Sunday, April 22, 2018

natural gas supplies now 38.3% below those of a year ago; DUC well report shows 6.4 month backlog of unfracked wells

oil prices were higher again this week, and they might have reached $70 a barrel for the first time in three and a half years had not Trump tweeted against them on Friday...after jumping nearly 9% to a 41 month high of $67.38 a barrel on widespread war fears last week, US oil prices for May delivery sunk $1.17 to $66.22 a barrel on Monday, as news over the weekend made it clear that the weekend missile strikes against Syria were likely just a one-off event, and that a direct US - Russia military confrontation had been avoided...oil prices then recovered 30 cents to $66.52 a barrel on Tuesday, bolstered by a strong stock market and concern that possible renewed U.S. sanctions against Iran would impact global oil supplies...prices then jumped nearly 3% on Wednesday, topping $68 for the first time in more than three years and closing up $1.95 at $68.47 a barrel, after the Saudis indicated an oil price target of $80 or even $100, and the EIA reported that U.S. stockpiles fell across the board....oil prices were up more than a dollar again on Thursday morning, hitting highs not seen since November 2014, before pulling back from that three-and-a-half-year high and closing down 18 cents at $68.29 a barrel, after oil ministers meeting in Saudi Arabia said that the global glut of crude supplies has nearly vanished....oil prices then dropped to as low as $67.50 on Friday morning, after Trump criticized OPEC, tweeting "Looks like OPEC is at it again,” “Oil prices are artificially Very High! No good and will not be accepted!” but later stabilized to close up 9 cents at $68.38 a barrel, after OPEC ministers pushed back, saying prices were not artificially inflated, and that they had no specific price objective in stabilizing oil markets...oil prices thus posted a second straight weekly gain as the May contract expired on Friday, while the new front month contract for June oil closed up 7 cents at $68.40 a barrel, for a 1.6% gain on the week...

natural gas prices for May, on the other hand, were little changed over the week, rising 1.7 cents on Monday, falling 1.4 cents on Tuesday, inching up a tenth of a cent on Wednesday, then falling 7.9 cents on Thursday despite a surprisingly large draw from gas supplies, but then gaining that entire 7.9 cents back on Friday to end the week four-tenths of cent higher at $2.739 per mmBTU, or roughly $2.84 a thousand cubic feet....the week's natural gas storage report from the EIA indicated that natural gas in storage in the US fell by 36 billion cubic feet to 1,299 billion cubic feet over the week ending April 13th, which left our gas supplies 808 billion cubic feet, or 38.3% lower than the 2,107 billion cubic feet that were in storage on April 14th of last year, and 449 billion cubic feet, or 25.7% below the five-year average of 1,748 billion cubic feet typically in storage after the second week of April...that large of a withdrawal was unexpected, and any withdrawal of gas from storage in April is unusual, as the heating season officially ended on March 31st with 1,351 billion cubic feet of natural gas in storage in the US, the lowest level at the end of winter since 2014 and the 2nd lowest amount of gas in storage as that date in the short history of the storage report...however, after that official end of the natural gas withdrawal season, we've now seen two more weeks of draw downs, which we're able to see quite clearly in the following graph...

April 19 2018 nat gas in storage as of April 13 via Kemp

the above graph came from the twitter feed of John Kemp, senior energy analyst and columnist with Reuters, and it shows the quantity of natural gas in storage, in billions of cubic feet, in the lower 48 states over the period from January 2015 up to the week ending April 13th 2018 as a red line, the quantity of natural gas in storage in the lower 48 states over the "prior year" from the period shown by the graph, which would thus be from January 2014 up until the end of 2017 as a yellow line, and the average of natural gas in storage over the 5 years preceding those same dates shown as a dashed blue the same time, the light blue shaded background shows us the range of the amount of natural gas in storage for any given time of year for the 5 years prior to the years shown by the graph…thus the light shaded area also shows us the normal range of natural gas in storage as it fluctuates from season to season, with natural gas in storage underground normally building to a maximum by the middle of October, falling through the winter, and usually bottoming out at the end of March, fluctuating of course depending on the temperature related heating needs during any given season...

however, we can see that the red line for this year's natural gas supplies has continued to fall over the past two weeks, while the blue-dashed average of gas in storage, and the yellow line for last year's gas in storage had already turned higher by mid-April...the 36 billion cubic foot drop in supplies referenced by this report compares to an average 38 billion cubic foot build in supplies for the typical second week in April, and the 47 billion cubic feet of natural gas that was added to storage in the week ending April 14th of last fact, if we check the Historical Record of Natural Gas in Working Underground Storage for the Lower 48 States, we can't find any year where there has been a withdrawal of natural gas from storage as late in the year as the 2nd week of April...even the polar vortex of 2014 saw natural gas supplies inch up at the end of March, and saw an increase of 49 billion cubic feet of gas in storage by the week ending April 18th of that year...moreover, the week ending April 20th this year, not yet reported or shown above, is at risk of another withdrawal, since the past week has seen another arctic weather outbreak over the eastern half of the country, where natural gas consumption is the highest...but whatever happens this week, however, it's clear that we will start this year's natural gas injection season with a large deficit...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering the week ending April 13th, was almost a reversal of the prior week's, in that it showed that due to a big drop in our oil imports and a big jump in our oil exports, our refineries had to pull oil out of our commercial crude supplies for the fifth time in the past twelve weeks...our imports of crude oil fell by an average of 720,000 barrels per day to an average of 7,930,000 barrels per day during the week, after rising by 752,000 barrels per day the prior week, while our exports of crude oil rose by an average of 544,000 barrels per day to an average of 1,749,000 barrels per day during the week, after falling by 970,000 barrels per day the prior week, which meant that our effective trade in oil over the week ending the 13th worked out to a net import average of 6,181,000 barrels of per day during the week, 1,264,000 barrels per day less than our net imports during the prior the same time, field production of crude oil from US wells rose by 15,000 barrels per day to a record high of 10,540,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 16,721,000 barrels per day during the reporting week..

during the same week, US oil refineries were using 16,949,000 barrels of crude per day, 70,000 barrels per day less than they used during the prior week, while at the same time 153,000 barrels of oil per day were being pulled out of oil storage facilities in the US....consequently, this week's crude oil figures from the EIA seem to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 75,000 fewer barrels per day than what refineries reported they used during the account for that disparity, the EIA needed to insert a (+75,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"... (for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this)...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports actually rose to an average of 8,157,000 barrels per day, which was 2.7 more the 7,941,000 barrel per day average we imported over the same four-week period last year, the first time our 4 week average imports topped the year ago averages this year....the 153,000 barrel per day withdrawal from our total crude inventories was all taken from our commercially available stocks of crude oil, as oil stocks in our Strategic Petroleum Reserve were unchanged...this week's 15,000 barrel per day increase in our crude oil production included a 25,000 barrel per day increase in output from wells in the lower 48 states, which was partially offset by a 10,000 barrel per day decrease in output from Alaska...the 10,540,000 barrels of crude per day that were produced by US wells during the week ending April 13th were the highest on record, 13.9% more than the 9,252,000 barrels per day that US wells were producing during the week ending April 14th of last year, and 25.1% above the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June, 2016...

US oil refineries were operating at 92.4% of their capacity in using those 16,949,000 barrels of crude per day, down from 93.5% of capacity the prior week, and and down from the off-season record 96.7% of capacity set during the last week of 2017....hence, the 16,949,000 barrels of oil that were refined this week were 3.7% less than the off-season record of 17,608,000 barrels per day that were being refined during the last week of December 2017, but were statistically unchanged from the 16,938,000 barrels of crude per day that were being processed during the week ending April 14th, 2017, when refineries were operating at 92.9% of capacity....

even with the modest decrease in the amount of oil being refined, gasoline output from our refineries was higher than the prior week, increasing by 54,000 barrels per day to 10,204,000 barrels per day during the week ending April 13th, after our refineries' gasoline output had increased by 35,000 barrels per day during the week ending April 6th....that increase meant that our gasoline production was 4.2% greater during the week than the 9,794,000 barrels of gasoline that were being produced daily during the week ending April 14th of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 162,000 barrels per day to 5,094,000 barrels per day, after rising by 753,000 barrels per day over the prior three weeks....still, that decrease meant the week's distillates production was 1.1% less than the 5,150,000 barrels of distillates per day than were being produced during the week ending April 14th, 2017....    

even with the modest increase in our gasoline production, our supply of gasoline in storage at the end of the week fell by 2,968,000 barrels to 235,967,000 barrels by April 13th, the sixth decrease in 7 weeks, but just the 7th decrease in 23 weeks, as gasoline is typically added to storage over the winter months...our gasoline supplies fell because our domestic consumption of gasoline rose by 548,000 barrels per day to a record high of 9,857,000 barrels per day, even while our exports of gasoline fell by 142,000 barrels per day to 647,000 barrels per day, and while our imports of gasoline rose by 50,000 barrels per day to 705,000 barrels per day...with this week's decrease, our gasoline inventories are now 0.7% lower than last April 14th's level of 237,672,000 barrels, even as they remain roughly 7.8% above the 10 year average of gasoline supplies for this time of the year...         

since we have a new record high for domestic gasoline consumption this week, we'll include a graph of the recent history of that metric...

April 18 2018 gasoline supplied week of April 13

the above graph came from a package of oil graphs on this report that John Kemp mailed out on Wednesday, and it shows gasoline supplied to US markets in thousands of barrels per day by "day of the year" for the past ten years, with the past ten year range of our gasoline usage for any given date shown in the light blue shaded area, and the median of our gasoline consumption, or the middle of the 10 year daily range, traced by the blue dashes over each day of the year....the graph also shows the number of barrels of gasoline supplied for each week in 2017 traced weekly by a yellow line, and our year to date gasoline consumption for 2018 represented by the red John notes at the top, that red line shows that gasoline supplied rose to a record high of 9.68 million barrels per day with this week's report, which is especially notable in that it happened in April, when as you can see, the summer months are usually the highest months for gasoline consumption...note that this 'gasoline product supplied' number does not necessarily mean that driving increased by that much, as it represents deliveries of gasoline to wholesalers, rather than retail sales, which nonetheless would not have set a record unless retail sales to drivers had demanded a restocking by gasoline wholesalers..

meanwhile, with this week's decrease in distillate's production, our supplies of distillate fuels fell by 3,017,000 barrels to 125,340,000 barrels over the week ending April 13th, the 5th decrease in six weeks and the largest drop since the beginning of January...our distillate inventories fell because the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 186,000 barrels per day to 4,356,000 barrels per day, and because our imports of distillates fell by 22,000 barrels per day to 103,000 barrels per day, while our exports of distillates fell by 75,000 barrels per day to 1,285,000 barrels per day...after this week’s inventory decrease, our distillate supplies ended the week 15.5% lower than the 148,266,000 barrels that we had stored on April 14th, 2017, and roughly 7.4% lower than the 10 year average of distillates stocks at this time of the year…    

finally, due to the drop in our oil imports and the jump in our oil exports, we had to take oil out of our commercial supplies of crude oil for the 7th time in 2018 and for the 36th time in the past year, as our commercial crude supplies decreased by 1,071,000 barrels, from 428,638,000 barrels on April 6th to 427,567,000 barrels on April 13th...hence, after falling most of the past year, our oil inventories as of April 13th were 19.7% below the 532,343,000 barrels of oil we had stored on April 14th of 2017, 15.7% lower than the 507,312,000 barrels of oil that we had in storage on April 15th of 2016, and 6.3% below the 456,271,000 barrels of oil we had in storage on April 17th of 2015, at a time when the US glut of oil had already begun to surge from the stable levels of prior years...  

This Week's Rig Count

US drilling activity increased for the eighth time in the past nine weeks and for 17th time in the past 24 weeks during the week ending April 20th, a period of higher oil prices that has consequentially seen the rig increases far exceed the few decreases...Baker Hughes reported that the total count of active rotary rigs running in the US rose by 5 rigs to 1013 rigs in the week ending on Friday, which was also 156 more rigs than the 857 rigs that were in use as of the April 21st report of 2017, while it was still down from the recent high of 1929 drilling rigs that were deployed on November 21st of 2014... 

the number of rigs drilling for oil increased by 5 rigs to 820 rigs this week, which was also 132 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, the same time, the number of drilling rigs targeting natural gas formations was unchanged at 192 rigs this week, which was just 25 more gas rigs than the 167 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, addition, there is also a rig drilling currently that was listed as "miscellaneous", unchanged from last week, but down from the 2 "miscellaneous" rigs that were operating a year ago.

new drilling began from 2 more platforms in the Gulf of Mexico this week, increasing current drilling activity in the Gulf to 18 rigs, which was still 2 rigs less than were working in the Gulf, or anywhere offshore, a year ago...meanwhile, the count of active horizontal drilling rigs increased by 6 rigs to 889 horizontal rigs this week, which was 171 more horizontal rigs than the 718 horizontal rigs that were in use in the US on April 21st of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014... meanwhile, the directional rig count was unchanged at 70 rigs this week, which was still up from the 60 directional rigs that were in use during the same week of last year....on the other hand, the vertical rig count decreased by 1 rig to 54 vertical rigs this week, which was also down from the 79 vertical rigs that were deployed on April 21st of 2017...

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas both tables, the first column shows the active rig count as of April 20th, the second column shows the change in the number of working rigs between last week's count (April 13th) and this week's (April 20th) count, the third column shows last week's April 13th active rig count, the 4th column shows the change between the number of rigs running on Friday and as of the equivalent weekend report of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was on Thursday the 21st of April, 2017...      

April 20 2018 rig count summary

obviously, this was another week when the whole increase in drilling was in the Permian of west Texas, while rigs the rest of the country were just shifting around like chickens in a barnyard...the largest decrease resulting from that shifting was in the Cana Woodford of Oklahoma, which was down 4 rigs to 61 rigs, which nonetheless only subtracted 1 from the Oklahoma total, as rigs were evidently added elsewhere in the state, likely including the two rigs added in the Mississippian lime near the Kansas border...note that drilling in the Utica shale was down by two rigs this week, both of which were targeting natural gas, one in Pennsylvania and one in Ohio...despite that, the natural gas directed rig count remained unchanged because two natural gas rigs were added in the Eagle Ford of south Texas, where one oil rig was shut down at the same time...that left the Eagle Ford with 68 oil rigs, and 8 drilling for natural gas...also note that other than the major producing states shown above, both Alabama and Indiana had rigs start up this week...for Alabama, that single rig is still down from the two rigs working in the state a year ago, while for Indiana, their new rig represents the first drilling the state has seen since February of 2017...

DUC well report for March

Monday of this week saw the release of the EIA's Drilling Productivity Report for April, which includes the EIA's March data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...we last looked at this monthly report in August of last year, when they consolidated their reporting on the Utica shale and the Marcellus into a single geographic unit labeled 'the Appalachia region", while at the same time initiating coverage on the Anadarko region, which includes 24 Oklahoma and 5 Texas counties, and which includes the STACK and SCOOP reservoirs in the Woodford shale, and the Granite Wash tight sands band transversing the Oklahoma Texas Panhandle border....the productivity report itself gets little coverage, as some writers are put off by the seemingly exact projections of yield per rig for the month ahead, which are inaccurate in themselves in that the action of drilling does not yield product until the wells are fracked, which could be months later...nonetheless, the data on drilled but uncompleted wells (DUCs) gives us a good idea of how many wells are being drilled, how many are being completed, and the backlog of those left to complete in each basin...

for March, this report once again showed a large increase in uncompleted wells nationally, mostly because of dozens of newly drilled but uncompleted wells (DUCs) in the Permian basin of west Texas, but also because of modest growth in uncompleted wells in the Eagle Ford of south Texas...for all 7 sedimentary regions covered by this report, the total count of DUC wells increased by 94, from 7,598 wells in February to 7,692 wells in March, the eighteenth consecutive monthly increase in uncompleted wells, and hence again the highest number of such unfracked wells in the history of this report....that was as 1291 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) and 1197 wells were completed and brought into production by fracking...hence, at the March completion rate, the 7,692 drilled but uncompleted wells left at the end of March represent a 6.4 month backlog of wells that have been drilled but not yet fracked...

as has been the case for most of the past two years, the March DUC increases were predominantly oil wells, with most of those in the Permian basin...the Permian saw its total count of uncompleted wells rise by 122, from 2,922 DUC wells in February to 3,044 DUCs in March, as 566 new wells were drilled into the Permian but only 444 wells in the region were the same time, DUC wells in the Eagle Ford of south Texas rose by 22, from 1,485 DUC wells in February to 1,507 DUCs in March, as 182 wells were drilled in the Eagle Ford during March, while 160 Eagle Ford wells were completed...meanwhile, DUC wells in the Anadarko region rose by 4, from 991 DUC wells in February to 995 DUCs in March, as 141 wells were drilled in the Anadarko region in March while 137 drilled wells in the basin were addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by one to 175, as 54 wells were drilled into the Haynesville, while 53 Haynesville wells were fracked during the same period....on the other hand, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 15 wells, from 764 DUCs in February to 749 DUCs in March, as 104 wells were drilled into the Marcellus and Utica shales, while 119 of the already drilled wells in the region were fracked...meanwhile, DUC wells in the Niobrara chalk of the Rockies front range decreased by 39 to 506, as just 144 Niobrara wells were drilled while 183 Niobrara wells were being fracked...lastly, DUC wells in the Bakken of North Dakota decreased by 1 to 716, as 100 wells were drilled into the Bakken while 101 Bakken wells were fracked...

thus, for the month of March, DUCs in the 5 oil basins tracked by in this report (ie., Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by 108 wells to 6,768 wells, while the DUC count in the natural gas regions (the Marcellus, Utica, and the Haynesville) decreased by 14 wells to 924 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...


Are we becoming too reliant on natural gas? - The past and present, at least in terms of how Ohio generates electricity, can be found within a few miles along the shores of Lake Erie. Pressed up to the edge of the water is the Bay Shore Plant, a coal-fired power plant owned by a subsidiary of Akron-based FirstEnergy that rarely runs and is scheduled to be closed by 2020. Sitting two miles inland is the Oregon Clean Energy Center, a natural-gas-fired power plant that opened last summer and is running most days. It’s owned by Clean Energy Future of Massachusetts, a company that focuses exclusively on building and operating these types of plants. “We are the next iteration of technology,” said Peter Rigney, the plant manager, referring to how the gas plant takes up less space, has fewer employees and generates less waste than coal or nuclear plants. Oregon Clean Energy is part of a building boom, one of 11 natural-gas plants built, under construction or in some phase of development in Ohio. Investors are spending billions of dollars on plants that will take advantage of the region’s inexpensive and plentiful natural gas. People who manage the electricity grid are trying to figure out the risks of increasing reliance on natural gas as old coal and nuclear units are closing or likely to close. At the same time, the people behind this slate of projects tend to downplay the risks and say natural gas will remain plentiful and inexpensive.

Six Permits Issued in Ohio's Utica – Six permits for new horizontal wells were issued in eastern Ohio’s Utica shale last week, according to the latest update from the Ohio Department of Natural Resources. ODNR awarded permits during the week ended April 14 to Ascent Resources Utica LLC for four wells in Jefferson County, while Gulfport Energy secured two permits to drill two wells in Belmont County. As of April 14, there are 2,804 permits issued in the Utica, 2,319 wells drilled, and 1,883 wells in production across Ohio’s oil and gas play. Twenty-three rigs were operating in Ohio’s Utica during the week, ODNR reported. There were no new permits issued in Mahoning, Trumbull or Columbiana counties for the week, ODNR said. According to the Pennsylvania Department of Environmental Protection, no new permits for horizontal wells were issued in neighboring Lawrence or Mercer counties in western Pennsylvania. A single renewal permit for a vertical well was issued to SWEPI LP, a subsidiary of Royal Dutch Shell, for a site in Mercer County, according to DEP data.

Fracking plans moving forward in Ashland County - Richland Source- Cabot Oil & Gas Corporation is proceeding with exploratory drilling plans to create wells for fracking in Ashland County. "We are moving forward with our first well in Ohio," John Smelko, manager of environmental and regulatory compliance for Cabot's North Region told Ashland County Commissioners Thursday. Smelko said the first well will be in Green Township, located about .8 miles from Ohio 511 on Township Road 2375. The company has already obtained permits from the Ohio Department of Natural Resources to construct a pad and a well in that location. "Our goal is to begin construction of the pad on Tuesday," Smelko said. "We expect to take somewhere around three weeks or so to build that pad, and then we intend to start with the drilling portion of the project." Smelko said the Texas-based oil and gas company will begin by drilling a vertical well to the depth of about 5,400 feet. From that vertical well, the company plans to begin horizontal drilling. The drilling process is expected to take about 30 days, he said. "Because this is our first well in Ohio and in this county, this is an exploration well, so there is going to be some extra time and care in logging the data and evaluating the well and figuring out what we actually have," Smelko said. Smelko said the company plans to drill three to five wells in the area over the next several months. "Ideally, we would find oil and gas and we would proceed from there," he said. Smelko said the company has plans to locate its second well in Mohican Township and is working on securing locations for other wells. Commissioner Denny Bittle asked Smelko whether the company plans to drill horizontally multiple times from a single vertical well. Smelko said it did not. After hearing from Smelko and from County Engineer Ed Meixner, commissioners approved a Roadway Use, Repair and Maintenance (RUMA) agreement with Cabot and Green Township.

Ohio research may cut risks of fracked well waste spills - Contaminated wastewater from oil and gas wells is the energy sector’s single largest industrial waste stream, with more than 14 billion barrels produced annually. Most of it gets transported by truck to wastewater disposal wells, for which Ohio is a regional hub because of its geology. It’s a potentially hazardous journey, and one whose costs also add up for the industry. That’s why a team at Ohio University is working on a new way to treat well wastewater where it’s produced. Chemical engineer Jason Trembly presented the research at the Ohio Shale Policy and Technology Symposium in Dublin, Ohio, on April 5.   Well developers pump millions of gallons of water, sand and chemicals into deep rock formations to create and prop open cracks so oil and gas can flow out. After initial flowback, fluid continues to come up along with any oil or gas.  The fluid is very salty — up to 30 percent by weight, says Trembly. The material can also contain significant amounts of what he calls “bad actors” — heavy metals, dissolved radioactive materials, and other chemicals.  The salt can kill plants, fish and other organisms. And the heavy metals and radioactive components can be toxic to them as well. Human health might be at risk if contaminated fluids get into drinking water supplies. Most contaminated fluids from fracked wells in Ohio go into deep injection wells. Well developers in Pennsylvania and West Virginia also send substantial quantities of the waste into Ohio because those states’ geology is generally not good for deep well injection. Along the way, crashes and spills can occur. Last November, a tanker truck spilled roughly 1,200 to 1,500 gallons of wastewater into a culvert and ditch between Coolville and Belpre. And in 2016, a spill of fluids from a conventional well caused officials to temporarily halt withdrawals from a reservoir that serves citizens in Barnesville. The technology developed by Trembly and his colleagues would use portable equipment to remove some problem materials from the fracked well fluids before separating the water from the salts.

