicators also showed crude close to overbought territory earlier Wednesday, which signals oil may be due for a pullback. With the prospect of more supply from OPEC+ and crude nearing overbought levels, “it’s not surprising to see it down,” said Tariq Zahir, managing member of the global macro program at Tyche Capital Advisors LLC. Economic recovery in countries like the U.S. and China has increased fuel consumption over the course of this year, propelling oil prices forward by more than 50%. Rising demand, especially during the peak summer travel season in the U.S., drew warnings about a deepening supply deficit after OPEC+ talks on a production hike broke down earlier this month. The latest breakthrough proposal involves a higher output quota for the UAE, which said OPEC+ talks are ongoing. It would need to be approved by all OPEC+ members before it can take effect. If the compromise is ratified at a new meeting, it could open the way to higher output, although some members have already locked in most of their supply volumes for August. The 23-nation coalition is aiming to restore supplies in installments of 400,000 barrels a day through to late 2022. The impasse introduced volatility in the market over the last week while near-term supply remained in question. In addition to gasoline, a boom in durable goods is driving demand for naphtha to make plastics as well as diesel to power deliveries. Domestic crude supplies tumbled for the eighth straight week, according to the weekly report. Inventories at the nation’s largest storage hub in Cushing, Oklahoma, fell by 1.6 million barrels.
Oil slides 2% on oversupply fears after OPEC wrangles an agreement – Oil prices dropped more than 2% Wednesday after major global oil producers came to a compromise about supply and after U.S. data showed demand slacked off a bit in the most recent week. Crude prices have surged to highs not seen in nearly three years, but have been choppy lately on worries about a pickup in supply. Brent crude settled down $1.73 a barrel, or 2.26%, at $74.76 a barrel. West Texas Intermediate was off by $2.12, or 2.82%, at $73.13 a barrel. Brent crude’s premium to West Texas Intermediate futures widened to the most since July 6, according to Refinitiv Eikon data. The U.S. benchmark fell more precipitously due to demand concerns. Oil initially dropped after Reuters reported Saudi Arabia and the United Arab Emirates reached a compromise that should unlock an OPEC+ deal to boost global oil supplies as the world recovers from the coronavirus pandemic. The benchmarks fell more after U.S. government data showed implied gasoline demand declining considerably last week. While the U.S. Energy Information Administration said crude stockpiles declined more than expected, in their eighth consecutive draw, the drawdown was overshadowed by lagging gasoline demand. “The significant decline in gasoline and diesel demand has pressured prices, even though crude oil inventories have continued to draw,” U.S. fuel stocks were higher, even as refinery runs eased. Gasoline stocks rose by 1 million barrels, compared with expectations for a 1.8 million-barrel drop. The Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, had been at loggerheads over increasing supply due to demands from the United Arab Emirates that its contribution to supply cuts be calculated from a higher production level. The agreement should now pave the way for OPEC+ members to extend a deal to curb output until the end of 2022, the sources added, although the UAE energy ministry said in a statement that no deal with OPEC+ on its baseline has been reached and deliberations were continuing. Also adding to a potential supply glut is crude from Iran, . For the market balance, two critical are the timing of a deal between Iran and Western powers, which could lead to increased oil exports, and supply coming from the U.S..
