oil prices ended modestly higher in a week that saw several sharp price moves, both to the upside and to the downside...after falling nearly 3% to $67.75 a barrel in their first drop in three weeks last week, contract prices for US crude for October delivery pulled back from an early rally to end 21 cents lower at $67.54 a barrel on Monday, after weekly data from Bloomberg suggested U.S. oil inventories were rising, contradicting an earlier report from Genscape forecasting declining inventories...however, with Hurricane Florence threatening East Coast supplies and ongoing turmoil in Libyan and Iraqi oil fields, traders betting that Iran sanctions would leave the market short of crude pushed oil prices 3% higher to over $70 a barrel on Tuesday on reports that South Korea, Japan and India had already reduced their Iranian crude imports, before prices settled back to close at $69.25 a barrel, an increase of $1.71, or 2.5%, on the day...oil prices then rose past $71 a barrel in a rally on Wednesday after the EIA reported a larger-than-expected drop in U.S. crude inventories before again settling back to close $1.12 higher at $70.37 a barrel...however, oil prices saw their steepest drop in over a month on Thursday in falling $1.78 to $68.59 a barrel, after OPEC reported rising crude production and the IEA (International Energy Agency) pegged global oil supplies at a record high....however, the price rally commenced again on Friday with oil up as much as 2% after it was reported that Secretary of State Pompeo was going to announce new sanctions on Iran, but then faded into a retreat after Trump instructed aides to proceed with tariffs on about $200 billion more of Chinese products, with oil prices closing just 40 cents higher at $68.99 a barrel, an increase of 1.6% for the week...
natural gas prices, meanwhile, were up 5.3 cents over the first three days of last week before a less bullish than expected storage report knocked prices back 6.2 cents over Thursday into Friday to end the week at $2.767 per mmBTU, down less than a penny for the week overall...this week's EIA natural gas storage report for week ending September 7th indicated that natural gas in storage in the US rose by 69 billion cubic feet to 2,636 billion cubic feet during that cited week, which left our gas supplies 662 billion cubic feet, or 20.1% below the 3,298 billion cubic feet that were in storage on September 8th of last year, and 596 billion cubic feet, or 18.4% below the five-year average of 3,232 billion cubic feet of natural gas that are typically in storage after the first week of September....this week's 69 billion cubic feet increase in natural gas supplies was more than analyst's expectations for a 65 billion cubic feet increase, but it was below the 74 billion cubic foot average of natural gas that have typically been added to storage during the first week of September in recent years, the ninth such below average inventory increase in the past ten weeks...natural gas storage facilities in the Midwest saw another 32 billion cubic feet increase this week, while supplies in the East increased by 20 billion cubic feet and are now just 12.9% below normal for this time of year...on the other hand, just 4 billion cubic feet cubic feet of gas were added to storage in the Pacific region, where natural gas supplies are 23.3% below normal for this time of year, while the South Central region saw a 7 billion cubic foot injection as their natural gas storage deficit increased to 23.4% below their five-year average..
The Latest US Oil Data from the EIA
this week's US oil data from the US Energy Information Administration, covering the week ending September 7th, showed that due to lower oil imports, higher oil exports, and an increase in refining, we had to withdraw more oil from our commercial crude supplies for the eighteenth time in the past thirty-three weeks... our imports of crude oil fell by an average of 123,000 barrels per day to an average of 7,591,000 barrels per day, after rising by an average of 229,000 barrels per day the prior week, while our exports of crude oil rose by an average of 320,000 barrels per day to an average of 1,828,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,763,000 barrels of per day during the week ending August 31st, 443,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reportedly down by 100,000 barrels per day to 10,900,000 barrels per day, which means that our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,663,000 barrels per day during the reporting week...
meanwhile, US oil refineries were using a near record high 17,857,000 barrels of crude per day during the week ending September 7th, 210,000 barrels per day more than the amount of oil they used during the prior week, while over the same period 757,000 barrels of oil per day were reportedly being pulled out of the oil that's in storage in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 437,000 fewer barrels per day than what refineries reported they used during the week....to account for that disparity between the supply of oil and the consumption of it, the EIA needed to insert a +437,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"...since that "unaccounted for crude" figure was at -179,000 barrels per day during the prior week, the 611,000 barrel per day swing in that metric from last week means that the week over week changes for one or more of this week's EIA oil metrics must be in error by a statistically significant amount..(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....
further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports fell to an average of 7,577,000 barrels per day, still fractionally more than the 7,565,000 barrel per day average that we were importing over the same four-week period last year....the 757,000 barrel per day decrease in our total crude inventories was all withdrawn from our commercially available stocks of crude oil, as the amount of oil in our Strategic Petroleum Reserve remained unchanged, even as a sale of 11 million barrels from those reserves to Exxon et al was closed at the end of last week....this week's crude oil production was reported as being down by 100,000 barrels per day to 10,900,000 barrels per day because a rounded 200,000 barrels per day decrease to 10,400,000 barrels per day in the output from wells in the lower 48 states combined with a 6,000 barrels per day increase in oil output from Alaska was only enough to lower the national total, which is now being rounded to the nearest 100,000 barrels per day, by 100,000 barrels per day to 10,900,000 barrels....US crude oil production for the week ending September 8th 2017 had been reduced to 9,353,000 barrels per day in the aftermath of Hurricane Harvey, so this week's rounded oil production figure was roughly 16.5% above that of a year ago, and 29.3% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 97.6% of their capacity in using 17,857,000 barrels of crude per day during the week ending September 7th, up from 96.6% the prior week and the highest September refinery utilization rate in 20 years....the 17,857,000 barrels per day of oil that were refined this week were again at a seasonal high, for the 14th out of the past 15 weeks, and far more than have ever been refined in a week in September, but not directly comparable to the 14,078,000 barrels of crude per day that were processed during the week ending September 8th 2017, when US refineries were operating at just 77.7% of capacity, because Gulf Coast refineries had been shut down in the aftermath of Hurricane Harvey at that time..
with the increase in the amount of oil being refined this week, gasoline output from our refineries was likewise higher, increasing by 169,000 barrels per day to 10,384,000 barrels per day during the week ending September 7th, after our refineries' gasoline output had decreased by 22,000 barrels per day during the week ending August 31st...again, due to Hurricane Harvey, our gasoline production during the week is not comparable to that of a year ago, but it was still 2.1% lower than what had been a record 10,602,000 barrels of gasoline that were produced daily during the week ending August 25th of last year...meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 97,000 barrels per day to a near record high of 5,536,000 barrels per day, after they had risen by 260,000 barrels per day over the prior week...for a rough year over year comparison absent hurricane impacts, we'd note this week's distillates production was 9.5% higher than the 5,055,000 barrels of distillates per day that were being produced during the week ending August 25th, 2017....
with the increase in our gasoline production, our supply of gasoline in storage at the end of the week rose by 1,250,000 barrels to 235,869,000 barrels by September 7th, the 13th increase in 29 weeks, and the 27th increase in 44 weeks, as gasoline inventories, as usual, were being built up over the winter months....our supplies of gasoline rose this week as the amount of gasoline supplied to US markets fell by 85,000 barrels per day to 9,649,000 barrels per day, after falling by 165,000 barrels per day the prior week, and as our imports of gasoline rose by 65,000 barrels per day to 1,053,000 barrels per day, while our exports of gasoline rose by 203,000 barrels per day to 680,000 barrels per day...after this week's increase, our gasoline inventories were at another seasonal high, 8.0% higher than last September 8th's level of 218,310,000 barrels, and roughly 10.3% above the 10 year average of our gasoline supplies for this time of the year...
meanwhile, with big increase in our distillates production, our supplies of distillate fuels were likewise much higher, increasing by 6,163,000 barrels to 139,283,000 barrels during the week ending September 7th, the 12th increase in 16 weeks and the largest increase this year...the major reason our distillates supplies increased was because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 1,002,000 barrels per day to 3,288,000 barrels per day, as domestic distributors apparently cut their purchases after having stocked up before the holiday....partially offsetting that, our exports of distillates rose by 429,000 barrels per day to 1,418,000 barrels per day, while our imports of distillates fell by 236,000 barrels per day to 50,000 barrels per day....however, with our distillate supplies still recovering from the 14 year seasonal low that they hit 6 weeks ago, this week's big inventory increase still leaves our distillates supplies 3.6% below the 144,552,000 barrels that we had stored on September 8th, 2017, and roughly 6.9% lower than the 10 year average of distillates stocks for this time of the year...
finally, with rising oil exports and near record refining of crude, our commercial supplies of crude oil decreased for the 20th time in 2018 and for the 31st time over the past year, falling by 4,302,000 barrels during the week, from 401,490,000 barrels on August 31st to 396,194,000 barrels on September 7th, which marks the first time our crude supplies were below 400,000 barrels since February 2015...however, even though our crude oil inventories are now about 3 percent below the five-year average of crude oil supplies for this time of year, they are still roughly 18.6% above the 10 year average of crude oil stocks for the first week of September, because it wasn't early 2015 that our oil inventories first rose above 400 million barrels...but since our crude oil inventories have now been falling through most of the past year and a half, our oil supplies as of September 7th were 15.4% below the 468,241,000 barrels of oil we had stored on September 8th of 2017, 17.5% below the 480,166,000 barrels of oil that we had in storage on September 9th of 2016, and 6.5% below the 423,958,000 barrels of oil we had in storage on September 11th of 2015...
OPEC's Monthly Oil Market Report
next we're going to review OPEC's September Oil Market Report (covering August OPEC & global oil data), which was released on Wednesday and is available as a free download, and hence it's the report we check for monthly global oil supply and demand data...the first table from this monthly report that we'll look at is from the page numbered 58 of that report (pdf page 68), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to thus resolve any potential disputes that could arise if each member reported their own figures...
as we can see on this table of official oil production data, OPEC's oil output increased by 278,000 barrels per day to 32,565,000 barrels per day in August, from their July production total of 32,287,000 barrels per day....however, that July figure was originally reported as 32,323,000 barrels per day, so OPEC's July output was therefore revised 36,000 barrels per day lower with this report (for your reference, here is the table of the official July OPEC output figures as reported a month ago, before this month's revisions)...as you can tell from the far right column above, an increase of 256,000 barrels per day in the oil output from Libya was the major reason for this month's increase, with increases of 90,000 barrels per day in oil output from Iraq and 74,000 barrels per day in output from Nigeria more than offsetting the decrease of 150,000 barrels per day in Iranian output...however, excluding new member Congo, OPEC's August output of 32,245,000 barrels per day was still 485,000 barrels per day below the 32,730,000 barrels per day revised quota they agreed to at their November 2017 meeting, mostly due to the big drop in Venezuelan output, which has also been impacted by US sanctions...
the next graphic we'll look at shows us both OPEC and global monthly oil production on the same graph, over the period from September 2016 to August 2018, and it's taken from the page numbered 59 (pdf page 69) of the September OPEC Monthly Oil Market Report...on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the millions of barrels per day of global output shown on the right scale...
OPEC's preliminary estimate indicates that total global oil production rose by a rounded 490,000 barrels per day to a record high 98.88 million barrels per day in August, after July's global output total was revised down by 140,000 barrels per day from the 98.53 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by 210,000 barrels per day in August after that revision....global oil output for August was also 2.13 million barrels per day, or 2.2% higher than the 96.75 million barrels of oil per day that were reported as being produced globally in August a year ago (see the September 2017 OPEC report online (pdf) for the year ago details)...with the increase OPEC's output, their August oil production of 32,565,000 barrels per day represented 32.9% of what was produced globally during the month, up from their 32.8% of global share reported for July...OPEC's August 2017 production was at 32,755,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding new members Congo and Equatorial Guinea, are still producing 637,000 fewer barrels per day of oil than they were producing a year ago, during the eighth month that their production quotas were in effect, with the 638,000 barrel per day decrease in output from Venezuela from that time responsible for the cartel's output drop...
despite the 490,000 barrel per day increase in global oil output in August, elevated summertime demand meant that we again saw a deficit in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...
the table above comes from page 32 of the September OPEC Monthly Oil Market Report (pdf page 42), and it shows regional and total oil demand in millions of barrels per day for 2017 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2018 over the rest of the table...on the "Total world" line of the fourth column, we've circled in blue the figure that's relevant for August, which is their revised estimate of global oil demand during the third quarter of 2018...
OPEC's estimate is that during the 3rd quarter of this year, all oil consuming regions of the globe have been using 99.38 million barrels of oil per day, which was a downward revision of 0.06 million barrels of oil per day from their prior consumption estimate for the quarter....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, the world's oil producers were producing 98.88 million barrels per day during August, which means that there was a still a shortfall of around 500,000 barrels per day in global oil production vis-a vis the demand estimated for the month...
while global demand for the 3rd quarter was revised 0.06 million barrels per day lower, total global oil output for July was revised down by 140,000 barrels per day at the same time, which means the global shortfall of 910,000 barrels per day that we had figured for July last month would now be revised to 990,000 barrels per day...also notice that this report revised oil demand figures for the 1st and second quarters, which we've circled in green; that means our previous estimates of surplus or shortfall for those months will have to be revised as well...a month ago, we estimated there was a shortfall of around 70,000 barrels per day in global oil production vis-a vis the demand in June, a shortfall for May of 510,000 barrels per day, and a shortfall in April of 320,000 barrels per day... but as we see in the green ellipse above, oil demand for the 2nd quarter was revised 10,000 barrels per day lower, so our revised global oil shortfalls for the 2nd quarter months will thus be 60,000 barrels per day for June, 500,000 barrels per day for May, and 310,000 barrels per day for April...
while global oil demand figures for the second quarter were revised lower, global oil demand figures for the first quarter of 2018 were revised 60,000 barrels per day higher, which means that our previously recomputed oil surplus for the first quarter of 2018 will also have to be recomputed again....since we had last figured a global oil output surplus of 120,000 barrels per day for March, a surplus of 300,000 barrels per day for February, and a surplus of 140,000 barrels per day for January, that revision means that our new figures will show a surplus of 60,000 barrels per day for March, a surplus of 240,000 barrels per day for February, and a surplus of 80,000 barrels per day for January....totaling up all these 8 monthly estimates of surplus or shortfall, we find that for the first eight months of 2018, global oil demand exceeded production by roughly 61,370,000 barrels, actually a comparatively small net oil shortfall that is the equivalent of roughly 15 hours of global oil production at the August production rate...
This Week's Rig Count
US drilling activity increased for the seventeenth time in twenty-five weeks during the week ending September 14th, even as the steady increases in drilling for oil we saw with higher oil prices during the first part of this year have stalled since May, with oil futures' prices remaining in backwardation, albeit now less so than in recent weeks....Baker Hughes reported that the total count of rotary rigs running in the US increased by 7 rigs to 1055 rigs over the week ending on Friday, which was 119 more rigs than the 936 rigs that were in use as of the September 15th report of 2017, but was still down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market...
the count of rigs drilling for oil was up by 7 rigs to 867 rigs this week, which was also 118 more oil rigs than were running a year ago, while it was well 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 186 rigs this week, which was also unchanged from the 186 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008...meanwhile, two rigs drilling exploratory wells in central Ohio considered to be "miscellaneous" continued to operate this week, an increase from just one such "miscellaneous" rig a year ago...
offshore drilling in the Gulf of Mexico saw a net increase of 1 rig to 18 rigs, up from 17 Gulf of Mexico rigs a year ago...in addition, two rigs continued to drill offshore from Alaska this week, so the total national offshore count is now at 20 rigs, which is thus up by 3 rigs from last year's total of 17 offshore rigs, since a year ago there was no offshore drilling other than in the Gulf...in addition, two more rigs began drilling through inland bodies of water in southern Louisiana this week, where there are now five such rigs operating, up from the 4 rigs that were drilling through inland waters there a year ago...
the count of active horizontal drilling rigs was up by 3 rigs to 921 horizontal rigs this week, which was also 126 more horizontal rigs than the 795 horizontal rigs that were in use in the US on September 15th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...in addition, the directional rig count increased by 6 rigs to 71 directional rigs this week, which was still down from the 74 directional rigs that were in use during the same week of last year...on the other hand, the vertical rig count was down by 2 rigs to 63 vertical rigs this week, which was also down from the 67 vertical rigs that were operating on September 15th of 2017...
the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of September 14th, the second column shows the change in the number of working rigs between last week's count (September 7th) and this week's (September 14th) count, the third column shows last week's September 7th active rig count, the 4th column shows the change between the number of rigs running on Friday and those on the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was on Friday the 15th of September, 2017...
Louisiana saw a three rig increase despite having a land based rig shut down in the southern part of the state because of a two rig increase on inland waters and because two additional Gulf of Mexico rigs were in state waters, while one rig offshore from Texas was idled...meanwhile, the three rig increase in Pennsylvania includes two rigs targeting the Marcellus and one rig targeting the Utica....the Utica shale count remained unchanged, however, because a Utica shale rig in Ohio was shut down at the same time...meanwhile, the natural gas rig count remained unchanged because 2 rigs targeting natural gas basins not tracked separately by Baker Hughes were shut down at the same time...all other activity shown above is oil directed, again with basins not tracked by Baker Hughes not shown...
Oil and gas industry 'here to stay' in Harrison County - Nearly two dozen elected officials met in Harrison County on Tuesday for an update on the oil and gas industry. The meeting, held at the Tappan Lake Marina, was led by two oil and gas representatives who say the industry is here to stay. "Oil and gas has been here for 8-9-10 years now, so it’s very prevalent here to stay for the next 30-40 years, so it’s better to keep everyone informed," said Nick Homrighausen, executive director of community and economic development for the county. "We covered all aspects of oil and gas. We talked about what was happening in the upstream industry. There’s been a lot of deals this summer. … There’s a lot of movement there, and we wanted to explain some of that," said Mike Chadsey, Director of Public Relations, Ohio Oil and Gas Association. Closing those new deals has allowed for continued growth across the county within the industry. Chadsey explained that he views Harrison County as one of the leader in downstream, upstream and midstream potential. "It’s really the heart of the Utica Shale Play,” Chadsey said. “And we take all responsibility to engage with elected officials and talk about the industry very seriously." With five major pipeline projects in the community right now, organizers felt now was the time for an update. "Everyone is waiting on that ethane cracker plant which we anticipate, fingers crossed, hopefully our final investment decision here soon,” Chadsey said. “It’s really a lot of exciting times in Harrison County and really all of southeast Ohio."
Ohio on receiving end of fracking waste - Warren Tribune Chronicle — Residents working to fend off a proposal to place a wastewater injection well along Hubbard Masury Road said this fight is about more than just their community.One trustee thinks it sends the wrong message about the entire state of Ohio.“We’ve absolutely become a dumping ground,” said Rick Hernandez. Data from the Ohio Department of Natural Resources shows from 2012 to so far in 2018, more than 91 million barrels of brine from the hydraulic fracturing, or fracking, industry in Ohio have been injected into class II injection wells in Ohio. That equates to more than 3.8 billion gallons of brine — a salt / water mix used to extract natural gas from below ground shale formations. ODNR numbers also show that more than 85 million barrels — 3.5 billion gallons — of brine produced outside the state have been injected into Ohio’s injection wells between 2012 and so far this year. Steve Irwin, ODNR spokesman, said the regulatory environments in Ohio and Pennsylvania may lead drilling companies to choose to inject their waste in Ohio. Irwin said ODNR has “primacy” to regulate the state’s oil and gas industry, meaning companies that want to establish injection wells in Ohio can apply for permits directly from ODNR. On the other hand, Pennsylvania’s oil and gas industry is regulated by both the state’s Department of Environmental Protection and the U.S. Environmental Protection Agency, which increases the permit application time and expense because a prospective injection company needs a permit from both agencies. State Rep. Glenn Holmes, D-Girard, has introduced House Bill 723 that would cap the number of injection well permits the chief of ODNR’s Division of Oil and Gas Resources Management can issue at 23 per county. Ohio has 216 active injection wells, according to ODNR. Trumbull and Ashtabula counties top the list with 17 active wells apiece. Next are nearby Portage and Stark counties with 16 each followed by Meigs County in southeast Ohio with 14. The legislation also would mandate the division chief to notify relevant state legislators whenever a request for a well permit is made. It’s expected the bill will be assigned to a committee when the General Assembly returns from its summer recess. State law allows Ohio to benefit financially from accepting fracking waste from other states. The state charges a 5-cent fee for the injection of each barrel of brine that is produced in Ohio. Conversely, the fee for the injection of each barrel of out-of-state brine is 20 cents.
Cabot to drill two more exploratory wells in Ohio by Dec. 31 -- Cabot Oil & Gas has drilled three exploratory wells in north-central Ohio and intends to add two additional wells before the end of the year, Kallanish Energy reports. The three wells drilled are all in Ashland County, between Cleveland and Columbus. That drilling began last June. The wells are in Green, Vermilion and Mohican townships north and northeast of Loudonville. One of the three wells has been hydraulically fractured. The Houston-based company, a major player in the Marcellus Shale in Pennsylvania, reported it is unclear where the fourth and fifth well will be drilled, it told the Columbus Dispatch newspaper last week. The company is interested in the Knox formation in Ashland, Richland, Holmes, Wayne and Knox counties at the western edge of Ohio’s Utica Shale. That formation is below the Utica, and is north and west of Ohio’s main Utica drilling area. Cabot Oil & Gas had announced plans to spend $75 million in the first half of 2018 to look closely at two exploratory areas. The company gave no clue as to where that exploratory wells might be drilled. If the tests reveal that additional drilling is warranted in the second half of 2018, Cabot is prepared to sell off assets to fund that work, the company said in releasing its 2018 operating plan. It later announced it had scrapped one exploration area as a failure. Analysts said that was likely the High Alpine area of Texas. Ashland County is where Oklahoma-based Devon Energy drilled for oil in the early days of Utica Shale drilling — with little or no success.
National Forests Being Impacted by Marcellus Drilling, Fracking and Pipelines The withdrawal of two mineral leases set to be auctioned later this month in the Wayne National Forest was received with relief from an organization that had protested the proposal and frustration from the state trade organization for oil and gas interests. The two plots, one of 35 acres and the other about 40 acres, are in Monroe County, and the mineral leases were scheduled for auction Sept. 20, according to an announcement in July by the Bureau of Land Management. The BLM announced Aug. 28 that the auction was canceled, citing Title 43 Code of Federal Regulations, paragraphs 3120.1-3, but offering no further explanation. That part of the code refers to suspending the offering of a parcel while an appeal is under consideration. Wendy Park, a senior lawyer for the Center for Biological Diversity, said Wednesday that her organization’s protest was the only one she could find that was lodged against the lease offering. She said the center opposed the lease because of its potential impact on nearby water bodies and settled areas. “This is the first time the feds have pulled parcels from a Wayne National Forest lease auction after approving its fracking plan for the Wayne, in response to environmentalists’ concerns,” she said. When the 400,000 acres of the Wayne National Forest was opened to oil and gas extraction leasing in 2016, she said, the environmental impact examination was general rather than site specific, and the leases offered since then have not taken local conditions into account. “This is pretty much what we’ve been saying in all our protests, that they’re not taking a hard look at the impact of fracking on site-specific resources,” she said. In addition to endangered species of bats, she said, there also are public health and cultural concerns. “There are homes and communities near these leases, and toxic chemicals and air pollution would certainly have an impact on the health of local residents,” she said. “They also have failed to comply with the obligation to make sure cultural and historical resources are not harmed.” The Ohio Oil and Gas Association, however, was not pleased by the decision, and its spokesman Mike Chadsey said the association members are frustrated with the federal government.
Haunting Poems and Photos From a State Torn by Fracking -- When Julia Spicher Kasdorf pulled off Pennsylvania’s Route 15 on her way upstate in 2012, she noticed something she’d never seen before. Across the highway, by the restaurant where she and her husband stopped for lunch, helicopters dangling strange pendants were hovering over the mountainside. Kasdorf, a poet and English professor at Pennsylvania State University, asked her server what was going on. “Those guys are here because of fracking,” the waitress said. Oil and gas companies were doing seismic testing for a new pipeline. Kasdorf grew up in central Pennsylvania surrounded by dairy farms. She’d seen the way coal mining had ravaged the state’s southwest, but this destruction was new. Determined to keep an open mind, she began seeking out stories from people affected by fracking. Her curiosity turned into a six-year project and a collaboration with documentary photographer Steven Rubin that culminated in their recent book, Shale Play: Poems and Photographs from the Fracking Fields. Her conversation at a roadside restaurant inspired the opening poem, “Fry Brothers Turkey Ranch with Urbanspoon and Yelp Reviews.” Here’s a snippet:
Report: More than half of Pennsylvania gas wells used 'secret' fracking chemicals -- Energy companies in Pennsylvania did not identify potentially harmful chemicals used for drilling and fracking for natural gas in more than half of the wells created between 2013 and 2017, according to a recently released report. The report, from the Partnership for Policy Integrity, a nonprofit based in Massachusetts that does energy research and advocacy, says companies withheld information about at least one chemical in 55 percent of wells drilled between 2013 and 2017. Dusty Horwitt, who wrote the report, said that health effects of so-called secret chemicals can't be ascertained if the chemical's identity is not disclosed, but he also said that the public has a right to know about all the chemicals used. "We cannot be sure of the effects of any chemical whose identity is withheld as secret," Horwitt said. "However, EPA records indicate that the fracking chemicals declared security in Pennsylvania may have serious negative health effects." However, even if the companies do not publicly disclose every chemical, according to state and federal law, they are required to disclose all chemicals to the EPA and DEP. “State and federal law requires hydraulic fracturing fluids – which are typically made up of more than 99 percent water and sand, and less than 1 percent of highly diluted additives that we all commonly use in our everyday lives – to be transparently disclosed via an online, searchable database. Our organization – which represents the energy companies responsible for safely producing more than 95 percent of Pennsylvania’s natural gas – was an early and vocal supporter of greater transparency and disclosure. Pennsylvania has some of the strongest environmental rules in the nation and we’re committed to continuously improving best practices to protect and improve our environment.” Marcellus Shale Coalition president David Spigelmyer. Frac Focus is the national hydraulic fracturing chemical registry. The site provides public access to reported chemicals used for hydraulic fracturing.
Beaver County Pipeline Explosion Destroys Home, Prompts Evacuations - Beaver County officials say an early morning methane gas pipeline explosion in Pennsylvania destroyed one home and prompted an evacuation of others. The blast in Center Township was reported shortly before 5 a.m. Monday. Officials say a home, two garages and several vehicles were destroyed by fires stemming from the explosion. No injuries have been reported and crews were able to move several horses to safety. The community of Center Township is located roughly 25 miles northwest of Pittsburgh. Witnesses reported hearing a loud boom and seeing an orange glow fill the sky. Pipeline owner Energy Transfer Partners says the valves to the pipeline were shut off and the fire was out by 7 a.m. The 100-mile pipeline, known at the Revolution line, began operating earlier this month. It was built to supply the company’s Rover pipeline and Mariner East 2 lines. About 25 to 30 homes were evacuated as a precaution. The Central Valley school district canceled classes. Interstate 376 was closed due to danger from falling power lines. In June, a newly-built TransCanada natural gas pipeline exploded near Moundsville, West Virginia. No injuries or damage to private property were reported, but a fireball burned for several hours after an 83-foot section of the pipeline burst into flames, releasing more than $430,000 worth of natural gas. The Pipeline and Hazardous Materials Safety Administration said shifting land likely triggered the explosion of the Leach Xpress pipeline.
Revolution Pipeline Explosion After a Week of Operation Burns Up One Home & Two Barns, Horses are Saved - An explosion from a natural gas pipeline operating for only a week sparked a fire early Monday that destroyed a Beaver County home and two garages and prompted authorities to evacuate about two dozen other homes in the area. The 24-inch pipeline’s owner, Dallas-based Energy Transfer Corp., said it was investigating but an early assessment of the explosion site showed there had been “earth movement in the vicinity of the pipeline.” Center police Chief Barry Kramer attributed that to heavy, continuous rain over the weekend, but he said he’d leave determining the exact cause “up to the experts.” Nearly 5 inches fell between Friday night and Monday morning, according to the National Weather Service. An orange glow lit up the dark-morning sky after the fire began along Center Township’s Ivy Lane around 5 a.m. “It was just a huge fireball. My house was shaking,” said Ivy Lane resident Toni DeMarco, 54. Another Ivy Lane resident, 64-year-old Karen Gdula, heard what she said sounded like an 18-wheel tractor-trailer idling outside her bedroom window before the blast. “The ground shook,” Gdula said. “It looked like it was noon and it was 5 a.m. The flames were shooting higher than the pine trees.” Residents of between 25 and 30 homes on Ivy Lane and Pine Drive were evacuated to a nearby fire social hall along Brodhead Road and were being assisted by the American Red Cross. Authorities closed busy Brodhead Road, which is connected with Ivy Lane, and Interstate 376 between the Center and Aliquippa interchanges. About 1,500 people lost power after the explosion brought down six high-tension electrical towers, according Kramer. Central Valley School District also canceled classes.
ETP Pipeline Explosion Unlikely to Impact Appalachian Natural Gas Production - An explosion that ripped through an Energy Transfer Partners LP (ETP) pipeline in Western Pennsylvania early Monday isn’t likely to disrupt production significantly, as the system serves an older part of the Marcellus Shale where fewer producers operate, compared to other parts of the basin. Torrential rain and saturated ground likely caused the line to slip and explode, the company said, but the exact cause remains unclear as an investigation is underway. The pipeline was placed into service last week and is part of the broader Revolution system, which gathers wet gas and includes a 30-inch diameter pipeline and has a capacity of more than 400 MMcf/d. At the time of the blast, the company was in the process of purging and packing the gathering lines that feed ETP’s Revolution Plant in Washington County, where construction was recently completed. The plant would deliver tailgate volumes to affiliate Rover Pipeline’s Burgettstown lateral.The explosion is unlikely to have any meaningful impacts on the line’s producer customers or other interstate pipelines, such as those owned by Columbia Gas Transmission LLC or National Fuel Gas Co., in the area, Genscape Inc. analyst Vanessa Witte said. ETP in 2015 inked a long-term deal with privately owned EdgeMarc Energy Holdings LLC, announcing at the time that it would build the cryogenic gas processing plant, a fractionator and the gathering lines to facilitate the agreement. EdgeMarc has subscribed to more than 160 MMcf/d on Rover. Witte said the incident could limit some volumes from reaching the Burgettstown lateral, which was only recently authorized for service by the Federal Energy Regulatory Commission and has shown no scheduled nominations yet. ETP has also said there are other producer customers subscribed to the Revolution system, but it’s unclear who they are.
