Sunday, June 14, 2015

the corporate trade promo vote, this week's oil patch data, & a followup on the Karnes county blowout

it appears the corporate oligarchy suffered a small setback in Friday's skirmish against their agenda, when the House voted 302 to 126 against the trade adjustment assistance (TAA) bill, a part of the trade promotion package added to provide relatively ineffective assistance to workers who would be displaced by upcoming trade deals; in general, Republicans were opposed to it because they saw it as welfare, and Democrats were opposed because it would be paid for by cuts to Medicare...since that bill was linked to trade promotion authority (aka fast track) in the Senate, and the Senate had defeated stand alone trade promotion authority four weeks ago, the defeat of TAA has effectively stopped the fast track bill from going forward...although much of the media coverage reported that fast track was defeated, it was actually submitted by Boehner and passed 219-211, with 28 Democrats joining 191 Republicans voting for it, shortly after the defeat of TAA by the much larger margin...however, it's not over yet, as Boehner has ominously scheduled a re-vote on TAA on Tuesday...recalling how TPA was defeated in the Senate, and then passed 48 hours later after a deal was cut, the sense of deja vu is overwhelming..

since analyzing, describing, or even comprehending the intricacies of the congressional sausage-making process is above my pay-grade, i'll just include a handful of links and excerpts from articles of the past week about it below to round out how that story developed and played out, before our regular fracking related links from this week..

while that was going on in DC, the number of drilling rigs operating in the US and coastal waters fell again this week for the 27th consecutive week, as working oil rigs fell by 7 to 635, and gas rigs and miscellaneous rigs each fell by one, to 221 and 3 respectively...the total active rig count of 859 is now down 995 from the year ago count of 1854, with horizontal rigs down 10 this week to 663 and down from 1248 a year ago, vertical rigs up 2 this week to 101 but down from 388 a year ago, and directional rigs down 1 this week to 95 and down from 218 a year based rigs were cut by 12 to 825, down from last year's 1780, while two rigs were added offshore, bringing the offshore total back up to 29, still down by more than half from the year ago 59, and a fifth rig was added on inland waters, while the inland water rig count is down from 15 that were in use during the 2nd week of June last year..

no state or shale basin lost more than 1 rig the past week, which is a first in the half year we've tracked this metric...Alabama, which now has none, Alaska with 9, Colorado at 38, Illinois with 2, Kansas at 13, Mississippi at 1, New Mexico at 45, Ohio at 21, Texas at 363, Utah with 6 and West Virginia at 19 all saw one rig each shut down this week, while Oklahoma added one rig to bring their total to 107, and Louisiana added 2 offshore and one on an inland lake while idling 2 land rigs, leaving the state with 107 rigs running on June 12th...Canadians, meanwhile, have added rigs for the 3rd week in a row, restarting 11 more this week, with active oil rigs up 9 to 68 and working gas rigs up 2 to 59...the 127 rigs they ran this week is down 117 from a year ago, with 81 fewer oil rigs and 36 fewer gas rigs than last June 12th... 

despite the ongoing drop in the number of active drilling rigs, US oil production again rose during the first week in June to a new modern record of 9,610,000 barrels per day, up from 9,586,000 barrels a day last week and 13.6% higher than the 8,460,000 barrel per day production in the first week of June last the face of higher production, our oil imports finally fell, dropping by 750,000 barrels a day to 6,623,000 barrels a day in this report, more than reversing last week's import increase of 677,000 barrels per day....considering the weekly volatility, we note that the weekly Petroleum Status Report (62 pp pdf) reports that over the last four weeks, crude oil imports averaged about 7.0 million barrels per day, 2.3% below the same four-week period last year...with US refineries operating at a near record 94.6% of their capacity, up from their 89.3% capacity utilization rate of a year ago, US inventories of crude oil dropped for the 6th consecutive week, falling by 6,812,000 barrels or 1.4% to 470,603,000 as of June 5th, the largest one week crude oil inventory drawdown in 11 months...lest anyone thinks that means our oil stocks are running low, we'll include the EIA graph of the track of our oil inventories over the last two years, and the range of the 5 years prior to that, taken from the weekly Petroleum Status Report...

June 2015 oil inventories on 6-5

in the graph above, the blue line shows the recent track of US oil inventories over the period from January 2014 to mid 2015, while the shaded area represents the range of US oil inventories as reported weekly by the EIA over the prior 5 years for any given time of year, essentially showing us the normal range of US oil inventories as they fluctuate from season to can see that even though inventories have been down for 6 weeks running, the current level of 470.6 million barrels is still 21.6% higher than the same week last year, much higher than they've ever been in recent years, and in fact much higher than they've been in the 80 years of EIA record keeping, which had never seen the 400 million barrel level breached before this year...also note that our oil stocks always decline over the summer period, from May through August, so a downturn of our oil stocks at this time of year is only to be expected... 

finally, we want to follow up on a story we touched on 3 weeks ago, wherein an oil well exploded in Karnes county Texas, spewing toxic hydrogen sulfide gas and forcing the evacuation of nearby residents...since it happened on the same day as the Santa Barbara beach oil spill, news coverage of it was pretty much buried, and though we did note that the blowout was accompanied by an oil mist that fell like rain over the area for two days before the well was brought under control, we assumed that with that done, cleanup would begin and those living in the area would return...however, this week we've learned that the evacuation order for the affected area remains in place for five of the families living closest to the damaged site...they are still being housed in a nearby motel while security guards refuse them access to their property, so they haven't even been allowed to return for a change of clothes...a local TV station reports that all vegetation in the area, including trees, are now brown and dying, while other Texas pastures are lush green from the recent rains...meanwhile, the well owner, Encana Corporation, is complaining that they lost 138,000 gallons of oil, worth $197,000, in the accident, not including what they're paying for motel rooms for those forced to evacuate..


this first batch of links has to do with the so-called trade deals currently under consideration, which aren't really about trade at all, but about international regulatory harmonization for the multinational corporations, so they can do business worldwide irrespective of the laws in the signatory nations...


Obama's Trade Agenda Rewards U.S. Companies That Profit From Slavery -- President Barack Obama's effort to include Malaysia in a major pending trade pact has baffled human rights advocates, who see it as a reward for a regime with one of the world's worst human trafficking records. But the myriad interests involved in the trade fight include some very large American corporations, which are currently padding their profits with labor costs kept low by modern-day slavery in Malaysia. Major U.S. electronics brands, including Intel, AMD, Apple, Hewlett-Packard, Texas Instruments and Dell, have relied on Malaysian manufacturing for years -- either in their own factories, or through facilities operated by their suppliers. Computer processors, hard drives, smartphone parts and other consumer electronic devices are all part of the slavery system -- more than one-fourth of all workers in the Malaysian electronics industry are victims of forced labor, according to a damning 2014 report commissioned by the U.S. Department of Labor. U.S. companies say that in the wake of that report, they have enacted corporate policies to root out slave labor from their supply chain. While labor experts applaud the formal changes, they also say that actually implementing them is nearly impossible under current Malaysian government policies. And indeed, American firms have relied on Malaysian labor in large part due to its extremely low cost.

Fast-track vote still up in the air - Supporters of a controversial trade bill are increasingly confident they can secure the votes needed to pass so-called fast-track legislation when it hits the House floor, which could come as early as this week. Still, House Majority Leader Kevin McCarthy of California and other GOP leaders have not yet committed to bringing up Trade Promotion Authority by week’s end, a sign that while pro-trade leaders in the House are closing in on the 217 ayes they need to pass the bill, the contentious vote remains very close. Only about a dozen members remain undecided, most of them Democrats, and President Barack Obama is expected to make another lobbying push this week to try and win over wavering members of his party.  Republican aides predicted a decision by Wednesday on whether the measure would come up for consideration in the House this week, signaling it does not have the votes to pass quite yet. Support for fast-track — which allows Congress up-or-down votes to approve trade packages while barring amendments — is a rare point of agreement between Obama and Hill Republicans. And enacting fast-track would be a major victory for the president, who needs the expedited authority to finalize a huge Pacific trade accord, the centerpiece of Obama’s economic agenda. In fact, with bitter fights looming over government spending this summer, it may be the last time for months that Obama and GOP leaders work together in relative harmony.

Fast Track Will Also Apply to TISA -- Gaius Publius - Fast Track is not just a path to TPP … it’s evil all on its own. There’s now another leaked “trade” deal, called TISA, and Fast Track will “fast-track” that one too. Want your municipal water service privatized? How about your government postal service? Read on. Most of the coverage of the Fast Track bill (formally called “Trade Promotion Authority” or TPA) moving through Congress is about how it will “grease the skids” for passage of TPP, the “next NAFTA” trade deal with 11 other Pacific rim countries. But as we pointed out here, TPA will grease the skids for anything the President sends to Congress as a “trade” bill — anything. One of the “trade” deals being negotiated now, which only the wonks have heard about, is called TISA, or Trade In Services Agreement. Fast Track legislation, if approved, will grease the TISA skids as well. Why do you care? Because (a) TISA is also being negotiated in secret, like TPP; (b) TISA chapters have been recently leaked by Wikileaks; and (c) what’s revealed in those chapters should have Congress shutting the door on Fast Track faster and tighter than you’d shut the door on an invading army of rats headed for your apartment. Congress won’t shut that door on its own — the rats in this metaphor have bought most of its members — but it should. So it falls to us to force them. Stop Fast Track and you stop all these “trade” deals. (Joseph Stiglitz will explain below why I keep putting “trade” in quotes.)  What’s TISA? It’s worse than TPP. As you read the following, keep the word “services” in mind. TISA protects the right of big money players to make a profit from “services,” any and all of them.

Fast Track to the Corporate Wish List -- Some time in the next several days, the House will likely vote on trade promotion authority, enabling the Obama administration to proceed with its cherished Trans-Pacific Partnership (TPP). Most House Democrats want no part of the deal, which was crafted by and for corporations. And many Tea Party Republicans don’t want to hand the administration any additional powers, even in service of a victory dearly sought by the GOP’s corporate allies. The vote, which has been repeatedly delayed as both the White House and House GOP leaders try to round up support, is expected to be extremely close. The Obama administration entered office promising to renegotiate unbalanced trade agreements, which critics believe have cost millions of manufacturing jobs in the past 20 years. But they’ve spent more than a year pushing the TPP, a deal with 11 Pacific Rim nations that mostly adheres to the template of corporate favors masquerading as free trade deals. Of the 29 TPP chapters, only five include traditional trade measures like reducing tariffs and opening markets. Based on leaks and media reports—the full text remains a well-guarded secret—the rest appears to be mainly special-interest legislation. Pharmaceutical companies, software makers, and Hollywood conglomerates get expanded intellectual property enforcement, protecting their patents and their profits. Some of this, such as restrictions on generic drugs, is at the expense of competition and consumers. Firms get improved access to poor countries with nonexistent labor protections, like Vietnam or Brunei, to manufacture their goods. TPP provides assurances that regulations, from food safety to financial services, will be “harmonized” across borders. In practice, that means a regulatory ceiling. In one of the most contested provisions, corporations can use the investor-state dispute settlement (ISDS) process, and appeal to extra-judicial tribunals that bypass courts and usual forms of due process to seek monetary damages equaling “expected future profits.”

Last-second objections threaten Obama-GOP vote on trade -- House Republicans are moving full-steam ahead toward a Friday vote to grant President Obama fast-track trade authority despite objections from Democrats to a last-second deal between Speaker John Boehner and Minority Leader Nancy Pelosi. The late Tuesday night Pelosi-Boehner deal scrapping cuts to Medicare that were to be used to pay for a program offering help to workers displaced by trade appeared to lift the final obstacle to a Friday vote. After repeatedly hedging their bets on whether the big vote would take place this week, Republican leaders announced the Friday vote at a closed-door caucus meeting on Wednesday. But Democrats at their own closed-door meeting complained to Pelosi that the Medicare deal wasn’t good enough because GOP leaders plan to attach the fix to a separate trade “preferences” bill. Since the bill granting trade preferences to African countries is not considered must-pass legislation, that means there is “no guarantee of enactment,” said a source in the meeting. Boehner and Republicans don’t want the fix attached to either fast-track or Trade Adjustment Assistance (TAA), the bill granting aid to displaced workers. Doing so would alter the Senate-passed package, requiring another vote by the upper chamber. It’s not clear whether the stumble will be enough to derail the fast-track vote, though some GOP aides expressed deep frustration at the last-minute maneuvering.

Why TPP sucks - On June 10th the Washington Post’s editorial page chastised Congress for “making free trade difficult”. Champions of Trade Promotion Authority and the Trans-Pacific Partnership (TPP) continue to label all skeptics as “opponents of free trade.” Many skeptics actually favor free trade, but the Trans-Pacific Partnership appears to be less about “free trade” and more about domestic regulatory harmonization. The post-WWII trade regime has been very successful in its aims of reducing tariffs and barriers to trade, expanding global market access, and integrating new players into the global trade regime. The spectacular economic rise of countries such as China, India, and Brazil is testament to the value of the trade route to lift millions out of poverty. The House may vote on Trade Promotion (“Fast Track”) Authority (TPA) as early as Friday, June 12th. The Senate has already voted in favor of TPA and Obama has been working hard to get skeptical House Democrats on board to support it. If the House grants Obama TPA, it ties its hands to an “up or down” vote on TPP with no possibility for amendment. There is much at stake and citizens and representatives need to know who is drafting it, what it means for US democracy and sovereignty, and the effects it will have on public health. Lobbyists representing corporate, not consumer, interests, drafted much of the TPP. William New, editor of IP-Watch and visiting fellow at Yale Law School, sued the Office of the United States Trade Representative (USTR) under the Freedom of Information Act and obtained hundred of pages of e-mails sent between the 600 or so “cleared advisors” and USTR. Though heavily redacted, the e-mail demonstrated an extraordinarily chummy relationship between corporate lobbyists, CEOs, and USTR. As New points out, many of the industry representatives are former USTR officials. For instance, Stan McCoy – former USTR negotiator of TPP – left USTR in April 2014 for a position as Senior Vice President and Policy Director for the Motion Picture Association. Former USTR Mickey Kantor became a lobbyist for the Pharmaceutical Research and Manufacturing Association (PhRMA). The revolving door between USTR and K Street creates incentives skewed against the public interest. Corporate interests have unparalleled access to USTR while consumers and citizens have been shut out.

Fast-Track Would Give Obama Green Light To Form EU-Inspired ‘Pacific Union,’ Surrender Congress’ Treaty Powers - U.S. Sen. Jeff Sessions (R-AL), Chairman of the Subcommittee on Immigration and the National Interest, sent the following letter to President Obama demanding information about the new global governance structure whose creation would be authorized through six-year fast-track executive authority. Text of the letter follows: (excerpt) I asked that you make public the section of the TPP that creates a new transnational governance structure known as the Trans-Pacific Partnership Commission. The details of this new governance commission are extremely broad and have the hallmarks of a nascent European Union, with many similarities. Reviewing the secret text, plus the secret guidance document that accompanies it, reveals that this new transnational commission—chartered with a “Living Agreement” clause—would have the authority to amend the agreement after its adoption, to add new members, and to issue regulations impacting labor, immigration, environmental, and commercial policy. Under this new commission, the Sultan of Brunei would have an equal vote to that of the United States. The implications of this new Pacific Union are extraordinary and ought to be discussed in full, in public, before Congress even contemplates fast-tracking its creation and pre-surrendering its power to apply the constitutional two-thirds treaty vote. In effect, to adopt fast-track is to agree to remove the constitutional protections against the creation of global governance structures before those structures are even made public. I would therefore ask that you provide to me the legal and constitutional basis for keeping this information from the public and explain why I cannot share the details of what I have read with the American people.

Nancy Pelosi Got a TPP Talking-To from Her Caucus, Plus Where We Are on Fast Track -- Gaius Publius: This explains the meat of the problem — for the bill and also for Leader Pelosi, who is reportedly working “almost daily” to oppose the wishes of the vast majority of her caucus. That opposition has now spilled over into intra-caucus conflict. There are more corporate Democrats in the House than any of us would like there to be, and all are potential pro–Fast Track (pro-TPA) votes. But the bill reported out of the Senate is two bills rolled into one — Fast Track itself, called “Trade Promotion Authority” or TPA, and a bill that pretends to offset the damage to workers from the coming job-creating “trade” bills, called “Trade Adjustment Assistance,” or TAA. Democrats need both bills to pass in order to make it look like the party as a whole cares about workers. All you need to know:

  • The Senate reported both bills out as a single piece of legislation.
  • If the House votes Yes to the exact language of the combined Senate bill (TPA plus TAA), it goes straight to the White House. No more votes.
  • The House will vote on each part of the combined Senate bill separately, however. (A move to get different members to vote Yes on different parts.)
  • Therefore, both bills must pass separately for the combined Senate bill to pass.
  • If the House changes any of the language of either bill, it goes into conference instead of to the White House, which means more delay and more voting.
  • If either the TPA or TAA bill fails, the whole Senate bill fails.
  • There’s a poison pill in the language of the Senate TAA bill.