Goldman Sees Oil Price Spiking On UAE/OPEC+ Deal -Oil suffered its biggest drop in 2.5 months today after the EIA reported that in the latest week, gasoline demand in the US unexpectedly tumbled by 760,000 barrels a day from the record 10 million barrels a day a week, to 9.28 million barrels a day to get back to levels in late June. While algos focused on the sharp drop, what they ignored was that the number was largely meaningless, since the reporting week included July 5, a day off for Americans. Additionally, the EIA’s estimate, known as product supplied, is derived from other data rather than being a direct measurement of consumption. Since that method often leads to erratic numbers, some observers prefer to use the 4-week rolling average. That measure was 9.485 million barrels a day, which was about equal to the same week in 2019 None of that mattered, however, as CTAs quickly joined in the selling frenzy and completely erasing the earlier jump on the far more important news of an OPEC+ deal. Just how important was the Reuters report that the UAE and Saudi Arabia are close to reaching a production agreement, one which sees both the higher baseline requested by the UAE (of 3.65 mb/d starting in April 2022) as well as an extension of the output agreement requested by Saudi (through December 2022). Important enough that in a note released late on Wednesday, Goldman said that the deal would remove the low-probability tail risks of potential price war, and “represents $2 to $4/bbl upside risk to our $80/bbl summer and $75/bbl 2022 Brent price forecasts.” In the note from Goldman commodity analysts Damien Courvalin and Jeff Currie, the two also write that the expected agreement “as the first of likely four potential bullish supply catalysts over the coming month” that would more than offset higher North American production. Additionally, although some OPEC+ details remain uncertain, like August and September quotas or baselines of other countries, “these are of limited magnitude and importance to the global oil market outlook, which the bank continues to see as supportive of higher oil prices” Piling on the bullish cash, Courvalin writes that an OPEC+ deal that offers a higher baseline for the UAE, as well as an extension of output agreement through December 2022 – such as the one being contemplated – would be bullish relative to Goldman’s base case.
Oil Prices Fall Amid Stronger Greenback and OPEC+ Uncertainty –— Oil slid to a four-week low Thursday as the dollar strengthened and on OPEC+’s signal it may raise output soon. Futures in New York slid 2% on Thursday with a rising U.S. dollar reducing the appeal of commodities priced in the currency. Traders are watching to see whether the OPEC+ alliance sets a date to formalize a deal to hike production after delegates said Wednesday the United Arab Emirates made significant progress in resolving its standoff with Saudi Arabia. In the U.S., an inventory report this week showing expanding fuel supplies and crude production also weighed on prices. “The market is still continuing to assess the fundamentals like what the OPEC+ deal is going to mean,” It “looks like the group is coming to an agreement, but there is lots of uncertainty over how it will be executed.” Crude has rallied nearly 50% this year as economies across the globe reopen and demand returns. Citigroup Inc. said the oil market is expected to be tight in the near-term and should push Brent prices into the mid-$80s, despite any compromise supply deal between the UAE and OPEC+. The Organization of Petroleum Exporting Countries published its first detailed assessment of 2022, in which it forecast that global oil demand will steadily recover to surpass pre-pandemic levels in the second half of next year. However, it also pointed to a lull in the first quarter. West Texas Intermediate for August declined $1.48 to settle at $71.65 a barrel on the New York Mercantile Exchange. The prompt spread ended the session at 27 cents a barrel, the narrowest in four weeks. Brent for September settled $1.29 lower at $73.47 on the ICE Futures Europe exchange. WTI’s prompt timespread weakened to its narrowest level since mid-June with U.S. government data shows domestic crude production is rising. The spread’s backwardation — indicating tighter supplies — is fading with output currently at the highest since May 2020. There are also demand concerns with rising Covid-19 cases in Europe and Asia that may lower consumption expectations in the second half of this year.. Meanwhile, Saudi Arabia and the UAE appear to be closing in on an agreement to revise Abu Dhabi’s production quota, it would still need to be ratified by the whole group before they can salvage plans to revive halted supply. Goldman Sachs Group Inc. said an accord would be a “bullish catalyst,” and would help remove the low risk of a potential price war. The two sides haven’t fully resolved their differences and talks are ongoing. There are signs other members of the alliance have been inspired to air their own grievances, with Iraq now seeking a higher baseline for its cuts too.
