Tag Archives: REPI:LNG

Business

Storm cuts U.S. oil, gas, power output, sending prices higher

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Dec 23 (Reuters) – Frigid cold and blowing winds on Friday knocked out power and cut energy production across the United States, driving up heating and electricity prices as people prepared for holiday celebrations.

Winter Storm Elliott brought sub-freezing temperatures and extreme weather alerts to about two-thirds of the United States, with cold and snow in some areas to linger through the Christmas holiday.

More than 1.5 million homes and businesses lost power, oil refineries in Texas cut gasoline and diesel production on equipment failures, and heating and power prices surged on the losses. Oil and gas output from North Dakota to Texas suffered freeze-ins, cutting supplies.

Some 1.5 million barrels of daily refining capacity along the U.S. Gulf Coast was shut due to the bitterly cold temperatures. The production losses are not expected to last, but they have lifted fuel prices.

Knocked out were TotalEnergies (TTEF.PA), Motiva Enterprises (MOTIV.UL) and Marathon Petroleum (MPC.N) facilities outside Houston. Cold weather also disrupted Exxon Mobil (XOM.N), LyondellBasell (LYB.N) and Valero Energy (VLO.N) plants in Texas that produce gasoline, diesel and jet fuel.

Sempra Infrastructure’s Cameron LNG plant in Louisiana said weather disrupted its production of liquefied natural gas without providing details. Crews at the 12 million tonne-per-year facility were trying to restore output, it said.

Freeze-ins – in which ice crystals halt oil and gas production – this week trimmed production in North Dakota’s oilfields by 300,000 to 350,000 barrels per day, or a third of normal. In Texas’s Permian oilfield, the freeze led to more gas being withdrawn than was injected, said El Paso Natural Gas operator Kinder Morgan Inc. (KMI.N).

U.S. benchmark oil prices on Friday jumped 2.4% to $79.56, and next-day gas in west Texas jumped 22% to around $9 per million British thermal units , the highest since the state’s 2021 deep freeze.

Power prices on Texas’s grid also spiked to $3,700 per megawatt hour, prompting generators to add more power to the grid before prices fell back as thermal and solar supplies came online.

New England’s bulk power supplier said it expected to have enough to supply demand, but elsewhere strong winds led to outages largely in the Southeast and Midwest; North Carolina counted more than 187,000 without power.

“Crews are restoring power but high winds are making repairs challenging at most of the 4,600 outage locations,” Duke Energy spokesman Jeff Brooks wrote on Twitter.

Heating oil and natural gas futures rose sharply in response to the cold. U.S. heating oil futures gained 4.3% while natural gas futures rose 2.5%.

In New England, gas for Friday at the Algonquin hub soared 361% to a near 11-month high of $30 mmBtu.

About half of the power generated in New England comes from gas-fired plants, but on the coldest days, power generators shift to burn more oil. According to grid operator New England ISO, power companies’ generation mix was at 17% from oil-fired plants as of midday Friday.

Gas output dropped about 6.5 billion cubic feet per day (bcfd) over the past four days to a preliminary nine-month low of 92.4 bcfd on Friday as wells froze in Texas, Oklahoma, North Dakota, Pennsylvania and elsewhere.

That is the biggest drop in output since the February 2021 freeze knocked out power for millions in Texas.

One billion cubic feet is enough gas to supply about 5 million U.S. homes for a day.

Reporting by Erwin Seba and Scott DiSavino; additional reporting by Arathy Somasekhar and Laila Kearney; editing by Jonathan Oatis, Kirsten Donovan, Aurora Ellis and Leslie Adler

Our Standards: The Thomson Reuters Trust Principles.

Scott Disavino

Thomson Reuters

Covers the North American power and natural gas markets.

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World

Russia says UK navy blew up Nord Stream, London denies involvement

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  • Russia says UK navy personnel blew up pipelines
  • Russia says UK navy personnel helped attack Crimea
  • Russia does not give evidence for claim
  • Britain denies Russian claims

LONDON, Oct 29 (Reuters) – Russia’s defence ministry said on Saturday that British navy personnel blew up the Nord Stream gas pipelines last month, a claim that London said was false and designed to distract from Russian military failures in Ukraine.

Russia did not give evidence for its claim that a leading NATO member had sabotaged critical Russian infrastructure amid the worst crisis in relations between the West and Russia since the depths of the Cold War.

The Russian ministry said that “British specialists” from the same unit directed Ukrainian drone attacks on ships of Russian Black Sea fleet in Crimea earlier on Saturday that it said were largely repelled by Russian forces, with minor damage to a Russian minesweeper.

