Oil prices retreat on Russian concerns about balance

Oct. 19 (UPI) — A downbeat sentiment from a Russian oil boss on the trajectory for crude oil prices sent key benchmarks diving into negative territory early Thursday.

Outside of the first week in October, crude oil prices have been holding steady in bullish territory for the better part of the third quarter. The rally is due in part to the effort by the Organization of Petroleum Exporting Countries to balance the market through coordinated production cuts, an effort that includes a handful of non-member producers like Russia.

The International Energy Agency said in its monthly market report for October that, for 2018, three out of the four quarters will show a market more or less in balance, assuming OPEC output stays the same and there are no major unforeseen disruptions.

Igor Sechin, the head of Russian oil company Rosneft, said U.S. shale oil production was out of OPEC’s control and could threaten the drain on the surplus in the five-year average for global crude oil inventories.

“The balance is fragile and unstable so far,” he was quoted as saying by Russian news agency Tass. “I think therefore that we should not expect a surge in oil prices in near future.”

The price for Brent crude oil, the global benchmark for the price of oil, was down 1.4 percent at 9:20 a.m. EDT to $ 57.31 per barrel. West Texas Intermediate, the U.S. benchmark, was down 1.5 percent to $ 51.24 per barrel.

The difference, or spread, between Brent and WTI is making U.S. crude oil competitive on the open market. U.S exports are near record territory, though U.S. oil has only been moving freely since 2015, when former President Barack Obama lifted a 40-year-old ban on exports.

A report emailed from RBC Capital on Thursday said more U.S. oil exports could be supportive of crude oil prices.

“We have long expected the WTI discount to Brent to remain wide until the market arrives at the juncture where inventories outside the United States normalize and the call on U.S. crude exports increases to plug global supply gaps,” the report read. “This is an incrementally bullish signal worth watching.”

The price for Brent crude oil has made a few runs on $ 60 per barrel this year, but has so far failed to break through the ceiling. Ole Hanson, the head of commodity strategy at Saxo Bank, told UPI a U.S. report on domestic oil storage drains and gasoline inventory builds helped take the steam out of the recent rally.

“The U.S. Energy Information Administration’s report yesterday was mildly bearish, while the supply disruptions from northern Iraq seems to have been quantified and Iraq expect production from Kirkuk to resume over the weekend,” he said.

Iraqi forces seized control over the oil fields in Kirkuk this week amid skirmishes with forces loyal to the Kurdistan Regional Government. So far, there are few indications that any disruptions to oil will be long term.

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Textron awarded $332.9M contract for mobile strike force vehicles

Oct. 18 (UPI) — U.S. Army officials have awarded a new contract to Textron Systems Marine and Land Systems, out of New Orleans, La., for the procurement of 255 Mobile Strike Force Vehicles, or MSFV, in a deal worth more than $ 332.9 million.

Work locations and funding will be determined with each order, with an estimated completion date of October 2024, the Department of Defense said Wednesday when announcing the deal.

Textron Systems Marine and Land Systems produces three variants of the MSFV, including an armored personnel carrier, or APC, which is equipped with a Mk.19 Grenade Launcher, an automatic belt-fed weapon system that fires 40mm grenades. The APC also has a .50 caliber machine-gun turret.

In May 2011, two years after former President Barack Obama surged more than 30,000 troops into Afghanistan, the U.S. Army contracted Textron Systems Marine and Land Systems to produce all three variants of the MSFV for the Afghanistan National Army, or ANA, totaling 240 vehicles. The first MSFVs were shipped there in November 2011 to ANA Kandak battalions, Afghan infantry units made up of around 600 soldiers.

In 2012, Pentagon officials ordered three additional contracts to procure 200 more MSFVs for the ANA. The June 2012 contract alone was worth $ 79.2 million. As the Afghanistan war began to wind down in 2014, the total vehicles the federal government provided to the ANA was 634.

The Department of Defense did not say whether the newly-ordered MSFVs would be for the U.S. Army or other allied nations.

