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Economy

Program to clean up inactive Saskatchewan oil and gas sites to create 2,100 jobs

The Saskatchewan government is launching its Accelerated Site Closure Program (ASCP) to help people get back to work amid the coronavirus pandemic.

It’s a reclamation program that deals with abandoned, inactive oil and gas wells and facilities.

Through the federal COVID-19 Economic Response Plan, the ASCP will access up to $400 million over the next two years.

It’s being overseen by the Ministry of Energy and Resources and delivered in partnership with the Saskatchewan Research Council (SRC).

The province says the program will deal with 8,000 inactive wells and facilities, creating 2,100 full-time jobs.

“We have worked hard to develop a common sense, administratively simple program that creates much-needed jobs in the struggling oil and gas sector,” Energy and Resources Minister Bronwyn Eyre said.

“The ASCP will accelerate the retirement of wells and facilities, which have reached the end of their life cycle, and complete a substantial amount of environmentally important work in a short period of time. For that, we would like to acknowledge the support of the federal government.”

Questions about COVID-19? Here are some things you need to know:

Symptoms can include fever, cough and difficulty breathing — very similar to a cold or flu. Some people can develop a more severe illness. People most at risk of this include older adults and people with severe chronic medical conditions like heart, lung or kidney disease. If you develop symptoms, contact public health authorities.

To prevent the virus from spreading, experts recommend frequent handwashing and coughing into your sleeve. They also recommend minimizing contact with others, staying home as much as possible and maintaining a distance of two metres from other people if you go out.

For full COVID-19 coverage from Global News, click here.

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Business

Oil prices drop amid supply glut, fears of second coronavirus wave

SINGAPORE (Reuters) – Oil prices fell on Monday as concern over a persistent glut and economic gloom caused by the coronavirus pandemic combined to cancel out support from supply cuts at some of the world’s top producers.

Brent crude futures LCOc1 were down 29 cents, or 0.9%, at $30.68 a barrel by 0431 GMT, while U.S. West Texas Intermediate crude futures CLc1 fell 17 cents, or 0.7%, to $24.57 a barrel.

Both benchmarks have notched up gains over the past two weeks as countries have eased business and social lockdowns imposed to cope with the coronavirus and fuel demand has rebounded modestly. Oil production worldwide is also declining.

But possible signs of a second wave of coronavirus infections in northeast China and South Korea worried investors even as more countries started to pivot towards easing pandemic restrictions in moves that could support oil demand.

Goldman Sachs analysts said there was still concern that demand will stay weak in 2021, with worries about a second wave of COVID-19 cases and only a modest increase in personal or corporate travel.

Global oil demand has plummeted by about 30% as the coronavirus pandemic curtailed movement across the world, building up inventories globally.

Fears that the United States is running out of storage space triggered WTI prices crashing into negative territory last month, prompting some U.S. producers to slash output.

In a sign of that impact, the number of operating oil and gas rigs in the world’s largest oil producer fell to 74 in the week to May 8, a record low according to data released on Friday from energy services firm Baker Hughes Co (BKR.N) going back to 1940.

“People are surprised by how quickly the U.S. is shutting in production and that’s exactly what we need in order to support prices,” said Tony Nunan, a senior risk manager at Mitsubishi Corp in Tokyo.

“There’s another 10 days before the June contract expires … if the WTI contract can avoid a crash going into expiry, hopefully we’ve seen the bottom.”

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World News

Mustard oil, alcohol and other virus health claims

As countries around the world grapple with the coronavirus epidemic, there’s been widespread sharing of health advice, ranging from the useless but relatively harmless to things that could be dangerous.

We’ve been looking at some examples and what the science says about them.

Drinking alcohol won’t stop the virus

This one has also come up regularly but is misleading and possibly harmful.

A politician has demanded the immediate opening of shops selling alcohol, closed during India’s lockdown.

“When coronavirus can be removed by washing hands with alcohol, then drinking alcohol will surely remove the virus from the throat,” said Bharat Singh, a senior member of the Congress Party, in Rajasthan state.

But there is no medical evidence for this.

And the World Health Organization (WHO) has made it clear drinking alcohol is not a way to stop the virus and could increase the risk of other health problems.

The only time the WHO and other official health bodies refer to using alcohol is as a component in hand-cleaning gels.

Holding you breath can’t tell you if you have the virus

The claim about holding your breath has surfaced in a many countries.