Buckeye Partners' revised plan for the Laurel pipeline - For a couple of years now, Buckeye Partners has been working to advance a controversial plan to reverse the western half of its Laurel refined-products pipeline in Pennsylvania to allow motor gasoline, diesel and jet fuel to flow east from Midwest refineries into the central part of the Keystone State. Some East Coast refineries that have relied on Laurel for 60 years to pipe their refined products as far west as Pittsburgh have been fighting Buckeye’s plan tooth and nail, arguing that it would hurt their businesses and hurt competition in western Pennsylvania gas and diesel markets — and refined-product retailers in the Pittsburgh area agree. Now, after a state administrative law judge’s recommendation that Pennsylvania regulators reject Buckeye’s plan, Buckeye has proposed an alternative: making the western half of the Laurel Pipeline bi-directional, which would allow both eastbound and westbound flows. Today, we consider the latest plan for an important refined-products pipe and how it may affect Mid-Atlantic and Midwest refineries.

Natural-gas proponents and renewable-energy advocates disagree on fracking's potential to grow jobs in Pittsburgh - Each year, more and more studies from environmental groups show how natural-gas drilling, also called fracking, is harming the environment. Whether it’s contaminating drinking water or spewing methane into the air, environmental activists say it’s becoming harder to defend fracking from an environmental point of view.   But despite environmental concerns, proponents of natural gas have always had a strong motivation to keep drilling: jobs. Pennsylvania House Speaker Mike Turzai (R-Marshall) is a champion of the natural-gas industry and he said in a 2015 Pittsburgh Post-Gazette article that the fracking industry is “creating work for steel manufacturers, engineering firms and refineries.”  Allegheny County Executive Rich Fitzgerald has also been supportive of fracking and believes it can help create jobs. In 2014, when the county allowed fracking on public land near the airport, he told KDKA that money generated from natural-gas drilling can “create jobs in this part of the county.” The Pittsburgh region, particularly its rural areas, has struggled with high unemployment for decades. In December 2017, the Pittsburgh metro area unemployment rate was 4.5 percent; the national average was 3.9 percent. And in more rural areas like Fayette and Armstrong counties, December’s unemployment rates were significantly higher — 6.6 percent and 5.7 percent respectively.  According to figures from the Bureau of Labor Statistics, from 2007 to 2012, Pennsylvania added more than 15,000 jobs in the oil and gas industry, with a large chunk of those concentrated in the Pittsburgh region. During this same time period, the Pittsburgh region’s overall employment also increased; 2012 was the first year in more than a decade that the region saw its population grow instead of shrink.  But tying employment growth to increased natural gas production in the Pittsburgh region could be seen as a bit of a leap. There are many factors that can lead to growth in some gas-related industries, including job losses in other areas. Natural gas is a direct competitor to other energy industries in the region, and its growth has already contributed to job losses at coal mines and power plants. And even though natural-gas production has drastically increased over the past few years, the gas-drilling job figures aren’t really following suit.

Penn Township fracking showdown begins in court - The court showdown over hydraulic fracturing in Penn Township began this week, but it won't be concluded until June. Nonprofit group Protect PT has challenged the township's zoning ordinance, which allows hydraulic fracturing wells in both industrial and rural-zoned areas, which comprises most of the sprawling community. The anti-fracking group contends wells should be limited to industrial zones. “Industrial gas drilling is an industrial operation, no matter how much the industry says its not,” said Gillian Graber, executive director of Protect PT. The township, its zoning hearing board and the gas drilling companies who do business there say the township's ordinance includes protections for residents, and that legal precedent set in other Pennsylvania communities allows fracking in agricultural zones. “This was a very long and very well-deliberated process, where we ended up developing an ordinance that is one of the most comprehensive and strict in Westmoreland County,” said Michael Korns, the Greensburg lawyer representing the township. Huntley and Huntley Energy Exploration and Apex Energy joined the lawsuit in support of the ordinance. Both sides began arguing their case this week with two days of hearings before Westmoreland County Judge Harry Smail Jr. Due to a busy court schedule, the final two days of hearings are scheduled for June 4-5. This week's hearings were focused on expert testimony from both sides. Protect PT's experts focused on the argument that fracking is a heavy industrial process. Previous Pennsylvania court cases have ruled fracking need not be limited to industrial zones. “The people who fought the cases previously have not been able to show the court that fracking is an industrial use,” Graber said. Protect PT hopes to prove the opposite, by focusing on the heavy equipment and extensive drilling methods needed for fracking. 

Energy company appeals Pennsylvania court decision on ’rule of capture’ - A Houston-based natural gas company plans to appeal a recent Pennsylvania Superior Court decision that said companies could be held liable for trespassing when unconventional wells release gas from unleased properties. Southwestern Energy wants all 20 judges of the court to hear the case that originated out of Susquehanna County. A decision by two judges this month sent shock waves through the oil and gas industry over worries that the “rule of capture” will no longer apply to hydraulic fracturing, or fracking. The legal principle comes from the fact that pools of oil and gas naturally migrate across property boundaries, making ownership difficult to determine. The Briggs family, which filed the suit in 2015, argued that the principle shouldn't apply to natural gas in the Marcellus Shale formation because it doesn't migrate unless fracking is used to release it. The Superior Court agreed and sent the case back to the county court. In a 97-page motion filed Monday, Southwestern said the decision could have an adverse impact on oil and gas production nationwide, not just in Pennsylvania. “Because hydrofracturing is the most economic and commonly used method of producing oil and gas across the country, and because Pennsylvania is the second-largest natural gas producing state, this court's decision unsettles the legal landscape for the entire industry,” the motion said. The Pittsburgh-based Marcellus Shale Coalition was one of several trade organizations filing briefs in support of Southwestern. “The partial panel's decision upends settled rules, contradicts policy and injects considerable uncertainty in the industry,” the coalition said in its amicus curiae (“friend of the court”) brief. The coalition said the decision will hamper oil and gas production and upend property rights. “If the decision stands, unleased landowners can prevent natural gas development on all surrounding properties to the detriment of all others who exercised their rights to develop their oil and gas interests,” the brief said 

These states want to make planning a pipeline protest a crime - As pipeline protests continue to delay and, sometimes, stop energy projects in their tracks, the fossil fuel industry and Republican lawmakers are looking for new ways to clamp down on environmental protest. In the last few years, state lawmakers across the country have proposed bills that would impose harsh penalties on environmental protest, particularly protests aimed at delaying pipeline construction or shutting down existing pipeline infrastructure. In energy-rich states like Oklahoma and North Dakota, lawmakers have successfully passed bills prohibiting certain kinds of protest, from protests that block highways or traffic to protests that trespass onto property containing energy infrastructure. But a new crop of bills proposed in Louisiana, Pennsylvania, and Minnesota — all states with controversial pipeline projects currently under consideration — take the criminalization of protest one step further.If passed, the bills would make it illegal to conspire to protest in certain instances, like when a protest would require trespass or some other kind of civil disobedience. This means the act of simply planning a protest that includes a civil disobedience component, like trespass — regardless of whether or not you actually protest — would become illegal.While anti-pipeline protest bills have been introduced across the country since 2017, the three most recent examples — introduced in Louisiana, Minnesota, and Pennsylvania within the last month — include uniquely broad definitions of conspiracy. And legal experts say it’s hardly a coincidence that these particularly strong bills are all proposed in states that have seen continuous opposition to proposed fossil fuel infrastructure.“I think these bills represent an escalation,” Alice Cherry, co-founder and staff attorney of the Climate Defense Project, told ThinkProgress. “The main motivation for these bills seems to be to deter would-be protesters and to make potential jail sentences and fines more draconian.”

Appalachia Markets Itself as Global Energy Hub - -   A team of rivals from Pennsylvania, Ohio and West Virginia recently announced that it would be redoubling its efforts to draw new oil and gas investment to a region once defined and later left behind by coal and steel.The states' respective leaders, Democratic Gov. Tom Wolf and Republican Govs. John Kasich and Jim Justice, signed an agreement last month to renew the Tri-State Shale Coalition for another three years. The group, an ad hoc collective of government representatives and regional economic champions, is hoping to generate a level of investment that would transform the Appalachian Basin into a global energy hub on par with Texas and Louisiana.  The three states sit atop the Marcellus and Utica shales, formations of porous rock stretching from West Virginia to Canada that hold huge deposits of oil and natural gas, which in the past decade have been shaken loose through hydraulic fracturing – or fracking – and horizontal drilling. The three states in 2016 accounted for roughly 29 percent of U.S. natural gas output – up from just 2 percent in 2008, and right behind Texas and Louisiana, which together made up 31 percent of the country's natural gas production in 2016, according to the Energy Information Administration. Unlike the Gulf region, however, the vast majority of the gas that's extracted in Appalachia is exported: Only about a quarter of the gas produced in Pennsylvania, for example, was consumed within the state in 2016, according to EIA data. In Texas, by contrast, two-thirds of the gas extracted there remained in-state, and in Louisiana 92 percent stayed within state lines. The Tri-State Shale Coalition hopes to change that. Though the states continue to compete for investment, since 2015 the group has also helped arrange partnerships among the states' universities and energy companies, promoted technical training for jobs in the oil, gas and petrochemical sectors, lobbied for investments in roads, rail and other infrastructure, and hired an advertising firm to coordinate a joint marketing effort. The goal is to make the region as a whole more attractive for what's known as midstream and downstream investments.

Commerce Secretary 'Hopeful' First China Energy Project is Near - West Virginia Commerce Secretary Woody Thrasher said he is hopeful the first project associated with the China Energy deal will be announced soon. Speaking to a crowd at the Marcellus and Manufacturing Development Conference in Morgantown Tuesday, Thrasher said interest is running high. Chinese delegations ranging in size from nine to 29 people have visited the state 15 times, with another visit scheduled next week. "So, certainly when you look at the level of activity that they’re investing into this, I think it’s hugely substantial and I’m very hopeful it’s going to pay significant rewards," said Thrasher. "I’m very hopeful in the very near future we’re going to be announcing that first project."  The nearly-$84 billion deal between West Virginia and China’s largest energy company, China Energy, was announced last November. Since then, few details have emerged since Thrasher and China Energy President Ling Wen signed a memorandum of understanding in Beijing as part of the US-China trade mission during President Donald Trump’s November 2017 visit.China’s largest energy company committed to investing billions in the state’s natural gas industry over the next 20 years. One goal is to make the Ohio Valley region the next petrochemical manufacturing hub in the U.S. Proponents of the China Energy investment tout the economic benefits, but environmental groups have expressed concern the creation of a storage hub for natural gas liquids and petrochemical processing plants could contaminate air and water resources. On their website, the Ohio Valley Environmental Coalition states: "This project would lead to increased petrochemical industrialization of Ohio River Valley. The experience of people in Cancer Alley of the Gulf Coast region informs us that the grave health risks outweigh the economic benefits."

Resistance Against Mountain Valley Pipeline Grows: Tree Sits Launched on Family Farm in Franklin County, Virginia - In the farmlands of Franklin County, a new stand against the Mountain Valley Pipeline has begun. Three tree sits loom directly in the path of the pipeline’s destruction, making it impossible to clear the way without severely injuring the inhabitants of those trees. The sits tower over 75 feet off the ground of a small family farm’s livestock pasture, overlooking Little and Teel creeks, home to the endangered Roanoke Log Perch. The tree sits build upon two other blockades to construction- a stand one hundred miles West, on Peters Mountain, and twenty miles West, in Bent Mountain, VA. One tree sitter stated, “The other tree sits show us that there are still effective ways to interrupt the violence of this proposed pipeline. We are celebrating their spirit of resistance in the mountains and bringing it down to the farmlands, where so much remains at stake. The fire truly is catching.” Local farmers Ian and Carolyn Reilly have been fighting the pipeline for their family’s future and to protect the soil and water. Using restorative practices, the Reilly’s are stewards of the earth. Ian Reilly said, “Launching Little Teel Crossing is an act of protection for our family’s home, land and water. This farm has been free from chemicals for decades. As farmers seeking to renew the land, we intend to keep it that way.” MVP’s 125-foot limits of destruction cuts through several family farms in Franklin County—places where local beef, honey, poultry, and produce are cultivated. According to the Roanoke Times, Precision Pipeline, the company contracted to construct the MVP, has a history of environmental violations and lawsuits for construction of several other pipelines. 

Lawmakers call out treatment of pipeline protester in trees — A Virginia woman who has spent weeks camped in trees protesting a natural gas pipeline that would cross her property is being treated inhumanely by authorities, who have cut off her deliveries of food and water, Democratic lawmakers said Wednesday. Around a dozen Democratic members of the Virginia House and Senate held a news conference in Richmond to protest authorities’ response to the 61-year-old Mountain Valley Pipeline protester. They also raised a host of other concerns about that multistate project as well as the Atlantic Coast Pipeline and called on Gov. Ralph Northam to impose further regulatory conditions on both. “The pipelines, quite frankly, have been called into question the last couple years: whether we need them, whether environmentally they make sense, whether or not the fossil fuels that they will transport are really necessary for today’s economy. ... People now are getting smart,” said Sen. Chap Petersen. Developers and other supporters of both projects say they can be built in a way that’s protective of the environment and pledge they will help lower energy costs and boost the economy. The approximately 300-mile (480-kilometer) Mountain Valley Pipeline would start in West Virginia and run through southwest Virginia before connecting with a compressor station for another interstate pipeline in Pittsylvania County. Pittsburgh-based EQT Midstream Partners, which owns a significant interest in the joint venture with other energy companies, recently announced plans to extend the line with a new branch stretching into North Carolina. The pipeline would cross the Roanoke County property of the protester, who has identified herself in interviews with local news outlets only as “Red.” Red climbed into a tree stand in protest April 1, said one of her neighbors, Genesis Chapman. Her daughter has also posted up in another tree, he said. The county said in a statement Friday that police had advised the “individuals sitting in two trees” that they were in the right of way granted to the pipeline company through a court order. “They will no longer be allowed to receive supplies from supporters. Anything the individuals need will be available to them when they come down from the trees,” it said. 

U.S. to review gas pipeline policy for first time since 1999 - U.S. energy regulators embarked upon a wide-ranging review of how interstate natural-gas pipelines are approved, amid concerns that current guidelines have become outdated following the shale boom. The Federal Energy Regulatory Commission will examine the use of eminent domain, how the need for a pipeline is assessed and the extent to which greenhouse gas emissions should be taken into account in pipeline approvals. "Given the changes in landscape since it was first put into place, reviewing our certificate policy statement for any possible improvement is good regulatory practice," Republican Commissioner Neil Chatterjee said at a commission meeting Thursday. The commission was among more than a dozen federal agencies that signed a memorandum of understanding earlier this month aimed at slashing the time needed for environmental reviews and permitting on major infrastructure projects. The timing of the agency’s own review is “quite coincidental but perhaps fortuitous,” Kevin McIntyre, its chairman, said at a monthly meeting on Thursday. The review also comes as divisions have emerged among the five-member commission in recent months over pipeline projects. Democratic Commissioner Cheryl LaFleur in October expressed concerns about the process in a statement dissenting to the commission’s approvals of the Mountain Valley Pipeline and Atlantic Coast Pipeline projects. She has criticized the agency for basing assessments of economic need solely on contracts between developers and customers signed before applications are submitted. LaFLeur said on Thursday she wants the agency to take a “hard look” at whether and how the agency could consider the social cost of carbon when it makes decisions.

LNG And Pipeline Reversals Turn Louisiana Gas Market Upside Down, Part 5 - The Louisiana natural gas market has undergone major changes in recent years, from the decline of its offshore and onshore production volumes to the emergence of new export demand from LNG terminals. But there are many more changes on the way. The industry has plans to add another 5.0 Bcf/d of liquefaction and export capacity in the Bayou State between now and 2023. At the same time, there are a slew of pipeline projects designed to carry Marcellus/Utica gas supply to the Perryville Hub in northeastern Louisiana. And, Louisiana’s own gas supply is soaring from the Haynesville Shale. The timing of these emerging factors will drive supply-demand economics and volatility in the region — including at the national pricing benchmark Henry Hub — over the next five years. Today, we take a closer look at the timing and extent of the supply and demand factors affecting the Louisiana gas market. In Part 1 of this series, we laid out the premise that the Louisiana market is at the epicenter of a major transformation that will play an important role in balancing the overall U.S. gas market. New LNG export facilities along Louisiana’s Gulf Coast — along with growing export demand downstream of Louisiana in Texas and Mexico — are making it the destination market of choice for U.S. gas producers. The Upper East corridor — comprising seven pipelines — reflects gas moving east from the Perryville Hub (in northeastern Louisiana) to serve South- and Mid-Atlantic demand, and in Part 2, we saw that the aggregated pipeline capacity along this route has been filling fast and is nearly full. The Lower East corridor provides takeaway capacity for Gulf of Mexico offshore gas production as well as serving industrial and power demand along the coast and in Florida. In Part 3, we looked at the Upper and Lower West corridors, reflecting flows across the western Louisiana border. These gas flows historically have moved west-to-east from Texas and Oklahoma supply basins into Louisiana. But Marcellus/Utica pushback also has reversed the flow direction on a couple of the pipes, with Enbridge’s Texas Eastern Transmission (TETCO) and TGP now flowing more east-to-west into Texas. Finally, in Part 4, we analyzed flows across the North and Offshore Gulf boundaries, as well as flows cutting through Central Louisiana.

Natural gas inventories end heating season at the lowest level since 2014 - Working natural gas in storage in the United States as of March 31, 2018, the end of the 2017–2018 heating season, totaled 1,351 billion cubic feet (Bcf), according to EIA’s estimate based on its Weekly Natural Gas Storage Report. This is the lowest level for U.S. working gas stocks at this time of year since March 31, 2014, when working gas stocks were much lower, at 837 Bcf following the 2013-2014 heating season. As of March 31, 2018, working gas stocks were 21% lower than the previous five-year (2013–2017) average for the end of the heating season.  The 2017–2018 heating season, which began on November 1, 2017, was characterized by periods of colder-than-normal temperatures that resulted in substantial withdrawals of natural gas from storage, including an all-time weekly record-breaking withdrawal of 359 Bcf in January. Natural gas is used during colder months not only for heating homes and businesses directly, but also for fueling natural gas power plants, which are increasingly used to meet winter electricity demand.  As a result of the colder-than-normal winter, net withdrawals from storage during the 2017–2018 heating season totaled 2,427 Bcf, the second-highest withdrawals on record behind only the 2,958 Bcf net withdrawals reported for the much colder-than-normal 2013–2014 winter.  This summer, EIA expects injections into storage to be higher than normal, exceeding the average of the previous five injection seasons (April through October). Because of the regulatory obligations of many of the larger storage operators to provide winter heating service, U.S. natural gas storage levels tend to end the injection season close to the previous five-year average of about 3,800 Bcf. Doing so would require injections to total nearly 2,500 Bcf, or about 30% more natural gas than the average of the previous five injection seasons.  EIA’s latest Short-Term Energy Outlook forecasts that working gas levels will total 3,767 Bcf at the end of October 2018, requiring net injections of about 2,416 Bcf over the injection season, the equivalent of 11.3 Bcf per day (Bcf/d).

U.S. natural gas production and consumption increase in nearly all AEO2018 cases - EIA’s Annual Energy Outlook 2018 (AEO2018) projects that U.S. dry natural gas production will increase through 2050 across a wide variety of alternative assumptions about the future. In the Reference case, which is based on current laws and regulations, production grows 59% from 2017 to 2050, starting at 73.6 billion cubic feet per day (Bcf/d) in 2017 and reaching 118 Bcf/d in 2050. In sensitivity cases with different assumptions for natural gas resources and extraction technology, natural gas production also increases through the forecast period, although at different rates.  Beyond 2020, natural gas production grows faster than consumption in all cases except the Low Oil and Gas Resource and Technology case, where production and consumption remain relatively flat because of higher production costs. In the High Oil and Gas Resource and Technology case, with lower production costs, natural gas production grows to 151 Bcf/d in 2050, more than double the 2017 rate of natural gas production. Although most of the projected production growth in AEO2018 cases comes from the Marcellus and Utica plays in the Appalachian region, associated natural gas from the Permian region in Texas and New Mexico is also projected to be a significant contributor.  In all AEO2018 cases except the Low Oil and Gas Resource and Technology case, EIA projects Henry Hub spot natural gas prices to remain lower than $6.00/million British thermal units (in 2017 dollars) through 2050. Near-term production growth across all cases is supported by growing demand in an environment of low and stable natural gas prices in both domestic and international markets.

Weekly Natural Gas Storage Report - Bullish Report And Price Band In Effect - The EIA reported a -36 Bcf change in storage for the week ended April 13. This brought storage to 1.299 Tcf. This compares to the +54 Bcf change last year and +38 Bcf change for the five-year average. Click to enlarge Source: EIA Going into this storage report, a Reuters survey of traders and analysts pegged the average at -23 Bcf with a range of -7 Bcf to -30 Bcf. We expected -25 Bcf and were 2 Bcf above the consensus. We were off by 11 Bcf on this storage report. EIA reported a very bullish storage report today. The -36 Bcf storage draw was much higher than the highest surveyed storage estimate, but despite the storage report coming in way higher than expected, the brief spike did not last as prices sold off immediately after. Throughout this week's NGF (exclusive), we noted that traders were going to sell the rallies regardless of what fundamentals turned out. The price range kicked into effect when June contracts traded up to $2.80/MMBtu making it biased to the downside. Following the sell-off of this bullish EIA report, however, we decided to go long UGAZ as prices have now reached the bottom range of our forecasted "price range." (No shares available to short for DGAZ.) Over the summer, natural gas will establish a price range depending on where fundamentals are, and weather will be the catalyst to push prices up or down from the extremes. The way to trade this then is to wait for the price to move to one extreme and flipping to the other side to play the other extreme. In this week's case, the market tested one extreme (the upper range) and is now testing the bottom range. Looking at the natural gas market balance, we find that the injection season so far has been heavily in the deficit. Here's our latest market balance update versus the last 2 years: 

Today's Horrific Petchem Margins And The Implications For NGLs - Could it get any worse? Possibly, but the last time we saw petchem margins this bad was in the depths of the 2008-09 economic meltdown, and back then the atrocious margin levels resulted in drastic plant curtailments and in some cases permanent shutdowns. But this time around the petchem industry is in the process of bringing on even more capacity! Is the current situation a fluke, or a harbinger of things to come? In today’s blog we examine recent trends in steam cracker margins, by far the largest demand sector for natural gas liquids (NGLs) and consider what these developments may mean for NGL markets in general, and ethane in particular. Petrochemical markets are a frequent topic here in the RBN blogosphere, almost always in the context of steam cracker feedstocks, with NGLs making up about 95% of those feedstock barrels. Or, looked at from the other end of the pipe, these plants make up about 60% of total domestic NGL demand, and 100% of domestic liquid ethane demand. So it is always a good thing — for both the petchems and producers of NGLs — when petchem margins are high. When the petrochemical industry makes money, they buy a lot of feedstocks, supporting NGL prices (and, with that, NGL producers). We recently looked at ethane margins in Ethane Asylum Revisited, where we considered the expected price impact from several new ethane-only crackers coming online, and covered new NGL supplies from “wet” shale gas production in Bring It On. Basically, the story has been that demand is increasing, but so is supply. So you’d think that petchem margins might be under some pressure, but no catastrophic collapse would be in the offing.

