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NY Governor looks to revoke utility’s license over imaginary natural gas

Westlake Legal Group Cuomo NY Governor looks to revoke utility’s license over imaginary natural gas utilities The Blog New York State New York City natural gas National Grid governor Andrew Cuomo

You may recall earlier this month when New York Governor Andrew Cuomo threatened utility company National Grid with massive fines if they didn’t start adding more natural gas hookups in New York City. This was done despite the fact that National Grid had told him that they no longer had an adequate supply of gas in their aging pipelines to provide service to more customers. This left everyone wondering what would happen during peak demand hours this winter when the temperatures dip into single digits.

In order to avoid the fines, the utility agreed to start adding more hookups, even though it might outstrip the supply. (That didnt’ stop the Governor from continuing to defy calls for the approval of a new pipeline to keep up with demand.) But even that concession apparently wasn’t enough for Cuomo. Now he wants the state’s public utilities regulator to look into the option of canceling National Grid’s license to operate. That’ll teach ’em a lesson, eh? (CBS New York)

Gov. Cuomo’s anger at National Grid has boiled over. In a stunning move, he ordered the state’s public utilities regulator to explore potential grounds for revoking the company’s license.

He also slammed his own agency, the Public Service Commission, for not preventing customers from become pipeline pawns, CBS2’s Marcia Kramer reported Thursday.

A little over a week ago, John Bruckner, president of National Grid New York, proudly took Kramer into his command center to show off his gas pipeline system. Now he faces the very real possibility that the system will be taken over by someone else, because he declared a gas moratorium that denied natural gas to 3,700 customers.

The governor is calling this a case of “corporate abuse.” National Grid calls it a wakeup call and a cold dose of reality. They’ve already explained that the existing pipelines don’t provide enough product for that many customers. But Cuomo and his environmentalist buddies continue to block any proposals to bring in a new pipeline to alleviate the problem.

Cuomo is really becoming unhinged over this. He told the utilities regulator to find out “when and how we eliminate an abusive utility from the state to protect consumers.”

But he didn’t stop there. Never one to complain about a problem without offering a solution, Cuomos offered up a suggestion. “What are the alternatives? You could use oil. You could truck in gas,” he said.

Excuse me? This is your idea of a solution to the problem? Oil or “trucking in gas?” First of all, even if you could start pumping heating oil through the existing pipelines (you can’t), the furnaces, stoves and other appliances that rely on the supply can’t run on oil. They’re not designed for it. Unless you want to tell everyone to gut their buildings, rip out the gas heaters and replace them with oil-fired furnaces. But then you’re just using more evil fossil fuels that you promised to keep in the ground.

I suppose you could consider “trucking in” CNG (compressed natural gas), assuming they have the facilities to offload it and feed it into the lines. But that process would cost a fortune and heating prices would spike. I somehow don’t think the voters will be too happy with you if that’s the answer.

There are two solutions here. You can try to abandon natural gas for all new customers and construction projects and come up with some other way to heat those buildings. Of course, you’ll bankrupt a ton of construction projects and force consumers to get rid of and replace furnaces and stoves at considerable expense. Nobody is going to go along with that. The other option is to stop playing politics with the environmentalist lobby and approve the pipeline that the utility companies have been asking for for a decade. Then you’ll have cheap, clean energy available to heat all of these buildings for many years to come.

Or, I suppose, you can fire National Grid and hand the problem over to someone else. But they won’t be able to make imaginary natural gas appear out of thin air either.

The post NY Governor looks to revoke utility’s license over imaginary natural gas appeared first on Hot Air.

Westlake Legal Group Cuomo-300x153 NY Governor looks to revoke utility’s license over imaginary natural gas utilities The Blog New York State New York City natural gas National Grid governor Andrew Cuomo   Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Pushed by Security Concerns and Trump, Germany Weighs a New Fuel

Westlake Legal Group 08sp-lng-inyt-4-facebookJumbo Pushed by Security Concerns and Trump, Germany Weighs a New Fuel Wilhelmshaven (Germany) Uniper SE Ships and Shipping Pipelines natural gas Germany

WILHELMSHAVEN, Germany — A jetty here juts out nearly a mile into the Wadden Sea from Germany’s low-lying northern coast. Now used by a chemical plant, the pier could become the site of the country’s first liquefied natural gas terminal.

Wilhelmshaven, a port city of about 80,000 people founded as a naval base, is celebrating its 150th anniversary. Now it is among a handful of candidates for a project, supported by the German government, that would open Europe’s largest economy to liquefied natural gas, known as L.N.G.

The fuel, which is created by chilling natural gas to a liquid form, is increasingly traded globally like oil. It is loaded onto enormous specialized ships, some more than 1,000 feet long. These vessels can go anywhere there is a terminal and deliver a substantial transfusion of fuel into a country’s gas network to keep the lights on and factories humming.

For Germany, Europe’s largest consumer of natural gas, an L.N.G. terminal would provide an alternative to its dependence on fuel piped from Russia, its largest supplier, and give the country a way to receive supplies from Qatar or the United States or elsewhere if an alternative were needed.

Uniper, a German energy provider, and other companies have considered building an L.N.G. facility in Wilhelmshaven for decades, holding on to the site since the 1970s. Earlier plans, including an effort to import the fuel from Algeria, have failed to come to fruition. Now, executives at Uniper say, the right moment may have arrived.

“The timing in the market is a very good one to develop such a facility,” Niels Fenzl, the company’s vice president for transportation and terminals, said in an interview.

Uniper recently held an “open season” to gauge the interest of potential suppliers, with encouraging results. Exxon Mobil, the American energy giant, has already reached a preliminary deal to use the terminal.

Germany has long relied on natural gas from Russia, Norway and other countries. Pipeline gas tends to be cheaper than L.N.G., which has higher processing and transportation costs.

In 2018, more than half of Germany’s gas imports came from Russia, according to the BP Statistical Review of World Energy. But although the German establishment appears to be comfortable with Russia and its main gas provider, Gazprom, there are increasing reasons for the country to explore L.N.G. as an alternative.

In 2009, a price dispute led to a nearly two-week disruption in Russian gas shipments through Ukraine, raising concerns about European reliance on Russian supplies. And the Netherlands, another large supplier to Germany, faces the prospect of declining output from the Groningen field, not far from the German border. Its production is expected to decline and eventually cease because of earthquakes triggered by gas production. An L.N.G. facility could help compensate for those losses.

President Trump has also leaned on Europe, including Germany, to import more natural gas from shale deposits in the United States, which have produced a bounty of fuel that is now flowing into exports in the form of L.N.G. The administration has criticized a new pipeline, Nord Stream 2, being built from Russia to Germany, while promoting fuel from new export facilities in Louisiana and Texas.

Earlier this year, Peter Altmaier, the German economics and energy minister, announced support for constructing an L.N.G. terminal in return for the United States toning down its opposition to the new pipeline with Russia.

For years, German politicians and industry leaders have shrugged off warnings about relying on Russia. Northwest Europe has other terminals, which until recently were little used. L.N.G. supplies instead went to destinations like Asia, where buyers were willing to pay higher prices.

Now the energy security arguments appear to be making headway, and the market for L.N.G. looks stronger. Utilization rates of terminals in northwest Europe have risen sharply. Uniper, which has an agreement to take L.N.G. from a facility in Freeport, Tex.., said that the shiploads of fuel traded by the company more than tripled from 2017 to 2018, from 40 to 135.

At a visitor’s center for the Wilhelmshaven port, Mr. Fenzl said that to keep costs down, the company is leaning toward using a floating vessel, rather than an onshore facility, as its terminal. The vessel, which would be provided by Mitsui O.S.K. Lines, would be tied to an extension of the existing jetty. L.N.G. vessels would tie up alongside and discharge their frigid cargo through flexible hoses.

