DAPL shutdown would 'shock' economy: Energy Transfer
A shutdown of Energy Transfer's 570,000 b/d Dakota Access crude pipeline (DAPL) will cause an "immediate economic shock" and severe rail congestion, the company said today.
North Dakota's oil producers would lose $378mn-$676mn in revenue each month from May-December 2021 from shut in oil production, Energy Transfer said in a filing to the US District Court for the District of Colombia. The loss for the entire year would be $3bn-5.4bn.
The state of North Dakota would lose $770mn-$1.4bn in tax revenue from oil production this year and $1.1bn-$2.5bn in 2022, the filing said.
DAPL faces a possible shutdown order after a federal district court threw out a key easement last year and ordered a new environmental review in a long-standing case that started before the line went into service in 2017.
US district court judge James Boasberg on 9 April gave Energy Transfer a 10-day extension to update information on the possible economic impact of a shut down. The plaintiffs in the case — the Standing Rock Sioux and other Native American tribes — have until 23 April to inform the court if they will respond. Boasberg is expected to rule on a shut down after all filings are in.
A DAPL shut down would cost the pipeline $3.44mn-$4.28mn per day, about 10pc higher than a previous estimate in November 2020, Energy Transfer said in the most recent filing.
The company also cited the economic impact a shut down would have on the MHA Nation, an affiliation of three Native American tribes who own substantial oil and gas reserves on the Fort Berthold Indian Reservation. About 80pc of the MHA Nation budget is made up of oil and gas royalties and tax revenues. The "substantial shut-ins" caused by a DAPL shut down would translate to estimated losses exceeding $160mn over a one-year period and more than $250mn in two years, the filing said.
The company also said that a DAPL shut down would cause producers to shift large amounts of crude to rail cars which would displace products such as grain that are currently transported by rail. This could cause "a catastrophic disruption" to agricultural freight movement, according to a study cited in the Energy Transfer filing.
DAPL moves Bakken crude to Patoka, Illinois, where it connects to another Energy Transfer pipeline to Nederland, Texas. It is the largest crude pipeline out of the Bakken shale.
Shutdown could boost Gulf coast flows
A DAPL shutdown could funnel more railed crude toward the US Gulf coast and Cushing, Oklahoma, North Dakota Pipeline Authority director Justin Kringstad said last week. The majority of railed Bakken crude has recently moved to the West coast (70pc) and East coast (29pc), with very little railed supply moving to the Gulf coast or Cushing, Kringstad said.
The start of DAPL in 2017 de-emphasized railed crude in the Bakken but about 10 railed crude terminals have remained active and stand to gain business in the event of a pipeline shutdown. US railroad BNSF serves the majority of those terminals, and Canadian Pacific (CP) reaches a handful of them.
Two of the biggest Bakken rail terminals would stand to pick up substantial volumes.
Hess, the largest Bakken producer, has an integrated system of pipelines, terminals and rail assets that gives it multiple options. Its facilities can access DAPL and Enbridge pipelines, as well as the Tioga rail terminal. Tioga connects directly to BNSF's tracks, and Hess' midstream affiliate owns 550 newly constructed DOT-117 rail-cars.
Crestwood, which operates the Colt terminal in Epping, North Dakota, is also a prominent Bakken crude-by-rail player. Colt, also located on the BNSF rail line, has 1.2mn bl of storage capacity and can load 160,000 b/d of crude.
The underlying DAPL lawsuit contends that the US Army Corps of Engineer's original environmental review failed to adequately study certain issues related to potential oil spills from the pipeline.
The Army Corps, acting on behalf of President Joe Biden's administration, told Boasberg earlier this month that it would not immediately act to shut DAPL despite the court ruling that vacated the easement under Lake Oahe in North Dakota. But the agency kept the option open.
The state of North Dakota yesterday asked the court to allow it to intervene as a defendant in the DAPL case saying that its interests are no longer adequately represented by the Army Corps.