The Secret of the Great American Fracking Bubble -- In 2008, Aubrey McClendon was the highest paid Fortune 500 CEO in America, a title he earned taking home $112 million for running Chesapeake Energy.  What was McClendon’s secret? Instead of running a company that aimed to sell oil and gas, he was essentially flipping real estate: acquiring leases to drill on land and then reselling them for five to 10 times more, something McClendon explained was a lot more profitable than “trying to produce gas.” But his story may serve as a cautionary tale for an industry that keeps making big promises on borrowed dimes — while its investors begin losing patience, a trend DeSmog will be investigating in an in-depth series over the coming weeks.   From 2008 to 2009, Chesapeake Energy’s stock swung from $64 a share under McClendon to around $17. Today, it's worth just $3 a share — the same price it was in 2000. A visionary when it came to fracking, McClendon perfected the formula of borrowing money to drive the revolution that reshaped American energy markets.  Roughly a decade after McClendon's rise, the Wall Street Journal reported that “energy companies [since 2007] have spent $280 billion more than they generated from operations on shale investments, according to advisory firm Evercore ISI.”  As a whole, the American fracking experiment has been a financial disaster for many of its investors, who have been plagued by the industry's heavy borrowing, low returns, and bankruptcies, and the path to becoming profitable is lined with significant potential hurdles. Up to this point, the industry has been drilling the “sweet spots” in the country's major shale formations, reaching the easiest and most valuable oil first. But at the same time energy companies are borrowing more money to drill more wells, the sweet spots are drying up, creating a Catch-22 as more drilling drives more debt.

VA: Anger over pipelines spills into General Assembly -- Intensifying public anger over the pending construction of two massive natural gas pipelines through Virginia boiled over into the General Assembly on Wednesday, when more than a dozen Democratic lawmakers asked Gov. Ralph Northam for more oversight of stream crossings and tree cutting and to protect the rights of landowners protesting the projects. Organized by Del. Mark Keam, D-Fairfax, a news conference conducted before the assembly reconvened in its annual veto session brought lawmakers into the fight from other parts of the state that aren't affected directly by construction of the Atlantic Coast and Mountain Valley pipelines. Del. Danica Roem, D-Prince William, was among a group of Northern Virginia Democrats who joined the protest, dismissing what she called "NOVA versus ROVA (Rest of Virginia) BS." "It is our obligation to stand with them," Roem said. The legislators joined protesters in waving posters that said "I stand with Red" in solidarity with a 61-year-old woman in the Roanoke Valley known publicly as Red, who, with her daughter, has been camping in trees on her Bent Mountain property to prevent crews from cutting trees in the path of the pipeline. Longtime neighbor and family friend Genesis Chapman said he has spent last week "camping under Red's tree," with temperatures dipping into the mid-20s and "spitting snow." He accused Roanoke and state police of denying the women access to food and water, and "spotlighting (them) at night like animals. "My community is under siege," said Chapman, a lifelong resident of Bent Mountain. Sen. Chap Petersen, D-Fairfax City, a longtime critic of Dominion Energy, the managing partner of the Atlantic Coast Pipeline project, said he comes to the fight as a supporter of environmental protection and a lawyer for landowners to protect their private-property rights. 

For 15 Years, Energy Transfer Partners Pipelines Leaked an Average of Once Every 11 Days: Report - 5,475 days, 527 pipeline spills: that's the math presented in a new report from environmental groups Greenpeace USA and the Waterkeeper Alliance examining pipelines involving Dakota Access builder Energy Transfer Partners (ETP). It's based on public data from 2002 to 2017.All told, those leaks released 3.6 million gallons of hazardous liquids, including 2.8 million gallons of crude oil, according to data collected from the federal Pipeline and Hazardous Materials Safety Administration (PHMSA).That doesn't include an additional 2.4 million gallons of “drilling fluids, sediment, and industrial waste” leaked during ETP's construction of two pipelines in West Virginia, Pennsylvania, Ohio, and Michigan. Also left out: air pollution and leaks from natural gas pipelines, which were beyond the scope of the new report but which play a significant role in climate change and can cause explosions.Across the entire industry, hazardous liquid pipelines spilled a total of 34.7 million gallons during the past decade, directly causing 16 deaths and $2.7 billion worth of damage. More than one in ten of those gallons came from ETP.“ETP and Sunoco's track record of spills, including several striking examples of big spills, are indicators of a constant threat to communities and water. This could happen again to communities along the pipeline routes.”   ETP spilled crude oil over 400 times, “refined petroleum products” such as gasoline 92 times, and other flammable or toxic fluids 27 times, the researchers found. And many of the spills involved large amounts of oil — roughly one in four of ETP's pipeline oil spills involved 2,100 or more gallons of oil. In one 2005 incident, 436,000 gallons of crude oil spewed from a tank farm into a Delaware River tributary outside Philadelphia. That same year, a pipeline built in the 1950s dumped enough oil into the Kentucky and Ohio river to leave a 17-mile oil slick. And in 2009, a Texas pipeline caught fire and leaked over 140,000 gallons near Colorado City, Texas.

Bayou Bridge Pipeline owners had 527 hazardous incidents over 16 years, environmental groups say - Pipelines owned and operated by the companies that are building the Bayou Bridge Pipeline through Louisiana's fragile Atchafalaya Basin had 527 hazardous incidents, including spills, between 2002 and 2017, according to a report released Tuesday by environmental groups citing data compiled by federal and state regulators.  The spills caused an estimated $115 million in property damage and resulted in 106 violation notices and the levying of $5.7 million in penalties from the federal agency that regulates pipeline operations, said the report by Greenpeace USA and the Waterkeeper Alliance.  Bayou Bridge is jointly owned by Energy Transfer Partners and Phillips 66. Energy Transfer Partners merged with Sunoco Inc. in October 2012, and the report includes incidents involving that company as well.  On Tuesday, a spokeswoman for Energy Transfer Partners defended the firms' environmental record and pointed out that the spills represented only a tiny percentage of the oil and other products transported by pipeline. Spokeswoman Vicki Granado said that in 2016, the Energy Transfer family of companies had transported 1.4 billion barrels of crude oil, highly volatile liquids, and refined or other petroleum products through 79,700 miles of pipeline, "of which 99.99 percent was delivered safely to its intended destination." She said the company delivered 99.96 percent was delivered safely in 2015.  The two groups produced the report in support of efforts by a variety of Louisiana-based environmental groups that are opposed to construction of the Bayou Bridge pipeline across the Atchafalaya Basin. Graphics Gallery: Hazardous incident record of pipelines operated by Bayou Bridge Pipeline owners.  spill map.jpgThis map shows where the pipelines and spills are located. An online version includes links to summaries of each incident.

Under Louisiana Bill, Peaceful Protesters Could Face 20 Years in Prison -- On April 12, 2018, in the chambers of the Louisiana State House of Representatives, Rep. Major Thibaut Jr. stepped up to the microphone before the Speaker to introduce seemingly benign House Bill 727. According to his testimony, the bill was humble -- almost technical -- in scope and aimed primarily to add "pipelines" to the list of what the state considers "critical infrastructure." It had faced no opposition in committee, Thibaut added, and had "over sixty-something authors." The bill would impose severe penalties on peaceful protesters engaged in nonviolent civil disobedience actions at sites considered "critical infrastructure". Ninety-seven legislators voted yay, three voted nay, and just like that, all 4.6 million residents of Louisiana took a step toward losing their First Amendment rights. Should the bill become law, it would impose severe penalties on peaceful protesters engaged in nonviolent civil disobedience actions at sites considered "critical infrastructure" by Thibaut's bill. In fact, simply planning to take such an action, considered "conspiracy" by HB 727, could be punishable by fees of up to $10,000 and prison sentences as long as 20 years. With the crack of a gavel, Louisiana joined the growing number of states across the nation with similar "critical infrastructure" bills moving swiftly through the courts and onto governors' desks.

The wrong kind of oil is flooding the US market — but that could be great news for a handful of producers - Super-light crude is flooding the US oil market, and there's little demand to meet it. All of the industry's growth in the US over the last year was thanks to crude with a gravity above 40 on the American Petroleum Institute's scale, which measures the weight of a petroleum liquid compared to water, according to analysts at Morgan Stanley. That's a problem for domestic shale explorers. Most refineries in the US are designed for heavier crude grades, around 32 API. And refiners are running out of room to process super-light shale without seeing losses. "Domestic refiners cannot take much more of this and are close to hitting the 'shale wall,'" the analysts said. Options to export what US refiners don't want are limited. Demand for superlight crude outside of the US is modest - Morgan Stanley estimates 15 million barrels per day. Even in Asia, where analysts say the outlook for oil demand is the strongest, lighter US shale has to fight for market share. Meanwhile, global prices of heavier oils are climbing. And the analysts predict that US oil explorers will soon need to lower prices of super-light crude in order to compete for market share. But there could be an upside for some. While processing super-light crude is currently inefficient for refineries, that could change with discounts. Specifically, lower prices could benefit a handful of US refineries "disproportionately," according to Morgan Stanley. "US refiners will essentially be 'paid-to-wait' for the price of light- and super-light crude to become discounted enough to the point where it becomes an economic option to run the crude even if it means suboptimal operations," they said. 

Explosion, Fire At Valero Texas City Refinery - An explosion and fire were reported at Valero's Texas City refinery, which has a refining capacity of 225kb/d. The explosion occurred at unit 106, according to the Texas City Police Department; the unit is a light hydrocarbon unit, according to court clerk Tammy Odom.While the Fire continues to burn as of 7pm ET, no injuries or fatalities have been reported.There has been an explosion at the Valero plant. As per Valero there is no need for a shelter plant. At the current time we have fire crews from the area and industry responding to the fire. No known casualties or injuries. Please continue to monitor. — City of Texas City (@CityofTexasCity) April 19, 2018Video I just got from a viewer of the fire at Valero Refinery in Texas City. Shot 30 seconds after explosion. Says he was half a mile north of explosion when he heard it. Says he could feel the heat. #khou11— Marcelino Benito (@MarcelinoKHOU) April 19, 2018Texas City reported that no shelter in place was in effect.The buses taking home the after schoolers from 21st Century are now rolling. There is no shelter in place in Texas City.— Texas City ISD (@TexasCityISD) April 19, 2018 Aerial videos from local television station KTRK showed flames erupting from the refinery and plumes of smoke.

The impact of pipeline constraints and apportionment on Permian producers and differentials, part 3 - If you’ve been watching market prices over the last week, you’ll have noticed that Permian differentials have tightened a bit. With the capacity of the new Midland-to-Sealy pipeline ratcheting up and the 146-Mb/d Borger refinery near Amarillo coming back online, there has been a brief respite for crude oil prices in West Texas. But soon, continued growth in crude production will again max out pipeline capacity out of the Permian until one of the major new pipes starts operating in 2019. In the interim, producers and traders without firm pipeline space will be taking deep price discounts, all the while attempting to maintain their revenue streams by sticking to their development plans or, at the very least, avoiding the specter of well shut-ins. Today, we dive into the current state of affairs regarding Permian pipeline allocations, the impact on producer logistics, and what it all means for price differentials.   In Part 1 of this series, we discussed the fact that by the tail end of 2017 Permian crude oil production had surpassed the combined capacity of in-region refineries and takeaway pipelines out of the play to deal with all that oil. That caused a large differential blowout between the price of crude at Midland and the prices at major trading hubs at Cushing and the Gulf Coast. Figure 1 below, which should be familiar to readers of this blog series, shows the recent timeline of these shifting differentials, including the recent rebound a topic we’ll discuss more today. In Part 2, we examined factors causing Permian production to grow so precipitously a key factor being ramped-up efforts by smaller exploration and production companies (E&Ps) to prove the value of their holdings to prospective acquirers by drilling and completing wells in Tier 2 acreage of the Permian. Incremental production from Tier 2 wells made an already challenging crude-takeaway situation worse, and E&Ps without firm pipeline space were left with no choice but to (1) truck their crude from the lease to faraway pipeline-injection points or (2) sell their crude at a steep discount.

A Crisis At The Heart Of U.S. Shale - The bottlenecks in the Permian are starting to capture the attention of the oil market, raising the prospect that U.S. shale production does not live up to the hype. The frenzy in West Texas has predictably led to bottlenecks up and down the supply chain. Oil drillers are facing rising prices for labor, rigs, services and land. The lack of pipeline capacity is starting to force discounts for oil as large as $9 per barrel. A new report from Rystad Energy points to the bottleneck specifically for pumping horsepower and frac sand. When wells are drilled, companies deploy trucks connected to pressure pumps that inject water, sand and chemicals underground to fracture a well. But the sky-rocketing level of drilling activity is actually straining the market for pressure pumping capacity. There just isn’t enough to go around.“Capacity is expected to be particularly tight in the Permian in the second quarter before the majority of new equipment comes online in the second half of the year,” Rystad Energy wrote in its report. “More than half of total U.S. pumping capacity will be in the Permian.”  .To be sure, Rystad Energy predicts that 2 million horsepower of new capacity will come online by the end of the year, a nearly 10-percent increase from 2017. That should help relieve some of the strain. The market for frac sand is also stretched to the limit. But that too should be temporary. Rystad Energy sees the supply of frac sand jumping by a massive 52 million tons in 2018, much of it located in the Permian in close proximity to drilling sites, which is different from the past when much of the sand had to be shipped to Texas from Wisconsin and Minnesota. Still, moving all that sand around requires a lot of trucks, and the market for trucks is also tight. To top it off, a zillion trucks moving around wears down roads, which ultimately could create bottlenecks for sand. “You’re going to see similar problems as to what happened in the Eagle Ford years back; roads get chewed up and no one wants to have them shut down for repairs,” an official from an E&P company told Rystad. However, the most critical bottleneck this year could be for pipeline capacity. Permian oil production is set to hit 3.18 million barrels per day in May, while pipeline capacity is expected to average 3.078 mb/d for the year, according to the Wall Street Journal and Goldman Sachs. The pipelines are essentially full, which is why Midland crude is suffering discounts. Additional supplies might need to be moved by truck, a costly form of transport.

US shale output to rise by 125000 bpd in May –EIA (Reuters) - U.S. shale oil production is expected to increase in May for the fourth consecutive month, U.S. Energy Information Administration data showed on Monday, boosted by record production in the prolific Permian Basin of West Texas and New Mexico. Total oil output is set to rise by 125,000 barrels per day (bpd) to 7 million bpd, the EIA said in its monthly drilling productivity report here#tabs-summary-2. Production in the Permian Basin is expected to jump by 73,000 bpd to 3.2 million bpd, the largest according to records dating back to 2007. The expanding production there has led to bottlenecks as pipelines transporting the crude have filled more quickly than expected.  Bakken output is expected to rise by 15,000 bpd to 1.2 million bpd, the highest since July 2015. In the Eagle Ford shale fields, production is set to rise by 24,000 bpd to 1.3 million bpd, the most since May 2016.

Fracking Has Brought the World to the Brink of Disaster - Gaius Publius: It’s worth looking at two recent pieces from the climate front, not for what they say as their main points, but for two smaller points buried within them. The first piece is by Jeffrey Sachs, writing in Canada’s Globe and Mail. His main argument is that Canada should abandon its plans to build pipelines to carry doomed Alberta tar sands to market and build out a smart energy grid connected to the U.S. energy grid to leverage and store  both nation’s renewable power capabilities. About that, Sachs writes: Oil seems to make politicians lose their bearings. The get-rich-quick mentality or too-much-to-lose thinking is very hard to overcome. Thus, two of Canada’s most progressive leaders, Prime Minister Justin Trudeau and Alberta Premier Rachel Notley, have both doubled down recently on Alberta oil sands and the pipelines to carry them to world markets. Whether Kinder Morgan’s controversial Trans Mountain expansion through British Columbia is built, or the company steps away from the project, remains uncertain. Either way, the truth is that Alberta oil sands have absolutely no place in a climate-safe world. Investing in them is almost surely to be investing in a future bankruptcy. […] Why is bankruptcy of these pipeline projects inevitable? In the long term, global warming will destroy all investment in fossil fuels (or it will destroy us, I hasten to add). But in the short term, it’s simple economics.  The marginal costs of the oil sands are typically estimated to be around US$60 per barrel, yet the world will find itself awash in US$30-per-barrel oil as world demand is cut back in the future.   Yet in that piece is this disturbing data point: Even with the amount of global warming to date (1.1 degrees C above the preindustrial average temperature), the world is experiencing record hot temperatures, devastating heat waves, droughts, extreme floods, and increasingly frequent high-intensity storms and hurricanes.  With two degrees or more of warming, the world could well experience a devastating rise in the ocean level, as well as devastating losses and dislocations from crop failures, temperature-linked diseases, invasive species, forest fires, and mega-storms.  Which leads to the second piece I want to look at, one by Sharon Kelly at DeSmogBlog. It argues, quite effectively, that the “fracked gas” boom — oil and gas extraction from shale formations — took us down a deeply destructive path, not just because it revitalized a dying industry, but because it simultaneously tragically hobbled development of desperately needed renewable energy sources.

From the Editorial Advisory Board: Fracking study - The feud over gas and oil extraction in rapidly developing areas continues unabated. Last Tuesday's headline "Study: Cancer risk higher near oil, gas operations" dominates the front page of the Camera. Even though the article duly reported that our local emission levels are safe and that the increase in risk of cancer only adds one-tenth of one percent to our lifetime risk, just mentioning an increase in chances of getting cancer freaks people out. Looking at issues while being needlessly scared eliminates objectivity and leads to decisions based on emotional values. We have all engaged in this process in our personal lives and suffered the consequences. We are now witnessing our local governments doing the same. Despite this study's author stating that the study "confirms our 2017 findings of low risk" at least one of our county commissioners is, nevertheless, calling for "immediate action" to protect us from what should be good news that the setback requirements for oil and gas operations seem to be working. Boulder City Council also appears to have ditched its objectivity by considering an ordinance (the assault weapons ban) based on the emotional appeal of "we have to do something" to end mass shootings, when there is no objective data showing that such an ordinance would accomplish anything. But our local governments do not have the luxury to make fear-based policies. We must insist that emotions be set aside and decisions be made on data and common sense.

Parents Didn’t Want Fracking Near Their School. So the Oil Company Chose a Poorer School, Instead. The first school was 77-percent white. The second is 87-percent students of color. In one of the most fracked counties in the country, a fight is underway between environmental justice advocates and the Colorado commission that oversees oil and gas development. Four environmental and civil rights groups are suing the commission for allowing a company to build 24 oil and gas wells by a public school in a low-income area—after the same company tossed its original plans to build near a charter school serving mostly white, middle-class families.Back in 2013, the company Mineral Resources was granted a permit to drill a few hundred feet from Frontier Academy, a majority white charter school in Greeley, Colorado. But after parents and neighborhood residents strongly resisted, the project was delayed. The following year, the Denver-based energy company Extraction Oil and Gas acquiredMineral Resources and abandoned the plans to frack near Frontier Academy. The site, Extraction explained in an internal analysis, was “not preferable” for oil and gas development because of its proximity to the school and its playground.  Instead, Extraction began scouting other locations in Greeley, a small city about 50 miles northeast of Denver. In May 2016, Extraction Oil and Gas filed a newapplication. This time, Extraction selected a site even closer to another school: Bella Romero Academy. The student population at Bella Romero is more than 87 percent Latino or Hispanic, African American, or other people of color. More than 90 percent of students at Bella Romero qualify for free or reduced-price lunch. (At Frontier, 77 percent of students are white, and about 20 percent qualify for free or reduced-price lunch.) “When they were looking for another site away from Frontier, where does it wind up? In the Hispanic community, by the Hispanic school,” says Eric Huber, an attorney with the Sierra Club’s Environmental Law Program, one of the groups behind the lawsuit. “We think that decision was made, unfortunately, because that particular community doesn’t have the resources to fight it.”

Latest legal fight accusing oil companies of climate change launched in Colorado (Thomson Reuters Foundation) - Three Colorado communities filed a lawsuit against oil companies on Tuesday, launching the latest legal battle seeking damages for what they claim are the costs of adapting to climate change. The lawsuit, filed in Colorado by the city of Boulder and the counties of San Miguel and Boulder, accuses Suncor and Exxon Mobil Corp of creating a public nuisance by producing and selling fossil fuels that cause climate change. Scientific consensus holds that carbon dioxide pollution from burning fossil fuels such as oil, gas and coal is the main cause of climate change. Suncor and Exxon “sold and promoted fossil fuels knowing that climate impacts were substantially certain to occur if unchecked fossil fuel use continued,” the communities said in the complaint. Exxon spokesman Scott Silvestri called the lawsuit part of a misplaced effort to pin the global phenomenon of climate change on oil producers alone. Exxon is the world’s largest publicly traded oil producer. “Reducing greenhouse gas emissions is a global issue and requires global participation and actions,” he said in emailed comments. A spokeswoman for Suncor, one of Canada’s biggest oil producers, said the company could not comment because it had not yet seen a copy of the lawsuit. Both Exxon and Suncor have operations in Colorado, the complaint said. The lawsuit is the latest in a growing body of legal action against oil companies over climate change. However, earlier cases have been filed by coastal communities including California and New York, and this is the first to be brought in the nation’s interior, officials behind the lawsuit said. Their region of Colorado is vulnerable to a wide range of climate threats, from droughts that imperil farming to warm winters that harm the ski industry, they said. “Climate change is not just about sea level rise. It affects all of us in the middle of the country as well,” said Elise Jones, a Boulder County commissioner, in a statement.  “This is now, I think, the tenth lawsuit of the sort that has been filed in the United States against fossil fuel companies seeking damages for costs associated with climate change impacts,” 

How The Energy Industry's Wish List Became The Interior Department's To-Do List -- An Interior Department advisory group relied on a top energy industry lobbyist to help draft a list of potential regulatory rollbacks, documents obtained by HuffPost show.At least one suggestion ― reducing the role that local environmental concerns play in leasing federal lands for oil and gas development ― quickly became a reality.The Onshore Work Group, charged with recommending how Interior Secretary Ryan Zinke ought to regulate federal lands available for fossil fuel development, already has deep ties to the energy industry. Its chair is Kathleen Sgamma, the president of the oil and gas industry group Western Energy Alliance and a vocal proponent of tearing down many Obama-era environmental protections.But metadata from the working group’s first draft of recommendations further link the Interior Department with the industry it is tasked with regulating. According to the metadata, Tripp Parks, the Western Energy Alliance’s head of government affairs, was the initial author of the document.The working group belongs to a growing cadre of industry-friendly advisory bodies Zinke has set up to guide his agenda. In November, he assembled a wildlife conservation advisory group dominated by people with links to trophy hunting. Most members of a public lands advisory group have connections to the outdoor recreation industry.“It’s a huge concern,” said John DeCicco, a University of Michigan research professor who has worked for the environmental advocacy group Environmental Defense Fund. Under previous administrations, DeCicco said, committees like these were usually composed of scientific experts. “What it really represents is that certain powerful interests, moneyed interests, they have the ear of policymakers who are running roughshod over due process and running roughshod over important checks and balances that are supposed to be there.”