Somehow, the Senate put language in the TAA bill that said, in effect, “Yes, we’ll allocate money for (some small number of) workers who need ‘assistance,’ but that money will come out of Medicare.”

House Kills TPP Fast-Track, Huge Blow to Corporate-Friendly Trade Agenda -- The U.S. House of Representatives on Friday dealt a serious blow to President Obama’s corporate-backed trade agenda, while erecting a major stumbling block for proponents of Fast Track, or trade promotion authority.  “Today’s votes to stall Fast Track and TPP are a major win for anyone who cares about climate change,” said Executive Director May Boeve. “This disastrous deal would extend the world’s dependence on fracked gas, forbid our negotiators from ever using trade agreements in the fight against global warming, and make it easier for big polluters to burn carbon while suing anyone who gets in the way.” She continued: “That message clearly broke through today, as House Democratic Leader Nancy Pelosi got up, bucked enormous pressure, and rallied against the deal, specifically citing concerns about its impact on climate change. Today was a big win, but the thousands of climate activists across the country who stood up and linked arms with fellow progressives to get us here won’t rest until Fast Track and TPP are dead for good.” A bill on Trade Adjustment Assistance (TAA), which would provide aid to workers displaced because of so-called “free trade” agreements, had been packaged with Fast Track authority, and a vote against either doomed the total package. Legislators opposed to Fast Track had hoped to derail the entire package by voting against TAA.  And derail it they did, voting 126-302 against TAA.

Congress Rebukes Obama On Trade, And Thus The Lame Duck Era Begins -- After an unusual last minute visit to Capitol Hill to personally lobby Democratic members of the House, President Obama suffered a big loss today in a vote on trade promotion authority:House Democrats rebuffed a dramatic personal appeal from President Obama on Friday, torpedoing his ambitious push to expand his trade negotiating power — and, quite likely, his chance to secure a legacy-defining trade accord spanning the Pacific Ocean.  In a remarkable rejection of a president they have resolutely backed, House Democrats voted to kill assistance to workers displaced by global trade, a program their party created and has stood by for four decades. By doing so, they brought down legislation granting the president trade promotion authority — the power to negotiate trade deals that cannot be amended or filibustered by Congress — before it could even come to a final vote.  “We want a better deal for America’s workers,” said Representative Nancy Pelosi of California, the House minority leader who has guided the president’s agenda for two terms and was personally lobbied by Mr. Obama until the last minute.Republican leaders tried to muster support from their own party for trade adjustment assistance, a program they have long derided as an ineffective waste of money and sop to organized labor. But not enough Republicans were willing to save the program. Republican leaders then passed a stand-alone trade promotion bill, 219 to 211. That measure cannot go to the president for his signature because the Senate bill combined both trade adjustment and trade promotion.

The Democrats’ TPP rebellion just drew blood: Everything you need to know about today’s shocking vote Today’s rebuke for the Obama Administration and his friends on the Republican side of the aisle on their trade agenda restores democratic accountability to the process of governing. What Obama was proposing was a trick, one used repeatedly to advance distasteful policies, by getting each side to vote only on the parts they like. And House progressives responded by saying they wouldn’t play that game anymore. If they can withstand the pressure, not only will trade be derailed, but the era of the split-vote gambit, where opponents help the victors, will be over.  Progressive Democrats took their stand on trade adjustment assistance (TAA), a separate bill to “fast track” trade authority for the President, which the Senate linked together, so that they had to pass concurrently. TAA offers modest job training, income support and health insurance assistance to workers who lose their jobs from trade deals. It’s not very effective, but it sounds good; Democrats who oppose trade  deals can say that they at least got some help for workers.  TAA and fast track have passed together ever since the Trade Act of 1974. This is a Washington game where Democrats get to vote for TAA so Republicans don’t have to. Republicans don’t favor TAA because they see it as welfare.  That set up liberal Democrats as the deciding factor on whether Obama would get his fast-track trade authority. The President went to Capitol Hill to tell Democrats to “play it straight” on the vote. But voting for TAA as a sweetener for a policy most Democrats don’t support is the opposite of playing it straight. It’s a stupid game, and progressives finally decided not to play… {more}

Liberals Deal Obama a Stunning Blow on Trade—but One More Showdown Awaits - Here’s what happened: The House considered three bills Friday. One was a generally noncontroversial customs enforcement bill. Another was the actual fast-track trade-authority legislation.  And the third was a bill providing trade-adjustment assistance to workers who get screwed over by trade deals. Republicans have long detested trade-adjustment assistance as a wasteful big-government program, and Democrats were not happy with the way it was being paid for. The way House Speaker John Boehner structured the process along with the Senate, all three bills had to pass or else the entire package would not advance. (If you’re a gambler, think of it like a three-item parlay bet.) Progressive Democrats who oppose fast track feared it would pass with mainly Republican votes alongside a small number of Democrats, but they sensed an opportunity on the must-pass trade-assistance bill—since relatively few Republicans would back the legislation, it would be much easier to kill by withholding Democratic votes. And if trade assistance goes down, so too would fast track. And that’s exactly what happened. Minority leader Nancy Pelosi took the floor early Friday afternoon and said that explicitly defeating trade assistance “is the only way we will be able to slow down fast track.” When the votes rolled in shortly thereafter, the trade-assistance bill failed with 302 votes against it and only 126 in favor. It’s worth stressing here how much progressive organizing had to do with this defeat. President Obama personally appeared in Congress at the last minute Friday morning to appeal to Democrats one more time, on the heels of crashing the congressional baseball game the night before. But Pelosi and Democrats remained unswayed, and in her speech, Pelosi instead credited the work of activists holding members to a “hot stove” back home.  But fast track isn’t quite dead yet. Boehner moved on to the fast-track and customs bills anyway, both of which “passed,” though fast track only got two votes more than it needed. The package still won’t advance without trade-adjustment assistance—but Boehner scheduled a revote for Tuesday.

Decline and Fall of the Davos Democrats - Krugman - OK, I didn’t see that coming: even though I have come out as a lukewarm opponent of TPP, I assumed that it would happen anyway... But no, or not so far. ...Or to put it another way, one way to see this is as the last stand of the Davos Democrats. If you talk to administration officials — or at least if I talk to them (they may be telling me what they think I want to hear) — they offer a fairly sophisticated defense of this deal. ...I’m not fully convinced, but this is a reasonable discussion. But the overall selling of TPP, to some extent by the administration and much more so by its business allies, has been nothing like this. Instead, it has been all lectures from Those Who Know How the Global Economy Works — the kind of people who go to Davos and participate in earnest panels on the skills gap and the case for putting Alan Simpson in charge of everything — to the ignorant hippies who don’t. You know, ignorant hippies like Joseph Stiglitz and Elizabeth Warren.  This kind of thing worked in the 1990s, when Davos Man actually did seem to know how the world works. But now Davos Democrats are known as the people who told us to trust unregulated finance and fear invisible bond vigilantes. They just don’t have the credibility to pull off arguments from authority any more. And it doesn’t say much for their perspicacity that they apparently had no idea that the world has changed. TPP’s Democratic supporters thought they could dictate to their party like it’s 1999. They can’t.

Trade in Services Agreement – Press release - Wikileaks -- WikiLeaks releases today 17 secret documents from the ongoing TISA (Trade In Services Agreement) negotiations which cover the United States, the European Union and 23 other countries including Turkey, Mexico, Canada, Australia, Pakistan, Taiwan & Israel -- which together comprise two-thirds of global GDP. "Services" now account for nearly 80 per cent of the US and EU economies and even in developing countries like Pakistan account for 53 per cent of the economy. While the proposed Trans-Pacific Partnership (TPP) has become well known in recent months in the United States, the TISA is the larger component of the strategic TPP-TISA-TTIP 'T-treaty trinity'. All parts of the trinity notably exclude the 'BRICS' countries of Brazil, Russia, India, China and South Africa. The release coincides with TISA meetings at the ministerial level at the OECD in Paris today (3–5 June). The 'T-treaty trinity' of TPP-TISA-TTIP is also under consideration for collective 'Fast-Track' authority in Congress this month. The TISA release today follows the WikiLeaks publication of the secret draft financial services annex of the TISA negotiations on 19 June 2014 showing the aim to further deregulate the financial sector, despite widespread consensus that lack of oversight and regulation was the main cause of the last global financial crisis of 2008. Today's release confirms the ongoing determination to deregulate. Furthermore, standstill clauses will tie the hands of future governments to implement changes in response to changing environment. Today's release is the largest on secret TISA documents and covers numerous previously undisclosed areas. It contains drafts and annexes on issues such as air traffic, maritime, professional services, e-commerce, delivery services, transparency, domestic regulation, as well as several document on the positions of negotiating parties. WikiLeaks has also published detailed expert analysis of the topics covered in today's release.

WikiLeaks releases secret TISA docs: The more evil sibling of TTIP and TPP --  WikiLeaks has released 17 secret documents from the negotiations of the global Trade in Services Agreement (TISA), which have been taking place behind closed doors, largely unnoticed, since 2013. The main participants are the United States, the European Union, and 23 other countries including Turkey, Mexico, Canada, Australia, Pakistan, Taiwan and Israel, which together comprise two-thirds of global GDP.  The 17 documents released today include drafts and annexes on issues such as air traffic, maritime transport, professional services, e-commerce, delivery services, transparency, and domestic regulation, as well as several documents on the positions of negotiating parties. The annexe on e-commerce is likely to be of particular interest to Ars readers, since, if adopted, it would have a major impact on several extremely sensitive areas in the digital realm. For example, the question of data flows—specifically the flow of European citizens' personal data to the US—is at the heart of disputes over the EU's proposed Data Retention rules, the Safe Harbour agreement, and TTIP. Here's what Article 2.1 of TISA's e-commerce annexe would impose upon its signatories: "No Party may prevent a service supplier of another Party from transferring, [accessing, processing or storing] information, including personal information, within or outside the Party’s territory, where such activity is carried out in connection with the conduct of the service supplier’s business." What that means in practice, is that the EU would be forbidden from requiring that US companies like Google or Facebook keep the personal data of European citizens within the EU—one of the ideas currently being floated in Germany. Article 9.1 imposes a more general ban on requiring companies to locate some of their computing facilities in a territory: "No Party may require a service supplier, as a condition for supplying a service or investing in its territory, to: (a) use computing facilities located in the Party’s territory."

America's Biggest Secret: Wikileaks Is Raising A $100,000 Reward For Leaks Of The TPP -- If there is one piece of legislation (and in a "democracy", there is no reason why any one law should be fast-tracked through Congress under the shroud of secrecy) that should be passed in complete openness and in full view of the general public, especially by the world's "most transparent organization", it is Obama's Trans-Pacific Partnership, a multi-trillion dollar treaty with 29 classified chapters, which - when not if passed - will have an impact on the vast majority of workers in the US, on their wages and living conditions. And yet, when it comes to the TPP, not only is the text of the legislation under lock and key,but the law's drafters, primarily US corporations, have made it so profoundly secret, that "many of the provisions will not only be secret before the vote in the House, but will also be kept secret for four years after the bill is signed.  That means we won’t know what’s in it even after it’s passed." Curiously, according to Wikileaks, the TPP contains 29 chapters but only 5 pertain to trade. As Red State reports, "Wikileaks will be publishing the entire bill and they have already released the chapter on Investment.  It’s very interesting.  It is written in a such a way as to give multinational companies a huge advantage on trade.  If a public hospital is built close to a private one, the private hospital has the right to sue the country for expected losses." The chapter on investment can be found here. It gets worse: The agreement also regulates the internet and requires internet companies to gather certain data which they will be required to share with certain private companies.  Many of the provisions will not only be secret before the vote in the House, but will also be kept secret for four years after the bill is signed.  That means we won’t know what’s in it even after it’s passed.

WikiLeaks Releases Section of Secret Trans-Pacific Partnership Agreement That Would Affect Health Care -- WikiLeaks has released a draft of an annex of a secret Trans-Pacific Partnership trade agreement, which would likely enable pharmaceutical companies to fight the ability of participating governments to control the rise of drug prices. It would empower companies to mount challenges to Medicare in the United States. For a number of years, the US and eleven other countries—Australia, Brunei, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—have been negotiating proposals for the TPP. Drafts previously released by WikiLeaks have shown that the US has been the most extreme negotiator in the process. “This leak reveals that the Obama administration, acting at the behest of pharmaceutical companies, has subjected Medicare to a series of procedural rules, negotiated in secret, that would limit Congress’ ability to enact policy reforms that would reduce prescription drug costs for Americans – and might even open to challenge aspects of our health care system today,” according to Peter Maybarduk, director of Public Citizen’s Global Access to Medicines Program. Public Citizen is a watchdog group that has been at the forefront of challenging the TPP in the US. The annex, which is dated December 17, 2014, expressly names the Centers for Medicare & Medicaid Services as being covered by the trade agreement.  The watchdog group contends that the language could affect the ability of the Secretary of Health and Human Services to pursue pharmaceutical reform and “negotiate the price of prescription drugs on behalf of Medicare beneficiaries.”


and now we return to our regular programming:


Editorial: One drilling mistake could prove devastating – Akron Beacon Journal - Since 2010, the U.S. Environmental Protection Agency has gathered data on one of the most controversial aspects of the oil and natural gas boom in Ohio and other states. The issue, impressed on many people by the documentary Gasland and incidents such as the contamination of aquifers in 2007 in Bainbridge Township, Geauga County, is how the technique of hydraulic fracturing affects the nation’s drinking water supplies. In a draft report released last week, the EPA did note a few specific instances of contamination, among them the Bainbridge incident. Still, the agency’s conclusion supports the contention of the industry that such drilling is generally safe. The EPA did not find evidence that hydraulic fracturing has “led to widespread, systematic impacts on drinking water resources.” That hardly amounts to a carte blanche for the industry. What the report makes plain is the massive scale of modern-day drilling, as many as 30,000 hydraulically fractured wells drilled each year, the activity affecting 25 states. Each well uses between 1 million and 5 million gallons of water mixed with sand and, in various combinations, more than 1,000 chemicals, about half with potential human health effects. Under high pressure, the mixture fractures rock and releases valuable resources. At the same time, many areas of potential vulnerability exist. In drier areas, tapping water for drilling can affect drinking water supplies. Mixing drilling fluid can lead to spills; so can handling the wastewater that comes back up after fracking takes place. Poorly constructed well casings, designed to prevent leakage into aquifers, can fail. There also is evidence of contaminants migrating into underground aquifers, although the EPA report characterizes the chances as “unlikely” in deep shale formations such as those in Ohio. In other parts of the country, hydraulic fracturing takes place in shallower formations or even layers where drinking water resources are at the same level. For state policymakers such as those in Ohio, the report must be viewed as a prescription for frequent, detailed inspections and careful monitoring. Providing the Ohio Department of Natural Resources with adequate funding must be a high priority, the department in almost total control of drilling in the state.

Fracking's dangers - Toledo Blade  Despite a recent federal report concluding fracking doesn’t adversely affect drinking water, the risks posed by fracking are clear. Oil and gas lobbies quickly looked to the Environmental Protection Agency’s new report on fracking safety to defend their absurd claims that fracking regulations aren’t necessary. Actually, the EPA’s limited report says nothing about the biggest danger of fracking: man-made earthquakes. It shouldn’t be read as a vindication of the practice, and certainly not as the last word on the dangers of fracking.  The report found that fracking, a method of releasing oil and natural gas by injecting water and chemicals deep into the Earth’s surface, has not shown any widespread effects on the quality of drinking water resources. But it notes that chemicals used in fracking have contaminated water supplies in some specific cases, and that it runs the risk of doing so again. The report also lacks data from long-term studies, which are critical to assessing environmental impacts. More important, though, is what the EPA report leaves out. Mounting evidence suggests that fracking is responsible for dramatic increases in earthquakes all over the country, including in Ohio. The Seismological Society of America found this year that fracking was responsible for dozens of earthquakes near Youngstown in 2011. Before the fracking boom of the last few decades, there were about 20 major earthquakes per year in the eastern and central United States. Last year, there were more than 650. The federal government also acknowledges the role of fracking in creating earthquakes, but it has limited authority to regulate the practice. That puts the burden on state and local governments to regulate the practice effectively. But industry-friendly officials in energy-rich states have mostly shirked that responsibility, and trusted the industry to regulate itself.