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Oil firm ReconAfrica agrees to class action settlement
Oil firm ReconAfrica agrees to class action settlement
Cape Town, 18 April (Argus) — Africa-focused, Canada-based upstream firm ReconAfrica has agreed to pay $10.8mn in total to eligible shareholders to settle class action lawsuits lodged in different jurisdictions over allegations that the company made misleading statements. The company will pay $7.05mn to investors who bought its shares on the US over-the-counter (OTC) markets and $3.7mn to shareholders who bought securities in the firm on Canada's TSX Venture Exchange and the Frankfurt Stock Exchange within specified class periods. In Canada, parties reached the proposed settlement after a full-day mediation in October 2023, without any admission of liability by ReconAfrica. A hearing has been scheduled on 20 June for the British Columbia Supreme Court to approve the settlement. The plaintiffs allege that between May 2020 and September 2021, ReconAfrica released misleading statements, including its plans to undertake hydraulic fracturing of "unconventional" resources and "shale" deposits within Namibia. The firm failed to disclose that Namibia has never before allowed fracking. The plaintiffs further claim that ReconAfrica did not disclose data from its test wells that revealed poor prospects for achieving commercially viable oil and gas production. The company also stands accused of undertaking unlicensed drilling and illegal water usage, as well as other environmental and human rights violations. It denies all these allegations. ReconAfrica has a current market capitalisation of C$204.7mn. Earlier this month, it raised C$17.25mn in a public share offering. The firm plans to undertake a multi-well drilling campaign this year, with the first well in Namibia's Damara Fold Belt scheduled for June. The company controls the entire Kavango sedimentary basin, which spans over 300km from the northeast of Namibia to northwest Botswana. Early estimates claimed the basin could hold as much as 31bn bl of oil, of which 22.3bn bl are in Namibia and 8.7bn bl in Botswana. ReconAfrica has a 90pc stake in the PEL 73 licence, which extends 25,000km² across northeast Namibia. The remaining 10pc is held by Namibian state-run company Namcor. The Kavango basin includes part of the ecologically sensitive Okavango Delta, a Unesco World Heritage site. The Okavango watershed consists of the Okavango river and a network of shallow, interlinked aquifers, which is a vital water source for more than a million people. The delta also serves as a habitat and migration path for many endangered animal species. Last year, ReconAfrica received environmental approval to drill 12 more wells in the Kavango. The firm recently completed a technical review of its entire exploration inventory in Namibia and now expects to find a mix of oil and gas. ReconAfrica announced an updated prospective resource estimate for Damara last month, indicating an unrisked 15.4bn bl of undiscovered oil initially-in-place. This compares with a previous estimate that pointed only to prospective natural gas resources amounting to 22.4 trillion ft³. The change "is the result of in-depth analyses of all geochemical data, including cores, cuttings, mud logs, seeps and additional basin modelling studies," ReconAfrica said. The firm has made the updated estimates available to potential joint venture partners and expects to complete this month a farm-out process that it started in December 2023. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Uganda aims for net zero energy sector by 2062
Uganda aims for net zero energy sector by 2062
Kampala, 18 April (Argus) — Uganda has brought forward its target for net zero carbon emissions from its energy sector by three years, to 2062, energy ministry permanent secretary Irene Batebe told an oil and gas conference in Kampala. This new deadline is still lagging some way behind a 2050 "net zero operations" target pledged by 40 oil and gas firms , including African state-owned ones such as Libya's NOC and Sudan's Nilepet, at the UN Cop 28 climate summit. Signatories to the Cop 28 charter also pledged "near-zero upstream methane emissions" by 2030. Uganda's CO2 emissions from fuel combustion were 5.7mn t in 2021, according to most recent IEA data, but this will probably increase with the development of a 230,000 b/d crude project in its western Lake Albert region. The crude project had been scheduled to begin production in late 2025 — although the head of TotalEnergies' Ugandan operations recently said the company may miss this long-standing target. Batebe said the Ugandan government has plans to increase hydroelectricity capacity to around 52GW by 2050, to increase use of solar wind and nuclear power, and has a budget of $8bn by 2030 to finance these. The IEA estimates hydroelectricity accounts for around 90pc of Uganda's generating capacity. But this installed capacity is only around 1.5GW currently. The country's nuclear ambitions remain at the planning stage, and biomass — wood and charcoal — dominates energy consumption. "We want to phase out use of coal, but… countries that produced oil and gas should get out first and we shall follow," she said. "We cannot afford to remain poor. We shall produce our oil and gas responsibly, use LPG from the [planned] refinery and then connect more than the current 57pc of our population to electricity with affordability to use it for cooking and other uses other than lighting then meet our emissions targets." Batebe said the world's longest heated crude export pipeline, which will connect its oil fields with to the port of Tanga on Tanzania's Indian Ocean coast, will be insulated to "three layers" to limit emissions. TotalEnergies' Ugandan general manager Philippe Groueix said the two Lake Albert projects, Tilenga and Kingfisher, are designed to produce crude at 13kg of CO2/bl, far below the world average of 33 kg/bl. TotalEnergies is developing the 190,000 b/d Tilenga field and and Chinese state-controlled CNOOC the 40,000 b/d Kingfisher. By Mercy Matsiko Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US reimposes Venezuela oil sanctions
US reimposes Venezuela oil sanctions
