January Global and Domestic Energy Update

Posted: February 22, 2023

High-Level US Articles

Republican Senators Oppose New Environmental Regulation on Heavy-Duty Trucks

The U.S. Environmental Protection Agency (EPA) guidelines to attempt to substantially reduce the smog- and soot-forming emissions from heavy-duty vehicles were challenged by a group of 34 Republican senators on Thursday. The new requirements, which are 80% stricter than existing criteria, are scheduled to go into effect on March 27 and are the first change to clean air regulations for heavy-duty vehicles in more than 20 years. The “aggressive” EPA regulation, according to Republican Senator Deb Fischer of Nebraska, who is leading the drive to repeal it, would encourage “operators to keep using older, higher-emitting vehicles for longer.”

Biden’s Declared War on Oil and Gas Hits Home Hard in West Texas’ Permian Basin

The “rush to green energy” initiatives of the Biden administration have created financial difficulties in the Permian Basin, resulting in uncertainty and market inefficiencies that need to be corrected. Both IPAA Board Chair Steven Pruett and Midland Hispanic Chamber of Commerce Head Adrian Carrasco testified that local oil and gas producers can no longer rely on banks to acquire necessary financing, leading to a shortage of oil and gas in the next two years. The Permian Basin’s oil and gas business as well as the Biden administration’s green energy goals were the topics of a hearing convened by the ECGS subcommittee in Midland.

Alaska Carbon Plan: Boost State Coffers Without Cutting Oil

In order to create additional money without increasing taxes on businesses or people, Alaska is aiming to make use of its experience in oil and gas to tap into the growing market of carbon storage. Similar to initiatives in other states dependent on fossil fuels to profit from carbon offsets and sequestration, Alaska is making plans to store carbon dioxide underground into consideration. Alaska is pursuing three “high potential” carbon offset pilot projects in state forest areas and is seeking permission from federal authorities to supervise carbon injection wells.

Is The Fed Finally Winding Down Its Fight Against Inflation?

The Federal Reserve is reducing the pace of rate increases but still indicating future increases to gradually bring inflation down to 2%. The conclusion of the FOMC meeting was first seen by the markets as proof that the Fed’s cycle of rate increases was about to come to a stop. When the economy falters, which is almost guaranteed to result in a slump, the battle against inflation will come to an end.

Road-Tripping Retirees Set To Bolster U.S. Gasoline Demand

Due to a demographic shift and a trend of retiring in rural regions, retirees are the main reason for higher-than-expected fuel consumption in the US. Although fuel efficiency is at its greatest point ever, some of the improvements are being countered by the market’s trend toward SUVs and trucks.


High-Level Global Articles

Russia Vows Oil Production Cuts, Compounding Natural Gas Retaliation Against Europe

In reaction to EU and G-7 sanctions intended to cripple Russia’s energy sector and its capacity to finance its invasion of Ukraine, Russia has stated that it will voluntarily lower output by 500,000 barrels per day in March. Due to the effects of the global crisis, OPEC-plus reduced output, although this year’s growth in global oil consumption is predicted to be 2.2 million b/d.

Europe is set to ramp up its oil war against Russia with a products ban

The planned EU ban on Russian oil product exports is anticipated to result in “severe market dislocations” and might be more disruptive than past EU restrictions against crude imports. Russia responded to the G-7 price cap by forbidding oil supplies to nations that adhere to the price restriction, raising the cost of transportation and the price of oil-related items. Due to logistical difficulties and increased transportation costs, the EU’s restriction on Russian oil product exports might have a greater effect on markets than its prior crude embargo.

Will OPEC+ Abandon Its Output Cuts Amid Soaring Chinese Demand?

According to the International Energy Agency (IEA), the OPEC+ group may review its production objectives and quotas if China’s oil consumption significantly increases this year. According to Fatih Birol, executive director of the IEA, if demand increases significantly and the Chinese economy strengthens, the OPEC+ nations would need to reevaluate their output policies. A comeback in oil consumption is anticipated as a result of China’s reopening; however, the “exploding” jet fuel demand in China may push that demand even higher.

End-of-Month Prices

Futures and IndexesPrice (USD)Year over Year
WTI Crude76.60-16.7%
Brent Crude83.25-11.3%
OPEC Basket82.02-14.7%
Canadian Crude59.30-25%
Natural Gas2.097-53%

DUC Count Graph

Rig Count Table

Basin/TerritoryRig Count October 31st, 2022Month Over Month Change
DJ/Niobrara/Piceance – Colorado16-4 (-27.2%)
Powder River Basin – Wyoming18-5 (-21.7%)
SCOOP/STACK – Oklahoma64+0 (0%)
Marcellus – Pennsylvania36  -5 (-12%)
Williston – North Dakota42+3 (7.7%)
Permian – Texas/New Mexico353+7 (+2%)
Eagle Ford – Texas71+1 (+1.4%)
California4-3 (-42.9%)

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