Sunday, September 20, 2015

Ohio Supreme Court rulings; frackers debt service now exceeds their cash flow, et al

in a decision on Wednesday, the Ohio supreme court ruled the charter county ballot initiatives of Athens, Fulton and Medina counties off the November ballot in those counties....yet in a ruling the next day, they unanimously ruled a fracking ban initiative back on to the November ballot in Youngstown, overturning the Mahoning County Board of Elections...while those two decisions may seem incongruent, their explanations for both seemed fairly rational, so we'll start today by taking a look at how they were arrived at...

in the case of Walker et al vs Husted (pdf) on Wednesday, the Ohio Supremes ruled 6-1 against complainants in Athens, Fulton and Medina county who wanted their county charter/community bill of rights amendments returned to their November should recall that in mid-August, the oil industry funded Ohio Secretary of State Jon Husted ruled that charter government proposals in Athens, Fulton and Medina counties could not appear on the November ballot, citing the common refrain that regulation of fracking is the sole province of the ODNR...shortly after that ruling, citizens from those 3 counties sued Husted in his official capacity as secretary of state, charging that he couldn't invalidate legitimate petitions residents had signed because of his personal quibbles over their content....that dispute headed to the Supreme Court, and is what was decided in this ruling, which in some ways was decided for both paragraph {¶ 15} of the ruling the Court held that "authority to determine whether a ballot measure falls within the scope of the constitutional power of referendum (or initiative) does not permit election officials to sit as arbiters of the legality or constitutionality of a ballot measure’s substantive terms." meaning that Husted's authority as Secretary of State was to rule on the form of the ballot initiatives, and that he had overstepped his authority in ruling on the substance of them...but the court ruled in favor of Husted's other objection, that the county referendums "did not set forth the form of (alternate) government, which is the sine qua non (necessary requirement) of a valid charter initiative.” or, as noted in paragraph {¶ 22} "the charters do not satisfy the threshold requirements that define a charter initiative. Specifically, Article X, Section 3 of the Ohio Constitution requires that every county charter “shall provide the form of government of the county and shall determine which of its officers shall be elected and the manner of their election.” .{and}..“shall include either an elective county executive or an appointive county executive.”

so it's pretty clear from a reading of the Justice's opinion that the initiatives were ruled off the ballot because they didn't go into the proper degree of detail on what new form of county government that would result should they pass, and not because of Husted's objection that they were designed to circumvent state laws regarding seems clear that the Justices felt Husted overstepped his authority on that part of his ruling, and that had the county referendums followed the letter of the law on changing the county's form of government, they would have been allowed to go before the voters...

then, in the second fracking related decision on Thursday, the Ohio Supreme Court decided by a 7-0 vote that a Youngstown fracking ban referendum that the Mahoning County Board of Elections had ruled off the ballot should be reinstated...we had not discussed this case, but what had happened there was that FrackFree Mahoning Valley had circulated a petition to amend Youngstown's charter to prohibit any kind of oil and gas activity, just as they had 3 times previously in the past 2 years, got the required signatures, only to have the Mahoning County Board of Elections vote unanimously not to certify their petition, again citing the previous rulings that fracking regulation was the sole of the ODNR, and complaining that the same initiative had been defeated in both 2013 and this case, it was Youngstown officials who filed the complaint to get the anti-fracking referendum back on the ballot, apparently not so much because they favored the initiative, but because they felt the Board of Elections had acted illegally against an otherwise legal petition...the Supreme Court logic that put the Youngstown initiative back on the ballot was quite similar to the ruling against Husted in the county charter initiatives; again, neither the state nor the county election officials are allowed to rule whether a referendum is legal or constitutional; that kind of decision rests solely with the effect, the court is saying that only if the Youngstown anti-fracking initiative should pass could it then be challenged on legal or constitutional grounds...

Current EIA Reports

the Wednesday reports from the EIA showed that both crude production and oil imports fell in the week ending September 11th, and refineries runs increased, so the industry had to pull oil out of storage for the first time in 3 weeks to meet that demand....our field production of crude oil fell from 9,135,000 barrels per day in the week ending September 4th to 9,117,000 barrels per day in the week ending September 11th; that now leaves us almost 5.1% below the modern production record of 9,610,000 barrels per day in the first week of June this year, and only 3.2% higher than our 8,838,000 barrels per day production during the 2nd week of September last year, when the growing global glut of oil had already started driving down oil prices...our imports of crude oil also fell, from 7,439,000 barrels per day in the week ending September 4th to 7,189,000 barrels per day in this week's report, enough to bring the 4 week average of imports carried in the weekly Petroleum Status Report (62 pp pdf) down to 7.4 million barrels per day, 4.3% below the same four-week period last year... 

