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blumenkraft

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Re: Oil and Gas Issues
« Reply #3850 on: June 18, 2020, 05:17:57 PM »
More than 100 million cubic meters of sea bottom is removed from this Arctic bay to make way for grand natural gas project
Researchers believe Novatek's dredging in the Gulf of Ob might ruin local ecosystems and eliminate local fish stocks.


Link >> https://thebarentsobserver.com/en/ecology-industry-and-energy/2020/06/more-100-million-cubic-meters-sea-bottom-are-removed-arctic-bay
“I’m an introvert. I’m just different that’s all. I’m so sorry. I don’t have a gun. I don’t do that stuff... All I was trying to do was to become better. I’ll do it... You all are phenomenal. You are beautiful. And I love you. Try to forgive me. I’m sorry.”

Elijah McClain

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3851 on: June 19, 2020, 10:20:04 PM »
The weekly oil and gas rig count continues to decline in the US and Canada.  US oil production is plummeting.

https://oilprice.com/Energy/Crude-Oil/Rig-Count-Plunges-For-The-Fifteenth-Straight-Week.html

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ig Count Plunges For The Fifteenth Straight Week
By Julianne Geiger - Jun 19, 2020, 12:07 PM CDT

- Baker Hughes reported on Friday that the number of oil and gas rigs in the US fell again this week, by 13, to 266.
- Canada’s overall rig count fell this week by 4 to just 17 active rigs. Oil and gas rigs in Canada are now down 102 year on year.

Baker Hughes reported on Friday that the number of oil and gas rigs in the US fell again this week, by 13, to 266, suggesting that the slide in the number of active rigs is not yet over.

The total oil and gas rigs is now sitting at 701 fewer than this time last year.

The number of active rigs in the United States has continued to decline over the last fifteen weeks.

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The significant fall in the rig count over the last couple of months is also reflected in the steady decline of EIA’s estimate for oil production in the United States, which fell again this week to 10.5 million barrels of oil per day on average for week ending June 12, which is 2.6 million bpd off the all-time high and a staggering 600,000 bpd lower than the week prior. It is the eleventh straight weekly production decline.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3852 on: June 19, 2020, 10:28:18 PM »
The decline in rig counts mean that US oil production wont recover until mid-2021 at the earliest, assuming that the rig counts strart to increase again.

https://oilprice.com/Energy/Crude-Oil/US-Oil-Dominance-Is-Coming-To-An-End.html

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U.S. Oil Dominance Is Coming To An End
By Arthur Berman - Jun 18, 2020

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Rig count is a good way to predict future oil production as long as the proper leads and lags are incorporated.

It takes several months between an upward price signal and a signed contract for a drilling rig. It takes another 9-12 months from starting a well to first production for tight oil wells. With pad drilling, usually all wells on the pad must be drilled before bringing in a crew to frack the wells.

Tight oil horizontal production reached 7.28 mmb/d in November 2019 when the lagged rig count was 613 (Figure 2). That corresponded to 12.9 mmb/d of U.S. oil production—tight oil is about 55% of total output. Approximately 600 rigs are needed to maintain 7 mmb/d of tight oil and 12.5 mmb/d of U.S. production.

The horizontal rig count is now 165 so it is unavoidable that production will fall. The considerable lags and leads mean that production decline cannot be expected to reverse until well into 2021 assuming that it starts to increase immediately. That won’t happen because of constrained budgets and low oil prices.

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With the storage crisis now apparently averted and with somewhat higher oil prices, most tight oil wells are being re-activated. Production should increase until all shut-in wells are back on line and then, it will resume its decline.

Based on rig count analysis, U.S. oil production will probably be about 8 mmb/d by mid-2021 or more than 4 mmb/d less than peak November 2019 levels.

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And that’s why it’s critical to keep 500 or 600 rigs drilling all the time—to replace the 30% of output lost every year to depletion.

Production can be turned off and on as it was in May and June. Production cannot be increased without adding rigs and drilling new wells. Assuming there was infinite capital available to add rigs and drill wells, it would take several years to increase rig count to levels needed to maintain 2019 output levels.


BeeKnees

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Re: Oil and Gas Issues
« Reply #3853 on: June 19, 2020, 10:55:45 PM »
The decline in rig counts mean that US oil production wont recover until mid-2021 at the earliest, assuming that the rig counts strart to increase again.

https://oilprice.com/Energy/Crude-Oil/US-Oil-Dominance-Is-Coming-To-An-End.html


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It has nothing to do with the lack of shale profitability or other silly memes cited by people who don’t understand energy.

How does that work?

Surely the low rig count is because many have become unprofitable.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3854 on: June 19, 2020, 11:06:23 PM »
^^^

Not sure where your second quote came from, but the lack of profitability is the issue.  (I see that it's from the first paragraph of the article that I linked to.  I'm not the author of that piece.)

Here's the full quote of that paragraph:

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U.S. energy dominance is over. Output is probably going to drop by 50% over the next year and nothing can be done about it. It has nothing to do with the lack of shale profitability or other silly memes cited by people who don’t understand energy.
 

The author may be exaggerating to make a point about the lag times involved in drilling and fracking new wells.  Even if it became profitable to drill new wells due to higher oil prices soon, it takes so long to bring the new wells online that production will continue to decline for awhile.