A popular yoga guru in India, Baba Ramdev, has said you should try holding your breath for a full minute if you’re young and healthy – 30 seconds for the elderly or those with underlying conditions.

If you can’t, he says, it indicates you have the virus.

But there is no scientific basis for this claim.

Mustard oil isn’t an effective treatment

The same Indian guru also suggests putting drops of mustard oil into the nostrils while doing the breathing test, claiming – again erroneously – the oil forces the virus out of the respiratory tract down into the stomach, where it is killed by acid.

The guru, one of India’s most widely followed, has a vast business empire that sells a wide range of products.

The Indian government’s own fact-checking service has debunked the claim.

Disinfectant and UV light claims have been widely shared

Since US President Donald Trump raised the idea, in a press briefing last month, injecting patients with disinfectant might help treat coronavirus, it has been repeated – and often derided – in various forms on social media in many countries.

Using a disinfectant can kill viruses on surfaces.

But consuming or injecting disinfectant risk poisoning and death.

And there is no evidence it has any effect against the virus.

Mr Trump also talked of exposing patients to UV (ultraviolet) light.

And there is some evidence viruses do not last as long on surfaces when exposed to direct sunlight.

But it is very damaging to human tissue.

And there is no evidence UV light is an effective treatment for anyone with the virus.

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Business

Oil heads for steep weekly slide after coronavirus turmoil

LONDON (Reuters) – Oil prices were broadly steady on Friday but headed for their third weekly loss as production shutdowns failed to keep pace with sliding demand due to the coronavirus crisis.

Brent crude LCOc1 was up 18 cents, or 0.84%, to $21.51 at 1043 GMT, having risen 5% on Thursday, while U.S. oil CLc1 was steady at $16.50 a barrel, after rising 20% the day before. Both contracts traded within a range of around $2 a barrel.

Prices are heading for their eighth weekly loss in the last nine, with Brent on course for a 23% drop this week and U.S. West Texas Intermediate (WTI) set for a fall of around 9.5%.

WTI fell into negative territory, to minus $37.63 a barrel on Monday, while Brent dropped to a two-decade low.

“After the price crash earlier this week, which seems to have made every person on the planet aware of the problems in the oil market, several relevant announcements of active crude production shut-ins have made the rounds,” JBC Energy said.

Continental Resources Inc (CLR.N), the largest oil producer in North Dakota has halted most of its production in the U.S. state and notified some customers it would not supply crude, people familiar with the matter said.

State officials say overall production has already dropped by about 300,000 barrels per day (bpd), and coming into this year Continental produced nearly 150,000 bpd in the Bakken.

Under a deal agreed between the Organization of the Petroleum Exporting Counties (OPEC) and other producers including Russia and Azerbaijan, a grouping known as OPEC+, output cuts of 9.7 million barrels bpd are due from May.

Kuwait’s state news agency KUNA said on Thursday the OPEC producer will begin cutting supplies to international markets without waiting for the official start of the deal.

Azerbaijan’s Azeri-Chirag-Guneshli oil project will also have to cut output sharply from May to fulfil commitments under the deal, four sources told Reuters.

But with global storage space filling up fast and oil demand slumping by around 30%, those shut-ins are so far proving too little to rebalance the market.

“Unless more production shuts down, the extracted oil will literally have nowhere else to be stored, which implies a forced shutdown across several locations,” Head of Oil Markets at Rystad Energy Bjornar Tonhaugen said.

In China, where the coronavirus outbreak started late last year, analysts said fuel sales should pick up in the second quarter as Beijing eases curbs to contain the pandemic.

Meanwhile, U.S. legislators approved a nearly $500 billion bill for relief from the pandemic, providing support to small businesses and hospitals. The package raises U.S. spending to combat the crisis to nearly $3 trillion.

Still, the global economy may see a record contraction this year, according to a Reuters poll.

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Business

Oil rises for second day as producers trim output to respond to demand loss

TOKYO (Reuters) – Oil extended gains on Thursday amid signs that producers are cutting production to cope with a collapse in demand for fuel as the coronavirus outbreak ravages the world’s economies.

Brent crude LCOc1 was up 33 cents, or 1.6%, at $20.70 a barrel by 0254 GMT after rising more than 5% on Wednesday.