while this week's supply of crude oil was thus lower, the amount of oil required by refineries rose, as crude oil refinery inputs averaged 16,513,000 barrels per day in the 2nd week of September, in contrast to refinery inputs of 16,110,000 barrels per day in the prior week...with the Whiting refinery back online, our refinery utilization rate rose from a 5 month low of 90.9% of operable capacity in the 1st week of September to 93.1% in the current week....while it's still down from 96.1% utilization and 17,075,000 barrels a day record pace of 6 weeks ago, refinery operations are now back above the summer average and heading into the time of year when demand and refinery output typically decline with this week's demand for oil exceeding supply, users took oil out of storage, and hence our commercial inventories of crude oil fell by almost half a percent, from 457,998,000 barrels in the 1st week of September to 455,894,000 barrels this week...that left us with still more than 25.8% crude in storage at the end of the week than the amount of crude we had stored in the same week last year, and as you know, the highest for this time of years in the 80 years that such records have been kept...however, while we imported less crude, our imports of refined products rose, and hence motor gasoline inventories increased by roughly 2.8 million barrels and distillate fuel inventories increased by 3.1 million barrels in the current reporting week...

Oil Industry Debt Service to Cash Flow Ratios

the most interesting report from the EIA this week came in their Friday release of "Today in Energy", which as the title suggests is a daily blog-like posting from the Energy Department which covers the whole gamut of energy related topics...the Friday report was titled "Debt service uses a rising share of U.S. onshore oil producers’ operating cash flow" and even without reading the report we could see from the first graph, which we'll include below, just how tight the situation had become for US oil producers...what the bar graph below shows is the annualized debt service of US oil producers as a percentage of their cash flow from operations stated quarterly, from the beginning of 2012 through the 2nd quarter of this year...what that means, stated more plainly, is that each bar represents the average oil producer's debt service to cash flow ratio over the preceding year, such that the bar for the 2nd quarter represents the average ratio over the year starting with the preceding 3rd while we can see that for the industry as a whole, debt service has long been above 50% of their operating cash flow, once oil prices started collapsing in the 4th quarter of last year, that percentage quickly climbed to over 70%, and as of the 2nd quarter of 2015 it had reached 83% of cash flow, or as the EIA explains "from July 1, 2014 to June 30, 2015, 83% of these companies' operating cash was being devoted to debt repayments"...thus, that 83% figure includes an extended period of time when oil prices had averaged above $80 a barrel, and almost no time in the current price $44.68 per barrel range, almost a deliberate obfuscation...since this is an industry wide average, it includes the vertically integrated major oil companies with lower debt levels and greater than average cash flow from operations, which probably means that for a high percentage of independent exploitation companies, their debt service has exceeded their cash flow all year and will only get worse, illustrating the ponzi-scheme nature of the fracking business, where new suckers with fresh cash are continually being sought to pay off the original creditors...but it's now getting close to game over for the frackers; when their economically recoverable reserves are reevaluated by the banks in their semi-annual review on October 1st, the driller’s banks lines of credit will most likely get cut off...and since their cash flow wont pay the 11% interest now demanded for new energy bonds, we expect many more will be forced into bankruptcy by Thanksgiving, roughly one year after the Saudis declared war on their scheme...

September 18 2015 oil co debt service as percentage of cash flow

Latest Rig Counts

there was another modest reduction in rigs drilling for oil this week, while rigs drilling for gas increased by 2 to 198...Baker Hughes reported that their total rig count fell by 6 rigs to 842 in the week ending September 18th, with oil rigs down by 8 to 644 and down by 957 from last years 1,601, while the 198 gas rigs running this week are down 131 from the 329 gas rigs that were working in the same week last year..a net of 8 horizontal rigs were stacked, leaving 640, and two directional rigs were added, bring those to 83, while the count of vertical rigs remained unchanged at 119, down from 378 a year ago...

while the overall rig count didn't change as much as last week, there were quite a few more changes in where they were working this week...the Mississippian basin of northern Oklahoma and southern Kansas saw the largest rig reduction, as they stacked 5 rigs, leaving 14 now working there, down from 78 rigs a year ago...3 rigs were pulled from the Williston basin of North Dakota, which now has 68, down from 198 a year earlier...2 rigs were pulled from both the Eagle Ford shale of Texas and the Marcellus of Pennsylvania, leaving the former with 88, down from 205 a year ago, and the later with 49, down from last year's 81...on the other side of Texas, 3 additional rigs were set up in the Permian basin, which now has 253 rigs working there, down from 560 a year ago, while one rig was added in the north central Texas Barnett shale, which now has 7 rigs, down from 25 last year at this time...2 rigs were added in Oklahoma's Cana Woodford, which now has 40, up from 38 a year ago, while there was also a rig added in the Arkoma Woodford, which again now has 8, the same count as a year addition, a single additional rig was set up in the Utica shale, which now has 20 rigs working it, down from 44 a year ago..

