Oil mixed as Hurricane Ida slams U.S. crude hub, Louisiana
Oil prices pared early gains on Monday, off more than three-week highs reached earlier in the session as a powerful hurricane ploughing through the Gulf of Mexico https://www.reuters.com/world/us/gulf-coast-ports-close-loop-halts-oil-deliveries-ahead-hurricane-ida-2021-08-29 forced shutdowns and evacuations of hundreds of offshore oil platforms. U.S. gasoline prices rose more than 3 per cent as power outages added to refinery closures on the Gulf coast. Brent was up 27 cents or 0.4 per cent at $72.97 a barrel by 0337 GMT. It rose more than 11 per cent last week in anticipation of disruptions to oil production from Ida. U.S. oil turned negative and was down by 6 cents at $68.68 a barrel, having jumped a little over 10 per cent over last week. The benchmarks hit highs not seen since early August, $73.69 and $69.64, respectively, earlier in the session, as Ida slammed into the coast near Port Fourchon, Louisiana, a hub of the Gulf’s offshore energy industry. “It’s still early days to know the full impact of Hurricane Ida,” said Vivek Dhar, commodities analyst at Commonweath Bank of Australia. “Oil products, like gasoline and diesel, are likely to see prices rise more acutely from refinery outages, especially if there are difficulties in bringing refineries and pipelines back online,” he added. PBF Energy’s 190,000 barrel-per-day (bpd) refinery in Chalmette, Louisiana, has been shut down by a power outage caused by Ida, sources told Reuters. Marathon Petroleum Corp shut its 578,000 bpd in Garyville, Louisiana, as the storm approached. Colonial Pipeline Co, the operator of the largest petroleum products pipeline in the United States, said on Sunday it would temporarily halt fuel deliveries from Houston to Greensboro, North Carolina due to Ida.
Sinopec plans to spend $4.6 bln on hydrogen energy by 2025
China’s Sinopec Corp plans to spend 30 billion yuan ($4.6 billion) on hydrogen energy by 2025, as the state oil and gas major pivots to natural gas and hydrogen, with the aim of becoming carbon neutral by 2050. The top Asian refiner said on Monday it plans to become China’s largest player to use hydrogen as transportation fuel, targeting an annual capacity of 200,000 tonnes of hydrogen refuelling by 2025. “Sinopec will expand forcefully into making hydrogen from renewable energy, and zero in on hydrogen for transportation fuel and using green hydrogen for refining,” acting Chairman Ma Yongsheng said. The company aims to produce more than 1 million tonnes of hydrogen using renewable energy between 2021 and 2025, as well as add 400 megawatts of solar power generation capacity for supplying electricity to charge vehicles. Sinopec has so far built 20 hydrogen filling stations, with another 60 under construction or in the planning and approval stage. The company, which reported its highest first-half net profit since 2018 on rebounding oil and gas prices as well as steady domestic fuel demand, expects China’s natural gas demand to maintain double-digit growth over the next three years. Gas consumption is expected to rise 13.3% in 2021, helped by a strong economic recovery and Beijing’s continued push to replace coal with lower-carbon gas, Ma said. Like state-run peers PetroChina and CNOOC Ltd that are prioritising natural gas development over oil, Sinopec plans to boost its gas output by 13.5% in the second half of this year from a year earlier, compared with a 13.7% growth in the first six months.
Petroleum minister mentions Vizag as state’s capital, triggers row
The Centre’s response in the recently concluded Parliament session regarding fuel prices has kicked up a new controversy in the state as it mentioned Visakhapatnam as AP’s capital city. Petroleum and natural gas minister Hardeep Singh Puri provided details of taxes levied by different states on petrol and diesel while replying to a question raised by Lok Sabha members Kumbakudi Sudhakaran and Pradyut Bordoloi. In a detailed response to the starred question on impact of rising fuel prices, the minister had enclosed the list of all the states and their capital cities to give the break-up of state taxes on the fuels. Although the minister made an attempt to provide comprehensive information about taxes imposed by the Centre and states on fuels which resulted in the steep increase in the cost of petrol and diesel, the reference about AP’s capital city has led to a heated debate among rival political parties in the state. The minister provided the prices of fuels in ‘AP capital’ Vizag along with capital cities of other states in Lok Sabha.