The US shale industry had cash flow problems before the Covid demand destruction hit.  Investors were already turning to more profitable investments (like wind and solar) because fracked oil requires constant investment in new wells to maintain production.  So I'm with BeeKnees on this, lack of profitability is the main issue for US frackers.
« Last Edit: June 19, 2020, 11:14:34 PM by Ken Feldman »

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3855 on: June 22, 2020, 08:49:30 PM »
Much of the growth in China the past two decades has been debt driven.  With the low oil prices and demand destruction, Chinese oil companies are defaulting on their debt.

https://oilprice.com/Energy/Crude-Oil/Chinas-Oil-Industry-Is-In-Crisis.html

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China’s Oil Industry Is In Crisis
By Tsvetana Paraskova - Jun 22, 2020

Another Chinese oil firm has defaulted on a dollar-denominated bond, bringing the total value of defaults in all sectors of China’s offshore bond market to US$4 billion so far this year, more than double the value of defaults in the same period last year, Bloomberg estimates.

Oil equipment and oil services company Hilong Holding said on Monday that it is defaulting on a US$165-million bond after an insufficient percentage of noteholders had agreed to swap the notes with new debt. The minimum acceptable level of noteholders to agree to the debt exchange offer was 80 percent, while just 63.45 percent had agreed to tender notes for the exchange offer.

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The low oil prices and the economic slowdown from the COVID-19 pandemic have hit the finances of Chinese companies, including such in the oil industry, and defaults in its so-called offshore bond market have accelerated in recent months.

Last month, Hong Kong-listed oil exploration firm MIE Holdings Corporation defaulted on a dollar-denominated bond, becoming the first victim from the oil sector in China’s offshore bond market. Independent oil refiner Shandong Qingyuan Group later also failed to pay a principal installment of a US$1-billion loan. 

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3856 on: June 22, 2020, 09:56:52 PM »
Around 1/3 of the US shale producers are insolvent according to Deloitte, a large financial consulting firm.

https://www.worldoil.com/news/2020/6/22/deloitte-reports-continued-strain-for-shale-producers-even-as-oil-prices-rise

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Deloitte reports continued strain for shale producers, even as oil prices rise
By Kevin Crowley on 6/22/2020

HOUSTON (Bloomberg) --Almost a third of U.S. shale producers are technically insolvent with crude at $35 a barrel, according to Deloitte LLP, highlighting the industry’s acute financial strain even as oil prices rebound from a record low earlier this year.

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Shale was just getting on a more solid footing and learning to live with $50 a barrel oil before the Covid-19 pandemic ripped through global crude demand causing prices to plunge. Now, shale producers may be forced to write down their assets by $300 billion this year, Deloitte said. That’s equivalent to the entire market value of Chevron Corp. and Royal Dutch Shell Plc, the world’s No. 2 and 3 major oil companies.

While the writedowns are non-cash items, they reduce the value of a company’s equity and increase their debt-to-equity ratios, a key measure of indebtedness used by lenders. The shale industry’s leverage ratio would increase to 54% from 40% with the writedowns.

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Shale producers’ financial problems stem from a decade’s worth of huge production growth using new fracking technologies funded by massive borrowing and financing from Wall Street.

The production boom propelled the U.S. to become the world’s largest producer of both oil and gas. But in doing so, companies burned through some $342 billion of cash since 2010, leaving little in the way of returns for investors.

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Technical insolvency means a company’s discounted future value at a certain oil price is lower than their net liabilities. Whether or not a company actually files for Chapter 11 bankruptcy depends on breathing room and new credit provided by lenders.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3857 on: June 22, 2020, 10:01:26 PM »
Oil demand isn't expected to rebound to pre-Covid levels before 2022, if ever.

https://oilprice.com/Energy/Crude-Oil/Whats-Holding-Back-A-Full-Recovery-In-Oil-Demand.html

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What’s Holding Back A Full Recovery In Oil Demand
By Tsvetana Paraskova - Jun 21, 2020

Since oil demand started crashing amid lockdowns to contain the coronavirus, analysts have been trying to predict when demand will return to the pre-crisis levels, throwing in V, U, or L shaped forecasts. There is a growing consensus among major international forecasting agencies that a 'return to normal' oil demand will take longer than anticipated—probably until 2022. Many analysts believe that a V-shaped recovery for total global oil demand is not in the cards.   

While oil demand for road transportation is showing signs of recovery--especially in China, which exited lockdowns first--demand for jet fuel will continue to drag on global oil demand for at least another two years. Permanent changes in lifestyle and possible reduced commuting in developed economies (with work from home now the norm rather than the exception) could also weigh on oil demand. Then there's the recession with high unemployment rates and reduced manufacturing activity, which could also stall the recovery in oil demand.

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This year, demand is expected to drop by 8.1 million bpd, the biggest-ever decline, the IEA said in its latest Oil Market Report for June.

While the latest estimate is an improvement from the IEA's forecasts from April (9.3 million bpd drop) and May (8.6 million bpd slump), the first look into 2021 demand is not so encouraging.

Demand is set to recover by 5.7 million bpd next year, according to the IEA. This means that at 97.4 million bpd, global oil demand in 2021 will still be 2.4 million bpd below the 2019 level. Most of the 2.4 million bpd gap in demand between 2019 and 2021 would be due to "the dire situation of the aviation sector," the IEA said.

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Uncertainties about oil demand range from a second wave of COVID-19 infections to fewer people commuting to work either because they work from home or are out of work. Even if gasoline and diesel demand recovers soon, jet fuel demand will still take years to return to pre-crisis levels. The global recession is set to reduce industrial activities and fuel demand from the industry. Oil demand recovering to pre-pandemic levels will likely take more than a year and a half. The recovery will not be V-shaped, but it's so uncertain and could be so bumpy that no letter in the alphabet can describe it. 