Mr. Fenzl said the company has not made a final decision to move ahead and was weighing commitments from other suppliers to use the facility, as well as potential government support. He estimated the cost of the project at 500 to 650 million euros. “For us, as Uniper, this is a lot of money,” he said. “It is not an easy task to get if off the ground.”

Building an L.N.G. terminal would not guarantee that Germany would import fuel from the United States. “The German stance is that they are going to take the most competitive L.N.G. supply that they can. If that happens to be the U.S., that is a bonus,” said Murray Douglas, an analyst at Wood Mackenzie, a market research firm.

Mr. Douglas said the United States would need to compete with Qatar, a major exporter, as well as planned projects in East Africa. Russia is also increasingly competing in the L.N.G. market.

Other German ports, including Stade, have also joined the competition for a terminal. In Brunsbuettel, the state-owned Dutch gas distributor and partners are considering a terminal in part to make up for lost supplies from the quake-rattled Groningen field. All three of these cities are near Hamburg, the thriving commercial and maritime hub in northern Germany.

Of course, local and environmental opposition to liquefied natural gas could grow, as it has in other ports. The Wadden Sea is considered a unique area of mud flats and shallows, and environmentalists say that putting a terminal there might cause pollution, while the big ships could damage the sea bottom.

In addition, some activists question whether Germany, which has halted the drilling process known as fracking, in which water is injected into gas wells to break up rock and increase their production, should be building a terminal to import gas from the United States produced by this process.

“It is extremely hypocritical that Germany forbids the use of this technology but allows the import of the same type of gas,” said Antoine Simon, a campaigner against fossil fuels at Friends of the Earth Europe in Brussels.

Andy Gheorghiu, a campaigner in Germany for Food and Water Watch, a group that opposes fracking, said opposition to the L.N.G. terminals had been relatively small but was growing. “I am pretty confident we can kill these projects,” he said.In Wilhelmshaven, some civic leaders see an L.N.G. terminal as a boost to the city’s efforts to build up local port activities. “Now it looks like we come to the end of a long, long story,” joked John H. Niemann, president of the Wilhelmshaven Port Association, noting that various versions of the project had been under discussion for 40 years.

The town was heavily damaged by bombing in World War II and revived, first as an oil terminal and, more recently, as a container port. Port traffic dropped sharply during the financial crisis beginning in 2008 but is gradually regaining momentum and attracting new businesses, Mr. Niemann said.

Mr. Fenzl said that part of the appeal of Wilhelmshaven, which has greater than 10 percent unemployment — twice the national average — is that the area is hungry for jobs and new businesses.

Tourism is also important to the region. People come to see the coastline and a nearby nature reserve, as well as attractions including a maritime history museum and an aquarium. On warm evenings, diners sit outside restaurants along a romantically lit canal. There is even a hulking vintage air raid bunker with a restaurant next door.

Tourists, Mr. Fenzl said, also like to watch the huge container vessels going in and out of the port. The L.N.G. carriers, some of the largest ships in the world, might also prove an attraction, he said. “I think they are quite a sight.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Rick Perry’s Focus on Gas Company Entangles Him in Ukraine Case

Westlake Legal Group 07dc-ukraine1-facebookJumbo Rick Perry’s Focus on Gas Company Entangles Him in Ukraine Case Zelensky, Volodymyr United States Politics and Government United States International Relations Ukraine Trump, Donald J Trump-Ukraine Whistle-Blower Complaint and Impeachment Inquiry Presidential Election of 2020 Perry, Rick natural gas Naftogaz of Ukraine Giuliani, Rudolph W Corruption (Institutional) Biden, Joseph R Jr

WASHINGTON — When Energy Secretary Rick Perry led an American delegation to the inauguration of Ukraine’s new president in May, he took the opportunity to suggest the names of Americans the new Ukrainian government might want to advise and oversee the country’s state-owned gas company.

Mr. Perry’s focus during the trip on Ukraine’s energy industry was in keeping with a push he had begun months earlier under the previous Ukrainian president, and it was consistent with United States policy of promoting anti-corruption efforts in Ukraine and greater energy independence from Russia.

But his actions during the trip have entangled him in a controversy about a pressure campaign waged by President Trump and his allies directed at the new Ukrainian president, Volodymyr Zelensky, that is at the center of the impeachment inquiry into Mr. Trump. That effort sought to pressure Mr. Zelensky’s government to investigate Mr. Trump’s rivals, including former Vice President Joseph R. Biden Jr., a leading contender for the Democratic presidential nomination to challenge Mr. Trump.

Mr. Perry’s trip raised questions about whether he was seeking to provide certain Americans help in gaining a foothold in the Ukrainian energy business at a time when the new Ukrainian government was looking to the United States for signals of support in its simmering conflict with Russia.

Mr. Trump seemed to suggest last week that he made a July 25 phone call to Mr. Zelensky, during which he repeatedly urged his Ukrainian counterpart to pursue investigations that could politically benefit him, at the urging of Mr. Perry. Mr. Trump told congressional Republicans last week that Mr. Perry wanted him to discuss the liquefied natural gas supply with Mr. Zelensky, Axios reported.

That topic did not specifically come up in the call between the two leaders, according to the reconstructed transcript released by the White House. Text messages released last week by House investigators showed that other officials were suggesting that the president speak with Mr. Zelensky to nail down an agreement for Ukraine to move ahead with the investigations being sought by Mr. Trump.

At a news conference on Monday in Vilnius, Lithuania, where he was meeting with Ukrainian and Polish energy officials, Mr. Perry said he asked Mr. Trump “multiple times” to hold a phone call with Mr. Zelensky.

Mr. Perry’s role in the diplomacy between the countries highlights the degree to which Mr. Trump entrusted his Ukraine policy to an ad hoc coalition of loyalists inside and outside the government, especially after the recall of the ambassador to Ukraine amid questions among Mr. Trump’s supporters about her loyalty to the president. It also reveals the extent to which Ukrainian politics and national security revolve around energy supplies.

Mr. Perry’s efforts, while broadly consistent with American national security and energy objectives, intersected with those of the figures involved in the pressure campaign. Two American diplomats who attended Mr. Zelensky’s inauguration with Mr. Perry — Gordon D. Sondland, the United States ambassador to the European Union, and Kurt D. Volker, then the State Department’s special envoy to Ukraine — pushed Mr. Zelensky to publicly commit to the investigations and were involved in setting up the call between Mr. Trump and Mr. Zelensky.

They appeared to work on the effort with Rudolph W. Giuliani, the president’s personal lawyer and a leading force in the campaign to pressure the Ukrainian government to pursue the investigations. Two associates of Mr. Giuliani also sought changes to the leadership of the Ukrainian state-owned gas company, Naftogaz. Those changes would have required approval from a supervisory board Mr. Perry sought to shape.

One of Mr. Giuliani’s associates, Lev Parnas, pitched a liquefied natural gas deal to the chief executive of Naftogaz in early spring, as The New York Times reported last month.

The deal was rejected by the Naftogaz executive.

But Mr. Parnas and a partner who was also involved in Mr. Giuliani’s political efforts in Ukraine, Igor Fruman, also sought to install a presumptive ally as Naftogaz’s chief executive. They told a gas executive named Andrey Favorov that they could use their American political connections to help him become chief executive of Naftogaz, suggesting that, if appointed, he might steer the company to buy liquefied natural gas from them, according to Dale Perry, the managing partner of a company that competes with one run by Mr. Parnas and Mr. Fruman.

Mr. Favorov, who is a lower-ranking executive at Naftogaz, rejected the proposal, which was first reported by The Associated Press.

Dale Perry, who is not related to the energy secretary, said he found it “very troubling and disturbing” that Mr. Parnas and Mr. Fruman boasted that they had worked with Mr. Giuliani to force the recall this spring of the American ambassador to Ukraine, Marie L. Yovanovitch.

But people in Ukraine and the United States who are familiar with the conversations said the Ukrainian government had requested recommendations from Mr. Perry for Americans who could advise Naftogaz and the government on governance reforms and liquefied natural gas transportation.