Lawmakers don't want injections - — Two Republican lawmakers want Michigan’s Monroe County to be declared off limits for deep underground injection of brine waste products from conventional oil drilling, citing a potential for groundwater contamination because of that county’s highly porous Karst geology.  The outcome of bills introduced into their respective chambers recently by state Sen. Dale Zorn (R., Ida) and state Rep. Jason Sheppard (R., Temperance) could have broader implications across Michigan and Ohio because of their amount of Karst.  “A Karst formation is like an underground river,” Mr. Zorn said. “We know this Karst area does have water flowing through it. If anything in the ground gets in there, it’s going to contaminate water.” Mr. Zorn and Mr. Sheppard said they are not against energy exploration, but said the sensitive geology of Monroe County is not conducive for waste products to be injected underground. “Any slip-up or error could ruin a lot of wells and a lot of farm fields,” Mr. Sheppard said. Karst, which includes limestone and other types of bedrock that can dissolve, is known for its porous, Swiss cheese-like formations. Only about 3 percent of Ohio has Karst geology near its surface, but much of that is in northwest and central Ohio, especially Delaware County. Portions of Seneca, Huron, Sandusky, Erie, and Ottawa counties, including the Marblehead Peninsula and the Lake Erie islands, also have Karst beneath them, according to the Ohio Department of Natural Resources.

Ohio severance tax is moving at a snail’s pace --According to Ohio’s Governor John Kasich, not much progress has been made regarding the new oil and gas severance tax. Although Gov. Kasich is optimistic about the tax being passed, legislators are moving at a snail’s pace when it comes to passing the tax.  The Governor participated in an interview with radio host Hugh Hewitt and explained there has been “virtually no progress” made.  The tax would increase what companies operating in the Utica Shale formation pay to drill.  A large portion of the revenue generated from the tax would be allocated to funding Gov. Kasich’s proposed income tax cut. During the interview, Gov. Kasich told Hugh that he cannot discuss the severance tax, if he were to go into detail he could ruin the entire chance of it being passed.  However, he did explain efforts are being towards a lower income tax: I’m not only for reducing taxes when you reduce government, but I’m also for creating a tax system that encourages consumption … And so far that’s part of our effort to try and get our income tax down. As reported by the Columbus Business First, “Kasich being at odds with the oil and gas industry has gone on longer than many expected.  The governor had wanted a tax of 6.5 percent on oil and gas and 4.5 percent on natural gas liquids from horizontally drilled wells.”  According to the industry, the proposed rates have the potential to slow oil and gas investment, especially considering how the industry has already suffered from the downturn.

New Ascent Resources sells 35,000 acres in eastern Ohio to Gulfport Energy for $407 million -- Aubrey McClendon’s American Energy Appalachian Holdings LLC has a new name and has sold off 35,000 acres of Utica Shale holdings in eastern Ohio for $407 million. The company, now known as Ascent Resources LLC, will be a standalone company that will be independent of American Energy Partners LP founded in 2013 by McClendon, the former CEO of Chesapeake Energy. The 35,000 acres and certain assets in Monroe, Belmont and Jefferson counties were purchased by Gulfport Energy Corp., another key player in the Utica Shale. The  assets include four completed wells, 18 unfinished wells and 11 miles of pipeline. The land is in what’s called the dry gas window and will produce natural gas but little oil or other liquids. When the deals are completed, Oklahoma-based Gulfport will hold about 243,000 acres in the Utica Shale. The biggest chunk of the acquired land, 29,100 acres, is in Monroe County. There are also 6,200 acres in Belmont and Jefferson counties.

Utica and Marcellus well activity in Ohio -- The following information is provided by the Ohio Department of Natural Resources (ODNR) and is through the week of May 30th. Activity in the Utica Shale formation in Ohio has caused a few slight changes in comparison to last week’s update.  The ODNR reported 424 wells were permitted, 551 drilled, 902 producing, 25 inactive, 24 in final restoration and 3 abandoned.  This brings the total number of wells in the Utica to 1,929.  The Marcellus Shale in Ohio remains unchanged from last week’s well report.  The area is still sitting at 15 wells permitted, 11 drilled, 14 producing and one well inactive.  There are a total of 44 wells in the Ohio Marcellus Shale.

Marcellus permit activity in Pennsylvania --  The Marcellus Shale formation in Pennsylvania saw quite a bit of action over the last week, and news of the possibility of new pipeline construction as surfaced. Sunoco Logistics Partners is  considering adding a second pipeline to its Mariner East II project.  The purpose of second pipeline would be to increase the flow of liquefied natural gas, but the company is unsure if it will use the pipeline right away.  In order for the pipeline to be put to use, Sunoco will have to be successful at selling capacity.  However, even though it may not be used right away, building the pipeline now makes sense.  According to Sunoco’s Communications Manager Jeffery Shield, since the company has plans to building one pipeline already, constructing a second one at the same time is logical.  By building it now, the company would cuts costs and limit construction.Sunoco has already been issued two permits to build two 350-mile long pipelines that would travel through Ohio and West Virginia.  The pipelines would eventually hook up to the Marcus Hook Industrial Complex, which is all part of the Mariner East II project.  According to a study conducted by Econsult Solutions, the project will bring in nearly $4.2 billion to Pennsylvania’s economy.  The pipeline will provide over 300,000 jobs over the course of the construction period and 300 to 400 permanent jobs once it is completed. The following information is provided by the Pennsylvania Department of Environmental Protection and covers June 1st through June 7th. New: 31 - Renewed: 3

Disturbing Study Links Fracking Wells to Low Birth Weights -- In an alarming new study, University of Pittsburgh researchers revealed that pregnant mothers who live in close proximity to fracking wells are more likely than their counterparts, who live farther away, to have babies with lower birth weights. Perinatal Outcomes and Unconventional Natural Gas Operations in Southwest Pennsylvania was published last week in the journal PLOS ONE. Hailing from Pitt’s Graduate School of Public Health, the researchers investigated birth outcomes for 15,451 babies born between 2007 and 2010 in three counties in the fracking-heavy state of Pennsylvania: Washington, Westmoreland and Butler. “Mothers whose homes fell in the top group for proximity to a high density of such wells were 34 percent more likely to have babies who were ‘small for gestational age’ than mothers whose homes fell in the bottom 25 percent,” states a summary of the report’s conclusions. “Small for gestational age refers to babies whose birth weight ranks them below the smallest 10 percent when compared to their peers.” Low birth weight is associated with medical problems later in life, including diabetes, heart disease and high blood pressure.The researchers say these findings held up even when numerous other factors were taken into account, including prenatal care, education, age and birthing history. They emphasized that the study does not definitively prove a causal relationship between fracking wells and low birth weights, but is certainly cause for concern—and further investigation.

Natural gas line bursts  – A natural gas pipeline rupture caused a voluntary evacuation of residents living in a three-mile radius of this Lycoming County village Tuesday evening. The line is owned by Williams, a natural gas pipeline company based in Tulsa, Okla., which wants to build a 178-mile line that would pass through Northumberland and Columbia counties. The Williams Transco 24-inch line ruptured at around 9:30 p.m. in a rural area north of Unityville near Wilson Road. State Route 118 was closed between routes 42 and 239 and an evacuation radius of 1 to 1.5 miles was quickly established, before being widened to three miles. Shelters were established at Lairdsville Elementary School and Unityville and Benton fire companies. Dan Jankowski, Benton EMA coordinator, said he could hear a loud roar from his home located about four miles away from the site. Other residents reported hearing a similar sound. Jankowski was manning the Benton shelter, where about 15 residents sought refuge before returning home when the evacuation order was lifted at 11:45 p.m. Jennifer Long, emergency management coordinator for Columbia County, did not know what caused the break and was unsure how much gas was released into the environment. A call into Lycoming County Department of Public Safety was not returned. Williams, a natural gas pipeline company based in Tulsa, Okla., announced this spring details of the Atlantic Sunrise Project, a 178-mile pipeline that would connect the natural gas fields of the northern tier to the existing Transco pipeline, which already distributes natural gas from Pennsylvania to southern states. According to a preliminary map, it would enter Northumberland County from the south in East Cameron Township through State Game Land 84. It would cross Upper Road and continue in a mountainous area into Coal Township and then Ralpho Township. It would enter Columbia County through Cleveland Township.

Gas line explosion in Lycoming County involves pipeline owned by same company that wants to build in Lancaster County - A natural gas pipeline rupture and explosion forced the evacuation of about 130 people Tuesday night in Lycoming County. The rupture occurred on a 24-inch natural gas pipeline owned by Williams, the pipeline company that wants to build a 42-inch gas pipeline through 36.5 miles in Lancaster County as part of the Atlantic Sunrise pipeline project. This is not the first Williams pipeline failure. Lance Latham, a spokesman for the Oklahoma-based Williams, said that “emergency shutdown equipment worked properly to quickly stop the flow of gas and isolate the section of line where the failure occurred. As a safety precaution, local emergency response personnel evacuated some nearby residents.” There were no reports of injuries. According to WNEP, a television station in Scranton, about 130 people were taken to two nearby fire stations. The evacuation order was lifted just before midnight. The cause of the pipe failure has not been determined, Williams said.

American Medical Association blasts secret shale records -- The American Medical Association, citing growing concerns about monitoring and tracking long-term human health impacts caused by shale gas development, is calling for the public disclosure of all chemicals used in the extraction technique known as hydraulic fracturing, or “fracking.” The new policy, adopted Tuesday by the nation’s largest physicians organization at its annual meeting in Chicago, states that in addition to requiring the chemical disclosures, monitoring “should focus on human exposure in well water and surface water and government agencies should share this information with physicians and the public.” Most of the 25 states in the U.S. where shale gas drilling and development is occurring — including Pennsylvania, where drilling in the Marcellus and Utica shale formations is booming — either don’t know or don’t publicly disclose all the chemicals used in fracking. “Keeping the names of the chemicals secret is preposterous,”  “It places an unreasonable burden on physicians. The AMA feels that if companies are going to be responsible petroleum and gas explorers and extractors, they need to disclose the chemicals they use and do better water testing. That’s not a radical position.” The industry says it meets all state laws. It has opposed calls to make public all of the chemicals used in the fracking process, citing commercial proprietary interests for keeping secret the chemicals used in fracking as biocides, friction inhibitors, anti-corrosives and acids to dissolve minerals.

Why New York's Fracking Ban for Natural Gas is "Unsustainable" - Forbes  - In December, New York became the 2nd state after Vermont to prohibit hydraulic fracturing (“fracking”) statewide. Although a few others have joined in, New York is the only state with significant shale gas potential to ban fracking, “the most important, and the biggest, energy innovation of this century.” This controversial decision by Governor Cuomo has even fueled secession talk by the southern part of the state that has sat idly by and watched neighbor Pennsylvania enjoy the huge economic benefits of shale development (as such, states like Texas and Oklahoma are banning fracking bans!). Fracking technology, after all, is a proven commodity that has been safely deployed for over 60 years in over a million wells – across the country to great success. New Yorkers should realize what’s at stake. New York sits atop the mighty Marcellus Shale, a huge source of oil and gas that also lies beneath much of Ohio, West Virginia, and Pennsylvania. The play covers some 18,750 square miles in New York and has transformed Pennsylvania into a natural gas powerhouse, surging state state output from 200 Billion Cubic Feet (Bcf) in 2008 to 3,800 Bcf in 2014. New York today isn’t a material gas producer, yielding just 22 Bcf a year, halved since 2009. Thus, New York now produces enough gas to cover its consumption needs for just 6 days. Nationally, New York consumes 5% of U.S. gas but produces 0% of U.S. gas. This is becoming increasingly awkward: New York, the 4th largest state with 19.8 million people, is increasingly turning to natural gas to fuel its economy, ranked 3rd at $1.5 trillion. Natural gas is easily New York’s most critical source of energy, supplying about 1,300 Trillion Btu a year, versus 615 Trillion Btu for 2nd place oil-based gasoline. By comparison, wind and solar renewables offer just 40 Trillion Btu. This heavily weighted oil and gas energy portfolio makes obvious New York’s necessity to develop its own shale resources, which are significant. Upper estimates have the Marcellus formation in New York containing 75-100 Trillion Cubic Feet of recoverable gas, but shale energy continues to prove previous assessments greatly understated as the resources get developed.

New forced pooling bill anticipated - Legislators are expecting a new forced pooling bill for the 2016 session, after the last-minute death of a 2014 bill. With that in view, industry and mineral owner representatives and a farmer schooled the Joint Standing Committee on Energy on the pros and cons of pooling Monday morning. Kurt Dettinger, attorney for the West Virginia Oil and Natural Gas Association (WVONGA), rehearsed some familiar points. Pooling — combining adjacent mineral leases into a unit big enough to drill one or more horizontal gas wells — helps prevent waste of gas resources and causes more efficient development by eliminating “stranded” properties that can’t be developed. So-called forced pooling allows developers to lease minerals belonging to unknown or missing owners, or to acquire leases on specified terms from otherwise unwilling owners. Also, Dettinger reminded them, pooling already exists for deep wells in the Utica. Last year’s bill and the coming one wrap in all wells — Marcellus and Utica — and offer protections not yet in law, he said. There is no threshold for mineral owner buy-in, for instance. The bill requires 80 percent — higher than any state in the nation. For pooled interests belonging to an unknown or missing owner, the dead and proposed bills allow the surface owner to acquire the mineral ownership after five years. “That’s a big, substantial benefit for surface owners,” he said.

Exploratory Drilling Approved For Louisiana Wetlands -  The Army Corps of Engineers this week issued a permit for an oil and gas company to fill three acres of wetlands in St. Tammany Parish, Louisiana, where it will begin exploratory drilling — the first step towards hydraulic fracturing (fracking). The decision raised questions for local leaders and environmental advocates about how much control they have over their natural resources.   The wetlands, in the town of Abita Springs, are part of a pristine aquifer — home to Abita Brewing Company, Louisiana’s most famous beer, and the sole source of drinking water for miles around. Unsurprisingly in a town where the official seal shows a woman kneeling by the water, the proposal to start fracking has been met with community outrage. In fact, Abita Springs sued the Army Corps of Engineers over its failure to hold adequate public hearings on the issue. That suit, as well as one seeking to prevent the drilling under a land-use law, was dismissed.  Wetlands are natural buffers to the effects of climate change, including both flooding and drought. In addition, they are important to regional biodiversity and erosion control. Louisiana loses a football field’s worth of land every hour, according to the U.S. Geological Survey. Part of the loss of land is due to oil and gas development.  Abita Springs Mayor Greg Lemons said he was “very disappointed” with the Army Corps’ decision to issue the permit.  “Louisiana has some of the best, sensitive, prettiest wetlands area in the world. Anything that can damage that or denude that is something we should really be thinking about not doing,” Lemons told ThinkProgress. “I’m of the understanding that the job of the Army Corps of Engineers is protecting wetlands.”

Concerns Over Earthquakes Spread To Texas -- The connection between wastewater injection wells and an alarming increase in the frequency of earthquakes is getting a lot more scrutiny these days. First was Oklahoma, which has suddenly become the earthquake capital of the United States. The culprit? Scientists are becoming more confident that the injection of wastewater into disposal wells causes fault lines to “slip,” contributing to the likelihood of an earthquake. The issue has become highly contentious in Oklahoma. But now the controversy has spread to Texas, where a subsidiary of ExxonMobil is under the microscope. After a series of earthquakes struck near Dallas, Texas regulators are demanding answers. The regulators will hold a set of hearings beginning on June 10 in which they will look into a set of earthquakes that have been linked to disposal wells operated by XTO Energy, a shale gas company purchased by ExxonMobil back in 2010. Research from Southern Methodist University, based in Dallas, may have found a link between nearby injection wells and the earthquakes. What is worrying state regulators is the fact that the fault line that was triggered had been dormant for a long time, but sprung to life after the disturbance from the disposal wells. In response to all the seismic activity, regulators sent requests to four energy companies, asking them to shut down their wells and look into the matter. Those companies were EOG Resources, Bosque Disposal Systems LLC, Metro Saltwater Disposal Inc., and Pinnergy Ltd.

Exxon to Face Regulators’ Questions Over Quakes - WSJ: Texas regulators are scrutinizing some of the biggest U.S. energy producers in the wake of several earthquakes that have rocked the Dallas-Fort Worth area this year. An Exxon Mobil subsidiary and EOG Resources Inc., one of the biggest shale-oil and gas pumpers, are facing questions about their use of injection wells to dispose of wastewater from hydraulic fracturing operations. The state’s oil-and-gas regulator on Wednesday begins a series of hearings in Austin to assess some oil companies’ role in causing the temblors. A growing body of scientific research from federal, state and academic researchers suggests that disposal wells, often used to get rid of the dirty water leftover from fracking and brine from oil-and-gas production, may be linked to increased seismic activity. Some in the energy industry are trying to discount those studies. The commission’s seismologist, Craig Pearson, has also expressed doubts that fracking or wastewater disposal wells are to blame for a recent spate of quakes in north Texas, home to a natural-gas exploration area called the Barnett Shale. But Ryan Lance, chief executive of ConocoPhillips, COP -0.58 % which is one of the biggest American shale drillers, concedes there is a link. “We’ve followed all the data and the evidence and it does appear that in some areas water disposal is creating seismic events,” Mr. Lance said last month. “We’re trying to understand how widespread it is.”

