Sunday, December 10, 2017

US oil supplies drop to 25 month low, distillates production at a record high; Ohio sheds 4 rigs

oil prices ended lower for the second week in a row this week, but still remain well above the average break-even prices for most US shale basins, and hence remain at a level that will only encourage further exploitation...after falling a mere 47 cents from a two and a half year high last week, contracts to buy or sell US light crude in January fell 89 cents to end at $57.47 a barrel on Monday, on concerns that higher prices would encourage growth of domestic crude production, as evidenced by the growing US rig count...oil prices then recouped some of those losses on Tuesday, rising 15 cents to $57.62 a barrel, in anticipation that the weekly reports from the API and EIA would show another sizable drop in U.S. crude supplies....while both reports did show decreases in excess of 5 million barrels of crude oil supplies, both reports simultaneously showed surprisingly sharp increases in U.S. inventories of refined fuels, with gasoline supplies seeing the largest increase since January, which thus precipitated a selloff in crude contracts, with oil prices ending Wednesday down $1.66, or 3%, at a three week low of $55.96 a barrel...oil prices then returned to the plus side on Thursday, rising 73 cents, or 1.3%, to settle at $56.69 a barrel, with the rally attributed to a threatened strike in Nigeria, which prompted traders who had sold oil they didn't own on Wednesday to cover their trades and buy it back...oil prices then rose another 67 cents on Friday, on reports of a jump in Chinese crude imports and a Platts report that OPEC production had hit a 6 month low in November, as oil still closed the week 1.7% lower than last week at $57.36 a barrel....


The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending December 1st, showed that our oil imports remained lower than recent weeks, likely due to the Keystone pipeline shutdown, while our refineries were using oil at a record pace for this time of year, and therefore they again found it necessary to pull quite a bit of oil out of storage to meet their needs...our imports of crude oil fell by an average of 127,000 barrels per day to an average of 7,202,000 barrels per day during the week, while our exports of crude oil fell by an average of 54,000 barrels per day to 1,358,000 barrels per day, which meant that our effective trade in oil worked out to a net import average of 5,844,000 barrels of per day during the week, 73,000 barrels per day less than the net imports of the prior week...at the same time, field production of crude oil from US wells rose by 25,000 barrels per day to another record high of 9,707,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 15,551,000 barrels per day during the reporting week... 

during the same week, US oil refineries were using 17,195,000 barrels of crude per day, 192,000 barrels per day more than they used during the prior week, while at the same time 1,151,000 barrels of oil per day were being withdrawn from oil storage facilities in the US....hence, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was 493,000 fewer barrels per day than what refineries reported they used during the week...to account for that disparity, the EIA needed to insert a (+493,000) 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, a metric that is labeled in their footnotes as "unaccounted for crude oil"...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports fell to an average of 7,576,000 barrels per day, 4.9% less than the 7,963,000 barrels per day average imported over the same four-week period last year....the 1,151,000 barrel per day decrease in our total crude inventories included an 801,000 barrel per day withdrawal from our commercial stocks of crude oil and a 350,000 barrel per day sale of oil from our Strategic Petroleum Reserve, part of an ongoing sale of 5 million barrels annually that was included in a Federal budget deal 25 months ago...this week's 25,000 barrel per day increase in our crude oil production included a 20,000 barrel per day increase in output from wells in the lower 48 states, and a 5,000 barrels per day increase in output from Alaska....the 9,682,000 barrels of crude per day that were produced by US wells during the week ending December 1st was yet another new record high for US output, 10.7% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 11.6% more than the 8,697,000 barrels per day of oil that were being produced during the during the equivalent week a year ago...

US oil refineries were operating at 93.8% of their capacity in using those 17,195,000 barrels of crude per day, up from 92.6% of capacity the prior week, thus operating a bit above their normal pace for this time of year...while the 17,195,000 barrels of oil that were refined this week were still 3.0% less than the record 17,725,000 barrels per day that were being refined the week before Hurricane Harvey struck at the end of August, they were at a record level for any week outside of the summer months, 4.7% more than the 16,417,000 barrels of crude per day that were being processed during week ending December 2nd, 2016, when refineries were operating at 90.4% of capacity, and 11.7% above the 10-year seasonal average for this time of the year... 

even with increase in the amount of oil refined, gasoline output from our refineries was 4.5% lower, decreasing by 464,000 barrels per day to 9,758,000 barrels per day during the week ending December 1st, the second significant drop in a row...that meant out gasoline production was 1.6% lower than the 9,913,000 barrels of gasoline that were being produced daily during the week ending December 2nd of last year...on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 118,000 barrels per day to a record high of 5,402,000 barrels per day, eclipsing the record set two weeks ago...that was also 6.3% more than the 5,083,000 barrels per day of distillates that were being produced during the the same week a year ago....    

even with the drop in our gasoline production, our gasoline inventories at the end of the week rose by 6,780,000 barrels to 220,882,000 barrels by December 1st, the largest jump in gasoline supplies since the third week in January of this year...that was as our exports of gasoline fell by 319,000 barrels per day from last week's record high to 894,000 barrels per day, while our imports of gasoline fell by 38,000 barrels per day to 488,000 barrels per day, and as our domestic consumption of gasoline rose by 171,000 barrels per day to 8,895,000 barrels per day at the same time...however, with significant gasoline supply withdrawals in 15 out of the last 25 weeks, our gasoline inventories are still down by 8.9% from their pre-summer high of 242,444,000 barrels, and down by 3.8% from last December 2nd's level of 229,548,000 barrels, even as they are still roughly 3.4% above the 10 year average of gasoline supplies for this time of the year...   

meanwhile, with our distillates production at a record high, our supplies of distillate fuels rose by 1,667,000 barrels to 129,446,000 barrels over the week ending December 1st, in just the fourth increase in distillates supply in fourteen weeks...that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 145,000 barrels per day to 3,737,000 barrels per day, and as our exports of distillates rose by 442,000 barrels per day to 1,572,000 barrels per day, while our imports of distillates rose by 25,000 barrels per day to 145,000 barrels per day...even after this week’s increase, our distillate inventories were still 17.4% lower at the end of the week than the 156,697,000 barrels that we had stored on December 2, 2016, and 5.1% lower than the 10 year average of distillates stocks at this time of the year

finally, with oil imports remaining below normal while refining continued at a seasonal record pace, our commercial crude oil inventories fell for the 28th time in the past 35 weeks, decreasing by 5,160,000 barrels, from 453,713,000 barrels on November 24th to 448,103,000 barrels on December 1st....since that's now the least amount of oil we've had in commercial storage in more than two years, since the week ending October 23rd, 2015, we'll include a graph that will show the trajectory that brought us to this low point:

December 8 2017 crude oil supplies as of December 1st

on the above graph, taken from the EIA's This Week in Petroleum Oil Section, the blue line shows the recent track of US oil inventories over the period from December 4th, 2015 to December 1st 2017, while the grey shaded area represents the range of US oil inventories millions of barrels as reported weekly by the EIA over the prior 5 years for any given time of year…thus the grey area also shows us the normal range of US oil inventories as they fluctuate from season to season, typically with a high in the springtime, before the summer driving season, and a low in the fall...and as you can see by the blue line, that pattern continued into early this year, where we were announcing a record glut of oil almost weekly up until the week ending March 24th, 2017, when our oil supplies topped out at 535,543,000, an increase of almost 68% from the early 2014 low of 319,079,000 barrels...however, as you can also see by following the blue line, our oil supplies have been falling since, and at 448,103,000 barrels are now 19.5% below their March 24 high...still, while our oil inventories as of December 1st were 7.6% below the 485,756,000 barrels of oil we had stored on December 2nd of 2016, and 1.2% lower than the 453,553,000 barrels of oil that we had in storage on December 4th of 2015, they were still 28.6% greater than the 348,313,000 barrels of oil we had in storage on December 5th of 2014, before the oil glut in the US had really built our crude supplies up to above normal levels...       

This Week's Rig Count

US drilling activity increased for the 5th week in a row, but for just the 8th time out of the last 19 weeks during the week ending December 8th, with only oil directed rigs seeing a small increase...Baker Hughes reported that the total count of active rotary rigs running in the US rose by 2 rigs to 931 rigs in the week ending on Friday, which was also 307 more rigs than the 624 rigs that were deployed as of the December 9th report in 2016, while that was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil rose by 2 rigs to 751 rigs this week, which was also an increase of 253 oil rigs over the past year, while the week's oil rig count remained far below the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the number of drilling rigs targeting natural gas formations was unchanged at 180 rigs this week, which was only 55 more gas rigs than the 125 natural gas rigs that were drilling a year ago, and way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

offshore drilling activity in the Gulf of Mexico and elsewhere nationally was unchanged at 20 rigs this week, which was down from the 22 rigs deployed in the Gulf of Mexico and nationally a year ago...however, there was a new drilling platform that started up on a lake in southern Louisiana this week, where there are now two such drilling platforms deployed, up from the one working on inland waters a year ago...

the count of active horizontal drilling rigs increased by 4 rigs to 796 rigs this week, which was up by 293 rigs from the 503 horizontal rigs that were in use in the US on December 9th 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 71 rigs this week, which was still up from the 51 directional rigs that were working during the same week last year....on the other hand, the vertical rig count was down by 2 rigs to 64 vertical rigs this week, which was also down from the 70 vertical rigs that were deployed on December 9th of 2016...

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 weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of December 8th, the second column shows the change in the number of working rigs between last week's count (December 1st) and this week's (December 8th) count, the third column shows last week's December 1st active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday 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 for the 9th of December, 2016...            

December 8 2017 rig count summary

as you can see from the above, the small net change in the number of rigs running masked considerable activity in several different states and basins this week, with the number of increases just barely eclipsing the number of decreases over the period...what is certainly most notable was the 4 rig decrease in drilling in Ohio, which may include the shut down of a non-shale vertical rig, since the net decrease in the 3 state area of Ohio, Pennsylvania and West Virginia is not reflected in the change in Marcellus and Utica activity...the 26 rigs still working in Ohio are the least since July 2nd, as are the 27 rigs that remained deployed in the Utica shale, probably reflective of natural gas prices which have remained below the average break-even price for the region and have trended lower all year...meanwhile, in addition to the major producing states shown in the first table above, Kansas also saw its only working rig shut down this week, leaving none, down from a year ago, when there was one rig active in the state...

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Secrecy surrounds pro-coal group eyeing Ohio wind cases - A pro-coal group that has appeared in multiple Ohio wind farm cases has not disclosed its members, raising questions about who funds the nonprofit organization and what relationship it might have to other parties. The Campaign for American Affordable and Reliable Energy (CAARE) has been added to the service list in ten wind energy matters at the Ohio Power Siting Board. As a result, its lawyers would formally receive copies of all filings. The group formally sought to become a party in only one of those cases, involving the Paulding Wind Farm. An administrative law judge denied that request because the group’s interest was “nothing more than objections to wind farms generally.” In two other cases, the same lawyers for CAARE later went on to represent individuals opposed to the projects. Counsel for CAARE would not discuss any of the cases. “I act as legal counsel for intervenors and such, but I’m not authorized to speak to the press about anything, so I can’t,” said John Stock at the Columbus office of Benesch Friedlander Coplan & Aranoff. “That’s just been the policy from day one, so don’t take it personally.” Stock likewise would not provide contact information for any member or officer of CAARE. And while the one filing that sought party status for the group said CAARE’s members were companies in the coal industry, it did not say who any of them were. There is no claim of illegal or unethical conduct by CAARE or its lawyers. Nonetheless, advocates say, the secrecy raises questions about transparency. Counsel for CAARE has represented other pro-coal interests and has represented landowners opposed to wind projects in at least one other state. “Ohioans deserve to know who the secretive coal interests behind CAARE are, so they can properly assess the impact these companies and their products have had on the environment and public health,” said David Anderson at the Energy and Policy Institute, headquartered in San Francisco. 

State board to consider Oregon natural gas power plant - Toledo Blade - Construction is expected to begin in January on Oregon’s second major power plant fueled by natural gas, a $900 million project that reinforces how America’s fracking boom is upending the energy marketplace.The Ohio Power Siting Board’s first order of business at its monthly meeting in Columbus on Thursday afternoon is to issue a permit to a Massachusetts developer planning to build the 955-megawatt project on behalf of Clean Energy Future-Oregon, LLC.Plans call for that plant to begin operating in 2020 next to the 960-mw Oregon Clean Energy plant that went online this summer. Both are attractive to the 13-state regional grid operator that includes Ohio, PJM Interconnection LLC, because each will have the capacity to produce more electricity than FirstEnergy Corp.’s cash-strapped Davis-Besse nuclear plant in nearby Ottawa County. FirstEnergy has said it may close Davis-Besse prematurely unless it finds a buyer or gets assistance from the Ohio General Assembly to help that plant and its Sammis coal-fired power plant in southern Ohio

Activists Take Aim at Energy Development to Amend Ohio Constitution - Natural Gas Intelligence -- Frustrated by industry pushback and court defeats, two citizens’ rights groups are spearheading ballot initiatives in Ohio to amend the state constitution in a way that would better guarantee local governments’ ability to regulate hydraulic fracturing (fracking) and related activities.Local charter amendments to ban or control fracking and other industrial operations have either been rejected by municipalities, or shot down by judges as a violation of state law, and the Ohio Department of Natural Resources’ (ODNR) centralized regulatory authority. The Pennsylvania-based Community Environmental Legal Defense Fund (CELDF), which has drafted and advanced the amendments across the Appalachian Basin, along with the Ohio Community Rights Network, wants to take the issue to a statewide vote.The proposals would alter Ohio law to ensure local governments may pass and enforce laws without concerns about legal challenges they have faced. Referendums, let alone constitutional amendments, are an uphill battle ,and the organizers face a lengthy process. But it marks the first time such groups have pursued statewide community rights amendments in a new and broader threat to oil and natural gas development in Ohio.“The simple answer to that is yes, because I think it’s designed to change the whole preemptive provisions in the Ohio Revised Code that are enacted by Chapter 1509, making ODNR the preemptive ruler on oil and gas permitting and development,” said energy attorney Alan Wenger of Youngstown-based Harrington, Hoppe & Mitchell Ltd., when asked if the amendments would dramatically change the industry’s regulatory scheme. “It would throw everything up in the air.”The Ohio Attorney General’s office certified two petitions last month to amend the state constitution. One would guarantee “local authority to enact laws to protect inalienable rights and the health, safety and welfare of community members and natural ecosystems, free from state preemption or corporate interference.” The other would extend the right to referendum to residents living in townships and counties. Only those living in cities and villages can currently pursue ballot initiatives. For now, however, industry representatives aren’t concerned. The Ohio Oil and Gas Association (OOGA) has reviewed the proposals and is monitoring the situation, but officials there acknowledged that organizers have a lengthy process to follow before anything gets on the state ballot.

Biting the Hand That Feeds: Environmental Group Pushes Anti-Fracking Amendment in Ohio - Earlier this year, a Pennsylvania-based group called Community Environmental Legal Defense Fund (CELDF) was pressuring the city of Youngstown, Ohio to put an anti-fracking measure on the ballot for its next local election. Having failed to pass the measure in November after it was taken off the ballot, the group is reorganizing, with the goal this time of amending Ohio’s state constitution to allow towns to ban fracking altogether. “For years we have tried to protect our communities from harmful corporate projects. Today, we understand why we can’t get what we want: We are blocked by a system designed to force the harms in against our will,” said Greg Pace, a member of the Ohio Community Rights Network, which submitted the proposed amendment to the state attorney general.  CELDF assisted the Ohio Community Rights Network in drawing together the proposed amendments. The group offered similar assistance to groups pushing for similar amendments in Oregon, Colorado, and New Hampshire, framing the debate as a matter of local control over land use. As of yet, none of the measures have been successful. In Colorado, the measure did not ultimately end up on the ballot in 2016. In New Hampshire, legislators have several times considered the measure, but it has yet to be on the ballot. “This amendment secures the right of local, community self-government for the people of Ohio by guaranteeing local authority to enact laws to protect unalienable rights and the health, safety and welfare of community members and natural ecosystems, free from state preemption or corporate interference,” reads the Ohio petition. In practice, the amendment would allow towns and local municipalities to pass their own regulations banning fracking within the city limits or on city land. This is likely an attempt to close a loophole in the earlier Youngstown fracking ban proposition, which many had pointed out would be in violation of the state constitution were it to have passed.“This goes beyond fossil fuel industries,” said Tish O’Dell, CELDF’s Ohio organizer. “The right to pass local laws regarding fracking, gun control, predatory lending, minimum wage, and more, are thwarted by state preemptive laws. And those laws are often written by industry.”  Thus far, CELDF has completed the first two steps in the process of adding the constitutional amendment to the ballot. In mid-November, the group submitted two petitions to Ohio Attorney General Mike DeWine, who certified the signatures. An additional 26 steps, including the drafting and certification of the ballot measure language, must be completed before the July 26, 2018 deadline.

