Posts Tagged ‘OPEC’

Jennifer Granholm

Energy Secretary Jennifer Granholm last month said it would be difficult for the U.S. to take advantage of low oil prices to replenish the Strategic Petroleum Reserve because of maintenance at two of the four sites.

The Financial Times reported, citing people familiar with Saudi Arabia’s thinking, that Riyadh was “irritated” by that comment. In any case, it came on top of stress in the financial sector that had dragged oil prices as low as $64 in March.

Market Watch

As previously posted, the SPR is easier to drain than fill. The reserve is still flat-lined at 371.6 million barrels or about half full.

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Planned obsolescence, as justification for the minimalist leasing program (see below), is neither prudent nor consistent with the OCS Lands Act.

The long-term nature of OCS oil and gas development, such that production on a lease can continue for decades makes consideration of future climate pathways relevant to the Secretary’s determinations with respect to how the OCS leasing program best meets the Nation’s energy needs.

5 Year Leasing Program, p.3

Basing offshore leasing decisions on “future climate pathways” is a high risk strategy that may be inconsistent with the recent SCOTUS decision in West Virginia vs. EPA. A planned or phased shutdown of the offshore oil and gas program would dramatically increase economic and security risks, and has not been authorized by legislation.

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Per Offshore-Energy.biz, comments by Aramco President and CEO, Amin H. Nasser, at the Schlumberger Digital Forum:

“When you shame oil and gas investors, dismantle oil- and coal-fired power plants, fail to diversify energy supplies (especially gas), oppose LNG receiving terminals, and reject nuclear power, your transition plan had better be right. Instead, as this crisis has shown, the plan was just a chain of sandcastles that waves of reality have washed away.”

“the warning signs in global energy policies were flashing red for almost a decade,” adding that investments in oil and gas decreased from $700 billion to a little over $300 billion, which is more than 50 per cent between 2014 and 2021.

“this is the moment to increase oil and gas investments, especially capacity development.”

Aramco is working to increase its oil production capacity to 13 million barrels per day by 2027 and grow its gas production by more than half through 2030.

Meanwhile, Rystad reports a further reduction in global oil and gas licensing, with help from the US govt:

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The Senate Judiciary Committee (with bipartisan support no less) has passed the old, stale, hypocritical, and insulting “No Oil Producing and Exporting Cartels Act” or “NOPEC”. Congress is again engaging in what it does best – blaming others. When oil prices are high, OPEC, nonproducing leases, and price gouging are the targets of choice.

Note the NOPEC language pasted below, particularly the highlighted text. Our government has proven quite capable of limiting production without OPEC’s help. This is especially true for the US offshore sector, which could be responsibly producing at least 1 million more BOPD with fewer access restrictions and timely leasing. Less than 0.5% of the US OCS is currently open to exploration and development.

Other than for grandstanding purposes, how is this bill helpful? Haven’t we been pleading with OPEC to increase production? Even the White House seems to think NOPEC is a bad idea:

White House spokesperson Jen Psaki said the administration has concerns about the “potential implications and unintended consequences” of the legislation, particularly amid the Ukraine crisis. She said the White House is still studying the bill.



“(a) In General.—It shall be illegal and a violation of this Act for any foreign state, or any instrumentality or agent of any foreign state, to act collectively or in combination with any other foreign state, any instrumentality or agent of any other foreign state, or any other person, whether by cartel or any other association or form of cooperation or joint action—

(1) to limit the production or distribution of oil, natural gas, or any other petroleum product;

“(2) to set or maintain the price of oil, natural gas, or any petroleum product; or

(3) to otherwise take any action in restraint of trade for oil, natural gas, or any petroleum product,when such action, combination, or collective action has a direct, substantial, and reasonably foreseeable effect on the market, supply, price, or distribution of oil, natural gas, or other petroleum product in the United States.

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COP26 bans oil industry. Is this helpful?

UAE Energy Minister Suhail al-Mazrouei has most definitely not forgotten:

“I think in COP 26 all the producers felt they were uninvited and unwanted but now we are again superheroes, it’s not going to work like that,” he said.


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Bad decision by Blackstone; worse timing. Putin and OPEC must be pleased.

Blackstone Inc., once a major player in shale patches, is telling clients its private equity arm will no longer invest in the exploration and production of oil and gas, according to people with knowledge of the talks. The firm’s next energy fund won’t back those upstream investments — a first for the strategy.



As the United States continues to tie its hands with regard to the transportation of natural gas, a fuel that has actually led to a large decrease in CO2 emissions over coal, Russia and China reached an agreement under which Russia will supply 100 million tons of coal to China so that China can continue to open up new coal-fired power plants


Embargo Russia, not US producers!

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February 2022:

For a second time this week, Fatih Birol, the executive director of the International Energy Agency (IEA), called on the OPEC+ group on Wednesday to narrow the widening gap between its production quotas and the much lower actual supply to the market.


May 2021:

There is no need for investment in new fossil fuel supply in our net zero pathway

IEA Roadmap for the Global Energy Sector

So much for what remains of the IEA’s credibility.

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But here’s the thing. Whether you think it was the right thing to do, the reality is that passing legislation that is hostile to the U.S. oil and gas industry makes it even more difficult for domestic production to bounce back. So, instead of asking Russia and OPEC to pump more oil, we could look internally to what we could do in the U.S. to pump more oil. 


From a US offshore perspective, there should be serious dialogue about how we can increase exploration and production. The risks associated with over reliance on imports have been repeatedly demonstrated over the past 5 decades. The horizontal drilling/well stimulation revolution has been a blessing, but given the sharp decline rates for fracked wells, we cannot solely rely on onshore production from tight reservoirs.

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But certainly, the supply and — and OPEC and putting additional pressure on OPEC is something that — that, certainly, our national security team will continue to do. 

Jen Psaki, Press Secretary

Equally predictable:

I will also note that, as it relates to gas prices, we remain concerned about trends we have seen where, even as supply has increased at times over the last several months, we’ve still seen heightened prices.

The FTC — we’ve asked the FTC to look into that.  They’ve said they were doing that.

Jen Psaki, Press Secretary

Related post.

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Leading up to #COP26 convening in Glasgow next month, the OPEC SG advised legislators and policymakers to consider the fact that billions of people lack reliable and affordable modern energy, a basic need for all.


Reminder that “no energy is dirtier than no energy.

For those interested in regional and international oil market data, OPEC’s monthly reports are quite good. You can download the October report here.


Demand for OPEC crude in 2022 was revised up by 0.1 mb/d from the previous month’s assessment to stand at 28.8 mb/d, around 1.0 mb/d higher than in 2021.

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