Mr. Perry recommended four Americans as possible advisers on energy issues, according to the Americans and Ukrainians who are familiar with the conversations. Names floated included Carlos Pascual, a former American ambassador to Ukraine, and Daniel Yergin, an author and energy expert who has worked with Mr. Pascual at an energy advisory firm.

Mr. Perry, a former governor of Texas, specifically recommended two Texas-based investors who work in Ukraine, Michael Bleyzer and Robert Bensh, for a supervisory board of Naftogaz, according to the Americans and Ukrainians familiar with the conversations.

Mr. Bleyzer, a Republican donor, has proposed gas deals with Naftogaz, according to people familiar with his efforts.

Shaylyn Hynes, a spokeswoman for the Energy Department, said in a statement on Monday night that Mr. Perry “has consistently called for the modernization and reform of Kiev’s business and energy sector in an effort to create an environment that will incentivize Western companies to do business in Ukraine.” As part of that effort, and at the request of Mr. Zelensky’s administration, Ms. Hynes said Mr. Perry “recommended the names of some widely respected individuals in the American energy sector, including government experts” at the Energy Department. But, she said Mr. Perry “did not recommend these individuals be placed on any board.”

Nonetheless, the circulation of the names of Mr. Bleyzer and Mr. Bensh as possible Naftogaz appointments led to speculation that Naftogaz was considering removing from the supervisory board a former Obama administration official named Amos J. Hochstein. Mr. Hochstein had worked with Mr. Biden on his Ukraine efforts as vice president.

That imbued the discussion about the board appointments with political overtones at a time when Democrats were beginning to build an impeachment case around the actions of Mr. Trump and his team to press Ukraine to investigate Mr. Biden and his son, who had served on the board of a private Ukrainian gas company.

Adding to the complexity of the situation: When Mr. Zelensky dispatched one of his top aides to Washington in July to meet with members of Congress and the Trump administration, and to try to connect with Mr. Giuliani, some of the meetings on Capitol Hill were arranged by a Naftogaz lobbyist, and attended by a Naftogaz official.

Naftogaz, until just a few years ago a money-losing monopoly stained by corruption, has been substantially overhauled in recent years to survive without Russian gas and to compete in the European Union market.

To comply with European Union regulations and be able to sell Ukrainian gas to the bloc’s energy-hungry countries, the company has been weaning itself off subsidies and spinning off its gas-transmission operations into a new entity with a guaranteed income of at least $2 billion a year.

Naftogaz officials said that this company, which will come into existence in January, and Naftogaz’s operations storing gas underground could attract American investments, and that they were at the heart of what the United States administration was interested in.

Naftogaz officials said the American interest was sufficient that Mr. Sondland held further discussions about the planned spinoff of the transmission operations in Brussels.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Another city bans natural gas in new construction projects

Westlake Legal Group drilling Another city bans natural gas in new construction projects The Blog san jose natural gas Electric power grid ban

Despite the fact that natural gas is the cleanest of the fossil fuels hands down (and now the cheapest), liberals continue to oppose it. The “keep it in the ground” folks scored another victory this week when the city of San Jose California voted to ban natural gas lines and appliances in all new construction projects going forward. This is allegedly part of the state-mandated goal of going 100% “carbon-free” by 2045. Of course, as with all things, the devil is in the details. (CBS San Francisco)

San Jose became the biggest U.S. city to ban natural gas in new construction projects as the city council unanimously approved the proposal Tuesday evening.

The so-called reach code targets appliances that use natural gas–stoves, water heaters and furnaces in buildings. The city says these appliances accounts for one-third of greenhouse gas emissions.

The passed ordinance will ban natural gas in the construction of new accessory dwelling units, new single family homes and new low rise and multifamily buildings.

San Jose may be the largest city to do this so far, but they’ hardly the first. Berkeley voted to do the same thing earlier this year to loud cheers from the environmentalist community. (But that’s Berkeley we’re talking about, so what did you expect?) They still have a lot of questions to answer, however, with all the pesky science nagging at their heals.

Consider the fact that their entire theory runs on “electrification.” In addition to the natural gas ban, this same legislation will mandate that all new housing be built with outlets in the parking areas for people to recharge their electric cars. The theory here is that people without access to charging stations will be less likely to buy an electric car, and California wants everyone using those soon.

So now, all of the appliances, including furnaces, stoves, water heaters and all the rest, will be electric. And the buildings will have electric outlets where people charge their vehicles. It doesn’t take a rocket scientist to realize that a considerable increase in the load on the electrical grid is coming. And where does California get their electricity? More than half of it comes from… wait for it... natural gas-fired plants.

To get rid of the natural gas plants when you’ve already banned coal plants, you’ve only got a few choices. Hydro is good, but California isn’t exactly brimming with water. (They get about 12% of their energy from hydro and they’re nearly maxed out.) Nuclear would be perfect, but they’re phasing that out too. (That’s another 9% they’re getting ready to lose.) That pretty much leaves them with solar and wind, which accounts for roughly 24% of their current power generation. Do you really think you can go from there to 100% in a decade or two?

And in the meantime, until they shut the natural gas plants down, they’ll actually wind up burning more natural gas to create all this juice while they “electrify” everything. It’s so brilliant on paper and yet so stupid at the bottom line. Still, they’re going to keep pushing to shut down the rest of their energy generation capacity.

But hey, San Jose. You do you. Feel free to freeze in the dark.

The post Another city bans natural gas in new construction projects appeared first on Hot Air.

Westlake Legal Group drilling-300x159 Another city bans natural gas in new construction projects The Blog san jose natural gas Electric power grid ban   Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Short-Term Impact on Oil Prices Seen After Attack on Saudi Facilities

HOUSTON — The drone attack on one of Saudi Arabia’s most important oil facilities could cripple a portion of Saudi petroleum exports for days or even weeks, and oil futures prices briefly spiked 20 percent when markets opened on Monday in Asia. But experts say that a severe shock to energy markets and the world economy is unlikely.

The attack on the Abqaiq processing facility and another plant, deep in Saudi territory, displayed the vulnerability of the kingdom to tensions in the Persian Gulf region. The country produces about 10 percent of the world’s oil supplies. The disruption could slash Saudi Arabia’s daily oil exports of 7.4 million barrels by as much as three-quarters, taking roughly 5 percent of global supplies off the market, unless the facility is quickly repaired.

President Trump suggested on Sunday that he could release supplies from the Strategic Petroleum Reserve, an attempt to calm oil markets. In response, Brent crude oil futures that had briefly jumped about 20 percent, or more than $11 a barrel, when the futures market opened on Monday in Asia eased over the next several hours to an increase of 8.6 percent, or just over $5 a barrel.

The attack raised the possibility of further disruptions in Saudi Arabia’s oil production if there were additional attacks on its fields and pipelines.

The planned initial public offering of the kingdom’s national oil company, Saudi Aramco, could also be hurt if international investors doubt Saudi Arabia’s ability to defend its vital energy infrastructure.

But as luck would have it, the attack came as global oil stockpiles were higher than usual, several producing countries have ample spare capacity and American oil facilities have so far been spared from a damaging hurricane season. Meanwhile, a slowing global economy has moderated energy demand.

ImageWestlake Legal Group merlin_159952797_41a4ceb5-81a4-47f6-a28f-15c277b3a2d8-articleLarge Short-Term Impact on Oil Prices Seen After Attack on Saudi Facilities Saudi Aramco Production Organization of the Petroleum Exporting Countries Oil (Petroleum) and Gasoline natural gas International Trade and World Market International Energy Agency Initial Public Offerings Energy Department Energy and Power Embargoes and Sanctions Drilling and Boring

A gas station in West Palm Beach, Fla. in August. The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents below a year ago.CreditSaul Martinez for The New York Times

“We do not expect an immediate disruption on global oil trade, since many nations, including the U.S., have ample crude oil in storage,” said Manish Raj, chief financial officer of Velandera Energy Partners, a Louisiana oil exploration and production company. “The Saudis themselves have enough storage to meet their export obligation for the next 60 days. Therefore, we expect no supply-demand imbalance in the near term.”