statewise, Louisiana and North Dakota both got rid of three rigs, leaving 70 in Louisiana , down from 113 a year ago, and 67 in North Dakota, down from 189 a year ago...Pennsylvania was down by two to 33, and down from 58 last year, while Kansas was down by 1 to 9, and down from 25 a year ago...states adding one rig included Colorado, now with 33, down from 76 last year, New Mexico, now with 49, down from 99, Ohio with 19, down from 42 last year, and Utah with 5, down from 23 a year ago...finally, the Texas rig count was down by 1 to 365, down from 900 a year ago, but with state oil and gas district totals we can see that these aggregate totals obscure a lot of arrive at that one rig change, Texas drillers pulled 3 rigs out of district 1, added 3 rigs in district 3, pulled 2 rigs out of district 4, added a rig in district 5, added 2 rigs in district 7C, pulled 3 rigs out of district 10, and added one rig on an inland lake...we suspect other state totals would reveal the same level of activity if they were similarly divided...


Clean-air rules would harm Ohio, EPA director tells Congress -- New clean-air standards threaten the future of some coal-burning power plants and would undercut the state’s industrial comeback, Ohio’s top environmental regulator told a U.S. House committee today.  “We are marching down the road toward implementing a rule with far-reaching economic consequences without any assurance that the rule is even a legal exercise of U.S. EPA’s authority,” said Ohio Environmental Protection Agency Director Craig Butler.  The new rules, which would force states to burn less coal and use more renewable energy, are “ not the answer,” Butler said in testimony before the environment subcommittee of the House Committee on Science, Space and Technology.   Ohio and 14 other states have filed a federal lawsuit in a bid to block the plan to dramatically reduce greenhouse-gas emissions produced by coal-fired power plants and other sources blamed for contributing to climate change.  Ohio and other states contend that the new U.S. EPA rules exceed its authority and represent an end-run around the power of Congress to enact standards.  Butler said meeting the standards would be expensive and undermine the long-term viability of power plants in a state that uses 50 percent of its electricity for heavy industry such as auto, steel, iron and glass manufacturing.  He revealed that Gov. John Kasich wrote President Barack Obama on Aug. 28 to ask that the new standards be suspended until legal challenges are resolved.

County, OU collaborate to test water near injection wells -  The Athens County Commissioners and the Ohio University Voinovich School for Public Affairs are partnering with property owners around Athens County to undertake baseline water well testing near fracking waste-injection wells. Baseline water testing has been a primary goal for area residents concerned about the potential impact of the oil-and-gas horizontal hydraulic fracturing waste being dumped in the county via deep underground injection. There are currently eight fracking waste-injection wells in Athens County with one more on the way. Athens was the most-heavily injected county in the state through the first quarter of 2015, with nearly 1.1 million barrels of fracking waste injected into the ground, and over one million of those barrels coming from out-of-state. Athens County Commissioner Chris Chmiel explained Tuesday that the testing would set a baseline at residential water wells within two miles of each of the injection wells in Athens County. Once that data is collected, the county can then go back in future years to see what changes have occurred. “This is establishing baseline water quality,” Chmiel explained. “It will tell us what the water quality is now.” Jennifer Bowman, environmental project manager at the Voinovich school, said in an interview Tuesday that some baseline samples were taken in 2013 and will be updated, while others will be sampled for the first time.

Oilfield wastewater: what you need to know: As U.S. oil and gas production increased this past decade, so, too, did spills of salty oilfield wastewater that can foul the land, kill wildlife and threaten freshwater supplies. An Associated Press analysis of 11 states found more than 180 million gallons of wastewater spilled from 2009 to 2014. Oilfield wastewater is the fluid that comes to the surface when oil and gas are pumped out of the earth. Some is salty residue from ancient seas in underground rock formations. The rest is fresh water that was mixed with chemicals and sand and injected underground to crack open subterranean rock, the drilling process known as “fracking.” The industry usually calls the liquid waste “produced water,” but other common terms include brine, saltwater and flowback.   In a typical year, about 10 times as much wastewater is produced as crude oil itself, according to one study by a group of state groundwater agencies. In 2012, for example, roughly 840 billion gallons of wastewater were produced from onshore wells. Offshore wells generated another 26 billion gallons. In 2014 in Ohio, which was not one of the states in the AP investigation, oil and gas wells created more than 513 million gallons of brine, according to state production reports.  Salinity varies from place to place. In its least potent form, such as wastewater generated by coal-bed methane production in Wyoming, it can be safe enough for livestock watering. In its most potent form, oilfield wastewater is at least 10 times saltier than ocean water. The liquid also can contain metals such as barium and iron, oil and grease, and radioactive materials such as radium. Wastewater spills have killed fish in streams and ponds, and cattle that drank contaminated water. Brine-flooded land won’t grow crops or other plants.