Responders seeking fracking chemical identities - A policy group has partnered with emergency management agencies across 21 states, including Ohio, to petition the U.S. Environmental Protection Agency to disclose the identities of chemicals used by oil and gas drilling companies in the hydraulic fracturing process. The policy group, the Partnership for Policy Integrity, was formed “to promote sound energy policy and to help citizens enact science-based policies that protect air quality, ecosystems and the climate. Our current work focuses on biomass energy, oil and natural gas drilling and hydraulic fracturing,” said Dusty Horwitt, senior counsel for the group. Horwitt said in a release that the state of Ohio and the federal government often prevent citizens, even first responders, from knowing what chemicals are used in drilling operations because they deem their extracting process as “confidential business information.” In a letter dated Nov. 15 and sent to U.S. EPA Director Scott Pruitt, the group, along with more than 100 first responders, health professionals and scientists from 21 states and the District of Columbia, requested the EPA disclose the identities of 41 chemicals that EPA regulators reviewed between 2003 and 2014, under a program created by the Toxic Substances Control Act to ensure that new chemicals are safe before they are used commercially. The Partnership for Policy Integrity claims evidence has shown the 41 chemicals likely were used for hydraulic fracturing, and that chemical manufacturers have declared confidential some or all of the chemicals’ identifying information, as permitted by the TSCA. 

New estimates of abandoned Pa. oil and gas wells less dire, still daunting - Pittsburgh Post-Gazette Maybe the number of old oil and gas wells lost in Pennsylvania’s landscape isn’t as enormous as the worst-case estimates suggest.Terry Engelder, professor emeritus of geosciences at Penn State, has a new appraisal based on historical records that is, in comparison, merely overwhelming.Mr. Engelder is famous for his estimates, most notably his calculation of the amount of recoverable natural gas trapped in the Marcellus Shale that helped trigger a world-changing rush to explore it.In recent presentations to the state’s crude oil development council andonline through the Penn State Extension, he suggested that the total number of wells ever drilled in Pennsylvania is 382,000.Minus the state’s active wells, that would leave 252,000 plugged and abandoned wells, of which the Pennsylvania Department of Environmental Protection has no record of at least 168,000.That big number is significantly lower than the 470,000 to 750,000 abandoned wells that a group of researchers led by Mary Kang, a postdoctoral researcher at Stanford University, said in a 2016 paper could be lingering in Pennsylvania’s forests, fields and neighborhoods.The count matters because abandoned wells can be dangerous and contribute to climate change. Depending on its state of decay, each well is a potential conduit for gas and oil to reach the surface, which can interfere with modern drilling, pollute streams and drinking water, create explosion hazards in homes and add the potent greenhouse gas methane to the atmosphere. Ms. Kang said in an email that Mr. Engelder's analysis “does not appear to be as thorough as mine and includes only select and very few documents,” some of which conflict with other historical records. She said her recent field-based research, which has not yet been published, provides “evidence for much higher numbers of wells” than Mr. Engelder's estimate “and closer to my 2016 paper.”

Why $84 Billion from China Can't Buy a U.S. East Gas Hub -- During President Donald Trump’s visit to Asia this week, a Chinese energy company pledged to spend almost $84 billion helping West Virginia build an entire supply chain that would bring the benefits of America’s shale gas boom to bear. Much of it will probably never materialize. Here are the reasons why.  China Energy Investment Corp. and West Virginia have grand -- albeit non-binding -- plans to build new gas-fired power plants, along with complexes to store the fuel and chemical plants to help turn it into plastics. Based on a statement from West Virginia’s Department of Commerce, China Energy Investment would spend $83.7 billion over 20 years, or more than $4 billion annually.  As Bloomberg Intelligence energy analyst Michael Kay points out, not even U.S. energy pipeline giant Kinder Morgan Inc. budgets that much for growth projects. There just isn’t enough infrastructure with high enough returns to make it worthwhile.  “That’s not going to happen,” Kay says. “The problem isn’t necessarily anything other than financial.”  Companies and politicians have been pushing for more pipelines and plants there since the shale boom unleashed a flood of gas from formations like the Marcellus a decade ago. West Virginia, in the heart of Coal Country, could especially use the help after a market collapse forced shut hundreds of U.S. mines. Another plus -- the region offers an alternative to the hurricane-prone Gulf Coast. One reason more projects haven’t taken off: The Gulf Coast is an easier and often cheaper alternative with existing pipelines to power plants, chemical plants and storage tanks. Meanwhile Texas is home to its own giant shale plays, including the Permian Basin where 9 billion cubic feet of gas is pulled from oil wells every day.

West Virginia weighs permit for Atlantic Coast Pipeline — West Virginia environmental regulators Wednesday announced two public hearings on issuing a construction stormwater permit for the Atlantic Coast Pipeline, which would carry natural gas southeast from the center of the state. The 600-mile (965-kilometer) pipeline would extend almost 100 miles (160 kilometers) through five counties in West Virginia, then cross Virginia and bend through eastern North Carolina. West Virginia's Department of Environmental Protection said that if approved, that permit would give the state agency wide-ranging inspection and enforcement authority over the project. At the same time, the department said it was waiving its issuance of a state certification under the federal Clean Water Act, saying provisions in the U.S. Army Corps of Engineers nationwide permit are "designed to mirror" the state's terms. "Under the nationwide permit, enforcement would be left to federal agencies and would be limited to stream crossings," it said. The lead developer of the 600-mile (965-kilometer), approximately $5 billion Atlantic Coast Pipeline is Dominion Energy, along with partners Duke Energy, Piedmont Natural Gas and Southern Co. Gas. The Federal Energy Regulatory Commission gave its project approval in October. Dominion Energy spokesman Aaron Ruby said Wednesday that the developers support the West Virginia decision, calling it "a key step toward beginning construction later this year." It will bring thousands of jobs and millions of dollars to West Virginia, he said. 

Pipeline opponents urge state board to to deny water quality permit 'without prejudice.' Can it do that? - Dozens of people urged the seven members of the State Water Control Board at an all-day meeting Wednesday to reject outright a proposed water quality certification necessary for the Mountain Valley Pipeline, which will run from West Virginia through six Southwest Virginia counties. A smaller number of pipeline proponents called on the citizen board to endorse the Virginia Department of Environmental Quality’s conditions, intended to shield the more than 1,100 waterways the pipeline will cross. Construction produces sediment loads and entails blasting, trenching and drilling through streams and along some of the state’s steepest terrain. But others suggested a third option: Deny the certification “without prejudice” and invite the pipeline developers and the DEQ to fix what critics contend has been an inadequate process to vet the potential water impacts of the MVP, led by EQT Midstream Partners, and another, longer natural gas pipeline project, the Dominion Energy-led Atlantic Coast Pipeline. Dominion’s pipeline faces the same approval process next week.  Can the board, which is tasked with deciding whether there is a “reasonable assurance” that construction of the pipelines will not violate state water quality standards, do that? Last week, the DEQ would not answer questions about the menu of options available to the board members. On Wednesday, though, the first of two days of meetings on the Mountain Valley Pipeline, a spokesman for the DEQ said it can’t. Some environmentalists have long grumbled that the DEQ presents the water board with a narrow slate of options that constrain its authority. Bill Hayden, the spokesman, noted that the board will pick up discussions about the certification and its options Thursday, when it is expected to make a decision on the MVP. “DEQ does not consider denial without prejudice an option. Only denial is an option,” Hayden said. “It is possible the board could ask counsel about the ‘without prejudice’ part.”

Study suggests hydrofracking is killing farm animals, pets - A new report has found dozens of cases of illness, death and reproductive issues in cows, horses, goats, llamas, chickens, dogs, cats, fish and other wildlife, and humans. It says these conditions could be the result of exposure to gas drilling operations. The paper's authors, Robert Oswald, a professor of molecular medicine at Cornell's College of Veterinary Medicine, and veterinarian Michelle Bamberger, DVM '85, interviewed animal owners in six states -- Colorado, Louisiana, New York, Ohio, Pennsylvania and Texas -- and cited 24 cases where animals were potentially affected by gas drilling. According to the study, recently published online and appearing soon in print, in New Solutions: A Journal of Environmental and Occupational Health Policy, making a direct link between death and illness is not possible due to incomplete testing, proprietary secrecy from gas drilling companies regarding the chemicals used in hydrofracking, and non-disclosure agreements that seal testimony and evidence when lawsuits are settled.  Some of the case studies include:

  • In Louisiana, 17 cows died within an hour of direct exposure to hydraulic fracturing fluid. A necropsy report listed respiratory failure with circulatory collapse as the most likely cause of death.
  • A farmer separated his herd of cows into two groups: 60 were in a pasture with a creek where hydrofracking wastewater was allegedly dumped; 36 were in separate fields without creek access. Of the 60 cows exposed to the creek water, 21 died and 16 failed to produce calves the following spring. None of the 36 cows in separated fields had health problems, though one cow failed to breed in the spring.
  • Another farmer reported that 140 of his cows were exposed to hydrofracking fluid when wastewater impoundment was allegedly slit, and the fluid drained into a pasture and a pond. "These farmers saw workers slitting the liner to decrease the amount of liquid in the impoundment in order to refill it," said Bamberger. "We have heard it now on several occasions." Of the 140 cows, about 70 died, and there were high incidences of stillborn and stunted calves.

Appalachia region drives growth in U.S. natural gas production since 2012  -- Shale gas production in the Appalachia region has increased rapidly since 2012, driving an overall increase in U.S. natural gas production. According to EIA’s Drilling Productivity Report, natural gas production in the Appalachia region—namely the Marcellus and Utica shale plays—has increased by more than 14 billion cubic feet per day (Bcf/d) since 2012. Overall Appalachian natural gas production grew from 7.8 Bcf/d in 2012 to 22.1 Bcf/d in 2016 and was 23.8 Bcf/d in 2017, based on EIA data through October 2017.   Drilling wells in the Appalachia region has become very productive. The average monthly natural gas production per rig for new wells in the Appalachia region increased by 10.8 million cubic feet per day since January 2012. EIA attributes this increase to efficiency improvements in horizontal drilling and hydraulic fracturing in the region, which include faster drilling, longer laterals, advancements in technology, and better targeting of wells.   For example, in West Virginia, the average lateral length per well has increased from about 2,500 feet in 2007 to more than 7,000 feet in 2016. Some operators have recorded lateral lengths as long as 15,000 feet in the Marcellus and 19,000 feet in the Utica. Along with longer horizontal drilling, the days it takes for completion have decreased from about 30 days in 2011 to 7 days in 2015.  The Marcellus shale extends from New York in the north to Kentucky and Tennessee in the south and is the most productive natural gas-producing formation in the Appalachian Basin. The formation's footprint covers about 95,000 square miles. Dry natural gas wells in the Marcellus are mostly located in the eastern portion of the play, and liquids-rich wells are typically located in the western portion.  The Utica Play consists of two stacked geological units: the Utica and Point Pleasant formations. These formations are older—and therefore deeper—than the Marcellus formation. The Utica play spans about 60,000 square miles across Ohio, West Virginia, Pennsylvania, and New York.

Inside FERC December US national gas average up 56 cents to $3.08/MMBtu - US December monthly natural gas prices largely rose as the market moves into the heart of peak winter heating season, pushing regions such as the Northeast to December levels not seen since 2014. Algonquin city-gates December jumped $3.15 to $5.80/MMBtu, up nearly 119% from November levels and one of the highest December levels since 2014, ushering in the upcoming winter at a high level. The remainder of the Northeast rose as well, pushing the regional average to $4.27/MMBtu, up $1.72/MMBtu. In the core of the Appalachian production basin, Dominion, Appalachia December movement was unfazed by numerous record output levels in recent months, soaring 93 cents to $2.50/MMBtu, nearly $1 above November as numerous infrastructure projects provided an outlet for sky-high production. Increases in the Upper Midwest region were not as pronounced, with Chicago city-gates December up 27 cents to $3.10/MMBtu. A contributing factor in the more-minimal rise is the ever-increasing supply of gas traversing the region. This dynamic, driven in part by increasing Western Canadian, Rockies and Northeast flows through the region, has weighed on the January futures basis contract as well in recent days. Rising in a similar fashion, Houston Ship Channel tacked on 24 cents to $3.00/MMBtu, but looking deeper into the upcoming winter, more pronounced increases along the Gulf Coast could be looming as LNG export demand soars on the back of strong consumption in northeastern Asia. To the east of Houston Ship Channel, benchmark Henry Hub December jumped 34 cents to $3.08/MMBtu, in line with other December contract movements in the Southeast.

NYMEX Jan gas down 5.2 cents at $2.933/MMBtu on mixed fundamentals -  NYMEX January natural gas futures moved higher in US overnight trading before retracing their gains as traders consider supportive weather against bearish supply. Colder weather outlooks for major heating regions support the upside, while the recent and impending lackluster pace of storage erosion is keeping downward pressure on the market. At 6:50 am ET (1150 GMT) the contract was 5.2 cents lower at $2.933/MMBtu. Updated National Weather Service projections for the six-to-10-day and eight- to 14-day periods continue to show the US split between below-average temperatures over the entire eastern half and aboveaverage temperatures over the bulk of the West, with a narrow swath of average temperatures over the Central US. Cold weather in store for the major heat-consuming regions in the East should boost demand and weekly stock withdrawals, but recent mild conditions have meant modest storage withdrawals.

Algonquin Pipeline expansion opponents urge residents to get informed - Environmental activist groups that oppose the Algonquin Pipeline Expansion are urging residents in the Lower Hudson Valley to educate themselves as the next leg of the controversial project kicks off. On Monday evening, an informational session was organized by Stop the Algonquin Pipeline Expansion (SAPE) was held, the first of two programs scheduled over the next week for residents in Somers. Enbridge is in the midst of expanding the half-century old natural gas pipeline that will run north from Pennsylvania, passing through communities in Rockland, Putnam and Westchester counties and up into New England. Removing and replacing the existing 26-inch pipeline with a 42-inch one will allow for more natural gas to go north from Pennsylvania to Canada, an upgrade that utility companies say is needed to deliver cheaper gas to power plants, particularly on cold days when demand rises. Work done so far includes a new section through Stony Point, under the Hudson River, into Verplanck near the Indian Point Energy Center. The next phase - the $452 million Atlantic Bridge Project - involves four miles of pipeline from Stoney Street to Stephanie Lane, modifying a Yorktown metering station and relocating a pigging station from Yorktown to Stephanie Lane in Mahopac. Work is scheduled to begin this fall and take about a year. Courtney Williams, a Peekskill mother, ran through a presentation on Monday covering the expansion of the high-pressure pipeline, as well as the metering, pigging and compressor stations, as well as known concerns related to the work.“My life has been this pipeline for many years now,” Williams, whose home is located just feet away from the pipeline, told the several dozen attendees at the program.  Since 2014, Williams, a cancer researcher, has become a spokesperson against the project, joining other environmental activists, officials and residents who have formed a major opposition movement.

In Massachusetts, protesters balk at pipeline company’s payments to police - It started as a faceoff between the protesters and the cops, but quickly escalated. As the police closed in, Colon-Aponte tried to move away from the front line.   After she turned her back, an officer shoved her repeatedly, Colon-Aponte said ― at least “four or five times.” When Colon-Aponte raised her arms in submission and turned around to ask the officer to stop, she said, her hand grazed his — which provided an opening for him to arrest her for assaulting a police officer. Colon-Aponte was charged with assault and battery on a police officer, “after she allegedly pushed a trooper who was trying to clear protesters off a road they were blocking,” Massachusetts State Police Director of Media Communications David Procopio said in an email. She was one of five people arrested that day, and one of the more than 100 who have been arrested protesting at the pipeline this year. She now faces up to two and half years in jail and a fine of up to $5,000. Colon-Aponte said the police reaction to the protests, which have been peaceful and nonviolent, has been disproportionate. But pipeline protesters think there’s a reason the reaction from state police officers has been so strong. According to records anti-pipeline protesters recently obtained through a public records request, Kinder Morgan has been reimbursing state police officers from nearby Troop B headquarters in Northampton for their many hours on site. Through October, the total reimbursement has been $957,682.15, according to Cathy Kristofferson, a member of the Massachusetts Pipeline Awareness Network.Kristofferson made the public records request in response to concerns over the potential effects the payments were having on law enforcement behavior at the site.It’s not the first time an energy giant has paid police to keep watch over its assets. In Pennsylvania, Kinder Morgan hired off-duty police officers as a “deterrent” at a pipeline in 2013. And at the height of the Dakota Access Pipeline protests last year, Energy Transfer Partners offered to defray some of North Dakota’s costs for patrolling the area. The developer transferred some $15 million into state coffers as a result of patrols on the Dakota Access line at the end of September.