Oil slumps on OPEC compromise expectations, COVID variant concerns Oil futures fell Thursday, extending a slump that began in the previous session after data showed a rise in U.S. fuel supplies and after reports said the United Arab Emirates and Saudi Arabia reached a compromise that would allow a further relaxation of output curbs beginning next month.Concerns that the spread of the delta coronavirus variant have also contributed to weakness in oil prices as the variant is leading to renewed lockdowns in some countries, particularly in Asia, dulling demand for energy.”We do feel the Delta variant is the biggest factor as Asia is having a real issue and Europe is problematic,” Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch. COVID cases are on the rise in the U.S. again also and this “could hamper oil demand in the days and weeks to come in parts of the country [where] vaccination levels are low,” he said. West Texas Intermediate crude for August delivery fell 89 cents, or 1.2%, to $72.24 a barrel on the New York Mercantile Exchange. September Brent crude , the global benchmark, was off 82 cents, or 1.1%, at $73.94 a barrel on ICE Futures Europe.Crude fell sharply Wednesday after reports (link) said the U.A.E. and Saudi Arabia had reached a compromise in their dispute over output cuts. The U.A.E., however, has said no deal has been reached with OPEC+ producers and that talks are ongoing and would need the support of other OPEC countries, according to various news reports (link).A meeting of OPEC and its allies — known as OPEC+ — ended earlier this month without an agreement on a proposed easing of output curbs after the U.A.E. insisted it should be allowed to raise the baseline dictating its output, putting it at odds with Saudi Arabia.”It is also unclear whether the UAE’s higher oil production would be set off against the planned increase in OPEC+ production, which would mean the other countries could raise their output by less, which they would hardly be willing to accept,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.”If not, the UAE’s increased output would be on top of the intended increase in OPEC+ production, which could ultimately lead to too much oil on the market,” he said.Traders will be watching to see if OPEC+ calls a meeting to ratify the reported compromise, said Robert Yawger, executive director of energy futures at Mizuho Securities.”All OPEC+ members will need to agree on the increase for it to become official OPEC+ policy. No meeting [means] no agreement,” he said.Weekly data from the U.S. Energy Information Administration released Wednesday (link) revealed that domestic crude supplies fell for an eighth week in a row, but implied demand for motor gasoline declined, leading to an increase in supplies of the fuel.In Thursday dealings, August gasoline fell by nearly 1.3% to $2.26 a gallon and August heating oil declined by 1.2% to $2.12 a gallon.Meanwhile, OPEC on Thursday forecast world oil demand to grow by 6 million barrels a day (link) in 2021, unchanged from its June projection, with total demand expected to average 96.6 million barrels a day.
Oil Futures Flat Amid OPEC+ Deal Chatter, Mixed Economic Data – Fading from intra-session highs, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Friday’s session little changed as mixed economic data in the United States pointed to accelerated inflation amid surging consumer spending. Renewed strength in the U.S. Dollar Index and risk-off sentiment across equity markets triggered additional pressure on the oil complex. U.S. retail sales — a measure of purchases at stores, restaurants and online — gained 0.6% in June, beating market expectations for a modest decrease compared to the previous month, the U.S. Census Bureau reported Friday morning. Last month’s surge in consumer spending would have been stronger if it excluded auto sales, which fell 2% from the previous month amid ongoing shortages of the key materials. High retail spending coincides with a faster-than-expected increase in consumer prices, which jumped 5.4% in June from a year earlier following a 5% increase in the prior month. There are growing signs that faster inflation has begun to take a toll on consumer sentiment in July, with University of Michigan’s gauge on year-ahead inflation expectations rising to the highest since 2008. Preliminary reading on consumer sentiment, meanwhile, dropped to the lowest since February at 80.8, compared with expectations for a monthly gain to 87.6.”Inflation has put added pressure on living standards, especially on lower- and middle-income households, and caused postponement of large discretionary purchases, especially among upper income households,” Richard Curtin, director of the survey, said in a statement.U.S. Federal Reserve Chairman Jerome Powell said during his testimony to the Senate Banking Committee on Thursday that inflation has risen to uncomfortably high levels but maintained that rising costs are transitory and tied to the economy’s reopening. U.S. Treasury Secretary Janet Yellen warned of several more months of rapid inflation before price pressures finally ease. U.S. equities declined and the dollar index gained modestly against the basket of foreign currencies, pressuring the front-month West Texas Intermediate futures into market-on-close trade. On the session, the NYMEX August WTI contract settled at $71.81 barrel (bbl), up 16 cents from the Thursday’s close, and the international crude benchmark Brent for September delivery added 0.12 cents for a $73.59 bbl settlement. Both crude benchmarks declined more than 2.5% on week. NYMEX August ULSD futures settled little changed at $2.1133 gallon, and the front-month NYMEX RBOB contact gained 0.33 cents to $2.2536 gallon.