Washington, 17 April (Argus) — The US administration today reimposed sanctions targeting Venezuela's oil exports and energy sector investments and set a deadline of 31 May for most foreign companies to wind down business with state-owned PdV. The US decision rescinds a sanctions waiver issued last October, which allowed Venezuela to sell oil freely to any buyer and to invite foreign investment in the country's energy sector. The waiver, which was due to expire on 18 April, was tied to Caracas' agreement to hold a competitive presidential election and to allow opposition politicians to contest it. Venezuelan president Nicolas Maduro's government reneged on that deal by refusing to register leading opposition candidate Maria Corina Machado or an alternative candidate designated by her, a senior US official said. The US considered the potential effects on global energy markets and other factors in its decision, but "fundamentally, the decision was based on the actions and non-actions of the Venezuelan authorities," the official said. The separate waivers granted to Chevron and to oil field service companies Halliburton, SLB, Baker Hughes and Weatherford will remain in place. Chevron will be allowed to continue lifting oil from its joint venture with PdV, solely for imports into the US. US-bound Venezuelan crude volumes averaged 133,000 b/d last year. Chevron said its Venezuela output was 150,000 b/d at the end of 2023. Argus estimated Venezuela's crude output at 850,000 b/d in March, up by 150,000 b/d on the year. PdV said it will seek to change terms of its nine active joint ventures , starting with Spain's Repsol, in an effort to boost production. The reimposition of sanctions will primarily affect Venezuelan exports to India and China. India has emerged as a major new destination for Venezuelan crude since the US lifted sanctions in October, importing 152,000 b/d in March. There are two more Venezuelan cargoes heading to India and are expected to arrive before the 31 May deadline. The VLCC Caspar left the Jose terminal on 14 March and was expected to arrive at a yet-unknown west coast Indian port on 26 April. The Suezmax Tinos left Venezuela on 18 March and was due at Sikka on 30 April. By contrast, Chinese imports of Venezuelan Merey, often labeled as Malaysian diluted bitumen, have been lower since October. Independent refiners in Shandong, which benefited from wide discounts on the sanctioned Venezuelan crude, cut back imports to just a fraction of pre-relief levels. By contrast, state-controlled PetroChina was able to resume imports. The Merey discount to Brent already widened in anticipation of a possible reimposition of US sanctions. Reprieve expected for European companies Separate US authorizations previously issued to Repsol and to Italy's Eni to allow oil-for-debt deals with PdV and to enable a Shell project to import natural gas from Venezuela's Dragon field to Trinidad and Tobago are expected to remain in place. The US sanctions enforcers as a rule do not disclose the terms of private sanctions licenses, and the European companies were not immediately available to comment. The US would still consider future requests for sanctions waivers for specific energy projects, another senior official said. Repsol imported 23,000 b/d of Venezuelan crude into Spain last year and 29,000 b/d so far this year, according to Vortexa data. The last cargo to arrive was on 15 April. Hope springs eternal The US administration says it will consider lifting the sanctions again if Maduro's government allows opposition candidates to participate in the July presidential election. The US action today "should not be viewed as a final decision that we no longer believe Venezuela can hold competitive and inclusive elections," a third senior official said. "We will continue to engage with all stakeholders, including Maduro representatives, the democratic opposition, civil society and the international community to support the Venezuelan people's efforts to ensure a better future for Venezuela." By Haik Gugarats and Kuganiga Kuganeswaran Chinese imports of Venezuelan crude Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House advances Ukraine, Israel aid bills
US House advances Ukraine, Israel aid bills
Washington, 17 April (Argus) — The Republican-controlled US House of Representatives is preparing to advance a bill to extend military and economic aid to Ukraine, as Kyiv has complained about critical shortages of ammunition on the battlefield and has resorted to aerial attacks against refineries in Russia. The House is also advancing a separate bill to extend military aid to Israel and to pay for the rising cost of US operations in the Middle East, including the cost of providing maritime protection from the Houthi attacks on commercial shipping in the Red Sea. Yet another bill would extend military aid to Taiwan and other US partners and allies in the Indo-Pacific region. The US Senate in February approved a bill providing around $60bn in military aid for Ukraine, $14bn for Israel, and $9bn in humanitarian aid to Gaza and other global crisis spots. House speaker Mike Johnson (R-Louisiana) has, in effect, deconstructed the Senate bill into individual components in an effort to facilitate their passage in a chamber where his party has a two seat majority and the Republican lawmakers allied with former president Donald Trump oppose aid to Ukraine. In an effort to secure the Republican caucus' assent to the three foreign aid bills, Johnson is also planning to advance a separate bill including a hodgepodge of his party's policy priorities, such as a ban on social media network TikTok and sanctions against Iran. Yet another bill would advance draconian restrictions on immigration and strengthen the security of the US-Mexico border. None of the bills released today would require President Joe Biden to reconsider his pause on the issuance of new LNG export licenses. Johnson's legislative proposal has immediately drawn opposition from some members of his party, two of which said they would move to oust him as speaker. Johnson assumed his position after his predecessor Kevin McCarthy was ousted in October following a compromise government funding deal with House Democrats. "Every true conservative America First patriot in the House should vote against the rule for this borrowed foreign aid bill with no border security!" congressman Bob Good (R-Virginia) said via X social network. The foreign aid bills will have to have the backing of the Democratic caucus and a sufficient number of Republicans in order to pass. Biden said he supports the three foreign aid bills proposed by Johnson. "The House must pass the package this week and the Senate should quickly follow," Biden said. The majority-Democratic Senate leaders likewise have signaled willingness to consider separate aid bills so long as those do not significantly differ from the version passed by the Senate. The only major differences in the House version of the Ukraine aid bill is a requirement that the US provide no more than 50pc of the total economic assistance extended to Ukraine by western countries, as well as a requirement for Ukraine to repay the $9.5bn in direct economic support under the bill. Congress since February 2022 has allocated $114bn in aid to Ukraine, including $66bn for military supplies. The EU in the same period has allocated $150bn to Ukraine, mostly in economic support. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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