NJ environmentalists use new legal strategy to fight pipelines -  It's not easy to thread a pipeline through the property of others.Companies can seek easement that allows them the right to use another's property for a certain purpose. If unsuccessful, the company may try to acquire the easement through the power of eminent domainOver the years, environmental groups opposed to the expansion of oil and natural gas pipelines across the nation have tried various ways to to fight against pipeline projects.Now, Garden State environmental advocates think they've found a way to stop pipeline companies from acquiring the land they need in the first place, and a pipeline project in New Jersey may serve as the legal battleground.The New Jersey Conservation Foundation has sued the Federal Energy Regulatory Commission on the grounds that the agency's use of eminent domain to take over land for the construction of interstate natural gas pipelines is often unconstitutional. (The NJCF is represented by the Eastern Environmental Law Center and the Columbia University Environmental Law Clinic.)The lawsuit, filed in federal court in November, cites the Fifth Amendment requirement that any eminent domain action be made for "public use."Environmentalists claim that FERC has consistently failed to prove that pipeline projects are necessary, and thus, the eminent domain land seizures further private profits rather than the public good. "We've taken this action because it's become abundantly clear that the way that [FERC] is approaching their review of proposed pipelines really is at odds with the Fifth Amendment of the Constitution," said Tom Gilbert, a campaign director for the New Jersey Conservation Foundation.

Trump officials examining states' authority in pipeline delays - After years of pipeline projects getting held up or derailed by environmental concerns, the Trump administration is examining ways to get around state roadblocks that have made it increasingly difficult to build in certain parts of the United States.  In late October, the Federal Energy Regulatory Commission startled many state officials when it granted a construction permit for a natural gas pipeline in New York, despite state regulators turning down the developer over concerns the project would increase greenhouse gas emissions that contribute to climate change. The Trump administration, meanwhile, has for months discussed the possibility of using federal authority to speed infrastructure development, a potential political third rail for Republicans who have long proclaimed the sanctity of states' rights. "This is an administration that's going to carry out its agenda by all means necessary," said Devashree Saha, director of energy and environmental policy at The Council of State Governments, a non-partisan advocate for state governments. "The New York example is the first we're seeing, but it could be a harbinger of things to come."FERC's action comes as the oil and gas industry increases pressure on the administration and lawmakers to intervene against an increasingly visible "Keep it in the Ground" movement that is leading campaigns across the country to stop pipelines, drilling and other activities that support production and consumption of fossil fuels, the primary cause of global warming. Political leaders in a handful of northeast states, most visibly New York, are beginning to listen, in some cases factoring climate change into regulatory decisions.

Enbridge halts Great Lakes Line 5 pipeline due to bad weather (Reuters) - Enbridge Inc temporarily shut down its Line 5 oil pipeline across the Straits of Mackinac in North America’s Great Lakes on Tuesday, due to high winds and nine-foot (3 meter) high waves, according to the Michigan Agency for Energy (MAE). The 540,000 barrel per day pipeline carries Canadian light crude and refined products from Wisconsin to Ontario and is a key link in Enbridge’s network, which transports the bulk of Canadian crude exports to the United States. Light synthetic Canadian crude prices weakened by 35 cents on Tuesday, according to Shorcan Energy brokers. One market participant in Calgary said the dip was most likely in relation to the Line 5 outage. In a statement on its website, the MAE said Enbridge told Michigan that Line 5 was shut down at 11.37 a.m. local time (1637 GMT) and would restart when conditions improve. Enbridge did not immediately respond to a request for comment. The Straits of Mackinac are a turbulent 5-mile (8 km) wide stretch of water connecting lakes Huron and Michigan. Some local businesses, politicians and environmental groups fear the 64-year-old underwater pipeline crossing the Straits is at risk of leaking and contaminating the Great Lakes. In response to those concerns, Enbridge signed an agreement with the state of Michigan on Nov. 27 to suspend the pipeline’s operations during sustained bad weather in which wave heights reach more than eight feet. “The purpose of the state’s agreement with Enbridge was to find practical solutions to concerns we had about the operation of Line 5 and the safety of the Great Lakes,” said Valerie Brader, executive director of the Michigan Agency for Energy.  

Spilled pipeline oil in lower Plaquemines is burned, site to be evaluated Tuesday -   A controlled burn to remove oil spilled after a pipeline leak near Pointe a la Hache in lower Plaquemines Parish went on as planned and air monitoring afterward showed no troubling results, the Coast Guard said Saturday (Dec. 2). The pipeline owned by XTO Energy was reported to be leaking to the Coast Guard at 2:40 p.m. Thursday. As of Thursday night, officials said, they'd removed 1,260 gallons of "product" using absorbent materials. The agency, in a press release, said fire was used to burn spilled oil in the marsh on Friday, from 12 p.m. to 3:40 p.m. "Air monitoring was conducted and the results showed no level of concern," the agency said. The press notice doesn't indicate how much oil was removed in total. Coast Guard and other officials plan to return to the site Tuesday to see if additional measures are needed. Contractors Teichman Group LLC and OMI Environmental Solutions, as well as several agencies including the National Oceanic and Atmospheric Administration, Louisiana Oil Spill Coordinators Office, Louisiana Department of Environmental Quality, and Louisiana Wildlife and Fisheries are involved in the effort. The Coast Guard said the pipeline is secured and there are no reported injuries or waterway restrictions. The cause of the spill is under investigation. 

Lawsuit Launched Against Trump EPA for Approving Fracking Waste Dumping Into Gulf of Mexico - The Center for Biological Diversity filed on Thursday a formal noticeof intent to sue the Trump administration for allowing oil companies to dump waste from fracking and drilling into the Gulf of Mexico without evaluating the dangers to sea turtles , whales or other imperiled marine life .  In September the U.S. Environmental Protection Agency ( EPA ) finalized a Clean Water Act permit for new and existing offshore oil and gas platforms operating in federal waters off the coasts of Texas, Louisiana and Mississippi. The permit allows oil companies to dump unlimited amounts of waste fluid, including chemicals involved in fracking, into the Gulf of Mexico.   "The Trump administration is letting the oil industry turn our oceans into toxic-waste dumps. The EPA's supposed to protect water quality, not help pollute the Gulf," said Kristen Monsell, a senior attorney at the Center for Biological Diversity. "It's time for the courts to remind this agency that its mission is to safeguard the environment and public health."   Thursday's notice letter highlighted the fact that the agency's approval of the permit without studying risks to imperiled species in the Gulf of Mexico is a violation of the federal Endangered Species Act.   Fracking chemicals and other contaminants in produced water raise grave ecological concerns because the Gulf of Mexico provides important habitat for whales, sea turtles and fish—as well as being federally designated critical habitat for imperiled loggerhead sea turtles. Dolphins and other species in the Gulf are still suffering the lingering destructive effects of the 2010 Deepwater Horizon oil spill.

Tax Bill Provision From Texas Senator Would Enrich Pipeline Giants - The controversial Keystone pipeline spilled more than 200,000 gallons of oil in South Dakota last month, prompting new pressure to slow pipeline development in the United States. Only weeks later, Republican lawmakers slipped a provision into a massive tax bill that could instead give the pipeline operator, TransCanada, a huge new tax cut. The company is one of a handful of energy giants that set up master limited partnerships (MLPs) -- financial vehicles often used to shield energy investments from taxes. The investors in those vehicles — who are often the parent company or its subsidiaries — could receive a huge boost thanks to an eleventh-hour amendment added to the GOP tax bill by Texas Sen. John Cornyn. MLPs themselves are already exempted from corporate taxes, but Cornyn’s last-minute provision would cut income taxes on the money earned by the MLP partners.The tax changes stand to enrich fossil fuel behemoths and their partners — many of whom recently delivered big campaign donations to Donald Trump and to groups backing Republican Party lawmakers. “These MLP financial vehicles already operate at a tremendous tax advantage over other publicly-traded businesses, because they are the only public companies that are allowed to escape paying corporate income tax,” Edward Kleinbard wrote in The Hill Monday. Kleinbard is a University of Southern California law professor who served as the chief of staff for Congress’s Joint Committee on Taxation. “But that existing subsidy was insufficient for Sen. Cornyn, and now existing investors in such vehicles have been awarded a further windfall by becoming eligible for the new discounted pass-through tax rates sold as tax relief for Main Street business.”

Cheniere marketing unit signs sales deal with Austria's OMV -- Cheniere Energy's marketing unit has secured a multi-year sales deal with the trading arm of Austrian energy company OMV to deliver LNG cargoes to Europe, Cheniere said Wednesday. Meanwhile, another Gulf Coast export project under development is nearing final investment decision. Details about the agreement between Cheniere Marketing and OMV, including pricing and duration, were not being released, Cheniere spokesman Eben Burnham-Snyder said in an email responding to questions. Europe and Asia are key markets for Cheniere as it adds liquefaction units, or trains, at its Sabine Pass export terminal in Louisiana and works to complete construction at its Corpus Christi, Texas, export facility. OMV produces and markets oil and natural gas. It also is involved in petrochemicals and refining. According to the company's website, OMV operates a gas pipeline network in Austria and gas storage facilities in Austria and Germany. In August 2015, Cheniere Marketing signed a similar deal with France's EDF. That sales arrangement called for delivery of up to 26 cargoes (approximately 100 MMcf/d) on Delivered Ex-Ship terms to the Dunkirk terminal through 2018. The sale price was indexed to the Dutch Title Transfer index, or TTF, with a cancellation clause written into the contract. Cheniere regulatory filings at the time stated that the variable SPA with Cheniere Marketing allowed them to purchase any LNG produced by Sabine Pass in excess of that required for other customers at "Cheniere Marketing's option" for a fee of $3/MMBtu. Cheniere Marketing owns the right to liquefy any excess, uncontracted capacity available at the Sabine Pass and Corpus Christi LNG export facilities. Platts Analytics' Bentek Energy estimated at the time of the EDF deal that that amounted to around 800 MMcf/d of potential capacity split between the seven trains under development at the two facilities. 

Cheniere Boosts LNG Tanker Fleet Amid Asian Demand Boom | Rigzone - U.S. liquefied natural gas (LNG) producer Cheniere Energy has expanded its shipping fleet with a flurry of spot vessel charters to keep up with Asian winter demand growth as spot prices hit three-year highs, market sources said.Cheniere's Sabine Pass terminal in Louisiana pumped out 22 cargoes last month and more are expected as it ramps up its fourth production unit, or train, with more than half of all November volumes sold to China, Japan or South Korea, according to ship-tracking data.An 82 percent surge in Asian spot LNG prices this year, driven by robust Chinese demand, rising oil and coal prices and nuclear supply shortfalls in South Korea and Taiwan, has left producers chasing to lock in sales.The world's biggest exporter, Qatar, entirely sold out of flexible winter LNG supply following a frenetic period of deal-making with term buyers in China and South Korea.Cheniere, which is still bringing new production to market, has chartered seven additional LNG carriers on spot markets as firm demand stretches its existing fleet, increasingly tied up in long-haul voyages, trade and shipping sources said.The charters span a variety of periods, from a single voyage to six months of employment, they said. A Cheniere spokesman confirmed the company now has 22 ships on the water. 

U.S. liquefied natural gas exports have increased as new facilities come online – EIA -  In August 2017, total U.S. natural gas liquefaction capacity in the Lower 48 states increased to 2.8 billion cubic feet per day (Bcf/d) following the completion of the fourth liquefaction unit at the Sabine Pass liquefied natural gas (LNG) terminal in Louisiana. With increasing liquefaction capacity and utilization, U.S. LNG exports averaged 1.9 Bcf/d, and capacity utilization averaged 80% this year, based on data through November.  Sabine Pass, located on the U.S. Gulf Coast near the Louisiana-Texas border, consists of four existing natural gas liquefaction units, or trains, with a fifth train currently under construction. When complete, Sabine Pass will have a total liquefaction capacity of 3.5 Bcf/d. Five additional LNG projects are currently under construction in the United States, and they are expected to increase total U.S. liquefaction capacity to 9.6 Bcf/d by the end of 2019:

  • Cove Point liquefaction terminal (one train, 0.75 Bcf/d capacity) in Maryland is 97% complete, and Dominion Energy expects to place it in service before the end of 2017.
  • Elba Island LNG (10 modular liquefaction trains, 0.03 Bcf/d capacity each) in Georgia is owned by Kinder Morgan. Six trains are scheduled to come online in the summer of 2018, and four trains are scheduled to come online by May 2019.
  • Freeport LNG (three trains, 0.7 Bcf/d capacity each) in Texas is being developed by Freeport LNG Development, L.P. The first train is expected to come online in November 2018, with the remaining two trains following in six-month intervals.
  • Corpus Christi (two trains, 0.6 Bcf/d capacity each) in Texas is being developed by Cheniere and is expected to come online in 2019.
  • Cameron LNG (three trains, 0.6 Bcf/d capacity each) in Louisiana is being developed by Sempra LNG and is expected to come online in 2019.

Overall utilization of existing LNG liquefaction facilities is expected to average 80% in 2017 and 79% in 2018, based on LNG export projections in EIA’s latest Short-Term Energy Outlook. Several factors can affect utilization rates, including weather-related disruptions, demand fluctuations, seasonality in import markets, production schedules for new LNG facilities, and maintenance on existing facilities.

More U.S. oil export capacity in the works - (UPI) -- A gas pipeline running from Texas shale could be converted to send oil to the Gulf Coast by the start of the next decade, Enterprise Products Partners said. The company announced plans Wednesday to convert a pipeline in its portfolio that carries natural gas from the Permian shale basin to a crude oil pipeline. With a new gas pipeline coming into service at the end of 2019, Shin Oak, the company said it has flexibility to repurpose another line for shale oil. "We have had strong demand for crude oil transportation, storage and marine terminal services for crude oil production from the Permian Basin," CEO Jim Teague said in a statement.  In its latest drilling productivity report, the U.S. Energy Information Administration put the Permian shale basin at the top in terms of U.S. shale oil producers, far exceeding output from the Bakken shale basin in North Dakota. Production from the Permian shale is expected to increase by about 2 percent from November to 2.68 million barrels per day.For gas, the Appalachian basin is by far the most productive shale reservoir in the United States, more than doubling the output from the Permian.Overall, however, the latest monthly data from the Texas Railroad Commission, the state's energy regulator, found oil production was on the decline. The preliminary rate of 2.3 million barrels per day for September, the last full month for which it published data, was lower than the same month last year by 3 percent. Enterprise said repurposing one of its gas lines to carry oil would lift its total carrying capacity to more than 650,000 barrels per day from the Permian shale to its crude oil hub in Houston.

Weekly Gas Storage: Surprise Build -  The EIA released its weekly Natural Gas Storage Report today, outlining how national natural gas stocks have changed in the last week. In total, the EIA reports natural gas stocks rose by 2 Bcf last week, rising from 3,693 Bcf to 3,695 Bcf. This is 6.7% below the 3,959 Bcf that was in storage at this point last year, and is 1.0% below the five-year average of 3,731. This week’s storage build was unexpected, as analysts predicted a draw of 4 Bcf.

Researchers Find Dangerous Bacteria in Water Wells Near Texas Fracking Sites -- Two new studies from University of Texas at Arlington researchers show harmful bacteria levels in groundwater near hydraulically fractured gas drilling sites. The studies published in the peer-reviewed journal Science of the Total Environment show antibiotic-resistant bacteria exist in private water wells in the Barnett Shale and Eagle Ford Shale regions of Texas. The researchers say these bacteria could cause gastrointestinal illnesses along with rashes and eye and ear infections. But the studies make no definitive links between fracking and contaminated water. Naturally occurring gas, agriculture waste or some combination could be the contamination sources. Fracking has led to a boom in natural gas production but raised widespread concerns about possible groundwater contamination. The method uses huge amounts of pressurized water, sand and chemicals to break apart underground rock formations 

E & Ps face challenges in managing "last mile" logistics --  With frac sand use — and costs — on the rise in the Permian, a number of exploration and production companies (E&Ps) are becoming more involved in managing sand acquisition and logistics. It’s not an easy job, because even though a greater share of the frac sand used in Permian wells is expected to come from local, West Texas sand mines in the coming year, those “last mile” logistics — the delivery of sand by truck from the mine, plus unloading and storage of sand at the well site — are especially complex. Today, conclude our series on frac sand with a look at the challenges E&Ps face when they assume supply chain responsibility for sand. E&Ps in the red-hot Permian and other U.S. shale and tight-oil and gas plays have had remarkable success the past few years in ratcheting down the cost of drilling and completing new wells and to increase hydrocarbon production per well. And, as they have gained a more nuanced understanding of their hydrocarbon resources, producers and their pressure pumpers have been implementing increasingly sophisticated and well-specific completion strategies to wring ever-increasing volumes of crude oil, natural gas and natural gas liquids from their wells. These gains have been particularly significant in the Permian, where E&Ps have largely figured out how to optimize production from the region’s multiple, stacked pay zones. Two key elements of their success, which we described in Faster Horses, are drilling longer horizontal wells or laterals (now often 7,500 or 10,000 feet, and sometimes longer) and intensifying completions with the use of more pressure, more frac sand per linear foot of lateral and more frac stages.