“According to available information, representatives of this unit of the British Navy took part in the planning, provision and implementation of a terrorist attack in the Baltic Sea on September 26 this year – blowing up the Nord Stream 1 and Nord Stream 2 gas pipelines,” the ministry said.

Britain denied the claim.

“To detract from their disastrous handling of the illegal invasion of Ukraine, the Russian Ministry of Defence is resorting to peddling false claims of an epic scale,” it said.

“This invented story, says more about arguments going on inside the Russian government than it does about the West.”

Russia has previously blamed the West for the explosions that ruptured the Russian-built Nord Stream 1 and Nord Stream 2 pipelines on the bed of the Baltic Sea.

But it had not previously given specific details of who it thinks was responsible for the damage to the pipelines, previously the largest routes for Russian gas supplies to Europe.

A sharp drop in pressure on both pipelines was registered on Sept. 26 and seismologists detected explosions, triggering a wave of speculation about sabotage to one of Russia’s most important energy corridors.

Reuters has not been able to immediately verify any of the conflicting claims about who was to blame for the damage.

PIPELINE MYSTERY

Sweden and Denmark have both concluded that four leaks on Nord Stream 1 and 2 were caused by explosions, but have not said who might be responsible. NATO Secretary-General Jens Stoltenberg has called the damage an act of sabotage.

Sweden has ordered additional investigations to be carried out into the damage done to the pipelines, the prosecutor in charge of the case said in a statement on Friday.

The Kremlin has repeatedly said allegations of Russian responsibility for the damage were “stupid” and Russian officials have said Washington had a motive as it wants to sell more liquefied natural gas (LNG) to Europe.

The United States has denied involvement.

The Nord Stream 1 and Nord Stream 2 pipelines have a joint annual capacity of 110 billion cubic metres – more than half of Russia’s normal gas exports volumes.

Sections of the 1,224-km (760-mile) long pipelines, which run from Russia to Germany, lie at a depth of around 80-110 metres.

Russia said meanwhile that Ukrainian forces attacked ships from the Black Sea Fleet in Sevastopol, the biggest city in Russian-annexed Crimea, in the early hours of Saturday.

“Nine unmanned aerial vehicles and seven autonomous marine drones were involved in the attack,” the defence ministry said.

“The preparation of this terrorist act and the training of servicemen of the Ukrainian 73rd Special Center for Naval Operations were carried out under the guidance of British specialists located in the town of Ochakiv.”

All the air drones were destroyed though minor damage was done to the minesweeper Ivan Golubets, the ministry said. Sevastopol is the headquarters of Russia’s Black Sea Fleet.

Reporting by Reuters
Editing by Guy Faulconbridge and Frances Kerry

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Business

World is in its ‘first truly global energy crisis’ – IEA’s Birol

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SINGAPORE, Oct 25 (Reuters) – Tightening markets for liquefied natural gas (LNG) worldwide and major oil producers cutting supply have put the world in the middle of “the first truly global energy crisis”, the head of the International Energy Agency (IEA) said on Tuesday.

Rising imports of LNG to Europe amid the Ukraine crisis and a potential rebound in Chinese appetite for the fuel will tighten the market as only 20 billion cubic meters of new LNG capacity will come to market next year, IEA Executive Director Fatih Birol said during the Singapore International Energy Week.

At the same time the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to cut 2 million barrels per day (bpd) of output is a “risky” decision as the IEA sees global oil demand growth of close to 2 million bpd this year, Birol said.

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“(It is) especially risky as several economies around the world are on the brink of a recession, if that we are talking about the global recession…I found this decision really unfortunate,” he said.

Soaring global prices across a number of energy sources, including oil, natural gas and coal, are hammering consumers at the same time they are already dealing with rising food and services inflation. The high prices and possibility of rationing are potentially hazardous to European consumers as they prepare to enter the Northern Hemisphere winter.

Europe may make it through this winter, though somewhat battered, if the weather remains mild, Birol said.

“Unless we will have an extremely cold and long winter, unless there will be any surprises in terms of what we have seen, for example Nordstream pipeline explosion, Europe should go through this winter with some economic and social bruises,” he added.

For oil, consumption is expected to grow by 1.7 million bpd in 2023 so the world will still need Russian oil to meet demand, Birol said.

G7 nations have proposed a mechanism that would allow emerging nations to buy Russian oil but at lower prices to cap Moscow’s revenues in the wake of the Ukraine war.