Mansfield to consider ordinance protecting home values - — The Mansfield City Council will consider legislation that would allow the city and homeowners affected by adverse development banned under local zoning — such as injection wells — to go to court to halt that development and seek damages. The council had a first reading Tuesday night, putting the proposal on a fast track. Law Director John Spon said the proposed Mansfield Home Value and Family Protection Act was designed to protect owners of homes, apartment complexes or condominiums. The legislation says that if a company comes into Mansfield with development counter to zoning regulations that could reduce the property’s market value by at least 25 percent, both Mansfield and the residential property owner would have legal standing to seek relief in court to halt the development and recover damages, including the reduction in home value. “No city in the state of Ohio has adopted an ordinance like this,” Spon said, adding he thought the proposal has “historical significance” and could survive a challenge in the Ohio Supreme Court. In 2011, a Texas-based company announced plans to drill two injection wells in Mansfield, then stopped short of building the facility. But “It’s not just injection wells,” Spon told the council, saying the ordinance would strengthen Mansfield’s ability to exercise home rule in other areas where the legislature has said siting decisions should rest with the state. That could include toxic waste dumps, radioactive waste storage facilities or unwanted state-licensed facilities, he said.“I authored this act. I strongly recommend it. There is absolutely no downside for the city or for residents of this city,” he told the council.

Bill of rights/charter won't be on November ballot in Athens - Athens County voters will not have an opportunity to vote on an anti-fracking charter/community bill of rights amendment this November, as a result of a decision the Ohio Supreme Court issued on Wednesday. The majority in the 6-1 decision ruled against the 10 so-called “relators” (or complainants) in their complaint against Ohio Secretary of State Jon Husted. While the Supreme Court rejected Husted’s arguments that the charters were unconstitutional or illegal based on a previous high-court decision (Morrison vs. Beck Energy), they upheld his position that the three proposed charters failed to qualify for the ballot because (according to the decision) “they did not set forth the form of (alternate) government, which is the sine qua non (necessary requirement) of a valid charter initiative.” The decision suggests that if local charter/bill of rights supporters can come up with a proposal that rectifies that failing, they can get it on the ballot. If the Supreme Court had upheld Husted’s other argument, with regard to the legality of the proposals, that likely would have doomed future charter proposals intended to restrict or ban oil and gas activities locally. In the expedited case before the Supreme Court, 10 representatives of committees in Athens, Medina and Fulton counties asked the Supreme Court to order Husted to dismiss protests against the charter/bill of rights measures and allow them to make the general election ballots in the three counties. In a decision Aug. 13, the Secretary of State rejected petitions for the charter/bill of rights proposals in the three counties, finding that the provisions in each of the charters relating to oil and gas development represented an attempt to circumvent state law in a manner Ohio courts (including the Supreme Court in Morrison vs. Beck Energy) already have found to violate the state constitution. This is the argument the high court found wanting in its decision Wednesday.

Local ballot issues to try to stop pipeline blocked by court - Toledo Blade  — Voters in Fulton, Medina, and Athens counties will not get the chance to vote on changes in local law designed to block the path of a natural gas pipeline across northern Ohio and more heavily regulate “fracking” operations in southern Ohio. The state Supreme Court ruled 6-1 today to deny the request from citizen groups to overturn Secretary of State Jon Husted’s refusal to put the questions on the Nov. 3 ballot.  Mr. Husted had argued that that regulation of the oil and gas industry is the responsibility of the state, not counties, and, therefore, the citizen-initiated ballot issues were unconstitutional from the state. He dismissed the argument that he was barred from considering the substance of the ballot issues at this stage.  His position was backed in his decision by the oil and gas industry, the Ohio Chamber of Commerce, Ohio Farm Bureau Federation, and Affiliated Construction Trades of Ohio.  But on that question, the court sided with the backers of the ballot issues, saying that agreeing that Mr. Husted has the power to “prejudge” the legality of ballot issues before voters have their say would lead to “absurd” results.  Still, the court agreed with Mr. Husted’s other argument that the questions did not spell out the kind of charter government they sought to create. All three counties proposed the creation of charter forms of government but primarily so that they could achieve their goals. In the case of Fulton and Medina counties, that would have been blocking the path within their borders of a 250-mile NEXUS Gas Transmission pipeline across northern Ohio.The question in Athens sought was aimed at preventing disposal of waste from hydraulic fracturing, or “fracking,” and more heavily regulating the industry in the county.

