Oil | Agriculture | Metals | Carbon & Power | Dry Freight Click on headers to go to that section Top News - Oil U.S. shale industry tempers output even as oil price "The quality of the acreage for privates is not as good as jumps the publics," Sheffield said, estimating private companies Even with oil prices surging toward $75 a barrel, U.S. account for 40% to 50% of U.S. rig count. shale producers are keeping their pledges to hold the line "We’re not seeing the upward pressure we would on spending and keep output flat, a departure from normally have predicted based on $73 oil," said Paul previous boom cycles. Mosvold, president and COO of driller Scandrill, which This year's run up in crude prices, and oil output curbs operates super-spec drilling rigs, equipment in high imposed by the OPEC+ producers group, historically demand since the oil market recovered. would have triggered a drilling boom. But investors are Mosvold reported a slight uptick in calls as oil prices have demanding financial returns over more volume and climbed, but said they are "not substantial." energy financiers are shifting to renewables, so shale firms are determined to stay disciplined. U.S. Supreme Court backs refineries in biofuel waiver "I'm still confident the producers will not respond" to the dispute run-up in prices, said Scott Sheffield, chief executive of The U.S. Supreme Court on Friday made it easier for Pioneer Natural Resources, the largest producer in the small oil refineries to win exemptions from a federal law Permian Basin shale field. A focus on shareholder returns requiring increasing levels of ethanol and other has kept spending low, he said in an interview with renewable fuels to be blended into their products, a major Reuters. setback for biofuel producers. Last week, benchmark U.S. crude futures traded above The justices overturned a lower court decision that had $73 a barrel, the highest since October 2018. Back then faulted the U.S. Environmental Protection Agency for there were 1,052 U.S. rigs drilling but today there are giving refineries in Wyoming, Utah and Oklahoma much less than half that many: around 470, according to extensions on waivers from renewable fuel standard Baker Hughes data. (RFS) requirements under a law called the Clean Air Act Shale output remains well below the January 2020 peak even though the companies' prior exemptions had of 9.18 million barrels per day (mbpd), with production expired. from the seven largest fields this month running 7.77 The extensions at issue were given to units of mbpd, or 15.4% below that level, according to U.S. HollyFrontier Corp and CVR Energy Inc. government data. Overall U.S. first-quarter oil production The 6-3 ruling, authored by conservative Justice Neil averaged 83% of last year’s peak. The U.S. recently Gorsuch, compared these extensions to ones granted in raised its 2021 average production outlook to 11.08 mbpd everyday life such as to a student wanting more time to due to higher crude prices, but it remains about 200,000 complete a term paper even though the deadline has bpd below last year’s average. passed or a business contract whose term had expired. "Oil prices will probably break $80 a barrel here shortly "It is entirely natural - and consistent with ordinary usage and I don't see any rig adds," Sheffield said. A spike in - to seek an 'extension' of time even after some time oilfield activity could drive up service prices, which are lapse," Gorsuch said. already up about 6%. Pioneer may reduce its active rigs In a dissent, conservative Justice Amy Coney Barrett, as its operations have become more efficient, he said. joined by liberal justices Sonia Sotomayor and Elena Kagan, faulted the ruling's interpretation of the word OPEC EASING CUTS "extend." The "EPA cannot 'extend' an exemption that a Shale's restraint is key to OPEC's next step. The oil refinery no longer has," Barrett wrote. producers' group has gradually added more production, President Joe Biden's administration has been confident U.S. shale will not return to an era of explosive considering ways to provide relief to U.S. oil refiners from growth. It will meet Thursday and consider furthering biofuel blending mandates. unwinding cuts from August. The case reflected a long-running dispute between the oil "So far, activity levels support the capital discipline and corn industries. The legal battle focused on changes narrative," said Jonathan Godwin, a senior associate at made in 2005 and 2007 to the Clean Air Act to require data provider Enverus. Frack fleet activity has held steady biofuel quotas in U.S. gasoline and diesel products - since jumping 20% at the start of the year, he said. intended to reduce dependence on foreign oil and In the United States, closely held companies have support fossil fuel alternatives. contributed substantially to rig additions this year, but Under the program, refiners must blend billions of gallons Sheffield