Birol said the scheme still has many details to iron out and will require the buy-in of major oil importing nations.

A U.S. Treasury official told Reuters last week that it is not unreasonable to believe that up to 80% to 90% of Russian oil will continue to flow outside the price cap mechanism if Moscow seeks to flout it.

“I think this is good because the world still needs Russian oil to flow into the market for now. An 80%-90% is good and encouraging level in order to meet the demand,” Birol said.

While there is still a huge volume of strategic oil reserves that can be tapped during a supply disruption, another release is not currently on the agenda, he added.

ENERGY SECURITY DRIVES RENEWABLES GROWTH

The energy crisis could be a turning point for accelerating clean sources and for forming a sustainable and secured energy system, Birol said.

“Energy security is the number one driver (of the energy transition),” said Birol, as countries see energy technologies and renewables as a solution.

The IEA has revised up the forecast of renewable power capacity growth in 2022 to a 20% year-on-year increase from 8% previously, with close to 400 gigawatts of renewable capacity being added this year.

Many countries in Europe and elsewhere are accelerating the installation of renewable capacity by cutting the permitting and licensing processes to replace the Russian gas, Birol said.

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Reporting by Florence Tan, Muyu Xu and Emily Chow; Editing by Jacqueline Wong and Christian Schmollinger

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Business

Biden administration denies Cheniere’s request to sidestep LNG pollution rule

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WASHINGTON, Sept 6 (Reuters) – The U.S. Environmental Protection Agency (EPA) said on Tuesday it has denied a request from leading liquefied natural gas (LNG) exporter Cheniere Energy Inc (LNG.A) to exempt turbines at its two U.S. Gulf Coast terminals from a hazardous pollution rule.

The rejection raises questions about whether the Texas-based company will have to reduce exports of the supercooled fuel to install new pollution control equipment at its facilities at a time that Europe is depending on increased shipments of LNG from the United States to offset cuts from Russia.

Europe is facing its worst-ever gas supply crisis, with energy prices soaring and German importers discussing possible rationing in the European Union’s biggest economy after Russia reduced gas flows westward. Moscow has cited a pipeline fault for the halt, but Europe sees it as apparent retribution for Western sanctions imposed on Russia for its invasion of Ukraine.

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“Though EPA is denying Cheniere’s request for a special subcategory to comply with the turbines rule, the Agency will continue to work with them and with other companies as needed to assure they meet Clean Air Act obligations,” EPA spokesperson Tim Carroll said in an email.

Owners and operators of gas turbines had a Sept. 5 deadline to comply with the National Emission Standards for Hazardous Air Pollutants (NESHAP), which the administration of President Joe Biden put into effect after an 18-year stay.

The rule imposes curbs on emissions of known carcinogens like formaldehyde and benzene from stationary combustion turbines, like those used by LNG facilities.

Cheniere had asked the Biden administration to exempt a specific kind of turbine that it installed at its LNG terminals from the NESHAP limits, arguing they would reduce shipments from the top U.S. exporter for an extended period and endanger the country’s efforts to ramp up supplies to Europe. read more

Cheniere was the only company to request such an exemption, according to the EPA. The company claimed the model of turbine it uses at its Texas and Louisiana facilities is the best technology for withstanding the types of storms that often strike the Gulf Coast, but that the equipment is also exceptionally hard to retrofit, and that engineering and installation of pollution controls could take years.

Cheniere spokesperson Eben Burnham-Snyder said that while the company “strongly disagrees” with the EPA’s decision, “we will work with our state and federal regulators to develop solutions that ensure compliance.”

He said the decision may result in “unwarranted expenditures” but added that coming into full compliance will not result in a material financial or operational impact and will not affect its ability to supply LNG to customers and countries around the world.

Gas-powered turbines emit formaldehyde and other dangerous pollutants through a chemical transformation that occurs when methane, the main ingredient in natural gas, is superheated.

Around 250 U.S. gas turbines are subject to the new rule, according to an EPA list, nearly a quarter of them Cheniere’s.

The Houston-based company accounts for around 50% of U.S. shipments of LNG abroad.

Ilan Levin, associate director of the Environmental Integrity Project, said the decision by EPA to deny Cheniere’s request was not a surprise because it had warned the company that it needed to meet the standard for years.

Reuters reported last month that the EPA had questioned Cheniere’s selection of gas turbines without adding pollution controls in 2011 and again in 2013. read more

“We applaud the EPA for enforcing the law and making sure the people living near these plants in the coastal bend and southeast Texas/southwest Louisiana get the same clean air protections as everybody else,” he said.