Decision by Ohio Supreme Court keeps fracking-related charter issues off fall ballot - Stow Sentry - The Ohio Supreme Court has denied a request from groups in three Ohio counties to allow fracking-related charter issues to appear on the November ballot. In a 6-1 decision Sept. 16, with Justice William O'Neill dissenting, the state's high court ruled Republican Secretary of State Jon Husted acted within his authority when he blocked the issues from consideration during the coming general election. Justices were not swayed by Husted's declaration that the proposed amendments would prove invalid if passed, however. The court instead based its decision on the fact that the petitioners did not meet other requirements for inclusion on the ballot. According to the majority decision, "We hold that it was within Husted's discretion to determine that the proposed charters were invalid...." Husted invalidated charter proposals in Athens, Fulton and Medina counties that were related to oil and gas exploration, including horizontal hydraulic fracturing. Husted said the issues were an attempt to circumvent state law, which places oil and gas regulations with the Ohio Department of Natural Resources. The latter has already been upheld by the Ohio Supreme Court. Husted said earlier this month that groups that want to change the state law and regulatory setup should pursue legislative action or the citizen initiative process to take the issue to a statewide vote.  Justices ruled that Husted had no authority to decide the constitutionality of charter petitions.

For Now, Ohio Supreme Court Rules Against Local Anti-Fracking Petitions - The Ohio Supreme Court has upheld Secretary of State Jon Husted's decision to invalidate petitions in three counties across the state that sought to ban oil and gas development in a ruling that will keep the initiatives off November ballots. More than 9,000 people had signed petitions in Athens, Fulton and Medina counties to vote for establishing a county charter that would have banned underground injection wells, oil and natural gas exploration and production, or both. In August, Husted invalidated the petitions and removed them from November ballots, saying state courts had already found such bans to be a violation of the Ohio Constitution (see Shale Daily, Aug. 14). But the high court's decision did not resolve the issue of grassroots referendums across the state seeking to ban oil and gas development. The petitions are likely to be circulated again next year, organizers said, because the court found that Husted does not have the power to deem voter initiatives unconstitutional. "An unconstitutional proposal may still be a proper item for referendum or initiative," the court wrote. "If passed, the measure becomes void and unenforceable only when declared unconstitutional by a court of competent jurisdiction. Until then, the people's power of referendum remains paramount." The court upheld Husted's decision because the organizers proposed charters did not provide for a county executive or any meaningful change to the structure of county government to accommodate the changes a charter would bring. The court said the charters did not satisfy the threshold requirements under state law.

Both sides claim win in Ohio Supreme Court ruling - The Ohio Supreme Court on Wednesday voted 6-1 to back Secretary of State Jon Husted who had invalidated county charter proposals with community bill of rights on the Nov. 3 ballot in Medina, Athens and Fulton counties. But the issues are likely to be returning to the ballot in 2016 because the state high court also ruled that Husted does not have the discretion to assess the legality of such community rights charters and cannot block such votes. “That is huge,” said spokeswoman Tish O’Dell of Broadview Heights, Ohio organizer for the Community Environmental Legal Defense Fund that had assisted in the petition drives. The high court cited another valid reason cited by Husted to block the measures. The justices said the fact that the issues failed to satisfy threshold requirements for legal charter initiatives was sufficient to keep them off the ballot. Grass-root groups in Ohio will likely circulate new petitions that will comply with the high court’s edict and resubmit them next year, O’Dell said. The industry was also claiming victory after the three county charter votes were blocked by the high court. “The Ohio Supreme Court affirmed the fact that the Pennsylvania-based Community Environmental Legal Defense Fund’s ballot measures are invalid,” said Jackie Stewart of Energy in Depth-Ohio, a pro-drilling industry group.

State fines international oil and gas company over $220K for fracking-well fire –  A fire at a natural gas fracking well that forced evacuations and killed thousands of fish in eastern Ohio last summer will result in fines of about $223,000 against an international oil and gas company. Environmental regulators announced the fines against Norway-based Statoil on Tuesday. The fines are being assessed for the loss of aquatic species, spill cleanup and water quality violations from the well-pad fire in June 2014, the Ohio Environmental Protection Agency and Department of Natural Resources said. They say the company operated the well in Monroe County and can resume fracking there after it pays the fines. A message left Wednesday at the company's North America office in Houston wasn't immediately returned. The Department of Natural Resources found that fluids left the well pad in violation of state law and the company failed to maintain operational control on it. The agency also said the company disposed of brine fluid used in fracking, or hydraulic fracturing, in an unapproved method. Investigators confirmed that the fluids from the well pad depleted oxygen levels in a nearby creek, where about 70,000 fish died, according to the statement. Teresa Mills, an Ohio organizer with the Center for Health, Environment and Justice, told The Columbus Dispatch that the fines were "a slap on the wrist."Authorities have said that a tubing malfunction led to the fire that spread to about 20 trucks on the pad. No injuries were reported.