Exxon subsidiary: Quakes not caused by injection wells -   A major player in the oil and gas industry on Wednesday joined the debate over whether Texas earthquakes are being caused by injection wells with a resounding “no,” at least in one case. Representatives of Exxon Mobil subsidiary XTO Energy Inc. blame nature for a series of earthquakes that struck the towns of Azle and Reno, northwest of Fort Worth, in 2013 and 2014. They told Texas Railroad Commission examiners in Austin on Wednesday that their wastewater injection well, built close to a faultline, did not trigger the temblors.XTO argued that the faults beneath Azle and Reno have been active for 600 million years. “The earth has been moving continuously over time, and that movement is the result of natural tectonic forces far away but that express themselves right here,” said Tim George, an attorney for XTO. A study published in April by researchers at Southern Methodist University, the U.S. Geological Survey and the University of Texas concluded that two wastewater wells, including one operated by XTO, most likely triggered the events. The earthquakes culminated in two widely felt 3.6-magnitude tremors in November and December 2013. Companies use wastewater wells to bury fluid from the oil and gas production process, including fracking.The Railroad Commission, which regulates the oil and gas industry, asked representatives of XTO and EnerVest, the company that operates the second wastewater well, to appear in Austin to explain why their wells should not be shut down. XTO responded with more than 30 exhibits, dozens of slides, and three expert witnesses who testified more than eight hours.

Natural gas firm asked to show it's not causing Texas quakes - (AP) — A natural gas extraction company controlled by energy giant Exxon Mobil sought to prove Wednesday that it is not to blame for a recent rash of small earthquakes in North Texas, telling a powerful state agency that it believes the earthquakes occurred naturally. XTO Energy submitted evidence to the Texas Railroad Commission, which regulates the state’s massive oil and gas industry, during a hearing that will test the agency’s willingness to suspend permits for injection wells based on seismology. The wells store wastewater from hydraulic fracturing, which has opened vast reserves of natural gas in North Texas but critics blame for causing small earthquakes. The multiday hearing is the first time the commission is requiring a company to prove it’s not to blame for earthquakes. The commission, under recent policy changes, can now require companies to conduct seismic tests before applying for permits or revoke permits if wells are linked to earthquakes. Studies have suggested a link between small earthquakes and injection wells in parts of Texas, Oklahoma and other states, but the industry has steadfastly denied any connection. In Texas, a recent Southern Methodist University study looked at wells west of Fort Worth where thousands of gallons of wastewater from fracking are disposed each day. The study suggested the wells caused hundreds of earthquakes in 2013 and 2014 in the city of Azle and other nearby communities, where no seismic activity had previously been recorded.

Six facts about human-caused earthquakes - The following information was posted on the U.S. Geological Survey website on June 10, 2015:The central United States has undergone a dramatic increase in seismicity over the past 6 years. From 1973-2008, there was an average of 24 earthquakes of magnitude 3 and larger per year. From 2009-2014, the rate steadily increased, averaging 193 per year and peaking in 2014 with 688 earthquakes. So far in 2015, there have been 430 earthquakes of that size in the central U.S. region through the end of May.There are many questions and misconceptions about what's happening. How does the observed increase relate to oil and gas production activities? Does this connect to fracking—more formally known as hydraulic fracturing? What exactly is fracking? What are induced earthquakes?USGS scientists recently published a report that explains what is causing these seismic events and addresses common misunderstandings. The article is published in the Seismological Research Letters journal.

  • Fact 1: In the United States, fracking is not causing most of the induced earthquakes. Wastewater disposal is the primary cause of the recent increase in earthquakes in the central United States.
  • Fact 2: Not all wastewater injection wells induce felt earthquakes. Most injection wells do not trigger felt earthquakes. A combination of many factors is necessary for injection to induce felt earthquakes.
  • Fact 3: Wastewater is produced at nearly every oil and gas well, not just hydraulic fracturing sites.
  • Fact 4: The content of the wastewater injected in disposal wells is highly variable.
  • Fact 5: Induced seismicity can occur at significant distances from injection wells and at different depths. Earthquakes can be induced at distances of 10 miles or more away from the injection point and at significantly greater depths than the injection point.
  • Fact 6: Wells not requiring surface pressure to inject wastewater can still induce earthquakes.

After 3 weeks, evacuation remains in place for Karnes County families -- It’s been roughly three weeks since the South Texas oil well in Karnes County ejected toxic gas into the air, and some families remain displaced as decontamination efforts continue.  On a Tuesday afternoon in the middle of May, an oil well owned by Encana Corp exploded and shot hydrogen sulfide gas into the air, forcing an evacuation of several homes. Roughly 20 people were evacuated from their homes as a precautionary measure while Encana employees worked to shut down the well. Now, five families are still waiting to return home as Encana continues to decontaminate their houses, according to Doug Hock, a spokesman for the Canadian-based company. Three of the families are being hosted at a local motel and are provided food every day and a per diem by Encana.   In a recent report from the National publication Inside Climate News, Texan Leonard Cordova elaborated the impact of displacement on his family. The report noted that Cordova, his wife and their 2-year-old daughter have shared a hotel room since May 19. Their three indoor cats are staying with them. The family’s dogs are at a friend’s house, and their three outdoor cats are still living on the Cordova’s property, which is across the street from the well that blew. Cordova stated that to his knowledge, their home was one of the most contaminated. “They’re not allowing us to go back to our property,” Cordova told reporters. “They have guards out front, and if we try to go back, they call the police. We left with nothing but the clothes we had on. All my daughter had was a shirt and a diaper.” Encana has stated that any valuable items requested by the family could be retrieved by workers, but Cordova has told them he’s uncomfortable with the idea of strangers going through his personal belongings. In addition, Cordova has requested for temporary housing to escape the claustrophobic conditions on a hotel room but feels it’s unlikely due to the housing crunch from the latest oil boom.

Encana lost $197k on oil in accident -  When an oil well belonging to Encana Corp. exploded and shot gas into the air May 19 in Karnes County, the incident cost several families their homes as surrounding residents evacuated the area. According to a report released last week, the accident also proved to be an expensive loss for Encana, San Antonio Business Journal reports. The report, which Canadian company The Calgary sent to the Texas Commission on Environmental Quality (TCEQ), noted a loss of 138,000 gallons of oil, worth $197,000, which spewed into the air. The Texas Railroad Commission is investigating the blast but has yet to take  regulatory action against Encana. The company had originally reported equipment testing and calibration to TCEQ while the surface pressure was at 0 psi. Encana attributed the the accident to a “downhole failure” while AAA Well Service worked on the premises. Well control specialists Boots & Coots, which quelled the effects of the accident, guessed that nearly 1,000 acres of surrounding land were affected.

"Tar balls" begin to dot Texas shorelines --  Seemingly out of nowhere, hundreds of “tar balls” have washed up along the shore in Corpus Christi and along southern Texas—baffling experts in the area. “We don’t have a source for the oil,” Jim Suydam, a spokesman for the Texas General Land Office, told ABC News reporters yesterday. Suydam stated that samples of the substance have been sent to the U.S. Coast Guard for analysis. As of now, researchers believe it’s some sort of produced crude oil from two different sources. “It is unlikely the source is from Texas waters, but possible sources include offshore rigs, a pipeline, a ship, or from natural seepage,” Suydam told ABC News in a statement. According to the report, the tar balls are dense accumulations of petroleum that have mixed with other materials such as sand, rock and shells. Some speculation about the sources include natural leaks along the continental shelf, which runs 40 to 100 miles off the Texas shoreline, or the result of frequent spills that occur when crude oil is transported from one tanker to another in the Gulf of Mexico before being brought into port. Director of environmental advocacy group Environment Texas Luke Metzer told ABC that he wouldn’t be a bit surprised if the source was manmade. Oil spills, he said, are just “a way of life” in Texas. He claimed that 543 spills occurred in 2012 alone, according to the Texas General Land Office.

Earthquakes in Kansas, Oklahoma prompt meeting over fracking - Environmental groups from Kansas and Oklahoma are hosting a public event this weekend that aimed at raising awareness about earthquakes and a hydraulic fracturing process commonly known as fracking that is used in drilling injection wells. The Sierra Club chapters from the two states have scheduled the meeting Saturday at the Medford Civic Center in Medford, Oklahoma. Both states have seen a rise in earthquake activity. On tap for the event is the screening of the film, “Groundswell Rising,” and a discussion with Todd Halihan, hydrogeology professor at Oklahoma State University. The environmental groups have been pushing for a moratorium on injection wells in the states.

Earthquakes near Colorado wastewater well decrease - The ground around a northern Colorado wastewater injection well has been relatively quiet for more than two months, offering hope that a 10-month string of more than 200 small earthquakes might have subsided. The bottom 450 feet of the 10,800-foot-deep well was plugged with cement last year, and that might be keeping the wastewater — a byproduct of oil and gas wells — from seeping into fractures and triggering earthquakes, researchers and regulators say. The newly shortened well is back in operation, and researchers say no quakes greater than magnitude 1 have been measured in a 7-mile radius around it since April 2. Colorado is one of a handful of states grappling with earthquakes blamed on such wells, which inject wastewater deep underground because it’s too salty or contaminated to be poured into rivers or lakes. Similar problems have been reported in Oklahoma and Texas, as well as Alabama, Arkansas, Kansas, New Mexico and Ohio. A 3.2-magnitude earthquake radiated from the site of the injection well in Weld County about 65 miles north of Denver on May 31, 2014. The quake was felt some 40 miles away but no damage was reported. Researchers and the Colorado Oil and Gas Conservation Commission, which regulates the industry, eventually zeroed in on the well as the likely cause.

Is Colorado's fracking battle over? - The national debate over hydraulic fracturing extends from one extreme to the other. New York state has banned the practice, while Texas recently passed a new law giving drillers carte blanche and local communities little recourse so long as a drilling site is “commercially reasonable.” To listen to Gov. John Hickenlooper, the debate in Colorado is all but over, with the industry having won a Texas-style victory. At a joint appearance with Sen. Cory Gardner last month in Denver, Hickenlooper suggested fracking opponents no longer have the enthusiasm or support to put regulatory measures on the ballot, as they did a year ago before the governor brokered a last-minute deal to remove them. “There will be proposals, but I don’t think there will be something that will be funded to any significant extent, and therefore I don’t expect something to get on the ballot,” Hickenlooper said, according to the Durango Herald. Boulder Congressman Jared Polis, who backed the ballot proposals and then agreed to remove them a year ago, says it’s too early to say what might be proposed for the 2016 Colorado ballot. “Given the pending Fort Collins and Longmont lawsuits that will hopefully confirm local authority to regulate fracking, and that we are 18 months out from the 2016 election, I can no more predict whether a ballot initiative is needed or would be viable in 2016 than I can predict who is going to win the World Series that year,”

Don't trust pro-oil messaging - The Coloradoan -- We live in an era when, if an entity wants to advance an interest and has sufficient monetary means, interest can be effectively promoted via TV commercials. It appears the oil and gas industry is employing that as a strategy given the current deluge of ads on most major networks. Some ads feature people represented as business professionals or a mother declaring they have looked into fracking and found it to be safe; or that fracking has been used for more than 60 years; or that Colorado has some of the strictest regulations in the nation and that we can breathe easy. On the other hand, numerous reports suggest the industry’s practices perhaps can’t be whitewashed quite so easily. For example, according to the COGIS Inspection/Incident Data Base on the Colorado Oil and Gas Conservation Commission’s website, there have been 268 incidents/spills year to date (through May 15). Some spills were in excess of 100 bbls of oil and produced water, condensate or both. Many resulted in contaminated soil; some occurred during rainy weather and in some cases the extent of contamination was reported as undetermined. There are also numerous research papers pointing to air quality/health concerns — including one published in November of 2014 by the scientific institute INSTAAR, of the University of Colorado Boulder titled “Influence of oil and gas emissions on ambient atmospheric non-methane hydrocarbons in residential areas of Northeastern Colorado.” The findings in this paper suggest O&G emissions are impacting a large population of Northern Front Range residents. Of particular concern were elevated levels of ozone precursors and benzene. Benzene levels in Platteville and Erie/Longmont were “of a high enough concentration for the potential of detrimental health effects if chronic exposure at these levels should occur.”

Emergency officials want more firefighting foam — An increase in crude oil traveling by rail through Wisconsin has prompted first responders to seek more firefighting foam so they’re better prepared for the possibility of a major train derailment. The state’s top emergency official says Wisconsin Emergency Management is working to stockpile the expensive material. He hopes to purchase 1,500 gallons of foam and store the firefighting material at several sites within two hours of where a derailment could occur. Wisconsin Public Radio reports that rail companies also are ramping up their firefighting foam supplies. A BNSF Railway spokeswoman says the company purchased more foam to ease the concerns of fire officials after a second track through La Crosse was approved. The state currently has one reserve of 1,600 gallons at Camp Douglas.

Alternate pipeline route would cross Central Minnesota - An alternative route for the proposed Sandpiper oil pipeline under consideration by state officials would bring the pipeline across Central Minnesota, including parts of Todd, Morrison, Benton and Mille Lacs counties. Last week, the Minnesota Public Utilities Commission approved a certificate of need for the $2.6 billion, 612-mile Enbridge Energy project, which would deliver light crude from the Bakken fields of North Dakota to a terminal in Superior, Wisconsin. The commission did not determine a route for the pipeline. Enbridge’s preferred route through north-central Minnesota is opposed by environmental groups and American Indian tribes who say it will impact sensitive lakes, wetlands and wild rice areas. Enbridge says Sandpiper is needed to move the growing supply of North Dakota crude safely and efficiently to market. It would carry about as much oil per day as 1,700 railroad tank cars. But environmentalists and tribal groups say the risk of leaks is too high. Opponents also argue that the pipeline will exacerbate the problem of climate change by continuing reliance on fossil fuels, when the emphasis should be on moving toward more renewable energy sources. Last Friday, the commission agreed on a 5-0 vote that the pipeline is necessary, but more review of the proposed route and an alternative route are required.

EIA: Bakken, overall production declines -- The momentum of the U.S. shale revolution is beginning to slow, according to the Energy Information Administration’s latest monthly drilling productivity report released this week. With the exception of the Permian Basin, the nation has experienced an overall decline in oil and gas production in the major shale plays. According to Shale Plays Media, by July production in the major U.S. shale plays is projected to drop by approximately 208,782 barrels of oil per day (bopd), down from April’s high of 5,694,580 bopd. This production downturn is largely attributed to a decrease in legacy production and increasing well depletion rates. The EIA reports that for the month of May, the Bakken produced 1.29 million barrels of crude oil per day, down 1 percent from April, but 23 percent greater than the same time period last year. Following the nationwide trend toward efficiency, though, the Bakken Shale produced 608 barrels of crude oil per day per rig, a 48 percent increase in production per rig compared to the previous year. This higher rate of production, however, has led to a decline in crude oil prices, leaving producers with less incentive to increase production. To read the full article, and to see activity in the other shale plays, click here.