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Hiccup clears for Canada's TransMountain pipeline

Oct. 13 (UPI) — A Canadian energy regulator said it dismissed challenges to environmental issues on the Trans Mountain pipeline after the operator pulled a request for relief.

The National Energy Board said it received a letter from those planning the expansion of the Trans Mountain that withdrew a request for relief from measures that prohibit spawning deterrents along the pipeline’s path. The request drew comments from environmental groups concerned about the pipeline’s development.

“The [NEB] board is of the view that Trans Mountain’s withdrawal of its request, coupled with action by the board’s compliance and enforcement staff, renders the request and related written comments moot,” the regulator said in a late Thursday update. “Therefore the board dismisses these matters for mootness.”

According to advocacy group WaterWealth, pipeline developer Kinder Morgan “was caught” putting fences into waterways that prevented trout and salmon from spawning, in violation of NEB conditions.

The regulatory hiccup followed a decision from pipeline developer TransCanada to pull its Energy East crude oil pipeline from consideration after the NEB expressed concerns about greenhouse gas emissions and the potential for an oil spill.

The NEB in early September said it was satisfied with the environmental plans outlined by Kinder Morgan to expand a port in British Columbia to handle the new volumes from Trans Mountain. Later that month, however, the regulator said it completed a pre-construction audit and found planners haven’t yet laid out plans regarding safety and environmental protection during the build process.

Kinder Morgan’s $ 5.9 billion plan to triple the capacity of the network to around 890,000 barrels of oil per day were approved in November, though vetting is still under way for some aspects. The project is part of a national effort to tap into markets outside North America as nearly all of Canada’s oil exports go to the United States.

Nearly all of the oil that Canada exports heads to the U.S. market and existing pipeline infrastructure means Canada is relatively landlocked to North America. The Canadian Association of Petroleum Producers said this week Canada could be a global energy supplier of choice, but only if the conditions are set up to attract new customers and maintain sector investments.

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Small island nations display climate solidarity

Oct. 13 (UPI) — Small island states and nations with developing economies pledged to take a stronger initiative in the fight against climate change, low-carbon leaders said.

Dozens of government ministers and senior officials met Friday in the Maldives to coordinate efforts on renewable energy development and other ways to stave off the impacts of a changing climate.

“Small island developing nations have been frontrunners in the global drive to scale-up renewables,” Adnan Amin, the director general of the International Renewable Energy Agency, said in an emailed statement. “This meeting is further evidence of their collective commitment to strengthen the momentum of the global energy transition as they pursue economic growth, energy security and increased national resilience.”

Amin’s organization estimates small island developing states, or SIDS, have a total installed renewable energy capacity of about 2 gigawatts, with at least 6 GW in the pipeline. According to IREA, several SIDS have made commitments to reach a 100 percent share for renewable energy in their electricity mix.

One gigawatt of power is the rough equivalent of two coal-fired power plants, or enough to meet the energy demands of around 500,000 homes. Based on 2010 U.S. Census data, 1 GW of renewable energy would meet about a third of the total demand for the U.S. island territory of Puerto Rico.

Debt-strapped Puerto Rico has struggled to recover from a string of hurricanes that swept through the Caribbean in late August and September. The pace of recovery has become a source of frustration for U.S. President Donald Trump, who is working to pull the country out of the Paris climate agreement.

“In the wake of a deadly hurricane season in the Caribbean and at a time when the resolve to tackle the climate crisis has been called into question, small islands are sending the world a clear message: we are seizing the promise of renewable energy to grow our economies today and build a better future for tomorrow,” Thoriq Ibrahim, the Maldives Environment Minister and chair of Alliance of Small Island States, said in a statement.

In the Pacific region, the Marshall Islands has a population of about 68,000 spread over 34 low-lying coral atolls, comprising 1,156 individual islands and islets. The average height of the islands is about 6 feet above sea level.

Already, it is experiencing the effects of climate change, mostly from rising sea levels which have caused flooding and inundation of crops. Government officials said that if climate change continues as it is now, there could be 2 million people from the Pacific region who will become refugees.

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Lebanon gets two bids for offshore gas exploration

Oct. 13 (UPI) — Lebanese ambitions to draw investors to its offshore reserve potential, notably for natural gas, brought in only two bids, the government reported.

