June 2024, Vol. 251, No. 6

Global News

Global News June 2024

Alaska Leaders Angered by Alaska Drilling Restrictions  

The White House moved to limit both oil and gas drilling in Alaska, angering state officials who said the plan would eliminate jobs and make the U.S. reliant on foreign resources.

The Interior Department has already finalized a regulation to block oil and gas development on 40% of Alaska’s National Petroleum Preserve (NPR-A), where polar bears, caribou and other wildlife live and are part of the way of life of indigenous communities. 

The agency also said it would reject a proposal by a state agency to construct a 211-mile (340-km) road intended to enable mine development in the Ambler Mining District in north central Alaska, according to Reuters. 

“I am proud that my administration is taking action to conserve more than 13 million acres in the Western Arctic and to honor the culture, history, and enduring wisdom of Alaska Natives who have lived on and stewarded these lands since time immemorial,” Biden said in a statement. 

The new rule would prohibit oil and gas leasing on 10.6 million acres, while limiting development on more than 2 million additional acres. The NPR-Ais a 23 million-acre area on the North Slope and is the largest tract of undisturbed public land in the United States.  

The White House decision would not affect existing oil and gas operations, which include ConocoPhillips’ $8 billion Willow project, approved last year by the administration. 

Mexico Seizes Air Liquide’s Hydrogen Plant at Pemex Refinery 

Mexico took control of a hydrogen plant at a Pemex state oil refinery that a previous administration sold to French firm Air Liquide, the government announced. 

Mexican officials ordered a temporary occupation of the facility in December and in February, declaring the U-3400 unit at Pemex’s Tula refinery in Hidalgo state a public good, according to Reuters. 

Compensation to Air Liquide was included in the order but no monetary amount was specified. Air Liquide said talks on the compensation were underway. 

Oil refineries use hydrogen to reduce the sulfur content in petroleum products, especially diesel, and Mexico's government had cited risks to motor fuels production at the Tula refinery due to the third-party supply of hydrogen. 

President Andres Manuel Lopez Obrador has pushed an agenda that reduces to reliance on imports and bolsters energy security by concentrating industrial control through Pemex and state power company CFE. 

Under his predecessor, however, Pemex's refining arm had signed a 20-year contract with Air Liquide in 2017 to supply hydrogen for Tula's operations in a bid to lower costs and improve efficiency. 

The Tula facility, located in central Hidalgo state north of the Mexican capital, is Pemex’s second-largest refinery currently in operation. 

CNOOC Stockpiles Russian Oil at New Reserve Base in China 

China National Offshore Oil has been sending shipments of ESPO blend from Russia’s Far East into a newly launched reserve base, according to traders and tanker trackers. 

This is the first-time stockpiling of Russian ESPO blend crude at CNOOC’s new reserve base has been reported, according to Reuters. 

The buildup of more than 10 million barrels as estimated by Vortexa Analytics, helped boosted China’s seaborne imports to a record high level in March. 

CNOOC started shipping the Russian crude last winter to a storage base in east China’s Dongying port, according to Vortexa. 

“ESPO discharges into Dongying began surging ... after the port put into use three new berths able to dock Aframax vessels,” said Emma Li, Vortexa’s senior China oil analyst, told Reuters. Each ESPO cargo contains about 740,000 barrels. 

EQT to Sell Pennsylvania Natural Gas Assets to Equinor 

EQT plans to swap a 40% interest in its non-operated natural gas assets in northeast Pennsylvania to Equinor USA in exchange for Equinor’s onshore asset in the Appalachian basin and $500 million in cash, both companies said. 

The move gives holders a cut from the hydrocarbons sold without taking charge of drilling or other operations, but they would still be responsible for their share of costs. 

“We plan to opportunistically divest the remaining portion of our non-operated assets in northeast Pennsylvania,” EQT CEO Toby Rice told Reuters at the time, adding the company would explore a sale of a portfolio of minority stakes in wells in Pennsylvania’s Marcellus shale formation. 

EQT’s plan to exit the position comes as the company tries to accelerate cutting its $5.9 billion debt and increase shareholder returns. 

Final Reforms for US Drilling Called ‘Overly Burdensome’ 

The U.S. administration completed reforms designed to boost returns and address environmental harms from oil and gas drilling on public lands. Many of the changes formalize portions of the 2022 Inflation Reduction Act (IRA). 

Under the new policy, oil and gas companies will pay higher bonding rates to cover the cost of plugging abandoned oil and gas wells as well as increased lease rents, minimum auction bids and royalty rates for the fuels they extract. The rules also limit drilling in sensitive wildlife and cultural areas. 

“These are the most significant reforms to the federal oil and gas leasing program in decades, and they will cut wasteful speculation, increase returns for the public, and protect taxpayers from being saddled with the costs of environmental cleanups,” Interior Secretary Deb Haaland said in a statement. 

About 10% of the nation’s oil and gas comes from drilling on federally owned land, according to federal records.  

“Overly burdensome land management regulations will put this critical energy supply at risk,” American Petroleum Institute Vice President of Upstream Policy Holly Hopkins said in a statement. 

Under the new provisions, minimum lease bonds will soar to $150,000 under from $10,000, a level that has been in effect since 1960. 

ADNOC Explored Potential Takeover of BP, Sources Say 

Abu Dhabi National Oil Company (ADNOC) recently considered buying BP, but the deliberations did not make it past preliminary discussions, according to Reuters sources close to the deliberation. 

In the end, it was decided BP would not fit into ADNOC’s strategy. Additionally, political considerations threw water on the potential move, one of source said. 

In contrast to BP, ADNOC recently increased oil and gas production capacity and is trying change its image to that of a global oil major.  

The two companies spoke directly in recent months, the sources confirmed. 

“It didn’t go far,” one source said of a potential deal, adding ADNOC has also looked at other international companies to give it access to a bigger gas and LNG portfolio, the person added. 

Both companies decline to comment to Reuters. 

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