Regulators to consider revising natural gas flaring policy - North Dakota’s oil industry is advocating for the state to keep its current gas capture targets but make some tweaks to the policy that regulates natural gas flaring.A North Dakota Petroleum Council task force studying ways to reduce flaring and spur infrastructure development recently completed its work and delivered recommendations to state regulators. The North Dakota Industrial Commission is set to discuss the recommendations on Tuesday and consider revising the gas capture policy.“I do anticipate that there's going to be changes to that policy,” Director of Mineral Resources Lynn Helms said Friday.North Dakota oil production held flat in February at 1.17 million barrels per day while natural gas production hit a new record at 2.1 billion cubic feet per day, according to preliminary figures the agency released Friday. Flaring decreased from 310 million cubic feet per day in January to 256 million cubic feet per day in February. Companies captured 89 percent of Bakken gas produced statewide in February, exceeding the state’s requirement of capturing 85 percent.The state requirement is set to increase to 88 percent in November, a level regulators and industry leaders had cautioned could be difficult to meet as natural gas production is expected to continue breaking records. But the industry group’s gas capture task force is now recommending that the gas capture targets and the timeline should stay the same with some other revisions to the policy. “I believe that with the recommendations they’ve made, and with the additional pipeline capacity and infrastructure, they’re feeling more confident that 88 percent is achievable,” said Kari Cutting, vice president of the North Dakota Petroleum Council. Some of the group's recommendations include changing the way natural gas outside of the core Bakken area is treated in the policy and extending credits for companies that beat the gas capture targets. Companies that fall below gas capture targets can be forced to reduce their oil production, but regulators have rarely imposed production restrictions on companies as the policy is currently written.

Changes to flaring policy keep benchmarks but give oil industry flexibility - North Dakota regulators are keeping current benchmarks for reducing wasteful flaring of excess natural gas but are giving industry more flexibility to comply. The North Dakota Industrial Commission voted unanimously Tuesday to adopt changes to the gas capture policy, many of which were recommended by an industry task force. “They’re saying they will get to 88 percent by Nov. 1,” said Lynn Helms, director of the Department of Mineral Resources. The changes expand some of the caveats that allow industry to be in compliance with the gas capture policy even if a company’s flaring rate exceeds the benchmark. For example, industry can exclude flared volumes from the first 14 days of production. The revised policy increases that to the first 60 days. In addition, the commission will change how it treats flared gas outside of the Bakken core where infrastructure is underdeveloped and gas is considered “stranded.” Allowing some temporary exemptions for stranded gas aims to incentivize pipeline development in those areas, Helms said. The revised policy also focuses more scrutiny on operators who fail to meet the gas capture targets, requiring them to submit gas capture improvement plans and meet with regulators twice a year.

Oil company allies say climate lawsuits were shopped around - The oil industry is hitting back after being sued for climate damages by California cities and counties.  The Manufacturers' Accountability Project (MAP), an oil industry supporter, demanded a swath of records from the municipalities that sued more than 20 oil companies. Citing a state public records law, MAP asked for paperwork, cellphone records, reports, memos, payments and other documents containing oil company names. They're also asking for city contracts with law firms working on contingency, a form of payment that awards a percent of what the firm is able to win. MAP, an arm of the National Association of Manufacturers, said it wants to expose details of the eight lawsuits against oil companies filed by California municipalities. "We really believe strongly in transparency. We think that taxpayers have a right to know what's behind these lawsuits,"   She added that "really what this whole effort is about is trial attorneys and politicians raising their public profile at the expense of manufacturers."Imperial Beach, San Mateo, Marin County, Richmond, Santa Cruz and Santa Cruz County sued two dozen or more fossil fuel companies and trade associations in separate cases. A 9th U.S. Circuit Court of Appeals decision is pending on whether to uphold U.S. District Court for the Northern District of California Judge Vince Chhabria's order sending those suits back to state court from federal court.In other cases, San Francisco and Oakland have sued the five biggest oil companies: Chevron Corp., BP PLC, ConocoPhillips, Exxon Mobil Corp. and Royal Dutch Shell PLC. Those are with Judge William Alsup in the District Court for the Northern District of California. MAP said it's getting involved because oil manufacturers are among those targeted by climate-related lawsuits. De la Torre would not say whether MAP gets funding from oil companies.

Trump Admin Begins Process to Open Pristine Arctic Refuge for Drilling - The Interior Department has launched the process of holding lease sales for oil and gas drilling in the 1.6-million-acre coastal plain of the Arctic National Wildlife Refuge ( ANWR ). Despite decades of fierce resistance from Democrats and conservation groups, pro-drilling Republicans were able to realize their goal of opening the refuge after quietly including the measure in last year's Tax Cuts and Jobs Act.  A notice published Friday in the Federal Register starts the 60-day public scoping period to assist in the preparation of an environmental impact statement for the leasing program . The sale targets the 1002 area on the Prudhoe Bay in Northern Alaska, which has an estimated 12 billion barrels of recoverable crude. The area is described by the Sierra Club as "the biological heart" of the Arctic Refuge—home to polar bears, caribou, migratory birds and other species—as well as vital lands and wildlife for the subsistence way of life of the Gwich'in Nation .  Environmental groups condemned the plan, calling it "shameful" that it would be published just before the eighth anniversary of the Deepwater Horizon oil spill in the Gulf of Mexico, the worst environmental disaster in U.S. history. "The Trump administration's reckless dash to expedite drilling and destroy the Arctic National Wildlife Refuge will only hasten a trip to the courthouse," Jamie Rappaport Clark, president of Defenders of Wildlife , said in a statement. "We will not stand by and watch them desecrate this fragile landscape."

Natural gas-weighted E&Ps continue to grow despite lackluster prices, part 4. -Four years ago this month, crude oil was selling for north of $100/bbl and natural gas prices were more than 50% higher than they are now. But while hydrocarbon prices sagged later in 2014 — and through 2015 and early 2016 — the declines didn’t deal a crippling blow to U.S. exploration and production companies. Instead, most of the upstream industry weathered the crisis remarkably well. Amidst that striking recovery, the 10 gas-focused E&Ps we’ve been tracking have engineered the strongest return to profitability. After $40 billion in pre-tax losses in 2015-16, they reported a collective $5.2 billion in pre-tax operating income in 2017, with all 10 producers in the black, as well as a 150% increase in cash flow over 2016, to $11.7 billion. However, gas prices have languished below $3.00/MMBtu since early February 2018 — their lowest level since mid-2016 — which means that the gas producers don’t have the tailwind that higher oil prices have been providing to their oil-focused and diversified competitors. Today, we conclude our blog series on E&Ps’ 2018 profitability outlook and cash flow allocation with a look at companies that focus on natural gas production.The decline in natural gas prices from $6/MMBtu in February 2014 — and about $4.60/MMBtu in April of that year — to well below $2/MMBtu in February 2016 led to plunging cash flows and massive reserve revisions that threatened the financial stability of gas producers. Pre-tax operating cash flow for the 10 E&P companies in our Gas-Weighted Peer Group fell from $17.5 billion in 2014 to $8.4 billion in 2015 and just $4.6 billion in 2016. Like their Oil-Weighted and Diversified peers, the gas-focused companies slashed capital spending — by 62%, from $17.2 billion in 2014 to $6.5 billion in 2016. They also implemented some of the same strategic transformations as the rest of the U.S. E&P industry, which featured impressive capital discipline and an intense focus on operational efficiencies. However, the Gas-Weighted group was able to achieve financial recovery more quickly than the Oil-Weighted and Diversified producers, which reported relatively small 2017 pre-tax operating losses of $1.8 billion and $2.5 billion, respectively. The 150% cash flow increase by the gas producers significantly exceeded the 58% gain by the oil producers and the 16% rise by the diversified companies. The key difference was that the Gas-Weighted producers, with the notable exception of Chesapeake Energy, already had relatively focused portfolios and did not have to undertake the substantial asset divestiture programs conducted by many companies in the other two peer groups.

Keep it in the ground groups call for fracking bans even as natural gas reduces emissions – Opinion  - The latest Environmental Protection Agency (EPA) data show U.S. carbon dioxide emissions have declined 13 percent since 2005, while overall greenhouse gas emissions are at their lowest levels since 1992. EPA data also show emissions of three air pollutants responsible for millions of deaths worldwide — sulfur dioxide, nitrogen oxide and fine particulate matter — have also plummeted since 2005.Numerous reputable third party experts — including the International Energy Agency (IEA), U.S. Energy Information Administration (EIA) and even the U.N. Intergovernmental Panel on Climate Change (IPCC) — agree that increased use of clean burning natural gas deserves the bulk of the credit for America’s declining emissions. Still, “keep it in the ground” activists continue to not only call for fracking bans, but the elimination of fossil fuel use altogether. This extreme agenda is simply not supported by the science. Bolstered by fuel switching to natural gas in the power sector, the United States has led all major industrialized countries in carbon reductions this century. The EIA released a report late last year that shows natural gas has prevented over 2 billion metric tons of carbon dioxide from being emitted since 2005, noting that natural gas’ share of power sector related carbon reductions is 72 percent greater than renewables and other non-carbon sources during that time-span. IEA stated plainly last year that, “The U.S. power sector has led the world in cutting CO2 emissions since 2008, thanks largely to natural gas…” Many extreme voices in the environmental movement argue that methane emissions from natural gas development effectively negate the obvious carbon reductions from natural gas. But the latest EPA data show that natural gas systems methane emissions have declined 3.5 percent since 2005, while overall methane emissions have declined as well. 

The Panama Canal Needs To Be Expanded Again -  When the Panama Canal was expanded, it drew a lot of enthusiasm, with many seeing U.S. oil and gas exports surging thanks to the wider waterway that cuts the journey to several key markets by between 15 and 30 days, therefore cutting the costs of this journey as well. Besides the shorter journey times for tankers and LNG carriers, the wider Panama Canal could handle larger vessels such as the Neopanamax class, which is widely used for shipping LNG globally, and Aframax crude tankers. Yet not all is bliss.  Forbes’ oil correspondent Gaurav Sharma wrote in a recent story that although LNG carriers passing through the expanded Panama Canal have increased significantly in numbers, they are still below what the canal can handle on a daily basis: 12 Neopanamaxes. Right now, the average daily transit of this size of vessel is five.What’s more, not all five carry LNG. In fact, the Panama Canal Authority has reportedly only allocated one slot daily for LNG carriers, which will inevitably lead to congestion as U.S. production—and especially export-bound production—continues to boom. At the end of last year, tensions flared between the PCA and LNG producers about whose fault it is that not enough LNG tankers are using the freshly expanded channel that saves 11 days from the journey to Asia, which has become a key market for U.S. LNG. According to the producers, the canal has expanded the access of cargo vessels at the expense of LNG tankers. According to the authority, LNG producers can’t comply with timetables. Right now, despite the official only slot daily for LNG carriers, two are becoming more frequently allocated, allowing for the shipping of 38.3 billion cu m of gas. U.S. energy companies, however, are pumping ever more gas and building more and more liquefaction terminals. The Oxford Institute for Energy Studies believes the Panama Canal will become congested with LNG carriers as soon as next year or, under a better-case scenario, by 2021. This will happen even if the PCA boosts the allocations for LNG to four daily. For now, the Panama Canal is a great passage for LPG and condensate carriers. But it’s LNG that urgently needs to reach global markets. As production grows, the risk of bottlenecks in the canal will inevitably become a harsh reality. It may well be the case that the freshly expanded waterway could need another expansion. The alternative would be costlier for both buyers and sellers in the long term.

Protests Against Pipelines In Canada Hurting Oil & Gas Industry - When the pipeline company Kinder Morgan announced it was suspending work on a major Canadian project that has been delayed by protests and court challenges, it sparked talk of a crisis north of the border and fears that investors may flee the nation’s tar sands industry.It was the clearest sign yet of how difficult it’s become for energy companies to find new routes to export the country’s landlocked oil, among the most expensive and damaging to the climate to produce. Over the past several years, climate activists and indigenous groups—in particular many of Canada’s First Nations governments—have built a sustained campaign that has succeeded in delaying, and in some cases canceling, almost every attempt to send more Canadian oil to foreign markets.Canada’s tar sands hold one of the world’s largest deposits of oil, but as the industry has expanded production over the past decade, it’s been unable to complete new pipelines fast enough to ship it out. The past few years saw the failure of two major pipeline projects that would have carried tar sands oil to the Atlantic and Pacific coasts of Canada, as well as the delay, demise and then revival of Keystone XL. This week’s news on Kinder Morgan’s Trans Mountain expansion, which is supposed to triple the capacity of an existing pipeline from Alberta to British Columbia’s Pacific Coast, was the latest setback.“With infrastructure projects like this, they don’t need to be turned down or stopped by people, they just need to be delayed to the degree that it makes sense to place capital elsewhere,” said Kevin Birn, an energy analyst with IHS Markit, a research firm. RBN Energy issued a report saying producers in the tar sands—also called oil sands—are being forced to export more of their oil by rail, driving up costs. It warned that no new pipeline capacity is slated to come online for at least a couple of years, and that each of the three projects that have been approved—including Trans Mountain—face substantial opposition and hurdles.

Canada's Trudeau ready to offer aid to ensure pipeline is built (Reuters) - Canadian Prime Minister Justin Trudeau on Sunday moved to end an escalating crisis over a Kinder Morgan Canada oil pipeline, saying Ottawa was prepared to offer financial aid to ensure the project went ahead. Trudeau cited investor confidence as one reason to help Kinder Morgan Canada, part of Kinder Morgan Inc, which plans to almost triple the capacity of its Trans Mountain line from Alberta to the Pacific province of British Columbia. The company, unhappy about moves by the British Columbia government to impede the C$7.4 billion ($5.9 billion) project on environmental grounds, is threatening to walk away unless it receives sufficient clarity about the path ahead by May 31. “I have instructed the minister of finance to initiate formal financial discussions with Kinder Morgan, the result of which will be to remove the uncertainty overhanging the Trans Mountain pipeline expansion project,” Trudeau told reporters, calling the line “a vital strategic interest to Canada.” Trudeau, speaking after an emergency summit with the premiers of Alberta and British Columbia, said “we are actively pursuing legislative options that will assert and reinforce the government of Canada’s jurisdiction in this matter.” Both the federal and Alberta governments have already suggested they could take a stake in the project. Speaking before the meeting, a federal government source said past examples of help included a bailout of the auto industry in 2009, federal loan guarantees for a hydro-electric project and Ottawa’s investment in an offshore energy project. “Construction will go ahead,” said Trudeau, who is under increasing pressure from the business community and opposition politicians to take action amid fears the dispute could hit already flagging foreign investment. . 

Trudeau Pledges Taxpayer Money, New Laws to Salvage Controversial Pipeline - Canadian Prime Minister Justin Trudeau said Sunday he is ready to offer financial aid and new legislation to push forward the contentious Trans Mountain Pipeline expansion that will triple production of tar sands going from Alberta to British Columbia.Houston-based developer Kinder Morgan has threatened to scrap the $7.4 billion (USD $5.9 billion) project unless political and legal opposition is resolved by May 31. The energy giant's move came after fierce opposition from environmental activists and Indigenous groups, as well as escalating tension between the Albertan and British Columbian governments.But after a meeting with the premiers of Alberta and British Columbia on Sunday, Trudeau insisted the project will go ahead."The Trans Mountain pipeline expansion is of vital strategic interest to Canada," he said. "It will be built.""I have instructed the minister of finance to initiate formal financial discussions with Kinder Morgan, the result of which will be to remove the uncertainty overhanging the Trans Mountain pipeline expansion project," Trudeau noted.Trudeau added that he is seeking federal jurisdiction over the pipeline "We are actively pursuing legislative options that will assert and reinforce the government of Canada's jurisdiction in this matter," he said.But British Columbia's Horgan said after the meeting he will continue to fight the pipeline expansion due to the threat of oil spills in the province."My obligation is to the people of B.C., and I will defend that until I am no longer premier," Horgan said Sunday.

Alberta readies to cut B.C. fuel shipments in Canada pipeline row (Reuters) - Canada’s Alberta province on Monday edged closer to cutting off fuel shipments to neighboring British Columbia in an escalation of a row over the stalled C$7.4 billion ($5.9 billion) expansion of the Kinder Morgan Canada Trans Mountain pipeline. The project has pitted Ottawa and Alberta against British Columbia (B.C.), and could turn into a constitutional crisis, derail Prime Minister Justin Trudeau’s energy strategy and dent business confidence. Kinder Morgan said earlier this month it was halting most work on the Trans Mountain expansion project, which was approved by Canada in 2016 but has been beset by legal tussles. The expansion of the pipeline, which extends from Alberta to the B.C. coast, is desperately needed by oil-rich Alberta, which wants to export more of the crude it produces. But it is vehemently opposed by B.C., which has pledged new environmental rules and a legal challenge, putting construction at risk. Seeking to put pressure on its neighbor, Alberta introduced legislation on Monday that gives it the power to control what products flow through export pipelines, allowing it to prioritize more valuable crude oil shipments over refined fuels, like gasoline. That could hurt B.C., which uses Alberta’s refined fuel. Trans Mountain is the only pipeline in North America that carries both crude and refined fuel products. “We did not start this fight, but let there be no doubt we will do whatever it takes to build this pipeline,” Alberta Premier Rachel Notley told reporters. B.C. environment minister George Heyman said in response that his government was “prepared to defend British Columbians’ interests with every legal means available.”

Update On The Brouhaha Between British Columbia And Alberta -- April 17, 2018 -- Apparently the word on the street is that Ms Notley will be defeated in the next election. The next election will take place on or before May 31, 2019.   She has said "the pipeline" will be built. She has threatened British Columbia with economic repercussions if the pipeline is further delayed or "killed."   Apparently there are already some pipelines that run from Alberta to the west coast of British Columbia. These pipelines carry refined products (such as gasoline and diesel fuel) which customers in British Columbia purchase and consume. The pipelines also carry crude oil that is refined in a Burnaby, British Columbia, refinery. The pipelines also carry crude oil (and refined products?) for export, mostly to Asia. Apparently, right now, the pipeline moves product based on a free market, capitalistic system. According to Irina Slav at, a bill to change this "system" has been introduced into the Alberta legislature. If passed, the bill will give the Alberta provincial government the authority to license fuel traders. The Alberta government will be able to control what products and how much product will go through those pipelines. Facts:

  • Alberta supplies 50% of total fuel imported by British Columbia
  • the only refinery in British Columbia is the Burnaby (Vancouver) refinery
  • this refinery produces 25% of BC's fuels
  • without the "right" kind of fuel the refinery cannot operate properly
  • British Columbia has other options: fuel and crude oil from west coast of the United States; problem:
    • more expensive
    • would also likely raise cost/prices of oil and refined products for consumers on the US west coast

B.C. to file legal challenge of contentious Canada oil pipe expansion  (Reuters) - The government of British Columbia said on Wednesday it would file a legal challenge of Kinder Morgan Canada Ltd’s contentious Trans Mountain pipeline expansion by month-end, even as a poll showed mounting public support for the project. People protest Kinder Morgan's Trans Mountain pipeline outside the British Columbia Supreme Court, in Vancouver, British Columbia, Canada, April 18, 2018. REUTERS/Ben NelmsThe West Coast province will file a reference case that asks the B.C. Court of Appeal to determine whether it has the jurisdiction to stop the C$7.4 billion ($5.9 billion) expansion, which was approved by the federal government in 2016. The legal process will tie the project up in court past the May 31 deadline set earlier this month by Kinder Morgan to scrap the expansion unless all legal and jurisdictional challenges are resolved. The Trans Mountain expansion, which would see a near tripling of capacity on an existing pipeline from Alberta to B.C.’s coast, has pitted Ottawa and the oil-rich province of Alberta against B.C. Some say it could turn into a constitutional crisis, derail Prime Minister Justin Trudeau’s energy strategy and dent business confidence. “I think the challenge is that you’re not going to have a final answer to a question like this, no matter how quickly parties move, for many, many months,” said Michael Feder, a corporate litigator with McCarthy Tétrault. A decision by the B.C. court could be challenged in Canada’s Supreme Court, dragging any resolution into 2019, he said. 

Corporate Canada demands Trudeau quell opposition to Trans Mountain pipeline -- From Canada’s corporate media, oil industry, and big business as a whole there is a deafening clamour for Prime Minister Justin Trudeau and the federal Liberal government to do whatever it takes to ensure the rapid completion of the Trans Mountain pipeline, which is to transport Alberta tar sands bitumen to the British Columbia shore. Numerous press commentators have declared that the fate of the Trudeau government now hangs in the balance. Failure to ensure that the “national interest” prevails will, they claim, undermine Canada’s competitive position, damage the Canadian federation, and cause domestic and international investors to withdraw their support for Trudeau’s Liberals. Some are urging Trudeau invoke the Emergencies Act, the successor to Canada’s notorious War Measures Act. Others that Ottawa deploy the army. Trudeau and his government have hastened to vow that the Can$7.6 billion project, which would triple the capacity of an existing pipeline, will be built, and built expeditiously. “Failure is not an option,” declared Finance Minister Bill Morneau last week. At the conclusion of an emergency meeting Sunday with the premiers of Alberta and British Columbia, Trudeau reiterated his previous assertions that the pipeline is in the “national interest.” “We are absolutely focused” on making progress “this construction season,” said Trudeau. “This is something Canadians expect us to do and quite frankly international investors who look at creating jobs in Canada want to see us able to do." The Trans Mountain project has long been a political flashpoint. Wide swathes of Canada’s population, especially in BC, oppose it because of its adverse impact on indigenous groups and the environment. In recent months, the pipeline project has been the subject of a bitter feud between the Alberta New Democratic Party (NDP) government and the BC NDP government, which is dependent on the support of three Green legislators for its parliamentary majority.