Disappearing Bakken oil discount adds to output slowdown signs -- Oil traders scrambling to secure crude in the U.S. Midwest have pushed North Dakota's Bakken to a near premium for the first time in two years, a rally stoked by record refinery runs and an unprecedented slump in Canadian imports. Yet some traders say the surprising strength emerging from opaque physical crude markets in the heartland of the fracking boom also points to a more important, lasting factor: declining production of Bakken crude, a long-anticipated but as yet unproven twist in the shale revolution. The buying frenzy pushed Bakken delivered at Clearbrook, Minnesota WTC-BAK, to trade just 35 cents a barrel below the West Texas Intermediate benchmark last week, dealers say, the narrowest discount since July 2013. On Tuesday, it widened slightly to a 75-cent discount. Four months ago, it traded at a $7.50 discount. "The rapid spread contraction may be indicative of a faster-than-anticipated production decline, presenting upside risk to our price forecast" in the second half, Barclays analysts wrote in a report. There are other compelling reasons for Bakken crude's relative strength, to be sure. Canada's oil exports to the United States suffered their biggest monthly decline on record this spring due to maintenance on big oil sands projects as well as forest fires that slashed a tenth of Alberta's total oil production. Refiners in the U.S. Midwest region ran the most crude ever for the month of May thanks to a light maintenance slate and robust margins, triggering a bidding war for light barrels.Regardless, the disappearing discount offers a partial reprieve for large producers after the past year slashed global oil prices by as much as 60 percent to six-year lows.Thanks to the stronger differentials, Bakken crude BAK- has risen 54 percent from its mid-March low, whereas U.S. WTI prices CLc1 are up only 37 percent

Federal fracking rule to cost ND income, jobs -- If new federal hydraulic fracturing regulations go into effect later this month, North Dakota could potentially lose 1,900 jobs and $300 million annually in oil income, reports the Forum News Service (FNS). The federal rules set to take effect June 24 include new standards for constructing wells and for disclosing the chemicals used during the hydraulic fracturing process. A preliminary injunction has been filed by North Dakota against the Bureau of Land Management in an attempt to delay the rules from going into effect until the court is able to review a lawsuit filed by North Dakota, Wyoming and Colorado.  A hearing is scheduled for June 23 in the Casper, Wyoming, U.S. District Court. As reported by the FNS, North Dakota Industrial Commission member and Attorney General Wayne Stenehjem will attend the meeting. He said the federal rule would disrupt North Dakota oil and gas development and result in lost mineral royalties and tax incomes in the next fiscal year. In North Dakota, oil and gas activity on federal lands such as the Fort Berthold Indian Reservation account for roughly 40 percent of overall production. State officials, who favor state regulation, claim the BLM rules would create lengthy permitting delays. On Wednesday Stenehjem told the FNS, “We simply feel that our rules are better, they are effective and we are much better and much more capable of actually enforcing them than they are.” Department of Mineral Resources Director Lynn Helms believes that 10 of 22 companies with major operations on federal and tribal lands would most likely leave the state if the rules are implemented. As a result of this emigration, the state would lose 1,900 jobs and as much as $9.4 billion in royalties and taxes.

Bakken pipeline: Sandpiper one step closer to reality --The proposed Enbridge Sandpiper pipeline is one step closer to becoming a reality after the Minnesota Public Utilities Commission granted the project one of two necessary permits, reports the Dickinson Press. The pipeline, which has faced scrutiny and many protests in the state, was granted a certificate of need last week after Enbridge subsidiary North Dakota Pipeline Company illustrated its need to ship crude oil from the Bakken oil patch to existing Enbridge pipeline infrastructure in Superior, Wisconsin. The certificate approves a 24-inch diameter pipeline capable of carrying 225,000 barrels of oil per day (bopd) from the North Dakota border to a terminal located in Clearbrook, Minnesota. It also granted approval of a 30-inch pipeline capable of transporting 375,000 bpod from the Clearbrook location to Superior. The cost for the project is estimated to be approximately $2.6 billion and is projected to begin operations by the summer of 2017.As reported by the Dickinson Press, Enbridge spokesperson Lorraine Little said, “Enbridge is pleased with the Minnesota Public Utilities Commission’s unanimous decision to grant a certificate of need for the Sandpiper Pipeline Project. Sandpiper has broad and deep support throughout Minnesota as evidenced by the supporters who attended public hearings on the project earlier this year and by the thousands of others – including 65 Minnesota legislators and the majority of the county commissions along the route – who have expressed their support of Sandpiper.”

Bakken oil would benefit from export sales, economist says -- Bakken oil production will be around for years, but some political strings are going to have to be pulled to drive up sweet crude prices before things pick up, according an industry analyst. Rayola Dougher, of the American Petroleum Institute, met with Montana farmers in Sidney on Wednesday to talk oil and agriculture. Oil, natural gas and the fertilizer that comes from refining play major roles in farm production costs. In Bakken country, oil and farm interests are folded together. Dougher said its possible to have the higher crude prices the Bakken oil economy needs and still keep fuel affordable for farmers. API is lobbying Congress to waive the export ban on American oil, refineries located outside the United States and dependent on sweet crude would be willing to pay more for Bakken oil if they could get it, Dougher said, because their refining costs would go down. Adding more Bakken oil to the global mix would at the same time lower the average price for oil, including heavy crude, which is what most refineries in the United States are designed to refine.

Shale Oil Bomb Trains Kill Without Exploding - They just gas you with vented toxic gases. (If they didn’t vent they’d explode.) Then they choke you with diesel exhaust.  Surprise.  Bomb trains are killing people without exploding according to a new article. They do so by polluting the air in the communities they travel through. A shale oil bomb train is pulled by diesel engines that have no pollution controls. These are massive two stroke diesel engines,  similar to the outlawed two stroke lawn mowers – and nothing like the four stroke gasoline engines on a car with a catalytic converter. One diesel engines puts out the particulate pollution of thousands of cars or hundreds of trucks. Since they are not pressurized cars, they have pressure relief valves (PRVs) that vent pent up vapors, such as benzene, radon, methane etc.  If there are fifty shale oil tank cars on a siding in a residential neighborhood on a hot day, they are gassing the locals by venting toxic fumes into the atmosphere. Even without the diesel engines. How many of these shale oil bomb train cars a day do you want in your neighborhood/town/state/ planet ?

Oil drilling in Montana taps out -- Oil drilling in Montana has all but tapped out, according to state records showing that the state has been without a major drilling rig since April. Observers said the inactivity is due to low oil prices, which have also slowed drilling activity in North Dakota’s much more active Bakken formation, though crews are still drilling there. Montana drilling has been very limited during the Bakken oil boom, but it’s been decades since the state was without a single drilling rig. State Board of Oil and Gas officials suspect that Montana might have been without a drilling rig in 2009, though Rep. Tom Richmond, R-Lockwood, said it’s been much longer since the state experienced a drilling drought. Richmond was Board of Oil and Gas director before retiring last year. “We might have got close in 2009, but I’m thinking it was probably some time in the 1990s when it was zero,” Richmond said.  States keep weekly reports about intentions to drill, but the source to which many insiders defer is Baker Hughes.

5 'Raging Grannies' arrested in anti-Shell protest at Terminal 5 --  Five members of the Seattle activist group the “Raging Grannies” were arrested by police Tuesday morning during a protest outside Terminal 5. But it wasn’t easy. The women, dressed in long skirts and sun hats and sipping from porcelain teacups, were bound together by so-called “sleeping dragons,” makeshift sleeves constructed with materials designed to make their removal difficult and time-consuming. The “grannies” were part of two simultaneous protests against Shell’s offshore oil rig, which is at the terminal being prepared for Arctic drilling this summer. While a group of younger protesters camped out on an overpass above, with two heavy oil drums and signs, the grannies chained their wooden rocking chairs together on the BNSF Railway tracks below. The women were also bound together by the homemade arm sleeves. Seattle police Lt. Jim Arata warned the younger protesters that they had to move their oil drums and get off the overpass above Terminal 5, or face arrest. When the department’s Apparatus Response Team (ART) pulled up with a truck full of saws, jackhammers and other heavy-duty tools in case the protesters were chained to the oil drums, the protesters got up and walked away. The five grannies, on the other hand, stayed put when the team arrived. The department formed ART during Seattle’s 1999 WTO riots as a specialty team trained to safely remove protesters who chain themselves to objects or each other, Arata said.

44% of coastline clean after Santa Barbara County oil spill, officials say: More than 40 miles of California coastline has been cleared of oil from the Plains All American Pipeline oil spill off Santa Barbara County, officials say. Cleanup crews have cleared 44% of 96.5 miles of shoreline from Santa Barbara and Ventura counties – mostly sandy beaches that had only trace amounts of oil, according to a statement from the oil spill’s joint information center released Sunday. But other sections of rocky beach will have to be more meticulously cleaned by hand crews while a handful of boats sail off the coast to ensure no more oil washes ashore onto the cleaned areas, officials said. About 14,267 gallons of oil-water mix has been recovered. On May 19, an estimated 101,000 gallons of crude gushed from a rupture in a 10.6-mile-long pipeline and spilled up to 21,000 gallons of it into the Pacific Ocean near Refugio State Beach. Authorities say 136 birds and 67 mammals have been found dead since the spill. A review of the damaged pipeline by the federal Pipeline and Hazardous Materials Safety Administration found that corrosion had eaten away nearly half of the pipe’s metal wall. Regulators said an inspection by third-party metallurgists revealed metal loss of greater than 45% of the pipe wall's thickness in the area of the break. The 10.6-mile pipeline had “extensive” external corrosion, and the thickness of the pipe's wall where it broke had degraded to an estimated one-sixteenth of an inch, the pipeline agency said. Investigators found a 6-inch opening along the bottom of the pipe where it broke.

Editorial: Oil spill inquiries show the need for real oversight – Sacramento Bee - Though federal investigators have yet to pinpoint the precise cause of last month’s Santa Barbara oil spill, the basic story is becoming less and less mysterious. The federal Pipeline and Hazardous Materials Safety Administration revealed last week that the 28-year-old pipeline, buried just inland from a coastal paradise of beaches, had been severely eaten away by rot and corrosion. Unaddressed was who let it get to that point. Refugio State Beach lies on an immaculate stretch of shoreline. It has been at risk for as long as oil development has gone on off the mineral-rich Santa Barbara coast. We know this; California’s environmental movement grew out of the 1969 Santa Barbara oil spill. In fact, the pipeline that ruptured was built as an environmentally responsible alternative in crude oil transport. According to the Santa Barbara Independent, inland pipes were thought to be easier to secure than the potentially leaky oil tankers that the industry used to move cargo along the coast. But even best practices require policing. And records show that the federal regulators — and state fire marshals who, for a time, were deputized to do the federal inspections — clearly failed to force Plains All American Pipeline, the conduit’s Texas-based owners, to do proper maintenance.

Offshore oil drilling banned along new stretch of California coast as Obama administration doubles size of marine sanctuaries -  In the largest expansion of national marine sanctuaries in California in 23 years, the Obama administration on Tuesday more than doubled the size of two Northern California marine sanctuaries, extending them by 50 miles up the rugged Sonoma and Mendocino coasts. Under the dramatic move by the National Oceanic and Atmospheric Administration, the boundaries of the Gulf of the Farallones and Cordell Bank national marine sanctuaries expand from Bodega Bay to Point Arena, permanently banning offshore oil drilling along that stretch of coast. “These waters represent an extraordinary marine ecosystem, one of the richest on our planet,” said Maria Brown, NOAA’s superintendent of the Farallones sanctuary, headquartered in San Francisco. The announcement marks the largest expansion of national marine sanctuaries in California since President George H.W. Bush established the Monterey Bay National Marine Sanctuary in 1992.

Groups Oppose Plan to Open Over a Million Acres of Federal Property in California to Drilling and Fracking — A lawsuit filed today by environmental organizations seeks to block a federal plan to open up more than a million acres of public land and mineral rights in central California to drilling and fracking. Earthjustice filed the suit against the Bureau of Land Management in the Central District of California, Western Division, on behalf of the Center for Biological Diversity and Los Padres ForestWatch. The groups are suing BLM for approving a resource management plan that would allow oil and gas drilling and fracking on vast stretches of public land and mineral rights across California’s Central and San Joaquin valleys, the southern Sierra Nevada, and in Santa Barbara, San Luis Obispo and Ventura counties along California’s central coast. In 2013, a federal judge ruled BLM violated the law when it issued oil leases in Monterey County without considering the environmental risks of fracking. Today’s lawsuit points out that BLM failed to consider a reasonable range of alternatives and failed to adequately analyze and disclose the impacts of fracking on air quality, water, and wildlife, in violation of the National Environmental Policy Act. BLM’s resource management plan opens federal land to fracking without any meaningful analysis of fracking-related risks, including the use of toxic chemicals and pollution threats to California’s precious water supplies during an historic drought.

Trans-Alaska pipeline will go offline for summer maintenance starting Friday -- The trans-Alaska pipeline will shut down starting Friday for 36 hours of scheduled summer maintenance. Meantime, pipeline operator Alyeska Pipeline Service Co. is assessing the best way to fix a “weeping joint” discovered along an underground section of the line. The “weep” at a pump station between Delta Junction and Glennallen — with crude leaking a rate of 1 teaspoon each day — is contained and under constant monitoring, said Michelle Egan, corporate communications director for Alyeska. It’s falling into a drip pan when an employee isn’t wiping off accumulated oil with a rag, she said. The leak will be fixed after the shutdown, she said. Maintenance conducted during a shutdown involves multiple organizations and projects, with planning taking place over several months, she said. “It’s more prudent for us to go through the work we have planned,” she said. “There’s no reason this has to be addressed in this shutdown.” The leak appears to have been caused by possibly degraded material that separates the steel pipe from a steel fitting. More investigation will determine the cause, said Egan.

EPA's draft of four-year fracking study finds no inherent water risks -Back in 2011, the US Environmental Protection Agency (EPA) announced an effort to evaluate the publicly controversial technique of fracking, in which fluid pumped at pressure fractures rock that contains trapped natural gas or oil. Lots of research has been published since then, and the EPA has finally released a draft of its report for public comment and peer review.  The report is a useful summary of the practices being employed in fracking and the available data relating to concerns about contamination.   The report touches on every stage of the fracking process, from acquiring the water used to disposing of it afterward. It takes about four million gallons of water to frack a natural gas well, and almost 30,000 new wells are being drilled each year in the US. Overall, this adds up to a pretty insignificant sliver of our water use, but there are some areas where it is problematic.  Much of the scrutiny on fracking is focused below-ground, but the everyday handling of fluids above ground obviously runs the risk of spills. Estimates are spotty, but something like one to 10 percent of wells have had a surface spill of some volume—either water or chemicals getting ready to go down the well or water that has come back up. About eight percent of the spills the EPA surveyed made it into surface water or groundwater, and some of the others will have resulted in soil contamination that had to be dealt with. Open pits have been used in some instances to hold fluid at the surface, and these have sometimes resulted in contamination as well.  Much of the report details what we know about the potential for groundwater contamination from the natural gas wells themselves. It lays out all the potential pathways for that contamination, such as the different ways water or gas can leak from wells. As research has made clear, it’s very unlikely that fracturing the hydrocarbon source rock allows gas or fracking fluid to migrate into drinking water aquifers. (There are some instances where the geology is not so protective, though.) Instead, it’s the seal around the gas well that is the weak link in the chain.

Awkward: Day After EPA Finds Fracking Does Not Pollute Water, Top Oil Regulator Resigns Over Water Contamination -- Put this one in the awkward file: just hours after the EPA released yet another massive study (literally, at just under 1000 pages) which found no evidence that fracking led to widespread pollution of drinking water (an outcome welcome by the oil industry and its backers and criticized by environmental groups), the director of the California Department of Conservation,  which oversees the agency that regulates the state's oil and gas industry, resigned as the culmination of a scandal over the contamination of California's water supply by fracking wastewater dumping. Tom Burke, science adviser and deputy assistant administrator of the EPA's Office of Research and Development, told NPR that "we found the hydraulic fracturing activities in the United States are carried out in a way that has not led to widespread systemic impacts on drinking water resources. In fact, the number of documented impacts to drinking water resources is relatively low when compared to the number of fractured wells." In retrospect the EPA surely wishes it had picked a slightly different time and date to release its "imparial" results because less than 24 hours later on Friday afternoon, Mark Nechodom, director of the California Department of Conservation who was appointed by governor Jerry Brown three years ago, abruptly resigned following an outcry over oil companies injecting their wastewater into Central Valley aquifers that were supposed to be protected by law.

EPA Divided Over Fracking? - The EPA’s new report on fracking, which found no “evidence that these mechanisms have led to widespread systemic impacts on drinking water,” sparked a heated debate between FBN’s Stuart Varney and “Gasland” director Josh Fox. “Gasland” director Josh Fox argued “the EPA issued something of a retraction of that statement this weekend, because it lead to a lot of false reporting on the subject,” and charged that the Obama Administration supports fracking, and therefore the EPA is burying the lede on its findings. “What we are actually seeing here is a pattern within the Obama Administration specifically with regards to fracking and the EPA…Within the report is actually really damning evidence about fracking contaminating [ground water] Pennsylvania…Texas,” said Fox.  Varney had a different take.“Wasn’t that the actual way that fracking was conducted? It was [mistakes made] in how fracking was done as opposed to the whole process?” asked Varney. “No, what the report says is that fracking contaminates … ground water,” said Fox. “What the EPA has done time and time again on this issue, is issue a scientific report, which has actual science in it, and then slap on the top of it a press release or statement that says ‘Oh nothing really to see here,’” argued Fox. “Hold on a second,” said Varney. “Why would the EPA – which I thought was definitely anti-fracking, they don’t want you to frack – why would they come out with a 1,300 page report which concludes ‘we did not find evidence that these mechanisms [have any widespread, systemic impacts on drinking water?]” asked Varney.  Fox claimed the EPA is working to dumb down its own science on fracking to stay in line with the Obama administration’s agenda.

EPA Fracking Report Leaves Both Sides Claiming Victory - Both the energy industry and environmentalists are welcoming a report by the U.S. Environmental Protection Agency (EPA) that hydraulic fracturing, or fracking, has the potential to contaminate drinking water, but that there’s no evidence that the problem so far has been widespread. Five years ago Congress asked the EPA to study the issue, and on June 4 the agency’s Office of Research and Development (ORD) issued the document, which identifies only “specific instances where one or more mechanisms led to impacts on drinking water resources, including contamination of drinking water wells. The number of identified cases, however, was small compared to the number of hydraulically fractured wells.”  EPA spokesman Thomas Burke said the $30 million study “greatly advances our scientific understanding of fracking’s impacts, and it serves as a foundation for future study.” The report said that from 2000 to 2013 there were 6,800 sources of drinking water situated within one mile of a fracked well. “These drinking water sources served more than 8.6 million people year-round in 2013,” it said.  The U.S. energy industry and its allies welcomed the report. One representative, Erik Milito, director of the Upstream Group  of the American Petroleum Institute, said it “confirms what the agency has already acknowledged and what the oil and gas industry has known. Hydraulic fracturing is being done safely under the strong environmental stewardship of state regulators and industry best practices.” Environmentalists also embraced the report, but for a different reason: the potential for broader water contamination. “The assessment smashes the myth that there can be oil and gas development without impacts to drinking water,” said John Noel of Clean Water Action.

Did the EPA just say fracking is safe? Depends who you ask. - The Environmental Protection Agency’s recent report on hydraulic fracturing, more commonly known as fracking, may have given oil and gas companies cause for celebration, but the report’s conditions and exceptions drew enough attention to keep the debate alive. Proponents of fracking rejoiced at the EPA’s announcement that it “did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States.” Erik Milito, director of Upstream and Industry Operations at the American Petroleum Institute, said the victory for oil and gas companies came as no surprise. “After more than five years and millions of dollars, the evidence gathered by EPA confirms what the agency has already acknowledged and what the oil and gas industry has known,” he said in an API press release.  While the report’s results initially sounded promising, critics latched onto the “but:” the EPA listed several ways in which fracking could potentially contaminate drinking water, and said that in a number of cases, water was, in fact, affected. Though cases in which drinking water was impacted were small in number compared with the sample size of cases studied overall, the EPA said the proportion could be inaccurate, a result of insufficient data and other limitations to the study. Michael Brune, executive director of environmental group The Sierra Club, was quick to cite the study’s results as a condemnation of fracking."The EPA's water quality study confirms what millions of Americans already know – that dirty oil and gas fracking contaminates drinking water," Brune said, according to The New York Times.

Why shale producers are happy with this EPA fracking study - The energy industry agrees with the U.S. Environmental Protection Agency — at least when it comes to the findings of an EPA study on hydraulic fracturing.  Michael Krancer, partner and chair of the energy industry team at law firm Blank Rome LLP, said a draft report on the EPA study shows that fracking is “safe,” with “no widespread issues.” Here’s what the EPA draft report released last week officially says: “There are above- and below-ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources.”  But the EPA did “not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States. Charles Perry, chief executive officer of energy-consulting firm Perry Management, said the report will “greatly benefit the oil producers.” The report makes “investors feel there will unlikely be any moves by the U.S. government to limit shale production and big frack jobs,” he said. That’s important for the shale industry. The U.S. government estimated that shale output accounted for about 49% of total U.S. crude production in 2014 and around 47% of total U.S. dry natural-gas production in 2013. A look at the benefits versus the risks show that it’s best to “embrace this technology,” as long as there’s strict oversight to make sure companies are doing things the right way, since mistakes “will be used as an excuse to hold back our economy,”

Leading Environmentalist: EPA an Oil Industry Mouthpiece - Anti-energy activist and documentarian Josh Fox believes the Obama administration’s Environmental Protection Agency is shilling for fossil fuel companies. “They will stick with the industry till all our water is contaminated, our air polluted and climate change has made our planet unlivable,” the filmmaker director said on Friday following the release of a widely anticipated EPA study on the environmental impacts of hydraulic fracturing, or fracking. The innovative oil and gas extraction technique has no “widespread, systemic impacts on drinking water,” the agency found. There were isolated incidents of water contamination among the wells tested, but “the number of identified cases … was small compared to the number of hydraulically fractured wells.”  Fox dismissed the findings in a column on the website EcoWatch.“What the EPA presented to the public yesterday was PR, not science and proof of the widespread, systemic contamination of our regulatory bodies by the oil and gas industry,” Fox wrote.“It is clear that EPA is a political agency not a scientific one,” he wrote on Twitter. Fox is one of the country’s most high-profile anti-fracking activists. His 2011 documentary Gasland was nominated for an Academy Award for Best Documentary and won a number of other awards.

Newsweek, Wash. Times Publish False Headlines About EPA Fracking Study -- Within hours of the Environmental Protection Agency (EPA) releasing a study on hydraulic fracturing, or "fracking," Newsweek and The Washington Times published online articles with headlines that falsely claimed the EPA determined fracking does not pollute drinking water. However, while the EPA said it found no evidence that fracking has led to "widespread, systemic impacts on drinking water resources in the United States," the study also identified "specific instances" where fracking "led to impacts on drinking water resources, including contamination of drinking water wells."   In its headline, Newsweek asserted: "Fracking Doesn't Pollute Drinking Water, EPA Says." The Washington Times' similar headline, "EPA: Fracking doesn't harm drinking water," was also adopted by The Drudge Report, a highly influential conservative news aggregator.  But the EPA study said none of those things. Rather, the EPA concluded:  From our assessment, we conclude there are above and below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources. These mechanisms include water withdrawals in times of, or in areas with, low water availability; spills of hydraulic fracturing fluids and produced water; fracturing directly into underground drinking water resources; below ground migration of liquids and gases; and inadequate treatment and discharge of wastewater. We did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States. Of the potential mechanisms identified in this report, we found specific instances where one or more mechanisms led to impacts on drinking water resources, including contamination of drinking water wells. The number of identified cases, however, was small compared to the number of hydraulically fractured wells.

Here’s What Most Media Outlets Left Out of Their Reporting on EPA Fracking Study --The EPA emphasized that the lack of evidence of “widespread” drinking water impacts could be due to “limiting factors,” and that “data limitations” prevent the agency from having “any certainty” of how often fracking actually impacts drinking water: This finding could reflect a rarity of effects on drinking water resources, but may also be due to other limiting factors. These factors include: insufficient pre- and post-fracturing data on the quality of drinking water resources; the paucity of long-term systematic studies; the presence of other sources of contamination precluding a definitive link between hydraulic fracturing activities and an impact; and the inaccessibility of some information on hydraulic fracturing activities and potential impacts.  InsideClimateNews published a lengthy investigation about the many factors preventing the EPA from conducting a comprehensive study of fracking’s impact on drinking water. The investigation which was based on a review of internal EPA documents and interviews with people who had knowledge of the study, noted that geochemist Geoffrey Thyne said the EPA study was “not going to produce a meaningful result,” and that “[m]ore than a half-dozen former high-ranking EPA, administration and congressional staff members echoed Thyne’s opinion, as did scientists and environmentalists.” InsideClimateNews further detailed how the oil and gas industry had prevented the EPA from conducting the prospective studies necessary to determine fracking impacts: The EPA’s failure to answer the study’s central question partly reflects the agency’s weakness relative to the politically potent fossil fuel industry. The industry balked at the scope of the study and sowed doubts about the EPA’s ability to deliver definitive findings. In addition, concerns about the safety of drinking water conflicted with the Obama administration’s need to spur the economy out of recession while expanding domestic energy production.

Josh Fox Gets Kicked Off of Fox News While Exposing Misleading Coverage of EPA Fracking Report - Josh Fox was kicked off of Fox’s Varney and Co. this morning after he called out host Stuart Varney on his hypocritical stance on fracking. Varney said he wouldn’t frack his own land in upstate New York because it’s in a “watershed” but promoted, on air, last week (while not letting Sandra Steingraber finish a sentence) that we should frack the rest of New York. When Fox called him out on the hypocrisy and questioned Varney’s claim that he lit his tap water on fire, Varney became irate and told Josh, “The interview is over. You are outta here young man.” “If you said to me earlier that you would not want fracking in your own neighborhood, it’s irresponsible for you to say on air that the rest of America should frack,” Fox can be heard saying to Varney as he’s being faded out. Fox was on the program to address untrue headlines most of the mainstream media ran with claiming fracking was safe, following the release of a long-awaited U.S. Environmental Protection Agency (EPA) report on the practice. In the report, the U.S. EPA publicly confirmed for the first time that fracking contaminates groundwater. However, the EPA’s press release led with the misleading headline saying that EPA has found no “widespread” evidence of water contamination.As Fox explains on the show this is not the first time we’ve seen the EPA release a report where the science says one thing and then their PR department slaps on a press release that says something else.

In Response to Controversial EPA Fracking Report, Bill Introduced to Close Loopholes and Protect Water -- The release last week of a report by the U.S. Environmental Protection Agency (EPA) on the danger to drinking water supplies from fracking has stirred up quite a bit of debate. It’s been spun by fracking supporters as vindicating them, since it said it did not find “widespread, systemic impacts on drinking water resources in the United States.” But fracking opponents have pointed to its conclusion that the proximity of drinking water supplies to fracking operations and the incidents that have already occurred indicate a crisis in the making, and that these operations pose a significant risk to human health and the environment. They also noted that the report drew on insufficient and voluntary data. Regardless, the report has focused attention on the fact that oil and gas drilling operations were exempted from the Clean Water Act of 1972 by amendments added to the bill in 1987 and 2005. The amendments let the oil and gas industry circumvent permitting regulations that other industries are required to follow to protect waterways, despite fracking’s extensive use of toxic chemicals and the proximity of its operations to water sources. Yesterday, Sen. Ben Cardin of Maryland moved to close that loophole by introducing the FRESHER Act (Focused Reduction of Effluence and Stormwater runoff through Hydraulic-fracturing Environmental Regulation). It removes the exemption from oil and gas companies engaged in fracking and sets consistent national standards to protect water by requiring them to have a plan to protect streams from runoff before acquiring a permit.

Fracking group hopes memes, BuzzFeed-like website can help industry - A new website backed by the oil and gas industry hopes its Buzzfeed-y Hollywood-inspired memes can help sway anti-fracking attitudes. uses listicles and a meme gallery to attack those opposed to oil and gas drilling. There's pictures with short lines of pithy text featuring cartoon and movie characters, environmentalists, President Barack Obama – even the anti-fracking celebrity chef Mario Batali, which the meme admonishes for wearing Ugg shoes, which are made in part by natural gas components.

Harvard University economist says fracking can had millions of jobs, help renewable industry in the next 15 years -  New research from a Harvard University economist says hydraulic fracturing-led oil and gas activity can add millions of jobs – and even help grow the renewable energy industry by 2030. "Our analysis shows that developing unconventional resources today is unlikely to delay the rollout of renewables. Instead, it can actually enable their scale-up," says the report from the Harvard Business School and Boston Consulting Group.  Harvard economist Michael Porter told NPR such drilling "is a game changer" and already a big part of the country's gross domestic product. "It's at least as big as the state of Ohio," he said. "We've added a whole new major state, top-10 state, to our economy." Ohio grew its gross domestic product 2.1 percent in 2014 to $583 billion. The report says natural gas-powered plants, which are fast replacing coal plants, is the best way to lessen greenhouse gas emissions while renewables, which don't have the storage capacity of gas or coal, are built up. A different economist interviewed by NPR expressed skepticism at the report, noting that U.S. drilling and related companies have lost tens of thousands of jobs in the wake of the industry downturn, which has caused activity across the U.S., including Ohio's Utica shale play, to falter.

What Is the TPP and Why Is it so Bad? -- The Sierra Club put together a video to help explain in simple terms why the Trans-Pacific Partnership (TPP) would threaten our ability to tackle climate change. The minute-and-a-half video, released yesterday, is part of the organization’s campaign to demand fair trade, not toxic trade.  The video shows how the TPP, a massive proposed trade deal with 11 other Pacific Rim nations “would empower multinational corporations to sue the United States government in private trade courts over domestic laws.” It would also “require the U.S. Department of Energy to automatically approve all exports of natural gas to countries in the pact, opening the floodgates to fracking across the U.S.” The video ends by saying, “This is just some of what we know about the TPP. What lurks in the shadows of the pact may be even worse. The time has come to build a new model of trade that puts communities and our environment above corporate profits.”  “In under two minutes, this video tells the truth about a trade deal that the U.S. Trade Representative is hiding from the public” said Ilana Solomon, director of the Sierra Club’s Responsible Trade Program. “Clean air, clean water and climate activists around the world can help bring this environmental disaster into the light of day by watching and sharing this video.” Watch here:

U.S. Shale Oil Boom Grinds to a Halt as OPEC Keeps Pumping - The shale oil boom that turned the U.S. into the world’s largest fuel exporter and brought $3 gasoline back to America’s pumps is grinding to a halt. Crude output from the prolific tight-rock formations such as North Dakota’s Bakken and Texas’s Eagle Ford shale will shrink 1.3 percent to 5.58 million barrels a day this month, based on Energy Information Administration estimates. It’ll drop further in July to 5.49 million, the lowest level since January, the agency said Monday. With the Organization of Petroleum Exporting Countries maintaining its own oil production, U.S. shale is coming under pressure to rebalance a global supply glut. EOG Resources Inc., the country’s biggest shale-oil producer, hedge fund manager Andrew J. Hall and banks including Standard Chartered Plc have forecast declines in U.S. output following last year’s plunge in crude prices. The nation was still pumping the most in four decades in March. “Production has to come down because rigs drilling for oil are down 57 percent this year,” . “Countering that is the fact that the rigs we’re still using are more efficient and drilling in areas where you get higher production. So that has delayed the decline.” Despite the U.S. oil rig count falling for 26 straight weeks, domestic crude production surged 126,000 barrels a day, or 1.3 percent, to 9.53 million in March, the most since 1972, Energy Information Administration data show.

Is the Fracking Boom Coming to an End? -- Since fracking began its boom period in the last decade, its supporters have promoted it as the answer to all of  the U.S.’s energy issues. It would free us from dependence on foreign oil, they said, thereby strengthening national security. And in fact, the U.S. has become the world’s largest exporter of fossil fuels, while prices at the gas pump have dropped steeply as fracked oil and gas production has exploded. States like Texas, Colorado, North Dakota, Pennsylvania and Ohio have welcomed frackers to their shale deposits, even though others, such as New York and Maryland, have resisted the lure due to concerns about fracking’s impacts on human health and the environment. But could the gravy train be derailing? While production is still at record levels, there are signs that should worry any company or economy that is heavily invested in the fracking process.  Compared to conventional wells, fracked wells tend to be initially productive but taper off quickly and then are shut down as operators move to new locations. And that is starting to catch up with them.“Production has to come down because rigs drilling for oil are down 57 percent this year,” James Williams, president of Arkansas-based energy consultancy WTRG Economics, told Bloomberg News. “Countering that is the fact that the rigs we’re still using are more efficient and drilling in areas where you get higher production. So that has delayed the decline.” According to the U.S. Energy Information Administration (EIA), some of the largest shale deposits will see a downturn in their output, and very soon. Output will shrink 1.3 percent this month. Texas’ Eagle Ford shale deposit will be pumping 49,000 barrels less a day in July, the EIA projects, while North Dakota’s Bakken shale region will lose 29,000 barrels a day. Overall, the EIA is projected that fracking will fall by 93,000 barrels a day in July, the biggest drop since the onset of the boom in 2009.

100 Scientists Call For A Halt On Tar Sands Development -- The scientists published a consensus statement laying out 10 reasons why mining of tar sands — an energy source that’s found largely in Alberta, Canada’s Athabasca region and whose mining has led to significant deforestation and forest degradation in the province — needs to be halted. Those reasons — all of which were backed up by scientific research — included findings that the expansion of tar sands development would slow North America’s move to clean energy, that environmental protections on tar sands development were lacking, and that less than 0.2 percent of the region affected by tar sands mining had been reclaimed. “If Canada wants to participate constructively in the global effort to stop climate change, we should first stop expanding the oil sands. More growth simply shows Canada has gone rogue,” Thomas Homer-Dixon, professor of governance innovation at Ontario’s University of Waterloo, said in a statement.  The scientists also singled out the impact tar sands development has on the local environment in their statement. “Independent studies have demonstrated that mining and processing Albertan oil sands releases carcinogenic and toxic pollutants (e.g., heavy metals, polycyclic aromatic compounds) to the atmosphere from smoke stacks and evaporation, and to groundwater from leaching of tailings ponds,” they wrote. “This pollution harms terrestrial and aquatic ecosystems and the species within them.” This pollution also has a major impact on the native communities that live near tar sands development. The community of Fort Chipewyan, Alberta, home to the Athabasca Chipewyan First Nation (ACFN) and the Mikisew Cree First Nation, has been dealing with the tar sands contamination of the nearby wildlife for years. That contamination affects both tribes’ food source and traditional way of life, which is centered around hunting and fishing. Still, the Canadian government has long disputed that the contamination of the community comes from the tar sands.