Energy companies race to complete Gulf of Mexico evacuations
U.S. oil and gas companies on Friday raced to complete evacuations from offshore Gulf of Mexico platforms as Tropical Storm Ida advanced toward oilfields that provide 17% of the nation’s oil production. The storm intensified into a hurricane on Friday with 75 mile per hour (120 kph) winds as it moved through the Caribbean Sea, according to the National Hurricane Center (NHC). It forecast Ida will become a major hurricane, packing winds of at least 111 mph (178 kph), by early Sunday. Top Gulf of Mexico oil producer Royal Dutch Shell Plc said it suspended production at seven offshore platforms and BP Plc stopped work at four platforms. Both are continuing to evacuate workers, the companies said. Chevron Corp. on Friday said it would shut-in production at its Gulf of Mexico platforms and evacuate all associated personnel. BHP and Equinor earlier pulled workers from offshore facilities, spokespeople said. Oil companies had shut 59% of their Gulf oil production and 49% of natural gas output as of Friday, according to the U.S. offshore regulator. A total of 90 offshore facilities were evacuated and 11 drilling vessels moved out of harm’s way. Gasoline producer Phillips 66 is preparing slow throughput and may idle a processing plant at the tip of Louisiana’s coast, said people familiar with the matter. A spokesperson declined to comment. Oil prices rose nearly 2% on Friday and were on track to post big gains for the week on worries over supply disruptions. U.S. Gulf Coast gasoline prices also climbed this week because of concerns about the storm, traders said. Over 45% of U.S. refining capacity lies along the Gulf Coast. Louisiana’s governor called on residents to prepare for a major storm, and two coastal communities on Friday asked residents to move to higher ground. Five storms made landfall in Louisiana last year, causing billions of dollars in damage. “This could be comparable to hurricanes Laura and Harvey, as far as intensity goes,” said Joe Bastardi, chief forecaster with Weatherbell Analytics, referring to two hurricanes with winds of at least 130 mph (209 kph). “In the worst-case scenario it could go as high as a category 5,” he said.
IGL hikes CNG price by 90 Paisa in city; PNG rates up too
Indraprastha Gas Ltd, the sole supplier of natural gas in the NCR, has raised CNG price by 90 paise to Rs 45.20 per kg and PNG price by Rs 1.25 to Rs 30.91 per unit (SCM) from Sunday, stretching household budgets already bearing the burden of high petrol and diesel prices. The company said prices have been raised to cover the increase in input costs. The company has been forced to service CNG and PNG consumers with imported gas, which costs eight times more than domestic gas, because of rising demand. “While sales volumes have increased substantially, the domestic gas allocation has remained constant due to lower average volumes of previous months,” the company said. After the revision, CNG costs Rs 50.90 per kg and PNG Rs 30.86 per unit in Noida, Greater Noida and Ghaziabad. In Gurgaon, PNG costs Rs.29.10 per unit. In Kaithal, CNG costs Rs.52.30 per kg. In Karnal, CNG costs Rs 52.30 per kg and PNG Rs.29.71 per unit. In Muzzaffarnagar, Meerut and Shamli, CNG sells for Rs.58.15 per kg and PNG Rs. 33.92 per unit.
Minister Dharmendra Pradhan lays foundation stone of common user petroleum facility in Odisha
Union Minister Dharmendra Pradhan on Saturday laid the foundation stone of common user petroleum facility in Odisha’s Dhenkanal district. This is the first common user petroleum facility of the country and the aim of this facility is to reduce the transportation cost of petroleum products from Paradip Port. Union Minister for Petroleum and Natural Gas Hardeep Singh Puri joined the event through a video conference. Speaking to after launching the facility, Pradhan said: “This to reduce the logistic expenses for petroleum. The facility will cater to the rising demand for petroleum products in Dhenkanal, Angul, Deogarh, and Keonjhar districts.” The Union Minister also congratulated Indian Oil Corporation (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) for starting the common facility. “The facility is targeted to be completed by August 2023,” he added.