The main uncertainty is how long will it take for the Saudis to repair the Abqaiq facility, which separates gas from oil from several important oil fields. While the fire was put out quickly, the Saudis may not know the answer for days since the facility is large and has complex equipment that still needs to be tested.

Should the damage be fixed quickly, Eurasia Group, a risk consulting firm, estimates that oil prices could rise a modest $2 to $3 a barrel, which would still leave the global benchmark Brent crude below $65 a barrel, relatively low by recent historical standards. The firm estimated that a more long-lasting disruption could mean an increase of $10 a barrel, though that would still leave prices several dollars below where they were a year ago.

Other analysts took a dimmer view, even as Saudi Aramco said on Sunday that repairs were already underway. The initial reaction of oil traders was panicky.

“The problem is that the attack is so significant, “ said Bill Farren-Price a director at RS Energy Group, a market research firm. “It demonstrates that one of the best regional oil companies has difficulties defending itself from this new style of threat. That theme is going to endure. “

There are doubts the Saudis will be able to maintain their usual exports and satisfy domestic consumption.

“Export volumes will be severely impacted,” Clay Seigle, an analyst at Genscape, a market research firm, said in an email. “The market will be left with a thinner cushion against additional supply disruptions, and traders will bid prices higher as a result.”

Brazil’s state-run Petrobras oil company in Brasilia. The United States has been ramping up oil production as have other countries, including Norway and Brazil.CreditUeslei Marcelino/Reuters

How the other countries in the Saudi-led OPEC will respond is not yet clear. In a phone conversation, an official with the Organization of the Petroleum Exporting Countries said that the Saudis had so far not shared information about the extent of the damage and when output might be restored. He also said that OPEC had not yet begun discussions on potentially loosening supplies. “We have to see how the market reacts tomorrow,” the official said.

The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents lower than a year ago. That decline has been a boon to consumers, giving them extra spending power that has helped retailers and restaurants. An increase in prices to last year’s levels is possible over the next few weeks unless the Saudi facility is quickly fixed, energy analysts said.

Only a decade ago, the attack would probably have sent oil prices soaring. But that was before American oil production climbed with the shale drilling frenzy. The United States now produces roughly 12.1 million barrels a day, double what it produced in 2012 and 1.4 million barrels more than only a year ago.

The United States imports about 630,000 barrels of Saudi oil a day, down about half from 2017.

American oil companies have recently been cutting back on production, but higher oil prices would encourage them to produce more. At the same time, several pipelines to the Gulf Coast are nearing completion and that could stimulate significant export growth over the next six to 10 months.

Other oil-producing countries are also ramping up production, including Norway and Brazil, while Iraq, Nigeria and Russia have been producing a total of 650,000 barrels of oil above the levels agreed to with their OPEC partners.

The United States and other developed countries have nearly 3 billion barrels in stockpiles, according to the International Energy Agency, enough to take care of about two months of demand. That is about 50 million barrels above a year ago, despite American sanctions on Iran and Venezuela that have constricted their exports.

The stockpiles of the industrialized countries are at their highest level since September 2017, and are nearly 20 million barrels above the average of the last five years, according to the energy agency.

Participants on Thursday at an OPEC meetng in Abu Dhabi, where producers appeared ready to call for even tighter adherence to the production cuts they have maintained for almost three years. But that was before the attack this weekend.CreditKarim Sahib/Agence France-Presse — Getty Images

“For now, markets are well-supplied with ample commercial stocks, “ the agency said in a statement on Saturday, adding that it was “monitoring” the Saudi situation.

Saudi Arabia has roughly 27 days of supply stockpiled, according to S&P Global Platts, a provider of energy information. That stockpile is stored not only in the kingdom but also Egypt, Japan and the Netherlands for added security.

The developed countries and China have sizable strategic reserves as well in cases of emergency, although stockpiles have been declining in the United States and Europe in recent weeks.

Until this weekend, OPEC has been more concerned about oversupply than shortages. As recently as Thursday, oil officials from OPEC, Russia and other producers met in Abu Dhabi and appeared to call for even tighter adherence to the production cuts they have maintained for almost three years. Those cuts were aimed at propping up prices and keeping the market from being swamped by oil.

The United States alone has as much as 713 million barrels in its strategic reserve, and administration officials are already talking about releasing some oil on the market to tamp down any gasoline price increase.

President Trump said in a tweet on Sunday evening that he had “authorized the release of oil from the Strategic Petroleum Reserve, if needed.”.

Such releases have had a powerful psychological effect on oil markets since the reserve was established after the oil embargoes of the 1970s. It has been drawn only occasionally, including during the first Persian Gulf war in 1991, Hurricane Katrina in 2005 and during the Arab Spring in 2011, when Libyan exports were halted.

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Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely

HOUSTON — The drone attack on one of Saudi Arabia’s most important oil facilities could cripple a portion of Saudi petroleum exports for days or even weeks, and oil futures prices briefly spiked 20 percent when markets opened on Monday in Asia. But experts say that a severe shock to energy markets and the world economy is unlikely.

The attack on the Abqaiq processing facility and another plant, deep in Saudi territory, displayed the vulnerability of the kingdom to tensions in the Persian Gulf region. The country produces about 10 percent of the world’s oil supplies. The disruption could slash Saudi Arabia’s daily oil exports of 7.4 million barrels by as much as three-quarters, taking roughly 5 percent of global supplies off the market, unless the facility is quickly repaired.

President Trump suggested on Sunday that he could release supplies from the Strategic Petroleum Reserve, an attempt to calm oil markets. In response, Brent crude oil futures that had briefly jumped about 20 percent, or more than $11 a barrel, when the futures market opened on Monday in Asia eased over the next several hours to an increase of 8.6 percent, or just over $5 a barrel.

The attack raised the possibility of further disruptions in Saudi Arabia’s oil production if there were additional attacks on its fields and pipelines.

The planned initial public offering of the kingdom’s national oil company, Saudi Aramco, could also be hurt if international investors doubt Saudi Arabia’s ability to defend its vital energy infrastructure.

But as luck would have it, the attack came as global oil stockpiles were higher than usual, several producing countries have ample spare capacity and American oil facilities have so far been spared from a damaging hurricane season. Meanwhile, a slowing global economy has moderated energy demand.

ImageWestlake Legal Group merlin_159952797_41a4ceb5-81a4-47f6-a28f-15c277b3a2d8-articleLarge Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely Saudi Aramco Production Organization of the Petroleum Exporting Countries Oil (Petroleum) and Gasoline natural gas International Trade and World Market International Energy Agency Initial Public Offerings Energy Department Energy and Power Embargoes and Sanctions Drilling and Boring

A gas station in West Palm Beach, Fla. in August. The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents below a year ago.CreditSaul Martinez for The New York Times

“We do not expect an immediate disruption on global oil trade, since many nations, including the U.S., have ample crude oil in storage,” said Manish Raj, chief financial officer of Velandera Energy Partners, a Louisiana oil exploration and production company. “The Saudis themselves have enough storage to meet their export obligation for the next 60 days. Therefore, we expect no supply-demand imbalance in the near term.”

The main uncertainty is how long will it take for the Saudis to repair the Abqaiq facility, which separates gas from oil from several important oil fields. While the fire was put out quickly, the Saudis may not know the answer for days since the facility is large and has complex equipment that still needs to be tested.

Should the damage be fixed quickly, Eurasia Group, a risk consulting firm, estimates that oil prices could rise a modest $2 to $3 a barrel, which would still leave the global benchmark Brent crude below $65 a barrel, relatively low by recent historical standards. The firm estimated that a more long-lasting disruption could mean an increase of $10 a barrel, though that would still leave prices several dollars below where they were a year ago.

