News of the Day: Manchin Comes Out against Biden Infrastructure Bill
U.S. oil rig count climbs, signaling revival from pandemic lows
Ben Geman, Axios, April 5,2021
The number of U.S. oil drilling rigs in operation last week climbed by 13 to reach 337, Baker Hughes data shows.
Why it matters: It’s the highest in nearly a year and, as Reuters notes, the increase was the largest since January 2020.
The increases — a signal of future output rises — are a sign of some activity returning from the pandemic as prices have risen.
The big picture: The Wall Street Journal explains why Pioneer Natural Resources’ $6.4 billion deal to acquire DoublePoint Energy announced last week is another sign of life in the U.S. oil patch.
“A surge in the shares of U.S. oil producers, following the rollout of Covid-19 vaccines and a slow but steady recovery in oil demand, is enabling larger companies to use their equity to pay for targeted acquisitions,” it reports.
But, but, but: It will be a long time before U.S. production approaches its pre-pandemic high of around 13 million barrels per day — if it ever happens.
The future of global demand growth is pretty hazy, while shale companies are under investor pressure to show returns instead of relentlessly pursuing growth.
What’s next: The Energy Information Administration’s next monthly look-ahead arrives tomorrow.
- Last month the EIA forecast that U.S. production will average 11.1 million barrels per day this year and 12 million in 2022.
Russia Expects Maritime Rules to be Respected Amid Nord Stream 2 Concerns
Pipeline & Gas Journal, April 4, 2021
Russia expects all maritime traffic rules “to be strictly observed” in the area of the construction site of the Nord Stream 2 gas pipeline, a foreign ministry official was quoted on Friday as saying, amid security concerns over the project.
The consortium behind the construction of the underwater Nord Stream 2 gas pipeline from Russia to Germany warned on Thursday about security risks to the project from warships and planes, as the link nears completion.
“We naturally expect all relevant norms of maritime traffic to be strictly observed,” TASS news agency cited Russian Deputy Foreign Minister Alexander Grushko as saying.
The pipeline, aimed at bypassing Ukraine and doubling the capacity of the current Nord Stream undersea gas link from Russia to Germany, has been the focus of tensions between Moscow and Washington, which imposed sanctions against the project.
Andrey Minin, a senior official at the Nord Stream 2 AG consortium, has said that the project’s fleet has been the target of “regular provocations by foreign civil and military vessels”, including from nearby Poland.
“We continue to believe that the project serves the interests of strengthening Europe’s energy security,” Grushko said, according to TASS. According to Nord Stream 2 AG, the pipeline is 95% complete and around 121 kilometers (75 miles) remains to be built. “We have complete confidence that the project will be completed,” Grushko told TASS.
U.S. Secretary of State Antony Blinken said in an interview broadcast on Sunday that it was ultimately up to those building the Nord Stream 2 pipeline whether to complete it despite opposition from Washington.
From the Washington Examiner, Daily on Energy:
THE COMPANY RACING TO FREE US FROM RELIANCE ON CHINA FOR ELECTRIC VEHICLES: One company sees a business opportunity in the U.S.’ reliance on China for rare earth elements. Demand for the metals is only growing as clean energy products such as wind turbines and electric cars, which use the metals, become more popular. UCore aims to rip that hegemony away from China, the Washington Examiner’s Zachary Halaschak reports for a story posted this past weekend.
“It’s a pretty dangerous spot to be in,” said UCore interim CEO Pat Ryan. “It’s quite an imbalance, and it’s got to be corrected, or the technology will continue to evolve with control by China.”
Ryan, who called rare earths “the new oil,” highlighted the anticipated explosion of growth in the electric vehicle industry over the next decade.
What the company is doing: UCore is aiming to build one of the first U.S. rare earth separation facilities and plans to do so in Ketchikan, Alaska. The facility will use cutting-edge technology to separate out the critical elements from feedstock shipped in from U.S.-allied countries. Once UCore is bringing in revenue, it plans to open its nearby Bokan-Dotson Ridge mine and use ore from there to form a completely domestic supply chain. The initial throughput of the facility could supply enough dysprosium for 1 million electric vehicles and, at peak, something like 3 million electric vehicles, the CEO said.
Democrats Asking Biden to Shut Down Dakota Access Pipeline
Maddy, McCarty, Pipeline & Gas Journal, April 5, 2021
A group of 33 Democratic congress members are named on a letter to President Joe Biden asking him to shut down the Dakota Access Pipeline while it undergoes a court-mandated environmental review.
The 1,172-mile Dakota Access Pipeline transports oil underground from the Bakken/Three Forks production are in northwest North Dakota through South Dakota and Iowa to Pakota, Illinois. The 570,000-bpd pipeline was completed in 2017 and Energy Transfer in 2019 began filing and making notifications about plans to optimize the existing pipeline to accommodate additional volumes of crude oil.
The Democrats, led by Reps Nanette Diaz Barragán (D-Calif.), Raul Ruiz (D-Calif.) and Raúl Grijalva (D-Ariz.) along with Sens. Jeffrey Merkley (D-Ore.) and Elizabeth Warren (D-Mass.), argue the U.S. Army Corps failed to consider the potential impacts of the pipeline on the Standing Rock Sioux Reservation and other communities when the corps issued a permit for the pipeline to cross a federal reservoir along the Missouri River.
“The tribe draws its water from the Missouri River, and rightfully fears an oil spill could disproportionately affect their drinking water, as well as hunting and fishing writes,” the letter dated April 1 said.
The pipeline partners and operators maintain that it is the safest and most environmentally sensitive way to transport crude oil from domestic wells to American consumers.
A court in January ruled against a decision by the federal government which allowed for the pipeline’s construction, deciding the Army Corps of Engineers should have conducted an environmental impact statement, but left the decision whether to shut down the pipeline up to the agency, The Hill reported. The court postponed a hearing on the shutdown until April 9 to discuss plans with the presidential administration, the letter states.
“By shutting down this illegal pipeline, you can continue to show your administration values the environment and the rights of Indigenous communities more than profits of outdated fossil fuel industries,” the letter states.
Pipelines like Dakota Access are safer than rail or truck transportation of crude, according to the Dakota Access website, and a computer network control system monitors the pipeline 24/7.
Big Oil Is Cutting Emissions. With Big Data It Will Do It Quicker.
Paul Steidler, Real Clear Energy, April 1, 2021
The world’s largest oil and natural gas companies are sprinting to cut greenhouse gas emissions and making significant progress. By reengineering many operations through digital technology and cloud storage – Big Data – emissions will be cut sooner, and without unnecessary, drastic steps that will drive up the price of oil and gasoline, thereby imposing a de facto, regressive tax.
The American Petroleum Institute’s March 25 announcement that it supports a price on carbon emissions adds impetus to these changes. Oil companies have already faced significant and growing pressure from Climate Action 100+, a group of 525 investors with $52 trillion in assets under management focused on “curbing emissions and strengthening climate-related financial disclosures.”
Companies have made bold pledges to cut emissions and are being watched closely by investors, policy makers and the public.
Exxon Mobil’s 2021 Energy & Carbon Summary pledges a 15-20 percent reduction in greenhouse gas emissions by 2025 from 2016 levels. This follows a 5 percent reduction from 2010 to 2019. Central to the plan is a 40-45 percent reduction in methane emissions.
BP has announced it will become carbon neutral by 2050. It is transforming into an integrated energy company as it aims to cut carbon emissions 40 percent by 2030.
Chevron is seeking to reduce its oil-related greenhouse gas emissions by 10 percent from 2016-23 while also investing $1.1 billion in carbon capture projects.