Ohio Supreme Court orders frack ban onto Nov. ballot: The Ohio Supreme Court agreed with Youngstown that the Mahoning County Board of Elections lacks authority not to certify an anti-fracking charter amendment and ordered it placed on the Nov. 3 ballot. In a 7-0 decision Thursday, the court ruled the board does “not have authority to sit as arbiters of the legality or constitutionality of a ballot measure’s substantive terms. An unconstitutional amendment may be a proper item for referendum or initiative. Such an amendment becomes void and unenforceable only when declared unconstitutional by a court of competent jurisdiction.” “We’re pleased the court did what we thought was the law and glad citizens will have an opportunity to vote on the proposed charter amendment,” said city Law Director Martin Hume. “This was about the separation of powers. The board made a decision that should be the responsibility of the judicial branch.” The city filed a writ of mandamus with the high court Aug. 28, two days after the board voted not to certify the citizen-initiative charter amendment. The city contended the board acted “illegally” by refusing to put the issue on the ballot. The board said it largely based its decision on a Feb. 17 Supreme Court decision that the Ohio Constitution’s home-rule amendment doesn’t grant local governments the power to regulate oil and gas operations in their limits, and that Ohio law gives the Department of Natural Resources the exclusive authority to regulate oil and gas wells.

StatOil fined $223000 over Ohio fracking-well fire - Columbus Dispatch -- Ohio environmental regulators will fine an international oil and gas company about $223,000 for a blowout and fire last summer at a Monroe County fracking well that contaminated a nearby stream, killed fish for miles and forced about 25 people from their houses.  StatOil North America, the company that operated the well, can resume fracking there after it pays the fines, which were announced on Tuesday. As much as $75,000 could go to first responders in eastern Ohio to help them deal with future oil and gas emergencies. The fines include about $41,000 for the roughly 70,000 fish that died after chemicals ran off the well pad and into a nearby creek, and about $132,000 for contaminating the water. The fire broke out on June 28, 2014. The Ohio Environmental Protection Agency and the Ohio Department of Natural Resources assessed the fines. StatOil officials did not return calls seeking comment. Teresa Mills, Ohio organizer with the Center for Health, Environment and Justice, called the fines “a slap on the wrist.” “Not even a dollar per fish,” she said. “So much for protecting wildlife.”

Gas well flame seen near Route 11 in Columbiana County - The Leetonia Police Department wants people to know that a large flame that visible in the area is not from a structure fire, but from a fracking well. Police say the flame is from a well located in the vicinity of Route 164 and Route 558. The flame, which can be seen from Route 11 is being used to burn off gas at the well. Energy companies use a method known as flaring, which according to the Ohio Department of Natural Resources is the controlled burning of natural gas and a common practice in oil and gas exploration, production and processing operations.

Step Energy scraps waterless fracking for now -- When GasFrac began testing their waterless fracking technique in Ohio, the prospect of using less water appealed to developers and environmentalists alike– rather than using millions of gallons of water for hydraulic fracturing, GasFrac’s method used a propane gel to fracture the earth. But Ohio Energy Inc. reports developers of the once-innovative process recently sacked plans for further development after testing yielded disappointing results. “The technology piece, the propane fracking, I like it,” said Regan Davis, CEO Step Energy Services, which now owns GasFrac. “I think it’s a technology that has a place in the market. But for our purposes, we decided that we weren’t going to be in that business, so we mothballed that whole segment.” GasFrac hoped to open access to the Utica shale play’s oil supply, development for which Energy Inc. writes is relatively young compared to Ohio’s gas industry.

Survey: Allegheny River water quality holds steady - Water quality is holding steady on the Allegheny River even though Marcellus shale drilling waste water and other river contaminants linger, according to one of the most comprehensive water surveys in the region.   However, all the news is not good: water from a creek in Indiana County that eventually drains into the Allegheny River via the Kiski River near Freeport keeps turning up bromide, a salt often associated with waste water from Marcellus shale fracking and abandoned mine drainage.  When combined with chlorine to treat drinking water drawn from the Allegheny, bromide form the carcinogen trihalomethane (THM).  The results are part of the Three Rivers Quest (3RQ) study, now in its third year, covering more than 30,000 square miles of the Upper Ohio River Basin. There are 54 sampling locations along the Allegheny, Monongahela and Ohio rivers and at the mouths of their major tributaries.   The highest concentration of bromide, the most persistent pollutant in the study since it began, was found in Blacklick Creek in Indiana County. The salt then travels downstream hitting the Conemaugh, Kiski and Allegheny rivers.  By the time the bromides hit the Kiski and the Allegheny rivers, they're diluted, according to Beth Dakin, a researcher from Duquesne University with 3RQ.  THMs showed up at varying levels in 2011 for drinking water surveys at water authorities including Tarentum, Buffalo Township, Brackenridge and New Kensington — all of which draw their water from the Allegheny River.

