The burning and releasing of vast amounts of natural gas into the atmosphere in America’s top shale basin is much bigger than previously thought when processing plants are included, Rystad Energy found.

Research on the controversial practices of flaring and venting — described by shale pioneer Scott Sheffield as a “black eye” for the Permian Basin — has typically focused on emissions by oil producers at the wellhead.

But gas-processing facilities in the region are receiving more gas than they can handle, so they burned off or released about 190 million cubic feet per day of the fuel last year, raising the total by 30% to roughly 810 million, data from Oslo-based Rystad shows. That’s almost enough gas to supply 5 million U.S. homes.

“With the inclusion of estimates for gas plant-related flaring, we observe a significant increase in total Permian flaring and venting compared to our previous update,” the consultancy said in a report.

The silhouette of an electric oil pump jack is seen near a flare at night in the oil fields surrounding Midland, Texas.

Flaring has become a major source of negative attention for Permian oil producers in Texas and New Mexico as concerns about greenhouse-gas emissions and climate change grow among consumers and investors. Permian drillers burn or release the gas that comes out of wells as an unwanted byproduct because they lack pipelines to send it where it’s needed.

Rystad, a leading provider of flaring and venting data, uses information from the U.S. Environmental Protection Agency, the Texas Railroad Commission, which regulates oil and gas in the state, and its own estimates.

Ryan Sitton, one of the regulator’s three commissioners, plans to release a first-of-its-kind report on flaring next week to give the public better information. The commission’s reporting has been criticized as “outdated” and “difficult-to-manipulate” by the Environmental Defense Fund.

The dearth of good-quality data means that total flaring volumes are likely underreported, according to Rystad. Of the Permian’s 50 smallest operators, only seven posted any flaring at all, meaning there are “obvious gaps” in the data, the consultancy said.

“This implies energy regulators might need to enforce better waste gas reporting standards to ensure that the market has sufficient fact-based visibility on the total volume of flared gas in the Permian,” Rystad said.

Texas regulators have come under pressure from environmentalists and some larger oil producers for allowing the industry to burn off gas at record levels in the Permian. While safer and cleaner than letting methane vent unchecked into the air, flaring produces carbon dioxide and wastes a useful resource. Opponents say producers should not be allowed to flare at will, and should not be allowed to drill wells unless they have a plan for their gas.

Click here for more on the commission’s planned report

The Texas Railroad Commission says the increased flaring is primarily a result of surging crude production in the basin. The amount of gas flared as a portion of total production in Texas is much lower than other major oil producers such as Russia or states like North Dakota, Sitton said last week.

Still, if the Permian were a country, it would have ranked ninth for total volume of flared gas in 2018, ahead of Mexico and Angola and just behind Libya.