Oil Has Worst Week in Months; UAE’s OPEC Deal Could Open ‘Can of Worms’ – New York-traded West Texas Intermediate crude, the benchmark for U.S. oil, settled up 35 cents, or 0.5%, at $72 per barrel. For the week though, WTI lost $2.56, or 3.4%. It was the largest weekly loss for U.S. crude since the week ended April 2. London-traded Brent, the global benchmark for oil, rose 12 cents, or 0.2%, to finish the session at $75.55. For the week, Brent lost $1.96, or 2.6%, for its sharpest weekly decline since the week to May 14. OPEC+ – which groups the 13 member Saudi-led Organization of the Petroleum Exporting Countries with 10 other oil producers led by Russia – had initially failed to agree on August production levels after the UAE sought a higher baseline for measuring its output cuts. News reports from the past couple of days, however, suggested that Saudi Arabia and the UAE have reached a compromise, paving the way for OPEC+ producers to end an uncertainty that had bogged down the market and prices for weeks. “All signs indicate that OPEC+ is heading for a potential compromise agreement that will allow the UAE to secure a baseline adjustment,” RBC Capital analysts said in a note. “Other producers will undoubtedly seek similar treatment and potentially prolong the deliberations heading into the August ministerial meeting.” John Kilduff, founding partner at New York energy hedge fund Again Capital, concurred with that view. “This certainly opens a can of worms where OPEC production is concerned,” said Kilduff. “The Iraqis were already talking about wanting their baseline for production increased too.” “Unless the Saudis can point at the new Covid outbreaks from the Delta variant and say ‘hey, we should all keep our production down in order not to lose what we have gained’, I think oil prices will remain under pressure.” On the Covid front, vaccination rates are down and cases are on the rise, exacerbated by the more transmissible Delta variant — and an expert said earlier this week that the key to winning the race against the spread is getting more Americans vaccinated. “We’re losing time here. The Delta variant is spreading, people are dying, we can’t actually just wait for things to get more rational,” Dr. Francis Collins, director of the National Institutes of Health, said Wednesday. Vaccines have been available to most Americans for months, but still only 48.2% of the country is fully vaccinated, according to the U.S. Centers for Disease Control and Prevention — and the rate of new vaccinations is on the decline. Meanwhile, case rates have been going up dramatically. In 47 states, the rate of new cases in the past week are at least 10% higher than the previous week, according to data from Johns Hopkins University. Of those, 35 have seen increases of over 50%.
The Conflict Within OPEC Is Far From Over – As expected, OPEC leaders Saudi Arabia and UAE have reached a so-called solution to the current export quota conflict. For two weeks, the global oil market was shocked by the strong position taken by Abu Dhabi’s power brokers, which demanded higher baseline production quota. OPEC sources now have stated that both countries have reached a compromise on production.Even that the first reactions to the so-called agreement which includes a higher base line production level for the UAE are positive, the deal in reality is nothing more than a band aid. Officials in many oil importing nations are hoping that the agreement will help to cool soaring prices.Reuters reports indicate that Riyadh has agreed to Abu Dhabi’s request to have its baseline production level lifted to 3.65 million barrels per day (bpd) when the current pact expires in April 2022, according to the source. The current baseline for the UAE was around 3.17 million bpd. With this gesture, Riyadh looks to keep the current OPEC+ agreement in place, while giving room to Abu Dhabi in order to claim a potential win-win situation. However, the higher production baseline will only be implemented in April 2022, and is a long way from the requested 3.8 million bpd at present. Knowing both sides, the first reactions will be positive, indicating a renewal of the Riyadh-Abu Dhabi-Moscow tandem, showing the market that OPEC is not heading towards a possible breakdown or implosion. It also shows that analysts that were expecting Abu Dhabi to leave OPEC were too quick to draw conclusions. Still, the unease about production quota may persist in the UAE, and the conflict could flare up again at the next OPEC+ meeting. The high-profile clash between Saudi Crown Prince