Fights lay ahead as the oil industry creeps into the Flint Hills and Douglas County - - Ten years ago, an application for a well permit in Morris County would have drawn no objections. Even three years ago, after man-made earthquakes began to hammer Oklahoma and south-central Kansas at unprecedented rates, it’s unlikely anyone in the Flint Hills would have cared too much.  Then Pawnee happened. On September 3, 2016, a 5.8-magnitude earthquake rippled out from its epicenter in Pawnee, Oklahoma, and was felt as far away as San Antonio, Texas; Memphis, Tennessee; Fargo, North Dakota; and Maricopa County, Arizona. Kansas City was not spared; the quake caused a crack in the Wyandotte County Courthouse that spans from the roof down to the ground. Despite being nearly 200 miles north of the epicenter, Flint Hills residents experienced an intense battering, according to Hoedel and others, of more than a minute. Picture frames fell from walls, beds and chairs bounced around, and cracks were later found in home foundations. Before 2012, seismic activity was rare in this part of the country: Kansas averaged only one earthquake a year strong enough to feel. Then they started coming in droves: 115 in 2013 and 2014. Those were small rumbles, mostly, but now they seemed to be gaining strength. And there was an obvious culprit: wastewater-injection wells used by oil companies in the boomtowns of Oklahoma and the southern Kansas counties of Harper and Sumner. Quail Oil sought a permit to inject as many as 5,000 barrels of wastewater a day deep into the ground in Diamond Springs. Its proposed well lay atop a site where three geologic formations converge: the Bourbon Arch, the Nemaha Uplift, and the Humboldt Fault, which 150 years ago experienced the largest recorded earthquake in Kansas history. The site is less than 100 miles from the Wolf Creek nuclear reactor, and 14 miles from the Tallgrass Prairie National Reserve. It’s also home to a spring, still in use, that has been renowned for the purity of its water since the days of the Santa Fe Trail. “They called it Diamond Spring because the water is so clear and clean and delicious and sparkling,” Hoedel said. “And now this company wants to dump all this contaminated water into the ground nearby, using this process that we know causes earthquakes.” In response, Hoedel and a few other like-minded souls in the community mobilized and formed a group called the Flint Hills Stewards.

Pipeline explodes in southeastern New Mexico oil patch (AP) — A pipeline exploded in southeastern New Mexico's oil patch, closing two highways but causing no reported injuries. Eddy County Emergency Manager Jennifer Armendariz says the pipeline that exploded early Wednesday morning is in a sparsely populated area about 10 miles (16 kilometers) south of Carlsbad believed to be used for natural gas. Armendariz says four energy companies have operations in the area and that authorities are working to identify the pipeline involved so it can be shut down. The explosion occurred near the junction of U.S. 285 and State Route 31 and closed both highways.County officials initially advised nearby residents to evacuate but later advised those in a 2-mile (3-kilometer) radius of the junction to shelter in place while authorities work to stabilize the situation. 

Fracking protester wants skull-and-crossbones case tossed -- An anti-fracking activist ticketed for projecting a skull and crossbones onto the wall of a Colorado courthouse argues his actions broke no law and were protected by the Constitution.The Daily Camera reports Boulder police cited David Paul for trespassing after officers say he beamed a skull and crossbones along with the words "Ban Fracking!" onto a courthouse building. The building houses Boulder County government offices.  Paul is asking the judge to throw out the case.  Boulder County Attorney Ben Pearlman directed police to issue the ticket, saying the county doesn't allow images or phrases to be beamed onto the building.

U.S. judge orders oil-spill response plan for Dakota Access Pipeline (Reuters) - A federal judge ordered Energy Transfer Partners LP to coordinate with local tribes and the Army Corps of Engineers to create an oil-spill response plan for the controversial Dakota Access Pipeline by next April, a decision he said will allow oil to keep flowing and prevent spills. The order on Monday by U.S. District Judge James Boasberg came nearly six months after he ruled that the Army Corps of Engineers review of the project, which transports oil from North Dakota near Native American reservations to Illinois, was inadequate before it granted federal permits. In October the judge ruled that crude oil can continue to flow through the 1,170-mile (1,900-km) North Dakota-to-Illinois pipeline while the review is conducted. It has shipped crude since June. The order met the requests of the Standing Rock Sioux and Cheyenne River Sioux tribes to get an independent, third-party auditor to share data obtained during the review. The order must be implemented by April 1. “While we think that the pipeline should have been shut down, we are gratified that the federal court has put measures in place to reduce risks and provide some independent oversight to reduce the risk of a spill from this project,” said Standing Rock Chairman Mike Faith. Boasberg also asked Energy Transfer Partners for other interim measures on Monday. He asked the company to begin submitting bi-monthly reports later this month on safety conditions at the Lake Oahe pipeline crossing, the center of months of anti-pipeline protests last year. In his ruling Boasberg cited concerns about oil spills raised by last month’s 5,000-barrel spill at the Keystone pipeline in South Dakota, near the boundaries of tribal lands, as a reason for independent monitoring of Dakota Access. “Although the Court is not suggesting that a similar leak is imminent at Lake Oahe, the fact remains that there is an inherent risk with any pipeline,” Boasberg wrote in his eight-page order. 

Court Orders Monitoring Of Dakota Access Pipeline After Keystone Spill - A federal court ordered the United States Army Corps of Engineers and Dakota Access to participate in multiple measures to monitor the oil pipeline constructed on land which under the 1851 treaty belongs to the Standing Rock Sioux tribe.The U.S. District Court for the District of Columbia invoked the recent spill of 210,000 gallons of oil from the Keystone XL pipeline in Marshall County, South Dakota, to justify the need for court monitoring.Judge James E. Boasberg wrote [PDF], “The spill occurred near the boundaries of the Lake Traverse Reservation, home of the Sisseton Wahpeton Oyate Tribe, thus highlighting the potential impact of pipeline incidents on tribal lands. Although the court is not suggesting that a similar leak is imminent at Lake Oahe, the fact remains that there is an inherent risk with any pipeline.”Although the court refused to completely shut down the pipeline in October, it previously acknowledged “allowing oil to flow through the pipeline” would create “potentially disruptive” effects and could lead to incidents that may potentially “wreak havoc on nearby communities and ecosystems.”The court instructed the Army Corps, Dakota Access and Sioux and Cheyenne Tribes to finalize “spill response plans” for Lake Oahe. The plans are to be filed with the court by April 1, 2018, and directly related to the risk of a spill. Dakota Access was also ordered to complete a third-party audit of its compliance with permits and regulations. The court requested the company consult with the Tribes when selecting this auditor so that they may share their own data with the auditor during the process. The results of the audit are also to be complete by April 1.

Amid deregulatory push, API launches push to limit methane emissions - The American Petroleum Institute Tuesday plans to unveil a voluntary industry program aimed at reducing methane emissions from US oil and natural gas operations, an effort to launch as the Trump administration continues its push to weaken and repeal methane rules finalized by the Obama administration. The API initiative, known as The Environmental Partnership, will initially include 26 oil and gas companies, including Shell, Pioneer Natural Resources and Cabot Oil and Gas, in all major US plays, according to Erik Milito, director of upstream and industry operations for API. Under the initiative, which will launch on January 1, participating companies will: commit to implement leak monitoring using the latest detection methods; replace or retrofit highly emitting pneumatic controllers; and attempt to minimize emissions from manual liquids unloading for gas production sources. "We've done it in a very surgical way so that we've picked programs that are actually going to help us see tangible improvements and really provide us a platform to really show continued emissions reductions," Milito said. Milito said the 26 companies already signed onto the program account for "tens of thousands" of US oil and gas sites, including many with multiple wells. He said the companies account for an estimated 25% of all domestic natural gas production. The percentage of total oil output represented was unavailable, he said. The program is voluntary, however, and, outside of potential removal from the program, there is no consequence for non-compliance. API will compile methane data in an annual report from the partnership, but there will be no formal monitoring and new industry standards implemented, Milito said.

GOP on verge of opening Arctic refuge to drilling | TheHill: Lawmakers are the closest they’ve been in decades to letting oil and natural gas companies drill in northeast Alaska’s Arctic National Wildlife Refuge (ANWR). The tax bill approved by the Senate includes a provision allowing two sales of drilling rights in the coastal plain of the wildlife refuge. While the House’s version of the tax bill does not include ANWR drilling, the provision is likely to survive in the final legislation and become law if it reaches President Trump’s desk. But even after the policy is approved, ANWR drilling is far from certain. Companies are unlikely to jump at the opportunity to drill there, analysts say, and any exploration is likely years away. And even if companies are interested in drilling there, environmental groups are nearly certain to challenge them every step of the way in the courts. Plus, if Democrats elect a president or take a majority in the House or Senate, they could put up significant roadblocks, or even stop ANWR drilling altogether. “There’s a lot of manic hyperbole about ‘oh my gosh, they’re going to start drilling tomorrow.’ That couldn’t be further from the truth,” said Kara Moriarty, president of the Alaska Oil and Gas Association, which has strongly supported allowing ANWR drilling for decades, an opinion shared by most residents and state leaders in Alaska. The U.S. Geological Survey estimates that the federally owned refuge’s coastal plain, the only area that would be open for drilling, could have up to 11.8 billion barrels of oil, though it hasn’t updated the assessment in years.

Major conservation group blasts GOP tax bill for allowing Arctic drilling: 'Simply shameful' | TheHill: A major conservation group is blasting the newly passed Senate GOP tax bill for allowing oil drilling in the Arctic National Wildlife Refuge (ANWR), calling the bill “simply shameful.” “Opening the Arctic to drilling as part of this tax plan is simply shameful. The Arctic Refuge isn’t a bank—drilling there won’t pay for the tax cuts the Senate just passed,” National Audubon Society President and CEO David Yarnold said in a statement Saturday. “The American people don’t support drilling in the Arctic and it’s up to the House to reject this flawed bill."The Republican tax bill included a provision to open up a section of ANWR to oil drilling for the first time. Democrats attempted to stop the provision in a late-night amendment vote, but that effort was shot down by Senate Republicans. Sen. Lisa Murkowski (R-Alaska) argued that the provision would create jobs as well as “protect an environment that as Alaskans we know how to protect.” The Audubon Society pushed back against that claim, citing dozens of Arctic wildlife scientists who united in opposition to the drilling expansion last week. “By making oil and gas drilling a primary purpose of the wildlife refuge and mandating an 800,000-acre oil and gas program, Senator Murkowski’s bill effectively undermines the environmental and wildlife protections that typically apply to oil and gas development on federal lands,” the group said. 

The GOP tax bill could forever alter Alaska’s indigenous tribes - Bernadette Demientieff is a member of the Gwich’in, an indigenous tribe of roughly 9,000 people that spans north-central Alaska and northern Canada.   And then, one day in 2014, something called to her, she felt the urge to step out onto the tundra. She started walking, up and out of the center of town—and then she turned around and looked: In front of her stretched the Arctic National Wildlife Refuge, the largest area of untouched wilderness in the United States. The land, an open expanse of peaks and rivers, spanned hundreds of miles past the horizon to the unseen, icy flat of the Arctic Ocean.“I started crying and crying,” she said. “And I asked the Creator for forgiveness.” Now 42, Demientieff is the executive director of the Gwich’in Steering Committee. She has spent years trying to protect the Arctic National Wildlife Refuge, or ANWR (pronounced AN-wahr), from oil and gas exploration. That fight suffered a major loss Saturday, the result of lawmakers voting on an expansive and quickly written bill several thousand miles away.  The majority of Alaskans and majority of Alaksa Natives express their support for [drilling in ANWR]. It’s an issue of economic self-determination for our community,”  The Inupiat live across the North Slope, including within the part of the ANWR that would soon be opened for drilling. Oil exploration already brings jobs and funds infrastructure in their communities. And the Arctic Slope Regional Corporation holds mineral rights to pockets of private land within the ANWR. If oil is discovered there, the corporation and its shareholders—roughly 13,00 members of the Inupiat tribe—could profit from the wealth. The Gwich’in people, meanwhile, live hundreds of miles south in west-central Alaska. Their regional corporation does not own land on the North Slope. But the Gwich’in are spiritually connected to the porcupine caribou, a herd of more than 160,000 creatures who migrate annually across the U.S. and Canadian tundra. The herd’s calving grounds, the most sacred space to the Gwich’in, lies within the area which could soon be open to drilling. To many of them, drilling in the calving ground isn’t just an attack on the Gwich’in way of life. It’s an attack on the Gwich’in.

Small bidders snatch up land near ANWR in state oil lease sale - Major oil companies did not bid Wednesday on state leases near the Arctic National Wildlife Refuge as Congress moves to open the refuge's coastal plain to drilling, but small bidding groups did. And new North Slope prospects generated interest in the annual state lease sale that officials said was one of the biggest of the last two decades.The state received $19.9 million in bids for the North Slope lease sale on Wednesday, making it the third-largest sale in the last two decades, said Chantal Walsh, director of the Alaska Oil and Gas Division. That was a surprise because so much of the land in the region had already been leased, she said.The amount of leased state land on the North Slope is at historically high levels, said Mark Wiggin, deputy commissioner of the state's Natural Resources department. Alaska officials opened bids for the lease sale at the Dena'ina Center in Anchorage. The state also received $1.3 million in bids for leases in state waters of the Beaufort Sea.The federal government also held a lease sale for the National Petroleum Reserve-Alaska on Wednesday afternoon. The Trump administration offered 900 tracts in the 23 million-acre reserve, the most ever. ConocoPhillips and partner Anadarko made up the only bidding group in that sale, for seven tracts totaling 80,000 acres, said Ted Murphy, associate director of the BLM in Alaska. Bids totaled $1.2 million, for acreage near ConocoPhillips' existing prospects in the petroleum reserve's eastern section, including the large Willow discovery. Alaska receives 50 percent of the bids.The companies were major bidding partners in an NPR-A lease sale last year that generated $18.8 million for 614,000 acres, the largest lease sale there in more than a decade.

Canada's Trans Mountain crude pipeline oversubscribed by 23% in December - Kinder Morgan Canada will limit crude oil nominations on its Trans Mountain pipeline system by 23% in December, meaning the line will carry 77% of nominated volumes, the company said Wednesday. December volumes on the Trans Mountain mainline system are expected to be 309,604 b/d, down from 319,571 b/d in November, Kinder Morgan said in an email. Exports from the Westridge Dock near Vancouver are expected to be 78,917 b/d, compared with 80,669 b/d in November. Throughput on the Puget Sound pipeline is expected to be 148,368 b/d, compared with 150,357 b/d in November. The Trans Mountain pipeline ships Canadian crude from Edmonton, Alberta, to the Westridge export terminal in Burnaby, British Columbia, and on to the connected Puget Sound pipeline to Seattle-area refineries.

MIT study suggests US vastly overstates oil output forecasts – Turns out, America’s decade-long shale boom might just end up being a little too good to be true.  Researchers at MIT have uncovered one potentially game-changing detail: a flaw in the Energy Department’s official forecast, which may vastly overstate oil and gas production in the years to come. The culprit, they say, lies in the Energy Information Administration’s premise that better technology has been behind nearly all the recent output gains, and will continue to boost production for the foreseeable future. That’s not quite right. Instead, the research suggests increases have been largely due to something more mundane: low energy prices, which led drillers to focus on sweet spots where oil and gas are easiest to extract. “The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,” said Justin B. Montgomery, a researcher at the Massachusetts Institute of Technology and one of the study’s authors. “This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.” Extrapolating from field studies Montgomery and his colleague Francis O’Sullivan conducted in North Dakota’s Bakken shale deposit, the research suggests that total U.S. oil and natural-gas production from new wells could undershoot the EIA estimate by more than 10 percent in 2020. Things would get progressively worse each year after that as wells in various sweet spots are exhausted and technology fails to close the gap. “The same forecasting methods are used in other plays in the U.S., and the same dynamic is likely to be present,” Montgomery added.