Aramco Trading to join Platts oil pricing process in Asia
Aramco Trading Company (ATC) will be participating in S&P Global Platts’ price assessment process for crude cargoes in Asia, the price reporting agency said on Wednesday. Platts said in a notice that it had reviewed the trading arm of the world’s top oil exporter Saudi Aramco, and would consider information from ATC in the Asia Market on Close (MOC) price assessment process for Asia crude cargoes. Some industry players have raised concerns about a potential conflict of interest as ATC is wholly-owned by Saudi Aramco and the Platts Dubai crude market structure is used by the world’s top oil exporter to set monthly prices for millions of barrels of Saudi crude sold in Asia. Others think sellers should share the platform with buyers. “I believe it is a balance. Buyers are always in MOC and it’s time for a seller to be (in MOC too),” an industry source said. Platts and Saudi Aramco did not immediately respond to a request for comment. ATC handles crude procurement and sales of oil products from joint-venture refineries in Asia and does third-party trading. The company is already participating in the MOC processes for oil products trading in Asia. Trading activities on the Asia MOC platform for Middle East crude picked up this month with TotalEnergies and Gunvor purchasing nine cargoes so far. Reuters competes with Platts in the provision of news and pricing information about the oil market.
MRPL to lease crude storage in Mangalore SPR
The company plans to lease 300,000t (2.2mn bl) in the 11mn bl Mangalore cavern. ISPRL is also selling some Abu Dhabi Upper Zakum crude to MRPL from the same SPR but the volume being bought could not be determined. MRPL’s 300,000 b/d Mangalore refinery processed the Abu Dhabi grade recently, a market participant said. ISPRL is planning to sell some crude from the state share of the Mangalore storage, its chief executive HPS Ahuja told Argus, but did not share any details on the volume. Abu Dhabi’s state-owned Adnoc also stores crude in the same SPR and has access to half the capacity under a government-to-government agreement. ISPRL, which manages the country’s strategic stocks, would trade the equivalent of 20pc of the reserves’ total capacity and lease another 30pc to third-party entities, Ahuja said last month. The 50pc of capacity available for commercialisation is in addition to the government-to-government agreement between India and the UAE. India’s SPR has around 39mn bl of capacity, with two other sites at Vishakhapatnam with 9.8mn bl and Padur with 18.4mn bl.
IOC to use drones to check fuel thefts from pipelines
Indian Oil Corp (IOC) is deploying drones to monitor its vast network of pipelines across the country as it doubles down on the use of technology to thwart attempts to steal fuel, helping not just save the commodity but also avoid accidents. The country’s top oil company already uses a combination of sophisticated technology and patrolling to detect any leakage from the pipeline network spanning over 15,000-kilometers. And now, it is adding drones to monitor the vast network, officials said. Use of technology helped throttle 34 attempts to pilfer fuel and arrest 53 persons in the 2020-21 fiscal year, they said adding the latest incident was in Sonipat, Haryana on August 17. IOC recently started drone monitoring of the 120-km long Delhi-Panipat section of the Mathura-Jalandhar pipeline. The live feed of the drones was monitored to detect leakages and attempts to pilfer fuel, they said. Pipelines are the lifeline of an economy and any attempt to disrupt flows through the underground energy highways has widespread ramifications. Pilferage from these pipelines, which carry highly inflammable petroleum products such as petrol and diesel at high pressure, can cause serious accidents that threaten lives and damage property besides interrupting energy supplies. “Any pilferage attempt on these pipelines is a grave offence under Sections 15 and 16 of The Petroleum and Mineral Pipelines (Acquisition of Right of Way) Act 1961. Such criminal acts are non-bailable offences, and intruders are punishable with rigorous imprisonment for ten years or more,” an official explained. IOC has deployed a SCADA-based system to closely monitor the flow in the pipeline network and is using a leak detection system (LDS) to identify tentative vulnerable points, officials said. The firm, which operates over 15,000-km of cross-country pipeline network that carries fuel like petrol and diesel from oil refineries to consumption centres, has deployed a robust round-the-clock monitoring system to track pipeline pilferage or any other such disruptive attempts on its pipeline network. The firm closely monitors the