ETP to Inspect Entire Blast-Damaged Gas Pipeline in Pennsylvania - Energy Transfer Partners LP (ETP) representatives said late Monday the company plans to inspect the entire 24-inch diameter segment of the Revolution pipeline system that runs from Butler County, PA, to Washington County, PA, after part of it exploded during commissioning operations earlier in the day.“We’ll be inspecting the full line, looking at areas where, with all of this rain, there may be other areas that we need to take a look at and go back in to do some additional work,” said spokesperson Vicki Granado, who traveled from Dallas to address news media and local residents from Center Township in Beaver County, PA, where the ruptured pipeline destroyed a house, garage and multiple vehicles. There were no injuries.Heavy rain that has fallen throughout the region since late last week finally moved out Monday. However, ETP management suspects that unstable ground caused the pipeline, which is buried about three feet below the surface, to slip and explode. The impacted section was isolated and the fire extinguished itself once the gas flow was cut.“The gas caught some ignition source when it leaked out,” said Center Township Police Chief Barry Kramer, when asked to describe the accounts of residents living nearby who were evacuated for part of the day. “I don’t think there was time to smell it. It happened relatively quickly, although I don’t know that for sure.”
Pipeline that Exploded in Pennsylvania Part of Push to Build Fracking-Reliant Petrochemical Network - DeSmog (blog) A column of fire shot 150 feet in the air and destroyed a home, a barn, and several cars. Residents of over two dozen homes, including Belczyk, were evacuated, with one family barely escaping the flames that engulfed their home, neighbors said. Interstate 376 was shut down amid concern over falling power lines, including a half-dozen high tension towers, which left 1,500 people temporarily without electricity. No one was injured or killed by the blast, authorities said, and because of recent rains, the possibility of a forest fire was averted. The 24” diameter pipeline responsible for the blast had gone into service just seven days earlier. It’s owned by Energy Transfer Partners, the same pipeline company behind the Dakota Access Pipeline project and the Bayou Bridge pipeline in Louisiana. The Pennsylvania Public Utility Commission has said it suspects that the blast was caused by heavy rainfall, which they believe may have caused the pipeline to slip on the saturated ground, break, and then explode. Energy Transfer Partners dubbed its new “gathering” line the Revolution pipeline. Revolution was built to connect individual gas wells to a new cryogenic plant, the Revolution gas processing plant, where so-called “wet gas” from Marcellus wells would be separated into natural gas liquids and dry gas. From the Revolution plant, that dry natural gas, a fossil fuel made of methane that’s used for electricity and heat, would be shipped west direction on the 725 mile Rover pipeline. Natural gas liquids like ethane, which is used to make plastics and petrochemicals, would head out on the Mariner East 2 pipeline to a shipping terminal near the Atlantic Coast, where it could be shipped to the Gulf Coast or abroad. By providing a path for the liquids and gas to flow to market, the Revolution gathering line would facilitate the drilling and fracking of roughly 500 Marcellus and Devonian wells in just one Pennsylvania County, Butler County, alone, officials from the company building the cryogenic plant said in 2015, when the deal was announced. Or at least that was Energy Transfer’s $1.5 billion plan. All three pipelines have been plagued by construction problems, particularly the much larger Mariner East natural gas liquids pipeline project. In the meantime, Energy Transfer Partners has faced strong pressure to finish the project from shale drillers, who aim to sell ethane for a higher price than it commands when it’s left mixed in with methane.
Mariner East Facing Additional Scrutiny After ETP Pipeline Explosion -- Pennsylvania lawmakers on both sides of the aisle are again airing concerns this week about natural gas pipeline projects, calling on Energy Transfer Partners LP (ETP) to halt construction of the Mariner East (ME) 2 and 2X projects, after a gathering system in the western part of the state exploded on Monday.Democratic state Sen. Andrew Dinniman, who filed a complaint with the Pennsylvania Public Utility Commission (PUC) earlier this year that eventually led to a construction suspension on parts of the ME projects that is partially in effect, said on Twitter the incident in Beaver County’s Center Township is a “chilling reminder” of just how “powerful and dangerous these pipelines can be.”The infrastructure “shouldn’t be so close to our schools, residential neighborhoods and community centers. Mariner East should be permanently halted until we get real assurance that they’re being installed, inspected and operated with safety as the top priority.”Dinniman, who represents Chester County where sinkholes formed near the ME project earlier this year, was joined by another lawmaker from the area, Republican state Rep. Chris Quinn, in calling for work to stop.“While I’m relieved to know that no injuries occured, I also realize that this area of Beaver County is far less dense than the pipeline corridor in Delaware County,” Quinn said of a heavily populated area where the ME system is located. “A similar incident in my district could be even more destructive and have a greater human toll.“Therefore, I’m calling for an immediate halt to all pipeline construction activities,” Quinn added of the ME project. “This pipeline should not be built until the real and legitimate safety and environmental concerns raised by myself and local residents have been fully addressed.” Republican state Sen. Tom McGarrigle, who represents constituents near the ME projects, also called on ETP to stop construction until a full investigation of the Beaver County incident has been completed.
25 zones along the proposed Shell Falcon Pipeline are at risk of explosions due to landslides – EHN —Shell Pipeline Company has identified 25 locations that are prone to landslides in or near the route of its proposed Falcon Ethane Pipeline through Pennsylvania, Ohio, and West Virginia. Fourteen of those locations are in Southwestern Pennsylvania. The Falcon Pipeline is just one piece of a massive network of unconventional oil and gas-related infrastructure being built by Shell and its affiliates and business partners in Pennsylvania with the aim of turning the region into a new petrochemical hub. The development has elicited concern from researchers, residents and environmental groups about the increased risk of explosions and spills, as well as the cumulative impact on air and water quality in the region. Two of the sites identified by Shell as being prone to landslides along the proposed Falcon Pipeline route are in Allegheny County. The other 12 sites are in Beaver County—35 miles west of Pittsburgh—where on Monday a natural gas pipeline not affiliated with Shell exploded, destroying one home, two garages, a barn, and several vehicles. The explosion, in a brand new section of Energy Transfer Partners' Revolution Pipeline, is being attributed to a landslide following heavy rains over the weekend. This isn't the first time a landslide has caused a natural gas pipeline to explode: In June, landslides resulted in the rupture and explosion of a TransCanada natural gas pipeline in Marshall County, West Virginia.Shell is currently constructing a multi-billion dollar ethane cracker plant in Potter Township, just five miles from the site of the Energy Transfer Pipeline explosion. Shell's proposed Falcon Pipeline would transport large volumes of natural gas and liquids to the ethane cracker plant to be converted into ethylene for use in plastics manufacturing. In its permit application, Shell identified "landslide risk" areas along the proposed route for the Falcon Pipeline. The FracTracker Alliance, a Pittsburgh-based oil and gas industry watchdog group, has mapped those locations. In Pennsylvania, the 14 landslide-prone areas on or near the proposed pipeline route total 2.1 miles.
Spill sends diesel fuel into Arthur Kill -- Authorities were at the scene of a spill at the Buckeye Terminal in Port Reading that sent an unknown amount of diesel fuel into the Arthur Kill Waterway, officials said Friday. The mishap was reported around 7:15 p.m Thursday and occurred during a product transfer at the terminal, according to the U.S. Coast Guard. "Due to high winds and rain at the time of the incident, facility personnel were unable to calculate the exact amount of fuel spilled into the waterway," the Coast Guard said in a statement. "All fuel transfers at the facility are temporarily suspended until investigators can determine the cause of the spill and the facility can safely conduct fueling operations," the statement said. A representative for the Buckeye Terminal could not be immediately reached. The Coast Guard said it deployed a pollution response team to the scene and an oil spill removal company was called to handle the cleanup. Crews put a containment boom in the water. More information was not immediately available Friday. The cause of the spill was being investigated.
Man killed, 12 injured after 70 gas explosions, fires rock Lawrence, Andover, North Andover - WHDH - - At least one person has died and 13 others were injured when as many as 70 gas-related explosions and fires rocked multiple homes and buildings in Lawrence, Andover and North Andover Thursday night, prompting officials to order widespread evacuations and establish emergency shelters. In the wake of the explosions, which were first reported around 5 p.m., all Columbia Gas customers in Lawrence, Andover and North Andover have been urged to evacuate immediately and National Grid has turned off power in all three communities.Gov. Charlie Baker joined city officials from Lawrence, Andover, and North Andover during a 9 p.m. press conference to stress to area residents to leave their homes and seek shelter at one of the many emergency shelters that have been set up to handle the thousands of displaced. Crews are working to depressurize gas lines across the region but the process may take quite some time.Lawrence police say a woman who was left trapped in a home on Chickering Road suffered leg injuries.The Essex District Attorney’s Office said 18-year-old Leonel Rondon was killed when a chimney fell onto his car.Andover town officials say at least four people were injured, including two firefighters and two civilians.At the peak of the chaos, 18 fires were burning at the same time in Andover. Video from Sky7 HD showed fires burning at multiple homes and buildings. One home appeared to be completely leveled and many others were seriously damaged. The total number of affected structures is expected to climb throughout the evening.Lawrence Mayor Dan Rivera has ordered all residents to evacuate the southern section of the city.Fire departments from across the region, including Boston, Methuen and New Hampshire, are responding to the impacted areas.The Red Cross and FEMA are also responding. All off-ramps along Interstate 495 between exits 41 and 45 have been closed until further notice. Service on the Haverhill commuter rail line has been temporarily suspended beyond North Wilmington Station.Shelters have been set up at Lawrence High School, North Andover Middle School, and at the Andover Senior Center. The Red Cross has set up three reception centers for people who have evacuated their homes:
Thousands of residents still out of their homes after gas explosions trigger deadly chaos in Massachusetts — Massachusetts Gov. Charlie Baker (R) declared a state of emergency Friday as officials inspected more than 8,600 homes and businesses to determine if it was safe for people to return, a day after a series of gas line explosions left one person dead and injured at least 23. The blasts, which led to scores of simultaneous structure fires across three towns in the Merrimack Valley, filled otherwise sunny skies with thick smoke and pushed thousands of residents out of their homes indefinitely. Electrical power has been cut to the communities, and residents have been told not to enter their homes until each one has been inspected for potential dangers. Columbia Gas of Massachusetts, which owns the gas lines involved in the blasts, has thus far given no indication of what might have caused the disaster. Baker and other officials, including Lawrence Mayor Dan Rivera, issued scathing criticisms of the company. “Since yesterday, when we first got word of this incident, the least informed and the last to act have been Columbia Gas,” Rivera said, with Baker at his side at a news conference. He said that the company had promised “hundreds of teams of technicians” but that “none have materialized.” “It just seems that there’s no one in charge,” Rivera said. “Like they’re in the weeds.” At a news conference a couple of hours later, Columbia Gas President Steve Bryant defended the company’s response. “We advanced this as rapidly as it could possibly be advanced,” he said. “I don’t think that anybody else managing this would have been further down the road then we are at the moment.” Bryant said the company had nearly 300 technicians in the field who had turned off gas to more than 3,200 of the affected customers, a necessary step before electricity can be restored. He said gas would be shut off to all homes in the area by Saturday or Sunday, allowing power to be turned back on and people to move back in. He referred questions about the cause of the incident to the National Transportation Safety Board (NTSB), which is leading the investigation.
Company Involved in Massachusetts Gas Explosions Has History of Blasts - As thousands of people were fleeing their coastal homes in the Carolinas yesterday, thousands more were forced from their homes in Lawrence, Andover, and North Andover, Massachusetts yesterday. The Massachusetts evacuations came without prior warning as more than 60 homes erupted in flames yesterday and at least three exploded from a natural gas malfunction involving the utility company, Columbia Gas of Massachusetts.Andover Fire Chief Michael Mansfield told local reporters that “It looked like Armageddon,” saying he could see “billows of smoke coming from Lawrence behind me” and “pillars of smoke in front of me from the town of Andover.”The Associated Press reported that “some local officials described scenes of panic as residents rushed to evacuate, many wondering if their homes would be next to erupt in flames. In North Andover, town selectman Phil Decologero said his entire neighborhood had gathered in the street, afraid to enter their homes. Just a few streets down, he said, homes were burning.”As of early this morning, local news channels were reporting one person was dead and approximately 25 individuals were injured in the fires. The Massachusetts Emergency Management Agency has initially suggested the possibility that gas lines became over-pressurized but a full investigation will be conducted, including one by Federal authorities including the National Transportation Safety Board.In a statement on their website, Columbia Gas referred to the disaster as an “incident” and said “crews need to visit each of the 8,600 affected customers to shut off each gas meter and conduct a safety inspection.” Yesterday, just hours before chaos would descend on the three towns in Massachusetts, Columbia Gas sent out a letter indicating it would be “upgrading natural gas lines in neighborhoods across the state.” The letter linked to a video which carried this statement in the accompanying text:“As with many other types of infrastructure, like roads, dams, and bridges, deterioration occurs over time and repairs or replacement are eventually needed. The old gas pipes installed in your neighborhood generations ago served us well, but they are now ready to be retired.” Pipes installed “generations ago” raise the question as to whether the pipes should have been upgraded long before now. The video shows deeply corroded metal pipes being replaced with “state-of-the-art plastic” pipes “more suited for underground use.”
FERC schedule slips for Transco project as NY primary politics complicate path for gas — The US Federal Energy Regulatory Commission has pushed back the timeline for completing its environmental review of Transcontinental Gas Pipe Line's Northeast Supply Enhancement Project to January 25, 2019, from September 17, 2018. The revised schedule adds to the federal review timeline for a protect (CP17-101) that would allow for as much as 400 MMcf/d of incremental supply into New York markets and potentially place downward pressure on Transco Zone 6 pricing. The project is viewed as facing headwinds in state reviews in New Jersey, as well as in New York, where opposition to natural gas has played into the Democratic primary, set for Thursday. Transco spokesman Christopher Stockton said the company is assessing FERC's updated schedule, "but we currently do not believe it will negatively impact the project's winter 2020 [in-service date]." Williams in August moved its targeted start to the fourth quarter of 2020. FERC said the change was based on the status of the project's general conformity review with state implementation plans to meet national air quality standards, as well as feasible mitigation options. The NESE project entails a new compressor station in Somerset County, New Jersey, as well as installation of about 23.5 miles of pipeline in the New York Bay, 3.5 miles of pipeline in Middlesex County, New Jersey and 10 miles of 42-inch-diameter pipeline in Lancaster County, Pennsylvania. Washington Analysis in a note said the new FERC schedule "underscores a difficult state-level review path that colors our bearish outlook for the pipeline's chances of being built." It said the delay of the final environmental report will delay the start of critical state reviews. While the project has filed with New York and New Jersey for Clean Water Act Section 401 certifications, state officials have made clear they will not consider the application complete without the final environmental impact statement, Washington Analysis noted. Also pending are determinations under the Coastal Zone Management Act.
Pipeline spills 8K gallons of fuel into Indiana river | TheHill -- A Houston-based company says one of its pipelines has spilled more than 8,000 gallons of jet fuel into a river in Indiana. Buckeye Pipe Line says it shut the line down immediately when it found the pressure problem Friday night, The Associated Press reported on Sunday. Local officials say they have placed booms in St. Marys River, the body of water into which the fuel spilled, and are vacuuming the oil off the surface, the AP reported. The cleanup may take weeks, according to Decatur Mayor Kenneth L. Meyer. The Environmental Protection Agency said it's monitoring the air around the area, as well as the water quality at a few places downstream from the contamination, according to the AP.
Pipeline Spills More Than 8,000 Gallons of Jet Fuel Into Indiana River - A pipeline spilled more than 8,000 gallons of jet fuel into an Indiana river, The Associated Press reported Sunday.The affected river was St. Marys River in Decatur, which is a town of 9,500 people about 100 miles from Indianapolis.Cleaning the spill could take weeks, Decatur Mayor Kenneth L. Meyer told the Fort Wayne, Indiana-basedJournal Gazette.The spill was first reported Friday night in a safety warning issued by the Decatur Police Department urging residents to avoid the area around the spill, local news outlet WANE reported Saturday.Houston-based Buckeye Pipe Line Company, L.P., which owns the pipeline, confirmed the spill to WANE Saturday.Company officials said there had been a failure Friday evening that had caused the spill. "One of their workers discovered a pressure drop, went immediately to check on it and immediately shut it down," Allen County Homeland Security Director Bernie Beier told The Journal Gazette.The pipeline will remain shut off until it is repaired and safe to operate, and Buckeye's Emergency Response Team worked to control the spill and clean the area, WANE reported. The company is investigating the cause of the failure.
CSX derailment and oil spill leads to federal lawsuit - — Federal and state officials accuse CSX Transportation of several environmental torts in response to oil spilled from a derailed train.The United States of America, the state of West Virginia and the West Virginia Department of Environmental Protection filed a complaint in U.S. District Court for the Southern District of West Virginia against CSX Transportation Inc. According to the complaint, a CSX train derailed in February 2015 and spilled oil into the Kanawha River and Armstrong Creek. The spill also affected the land around the waterways. Government officials allege the spilled oil violated the West Virginia Water Pollution Control Act, West Virginia Groundwater Protection Act, and Clean Water Act.The plaintiffs seek civil penalties up to $2,100 per barrel of oil discharged for violation of the Clean Water Act, civil penalties up to $25,000 per day for violation of the West Virginia Water Pollution Control Act and civil penalties up to $25,000 per day for violations of the West Virginia Groundwater Protection Act. They are represented by Devon A. Ahearn of Department of Justice in Washington, Fred B. Westfall, Jr. of Department of Justice in Charleston and Lauren E. Ziegler of Environmental Protection Agency in Philadelphia.
Orphan Wells: States Wrestle With Soaring Costs For Oil & Gas Industry Mess – - The latest boom in natural gas is transforming the Ohio Valley’s energy landscape. But over the years the industry has also abandoned thousands of oil and gas wells, often polluting nearby air, land, and water. An analysis by the Ohio Valley ReSource estimates more than 8,000 old wells in Kentucky, Ohio and West Virginia are considered “orphan,” with no company responsible. The costly process of plugging these wells often falls to state agencies struggling to pay for the cleanup. Across the country, many state regulators have few resources to deal with an ever-expanding list of abandoned wells. “The states are pretty good at regulating wells that are being explored, are being fracked, are in production, but they kind of lose interest once that happens,” said Alan Krupnick, a senior fellow with the nonpartisan environmental think tank, Resources For the Future. “There’s not enough attention being paid to reducing the risk from these abandoned wells.” Across the Ohio Valley, thousands of oil and gas wells sit idle. An analysis of state data by the Ohio Valley ReSource estimates more than 8,000 oil and gas wells are considered “orphan.” Definitions of orphan and abandoned wells vary by state, but in general, orphan wells lack an operator or company that can pay to plug them. That responsibility then falls to state regulators who are frequently struggling to keep up with demand and scrambling to find money to clean up the mess. A 2016 study of inactive well regulations in 22 states by Resources for the Future, a nonprofit advocacy group, found the majority lack policies to deal with legacy wells drilled decades ago and the means to collect sufficient funds to plug wells currently being drilled. “We want good policy to make sure that these wells when they’re eventually abandoned do not present environmental risk” Krupnick said. “One thing is they could raise the bonding amounts to the point where they’re covering the costs of these wells, of decommissioning the wells.”He said another challenge is that many states allow wells to remain in “idle status” for years. These wells aren’t producing, but operators aren’t being required to plug them. Unplugged wells can leak oil and other pollutants into water or the ground and inactive wells can emit methane, a powerful greenhouse gas many times more potent than carbon dioxide.
Pipeline in Hurricane Florence’s Potential Path Poses Added Danger - Hurricane Florence is projected to be an "extremely dangerous" storm, poised to inflict life-threatening impacts on low-lying coastal communities—and it may also dump vast quantities of rain over a limited area after making landfall, catastrophic rainfall and flooding as Hurricane Harvey did last year to Houston, Texas. Forecasters don't know where such flooding will occur, but one possible target is the Appalachian Mountains, including mountainous southwest Virginia—the site of the Mountain Valley Pipeline (MVP). The pipeline would carry fracked methane gas from West Virginia into Virginia, where it will connect with an existing pipeline system. Methane is a powerful greenhouse gas that accelerates climate change, and extracting methane using fracking utilizes complex mixes of chemicals, many known to be toxic, contaminating millions of gallons of water as well as emitting dangerous air pollutants. Residents along the route have protested the loss of private property and destruction of treasured places, but the pipeline company has secured the right of eminent domain and has so far proved unstoppable. Along its 303-mile route, a swath 125 feet wide is now being clearcut; trenches are being opened; pipes 42 inches in diameter are being laid. This heavy-construction scar will through farms and national forests, up and down steep mountain slopes, even across the Appalachian Trail. Where the pipeline crosses steep mountains, erosion is a grave hazard. Locals fear that sediment will choke local streams and rivers, damaging the water sources of cities like Salem and Roanoke, VA as well as private wells and springs serving rural homes. Clearing land and digging trenches has already muddied local streams, choked off intermittent streams, and caused a mudslide that closed a local road, despite erosion control measures taken by the pipeline company. Heavy rainfall poses a particular threat. The geology of southwest Virginia magnifies the danger. Much of the land is karst, a porous limestone that has eroded over time, producing sinkholes, caverns and underground channels. Should the ground sink, pipes could buckle into underground caves. Heavy rainfall increases the threat. Now, with Florence on its way, residents and developers alike worry about what may happen if the hurricane drops torrents of rain. Construction on the MVP was temporarily halted on Tuesday, and the pipeline company said it was focusing on steps to maintain erosion and sediment controls. However, such controls have failed repeatedly in the face of normal rainfall events.
Mountain Valley Pipeline halts construction as Hurricane Florence takes aim at Carolinas, Virginia - With Hurricane Florence forecast to make landfall later this week, Mountain Valley Pipeline (MVP) temporarily halted construction on its 303-mile pipeline project on Tuesday and is taking measures to prevent extensive damage to its construction zone.Forecasters are expecting an unprecedented amount of rainfall from Florence across portions of Virginia, starting late this week and continuing through the weekend. MVP said it is taking “all possible precautions in Virginia” in consultation with the Virginia Department of Environmental Quality (DEQ) to maintain erosion and sediment controls along the pipeline’s right of way.Locals, however, worry about the impact heavy rainfall will have on the land. From the tree-clearing phase to the laying of the 42-inch-diameter pipe into trenches, MVP has faced problems with erosion and sediment controls when it rains. In July, the Virginia DEQ served the company with a notice of violation for failing to install proper erosion controls.But the rains that have slowed construction of the pipeline so far do not compare to the potentially catastrophic rains that Hurricane Florence could unleash on a large part of Virginia, including the MVP construction zone south of Roanoke, Virginia. Last weekend, Virginia Gov. Ralph Northam declared a state of emergency in anticipation of the potential impact of Florence. “MVP has failed with the normal rainfalls we have in this area,” Sandy Schlaudecker, chair of Preserve Montgomery County, Virginia, said in an email to ThinkProgress. “I have great doubts that anything they have done will be enough. We will have people out documenting the damage as soon as it is safe.”
Virginia pipeline construction to continue with ‘aggressive’ monitoring - Will existing environmental rules be enough to protect Virginia streams from the potentially damaging side effects of two pipeline projects? Citizens and environmental groups cry no, but the State Water Control Board says its hands are tied. The seven-member board decided at a contentious Aug. 21 meeting to continue allowing two natural gas pipelines — the Mountain Valley Pipeline and Atlantic Coast Pipeline — to be constructed across the state, under additional oversight.The governor-appointed board is charged with administering the state’s water control laws and resolving special issues.Both pipelines will carry natural gas, extracted from underground shale formations using a controversial technique called hydraulic fracturing or “fracking.” Pipeline construction entails disrupting wetlands, crossing streams, removing trees and exposing bare soil, sometimes on steep slopes.The Mountain Valley Pipeline travels a largely north-south route through West Virginia into Virginia’s southwest corner, where work is already under way. Construction has also begun on the Atlantic Coast Pipeline in West Virginia. From there, it will cut a southeastern path through Virginia, including parts of the Chesapeake Bay watershed, to North Carolina. According to the Southern Environmental Law Center, it will cross Virginia waterways nearly 1,000 times.
Dominion’s 600-mile gas pipeline heading in direction of South Carolina -- Bolt by bolt, a major pipeline is running toward South Carolina. Conservation advocates fear it could mean that exporting natural gas from the state is getting closer to reality. It would be one of the more controversial fallouts from the sale of SCANA to Dominion Energy, if that agreement actually goes through. The 600-mile Atlantic Coast Pipeline being built by Dominion is projected to pump 1.5 billion cubic feet per day of gas fracked from the ground under various Northern states. It would run from West Virginia to North Carolina. It could be expanded to cross into South Carolina near the mixing of Interstate 95 and South Carolina’s inland port shipping facility near Dillon, conservationists say. The route would put it on a line to continue on to ports such as Georgetown or Charleston, they warn. A Dominion spokeswoman said that’s not part of the company’s current plans. “Dominion Energy has not proposed any expansion of the Atlantic Coast Pipeline beyond what has already been approved by the Federal Energy Regulatory Commission,” said spokeswoman Kristen M. Beckham. Extending the pipeline into South Carolina could give fracking companies a much sought-after larger East Coast port from which to export gas to Europe. That would bring the state a new tax source and potentially jobs, particularly in Georgetown, which is struggling economically. Such an extension would also continue Dominion’s growing reliance on pipeline building for revenue. Conservation groups are concerned it could also mean building an onshore facility for processing any oil or gas drilled offshore South Carolina — a proposal opposed by most coastal residents, surveys show. It would add to pollution threats in waters already compromised by development.
If oil spilled off SC’s coast, a huge current would make it ‘impossible to control’ Oil spills in the Gulf Stream off South Carolina could form fast-moving slicks for hundreds of miles, making cleanup nearly impossible, devastating one of the Atlantic’s most important fisheries and wreaking havoc with the state’s billion-dollar tourist industry, a Post and Courier analysis shows.While spills in the Gulf Stream would travel far, spills closer to shore could ooze their way toward land, fouling beaches and marshlands anywhere from the Lowcountry to North Carolina’s Outer Banks.In what’s thought to be a first for a news organization, The Post and Courier generated more than 1,000 simulations of potential spills off the East Coast. To tell this undercovered story, The Post and Courier weaves history and science into a story that captures the majesty of the Gulf Stream and the stakes as the climate warms.The newspaper used a program developed by the National Oceanic and Atmospheric Administration that takes into account amounts of oil spilled, weather patterns and ocean currents, including the Gulf Stream.Simulations ranged from a spill of 1,000 barrels to a worst-case scenario: the 4.9 million-barrel BP/Deepwater Horizon disaster in 2010. Among the findings:
- In many medium-to-large spill scenarios, the Gulf Stream is like a high-velocity pump. Spills in the powerful current would spread quickly. Within two weeks, slicks off Georgia could hit the Outer Banks and then move into deeper waters off Virginia and pivot toward Europe.
- The Gulf Stream also serves as a lid — one that traps oil between the current and our coast. If spills happened within 50 miles of South Carolina — before the Gulf Stream — oil plumes could coat beaches along the tourist-driven Grand Strand. Other simulations show oil hitting the North Carolina coast around Wilmington and the Outer Banks.
- Shifting winds and currents add layers of complexity to oil-spill predictions — and potential cleanup operations. In some scenarios, winds push oil ashore. In others, oil ends up in eddies that spiral miles offshore.
The newspaper’s simulations come amid a heated debate about the potential risks and rewards of oil exploration along the East Coast.
Bayou Bridge Pipeline halted by property rights challenge - A legal challenge from Atchafalaya River Basin landowners and environmental groups has temporarily halted construction of the controversial Bayou Bridge Pipeline. On Monday (Sept. 10), a judge was scheduled to hear the case of St. Mary Parish landowners who filed an injunction against builders of the pipeline, which they say would cross their property illegally. But just before the hearing, Texas-based Energy Transfer Partners, which is constructing the pipeline jointly with Phillips 66, came to an agreement with landowners that effectively stops construction on a key section of the route. "It's a huge victory and blow to Bayou Bridge," said Anne Rolfes of Louisiana Bucket Brigade, one of the groups opposed to the pipeline. The proposed 162-mile pipeline would run from St. James to Lake Charles, with portions crossing the ecologically-sensitive Atchafalaya Basin. The pipeline would link to Energy Transfer's Dakota Access Pipeline and the oil fields in North Dakota. The injunction was filed in July after members of the Atchafalaya Basinkeeper, a preservation group, noticed pipeline workers cutting trees and digging trenches on a 38-acre marshland in St. Mary. The property's owners, which includes Peter Aaslestad and other members of his family, had not granted access to the property and opposed the pipeline's construction through the basin, which contains one of the largest swamps in North America.
Why The U.S. Is Suddenly Buying A Lot More Saudi Oil - For a few months now, OPEC has been boosting production to ease concerns about high oil prices amid expected supply losses from Venezuela and Iran. The cartel’s largest producer and exporter, Saudi Arabia, has been specifically targeting an increase in crude oil exports to the most transparent market, the United States, which reports crude oil imports and inventory levels every week.On the one hand, the Saudis are looking to regain their foothold in the American market after having cut shipments to the United States to a 30-year-low at the end of last year, when OPEC’s efforts to erase the global oil glut were in full swing.On the other hand, the Saudis are responding to the demands of their staunch ally U.S. President Donald Trump, who has repeatedly slammed OPEC for the high gasoline prices, urging the cartel in early July to “REDUCE PRICING NOW!”In the week to August 31, the four-week average of U.S. crude oil imports from Saudi Arabia exceeded 1 million bpd for the first time since June 2017, data by the EIA showed.At that time last year, Saudi Arabia started to purposefully reduce its exports to the United States, where inventory data and refinery runs are reported every week. Those reports influence the price of oil and investor sentiment. In the last week of October 2017, the four-week average of U.S. imports from Saudi Arabia was just 506,000 bpd—almost half of the four-week average of 1.009 million bpd for the last week of August this year.