Cheniere shares closed 2.3% lower at $158.58 on Tuesday.

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Reporting by Valerie Volcovici in Washington and Nichola Groom in Los Angeles; Editing by Jonathan Oatis, Matthew Lewis and Himani Sarkar

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Business

Europe races to cut Russian gas usage amid new Putin warning

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  • Nord Stream 1 pipeline out of action for maintenance
  • Pipeline due to resume pumping on Thursday
  • EU says states must act now to reduce gas consumption
  • Germany, others have rationing and other plans in place

BRUSSELS/LONDON, July 20 (Reuters) – The European Union will set out emergency plans on Wednesday to curb gas usage after President Vladimir Putin warned that Russian supplies sent via the biggest pipeline to Europe, Nord Stream 1, were at risk of being reduced further.

Deliveries via the pipeline, which accounts for more than a third of Russian gas exports to the EU, are due to resume on Thursday after a 10-day halt for annual maintenance.

But supplies via that route had been reduced even before the maintenance outage because of a dispute over sanctioned parts, and may now face further cuts, while deliveries via other routes, such as Ukraine, have also fallen since Russia invaded its neighbour in February.

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The disruptions have hampered Europe’s efforts to refill gas stores before winter, raising the risk of rationing and another hit to fragile economic growth if Moscow further restricts flows in retaliation for Western sanctions over the war in Ukraine.

The European Commission’s plan will urge countries to slash gas use. A draft seen by Reuters proposed a voluntary target for countries to cut gas demand over the next eight months, which could be made legally binding in an emergency.

EU officials said the target cut would be 10%-15%, with any plan needing approval from members of the 27-nation bloc. But EU officials say it is vital to act now rather than wait to see what happens to flows via Nord Stream 1 or other routes.

“We believe that a full disruption is likely and it is especially likely if we don’t act and leave ourselves vulnerable to it,” one said. “If we wait, it will be more expensive and it will mean us dancing to Russia’s tune.”

European politicians have accused Russia of playing politics with its gas supplies, using technical issues as a pretext to reduce deliveries. The Kremlin says Russia remains a reliable energy supplier and has blamed reduced flows on sanctions.

Two Russian sources familiar with Russia’s export plans said flows via Nord Stream 1 were expected to restart on time on Thursday after being halted on July 11 for annual maintenance.

But they said it would below its capacity of 160 million cubic metres (mcm) per day.

Kremlin-controlled Gazprom (GAZP.MM) cut gas exports via the route to 40% capacity in June, blaming delays on the return of a turbine that Siemens Energy (ENR1n.DE) was servicing in Canada.

FURTHER REDUCTIONS

That turbine, which was caught up in sanctions, was reported this week to be on its way back, although Gazprom said on Wednesday it had not received documentation to reinstall it and said the turbine’s return and maintenance of other equipment was needed to keep the pipeline running safely. read more

Putin suggested there might be a further reduction in supplies via the pipeline that runs under the Baltic Sea to Germany, Europe’s economic powerhouse which has relied heavily on Russian fuel, adding to European supply concerns. read more

Gas prices have rocketed in volatile trade since the Ukraine crisis erupted. The front-month gas contract climbed above 160 euros per megawatt hour (MWh) on Wednesday, 360% up on a year ago but below its March peak of 335 euros.

Putin said there were five gas pumping units, operated by Siemens Energy at Nord Stream 1 and one more unit was out of order due to “crumbling of inside lining.”

“There are two functioning machines there, they pump 60 million cubic metres per day … If one is not returned, there will be one, which is 30 million cubic metres. Has Gazprom something to do with that?” he said.

Putin said one more of the gas pumping turbines was due to be sent for maintenance on July 26.

He also said Gazprom, which has a monopoly on Russian gas exports by pipeline, was not to blame for the reduction of gas transit capacity via a network of pipelines to Europe.

He blamed Kyiv for closing one route via Ukraine, although Ukraine’s authorities blame the shutdown on Russia’s invasion.

Siemens Energy said maintaining turbines for the Nord Stream 1 would normally be a routine matter. It said it would continue maintaining equipment under sanctions if possible and where required, and it would work as fast as it could. read more

In a pivot east, Gazprom said on Wednesday Russian gas supplies heading to China via its Power of Siberia pipeline hit a new daily record. Moscow has been expanding capacity to supply China even as deliveries to Europe dwindle, although Russia’s far east network is not connected to the European supply system.