U.S. West Texas Intermediate (WTI) futures were up 28 cents, or more than 2%, at $14.06 a barrel, having risen around a fifth in the previous session. U.S. crude futures fell to below minus $40 on Monday on concerns that buyers were running out of storage space to take deliveries.

In the United States, the world’s biggest oil producer, Oklahoma’s energy regulator said companies could shut wells without losing their leases, an initial victory for struggling U.S. producers seeking relief from the market crash after a surge in production. The state is the fourth-largest oil producer in the U.S.

As oil consumption collapses, the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, a group known as OPEC+, are set to cut supply by a record 9.7 million barrels per day (bpd) from May 1. Those cuts may have to be extended to match the shortfall in demand, analysts said.

Loadings of Russia’s Urals crude grade from the Baltic Sea in the first 10 days of May are set to be 36% lower than the same period in April, indicating the country is complying with the cuts.

U.S. stockpiles of crude, gasoline and distillate fuels rose last week as inventory are building around the world, the Energy Information Administration said on Wednesday.

Crude inventories USOILC=ECI rose by 15 million barrels in the week to April 17 to 518.6 million barrels, near a record of 535 million barrels set in 2017.

Inventories are expected to keep rising, due to the collapse in demand from the viral outbreak and an aggressive response by refiners to cut processing.

In Japan, the world’s third-biggest economy, data released on Thursday showed services shrank at the most on record while manufacturers also shut down operations.

The coronavirus sweeping across the world has infected more than 2.5 million people and killed nearly 180,000 people, forcing governments to impose strict lockdowns and shutter industries while pushing central banks unleash unparalleled stimulus.

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Business

Oklahoma regulators approve application classifying oil output as 'economic waste'

DENVER (Reuters) – Oklahoma’s energy regulator on Wednesday ruled in favor of an oil company’s application effectively bars property owners from cancelling leases where production is halted due to low prices.

The decision represents the first win by regional oil groups seeking relief from state regulators as prices fall to levels that are not profitable to pump. Globally crude supplies have overwhelmed demand that has fallen more than 30% due to the coronavirus pandemic and earlier this week, benchmark U.S. crude futures traded negative for the first time in history.

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Business

Texas oil hearing stirs hornet's nest, as regulators offer no clue to decision

HOUSTON (Reuters) – Texas energy regulators listened as top executives on Tuesday debated whether the state should cut oil output by 1 million barrels per day, but did not indicate how they might vote after more than 10 hours of sometimes dire testimony.

Oil and gas companies are gushing red ink and cutting tens of thousands of workers as oil prices tumble, prompting regulators in the largest U.S. oil-producing state to wade into global oil politics and consider the calls for cuts. U.S. crude oil prices CLc1 fell during the hearing to under $20 a barrel at one point, a nearly 18-year low.

While the federal government has little power to influence oil production, many state regulators like the Texas Railroad Commission have powers that can include limiting production across the state.

The hearing, based on a request by executives from shale producers Pioneer Natural Resources Co (PXD.N) and Parsley Energy Inc (PE.N), ignited a debate between those who favor free markets and those who worry that without intervention, small producers could get shut out of oil sales as storage fills next month. Some firms have already started closing wells, several executives said.

The industry is facing a historic economic collapse with $3 per barrel to $10 per barrel oil in coming weeks, Pioneer Chief Executive Scott Sheffield warned commissioners on Tuesday.

“Demand is not going to come roaring back,” he said.

Kirk Edwards, president of small producer Latigo Petroleum, argued uniform cuts could help thousands of firms like his continue to sell some of their oil production.

But producers have reduced spending as much as 50% and output has started falling already, said Lee Tillman, CEO of Marathon Oil Corp (MRO.N), who opposed state-mandated cuts, arguing the market is taking care of the glut.

The commissioners are expected to vote on the oil companies’ motion on April 21.

The hearing was held days after the Organization of the Petroleum Exporting Countries and allies agreed to reduce their output by 9.7 million barrels per day (bpd) in May and June.

However, U.S. crude futures CLc1 continued to fall this week as traders bet the historic OPEC deal was not large enough to counter oil demand destruction caused by coronavirus-related travel restrictions and business halts.

At least two votes on the three-member Texas Railroad Commission are needed to pass the proposal. Commissioner Ryan Sitton has pushed for evaluating statewide cuts. Wayne Christian and Christi Craddick, have been careful not to reveal how they might vote, though Christian said Tuesday, “the hardest thing I think in my life is to sit back and do nothing, and yet that is sometimes” what is needed.

“What if other states don’t do this?” Craddick asked at one point during the hearing, suggesting Texas could send oil revenue to nearby states.

Some of the state’s largest and most influential oil companies, Exxon Mobil Corp (XOM.N), Chevron Corp (CVX.N) and Occidental Petroleum Corp (OXY.N), have opposed imposing limits, along with some of the largest trade organizations.

The idea, however, has gained proponents elsewhere. A group of Oklahoma oil producers filed a request with that state for a hearing to consider production curbs. It is set to take place May 11.

The executive chairman of Oklahoma-based Continental Resources Inc(CLR.N) , Harold Hamm, said at the Texas hearing that he would “not oppose” Oklahoma cuts and urged Texas regulators to consider cutting output 25%.

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Economy

Iraq oil minister says Kurdistan is included in cut of oil production – INA

CAIRO, April 14 (Reuters) – Iraq’s oil minister Said on Tuesday that Kurdistan region is included in the cut of oil production, Iraqi news agency (INA) cited the minister as saying.

Minister Thamer al-Ghadhban said that on Thursday a delegation from the Kurdistan region will arrive at the oil ministry on Thursday to discuss the reduction mechanism, INA reported.

OPEC and allies led by Russia, a group known as OPEC+, agreed on Sunday to a record cut in output to prop up oil prices amid the coronavirus pandemic in an unprecedented deal with fellow oil nations, including the United States, that could curb global oil supply by up to 20%. (Reporting by Nayera Abdallah and Omar Fahmy)

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Business

Texas hearing on oil production curbs stirs hornet's nest

HOUSTON (Reuters) – Texas energy regulators are scheduled on Tuesday to hear from dozens of energy executives on an initiative calling for the state to mandate an output cut to stem the sharpest oil price drop in decades.

Oil and gas companies are gushing red ink and cutting tens of thousands of workers as oil prices have crashed to about $22 a barrel from $61 in January. On Monday, Texas refiner Valero Energy (VLO.N) forecast a first-quarter loss of up to $2.1 billion on falling demand.

The proposal, submitted by executives from shale producers Pioneer Natural Resources (PXD.N) and Parsley Energy (PE.N), has stirred up anger at the Texas Railroad Commission, the state’s oil and gas regulator, for considering cutbacks, and fury that livelihoods are disappearing.

“The shale revolution would not have begun here in Texas without free market principles,” Marathon Oil (MRO.N) Corp Chief Executive Lee Tillman wrote in a letter to the commission, which is scheduled to hold its hearing Tuesday morning.

Tillman added that cuts would not “have the desired effect – or any meaningful effect – on global oversupply, and would only serve to disadvantage Texans.”

Intervening “in markets could prove more harmful in the long run,” David Hager, chief executive of shale producer Devon Energy (DVN.N), wrote in his letter to the commission opposing the proposal.

But Marilyn Craaybeek, who owns a small oil company, said small oil and gas operators were failing, something she blamed on government inaction, and with them her hope for the future.

“This was my retirement and I will die poor,” she wrote in a letter to the commission in favor of the production curbs.

The hearing is being held days after the Organization of the Petroleum Exporting Countries (OPEC) and allies agreed to reduce their output by 9.7 million barrels per day (bpd) in May and June. Other non-OPEC countries and government reserve purchases could lift the total reduction to 19 million bpd, analysts said.

However, U.S. crude futures CLc1 edged lower on Tuesday to $21.54 a barrel, below the average cost of production in all Texas oilfields. Traders have bet the historic OPEC deal was not large enough to counter oil demand destruction caused by coronavirus-related travel restrictions and business halts.

At least two votes on the three-member Texas Railroad Commission are needed to pass the proposal. Ryan Sitton, one of the commissioners, has pushed for evaluating statewide cuts, but Wayne Christian, the commission’s current chairman, and Christi Craddick, the other commissioner, have not offered their views. Christian and Craddick have rebuked Sitton for suggesting the board had reached consensus.

Parsley and Pioneer, two major shale producers in the Permian Basin in West Texas, have said uniform cuts are important to keep the industry from collapse as oil storage starts to fill and will be limited in May.

“Large-scale production interruptions appear inevitable and imminent,” executives from Pioneer and Parsley wrote in a joint letter to the commission.