— With assistance by Rachel Adams-Heard

Europe’s second-largest gas supplier plans to keep pumping natural gas even after prices dropped to their lowest in more than a decade. The region’s benchmark slid 50% in the past year after a mild winter left inventories brimming and more cargoes of liquefied natural gas flooded the market. Yet that’s not putting off Equinor ASA, the Norwegian state-owned producer, which delivers about a fifth of the European Union’s pipeline gas imports. “If someone is hoping for supply relief coming from Norway, we will have to disappoint them,” Tor Martin Anfinnsen, the state-owned company’s senior vice- president for marketing and trading, said in an interview in Essen, Germany. “We will be the last ones to turn off the taps. We are far away from reducing flows.” The unwillingness to cut flows may seem surprising, considering that Equinor is one of the most exposed oil companies to European and US spot natural gas prices, according to Sanford C Bernstein & Co, which sees the company’s gas earnings fall by about €300mn ($326mn) in 2020 if prices don’t change from current levels. But both Equinor and its larger Russian rival Gazprom PJSC may be focusing on preserving market share as competition heats among LNG suppliers. Equinor’s gas production “is very cost-competitive,” Anfinnsen said. The company said it continues its normal practice, which is to optimize prompt versus forward markets according to demand signals within the flexibility limits under its license permits. Norway’s pipeline exports of natural gas to continental Europe and the UK fell to 107bn cubic meters in 2019 from 114bn cubic meters the year before as Equinor and other producers choose to hold back volumes amid the bad market conditions, according to Norwegian Petroleum Directorate. Benchmark next-month gas in the Netherlands has dropped to about €8.70 a megawatt-hour ($2.75 a million British thermal units), the lowest since August 2009. Norway’s marginal production cost is about €6 a megawatt-hour and Russia’s is around €8, according to six traders and analysts consulted by Bloomberg since Tuesday at the E-World conference in Essen, Germany. “Even if prices achieve levels below Norway and Russia’s marginal cost of production, these countries usually have long-term strategies for gas supply,” Frank van Doorn, head of trading at Sweden’s Vattenfall AB, said in an interview in Essen. “I am not sure if they would have a quick answer to low prices.” Even the coronavirus may weigh down on European gas if more Chinese buyers declare force majeure on LNG supplies, leaving the potential for increased imports of the chilled fuel into the region, van Doorn said. “It is hard to find a bullish factor for natural gas right now,” he said. “It can take more than two years until we see an upside move.”

MINERALNYE VODY/MOSCOW, Russia, Feb 7 (Reuters) – Russia said on Friday it needed more time to decide whether to join any additional oil output cuts by OPEC, saying U.S. crude production growth would slow and global demand remained solid.

Energy Minister Alexander Novak was speaking as the Organization of the Petroleum Exporting Countries pushes Moscow to make a decision on whether to cut output more in response to the coronavirus outbreak that has hit the global economy.

A technical panel that advises OPEC and its allies, led by Russia – a grouping known as OPEC+ – proposed on Thursday a provisional cut of 600,000 barrels per day (bpd), three sources told Reuters.

Producers in OPEC+ are scheduled to meet in Vienna on March 5-6, although the meeting could be brought forward depending on how the coronavirus outbreak affects oil prices.

Novak said Moscow needed more time to assess the situation, stopping short of giving a clear Russian position on the proposal. Oil prices have come under pressure recently in the absence of a Russian response to calls for more output cuts.

“I can’t tell you about my position right now, maybe we will say it next week,” Novak said when asked about Moscow’s position. “Russia needs a few days for market analysis.”

Crude prices fell on Friday following Novak’s comments. They had rallied earlier on remarks from Russian Foreign Minister Sergei Lavrov that were initially seen as being more upbeat about the proposal to cut output.

Speaking at a news conference in Mexico City on Thursday, Lavrov said via interpreters that Moscow supported “the idea”, when asked about the proposal.

However, a foreign ministry transcript of his comments suggested he was speaking in general terms.

Lavrov was asked: “Is Russia planning to support the call by OPEC+ to cut oil production, as was suggested at a recent emergency meeting?”

He replied: “We are actively supporting cooperation within the framework of OPEC+ and collaboration between oil exporting countries, including both OPEC and non-OPEC countries.”

On Friday, Novak said global oil demand might fall by 150,000 to 200,000 bpd this year due to the virus outbreak and other negative factors, lower than other forecasts.

Novak said his estimate was “an insignificant volume, taking into account that the volatility in consumption also depends on many factors, such as Libya, Iran, Venezuela, where supply is also quite volatile”.

Others have suggested a much bigger impact. BP said a global slowdown was expected to reduce 2020 oil demand growth by 300,000-500,000 bpd, or up to 0.5% of total demand.

Novak also said U.S. oil output was not expanding as fast as before.