Ken Feldman

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Re: Special Report: Millions of abandoned oil wells are leaking methane
« Reply #3858 on: June 22, 2020, 10:18:24 PM »
Special Report: Millions of abandoned oil wells are leaking methane, a climate menace

<Merged the post with this thread since it needs some policy and solutions. Kassy>

Here's an article about plugging abandoned oil and gas wells in the US.

https://www.eenews.net/stories/1063430105

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Should feds plug 'orphan' wells? States offer a warning
Mike Lee, E&E News reporterPublished: Monday, June 22, 2020

The article starts by describing the problems Ohio had in hiring contractors to plug abandoned wells two years ago.  The article fails to mention that most oil and gas service companies were busy drilling new wells; there are many idle firms that could bid on the work now.

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Ohio's experience could be a cautionary tale as Congress considers using federal stimulus funds to plug defunct aging oil and gas wells around the country. The idea is being promoted by Democrats and environmental groups as a way to provide jobs for oil field workers during the economic slump and also cut back on the pollution associated with aging wells (E&E Daily, June 2).

"In the face of economic headwinds for the oil industry, the number of orphan wells can only be expected to grow, which will be detrimental to workers, the environment and already budget-constrained states," Sen. Dianne Feinstein (D-Calif.) and Rep. Alan Lowenthal (D-Calif.) wrote in a letter to the Bureau of Land Management last week. That followed a statement from the New Mexico congressional delegation this month urging Congress to provide more funding on the issue.

State oil and gas regulators, who are most closely involved in tracking and fixing orphan wells, are generally receptive to the idea. The Interstate Oil and Gas Compact Commission, which serves as a trade group for state regulators, sent a letter to Congress this month asking lawmakers to consider spending some of any federal stimulus on orphan wells.

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Most states require companies to put up a bond guaranteeing that they'll cover the cost of plugging wells at the end of their productive life. But some Eastern states like Pennsylvania and Ohio were home to decades of production before the bonding rules went into place.

Even now, many states' bond amounts are inadequate anyway. Ohio allows companies to post a $15,000 bond to guarantee an unlimited number of wells. The state's average plugging cost last year was in excess of $100,000 per well.

That makes the idea of plugging wells with federal funds attractive, said Adam Peltz, a senior attorney with the Environmental Defense Fund. Federal money not only would supplement the states' limited resources, it would help reduce pollution and provide blue-collar jobs in largely rural areas.

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Ohio's oil and gas division found there were only 29 qualified contractors when the state first tried to expand its plugging program. After some work, the state now has a list of 52 contractors, Vendel said.

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Pennsylvania, where the first U.S. oil well was drilled in 1859, has as many as 560,000 orphan wells and spends about $400,000 annually on plugging.

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In North Dakota, the state Industrial Commission voted Friday to spend $33 million in funding from the federal Coronavirus Aid, Relief and Economic Security Act on plugging wells. The commission, led by Gov. Doug Burgum (R), approved the idea in part to keep oil workers from leaving the state.


rboyd

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Re: Oil and Gas Issues
« Reply #3859 on: June 22, 2020, 10:25:12 PM »
The oil and gas companies make their money then run, and the state (the people) end up having to spend the money cleaning up. Privatize profits, socialize costs - the great American (and Canadian) way.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3860 on: June 22, 2020, 11:43:30 PM »
^^^
Don't forget that the oil and gas companies spend a great deal of money lobbying their Congressional representatives for these subsidies.  They also pay people to write articles denigrating renewables and all of the subsidies the government gives the renewable sector.

In the meantime, they've received many orders of magnitude more subsidies, such as the lack of funding for cleaning up their mess, than the renewables sector has received.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3861 on: June 24, 2020, 01:04:25 AM »
Updated forecasts of natural gas production show large decreases from last year.

https://oilprice.com/Energy/Energy-General/Global-Gas-Production-Set-To-Tumble-In-2020.html

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Global Gas Production Set To Tumble In 2020
By Rystad Energy - Jun 23, 2020

The Covid-19 pandemic has landed a lasting blow to both oil and gas markets. Global oil production has absorbed the lion’s share of the impact, but natural gas output, which was previously set to grow, is also set to decline by 2.6 percent this year, Rystad Energy forecasts. Production of associated gas from oil fields will be hit most, losing some 5.5 percent compared to 2019 levels.

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Production from natural gas fields, which was initially expected to rise to 3,687 Bcm this year from 3,521 Bcm in 2019, is expected to reach 3,445 Bcm instead, recovering to 3,485 Bcm in 2021 and further to 3,551 Bcm in 2022.

gerontocrat

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Re: Oil and Gas Issues
« Reply #3862 on: June 24, 2020, 02:01:21 PM »
The natural gas production decline forecast by Rystad is merely a hiatus.

CO2 emissions need to drop by 7% per annum  to keep the sliver of hope for a limit to a 1.5 Celsius temperature increase alive.

I am sure that Solar, Wind, Batteries & EVs will increase greatly this decade.
I am also sure that the required 7% annual reduction in CO2 emissions will not be achieved, probably not even in 2020.
"Para a Causa do Povo a Luta Continua!"
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3863 on: June 24, 2020, 07:51:16 PM »
North Dakota will start plugging the wells abandoned due to the Covid demand destruction.

https://oilprice.com/Energy/Crude-Oil/North-Dakota-Oil-Income-Crashes-By-81.html

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North Dakota Oil Income Crashes By 81%
By Irina Slav - Jun 24, 2020

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Oil production in North Dakota shrunk by 15 percent between March and April and is expected to have shrunk even more in May. As of April 15, oil producers active in the state had idled as much as 35 percent of producing wells.