Sunoco claims eminent domain over properties in pipeline path -- A natural gas products distribution company has begun eminent domain proceedings against a number of Lebanon County property owners to obtain rights-of-way for a pipeline project. Sunoco Pipeline L.P. filed “Documents of Taking” in July and August against 13 property owners who live in the path of the company's Mariner East Pipeline project. Similar actions have been taken in other counties where the 350-mile Mariner East 1 Pipeline crosses underground. The company is re-purposing the 84-year-old pipeline that crosses southern portions of Lebanon County so it can carry products like ethane and propane from natural-gas-rich western Pennsylvania to its refineries in Marcus Hook, where it can be shipped to other states and overseas. The pipeline previously carried liquid petroleum fuels from the refinery westward. Sunoco also plans to add at least one parallel pipeline, called Mariner East 2, and possibly a second, and is seeking right-of-ways to construct them. Most of the properties condemned by Sunoco as part of the eminent domain process are residential. However, a few, including Thousand Trails Campground in South Annville Township and the former Alcoa property on State Drive in South Lebanon Township, are commercial properties. Since Sunoco began the eminent domain process, five land owners have negotiated settlements granting the company a right-of-way on their properties, according to court documents. Whether the company has the right to use the eminent domain law to forcibly obtain right-of-ways from landowners who do not wish to grant them for the dollar amount offered by the company, or for any amount, is a matter of disagreement.

Pipeline crunch is a key topic at Philadelphia shale conference - The buildout of pipelines needed to move natural gas from Pennsylvania’s shale fields to markets could last another 20 years, the head of one of the state’s largest utilities said Wednesday. “That’s probably a two-decade period to put the infrastructure in place to ensure continuous access to low-cost energy,” UGI Corp. CEO John Walsh told several hundred energy industry leaders during an annual conference at the Pennsylvania Convention Center. The Marcellus Shale Coalition’s Shale Insight conference began with a discussion of Philadelphia’s role in the shale boom that has generally taken place hundreds of miles to the north and west. A revived energy hub that has developed here at the end of crude oil rail lines and natural gas liquid pipelines “is basically a taste of what is yet to come,” said Philip Rinaldi, CEO of Philadelphia Energy Solutions, which runs the East Coast’s largest refinery.“This is a region that already is acting as a funnel for energy products,” he said. The key sites include the South Philadelphia refinery that Rinaldi’s company bought to process 20 percent of the oil pulled from shale in North Dakota, and Sunoco Logistics’ natural gas liquids terminal south of the city in Marcus Hook. Sunoco Logistics is building at least a second and possibly a third pipeline as part of its Mariner East project to bring propane, ethane and butane from shale wells around Pittsburgh to the terminal.

Is This The End Of The US Shale Gas Revolution - While everyone is watching the oil bust, there is another bust going on – one for natural gas.  Before there was a boom in oil production in the United States, there was the “shale gas revolution.” That is where we all became familiar with terms like “fracking.” And the Marcellus, Haynesville, and Barnett Shales were famous long before the Bakken or Permian. The surge in natural gas production crashed prices, fueling a huge increase in activity in petrochemicals and causing a major switch from coal to natural gas in the electric power industry. Aside from a few brief moments (such as the winter of 2014), natural gas has mostly traded around $4 per million Btu (MMBtu) or lower since the financial crisis of 2008. But unlike oil, the boom in shale gas did not stop with plummeting prices. U.S. natural gas production continued to climb. For example, production from the prolific Marcellus Shale – which spans Pennsylvania, West Virginia and Ohio – skyrocketed from less than 2 billion cubic feet per day (bcf/d) in 2009, to a record-high of over 16.5 bcf/d this year. And the dramatic ramp up in production occurred over several years when prices were extremely low. Much of that has to do with the huge innovations in drilling techniques, including fracking and horizontal drilling, which allowed for production to remain profitable despite the downturn in prices. But some of the credit also goes to drillers searching for more lucrative natural gas liquids and crude oil. Dry natural gas is produced in association with oil. With oil prices extremely high, especially in the period between 2010 and 2014, drillers continued to produce natural gas even if they were looking for oil.  So only after oil prices busted did natural gas production start to slow down. In fact, while the markets are eagerly watching for declines in oil production, few are noticing that natural gas production is also declining. The EIA reports that in October, several of the largest shale gas regions will post their fourth month in a row of production declines. With a loss of around 208 million cubic feet per day expected in October, the four-month drop off will be the longest streak of losses in about eight years.