Jerry Brown and Justin Trudeau: Climate Advocates, or Hypocrites? - Two leading political figures from the U.S. and Canada, who have boasted about the need to fight climate change , are now under fire for being climate change hypocrites: saying they care about the climate, but allowing drilling and fossil fuel infrastructure to be built anyway.  On Wednesday, more than 750 public interest groups from California and around the world, including Oil Change International , started a campaign urging the governor of California, Jerry Brown, to stop building fossil fuel infrastructure, including no new exploration permits offshore.  The letter told Brown to "take immediate action to protect those most vulnerable to climate change or lose their support for the global climate action summit that he will host five months from now in San Francisco."  The letter urged Brown, who has stated on numerous times that time is running out to solve climate change and who has stated that fighting the issue will be one of his signature acts , to "champion a vision for California that looks beyond the oil and gas industry to a future that is safe and healthy for everyone," the letter says.  But Brown is not the only politician who has promoted their green credentials who is now under fire for failing to adequately act on climate.  Canadian Prime Minister Justin Trudeau is due to fly back from an overseas trip over the weekend to convene a meeting concerning the controversial Kinder Morgan Trans Mountain pipeline that will triple production of dirty tar sands going from Alberta to British Columbia.  The pipeline has been subject to sustained protests and legal action by the local community and BC government, led by John Horgan. Earlier this week, Kinder Morgan announced that it was stopping work until the end of May until political and legal opposition is sorted. Many people now see the pipeline as being on " life support ."  Even the Economist argues that the pipeline is now likely to become "another flop," and noted that last week David McKay, head of RBC, Canada's largest bank, was concerned that investment was flowing out of the Canadian energy sector "in real time."  Trudeau continues to support the pipeline. Yesterday he tweeted that "I wouldn't approve major pipeline projects if I wasn't confident they could be done safely. And they can be done safely because we've made a massive investment in protecting our oceans and coastlines—in BC and across the country."

Pipeline Spills 76,000 Gallons of Crude Oil Emulsion in Northern Alberta - A pipeline owned by Paramount Resources Ltd. released an estimated 100,000 liters (approximately 26,000 gallons) of crude oil and 190,000 liters (approximately 50,000 gallons) of produced water near Zama City, in northwest Alberta, according to an April 11 incident report filed with the Alberta Energy Regulator.The release was discovered after company personnel looked into a low-pressure alarm from the company's leak detection system, the incident report states. The emergency status of the spill ended April 16. The report says that although "the release was initially believed to be minor," further investigation shows the spill to be around 290,000 liters and has impacted an area of 200 meters (approximately 656 feet) by 200 meters."The pipeline was isolated and depressurized, and clean-up is underway," the incident report states. "No reported impacts to wildlife."The cause of the spill is still under investigation, Paul Wykes, spokesperson with Paramount Resources, told DeSmog Canada.The spill is located approximately 10 kilometers (approximately 6.2 miles) northeast of Zama City, Wykes said.The remote pipeline is part of a network in the Zama area obtained by Paramount Resources when it acquired Apache Corp for $487 million in 2017.Between May 2013 and January 2014, Apache's pipeline infrastructure was plagued by a series of incidents that included one of the largest recent pipeline spills in North America.   In June 2013, a pipeline released 15.4 million liters of oil and toxic produced water into the muskeg, contaminating a 42-hectare (approximately 104-acre) span of boreal forest.   "Every plant and tree died" James Ahnassay, chief of the Dene Tha First Nation, told the Globe and Mail at the time.

Trump's Corporate-Friendly NAFTA 2.0 Would Be Total Climate Disaster, Report Warns -  A new report reveals how "NAFTA 2.0" could deal lock in fossil fuels and deliver a brutal blow to efforts to rein in greenhouse gas emissions.  The publication from the Council of Canadians, Sierra Club U.S., and Greenpeace Mexico—NAFTA 2.0: For People Or Polluters? (pdf)—comes as the U.S. is reportedly hoping to reach a deal with Canada and Mexico in the next three weeks. But the groups' report warns that a "NAFTA renegotiation that fails to address climate change would be a costly exercise in climate denial."  "NAFTA was written to support corporate polluters, not climate-impacted communities. The deal must be fundamentally rewritten to benefit the working families hit hardest by the fossil fuel economy," said Ben Beachy, report author and director of Sierra Club's A Living Economy program. "Instead, Trump's climate-denying agenda for NAFTA 2.0 would give corporations a new, backdoor way to block climate protections while letting them offshore more jobs and pollution." Among the climate problems in the deal are the "proportionality rule" that forces Canada to make available for export to the U.S. the same percentage of oil and gas as it has in the past three years; the fact that it facilitates Mexico's dependence on fossil fuels; the inclusion of the regulation-thwarting, corporate-friendly "investor-state dispute settlement" (ISDS); and that it allows corporations to just outsource emissions and pollution onto another country with less stringent regulations. Outlining how the proportionality rule is a barrier to climate progress, the report explains:  Canada must make available for export to the U.S. three quarters of its oil production and over half of its natural gas. Not only that. Ottawa also must not alter the proportion of tar sands oil in its export mix, nor the fraction of exports from hydraulically fractured (fracked) oil and natural gas. This means that although tar sands oil is one of the most carbon-intensive and locally damaging fuels on the planet and fracked gas can be a worse emitter of greenhouse gases (GHGs) than coal, Canada is not allowed to phase them out faster than conventional oil and gas.

Australia's Northern Territory Scraps Fracking Ban  - Australia’s Northern Territory has removed a moratorium on hydraulic fracturing introduced two years ago while the state’s government assessed the potential impacts of fracking on the environment.Now, the assessment has been completed and the conclusion is that the Northern Territory can avoid the worst of the environmental effects of fracking by strictly regulating the activity.The Northern Territory, which spans more than half a million square miles from central Australia to the northern coast of the country, is the poorest and most scarcely populated state. It sits on a lot of oil and gas-bearing rocks, however, according to government information, and only a small part of these resources is being exploited.For now, gas production is better developed than oil production. There are a couple of LNG and onshore gas projects, including the offshore Ichthys LNG project due to start producing later this year, and the Darwin LNG project operated by ConocoPhillips that has been producing since 2006.Now the state is seeking to expand its hydrocarbons industry by tapping the potential reserves locked underground by fracking. “The risks from fracking can be reduced to acceptable levels,” the state’s Chief Minister Michael Gunner said, commenting on the conclusions of the study. “The moratorium on fracking in the Northern Territory will be lifted, with strict new laws to be in place before exploration or production can occur,” he added, noting that not all of the Northern Territory will be open to frackers: almost half of the land will remain outside their reach, including nature reserves and national parks.

Vast reserves in Northern Territory up for grabs as Australia ends fracking ban - Australia’s Northern Territory on Tuesday lifted a nearly two-year moratorium on fracking to extract gas, unlocking vast onshore reserves in the resource-rich region and raising the possibility of other provinces following suit. The Northern Territory (NT), a 1.4 million sq km (540,000 sq miles) expanse of outback extending from the center of Australia to its northern coastline, had banned hydraulic fracturing, commonly known as fracking, in September, 2016 amid concerns the drilling method could harm the environment. It commissioned an inquiry into the environmental, social and economic risks of the extraction process and on Tuesday accepted the inquiry’s conclusion that the risks were manageable. “The moratorium on fracking in the Northern Territory will be lifted, with strict new laws to be in place before exploration or production can occur,” Chief Minister Michael Gunner told reporters in the Territory’s capital, Darwin. The announcement, which drew criticism from environmentalists, reopens shale gas reserves in the Beetaloo and McArthur basins for development. It immediately sent shares in commodity explorers in the region sharply higher, even though production is not expected to begin for about a decade. It also raised industry hopes for pushing Australia, with 88 trillion cubic feet of identified unconventional gas reserves, like the United States before it towards energy self-sufficiency if blocks on fracking were lifted elsewhere in the country. Origin Energy Ltd said it would resume plans “as soon as practical” to drill and frack the Beetaloo Basin shale gas field, which it says contains 6.6 trillion cubic feet in contingent reserves. Its shares rose 1.4 percent. Shares of McArthur basin explorer Empire Energy Group Ltd jumped by two thirds and shares in Armour Energy Ltd, which also holds exploration acreage in the region rose 6.7 percent. The broader market edged higher. 

Hundreds protest against NT decision to lift fracking moratorium - The Northern Territory Government has faced a backlash from protesters over its decision to lift a moratorium on fracking, while the Chief Minister travelled interstate for a conference. About 250 people gathered outside the Northern Territory Parliament to protest against the decision announced by Chief Minister Michael Gunner on Tuesday. The opponents yelled "shame, Gunner, shame", and called for the Chief Minister to come out and address the crowd. However, Mr Gunner was in Kununurra attending a forum on northern development. "I don't know how the politicians can look their children in the eye, [it's a] disgrace," one man said. The Government was accused of betraying the public after taking the moratorium on fracking to the last election. "It's a bit sad when a Government gets in saying they'll listen to scientific evidence and the community on this issue and yet same business as usual," one woman said. Many protesters were concerned about the effects of hydraulic fracturing on the Territory's water and an increase in greenhouse gas emissions. "This is actually my first protest," local musician David said. "This is the first issue that's really engaged me to get off my behind and get involved. "I think it's just because water is just such a precious resource and we need it to live." An Indigenous man said he travelled all the way from Queensland to support traditional owners protesting against fracking.

A first for the Panama Canal -- three LNG tankers crossed in one day -- Three liquefied natural gas tankers sailed through the Panama Canal on the same day this week, marking a first for the newly expanded waterway and highlighting the booming global gas trade. All three ships -- Gaslog Hong Kong, Gaslog Gibraltar and Clean Ocean -- entered the canal on a staggered basis from the Pacific side Tuesday and had completed their crossings by early Wednesday, according to vessel tracking data compiled by Bloomberg. A representative for the canal authority confirmed the tanker moves. The crossings underscore how the LNG trade has surged worldwide as new export facilities from the U.S. to Australia rumble to life and buyers in Asia boost their demand for the fuel. Since the canal completed a $5 billion expansion almost two years ago, traders and terminal developers have been closely watching the authority's ability to accommodate the jump in tanker traffic. "You're going to have a lot of these plants up an running and you need the logistics to get those cargoes" through the canal, Sam Margolin, lead analyst at Cowen and Company LLC in New York, said by telephone. The increased traffic "should make people feel a lot more confident about the U.S.'s ability to place LNG in China." Dominion Energy Inc.'s Cove Point LNG terminal -- the second to send U.S. shale gas overseas -- started commercial service this week, roughly two years after Cheniere Energy Inc. opened up its Sabine Pass terminal in Louisiana. Thus far, Sabine Pass has shipped more than 300 cargoes to 26 countries. As of March, the Panama Canal has seen 134 LNG vessels pass through it this fiscal year, according to a statement. Though this marks the first time three ships made the transit in one day, two ships have made the journey in 24 hours more than a dozen times.

Venezuela spends millions a day importing oil - Venezuela’s government is being forced to spend millions of dollars a day importing crude to prop up its ailing industry. Most of the enormous oil reserves Venezuela has access to is heavy crude, and needs to be diluted with lighter oil to become a commercially viable product. In 2016 Venezuela imported diluents for the first time in its history. In the two years since, those imports have grown to as many as 200,000 barrels a day, mostly from the US. Filling your tank is still cheaper than drinking water in Venezuela, but the industry can no longer meet domestic demands. “One of the craziest things is that a part of Venezuela’s imports is for the domestic market, but given its price, they practically give gasoline away for free. They are importing barrels that cost $80 to $90 and selling them at $0.”

Greenpeace Finds Amazon Reef Formation Where Total Plans to Drill for Oil - A team of scientists on board the Greenpeace Esperanza ship have documented the existence of a rhodolith field where French company Total intends to drill for oil, 120km off the northern coast of Brazil.The finding proves the existence of a reef formation in the area and invalidates Total's Environmental Impact Assessment (EIA), which states the closest reef formation is 8 kilometers (approximately 5 miles) away from one of the oil blocks. “Now that we know the Amazon Reef extension overlaps with the perimeter of Total's oil blocks, there is no other option for the Brazilian government but to deny the company's license to drill for oil in the region," said Thiago Almeida, Greenpeace Brazil campaigner."To learn the Amazon Reef extends beyond our expectations was one of the most exciting moments of my research about this ecosystem," said Fabiano Thompson, oceanographer and professor at Rio de Janeiro Federal University. "The more we research about the Amazon Reef, the more we find. We still know so little about this fascinating new ecosystem and the knowledge obtained so far indicates any oil drilling activity could seriously harm this unique system." Rhodoliths are calcareous algae that work as a habitat for fish and other reef creatures. Its presence confirms the Amazon Reef extends further than previously expected, as revealed in the scientific magazine Frontiers in Marine Science . The paper, based on footage of the reef captured in January 2017 during Greenpeace's first expedition to the region, estimates the Amazon reef to be 56,000 square kilometers (approximately 22,000 square miles)—almost six times larger than previous scientific estimates.

Chevron expects LNG supply shortage by 2025 (Reuters) - Chevron Corp said on Tuesday it expected supply shortage in the global liquefied natural gas (LNG) market by around 2025, echoing comments made last month by top LNG trader Royal Dutch Shell. Demand for natural gas, which burns cleaner than coal and oil, has surged as countries such as China look to curb environmental pollution. Chevron, owner of the giant Gorgon and Wheatstone LNG projects in Australia, said it expects global demand to be nearly 600 million metric tonne per annum (mmtpa) by 2035, while supply could be just about half of that. "China's demand is increasing significantly - they've had a very active programme to move off of coal in heating industrial applications, and that's pulled on LNG," Pierre Breber, EVP -downstream at Chevron, said during the company's analyst day, when asked about spot LNG prices. China imported record levels of LNG in January, as the world's second-largest economy shored up supplies ahead of the Lunar New Year celebrations. Shell in February estimated that more than $200 billion of investments in LNG is needed to meet the boom in demand by 2030. The global LNG market is set to continue its rapid expansion into 2020 as facilities approved for construction in the first half of the decade come on line. However, a decline in spending in the sector since 2014 will create a supply gap from the mid-2020s unless new investments emerge, Shell said in its 2018 LNG Outlook.

CNOOC sells LNG in first auction as China looks to avoid new gas crunch --China National Offshore Oil Corporation (CNOOC) sold two liquefied natural gas (LNG) cargoes on a local exchange for the first time, just as China emerged from severe gas shortages this winter, during which industrial gas users had to divert supplies to residential customers.CNOOC sold a 60,000-ton LNG cargo for delivery in July and a 30,000-ton cargo for November delivery at an auction on the Shanghai Petroleum and Gas Exchange, Reuters reported, quoting an official at the exchange.“Interest in the auction was very strong,” the official told Reuters, adding that 18 bidders took part in the auction. The prices for the LNG volumes—all of which sold within 30 minutes—were “relatively low” compared to what the market had expected, said the official who declined to disclose the exact prices.CNOOC could hold another LNG auction next month, according to the official at the Shanghai exchange.The Chinese drive to burn more gas instead of coal left residents in the north freezing in a cold snap in early December, prompting China to backpedal on the coal ban in some areas to ease natural gas shortages. Ahead of the longest holiday period in China—the Lunar New Year in the middle of February, the country was gobbling up LNG cargoes from all over the world as it was trying to avoid severe natural gas shortages. This resulted in China becoming the world’s second-largest LNG importer in 2017, outpacing South Korea and second only behind Japan, the EIA said in February. Chinese LNG imports surged 46 percent last year. Today’s volumes sold are negligible compared to China’s enormous natural gas thirst. Yet, industrial buyers could use the LNG auctions to lock up supplies at favorable prices ahead of next winter’s heating season, according to Reuters.

China is getting better at fracking - Chinese energy giants are making progress unlocking natural gas from shale rock formations, taking a step towards replicating the U.S. shale revolution, according to a new report. But China's national oil companies still have plenty of ground to cover before they even approximate the level of success America's shale pioneers have achieved, reports energy research firm Wood Mackenzie. Over the last decade, China's natural gas production has risen to 9 billion cubic meters. Wood Mackenzie forecasts that output will nearly double to 17 billion cubic meters by 2020 as Chinese energy giants fine tune advanced drilling methods tailored for their country. "In terms of technology, the Chinese NOCs actually have built up their learning curves in a relatively short period." -Dr. Tingyun Yang, Wood Mackenzie consultant While that's notable, it still makes China a minnow compared to the whale that is U.S. shale gas. Last year, American drillers produced 474.6 billion cubic meters of natural gas from shale rock. Wood Mackenzie's forecast puts output far short of targets set by Beijing. The country aimed to produce 30 billion cubic meters of natural gas from shale by the turn of the decade to cut its reliance on coal. "The simplest challenge for China to hit the 30 bcm target is the target's too high," Wood Mackenzie consultant Dr. Tingyun Yang told CNBC's "Squawk Box" in Asia. Chinese oil companies would have to roughly double their activity to hit that target, and that is "not physically feasible," says Yang.

Chinese shale gas production will almost double in two years -- We've seen significant progress for shale gas in China over the last year.  As China races to meet government targets, its shale gas has grown to nearly 600 wells and 9 bcm of production. We project production to almost double to 17 bcm in 2020.  Sinopec's Fuling, PetroChina's Changning-Weiyuan and Zhaotong projects - which sit in the mountainous terrain of the Sichuan Basin – are responsible for a total capital investment of US$5.5 billion. Nearly 700 new wells will come onstream between 2018 and 2020 from the three projects combined. Despite commendable achievements in domestic shale, China will still miss the 2020 30-bcm production target announced in its 13th energy sector five-year plan by a considerable margin. While China is eager to materialise its shale gas potential to fuel its massive gasification initiative and support rising demand growth, there's much more work to be done.  Considering the impact of shale gas production on domestic demand, the 2020 13-bcm 'gap' will have to be filled by imports, in particular LNG. We have already witnessed how China was able to leverage on flexible LNG to cope with record-high demand this recent winter season. The good news is that well costs have gone down considerably – 40% for exploration wells compared to 2010 levels, and 25% for commercial wells compared to 2014.

India jet fuel demand to soar as domestic air travel takes off (Reuters) - An Indian push to connect more cities via airports as an expanding middle class increasingly takes to the skies is set to help propel the country’s demand for jet fuel to record highs this year. FILE PHOTO: A Jet Airways plane is parked as another moves to runway at the Chhatrapati Shivaji International airport in Mumbai, India, February 14, 2018. REUTERS/Danish Siddiqui/File PhotoThat rapid growth in appetite for aviation fuel means the country’s refiners are far less likely to send cargoes abroad, tightening markets from Asia to Europe. Years of breakneck economic expansion have helped India become the world’s fastest growing major domestic aviation market, according to the International Air Transport Association. That has been underpinned by ambitious government plans to overhaul the nation’s infrastructure, including a push to build airports and offer airlines incentives to fly to smaller cities. “The country’s air transport sector has huge potential to grow in the long-term given its large geographical expanse and growing consumer affluence,” said Sri Paravaikkarasu, a Singapore-based analyst at energy consultancy FGE. Average monthly demand for jet fuel could break through 700,000 tonnes this year, up from 2017’s record 623,000 tonnes and from 566,000 tonnes in 2016, several industry analysts estimated. That would be an annual growth rate of around 12 percent, comparable to what China achieved during its main boom years in the early 2000s. For graphic on India jet fuel demand click

Exxon faces setback in Iraq as oil and water mix (Reuters) - Talks between Exxon Mobil and Iraq on a multi-billion-dollar infrastructure contract have reached an impasse, Iraqi officials and two industry sources said, in a potential setback to the oil major’s ambitions to expand in the country. More than two years of negotiations on awarding the U.S. firm a project to build a water treatment facility and related pipelines needed to boost Iraq’s oil production capacity have hit difficulties because the two sides differ on contract terms and costs, the officials and sources told Reuters. Unless the differences can be resolved, the project could be awarded to another company in a tender, the officials said, without elaborating on the points of dispute. Losing the contract could deal a blow to Exxon’s broader Iraqi plans, as it would be handed rights to develop at least two southern oilfields - Nahr Bin Umar and Artawi - as part of the deal. Exxon declined to comment. Further delays to the project could also hold back the oil industry in Iraq, OPEC’s second-largest producer; the country needs to inject water into its wells or risk losing pressure and face severe decline rates, especially at its mature oilfields. As freshwater is a scarce resource in Iraq, using treated seawater is one of the best alternatives. The Common Seawater Supply Project (CSSP), which would supply water to more than six southern oilfields, including Exxon’s existing West Qurna 1 field and BP’s (BP.L) Rumaila, was initially planned to be completed in 2013 but has now been delayed until 2022. “The CSSP would be expensive and challenging but there’s opportunity here (for Exxon) ... to get access to resources on a very large scale and to achieve something and really make a difference to its own business,” said Ian Thom, principal analyst at consultancy Wood Mackenzie. 

IEA: U.S.-China Trade Row Could Dampen Oil Demand Growth - OPEC is very close to achieving its mission to draw oil inventories down to their five-year average, but the ongoing U.S.-China trade spat is a risk to oil demand growth expectations this year, the International Energy Agency (IEA) said in its Oil Market Report on Friday. The Paris-based agency kept its global oil demand growth estimate unchanged from last month’s report—at 1.5 million bpd for this year. “However, there is an element of risk to this outlook from the current tension on trade tariffs between China and the US,” the IEA noted. The trade dispute is “introducing a downward risk to the forecast,” said the agency which sees oil demand growth possibly dropping by around 690,000 bpd if global economic growth were reduced by 1 percent on the back of widespread increase in trade tariffs. “Oil demand would suffer the direct impact of lower bunker consumption and lower inland transportation of traded goods, reducing fuel oil and diesel use,” said the IEA. On the supply side, the agency continues to expect non-OPEC growth unchanged at 1.8 million bpd, with the U.S. production growth also unchanged from the previous report, at 1.3 million bpd year on year. Yet, there is concern about takeaway bottlenecks in Midland, Texas and in Canada, and those could widen the discounts of local grades to the international benchmarks, according to the IEA.  OECD commercial stocks—OPEC’s current measure of the success of its production cut deal—dropped by 26 million barrels in February and were just 30 million barrels above the five-year average at end-February. “The average could be reached by May, on the assumption of tight balances in 2Q18. Product stocks are already in deficit,” the IEA said. “With markets expected to tighten, it is possible that when we publish OECD stocks data in the next month or two they will have reached or even fallen below the five-year average target.