Is The EIA Overestimating The U.S. Shale Boom? -- The American shale boom may be overstated by the U.S. Energy Department, according to a new MIT study that suggests the agency may be over-attributing a rise in shale drilling to technological advances. “The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,” MIT researcher Justin B. Montgomery told World Oil. “This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.”Instead, lukewarm oil prices have forced oil majors to drill only in easy-to-access areas, located mostly in the Eagle Ford and Permian basins in Texas, and the Bakken formation in North Dakota. This has led to an exaggerated increase in the number of active wells, and a hyperbolized narrative of growth in the shale industry, the study says.“The same forecasting methods are used in other plays in the U.S., and the same dynamic is likely to be present,” Montgomery added.Margaret Coleman, the Energy Information Administration’s chief of oil, gas and biofuels exploration and production analysis, said the “study raised valid points” and offered insights for more accurate analysis of domestic fossil fuel forecasting. Part of the blame can be attributed to an information gap in data available to the EIA team, she added. Many shale wells lack key pieces of data tracked down by the MIT team, meaning EIA projections over-emphasized geological and capital assumptions as well as technological developments to estimate the shale industry’s growth. Of course, there have been some advances in drill head technology, mapping software, and hydraulic fracking, but that is just one part of the puzzle.  “It’s really hard to bet against the ability of the industry to improve and get more out of the rock,”  . Three years of oil prices have forced oil and gas majors worldwide to get creative to lower costs and avoid bankruptcies. Mass firings and empty offices pushed multinationals to operate on a leaner human resources diet, utilizing robots and merging job descriptions to keep the companies functional.

The coming surge in US superlight crude and condensate production - Back in 2015, U.S. production of superlight crude oil and condensate had been on the rise for five years, driven primarily by boom times in the Eagle Ford shale play in South Texas. Condensate was selling for several bucks-a-barrel less than light-crude benchmark West Texas Intermediate (WTI), the U.S. government had recently approved the export of minimally processed condensate, and new condensate splitters were being built to allow refineries to use more high-API-gravity liquids. Fast forward to now, though, and production of superlight crude and conde is off by one-third ­­— the lighter the material, the steeper the decline — a barrel of conde is selling for several dollars more than WTI and a lot of those new splitters are running at far less than full capacity. As for exports of neat conde, they’ve dropped to almost zero, and whatever superlight crude and conde that is being exported goes out as part of blended crude. But things could be about to change again, possibly in a big way. Today, we begin a new blog series on the chaotic U.S. conde and superlight crude market. Any discussion of superlight crude and condensate needs to begin with definitions, or at least attempts at definitions. First of all, crude oil isn’t a single commodity — instead, there’s a wide spectrum of crude oil types that emerge from wells, ranging from molasses-like, high-sulfur heavy crude to easily poured, sweet (or low-sulfur) superlight crude. And then there’s field (or lease) condensate, commonly called conde (rhymes with Gandhi), which is even lighter, more like cream soda. As we said in our Drill Down Report, Blinded by the Lights, crude oil and condensate are categorized by their API gravity (API standing for American Petroleum Institute), which measures (in degrees) a petroleum liquid’s density relative to water — the lighter or less dense the crude, the higher its API gravity number. We should note that each and every type of crude has value; the most complex refineries have the sophisticated equipment to break down the heaviest, sourest (highest-sulfur) crudes into gasoline, distillate and other refined products, and simpler refineries (with fewer bells and whistles) consume lighter, sweeter crudes.

U.S. shale eases into detente with OPEC as supply cut extended (Reuters) - U.S. shale oil producers and OPEC appear to have called a truce of sorts even though there is no sign the U.S. industry will do anything to help reduce the global oil supply glut. U.S. producers applauded Thursday’s decision by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers led by Russia to extend output cuts until the end of 2018. Texas and North Dakota - the two largest U.S. shale-producing states - described it as a boon for their producers. Their appreciation was in contrast to a more combative style in recent years, when shale states seemed to relish openly bashing the group. “Now that it seems prices are looking to stabilize with this OPEC deal around $60 (per barrel), I think that’s going to be a very nice price environment for folks around the state,” Ryan Sitton, one of three commissioners on the Texas Railroad Commission, said in a phone interview from Austin.  Unlike the last OPEC meeting in May, when frustration with shale producers boiled over into public view more than once, members in Vienna this week took a more conciliatory tone. “Shale is an important parameter, and complementing to the production of the world,” United Arab Emirates Energy Minister Suhail al-Mazroui told reporters on the sidelines of the talks. “We cannot ignore it, but we need to apply the right weight for that contributor without exaggerating the effect if it.”  One reason for the change in OPEC’s tone may be a greater confidence that U.S. shale producers will never be able to match its clout especially with the global appetite currently growing by some 1.5 million barrels per day (bpd). OPEC supplies roughly a third of the world’s crude. U.S. antitrust law prevents U.S. producers from joining the group. 

Asia, Europe prices to boost US LNG exports over winter: EIA -- Strong demand for power plant and home heating fuel, along with high spot prices in Asia and Europe, are expected to boost US LNG export volumes and utilization of liquefaction units this winter, the Energy Information Administration said Thursday. However, overall utilization of existing LNG liquefaction facilities in 2018 will be slightly lower, on average, than in 2017, EIA said in a report.The outlook comes as a second US exporter of LNG produced from shale gas, Dominion Energy, prepares to begin production in Maryland, joining Cheniere Energy, which shipped its first cargo from its Sabine Pass terminal in Louisiana in February 2016.None of the second wave of projects that are being proposed for US shores took a final investment decision this year amid fears of a global supply glut.  Next year is expected to be a consequential one for the dozen or so developers, as several are hoping to prove viability and advance toward construction. In the meantime, the handful of LNG projects currently being built in the US will strengthen the US' position in the market."With increasing liquefaction capacity and utilization, US LNG exports averaged 1.9 Bcf/d, and capacity utilization averaged 80% this year, based on data through November," EIA said. "Exports from Sabine Pass began to increase in September 2017 as Train 4 ramped up to full production -- reaching 2.7 Bcf/d in November -- with an overall capacity utilization rate of 96% across four trains."Over the last two months, feedgas volumes at Sabine Pass have remained highly utilized at 98%, likely driven by increasingly favorable netbacks, data compiled by Platts Analytics' Bentek Energy show. Netbacks to the UK's National Balancing Point trading hub and in JKM, the benchmark price for spot LNG in Northeast Asia, have continued to rise, increasing $1.01/MMBtu to $3.19/MMBtu and 85 cents/MMBtu to $4.15/MMBtu, respectively, over the last two months.

Platts JKM rises above $10/MMBtu mark on north Asian LNG demand, oil price strength - Spot Asia LNG prices broke above $10/MMBtu Thursday on robust peak winter demand from Northeast Asia and recent oil price strength.The Platts JKM for cargoes delivered in January was at $10.05/MMBtu, the first time in double digits since January 2015, having surged more than 60% since the beginning of September.  Spot prices have been on an upward trajectory over the past three months, almost doubling the 2017 low of $5.35/MMBtu.  A similar upward trend was observed in the JKM towards the end of 2016, before prices dropped to just over $5/MMBtu by the end of March. While the price surge last winter was spurred by supply concerns, mainly at Australian and Angolan facilities, this year's rally has been underpinned by strong demand from north Asian buyers, especially from China. China's soaring demand for LNG imports this year has been driven by cold weather, coal-to-gas switching policy directives to curb air pollution, and large-scale replacement of coal-fired heating with gas-fired boilers in domestic households.The country has imported 32.7 million mt of LNG in 2017 to date, just below the 33.3 million mt imported by South Korea, according to Platts Analytics, and well above the 25.7 million mt China imported in the full year 2016.China's interest in January cargoes has been strong, with recent bids from end-users in the high-$9s/MMBtu, though the country's spot demand growth potential might be limited by high terminal capacity utilization.  Terminals in the key winter demand center of northeast China, operated by state-owned importers CNOOC, PetroChina and Sinopec, have been running above nameplate capacity, according to market sources.

Argentina could become player in global gas market: analysts - Argentina could become a player in the global natural gas market by developing its giant Vaca Muerta shale play, but a number of challenges must be taken on including finding new outlets for the rising production, analysts said Tuesday. "Argentina has huge potential in gas," Daniel Montamat, an advisor to the Argentinian Energy Ministry, said at the Latin American Energy Organization's Forum on Regional Energy Integration in Buenos Aires. The country has proved oil and gas reserves of 4 billion barrels of oil equivalent and probable reserves of 9 billion boe, whereas the shale oil and gas resources total 170 billion boe, of which nearly 80% is gas, Montamat said. The size and quality of the resources have attracted companies like BP, Chevron, Dow Chemical, Total and others that, along with Argentina's state YPF, are starting to develop resources in Vaca Muerta. The play has gained comparisons to the Permian Basin in the US. Shale oil and gas production rose 26% to 75,700 boe/d in August in Neuquen, home to most of the play, according to the latest data of that province's Department of Energy, Mining and Hydrocarbons. The projects are expected to increase the Argentina's total gas output to 142 million cu m/d in 2023 and 185 million cu m/d in 2025, according to energy ministry forecasts. That would be up from 122 million cu m/d this year, its data show. 

China's natural gas push is too successful, creates price dilemma: Russell (Reuters) - China’s push to use more natural gas over winter in a bid to cut air pollution is running into the harsh realities of rising prices and limited supplies of the cleaner fuel. In a signal of what may become more government intervention in the natural gas market, China’s state planner ordered eight regions to meet with natural gas producers, liquefied natural gas (LNG) terminal operators and traders. The meetings are effectively a warning by the National Development and Reform Commission (NDRC) to the various players in the natural gas sector to ensure that prices don’t rise too much even as rising demand causes supply shortages. Beijing has encouraged China’s provinces to switch from coal to natural gas for both residential heating and industrial processes over winter as part of efforts to limit the smog that has in past years choked cities, including the capital. In some ways, the move has been too successful, with the industry-heavy provinces of Hebei and Shandong warning of natural gas shortages, and Hebei forcing some users to cut consumption. It’s not only the shortage of natural gas that’s causing problems. China’s domestic LNG price has risen to its highest since 2011, topping 7,000 yuan ($1,061) a tonne in the last week of November. The spot price of seaborne LNG in Asia LNG-AS has also surpassed the high from the 2016-17 winter, reaching $9.85 per million British thermal units (mmBtu) in the week ended Dec. 1. The peak from the previous winter was $9.75 per mmBtu, hit in early January this year, and the price is some 82 percent higher than the $5.40 low reached during the low demand summer period. 

Oil-hungry China imported record levels of US crude in November -  Chinese crude oil imports hit the second highest level on record last month, and U.S. oil producers are reaping the benefits. U.S. crude oil imports into China hit an all-time high in November, according to figures from ClipperData. The tanker-tracking firm reports that 289,000 barrels a day of U.S. crude hit Chinese shores by the end of the month. That is a small share of the 9.01 million barrels a day that China imported in November, but it shows that U.S. producers continue to make inroads into the country two years after Congress lifted a 40-year ban on crude oil exports. The United States has been able to penetrate the market in part because OPEC, Russia and nine other oil exporters are limiting their production in order to balance an oversupplied market. That has allowed U.S. producers to capture some of China's growing crude oil demand. The price difference between U.S. West Texas Intermediate crude and international benchmark Brent crude expanded this fall after Hurricane Harvey shut down U.S. Gulf Coast refineries. That suppressed the price of WTI, making it attractive to overseas buyers. The Chinese purchases started around that time, according to Smith. The price spread between WTI and Brent has narrowed since then, but still stands at about $6 a barrel. That helped to drive total U.S. crude oil exports to an all-time high above 2 million barrels a day in October. U.S. exports to China are "really going to depend on the spread," Smith said. "We're still here at over $5 on the Brent-WTI spread and so as long as that U.S. crude is discounted it will be bought up by Asia or Europe."    Market watchers shouldn't expect to see Chinese imports stay at 9 million barrels a day, but there is more growth on the horizon, s Refinery activity in China is healthy, demand is "decent," and refining margins are "phenomenal" thanks to tight supplies of diesel, she says. Meanwhile two new refineries in China are ramping up a combined 460,000 barrels a day of refining capacity and more small, independent "teapot" refineries are opening. Chinese crude oil imports are up about 900,000 barrels a day to an average of nearly 8.5 million barrels a day through November,

No significant inventory draw expected in Q1 2018, says Saudi's Falih - No significant oil inventory draws are expected in the next four months, Saudi energy minister Khalid al-Falih said Monday, meaning the global oil markets will not reach balance. "Our projection is that inventories will not draw significantly in the next four months, just as we have seen in 2017," Falih told reporters at a press conference in Riyadh following talks with his US counterpart, Rick Perry. "It won't make a dent," he added. The meeting came after Falih secured a nine-month extension to the OPEC/non-OPEC production cut deal in Vienna last Thursday, allowing the group to continue drawing down inventories. OPEC and non-OPEC producers still need to contend with supply growth, particularly from US shale producers, making a forecast of the exact rate of stock draws difficult. There was still an estimated 150 million barrels of crude oil in storage that needed to be drained, Falih said. The coalition had previously stated its aim of bringing OECD oil inventory levels down to their five-year average. OPEC estimated commercial OECD oil inventories stood 140 million barrels above that benchmark as of October. Now Falih is pushing for an even more ambitious target of reducing them by 150 million barrels. How quickly this happens will be reviewed in June. "We will wait to see it and will review in June, with the expectation, that unless something unexpected happens, we will not alter our course in the second half of the year", Falih said. "The outlook of when we will hit a balanced market will be clearer in June and we will start thinking what do we do in 2019," he added. This will mean looking at how OPEC and non-OPEC producers begin the process of exiting their supply cuts. The exit strategy, still to be devised, will certainly not include opening the taps to release 1.8 million barrels into the market overnight.

OPEC Can Drain Some Oil Barrels With a Calculator - Catching a moving target is difficult, but it's far easier if the target is moving toward you.OPEC and its associates, which extended their supply cuts on Thursday, are chasing a particularly elusive quarry known as the five-year average of commercial oil inventories in the OECD countries.This stockpile of oil held by companies (rather than government-controlled strategic stocks) is the most visible indicator of the glut weighing on oil prices and OPEC's progress in draining it. The Blob The oil glut began building in earnest in 2015 as OPEC first refused to cut supply to support prices, and draining it is a slow process Source: International Energy Agency, Bloomberg Gadfly analysis Note: Data for October 2017 are estimated, based on preliminary stock movements in the U.S., Europe and Japan. At the start of the 2017, stocks were 278 million barrels above the five-year average for that month, according to OPEC. As of October, the excess had dropped to 140 million, the group said Thursday. It aims to close that next year, with a review planned for June.The good news for OPEC is that the average itself will do some of the job.I wrote here about how the build-up of the oil glut meant five-year moving averages of U.S. inventories were also rising. Like a big meal moving through a python, a sudden increase in stocks will cause a bulge in the moving average for several years.The same is happening with OECD inventories. Based on OPEC's published data, the implied five-year average stockpile for June 2018 -- meaning the average level for that month in the years 2013 through 2017 -- is 2.853 billion barrels. The implied average for October 2017 is 2.818 billion.  In other words, the average will rise 35 million barrels by the time of the next Vienna show. That means one out of every four barrels OPEC needs to disappear in order to hit its target will be drained not by demand or supply -- just math.

November OPEC oil output drops to 6-month low - Oil production from the Organization of the Petroleum Exporting Countries fell to the lowest level in six months in November, according to an S&P Global Platts survey released Thursday. OPEC output declined by 220,000 barrels a day in November from a month earlier, to 32.35 million barrels a day. The decline was driven by "steady" crude production falls in Angola, Saudi Arabia, Iraq, Venezuela, Libya and the UAE, S&P Global Platts said. Saudi Arabia's output fell by 50,000 barrels a day to a four-month low of 9.97 million barrels a day. Output from Nigeria and Algeria, however, climbed. January West Texas Intermediate crude held onto earlier gains, trading 50 cents, or 0.9%, higher at $56.46 a barrel on the New York Mercantile Exchange.

Asia turns to North America for more oil as OPEC extends output cuts - Asian refiners are losing no time reacting to a decision by OPEC and Russia to extend their agreed production cuts to all of 2018, ordering more oil from the Caribbean and Gulf of Mexico in a move that will result in lost OPEC and Russian market share. In a note to clients titled “Christmas comes early,” Barclays bank said on Friday: “U.S. crude oil exports to China could easily double next year as U.S. production and export capacity expands … (and) OPEC countries will see their market shares in Asia decline further.” “There have been many enquiries from Asia for oil tanker shipments from the Gulf of Mexico and Caribbean. Now that we know OPEC’s cuts will be extended, these enquiries are being turned into orders,” said a broker who specializes in long-haul crude oil shipments.