Lebanon in January filed a request to join the Extractive Industries Transparency Initiative, a body that aims to cast light on how countries manage their oil, gas and mineral resources. Energy Minister Cesar Abi Khalil said that, as the country opens itself up to foreign energy investors, accountability was essential.

Decrees put forward by the Lebanese government outline a model for revenue sharing, something that derailed previous efforts to court foreign investors. The Lebanese government estimates there are 95 trillion cubic feet of natural gas and 750 million barrels of oil in its territorial waters.

Khalil said Thursday the government received two bids for offshore gas operations, but offered few specifics on the details, the English-language Daily Star reported.

Lebanon has been at odds with Israel over maritime borders in the Mediterranean Sea. Parliament members from Shiite group Hezbollah have pushed for the development of offshore reserves. According to Israeli military leaders, Hezbollah’s military arm could hit emerging energy infrastructure centered on the port of Haifa with its missile arsenal.

Israel is working to exploit the gas reserves in the Leviathan and Tamar natural gas fields in the Mediterranean Sea. Delek Drilling, an Israeli company, estimates Leviathan, the larger of the two, holds about 21.4 trillion cubic feet of natural gas, an estimate that’s about 13 percent higher than when the field was discovered in 2010.

Beirut postponed offshore natural gas auctions several times after rancor erupted over the amount of revenue Beirut would get from energy companies.

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House leadership supports U.S. offshore overhaul

Oct. 12 (UPI) — An offshore drilling act critics said was “wish list” legislation for the oil and gas industry was hailed as a strategic win by House Republican leadership.

The House Natural Resources Energy and Mineral subcommittee heard testimony Wednesday on the Accessing Strategic Resources Offshore Act, or ASTRO. The measure would limit the presidential authority to put parts of the Outer Continental Shelf off limits to oil and gas drillers and give the Interior Department the authority to move ahead with new lease sales “as soon as practicable,” but no later than a year after the announcement of intent.

Subcommittee Chairman Paul Gosar, R-Ariz., said the offshore oil and gas industry is vital for U.S. economic success, generating “billions of dollars” in revenue and creating “millions” of direct and indirect jobs in the country.

“It is critical that we maintain and increase access to offshore exploration and production to improve upon these trends,” he said in a statement.

The committee said that, under former President Barack Obama, more than 90 percent of U.S. territorial waters were off limits to drillers. The Republican-led committee said opening up more areas to drillers could create more than 800,000 new jobs and generate $ 200 billion in revenue.

When the committee rolled out its agenda last week, a spokesman for offshore advocacy group Oceana told UPI the ASTRO Act is “the kitchen sink of the oil industry’s wish list.” After the hearing, Ocean campaign director Diane Hoskins said the bill was extreme.

“This is a clear attempt by a few in Congress to provide massive giveaways to special interests in the oil and gas industry,” she said in a statement emailed to UPI. “With an oil surplus and gasoline prices near recent historic lows, it makes absolutely no sense to put our coastal communities and state economies at risk from more drilling.”

Apart from expanding access to drillers, the ASTRO Act would recombine the Bureau of Ocean Energy Management with the Bureau of Safety and Environmental Enforcement. The BSEE was set up in response to failures with the former federal Minerals Management Service in the Deepwater Horizon oil spill in the Gulf of Mexico in 2010.

“I think such a recombination is not just a profoundly bad idea that would be unnecessarily disruptive for the agencies and the industry and for which no clear case has been made, but it is also a dangerous idea that would significantly raise the risk of a catastrophic offshore accident,” Michael Bromwich, the director of the BOEM at the time of 2010 spill, testified.

The federal government estimates about 90 billion barrels of oil have yet to be discovered in U.S. territorial waters. Erik Milito, the director of industry operations for the American Petroleum Institute, testified that unplanned supply disruptions from the global market, meanwhile, can sometimes put more than 3 million barrels per day off limits, which is about three times what North Dakota produces. A bigger offshore reach, he said, would boost U.S. energy security.

“We can and should do more,” he said.

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