Is OPEC's Mission "Accomplished"? - OPEC’s goal of draining the global inventory surplus has finally been achieved. The International Energy Agency said in its latest Oil Market Report that the supply overhang has pretty much vanished, thanks to OPEC’s efforts at limiting production. “It is not for us to declare on behalf of the Vienna agreement countries that it is ‘mission accomplished’, but if our outlook is accurate, it certainly looks very much like it,” the Paris-based energy agency wrote.Market fundamentals are on a similar track compared to last month’s report. The IEA kept its oil demand forecast at 1.5 million barrels per day (mb/d), although it noted that the back-and-forth on trade tariffs between the U.S. and China puts the demand outlook at risk. For example, a 1 percent decline in global GDP growth would result in a reduction in demand growth by 690,000 bpd. “Oil demand would suffer the direct impact of lower bunker consumption and lower inland transportation of traded goods, reducing fuel oil and diesel use,” the IEA said. Still, the negative effects of a trade war remain to be seen.The supply picture also looks about the same, with growth expected to hit a soaring 1.8 mb/d this year, underpinned by a staggering 1.3 mb/d growth rate from the U.S. However, the IEA said that its supply forecast is also vulnerable to some new potential risks. The pipeline bottleneck emerging in the Permian basin could slow the rate of growth of U.S. shale supply. “[T]here is concern about bottlenecks in takeaway capacity that have seen recent discounts for WTI Midland versus Houston widen to a record at nearly $9/bbl. This issue applies in Canada as well as in the US,” the IEA said. The flip side of that is the unexpected production declines from OPEC. The IEA said that taken together, some 800,000 bpd of supply has been sidelined, dramatically bolstering the impact of the OPEC/non-OPEC cuts. “To all intents and purposes, more than a second Saudi Arabia has been added to the output agreement,” the agency wrote. Sharp declines from Venezuela, in particular, are accentuating the agreement, helping to put OPEC’s compliance rate at 163 percent in March.

Have you sent OPEC a thank you note yet? - Every oil executive owes Saudi Crown Prince Mohammed bin Salman, and OPEC, a thank you note, if not a steak dinner. The historic production agreement between OPEC, Russia and a handful of other national oil companies has sopped up the crude oil glut. The International Energy Agency reports that storage levels are returning to five-year averages.  Crude prices have risen to roughly the cost of producing the last barrel needed to meet global demand. That’s about $65 a barrel on the international market and $60 a barrel on the New York Mercantile Exchange. “Americans love to disparage OPEC and the Saudis for manipulating prices,” Jim Krane, a fellow at Rice University’s Baker Institute, said. “But the truth is that Houston is much better off because of it.” Oil prices dropped below $30 a barrel in January 2016, and when Naimi tried to strike a deal with Russia, Iran and other countries to freeze production in April, the king’s 30-year old son, Mohammad bin Salman, called it off and named a new oil minister. After months of new negotiations, the prince signed off on a deal in November 2016 to work with Iran, Russia and other oil producers to cut crude supply. Their goal: return inventory levels to five-year norms and stabilize crude price in the $60 range. This is no small achievement. OPEC members have routinely cheated on quotas in the past, and this time they didn’t. The prince also convinced Russian President Vladimir Putin to deny his nation’s oil companies significant revenues. After this success, the king named Mohammad bin Salman crown prince in June 2017, placing him in day-to-day control of the country.  His last stop was a low-key visit to Houston, where our oil executives should have welcomed him as a hero. Because without the crown prince’s deft diplomacy, a lot of their companies would be in bankruptcy.

Oil Price Risk Cut After US Avoids Direct Confrontation With Russia - The US' declaration that the overnight missile strikes against Syria would be limited and a "one-time shot" may tamp down some of the risk to oil prices spiking when markets open Monday. At the moment, there appears to be no escalation of the conflict with Russian and Iranian forces, after the US and allies the UK and France launched attacks hitting suspected chemical weapons facilities associated with Syrian President Bashar al-Assad.  "We do know the operation is finished for now, and that it was indeed what most of us expected: a narrow action done for narrow purposes, punishing and deterring the use of chemical weapons," said Faysal Itani, a senior fellow at the Atlantic Council's Rafik Hariri Center for the Middle East. US officials said they notified Russian counterparts through “normal deconfliction channels” that allied forces would be using Syrian airspace in the strikes, which did not hit any Russian assets.  The pre-attack communication with Russia, a key Assad ally, signals an attempt to avoid direct confrontation, said Olivier Jakob, an analyst with oil consultancy Petromatrix.  Oil prices had been pushed up to a three-and-a-half-year high of above $72/b on Friday, when US President Donald Trump signaled his intent to attack. With Syria having little oil production of its own, the main concern over supplies arising from a confrontation would be the threat to key supply routes out of the Middle East.  "Any escalation in Syria may also instigate unrest elsewhere in the region, either against the US or its allies, raising the threat to the delivery of energy supplies," analysts at Barclays Capital warned in a research note published before the missile attacks. "So with the driving season fast approaching and OPEC making its June meeting decision to extend all but a foregone conclusion, it is difficult to see much downside to oil prices in the next two months of Q2," the note added. Chris Midgley, head of S&P Global Platts Analytics, said the market has not had such a large risk premium since 2012, when low stocks and the conflict in Libya, along with geopolitics in Iraq and Iran, pushed oil prices to more than $100/b. While the situation today is similar, the growth in US shale supplies has mitigated the likelihood of a price spike, he said.

Oil Prices Sink Amid Indications Syria Attack A One-Off - Crude prices started the week in negative territory on Monday, amid indications that weekend missile strikes against Syria by the United States, France and Britain may be a one-off event. New York-traded West Texas Intermediate crude futures lost $1.01, or 1.5%, to $66.38 a barrel by 3:50AM ET (0750GMT). The U.S. benchmark touched its highest level since Dec. 2014 in the last session at $67.76. Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., sank $1.20, or roughly 1.7%, to $71.36 a barrel. Both benchmarks last week saw their strongest weekly percentage performance since late July of last year, with WTI gaining about 8.6%, while Brent saw a weekly increase of 8.2%. The United States, Britain, and France pounded Syria in a coordinated air strike on Friday night, in response to an alleged chemical weapons attack earlier this month believed to be carried out by forces aligned with the government of Syrian President Bashar Assad in Douma, a town that was held by Syrian rebels. Suggesting that the military action would not be prolonged, President Donald Trump hailed the U.S.-led intervention in Syria as "perfectly executed" in a tweet on Saturday, adding that the military campaign to degrade the Assad regime's chemical weapons capability had accomplished its goals. While Syria is not a significant oil producer itself, the wider Middle East is the world's most important crude exporter and tension in the region tends to put oil markets on edge. Meanwhile, a rise in U.S. drilling for new production also dragged on prices. U.S. drillers added seven oil rigs in the week to April 13, bringing the total count to 815, Baker Hughes energy services firm said in its closely followed report on Friday. That was the highest number since March 2015, underscoring worries about rising U.S. output. Domestic oil production - driven by shale extraction - rose to an all-time high of 10.52 million bpd last week, the Energy Information Administration (EIA) said, staying above Saudi Arabia's output levels and within reach of Russia, the world's biggest crude producer.

Hedge funds build record bullish position in Brent: Kemp (Reuters) - Hedge funds are holding a near-record bullish position in crude oil and refined fuels but the buying seems to have run out of momentum and is increasingly concentrated only in Brent.Hedge funds and other money managers increased their net long position in the six most important futures and options contracts linked to petroleum by 12 million barrels in the week to April 10.The net long position has increased by 149 million barrels over the last four weeks to 1.365 billion barrels.Net length across the petroleum complex is only 118 million below the record of 1.484 billion set on Jan. 23.But the increasing bullishness is becoming more selective and is almost entirely concentrated in Brent, according to an analysis of position records published by regulators and exchanges.Portfolio managers increased their net long position in Brent by 17 million barrels in the week to April 10 and have raised net length by a total of 48 million barrels since Jan. 23.By contrast, the net long position in WTI was cut by 3 million barrels last week and is down by 108 million barrels since Jan. 23.Net positions in U.S. gasoline, U.S. heating oil and European gasoil were cut or essentially unchanged in the most recent week ( result is an increasing divergence between Brent and WTI and to a lesser extent between Brent and refined fuels.Portfolio managers now hold a record net long position of 632 million barrels in Brent, up from 584 million on Jan. 23.Hedge fund long positions outnumber shorts in Brent by more than 20:1, up from a ratio of 11:1 back in January. The latest position data refers to positions at the end of trading on April 10, before the United States and its allies launched air strikes on Syria in the early hours of April 14.Rising political and military tensions across the Middle East, including in Syria and Yemen, have created a speculative bid for oil prices. Nonetheless, hedge fund positioning in Brent has become exceptionally stretched and is a significant source of downside risk if and when fund managers try to realize some of their profits.

New Sanctions On Russia Could Lift Oil Prices Further - Crude oil prices started the week with a drop of about one percent as traders were still watching what happens in Syria next and despite the announcement that Washington will impose new sanctions on Russia for its support of Syrian President Bashar Assad. At the time of writing, Brent crude traded at US$71.87, down by 0.98 percent from Friday’s close, and West Texas Intermediate was down 0.85 percent to US$66.82 a barrel, after on Sunday the US Ambassador to the UN Nikki Haley said Washington would announce the third round of sanctions against Russia today. Speaking on “face the Nation” on CBS, Haley said “Secretary Mnuchin will be announcing those on Monday if he hasn't already and they will go directly to any sort of companies that were dealing with equipment related to Assad and chemical weapons use. And so I think everyone is going to feel it at this point. I think everyone knows that we sent a strong message and our hope is that they listen to it.” Perhaps market participants are waiting for the actual announcement before they decide whether it is time to panic or not, or perhaps the effect of any Syria-related news has lost its edge for oil prices after the strikes carried out by the U.S., the UK, and France over the weekend failed to spark what many worried would be World War Three.

The Bullish And Bearish Case For Oil -  Oil prices could rise due to the perfect storm of stagnant supply, geopolitical risk, and a harsh winter,” according to an April 12 note from Barclays. Geopolitical events specifically could help keep Brent above $70 through April and May, which comes on the back of a substantial decline in oil inventories. The investment bank significantly tightened its forecast for Venezuelan production, lowering it to 1.1-1.2 million barrels per day (mb/d), down sharply from its previous forecast of 1.4 mb/d. That helped guide the bank’s upward revision for its price forecast for both WTI and Brent in 2018 and 2019, a boost of $3 per barrel.The flip side is that the explosive growth of U.S. shale keeps the market well supplied, and ultimately forces a downward price correction in the second half of the year, Barclays says. In fact, the investment bank said there are several factors that could conspire to kill off the recent rally. One of the looming supply risks is the potential confrontation between the U.S. and Iran. The re-implementation of sanctions threatens to cut off some 400,000 to 500,000 bpd of Iranian supply. But Barclays says these concerns are “misguided,” with the risk overblown. “Therefore, it is worth suggesting that in both of these countries, a dire scenario may already be priced in,” Barclays wrote.Ultimately, the current price levels could be “as good as it gets,” Barclays argues. The bank forecasts Brent will average $63 per barrel this year and only $60 per barrel in 2019.However, Goldman Sachs is way more bullish, noting that the sudden spike in geopolitical tension only “reinforces” its prediction of a 10 percent increase in commodity prices over the next 12 months. With the potential for inflation, the backwardation in the oil futures curve, and supply risks from geopolitical instability, “the strategic case for owning commodities has rarely been stronger,” Goldman analysts wrote last week. Goldman also cited the recent attacks on Saudi oil facilities, a development that would normally frighten oil traders but these days arguably doesn’t even rank in the top 5 in terms of supply risks. Iran-backed Houthi rebels in Yemen have targeted Aramco facilities and an oil tanker, although none have succeeded in disrupting supply.

Oil Markets: The Calm Before The Storm - U.S. oil production is expected to rise by another 125,000 bpd in May, compared to a month earlier.
-    The gains will, unsurprisingly, come from the Permian basin, which is expected to add 73,000 bpd.
-    Interestingly, the number of drilled but uncompleted wells (DUCs) continues to rise, an indication that supply chain bottlenecks are causing some delays.
Oil prices rose sharply last week in anticipation of U.S. airstrikes in Syria. Although Syria is only a marginal producer of oil, the fear was that the U.S. would get sucked into a broader conflict if it sparked retaliation from Russia or Iran. With only a narrow action taken by Washington, the threat of wider conflict abated. Oil fell on the news. In early trading on Tuesday oil held steady in anticipation of inventory drawdowns and comments from OPEC about a possible extension. Saudi Aramco earned $33.8 billion in the first six months of 2017, making it the most profitable company on the planet. The numbers are a closely held secret but Bloomberg News reported the details, offering the clearest picture yet on the inside workings of the famed oil company. Crucially, the first half of 2017 was a period of time in which oil prices were significantly lower than they are today. Also, Aramco appears to be virtually debt-free and has production costs at a small fraction of the broader industry.   Oil prices firmed up after Kuwait said that OPEC would consider extending the production cuts into 2019. “OPEC and its allies are expected to control their supplies at levels that meet demand even after crude inventories decline,” Jun Inoue, a senior economist at Mizuho Research Institute Ltd, told Bloomberg. The Canadian federal government said it would enter talks with Kinder Morgan Canada to offer the company some financial support in order to get its Trans Mountain Expansion pipeline off the ground. The company idled the project because of opposition from British Columbia and said it would be entirely scrapped by the end of May if there wasn’t a resolution.

Oil prices little changed as profit locked in; supply worry supports - (Reuters) - Oil prices were little changed on Tuesday as investors took profit following last week's rally above three-year highs, with prices supported by growing concern over the potential for supply disruptions.Brent crude oil futures LCOc1 were down 9 cents at $71.33a barrel by 11:50 a.m. EDT (1550 GMT), having come off an earlier high of $71.89, while U.S. crude futures CLc1 slipped 8 cents to $66.14."We're starting to see a little of the premium come off from geopolitics, and the focus is shifting to inventories," said Bill Baruch, president of Blue Line Futures in Chicago. Brent has risen 1.4 percent so far this month. It hit a peak last week of $73.09, the highest since late 2014, amid mounting tensions in the Middle East, the possibility of renewed U.S.sanctions against Iran and falling output in Venezuela, where economic crisis has dragged down oil output to multi-year lows."The rally upwards was purely on geopolitical risk and if now we haven't had any further stimulus, we're seeing prices slip off a bit," Natixis commodities strategist Joel Hancock said. Analysts expected uncertainty over U.S. policy towards Iran to continue to support prices through May 12, the deadline that U.S. President Donald Trump gave to Congress and European allies to "fix" the Iran nuclear deal. If Washington does not renew sanctions relief for Tehran at this point, Iran may have difficulty exporting its crude.Healthy demand and coordinated crude supply cuts by the Organization of the Petroleum Exporting Countries and several partners including Russia have made oil one of thetop-performing commodities of 2018, with a gain of 7 percent,after wheat and corn, which have gained nearly 10 percent. Bullish enthusiasm over the outlook for oil prices, however,might be contained by an increase in supplies in Cushing,Oklahoma, the delivery point for U.S. crude futures.

US Crude Oil Inventories Decline Slightly; Essentially Flat -- API -- April 17, 2018 -- Weekly crude oil inventories, API data:

  • forecast: an increase of 0.625 million bbls of oil
  • actual: a decrease of 1.047 million bbls of oil; said this was in-line with analysts expectation, although API forecast a slight build
  • the EIA data will be released Wednesday morning, 10:30 a.m. EDT
  • headline: "oil prices head higher after API reports crude inventory draw"
  • at close: WTI was up 30 cents for the day; trading at $66.52
  • 30 cents / $66.52 = 0.4%
  • technically, the headline was correct -- "oil prices were higher" -- 0.4%

Oil Prices Head Higher After API Reports Crude Inventory Draw - The American Petroleum Institute (API) reported a draw of 1.047 million barrels of United States crude oil inventories for the week ending April 13, largely in line with analysts who had anticipated a draw in crude oil inventories of 1.429 million barrels. Last week, the American Petroleum Institute (API) reported surprise build of 1.758 million barrels of crude oil.The API reported a draw for gasoline inventories as well for week ending April 13, in the amount of of 2.473 million—a surprise given the small 227,000-barrel draw that analysts had expected.Neither benchmark saw much activity earlier on Tuesday, with a mixed bag of small ups and downs. The WTI benchmark was trading up by $0.05 (+0.08%) at $66.27—less than $0.50 over last week’s prices, while Brent traded down $0.07 (-0.10%) at $71.35—almost even with last week’s prices at 2:30 pm EST. Brent was trading up earlier in the day, as high as $71.64.Oil prices are in a tug of war with geopolitical risk premium courtesy of the Syrian conflict and Venezuelan production declines on one side, and US crude oil production and EIA forecasts of drilling productivity on the other.Yesterday, the Energy Information Administration said in its monthly Drilling Productivity Report that U.S. shale production is expected to increase by 125,000 bpd in May over April, with the Permian production surging by 73,000 bpd, Eagle Ford’s—by 24,000 bpd, and the Bakken’s by 15,000 bpd. And while forecasts of US production are grim, actual US crude oil production is even more grim, which for the week ending April 6 increased to 10.525 million bpd—a continuance of weeks and weeks of production gains.

WTI/RBOB Surge After Across-The-Board Inventory Draws - WTI/RBOB has surged since last night's across-the-board bullish API report, and while DOE showed that US crude production rose to a new record high, it confirmed API's draws across all components. Bloomberg Intelligence Senior Energy Analyst Vince Piazza explains that, impelled by WTI discounts to Brent of greater than $5 a barrel, domestic refinery runs are expected to push higher.  Strength in crude exports, relative to last year, should persist even with recent sequential softness. While summer driving season presents a demand catalyst, U.S. crude production remains robust. DOE

  • Crude -1.071mm (+650k exp)
  • Cushing -1.115mm (-650k exp)
  • Gasoline -2.968mm
  • Distillates -3.107mm

DOE data confirmed the API across-the-board inventory drawdown. Total petroleum stockpiles haven't been this low since March 2015...

Oil tops $68 for the first time in more than three years as US crude stockpiles fall -  Oil prices rose to their highest level since late 2014 after government data showed U.S. crude stockpiles fell last week and as the market continued to worry about supply disruptions in key fossil fuel-producing nations.U.S. West Texas Intermediate crude futures ended Wednesday's session up $1.95, or 2.9 percent at $68.47, the best settle since Dec. 1, 2014. The contract hit an intraday high going back to Dec. 2, 2014.International benchmark Brent crude oil futures also hit hit a new intraday high going back to November 2014. The contract rose $1.90, or 2.7 percent, to end the session at $73.48 a barrel.Brent's settlement marked its best close since Nov. 26, 2014, the day before OPEC refused to take steps to stop a decline in oil prices, sparking a sharp sell-off that ultimately sent oil prices to 12-year lows. OPEC has since reversed course, reaching a deal with Russia and other oil producers to cut output by 1.8 million barrels a day starting in January 2017.The deal, which runs through the end of this year, has nearly shrunk global oil stockpiles to their five-year average. A committee that monitors adherence to the cuts meets in Saudi Arabia on Friday, and the wider group will gather in June to determine whether the agreement should be adjusted.Some senior Saudi officials are reportedly targeting $80 per barrel oil, and could argue for keeping the production caps in place to achieve that goal.U.S. commercial crude inventories dropped by 1.1 million barrels in the week through April 13, the U.S. Energy Information Administration reported.Stockpiles of gasoline also dropped by 3 million barrels, while distillates fuels including diesel declined by 3.1 million barrels."It's a bullish report with the across-the-board drawdowns in everything," Oil tops $68 for the first time in more than three years as US crude stockpiles fall

OPEC's new price hawk Saudi Arabia seeks oil as high as $100 - sources (Reuters) - Top oil exporter Saudi Arabia would be happy to see crude rise to $80 or even $100 a barrel, three industry sources said, a sign Riyadh will seek no changes to an OPEC supply-cutting deal even though the agreement’s original target is within sight. The Organization of the Petroleum Exporting Countries, Russia and several other producers began to reduce supply in January 2017 in an attempt to erase a glut. They have extended the pact until December 2018 and meet in June to review policy. OPEC is closing in on the original target of the pact - reducing industrialized nations’ oil inventories to their five-year average. There is no indication yet, however, that Saudi Arabia or its allies want to wind down the supply cut. Over the past year, Saudi Arabia has emerged as OPEC’s leading supporter of measures to boost prices, a change from its more moderate stance in earlier years. Iran, once a keen OPEC price hawk, now wants lower prices than Saudi Arabia. Industry sources have linked this shift in Saudi Arabia’s stance to its desire to support the valuation of state oil company Aramco ahead of the kingdom’s planned sale of a minority stake in an initial public offering. The supply cut has helped boost oil prices this year to $73 a barrel, the highest since November 2014. Oil began a slide from above $100 - a price that Saudi Arabia endorsed in 2012 - in mid-2014, when growing supply from rival sources such as U.S. shale began to swamp the market. But the kingdom wants the rally to go further. Two industry sources said a desired crude price of $80 or even $100 was circulated by senior Saudi officials in closed-door briefings in recent weeks. “We have come full circle,” a separate high-level industry source said of the change in Saudi thinking. “I would not be surprised if Saudi Arabia wanted oil at $100 until this IPO is out of the way.” Once the Aramco share sale is done, Riyadh would still want higher prices to help fund initiatives such as Vision 2030, an economic reform plan championed by Crown Prince Mohammed bin Salman. 

Oil jumps 3 pct on Saudi price target, U.S stockpiles (Reuters) - Oil futures jumped nearly 3 percent on Wednesday on a decline in U.S. crude inventories and after sources signaled top exporter Saudi Arabia wants to see the crude price closer to $100 a barrel. OPEC’s new price hawk Saudi Arabia would be happy for crude to rise to $80 or even $100, three industry sources said, a sign Riyadh will seek no changes to a supply-cutting deal even though the agreement’s original target is within sight. Brent crude futures LCOc1 settled at $73.48 a barrel, up $1.90, or 2.7 percent. U.S. West Texas Intermediate crude futures CLc1 gained $1.95, or 2.9 percent, to settle at $68.47 a barrel, their highest since late 2014. Prices were supported as U.S. oil stockpiles fell across the board last week with gasoline and distillates drawing down more than expected on stronger demand, according to data from the U.S. Energy Information Administration. Crude inventories dropped by 1.1 million barrels as a result of a decline of 1.3 million barrels per day in net crude imports. “This may be one of the most bullish reports in some time, with the across-the-board declines in inventories,” said John Kilduff, a partner at Again Capital Management in New York. “Beyond the headlines, gasoline demand was very strong, virtually summer-like, and crude oil exports are climbed back toward 2 million bpd at 1.75 million.” Buying in anticipation of the report started late Tuesday, said Brian LaRose, a technical analyst with United-ICAP. The market also found support in expectation that the Organization of the Petroleum Exporting Countries’ production cuts will be sustained. OPEC and 10 rival producers have curbed output by a joint 1.8 million bpd since January 2017 and pledged to do so until the end of this year. OPEC’s ministerial committee tasked with monitoring the group’s supply-cutting deal with non-OPEC countries, led by Russia, meets in the Saudi city of Jeddah on Friday. “Despite an oil price of over $70 per barrel and the fact that the oversupply has been eliminated, a phase-out of the production cuts will not be on the agenda,” 

Oil prices soar to highest level in years on Mideast tensions - Oil surged on Thursday (Apr 19) close to 3.5-year peaks on simmering Mideast tensions and keen US demand, while London stocks rose with drug manufacturer Shire boosted by a possible takeover battle. World oil prices extended Wednesday's gains on the back of data showing a drop in US stockpiles - indicating improved demand - and expectations that a Russia-OPEC output cap deal will be kept in place. The market was also propelled after OPEC kingpin reportedly stated it wanted crude prices to top US$80 per barrel as it prepares for a gigantic listing of part of its state oil company. Tensions in the oil-rich Middle East also kept prices elevated. "WTI and Brent Crude have hit fresh 41-month highs after Saudi Arabia stated they would be happy for oil to reach US$80 or US$100," said market analyst David Madden at CMC Markets UK. As OPEC members met on Thursday in Saudi Arabia, the cartel's largest producer was seen as favouring strengthening the partnership with Russia that has successfully limited production to mop up the glut that had sent oil prices plunging under US$30 per barrel in early 2016. "When it comes to the oil cartel, the Saudis usually get what they want," said Madden. Oil surged to summits last seen in November 2014, with London Brent striking US$74.74 per barrel and New York crude touching US$69.56. 