OPEC expects to stick to cuts in second half of 2018 - Saudi minister (Reuters) - Saudi Arabia’s Energy Minister Khalid al-Falih said on Monday oil producers might start discussing in June when to raise output once the market outlook was clearer, even though OPEC was expected to continue output curbs in the second half of 2018. Saudi Arabia's Oil Minister Khalid al-Falih listens during a news conference after an OPEC meeting in Vienna, Austria, November 30, 2017. REUTERS/Heinz-Peter BaderThe Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia have agreed to extend oil output cuts until the end of 2018 to clear a global glut but have signalled a possible early exit if market overheated. Falih said in Riyadh that the expectation was that “we will not alter our course in the second half of the year,” adding that this assumed there were no unexpected developments. “However, we think that the outlook for when we will hit the balanced market will be clearer in June, and we will start thinking of what do we do in 2019,” he said when asked if he sees oil producers starting to raise output in June when OPEC is set to review the supply cuts. Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts to ensure the market does not flip into a deficit too soon, prices do not rally too fast and rival U.S. shale firms do not boost output further. Speaking at a news conference with U.S. Energy Secretary Rick Perry, Falih said the kingdom and other major oil producers had plenty of supply to respond to any sudden disruptions. “We have close to 2 million barrels (per day, bpd) of spare capacity so our ability to bring back production in case of need for global supply security goes beyond the amount of cuts we have made,” Falih said. “There will be plenty of supply to respond to any need in the market.” 

Funds build record bullish position in oil ahead of 2018: Kemp -  (Reuters) - Hedge fund managers raised their bullish position in crude oil and refined products by another 63 million barrels to a record 1,155 million barrels in the week before the OPEC meeting.Portfolio managers were emboldened as it became clear OPEC and its allies were likely to extend production cuts for another nine months until the end of 2018 (http://tmsnrt.rs/2A0cUsJ).Fund managers have brushed aside concerns about the enormous concentration of long positions already in the market and the risk of a sharp liquidation-driven reversal.The focus has instead been on the potential for a further tightening of crude and product markets next year as oil consumption continues to grow strongly and OPEC restricts output to draw down inventories.The increase in net long positions was concentrated mostly in U.S. crude (WTI) where net length increased by 52 million barrels in the week to Nov. 28.Net length in Brent rose by 12 million barrels while there were only minor changes in U.S. gasoline (-3 million barrels) and heating oil (+2 million barrels).WTI appears to have been playing catch-up with Brent, where net long positions have been at or near record levels since the start of November.In contrast to Brent, traders have taken a much more cautious view on WTI, owing to the local oversupply of crude in the U.S. Midwest and around the WTI delivery point at Cushing. But some of that caution appears to have evaporated following problems with the Keystone pipeline that delivers crude from Canada into the region.Hedge fund managers have cut short positions in WTI to just 40 million barrels, the lowest level since February 2017 and before that July 2014 at the start of the oil slump.  Across the entire petroleum complex, the imbalance between long and short positions has become extreme, which suggests that the risk of a sharp price reversal remains high in the short-term.

Oil Markets Calm After OPEC Storm -- Oil prices fell back a bit on Monday as the dust from the OPEC meeting settled. Hedge funds and other money managers still have an enormously bullish positioning, which will leave open the opportunity for profit-taking. “A lack of any significant bullishness in the weekend let the bears regain control they were looking for,” Donald Morton, senior vice president at Herbert J. Sims & Co., told the Wall Street Journal. Researchers at MIT have discovered a flaw in the EIA’s official forecast, which might mean that the agency is vastly overstating the potential growth of oil and gas production. “The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,” said Justin B. Montgomery, a researcher at the Massachusetts Institute of Technology and one of the study’s authors, according to Bloomberg. “This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.” The EIA has assumed technology has been behind much of the growth of shale, but the MIT researchers said recent growth is more due to the fact that low prices have forced drillers to focus only on the sweet spots. “When that’s all played out, they’re going to have to go to the tier-two acreage, which isn’t going to be as productive,” Dave Yoxtheimer, a hydrogeologist at Penn State, told Bloomberg. The conclusion from the MIT report is that total U.S. oil and natural gas production could undershoot EIA forecasts by 10 percent by 2020, a disparity that widens in subsequent years.  Saudi oil minister Khalid al-Falih told reporters on Monday that the group will have a better sense of what they will do next by June. “[W]e think that the outlook for when we will hit the balanced market will be clearer in June, and we will start thinking of what do we do in 2019,” he said. However, he also said that the expectation was that “we will not alter our course in the second half of the year.” When asked about the possibility of tightening the market too much, al-Falih dismissed those claims. “We have close to 2 million barrels (per day, bpd) of spare capacity so our ability to bring back production in case of need for global supply security goes beyond the amount of cuts we have made,” Falih said. “There will be plenty of supply to respond to any need in the market.” A Bloomberg survey estimates that total OPEC production declined by 80,000 bpd in November compared to a month earlier, dropping to a six-month low. Output stood at 32.47 million barrels per day, the lowest total since May. Much of the decline was the result of a 100,000-bpd decline from Angola, due to field maintenance.

Oil slips on worries of possible shale oil surge - Houston Chronicle: Oil retreated the most in more than two weeks amid worries that OPEC's deal to extend production cutbacks may take U.S. shale activity to a whole new level. Futures closed 1.5 percent lower in New York. OPEC and partners including Russia last week agreed to keep cutting output through the end of next year. At the same time, North American explorers probably will boost spending by 20 percent in 2018, according to an Evercore ISI survey of industry budget trends. "It's been a steady climb on the production side here in the U.S., which continues to eat away at OPEC's hopes for balancing this market," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. "They are sowing the seeds for the deal unraveling just because the way it's promoting shale output." The slide comes after oil jumped about a fifth from early September as investors geared up for last week's decision by the Organization of Petroleum Exporting Countries and its allies. The producers will maintain cuts until global supply meets demand, Saudi Arabia's Energy Minister Khalid Al-Falih said. OPEC's output in November dropped to a six-month low, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. But the danger is U.S. shale activity may surge, undermining the OPEC reductions. The U.S. oil rig count was already at the highest level since September last week, according to Baker Hughes data released Friday, and U.S. output was at a record high in the latest weekly government statistics. West Texas Intermediate for January delivery fell 89 cents to settle at $57.47 a barrel on the New York Mercantile Exchange. Total volume traded was about 32 percent below the 100-day average. Brent for February settlement slid $1.28 to end the session at $62.45 on the London-based ICE Futures Europe exchange, the lowest level in two weeks. The global benchmark crude was at a premium of $4.96 to February WTI. 

Goldman raises 2018 oil price forecast after OPEC deal -- A stronger than anticipated OPEC-led commitment to extend production cuts will support prices through 2018, according to analysts at Goldman Sachs. In a research note published late Monday, Goldman lifted its Brent price forecast for next year to $62 a barrel and its WTI projection to $57.50 a barrel. The revisions were up from $58 a barrel and $55 a barrel respectively. While the OPEC-led deal "leaves room for an earlier exit than currently scheduled, we now reflect this resolve in our supply forecast, with full compliance for longer and a more modest exit rate," Goldman analysts said in the research note. Oil prices have lost ground in the days following OPEC's deal with global producers last week. The 14-member cartel, Russia and nine other crude producers announced plans to extend their output cuts until the end of 2018. The move was heavily telegraphed ahead of the decision, but oil producers had earlier indicated they could exit the deal if they feel the market was overheating. 'Risks remain' beyond 2018 "Of course, risks remain and we see these as skewed to the upside into 2018 on the risk of an over tightening, either because of new disruptions, demand exceeding our optimistic forecast of OPEC letting the stock draw run hot," Goldman analysts said. However, Goldman said the response of shale oil and other producers to higher prices would likely incentivize OPEC and Russia to "pare back" their now greater capacity, thus leaving risks to prices skewed towards the downside over the long term. 

Oil rises in anticipation of another US crude drawdown  (Reuters) - Oil rose on Tuesday, supported by strong demand, expectations of a drop in U.S. crude inventories and an OPEC-led deal to extend oil output cuts. Analysts expect data on Wednesday from the U.S. Energy Information Administration (EIA) to show crude stocks fell 3.4 million barrels last week. Industry group the American Petroleum Institute said late on Tuesday that crude stocks fell by 5.5 million barrels, more than expected. But gasoline stocks were up by 9.2 million barrels, and distillate inventories rose by 4.3 million barrels, far more than expected for both categories. The EIA and API numbers do not always run in tandem.  In quiet post-settlement trade, oil prices dropped. Brent crude settled up 41 cents, or 0.7 percent, at $62.86 a barrel while U.S. West Texas Intermediate crude ended 15 cents, or 0.3 percent, higher at $57.62 a barrel.  After the API data, U.S. crude fell to $57.48 a barrel as of 5:08 p.m. EST.

Crude Oil Prices Settle Higher Amid Strong OPEC Compliance -– Crude oil futures settled higher on Tuesday as market participants continued to expect that ongoing strong OPEC compliance with the production-cut deal will continue to support oil prices. On the New York Mercantile Exchange crude futures for January delivery rose 15 cents to settle at $57.62 a barrel, while on London's Intercontinental Exchange, Brent gained 45 cents to trade at $62.90 a barrel. OPEC oil output fell in November by 300,000 barrels per day (bpd) to its lowest since May, a Reuters survey found on Monday, as the oil cartel maintained strong compliance with the deal to curb output. Expectations for ongoing strong OPEC compliance stoked investor hopes that rebalancing in oil markets would continue through 2018 as Goldman Sachs raised its 2018 forecasts for both Brent and WTI. Goldman Sachs raised its 2018 forecasts on Brent and WTI to $62 per barrel, and $57.50 a barrel, respectively. That is an increase from its previous 2018 Brent forecast of $58 per barrel and WTI forecast of $55 per barrel. “While the deal leaves room for an earlier exit than currently scheduled, we now reflect this resolve in our supply forecast, with full compliance for longer and a more modest exit rate,” Goldman Sachs analysts said in a note. The upbeat session for crude futures comes ahead of inventory data from the American Petroleum Institute on Tuesday as well as a further report from EIA on Wednesday expected to show a decrease in domestic crude inventories for the second-straight week. U.S. crude production, meanwhile, is likely to be closely monitored amid fears that U.S. producers are set to ramp up output. U.S. output rose in September to 9.5 million barrels per day (bpd), the highest monthly output since 2015, the EIA said last week.

WTI/RBOB Sink On Massive Product Inventory Builds  --A relatively stable day in energy markets as many other markets turmoiled, but as tonight's data hit, both WTI/RBOB kneejerked lower after API showed massive product inventory builds (despite a big crude draw). API:

  • Crude -5.48mm (-2.5mm exp)
  • Cushing -1.95mm (-2.4mm exp)
  • Gasoline +9.196mm - biggest build since Jan 2016
  • Distillates +4.259mm - biggest build since Jul 2017

After last week's surprise product builds and huge destocking at Cushing, expectations are high for more of the latter, but Cushing's Draw was less than expected and the massive builds in Gasoline and Distillates was shocking...The initial reaction to the API data was both WTI and RBOB kneejerked lower..

Oil Prices Fall After API Reports Huge Build In Gasoline Inventories - The American Petroleum Institute (API) reported a large draw of 5.481 million barrels of United States crude oil inventories for the week ending December 1, while analysts had expected a drawdown of 3.507 million barrels. The draw may embolden oil bulls who were left wanting after the OPEC meeting failed to lift prices as many had hoped.  Last week, the American Petroleum Institute (API) reported a surprise build of 1.821 million barrels of crude oil when analysts had expected a drawdown of 3.15 million barrels. A day later, however, the EIA reported a 3.4-million-barrel draw, more in line with analyst expectations.Gasoline inventories, on the other hand, saw a massive build this week of 9.196 million barrels for the week ending December 1, compared to forecasts of a much smaller 1.145-million-barrel build.  This week’s unexpectedly large build in gasoline inventories is likely to put downward pressure on oil prices. Oil prices were mixed heading into today’s data, with WTI down $.02 (-0.03%) at $57.45 at 12:06pm EST, and Brent crude up $0.14 (-0.22%) at $62.59—both benchmarks down from prices just two days before the OPEC meeting last week, despite OPEC’s promise to continue the production cuts through the end of 2018. Distillate inventories, too, saw a build this week, up 4.259 million barrels, against a forecast of a 548,000-barrel build.Inventories at the Cushing, Oklahoma, site decreased by 1.951 million barrels this week.

EIA: US commercial crude oil inventories decreased by 5.6 mln barrels - Below are the key highlights from the EIA's weekly petroleum report for the week ending December 1, 2017.

  • U.S. crude oil refinery inputs averaged 17.2 million barrels per day during the week ending December 1, 2017.
  • U.S. crude oil imports averaged 7.2 million barrels per day last week, down by 127,000 barrels per day from the previous week.
  • U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 5.6 million barrels from the previous week.
  • Total products supplied over the last four-week period averaged about 19.7 million barrels per day, up by 0.5% from the same period last year.

WTI/RBOB Extend Losses On Biggest Gasoline Build In 11 Months, Record Crude Production -  Following last night's API-reported huge product inventory builds, bulls were hoping DOE would rescue WTI/RBOB prices but it did not as the dat confirmed a huge crude draw and even bigger product build (gasoline's biggest weekly build since January). Adding to the pain, US crude production rose to another new record.  A gasoline build is likely as “refineries have been running very high, so it’s pretty natural,” James Williams, president of energy researcher WTRG Economics, says, adding that investors will also look to see the magnitude of a potential drop at Cushing.  DOE:

  • Crude -5.61mm (-2.5mm exp)
  • Cushing -2.753mm (-2.4mm exp)
  • Gasoline +6.78mm (+2.56mm exp) - biggest build since Jan 2017
  • Distillates +1.667mm

Confirming API's data, DOE showed a major crude draw, big drop at Cushing but major builds in products...  US Crude production rose 25k b/d to a new record high...

Oil Prices Slide On Major Gasoline Build | OilPrice.com The Energy Information Administration reported a 5.6-million-barrel draw in crude oil inventories for the week to December 1, largely in line with the American Petroleum Institute’s estimate of a 5.481-million-barrel draw that was reported yesterday. Analysts had expected a draw of 3.507 million barrels.But more notably, the API had yesterday reported a staggering 9.196-million-barrel build in gasoline inventories—when analysts had expected a small build of just 1.145 million barrels. The EIA today confirmed a large build of 6.8 million barrels.US crude oil imports averaged 7.2 million barrels per day last week—a decrease of 127,000 barrels per day from the previous week. The EIA said refineries last week processed 17.2 million barrels of crude per day, producing 9.8 million barrels per day of gasoline, down from 10.2 million bpd in the previous week. Prices have been stubbornly resistant to OPEC’s promise to extend the OPEC production cuts to the end of 2018, dropped yesterday as the API reported the surprisingly large gasoline inventory build. Both WTI and Brent crude benchmarks continued to fall in after-hours trading yesterday, settling at $57.36 and $62.60 respectively around 9:00pm EST. The benchmarks continued to fall overnight, and at 7:42am EST, they were trading at $56.90 and $62.21. Related: The 'Mega' Oil Field That Will Never Boom Despite the price drop, the extension of the OPEC and allies’ production cut deal through the end of 2018 continues to sent a stronger signal that the oil market rebalancing could speed up and send WTI oil prices to average $54.78 a barrel in 2018, up from a previous projection of $52.50, a Reuters poll of 30 analysts and economists showed on Wednesday.

Crude oil rally stalls as fuel prices soften: Kemp (Reuters) - Surging prices for refined products, especially distillate fuel oil, led crude prices higher between June and November, but now fuels are slipping and putting crude under pressure. Gross refining margins for producing distillate fuel oil from U.S. crude rose from $14 per barrel in June to more than $25 per barrel in the middle of November. The U.S. distillate market started the year in substantial oversupply, with inventories well above the long-term average (http://tmsnrt.rs/2joA5Cw ). But as a result of strong demand, primarily in export markets, the market has moved into an increasingly large deficit as the year has progressed. Distillate stocks have moved from a surplus of 33 million barrels over the 10-year average in February to 7 million barrels below the average at the start of December. Stocks have fallen by more than 33 million barrels since the start of the year compared with a ten-year seasonal average fall of 3 million barrels. As stocks have shrunk, distillate prices and margins have risen to encourage refiners to produce more of the fuel, with a clear uptrend since the end of June. U.S. refiners have responded by increasing crude processing and distillate production to unprecedented levels to meet demand. U.S. refinery crude runs have been running at record rates almost continuously since April, according to data from the U.S. Energy Information Administration. Runs in the most recent week were 800,000 barrels per day (bpd) higher than at the same point in 2016 and 1.8 million bpd above the 10-year seasonal average. At the end of November, U.S. refineries were processing crude at rates that had only ever previously been seen during the summer peak driving season. There has been a clear tilt towards maximising the production of distillate fuel oil to take advantage of higher margins than on gasoline. U.S. refineries produced a record 5.4 million bpd of distillates in the last week of November, which was 280,000 bpd higher than the year before and almost 480,000 bpd above the 10-year seasonal average. Most of this extra distillate is being exported to Latin America and other overseas markets with only a modest increase in domestic consumption. 

Oil rises on threatened Nigeria strike, short covering (Reuters) - Oil prices climbed more than 1 percent on Thursday due to a threatened strike in Nigeria and as traders cover shorts after sharp losses the previous day brought on by an unexpectedly large rise in U.S. stocks of refined fuels. Short covering in the market, together with the threat of a strike by Nigeria’s key oil union, has provided some support to oil prices in today’s session,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. One of Nigeria’s two main oil unions threatened to launch a nationwide strike from Dec. 18 over what it said was a “mass sacking of workers that joined the union.” The country is Africa’s top oil exporter. Brent futures rose 98 cents, or 1.6 percent, to settle at $62.20 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 73 cents, or 1.3 percent, to settle at $56.69. The previous day, Brent settled down 2.6 percent and WTI down 2.9 percent after an unexpected rise in U.S. fuel stocks. Data from the Energy Information Administration (EIA) on Wednesday showed that U.S. crude oil inventories fell by 5.6 million barrels in the week to Dec. 1, to 448.1 million barrels, putting stocks below seasonal levels in 2015 and 2016. But gasoline stocks rose by 6.8 million barrels, well above the 1.7 million-barrel gain analyst had expected, and distillate stocks, which include diesel and heating oil, rose 1.7 million barrels. “It was a sharp correction yesterday, so it’s a bit of a pause today,” said Olivier Jakob, managing director of PetroMatrix, adding “technically, it’s still very weak.” 

US drillers add oil rigs for 3rd week in a row -Baker Hughes (Reuters) - U.S. energy companies this week added oil rigs for a third week in a row, the longest string of increases since summer, as higher crude prices prompt drillers to return to the well pad after a break in the autumn. Drillers added two oil rigs in the week to Dec. 8, bringing the total count up to 751, the highest level since September, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. The U.S. rig count, an early indicator of future output, is still much higher than a year ago when only 498 rigs were active after energy companies boosted spending plans for 2017 as crude started recovering from a two-year price crash around the same time OPEC agreed to the production cuts a year ago. Last week, the Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia agreed to extend oil output cuts of about 1.8 million barrels per day until the end of 2018 as they try to finish clearing a global glut of crude. The increase in U.S. drilling lasted 14 months before stalling in August, September and October as some producers trimmed their 2017 spending plans after prices turned softer over the summer. Energy firms started adding rigs again in November as crude prices rose. So far in 2017, U.S. crude futures have averaged over $50 a barrel, easily topping last year’s $43.47 average. This week, futures traded near $57 a barrel, just below their highest since June 2015. Looking ahead, futures were trading near $57 for calendar 2018 and $54 for calendar 2019. In anticipation of higher prices than in 2016, exploration and production (E&P) companies increased their spending on U.S. drilling and completions in 2017 by about 53 percent over 2016, according to U.S. financial services firm Cowen & Co. In addition, Cowen said 17 of the 64 E&Ps they track, including Chevron Corp, have already provided capital expenditure guidance for 2018 indicating a 17 percent increase in planned spending over 2017. 

OilPrice Intelligence Report: Oil Prices Recover As Middle East Tensions Mount -- After sinking for much of the week, oil prices recovered slightly on Thursday and Friday. Analysts attributed the rise to tensions in the Middle East after the Trump administration announced the U.S. would move its embassy in Israel to Jerusalem, a move that was met with widespread protest in the region. Meanwhile, data from China showed strong crude import data for November – imports jumped above 9 million barrels per day, up from 7.3 mb/d a month earlier. Saudi oil minister Khalid al-Falih seemed to pull off an unexpected victory with the inclusion of Libya and Nigeria into the OPEC agreement – the two countries agreed to cap their output at 2017 levels – but their participation actually means very little for the oil market, consultants from Wood Mackenzie and Eurasia Group told Bloomberg. “The OPEC quota doesn’t matter,” Riccardo Fabiani, an analyst at Eurasia Group, said of Libya’s participation. “Moving beyond 1 million barrels a day in 2018 is going to be very difficult anyway.” China’s Sinopec is suing PDVSA over missed payments for an order of steel rebar. According to Reuters, Sinopec’s lawsuit is seeking $23.7 million for a breach of contract and conspiracy to defraud. The case is significant because for years China was one of the few main backers of Venezuela, offering the cash-strapped nation more than $50 billion in loans over the past decade in exchange for oil shipments. U.S. Secretary of Energy Rick Perry trumpeted the opportunity of U.S. LNG for the Middle East in a visit to Abu Dhabi this week. “We want to be in the mix of LNG suppliers for the Mideast,” Perry said at the news conference. “Creating a relationship, having these conversations is good, it gives the U.A.E. some options.” Jordan, the UAE and Egypt have occasionally purchased LNG cargoes from Cheniere Energy’s Sabine Pass facility over the past two years, according to Bloomberg. Qatar is the largest LNG exporter in the world, but the deep rift between them and other Gulf countries led by Saudi Arabia opens up an opportunity for other suppliers to fill the void.

US Rig Count Rises Amid Falling OPEC Output - - While OPEC continues to curb its in-house oil production among its members, US drillers are ramping up, adding rigs for the fifth week in a row. This week, Baker Hughes reported that active oil and gas rigs in the US had climbed by 2.The total oil and gas rig count in the United States now stands at 931 rigs, up 307 rigs from a year ago, with the number of oil rigs climbing by 2 and the number of gas rigs holding steady. The number of oil rigs stand at 751 versus 498 a year ago. The number of gas rigs in the US now stands at 180, up from 125 a year ago.The WTI and Brent benchmarks had slipped earlier in the week after the EIA and API reported a massive build in gasoline inventories. But prices had started to recover on Friday on threats of a nationwide strike in Nigeria and reports that China’s crude oil imports had hit record highs for the month of November.  By 11:25am EST, the price of a WTI barrel was up $0.78 (+1.38%) to $57.47, with a Brent barrel up $1.08 (+1.74%) to $63.28. The Permian Basin added 3 rigs for the week, bringing the total count in the fastest growing shale patch to 400 compared to just 246 a year ago. Eagle Ford, Haynesville, and Marcellus all added three rigs this week as well.Along with an increase to the number of active oil rigs, US crude oil production continues to climb a weekly basis, placing further pressure on prices. US crude oil production for the week ending December 1 was 9.707 million barrels per day—another record for 2017, and the seventh straight weekly increase. At 1:08pm EST, WTI was trading at $57.26 with Brent trading at $63.19.

Oil rises nearly 2 percent on China demand, but weekly losses loom  (Reuters) - Oil prices rose almost 2 percent on Friday, helped by rising Chinese crude demand and threats of a strike in Africa’s largest oil exporter.   U.S. prices fell 1.7 percent on the week and Brent prices fell 0.5 percent amid concerns that rising U.S. production could undermine OPEC-led supply cuts. Brent crude settled up $1.20 or 1.9 percent at $63.40 a barrel. U.S. West Texas Intermediate (WTI) crude settled up $57.36 a barrel, up 67 cents or 1.2 percent. China’s crude oil imports rose to 9.01 million barrels per day (bpd), the second highest on record, data from the General Administration of Customs showed. “We have good numbers out of China,” said John Macaluso, an analyst at Tyche Capital Advisors. “A lot of the extra imports are not from Saudi Arabia. Iran, Russia and the U.S. are some of the countries picking up the slack.” Booming demand will push China ahead of the United States as the world’s biggest crude importer this year. U.S. investment bank Jefferies forecast 2018 global oil demand growth of 1.5 million bpd, driven by almost 10 percent demand growth in China. “Generally speaking, the market is looking more healthy than sick,” said Tamas Varga, analyst with PVM Oil Associates. Varga said the threat of a strike later this month from a union in Nigeria, Africa’s largest oil exporter, was supportive. An extension to the end of 2018 of production cuts by the Organization of the Petroleum Exporting Countries, Russia and other producers underpinned the market. The output cuts pushed oil prices higher between June and October, with Brent gaining around 40 percent. “Even if you have no bullish view ... OPEC and Russia have taken away the risk to the downside,” said Bjarne Schieldrop, chief commodities analyst with SEB Bank, adding it was unlikely that Brent would drop below $61 per barrel. 

Angola, Saudi, Iraq drag OPEC Nov oil output to six-month low: Platts survey - OPEC oil output in November dived to 32.35 million b/d, its lowest in six months led by declines in eight of the 14 member countries, an S&P Global Platts survey of OPEC and oil industry officials and analysts showed Thursday.November output slid 220,000 b/d from the previous month due to steady falls in Angola, Saudi Arabia, Iraq, Venezuela, Libya and the UAE. The only two countries to have a production rise were Nigeria and Algeria. The OPEC output level was 430,000 b/d above its declared ceiling of about 31.92 million b/d when Equatorial Guinea, which joined in May, is added in and Indonesia, which suspended its membership in December, is subtracted.  Last week OPEC and non-OPEC countries agreed to a nine-month extension of their production cut agreement through the end of 2018, with an option to review the deal in June.  OPEC kingpin Saudi Arabia led by example again, reducing its production by 50,000 b/d to a four-month low of 9.97 million b/d, as it reduced its domestic burning of crude to a four-month low and curbed exports.The kingdom had previously indicated a sharp dip in its November and December crude export allocations. Contributors to the survey said that in place of burning crude for power generation, Saudi Arabia had increased its refining volumes as it pushes up oil product exports.

The Qatar Crisis in an Age of Alternative Facts - The Gulf Cooperation Council (GCC) holds its annual Summit in Kuwait City this week, exactly six months since three of the six GCC states—Saudi Arabia, Bahrain, and the United Arab Emirates (UAE)—cut diplomatic relations and imposed economic sanctions on a fourth, Qatar. From the start, the so-called Anti-Terror Quartet (the three GCC states plus Egypt) has pursued a disinformation campaign that portrayed Qatar as a reckless threat to regional security. The media war has sought to secure the support of the neophyte political and foreign policy operators in the White House in the first international crisis of the era of alternative facts. This attempt to drag the US government into a dispute that has pitted core regional political and security partners against one another has highlighted the dangers of picking sides in a clash in which—from an American perspective—there can be no clear winners or losers. The Qatar crisis originated in a hack of the Qatar News Agency and creation of a fake-news account of a speech in which Emir Tamim bin Hamad Al Thani allegedly praised Iran and Hamas and criticized the Trump administration. Media outlets in Saudi Arabia and the UAE seized on these fabricated remarks in a two-week onslaught that preceded the actual diplomatic rupture on June 5. Significantly, the hack came just two days after the Saudi leadership at the Arab-Islamic-American Summit in Riyadh feted President Trump and when he called on Sunni Arab states to rally against terrorism and extremism. Subsequent tweets by President Trump in June and comments in October by Stephen Bannon, by then the former White House chief strategist, drew a direct line between their talks in Riyadh on May 21 and the later action taken against Qatar on June 5, and implied a degree of forewarning and tacit approval. After years of tense relations with the Obama administration, not least over its secret negotiations with Iran that culminated in the Joint Comprehensive Plan of Action in 2015, Saudi and Emirati leaders reached out quickly to senior figures in the incoming Trump presidency. Fortified by the expectation that the administration would follow policies on Islamism and Iran that aligned closely with their own hawkish approaches, the then-Deputy Crown Prince of Saudi Arabia, Mohammed bin Salman Al Saud, and the influential UAE Ambassador to Washington, Yousef al-Otaiba, established a close rapport with Jared Kushner. Their efforts to woo the inner circle paid off in May when Trump made his first international visit as president to Saudi Arabia – rather than to Canada or Mexico, as his five immediate predecessors had done – and the State Department was said to be cut out of much planning for the Riyadh Summit, which was handled instead by the White House and the Royal Courts in Riyadh and Abu Dhabi.

Kuwait Struggles for Unity at Home and in the Region - Arab Gulf States Institute in Washington As Kuwait hosts the annual Gulf Cooperation Council summit this week in yet another push to find an antidote for Gulf acrimony, stakes are rising. A zero-sum battle for Gulf supremacy –  Iran versus Saudi Arabia; the self-proclaimed anti-terror quartet versus Qatar – places Kuwait in an untenable position, and threatens its model of civic accommodation. Kuwait’s relatively open politics and careful balancing of societal constituencies – Sunni and Shia, liberals and Islamists – look anomalous in today’s maximalist Gulf, and increasingly under threat. On October 24, Emir Sabah al-Ahmed al-Sabah stood before the opening session of Kuwait’s Parliament and issued a call for unity. Citing the difficult regional situation – civil wars, sectarian conflict, and Gulf disagreements – he pleaded with Kuwait’s rambunctious lawmakers to be aware of the seriousness of the current situation and act with responsibility. His appeal to domestic harmony mirrored his thus far fruitless effort to mend the yawning divisions that have opened within the GCC with the quartet of countries led by Saudi Arabia and the United Arab Emirates continuing its boycott of Qatar on accusations of its support for terrorism. Yet less than a week later, Kuwait’s Cabinet resigned in the face of opposition questioning of a royal cabinet member and an impending parliamentary vote of no confidence. A new government has yet to be appointed, a delay most believe to be due to difficult negotiations over power sharing by factions within Kuwait’s ruling family. Meanwhile, the decision of an appeal’s court to jail nearly 70 politicians and youth activists for crimes surrounding the storming of the Parliament in protest in November 2011 is roiling Kuwaiti domestic politics. The obstacles are mounting to find a formula to achieve unity at home and in the region.

Middle East Tensions Near Boiling Point -- The 38th Gulf Cooperation Council (GCC) Summit resulted in a showdown between Qatar and its Saud-led alliance counterparts.Saudi King Salman decided to send a lower diplomatic delegation in his place, chipping away at the stability in the region. Additionally, in an unexpected move, Saudi Arabia and the United Arab Emirates (UAE) announced that the two countries have formed a new economic and military partnership, separate from the GCC. Arab analysts have already indicated that this could deal a deadly blow to the role of the GCC. Officially, the decision made by UAE’s ruler Sheikh Khalifa bin Zayed Al Nayhan and the Saudi King is not linked to the ongoing Qatar crisis. However, the symbiosis currently showing between Saudi crown prince Mohammed bin Salman and Abu Dhabi’s crown prince Sheikh Mohammed bin Zayed is the main force behind this bilateral cooperation agreement.The direct impact wasn’t clear within the first few hours of the GCC meeting. Analysts speculated how the news of the fresh Saudi-Emirati military and economic cooperation would impact the six-member GCC meeting. Until the new alliance was announced, the media was primarily focused on the ongoing Qatar crisis, especially due to the fact that the Qatari Emir was in attendance. Insiders, however, already expected that the new agreement would have a detrimental effect on the GCC meeting, given the impact of the council’s two main supporters decided to create their own military, political, and economic alliance.Riyadh and Abu Dhabi have clearly been paving the way for a confrontation with Iran and Qatar for several months, while also setting up major economic projects in their own countries as they coordinate military operations in Yemen, Syria and Libya. Two weeks ago, Emirati analysts indicated that the UAE would take a primary role in regional conflicts, which has now come to the surface more clearly. Several major conclusions now need to be drawn. First of all, the Saudi-Emirati move puts immense pressure on the other GCC countries to comply to the Riyad-Abu Dhabi axis point of views with regards to Doha and Tehran. It also shows that these two leading Gulf states have decided to put their own strategy in place, which is independent from the US-allied Gulf Arab nations planned by the GCC. It’s clear that both countries are even willing to confront Washington in their strategy towards Qatar, which still holds a major U.S. military base. The Abu Dhabi-Riyadh axis puts Washington under pressure to decide its own policies towards Qatar and Iran. With the increased pressure on the Trump administration, it also asks its Arab neighbors to pull ranks.

How can the Arab world sidestep the pull of the abyss? - A series of startling events in November revealed the abysmal state of affairs in the Arab world. The Lebanese prime minister announced his resignation abroad, but reversed the statement later. A missile was launched from Yemen toward Saudi Arabia’s capital, Riyadh. Saudi Arabia’s leadership carried out a major anti-corruption campaign that affected dozens of high-profile personalities. Egypt, meanwhile, experienced its worst terrorist attack in living memory, with more than 300 civilians killed and injured. Video footage of alleged slave auctions in Libya underscored the continuing chaos there amid the complete breakdown of the Libyan state. Military victories against the Islamic State and a rapprochement between Palestinian factions in Gaza and the West Bank have done little to ease a collective sense of anxiety in the region. Nor have these positive developments inspired much confidence that the Arab world will somehow pull itself back from the edge of the abyss. Foreign interference has become routine in Syria, Lebanon, Iraq, and Yemen. And ongoing debates over identity politics and borders in the Levant are a prelude to the grave, fundamental challenges ahead. In fact, the situation in the Middle East is not surprising, given that in recent years no Arab country has led attempts to resolve the ongoing conflicts in Libya, Syria, and Yemen, let alone address the Palestine-Israel issue. In many of these conflicts, foreigners have had far more influence than Arabs.  But while there are many reasons to blame foreign powers for the region’s parlous state of affairs, blaming others – or even one another – will solve nothing. After all, the Arab world has many homegrown problems, too, including inefficient and ineffective governance, unholy alliances, and undeveloped national capacities.

Pentagon: US Troops Will Stay In Syria "As Long As We Need To" - US forces plan to stay in Syria "as long as they need to” support local partners and to ensure that terrorists will not return, a Pentagon official told AFP on Tuesday. The announcement comes as the Islamic State has ceased to be a reality, and as the Syrian Army is on the cusp of final victory over ISIS in remaining pockets of eastern Syria. “We are going to maintain our commitment on the ground as long as we need to, to support our partners and prevent the return of terrorist groups,” Pentagon spokesman Eric Pahon said. “To ensure an enduring defeat of ISIS, the coalition must ensure it cannot regenerate, reclaim lost ground, or plot external attacks.” Though officials recently hinted that the Pentagon would soon formally acknowledge that it has "about 2,000" American troops in Syria, the long standing official number of 503 still hasn't changed. In late October a top military official briefly admitted to 4,000 troops on the ground in Syria during an interview, but awkwardly backtracked on his statement and said, “I’m sorry, I misspoke there, there are approximately 500 troops in Syria."

Yemen Rebels Claim They Fired Missile At Abu Dhabi Nuclear Plant -- Two days after Israel reportedly destroyed an alleged Iranian airbase in the city of al-Qiswa near Damascus in Syria, Yemen’s Houthi rebels claimed they fired a cruise missile toward the $20 bilion Barakh nuclear power plant in Abu Dhabi in the UAE (which is still under construction) which "successfully hit its target", the group’s television service said on its website Sunday, however without providing evidence.The launch was in retaliation for the closing of sea and air ports, it said without offering evidence or providing further details. The statement quoted a Houthi leader who warned against continuing the blockade, “affirming Yemenis’ right to take sensitive steps.”“The missile force announces the launching of a winged cruise missile … toward the al-Barakah nuclear reactor in Abu Dhabi,” the website said. It gave no further details. The claim comes as the United Arab Emirates, which is part of the Saudi-led coalition, celebrates its National Day.’

US-Supplied Defense System Failed To Intercept Houthi Missile Attack On Saudi Capital - A new study in the New York Times suggests that Saudi Arabia's state of the art defense system failed to intercept the ballistic missile fired by Yemen's Houthi rebels which nearly hit Riyadh's international airport on November 4th. The report contradicts the official claims of the Saudi and American governments, which both announced immediately after the incident that the US-supplied Patriot missile defense system had successfully intercepted the Houthi fired Scud.   The analysis, which utilized open-source material in the form of available video and social media photos of the aftermath of the attack, was conducted by a team of missile experts, and threatens to shake confidence in the US system, which is currently implemented by American allies around the world from South Korea and Taiwan to Turkey, Israel and Japan, among others.  And notably President Trump himself had announced while aboard Air Force One on the day following the attack, “Our system knocked the missile out of the air.” Trump also emphasized the importance of demonstrable success of the systems and added, “That’s how good we are. Nobody makes what we make, and now we’re selling it all over the world.” But The New York Times report begins with a flat contradiction of that claim:The official story was clear: Saudi forces shot down a ballistic missile fired by Yemen’s Houthi rebel group last month at Saudi Arabia’s capital, Riyadh.....But an analysis of photos and videos of the strike posted to social media and analyzed by a research team of missile experts appears to show the missile’s warhead flew unimpeded over Saudi defenses and nearly hit its target, Riyadh’s airport. The warhead detonat ed so close to the domestic terminal that customers jumped out of their seats.

Yemen Houthis Blow Up Ex-President Saleh's House Amid Heavy Fighting -- Fighters from Yemen's Houthi rebel movement have blown up the house of ex-President Ali Abdullah Saleh in the centre of the capital Sanaa, residents reported, as Saleh's current whereabouts remained unknown, Reuters reported. The attack came a day after Saleh said he was ready for a "new page" in ties with the Saudi-led coalition. Saleh's loyalists had lost ground on the sixth day of heavy urban combat with the Iran-aligned Houthis, his former allies in nearly three years of war with a Saudi-led military coalition. On Monday, the Houthis made gains against forces supporting the former president. According to witness reports in local media, there was intense fighting overnight, with explosions rocking the city into Monday morning. The alliance between the Houthi rebels and former Saleh recently seemed to be on the verge of a split, after on Sunday, the former leader of the war-torn country formally renounced his alliance with the Houthis, pulling a "Hariri." Saleh pledged to step up his fight with the Iranian-backed group, having re-aligned his forces with Saudi Arabia. In an earlier televised speech, Saleh said that he made the decision to cease fighting in the country, having asked Riyadh to stop attacks on Yemen in exchange for his support."I call upon the brothers in neighboring states and the alliance to stop their aggression, lift the siege, open the airports and allow food aid and the saving of the wounded and we will turn a new page by virtue of our neighborliness," he said.Until Sunday's unexpected reversal, Saleh and the Houthis had been fighting against the Saudi-backed forces of ousted President A bdrabbuh Mansur Hadi since 2015.

Ousted Yemen President Ali Abdullah Saleh killed -  Yemen's ousted leader Ali Abdullah Saleh has been killed by Houthi rebels near the capital, Sanaa, a development expected to have major implications for the war in the Arab world's poorest country. The death was first announced on Monday by the Sanaa-based interior ministry, controlled by Saleh's allies-turned-foes, the Houthi rebel group.  His killing was later confirmed to Al Jazeera by Saleh's political party, the General People's Congress (GPC).Footage circulating on social media appeared to display a body resembling Saleh, with one video showing how armed militia members used a blanket to move the corpse into the back of a pick-up truck. There were earlier reports that the Houthi rebels blew up one of Saleh's houses, after storming the property.Houthi sources said Saleh was killed by the rebels in a rocket-propelled grenade and shooting attack on his car at a checkpoint outside Sanaa. Yasser al-Awadi, the GPC's assistant secretary-general, was also killed. In a statement read out on a Houthi TV network, the interior ministry announced the "killing" of "Saleh and his supporters".  "This is after he and his men blockaded the roads and killed civilians in a clear collaboration with the enemy countries of the coalition," the statement said.

Yemen Without Saleh - The former Yemeni President Ali Abdullah Saleh has been killed today. He was 75 years old but still very active in Yemeni politics. Video of his dead body being thrown onto the back of a pickup is making the rounds. One hears Houthi slogans shouted in the background. The pictures show a gun wound on the chest and at the side of the head. The face is easily recognizable. There are also pictures of his ID card.Though several media report his death there is no confirmation yet from his GPC party or his family. Over the last few days Houthi media had announced several times that Saleh had been killed. This morning Saleh's house was blown up. This time the Houthi news proved right. The circumstances of Saleh's death are not yet known, but it was said that he was fleeing Sanaa when fate caught up with him. As we wrote in our recap on Saturday, Saleh had suddenly made peace with the Saudis and asked his followers to take up arms against his former allies. For more than two years he had allied with the Houthi against the U.S. and UK supported Saudi invasion and proxy forces. On Friday, after several days of local clashes with the Houthi, he had called for his followers to throw the Houthi out of the Yemeni capital Sanaa. For a day his fighters, led by some 1,000 soldiers of Saleh's personal guards, were successful and the Houthi were kicked out of many of their positions. But they were not defeated. They called up more of their troops and on Sunday regained the lost ground and buildings. They occupied Saleh's media. His TV station started to transmit his enemies chants. Over the last night and throughout today they defeated Saleh's troops. It is yet a mystery why not more of Saleh's supporters came to his help. Sanaa is his home turf and whenever he had called for demonstrations in the city, hundreds of thousands attended.  The Saleh family and clan is quite big and resourceful. Many of his relatives have held high military positions in the Yemeni army and keep enough money to pay for their troops loyalty.  The Saudis had recently bet on Saleh to end the stalemate in their war on Yemen. Had he won out, it could have meant a pause in the war and probably its end. With the Houthi now having the upper hand in Sanaa, the war, the permanent Saudi bombing and the blockade of Yemen are likely to continue. The Houthi will continue to attack within Saudi Arabia and the fight against the Saudi proxy forces on the ground will go on. It will need another breakthrough event for the war to stop.

Exiled son of Yemen's Saleh takes up anti-Houthi cause (Reuters) - The powerful exiled son of Yemen’s slain ex-president Ali Abdullah Saleh vowed on Tuesday to lead a campaign against the Houthi movement that killed his father after he switched sides in the civil war. The intervention by Ahmed Ali Saleh, a former leader of the elite Republican Guard once seen as a likely successor to his father, gives the anti-Houthi movement in Sanaa a potential figurehead, after a week of fighting that saw the Houthis rout Saleh’s supporters in the capital. Yemen’s war, pitting the Iran-allied Houthis who control Sanaa against a Saudi-led military alliance backing a government based in the south, has brought what the United Nations calls the world’s worst humanitarian crisis. The world body says millions of people may die in one of the worst famines of modern times, caused by warring parties blocking food supplies. Saleh had helped the Houthis win control of much of the country’s north including Sanaa, and his decision to switch allegiances and abandon the Houthis in the past week was the most dramatic change on the battlefield in years. But the Houthis swiftly crushed a pro-Saleh uprising in the capital and shot him dead in an attack on his convoy. Tens of thousands of Houthi supporters staged a rally in the capital on Tuesday to show support for their leader and celebrate the death of Saleh. They chanted slogans against Saudi Arabia and its allies. Mahmoud Ali al-Houthi, head of the movement’s Revolutionary Committee, denied allegations that the group was executing members of Saleh’s party after their capture: “We have been treating some of Saleh’s sons and we haven’t executed them,” he told the crowd.

Hamas says Trump has opened 'gates of hell' over Israel - Palestinian terrorist group Hamas has said President Donald Trump's recognition of Jerusalem as Israel's capital is a 'flagrant aggression against the Palestinian people'.In a speech in Washington, Trump said his announcement marked the beginning of a new approach to the Israeli-Palestinian conflict.But Hamas, which dominates the Gaza Strip, urged Arabs and Muslims to 'undermine the US interests in the region' and to 'shun Israel.' Hamas political leader Ismail Haniyeh said the Palestinian people 'know how to respond properly to the disregard of their feelings and sanctuaries.' He added that the decision 'will not change the facts of history and geography.' President Trump recognized the disputed city of Jerusalem as Israel's capital earlier today - a historic decision that overturns decades of US policy and risks triggering a fresh spasm of violence in the Middle East. 'Israel is a sovereign nation with the right like every other sovereign nation to determine its own capital,' the US leader declared from the White House. 'Acknowledging this as a fact is a necessary condition for achieving peace.' The declaration - met by fierce regional condemnation - ends seven decades of deliberate diplomatic ambiguity about the final status of a holy city vociferously claimed by both Israelis and Palestinians. Although welcomed by Israel's Prime Minister Benjamin Netanyahu as a 'courageous and just decision,' Trump's move also left the already faltering peace process in deep doubt. Mahmud Abbas's Palestine Liberation Organization said Trump has destroyed the two-state solution, warning the United States could no longer hope to be a peace broker, while Hamas - the Palestinian Islamist movement that runs the Gaza Strip - said Trump's decision opens 'the gates of hell on US interests in the region.' 

Palestinians 'ready to sacrifice' for Jerusalem -- Hundreds of Palestinians marched through Bethlehem in a "day of rage" protest against Donald Trump's recognition of Jerusalem as Israel's capital, as anger over the controversial decision continues to spread across the occupied Palestinian territories.Israeli military forces fired tear gas and rubber bullets at Palestinian protesters in Bethlehem on Thursday, and at least seven youths were injured in the clashes, including one small child. Men, women and children participated in the march, which was among several held in the West Bank, Gaza Strip and occupied East Jerusalem, as well as in major cities across the region, throughout the day.Palestinian leaders also declared a general strike across the Palestinian territories. "I am seeing people at this protest that never come out to these kinds of demonstration," Rabee Alsos, 32, told Al Jazeera in Bethlehem."Jerusalem and al-Aqsa [Mosque] means a lot to everyone here, even the children. This [US] decision is a big mistake."Trump announced on Wednesday that he was recognising Jerusalem as Israel's capital and that he would begin the process of moving the US embassy from Tel Aviv to the city, to the disbelief of Palestinians and world leaders. No country currently has its embassy in Jerusalem. West Jerusalem was seized by Israel during the 1948 Arab-Israeli war, when more than 750,000 Palestinians were expelled from historic Palestine, referred to by Palestinians as the Nakba (catastrophe) when Israel was officially founded.  Israel subsequently occupied and annexed the eastern part of the city after its military victory in the 1967 war, but its control over East Jerusalem has never been recognised by the international community.  Palestinians want occupied East Jerusalem as the capital of a future state, while Israel says the city cannot be divided.

‘Decades of chaos’: Arab leaders condemn US decision on Jerusalem - The Trump administration’s recognition of Jerusalem as Israel’s capital has drawn widespread condemnation across the Arab world, with political leaders, commentators and locals labelling the move as provocative and a threat to global security. The decision has been cast as the final nail in the coffin of a two-state solution to the Israel/Palestine conflict – an approach broadly recognised by Arab states – and the end of meaningful US diplomacy between both sides after almost 70 years. It has also allowed competing factions across the Middle East to refocus on a common cause that had drifted from the spotlight over the past five years, eclipsed by regional power plays, war and insurrection. Leaders in Turkey and Lebanon warned of dangerous instability in the wake of the announcement, which overtly sides Washington with Israel at a time when the US had been attempting to table a new peace initiative between Jerusalem and Ramallah. The future of Jerusalem had been central to all previous peace pushes and commentators and residents were united in their belief that negotiations could not begin if the Palestinians’ claim to the holy city was no longer on the table. Jordan’s King Abdullah said: “There is no alternative to a two-state solution, and Jerusalem is key to any peace agreement. It is imperative to work fast to reach a final status solution and a peace agreement. Ignoring Palestinian Muslim and Christian rights in the holy city could fuel terrorism.” In Beirut, Hassan Nasrallah, the Hezbollah leader, called for demonstrations on Monday to protest against the decision. “Trump had support from the Arabs or else he wouldn’t have been able to do this,” said Nasrallah. “The Arab government will scream for a few days then go on with the occupation. America has shown that it doesn’t take into account the opinion of its allies.”

Iraqi Militia Says Trump's Recognition Of Jerusalem Is A "Legitimate Reason" To Attack Americans --- In the latest sign that Trump’s decision to recognize Jerusalem as Israel’s true capital has put American lives at risk, Russia Today is reporting that Shia paramilitary group Harakat Hezbollah al Nujaba has declared that the US’s violation of the holy land status quo is a “legitimate reason” to attack American troops in Iraq.“Trump's stupid decision... will be the big spark for removing this entity [Israel] from the body of the Islamic nation, and a legitimate reason to target American forces,” said Akram al-Kaabi, the Iraqi organization’s leader, as cited by Reuters. Of course, militia leaders aren’t the only ones speaking out against Trump’s decision. Heads of state and other senior officials in the governments of Turkey, Saudi Arabia, Jordan and – of course – the Palestinian territories have denounced the declaration. Meanwhile, the embassy’s impending move to Jerusalem will probably only further infuriate much of the Muslim world. One Palestinian official said Trump’s declaration has effectively precluded the possibility of a two-state solution.

Erdogan Says U.S. Sanctions on Iran Weren’t Binding for Turkey - Turkey’s president has argued that his country did not break a trade embargo on Iran as it hadn’t committed to abide by U.S. sanctions, and there were no United Nations restrictions in place, the Hurriyet newspaper reported on Friday. The comments at a Thursday meeting of Turkey’s ruling party came hours before Erdogan was for the first time implicated in a plot to help Iran evade U.S. sanctions. The Islamic Republic was only released from UN curbs imposed over its nuclear program in January 2016, when a multi-lateral accord struck the year before was implemented. “We have not broken an embargo,” the president was cited by Hurriyet as saying. “The world does not consist of the U.S. alone.” Reza Zarrab, who’s accused of laundering billions of dollars on behalf of Iran, told a New York jury Thursday that a senior Turkish official said to him that then-prime minister Erdogan personally signed off on a plan to involve two Turkish banks in the scheme. The case began as a corruption investigation in Turkey in 2013, but Erdogan quashed it amid a purge of investigators and prosecutors. Erdogan has increasingly questioned Turkey’s alliance with the U.S. since Washington declined to extradite U.S.-based cleric Fethullah Gulen, whom Turkish authorities accuse of masterminding a coup attempt last year, a theme he also alluded to on Thursday. “There are games played against our economy,” Erdogan was quoted as saying, an apparent reference to the swings in Turkey’s currency, interest rates and bank stocks triggered by news about the trial.