“Growth is slowing down in the United States. It was 1.3 million bpd last year … This year, we expect less than 1 million,” he said. “Oil production growth is slowing down there due to lower prices.” (Reporting by Olesya Astakhova; Writing by Vladimir Soldatkin; Editing by Edmund Blair, Katya Golubkova and David Clarke)

China’s big state-owned liquefied natural gas importers are considering force majeure declarations on contracted cargo deliveries as they grapple with the impact from the novel coronavirus, according to people with knowledge of the situation.

The fight against the deadly virus is threatening China’s economic growth and is casting a cloud over energy demand for the top crude importer and second-biggest LNG buyer. The nation’s oil consumption is already estimated to have dropped by 20%, which is expected to cause fuel makers to cut back production and seek to delay some oil shipments. A decline in gas demand is similarly forcing buyers to consider postponing deliveries to cope with high inventories.

A drop in China’s gas demand would likely leave little outlet for additional imports as the nation has been grappling with high inventories over the last few months amid milder-than-normal winter temperature. And any disruption or cancellation of cargoes to China would put more pressure on Asian spot LNG prices, which have hit record low levels amid a global glut of supply.

CNOOC and PetroChina Co. have begun drafting the necessary documents to issue the declarations, in case they decide to move ahead, said the people. Sinopec Corp. is also considering force majeure.

PetroChina and Sinopec declined to comment. Nobody answered multiple calls to CNOOC.

China said last week that it would offer support to companies that sought to declare force majeure on international contracts. The announcement came as provinces accounting for two-thirds of China’s gross domestic product extended the Lunar New Year holiday until at least the second week of February, prolonging the shutdown of factories that produce everything from cellular phones to sneakers.

The Japan/Korea Marker, the spot LNG benchmark for Asia, fell to a record low $3.512 per million British thermal units on Monday, according to S&P Global Platts.

— With assistance by Anna Shiryaevskaya, and Feifei Shen

Qatargas has achieved a major milestone with its North Field Bravo (NFB) Living Quarters Expansion (LQX) Project as it safely and successfully completed the onshore fabrication of the living quarters’ structure locally, a first in the country.

The fabrication was done by Nakilat-Keppel Offshore Marine (N-KOM) at the Erhama Bin Jaber Al Jalahma Shipyard. The project is significant for Qatar as it is for the first time that a major offshore living quarter’s structure has been entirely fabricated at a local yard in the country.

Qatargas organised a ceremony to mark the sail-away of the jacket and topside of the structure at Ras Laffan. The event was attended by Qatargas’ shareholders and senior executives, N-KOM, and the project’s contractor, Rosetti Marino.

“This project is a historic milestone for Qatar as it highlights a new and important capability. This achievement showcases the capabilities, skills and resources which are available locally at the Erhama Bin Jaber Al Jalahma Shipyard for the fabrication of large and complex offshore structures,” said Khalid bin Khalifa al-Thani, chief executive, Qatargas.

Qatargas had awarded the engineering procurement and construction contract for the LQX project to Rosetti Marino that undertook engineering designs in Italy. All the fabrication work was undertaken by N-KOM at the Erhama Bin Jaber Al Jalahma Shipyard at Ras Laffan Port.

The project provides for additional living quarters which will increase the capacity of the NFB Offshore living quarters by 90 personnel on board. When fully installed, this will allow for the catering of additional operational requirements.

The project work scope includes the construction of a four-legged jacket and piles weighing about 2,200 tonnes. This will support the new living accommodation platform weighing around 2,800 tonnes and consisting of five decks, a fully equipped helideck, six bridge links to existing living quarters, services and utilities.

The project has recently achieved 2.5mn safe man-hours without any lost time incidents with a peak manpower rate of over 900 people. The next major milestone of the project is the safe transportation and installation of the 5,000 tonnes of structure to offshore NFB this month. The load out, sail away and installation activities will be carried out by subcontractor Heerema using their heavy lift vessel ‘Aegir’.

“This project is not only a milestone achievement for Qatar but also an excellent testament to N-KOM’s experience in handling offshore fabrication projects,” according to Nakilat chief executive Abdullah Fadhalah al-Sulaiti.