European nations, meanwhile, have been chasing alternative supplies, although the global gas market was stretched even before the Ukraine crisis, with demand for the fuel recovering from the pandemic-induced downturn.

Those efforts have included seeking more gas from suppliers linked to Europe by pipeline, such as Algeria, and by building or expanding more liquefied natural gas (LNG) terminals to receive shipments from much further afield, such as the United States.

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Reporting by Reuters bureaus; Writing by Edmund Blair; Editing by Carmel Crimmins

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Business

Exclusive: Russia’s Gazprom tells Europe gas halt beyond its control

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A view shows a screen with the logo of Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 17, 2022. REUTERS/Anton Vaganov/

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LONDON, July 18 (Reuters) – Russia’s Gazprom has told customers in Europe it cannot guarantee gas supplies because of ‘extraordinary’ circumstances, according to a letter seen by Reuters, upping the ante in an economic tit-for-tat with the West over Moscow’s invasion of Ukraine.

Dated July 14, the letter from the Russian state gas monopoly, said it was declaring force majeure on supplies, starting from June 14.

Known as an ‘act of God’ clause, force majeure is standard in business contracts and spells out extreme circumstances that excuse a party from their legal obligations.

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Gazprom’s (GAZP.MM) had no immediate comment.

Uniper, Germany’s biggest importer of Russian gas, was among the customers who said they had received a letter, and that it had formally rejected the claim as unjustified.

RWE (RWEG.DE), Germany’s largest power producer and another importer of Russian gas, also said it has received a force majeure notice.

“Please understand that we cannot comment on its details or our legal opinion,” the company said.

A trading source, asking not to be identified because of the sensitivity of the issue, said the force majeure concerned supplies through the Nord Stream 1 pipeline, a major supply route to Germany and beyond.

Flows through the pipeline are at zero as the link undergoes annual maintenance that began on July 11 and is meant to conclude on Thursday. read more

Europe fears Moscow could keep the pipeline mothballed in retaliation for sanctions imposed on Russia over the war in Ukraine, heightening an energy crisis that risks tipping the region in recession.

TURBINE DELAY

Already on June 14, Gazprom had cut the pipeline’s capacity to 40%, citing the delay of a turbine being maintained in Canada by equipment supplier Siemens Energy (ENR1n.DE).

Canada sent the turbine for the Nord Stream gas pipeline to Germany by plane on July 17 after repair work had been completed, Kommersant newspaper reported on Monday, citing people familiar with the situation. read more

Provided there are no problems with logistics and customs, it will take another five to seven days for the turbine to reach Russia, the report said.

Germany’s economy ministry said on Monday it could not provide details of the turbine’s whereabouts.

But a spokesperson for the ministry said it was a replacement part that was meant to be used only from September, meaning its absence could not be the real reason for the fall-off in gas flows prior to the maintenance.

“This sounds like a first hint that the gas supplies via NS1 will possibly not resume after the 10-day maintenance has ended,” said Hans van Cleef, senior energy economist at ABN Amro.

“Depending on what ‘extraordinary’ circumstances have in mind in order to declare the force majeure, and whether these issues are technical or more political, it could mean the next step in escalation between Russia and Europe/Germany,” he added.

Austrian oil and gas group OMV (OMVV.VI), however, said on Monday it expected gas deliveries from Russia through the Nord Stream 1 pipeline to resume as planned after the outage. read more

Russian gas supplies have been declining via major routes for some months, including via Ukraine and Belarus as well as through Nord Stream 1 under the Baltic Sea.

The European Union, which has imposed sanctions on Moscow, aims to stop using Russian fossil fuels by 2027 but wants supplies to continue for now as it develops alternative sources.

For Moscow and for Gazprom, the energy flows are a vital revenue stream when Western sanctions over Russia’s invasion of Ukraine, which the Kremlin terms a “special military operation”, have strained Russian finances.

According to the Russian Finance Ministry, the federal budget received 6.4 trillion roubles ($115.32 billion) from oil and gas sales in the first half of the year. This is compared to planned 9.5 trillion roubles for the whole 2022.

The grace period for payments on two of Gazprom’s international bonds expires on July 19, and if foreign creditors are not paid by then the company will technically be in default.

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Reporting by Julia Payne; additional reporting by Christoph Steitz in Frankfurt, Bozorg Sharafedin in London, writing by Nina Chestney in London; Editing by David Goodman, Edmund Blair and Barbara Lewis

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