Midland WTI gets its own cavern at LOOP crude terminal - The Louisiana Offshore Oil Port has quietly allocated one of its eight underground crude oil storage caverns to West Texas Intermediate, a reflection of the Texas grade’s continued ascent as the US’ flagship oil. In documents published to its website, LOOP established this month a “Midland WTI cavern” into which the grade may be delivered. LOOP defines Midland WTI as maximum 44 API, maximum 0.45% sulfur, maximum 10 psi RVP, maximum 11 psi TVP and maximum 1% sediment and water. The cavern is known as Segregation 21. It replaces Segregation 20, which allowed for deliveries of maximum 46.5 API Eagle Ford, Bakken and Midland WTI. That took effect in October 2017. The cavern has historically been used for light grades. Before October 2017, LOOP in the past also allowed for the Nigerian grades Bonny Light (34.4 API, 0.20%S), Forcados (30.3 API, 0.18%) and Qua Iboe (36.3 API, 0.12%) to be delivered. The best option for delivering WTI into LOOP would be via Shell’s 375,000 b/d Zydeco pipeline (formerly known as Ho-Ho), which extends from Houston to the Louisiana terminal. Another option would be by barge or tanker from Corpus Christi or the Houston area delivering into LOOP’s offshore platform. A typical river barge holds 10,000-30,000 barrels of oil, while new articulated tug-barges (ATBs) used on the ocean can hold as much as 340,000 barrels. Shippers can also rail crude to Genesis Energy’s Raceland, Louisiana, terminal, where it can be injected into pipe and reach LOOP. The move reflects the rising importance of WTI globally. The Permian region of West Texas and southeastern New Mexico, from which WTI comes, is currently producing around 3.4 million b/d of oil, according to US government figures. The Permian accounted for 26% of total US oil production in 2017. Phillips 66 is a large regional consumer of light sweet grades at its 249,700 b/d Alliance refinery in Belle Chasse, Louisiana. LOOP’s eight caverns hold about 60 million barrels in total, or roughly 7.5 million barrels each. LOOP currently lists assignments for six of the eight caverns. This includes Mars in two caverns, Thunder Horse, LOOP Sour, and Segregation 17, into which Arab Medium, Basrah Light and Kuwait may be delivered. The status of two caverns is not known.
Big Oil Seeks Billions from U.S. Government to Protect It From…Climate Change - Gaius Publius: In a masterstroke of irony — and hubris — the oil industry wants the federal government to build and pay for “a nearly 60-mile ‘spine’ of concrete seawalls, earthen barriers, floating gates and steel levees on the Texas Gulf Coast” to protect “the crown jewels of the petroleum industry.” What are those crown jewels? One of the “world’s largest concentrations of petrochemical facilities, including most of Texas’ 30 refineries, which represent 30 percent of the nation’s refining capacity.” The cost, of course, is in the billions. From the AP:Texas is seeking at least $12 billion for the full coastal spine, with nearly all of it coming from public funds. Last month, the government fast-tracked an initial $3.9 billion for three separate, smaller storm barrier projects that would specifically protect oil facilities.That followed Hurricane Harvey, which roared ashore last Aug. 25 and swamped Houston and parts of the coast, temporarily knocking out a quarter of the area’s oil refining capacity and causing average gasoline prices to jump 28 cents a gallon nationwide. Many Republicans argue that the Texas oil projects belong at the top of Washington’s spending list. The industry doesn’t care at all about the “overall economy.” They only care about their own economy. If industry CEOs could hire Texans to work for a pittance instead of a wage, they would do that. If they could hire Texans to work for nothing instead of a pittance, they would do that too. The planned infrastructure is quite extensive. Just some of the detail: “While plans are still being finalized, some dirt levees will be raised to about 17 feet high, and 6 miles of 19-foot-tall floodwalls would be built or strengthened around Port Arthur, a Texas-Louisiana border locale of pungent chemical smells and towering knots of steel pipes.” The stink of the town is obviously due to the massive refinery structures. Note that this federal spending protects the property of non-U.S. companies as well: The town of 55,000 includes the Saudi-controlled Motiva oil refinery, the nation’s largest, as well as refineries owned by oil giants Valero Energy Corp. and [the French company] Total S.A. There are also almost a dozen petrochemical facilities.
U.S. Department Of Energy Authorizes Freeport LNG Exports --Last week, the U.S. Department of Energy authorized Freeport LNG to export up to 2.14 billion cubic feet of LNG from the same-name facility in Texas “to any country not prohibited by U.S. law or policy” beginning in the third quarter of 2019 when the Freeport facility will begin exports.The Energy Department release explained that the short-term order for Freeport LNG “allows for additional flexibilities to export LNG pursuant to short-term contracts and for the initial commissioning volumes from the project. Freeport will also still be able to export LNG pursuant to its long-term authorizations from DOE.”Last week, Freeport LNG said it had sealed a long-term deal with a U.S. division of Japan’s Sumitomo Corp for the delivery of 2.2 million tons of liquefied natural gas annually over a 20-year period, Reuters reported.The deal, to enter into effect in 2023 when the fourth liquefaction train at the Freeport facility is due to be completed, will be instrumental in providing the funds for the completion of the unit, which will have an annual capacity of 3.5 million tons of LNG. Now Freeport LNG needs to find long-term commitments for another 1.3 million tons of LNG to guarantee the construction of the fourth train. The first train should begin operating by the end of June 2019. Liquefied natural gas exports from the United States began in 2016, and since then, the Department of Energy reports, total production has reached the equivalent of more than 1.3 trillion cubic feet of natural gas. The only two operating LNG export facilities in the country are Sabine Pass and Dominion Cove Point, with a combined capacity of 3.5 billion cubic feet of gas daily. So far, the government has approved long-term LNG export contracts to the tune of 21.35 billion cubic feet of gas daily.
Projects may double Corpus Christi crude oil export capacity by late 2019— Options for exporting more US crude oil from the burgeoning hub of Corpus Christi, Texas, continue to expand as companies prepare for a flood of crude available to head there within the next year. And infrastructure expansion is sorely needed. Planned long-haul pipelines out of the Permian Basin will potentially bring an additional 1.9 million b/d of light, sweet crude and condensate to Corpus Christi by the end of 2019. That's on top of the about 2 million b/d of crude from the Permian Basin and Eagle Ford Shale play that reaches the port city currently. As the area only has three refineries and two condensate splitters, with a combined capacity of about 795,000 b/d, much of the oil that makes its way to the port has to be exported, or transported by water. Exports of WTI and Eagle Ford crude and condensate out of Corpus Christi are also ramping up. The port is the closest -- and cheapest -- point along the Gulf Coast to buy Eagle Ford crude and condensate. WTI Midland crude also is available there. Corpus Christi, located about 220 miles southwest of Houston, is less congested, has less fog and has a deeper draft than the Port of Houston. All of those reasons, traders say, can make it more appealing for exports. By exporting crude from Corpus Christi, buyers and sellers can avoid the snarl of Houston pipeline and port logistics and marine bottlenecks there. In June, the port of Corpus Christi exported 619,242 b/d of crude, according to port data. In January, the port exported 458,153 b/d. Current facilities in Corpus Christi have the ability to export some 1.1 million b/d of crude. By late 2019, numerous projects at the port aim to more than double the export capacity to around 2.4 million b/d, according to S&P Global Platts Analytics data. That number could top 3.2 million b/d in early 2021 if all of the proposed projects are completed. Driving this is expansion are expected production increases in the Permian Basin, as well as the nearby Eagle Ford play. Crude pumped there will feed new or expanded pipelines including the 590,000 b/d EPIC line; Plains All American's 650,000 b/d Cactus II line and the 700,000 b/d Gray Oak line proposed by Phillips 66/Andeavor. Some planned infrastructure projects in Corpus Christi have focused on the need to directly load VLCCs that can transport some 2 million barrels of crude. However, until planned dredging of the Corpus Christi main channel is complete, or until a offshore crude export terminal is built, that will be impossible as the bay is too shallow to load VLCCs currently.
Permian E&Ps Significantly Boost 2020 Oil Hedges -- Possibly on Doubts about Pipeline Completion -- Oil and gas producers working in the Permian Basin increased their 2020 oil basis hedge positions by 431% during the second quarter, a sharp uptick that may signal doubts about 2019 target dates for key pipeline projects, Wood Mackenzie analysts said Tuesday. "It was an anomalously high trading volume” for 2020 Midland-Cushing (Mid-Cush) basis swaps during the quarter, said corporate research analyst Andrew McConn. “The only reasonable conclusion one can draw from this surge is that Permian producers are concerned that key pipeline projects won't be completed on schedule." With oil production forecast to grow on average in the Permian by more than 400,000 b/d year/year through 2022, output has been overwhelming takeaway capacity and causing oil and gas to sell inside the basin at steep discounts to national indexes. As recently as 2015, pipeline capacity constraints caused the Mid-Cush West Texas Intermediate discount to widen to $20/bbl, according to Wood Mackenzie researchers. “This has prompted many Permian operators to use derivatives to hedge against the risk of price differentials growing wider.” According to a U.S. exploration and production (E&P) review by Goldman Sachs of all hedging completed during 2Q2018, operators overall only slightly increased their 2018 oil hedging, but 2019 still was near normal levels. Hedging activity of Goldman’s covered E&Ps was considered to be minimal at the end of June versus the end of March. Post-2Q2018, E&Ps were 52% hedged for oil, 3% above an equivalent 49% at the end of the first quarter. For 2019, hedging had climbed to 23% from 16% post-1Q2018 results.
Study Suggests Pipeline Delay Worries Among Permian - Oil producers in the Permian Basin appear to be worried that key pipeline projects to boost takeaway capacity from the region might not hit their 2019 targeted start-up dates. That is the conclusion of Wood Mackenzie analysts, who in a new report observe that Permian producers increased their 2020 oil-basis hedge positions by 431 percent – or 175,000 barrels per day – during the second quarter of this year. “It was an anomalously high trading volume for this particular hedging derivative,” Andrew McConn, corporate research analyst at Wood Mackenzie, said in a written statement Tuesday regarding the 2020 Midland to Cushing WTI discount (Mid-Cush basis-swaps). “The only reasonable conclusion one can draw from this surge is that Permian producers are concerned that key pipeline projects won’t be completed on schedule.” Wood Mackenzie noted that Permian oil production is ramping up at “breakneck speed,” with growth estimated at more than 400,000 barrels per day year-over-year on average through 2022. The study’s authors contend the production surge is overwhelming takeaway capacity within the Permian, causing oil and gas to sell inside the basin at steep discounts to national indexes. To illustrate, they noted that significant pipeline capacity constraints as recently as 2015 caused the Mid-Cush WTI discount to widen to $20 per barrel. As a result, many Permian operators have turned to derivatives to hedge against the risk of price differentials growing wider, Wood Mackenzie stated. “The more than 52 percent increase in 2019 Mid-Cush hedge positions suggests that producers perceive risk for that year as well,” continued McConn. “Specifically, the risk that Midland oil prices don’t gradually rise and converge back to parity with the Cushing index – as futures markets currently imply.” Acknowledging that midstream companies are “racing” to add new pipeline capacity to ease congestion, Wood Mackenzie estimates that West Texas producers may not get “sustained relief” from current under-construction and final investment decision projects until late 2019. Wood Mackenzie stated that its most recent North American Crude markets short-term outlook projects that more than 2 million barrels per day of capacity should go online in the late-2019/early 2020 time frame.
Permian Takeaway Pains Leading to Other U.S. Basin Gains - Pipeline capacity constraints in the crowded Permian Basin won’t lead to any sharp pullback but they have led to opportunities elsewhere in the U.S. onshore, many of the largest domestic producers said last week.The annual Barclays Energy and Power CEO Conference, held in New York City, drew almost 200 companies and nearly 2,000 clients. Analysts Michael Cohen and Samuel Phillips offered a macro view of the salient points by exploration and production (E&P) companies and oilfield service (OFS) operators.There was no surprise about the leading topic at the flagship confab: Permian oil and gas takeaway constraints.“The key concern is in the Permian, where mixed messages from producers and service companies is keeping investors wondering about the sector overall,” said the analyst team.“Producers universally indicated that they planned to marginally slow down their drilling and completion activity in the Permian because of pipeline constraints.”But it’s not a long-term issue. Halliburton Co., which announced a reduction in its 3Q2018 outlook, said several E&Ps may have “blown through” 2018 Permian budgets, but they planned to get “straight back to work” in January.“E&Ps have strategies in mind” should a major price collapse occur in the Permian, said the Barclays team.They cited Diamondback Energy Inc. and Encana Corp., among a few others, which indicated that if differentials blow out too much, they “would likely adjust the shape of their production profiles in 2019 to deal with the egress issues.”
Oil and gas well fracking creates a lot of wastewater. Here's where things get interesting -- The extraction of petroleum hydrocarbons, particularly from impermeable strata like shale, is a thirsty process. It requires millions (and sometimes tens of millions) of gallons of water to stimulate a single production well. Couple this need with the feverish pace at which oil and gas production is expanding across the epicenter of shale energy extraction (far West Texas and eastern New Mexico), and it is easy to see the concerns about water resource management. Unconventional oil and natural gas extraction processes yield an incredible amount of wastewater. In the Permian Basin, as many as two to six barrels of wastewater are collected for every barrel of oil. This is where the story of shale energy extraction and the quest for domestic energy security becomes a tale of tremendous responsibility and opportunity. The bad news is that the systematic use of underground injection wells, known in the industry as saltwater disposal wells, has been linked to induced seismicity in several shale basins in the U.S. These induced earthquakes can damage property, thus potentially triggering a wave of litigation for energy companies. Equally problematic is the simple fact that pumping these large volumes of wastewater into the subsurface strata essentially removes that water from the water cycle. This may not be an emergency issue today in the U.S., but water management could become a pertinent topic in the very near future as the U.S. rig count rises. Our research group, the Collaborative Laboratories for Environmental Analysis and Remediation at the University of Texas at Arlington, has studied this extensively under some of the most complex and diverse field conditions. We found that multiple treatment technologies are required to remove the contaminants that generally preclude oilfield waste from reuse.
U.S. oil boom starts to cool, tightening global market- (Reuters) - U.S. oil production is running into capacity constraints, which are starting to have a material impact on the global availability of crude, causing the market to tighten and putting upward pressure on prices. The biggest problem is the lack of sufficient pipeline capacity to move oil from shale wells in western Texas and eastern New Mexico to refineries in the Midwest and export terminals on the Gulf Coast. But production in the Permian Basin has also been constrained by shortages of labour, equipment and materials, which have pushed drilling, pressure pumping and completion costs sharply higher. The most obvious impact has been a sharp drop in the price that Permian producers receive for their oil compared with other benchmarks, especially Brent (https://tmsnrt.rs/2p0CTbx ). West Texas producers are currently receiving just $55 per barrel for oil delivered to Midland, in the heart of the Permian, compared with $79 for North Sea Brent. The massive discount reflects the twin difficulties of moving the crude out of the Permian to the main inland trading hub at Cushing in Oklahoma or down to the refineries and export terminals on the coast. Midland crude is currently trading at discount of $14 per barrel compared with Cushing, while Cushing is itself priced at a further discount of $10 to Brent. Midland has traded at an average discount to Brent of more than $12 per barrel this year, up from $4 in 2017 and less than $1 in 2016, and the price differential is steadily worsening. Midland prices have mostly been falling this year while Brent has climbed, leaving Midland up by just $10 per barrel (22 percent) since the end of June 2017 while Brent has risen by $32 (68 percent). Well completions, which are more relevant for production, also show signs of stabilising in recent months, after increasing fairly consistently over the two previous years (“Drilling productivity report”, EIA, August 2018).Since the Permian Basin has been the biggest contributor to U.S. oil output growth in the last two years, the slowdown is starting to temper expectations for further increases in the rest of 2018 and through 2019.
Domestic Onshore Drilling Permits Gain in August, Slow Down in Early September - A total of 4,389 permits to drill in the U.S. onshore were filed by operators during August, up 22% from July and nearly one-third higher from a year ago, according to data compiled by Evercore ISI.Each month the analyst team provides an overview of domestic drilling permit activity onshore and offshore using data compiled from all major states and the Bureau of Ocean Energy Management. Drilling permits require approval before exploration and production companies may drill a new well or bypass/sidetrack an existing well.According to Evercore, August data is nowhere near the heights achieved in August 2014, when 7,746 permits were filed, nor the monthly onshore permit count peak of 8,441 in June 2008.Analysts also cited some “weakening” permit numbers for the month in Wyoming, down 24% from July, as well as Mississippi (off 44%) and Ohio (off 15%), which pressured the permit totals.However, the permit losses in August from July were “more than offset” by gains in Colorado (66%), Texas (21%) and Kansas (66%).Still, the year-to-date domestic permit count remains 2% below the count during the 2009 cyclical downturn, according to Evercore.This month began slow for permitting, with a total of 742 U.S. onshore permits and one new offshore plan issued during the first week of September, down from the first week of August at 830.“Year-to-date onshore weekly average is down at 742 permits from 2017’s weekly average of 847 permits,” said analysts. For the Gulf of Mexico (GOM), 18 permits were issued in August, up from 13 in July and 11 in the year-ago period. Eight permits were issued for new wells, two deepwater, three midwater, and three shallow water. Seven permits were issued for sidetracks, while three were issued for bypasses.
Pioneer Secures In-Basin Sand, 15-Year Contract for Permian Operations with U.S. Silica -- Dallas-based Pioneer Natural Resources Co., one of the largest Permian Basin producers, has secured fracture sand reserves near its West Texas operations in a 15-year deal with U.S. Silica Holdings Inc.The contract guarantees long-term supply from U.S. Silica’s mine now underway near Lamesa, TX, which is close to Pioneer’s Midland sub-basin operations. Pioneer also took a stake in the Lamesa mine, but no details were disclosed.“Strategically located in close proximity to our Midland Basin acreage, delivered sand from the Lamesa mine will cost approximately half that of our current delivered sand, reducing well costs into 2019 and beyond,” CEO Timothy Dove said. “The long-term nature of this agreement will benefit both companies. U.S. Silica has been a trusted partner for many years, and this contract solidifies their position as one of our key suppliers of proppant.” Pioneer, the largest acreage holder in the Midland with an estimated 750,000 gross acres, last month increased its Permian capital spending by about 15% for the year to $3.4 billion.
Ex-CEO of Texas fracking sand company gets 15 years in scam - (AP) - The former CEO of a Texas fracking sand company must serve 15 years in federal prison over a $6 million Ponzi scheme that also landed an ex-lawmaker behind bars. Stanley Bates was sentenced Tuesday in San Antonio. The ex-FourWinds Logistics executive pleaded guilty to counts including securities fraud and money laundering in the scam linked to oil production. State Sen. Carlos Uresti of San Antonio resigned in June before being sentenced to 12 years for his conviction on counts including money laundering and wire securities fraud. Uresti was general counsel for now-defunct FourWinds. A consultant was also convicted and sentenced to more than five years. Prosecutors say investments were wrongly spent on gifts, travel, luxury vehicles and prostitutes. The three men must also repay more than $6.3 million.
Pipeline in fatal blast had a dime‑sized hole in it - A natural gas pipeline that exploded in Texas, killing a 3-year-old girl, had been leaking gas through a dime-sized hole for some time, records show. Delaney Tercero, 3, died and her sister and parents were badly burned in the explosion. A gathering line owned by Targa Pipeline Mid-Continent WestTex exploded on Aug. 9 near their mobile home outside Midland, Texas. Texas Railroad Commission (RRC) records obtained by E&E News through an open-records request indicate that Targa had the pipeline excavated. They found that the steel wall of the line and the tar coating that is supposed to protect it had been "compromised," according to the RRC incident report. There was a hole, three-eighths of an inch by five-eighths of an inch wide, that had been leaking for "an undetermined length of time." The gas in the 10-inch-diameter pipeline was not odorized. The line was about 20 feet from the front of the family's mobile home. Targa hired a contractor to remove a 19-foot section of the pipe, and it was taken to a Targa location under "lock and key," RRC officials wrote that only Targa lawyers have access to the damaged pipe. Targa plans to reroute the gathering line in the area, the report said. Delaney's 2-year-old sister, Dalayza, remains hospitalized at University Medical Center in Lubbock. Her parents, Auden Tercero, 32, and Lucia Cereceres, 29, were also airlifted there after the explosion. The Aug. 10 posting by the sheriff's office said Cereceres was on a ventilator and Dalayza was considered "extremely critical" and on a breathing tube.
‘We’ve waited a long time for this:’ Iowa Supreme Court to decide fate of Dakota Access pipeline - More than a year after the contentious Dakota Access pipeline began carrying crude oil underneath Iowa fields, local landowners who opposed the project finally got the chance to argue their case in front of the Iowa Supreme Court."We've waited a long time for this," Boone County farmer Dick Lamb said.The 1,172-mile pipeline transports about 470,000 barrels of crude oil each day from the Bakken formation in North Dakota to a distribution hub in Patoka, Illinois, cutting through 18 Iowa counties along the way. After the Iowa Utilities Board approved the project and the use of eminent domain to gain easements on properties, several landowners contested the decision in court.They were joined by other groups, including the Sierra Club Iowa chapter. In demonstrations, landowners, environmentalists and American Indians fought the $3.8 billion pipeline up and down the route as crews built the pipeline in 2016. In February 2017, Polk County District Judge Jeffrey Farrell ruled that pipeline builders acted lawfully in seizing private land through Iowa's eminent domain laws. But the landowners appealed the decision to the state's highest court.The case is being closely watched because it will determine the fate of the hotly contested pipeline in Iowa. But the ruling could also set a precedent for how courts interpret Iowa's eminent domain laws in the future. Lawyers argued in front of Iowa's seven justices for about an hour Wednesday. The case now awaits the court's decision.
State regulators postpone Enbridge meetings after protests erupt - State regulators on Tuesday postponed a meeting on Enbridge's controversial new $2.6 billion oil pipeline project after protests erupted in the hearing room.The Minnesota Public Utilities Commission (PUC) was evaluating whether Enbridge met conditions imposed by the panel in June in regard to the pipeline project, which would replace the company's current Line 3. The conditions, which must be met for the company to receive its permit, include details of Enbridge's corporate guarantee and insurance coverage in case of an oil spill.A disruption started around 11:15 a.m. when three pipeline opponents in the back of the PUC hearing room in downtown St. Paul took out a bullhorn and made speeches aimed at the commissioners."You should all be ashamed," one protester said."It's going to be really uncomfortable for you for the next couple of years," another protester said.PUC Chairwoman Nancy Lange then recessed the meeting until 11:45 a.m. The commissioners came back at 11:55, and they were greeted with protesters shouting, "What do you do when your land is under attack? Fight back."Lange tried to restart the meeting, and the protests diminished, though one pipeline opponent continued playing music on a boombox. Lange then canceled the rest of the meeting when her request to turn the music off wasn't heeded. The PUC will reschedule the meeting as soon as possible, said Dan Wolf, the commission's executive secretary. There were at least 20 opponents in the crowd, and about 20 pipeline supporters.
Colorado industry pumps millions into effort to defeat drilling setback — Oil and gas companies have pumped millions this campaign cycle into an effort to defeat a Colorado ballot measure that would increase new drilling setbacks by five-fold and cripple the future of the industry there. The pro-industry group Protecting Colorado's Environment, Economy and Energy Independence, received $7.9 million during August alone, according to data from the state's secretary of state. The industry learned in late August that Initiative 97 had received enough valid signatures to secure a spot on the November ballot. If approved, drilling setbacks would increase from the current 500-foot setback to 2,500 from all occupied structures as well as vulnerable areas, including waterways and parks. It will appear on the ballot as Proposition 112. "Proposition 112 will devastate the economy and cut nearly 150,000 jobs and billions in tax revenue for critical local services like schools, public safety and roads," said Karen Crummy of Protect Colorado. "The measure is so extreme it has bipartisan opposition from former, current and future elected officials, including gubernatorial candidates Jared Polis and Walker Stapleton." Protect Colorado has been running ads in an attempt to educate the public about what is at stake if Proposition 112 passes. More than 94% of non-federal land in the state's top five producing oil and natural gas counties (Weld, Garfield, La Plata, Rio Blanco and Las Animas) would be unavailable for new production. And at least 85% of all new oil and natural gas development on non-federal lands would be off limits, according to the Colorado Oil and Gas Conservation Commission. "What is clear, and what industry clearly understands, is that 97 is a must kill for the Colorado oil and gas industry, which will spare no expense or effort, especially key players, to educate voters about the economic harm that 97 likely would inflict upon the state," according to a note by Baird Equity Research. Key players in Colorado have already poured a lot of money into fighting the measure. Anadarko Petroleum, for instance, has contributed a total of $5.8 million to Protect Colorado so far this election cycle, including $1.83 million last month. DCP Midstream has donated $1 million, while Noble Energy and PDC energy have contributed $4.4 and $3.3 million, respectively, in 2018. Contributions have also come in from SRC Energy, Whiting Oil and Gas Corporation and many others. Total contributions to Protect Colorado throughout 2018 top $21 million through the end of August.
Trump's EPA proposes weaker methane rules for oil and gas wells (Reuters) - The Trump administration on Tuesday proposed weakening requirements for testing and repairing methane leaks in drilling operations, among other measures, in a step toward rolling back an Obama-era policy to combat climate change. The Environmental Protection Agency (EPA) said the changes will save the industry $75 million a year in regulatory costs between 2019 and 2025, while increasing methane emissions. Methane, the primary component of natural gas, leaks from oil and gas wells during drilling. It accounts for 10 percent of U.S. greenhouse gas emissions and has more than 80 times the heat-trapping potential of carbon dioxide in the first 20 years after it escapes into the atmosphere. The oil and gas sector is the largest single source of U.S. methane emissions, according to EPA data. The proposal is the latest move by the Trump administration to roll back environmental rules put in place by former President Barack Obama. Last month, the administration proposed rolling back tougher fuel efficiency standards for vehicles and moved to replace a policy to limit emissions from power plants with one that would allow states to write their own standards. Last year, it delayed implementing the Obama-era rule limiting methane gas emissions from oil and gas operations on federal and tribal lands. Under the new proposal methane gas emissions will increase by a total 380,000 short tons between 2019 and 2025 compared with the EPA’s 2018 baseline estimate. Obama’s updates to the EPA’s New Source Performance Standards envisioned preventing emissions of 300,000 short tons of methane in 2020, rising to preventing 510,000 short tons of methane emissions in 2025. “It’s unfortunate that the Trump Administration is once again ignoring facts and common sense only to put the interests of the nation’s worst-run oil and gas companies ahead of the health and welfare of all Americans,” Matt Watson, associate vice president, energy, for the Environmental Defense Fund, said in a statement.
Forest Service Proposes Faster Permitting For Oil, Gas Leasing -- The U.S. Forest Service (USFS) plans to propose streamlining environmental reviews and permitting for oil and gas leasing in the forests and grasslands it manages, which it said should lead to expedited leasing decisions.In an advance notice of public rulemaking published in Thursday's issue of the Federal Register, the Department of Agriculture agency said the proposed rule would also improve coordination with the Interior Department's Bureau of Land Management (BLM) and create "one simplified permitting system" for oil and gas operators."The potential changes to the existing regulation permitting sections include eliminating language that is redundant with the National Environmental Policy Act process, removing confusing options, and ensuring better alignment with the BLM regulations," USFS said. "The intent of these potential changes would be to decrease permitting times by removing regulatory burdens that unnecessarily encumber energy production. These potential changes would promote domestic oil and gas production by allowing industry to begin production more quickly."USFS is accepting public comments through Oct. 15. The agency said the proposed changes would help modernize legislation that was first promulgated in 1990 and only given a minor update once, in 2007. According to the notice, USFS proposes to streamline and reform the process used to identify national forest land that BLM may offer for oil and gas leasing, and to update regulatory provisions that cover lease stipulation waivers, exceptions and modifications. It also plans to review language addressing an "operator's responsibility to protect natural resources and the environment."
Trump panel weighs change on royalties for gas from public land - (AP) — A Trump administration advisory committee on Thursday recommended a change in the way energy companies calculate how much money they owe taxpayers for pumping natural gas from public lands. But the U.S. Interior Department's Royalty Policy Committee first had to clear up an apparent misunderstanding over how much leeway the companies would have in determining how much they owed. Critics said the proposal would have allowed companies virtually a free hand in calculating the royalties they had to pay, but committee members said that was not their intent. Instead, they said companies should get a choice between two formulas, both set by the government. Interior Secretary Ryan Zinke formed the committee to recommend ways to remove barriers to getting coal, oil and gas from public land while ensuring taxpayers get fair prices. The panel held its fourth meeting in the Denver suburb of Lakewood. Royalties from publicly owned energy reserves are distributed among federal, state and tribal governments, and billions of dollars are at stake. In fiscal year 2017, the government passed out $7.1 billion in royalties on oil, gas and coal extracted from federal lands, federal offshore areas and Native American lands, according to the Interior Department, which manages most federally owned energy. Environmentalists and taxpayer advocates said an early version of the Royalty Policy Committee's proposal — posted on the Interior Department's website — had a loophole that would have let companies decide how to calculate royalties instead of using a formula set by the Bureau of Land Management, part of the Interior Department. The proposal "would remove BLM's authority to determine valuation, handing power over to producers to self-regulate,"
North Dakota Geologists Seek Local Sand Source for Fracking — North Dakota geologists are attempting to locate local sources of sand to be used for hydraulic fracturing as the oil industry demand grows. The North Dakota Geological Survey is collecting sandstone samples from Billings and McKenzie counties this year, the Bismarck Tribune reported. The agency had already collected samples in other areas and authored a 2011 study that found the state's sand sources are lower in quality than other U.S. sources. This second phase of research comes as demand for sand increases and companies experiment with lower-cost options. Companies are now accepting sands that they wouldn't have accepted between 10 and 15 years ago, according to Monte Besler, who owns FRACN8R Consulting in Williston. "We're trying to test and characterize our sand resource so that industry can decide whether or not we have a usable alternative," said Fred Anderson, a geologist with the state survey agency. Preferred sand for fracking is spherical and close to pure quartz, similar to the Northern white sand that's shipped to the Bakken from Minnesota, Wisconsin and Illinois. North Dakota's sand contains quartz, but it's more mixed than pure, according to Anderson. Anderson said it's possible that the state's sand could be processed to get it closer to the desired sand characteristics. North Dakota operators want to find a local sand source to save on transportation costs instead of importing by rail, said Ron Ness, president of the North Dakota Petroleum Council.
Native American tribes sue over Keystone XL pipeline | TheHill: Two Native American tribes are suing the Trump administration over its approval of the Keystone XL oil pipeline, which they say will damage important cultural sites. The Fort Belknap and Rosebud Sioux tribes brought the lawsuit against the State Department on Monday, claiming the pipeline was approved last year without consideration of the harm it could inflict. The tribes are asking a court to rescind the permit, arguing that the president ignored their human rights and specific protections for tribes when he approved the project last year. "All historical, cultural, and spiritual places and sites of significance in the path of the pipeline are at risk of destruction," the tribes told the federal District Court for the District of Montana in their filing. The lawsuit is the latest in a series of ongoing legal battles which have stalled the pipeline's construction since the State Department issued a permit allowing it to move ahead in 2017. The pipeline was most recently delayed last month after a judge ordered an environmental review of the project.