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Meanwhile, some wells have been abandoned, and producers will begin plugging them in July, the AP reported earlier this month. North Dakota will use some $66 million in federal aid to finance the operation, which will involve at least 239 wells and other sites. Following the plugging, plans are to reuse the land for agriculture or return it to its natural state.

rboyd

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Re: Oil and Gas Issues
« Reply #3864 on: June 25, 2020, 06:11:31 AM »
So lots of subsidies to help the oil and gas industry plug their wells .... the state just never stops giving if you are in oil and gas.

gerontocrat

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Re: Oil and Gas Issues
« Reply #3865 on: June 26, 2020, 10:25:10 PM »
https://www.eia.gov/totalenergy/data/monthly/

The USA IEA
did its monthly update yesterday, but still very much pre-covid19 and early covid19 data, apart from some petroleum (oil) data that is up to May.
The first graph shows monthly totals of the major fossil fuels analysed by heat content. NB. these are simple monthly totals, NOT 12 month trailing averages. For me the main points are..
- Natural Gas consumption in March did fall, but very much in the normal seasonal pattern,
- Petroleum products supplied dropped sharply in April, but with a partial recovery in May.
- Coal was king, and is now the beggar at the feast. We may hope that one result of covid is its accelerated decline.

The second graph is USA Primary energy consumption by source - the 12 month trailing average. Oil & Gas rule the roost. Crowing about coal plants shutting needs to be put into perspective.
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gerontocrat

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Re: Oil and Gas Issues
« Reply #3866 on: June 28, 2020, 12:14:04 AM »
Any of our US members living / working close to a railway line (or travel to work by train)?

https://www.ecori.org/renewable-energy/2020/6/26/lng-train-shipping-approved
Feds Green Light Use of Trains to Transport LNG
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President Trump has followed through on his pledge to allow trains to transport liquefied natural gas (LNG), a decision opposed by environmental groups and 15 states, including Rhode Island and Massachusetts.

The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) issued the final rule June 19. The regulation takes effect 30 days later.

Prior to the agency’s final decision, objections were raised via online comments from across the country. Washington Gov. Jay Inslee said the rule was illegal because it lacked required environmental and safety reviews.

“This proposed rule is rushed and ill-advised, and, if finalized, will pose a serious risk to public health and safety — not just in my state but nationwide,” Inslee said.

Others noted the health risks from a leak or fire, especially in densely populated urban areas. They accused PHMSA of rushing approval to benefit the domestic fracking industry.

“We must not be used as guinea pigs by this untested and high-consequence rush to grease the rails for special interests,” wrote Tamar Dick of Bethlehem, Pa.......

......Others noted the health risks from a leak or fire, especially in densely populated urban areas. They accused PHMSA of rushing approval to benefit the domestic fracking industry.

“We must not be used as guinea pigs by this untested and high-consequence rush to grease the rails for special interests,” wrote Tamar Dick of Bethlehem, Pa.

Dick noted that LNG volume expands significantly when released in the air and is “capable of a far-reaching catastrophe, including a fire too hot to extinguish.”

PHMSA argued in its decision that the rule change was necessary to address regional inadequacies in natural-gas pipeline infrastructure. The federal agency said more natural gas is needed to satisfy growing domestic and international markets.

Train transportation, the agency maintained, is less risky than shipping by highway. LNG is similar to other flammable, cryogenic liquids currently transported by rail. The rule requires the use of an existing class of tank cars, called DOT-113, that is refrigerated and protected with a double-pressure vessel design.

The National Transportation Safety Board (NTSB), however, has refuted some of PHMSA’s claims, saying a thorough safety assessment of the DOT-113 tank cars is needed because the colorless, odorless gas is easily ignitable and hard to detect.

“Specifically, an analysis should address fireballs, flash fire, and explosions from ground-level vapor clouds that may expand far beyond the point of release to an ignition source,” according to a letter signed by Robert L. Sumwalt III, chairman of the NTSB.

The NTSB also noted that many more LNG tank cars will be traveling by rail than projected by PHMSA. Without added safety equipment and testing certifications, there isn’t enough data proving LNG can be transported safely, according to the safety board. The NTSB said lower train speed limits should be mandated in high-risk urban areas, special braking is needed, and training required to detect leaks and gas accumulations.

“We believe the risks of catastrophic LNG releases in accidents is too great not to have operational controls in place before large blocks of tank cars and unit trains proliferate,” Sumwalt said.

Sumwalt noted that derailments of DOT-113 tank cars, although rare, can release larger quantities of hazardous material than a truck accident, and that federal regulators have a poor track record of responding to “fiery flammable-liquids accidents.”

The Pennsylvania Independent Oil & Gas Association argued that the refrigerated rail cars have been proven safe to transport flammable cryogenic liquids such as ethylene and hydrogen. Increasing transportation options, the trade group argued, would allow natural-gas producers to make more money selling the fossil fuel around the world.

In a 43-page letter sent earlier this year, attorneys general from 15 states called for safety studies and a full environmental impact report. They noted that LNG would travel through densely populated areas in trains of up to 100 tank cars, on the same rail line used by high-speed passenger trains.

The “finding of no significant impact” by PHMSA, according to the letter, is fundamentally flawed and failed to consider the expected greenhouse-gas emissions attributable to the extraction and use of natural gas and the potential harm to public safety and the environment from accidental releases of LNG.

The letter explained that, in the event of a spill, vaporization creates an extremely cold, gaseous vapor cloud that can embrittle steel, cause severe burns, damage infrastructure, and further complicate an emergency response.

The Surfrider Foundation has pointed to a government study that put the hazard range of such a vapor cloud at more than 1.5 miles.