Busting The "Canadian Bakken" Myth -- The financial pages of Canadian newspapers have been full of headlines lately announcing the potential of two large shale oil fields in the Northwest Territories said to contain enough oil to rival the Bakken Formation of North Dakota and Montana.  The report by Canada’s National Energy Board (NEB) evaluated, for the first time, the volume of oil in place for the Canol and Bluefish shale formations, located in the territory’s Mackenzie Plain. It found the “thick and geographically extensive” Canol formation is expected to contain 145 billion barrels of oil, while the “much thinner” Bluefish shale contains 46 billion barrels.  The report did not estimate the amount of recoverable oil, but points out that even if one percent of the Canol resource could be recovered, that represents 1.45 billion barrels. The calculation immediately had reporters comparing Canol and Bluefish to the Bakken, where the latest USGS estimate shows 7.4 billion barrels of technically recoverable oil (this includes the Three Forks Formation underlying the Williston Basin straddling North Dakota, Montana, Saskatchewan and Manitoba). “Northwest Territories sitting on massive shale oil reserves on par with booming Bakken field in U.S.,” enthused the Financial Post. “NEB and GNWT study finds 200 billion barrels of oil in the Sahtu,” gushed CBC News, referring to a region of the sprawling territory that cuts across three provinces and touches the Arctic Ocean. In truth, energy industry followers would do better to read a more subdued story in Bloomberg News, titled “Drop in oil prices means no drilling in Canada's biggest shale reserves.” Because while the report from the NEB does indeed point to a very large pool of potential shale oil, getting it out of the ground will be no small feat, especially at today's prices.  Knowledgeable oilmen like Hogg told Bloomberg that exploring the Canol costs three to four times more than in northeast British Columbia, where the Montney Basin has been a hot zone of oil and gas exploration recently. That's because the region lacks key infrastructure. A winter road is the only means of trucking drilling equipment to the Mackenzie Valley, with no all-weather road linking the potential oilfields to southern Canada.

UK Oil & Gas in the ground -- UK Oil & Gas, the company at the heart of a collection of companies associated with David Lenigas and the Horse Hill project to explore oil under Gatwick, has announced discussions about raising at least £4.5m from shareholders.  The move follows the release of the executive summary of a report by reputable oil services group Schlumberger about what resources may lie under the patch of South East England. It says confidential down the side, but we checked with Schlumberger and they gave permission to publish.  There is no question that there are billions of barrels of oil beneath southern England, but how much could be technically or profitably produced remains extremely uncertain. What we are talking about, really, is fracking. So add to the reading list the recent presentation by David Einhorn’s Greenlight Capital on the US fracking companies, which he argues were not economically profitable even at $100 per barrel of oil. What has sustained the industry is cash provided by Wall Street and spent drilling holes in the ground.The large oil frackers have spent $80 billion more than they have received from selling oil. Wall Street greased those skids by underwriting debt and equity securities that allowed them to garner billions in fees.The banks are clearly incentivized to enable the frack addicts. What’s less obvious is whether investors are furnished a clear analysis of the returns these companies actually generate.

US rig count seen bottoming out soon, recovering towards year-end --The U.S. drilling-rig count, which recorded its 26th straight weekly decline this week, is close to bottoming out ahead of a recovery in the second half of the year, mainly in the Permian and Eagle Ford shale plays in Texas, analysts said. Oil prices are expected to hold roughly at current levels over the next three to six months after OPEC agreed on Friday to stick by its policy of unconstrained output for another six months, but did not raise its output ceiling. That implied stability is expected to encourage drilling, especially in cost-efficient U.S. shale basins. More optimistic industry and equity analysts expect companies to put back to work up to 140 rigs by the end of the year. Most, however, expect the rig count to go up by about 50 if oil prices stay in the $55-$65 per barrel range. Brent crude hit a high of $63.43 on Friday. At the end of this week, 868 oil and gas rigs were working in the United States, including 27 offshore, according to oilfield services provider Baker Hughes Inc. That was the lowest number since January 2003, and down by seven from the previous week.

Crude Oil Jumps After API Reports Significant Inventory Draw -- While API and DOE data has not exactly been consistent recently, the fact that API reported a huge 6.7 million barrel inventory draw for the last week is significant. Of course, all eyes will be focused on production data tomorrow but for now, WTI prices are up at the highs of the day. WTI loves the news...For some context on the size of the draw... Charts: Bloomberg

Crude Soars Despite Record Saudi Production, Lowest China Demand Growth Since 1998 -- If Inventories down, then buy oil at the fastest pace in 2 months. That appears to be the algo logic as talking heads additionally blame Saudi airstrikes on Yemen for the over 6% surge in WTI in the last 2 days. However, as crude nears $62 (6 month highs) once again, we note that not only Saudi oil production just hit a new record high, but US production hit a new cycle high last week (DOE data today), and this is happening as China's energy demand grows at the slowest pace since 1998.  So slowing demand growth and soaring production...  means prices are ripping. This is happening as Saudi Oil Production hits a record high: Saudi Arabia increased its oil production to a fresh record in May as the kingdom stepped up its attempt to win back more customers and as Opec forecasts supply outside the group to fall in the second half of this year. The Kingdom's output in May reached 10.33m barrels a day, according to numbers submitted by Riyadh to Opec, confirming the widely held view that Saudi Arabia's production is heading higher, Anjli Raval, FT oil and gas correspondent writes. Saudi's oil output was 10.31m b/d in April, Riyadh told Opec.  While on the demand front, BP reports that demand growth was the lowest of the 21st century aside from the 2008 financial crisis: Global energy consumption growth slowed markedly last year to the lowest level since the late 1990s, apart from around the time of the financial crisis in 2008, BP said on Wednesday.

EIA: Crude oil inventories decline for sixth straight week - U.S. crude oil refinery inputs averaged 16.6 million barrels per day during the week ending June 5, 2015 , 169,000 barrels per day more than the previous week’s average. Refineries operated at 94.6% of their operable capacity last week. Gasoline production increased last week, averaging 10.0 million barrels per day. Distillate fuel production increased last week, averaging 5.1 million barrels per day. U.S. crude oil imports averaged over 6.6 million barrels per day last week, down by 750,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 7.0 million barrels per day, 2.3% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 666,000 barrels per day. Distillate fuel imports averaged 181,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 6.8 million barrels from the previous week. At 470.6 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 2.9 million barrels last week, but are in the upper half of the average range.  Distillate fuel inventories increased by 0.9 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.7 million barrels last week and are well above the upper limit of the average range. 

Crude Pops (On The Biggest Inventory Draw In 11 Months) & Drops (On Production Rise) --Following API's considerably larger than expeted inventory draw last night, DOE reported a huge 6.81 million barrel draw (against expectations of a 3.46mm barrel draw). This is the biggest inventory draw in 11 months. In addition production rose once again (up 0.25%) tonew record highs at 9.61mm bbl/day. Crude prices are holding gains after this.  Inventories plunged by the most in 11 months. And production rose once again... It seems the machines took a little time to read the production data... One wonders - if production is so high everywhere and inventories are being drawn down and tanker fees are stillhigh - is all this production just going into the storage/carry trade? Charts: Bloomberg

US oil and natural gas rig count drops by 9 to 859 - (AP) - Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. declined by nine this week to 859. Houston-based Baker Hughes said Friday 635 rigs were seeking oil and 221 explored for natural gas. Three were listed as miscellaneous. A year ago, with oil prices nearly double the current levels, 1,854 rigs were active. Among major oil- and gas-producing states, Alaska, Colorado, Kansas, New Mexico, Ohio, Texas, Utah and West Virginia each declined by one rig. Louisiana and Oklahoma both gained one rig apiece. Arkansas, California, North Dakota, Pennsylvania and Wyoming were unchanged. The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999.

US oil rig count falls for 27th straight week - The US oil rig count fell for a 27th straight week. The number of oil rigs in operation fell by seven to 635 this week, the lowest since August 6, 2010, according to data from driller Baker Hughes. The combined count fell by nine to 859. In the prior week, the number of oil rigs fell by four to 642, the lowest level since August 16, 2010. The combined count fell by seven to 868, the lowest level since January 24, 2003. Following the data, West Texas Intermediate crude oil gained slightly but was still down by less than 1%, near $60.36 per barrel. Production of crude oil is still on the rise despite the plunge in rig counts we've now seen for 26 straight weeks. In its short-term outlook released on Tuesday, the Energy Information Administration estimated that US oil production rose by 9.6 million barrels in May. That's about 400,000 barrels higher than the average production level in the fourth quarter of 2014. The EIA further forecast that US crude-oil production would begin to decline from this month until February 2016. Here's the latest chart showing the plunge:

EIA productivity report: Is it all downhill from here? -  Although the U.S. shale revolution has maintained impressive momentum over the course of the last year, depressed oil prices have taken their toll. The Energy Information Administration released its monthly drilling productivity report this week, and it has confirmed what many industry experts saw coming. With the exception of the Permian Basin, the U.S. has seen a drop in oil and gas production across the board in the major shale regions. According to Oilprice, the major shale plays in the U.S. will have decreased a projected 208,782 barrels of oil per day (bpd) by July, down from April’s peak of 5,694,580 bpd as production decreases took root shale by shale. Now, the last holdout is the Permian, where production has yet to decrease but has seriously plateaued.  The biggest factor in the downward trend is the decrease in legacy oil production, which the EIA report asserts is largely due to well depletion rates. The nation’s strongest areas saw the most troubling declines. The Bakken decreased 29,000 bpd from the previous month. The area’s peak point was at 1,311,703 bpd in March but will have decreased roughly 74,763 bpd by July. The Eagle Ford shale play has taken a massive hit as well. The region’s oil production has dropped 49,000 bpd from last month. The Eagle Ford peaked at 1,711,376 bpd back in March, but by July production will drop by 117,971 bpd. Although the Niobrara region isn’t the strongest oil producer in the country, it also saw a sharp decrease of 17,000 bpd from the previous month. With a peak of 459,861 bpd in March, the 49,712 bpd fall by July is perhaps even harder hitting for the smaller area. The lone wolf among the oil producers, the Permian shale play will actually see a 3,000 bpd increase month over month, and the EIA projects that the area will produce 2,059,851 bpd in July. However, production has been levelling out since the beginning of 2015. It is only a matter of time before the Permian caves to the trend and shows a decrease in production levels.

Global oil demand slowed to a crawl in 2014 – World oil demand grew by just 843,000 barrels per day (bpd) last year, the slowest pace for 14 years, outside U.S. recessions. Consumption increased by less than 1 percent to 92.1 million bpd in 2014, according to the BP Statistical Review of World Energy published on Wednesday. Demand in the advanced economies of North America, Europe and Asia has been declining for nine years and is now down by 5 million bpd since 2005. Over the same period, however, consumption in non-OECD economies has risen by almost 12.7 million bpd, according to BP. For the last decade, the non-OECD has absorbed all the growth in supply. In 2013 and 2014 emerging economies consumed more oil than the advanced economies for the first time. But last year the continued slide in OECD consumption (-475,000 bpd) was offset by relatively tepid growth in the non-OECD (+1.3 million bpd). Three years with oil prices consistently above $100 per barrel have prompted widespread measures to conserve fuel and switch to cheaper alternatives such as natural gas. The marked slowdown in global consumption occurred at precisely the same time oil supplies were soaring thanks to the shale revolution.

Why EIA, IEA, And BP Oil Forecasts Are Too High -- Gail Tverberg via Our Finite World blog, When forecasting how much oil will be available in future years, a standard approach seems to be the following:

  1. Figure out how much GDP growth the researcher hopes to have in the future.
  2. “Work backward” to see how much oil is needed, based on how much oil was used for a given level of GDP in the past. Adjust this amount for hoped-for efficiency gains and transfers to other fuel uses.
  3. Verify that there is actually enough oil available to support this level of growth in oil consumption.

In fact, this seems to be the approach used by most forecasting agencies, including EIA, IEA and BP. It seems to me that this approach has a fundamental flaw. It doesn’t consider the possibility of continued low oil prices and the impact that these low oil prices are likely to have on future oil production. Hoped-for future GDP growth may not be possible if oil prices, as well as other commodity prices, remain low.It is easy to get the idea that we have a great deal of oil resources in the ground. For example, if we start with BP Statistical Review of World Energy, we see that reported oil reserves at the end of 2013 were 1,687.9 billion barrels. This corresponds to 53.3 years of oil production at 2013 production levels. If we look at the United States Geological Services 2012 report for one big grouping–undiscovered conventional oil resources for the world excluding the United States–we get a “mean” estimate of 565 billion barrels. This corresponds to another 17.8 years of production at the 2013 level of oil production. Combining these two estimates gets us to a total of 71.1 years of future production. Given these large amounts of theoretically available oil, it is not surprising that forecasters use the approach they do. There appears to be no need to cut back forecasts to reflect inadequate future oil supply, as long as we can really extract oil that seems to be available. There is clearly a huge amount of oil available with current technology, if high cost is no problem. Without cost constraints, fracking can be used in many more areas of the world than it is used today. If more water is needed for fracking than is available, and price is no object, we can desalinate seawater, or pump water uphill for hundreds of miles.The amount of available future oil is likely to be much lower if real-world price constraints are considered.

OPEC's Oil Demand Growth Forecast Remains Unchanged - The Organization of the Petroleum Exporting Countries (OPEC) has left its demand growth forecast for crude oil unchanged. The organization on Wednesday said that it expects the current oversupply in the market to ease over the coming quarters. In the organization’s monthly market report, OPEC said oil demand growth in 2015 will remain unchanged at 1.18 million barrels per day. OPEC said its expectations of demand for its own oil this year remains at 29.3 million barrels a day — 300,000 higher than 2014. Risks in U.S. oil demand remain skewed to the upside as lower price environment plays a role in pushing up demand for transportation fuels that consume more gasoline such as SUVs and trucks. The organization believes non-OPEC crude oil output will remain unchanged at 680,000 barrels per day. The organization also said its own production rose by 24,000 barrels a day to 30.98 million barrels in May 2015. That output increased because of higher numbers from Iraq and Angola. Iraq produced 3.8 million barrels a day in May, up from 3.695 million barrels in the previous month. Saudi Arabia, the world’s largest oil exporter produced 10.333 million barrels a day last month, up from 10.308 million barrels a day in April. Even with demand outlooking unchanged and increasing supplies, OPEC believes the 2 million barrels a day of overproduction will “east in the coming quarters.” The report still suspects that U.S. production will decline in Q3 2015.

OPEC adjusts to new oil market reality -- OPEC has never really been a “cartel” in the conventional sense of an organization that agrees to restrict output to maximize revenues. So its decision on Friday not to cut production was entirely predictable and the only practical option open to its members. The strategy of maintaining production even as prices fall, led by the Saudis but now more or less embraced by most of the organization’s membership, is really the only sensible course. Most traders sense this: the price of Brent for delivery in December 2015 has been virtually unchanged since February and barely moved on Friday. If the organization was confronted by a temporary shortfall in demand it might make sense to cut output to secure more revenue. But faced with a permanent shock from the supply side, such as the shale revolution, and the permanent loss of demand from substitution and conservation, the organization’s only sustainable response is to continue pumping and allow the market to adjust. Attempts to buck the market always end in failure, a lesson top Saudi officials and others in OPEC have learned the hard way over the last 50 years.

OPEC Set To Continue Playing The Waiting Game -- Following OPEC’s decision not to cut production at its June 5, 2015 meeting in Vienna, oil prices should likely continue their descent that began in early May (Figure 1). Prices may fall into the $50+ per barrel range since there is no tangible reason for their rise from January’s $46 low. Saudi Arabia’s longer view of demand and market share dominated the decision not to cut. World oil production has undergone a structural shift from supply dominated by relatively inexpensive conventional production to increasingly more supply coming from expensive deep-water and unconventional production. Most conventional oil is located in the Arabian, Siberian and North Caspian basins (Figure 2) while deep-water and unconventional production is focused along the margins of the Atlantic Ocean and in North America. This shift is at the root of the current price conflict between OPEC and North American oil producers. Since 2008, OPEC liquids production has been fairly flat until mid-2014 (Figure 3). Non-OPEC production outside of North America has been flat. Most production growth has occurred in the U.S. and Canada but it is not only from tight oil. The competition for OPEC market share is from Canadian oil sands, Gulf of Mexico deep-water and tight oil production. U.S. plus Canadian production has increased 6.2 million barrels per day (mmbpd) since January 2008. OPEC production has increased 2 mmbpd over that period with 1.3 mmbpd (65%) of that increase since June 2014. Lower oil prices over the past year (Figure 4) have not yet resulted in any observable decrease in North American production. Higher prices over the last few months further complicate the situation for OPEC. The global production surplus has gotten worse, not better, in recent months but prices rose based on sentiment.