California Jury Finds Plains Guilty in 2015 Oil Spill - A jury in Santa Barbara County, CA, has found Houston-based Plains All American Pipeline LP guilty of criminal charges in a 2015 pipeline oil spill that fouled local beaches. After a four-month trial, the state Superior Court jury found Plains guilty of one felony count for causing the spill by failing to properly maintain its pressurized oil pipeline, the 10.2-mile Las Flores to Gaviota Pipeline, or Line 901, that ruptured with some of the oil reaching the Pacific Ocean at Refugio State Beach through a drainage culvert. Plains shut down Line 901 and another nearby pipeline, Line 903.The jury also found Plains guilty on eight misdemeanor counts for failing to report the spill in a timely manner, knowingly making false reports to the state, and for killing marine mammals, protected sea birds and other sea life. The jury considered 13 counts against Plains, which had been whittled down from an original list of 46 counts in a 2016 indictment by a California grand jury.Plains was acquitted on one misdemeanor charge. The judge declared a mistrial on three other counts after the jury failed to come to agreement.Plains officials said the publicly traded master limited partnership "continues to accept full responsibility for the impact of the accident, and we're committed to doing the right thing." They cited the company's "comprehensive clean up effort" and the absence of any "knowing wrongdoing" by the company or its employees in the verdicts.Plains maintained that its operations of Line 901 met or exceeded all applicable legal and industry standards, and that the jury "erred in its verdict on one count where applicable California laws allowed a conviction under a negligence standard." Plains indicated it would evaluate legal options regarding the jury's decision. In the original 46 counts, Plains and a former employee, who was terminated before the trial began, were specifically named for allegedly violating state laws. Following the spill, Gov. Jerry Brown signed three laws on oil pipeline preventive and contingency planning requirements spurred by the Plains incident.
California Gov. Jerry Brown moves to block Trump on offshore drilling, declares 'not here, not now' - California Gov. Jerry Brown on Saturday signed legislation to thwart the Trump administration's efforts to expand offshore oil drilling along the California coast. At the same time, the Democratic governor announced the state's opposition to the federal government's plan to expand oil drilling on public lands, an idea that's is controversial in conservation-minded California. It follows the U.S. Interior Department move in January that proposed to open up 90 percent of the country's offshore oil and gas reserves through new federal leases. "Today, California's message to the Trump administration is simple: Not here, not now," Brown said in a press release. "We will not let the federal government pillage public lands and destroy our treasured coast." The two bills signed by Brown on Saturday, Senate Bill 834 and Assembly Bill 1775, seek to prohibit new construction of oil drilling-related infrastructure, such as pipelines, within state waters if the federal government authorizes any new offshore oil leases.The White House and Interior Department did not immediately return CNBC's request for comment. California can make it difficult to expand oil and gas drilling, because it controls waters that are within three miles of its shoreline. The federal government has rights over waters between three and 231 miles offshore. Moreover, the new legislation signed by the governor require new public notices and processes for lease renewals, as well as other hurdles to authorize new construction of oil and gas-related infrastructure associated with new federal leases. There has been no federal expansion of oil drilling along California's coastline for more than three decades, and public opinion polling in the state has shown Californians oppose more oil drilling off the coast.Back in 2015, the state experienced its worst oil spill in 25 years when a ruptured oil pipeline spilled over 140,000 gallons of crude into the ocean, and coastal beaches near Refugio State Beach in Santa Barbara County. On Friday, a jury in Santa Barbara County convicted Texas-based Plains All-American Pipeline of nine criminal charges related to the spill, including a felony for failing to properly maintain its pipeline infrastructure.
Gov. Brown signs bills to block Trump's offshore oil drilling plan: Gov. Jerry Brown on Saturday signed two bills that would block new offshore oil drilling in California by barring the construction of pipelines, piers, wharves or other infrastructure necessary to transport the oil and gas from federal waters to state land. This locks into law the vows of Brown and other state officials who declared earlier this year they would do whatever it takes to stop the Trump administration from opening California waters to drilling on an unprecedented scale. Bills AB 1775 and SB 834 prohibit the State Lands Commission, which has jurisdiction over tidelands and waters extending roughly three miles offshore, from granting leases for new pipelines and infrastructure — the most economical way to transport oil and gas to land. The Senate version of the bill also bans the commission from renewing an existing lease if that action would result in increased oil or natural gas production from federal waters.A similar Senate bill last year had failed amid pressure from oil and business interests that said stripping the state of this decision-making authority could do more harm than good.Sen. Hannah-Beth Jackson (D-Santa Barbara), who wrote the Senate bill last year and this year, said she was pleased to see it succeed: “From the 1969 Santa Barbara oil spill to the 2015 Refugio spill, I represent a community that knows all too well the devastation oil spills can bring to our economy and environment.”Polls today show 69% of California residents oppose more drilling off their coast. Both the Republican and Democratic candidates vying to be the next governor have declared that the state's commitment to block new offshore drilling would not change under their leadership.Oil and gas production from the state’s tidelands peaked in the 1960s and has been more or less declining ever since. The state has not issued a new offshore oil and gas lease since the devastating 1969 spill in Santa Barbara turned public sentiment against offshore drilling. In 1994, the state Legislature passed the California Coastal Sanctuary Act, which prohibits new leasing in state waters.
ExxonMobil strikes deal with Alaska to feed LNG project — ExxonMobil has agreed on terms and conditions for the sale of its 13.8 Tcf of natural gas resources in the Prudhoe Bay and Point Thomson fields of Alaska's North Slope to Alaska Gasline Development Corp., the state-owned entity leading development of the Alaska LNG Project, state and AGDC officials announced Monday. The agreement follows a similar commitment of gas to the LNG project made last May by BP, also a major North Slope gas owner. State Commissioner of Natural Resources Andy Mack said the two agreements commit 22.7 Tcf to the LNG project, the majority of the about 32 Tcf of gas identified on the slope. The figures include the state's royalty share of gas, which ranges between 12.5% and 16.6% of the gas depending on the leases involved. "Today's announcement is further evidence that the major North Slope producers are committed to this project. It's good news, but it's just one step of many needed for a major project like this," Mack told a briefing for reporters. As part of the deal, the state reached an agreement with ExxonMobil to modify certain terms of a 2012 lawsuit settlement with the owners of Point Thomson, the largest stakes in which are held by ExxonMobil and BP, Mack said. ConocoPhillips, the third major North Slope gas owner, is still in discussions with AGDC on commitment of its gas to the project,
Prices Slide As Weather Moderates And Summer Comes To A Close -- Highlights of the Natural Gas Summary and Outlook for the week ending September 7, 2018 follow. The full report is available at the link below.
- Price Action: The October contract fell 14.0 cents (4.8%) to $2.776 on a 14.5 cent range ($2.904/$2.759).
- Price Outlook: Weather forecasts are beginning to moderate and summer cooling demand is rapidly coming to a close. However, the storage deficit remains daunting and although US production is set to rise, impending nuclear maintenance may keep power burn elevated and the storage deficit to the 5-year looks to remain very high for the next two weeks. For daily updated storage projections, subscribe to our joint publication with RBN Energy. CFTC data indicated a (21,987)contract reduction in the managed money net long position as longs liquidated and shorts added. This is the lowest long position since January 5, 2016. Total open interest rose 57,630 to 3.830 million as of September 04. Aggregated CME futures open interest rose to 1.657 million as of September 07, a new record. The current weather forecast is now warmer than 8 of the last 10 years. Pipeline data indicates total flows to Cheniere’s export facility were at 2.8 bcf. Cove Point is net exporting 0.7 bcf.
- Weekly Storage: US working gas storage for the week ending August 31 indicated an injection of +63 bcf. Working gas inventories rose to 2,568 bcf. Current inventories fall (652) bcf (-20.2%) below last year and fall (581) bcf (-18.4%) below the 5-year average.
- Storage Outlook: The EIA weekly implied flow was 2 bcf from our EIA storage estimate. Although our weekly storage error has been somewhat disappointing, over the last 5 weeks the EIA has reported total injections of 232 bcf compared to our 233 bcf estimate and that is more than acceptable. The forecasts use a 10-year rolling temperature profile past the 15-day forecast. Our joint publication with RBN updates storage projections daily.
- Supply Trends: Total supply rose 0.7 bcf/d to 80.5 bcf/d. US production rose. Canadian imports rose. LNG imports rose. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count was unchanged +0. Oil activity decreased (2). Natural gas activity increased +2. The total US rig count now stands at 1,048 .The Canadian rig count fell (24) to 204. Thus, the total North American rig count fell (24) to 1,252 and now exceeds last year by +106. The higher efficiency US horizontal rig count rose +1 to 918 and rises +125 above last year.
- Demand Trends: Total demand rose +2.1 bcf/d to +72.1 bcf/d. Power demand rose. Industrial demand fell. Res/Comm demand rose. Electricity demand rose +4,347 gigawatt-hrs to 89,856 which exceeds last year by +12,756 (16.5%) and exceeds the 5-year average by 4,846 (5.7%%).
The cooling season is now entering its final stretch. With a forecast through September 21 the 2018 total cooling index is at 5,367 compared to 4,638 for 2017, 5,391 for 2016, 4,230 for 2015, 3,351 for 2014, 4,793 for 2013, 7,110 for 2012 and 6,577 for 2011.
Volatile Day for October Natural Gas as Market Fixated on Florence, Storage Data - October natural gas appeared ready to stage a third day of solid gains as the prompt month rose 4 cents Wednesday morning but then retreated throughout the remainder of the session as traders began to consider the potentially devastating effect Hurricane Florence could have on natural gas demand in the coming weeks. The Nymex October futures contract ultimately settled at $2.829, up just one-tenth of a cent on the day. November and December slipped less than a penny to $2.82 and $2.91.Spot gas prices, however, were mixed despite mostly warm to hot conditions across the country. The NGI National Spot Gas Avg. rose a penny to $2.63.Meanwhile, all eyes were on Hurricane Florence, which as of 2 p.m. ET, had been downgraded to a Category 3 storm as maximum sustained winds decreased to near 125 mph. Florence was moving toward the northwest near 16 mph and this general motion, accompanied by a gradual decrease in forward speed, was expected through Saturday.On the forecast track, the center of Florence was expected to move over the southwestern Atlantic Ocean between Bermuda and the Bahamas Wednesday, and then approach the coast of North Carolina or South Carolina in the hurricane warning area on Thursday and Friday and move slowly near the coastline through Saturday.“Demand wise, Florence will play out primarily b earish from rain, cooling and power outages,” NatGasWeather said.
US natural gas in storage increases 69 Bcf to 2.636 Tcf: EIA — US natural gas in storage increased by 69 Bcf to 2.636 Tcf for the week ended September 7, the US Energy Information Administration reported Thursday. The build was slightly less than an S&P Global Platts' survey of analysts calling for a 70-Bcf addition. The injection was less than both the 87-Bcf build reported during the corresponding week in 2017 and the five-year average addition of 76 Bcf, according to EIA data. As a result, stocks were 662 Bcf, or 20%, less than the year-ago level of 3.298 Tcf and 595 Bcf, or 18%, less than the five-year average of 3.232 Tcf. The injection was more than the 63-Bcf build reported the week prior as cooler temperatures across the South dropped gas-fired power generation by 7 Bcf, with estimates in Texas reaching the lowest levels since June, according to S&P Global Platts Analytics. The East region added 20 Bcf to 659 Bcf, which was 103 Bcf less than the five-year average. The Midwest gained 32 Bcf to 734 Bcf and is now 155 Bcf below average. A 4-Bcf injection in the Mountain region brought stocks up to 166, or 29 Bcf less than average, while the Pacific also added 4 Bcf to 250 Bcf, compared the five-year average of 326 Bcf. South Central posted a 7-Bcf injection, bringing volumes to 806 Bcf, which is 226 Bcf below average. At 2,636 Bcf, total working gas is below the five-year historical range. The NYMEX October Henry Hub natural gas futures added 1.3 cent to $2.842/MMBtu following the 10:30 am EDT storage announcement. Over the past five years, storage levels peaked in the week ending November 9 at 3.8 Tcf. That would allow for nine more injections before the flip to net withdrawals begin. An early forecast for at least the next three weeks show no reduction in the deficit, according to Platts Analytics. Storage is expected to peak at approximately 3.3 Tcf before the switch to withdrawals in early November. If so, it would be the lowest level to start the heating season since 2005 when stocks peaked at 3.2 Tcf. However, high gas production has kept prices from rising despite the large storage deficit.
Natural Gas Price Moves Higher Briefly After Storage Report - The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles increased by 69 billion cubic feet for the week ending August 31. Analysts were expecting a storage injection of around 65 billion cubic feet. The five-year average for the week is an injection of 74 billion cubic feet, and last year’s storage increase for the week totaled 87 billion cubic feet. Natural gas inventories rose by 63 billion cubic feet in the week ending August 31. Natural gas futures for October delivery traded up about a penny in advance of the EIA’s report, at around $2.83 per million BTUs, and it rose to about $2.85 shortly after the report was released. For the period between September 13 and September 19, NatGasWeather.com predicts “moderate” demand and offers the following outlook: It remains hot over the Southwest with 90s and 100s, while also hot over the Southeast with lower 90s. Warm high pressure will strengthen over the northern half of the country to close out the week with 80s becoming widespread besides the Northwest. In its Short-term Energy Outlook published earlier this week, the EIA forecast dry natural gas production to average 81 billion cubic feet per day in 2018, up by 7.4 billion cubic feet in 2017 and establishing a new record high. The agency expects natural gas production will continue to rise in 2019 to an average of 84.7 billion cubic feet per day. Total U.S. stockpiles slipped slightly week over week to 20.1% below last year’s level and rose to 18.4% below the five-year average. The EIA reported that U.S. working stocks of natural gas totaled about 2.636 trillion cubic feet at the end of last week, around 596 billion cubic feet below the five-year average of 3.232 trillion cubic feet and 662 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 3.298 trillion cubic feet for the same period a year ago.
Henry Hub Natural Gas to Average $2.99 in '18, $3.12 in '19, Says EIA - Relatively low storage levels, robust domestic consumption and growing export levels are propping up Henry Hub prices, which are expected to average $2.99/MMBtu this year and $3.12/MMBtu in 2019, slightly higher than previously forecast, according to the Energy Information Administration (EIA).Both price forecasts, found in EIA's latest Short-Term Energy Outlook (STEO), are up marginally from last month, when the agency said it expected 2018 Henry Hub prices to average $2.96/MMBtu and upward pressure to push average prices to $3.10/MMBtu in 2019.New York Mercantile Exchange contract values for December 2018 delivery traded during the five-day period ending Sept. 6 suggest a price range of $2.31-3.77/MMBtu, encompassing the market expectation of Henry Hub prices in December at the 95% confidence level, EIA said.The front-month natural gas futures contract for delivery at Henry Hub settled at $2.77/MMBtu on Sept. 6, an increase of 1 cent/MMBtu from Aug. 1."The Henry Hub natural gas spot price averaged $2.96/MMBtu in August, 12 cents/MMBtu higher than in July," EIA said. "Cooling degree days in the United States averaged 13% higher than the 10-year (2008-2017) average in August, which contributed to high natural gas demand for power generation."Natural gas inventories have been low this year compared to the five-year (2013-2017) average, reflecting relatively high residential and commercial gas consumption early in the year and growth in both liquefied natural gas and pipeline exports throughout the year, according to EIA.Last week, EIA reported a 63 Bcf build, growing natural gas inventories to 2,568 Bcf/d, which was 643 Bcf below the same time a year earlier and 590 Bcf below the five-year average. EIA is forecasting that natural gas inventories will reach 3,308 Bcf by the end of October, which would be the lowest end-of-October inventory level since 2005.
Oil set to be toppled as North America's 'main energy source' this year, risk management firm says --Oil will be toppled as North America's primary energy source this year, according to risk management firm DNV GL, with natural gas and electrification set to reshape the region's energy future.The Norway-headquartered firm said Monday that overall energy demand in the U.S. and Canada would continue to decline over the coming months, as improving efficiencies in the transport sector dramatically reduce North America's reliance on oil."Energy efficiency is going to outpace the growth in GDP (gross domestic product), that's the main reason why energy demand is peaking," DNV GL's group president and CEO Remi Eriksen told CNBC's "Squawk Box Europe" on Monday."(And) there will be a massive change in technology in the transport sector, not only on the roads but also at sea," he added.In a separate report published Monday by DNV GL, the company said "natural gas is set to overtake oil as the region's largest single energy source (this year) and remain the dominant source until 2050."DNV GL predicted overall energy demand in the U.S. and Canada would continue to shrink as the regional economy becomes less based on manufacturing and as electricity plays a greater role. This would eventually lead to energy demand falling 43 percent by 2050, it added. The world's largest oil firms have different views over the potential for an oil demand peak, but all say that even if demand peaks, trillions of dollars of investments in oil gas would be required to develop new barrels.
The United States is now the largest global crude oil producer - The United States likely surpassed Russia and Saudi Arabia to become the world’s largest crude oil producer earlier this year, based on preliminary estimates in EIA’s Short-Term Energy Outlook (STEO). In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999. Although EIA does not publish crude oil production forecasts for Russia and Saudi Arabia in STEO, EIA expects that U.S. crude oil production will continue to exceed Russian and Saudi Arabian crude oil production for the remaining months of 2018 and through 2019. U.S. crude oil production, particularly from light sweet crude oil grades, has rapidly increased since 2011. Much of the recent growth has occurred in areas such as the Permian region in western Texas and eastern New Mexico, the Federal Offshore Gulf of Mexico, and the Bakken region in North Dakota and Montana. The oil price decline in mid-2014 resulted in U.S. producers reducing their costs and temporarily scaling back crude oil production. However, after crude oil prices increased in early 2016, investment and production began increasing later that year. By comparison, Russia and Saudi Arabia have maintained relatively steady crude oil production growth in recent years. Saudi Arabia's crude oil and other liquids production data are EIA internal estimates. Russian data mainly come from the Russian Ministry of Oil, which publishes crude oil and condensate numbers. Other sources used to inform these estimates include data from major producing companies, international organizations (such as the International Energy Agency), and industry publications, among others.
U.S. Hydraulic Fracturing Market Estimated to be Valued at $13.91 Billion by 2025 | Hexa Research - The U.S. Hydraulic Fracturing Market to reach USD 13.91 billion by 2025, owing to the rise in the oil and gas exploration and extraction activities in the country over the forecast period. There is a rise in the demand for primary energy resources owing to the rise in population and industrialization. To meet these demands and ensure the continuous supply of natural resources in the country, the market for unconventional techniques such as hydraulic fracturing is expect to grow over the forecast period. This technology was first employed in in the U.S.in 1947 and has been constantly upgraded since then. In 2015, around 67% of natural gas was produced from hydraulically fractured wells in the country. The U.S. hydraulic fracturing market is expected to grow significantly owing to the rise in the recent developments and innovations such as using hydraulic fracturing in combination with horizontal drilling during shale formations. This has revealed new sources for huge amount of natural gas supplies, which is fulfilling the energy needs of the nation and is expected to transform the energy future. The use of this technology was first employed around the year 2000 after which it was continuously being used in the oil and gas production and extraction processes. There is a significant rise in the domestic oil and gas production from hydraulically fractured oil and gas production wells. In 2015, the production of oil from hydraulically fractured reservoirs accounted for more than 50% of the total oil production and the gas production accounted for around 70% of the total gas production in the country. This combination technology of directional drilling and hydraulic fracturing allows the oil and gas reservoirs to be punctured directionally or horizontally alongside the foundation of targeted rocks, giving exposure to the rock formation bearing oil and gas in the production well, which is expected to drive the growth for this market over the forecast period.
EIA Cuts Forecast For 2019 US Crude Production Growth (Reuters) - U.S. crude oil production in 2019 is expected to grow at a slower rate than previously forecast, according to a monthly U.S. government forecast on Tuesday. U.S. crude production is expected to rise by 840,000 barrels per day (bpd) to 11.5 million bpd next year, lower than a previous expectation for it to rise 1.02 million bpd to 11.7 million, according to a report from the U.S. Energy Information Administration. Oil demand growth in 2019 is expected to rise by 250,000 bpd, a decrease from EIA's previous projection for an increase of 290,000 bpd. The agency largely left 2018 production and demand growth forecasts unchanged. A shale boom has helped send U.S. production surging above 10 million bpd this year for the first time since the 1970s. But drilling activity in the Permian basin, the largest U.S. oil patch, has begun showing signs of a slowdown due to limited pipeline takeaway capacity. U.S. crude oil production in 2018 is expected to grow 1.31 million barrels per day (bpd) to 10.66 million bpd, little changed from EIA's previous forecast. Demand in 2018 is likely to grow by 470,000 bpd, also unchanged. "EIA's September outlook revised expectations for Brent spot prices upward to an average of $73 per barrel for 2018," EIA Administrator Linda Capuano said. "The change was largely due to lower expectations for Canada's crude oil production and OPEC's condensate production," she said. Saudi Arabia wants oil to stay between $70 and $80 a barrel for now as the world's biggest crude exporter strikes a balance between maximizing revenue and keeping a lid on prices until U.S. congressional elections in November, OPEC and industry sources have told Reuters. EIA forecasts Brent spot prices to average $74 per barrel in 2019.
Why a 'new energy order' is threatening shareholder returns for oil companies --Oil companies are soon to be stuck between a rock and a hard place despite increased oil prices, according to energy analysts at J.P. Morgan.Under pressure from consumers and governments to transition to new and greener energy sources, oil majors will have to "reinvent themselves," Christyan Malek, head of EMEA oil and gas research at the bank, told CNBC's "Squawk Box Europe" on Tuesday.But this will increase capital expenditure and thereby hit shareholder returns, the companies' primary lure for investors, he added.In a research note published this week, J.P. Morgan described a "trilemma" facing oil firms: traditional oil and gas revenue growth, energy transition to reduce carbon footprint, and returning surplus cash to shareholders. "The industry has gotten to a point where they can no longer pay lip service, they have to spend dollars [on diversifying]," Malek said. "But they've got to do that whilst giving back cash to shareholders, as well as supporting the bread and butter business. To do all three is very difficult, and that is why we think the sector's risk-reward is, at best, challenged." Fossil fuels divestments now total an eye-popping $6 trillion, with nearly 1,000 institutional investors having pledged to divest from coal, oil and gas under pressure from environmental groups, governments and increasingly conscientious consumers. This is according to a recently-published divestment report from Arabella Advisors, which revealed an increase in divestment from the 2016 figure of $5.2 trillion. The growing movement has been led by the insurance industry but followed by universities across 37 countries, sovereign wealth funds, medical institutions, cities including New York, and the nation of Ireland. The Church of England last month voted to divest from fossil fuel companies if by 2023 they had not shown ample progress in abiding by the parameters of the Paris Climate Accord to limit global warming. Oil majors like Shell have publicly labeled divestment as a material risk.
Next Financial Crisis Lurks Underground - In 10 years, fracking in America has turned the energy world upside down. A decade and a half ago, Congress was hand-wringing about impending shortages of oil and natural gas. By the end of 2015, President Barack Obama lifted the ban against oil exports. Today, America is the world’s largest producer of natural gas and is an oil powerhouse, ready to eclipse both Saudi Arabia and Russia. This has led to muscular claims about American energy wealth. Erik Norland, executive director of CME Group, a derivatives marketplace,calls fracking “one of the top five things reshaping geopolitics.” This radical change has resulted in widespread concern about the impact of fracking on the environment, about earthquakes and water contamination. But another, less well-known controversy may prove to be more important. Some of fracking’s biggest skeptics are on Wall Street. They argue that the industry’s financial foundation is unstable: Frackers haven’t proven that they can make money. “The industry has a very bad history of money going into it and never coming out,” says the hedge fund manager Jim Chanos, who founded one of the world’s largest short-selling hedge funds. The 60 biggest exploration and production firms are not generating enough cash from their operations to cover their operating and capital expenses. In aggregate, from mid-2012 to mid-2017, they had negative free cash flow of $9 billion per quarter. These companies have survived because, despite the skeptics, plenty of people on Wall Street are willing to keep feeding them capital and taking their fees. From 2001 to 2012, Chesapeake Energy, a pioneering fracking firm, sold $16.4 billion of stock and $15.5 billion of debt, and paid Wall Street more than $1.1 billion in fees, according to Thomson Reuters Deals Intelligence. A key reason for the terrible financial results is that fracked oil wells show a steep decline rate: The amount of oil they produce in the second year is drastically smaller than the amount produced in the first year. According to an economist at the Kansas City Federal Reserve, production in the average well in the Bakken — a key area for fracking shale in North Dakota — declines 69 percent in its first year and more than 85 percent in its first three years. A conventional well might decline by 10 percent a year. For fracking operations to keep growing, they need huge investments each year to offset the decline from the previous years’ wells.
No fracking boom if not for low interest rates after financial crisis, CNBC contributor says – video - Bethany McLean, author and CNBC contributor, says fracking companies haven't proven that they can produce cash flow and have incurred a lot of debt, which isn't good for shareholders.
Barge holding fuel drifts near Skidegate Inlet - A barge carrying thousands of litres of fuel broke free from its moorings during Saturday’s storm and has drifted southeast of Queen Charlotte near the community of Skidegate in Haida Gwaii. The Canadian Coast Guard has responded and is working with the barge’s owner as well as Haida Gwaii Nation and provincial and federal authorities to manage any public safety and environmental risks. “We are also mobilizing a hazmat team to do an initial search of the vessel,” Jocelyn Lubczuk, a spokesperson with the Canadian Coast Guard, said. Lubczuk said the luxury fishing lodge was moored in Alliford Bay but was spotted adrift in Skidegate Bay near Jewell Island around 9:30 p.m. and a four-inch crack in the hull kept it grounded on the island’s shore. The Western Canada Marine Response Corporation (WCMRC), which handles marine spills, was called in to help and its skimming vessel was dispatched from Prince Rupert. “We staged some equipment nearby. Right now the barge is on the ground so it is right up on the beach. It is not spilling,” While no pollution has been observed, authorities are carefully watching the situation. “The estimated volume of hydrocarbons on board is about 18,000 litres of gas and about 15,000 litres from diesel. We haven’t observed any pollution in the water yet,” Lubczuk said.
First Nations group proposes oil pipeline that protects indigenous rights - First Nations have played a central part in Canada's national debate over pipeline projects, leading protests that have seen thousands take to the streets or building tiny homes in hopes of thwarting construction.Behind the scenes, however, one group has been quietly refining a precedent-setting proposal that they say offers a means of protecting indigenous rights while unlocking the country’s vast oil and gas reserves: a First Nations-led pipeline.“We did this because First Nations wanted to be able to demonstrate how to do this right,” said Calvin Helin, the chairman and president of Eagle Spirit Energy Holdings and a member of the Lax Kw’alaams band on Canada’s west coast. Six years in the making, plans for the Eagle Spirit pipeline envision transporting up to 2m barrels a day of medium to heavy crude oil from Alberta’s landlocked oil sands to tide water on the west coast.The proposal still faces considerable hurdles, leading some to describe the project as far-fetched. But Helin describes it as an alternative way forward at a time when the politics around pipelines has become increasingly sensitive.The project was launched amid complaints by some First Nations over the Northern Gateway pipelines, a proposed project that sought to carry Alberta oil to a port in northern British Columbia for export. Despite their concerns about the project’s environmental standards, the communities most affected by the proposal didn’t feel like anyone was paying attention, said Helin.Their viewpoint was vindicated in 2016 when a court ruled that Ottawa had failed in its duty to consult with aboriginal groups. Soon after, the project was cancelled by the prime minister, Justin Trudeau.It was a victory for First Nations, said Helin. “But at the end of the day, they weren’t opposed to pipelines. And so they came together and have led this project from the very beginning.”The Eagle Spirit pipeline – since expanded into plans for a C$12bn ($9bn) multi-pipeline energy corridor that could include liquefied natural gas and natural gas liquids – would see First Nations become the major equity holders, giving them a share of the profits and control over its environmental model. According to Helin, so far the project has the support of 34 of the 35 communities it would traverse. “We’ve just gotta have meetings with one community,” he said. “We’ve gone to great pains to meet with everybody, we’ve done thousands of meetings.”
Mexico oil production to reach 2.6 mil b/d by 2025: Lopez Obrador — Mexico's President-elect Andres Manuel Lopez Obrador said Sunday he plans to focus on developing and exploring onshore and shallow water areas under the control of state oil company Pemex to boost the country's oil production. "We have a projection, and our plan is to have production of at least 2.6 million b/d by the end of the presidential term; additional production of 800,000 b/d," Lopez Obrador said in webcast press conference. Lopez Obrador was speaking to journalists after a meeting with Mexican drilling and oil service companies at Villahermosa in Tabasco. Mexico's production averaged 1.8 million b/d in July, down from an historical high of 3.4 million b/d in 2004, latest data from Mexico's National Hydrocarbon Commission showed. Lopez Obrador said the incoming administration plans to tender drilling contracts in December when his six-year term begins to develop Pemex's shallow water and inland areas to boost oil production. "We are inviting all companies to participate in these tenders. However, we will have a preference over domestic contractors," he added. He said he planned to add Peso 75 billion ($3.9 billion) to Pemex's exploration and production budget to boost drilling and thus raise output. The tenders will help Mexico reverse its production downtrend by the end of 2019, he added. Mexico's oil industry is at a crisis as a result of low public investment in the sector. Pemex in 2017 had an E&P capital expenditure budget of Peso 81.5 billion, down from Peso 222 billion in 2014, the company's annual financial statements show. The cut in Pemex's budget resulted in a significant decrease in drilling activity; it drilled 83 wells in 2017, compared with 705 in 2013. Lopez Obrador blamed the previous administration for Pemex's lower capital expenditure, claiming it was done on purpose amid expectations the private sector would offset lower activity from the state company. "It has been a complete failure, this wrongly named energy reform," Lopez Obrador said The president-elect has historically been an opponent of private participation in Mexico's energy sector. His critics note Pemex's spending cuts reflect lower global oil prices after 2014.