Other analysts took a dimmer view, even as Saudi Aramco said on Sunday that repairs were already underway. The initial reaction of oil traders was panicky.

“The problem is that the attack is so significant, “ said Bill Farren-Price a director at RS Energy Group, a market research firm. “It demonstrates that one of the best regional oil companies has difficulties defending itself from this new style of threat. That theme is going to endure. “

There are doubts the Saudis will be able to maintain their usual exports and satisfy domestic consumption.

“Export volumes will be severely impacted,” Clay Seigle, an analyst at Genscape, a market research firm, said in an email. “The market will be left with a thinner cushion against additional supply disruptions, and traders will bid prices higher as a result.”

Brazil’s state-run Petrobras oil company in Brasilia. The United States has been ramping up oil production as have other countries, including Norway and Brazil.CreditUeslei Marcelino/Reuters

How the other countries in the Saudi-led OPEC will respond is not yet clear. In a phone conversation, an official with the Organization of the Petroleum Exporting Countries said that the Saudis had so far not shared information about the extent of the damage and when output might be restored. He also said that OPEC had not yet begun discussions on potentially loosening supplies. “We have to see how the market reacts tomorrow,” the official said.

The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents lower than a year ago. That decline has been a boon to consumers, giving them extra spending power that has helped retailers and restaurants. An increase in prices to last year’s levels is possible over the next few weeks unless the Saudi facility is quickly fixed, energy analysts said.

Only a decade ago, the attack would probably have sent oil prices soaring. But that was before American oil production climbed with the shale drilling frenzy. The United States now produces roughly 12.1 million barrels a day, double what it produced in 2012 and 1.4 million barrels more than only a year ago.

The United States imports about 630,000 barrels of Saudi oil a day, down about half from 2017.

American oil companies have recently been cutting back on production, but higher oil prices would encourage them to produce more. At the same time, several pipelines to the Gulf Coast are nearing completion and that could stimulate significant export growth over the next six to 10 months.

Other oil-producing countries are also ramping up production, including Norway and Brazil, while Iraq, Nigeria and Russia have been producing a total of 650,000 barrels of oil above the levels agreed to with their OPEC partners.

The United States and other developed countries have nearly 3 billion barrels in stockpiles, according to the International Energy Agency, enough to take care of about two months of demand. That is about 50 million barrels above a year ago, despite American sanctions on Iran and Venezuela that have constricted their exports.

The stockpiles of the industrialized countries are at their highest level since September 2017, and are nearly 20 million barrels above the average of the last five years, according to the energy agency.

Participants on Thursday at an OPEC meetng in Abu Dhabi, where producers appeared ready to call for even tighter adherence to the production cuts they have maintained for almost three years. But that was before the attack this weekend.CreditKarim Sahib/Agence France-Presse — Getty Images

“For now, markets are well-supplied with ample commercial stocks, “ the agency said in a statement on Saturday, adding that it was “monitoring” the Saudi situation.

Saudi Arabia has roughly 27 days of supply stockpiled, according to S&P Global Platts, a provider of energy information. That stockpile is stored not only in the kingdom but also Egypt, Japan and the Netherlands for added security.

The developed countries and China have sizable strategic reserves as well in cases of emergency, although stockpiles have been declining in the United States and Europe in recent weeks.

Until this weekend, OPEC has been more concerned about oversupply than shortages. As recently as Thursday, oil officials from OPEC, Russia and other producers met in Abu Dhabi and appeared to call for even tighter adherence to the production cuts they have maintained for almost three years. Those cuts were aimed at propping up prices and keeping the market from being swamped by oil.

The United States alone has as much as 713 million barrels in its strategic reserve, and administration officials are already talking about releasing some oil on the market to tamp down any gasoline price increase.

President Trump said in a tweet on Sunday evening that he had “authorized the release of oil from the Strategic Petroleum Reserve, if needed.”.

Such releases have had a powerful psychological effect on oil markets since the reserve was established after the oil embargoes of the 1970s. It has been drawn only occasionally, including during the first Persian Gulf war in 1991, Hurricane Katrina in 2005 and during the Arab Spring in 2011, when Libyan exports were halted.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely

HOUSTON — The drone attack on one of Saudi Arabia’s most important oil facilities could cripple a portion of Saudi petroleum exports for days or even weeks, and oil futures prices briefly spiked 20 percent when markets opened on Monday in Asia. But experts say that a severe shock to energy markets and the world economy is unlikely.

The attack on the Abqaiq processing facility and another plant, deep in Saudi territory, displayed the vulnerability of the kingdom to tensions in the Persian Gulf region. The country produces about 10 percent of the world’s oil supplies. The disruption could slash Saudi Arabia’s daily oil exports of 7.4 million barrels by as much as three-quarters, taking roughly 5 percent of global supplies off the market, unless the facility is quickly repaired.

President Trump suggested on Sunday that he could release supplies from the Strategic Petroleum Reserve, an attempt to calm oil markets. In response, Brent crude oil futures that had briefly jumped about 20 percent, or more than $11 a barrel, when the futures market opened on Monday in Asia eased over the next several hours to an increase of 8.6 percent, or just over $5 a barrel.

The attack raised the possibility of further disruptions in Saudi Arabia’s oil production if there were additional attacks on its fields and pipelines.

The planned initial public offering of the kingdom’s national oil company, Saudi Aramco, could also be hurt if international investors doubt Saudi Arabia’s ability to defend its vital energy infrastructure.

But as luck would have it, the attack came as global oil stockpiles were higher than usual, several producing countries have ample spare capacity and American oil facilities have so far been spared from a damaging hurricane season. Meanwhile, a slowing global economy has moderated energy demand.

ImageWestlake Legal Group merlin_159952797_41a4ceb5-81a4-47f6-a28f-15c277b3a2d8-articleLarge Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely Saudi Aramco Production Organization of the Petroleum Exporting Countries Oil (Petroleum) and Gasoline natural gas International Trade and World Market International Energy Agency Initial Public Offerings Energy Department Energy and Power Embargoes and Sanctions Drilling and Boring

A gas station in West Palm Beach, Fla. in August. The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents below a year ago.CreditSaul Martinez for The New York Times

“We do not expect an immediate disruption on global oil trade, since many nations, including the U.S., have ample crude oil in storage,” said Manish Raj, chief financial officer of Velandera Energy Partners, a Louisiana oil exploration and production company. “The Saudis themselves have enough storage to meet their export obligation for the next 60 days. Therefore, we expect no supply-demand imbalance in the near term.”

The main uncertainty is how long will it take for the Saudis to repair the Abqaiq facility, which separates gas from oil from several important oil fields. While the fire was put out quickly, the Saudis may not know the answer for days since the facility is large and has complex equipment that still needs to be tested.

Should the damage be fixed quickly, Eurasia Group, a risk consulting firm, estimates that oil prices could rise a modest $2 to $3 a barrel, which would still leave the global benchmark Brent crude below $65 a barrel, relatively low by recent historical standards. The firm estimated that a more long-lasting disruption could mean an increase of $10 a barrel, though that would still leave prices several dollars below where they were a year ago.

Other analysts took a dimmer view, even as Saudi Aramco said on Sunday that repairs were already underway. The initial reaction of oil traders was panicky.

“The problem is that the attack is so significant, “ said Bill Farren-Price a director at RS Energy Group, a market research firm. “It demonstrates that one of the best regional oil companies has difficulties defending itself from this new style of threat. That theme is going to endure. “

There are doubts the Saudis will be able to maintain their usual exports and satisfy domestic consumption.

“Export volumes will be severely impacted,” Clay Seigle, an analyst at Genscape, a market research firm, said in an email. “The market will be left with a thinner cushion against additional supply disruptions, and traders will bid prices higher as a result.”