Delayed gratification for OPEC, more pain for investors -- Delayed gratification is said to be a sign of maturity. By that standard OPEC at age 55 demonstrated its maturity this week as it left oil production quotas for its members unchanged. It did so in the face of oil prices that are about 40 percent lower than they were at this time last year, delaying once again a return to the $100-per-barrel prices seen during the past four years. Why OPEC members chose to leave their oil output unchanged is no mystery. The explicit purpose for keeping oil prices depressed is to close down U.S. oil production from deep shale deposits--production that soared when oil hovered around $100 a barrel, but which is largely uneconomic at current prices. That production was starting to threaten OPEC's market share. If OPEC were to cut its oil production now and drive prices back up, it would only lead to increased drilling in the United States and loss of market share. In fact, even as spot oil prices sank below $45 per barrel in the United States earlier in the year, investors continued pumping money into U.S. oil drilling. According to The Wall Street Journal U.S. oil companies sold almost $17 billion in new shares in the first quarter of 2015, more than they sold in any quarter last year when prices were much higher. Preliminary estimates by the U.S. Energy Information Administration show that oil production continues to grow in the United States despite low prices. OPEC's next task is to convince those making new investments in oil that rather than catching a bottom in oil prices, they have caught a falling knife. The cartel must dampen enthusiasm for investment for the long term if the organization's members are going to benefit. A crippled U.S. oil industry without friends in the investment world is the only way to assure that rising prices won't simply lead to a stampede back into U.S. shale deposits.

Saudi Arabian oil output hits record - Saudi Arabia increased its oil production to a record level in May in an attempt to win back more customers and meet demand for its crude. Output in May reached 10.33m barrels a day, according to numbers submitted by Riyadh to Opec, the oil cartel, confirming the widely held view that Saudi Arabia’s production is heading higher. The kingdom’s oil output had been 10.31m b/d in April, Riyadh told Opec. In its monthly oil market report Opec said world oil demand would stand at 92.5m b/d this year, up from 91.3m b/d in 2014, unchanged from the previous month’s report. “The global economy recovery appears to have stabilised at a moderate level,” said the cartel on Wednesday. It expects non-Opec supply to decline in the second half of the year, compared with an increase in the first six months. A forecast of slower annual growth of 680,000 b/d was in line with previous predictions. “The current oversupply in the market is likely to ease in the coming quarters,” the group said. Opec expects demand for its crude to stand at 29.3m b/d a day in 2015 but output from the producers’ group stands at almost 31m b/d, according to estimates by analysts and traders. After the report ICE July Brent, the international oil marker, rose to a near three-week high of $66.36 a barrel, before paring its gains.

This Country Wants To Rejoin OPEC As Soon As Possible -- In a surprise announcement, Indonesia has decided to officially pursue full membership in the oil cartel. Indonesia is no stranger to OPEC. It used to be a member, but left six years ago. Now it hopes to rejoin by the time the group meets again in November 2015. The move is a curious one considering Indonesia is not a net oil exporter. It consumes around 1.5 million barrels per day and only produces 800,000 barrels per day. Indonesia has insisted on becoming a full member despite the fact that full membership typically requires being a net exporter. It originally suspended its membership in the cartel in 2008 once its imports started to quickly surpass its level of exports.  There are currently only 12 members of OPEC. Indonesia once was the only Asian country in OPEC and would be again if it rejoins. Meanwhile, Indonesia is seeking supply agreements with OPEC members in order to import oil. Indonesia has a fast growing economy and is continuously searching for more sources of supply. “We will discuss purchasing crude from them. We have a plan to build refineries, so we need crude supplies,” Wiratmaja Puja, a top official at Indonesia's Energy Ministry, said to Reuters in an interview. That would be crucial for a country that is desperate to increase its domestic production of refined products.

India seeks to use its oil thirst to drive bargains - – India is trying to use its position as one of the world’s biggest energy consumers to strike better bargains for its companies with oil exporting nations, in a marked change of approach under Prime Minister Narendra Modi. The oil ministry is moving beyond seeking additional barrels for import in talks with exporters. Now, the energy-deficient country wants to use its thirst for oil as a weapon to broker deals to help strengthen its economy and create jobs, Oil Minister Dharmendra Pradhan told Reuters in an interview. “We are a market. The quantum that we buy is our weapon,” 45-year-old Pradhan said. India, the world’s fourth biggest oil consumer and third biggest importer, ships in about 80 percent of the crude oil it consumes and fuel demand is rising with rapid economic growth. After clocking faster growth than China in the December quarter, India’s economy grew 7.5 percent in the quarter through March, outstripping its larger neighbor’s 7 percent in the same period. Last year, India’s economy grew at 7.3 percent. Consumption of petroleum products is estimated to be 166.9 million tonnes this fiscal year, and local oil output has remained almost stagnant for years.

Saudi Arabia ready to raise oil output further to meet demand -- – Saudi Arabia is ready to increase its oil output in the coming months to a new record to meet a rise in global demand, despite increased domestic use, a senior state oil company official said on Thursday. Ahmed Al-Subaey, Saudi Aramco’s [SDABO.UL] executive director for marketing, told Reuters the world’s top oil exporter was already talking to prospective Indian buyers for additional oil. Saudi Arabia increased production in May to around 10.3 million barrels per day (bpd) – its highest rate on record – as a result of increased global demand. Any increase in production in a market which already faces a glut would signal that OPEC is unrelenting in its decision to maintain global market share. The strategy is seen as a major factor in the sharp decline in oil prices over the past year. “We have plenty of crude… You are not going to see any cuts from Saudi Arabia,” Al-Subaey said after meeting Indian oil officials in New Delhi. Saudi Arabia has historically lowered its oil exports during the summer months when domestic demand peaks due to scorching temperatures and the need to power air conditioning. “We have enough in reserves and we have enough production to do so. We will match whatever the need is. If the market requires it, we will provide it,” he added.

"Oil army" of 27,000 raised to clash with ISIL terrorists --The government of Iraq is building a 27,000 person security force to protect vital oil and energy facilities against Isil-related terrorists. At the end of the recent Organization of the Petroleum Exporting Countries meetings Iraqi oil minister Adel Abdel Mahdi announced the details of the strong army against Islamic State insurgents. The Islamic State of Iraq and the Levant (Isil) fighting activity has heightened concerns that vital oil infrastructure and pipeline networks could be susceptible to sabotage and attacks. According to The Telegraph, Saudi Arabia, the Gulf States and Iraq – which together account for two thirds of OPEC’s production – are all now affected by the overbearing Isil jihadists. The threat is growing ever stronger due to the widening sectarian schism between the Sunni and Shia Muslims across the region in the wake of the Arab spring uprisings five years ago. Mr Abdel Mahdi stated that the oil army would be drawn from an existing energy police corp that is under control of the country’s Interior Ministry. The Telegraph reported that meetings will take place in the coming weeks to finalize the structure of the force, which will receive additional training and equipment. British oil majors Royal Dutch Shell and BP are both active in Iraq, operating some of the country’s largest fields in the Shia-Muslim dominated South. The nation produces roughly 4 million barrels per day and is OPEC’s second largest player.

Obama Considers Sending More Troops To Iraq -- Earlier today we described the situation currently facing Syria’s soon-to-be ex-President Bashar al-Assad as follows:  And speaking of time, the US-led alliance realizes very well that as long as Assad has to fight three fronts: i.e., the Nusra  Front in the northwestern province of Idlib and ever closer proximity to Syria's main infrastructure hub of Latakia, ISIS in the central part of the nation where they recently took over the historic town of Palmyra, and the official "rebel" force in proximity to Damascus, Assad's army will either eventually be obliterated or, more likely, mutiny and overthrow the president, putting the Ukraine scenario in play.  Meanwhile, the US is waiting just across the border for the right time to sweep in and effect a long overdue (in the eyes of the US and its Middle Eastern allies, if not in the eyes of Iran and Russia) regime change in Damascus.   Complicating the issue is ISIS, a one-time “strategic asset” that has, for all intents and purposes, gone rogue by deviating from the original Assad usurpation plan, and getting sidetracked by the whole internally conceived “establish a caliphate” idea.  Now, it appears the US doesn’t know whether it wants to stick with what was probably the original plan (i.e. wait until ISIS overruns Assad and then storm in with 10,000 marines to ‘liberate’ the country before installing a more ‘agreeable’ leader after some farce of an election) or speed up the process by claiming that Assad is in fact working with ISIS and using the imaginary unholy alliance as an excuse to invade now.

US Will Send 400 More Troops To Iraq Bringing Total To 3,500; Open New Military Base -- As reported yesterday, in the latest escalation of the "war on ISIS", Obama - winner of the Nobel peace prize for pulling US soldiers out of Iraq - was said to be sending even more US soldiers, pardon military advisors, to Iraq to halt the inexplicable, constant expansion of ISIS, now deep in Syrian territory. Earlier today, this was confirmed when Reuters reported that, as expected, the US will announce on Wednesday plans for a new military base in Iraq's Anbar province and the deployment of around 400 additional U.S. trainers to help Iraqi forces in the fight against Islamic State, citing an unnamed U.S. official. From Reuters: The plan would expand the 3,100-strong U.S. contingent of trainers and advisers in Iraq and would mark an adjustment in strategy for President Barack Obama, who is facing mounting criticism for not being tougher in combating Islamic State. U.S. officials, speaking on condition of anonymity, expressed hope that even a modestly strengthened U.S. presence could help Iraqi forces plan and carry out a counter-attack to retake Anbar's capital Ramadi, which insurgents seized last month.

The no. 1 appetite: China passes U.S. in oil imports -- The data is hard to pin down, but many are finally recognizing what was on the horizon for some time now. China is now the world’s largest oil importer.  As reported by Forbes, market analysis stated that in April, China had surpassed the United States in oil imports. It’s true that overall, China’s oil composition growth has slowed, however, their new title does point to the fact that China will consume significant amounts of crude for years to come. Just this morning, oil fell slightly on the news of slowed Chinese oil imports. Chinese petroleum imports fell 11 percent from a year earlier, according to Market Watch reports. Sturdy Chinese oil demand has been one of the few mainstays of oil support in 2015, making any signs of slowdown an obvious impact on petroleum prices. Nonetheless, China’s hearty reliance on oil imports has a major impact on global politics. As quoted in Forbes, Keith Johnson wrote in Foreign Policy on May 11, 2015, “… China’s continued and, indeed, deepening reliance on volatile regions for the world for energy supplies, especially the Middle East, points to continued security vulnerabilities for Beijing for decades to come.” With some credibility as Americans, we can see a potential political danger from oil addiction taking shape. As China’s dependence on crude from Saudi Arabia and natural gas from Russia continue, political unrest in the Middle East or sanctions on Russia could mean a disruption or price spike for China’s imports.

Oil Markets Could Be In For A Shock From China Soon  - Oil analysts and commodity traders watch the price of crude swing down and up, and are trying to figure out when and to what extent the OPEC “price war” will force supply reductions from US shale. Any insight into this development can clarify the trajectory of oil prices. But, of course, oil market dynamics are complex and fluid. US shale supply is hugely important for oil prices, but one of the more underreported factors influencing the price of oil is the pace of demand growth coming from China. Consumption of oil in China has climbed rapidly and consistently since it took off in 1990, accelerating into overdrive in the 2000s. The inexorable surge in demand caused oil markets to tighten in the lead up to the financial crisis, and then again in subsequent years as the global economy recovered. The rise in US shale production managed to finally halt the climb in prices, adding enough supply to send prices downwards. When it comes to demand, China is arguably the most important country to watch. And despite accounting for much of the world’s growth in demand in the 21st Century, China’s oil imports have been all over the map in recent months. In April, China imported 7.4 million barrels per day, a record high and enough to make it the world’s largest oil importer. But a month later, imports plummeted to just 5.5 million barrels per day. Much of that had to do with Chinese refineries going offline for maintenance, suggesting that the slowdown may have been just a slight detour from China’s seemingly ceaseless climb in import demand. On the other hand, China’s exceptionally high levels of imports could be temporary. China is in the midst of filling up its strategic petroleum reserve, a project aimed at stockpiling 100 days’ supply in a reserve by 2020. China has seized the opportunity of low oil prices to fill up its strategic reserve as quickly as it can, buying up crude while it is cheap. This elevated level of imports has soaked up some of the glut, diverting several hundred thousand barrels per day of global supplies to China. But what happens when China stops buying extra oil for its stockpile?

The PetroYuan Is Born: Gazprom Now Settling All Crude Sales To China In Renminbi -- China and Russia indicated that going forward, more trade between the two countries would be settled in yuan. From Reuters: Russia and China intend to increase the amount of trade settled in the yuan, President Vladimir Putin said in remarks that would be welcomed by Chinese authorities who want the currency to be used more widely around the world. Spurred on by their often testy relations with the United States, Russia and China have long advocated reducing the role of the dollar in international trade.Curtailing the dollar's influence fits well with China's ambitions to increase the influence of the yuan and eventually turn it into a global reserve currency. With 32 percent of its $4 trillion foreign exchange reserves invested in U.S. government debt, China wants to curb investment risks in dollar. Sure enough, Gazprom has confirmed that since the beginning of the year, all oil sales to China have been settled in renminbi. From FT: Russia’s third-largest oil producer, is now settling all of its crude sales to China in renminbi, in the most clear sign yet that western sanctions have driven an increase in the use of the Chinese currency by Russian companies. Russian executives have talked up the possibility of a shift from the US dollar to renminbi as the Kremlin launched a “pivot to Asia” foreign policy partly in response to the western sanctions against Moscow over its intervention in Ukraine, but until now there has been little clarity over how much trade is being settled in the Chinese currency. Gazprom Neft, the oil arm of state gas giant Gazprom, said on Friday that since the start of 2015 it had been selling in renminbi all of its oil for export down the East Siberia Pacific Ocean pipeline to China. Russian companies’ crude exports were largely settled in dollars until the summer of last year, when the US and Europe imposed sanctions on the Russian energy sector over the Ukraine crisis...

Did The World's Last Big Oil Price Support Just Falter? --China's trade balance surged once again, spiking to near the highest on record according to data released this weekend, driven by a collapse in imports (and a roughly in line export print). Exports dropped 2.5% YoY, dropping for the 4th month of last 5 but it was Imports that createred. Down a stunning 18.1% YoY (the 5th drop in a row) China imports collapse reflects both volume and price effects and crucially, as Goldman notes, volume effects may be even more critical. Hidden deep inside the data, China exposed the oil market's greatest fear - it appears to be done restocking its SPR. As Goldman Sachs reports, The weakness in import growth is likely to be a reflection of both price and volume effects (an official price index is not yet available for May) -- though volume effects might be more important this month amid modestly higher oil prices. Based on the released breakdown, the value of crude oil imports went down 50.3% yoy in May (vs. -43.9% yoy in April), cutting 6.3 percentage points from headline import yoy growth (in April it cut 5.6 pp). Imports of other major commodities such as steel and coal also declined further in yoy terms in May. But while a lot of the drop in imports is related to price, it is the scale of plunge in volume that is of most concern...

China natgas output drops for 2nd month, price cut eyed -- China’s natural gas output fell 2 percent in May from a year earlier, official data showed on Thursday, its second straight month of decline as the market expects Beijing to announce another price cut in the coming months to lift slowing demand. Output recorded a 2.9-percent year-on-year drop in April, to 9.4 billion cubic meters (bcm), the lowest since July 2014 in outright volumes. Such drops in output have been rare. Production was 9.9 bcm in May, slightly higher than April on a daily basis. Total output in the first five months of 2015 climbed 2.1 percent from the same period the  year before to 53.2 bcm, the National Statistical Bureau (NSB) said. China, the world’s largest energy guzzler, is keen to boost the use of natural gas to cut emissions and fight air pollution. But demand has been hit since last year as domestic prices, which are regulated by the government, were not cut until April, lagging the steep declines in global oil markets that Beijing uses as a benchmark for gas pricing. In the first four months of 2015, China burned 62.9 bcm of gas, up a tepid 2.4 percent from the same period last year, according to the National Development & Reform Commission.

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