Worldwide oil and gas rig count grows again - The number of working oil and gas rigs working worldwide grew again month-on-month in August 2018 according to the Baker Hughes, a GE company, (BHGE) monthly rig count, monitored by Kallanish. The rise was due to a monthly increase in the number of international and Canadian rigs. The U.S. rig count, was unchanged on-month, whilst still remaining ahead year-on-year.The number of rigs operating in the US remained at 1050 following increases in April, May and June and a fall in July. Numbers in Canada grew strongly again m-o-m in August, rising by 16 units to 220.The North American rig count for the month was therefore 1,270, an increase of 16 (1.3%) m-o-m and still up by 106 (9.1%) y-o-y. The international rig count for August 2018 was 1008, up by 11 from the 997 polled in July and also well ahead of the 952 rigs counted in August 2017.The worldwide rig count for August 2018 was 2,278 therefore, up by 27 (1.2%) from the 2,251 counted in July and up by 162 (7.7%) from the 2,116 counted in the same period 12 months before.Internationally, the rig count rose m-o-m in all monitored regions except Asia Pacific. It rose by 6 in Africa to 104 although numbers in the Asia Pacific region fell by 4 rigs to 225. The rig count ticked up again m-o-m in Latin America by 2 to 192. The count in Europe rose m-o-m by 5 rigs to 85. The second largest region in terms of rig numbers after North America, the Middle East, also saw working rig numbers improve by 2 to 402. This was 11 more than in August 2017. The BHGE Rotary Rig Counts assess the number of rotary drilling rigs actively exploring for or developing oil or natural gas in the United States, Canada and international markets.
Ukrnafta to conduct at least 18 hydraulic fracturing operations in 2018 -- PJSC Ukrnafta this year plans to carry out at least 18 hydraulic fracturing operations in 2018. The company's press service reported that since early 2018, Ukrnafta conducted nine operations at wells of the eastern and western oil regions. "During this year the company plans to conduct at least 18 hydraulic fracturing operations," the press service said. The company said that in H1 2018, Ukrnafta conducted several successful hydraulic fracturing operations in the western oil region: on Pivdenno-Hvyzdetske, Bytkiv-Babchynske, Zavodivske, Pivnichno-Dolynske and Strutynske fields. At the end of the summer Ukrnafta switched to hydraulic fracturing operations in the eastern oil and gas region: on the Prylutske, Bohdanivske and Velykobubnivske fields. Now the company is working on the Buhruvativske field in Sumy region. Ukrnafta uses only own hydraulic fracturing equipment.
Ports compete to build ‘white elephant’ gas terminal -- Three German cities are competing to become the site of Germany’s first import terminal for liquified natural gas (LNG). Whichever of Stade, Brunsbüttel and Wilhelmshaven, all located on or close to the country’s North Sea coast, wins the contract, they will likely be helped by substantial federal government subsidies.Plans to liquefy gas from the North Atlantic coast of the United States and Canada are well advanced, and German energy giant Uniper agreed to a 20-year deal to buy LNG from Pieridae, the Canadian enterprise behind the scheme.After liquification, the gas would be shipped across the Atlantic in tankers. But as yet there are no ports in Germany with an LNG terminal equipped to process the gas and deliver it into the national network.Berlin is very keen to see the infrastructure developed, citing the need for energy supply diversification. The Economic Affairs ministry indicated that it is willing to guarantee loans for half of the investment needed. The government’s spokesman on maritime affairs confirmed the taxpayer may also directly contribute tens of millions of euros.So why the rush to build? The answer is Donald Trump. When Mr. Trump’s administration ratcheted up trade tensions with Europe earlier this year, one of his complaints was Germany’s reliance on Russian gas and its failure to import American gas.The German government, which never previously lamented the lack of an LNG terminal, saw a chance to make a relatively harmless concession. A small price to pay to stop a damaging trade war, especially since Berlin continues to support Nord Stream 2, a controversial new pipeline which will bring even more Russian gas to Germany. Wherever it is delivered, LNG is unlikely ever to be competitive with Russian gas, which can be pumped directly into the grid, without the elaborate processing needed by LNG.
US Warns Russia It May Sanction New Gas Pipeline to Germany-- The U.S. warned Russia that it may follow through on sanction threats over the construction of a major natural gas pipeline to Germany. Asked if the U.S. might impose punitive measures against Nord Stream 2 and other projects, Energy Secretary Rick Perry answered “yes,” during a joint news conference with his Russian counterpart Alexander Novak on Thursday in Moscow. “Minister Novak and I both agree that getting to that point of sanctions is not where we want to go,” he said. Perry urged Russia to be a “responsible supplier” and to stop using its resources for “influence and disruption,” adding that the U.S. opposes the gas link because it would concentrate two-thirds of Russian exports of the fuel to the European Union in a single choke point. Novak said that Russia was concerned if the U.S. sanctions a “competitive” gas pipeline. Nord Stream 2 would double Russia’s current capacity to deliver natural gas directly to Germany under the Baltic Sea and circumvent Ukraine. The project would be a major supply route to the EU and has been a sore point between the U.S. and its allies. In July, U.S. President Donald Trump slammed what he called German dependence on Russian energy, saying it made the nation “captive” to Moscow. The Kremlin said Trump’s attacks were economically motivated and an attempt to promote U.S. liquefied natural gas in Europe. Later that month, Trump eased his tone after a summit with President Vladimir Putin, saying the U.S. could compete successfully with the Russian gas pipeline even if the project wasn’t in Germany’s best interests
Zohr Field Now Producing 2 Bcf Per Day - Eni SpA announced Saturday that the Zohr field offshore Egypt is now producing 2 billion cubic feet per day (Bcf/d), equivalent to approximately 365,000 barrels of oil equivalent per day.In a statement posted on social media site Twitter, the Italian oil and gas company labeled the development as an “outstanding result”.Eni announces that #Zohr field is now producing 2 bcfd. This outstanding result has been achieved only a few months after the first gas in December 2017 & one year before the schedule of the Plan of Development https://t.co/7F2vupEIdF pic.twitter.com/498QNQvFnb— eni.com (@eni) 8 September 2018 The production start-up of Zohr was announced in December 2017, after being discovered in August 2015. The project is described by Eni as one of its seven “record-breaking” projects, which the company says is “playing a fundamental role in supporting Egypt’s independence from LNG imports”. Earlier this year, Eni announced on Twitter that production at Zohr would be increased to 2 Bcf/d by September. The Zohr field, which is the largest gas discovery ever made in Egypt and the Mediterranean Sea, is located within the offshore Shorouk Block. In the block, Eni holds a 50 percent stake, Rosneft holds a 30 percent stake, BP a 10 percent stake and Mubadala Petroleum a 10 percent stake of the contractor’s share. Eni has been present in Egypt since 1954, where it operates through its subsidiary IEOC. The company is the country's leading producer with an equity of around 340,000 barrels of oil equivalent per day.
Russia Looks To Boost Gas Sales In Tighter European Markets - Western Europe will need more flexibility in natural gas supplies in the coming winter season.The European market has been tight amid higher demand in the summer’s heat wave, while natural gas stockpiles are lower than usual after one of the coldest winters in the past decade. Liquefied natural gas (LNG) is more profitable to send out to other (Asian) destinations. So some additional flexibility will be needed in the near term as the northern hemisphere is preparing for the winter.This additional flexibility in natural gas supplies to Northwest Europe, the Netherlands in particular, is likely to come from Russia, S&P Global Platts said in an analysis this week. The prime source of Russian supplies will be pipeline gas from gas giant Gazprom, which holds more than a third of the European gas market. The Yamal LNG facility in Russia, which started operations last winter, could also provide more flexibility in winter supplies, traders tell S&P Global Platts.Russian pipeline volumes via the Velké Kapušany point on the Ukraine-Slovakia border bound for further west in Europe have been somewhat depressed over the past week. Traders are not sure what the cause is, telling Platts that the Russian flows remain a sort of a wild card.Yet, pipeline supply from Russia’s Gazprom is likely to be Northwest Europe’s key flexibility source this winter—a role that Gazprom would only be too happy to play.“LNG is out of the picture. Storage is not that great. Solution: LNG from Yamal and the wildcard: the Russians,” a European gas trader told Platts.
Russia, Japan discuss energy cooperation, sign LNG agreement in Vladivostok — Russia and Japan are considering further expansion of their economic cooperation, a core element of which is energy projects, following a meeting between national leaders and the signing of new cooperation agreements between several companies in Vladivostok on Monday. "The energy sector is a key area of bilateral cooperation," Russian President Vladimir Putin said following a meeting with Japanese Prime Minister Shinzo Abe, ahead of the opening of the Eastern Economic Forum in Vladivostok on Tuesday. Putin said the LNG sector in particular was a key focus area for future cooperation, noting that Japanese companies may take part in the planned expansion of Sakhalin 2, Arctic LNG 2 and Baltic LNG projects as well as an LNG transshipment facility in Kamchatka. Following the meeting on Monday, several Russian and Japanese companies signed agreements, including Novatek and Jogmec who signed a memorandum of understanding on LNG cooperation. The MoU covers exploring opportunities for cooperation "on Novatek's projects in the Yamal and Gydan peninsulas, including the Arctic LNG 2 project and on developing a regular transport link via the Northern Sea Route for LNG deliveries to the Japanese and Asia-Pacific markets, as well as exploring LNG marketing opportunities in the Asia-Pacific region," Novatek said.
PetroChina and Qatargas Sign 22-Year LNG Supply Deal -- PetroChina Co. signed a deal with Qatargas Operating Co. to purchase 3.4 million tons of liquefied natural gas annually, the Chinese company’s biggest supply deal, amid a brewing trade war with the U.S. that threatens to stifle the Asian nation’s purchases of American fuel. Under the 22-year agreement, Qatargas will supply LNG from the Qatargas 2 project, a joint venture between Qatar Petroleum, Exxon Mobil Corp. and Total SA, state-controlled Qatargas said in a statement Monday. The first cargo will be delivered later this month. The contract is PetroChina’s largest by annual volume, according to data compiled by Bloomberg NEF. China’s LNG imports have surged 35 percent in the first eight months of this year, helping it overtake Japan as the world’s biggest buyer of natural gas, amid a drive by President Xi Jinping’s government to boost use of the fuel. The deal comes as President Donald Trump’s trade war threatens to snuff out the budding energy relationship between the U.S. and China. Just last year, U.S. officials were courting Chinese companies to invest in new export projects. Now, the Asian nation is poised to hit American supplies with a 25 percent retaliatory duty, a move that’s pushed PetroChina to consider a temporary halt to U.S. spot purchases and increased buying from other nations. The new long-term Qatar agreement may also help insulate China from volatility in the spot market this winter. Regional spot prices this month have already topped last winter’s peak, which was reached in January when they hit the highest since 2014 as the government’s campaign sent domestic demand soaring.
The Qatar-China LNG Deal Is A Game Changer -- PetroChina has just inked a deal to buy 3.4 million tonnes per annum (mtpa) of LNG from QatarGas in a move representing the Chinese firm’s largest ever to date LNG supply deal by volume. Per terms of the new 20-year agreement, state-controlled QatarGas has agreed to supply PetroChina from the QatarGas 2 project, a joint venture between Qatar Petroleum, U.S.-based oil major Exxon Mobil and French major Total SA. The first cargo will be delivered later this month. The deal has several market and geopolitical take-aways. First, it comes as President Donald Trump ramps up the ongoing trade war between the U.S. and China. On Friday, Trump said he was ready to levy additional taxes on practically all Chinese imports, threatening duties on $267 billion of goods over and above planned tariffs on $200 billion of Chinese products. On cue, China’s foreign ministry on Monday vowed (once again) to defend itself over any possible new tariffs on its products going into the U.S. "If the U.S. side obstinately clings to its course and takes any new tariff measures against China, then the Chinese side will inevitably take countermeasures to resolutely protect our legitimate rights," Foreign Ministry spokesman Geng Shuang told a regular briefing, when asked about Trump's warning. China has already threatened a 25 percent tariff on American LNG imports that have the potential to dramatically set back the so-called second wave of the U.S. LNG sector. Most new American LNG project proposals have been counting on not only Chinese funding for their CAPEX intensive LNG projects, but for Chinese firms to sigh much needed long term off-take agreements that help projects reach a final investment decision (FID) that must be in place before projects can be built. Moreover, the new deal between PetroChina and QatarGas could also arguably be called an opportunity cost/loss for U.S.-based LNG projects already operational that need to sign new agreements to finance additional production trains. Not only is it a potential loss for American projects but these volumes can also help PetroChina offset the reduction and possible elimination of buying U.S. LNG cargoes on the spot market in Asia. If Beijing pushes through with its retaliatory LNG threat, those duties would push up the price of U.S. LNG above what companies could afford to pay for them in the near term.
Queensland LNG exports hit 7-month high in August at 1.76 mil mt — LNG exports from Gladstone port in the eastern Australian state of Queensland hit a seven-month high in August, with strong volumes recorded to the key destinations of China and South Korea, data from Gladstone Ports Corporation showed Thursday. A total 1.76 million mt of LNG was shipped in August from the port - where all three of Australia's eastern seaboard LNG terminals are based - up 8% year on year and up 7% from July. It was the highest monthly volume since January, when 1.77 million mt was exported, and the third-highest on record, the GPC data showed. The terminals at the port are the Origin-ConocoPhillips Australia Pacific LNG, Santos-led Gladstone LNG and Shell's Queensland Curtis LNG. Each facility has two trains, with the first of the lot having come online in January 2015 and the last in October 2016. They have a combined nameplate capacity of 25.3 million mt/year. The 9 million mt/year APLNG terminal had a half train outage for maintenance over August 21-August 26 and is scheduled for further maintenance over September 11-17, according to a notice given to the Australian Energy Market Operator earlier in the year. As with total LNG exports from the port, volumes bound for China were also at a seven-month high in August, at 1.26 million mt, up 13% on year and up 3% from July. It was also the third strongest month on record for Gladstone-China volumes, the GPC data showed. Australia's LNG imports to China could benefit from the trade dispute between the US and China, in which China has threatened to impose a 25% tariff on US LNG.
China's Fracking Shakeup Won't Spur an Oil and Gas Boom -Could China’s oil and gas industry be on the brink of a revolution? That’s one interpretation of the government’s shakeup of regulations on petroleum production this month. The introduction of drill-it-or-lose-it rules and a possible extension of subsidies for unconventional gas output could end up dismembering sprawling industry leader PetroChina Co. and creating a new sector of independent upstream producers like those that have transformed the U.S. energy industry over the past decade, according to Laban Yu, a Hong Kong-based analyst at Jefferies LLCFracking made the U.S. a major oil producer, but not energy independent | WBFO: The oil shortages of the 1970s triggered laws that banned the export of American crude oil. Those lingering fears of scarcity kept those laws around for decades. Then came the shale revolution in mid-200os, otherwise known as the fracking boom, which helped the United States become one of the world's top oil and gas producers. In her book, “Saudi America: The Truth About Fracking and How It's Changing the World,” author and journalist Bethany McLean explores fracking's nuanced success, but also cautions that this energy revolution is not the country's golden ticket to energy independence. She spoke to host Sabri Ben-Achour on Marketplace Morning Report. Below is an edited transcript of their conversation. That would be great news for Beijing. China overtook the U.S. as the world’s largest importer of crude last year, a headache for a country that’s long fretted about its dependence on imported raw materials. It’s hard to believe that would have happened had oil production roughly doubled over the past decade (as it did in the U.S.) instead of standing still. The question is whether radical change is a realistic prospect. After all, China’s oil and gas companies have hardly been sitting passively on their land holdings. About 64 percent of PetroChina’s net acreage was under development at the end of 2017, making it look more like an entrepreneurial wildcatter than the likes of Total SA, BP Plc and Exxon Mobil Corp., which typically have wells drilled on 10 percent or less of their leases. Nor has it been left behind by the revolution in unconventional oil and gas. Indeed, almost half the wells that PetroChina drills each year are in the Changqing field, an area near the Mongolian border characterized by impermeable rock, horizontal bore holes and all the usual features of the fracking revolution.
Oil spill clean-up operations in progress - A leakage in a fuel pipeline from the tankers to the Muthurajawela Oil Refinery Complex was reported in the Uswetakeiyawa area on Friday night. A Ceylon Petroleum Corporation team (CPC) on patrol visit observed the leakage on Saturday morning and immediate steps were taken to bring the situation under control, Petroleum Ministry Secretary Upali Marasinghe said. “Due to the leakage, an oil spill was identified in the beach area from Dikovita to Uswetakeiyawa, while efforts to clean the sea area by removing the fuel spill are being carried out with the support of Sri Lanka Navy, Ceylon Petroleum Storage Terminals Ltd., Marine Environment Protection Agency and the Coast Conservation Department,” he said. Over 300 naval personnel attached to the Western Naval Command and Coast Guard joined the cleaning up operation with the support of Sri Lanka Coast Guard ships ‘Samaraksha’ and ‘Samudra Raksha’, which were presented to the SLCG by the Japanese Government on August 29. According to the Secretary, the CPC has incurred a loss due to the leakage. He said an assessment in this regard will be carried out. According to Marasinghe,a new pipeline is being laid replacing an old one and 90 per cent of the construction work has been finished. The rest of the construction work is expected to completed by year’s end, but a group of illegal dwellers in the Mahawatte area, beside the railway track from the Colombo harbour to Kolonnawa are protesting against the project.
Cleanup operation underway following oil spill in Dikkowita - A major cleanup operation is underway following an oil spill off Dikkowita. The Navy said that it had deployed a team to minimize the environmental damage caused by the oil spill from a pipeline carrying oil to the Muthurajawela Oil Refinery Complex. The cleanup operation is being carried out by Ceylon Petroleum Corporation (CPC) and Sri Lanka Coast Guard (SLCG) together with the Navy. The Navy media unit said that a group of naval personnel attached to the Western Naval Command was rushed to the location following directives issued by the Naval Headquarters. Sri Lanka Coast Guard ships 'Samaraksha' and 'Samudra Raksha' – two vessels presented to the SLCG by the Japanese Government, were also deployed. Meanwhile, officers and sailors of the Navy and Coast Guard commenced cleaning up the oil along the beach from Dikovita to Uswetakeiyawa this morning with the assistance of experts from the Marine Environment Protection Authority.
Iraq protests threaten oil production and critical ports | Asia Times: Basra protesters set the Iranian consulate ablaze on Friday night, the latest manifestation of outrage against influential actors in Basra city, which should be one of the richest in the country with its massive oil reserves and port, but which has become one of the most decrepit. More than 18,000 Basra residents have been poisoned by tap water since the start of the month, according to the Basra province health directorate. Hospitals, inundated with patients, have collapsed under the pressure.Basra, like neighboring Iran, is majority Shiite. But in recent years, residents have grown hostile toward Tehran over its dominance of Iraqi affairs, its support for political parties notorious for public waste and its backing of armed factions that enforce themselves as morality police. The torching of the Iranian consulate came just 24 hours after the protesters — ignoring a government curfew — set fire to the offices of powerful Shiite political parties and Iran-backed militias that formed the backbone of the paramilitary Popular Mobilization Units. The demonstrators did not spare the local government headquarters and provincial council, setting those ablaze as well. Basra has been roiled by unrest since July, and the latest round of revolt was met with tear gas and live fire. The first week of September saw nine demonstrators killed and 93 wounded, according to the UN. The deadly force has only inflamed the movement. Over the past two nights, security evaporated from the streets while the military kept to the sidelines. Angry groups of youths roamed the city center, demanding revenge for those killed and for years of neglect. The city appears out of control. The unrest has put a spotlight on corruption in Iraq’s economic capital, just as the Ministry of Oil seeks foreign investment – including from China – to transform the country from an importer of oil products to an exporter. Demonstrators on Thursday shut down the country’s most important port, Umm Qasr. Basra province is Iraq’s only outlet to the sea, and Umm Qasr is just one of five commercial sea ports that serve as the country’s main gateway for basic necessities. Like the oil fields, these critical hubs have drawn protesters, who see the wealth they create being siphoned off by corruption.
Oil production at risk as violent protests rock Iraq's Basra province -- Iraq's oil-rich Basra province is being rocked by renewed violence as summer protests regain momentum, threatening oil facilities and the country's leadership.Thousands of Iraqis have been taking to the streets daily over the last week, torching government buildings and political party offices in a show of anger against abject living conditions, government corruption and foreign influence.The past week saw rockets fired at the U.S. consulate and Basra airport. The Iranian consulate and offices of powerful Iranian-backed Shia paramilitary groups were also set alight.So far, at least 12 protesters have been killed and more than 200 injured by security forces, deployed against the demonstrators for the first time this year in a sign of mounting panic from the government.As home to most of the oil production facilities for OPEC's second-largest producer, Basra in crisis could have a material impact on oil output and prices, analysts say.It may also see Iraq's Prime Minister Haider al-Abadi pushed from power, creating even more uncertainty for the war-scarred nation and its 15-year old democracy.
Why the World Should Care About What Happens in Basra - The current protests in Iraq are the most serious seen in the country for years, and are taking place at the heart of some of the world’s largest oilfields. The Iraqi government headquarters in Basra was set ablaze, as were the offices of those parties and militias blamed by local people for their wretched living conditions. Protesters have blockaded and closed down Iraq’s main sea port at Umm Qasr, through which it imports most of its grain and other supplies. Mortar shells have been fired into the Green Zone in Baghdad for the first time in years. At least 10 people have been shot dead by security forces over the last four days in a failed effort to quell the unrest.If these demonstrations had been happening in 2011 during the Arab Spring then they would be topping the news agenda around the world. As it is, the protests have so far received very limited coverage in international media, which is focusing on what might happen in the future in Idlib, Syria, rather than on events happening now in Iraq.Iraq has once again fallen off the media map at the very moment when it is being engulfed by a crisis that could destabilise the whole country. The disinterest of foreign governments and news outlets has ominous parallels with their comatose posture five years ago when they ignored the advance of Isis before it captured Mosul. President Obama even dismissed, in words he came to regret, Isis as resembling a junior basketball team playing out of their league.The causes of the protests are self-evident: Iraq is ruled by a kleptomaniac political class that operates the Iraqi state apparatus as a looting machine. Other countries are corrupt, notably those rich in oil or other natural resources, and the politically well connected become hugely wealthy. However big the rake-off, something is usually built at the end of the day.
Are Iran and Iraq Headed toward Another Conflict? - The latest protests in Iraq have taken a distinctly anti-Iran character, as shown by the attack on Iran’s consulate in Basra. According to reports in Iranian and some Iraqi news outlets, the Iraqi security authorities were lax in preventing the attack. More or less simultaneously, the Islamic Revolutionary Guard Corps (IRGC) targeted the bases of the Iranian Kurdish Democratic Party, which in the last several months had increased its violent activities in the northwestern regions of Iran with large Kurdish populations. The IRGC noted that the attack was a warning to the Iraqi Kurdish government in Erbil to be more diligent in preventing anti-Iran activities conducted at least partly from its territory. Despite Arab and Western claims—and some Iranian officials’ boasts—that Iraq has become a satrapy of the Islamic Republic, Baghdad was never and will never be a vassal of Tehran. Even from the early days of the post-Saddam era, tensions and rivalries existed between Iran and Iraq at both the governmental level and at the level of their religious establishments. Iran’s influence, to the extent that it existed, was mostly a function of the Sunni Arab government’s shunning Iraq’s Shia-dominated government and its efforts to undermine it. Meanwhile, the behavior of some Iranian officials and commanders and their comments about Iran’s influence in Iraq helped to undermine Iran’s image and generated resentment among Iraqis. More important, it was obvious from the beginning that once Iraq recovered from its problems, it would assert its national and state identity and try to regain its regional role. Such a development, in turn , was also bound to bring to the fore the competitive aspects of its relations with Iran. Moreover, in the process of redefining and recreating its national and state identity, it was almost inevitable that Iraq , as in the past, would use Iran as the hostile other against whom the Iraqis should define and defend themselves.
White House Threatens Military Response Against Iran-Backed Militias in Iraq - Iraq may once again, for the first time in nearly a decade, become a theater of US-Iran confrontation according to a White House statement published Tuesday evening.“The United States will hold the regime in Tehran accountable for any attack that results in injury to our personnel or damage to United States government facilities,” press secretary Sarah Sanders said in a written statement posted to WhiteHouse.gov. “America will respond swiftly and decisively in defense of American lives.” The threat of military force comes after the American embassy in Baghdad's 'green zone' came under a brazen overnight mortar attack last Thursday, which left no one injured but started a blaze near the sprawling embassy's gate.Up to four mortars were fired in what officials confirmed was a targeted assault American diplomatic soil. Defense analysts and officials were quick to blame Iran-backed militias in the area, which had previously in the week vowed in a joint statement to expel all "foreign occupying forces" from the country. And days later multiple rockets were fired at the Basra airport, which is also site of the United States consulate for the area. Though denying it had a role in events in Basra or Baghdad, Tehran's leaders did admit to a major missile attack on the headquarters of the Kurdistan Democratic Party in Northern Iraqi Kurdistan, which resulted in up to a dozen killed and scores wounded. The White House statement, which condemns "life threatening attacks" against "the United States consulate in Basra and against the American embassy compound in Baghdad" also follows two weeks of heightened sectarian tensions across various parts of the country, but especially the southern Sunni-majority city of Basra, where the Iranian consulate was burned to the ground after it was stormed by a mob late last week.
South Korea Grants US Wish for Zero Oil Imports From Iran - -- South Korea has become the first of Iran’s top-three oil customers to fulfill a hard-line U.S. demand that buyers cut imports to zero. The Asian nation didn’t import any crude from Iran last month, compared with 194,000 barrels a day in July, tanker-tracking and shipping data compiled by Bloomberg show. While bigger consumers China and India have curbed buying from the OPEC producer, South Korea’s gone one step further by halting purchases before the U.S. imposes sanctions on the Islamic republic on Nov. 4. Donald Trump’s administration made the demand over Iranian oil after the U.S. president in May withdrew from a 2015 deal that lifted many sanctions on the Middle East nation in exchange for restrictions on the country’s nuclear program. South Korea heeding that call may signal America’s clout over the North Asian nation. Trapped in a decades-long war in the Korean peninsula, the South’s government has relied on the U.S. to pressure the North’s leader, Kim Jong Un, to abandon its nuclear program. Political ties to America mean it can’t ignore Trump’s order for allies to adopt a tough policy on Iran, according to the Korea Energy Economics Institute. “Maintaining relations with the U.S. is of the utmost importance to South Korea,” The South Korean government’s official stance over Iranian sanctions is that it’s continuing talks with the U.S. in a bid to seek a waiver. While the Trump administration has softened its stance slightly, going from zero tolerance on purchases to saying it will consider exemptions, they are yet to be granted and buyers still face the risk of being cut off from the American financial system after the November deadline.
Will The U.S. Let India Continue To Import Iranian Crude? -- India is increasingly finding itself caught between competing alliances.On one hand, ties between Washington and New Delhi have improved in recent years in large part to what both sides perceive as increased threats from China both militarily and economically in the South China Sea and overall Indo-Pacific region. On the other, New Delhi has also experienced improved bilateral relations with Tehran. This improvement in relations, in large part, comes from the two countries’ own oil related interests. Iran, since earlier sanctions against its energy sector were removed in 2016, has been eager to recapture lost market share both in India and the overall Asia-Pacific region as it quickly ramped up oil production post sanctions. India, as the world’s third largest oil importer after China and the U.S., needs Iranian oil for its expanding refinery sector and also the diversity of supply extra Iranian oil imports would provide. Iran has also been offering India generous discounts on its oil imports this year. As recently as late July, with the first phase of new U.S. sanctions impending, Iran upped the ante ever more by offering to ensure oil cargoes to India after some local insurers stopped providing the service. Currently, India is Iran’s second largest buyer of crude oil after China. Now, recent data shows that India has been trimming its purchases of Iranian crude due to increased pressure from Washington. Earlier this week, preliminary tanker arrival data indicated that India had imported 5320,000 barrels per day (bpd) of Iranian oil in August, a 32 percent plunge from just one month earlier. Despite the marked decrease, the August figure is still 56 percent higher than the same period last year as Indian refiners continue to take advantage of Iranian discounts.Another problem for India is the fact that annual import plans from its refiners were already in place before President Trump’s decision in May to reimpose sanctions against Iran over its nuclear development plans. In April, industry sources told media outlets that Indian refiners had planned to double its import of Iranian crude in 2018/19, mostly due to advantageous pricing and discounts offered by Iran. The development at the time marked a pivot in Indian-Iranian bilateral relations and a win-win scenario for the energy sectors in both countries. Though India trimmed its Iranian oil procurement last month, the question going forward is whether or not this trend will last.
India's Iran oil purchases to fade ahead of U.S. sanctions (Reuters) - Indian refiners will cut their monthly crude loadings from Iran for September and October by nearly half from earlier this year as New Delhi works to win waivers on the oil export sanctions Washington plans to reimpose on Tehran in November. India’s loadings from Iran for this month and next will drop to less than 12 million barrels each, after purchases over April-August had been boosted in anticipation of the reductions. The United States is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers. Washington reimposed some of the financial sanctions from Aug. 6, while those affecting Iran’s petroleum sector will come into force from Nov. 4. India, Iran’s No.2 oil client behind top buyer China, does not recognize the reimposed U.S. sanctions, but winning a waiver from the restrictions is a must for New Delhi to protect its wider exposure to the U.S. financial system. India’s oil ministry in June told refiners to prepare for a “drastic reduction or zero” imports from Iran from November. “Some refiners have either already exhausted or front-loaded their term contract to a large extent, which allows them the flexibility to go to zero if required, or until clarity on the waivers emerge,” Amrita Sen, chief oil analyst at Energy Aspect, told Reuters. Washington will consider waivers for Iranian oil buyers such as India but they must eventually halt crude imports from Tehran, U.S. Secretary of State Mike Pompeo said last week in New Delhi after a meeting of high level officials. The Indian government, already facing a backlash over a falling rupee INR=D2 and record high fuel prices, does not want to halt the oil imports from Iran as the Islamic republic offers a discount on oil sales to India. Government sources said India made this point clear in last week’s meetings with U.S. officials and remains engaged with Washington to work out waivers on its oil purchases from Iran. “We have a special relationship with both the U.S. and with Iran, and we are seeing how to balance this all, and also to balance out the interest of the refiners and end-consumers,” said one of the government officials.