Oil prices hit $75 as Saudi seeks hike - Oil prices rose on Thursday to their highest since late 2014 as the United States crude inventories declined after sources told the media that top exporter, Saudi Arabia is seeking to push oil prices higher. Brent crude oil futures rallied as high as 74.44 dollars a barrel, the strongest since Nov. 27, 2014, the day that OPEC decided to pump as much as it could to defend market share. Brent futures were at 74.35 dollars per barrel at 0823 GMT, up 87 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures rose 71 cents to 69.18 dollars a barrel. WTI had earlier hit 69.27 dollars , its best level since Dec. 2, 2014. “Oil prices continued to climb on Thursday as a decline in U.S. crude inventories and commentary from Saudi Arabia that it will be happy to see crude rise to 80 dollars or even 100 dollars helped boost prices,” RBC said in a note. The Organisation of the Petroleum Exporting Countries (OPEC) and other major producers including Russia started to withhold output in 2017 to rein in oversupply that had depressed prices since 2014. OPEC and its partners will meet in Jeddah, Saudi Arabia, on April 20. OPEC will then meet on June 22 to review its oil production policy. Since the start of the supply cuts, crude inventories have gradually declined from record levels towards long-term average levels. Further supporting oil prices is an expectation that the U. S. will re-introduce sanctions against Iran, OPEC’s third-largest producer, which can result in further supply reductions from the Middle East.

Why Oil Prices Can't Rise Very High, For Very Long - Gail Tverberg via Our Finite World - Oil prices are now as high as they have been for three years. At this writing, Brent is $74.14 per barrel and West Texas Intermediate is at $68.76. These prices aren’t really very high, if a person looks at the situation from a longer term point of view than the last three years.There is always a question of how high oil prices can go, and for how long.In fact, we have many resources, of many kinds, whose prices of extraction keep rising higher. For example, obtaining fresh water for the world’s population keeps getting more and more expensive. Some parts of the world need to resort to desalination.The world economy cannot withstand high prices for any of these resources for very long. Certainly, it cannot withstand high prices for a combination of necessary resources, because people need to cut back on other purchases, in order to afford the necessities whose prices are rising. This article is a guest post  by another actuary, who goes by the pseudonym Shunyata. He explains in a different way why high resource prices cannot last, whether they are for oil, or natural gas, water, or even fresh air.

Oil pulls back from gains; OPEC says glut nearly gone (Reuters) - Oil prices on Thursday hit highs not seen since 2014, built on the ongoing drawdowns in global supply and as Saudi Arabia looks to push prices higher, though U.S. crude gave back gains in the afternoon to finish lower. o A global oil glut has been virtually eliminated, according to a joint OPEC and non-OPEC technical panel, two sources familiar with the matter said, thanks in part to an OPEC-led supply cut deal in place since January 2017. U.S. West Texas Intermediate (WTI) crude futures CLc1 settled 18 cents lower at $68.29 a barrel after earlier hitting $69.56, their highest since Nov. 28, 2014. WTI has gained nearly 8 percent in the last eight days of trading. Brent crude futures LCOc1 ended at $73.78 a barrel, up 30 cents. The global benchmark touched $74.75 a barrel, its highest since Nov. 27, 2014 - the day OPEC decided to pump as much as it could to defend market share. “Overall the supply-demand equation is fairly balanced,” said Anthony Scott, managing director at BTU Analytics in Denver. “It depends on expectations at this point - bullishness may be stalling out, and people are asking, ‘What’s the next leg; you need to see the next signal, whether it’s a bullish or bearish signal.’” Traders said speculators continue to bet on further upside, expecting potential supply disruptions and further drawdowns, driven by strong demand. More than 830,000 front-month contracts changed hands on CME Group’s New York Mercantile Exchange on Thursday, compared with a daily average of about 615,000. Investors are eyeing the $70 level on U.S. crude, but said that would likely face resistance, particularly as the speed and magnitude of the recent rally would augur for selling pressure before long. 

Bullish Sentiment Drives An Oil Price Rebound - Geopolitics and an ever-tightening oil market are pushing prices up to fresh multi-year highs. “Brent crude oil is ticking higher by the day as OPEC+ cuts are intact, global oil demand growth is firm…Venezuela oil production is in a death spiral, renewed Iran sanctions are imminent (12 May) and sanctions towards Russia on oil and not just aluminum is possible,” Bjarne Schieldrop, chief commodities analyst at SEB, wrote in a note. “Barring a global recession we think there is more room on the upside and as we stated in early march, if OPEC+ sticks to its cuts we are likely to see $85/bl later in the year as inventories draw lower.” While Friday morning saw a string of bearish news push oil down, this bullish sentiment drove a rebound in prices. In an early morning tweet on Friday, President Trump took aim at OPEC. “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!” His tweet helped reverse the gains for crude benchmarks, although the effect will likely be brief.   Saudi oil minister Khalid al-Falih said that OPEC will phase out its cuts so as not to shock the market, but that it would be premature to discuss such plans at the June meeting. He also said that the global economy could tolerate higher oil prices and that there wouldn’t be demand destruction. The comments suggest OPEC is set on keeping the limits in place for the rest of this year. Still, OPEC is meeting in Jeddah to take stock of the market, and the data suggests that they have just about eliminated the inventory surplus, which means that keeping the cuts in place could help drive up prices. “The petro-nations seem willing to over-tighten the market, with the current price levels fostering confidence in their supply deal,” Norbert Ruecker, head of macro and commodity research at Julius Baer, wrote in a note.

Oil Prices Under Pressure As Rig Count Climbs Again -Coming off of what turned out to be a rather rocky morning for oil prices, U.S. drillers added 5-rigs to the number of oil and gas rigs this week, according to Baker Hughes. The total number of oil and gas rigs now stands at 1013, which is an addition of 156 rigs year over year.The number of oil rigs in the United States increased by 5 this week, for a total of 820 active oil wells in the U.S.—a figure that is 132 more rigs than this time last year. The number of gas rigs stayed the same this week, still at 192; 25 rigs above this week last year.While U.S. drillers seem determined to add rigs, Canada—which is suffering from a rather tumultuous war in its country over pipeline infrastructure and a rather significant discount in its Western Canadian Select (WCS) benchmark—continues to hemorrhage rigs, losing 9 more oil and gas rigs this week, after shedding hundreds of rigs in the in the last couple of months. At 93 total rigs, Canada now has 6 fewer rigs than it did a year ago.  Oil prices were trading down on Friday after President Donald Trump took a swing at OPEC’s price manipulation via Twitter. “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!” The tweet read. WTI had just come off end-2014 highs on Thursday¬—a result of the of the Joint Technical Committee (JTC) of the OPEC and non-OPEC oil producers yesterday, which found that oil inventories in developed economies had dropped to just 12 million barrels over the official target of the cuts—the five-year average. West Texas Intermediate was trading down $0.06 (-0.09 percent) at $68.27 at 12:37pm EST. The Brent benchmark was trading down $0.10 (-0.14 percent) at $73.68. Both benchmarks are still up week on week. Aside from the Trump effect, oil price pressures remain from growing U.S. production, which rose again in the week ending April 13, reaching 10.540 million bpd—the eighth build in as many weeks—less than a half million bpd off the 11.0 million bpd forecast that many predict for 2018.

Trump rails against high oil prices, OPEC pushes back (Reuters) - U.S. President Donald Trump accused OPEC on Friday of “artificially” boosting oil prices, drawing rebukes from some of the world’s top energy exporters. “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea. Oil prices are artificially Very High! No good and will not be accepted!” Trump wrote on Twitter. It was unclear what triggered the tweet, Trump’s first mention of OPEC on social media during his term. U.S. oil prices are near a three-year high, at close to $70 a barrel, and have been rising since OPEC and non-OPEC producers including Russia cut supply in January 2017 to end a global oil glut and price collapse. Trump’s tweet came shortly after officials from top oil exporter Saudi Arabia said they would like to see prices climb even higher and that they were still far from their goal of ending the supply glut. The cartel is expected to restrain supply through the end of this year, and possibly into 2019. Three Saudi officials told Reuters this week they would be happy to see oil hit $80 or $100 a barrel. Higher prices drive up gasoline prices for motorists worldwide and rising energy costs feed inflation. But higher oil prices have also benefited the U.S. energy industry, feeding rapid growth in output from shale fields. U.S. oil output is at record levels. Despite Trump’s comments, oil benchmarks ended the day modestly higher, rebounding from early losses. Several members of the Organization of the Petroleum Exporting Countries responded to the tweet, saying prices were not artificially inflated. OPEC Secretary General Mohammed Barkindo said the output cut agreement halted the collapse in global oil prices, and is “on course to restore stability on a sustainable basis in the interest of producers, consumers and the global economy.” “We don’t have any price objective in OPEC, and not in this joint endeavor with non-OPEC,” Barkindo said on Friday, in response to Trump’s tweet. 

Trump’s Oil Rant Misses New Reality: High Prices Can Help, Too - President Donald Trump may have a problem with oil prices being “very high,” but a decline would be a mixed bag for the U.S. economy, thanks to the boom in American energy production.When prices plunged starting in mid-2014 and stayed low for the next two years, U.S. producers felt the pain, much more and longer than was expected. A pullback in demand for oil-related equipment slowed mining and manufacturing output cooled investment and hurt jobs. For consumers, though, it expanded purchasing power, as less-expensive fill-ups at the gasoline pump left more money to spend elsewhere -- supporting the biggest part of the economy.The idea of cheap oil as a clear positive for the U.S. harks back to an earlier era when it would boost consumption, contain the trade deficit and hold down costs for businesses. Now oil prices play a more nuanced role: There’s been a boom in shale oil production, helping reduce petroleum imports and boost exports. And the global energy-price recovery since mid-2017 has helped usher a rebound in U.S. manufacturing and capital spending, underpinning growth.  If oil prices were to drop again, the effect won’t be “cut and dry the way it would’ve been even a few years ago,” said Stephen Stanley, chief economist at Amherst Pierpont Securities and a former Federal Reserve researcher. U.S. production has “ramped up dramatically,” so “from a growth perspective, there are both winners and losers,” he said. “It’s one of those things where 90 percent of the economy benefits small and 10 percent gets hurt big.”

Oil ends modestly higher, posts a second straight weekly gain - Oil prices settled with a modest gain Friday, shaking off earlier weakness sparked by a tweet from U.S. President Donald Trump, to finish higher for the week. Trump had taken to Twitter early Friday to blame the Organization of the Petroleum Exporting Countries for “artificially high” prices.  Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted! ‘”They are ‘artificially’ high. If they were not a quasi cartel, they would all be producing at capacity and prices would be lower,” said James Williams, energy economist at WTRG Economics. “However, it is unlikely that a tweet will change OPEC behavior. Virtually all of the OPEC countries need prices this high or higher to balance their budgets.” May West Texas Intermediate crude gave up earlier declines to edge up by 9 cents, or 0.1%, to settle at $68.38 a barrel on the New York Mercantile Exchange. The U.S. benchmark hit a 3 ½-year high earlier this week, and the contract ended the week 1.5% higher. June WTI crude, which became the front-month contract the settlement, added 7 cents, or 0.1%, to $68.40.  June Brent crude rose 28 cents, or 0.4%, to $74.06 a barrel on ICE Futures Europe, marking another finish at the highest since November 2014. It rose 2% for the week.The price action comes as members of the joint OPEC and non-OPEC ministerial monitoring committee held a meeting in Saudi Arabia Friday. OPEC ministers were quick to respond to Trump’s tweet, according to news reports, with Saudi energy minister Khalid al-Falih saying there is “not such a thing as artificial prices,” according to Bloomberg.

Can Saudi Arabia Afford Its Megaprojects? - Most headlines with "Saudi Arabia" in them seem to feature a hefty sum of money. A US$500-billion smart city here, a US$200-billion solar project there--it's beginning to look like Saudi Arabia wouldn't even look at a project if it costs less than a billion dollars.One also gets the distinct feeling that Saudi Arabia is still an extremely rich nation that can afford all these projects, even without the listing of its state oil giant Aramco.The truth, however, may be that it can't afford them even with the Aramco listing. Here's a simple calculation. The Neom city project and the SoftBank deal alone come in at US$700 billion. Add to this a US$10-billion deal with Egypt for another smart city, the US$44-billion refinery deal with three Indian companies, and a couple of smaller projects: a US$7-billionrefinery in Malaysia and a US$5-billion petrochemicals complex in Saudi Arabia. The bottom line of this selection: US$766 billion.Of course, the Kingdom won't finance all these projects on its own, but it will need to finance a certain portion of them—in some of the projects, even half of the total. Also, these are not all the large-scale projects that Saudi Arabia has signed up for. Let's make a crude assumption that Riyadh's participation in the megaprojects is half, at US$383 billion. Can it afford it? Saudi Arabia's sovereign wealth fund, the government's investment vehicle, has US$250 billion in assets under management. Plans are to expand this to US$400 billion by 2020 through local and international investments, but right now US$250 billion is what the Kingdom has in the fund, and oil is still below its target price of US$80 a barrel. Meanwhile, the 2018 Saudi budget features a deficit of US$52 billion and some observers believe the Kingdom is stretching itself too thin with all its ambitious reform plans.

Israel Conferred With U.S. on Strike in Syria to Target Iranian War Gear- WSJ —With tacit American support, the Israeli military targeted an advanced Iranian air-defense system at a Syrian base last week, said intelligence officials and others briefed on the matter, the latest sign the Trump administration is working with Israel to blunt Tehran’s expanding influence in the Middle East. After conferring with President Donald Trump, Israeli Prime Minister Benjamin Netanyahu ordered a strike on the newly arrived antiaircraft battery to prevent Iranian forces from using it against Israeli warplanes carrying out increasing numbers of operations in Syria, some of these people said. Israeli officials told the Trump administration about the planned strike in advance so that the U.S. was aware of their plans to directly target an Iranian base, according to two people briefed on the plans. Israeli leaders have kept silent about the strike, but Russia, Iran and Syria all accused Israel of carrying it out. Information provided by intelligence officials and others briefed on the strike offered new details on the specific target, Israel’s goals, and the discussions with Washington. Last week’s attack marked a significant escalation in Israel’s efforts to prevent Iran from cementing its military presence in Syria, where Tehran and its Hezbollah ally provide vital support for President Bashar al-Assad. Iran has threatened to hit back at Israel, which is bracing for a wider clash with Tehran. A protracted confrontation between the two Middle East rivals could create a dangerous new dynamic in Syria, where Mr. Trump is looking to extricate American forces from a convoluted conflict that shows no signs of coming to an end soon. Some U.S. officials worry that a broader Israel-Iran fight in Syria could trigger new spasms of conflict that envelop Lebanon and Israel. The region is roiled by a toxic stew of conflicting alliances surrounding the war in Syria. Iran, Hezbollah and Russia are helping Mr. Assad push rebels to the brink of defeat. More than 2,000 U.S. troops whose mission is to defeat Islamic State militants work alongside Kurdish and Arab forces in Syria. And Turkey has seized another section of Syria as Ankara moves to contain Kurdish ambitions. U.S. support for the Israeli strike comes as Mr. Trump, wary of an open-ended fight in the Middle East, is leaning on allies—especially Israel and Saudi Arabia—to play a bigger role. 

Russia And Iran Complete First Oil-For-Goods Transfer, Extend Agreement For A Year - Nearly four years after Iran and Russia first agreed to an oil-for-goods swap agreement worth billions of dollars, RT is reporting that the first delivery of Iranian crude oil to Russia under the program has been completed, and the two sides are angling to extend the deal, possible for another five years."The agreement is effective; it has been extended for the year, but in general, we think it should be extended for five years," said Russian Energy Ministry Aleksandr Novak.As we reported more than three years ago, the $20 billion agreement was initially signed in April 2014 when Iran was facing Western sanctions over its nuclear program (they have since been lifted thanks to the Iran deal, but will likely soon be reimposed). When the sanctions against Tehran were lifted in 2016, Novak said the deal was no longer necessary. However, Novak said in March 2017 that the plan was back on the table with Russia buying 100,000 barrels per day from Iran and selling the country $45 billion worth of goods. Another agreement was later signed in late May.Current Iranian oil supplies under the program amount to five million tons per year. The first delivery was made in November 2017 and totaled one million tons.Russia and Iran have also discussed cooperation in energy, electricity, nuclear energy, gas and oil, as well as cooperation in the field of railways, industry, and agriculture. Novak said in February that Russia’s state trading enterprise Promsirieimport has been authorized by the government to carry out the purchase of Iran’s oil through the oil-for-goods program under study by both countriesThe oil-for-goods swaps are expected to boost trade between the two countries (while conveniently circumventing the petrodollar system). The nations have also signed six provisional agreements to collaborate on "strategic" energy deals worth up to $30 billion.Presidential aide Yuri Ushakov said earlier this month that Russian investment in Iranian oil and gas fields could total more than $50 billion.

Scorched Earth - The Middle East Oil Denial Policy --In a fascinating look back in time, recently released documents on the National Security Archives website show what plans the United States and its key ally in the Middle East at the time, the United Kingdom, had for Iran and other oil producing nations in the region.  The Top Secret National Security Council NSC 26 Report dated August 19, 1948, provides us with a plan of action should the Soviet Union make aggressive moves into the Middle East.  With the Middle East currently on "high alert", the information in this posting seemed, to me, to be particularly pertinent.NSC 26 also known as "Demolition and Abandonment of Oil Facilities and Fields in the Middle East" was collaborative effort by the National Security Agency, the Central Intelligence Agency, the State-Army-Navy-Airforce Coordinating Committee or SANACC and the State Department and became part of what was known as the "denial policy".   Here is the cover letter from the report: (image)The report examined the implications of a "determined attack" by the USSR on the Middle East region.  This attack would have resulted in a Soviet takeover of all of the Middle East's oil production facilities, a move which would have meant that the USSR would have been able to use the oil and associated refined products to fuel its military machine. In the Analysis section of the report, it is noted that the Joint Chiefs of Staff concluded that, at the time of the analysis, the United States and its allies would not be able to protect Middle Eastern oil against an attack by the USSR and that, to deny the Soviets of Middle East oil reserves, they would have to destroy surface installations including refineries, loading, storage and transportation facilities as well as plugging and abandoning all oil wells.  The analysis suggests the following:

  • 1.) surface oil facilities could be effectively destroyed within a few hours
  • 2.) plugging and abandoning wells would require from 30 to 60 days provided that the necessary personnel and equipment was available.  While this would render the wells unproducible in the future, the oil and natural gas reserves would remain intact and be available for later production.

Trump Hits Assad Regime Over Suspected Chemical Attack - After days threatening to take action, President Donald Trump announced Friday evening that he’d ordered “precision strikes on targets associated with the chemical weapons capabilities,” of Syrian dictator Bashar Assad.Trump said U.S. forces acted together with France and the U.K.,  retaliating for a suspected poison gas attack that killed dozens near Damascus last week. The Pentagon listed the targets as a scientific research facility in Damascus that officials said was involved in producing chemical and biological weapons, as well as a chemical weapons facility near Homs, and a chemical weapons equipment storage facility and a military command post near Homs involved in the most recent attack. Trump said the strike was also a message to the “two governments most responsible” for equipping the Assad regime – Russia and Iran. “No nation can succeed by promoting rogue states, brutal tyrants,” and dictators, he said. “Russia must decide if it wil continue down this dark path” or join with “civilized nations.” Syrian opposition leaders via Amman from their sources in the ground say the attacks were very surgical and hit, by their accounts, facilities that had been mostly evacuated.  Syrian security forces have cordoned much of the targeted areas but there does not appear to be any reported leaks of chemical products. From the Syrian opposition’s standpoint, as conventional forces do not appear to have been targeted, they not see the attacks as a game changer on the ground. Nor do they see the attacks in any way as being in support of the opposition efforts against Assad overall.  Assad is winning on the ground and does not need the chemical weapons to continue reestablishing control over most of the country.   Unfortunately, the limited nature of the attack is seen as clearly highlighting that absent the use of internationally banned weapons, Assad can continue to purge his country of the opposition, fill his prisons with opponents, execute whoever he wants as long as it is done with anything but a chemical weapon. 

Syria – Pentagon Hides Attack Failure – 70+ Cruise Missiles Shot Down - The U.S. military seems to hide that its attack on Syria last Saturday largely failed. We checked the numbers and sources and said so in our weekly review published yesterday. This post is extending yesterday's analysis.The U.S. attack on Saturday was launched as revenge for an alleged 'chemical attack' by the Syrian government forces against the then 'rebel' held Damascus suburb Douma. The alleged 'chemical attack' never happened but was theater staged by the 'rebels' and their supporters after some people suffocated in a collapsed building.There is a very large discrepancy between the Russian Ministry of Defense report of the strike as well as other sources and the description in the Pentagon briefing on the strike. According to the Pentagon only three places related to a nonexistent Syrian chemical weapon program were targeted:This combined military strike was directed against three distinct Syrian chemical weapons program targets....We are confident that all of our missiles reached their targets.... In summary, in a powerful show of allied unity, we deployed 105 weapons against three targets. One hundred and five weapons against three targets would be a remarkable overkill. Just consider that the U.S. Tomahawk and JASSM cruise missiles and the British Skalp EG cruise missiles used in these attacks carry 450 kilogram (~1,000 pounds) of high explosives each. Did the U.S. military really plan to use 15 metric tons of high explosives against each target. That would be enough to blow up a whole town. The U.S. claims it sent 76 cruise missiles against the non-hardened, non-defended Barzeh research center. This was a small two story building complex and had just recently been declared free of chemical weapons and weapon research by the OPCW. Sure, the facility is destroyed. But by 34 tons of high explosives? Or by maybe 2 tons?