Under the new rule, there are no limits placed on where LNG trains can travel. Instead, the rail companies must evaluate 27 safety and security risk factors when considering potential routes.
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longwalks1

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Re: Oil and Gas Issues
« Reply #3867 on: June 28, 2020, 03:58:34 PM »
Desmogblog.com has not posted anything on the LNG in the US yet.  I would expect them to cover it soon.  However in the past years they have really covered the shale and bitumen rail scene.  And as in so many aspects in our societies, rail maintenance is too sparse.  Making it worse the oil tankers are not weighed and often exceed the limit.  I have seen over 80 cars in a row in Winnipeg 3 years ago, but am not near a major rail line in northern Iowa at this time.    It is not just the weight, the length is supposedly tied to harmonics that degrade the rails and the beds.   Bolts are getting sheared off left and right.  Mix it in with a chlorine tanker ...   or your choice of  hazardous material.   

If you want someone to salute, it is the volunteer fire-fighters of Canada and the usOFa. 

vox_mundi

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Re: Oil and Gas Issues
« Reply #3868 on: June 29, 2020, 02:50:45 AM »
Chesapeake Energy, a Pioneer In the U.S. Shale Revolution, Files for Bankruptcy Protection
https://www.cnbc.com/amp/2020/06/28/chesapeake-energy-a-pioneer-in-the-us-shale-revolution-files-for-bankruptcy-protection.html

Chesapeake Energy, the poster child of the U.S. shale revolution, filed for bankruptcy protection on Sunday.

The move comes as the company and industry more broadly has been rocked by a drop in oil and gas prices amid the coronavirus pandemic.

The heavily indebted company has been in trouble for some time, and in May said that it had concerns regarding its long-term viability.

The company said that $7 billion in debt will be wiped out through the restructuring.

The company has secured $925 million in debtor-in-possession financing in order to continue operations during the bankruptcy process. In addition, Chesapeake has secured an agreement in principle from certain existing lenders for $2.5 billion in debt financing on emergence from bankruptcy, as well as a backstop commitment for $600 million in new equity.

Chesapeake's downturn is not unique. Whiting Petroleum is among the other once great drillers that couldn't survive a historic plunge in oil prices. The company filed for bankruptcy protection on April 1.

The company will continue operations at a much reduced capacity, with a handful of gas rigs and no oil rigs, according to those familiar with the company's plans.
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3869 on: June 29, 2020, 06:38:08 PM »
The natural gas glut has gotten so severe that buyers are paying to cancel deliveries and US producers are planning to shut-in production.

https://oilprice.com/Energy/Natural-Gas/Natural-Gas-Price-Plunge-Could-Soon-Lead-To-Shut-Ins.html

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Natural Gas Price Plunge Could Soon Lead To Shut-Ins
By Nick Cunningham - Jun 28, 2020

Natural gas prices plunged to new lows this week, falling below $1.50/MMBtu, a catastrophically low price for U.S. gas drillers.  The factors afflicting the gas market are multiple. Prices had already fallen below $2/MMBtu at the start of 2020, weighed down by oversupply. But it wasn’t a problem confined to the U.S. There was also a global glut of LNG due to a wave of capacity additions in 2019. 

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Buyers abroad are willing to pay a cancellation fee instead of receiving shipment from U.S. exporters, a sign of how badly the market has deteriorated. For August delivery, between 40 and 45 cargoes have been cancelled, nearly double the rate of cancellation in June.

Typically, cheaper gas can stimulate demand, particularly in the electric power sector. But that outlet is not as large as it may have been in the past, not least because gas has already been cheap for quite some time. Thus, the coal-to-gas option is limited. Without an export route, and without larger uptake from utilities, the gas glut has deepened.

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Worse, for American shale gas drillers, backed up LNG cargoes will exacerbate the glut within the United States. By the end of the summer, the volume of cancelled gas could add more than 760 billion cubic feet of gas to storage, according to Goldman Sachs.

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Still, others say the outlook is more negative, even in the medium-term. The pandemic, weaker demand and the shock to capital budgets make it unlikely that any additional North American LNG project goes forward in the next five years, according to S&P Global Platts Analytics.

vox_mundi

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Re: Oil and Gas Issues
« Reply #3870 on: June 30, 2020, 12:07:59 PM »
Oil Major Shell to Write Down Up to $22 Billion of Assets in Second Quarter
https://www.cnbc.com/amp/2020/06/30/shell-to-write-down-assets-worth-up-to-22-billion-in-q2.html

Shell said in a statement to investors that it had reviewed a significant portion of its business given the impact of the coronavirus pandemic and the "ongoing challenging commodity price environment."

It said it would take aggregate post-tax impairment charges in the range of $15 billion to $22 billion in the second quarter.

It comes after the energy company announced in mid-April an ambition to reduce greenhouse gas emissions to net zero by 2050.
“There are three classes of people: those who see. Those who see when they are shown. Those who do not see.” ― Leonardo da Vinci

Insensible before the wave so soon released by callous fate. Affected most, they understand the least, and understanding, when it comes, invariably arrives too late

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3871 on: July 03, 2020, 12:07:56 AM »
More important business consultants are declaring that oil demand has probably peaked and that the Covid recession will speed the energy transition.

https://oilprice.com/Energy/Crude-Oil/Moodys-Turns-Bearish-On-Oil-Demand-Growth.html

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Moody’s Turns Bearish On Oil Demand Growth
By Irina Slav - Jul 02, 2020

Billions of people spent the last few months in a lockdown of some form or another with travel bans or severe restrictions in place. Some warn that this will be our new normal. And this new normal could accelerate a shift away from hydrocarbons as the single most popular source of energy.

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As demand for oil falls, Moody’s said, slower economic growth, increased use of alternative fuels for transportation, electric vehicles, and better fuel efficiency will add their own weight on oil demand. And as new behavioral patterns become permanent, this weight on oil demand will also become permanent.

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But things may already be past the point of no return for oil. In fact, according to Boston Consulting Group, peak oil demand has been passed, and the coronavirus pandemic has only made this more obvious.

In a report, BCG noted how disproportionately hard oil and coal were hit in terms of demand, unlike renewable energy, the demand for which continued to grow throughout the lockdowns. Of course, a lot of the demand loss for oil was because of the virtual halting of global passenger air traffic—a sector where renewables are not yet a viable alternative to fossil fuels, so they could not be affected by events. But air transport was not the whole picture.

BCG, like Moody’s, cites the slow global economic recovery from the crisis as a fundamental factor in oil demand changes ahead. But it also notes the green recovery plans of governments and similar scenarios of international energy authorities. By modeling the impact of the pandemic on fossil fuel demand, BCG analysts revealed that the only scenarios where oil demand recovered to growth mode were the ones that featured no green recovery measures at all.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3872 on: July 03, 2020, 12:11:50 AM »
The oil rig count is still dropping, albeit more slowly than earlier in the recession.

https://oilprice.com/Energy/Crude-Oil/Oil-Rig-Count-Collapse-Beginning-To-Slow.html

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Oil Rig Count Collapse Beginning To Slow
By Julianne Geiger - Jul 02, 2020

Baker Hughes reported on Thursday that the number of oil and gas rigs in the US fell again this week, by 2, to 263, showing the second small loss in the number of active rigs in as many weeks after a long streak of major losses.

The total oil and gas rigs is now sitting at 700 fewer than this time last year.

The number of active oil and gas rigs in the United States has continued to decline over the last seventeen weeks.

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To compare active rigs with supply figures, the EIA’s estimate for oil production in the United States, which rose for the first time in eleven weeks for week ending June 19, held fast for the second week at 11 million barrels of oil per day for week ending June 26. Oil production in the United States is still 2.1 million bpd less than the all-time high for US production.

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Re: Oil and Gas Issues
« Reply #3873 on: July 06, 2020, 01:00:49 AM »
U.S. east coast

Dominion canceling controversial natural gas pipeline across Virginia
Jul 05, 2020
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Dominion Energy is pulling the plug on its controversial plan to build a natural gas pipeline crossing Virginia.

The decision comes in tandem with a major strategic shift out of the energy giant’s multi-billion-dollar investment in a gas transmission business with operations as far away as Wyoming.

Dominion wants to focus on its regulated electric and natural gas utilities and its push to net zero carbon emissions, chairman and chief executive officer Thomas Farrell said Sunday, announcing the $9.7 billion sale of the company’s gas pipeline operations to Warren Buffett’s Berkshire Hathaway investment company.

Describing the deal as a “narrowing of focus,” Farrell said it is “another significant step in our evolution as a company, allowing us to focus even more on fulfilling utility customer needs and positioning us for a bright and increasingly sustainable future.”
...
The gas companies been concerned for years about gas supplies — some large industrial and military customers in Hampton Roads have had gas supplies interrupted on the coldest winter days in the past half dozen years because there’s not been enough gas to go around. Those big customers get a price break for agreeing to allow their supplies to be cut.
...
Dominion will receive $4 billion in cash and will transfer some $5.7 billion of debt to Berkshire Hathaway. ...
https://www.pilotonline.com/news/environment/dp-nw-atlantic-coast-pipeline-canceled-20200705-cjidl5f2mnc3xkkiwg6ty5gzw4-story.html
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Sigmetnow

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Re: Oil and Gas Issues
« Reply #3874 on: July 06, 2020, 06:03:06 PM »
Judge orders Dakota Access pipeline shut down pending review
July 6
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A federal judge has ordered the Dakota Access pipeline to shut down pending further environmental review, a victory for the Standing Rock Sioux Tribe.

In his order on Monday, U.S. District Judge James Boasberg wrote that the closure must take place in the next 30 days.

Protesters have argued that the controversial oil pipeline project poses both a cultural and environmental threat to the land it runs through. Proponents say it is a financial boon, creating jobs and bringing money into local economies.

The order to shutter the pipeline comes after a protracted legal battle.
“It took four long years, but today justice has been served at Standing Rock,” attorney Jan Hasselman, who represents the Standing Rock Sioux Tribe, said in a press release. “If the events of 2020 have taught us anything, it’s that health and justice must be prioritized early on in any decision-making process if we want to avoid a crisis later on. ”

Chairman Mike Faith of the Standing Rock Sioux Tribe called it a historic day.
“This pipeline should have never been built here. We told them that from the beginning,” he said in the same press release.

Energy Transfer, the Texas-based company behind the pipeline, did not immediately respond to a request for comment from NBC News.
https://www.nbcnews.com/news/us-news/judge-orders-dakota-access-pipeline-shut-down-pending-review-n1232970
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Sigmetnow

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Re: Oil and Gas Issues
« Reply #3875 on: July 07, 2020, 05:18:33 AM »
As posted just above, this decision comes after Sunday’s cancellation of the $8 billion Atlantic Coast gas pipeline in the Southeast, and on Monday a ruling that shut down the Dakota Access oil pipeline in North Dakota

U.S. Supreme Court deals setback to Keystone oil pipeline project
July 6, 2020
Canadian company blocked from getting key permit to continue building
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  BILLINGS, Mont. — The U.S. Supreme Court has handed another setback to the Keystone XL pipeline from Canada by keeping in place a lower court ruling that blocked a key permit for the project.