Iran oil embargo: Impossible to bring down oil imports to zero, India tells US - Amid looming US sanctions, India has conveyed to Trump administration that it couldn’t stop its oil imports from Iran, sources say. Indian officials are believed to have made it clear, in three rounds of technical discussions with US officials as well as the most recent 2+2 Dialogue, that while India was willing to negotiate the amount of oil it could continue to import from Iran, it would be impossible to completely scrap its dealings.The 2+2 Dialogue were September 6 meetings held between India's Defence Minister Nirmala Sitharaman and External Affairs Minister Sushma Swaraj with US Secretary of State Mike Pompeo and Defence Secretary James Mattis. Iran is India’s third largest supplier of oil, behind Iraq and Saudi Arabia. Another American delegation is expected later this month to negotiate how much India would have to cut down its imports by to help make exception for other kinds of tradings with Iran, such as the Chabahar Port that India projects as “humanitarian development project with special significance to Afghanistan”. At the end of the 2+2 talks, US Secretary of State Pompeo in his press interaction said: “We have told the Indians consistently, as we have told every nation, that on November 4, the sanctions with respect to Iranian crude oil will be enforced, and that we will consider waivers where appropriate, but that it is our expectation that the purchases of Iranian crude oil will go to zero from every country, or sanctions will be imposed”. India however cites domestic needs, rising crude oil prices, sustainability and supply issues to insist that stopping its nearly 12 per cent crude oil imports is impossible. “Already fuel prices are high in India. If cost of production of oil goes up internationally, it will add to our problems. Companies will pass on added prices to consumers,” said an official, pointing out that US was currently isolated internationally over its stance, with Europe, China and Russia still standing by the Iran nuclear deal. India has been holding separate discussions with Europe over US ultimatum.
Analysis: Iran starts to feel pinch from US sanctions on refined oil products - Iran's headache ahead of looming US sanctions is not going to be limited to crude oil exports.While Iran's crude exports have started to slide, its woes could intensify as it is likely to face further obstacles in condensate and refined product markets.Imports and exports of refined products and condensates for Iran will be affected as the OPEC member's economy comes under increasing pressure when the US sanctions snap back early November.Besides crude, Iran is dependent on exports of condensates and fuel oil, while it relies on gasoil and gasoline imports.Unlike when the US imposed sanctions in 2011, the Trump administration has broadened the list of secondary sanctions, not just targeting Iran's crude exports but also condensates and other oil products.The new sanctions relate to the purchase of "petroleum products" which covers products "obtained from the processing of: crude oil (including lease condensate), natural gas, and other hydrocarbon compounds," according to the US Treasury.There have been signs Iran's exports of fuel oil and LPG have started to fall in the past few weeks. Iran's fuel oil exports have also started to see a small impact, shipping and trading sources said.The country exports most of its fuel oil to Singapore and Fujairah, and flows from Bandar Mahshahr and Abadan have fallen more than 10%, according to data from Platts cFlow, trade flow service. The Fujairah marine fuels market is one of the key export destinations for Iranian fuel oil. Its close proximity to Iran's refineries makes it hard to track exactly how much Iranian product is being bunkered there, and large quantities were said to have been sold at Fujairah while the previous sanctions were in force. This time around the Fujairah market is in a much weaker state as a result of the diplomatic impasse following the imposition of sanctions on Qatar by Bahrain, Egypt, Saudi Arabia and the UAE in June 2017.Why, then, has production failed to take off? The best explanation isn’t that the country’s big three oil companies are an oligopoly — though they are — but that China’s geology is fundamentally more difficult than that of North America. Many prospective fields are buried deep below the surface. To make matters worse, they’re often riven with seismic faults from the slow collision of continental plates that have built the Himalayas and the Japanese and Philippine island chains.
Iran Sanctions Fuel OPEC Tensions - Two months before renewed U.S. sanctions on its oil exports take effect, Iran has already suffered a sharp drop in sales and lost key buyers in Asia and Europe.That slump will continue in coming weeks. Meanwhile, rising output from other OPEC members is fueling tensions within the producer group that could come to a head at a meeting in Algeria later this month.Iran exported just over 2 million barrels a day of crude oil and condensate (a light form of crude extracted from gas fields) in August, according to Bloomberg tanker tracking. That is the lowest since March 2016, and down 28 percent from April, the last month before President Donald Trump announced that he was withdrawing from the Iran nuclear deal and reimposing sanctions. Several key buyers of Iranian oil have already halted purchases. There have been no shipments to South Korea or France since June, while overall exports to the European Union have fallen by about 40 percent since April. The loss of the South Korean market creates a particular problem for Iran, as it was the destination for almost 60 percent of the country’s condensate exports. These flows were exempted from sanctions under President Barack Obama — but have been included this time around.Iran has built a new refinery to process its condensate, but exports are still needed to support the growth in gas production from the South Pars field that straddles the border between Iran and Qatar. If it can’t dispose of the condensate, Iran may be forced to reduce gas extraction and risk triggering winter fuel shortages. Iran’s other Asian markets have proved more resilient, so far. China appears to be making good on its pledge to neither raise nor cut its purchases of Iranian crude, while India and Japan are still seeking waivers from U.S. sanctions in return for a reduction, rather than a full curtailment, of their purchases. Those discussions are continuing, but, in the meantime, buyers are holding off on booking cargoes for October loading, suggesting a further drop in Iran’s exports is likely.
Iran Develops a $5 Billion Weapon to Fight Sanctions - With much fanfare, a French-Iranian scientist recently announced a $3 million plan to invest in a bankrupt medical factory that had become a symbol of France’s troubled economy and revive it.The majority owner wasn’t disclosed: Iran’s government.It was the latest example of how Tehran is quietly leveraging its Iran Foreign Investments Co. to loosen the Trump administration’s tightening economic noose. The fund, with dozens of investments and cash accounts in 22 countries worth $5 billion, prioritizes assets that give it access to services, goods and technologies that it is at risk of losing under U.S. sanctions, the fund’s advisers say. Iran’s government also hope to build good will and counter the nation’s isolation. And, it hopes, to make money. In this case, the fund bought the French medical factory and its weed-strewn grounds in June to ensure Iran can obtain medicine for tuberculosis, bladder cancer and other afflictions—drugs that could become difficult to obtain because of U.S. sanctions, said people familiar with the project.“Their aim is to make Iran independent” from sanctions, said a fund adviser.Iran’s already weak economy has worsened since President Trump withdrew in May from a U.S.-led international accord that curbed Tehran’s nuclear-weapons program in exchange for sanctions relief, and restored some financial penalties. The U.S. administration is pressing Iran to abandon its military role in the Middle East and scale back its missile program.Iran’s currency has plummeted to record lows, foreign investors have fled, and inflation has risen to its highest levels since the previous round of U.S. sanctions ended in 2015. Another round of U.S. sanctions to begin Nov. 5 will ban companies from working both with Iran and the U.S. financial system at the same time.Iran’s foreign-investment arm is one of several ways Iran is trying to work around U.S. sanctions. Iran is also exploring a barter system with oil buyers taking goods as payment and finding Asian companies to replace the business of departing European companies.The Iran Foreign Investments Co.’s managers didn’t respond to requests for comment. A U.S. Treasury spokesman declined to comment.
Russia warns of 'fragile' oil market due to geopolitics, but says it can raise output (Reuters) - Global oil markets remain “fragile” due to geopolitics and production declines in several regions, Russia’s energy minister said on Wednesday, but added his country could raise output if needed. r The comments come amid oil prices eyeing $80 per barrel LCOc1, up from little over $60 in February, amid supply disruptions and expected U.S. sanctions against Iran. “Today, the situation is quite fragile, of course, and it is related to the fact that not all the countries have managed to restore their market and production,” Russian Energy Minister Alexander Novak said at an economic conference in the Russian far eastern city of Vladivostok. “We observe such situation in Mexico, where the decline more than halved from the forecasts on 2018. In Venezuela production is falling quite strongly, by 50,000 barrels per day. This means that the market is still not balanced in long-term perspective.” Venezuelan oil exports have halved over the past year to little more than 1 million barrels per day (bpd) as the South American country grapples with a political and economic crisis. Novak also warned of the impact on markets of looming U.S. sanctions against Iran’s oil exports, which will be implemented from November. “This is huge uncertainty on the market – how the countries, which buy almost 2 million barrels per day of Iranian oil will act. Those are Europe, Asia Pacific region ... There is a lot of uncertainty. The situation should be closely watched, the right decisions should be taken.” Washington has put pressure on other countries to also stop importing Iranian oil. Despite some opposition from governments in Europe and Asia, many oil firms have already started dialling back purchases in anticipation of U.S. sanctions.
US trade war and sanctions are not helping oil markets, Russian energy minister says - The U.S. trade war against China and sanctions regime is contributing to instability in the global oil market and putting pressure on prices, Russian Energy Minister Alexander Novak told CNBC on Wednesday."We can see that the pricing situation today depends not just on the supply/demand balance or the general economic situation but also on the uncertainty that we observe today in the global markets: the trade wars, the sanctions that the U.S. pursue," Novak said, speaking to CNBC's Geoff Cutmore at the Eastern Economic Forum (EEF) in Vladivostok, Russia.Novak said geopolitical uncertainties such as the U.S.' decision to impose a massive package of tariffs on Chinese imports, as well as its sanctions on Russia and those coming up on Iran, could prompt oil prices to rise modestly."If we talk figures, I think that the additional premium is about $5-6 on top of the usual oil price, that would reflect the supply/demand balance," he said. Benchmark Brent crude futures are currently trading at $79.21 while U.S. West Texas Intermediate (WTI) futures are at $69.82 per barrel. Novak's comments come as oil market focus shifts away from a successful 2016 deal between OPEC and Russia (and other non-OPEC producers) to curb output in order to support prices, to current threats to the global oil supply.Forthcoming U.S. sanctions on Iran's oil sector, coming into effect in November, are seen as the biggest disruptive force with oil market analysts predicting that Iran's daily production could fall by as much as 1.5 million barrels a day. Novak's prediction that $5-$6 could be added to the price of a barrel of oil is conservative with many oil market watchers predicting prices per barrel could rise to $90 or even $100 per barrel, particularly when sanctions against Iran take hold.
Oil prices may spike on a coming mismatch between supply and demand, an expert says -- After cruising to four-year highs earlier this year, crude oil has hit the skids. Since hitting $70 a barrel for the first time since 2014 in May, prices have been range-bound, but it could soon snap out of that range, according to energy expert Robert Raymond. "We've sort of achieved [a recovery to the $70] level probably a little faster than we thought we would have relative to declines in Venezuela and Mexico and parts of China and so the production side of the equation has actually rolled over a little faster than we thought it would," Raymond, investment strategist at hedge fund RCH Energy, told CNBC's "Futures Now" on Thursday. Global inventories have since drawn down to border on "critical levels" as demand remains robust, explained Raymond.The Organization of Petroleum Exporting Countries' (OPEC) spare capacity, which measures their bandwidth to ramp up production to cushion price fluctuations, is below 3 percent of total global demand. Lower spare production levels restricts how able OPEC is to respond to spiking prices.Oil companies' re-investment and capital expenditure levels are also signaling a potential squeeze in supplies, he adds."The industry, for the last three years, has been chronically underinvesting and continues to do so at a rate of only 60 percent of cash flow being reinvested in the form of capex," explained Raymond. "The last time that happened [was] in 2004 and '05 which precipitated a spike to $147 a barrel." Oil producers tightened their belts during crude oil's sell-offs in 2014 and 2015, in an attempt to minimize losses. Exxon Mobil, for instance, reduced its exploration expenses in 2014 by 15 percent and by another 9 percent in 2015.
Could Oil Demand Peak in Just Five Years? – WSJ - The Era of Oil is coming to a close but experts and corporate analysts disagree about just when that will happen. The time left before global demand for crude peaks is increasingly tightening, according to new projections from industry analysts. Two reports published this week point to an end of oil’s growth within the next five years, far earlier than many in the industry are expecting. Though most forecasts of oil’s demise project a long tail, the estimates put increased pressure on big oil companies to clarify how they intend to confront a looming energy transition. Demand for fossil fuels will peak around 2023, as increasingly cost-competitive solar and wind are buoyed by supportive government policies to displace growth in oil, coal and natural gas, according to an analysis by London-based think tank the Carbon Tracker Initiative. Norwegian risk-management company DNV GL takes a similar view in an analysis released in London on Monday. It predicts oil demand will max out in five years’ time, making way for renewables to dominate an increasingly electrified and efficient energy system. “The transition is undeniable,” said DNV CEO Remi Eriksen. .The aggressive forecasts add to a raging debate among energy executives and analysts over what the coming decades may hold for the industry. Mainstream views have shifted from a decade ago, when many fretted over the prospect that oil supply could run out. Now, global ambitions to curb global warming, coupled with cheaper and better renewable technologies, are pressuring assumptions about long-term demand. Investors are increasingly sitting up and taking notice, demanding big oil companies outline how resilient their businesses are to an energy transition. While the industry unsurprisingly has a more bullish outlook on the commodity, even some big oil companies acknowledge a tipping point may be coming sooner than previously anticipated.
Trump's sanctions on Iran could push oil prices above $100 per barrel - U.S. sanctions on Iran's energy industry, when they come into effect in November, could potentially drive oil prices above $100 per barrel, according to an industry expert.U.S. West Texas Intermediate crude oil futures traded at about $68 per barrel on Tuesday, while Brent crude futures sat at nearly $78."If there was not that set of sanctions, I think prices would go to $70 or even a little bit lower. But now the sanctions threat is real and less than two months in front of us, that will transform the market into much higher prices," Fereidun Fesharaki, founder and chairman of consultancy FACTS Global Energy, told CNBC's Akiko Fujita at the CLSA Investors' Forum in Hong Kong."The higher price will only be blamed on the Trump administration. There's not much anybody can do if the sanctions come in and are enforced properly," he said on Tuesday.U.S. President Donald Trump's decision to withdraw from an international agreement to curb Iran's nuclear program has resulted in a round of sanctions being re-imposed on the country's financial, automotive, aviation and metals sectors. The U.S. State Department has set Nov. 4 as a deadline for Iranian oil buyers to completely cut their purchases to avoid American sanctions.Iran is currently one of the largest oil exporters in the world. Cutting off Iranian supplies entirely would push oil prices above $100 per barrel because other major producers could not easily fill the void, said Fesharaki. Trump said on Twitter in July that energy prices were too high and urged the Organization of the Petroleum Exporting Countries to reduce prices. But OPEC and Russia don't have the spare capacity to ramp up supply much more, Fesharaki said.
Hedge funds turn bullish again on oil -- (Reuters) - Hedge fund managers have turned bullish again towards crude and fuels, adding a significant number of new long positions in the last two weeks, after spending much of the previous four months liquidating positions.Hedge funds and other money managers raised their combined net long position in the six most important petroleum futures and options contracts by 47 million barrels in the week to Sept. 4.Fund managers have boosted their net long position by 172 million barrels in the last two weeks, after cutting it by 508 million barrels since April 17, according to regulatory and exchange records.The most recent week saw portfolio managers add to net long positions in Brent (+28 million barrels), NYMEX and ICE WTI (+17 million), U.S. heating oil (+4 million) and European gasoil (+3 million).Only U.S. gasoline futures and options saw a small reduction in fund managers' net long positions last week (-4 million barrels).Net long positions in Brent have jumped by 92 million barrels since Aug. 21 while net positions in WTI are up by 45 million barrels over the same period (https://tmsnrt.rs/2CF2Wia). Fund managers' combined net long in Brent and WTI has risen to 803 million barrels, from a low of 666 million barrels just two weeks ago, and the highest since early July.During the four months from late April to late August, position changes were led by the liquidation of old long positions rather than the creation of fresh shorts.The last two weeks has seen that reversed, however, with the creation of new long positions leading the market higher.
Oil steadies as U.S. inventory concerns curb gains (Reuters) - Oil prices were mixed on Monday, pulling back from an early rally after data suggested U.S. crude inventories might build, weighing on the market. Traders said weekly data from Bloomberg suggested U.S. oil inventories are rising, contradicting an earlier report from energy information provider Genscape, which forecast declining inventories. The data put a damper on a bullish mood that had driven trading early in the session. “This has been a Monday morning special that the Bloomberg or Genscape numbers can kill a rally,” said Bob Yawger, director of futures at Mizuho in New York. U.S. crude futures settled down 21 cents at $67.54 a barrel. Brent crude oil rose 54 cents to $77.37 a barrel after touching a session high of $77.92 a barrel. Earlier in the session, crude had strengthened as growth of U.S. drilling braked and investors anticipated lower supply once new U.S. sanctions against Iran’s crude exports kick in from November. “The low rig count set the stage for us to move higher,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “At the end of the day you also have storms that could impact inventories for some time to come.” U.S. drillers cut two oil rigs last week, reducing the total count to 860, Baker Hughes said on Friday. Growth of the number of rigs drilling for oil in the United States has stalled since May, reflecting increases in well productivity but also bottlenecks and infrastructure constraints.
Crude oil futures supported by sanctions, US rig count, Libya attack — Crude oil futures held on to gains during midday European trading Monday as the market weighed likely tighter global supply conditions ahead of the reintroduction of US sanctions against Iran and news of an attack by gunmen at the headquarters of Libya's National Oil Corporation. At 1220 GMT, the November ICE Brent crude futures contract was up 62 cents/b from Friday's settle at $77.45/b, while the NYMEX October sweet light crude contract was up 49 cents/b at $68.24/b. The looming re-imposition of US oil sanctions on Iran, scheduled to begin November 4, was keeping oil market prices in firm territory. South Korea has been the first of the top consumers of Iranian oil to announce it will be halting purchases and cutting imports to zero ahead of the sanctions. Prices were further supported, meanwhile, on the latest reports that the US oil rig count fell by two to 860 last week as operations in the country's most active play, Permian Basin, continued to slow as takeaway capacity approached its limit, weekly data released by Baker Hughes showed Friday. Elsewhere, tensions flared in Libya once again as the headquarters of the NOC were raided by several armed men. NOC chairman Mustafa Sanalla was evacuated from the Tripoli headquarters after gunmen stormed the building and detonated grenades, sources in the country told S&P Global Platts. So far, however, there has been no impact on the OPEC member's upstream production. Crude production has recovered to more than two-month highs of 1 million b/d in the past few weeks.
Oil Steadies As US Inventory Concerns Curb Gains (Reuters) - Oil prices were mixed on Monday, pulling back from an early rally after data suggested U.S. crude inventories might build, weighing on the market. Traders said weekly data from Bloomberg suggested U.S. oil inventories are rising, contradicting an earlier report from energy information provider Genscape, which forecast declining inventories. The data put a damper on a bullish mood that had driven trading early in the session. "This has been a Monday morning special that the Bloomberg or Genscape numbers can kill a rally," U.S. crude futures settled down 21 cents at $67.54 a barrel. Brent crude oil rose 54 cents to $77.37 a barrel after touching a session high of $77.92 a barrel. Earlier in the session, crude had strengthened as growth of U.S. drilling braked and investors anticipated lower supply once new U.S. sanctions against Iran's crude exports kick in from November. "The low rig count set the stage for us to move higher," "At the end of the day you also have storms that could impact inventories for some time to come." U.S. drillers cut two oil rigs last week, reducing the total count to 860, Baker Hughes said on Friday. Growth of the number of rigs drilling for oil in the United States has stalled since May, reflecting increases in well productivity but also bottlenecks and infrastructure constraints. "A higher oil price scenario is built on lower exports from Iran due to U.S. sanctions, capped U.S. shale output growth, instability in production in countries like Libya and Venezuela and no material negative impact from a U.S./China trade war on oil demand in the next 6-9 months,"
Oil firm as Iran sanctions loom, but US seeks to prevent supply shortfall --Oil prices rose on Tuesday as U.S. sanctions squeezed Iranian crude exports, tightening global supply despite efforts by Washington to get other producers to increase output.Brent crude oil was up 51 cents at $77.88 a barrel. U.S. light crude was up 16 cents at $67.71."The impact of the U.S. sanctions on Iran is firmly being felt," said Tamas Varga, analyst at London brokerage PVM Oil. "The biggest worry is obviously the amount of Iranian oil that is disappearing from the market."Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line.But the U.S. government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth.U.S. Energy Secretary Rick Perry met Saudi Energy Minister Khalid al-Falih on Monday in Washington, as the Trump administration encourages big oil-producing countries to keep output high. Perry will meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.Russia, the United States and Saudi Arabia are the world's three biggest oil producers by far, meeting around a third of the world's almost 100 million barrels per day (bpd) of daily crude consumption.Their combined output has risen by 3.8 million bpd since September 2014, more than the peak output Iran has managed over the last three years.Russian Energy Minister Alexander Novak said on Tuesday that Russia and a group of producers around the Middle East which dominate the Organization of the Petroleum Exporting Countries may sign a new long-term cooperation deal at the beginning of December, the TASS news agency reported. Novak did not provide details. A group of OPEC and non-OPEC producers have been voluntarily withholding supplies since January 2017 to tighten markets, but with crude prices up by more than 40 percent since then and markets significantly tighter, there has been pressure on producers to raise output.
Traders bet Iran sanctions will leave market short of crude: (Reuters) - Oil traders have become much more concerned in recent weeks about the potential impact of U.S. sanctions on Iran and the effect on the availability of crude at the end of the year. Brent futures for November have moved to a premium of 45 cents a barrel over the December contract, in a sharp reversal from early last month, when the earlier contract traded at a 20 cent discount. The gyrations in the futures curve are linked closely to traders’ perceptions of the availability of seaborne crude once sanctions are re-imposed from early November (https://tmsnrt.rs/2oZ5MoB). The November-December calendar spread moved into an increasing premium (backwardation) between July 2017 and May 2018, reflecting the overall tightening of the oil market. Rapid growth in consumption, output restraint by OPEC and its allies as well as unexpected disruptions to production in Venezuela and some African countries all helped to reduce excess oil inventories. The U.S. decision to re-impose sanctions on Iran’s exports from early November contributed to a forecast tightening of the market, pushing the Nov-Dec spread to a premium of more than 50 cents in early May. But the calendar spread subsequently collapsed as OPEC, led by Saudi Arabia, and its non-OPEC allies, led by Russia, started to increase production from May onwards. For a short period, in late July and early August, the Nov-Dec spread was trading at a small but significant discount (contango) consistent with plentiful availability of oil at the end of the year. In recent weeks, however, the spread has tightened again, amid signs that output from the Permian Basin in Texas is levelling off and that Saudi Arabia is raising production more slowly than expected. Traders have become much more cautious about crude availability late this year, reflected in a rise in spot oil prices, tighter calendar spreads and an increase in bullish hedge fund positioning in crude futures. Concerns about crude availability have been exacerbated by signs that the threatened re-imposition of sanctions is already having an impact on Iran’s exports, even before the secondary embargo formally goes into effect.
Oil Nears $80 On Iran Concerns - Oil prices were quiet at the start of the week, but rose more than 1 percent in early trading on Tuesday on concerns about outages in Iran and turmoil in Libya and Iraq, although that bullish sentiment was offset by ongoing concerns about emerging markets. Still, after the recent price correction, there is room on the upside. “The path of least resistance for oil prices, given the supply fundamentals, remains up,” Harry Tchilinguirian, oil strategist at BNP Paribas, told Reuters Global Oil Forum.. The EPA is reportedly set to release a proposal on Wednesday that would make it easier for oil and gas companies to meet rules on methane emissions. The proposed rule would extend the time that companies are required to assess and repair infrastructure in remote locations. For instance, drillers would have a year to conduct an inspection rather than six months, and 60 days to make repairs instead of 30. In a related move, the Interior Department is expected to release its final rule (it was proposed earlier this year) to loosen restrictions on flaring. Long known for its coal production, Wyoming’s Powder River Basin is starting to receive more attention from the oil and gas industry as the Permian becomes crowded and expensive. The Powder River Basin produces less than 200,000 barrels of oil equivalent per day (boe/d), but as Bloomberg Opinion points out, a growing number of shale companies are highlighting their assets in the region. Land prices can be a tenth of what they are in West Texas, so the spillover from the Permian is underway. The Powder River Basin has seen a fourfold increase in the rig count, a sign that drilling activity is on the upswing. California took a bold step by passing legislation requiring 100 percent clean electricity by 2045, with the interim goal of 60 percent by 2030 (up from a previous target of 50 percent). Separately, California Governor Jerry Brown signed a bill that effectively bans offshore oil drilling on California’s coast. Because any drilling (were it to occur) would likely lie in federal waters beyond the reach of California, the legislation bans the construction of associated pipelines, piers, wharves or other infrastructure that would support drilling. “Today, California’s message to the Trump administration is simple: Not here, not now,” Brown said in a statement. “We will not let the federal government pillage public lands and destroy our treasured coast.”
Iran OPEC governor accuses Trump of 'bullying world' and oil markets — Iran's OPEC governor has blamed US President Donald Trump for "bullying" oil markets and warned of the economic consequences for Europe and Asia from higher prices after crude breached $80/b. "Oil prices are getting higher in favor of Russia and Saudi Arabia while the US is punishing its allies," said Hossein Kazempour Ardebili in an interview with S&P Global Platts on Wednesday. His remarks come as Brent crude breached $80/b in London trading and Europe's largest bank HSBC warned a spike to $100/b was a risk when US sanctions on Iran, which come into force in November, limit the Middle East producer's exports. "The US' only choice is to appeal to Russia and Saudi to produce more. They already started in Washington and Moscow, but seems they cannot do more," said Kazempour. OPEC's latest survey of production on Wednesday showed Iranian output already falling, down to 3.60 million b/d in August, its lowest production in more than two years. Meanwhile, Saudi Arabia, pumped almost 10.5 million b/d in the same period. His remarks also come as Russian energy minister Alexander Novak asserted that his country could boost supply if required. Iran is due to attend the Joint Ministerial Monitoring Committee meeting of OPEC and its allies led by Russia in Algiers on September 23. Kazempour added that Trump's policies would "punish Europe, Japan, China and India with higher oil and gas prices and rush to [sell] arms to Saudi Arabia."
ICE Brent/NYMEX spread crosses $10/b amid Brent volatility ahead of Iran sanctions - — The front-month ICE Brent/NYMEX futures spread crossed the $10/b mark at the Asian close on Tuesday for the first time since June, as the uncertainties surrounding the impact of US sanctions on Iran has started to inject volatility into Brent crude prices. The November ICE Brent/NYMEX spread stood at $10.36/b at 4:30 pm Singapore time (0830 GMT) on Tuesday, S&P Global Platts' data showed. The spread was last higher on June 12, when it stood at $10.56/b, Platts' data showed. The spread, however, lost some steam later Tuesday, as the November NYMEX contract price climbed in anticipation of demand spikes ahead of Hurricane Florence's arrival on the East Coast later this week. The November Brent/NYMEX futures spread settled at $10.02/b on Tuesday, and as at 0600 GMT Wednesday was at $9.79/b Prompt-month Brent futures had been subject to volatility as markets head closer towards November when the US sanction on Iranian crude is to take effect, and concerns over reduced global supply start to weigh in on prices, market sources said. While there are looming fears in the market about the loss of Iranian crude grades, markets are also looking to OPEC and Russia to pump more oil to compensate for the loss. Since mid-August, the prompt-month Brent futures contract has risen by more than $8/b or 11.73% to-date, to settle at $79.06/b on Tuesday. According to the latest Platts survey, Iranian crude production in August fell to its lowest level in more than two years at 3.6 million b/d. Oil exports from the country plunged 17% from July, as key buyers China and India cut purchases significantly, data from Platts trade flow software cFlow showed. Platts Analytics estimates that the market may lose some 1.4 million b/d of Iranian oil by November, when the sanctions are set to take effect.
Hurricane danger lifts oil prices - Hurricane Florence, which is moving towards the U.S. East Coast, helped push prices higher today and will continue to act as a tailwind for West Texas Intermediate until at least Thursday, based on the latest updates from the National Hurricane Center.The NHC said that the hurricane might strengthen further, reaching Category 5 before making landfall, and warned that “A life-threatening storm surge is likely along portions of the coastlines of South Carolina, North Carolina, and Virginia, and a Storm Surge Watch will likely be issued for some of these areas by Tuesday morning.”Another two storms are developing in the Atlantic—hurricane Helene and tropical storm Isaac—but are yet to make an entrance near the U.S. coast.Last week, tropical storm Gordon shut in oil production amounting to 160,000 bpd for several days as it passed through the Gulf of Mexico. That represented about one-tenth of total oil production in the GOM.Unlike the 2017 hurricane season that caused serious production outages in the Gulf of Mexico and at Gulf Coast refineries, this year’s hurricanes are thought to be fewer and weaker. Colorado State University recently revised its forecast for the number of named storms this season to 11 from 14, as per a Bloomberg report from July. Still, any hurricane approaching the U.S. coast will affect prices in the current supervolatile state of the market, with demand concerns adding to the already high geopolitical risk premium.
WTI Rises 2.5 Percent on Hurricane Threat - Crude oil and reformulated gasoline surged Tuesday as three named tropical systems churned in the Atlantic Ocean.The October WTI futures contract gained $1.71 Tuesday to settle at $69.25 a barrel. The intraday range for the benchmark was a low of $67.48 and a high of $69.55. Traders continued to monitor Hurricane Florence, a Category 4 storm packing maximum sustained winds of 140 miles per hour as of 4 p.m. Eastern Tuesday. According to the National Hurricane Center (NHC), Florence is expected to make landfall in the Carolinas Friday and could cause widespread flooding throughout the Mid-Atlantic region. It could also affect operations at major East Coast fuel terminal facilities.“The market was focused on a series of storms headed toward the U.S. East Coast, which helped lift gasoline prices on the day,” Delia Morris, Houston-based commodity pricing analyst, told Rigzone. “The RBOB contract for October was up almost 3 percent, to $2.01 per gallon, which had a knock-on effect on oil prices.”NHC forecasters are also monitoring Tropical Storm Isaac, which could enter the Caribbean Sea Thursday, and a tropical disturbance north of Mexico’s Yucatan Peninsula. Another named storm in the Atlantic, Hurricane Helene, is predicted to weaken as it moves northward into cooler waters.Ongoing concerns tied to pending U.S. economic sanctions on Iran also factored into Tuesday’s crude price movements.
Oil up over two percent on concerns over Iran, slower U.S. output growth (Reuters) - Oil prices rose more than 2 percent on Tuesday as U.S. sanctions squeezed Iranian crude exports and after U.S. crude oil production in 2019 was forecast to grow at a slower rate than previously expected, prompting supply concerns. Since spring when the Trump Administration said it would impose sanctions on Iran, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from the third-largest OPEC member are cut. As the Nov. 4 date for imposing sanctions draws nearer, the premium has increased. Brent crude futures rose $1.69, or 2.2 percent, to settle at $79.06 a barrel. U.S. West Texas Intermediate (WTI) crude settled $1.71, or 2.5 percent, higher at $69.25 a barrel. Prices extended gains in post-settlement trade after industry data from the American Petroleum Institute showed U.S. crude inventories slumped 8.6 million barrels last week, versus analysts’ forecasts of a 805,000-barrel decrease. Official U.S. government data is due to be released on Wednesday. Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line. But the U.S. government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth. U.S. Energy Secretary Rick Perry met Saudi Energy Minister Khalid al-Falih on Monday in Washington, as the Trump administration encourages big oil-producing countries to keep output high. Perry will meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.