said those smaller firms should not drive up of biofuels such as ethanol into their fuel or buy volumes enough to ruffle OPEC+ producers. compliance credits, known as RINs, from those that do. U.S. renewable fuel credits fell on the news, trading at Noting that because the lower court had faulted the $1.55 cents each, down from $1.65 each on Thursday. EPA's decision on other grounds as well, the groups said U.S. gasoline and diesel futures plunged about 3% they were optimistic that Biden's administration and the immediately following the news, but later eased losses. EPA would "take a far more judicious and responsible States backing the refineries included Wyoming. Those approach to the refinery exemption program than their backing biofuels included Iowa. Both sides cited predecessors did." economic threats to their rural economies posed by the Renewable fuel groups said that an increase in waivers litigation. during former President Donald Trump's administration HollyFrontier Corp said in a statement, "We are pleased had undercut the demand for their products by billions of that our longstanding arguments were today validated by dollars. the Supreme Court." HollyFrontier urged the EPA to Small refineries were exempt until 2011 to account for "immediately take action to make the RFS a workable any "disproportionate economic hardship" they would program for U.S. refiners and consumers." endure by complying with volume requirements for American Fuel & Petrochemical Manufacturers President ethanol and other biofuels. Chet Thompson said the renewable fuel standard "is But the EPA was allowed to extend those exemptions for hurting consumers and jeopardizing the viability of certain periods. refineries across the country, as well as the jobs and At issue in the case was whether the EPA impermissibly communities they support." exempted units of HollyFrontier and CVR Energy in 2017 Biofuel and corn producer groups that challenged the and 2018 when they had not received continuous prior waivers, including the Renewable Fuels Association and extensions of an initial exemption. the National Corn Growers Association, said in a The Denver-based 10th U.S. Circuit Court of Appeals last statement they were "extremely disappointed in this year found that the EPA had exceeded its authority unfortunate decision from the Supreme Court." "because there was nothing for the agency to 'extend.'" Top News - Agriculture EU strikes deal on huge farm subsidies, ending three warning that many measures to encourage farmers to years of negotiations shift to environmentally friendly methods were weak or European Union negotiators struck a deal on reforms to voluntary. the bloc's huge farming subsidy programme on Friday, The deal would require countries to spend 20% of introducing new measures aimed at protecting small payments to farmers from 2023-2024, rising to 25% of farms and curbing agriculture's environmental impact. payments between 2025-2027, on "eco-schemes" that The deal ends a near three-year struggle over the future protect the environment. of the EU Common Agricultural Policy, which will suck up Examples could include restoring wetlands to absorb around a third of the EU's 2021-2027 budget, spending CO2, or organic farming, although the rules did not define 387 billion euros on payments to farmers and support for what would count as an eco-scheme. Any funds below rural development. those limits that are not spent on eco-schemes must be Representatives from EU member states and European spent on green measures in other areas instead. Parliament clinched the agreement, which aims to shift The rules require EU countries to redistribute at least money from intensive farming practices to protecting 10% of CAP funds to smaller farms. Countries could nature, and rein in the 10% of EU greenhouse gases dodge this requirement if they use other methods to emitted by agriculture. distribute the funds fairly. The new CAP rules apply from 2023 and do not cover Countries must hand 3% of subsidies to young farmers, Britain following its exit from the EU. and should use criteria like income tests to define who is "In future, agriculture will not just ensure that farmers an "active farmer" and can receive subsidies - another have a viable business, that we have a fair price for attempt to stop large businesses sucking up money. consumers, but it will also contribute to a greener All farmers' payments would be tied to complying with Europe," said Portuguese agriculture minister Maria do environmental rules, such as setting aside 3% of arable Ceu Antunes, who represented EU countries in the talks. land for areas where nature can thrive. "Small family-run farms will get support," said Norbert The deal also creates a 450 million euro crisis fund in Lins, parliament's chief negotiator, adding that the deal case agricultural markets are disrupted by an emergency gives farmers incentives to protect the environment.