Brazil’s state-run Petrobras oil company in Brasilia. The United States has been ramping up oil production as have other countries, including Norway and Brazil.CreditUeslei Marcelino/Reuters

How the other countries in the Saudi-led OPEC will respond is not yet clear. In a phone conversation, an official with the Organization of the Petroleum Exporting Countries said that the Saudis had so far not shared information about the extent of the damage and when output might be restored. He also said that OPEC had not yet begun discussions on potentially loosening supplies. “We have to see how the market reacts tomorrow,” the official said.

The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents lower than a year ago. That decline has been a boon to consumers, giving them extra spending power that has helped retailers and restaurants. An increase in prices to last year’s levels is possible over the next few weeks unless the Saudi facility is quickly fixed, energy analysts said.

Only a decade ago, the attack would probably have sent oil prices soaring. But that was before American oil production climbed with the shale drilling frenzy. The United States now produces roughly 12.1 million barrels a day, double what it produced in 2012 and 1.4 million barrels more than only a year ago.

The United States imports about 630,000 barrels of Saudi oil a day, down about half from 2017.

American oil companies have recently been cutting back on production, but higher oil prices would encourage them to produce more. At the same time, several pipelines to the Gulf Coast are nearing completion and that could stimulate significant export growth over the next six to 10 months.

Other oil-producing countries are also ramping up production, including Norway and Brazil, while Iraq, Nigeria and Russia have been producing a total of 650,000 barrels of oil above the levels agreed to with their OPEC partners.

The United States and other developed countries have nearly 3 billion barrels in stockpiles, according to the International Energy Agency, enough to take care of about two months of demand. That is about 50 million barrels above a year ago, despite American sanctions on Iran and Venezuela that have constricted their exports.

The stockpiles of the industrialized countries are at their highest level since September 2017, and are nearly 20 million barrels above the average of the last five years, according to the energy agency.

Participants on Thursday at an OPEC meetng in Abu Dhabi, where producers appeared ready to call for even tighter adherence to the production cuts they have maintained for almost three years. But that was before the attack this weekend.CreditKarim Sahib/Agence France-Presse — Getty Images

“For now, markets are well-supplied with ample commercial stocks, “ the agency said in a statement on Saturday, adding that it was “monitoring” the Saudi situation.

Saudi Arabia has roughly 27 days of supply stockpiled, according to S&P Global Platts, a provider of energy information. That stockpile is stored not only in the kingdom but also Egypt, Japan and the Netherlands for added security.

The developed countries and China have sizable strategic reserves as well in cases of emergency, although stockpiles have been declining in the United States and Europe in recent weeks.

Until this weekend, OPEC has been more concerned about oversupply than shortages. As recently as Thursday, oil officials from OPEC, Russia and other producers met in Abu Dhabi and appeared to call for even tighter adherence to the production cuts they have maintained for almost three years. Those cuts were aimed at propping up prices and keeping the market from being swamped by oil.

The United States alone has as much as 713 million barrels in its strategic reserve, and administration officials are already talking about releasing some oil on the market to tamp down any gasoline price increase.

President Trump said in a tweet on Sunday evening that he had “authorized the release of oil from the Strategic Petroleum Reserve, if needed.”.

Such releases have had a powerful psychological effect on oil markets since the reserve was established after the oil embargoes of the 1970s. It has been drawn only occasionally, including during the first Persian Gulf war in 1991, Hurricane Katrina in 2005 and during the Arab Spring in 2011, when Libyan exports were halted.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely

HOUSTON — The drone attack on one of Saudi Arabia’s most important oil facilities could cripple a portion of Saudi petroleum exports for days or even weeks, and oil futures prices briefly spiked 20 percent when markets opened on Monday in Asia. But experts say that a severe shock to energy markets and the world economy is unlikely.

The attack on the Abqaiq processing facility and another plant, deep in Saudi territory, displayed the vulnerability of the kingdom to tensions in the Persian Gulf region. The country produces about 10 percent of the world’s oil supplies. The disruption could slash Saudi Arabia’s daily oil exports of 7.4 million barrels by as much as three-quarters, taking roughly 5 percent of global supplies off the market, unless the facility is quickly repaired.

President Trump suggested on Sunday that he could release supplies from the Strategic Petroleum Reserve, an attempt to calm oil markets. In response, Brent crude oil futures that had briefly jumped about 20 percent, or more than $11 a barrel, when the futures market opened on Monday in Asia eased over the next several hours to an increase of 8.6 percent, or just over $5 a barrel.

The attack raised the possibility of further disruptions in Saudi Arabia’s oil production if there were additional attacks on its fields and pipelines.

The planned initial public offering of the kingdom’s national oil company, Saudi Aramco, could also be hurt if international investors doubt Saudi Arabia’s ability to defend its vital energy infrastructure.

But as luck would have it, the attack came as global oil stockpiles were higher than usual, several producing countries have ample spare capacity and American oil facilities have so far been spared from a damaging hurricane season. Meanwhile, a slowing global economy has moderated energy demand.

ImageWestlake Legal Group merlin_159952797_41a4ceb5-81a4-47f6-a28f-15c277b3a2d8-articleLarge Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely Saudi Aramco Production Organization of the Petroleum Exporting Countries Oil (Petroleum) and Gasoline natural gas International Trade and World Market International Energy Agency Initial Public Offerings Energy Department Energy and Power Embargoes and Sanctions Drilling and Boring

A gas station in West Palm Beach, Fla. in August. The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents below a year ago.CreditSaul Martinez for The New York Times

“We do not expect an immediate disruption on global oil trade, since many nations, including the U.S., have ample crude oil in storage,” said Manish Raj, chief financial officer of Velandera Energy Partners, a Louisiana oil exploration and production company. “The Saudis themselves have enough storage to meet their export obligation for the next 60 days. Therefore, we expect no supply-demand imbalance in the near term.”

The main uncertainty is how long will it take for the Saudis to repair the Abqaiq facility, which separates gas from oil from several important oil fields. While the fire was put out quickly, the Saudis may not know the answer for days since the facility is large and has complex equipment that still needs to be tested.

Should the damage be fixed quickly, Eurasia Group, a risk consulting firm, estimates that oil prices could rise a modest $2 to $3 a barrel, which would still leave the global benchmark Brent crude below $65 a barrel, relatively low by recent historical standards. The firm estimated that a more long-lasting disruption could mean an increase of $10 a barrel, though that would still leave prices several dollars below where they were a year ago.

Other analysts took a dimmer view, even as Saudi Aramco said on Sunday that repairs were already underway. The initial reaction of oil traders was panicky.

“The problem is that the attack is so significant, “ said Bill Farren-Price a director at RS Energy Group, a market research firm. “It demonstrates that one of the best regional oil companies has difficulties defending itself from this new style of threat. That theme is going to endure. “

There are doubts the Saudis will be able to maintain their usual exports and satisfy domestic consumption.

“Export volumes will be severely impacted,” Clay Seigle, an analyst at Genscape, a market research firm, said in an email. “The market will be left with a thinner cushion against additional supply disruptions, and traders will bid prices higher as a result.”

Brazil’s state-run Petrobras oil company in Brasilia. The United States has been ramping up oil production as have other countries, including Norway and Brazil.CreditUeslei Marcelino/Reuters

How the other countries in the Saudi-led OPEC will respond is not yet clear. In a phone conversation, an official with the Organization of the Petroleum Exporting Countries said that the Saudis had so far not shared information about the extent of the damage and when output might be restored. He also said that OPEC had not yet begun discussions on potentially loosening supplies. “We have to see how the market reacts tomorrow,” the official said.

The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents lower than a year ago. That decline has been a boon to consumers, giving them extra spending power that has helped retailers and restaurants. An increase in prices to last year’s levels is possible over the next few weeks unless the Saudi facility is quickly fixed, energy analysts said.

Only a decade ago, the attack would probably have sent oil prices soaring. But that was before American oil production climbed with the shale drilling frenzy. The United States now produces roughly 12.1 million barrels a day, double what it produced in 2012 and 1.4 million barrels more than only a year ago.