WTI Spikes Above $70 After Huge Crude Draw Amid east coast disruptions and Iran-related headlines, WTI spiked above $69 ahead of tonight's inventory data, before extending gains when API reported a much bigger than expected crude draw (-8.4mm vs -1.75mm exp). API
- Crude -8.636mm (-1.75mm exp) - biggest draw since July 2018
- Cushing +2.122mm (+900k exp) - biggest build since March 2018
- Gasoline +5.821mm - biggest build since Dec 2017
- Distillates -1.165mm
This is the 4th weekly crude draw in a row (and the biggest since July) but most notable was the huge build in gasoline - the biggest weekly rise in inventories since Dec 2017... Bloomberg reports that East Coast motorists may see “dramatic” spikes in gasoline prices, according to AAA, as mass evacuations stretch supplies and Florence’s heavy rains imperil major fuel pipelines. Meanwhile, France and South Korea are shunning Iranian crude, forcing the Islamic Republic to effectively remove some oil from global markets. Some investors “believe we are going to see a significant jump in gasoline prices,” said John Kilduff, a partner at New York-based hedge fund Again Capital LLC. “The supportive factors in this market still remain.” WTI traded above $69 ahead of API and spiked up to within a tick of $70 on the crude draw...
Oil prices leap higher after API reports huge crude draw - The American Petroleum Institute (API) reported a major draw of 8.636 million barrels of United States crude oil inventories for the week ending September 7, compared to S&P Global Platts analyst expectations that this week would see a draw in crude oil inventories of 2.7 million barrels. Last week, the American Petroleum Institute (API) reported a modest draw of 1.17 million barrels of crude oil. The API reported a build in gasoline inventories for week ending September 7 in the amount of 2.122 million barrels. Platts analysts predicted no change in gasoline inventories for the week. Oil prices were trading up in late morning trade prior to the release of the API data on inventories. At 11:17am EDT, WTI was trading up 1.72% (+$1.16) at $68.70 per barrel—down slightly from prices this time last week. Brent crude was also trading up, by 1.56% (+$1.21) at $78.58—almost $1.00 over last week’s figures.Tuesday’s rising prices were largely the result of OPEC geopolitical woes and supply outages, both real and imagined, including in Iraq, Libya, Venezuela, and Iran. Also a boost for prices is Hurricane Florence—a Category 4 hurricane that is expected to hit the Carolinas this week. Florence may prove to be the worst storm to hit North Carolina in 60 years, and nearly 1.5 million people have been ordered to evacuate, according to CNBC. US crude oil production as estimated by the Energy Information Administration was unchanged for yet another week at 11.0 million bpd for the week ending August 31—unable to break through the 11 million barrier. Distillate inventories were also up this week—by 5.82 million barrels, compared to an expected build of 2.3 million barrels. Inventories at the Cushing, Oklahoma, site decreased this week by 1.165 million barrels. The U.S. Energy Information Administration report on crude oil inventories is due to be released on Wednesday at 11:30a.m. EDT.
Oil prices rise on lower U.S. crude inventories, looming Iran sanctions = Oil eased on Wednesday, having neared its highest level this year after a drop in U.S. crude inventories and the prospect of the loss of Iranian supply added to concerns over the delicate balance between consumption and production. Brent crude futures were last down 23 cents on the day at $78.83 a barrel by 0923 GMT, having touched a session peak of $79.66, the highest since late May, when the price broke above $80.U.S. crude futures were up 35 cents at $69.60 a barrel."We think oil market fundamentals are increasingly supportive of crude prices, at least at current levels," said Gordon Gray, HSBC's global head of oil and gas equity research."While we aren't explicitly forecasting Brent to rise to $100 a barrel, we see real risks of this happening. The fact that much higher supply is already needed from the likes of Saudi Arabia - and the low levels of spare capacity remaining - leave the global system highly vulnerable to any further significant outage."U.S. crude stocks fell by 8.6 million barrels in the week to Sept. 7 to 395.9 million, the American Petroleum Institute (API) said on Tuesday, while the U.S. Energy Information Administration (EIA) cut its forecast for U.S. crude output growth in 2019.Outside the United States, traders have been focusing on the impact of U.S. sanctions against Iran that will target oil exports from November."Iran is increasingly becoming the preoccupation of the crude market. The last couple of weeks have seen the expected squeeze on Iranian crude flows taking shape, with overall outflows down markedly," consultant JBC Energy said.
Crude oil futures higher on US stocks draw, Iran sanctions -- Crude oil futures were stable to higher during mid-morning trade in Asia Wednesday after the American Petroleum Institute reported a larger-than-expected draw in US crude inventories and geopolitical tensions remained in focus ahead of the re-imposition of US sanctions on Iran.n At 10:41 am Singapore time (0241 GMT), November ICE Brent crude futures were up 55 cents/b (0.70%) from Tuesday's settle at $79.61/b, while the NYMEX October light sweet crude contract was 79 cents/b (1.14%) higher at $70.04/b."The American Petroleum Institute figures for the week ended September 7 showed a much larger-than-expected 8.6 million barrels and WTI reacted positively," OANDA's head of trading Stephen Innes said.The draw exceeded analysts' expectations of a 2.7 million-barrel draw in a survey by S&P Global Platts Tuesday."Even Cushing, which everyone was fretting about early in the week due to pipeline bottlenecks, showed a decrease of 1.17 million barrels," Innes added."The oil market is directionally bullish now," Mitsubishi Corp.'s senior adviser Tony Nunan said. "The biggest driver of crude [Wednesday] is the big draw on crude, especially towards the end of summer season when demand starts to fall," he added."The underlying strength also lies in the US sanctions on Iran. In addition, the market is factoring in possible pipeline disruptions as a result of the hurricane," Nunan added.Market participants have increased hedging activity ahead of the re-imposition of US sanctions on Iranian oil exports in November, when many expect prices to climb above $80/b, the US Energy Information Administration said Tuesday in a report.
EIA- US Crude Stockpiles Fall More Than Expected To Below 400 Million Bbls (Reuters) - U.S. crude oil inventories fell more than expected last week to below 400 million barrels, while gasoline and distillate inventories rose as refiners ramped up production, the Energy Information Administration said on Wednesday. Crude inventories fell 5.3 million barrels in the week to Sept. 7 to 396.2 million barrels, the lowest level since February 2015, and about 3 percent below the five-year average for this time of year, the EIA said. Analysts had forecast a decrease of 805,000 barrels. U.S. Midwest crude oil inventories fell to 105.9 million barrels last week, the lowest weekly level since January 2015, EIA data showed. Inventories at the Cushing, Oklahoma, delivery hub for U.S. crude futures, located in the PADD 2 or the Midwest, fell 1.2 million barrels, EIA said. The bullish weekly report sent crude futures higher, with global benchmark Brent rising more than $1 a barrel in the session to a high of $80.13 a barrel. U.S. crude rose $1.65 a barrel to $70.90 after the report was issued. "A solid draw to crude inventories this week was the result of a counter-seasonal increase in refining activity - at a point when we should be tumbling into fall maintenance," said Matt Smith, director of commodities research at ClipperData. "The Midwest accounted for the lion's share of the inventory drop, while lower crude imports, higher crude exports and higher refinery runs on the Gulf Coast also help explain away a good part of today's crude draw," he said. Net U.S. crude imports fell last week by 443,000 barrels per day. Refinery crude runs rose by 210,000 bpd and utilization rates increased 1 percentage point to 97.6 percent of total capacity, EIA data showed. Gasoline stocks rose 1.3 million barrels, slightly below analysts' expectations. Distillate stockpiles, which include diesel and heating oil, rose by 6.2 million barrels, versus expectations for a 1.4 million-barrel increase, the EIA data showed.
Oil prices rise on lower US crude inventories, looming Iran sanctions - (Reuters) - Oil prices rose on Wednesday following a report that crude inventories in the United States fell and as looming sanctions against Iran raised expectations of tightening supplies, with top producer Russia warning of a “fragile” global crude market. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $69.81 per barrel at 0047 GMT, up 56 cents, or 0.8 percent, from their last settlement. WTI futures gained 2.5 percent in the previous session. Brent crude futures LCOc1 climbed 24 cents, or 0.3 percent, to $79.30 a barrel. Brent has climbed for four straight days and gained 2.2 percent in the previous session. “Oil prices jumped overnight as American Petroleum Institute inventory data showed a large drawdown in inventories,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities. U.S. crude stocks fell by 8.6 million barrels in the week to Sept. 7 to 395.9 million barrels, the American Petroleum Institute (API), a private industry group, said on Tuesday. Official weekly government data will be published by the U.S. Energy Information Administration (EIA) on Wednesday. Outside the United States, traders have been focusing on the impact of U.S. sanctions against Iran that will target oil exports from November. Washington has put pressure on other governments to also cut imports, and many countries and companies are already falling in line and reducing purchases, triggering expectations of a tighter market.
Oil prices are re-entering the Tweet zone: Kemp (Reuters) - Oil prices have risen back to levels that earlier this year prompted U.S. President Donald Trump to take to Twitter and demand OPEC do more to bring them down.Front-month Brent futures settled well above $79 per barrel on Wednesday, the highest for over three months, and above levels that have spurred the president to complain in the past (https://tmsnrt.rs/2p5xq3j)."The OPEC monopoly must remember that gas prices are up and they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members," the president wrote in July."REDUCE PRICING NOW!" the president demanded in his trademark all-capitals style when Brent was trading at only $78 per barrel on July 4.The president had already grumbled on June 13, when Brent was over $76, writing "Oil prices are too high, OPEC is at it again. Not good!".And his first intervention came on April 20, when Brent was just $74, tweeting "Oil prices are artificially Very High! No good and will not be accepted!" The president has repeatedly blamed OPEC for not pumping enough, even as his administration has worked closely with Saudi Arabia to cut off oil exports from Iran.The renewed rise in prices must therefore be increasing the risk the president will complain again and press OPEC - in effect Saudi Arabia, which holds almost all spare capacity - to increase production further.There is some evidence that presidential tweets, as well as private conversations with Saudi policymakers, have influenced the kingdom's production policy.The president's tweets between late April and early July coincided with a sharp change in Saudi rhetoric about the state of the oil market and need for more supplies, followed quickly by a ramp up in the kingdom's production.While some commentators have dismissed the tweets as empty political theatre, they have probably had a real impact on supplies. The president's interventions, on twitter and behind-the-scenes, are therefore significant for prices, at least in the short and medium term.
OPEC Warns Of Slowing Oil Demand Amid Growing Risks To Global Economy - Amid fears of global oil supply disruption and production curbs, in its latest monthly report, OPEC expects global oil supplies to remain stable, while cautioning that demand is becoming a growing concern.In the latest report, OPEC said that preliminary data suggested that the global oil supply increased 490,000 barrels a day to average 98.9 mb/d in August, compared with the previous month. OPEC projects that in 2018, non-OPEC oil supply will grow by 2.02 mmb/d despite making a downward revision of 64,000 b/d from its last report. In 2019, non-OPEC oil supply is expected to grow by another 2.15 mb/d, an upward revision of 17,000 b/d. Meanwhile, OPEC's supply is also rising. According to secondary sources total crude oil production by OPEC members averaged 32.56 mb/d in August, an increase of 278,000 b/d over the previous month. As shown in the table below, oil output increased mostly in Libya, Iraq and Nigeria, while production declined in Iran, which is due to be hit with sanctions on its oil industry from November onwards, Venezuela, which is experiencing economic and political upheavals depressing production, and Algeria. Meanwhile, oil production by OPEC's leader Saudi Arabia rose by 38kb/d to 10.4 million barrels daily, ticking up every months since May, when it and Russia signalled that they could increase output to fill any supply shortages due to incoming U.S. sanctions on Iran's oil industry.One curious divergence: according to secondary sources, Iran's oil supply production fell by 150,000 barrels a day from July to August to around 3.5 mb/d. But according to Iran's own reporting, production was stable and unchanged production figures for the last three months, however, of 3.8 mb/d. But while OPEC sees supply as stable, some clouds emerged on the demands side, where OPEC expects that in 2018 global oil demand is expected to grow by 1.62 million barrels a day, a minor downward revision from last month's projection. "World oil demand growth in 2018 was revised downward by around 20,000 b/d, primarily as a result of the slower-than-expected performance by non-OECD Latin America and the Middle East during the second quarter of 2018" OPEC said. "Hence, world oil demand growth is now pegged at 1.62 mb/d for 2018, with total global consumption at 98.82 mb/d." OPEC revised world oil demand growth lower for 2019 as well. "In 2019, world oil demand growth was revised slightly lower by 20,000 from the previous month's report, primarily as a result of economic revisions to Latin America and the Middle East. World oil demand growth is now anticipated at 1.41 mb/d and total global consumption at around 100.23 mb/d."
IEA report: Global oil supply hit a record high in August despite Iran, Venezuela fallout - Global oil supply was firing on all cylinders in August, reaching a record 100 million barrels per day (bpd), the International Energy Agency revealed in its monthly Oil Market Report Thursday. Higher output from Organization of the Petroleum Exporting Countries (OPEC) managed to more than offset seasonal declines from non-OPEC members, although non-OPEC supply was also up 2.6 million bpd in August of the previous year, led by the U.S. The IEA forecasts non-OPEC production to grow by 2 million bpd in 2018 and 1.8 million bpd in in 2019, characterized by "relentless growth led by record output from the U.S." Meanwhile, August saw OPEC's crude supply hit a nine-month high of 32.63 million bpd, despite concerns over falling production and slashed access in major producers Venezuela and Iran. Higher volumes from Nigeria and Saudi Arabia as well as increased production in Libya and Iraq served to outweigh these drops. Welders work on the Strategic Petroleum Reserve pipeline on June 1, 1980, in West Hackberry, Louisianna. Begun under President Ford to reduce the threat of oil embargoes, the SPR crude oil is stored in huge underground salt caverns along the Gulf of Mexico, a natural choice due to the proximity of many refineries and distribution points.The 15-nation cartel's members agreed to start raising output beginning in July this year to stabilize markets and offset losses in major suppliers Iran and Venezuela, OPEC's third and sixth-largest producers, respectively.Tehran is facing the loss of most of its energy export markets as the Trump administration prepares tosanction its oil sales on November 4 after pulling out of the Iran nuclear deal in May. August saw Iran's production drop dramatically by 150,000 bpd to 3.63 million bpd, its lowest level since July 2016, as buyers cut orders in the face of impending U.S. penalties.The Iran deal, known officially as the Joint Comprehensive Plan of Action and signed with five other world powers, offered sanctions relief to the Islamic Republic in exchange for limits to its nuclear program. Renewed sanctions imposed by Washington on other parts of its economy in August have already sent its currency, the rial, into a tailspin.Meanwhile, Venezuela's protracted economic crisis has led to a production collapse that's seen 1 million bpd wiped off the market in the past two years, and supply there is expected to continue to deteriorate rapidly.The demand outlook is less bullish. Global oil demand growth for 2018 and 2019 are unchanged, the IAE reported, remaining at 1.4 million bpd and 1.5 million bpd, respectively.
IEA Warns of Higher Oil Prices as Iran and Venezuela Losses Deepen -- -- The International Energy Agency warned that oil prices could break out above $80 a barrel unless other producers act to offset deepening supply losses in Iran and Venezuela. Iranian crude exports have fallen significantly before U.S. sanctions even take effect, the IEA said in a monthly report. The Middle Eastern nation will face further pressure in coming months and the economic crisis in Venezuela is pushing output there to the lowest in decades. It’s uncertain whether Saudi Arabia and other producers will fill any shortfall, or how far they’re able to, the agency said. “Things are tightening up,” said the Paris-based IEA, which advises most major economies on energy policy. “If Venezuelan and Iranian exports do continue to fall, markets could tighten and oil prices could rise” unless there are offsetting production increases elsewhere, it said. Oil climbed to a three-month high above $80 a barrel in London on Wednesday as fears of a supply crunch eclipsed concern about the risks to demand such as the U.S.-China trade dispute. While the Organization of Petroleum Exporting Countries and allies including Russia pledged to boost supply, the IEA said it remains to be seen how much will be delivered. Saudi Arabia lifted output by 70,000 barrels a day to 10.42 million last month, but that remains “some distance from the 11 million barrels a day level that Saudi officials initially suggested was on the way,” the IEA said. While the agency warned that “there is a risk to the 2019 outlook” for demand from challenges in emerging markets such as currency depreciation and trade disputes, it kept forecasts for consumption unchanged.
OMR: Tightening up on the way - Since the previous edition of this Report, the price of Brent crude oil fell close to $70/bbl and is now flirting with $80/bbl. Two reasons for the swing are that Venezuela’s production decline continues, and we are approaching 4 November when US sanctions against Iran’s oil exports are implemented. In Venezuela, production fell in August to 1.24 mb/d and, if the recent rate of decline continues, it could be only 1 mb/d at the end of the year. Evidence provided by tanker tracking data suggests that Iran’s exports have already fallen significantly but we must wait to see if the 500 kb/d of reductions seen so far will grow. (See Iran supply tumbles as buyers take heed of US sanctions). If Venezuelan and Iranian exports do continue to fall, markets could tighten and oil prices could rise without offsetting production increases from elsewhere. Supply from some countries has grown since the Vienna meetings in June: last month Saudi Arabia and Iraq combined saw output increase by 160 kb/d. In Iraq’s case, exports have grown to such an extent that they are greater than Iran’s production, and there is still about 200 kb/d of shut-in capacity in the north of the country due to the ongoing dispute with the Kurdistan Regional Government. Based on our August estimates of production, OPEC countries are sitting on about 2.7 mb/d of spare production capacity, 60% of which is in Saudi Arabia. But the point about spare capacity is that, having been idle, it is not clear exactly how much, beyond what is widely thought to be “easy” to bring online, will be available to coincide with further falls in Venezuelan exports and a maximisation of Iranian sanctions. It is not just a question of volume; refiners used to processing Venezuelan or Iranian crude will compete to find similar quality barrels to maintain optimal refinery operations. Alternative supplies of lighter crude might not be ideal for this reason. Even before we factor in any further fall in exports from Venezuela or Iran, record global refinery runs are expected to result in a crude stock draw of 0.5 mb/d in 4Q18. Any draw will be from a basis of relative tightness: in the OECD, stocks at end-July were 50 million barrels below the five-year average.
Oil Slips as Economic Concerns Counter Tightening Supplies- (Reuters) - Oil prices fell on Thursday, reversing some of the strong gains from the previous session, as economic concerns raised doubts about ongoing fuel demand growth. U.S. West Texas Intermediate (WTI) crude futures were at $69.88 per barrel at 0635 GMT, down 49 cents, or 0.7 percent, from their last settlement. Brent crude futures slipped 38 cents, or 0.5 percent, to $79.36 a barrel. The falls were due to concerns of a potential slowdown in fuel demand growth because of trade disputes between the United States and China, the world's two largest oil consumers, as well as emerging market turmoil. American companies in China are being hurt by tariffs in the growing trade war between Washington and Beijing, according to a survey of hundreds of firms, prompting the U.S. business lobbies behind the poll to urge the Trump administration to reconsider its approach. The Trump administration has invited Chinese officials to restart trade talks, just as Washington prepares to escalate the U.S.-China trade war with tariffs on $200 billion worth of Chinese goods. The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday reduced its forecast for 2019 global oil demand growth, pointing to economic risks. In its monthly report, OPEC said world oil demand next year would rise by 1.41 million barrels per day (bpd), 20,000 bpd less than last month and the second consecutive reduction in the forecast. One factor that could weigh on long-term fuel demand is China's decision to take at least 1 million heavy duty diesel trucks off the roads by 2020, and to replace them with vehicles using alternative fuels like electric engines, liquefied natural gas or to shift transport to rail. Despite this, the short-term outlook for oil markets is for tighter supply.
Oil prices slip as economic growth concerns counter tighter supplies - Oil prices fell on Thursday, slipping back from four-month highs as investors focused on the risk that emerging market crises and trade disputes could dent demand.Benchmark Brent crude oil was down 70 cents a barrel at $79.04 by 0830 GMT. U.S. light crude fell $1.15 to a low of $69.22 a barrel.The International Energy Agency said on Thursday that although the oil market was tightening at the moment and world oil demand would soon reach 100 million barrels per day (bpd), global economic risks were mounting."Things are tightening up," the agency said in its monthly report, but added: "As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the U.S. dollar raising the cost of imported energy.""In addition, there is a risk to growth from an escalation of trade disputes," the Paris-based agency said.U.S. companies in China are being hurt by tariffs in the growing trade war between Washington and Beijing, according to a survey, prompting U.S. business lobbies to urge the administration of U.S. President Donald Trump to reconsider its approach.The White House has invited Chinese officials to restart trade talks just as it prepares to escalate a trade war with China with tariffs on $200 billion worth of Chinese goods. Short-term, the outlook is for tighter supply.Brent rose above $80 per barrel on Wednesday for the first time since May, spurred by expectations that U.S. sanctions against Iran's oil exports, which will start in November, will tighten global markets.U.S. light crude pushed over $70 on Wednesday due to falling U.S. crude inventories and production levels. The IEA said tightening supply was putting increasing pressure on prices: "The price range for Brent of $70-$80 per barrel in place since April could be tested," it said. U.S. crude stocks fell 5.3 million barrels in the week to Sept. 7 to 396.2 million barrels, the lowest since February 2015 and about 3 percent below the five-year average for this time of year, the U.S. Energy Information Administration (EIA) said on Wednesday.
Oil prices claw back some ground, but demand worries drag --Oil on Friday clawed back some of its losses from the previous session, when prices fell the most in a month, as concerns about oil supply are countering worries that emerging market crises and trade disputes could dent demand.Brent crude was up 8 cents, or 0.1 percent, at $78.26 a barrel by 0338 GMT, after falling 2 percent on Thursday. The global benchmark rose on Wednesday to its highest since May 22 at $80.13.U.S. West Texas Intermediate (WTI) futures were up 18 cents, or 0.2 percent, at 68.76 a barrel, after dropping 2.5 percent on Thursday.Brent is heading for a 1.8 percent gain this week, while WTI is on track for a 1.5 percent increase."Prices remain well supported as the market continues to fret about ongoing structural supply issues elsewhere," ANZ Research said in a note.The International Energy Agency on Thursday warned that although the oil market was tightening at the moment and world oil demand would reach 100 million barrels per day (bpd) in the next three months, global economic risks were mounting."As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the U.S. dollar, raising the cost of imported energy," the agency said."In addition, there is a risk to growth from an escalation of trade disputes," the Paris-based agency said.China will not buckle to U.S. demands in any trade negotiations, the major state-run China Daily newspaper said in an editorial on Friday, after Chinese officials welcomed an invitation from Washington for a new round of talks.U.S. President Trump said on Twitter on Thursday that the United States holds the upper hand in talks."We are under no pressure to make a deal with China, they are under pressure to make a deal with us," Trump tweeted. Still, supply concerns are supported by data showing that U.S. crude production fell by 100,000 bpd to 10.9 million barrels per day last week as the industry faces pipeline capacity constraints.
Oil Prices Unfazed By Growing Rig Count - Baker Hughes reported an additional seven U.S. rigs this week, bringing the total number of active oil and gas rigs to 1.055, according to the report. The number of active oil rigs increased by 7 to reach 867 while the number of gas rigs held steady at 186. The oil and gas rig count is now 119 rigs higher that it was this time last year.At 11:37am. EDT on Friday, WTI Crude was trading up 0.13 percent at $68.68—over $1 per barrel up over this time last week, while Brent Crude was trading down 0.20 percent at $78.02—about $1.50 above last week’s levels. The mixed directions of WTI and Brent likely the cause of a perfect storm of catalysts including increasing worries that Iran’s oil exports will be curtailed beyond what OPEC and friends can offset with their own production. Other factors contributing to the volatility of oil prices include Venezuela’s continuing freefall into economic collapse, violence in Libya’s oil-rich areas, and fears that the trade war between China and the United States may indirectly hurt oil demand if global trade were to slow.Canada’s oil and gas rigs for the week picked up 22 rigs this week after losing 24 rigs last week, bringing its total oil and gas rig count to 226, which is 14 more than this time last year, with a 15-rig increase for oil and a 7-rig increase for gas for the week. On the production side, the EIA’s estimates for U.S. production for the week ending September 7 were for an average of 10.9 million bpd. By 1:09pm EDT, WTI was trading up 0.83% (+$0.57) at $69.16. Brent crude was trading up 0.18% (+$0.14) at $78.32 per barrel.
Oil mixed as China tariff talk scotches early rally -- (Reuters) - Oil prices pulled back on Friday on concerns additional U.S. tariffs would be placed on Chinese imports, after an earlier rally triggered by worries that more sanctions on Iran might constrict supply. Crude futures ended the week up more than 1.6 percent. Traders said an early rally on Friday was sparked by reports U.S. Secretary of State Michael Pompeo was going to announce new sanctions on Iran. “It increases the odds that there will be less oil coming out of there,” said Phil Flynn, an analyst at Price Futures Group. The gains were curbed though by reports U.S. President Donald Trump instructed aides to proceed with tariffs on about $200 billion more of Chinese products. Brent crude oil futures pulled back on the reports of additional tariffs, dropping 9 cents a barrel to settle at $78.09. The global benchmark fell 2.0 percent on Thursday after rising on Wednesday to its highest since May 22 at $80.13. U.S. West Texas Intermediate (WTI) futures settled up 40 cents at $68.99 a barrel after dropping 2.5 percent on Thursday. After a volatile week, Brent was set for a 1.6 percent weekly rise and WTI 1.8 percent. Brent reached a session high of $78.94 a barrel, as speculators attempted to push the price above the $79.00 level. Brent crude futures have reached a high around $80.00 a barrel three times this year before pulling back.
White House warns Iran over attacks on US diplomatic missions in Iraq | TheHill: The White House on Tuesday blamed Iran for recent attacks against U.S. diplomatic facilities in Iraq, warning that it will hold Tehran accountable if U.S. personnel are injured. Press secretary Sarah Huckabee Sanders blamed "proxies" of Iran for recent attacks at the U.S. consulate in Basra, Iraq, and near the American Embassy compound in Baghdad."Iran did not act to stop these attacks by its proxies in Iraq, which it has supported with funding, training, and weapons," Sanders said in a statement. "The United States will hold the regime in Tehran accountable for any attack that results in injury to our personnel or damage to United States Government facilities," she added. "America will respond swiftly and decisively in defense of American lives." The U.S. and Iran have for years backed opposing political groups in Iraq, contributing to tensions between the two countries. The Wall Street Journal reported that Iraqi protesters lit the Iranian consulate on fire last week and chanted "Iran out out!" Hours later, an unknown party fired rockets toward the Basra airport that houses the U.S. consulate, as well as toward the Green Zone in Baghdad, where the U.S. Embassy is located. While tensions between the U.S. and Iran have simmered for decades, the Trump administration seemingly escalated the war of words between the countries after it withdrew from the Iran nuclear deal earlier this year. The Obama-era deal offered Tehran economic sanctions relief in exchange for limitations on its nuclear program.
Bloody siege of Yemeni port resumes as US certifies Saudi concern for civilians -- US-backed forces led by Saudi Arabia and the United Arab Emirates renewed their assault on Yemen’s Red Sea port of Hodeidah on Wednesday, carrying out as many as 60 airstrikes on the densely populated city.Saudi-backed mercenary ground forces have reportedly cut off the main road linking Hodeidah with the Yemeni capital of Sana’a, threatening to cut off food and medical imports upon which at least 22 million people, three-quarters of the population, depend. An estimated eight million Yemenis—a number equivalent to the entire population of Switzerland—are already confronting famine.Aid groups have warned that the renewed assault on Hodeidah threatens to not only kill tens of thousands of civilians, but to push millions more over the brink of starvation.The ferocious new Saudi-UAE assault came on the same day that US Secretary of State Mike Pompeo issued a criminally cynical statement certifying that the two US-allied Gulf oil monarchies “are undertaking demonstrable actions to reduce the risk of harm to civilians and civilian infrastructure resulting from military operations.”The “certification” was required under the terms of a toothless amendment to the $717 billion 2019 National Defense Authorization Act (NDAA) signed into law by President Donald Trump last month. Inspired in part by the international outcry over the initial launching of the Saudi-led siege of Hodeidah in June, the measure required the secretary of state to report to Congress within 30 days that Saudi Arabia and the UAE were seeking to end the more than three-year-old war, ameliorate what is universally recognized as the world’s worst humanitarian crisis and reduce the slaughter of civilians.The ostensible penalty for a failure to provide such assurances would be the cut-off of funding for US tanker jets providing the mid-air refueling that makes it possible for Saudi and UAE w arplanes to carry out the continuous aerial bombardment of Yemen. These airstrikes are responsible for the vast majority of the well-over 10,000 deaths of civilians since 2015, when Saudi Arabia initiated the war to stop Houthi rebels from establishing their control over the entire country and to reinstall the US-Saudi puppet government of President Abd-Rabbu Mansour Hadi, who currently resides in Riyadh.
Saudi-led coalition seizes main road linking Yemen's Hodeidah to Sanaa - (Reuters) - Yemeni forces backed by a Saudi-led coalition seized the main road linking the port city of Hodeidah to the capital Sanaa, blocking a supply route for the Houthi group that controls both cities, military sources and residents said on Thursday. The Western-backed alliance in Yemen resumed its offensive after the collapse of peace talks on Saturday which the United Nations had hoped would avert an assault on the Red Sea city, the country’s main port and a lifeline for millions of Yemenis, and start a process to end the three-year war. “The situation has deteriorated dramatically in the past few days. Families are absolutely terrified by the bombardment, shelling and airstrikes,” U.N. humanitarian coordinator Lise Grande said in a statement on Thursday. The coalition of Sunni Muslim states led by Saudi Arabia and the United Arab Emirates has said taking control of Hodeidah would force the Iranian-aligned Houthi movement to the negotiating table by cutting off its main supply line. “The main entrance in Hodeidah leading to Sanaa has been closed after forces backed by the UAE took control of the road,” a pro-coalition military source told Reuters. Residents said the main eastern gate had been damaged in air strikes by coalition warplanes and that fighting was continuing on secondary streets off the main road. There is another more circuitous route between Hodeidah on the western coast of Yemen to the capital in the north. The United Nations fears an attack on Hodeidah, the entrypoint for the bulk of Yemen’s commercial imports and aidsupplies, could lead to a famine in the impoverished country where an estimated 8.4 million people are facing starvation. Grande said people in Hodeidah are struggling to survive.