Canadian company TC Energy needs the permit to continue building the long-disputed pipeline from Canada across U.S. rivers and streams. ...
https://www.marketwatch.com/story/us-supreme-court-deals-setback-to-keystone-oil-pipeline-project-2020-07-06
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3876 on: July 09, 2020, 06:45:23 PM »
All those stories about economies recovering quickly and oil demand returning rapidly are failing to pan out.  Demand has levelled off at 88 to 89 million bpd, well below the 100 mbpd it was at before the Covid recession.  And the US isn't even out of the first wave of infections yet.

https://oilprice.com/Energy/Oil-Prices/Oil-Market-Recovery-Threatened-By-Weaker-Fuel-Demand.html

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Oil Market Recovery Threatened By Weaker Fuel Demand
By Nick Cunningham - Jul 08, 2020

Gasoline demand appears to be weakening in some parts of the United States, as the coronavirus continues to spread. The states hardest hit by the surging number of infections are also some of the largest, with tens of millions of drivers.  Much of the country continues to see a slight uptick in gasoline consumption. But in Arizona, Texas and Florida, where the coronavirus is raging, a growing number of people are staying home. Cases are rising in more than 30 states.

Gasoline demand in the U.S. climbed back to 8.6 million barrels per day (mb/d) for the week ending on June 19, up from a low of 5 mb/d in early April. But demand slipped a bit by the end of June as the virus began to spread at a faster clip. On Wednesday, the EIA reported another increase in demand, although the report was offset by a rise in crude inventories, and the slightly muddying caveat that it was a holiday weekend. Gasoline demand is still roughly 1 mb/d below last year’s levels.

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To be sure, the sharp decline in oil production has tightened up the market. Instead of supply and demand balancing at 100 mb/d, the market is now “balanced” at a level that is 10 percent smaller. In fact, demand could average around 89 mb/d in July, with supply at only 88 mb/d. The oil market has now reached a new “balance at the bottom,” according to Rystad Energy.


Ken Feldman

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Re: Oil and Gas Issues
« Reply #3877 on: July 09, 2020, 11:07:45 PM »
The outlook for LNG exports is grim.

https://www.reuters.com/article/us-usa-lng-coronavirus/coronavirus-demand-destruction-cuts-u-s-lng-exports-to-over-20-month-low-idUSKBN2492XZ

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Coronavirus demand destruction cuts U.S. LNG exports to over 20-month low
July 8, 2020
Scott DiSavino

NEW YORK (Reuters) - Natural gas flows to U.S. liquefied natural gas (LNG) export plants plunged this month after falling to a 20-month low in June as coronavirus lockdowns cut global demand for the fuel.

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With U.S. LNG capacity rising as new units enter service, utilization of those plants has collapsed from 85%-90% in 2019 to just 32% so far this month as buyers cancel dozens of cargoes.

Analysts at Simmons Energy, energy specialists at U.S. investment bank Piper Sandler, projected U.S. LNG utilization will hover between 60%-70% over the next several years.

Those plants cost billions of dollars to build.  If they're sitting idle, their owners will go broke.


Ken Feldman

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Re: Oil and Gas Issues
« Reply #3878 on: July 11, 2020, 12:04:31 AM »
The US rig count continues to decline.

https://oilprice.com/Energy/Energy-General/US-Rig-Count-Falls-For-18th-Week-In-A-Row.html

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U.S. Rig Count Falls For 18th Week In A Row
By Julianne Geiger - Jul 10, 2020

Baker Hughes reported on Friday that the number of oil and gas rigs in the US fell again this week, by 5, to 258, marking the eighteenth loss in the number of active rigs, with losses in the Permian, Eagle Ford, Marcellus, and Barnett basins.

The total oil and gas rigs is now sitting at 700 fewer than this time last year.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3879 on: July 11, 2020, 12:10:39 AM »
The US EIA is forecasting  decreased natural gas consumption of 3.1% in 2020 and 4.5% in 2022.

https://www.eia.gov/outlooks/steo/report/natgas.php

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Natural Gas Consumption. Consumption of natural gas in the United States averaged an estimated 85.0 billion cubic feet per day (Bcf/d) in 2019, and EIA expects U.S. consumption will decrease by 2.6 Bcf/d (3.1%) in 2020 before decreasing by an additional 3.7 Bcf/d (4.5%) in 2021.

The largest natural gas consuming sector in the United States is the electric power sector. EIA estimates that electric generation will consume an average 31.9 Bcf/d in 2020, which is 2.9% more than in 2019 because of new natural gas-fired electric generation capacity and competitive natural gas prices. EIA forecasts power sector consumption of natural gas to decline by 14.3% in 2021, which reflects increased competition from renewable sources and from coal. Growth in renewable sources of electricity generation is a result of continuing renewables capacity additions. EIA’s forecast of higher natural gas spot prices in 2021 compared with 2020, makes natural gas less competitive compared with coal for use in power generation.

Natural gas losing share to renewables seems obvious.  But coal?  Coal plants are closing and no new ones are being built.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3880 on: July 11, 2020, 12:29:22 AM »
The oil glut is projected to take two years to clear at present rates of production and consumption.

https://oilprice.com/Energy/Energy-General/The-Largest-Oil-Inventory-Increase-In-History.html

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The Largest Oil Inventory Increase In History
By Editorial Dept - Jul 10, 2020

1. The oil market’s massive inventory problem

- Oil inventories increased in the second quarter at a rate of nearly 1.8 mb/d, more than four times the ten-year average, according to Standard Chartered.

- Inventories typically increase in the second quarter, but this was the largest build since data collection began in 1956.

- The oil market has technically flipped into a deficit, although at a much lower base. Instead of a 100 mb/d market, supply is right around 88 mb/d and demand at 89 mb/d, rebalancing at a lower level.

- If sustained, the market will draw down on inventories going forward, although the overhang will take around 2 years to drain back to normal levels.

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Re: Oil and Gas Issues
« Reply #3881 on: July 11, 2020, 01:47:49 AM »
Natural gas losing share to renewables seems obvious.  But coal?  Coal plants are closing and no new ones are being built.
The orange seems to think if he lies enough than it will be true.

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Re: Oil and Gas Issues
« Reply #3882 on: July 14, 2020, 05:07:14 PM »
Global Push for LNG Creates 'Gas Bubble' That Could Bust

...


Much of the rationale is falling apart. The world has changed dramatically since many LNG projects originally received the go-ahead. The price of LNG in Asia — the so-called Japan-Korea Marker, or JKM —collapsed to just above $2 per MMBtu this year, while U.S. natural gas prices (using the Henry Hub benchmark) have traded at roughly $1.80/MMBtu. After factoring in the cost of liquefaction and transport, the window to export American LNG on the spot market has temporarily closed. 

But deteriorating economics pre-date the pandemic. The market was already souring last year as a wave of new projects came online and demand failed to keep up. Market prices in Europe and Asia declined by roughly 45 percent in 2019 as export capacity swelled, according to the International Energy Agency (IEA).

If the market was already weakening, the pandemic decisively pushed it into a depression. Even contracted cargoes have been canceled in growing numbers in recent months as the worldwide glut deepens. For July and August, LNG buyers overseas canceled around 80 cargoes from the U.S., and export terminals on the Gulf Coast are only operating at a fraction of typical capacity. The more exports decline, the more gas becomes trapped within the United States, deepening the glut.

Despite the negative direction, the gas industry and its financial backers continued to pour capital into new LNG terminals, at least until recently. Last year was a record year for investment and the trend continued into the early part of 2020. Globally, spending on LNG infrastructure soared to $196 billion between April 2019 and May 2020, up from $82 billion in the year prior, according to the Global Energy Monitor study.

The spending spree is now hitting turbulence. At least 11 major LNG projects from around the globe have run into some form of disruption, with problems stemming from low natural gas prices, heightened protest from impacted communities, as well as disruptions due to the spread of COVID-19, according to Global Energy Monitor. Delays and canceled investment decisions are mounting.

...

However, others warn that the downturn is not transitory. Global Energy Monitor warned that the “gas bubble” could pop. Massive LNG projects carry multi-billion-dollar price tags, with very aggressive assumptions about demand growth. China stands at the very core of every long-term demand forecast. If China pursues alternatives, or even finds gas supplies via pipeline from its neighbors, the rosy scenarios could badly disappoint.

“China is like the single point of failure for the LNG industry,” Clark Williams-Derry, an energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), told DeSmog. “In order to really inflate this market, it doesn't work without China.”

...

https://www.desmogblog.com/2020/07/13/global-energy-monitor-report-lng-gas-bubble
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3883 on: July 14, 2020, 06:51:07 PM »
US oil production is forecast to be down for the next two years as consumption has dropped.

https://www.eia.gov/outlooks/steo/#:~:text=EIA%20expects%20annual%20average%20U.S.,million%20b%2Fd%20in%202021.

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    EIA expects annual average U.S. crude oil production to fall in 2020 and 2021 as forecast West Texas Intermediate (WTI) spot prices remain less than $50/b through 2021. EIA forecasts that U.S. crude oil production will average 11.6 million b/d in 2020 and 11.0 million b/d in 2021. These levels are 0.6 million b/d and 1.2 million b/d, respectively, lower than the 2019 average of 12.2 million b/d. EIA finalized this month’s forecast before a U.S. District Court ordered on July 6 the temporary closure of the Dakota Access Pipeline. The operators of the pipeline have announced they will file a motion to stay the decision.

    EIA forecasts U.S. liquid fuels consumption will average 18.3 million b/d in 2020, down 2.1 million b/d from 2019. Declines in U.S. liquid fuels consumption vary across products. From 2019 to 2020, EIA expects jet fuel consumption to fall by 31% and gasoline and distillate fuel consumption to both fall by 10%. The declines reflect travel restrictions and reduced economic activity related to COVID-19 mitigation efforts. EIA expects the largest declines in U.S. liquid fuels consumption have already occurred and consumption will generally rise through the second half of 2020 and in 2021. EIA forecasts U.S. liquid fuels consumption will average 19.9 million b/d in 2021.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3884 on: July 14, 2020, 06:57:02 PM »
US natural gas production and consumption is also decreasing (same web link as above).

https://www.eia.gov/outlooks/steo/#:~:text=EIA%20expects%20annual%20average%20U.S.,million%20b%2Fd%20in%202021.

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    EIA expects U.S. dry natural gas production to average 89.2 billion cubic feet per day (Bcf/d) in 2020, down from 92.2 Bcf/d in 2019. This 3% decrease is the result of falling natural gas prices that caused a decline in drilling activity and production curtailments. EIA expects annual average dry natural gas production in the United States will decline by 6% in 2021 to 84.2 Bcf/d. However, EIA expects production to increase during the second half of 2021 as natural gas prices in the forecast rise.

    EIA expects U.S. natural gas consumption will decline by 3% in 2020. The main driver of the decline is lower consumption in the industrial sector because of COVID-19 mitigation efforts and related reductions in economic activity. Forecast U.S. natural gas consumption declines by 5% in 2021 as a result of expected rising natural gas prices. The rising prices will reduce the use of natural gas in the electric power sector, which will more than offset increases in natural gas consumption in the industrial, commercial, and residential sectors.

AS Kassy noted above, the global natural gas glut has especially impacted LNG exporters, which creates storage problems.

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EIA forecasts working natural gas in storage will reach 4,039 billion cubic feet (Bcf) at the end of October, which would be the most U.S. natural gas in storage as of the end-of-October on record. This forecast level surpasses the previous end-of-October record of 4,013 Bcf reached in October 2016.