The United States imports about 630,000 barrels of Saudi oil a day, down about half from 2017.

American oil companies have recently been cutting back on production, but higher oil prices would encourage them to produce more. At the same time, several pipelines to the Gulf Coast are nearing completion and that could stimulate significant export growth over the next six to 10 months.

Other oil-producing countries are also ramping up production, including Norway and Brazil, while Iraq, Nigeria and Russia have been producing a total of 650,000 barrels of oil above the levels agreed to with their OPEC partners.

The United States and other developed countries have nearly 3 billion barrels in stockpiles, according to the International Energy Agency, enough to take care of about two months of demand. That is about 50 million barrels above a year ago, despite American sanctions on Iran and Venezuela that have constricted their exports.

The stockpiles of the industrialized countries are at their highest level since September 2017, and are nearly 20 million barrels above the average of the last five years, according to the energy agency.

Participants on Thursday at an OPEC meetng in Abu Dhabi, where producers appeared ready to call for even tighter adherence to the production cuts they have maintained for almost three years. But that was before the attack this weekend.CreditKarim Sahib/Agence France-Presse — Getty Images

“For now, markets are well-supplied with ample commercial stocks, “ the agency said in a statement on Saturday, adding that it was “monitoring” the Saudi situation.

Saudi Arabia has roughly 27 days of supply stockpiled, according to S&P Global Platts, a provider of energy information. That stockpile is stored not only in the kingdom but also Egypt, Japan and the Netherlands for added security.

The developed countries and China have sizable strategic reserves as well in cases of emergency, although stockpiles have been declining in the United States and Europe in recent weeks.

Until this weekend, OPEC has been more concerned about oversupply than shortages. As recently as Thursday, oil officials from OPEC, Russia and other producers met in Abu Dhabi and appeared to call for even tighter adherence to the production cuts they have maintained for almost three years. Those cuts were aimed at propping up prices and keeping the market from being swamped by oil.

The United States alone has as much as 713 million barrels in its strategic reserve, and administration officials are already talking about releasing some oil on the market to tamp down any gasoline price increase.

President Trump said in a tweet on Sunday evening that he had “authorized the release of oil from the Strategic Petroleum Reserve, if needed.”.

Such releases have had a powerful psychological effect on oil markets since the reserve was established after the oil embargoes of the 1970s. It has been drawn only occasionally, including during the first Persian Gulf war in 1991, Hurricane Katrina in 2005 and during the Arab Spring in 2011, when Libyan exports were halted.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Attack on Saudi Oil Facility Is Seen as Short-Term Disruption

HOUSTON — The drone attack on one of Saudi Arabia’s most important oil facilities could cripple a portion of Saudi petroleum exports for days or even weeks and send energy prices higher. But experts say that a severe shock to energy markets and the world economy is unlikely.

The attack on the Abqaiq processing facility, deep in Saudi territory, displayed the vulnerability of the kingdom to tensions in the Persian Gulf region. The country produces about 10 percent of the world’s oil supplies. The disruption could slash Saudi Arabia’s daily oil exports of 7.4 million barrels by as much as three-quarters, taking roughly 5 percent of global supplies off the market, unless the facility is quickly repaired.

The attack also raised the possibility of further disruptions in Saudi Arabia’s oil production if there were additional attacks on its fields and pipelines.

The planned initial public offering of the kingdom’s national oil company, Saudi Aramco, could also be hurt if international investors doubt Saudi Arabia’s ability to defend its vital energy infrastructure.

But as luck would have it, the attack came as global oil stockpiles were higher than usual, several producing countries have ample spare capacity and American oil facilities have so far been spared from a damaging hurricane season. Meanwhile, a slowing global economy has moderated energy demand.

“We do not expect an immediate disruption on global oil trade, since many nations, including the U.S., have ample crude oil in storage,” said Manish Raj, chief financial officer of Velandera Energy Partners, a Louisiana oil exploration and production company. “The Saudis themselves have enough storage to meet their export obligation for the next 60 days. Therefore, we expect no supply-demand imbalance in the near term.”

ImageWestlake Legal Group merlin_159952797_41a4ceb5-81a4-47f6-a28f-15c277b3a2d8-articleLarge Attack on Saudi Oil Facility Is Seen as Short-Term Disruption Saudi Aramco Production Organization of the Petroleum Exporting Countries Oil (Petroleum) and Gasoline natural gas International Trade and World Market International Energy Agency Initial Public Offerings Energy Department Energy and Power Embargoes and Sanctions Drilling and Boring

A gas station in West Palm Beach, Fla. in August. The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents below a year ago.CreditSaul Martinez for The New York Times

The main uncertainty is how long will it take for the Saudis to repair the Abqaiq facility, which separates gas from oil from several important oil fields. While the fire was put out quickly, the Saudis may not know the answer for days since the facility is large and has complex equipment that still needs to be tested.

Should the damage be fixed quickly, Eurasia Group, a risk consulting firm, estimates that oil prices could rise a modest $2 to $3 a barrel, which would still leave the global benchmark Brent crude below $65 a barrel, relatively low by recent historical standards. The firm estimated that a more long-lasting disruption could mean an increase of $10 a barrel, though that would still leave prices several dollars below where they were a year ago.

Other analysts took a dimmer view, even as Saudi Aramco said on Sunday that repairs were already underway.

“The problem is that the attack is so significant, “ said Bill Farren-Price a director at RS Energy Group, a market research firm. “It demonstrates that one of the best regional oil companies has difficulties defending itself from this new style of threat. That theme is going to endure. “

There are doubts the Saudis will be able to maintain their usual exports and satisfy domestic consumption.

“Export volumes will be severely impacted,” Clay Seigle, an analyst at Genscape, a market research firm, said in an email. “The market will be left with a thinner cushion against additional supply disruptions, and traders will bid prices higher as a result.”

Brazil’s state-run Petrobras oil company in Brasilia. The United States has been ramping up oil production as gave other countries, including Norway and Brazil.CreditUeslei Marcelino/Reuters

How the other countries in the Saudi-led OPEC will respond is not yet clear. In a phone conversation, an official with the Organization of the Petroleum Exporting Countries said that the Saudis had so far not shared information about the extent of the damage and when output might be restored. He also said that OPEC had not yet begun discussions on potentially loosening supplies. “We have to see how the market reacts tomorrow,” the official said.

The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents lower than a year ago. That decline has been a boon to consumers, giving them extra spending power that has helped retailers and restaurants. An increase in prices to last year’s levels is possible over the next few weeks unless the Saudi facility is quickly fixed, energy analysts said.

Only a decade ago, the attack would probably have sent oil prices soaring. But that was before American oil production climbed with the shale drilling frenzy. The United States now produces roughly 12.1 million barrels a day, double what it produced in 2012 and 1.4 million barrels more than only a year ago.

The United States imports about 630,000 barrels of Saudi oil a day, down about half from 2017.

American oil companies have recently been cutting back on production, but higher oil prices would encourage them to produce more. At the same time, several pipelines to the Gulf Coast are nearing completion and that could stimulate significant export growth over the next six to 10 months.

Other oil-producing countries are also ramping up production, including Norway and Brazil, while Iraq, Nigeria and Russia have been producing a total of 650,000 barrels of oil above the levels agreed to with their OPEC partners.

The United States and other developed countries have nearly 3 billion barrels in stockpiles, according to the International Energy Agency, enough to take care of about two months of demand. That is about 50 million barrels above a year ago, despite American sanctions on Iran and Venezuela that have constricted their exports.

Participants on Thursday at an OPEC meetng in Abu Dhabi, where producers appeared ready to call for even tighter adherence to the production cuts they have maintained for almost three years. But that was before the attack this weekend.CreditKarim Sahib/Agence France-Presse — Getty Images

The stockpiles of the industrialized countries are at their highest level since September 2017, and are nearly 20 million barrels above the average of the last five years, according to the energy agency.