Another Coalition Strike On Yemen Civilian Bus Occurs The Same Day US Affirms It Stands By Saudis Just as the U.S. in typical fashion continues lecturing countries like Syria, Russia, and Iran over severe human rights violations, including allegations of everything from launching barrel bomb strikes on civilian areas in Idlib to chemical weapons attacks to sensational spy poisoning ops in the U.K., the Saudi-US coalition in Yemen has attacked another bus full of children and civilians in Yemen. On Wednesday multiple Yemeni journalists reporting from on the ground confirmed a new airstrike resulting in mass civilian casualties, this time a Saudi-US coalition strike scored a direct hit on a bus station in beseiged Hodeidah City. The strike occurred the same day Secretary of State Mike Pompeo and Secretary of Defense James Mattis announced they've certified the legality of US assistance to the coalition in Yemen before Congress. Aftermath of the reported Wednesday airstrike in Hodeidah, via Hussain AlbukhaitiAnd this further comes, as NPR reports, after a long litany of instances of the coalition "causing disproportionate civilian deaths in the Yemen conflict because of airstrikes that have hit markets, weddings and even a bus carrying children from summer camp." The Red Cross identified 40 children dead from that first major bus attack in Yemen's north on August 9th. Sanaa-based journalist Ahmad Algohbary reports of the new Wednesday attack: Civilians were Killed & injured by Saudi led coalition airstrikes on bus station in Hodeidah City, Yemen. The warplanes are preventing the paramedics from getting into the attack scene. Mainstream media has been slow to pick up the new report, however the graphic video of the aftermath of the horrific airstrike spread quickly on social media, and was quickly picked up by various journalists (warning: graphic content).
Two killed after armed militants storm Libya's state oil corporation HQ in Tripoli -Two workers at Libya's National Oil Corporation (NOC) have been killed after a militant attack on the company’s headquarters in Tripoli on Monday, according to local law enforcement. They say two of the attackers were also killed. "The death toll so far is two killed from NOC staff and two attackers," Ahmed Ben Salim, a spokesman for the Special Deterrence Force, told Reuters. Earlier on Monday, witnesses reported hearing explosions and gunfire, with smoke rising from close to the NOC offices. Security officials said they were attempting to deal with militants attacking the building. Security forces took up positions around the offices in central Tripoli, while surrounding roads were cordoned off. Witnesses said they saw ambulances leaving the site. A member of staff from a hotel next to the NOC offices said that he had heard around five blasts. Tripoli has been shaken by clashes between rival armed groups since the beginning of this month. The capital has also seen occasional militant attacks. In May, Islamic State claimed responsibility for a deadly attack on the National Election Commission offices in Tripoli. Libya’s oil production has plunged since the overthrow of long-serving ruler Muammar Gaddafi in 2011. The country has been torn apart by civil war with rival factions vying for power.
After Tehran talks, Syria and Russia forces step up Idlib attacks - Syrian government forces backed by their Russian allies have stepped up their bombardment of rebel-held territories in northwest Syria, killing at least six civilians, according to local activists. The air raids and shelling on Saturday came a day after Russia rejected a Turkish call for a ceasefire in Syria's Idlib province, where a major government assault aimed at recapturing the last rebel stronghold in the country is seemingly imminent.The attacks targeted areas in southern Idlib province and in the north of neighbouring Hama province, in what is seen as the biggest escalation over the past week.One hospital in the village of Hass in southern Idlib was destroyed by a barrel bomb dropped from a helicopter.Local activists told Al Jazeera that six civilians died in the bombardment, including one child.According to Abd al-Kareem al-Rahmoun, a representative of the White Helmets, a volunteer rescue group operating in rebel-held parts of Syria, the town of Qalaat al-Madiq in northern Hama province was targeted with more than 150 shells.The shelling killed two men and wounded five others, including two children.At least 26 people in rebel-held areas have been killed since the beginning of the month, the White Helmets said. Rebel factions in northern Hama province responded to Saturday's attacks with rocket fire and shelling of areas under government control, including the city of Salhab further west.
Syria: Rebel-held areas bombed as Turkey reinforces outposts -- Syrian government forces have pounded rebel-held areas in northwest Syria, killing at least five people in a second day of heavy bombardment, according to rescuers, as Turkey sent more troops to the region.The intensified strikes on Sunday, including air attacks, shelling and helicopter-dropped barrel bombs, targeted villages in southern Idlib and northern Hama provinces.The escalation comes amid growing fears over a seemingly imminent all-out offensive against the densely populated Idlib province, the last rebel bastion in Syria. A baby and a young child were killed in the village of Habeit in southern Idlib in a barrel bomb attack, according to the White Helmets, a civil defence group operating in rebel-held areas.Three others, including a rebel officer, were killed in air raids and shelling that struck the northern Hama province.Abd al-Karim al-Rahmoun, a member of the White Helmets in northern Hama, said that about half of the local population had left the sparsely populated region to escape the bombardment.Activists told Al Jazeera that while hundreds of people have been fleeing the attacks in northern Hama and southern Idlib provinces, there has not been a significant wave of civilians moving towards the north. In some cases, the activists said, people would leave their villages early in the morning and return after sunset once the bombardment stopped.According to the UK-based Syrian Observatory for Human Rights (SOHR), over the past 72 hours, forces loyal to Syrian President Bashar al-Assad and his Russian ally have hit rebel-held areas 1,060 times with air attacks, shelling and barrel bombs. In response, al-Jabha al-Wataniya lil-Tahrir (NLF), a major armed opposition group, on Sunday shelled government forces' positions in northern Hama, SOHR reported.
Israel Secretly Armed and Funded 12 Syrian Rebel Groups, Report Says - Israel discreetly funded and armed at least 12 rebel groups in southern Syria in order to keep Iranian-backed militias and Islamic State fighters away from Israel's border, Foreign Policy magazine reported on Thursday. Foreign Policy's Elizabeth Tsurkov interviewed more than two dozen members of the rebel groups, who reported that Israel's support took place in recent years and ended last month. The weapons transfer, according to the report, included assault rifles, machine guns, mortar launchers and transport vehicles, all delivered through three border crossings – gates that connect the Golan Heights and Syria. These crossings are the same ones through which Israel transferred humanitarian aid to Syria. According to Tsurkov, Israel paid each rebel approximately 75 dollars per month, with additional money transfers for the groups to purchase weapons on Syria's black market. When Bashar Assad's forces retook south Syria in July, rebel groups expected Israel to intervene, due to the support they had received, sources told Tsurkov. One fighter said: “This is a lesson we will not forget about Israel. It does not care about … the people. It does not care about humanity. All it cares about it its own interests.” Similar reports about Israel's support to Syrian rebels were published in 2017.
US sanctions target Syrian petroleum trade network — The US Treasury Department Thursday sanctioned four individuals and five entities it claims set up a delivery network supplying the Syrian government with crude oil, fuel and LNG as well as financing and weapons. The sanctions, which will prohibit transactions between these individuals and entities and US persons, target the fuel trade between the Syrian regime and ISIS.The US sanctioned Muhammad al-Qatirji and his Qatirji Company, a Syria-based trucking company, which facilitated this fuel trade, including providing oil products to ISIS and setting contracts with the Syrian Ministry of Oil, according to Treasury. The Qatirji Company was the exclusive agent for providing oil to ISIS-controlled areas in a 2016 trade deal between ISIS and Syrian government, the agency said.In addition, the US sanctioned Abar Petrolem, a Lebanon-based company that Treasury said worked with the Syrian government to evade sanctions and import crude oil and petroluem products to Syrian ports."Abar Petroleum consigned on nearly all petroleum product shipments delivered by commercial vessels to Baniyas, Syria, throughout 2016 that were not jet fuel or Iranian-origin," Treasury said in a statement. "Additionally, Abar Petroleum coordinates the movement of payments for petroleum products through bank accounts belonging to Government of Syria entities and front companies."Abar Petroleum brokered more than $30 million in shipments of gasoline, gasoil and liquefied petroleum gas to Baniyas in 2017, according to Treasury. Treasury also sanctioned Lebanon-based Nasco Polymers and UAE-based Sonex Investments for facilitating shipments of petroleum products to Syrian ports by serving as consignees and chartering the vessels. Sonex consigned a shipment of over 90,000 mt of fuel oil delivered to Baniyas in May 2017 and a shipment of over 43,000 mt of crude oil delivered to Baniyas in November 2017, Treasury said.
Moscow Has Upped the Ante in Syria - Mr. President: We are concerned that you may not have been adequately briefed on the upsurge of hostilities in northwestern Syria, where Syrian armed forces with Russian support have launched a full-out campaign to take back the al-Nusra/al-Qaeda/ISIS-infested province of Idlib. The Syrians will almost certainly succeed, as they did in late 2016 in Aleppo. As in Aleppo, it will mean unspeakable carnage, unless someone finally tells the insurgents theirs is a lost cause.That someone is you. The Israelis, Saudis, and others who want unrest to endure are egging on the insurgents, assuring them that you, Mr. President, will use US forces to protect the insurgents in Idlib, and perhaps also rain hell down on Damascus. We believe that your senior advisers are encouraging the insurgents to think in those terms, and that your most senior aides are taking credit for your recent policy shift from troop withdrawal from Syria to indefinite war. Russian missile-armed naval and air units are now deployed in unprecedented numbers to engage those tempted to interfere with Syrian and Russian forces trying to clean out the terrorists from Idlib. We assume you have been briefed on that — at least to some extent. More important, we know that your advisers tend to be dangerously dismissive of Russian capabilities and intentions.We do not want you to be surprised when the Russians start firing their missiles. The prospect of direct Russian-U.S. hostilities in Syria is at an all-time high. We are not sure you realize that.The situation is even more volatile because Kremlin leaders are not sure who is calling the shots in Washington. This is not the first time that President Putin has encountered such uncertainty (see brief Appendix below). This is, however, the first time that Russian forces have deployed in such numbers into the area, ready to do battle. The stakes are very high.We hope that John Bolton has given you an accurate description of his acerbic talks with his Russian counterpart in Geneva a few weeks ago. In our view, it is a safe bet that the Kremlin is uncertain whether Bolton faithfully speaks in your stead, or speaks INSTEAD of you. The best way to assure Mr. Putin that you are in control of U.S. policy toward Syria would be for you to seek an early opportunity to speak out publicly, spelling out your intentions. If you wish wider war, Bolton has put you on the right path.
Will World War III Start This Week? - A report posted by the Wall Street Journal, late yesterday, gives reason to ask that question. "President Bashar al-Assad of Syria has approved the use of chlorine gas in an offensive against the country's last major rebel stronghold, U.S. officials said, raising the prospects for another retaliatory U.S. military strike as thousands try to escape what could be a decisive battle in the seven-year-old war," it begins. "In a recent discussion about Syria, people familiar with the exchange said, President Trump threatened to conduct a massive attack against Mr. Assad if he carries out a massacre in Idlib..." .The Journal article otherwise repeats ad nauseum all of the propaganda about Assad and chemical weapons, including quotes from Bob Woodward's latest book, demonstrating how deeply entrenched it has become, like the "intelligence" about Saddam Hussein's WMD in the run up to the Iraq invasion. "I will not comment on U.S. military plans, but Assad's use of chemical weapons, sarin and chlorine, and disregard for civilian lives is well documented and contrary to regional stability," Pentagon spokeswoman Dana White said. Clearly, the Al Qaeda terrorists that run Idlib are getting a free pass. The propaganda and the pressure for war is apparently getting results in Germany. The German Bild tabloid reported yesterday (here in English translation) that the German government is now considering joining any US-UK-French offensive against Syrian government troops. Previously, Angela Merkel has rejected German participation in such military actions "But now a radical change is being discussed in the ministry." Ursula von der Leyen, the defense minister, appears to be fully onboard. According to Bild's account, it began with a request from the US side, and progressed to meetings of experts between the German Defense Ministry and the US military attache. The two sides discussed several options relating to a possible military alliance against Assad, including pre- and post-strike reconnaissance and even combat missions. "Should Assad verifiably use chemical weapons against its own people again, armed Bundeswehr [Luftwaffe actually] Tornados could fly attacks on military infrastructure — barracks, air bases, command posts, ammunition and weapon depots, factories, and research centers, for example," Biild reports. "In doing so, Germany would risk a direct confrontation with Syria's allied Russia for the first time."
YouTube Shuts Down All Syrian State Channels As Idlib Assault Begins - Syrian state YouTube channels have been shut down this morning just as the Syrian Army's ground offensive has officially begun.This includes the following now terminated Syrian state and pro-government channels: Syrian Presidency, Syria MoD (Ministry of Defense), SANA, and Sama TV. This follows YouTube reportedly closing Syria's Ortas News last week. It is unclear whether or not the action is part of a broader move among US social media companies to close "Iran-linked" accounts, or if directly connected to events now rapidly unfolding in Idlib.A number of Syria observers say the account closures could be connected with potential US plans for military action in response to the Syria-Russian forces air and ground attack on Idlib.This news comes just as CENTCOM chief Gen. Joseph Dunford said on Saturday t he Pentagon is preparing "military options" and is in "routine dialogue" with the White House concerning a potential military response.
US Military Preparing For Options In Syria - Events are moving rapidly in Syria as Russian jets pound insurgent positions in Idlib Province and as the Syrian Army initiates a ground invasion which Damascus has described as coming in a "phased" approach. The White House responded to the Syrian and Russian bombing campaign by vowing it would act “swiftly and vigorously” should chemical weapons be used, and a day ago claimed there's “lots of evidence” chemical weapons are being prepared by the Syrian forces, citing intelligence of such activities. And now America's top general has confirmed the Pentagon is drawing up military options to attack Syria and is in currently in close discussion with the White House over the plans. Marine General Joseph Dunford, chairman of the Joint Chiefs of Staff told reporters on Saturday during a trip to India, according to Reuters: ...he was involved in “routine dialogue” with the White House about military options should Syria ignore U.S. warnings against using chemical weapons in an expected assault on the enclave of Idlib.However, Gen. Dunford noted that no decision has been made to intervene militarily in response to Idlib. “But we are in a dialogue, a routine dialogue, with the president to make sure he knows where we are with regard to planning in the event that chemical weapons are used,” he told a group of reporters.Dunford added in reference to his talks with President Trump: “He expects us to h ave military options and we have provided updates to him on the development of those military options.”
Pentagon Sends Strong Message To Russia With Live-Fire Assault Drills In Syria - The Pentagon responded to the highly unusual and unique Russian amphibious landing drills staged Saturday on the Mediterranean Sea along the Syrian coast, involving both its Navy and Air Force. Russia released footage of the large-scale exercise amidst threats issued from leaders in Washington, Paris, and London over the Russian-Syrian allied assault on al-Qaeda held Idlib Province. The Pentagon has publicized its own military exercise that took place just prior to the Russian drills. US officials related to reporters that over 100 Marines flown to southeast Syria for what have been described as "snap live-fire excercises" in order to send a "strong message" to Russia after earlier this week Moscow warned its forces could attack in the area near US-occupied At Tanf. In a statement a spokesman for the U.S. military’s Central Command said the air-assault drill was an effort to “demonstrate the capability to deploy rapidly, assault a target with integrated air and ground forces, and conduct a rapid exfiltration anywhere in the Operation Inherent Resolve combined joint operations area.”The spokesman, Navy Capt. Bill Urban, explained further that “Exercises like this bolster our defeat-ISIS capabilities and ensure we are ready to respond to any threat to our forces.” However, with ISIS essentially now wiped out and driven almost completely underground, the threat appears more immediately aimed at Moscow. It reportedly involved a company-sized unit and took place near or outside of the American garrison at Tanf, and the deployment of heavy artillery. Marines were deployed at the start of the exercise via assault helicopters.
Russia Accuses US Of White Phosphorus Attack In Syria - President Trump has continued to threaten Syrian and Russian forces planning to take back the terrorist-controlled stronghold of Idlib in northwestern Syria, potentially bringing the world to the brink of World War III, as we explained yesterday. But Trump's tweets about the potential "humanitarian catastrophe" have exposed a guiding principle of the US's involvement in Syria (and indeed across the Middle East): A chemical weapons attack isn't a "catastrophe" if it's carried out by the US.In what Russian officials warned could be a preamble to another US-approved false flag attack, US jets on Saturday reportedly dropped white phosphorus on Hajin, a Syrian town in the Deir Ez-Zor province. When it comes in contact with oxygen, white phosphorus can cause massive fires. Because of this, it's banned by the Geneva Convention for use in combat. Russian officials said they're still waiting for information on casualties.Here's more from RT:Two F-15 jets on Saturday bombed the town of Hajin with white phosphorus incendiary munitions, banned under the Geneva Convention, according to the Russian Center for Reconciliation in Syria. "Following the strikes, large fires were observed in the area," Lieutenant-General Vladimir Savchenko said Sunday. There’s still no information on casualties caused by the bombing run, he added.The US promptly denied responsibility for the attack.A Pentagon spokesperson denied the allegations of dropping white phosphorus bombs. "At this time, we have not received any reports of any use of white phosphorous," Commander Sean Robertson told the media on Sunday. "None of the military units in the area are even equipped with white phosphorous munitions of any kind."Photos of the attack have emerged on social media:
U.S. Again Cries ‘Chemical Warfare’ in Syria - The Syrian government, backed by Russian airpower and Iranian advisors, is preparing to undertake a major offensive designed to retake the province of Idlib from opposition forces. The newly appointed State Department Special Representative for Syria, Jim Jeffreys, claims that there is “Lots of evidence” that Syria is preparing to use chemical weapons, specifically chlorine gas, in support of the Idlib operation. For its part, Russia claims to have specific intelligence that al Qaeda affiliates, working in conjunction with the White Helmet organization, is preparing to stage a chlorine gas attack designed to look like it was done by the Syrian government. The U.S. has warned that it would launch a major military strike against not only the Syrian government, but also Russian and Iranian targets in Syria, if chemical weapons were used in Idlib. The issue of provenance is as relevant today as when this article was originally written, with the OPCW still assessing information to determine how the chlorine canisters discovered at Douma got there, and who was responsible for their use. The Douma incident stands as a case study against the rush to judgment when it comes to the attribution of blame, and is even more relevant today, when the mere allegation of chemical weapons use in Syria could lead to a major escalation in the fighting: This summer the international monitoring organization tasked with investigating an alleged chemical weapons incident in the Damascus suburb of Douma on April 7 quietly published an interim report listing its preliminary findings. Interestingly, the report, issued by the Organization for the Prohibition of Chemical Weapons (OPCW), the Nobel Peace Prize-winning agency mandated to implement the provisions of the Chemical Weapons Convention, noted that “no organophosphorus nerve agents or their degradation products were detected” on the scene—more simply put, there was no evidence of Sarin nerve agent present at the incident site, despite wide speculation otherwise at the time of the incident. In fact, this speculation, for which the Trump administration insisted it had evidence, was used as an excuse for the U.S., France, and the UK to launch a coordinated bombing campaign against the Syrian government on April 12. The “chlorinated organic chemicals” listed by the OPCW are commonly found in residential environments; several are by-products of chlorinated drinking water. The OPCW report does not provide any information about the concentrations of these chemicals, nor their physical location in relation to the victims alleged to have been killed or injured in the incident.
Are Warnings About Chemical Warfare in Syria Another ‘Weapon of Mass Distraction’? (Real News Network interview & transcript) Larry Wilkerson - Russian and Syrian jets resumed intensive strikes in Idlib and Hama on Sunday. Damascus has been stepping up its assault on the rebels’ last major stronghold after a Russian-Iranian-Turkish summit failed to deliver a cease fire. In the meantime, the Russian news agency TASS and RT are both reporting that the Russian military detected two U.S. F-15 fighter jets dropping phosphorous bombs over Syria as Deir ez-Zor province on Saturday.A Pentagon spokesperson, who is Commander Sean Robertson, denied the allegations, saying that “At this time we have not received any reports of any use of white phosphorus.” In the meantime, there has been reports that Bashar al Assad is claiming that U.K.’s MI6 is planning a chemical attack in Syria so that they could blame it on President Assad. Joining me now to discuss the attacks on Syria is Larry Wilkerson. Larry is the former Chief of Staff to Secretary of State Colin Powell and now a distinguished professor at the College of William and Mary. Col. Larry Wilkerson says that it was the plan of John Bolton and the neocons to take Iraq, then Syria, and then Iran. These false flag operations are all about maintaining the perpetual war in the region. Thanks for joining us, Larry.
German government plans combat mission against Syria - Behind the backs of the German people, the grand coalition of Christian Democrats and Social Democrats is preparing a massive combat mission against the Syrian government of President Bashar al-Assad. According to a report in the Bild newspaper published on Monday, Defence Minister Ursula von der Leyen (Christian Democratic Union—CDU) is examining possible reprisals by the Luftwaffe (Air Force) against Syrian government troops should chemical weapons be used against “rebel”-held areas in Idlib province.The Bild, which has close connections to military and intelligence circles, describes a “simulation game” being conducted: “If Assad were to attack his own people with poison gas, then, besides the US being joined again by Britain and France (and possibly other new allies), armed Luftwaffe tornadoes could fly missions against military infrastructure (barracks, air bases, command posts, ammunition depots, weapon depots, factories, research centres).”The newspaper reports that the preparations by the Ministry of Defence are in response to a request from the US government to the federal Chancellery. The Bild writes that two weeks ago, at high-level talks, “various options were discussed in the ministry.”In subsequent talks, options discussed included “reconnaissance flights and damage analysis following a possible attack (‘Battle Damage Assessment’), as well as possible participation in combat missions in which German tornadoes would drop bombs for the first time since the Balkan War.” To carry out the mission, parliamentary oversight powers laid down in the Constitution are to be effectively abrogated. “Parliament would be consulted only retrospectively in the event of a rapid intervention, due to time pressure,” the newspaper reports.
Russia postpones Syrian offensive in Idlib as NATO threatens escalation -- Moscow announced yesterday the postponement of a planned joint offensive by Syrian and Russian government forces against Islamist opposition militias in Syria’s Idlib province, after growing threats from the militias’ backers in Turkey and the NATO imperialist powers.Before yesterday, Moscow and Syrian President Bashar al-Assad’s regime had made clear that they intended to crush the Islamist terrorist militias inside Idlib. The United Nations has estimated that there are 10,000 Al Qaeda-linked forces among the Islamist militias in the province, primarily from the Hayat Tahrir al-Sham militia. They are the last bastion of opposition support in Syria, after the lack of popular support for the NATO-backed forces and Russian and Iranian military aid to the Syrian regime turned the tide of the war against NATO.Over the last several days, however, US, European and Turkish officials blocked the Russian-Syrian offensive, at least temporarily, by drastically escalating military tensions in the region. They repeatedly threatened to strike Syrian forces and their allies, risking a direct military clash with nuclear-armed Russia, if the Syrian regime attacked Al Qaeda-linked forces in Idlib.Yesterday, the Times of London reported that “Britain is preparing to join the United States and France in launching waves of airstrikes against Syria,” identifying a long list of potential targets. It added, “The Pentagon has begun drawing up a list of chemical weapons sites inside Syria that could be targeted in a far wider campaign of retribution than the single night of strikes in April involving British, American and French warplanes, after a chemical attack near Damascus killed at least 40 people.”After conducting eight days of large-scale military exercises with US troops in Syria, Colonel Muhanad al-Tanaa of the Pentagon-sponsored Maghawir al-Thawrah (“Revolutionary Commando Army”) militia said US-backed opposition militias “are staying whether the Russians or Iranians want or not.” He added that if they approached restricted areas of Syria the Pentagon considers to be its territory, “there is a big likelihood they will be hit” by US air strikes.Yesterday, Turkey continued to send Special Forces troops, tanks and heavy artillery to reinforce its 12 military posts in Idlib. It also threatened to retaliate against any military attack on them. On Wednesday, a Turkish military source had told Reuters: “We have a military presence there, and if that military presence is damaged or attacked in any way, it would be considered an attack on Turkey and would therefore receive the necessary retaliation.”
Iran Mulling Export of Missile Solid Fuel Production Technology - (FNA)- A senior Iranian official underlined the country's capability to export the technology needed for the production of solid fuel for missiles. "We could produce solid fuel for missiles after a year of day-and-night efforts with the help of our experts," Secretary-General of the Strategic Center of National Defense University and former deputy defense minister Brigadier General Majid Bokayee said, addressing a forum in Tehran on Sunday. "Today, we have advanced to such levels that we can export the technology for the production of solid fuel for missiles," he added. In relevant remarks earlier this month, a senior advisor to the Iranian defense ministry announced the country's plans to increase the power of its ballistic and cruise missiles. "The defense ministry's new plans include enhancement of the power of different types of ballistic and cruise missiles, manufacturing a new generation of fighter jets and heavy and long-range surface and subsurface vessels with various weapons systems and capabilities," Amir Mohammad Ahadi said, addressing the foreign military attaches in Tehran. He added that Iran enjoys the necessary infrastructures to further develop its defense industries. Last month, a new generation of home-made pin-pointing missiles, named 'Fateh Mobin' and equipped with an advanced and smart explorer, was unveiled in Iran. The radar-evading, tactical and pin-pointing missile which was unveiled in a ceremony participated by Defense Minister Brigadier General Amir Hatami enjoys high agility and can operate against sea and land-based targets in all types of environment, even in electronic warfare conditions. The missile is also capable of penetrating anti-missile defense shields.
Israel's Secret War Against Iran Is Widening - It has recently become clear that Israel is engaged in a secret war against Iran in Syria. The war is conducted mainly by means of air power, presumably combined with the intelligence work necessary to provide the country’s airmen with the relevant targets; there is also evidence that targeted killings are among Israel’s tactics in Syria. The objective of this campaign, as plainly stated by senior officials such as Prime Minister Benjamin Netanyahu and Defense Minister Avigdor Lieberman, is the complete withdrawal of Iranian forces and their proxies from Syria. Given the government’s strategy, this objective is unlikely to be achieved. But its lesser goal of disrupting Tehran’s efforts to consolidate and entrench itself in Syria is within reach. Israel has carried out periodic strikes against the Syrian regime and Hezbollah targets throughout the country’s civil war. Starting this year, however, there has been a sharp increase in the frequency of such attacks and the commencement of the direct targeting of Iranian facilities and personnel. The imminent demise of the Syrian rebellion spurred this shift. So long as the insurgency remained viable, Israel was content to observe from the sidelines. At most, the Israeli government maintained a limited relationship with rebels in the Quneitra area to ensure that the war did not reach the border with the Golan Heights while intervening sporadically to disrupt the supply of weaponry to Hezbollah in Lebanon. Beyond that, Israel was content to allow Bashar al-Assad’s regime and Iran and the mainly Sunni Islamist rebels to subject one another to a process of mutual attrition. This year, however, it became clear that the rebellion, thanks to Iranian and Russian intervention, was going to be defeated. Israel could no longer afford the luxury of relative inaction if it wished to prevent the consolidation of an independent infrastructure of military and political power by Iran’s Islamic Revolutionary Guard Corps (IRGC) on Syrian soil, along the lines of its existing bases in Lebanon and Iraq. Israel’s direct targeting of this nascent infrastructure began shortly thereafter. It’s difficult to trace the precise contours of this campaign, given Israel’s reticence about taking responsibility for attacks. It is also sometimes in the interest of both Tehran and the Assad regime to avoid publicizing Israel’s strikes.
Iranian Money Exits For Turkey's Troubled Economy As Immigrants Buy Up Turkish Property - A new extensive report in Middle East Eye charts the unsurprising trend of Iranians of means pulling money out of Iran to invest and lay down roots abroad. The only surprise, however, is that they appear to be fleeing one smashed economy for another troubled one in the region: Turkey has experienced a surge in recent Iranian real estate purchases in the country, according to the report. One Iranian economic migrant interviewed by Middle East Eye summarizes the trend: “To survive and to have a better life, we chose to migrate to Turkey,” said Ali, an Iranian living in Ankara. “Iranian currency has lost its value, even against Turkey’s," he said, but the Turkish lira still remains more affordable for Iranians than the euro or the dollar. Image via Hurriyet Daily, Istanbul"That’s why Iranian’s first step would always be Turkey, even when they actually want to migrate to Europe or America,” Ali said. For other Iranians who had ever had an inkling of relocating abroad, those plans have now been dramatically hastened, as people's entire savings have turned to nothing seemingly overnight. “Over one night, I lost half of it after the US president issued an ultimatum and then killed the nuclear deal,” another Iranian told Middle East Eye while filing immigration paperwork at an Istanbul office. Last week the rial for the first time since President Trump pulled the US from the 2015 Iran nuclear deal began trading at over 150,000 rials to $1USD in the currency exchange shops of Tehran, which marks a dramatic plummet of 140 percent since the since the May White House decision to end its terms of the JCPOA agreement and reimpose new rounds of crippling sanctions.
Seventeen years after Sept. 11, Al Qaeda may be stronger than ever -- In the days after Sept. 11, 2001, the United States set out to destroy Al Qaeda. President George W. Bush vowed to “starve terrorists of funding, turn them one against another, drive them from place to place, until there is no refuge or no rest.” Seventeen years later, Al Qaeda may be stronger than ever. Far from vanquishing the extremist group and its associated “franchises,” critics say, U.S. policies in the Mideast appear to have encouraged its spread. What U.S. officials didn’t grasp, said Rita Katz, director of the SITE Intelligence Group, in a recent phone interview, is that Al Qaeda is more than a group of individuals. “It’s an idea, and an idea cannot be destroyed using sophisticated weapons and killing leaders and bombing training camps,” she said. The group has amassed the largest fighting force in its existence. Estimates say it may have more than 20,000 militants in Syria and Yemen alone. It boasts affiliates across North Africa, the Levant and parts of Asia, and it remains strong around the Afghanistan-Pakistan border. It has also changed tactics. Instead of the headline-grabbing terrorist attacks, brutal public executions and slick propaganda used by Islamic State (Al Qaeda’s onetime affiliate and now rival), Al Qaeda now practices a softer approach, embedding itself and gaining the support of Sunni Muslims inside war-torn countries. Here’s a look at how Al Qaeda has grown in some key Middle Eastern countries: