What You Should Know About Oil and Gas Today
The State of Play
A massive spill from a Russian industrial plant north of the Arctic Circle has polluted the Ambarnaya River in one of the largest spills in the Arctic region. CNBC reports that at least 20,000 tons of “oil products” were released from the plant, which produces nickel, palladium and other metal products.
Russian President Vladimir Putin was reportedly outraged to discover that local officials only found out about the massive spill via social media fully 48 hours after it began. “What are we to learn about emergency situations from social networks? Are you alright health wise over there?” Putin said. Putin later expressed support for a declaration of a national state of emergency in order to help with the clean-up effort.
Meanwhile, everyone in the U.S. industry is waiting to see what the OPEC+ countries will do in terms of potentially extending their deal to cut supply when they next meet. Unfortunately, it’s undecided right now as to when that next meeting will take place. Some media outlets, like CNBC, are reporting that the question related to extending the cuts remains up in the air, while Bloomberg seems to believe that the group has already agreed in principle to extend the deeper May/June cuts for at least a few more months.
Everyone seems to believe that Russia and Saudi Arabia, the two largest producers, have agreed to an extension of at least 2 months. However, they were not able to reach agreement to hold the full group’s conference call today, a week sooner than expected, and Bloomberg reports that even the original June 11 date for the meeting is now in doubt.
The issue at hand seems to be the insistence by Russia and Saudi Arabia that countries who have been cheating on their quotas, commit to meeting them going forward and also to work off the results of past non-compliance. The countries in question include Iraq, Nigeria, Kazakhstan and Angola.
OPEC+ countries cheating on quotas? So hard to believe, right?
Tropical Storm Cristobal has forced the closures of several Mexican ports along the Bay of Campeche as it continues to wander around the edge of the Yucatan Peninsula before heading north. NOAA’s projected cone for the storm’s eventual landfall in the U.S. narrowed slightly overnight, but still extends from Freeport, Texas all the way east to Mobile Bay.
Landfall is now expected to occur late Saturday evening or very early Sunday morning. The storm will force pretty much every oil and gas platform and vessel working in the Gulf of Mexico to make preparations.
The Texas Alliance of Energy Producers has a new President. His name is Jason Modglin, a veteran of Texas government who most recently has served for several years as Chief of Staff for Texas Railroad Commissioner Christi Craddick. We wish him all the best as he assumes the post during the midst of one of the worst industry busts in history.
In Pennsylvania, the efforts by Governor Tom Wolf to regulate the industry into oblivion continue apace. The state’s Department of Environmental Protection has scheduled three hearings during the month of June related to its proposed new heavy-handed emissions regulations. Obviously, the Governor and his folks are intent on not letting this current crisis go to waste.
Meanwhile, the government in Louisiana continues efforts to save its struggling industry. The state Mineral Land Board announced on Wednesday that it would delay required payments related to leasing, production reporting and some penalties through mid-July.
Royal Dutch Shell is working on the sale of its Australian LNG operations for the sum of $3 billion. Shell is reportedly pitching the facilities to institutional investors and the sale flyer seen by Reuters says that “Royal Dutch Shell plc is considering a sale of a 26.25% interest in the Queensland Curtis LNG (QCLNG) Common Facilities – a multibillion dollar investment opportunity.”
Texas Senator Ted Cruz, a Republican, is teaming up with Democrat Senator Jeanne Shaheen to sponsor a bill that would place new sanctions on contractors working on Russia’s controversial Nordstream 2 natural gas pipeline. The U.S. government continues to oppose the project, which it believes will make Europe overly-dependent on Russian natural gas.
That’s all for today.