Some of the state’s largest and most influential oil companies, Exxon Mobil (XOM.N), Chevron Corp (CVX.N) and Occidental Petroleum Corp (OXY.N), have opposed imposing limits.

The idea, however, has gained proponents elsewhere. A group of Oklahoma oil producers on Monday filed a request with their state also asking for a hearing to consider production curbs.

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Business

OPEC, Russia approve biggest-ever oil cut amid coronavirus pandemic

BAKU/DUBAI/LONDON (Reuters) – OPEC and allies led by Russia agreed on Sunday to a record cut in output to prop up oil prices amid the coronavirus pandemic and said they had an unprecedented deal with fellow oil nations, including the United States, to curb global oil supply by 20%.

Measures to slow the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the U.S. shale industry, which is more vulnerable to low prices due to its higher costs.

The group, known as OPEC+, said it had agreed to reduce output by 9.7 million barrels per day (bpd) for May and June, after four days of talks and following pressure from U.S. President Donald Trump to arrest the price decline.

The biggest oil cut ever is more than four times deeper than the previous record cut in 2008. Producers will slowly relax curbs after June, although reductions in production will stay in place until April 2022.

“The big Oil Deal with OPEC+ is done. This will save hundreds of thousands of energy jobs in the United States,” Trump wrote on Twitter, thanking Russian President Vladimir Putin and Saudi King Salman for pushing the deal through.

“I just spoke to them… Great deal for all,” Trump said.

OPEC+ said in a draft statement seen by Reuters it expected total global oil cuts to amount to more than 20 million bpd, or 20 percent of global supply, effective May 1.

Three OPEC+ sources said effective oil output cuts would include contributions from non-members, steeper voluntary cuts by some OPEC+ members and strategic stocks purchases by the world’s largest consumers.

The sources said non-members Brazil, Canada, Norway and the United States would contribute 3.7 million bpd. Gulf members of the Organization of the Petroleum Exporting Countries will be cutting output more steeply than agreed, OPEC+ sources said.

The sources said the International Energy Agency (IEA) would announce purchases into stocks by its members on Monday to the tune of 3 million bpd in the next couple of months.

The IEA did not immediately respond to a request for comment.

SEVERE DISTRESS

Trump had threatened OPEC leader Saudi Arabia with oil tariffs and other measures if it did not fix the market’s oversupply problem as low prices have put the U.S. oil industry, the world’s largest, in severe distress.

Canada and Norway had signalled a willingness to cut and the United States, where legislation makes it hard to act in tandem with cartels such as OPEC, said its output would fall steeply by itself this year because of low prices.

The OPEC+ deal had been delayed since Thursday, however, after Mexico, worried about derailing its plans to revive heavily indebted state oil company Pemex, balked at the production cuts it was asked to make.

Mexican President Andres Manuel Lopez Obrador said on Friday that Trump had offered to make extra U.S. cuts on his behalf, an unusual offer by the U.S. leader, who has long railed against OPEC.

Trump said Washington would help Mexico by picking up “some of the slack” and being reimbursed later. He did not say how that would work.

A previous agreement by OPEC+ to cut production this year fell apart because of a dispute between Russia and Saudi Arabia, triggering a price war that brought a flood of supply just as demand for fuel was crushed by the coronavirus pandemic.

Global oil demand is estimated to have fallen by a third as more than 3 billion people are locked down in their homes due to the outbreak.

An 10-15% cut in supply might not be enough to arrest the price decline, banks Goldman Sachs and UBS predicted last week, saying Brent prices would fall back to $20 per barrel from $32 at the moment and $70 at the start of the year.

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ANALYSIS-Mexican president’s nationalist oil vision fuels standoff with Saudis )

TIMELINE-OPEC’s oil output changes since the 1990s

FACTBOX-Even big OPEC+ cuts won’t offset oil demand collapse – analysts

Crude oil prices vs U.S. crude oil stocks reut.rs/34qOqEO

OPEC+ 10 million bpd cut distribution for May-June reut.rs/2VjJGwB

Related Coverage

  • Saudi energy minister says OPEC+ effective oil cuts are 12.5 million bpd
  • Saudi Arabia, Russia, U.S. welcome outcome of OPEC+ meeting: SPA

OPEC+ 8 million bpd cut distribution for July-December reut.rs/39S16py

OPEC+ 6 million bpd cut distribution for January 2021-April 2022 reut.rs/2JVK92Q

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