Mohammed bin Salman and Abu Dhabi Crown Prince Mohammed bin Zayed is not over, instead, it’s just been pushed aside for the moment being. For both parties, a more volatile oil (and gas) market is not the goal, as both pursue a stable situation where prices stay at a level that is acceptable for both producers and consumers.OPEC also wants to continue the overall strong cooperation of the last years, as non-OPEC, especially Russia and FSU countries are starting to become unhappy about production and export levels. Russian companies are for sure willing to up the ante, bringing additional volumes to the market to reap the gains at present. Some other OPEC producers, including Iraq are also unhappy about missing out on higher revenues or market share due to OPEC policies. Battling COVID-19’s economic impact, high unemployment, and the ongoing threat of energy-transition polices in the EU and OECD, a growing amount of countries want accelerate the monetization of their hydrocarbon resources. The UAE-Saudi spat is only a sign on the wall of future problems within the cartel. Whatever analysts were stating, MBS and MBZ are maybe competing on lots of issues, but oil and gas are still a binding factor for decision making and cooperation. Saudi Arabia also knows that Abu Dhabi’s continues to invest in increasing its production capacity, which it aims to boost to around 5 million bpd by 2030.
US Waives Sanctions On Frozen Iranian Oil Funds -The United States has decided to temporarily waive sanctions on Iranian oil funds abroad but without returning Tehran’s access to its bank accounts in Japan and South Korea. “Allowing these funds to be used to repay exporters in these jurisdictions will make those entities whole with respect to the goods and services they exported to Iran, address a recurring irritant in important bilateral relationships, and decrease Iran’s foreign reserves,” the waiver, which the Department of State presented to Congress, said, as quoted by Iran’s Mehr news agency.This means the government in Tehran will be unable to withdraw the funds but can use them to pay accounts outstanding to South Korean and Japanese exporters. In fact, the money cannot be transferred to Iran at all, the State Department said.“The secretary of state previously signed a waiver to allow funds held in restricted Iranian accounts in Japan and Korea to be used to pay back Japanese and Korean companies that exported non-sanctioned items to Iran,” a State Department spokesperson said as quoted by Mehr.“These repayment transactions can sometimes be time-consuming, and the secretary extended the waivers for another 90 days.”The sanction talks between the U.S. and Iran have stalled lately as the government in Iran changed, with the new president known as a hardliner unlike his predecessor Hassan Rouhani who was hailed as a reformer when he came into power.
Russia Warns Pentagon: Don’t Deploy Troops In Central Asia Near Afghanistan Amid the continuing full US troop draw down from Afghanistan, which last week President Biden said would be ‘complete’ by August 31st, the Pentagon has been debating how to maintain a foothold in Central Asia as it increasingly looks like Kabul will come under Taliban threat within a mere months. Last month in an interview with Axios’ Jonathan Swan, Pakistan’s prime minister Imran Khan slammed the door shut on allowing the CIA or US special forces to conduct cross-border counterterrorism missions against a resurgent Al-Qaeda, ISIS or the Taliban. Given Washington’s scrambling to establish other outposts in countries neighboring Afghanistan,Russia is now warning against such an expanded Central Asian US military presence. On Tuesday Russia’s foreign ministry put the US on notice, warning that the possibility of a US “permanent military presence” in countries neighboring Afghanistan is “unacceptable”. The comments by Russian Deputy Foreign Minister Sergei Ryabkov further stated: “We told the Americans in a direct and straightforward way that it would change a lot of things not only in our perceptions of what’s going on in that important region, but also in our relations with the United States.”Crucially Moscow also warned Central Asian countries, especially its allies, against hosting US troops connected to events in Afghanistan.”We cautioned them against such steps, and we also have had a frank talk on the subject with our Central Asian allies, neighbors and friends and also other countries in the region that would be directly affected,” Ryabkov said further.
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