“For now, markets are well-supplied with ample commercial stocks, “ the agency said in a statement on Saturday, adding that it was “monitoring” the Saudi situation.

Saudi Arabia has roughly 27 days of supply stockpiled, according to S&P Global Platts, a provider of energy information. That stockpile is stored not only in the kingdom but also Egypt, Japan and the Netherlands for added security.

The developed countries and China have sizable strategic reserves as well in cases of emergency, although stockpiles have been declining in the United States and Europe in recent weeks.

Until this weekend, OPEC has been more concerned about oversupply than shortages. As recently as Thursday, oil officials from OPEC, Russia and other producers met in Abu Dhabi and appeared to call for even tighter adherence to the production cuts they have maintained for almost three years. Those cuts were aimed at propping up prices and keeping the market from being swamped by oil.

The United States alone has as much as 713 million barrels in its strategic reserve, and administration officials are already talking about releasing some oil on the market to tamp down any gasoline price increase.

“Our Department of Energy stands ready to tap into the Strategic Reserve if we must to stabilize the global energy supply,” Kellyanne Conway, the White House counselor, said on Fox News Sunday. Energy Secretary Rick Perry has already instructed his department to work with the International Energy Agency to coordinate possible releases from the reserves.

Such releases have had a powerful psychological effect on oil markets since the reserve was established after the oil embargoes of the 1970s. It has been drawn only occasionally, including during the first Persian Gulf war in 1991, Hurricane Katrina in 2005 and during the Arab Spring in 2011, when Libyan exports were halted.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trump’s Methane Rule Rollback Divides Oil and Gas Industry

HOUSTON — Oil and gas producers might have been expected to welcome a decision to loosen regulations affecting their business. But their reaction to the Trump administration’s move to roll back methane-emissions rules revealed at least tactical divisions on climate policy.

Contradictory voices quickly emerged Thursday between those who supported the move as a boon to domestic energy production and others who viewed it as a counterproductive measure that would sully the reputation of natural gas as a clean fuel.

Global oil and gas companies generally distanced themselves from the administration decision, while smaller domestic companies that are struggling to make a profit at a time of low oil and gas prices said they supported the rollback.

The divide reflected differing visions of the industry’s future in light of growing concerns about greenhouse-gas emissions that cause climate change.

Natural gas often escapes unburned during production and distribution, and its essential component — methane — is more than 80 times as potent as carbon dioxide in trapping heat in the earth’s atmosphere in the 20 years it takes to dissipate. The administration’s move would loosen regulations affecting methane emissions from pipelines, storage tanks and wells.

Without constraints on harmful emissions, some in the industry feel they will be less effective in arguing that gas should replace coal in generating power. And that would strengthen the case for favoring sources like wind and solar energy rather than gas to control global warming.

“What some people in the industry do not get, but others are beginning to get, is that we are transitioning to a low-carbon economy,” said Mark Boling, former executive vice president of Southwestern Energy and a consultant to oil companies trying to monitor emissions in Colorado. “If natural gas is going to replace coal, we need to show the climate benefit.”

Natural gas has replaced coal as the most important power fuel in the United States in recent years, largely because it is cheap and far cleaner to burn. Proponents say gas can be a “bridge fuel” that can back up wind turbines when the wind does not blow and solar arrays when the sun does not shine.

But critics note that the problem of leaks may be underestimated to the point where the environmental benefits of gas have been overstated. Big companies that propose to ship gas around the world in pipelines and in cooled liquid form want to counter that argument so they can increase exports to countries like India and China.

Under increasing pressure from shareholders, activists and their own employees, BP, Shell, Exxon Mobil and several other international oil companies have joined the Oil and Gas Climate Initiative, which is pledged to reduce gas emissions. It is one part of a growing acknowledgment in the industry that climate change and future regulation are a threat.

“Shell has long supported the direct regulation of methane when regulation is efficient, effective and encourages innovation,” said Gretchen Watkins, Shell’s president for U.S. operations. “While the law may change in this instance, our environmental commitments will stand.”

ImageWestlake Legal Group merlin_139971951_bc803102-e188-4c52-b4c4-a157562b1601-articleLarge Trump’s Methane Rule Rollback Divides Oil and Gas Industry Trump, Donald J Regulation and Deregulation of Industry Oil (Petroleum) and Gasoline natural gas Methane Greenhouse Gas Emissions Global Warming American Petroleum Institute

Bubbles rising from a leaky pipe juncture at a natural-gas well site. Natural gas often escapes unburned during production, and its essential component, methane, traps heat in the atmosphere.CreditAndrea Morales for The New York Times

BP said Thursday that the Environmental Protection Agency should regulate methane emissions from both new and existing energy sources. “We have to reduce methane emissions for natural gas to realize its full potential in our energy mix,” said Susan Dio, BP America’s chairman and president.

But the industry’s principal trade organization, the American Petroleum Institute, took a different tack. The group, which represents all facets of the industry, from production to refining, voiced support for the Trump administration’s action and said companies were controlling leaks without government intervention.

Erik Milito, a vice president at the institute, said the organization welcomed “smart regulations” that “provide the flexibility to develop and deliver affordable and reliable American energy.”

Among the critics of government methane regulations are the thousands of small producers who pump oil around Texas, Oklahoma and Louisiana from small wells that sometimes produce as little as 10 barrels a day. They say they cannot afford higher compliance costs.

“They want us to comply with extremely expensive equipment and procedures that will hinder us from making a profit,” Darlene S. Wallace, president of Columbus Oil, an Oklahoma company, said of those who promoted stricter standards adopted during the Obama administration. “Most people who own marginal wells are rural people, and all the regulation is going to do is take a living away from a lot of people.”

Patrick Montalban, chairman of Montalban Oil and Gas Operations in Montana, said tighter regulation meant “a tremendous amount of administrative and field expenses that is not required,” adding, “You are not saving the environment by doing this.”

The administration decision is bound to be popular with many oil workers who are skeptical about climate change and see regulations as a threat to their jobs. But many oil executives have shown little enthusiasm for administration initiatives that would open the way for exploration in the Arctic National Wildlife Refuge in Alaska and deepwater areas off the Atlantic coast. They cite a supply glut and plenty of exploration opportunities in existing shale fields. They also privately express concern that the trade war with China could limit their oil and gas exports in the future.

And in addressing environmental concerns, some big companies are taking a new look at technological solutions. Chevron and Occidental are investing in a Canadian company that is designing a way to sweep carbon dioxide out of the air to produce a clean fuel.

Executives are also beginning to speak out more bluntly about climate change, and in support of the 2016 Paris climate accord that President Trump abandoned.

“It’s for both moral and economic reasons that we should not vent methane or flare,” said Bill Maloney, a board member for two private oil and gas companies. “Why in the world would we want to make a product that we can sell and then vent it into the atmosphere?” added Mr. Maloney, a former executive vice president for development and production in North America for Statoil, the Norwegian company that has since changed its name to Equinor.

Since 2014, more than a dozen medium-size oil and gas companies, including Hess, Apache and Noble, have sided with an effort called One Future Coalition that aims to trace and reduce gas emissions. They are joined by Kinder Morgan, the pipeline giant, and several utilities.

Early indications are that there will not be a retreat from the effort.

“We will continue to urge the E.P.A. to retain the main features of the existing methane rule,” said Scott Silvestri, a spokesman for Exxon Mobil, the country’s largest oil company. “Last year, we announced our support for the direct regulation of methane emissions for new and existing oil and gas facilities. That hasn’t changed.”

Mark Brownstein, a senior vice president of the Environmental Defense Fund who has worked with oil companies to reduce methane emissions, expressed cautious optimism. “I think the larger and globally focused companies continue to focus on this issue and getting it right,” he said. “But this is a situation where the laggards define the reputation of the product. This will ultimately come down to the weakest link in the chain.”

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