pipeline flow, pressure parameters, and trends through an Instrumentation and Supervisory Control and Data Acquisition (SCADA) system. In addition to this, an LDS ensures 24X7 analysis to identify tentative vulnerable points, officials said. Also, a comprehensive system of physical inspection of the entire network on foot by line patrolmen and DGR guards are also in place. To further enhance the effectiveness of this constant vigil, the movement of line patrolmen and DGR guards are monitored through Global Positioning System (GPS) enabled devices. The existing Right of Way (ROW) of the pipelines is also mapped through Geo-Fencing. “Such GPS-tracked physical inspections also help spot and identify abnormalities like loose soil, the smell of leaked petroleum products or suspicious vehicle tyre marks in the vicinity of the pipelines,” an official said. IOC teams, along with local Police, also undertake periodic joint patrolling of vulnerable locations to track any unauthorised activities. To further boost the security of its pipelines, IndianOil has undertaken focused digital initiatives like the optical fibre based Pipeline Intrusion Detection and Warning System (PIDWS). This system is presently under implementation in 5,474 KM of its pipeline length. The system is already functional for 997 KM of the pipeline network, and the remaining will be commissioned by 2022-23. Officials said IOC is also exploring several other innovative security protocols to enhance pipeline security further, like the ‘Negative Pressure Wave Type Leak/Pilferage Detection System’ and monitoring the vast network through Drones. Based on previous experience fighting this menace, IndianOil has also identified the most vulnerable sections of Pipelines to ensure better surveillance, they said adding such locations are monitored through CCTVs, and pipeline routes are shared with local administration for better supervision. Moreover, to ensure swift recourse, the issues related to pilferage are taken up at various levels of the State Government and Police Departments. “IOC’s concerted efforts in fighting the menace of oil pipeline pilferage have resulted in swift tracking of miscreants indulging in such criminal activities across the country. During 2020-21, 53 arrests have been made against 34 pipeline pilferage attempts across the country,” an official said. The surveillance system is further strengthened by garnering local support in enhancing the efficacy of the overall process. While the population along the pipeline route is being sensitised, reward schemes for informants have also been put in place to incentivise local monitoring, officials said adding the identity of the citizens informing such illegal intrusion will be kept confidential.
BP IN THE US TO USE BIOMETHANE AS A VEHICLE FUEL
US-based CleanBay Renewables said August 24 it had signed a 15-year agreement with BP to sell gas sourced from poultry industry waste for use as a transportation fuel. CleanBay draws on a mixture of poultry manure, feathers and bedding to produce a form of gas, including methane, that is viewed as renewable natural gas (RNG). The company uses an anaerobic digester in the process to yield a product that can be used to fuel vehicles. “Through this agreement, BP’s trading and shipping team will sell the fuel to its customers, initially in California,” the company said. Alternative forms of fuel are in strong demand in California due to state mandates on low-carbon fuels. “Not only will our process improve the air, soil and water quality around our agricultural facilities, but our RNG is a sustainable, environmentally-friendly way to help reduce greenhouse gas emissions,” Thomas Spangler, the executive chairman of CleanBay Renewables, said. The agreement with BP marks the second such arrangement announced by a major oil company this week. Chevron and joint venture partner Brightmark, a biomethane producer, said they would make “additional equity investments” to support the construction of the infrastructure necessary to bring 10 dairy farm-sourced methane projects to commercial service across US. Under the terms of that agreement, Chevron will purchase the biomethane from the new facilities and market it for use in vehicles powered by compressed natural gas. “RNG is a necessary energy transition approach in the near-term, but green hydrogen and the use of RNG to power electric vehicle charging stations will be the backbone of a fast transition to a net-zero future,” CleanBay CEO Donal Buckley said. Green hydrogen is produced by using an electrolyser powered by renewable energy to split water into oxygen and hydrogen. Research suggests that manufactured methane may not be as environmentally friendly as initially perceived.