At destroyed Syria lab, workers say they produce antidotes to snake venom not toxic weapons - Plastic gloves and face masks lay scattered in the rubble of a Syrian research lab destroyed by Western strikes on Saturday, where an official denied the centre was developing chemical weapons. US, British and French strikes slammed into a series of targets around Damascus that the Western countries said were linked to the Syrian government’s chemical weapons programme.One multi-storey complex, in the capital’s northern district of Barzeh, had been completely reduced to rubble, AFP’s correspondents saw during a government-sponsored tour on Saturday. Its roof had been punched down and several walls appeared on the verge of collapse.Even hours after the strikes wrapped up, plumes of smoke wafted lazily up from the building and a burning smell still hung in the air. “The building had three storeys: a basement, ground floor, and second floor,” said Said Said, an engineer who identified himself as head of the centre’s paint and plastics department.“It had labs and departments that were unfortunately completely destroyed, with all their equipment and furniture. Thank God, no one was here,” he told AFP.  The site, according to Western powers, was part of the Syrian government’s “chemical weapons infrastructure.”But Said told AFP only non-lethal research and development was under way at the centre.“As we work in civilian pharmaceutical and chemical research, we did not expect that we would be hit,” he said.Instead, the centre had been producing antidotes to scorpion and snake venom while running tests on chemical products used in making food, medicine and children’s toys, according to Said.  “If there were chemical weapons, we would not be able to stand here. I’ve been here since 5:30 am in full health -- I’m not coughing,” he added.

Syria: chemical weapons inspectors barred from Douma site - Russia and the Syrian regime have been accused by western diplomats of denying chemical weapons inspectors access to sites in the town of Douma, where an attack killed dozens and prompted US-led missile strikes over the weekend.Russia and Syria had cited “pending security issues” before inspectors could deploy to the town outside Damascus, said Ahmet Üzümcü, the director general of the Organisation for the Prohibition of Chemical Weapons (OPCW), at a meeting of its executive council.Syrian authorities were offering 22 people to interview as witnesses instead, he said, adding that he hoped “all necessary arrangements will be made … to allow the team to deploy to Douma as soon as possible”.Meanwhile, the Trump administration delayed action on sanctions against Russians suspected of helping Syria’s chemical weapons programme, contradicting remarks on Sunday by the US envoy to the UN, Nikki Haley. Haley had said in a television interview that sanctions would be “coming down” on Monday. But the White House spokeswoman, Sarah Sanders, said on Monday that “a decision will be made in the near future. We’ll keep you guys posted.”The Washington Post reported that Trump had intervened personally to delay the implementation of sanctions, citing unnamed sources as saying the president “was upset the sanctions were being officially rolled out because he was not yet comfortable executing them”.  And a senior administration source told Reuters that Trump was unlikely to approve more sanctions unless Moscow carries out a new cyber-attack or some other provocation.

Russia Reveals Who "Staged" Syria Gas Attack, As US Claims Moscow "May Have Tampered" With Site - The Russian envoy to the chemical weapons watchdog group, OPCW, said that non-governmental organizations (NGOs) funded by the UK and US carried out the April 7 chemical attack in the Damascus, Syria suburb of Douma. Russia's permanent representative to the Organization for the Prohibition of Chemical Weapons (OPCW), Alexander Shulgin, said Russia has irrefutable evidence that there was no chemical weapons incident in Douma. "Therefore, we have not just a "high degree of confidence," as our Western partners claim, but we have incontrovertible evidence that there was no incident on April 7 in Douma and that all this was a planned provocation by the British intelligence services, probably, with the participation of their senior allies from Washington with the aim of misleading the international community and justifying aggression against Syria," he stated. –Sputnik Shulgin added that the US, UK and France are not interested in conducting an objective investigation of the attack site. "They put the blame on the Syrian authorities in advance, without even waiting for the OPCW mission to begin to establish the possible facts of the use of chemical weapons in Syria," he said. The nine-member OPCW mission people has yet to deploy to the city of Douma according to the organization's Chief, citing pending security issues. The Syrian and the Russian officials who participated in the preparatory meetings in Damascus have informed the FFM Team that there were still pending security issues to be worked out before any deployment could take place. In the meantime the Team was offered by the Syrian authorities that they could interview 22 witnesses who could be brought to Damascus,"  The Russian Envoy says that the controversial "White Helmets" were one of the anti-Assad "pseudo-humanitarian NGOs" which staged the event. As Disobedient Media and others have reported, the White Helmets are funded in large part by the United States.

Syria chemical attack: Investigators allowed to visit site - BBC News: Chemical weapons inspectors in Syria will be permitted to visit the site of an alleged chemical attack on Wednesday, Russia has said. The international team has been in the country since Saturday, but has not been allowed to visit Douma. The attack on 7 April prompted military strikes on Syrian government targets by the US, UK, and France a week later. Syria and its ally Russia deny any chemical attack took place - with Russia calling it a "staged thing". Early on Tuesday, Syrian state media said the country's air defences had responded to a missile attack over the western city of Homs. The missiles targeted Shayrat air base, it said - but did not say who fired the missiles. Another report, from the pro-Iranian Hezbollah militia, said that Syrian air defences had intercepted three missiles targeting Dumair military airport, north-east of the capital Damascus. A Pentagon spokesperson told Reuters: "There is no US military activity in that area at this time."Investigators from the Organisation for the Prohibition of Chemical Weapons (OPCW) are in the capital, Damascus - but have been waiting to begin their inspection. When they arrive at the site on Wednesday, it will be 11 days since the attack. They are expected to gather soil and other samples to help identify the substances - if any - used in an attack. 

Syria air strikes: Russia denies tampering with suspected chemical attack site - BBC News: Russia has denied interfering with evidence at the site of the suspected Syrian chemical attack, which led to Western air strikes on Saturday. In an interview for BBC's Hardtalk, Russian Foreign Minister Sergei Lavrov said: "I can guarantee that Russia has not tampered with the site." The US raised concern at the international chemical weapons agency. International inspectors will be allowed to visit the site on Wednesday, the Russian military has announced. A nine-strong team from the agency, the OPCW (Organisation for the Prohibition of Chemical Weapons), has been waiting nearby in the Syrian capital Damascus for the green light. Douma was a rebel stronghold at the time of the attack on 7 April and is now under the control of the Syrian government and Russian military. UK Prime Minister Theresa May has defended Britain's involvement in the air strikes, saying it was to prevent "further human suffering", as opposition parties said MPs should have been consulted in advance.

First Western Journalist In Syrian Hospital Which Treated “Chemical Weapons” Victims Explains What REALLY Happened - Forget what the Syrian government or the Ruskies say. The first Western journalist has interviewed doctors at the hospital in Douma, Syria which supposedly treated chemical weapons victims and is announcing what really happened.In the following 1-minute clip, award-winning journalist Robert Fisk – writer for Britain’s Independent for almost 30 years – explains that the video of victims struggling to breathe are real, but that they have nothing to do with a chemical weapons attack: Here’s a transcript:  I’ve just been in the town of Douma. I found the clinic where the film of the children frothing at the mouth and having water thrown at them was made. And I spoke to the hospital doctor, who actually spoke very good English. And he told me that the video is real. But they’re not suffering from gas poisoning.  They’re suffering from hypoxia (i.e. insufficient of oxygen) because of the amount of dust in the tunnels in which they live. All year people in the Douma area have been living beneath their own homes, in tunnels and basements. And that night there was a shelling by the Syrian army and the Russian air force. And it produced a huge amount of dust and debris in the streets. And many people found it difficult to breathe. And when they reached the clinic according to the doctor, someone shouted “gas” … and they panicked. Background.Update: Fisk filed the following report with the Independent today:The same 58-year old senior Syrian doctor then adds something profoundly uncomfortable: the patients, he says, were overcome not by gas but by oxygen starvation in the rubbish-filled tunnels and basements in which they lived, on a night of wind and heavy shelling that stirred up a dust storm.As Dr Assim Rahaibani announces this extraordinary conclusion, it is worth observing that he is by his own admission not an eye witness himself and, as he speaks good English, he refers twice to the jihadi gunmen of Jaish el-Islam [the Army of Islam] in Douma as “terrorists” – the regime’s word for their enemies, and a term used by many people across Syria.

Famed War Reporter Robert Fisk Reaches Syrian 'Chemical Attack' Site, Concludes "They Were Not Gassed" -- Robert Fisk's bombshell first-hand account for the UK Independent runs contrary to nearly every claim circulating in major international press concerning what happened just over week ago on April 7th in an embattled suburb outside Damascus.   Importantly, the report, published late in the day Monday, is causing a stir among mainstream journalists whominutes after the Saudi-sponsored jihadist group Jaish al-Islam (Army of Islam) accused the Syrian Army of gassing civiliansbegan uncritically promoting the "Assad gassed his own people" narrative as an already cemented and "proven" fact based on the mere word a notoriously brutal armed group who itself has admitted to using chemical weapons on the Syrian battlefield in prior years. Also notable is that no journalist or international observer was anywhere near Douma when the purported chemical attack took place.  Controversy ensued immediately after Fisk's report, especially as he is among the most recognizable names in the past four decades of Middle East war reporting, having twice won the British Press Awards' Journalist of the Year prize and as seven time winner of the British Press Awards' Foreign Correspondent of the Year (the NY Times has referred to him as "probably the most famous foreign correspondent in Britain" while The Guardian has called him "one of the most famous journalists in the world"). An Arabic speaker, Fisk says he was able to walk around and investigate newly liberated Douma without Syrian government or Russian minders (in part this is likely because he has reported from inside Syria going back decades, in war-torn 1982 Hama, for example), and he begins his account as follows:This is the story of a town called Douma, a ravaged, stinking place of smashed apartment blocks–and of an underground clinic whose images of suffering allowed three of the Western world’s most powerful nations to bomb Syria last week. There’s even a friendly doctor in a green coat who, when I track him down in the very same clinic, cheerfully tells me that the “gas” videotape which horrified the world– despite all the doubters–is perfectly genuine. War stories, however, have a habit of growing darker. For the same 58-year old senior Syrian doctor then adds something profoundly uncomfortable: the patients, he says, were overcome not by gas but by oxygen starvation in the rubbish-filled tunnels and basements in which they lived, on a night of wind and heavy shelling that stirred up a dust storm.

Employee Of Bombed Syrian Research Site Says No Chemicals Released Is Proof None Existed - An employee of the chemical research center which was bombed by the United States, the United Kingdom, and France says that no chemicals were released during the strike that leveled the building.  That’s incredibly important proof that no chemical weapons were actually there, he said.Said Said, an engineer at the Scientific Research Center facility, told RT Arabic that the very fact that no chemicals were released during the strike should serve as evidence that no chemical weapons program was run at the site.“You can see for yourself that nothing has happened. I’ve been here since 5:00 a.m. No signs of weapons-grade chemicals,“ he said.  The researcher said he had worked at the facility for decades, and it used to develop medicine and household chemicals.   Before...  After... (photos)   The West is alleging Bashar al-Assad, Syria’s leader used chemical weapons on civilians to justify military attacks on Damascus and Homs.  But interestingly enough, those strikes occurred the day before international investigators were scheduled to arrive to conduct a thorough inspection of the site. The Organization for the Prohibition of Chemical Weapons (OPCW) had visited the site several times and never found any traces of banned chemicals. Since Syria joined the Chemical Weapons Convention under a deal brokered by Russia and the US in 2013, the UN chemical watchdog repeatedly confirmed its full compliance with its obligations to dismantle and remove its chemical stockpiles. In June 2014, the OPCW declared Syria free of chemical weapons.On April 12, even US Secretary of Defense James Mattis told the House Armed Services Committee that the US government does not have any evidence that sarin or chlorine was used, that he was still looking for evidence. Yet the bombing happened anyway.

Containers With Chlorine From Germany, Smoke Grenades From UK Found In Syria's Ghouta: Russia -- Russian Foreign Ministry spokeswoman Maria Zakharova stated during a Thursday press conference that containers filled with chlorine from Germany and smoke bombs manufactured in the United Kingdom city of Salisbury were found in the East Ghouta region of Damascus, the location of the alleged chemical attack by Assad which resulted in the launch of 105 Tomahawks on 3 Syrian targets by US, UK and French forces last Friday. “In the liberated areas of Eastern Ghouta, Syrian government troops have found containers with chlorine – the most horrible kind of chemical weapons – from Germany, and also smoke grenades produced – please pay attention [to this] – in the city of Salisbury, the UK,” Zakharova told a news conference in Moscow on Thursday.The findings undermine "the faith in humaneness” of some states’ leadership, who “give such orders and make such decisions," Zakharova added. No further details were released regarding this finding.

Top UN Inspector: Assad Not Responsible For Chemical Weapons Attack - A former director of UN weapons inspectors has said that the Syrian government is not responsible for the recent chemical weapons attack, and claims the attack is an attempt to topple Bashar Al-Assad.Dozens of people were killed in the rebel-held town of Douma on Saturday, in an attack President Putin and others described as a ‘false flag’ perpetrated by the Al-Qaeda affiliated White Helmets group.On Sunday night, two Israeli F-15 fighters targeted a Syrian military airbase in the Homs province, firing eight guided missiles at the airport, killing 14 soldiers. reports: However, according to chemical weapons expert Åke Sellström, who investigated the use of chemical weapons in both Iraq and Syria, it is unlikely that Bashar Al-Assad and the Syrian Army were responsible for the attack in Eastern Ghouta. “With great criticism from the international community, Assad and Russians bombard Ghouta bit by bit, and that they would add the opportunity to be criticized for using chemicals – it feels strange. They do not need it, their tactics are already successful,” said Sellström, adding that there could be numerous “other explanations” for the attack. Sellström added that if the United Nations was to investigate the attack, recordings and testimony would not be enough to ascertain what happened. “We would have to meet people and doctors themselves and, in particular, need samples from the environment and poisoned persons,” said Sellström, adding that it would be difficult to measure chlorine exposure “because it evaporates quickly and does not leave any clear markers in the body”.

Now Mattis admits there was no evidence Assad used poison gas on his people - Lost in the hyper-politicized hullabaloo surrounding the Nunes Memorandum and  the Steele Dossier was the striking statement by Secretary of Defense James Mattis that the U.S. has “no evidence” that the Syrian government used the banned nerve agent Sarin against its own people.This assertion flies in the face of the White House (NSC) Memorandum which was rapidly produced and declassified to justify an American Tomahawk missile strike against the Shayrat airbase in Syria.Mattis offered no temporal qualifications, which means that both the 2017 event in Khan Sheikhoun and the 2013 tragedy in Ghouta are unsolved cases in the eyes of the Defense Department and Defense Intelligence Agency. Mattis went on to acknowledge that “aid groups and others” had provided evidence and reports but stopped short of naming President Assad as the culprit.  But America has accused Assad of direct responsibility for Sarin attacks and even blamed Russia for culpability in the Khan Sheikhoun tragedy. Now its own military boss has said on the record that we have no evidence to support this conclusion. In so doing, Mattis tacitly impugned the interventionists who were responsible for pushing the “Assad is guilty” narrative twice without sufficient supporting evidence, at least in the eyes of the Pentagon.

Interview With Boy In Syria Video Raises More Doubts Over "Chemical Attack" - The boy portrayed as a ‘victim’ in a video of the alleged chemical attack in Douma has told a group of Russian correspondents led by Evgeny Poddubny that he was asked to go to hospital, where people “grabbed” him and started “pouring water” over his head. One of the main ‘characters’ in the footage is a soaked boy, who is seen being sprayed with water by people who claim to be ‘rescue workers.’ It’s not clear whether they are doctors from the hospital, human rights activists, or White Helmets members. The latter usually make such videos and send them to news agencies, including Reuters. Russian broadcaster VGTRK said it found the boy in the video, who appeared to be 11-year-old Hassan Diab. His story differed from the one presented by the activists and later propagated by the mainstream media. He told Poddubny: “Somebody was shouting that we had to go to the hospital, so we went there. When I came in, some people grabbed me and started pouring water over my head,” He was eventually found by his father, who said he didn’t hear about any chemical attack that day. “I went to the hospital, walked upstairs, and found my wife and children. I asked them what had happened, and they said people outside were shouting about some smell, and told them to go to the hospital. At the hospital, they gave dates and cookies to the kids,” he said. Full interview below:  According to Poddubny:

  • 11-year-old Hassan Diab is fine;
  • He suffered no injures from the “chemical attack” because there was no attack (at least then and there);
  • The boy participated in the video for food (rice, dates and cookies).

Mapping Where The 13 Million Displaced Syrians Are - While the stock market seems to believe the worst is over, one-and-done-and-everyone-crawls-back-in-their-hole, we suspect the ordeal that the Syrian people are dealing with is far from over and could lead to an even greater spike in the number of displaced Syrians, 13 million of whom are now scattered all over the world.  That's according to a Pew Research Center analysis published in January. Statista's Niall McCarthy notes that Pew's analysis found that over 6 million Syrians are displaced within their own country and they account for 49 percent of all Syrians displaced worldwide. Turkey has the second highest population with 3.4 million displaced people currently living there.  Another million of them have made the long and dangerous journey to Europe. Germany hosts most of them with 530,000, followed by Sweden with 110,000. Another 54,000 Syrians live in Canada while 33,000 are in the United States. (infographic)

U.S. Seeks Arab Force and Funding for Syria - Wall Street Journal—The Trump administration is seeking to assemble an Arab force to replace the U.S. military contingent in Syria and help stabilize the northeastern part of the country after the defeat of Islamic State, U.S. officials said. John Bolton, President Donald Trump’s new national security adviser, recently called Abbas Kamel, Egypt’s acting intelligence chief, to see if Cairo would contribute to the effort, officials said. The initiative comes as the administration has asked Saudi Arabia, Qatar and the United Arab Emirates to contribute billions of dollars to help restore northern Syria. It wants Arab nations to send troops as well, officials said.Details about the initiative, which haven’t been previously disclosed, have emerged in the days since the U.S.-led strikes on sites associated with the Syrian regime’s chemical-weapons capabilities.Mr. Trump, who has expressed growing impatience with the cost and duration of the effort to stabilize Syria, alluded to the push on Friday night, when he announced the missile strikes.  “We have asked our partners to take greater responsibility for securing their home region, including contributing larger amounts of money," Mr. Trump said.In early April, Mr. Trump spoke about the need to speed the withdrawal of the 2,000 troops the U.S. has in Syria, a position at odds with many top advisers who worry that leaving the country too soon would cede ground to Iran, Russia, their proxies or other extremist groups. The new administration initiative is aimed at avoiding a security vacuum in Syria that would allow Islamic State to return or ceding hard-won gains to Iranian-backed forces in the country. A spokesman for the National Security Council declined to comment about Mr. Bolton’s call to Mr. Kamel, who is widely regarded as one of the most powerful figures in the Egyptian regime.

Saudi Arabia Would Send Troops To Syria As Part Of "Islamic Coalition" -  The Trump administration is hoping to secure a commitment from a handful of Middle Eastern states to assemble what is effectively an Arab army for a permanent military "stabilizing force" in Syria that would replace the U.S. military deployment in Syria and overthrow Assad prevent ISIS from regaining lost territory in Syria's battle-ravaged east. According to the Wall Street Journal, Trump's new neocon National Security Advisor John Bolton, only in his second week on the job, has discussed the possibility of contributing troops with Egypt's top intelligence official - allegedly one of the most influential figures in Egypt's military-led regime. And while full-scale commitments from Egypt and a handful of Gulf states remain elusive, should Trump succeed, he'd be able to tout a victory in an area where President Obama failed. Indeed, the Obama administration sought similar troop contributions from Syria's neighbors but came up empty handed.The Trump administration is seeking to assemble an Arab force to replace the U.S. military contingent in Syria and help stabilize the northeastern part of the country after the defeat of Islamic State, U.S. officials said.John Bolton, President Donald Trump’s new national security adviser, recently called Abbas Kamel, Egypt’s acting intelligence chief, to see if Cairo would contribute to the effort, officials said. The initiative comes as the administration has asked Saudi Arabia, Qatar and the United Arab Emirates to contribute billions of dollars to help restore northern Syria. It wants Arab nations to send troops as well, officials said.Update (10:30 pm ET): Saudi Foreign Minister Adel al-Jubeir said on local TV Tuesday that Saudi Arabia would consider sending troops to Syria if they were part of a coalition, per Sputnik. "We've proposed America to send forces of the Islamic Coalition to Syria in order to fight against terrorism," he said.

Blackwater Founder May Train Arab Forces To Dominate Syria - Blackwater founder Erik Prince says he has been informally contacted by Arab officials looking to marshal a multi-national force in Syria which would be able to fill any "security vacuum" left by a United States withdrawal - similar to the one which allowed ISIS to flourish when President Obama pulled US troops out of Iraq.  The security force would have two goals: stop ISIS from reestablishing a presence in Syria, while also stopping Iran or Iranian-backed sources from doing the same (though Israel already has the latter pretty well under control). The mission of the regional force would be to work with the local Kurdish and Arab fighters the U.S. has been supporting to ensure Islamic State cannot make a comeback and preclude Iranian-backed forces from moving into former Islamic State territory, U.S. officials say. –WSJ As we reported yesterday, President Trump has already reached out to Egypt and the Gulf States, including Saudi Arabia, Qatar and the UAE, to contribute funds and manpower for the restoration of areas in Syria formerly held by the Islamic State. “We have asked our partners to take greater responsibility for securing their home region, including contributing larger amounts of money,” he said. “America does not seek an indefinite presence in Syria,” Trump said last Friday. “It’s a troubled place. We will try to make it better. But it’s a troubled place.” While Trump and his advisors say they want to withdraw the 2,000 or so US troops in Syria as soon as possible, according to the Wall Street Journal, Trump's new neocon National Security Advisor John Bolton has discussed the possibility of contributing troops with Egypt's top intelligence official - allegedly one of the most influential figures in Egypt's military-led regime. Pentagon officials say that while ISIS has lost around 90% of their foothold in Syria, it still remains strong in pockets along the border with Iraq and others - home to an estimated 5,000 - 12,000 ISIS fighters.  "In essence, the Trump administration wants to build a new anti-ISIS alliance in Syria that has not previously existed on the ground and which would bring with it all sorts of competing interests that don't necessarily align with America's."

Iraqi Planes Cross Into Syria, Bomb IS - Iraq on Thursday carried out air strikes on positions of the militant Islamic State group in Syria a week after Prime Minister Haider al-Abadi said his country would defend itself from militant threats across the border. Iraqi F-16 warplanes crossed into Syria to carry out the strikes after coordination with Syrian President Bashar al-Assad’s government, an Iraqi military spokesman said. “Carrying out air strikes on Daesh gangs in Syrian territories is because of the dangers posed by said gangs to Iraqi territories and is proof of the improved capabilities of our armed forces,” the Iraqi military said in a statement. Earlier this month, Abadi had said Iraq would “take all necessary measures if they threaten the security of Iraq”, referring to the jihadist militants who just three years ago overran a third of Iraq. The prime minister declared final victory over the ultra hardline group in December but it still poses a threat from pockets along the border with Syria and has continued to carry out ambushes, assassinations and bombings across Iraq. Iraq currently has good relations with Iran and Russia, Assad’s main backers in the seven-year Syrian civil war, while also enjoying strong support from the US-led coalition.