The original NFB accommodation, installed in 1995, was designed for the operational needs of Qatargas Trains 1 and 2. The offshore accommodation expansion project was initiated to cater to the changes in the operational requirements following various expansion projects. Brownfield modifications will also be done on the existing living quarters and platform to properly integrate the new additional living quarters.

A glut of liquefied nat- ural gas that has sent global prices toward historic lows could be erased as soon as a year from now, accord- ing to Charif Souki, co-founder of LNG- terminal developer Tellurian Inc, reports Bloomberg. While gas prices are too low across the globe to justify build- ing new export termi- nals, more facilities are needed to meet rising demand, according to Souki. Given building terminals takes a long time, and limited new capacity is slated to come online in the next five years, LNG prices may be set for a rebound, he said. “They cannot crash any more than they already have,” Souki said in an interview last week, referring to LNG prices. “You cannot justify building anything at these current levels, it’s not sustainable. We are go- ing to be short of LNG” in the next 12 months, he said. Several new projects were greenlit last year.

Oil is off to the worst begin to a yr since 1991, tumbling 16% in January on concern that the unfold of coronavirus will curb demand for transportation fuels.

Futures fell 1.1% in New York on Friday, capping the worst month since May as traders have been rattled by the concern of demand destruction after the World Health Organization declared the outbreak a world well being emergency. The U.S. Centers for Disease Control and Prevention referred to as the virus an unprecedented public well being risk.

“People are wanting on the continued rise in circumstances and the way that’s impacting jet gasoline and has made these demand fears worse,” Leo Mariani, vitality analyst at KeyBanc Capital Markets Inc. “It’s going to take the virus not being a persistent occasion and for international demand to indicate indicators of enchancment so as to stabilize.”

China, the world’s second largest financial system and key driver of oil demand, resorted to unprecedented measures to sluggish the outbreak, together with extending the Lunar New Year vacation and a lock-down within the nation’s main cities and provinces. At least two-thirds of China’s financial system will keep shut subsequent week, as residents are being advised to not return to work or college, or to keep away from congregating in public locations.

The plunge in oil costs has prompted a push led by Saudi Arabia for the Organization of Petroleum Exporting Countries and its allies to carry an emergency session in February, with Russia signaling for the primary time on Friday it was open to holding the assembly earlier.

The coalition is contemplating a proposal to deepen present manufacturing curbs by about 500,000 barrels a day, although there’s no consensus on the concept but, in keeping with marketing consultant Energy Aspects Ltd. As the oil producer group and its companions, a 23-nation coalition referred to as OPEC+, have already made steep cutbacks not too long ago, analysts have been skeptical on how far more they’re keen to do.

“This virus is requiring extra out of the group because the demand image will get weaker,” mentioned Rebecca Babin, a senior fairness dealer at CIBC Private Wealth Management.

West Texas Intermediate crude for March supply fell 58 cents to settle at $51.56 a barrel on the New York Mercantile Exchange, after sliding as a lot as 2.2% throughout the session.

Brent for March supply, which expired Friday, misplaced 13 cents to $58.16 a barrel on the London-based ICE Futures Europe change, and sank 12% in January. The extra lively April contract slid 71 cents to $56.62 a barrel. April Brent was $four.94 a barrel above WTI for a similar month.

In addition to the drop in outright costs, the market’s construction confirmed additional indicators of the market malaise. April Brent’s premium over May contracts falling by about greater than one-third to simply 20 cents a barrel. The December 2020-December 2021 unfold, a intently watched indicator of the market’s power, shrank 70 cents a barrel, the bottom because the finish of October. On Jan. 6, it closed at $four.05.

LONDON (Reuters) – OPEC oil output plunged in January to a multi-year low as top exporter Saudi Arabia and other Gulf members overdelivered on a new production-limiting accord and Libyan supply dropped due to a blockade of ports and oilfields, a Reuters survey found.

On average, the 13-member Organization of the Petroleum Exporting Countries pumped 28.35 million barrels per day (bpd) this month, according to the survey. That is down 640,000 bpd from December’s revised figure.

Despite the drop in supply, crude prices have slipped to below $60 a barrel on concern that the coronavirus outbreak could cut China’s oil demand. This has prompted OPEC and its allies to discuss holding an early meeting and taking further steps to support the market.

OPEC, Russia and other allies, known as OPEC+, agreed to deepen an existing supply cut by 500,000 bpd from Jan. 1 2020. OPEC’s share of the new reduction is about 1.17 million bpd, to be made by 10 members, all except Iran, Libya and Venezuela.

The 10 OPEC members bound by the agreement easily exceeded the pledged cuts in January thanks to Saudi Arabia and its Gulf allies cutting more than called for to support the market.

OPEC complied with 133% of the pledged cuts in January, the survey found. In December, the group implemented 158% of the promised curbs.

January’s output was the lowest by OPEC since 2009, the year in which the group implemented its biggest-ever supply cut due to the financial crisis, excluding membership changes that have taken place since then, according to Reuters surveys.

LIBYAN PLUNGE

Oil output in Libya has plunged since Jan. 18 due to a blockade of ports and fields by groups loyal to eastern-based commander Khalifa Haftar.

Production in Libya averaged 760,000 bpd during the month, the survey found, down from 1.15 million bpd in December.

Saudi Arabia trimmed supply from December’s rate, voluntarily going beyond the reduction it is required to make under the OPEC+ accord. Gulf ally the United Arab Emirates also overdelivered, sources in the survey said.

The January survey suggests Nigeria and Iraq, both laggards in making cuts in 2019, achieved some progress. Both countries reduced output although they have more to do in later months.

Among countries pumping more, Venezuela, which is contending with U.S. sanctions imposed on state oil firm PDVSA and a long-term decline in output, managed a small boost to supply with exports increasing in January.

Production from the other exempt producer Iran, under U.S. sanctions, was steady.

The Reuters survey aims to track supply to the market and is based on shipping data provided by external sources, Refinitiv Eikon flows data and information provided by sources at oil companies, OPEC and consultants.

Russia’s oil production increased to a five-month high in January following an agreement with the Opec+ alliance to exclude condensate from its quota.
The nation pumped 47.72mn tonnes of crude and condensate – a light oil extracted from natural gas – last month, Interfax reported, citing preliminary data from the Energy Ministry’s CDU-TEK unit. The figure, which may be rounded, equates to about 11.28mn barrels a day on average, based on the standard 7.33 barrels-per-tonne conversion ratio.
The CDU-TEK data usually doesn’t provide a separate figure for crude production, so it can’t be used to gauge Russia’s compliance with promised output cuts. In December, the country successfully lobbied the Organisation of Petroleum Exporting Countries and its allies to exclude condensate from its quota.
Energy Minister Alexander Novak has insisted the exclusion isn’t a loophole, and that Russia will be transparent about its oil production. Last month, the ministry published December figures that showed how Russia may disclose its compliance. While the statement was less detailed than the CDU-TEK data, it split output cuts into crude and condensate, compared with the respective October 2018 baselines.
Russia has pledged to cut its crude-only output by 298,000 barrels a day this quarter, from a baseline of 10.626mn barrels a day. The nation was not far from meeting that target in December, the Energy Ministry said, reporting crude-only cuts of 234,000 barrels a day.
Russia largely failed to meet its obligations in 2019 under the previous Opec+ deal. It attributed that failure to challenging weather and geological conditions in winter, the temporary shutdown of the Druzhba oil pipeline and growing condensate output at gas projects. Russia’s main gas producers Novatek PJSC and Gazprom PJSC have been bringing new fields online and expanding existing projects to ramp up exports to markets in Europe and Asia.