What the Industry Doesn’t Want You to Know About Fracking - When we hear politicians and gas companies extoll the virtues of fracking, jobs created by drilling is usually high on their list of talking points. But the jobs created by fracking are extremely dangerous, exposing workers to chemicals whose long-term impacts on human health are yet unknown. In fact, the fatality rate of oil field jobs is seven times greater than the national average.  In our new short film, GASWORK: The Fight for C.J.’s Law, we conduct an investigation into worker safety and chemical risk. We follow Charlotte Bevins as she fights for CJ’s law—a bill to protect workers named for her brother CJ Bevins, who died at an unsafe drilling site. We interview many workers who have been asked to clean drill sites, transport radioactive and carcinogenic chemicals, steam-clean the inside of condensate tanks which contain harmful volatile organic compounds, polycyclic aromatic hydrocarbons and other chemicals, and have been told to do so with no safety equipment. A lot of reporting has been done on the health impacts fracking and drilling have on local communities, but often the story of the workers, the folks who are exposed to fracking chemicals and unsafe working conditions around the clock, goes untold. GASWORK has rare interviews with oil and gas workers who have come forward to speak out about the unsafe conditions.  The industry won’t tell you that the “good” jobs created by fracking are paying men to poison their own communities in order to feed their families. They won’t tell you that those jobs are not union jobs and if you get hurt, you are on your own. And they won’t tell you that the transition to 100 percent renewables will create hundreds of thousands of safer jobs.

Poisoning The Community: Gas Compressor Stations --In rural Minisink, NY, air contaminants from the Millennium Pipeline gas compressor now exceed what would be found even in a big city, says environmental health consultant David Brown. After dozens of Minisink residents found they were beset by similar ailments immediately after the compressor station was built in 2013, a two-month study of air contaminants and residents’ symptoms was conducted by Brown and his cohorts at Southwest Pennsylvania Environmental Health Project. The nonprofit group of public health experts, based in McMurray, PA, have been investigating a comparable pattern of symptoms near gas drilling sites in Pennsylvania and other states. In the Minisink study, recently released, they found that spikes in air toxins around the compressor coincided with residents’ adverse health symptoms. The study involved 35 residents, who were surveyed using a well-tested survey method, including interviews by a physician. SWP-EHP also provided five Speck monitors to measure fine particulate matter in air near residences for the two months, from October 19 to December 17 of 2014. Participants additionally used special canisters to capture air samples during “odor events,” periods when the compressor emitted strong odors. Asthma, nosebleeds, headaches, and rashes were common among the 35 participants in eight families living within one mile of the compressor. Those symptoms are also frequently reported around gas fracking sites, said Brown. Six of the 12 children studied had nosebleeds, which Brown attributed to elevated blood pressure or irritation of mucous membranes by formaldehyde, a carcinogen found in excess around compressors in a recent SUNY Albany study. Of particular concern were elevations of fine particulate matter (PM 2.5).

Residents organizing against offshore testing, drilling - The next wave of opposition to offshore testing for oil and gas deposits and drilling is emerging — grassroots groups looking to amass voter numbers to sway government officials. Don’t Drill Low country plans a launch-party meeting Tuesday with addresses by drilling opponents U.S. Rep. Mark Sanford and state Sen. Chip Campsen. The meeting, open to the public, is at 6:30 p.m. at the Charleston Harbor Resort Yacht Club, 32 Patriots Point Road in Mount Pleasant. Resident groups have begun coalescing in the Carolinas after at least 40 community governments in the two states have come out against the proposed drilling, along with hundreds of businesses and business groups. A coalition of governors, including Gov. Nikki Haley, worked largely behind the scenes with industry lobbyists to urge federal officials in the Obama administration to open the Southeast coast to oil and natural gas testing and drilling. In January, the Interior Department included the region in its proposed areas for five-year leases that would open the waters to exploration with repeated blasts of seismic guns 50 miles or more offshore. Most state political figures and others support exploring for potential economic benefits, even though the federal Bureau of Ocean Energy Management has concluded that the work “may result in low immediate economic benefits for nearby communities.” The leases would open up swaths of the Atlantic Ocean, Gulf of Mexico and Arctic for new oil and gas development. Meanwhile, a bill now in the U.S. Senate would give states the option to open up their own waters to testing closer the shore.

Hearing set on fracking moratorium - The Stokes County Board of Commissioners chambers erupted in applause Monday after the board agreed to set a public hearing on a proposed three-year moratorium on fracking in Stokes County. The hearing will be held in Courtroom A in the Stokes County Courthouse on Sept. 28 at 6 p.m. and commissioners could vote to approve the moratorium after the hearing. Under the proposed moratorium, it would be unlawful for anyone to engage in hydraulic fracturing (fracking) or oil and gas development for a three year time period with violators of the ordinance facing a $500 per day fine. Commissioners said they were in favor of the proposed moratorium, noting that they had not commented on the issue previously because the board’s policy is to not respond to public comments. “We have had several interesting people from Stokes County give their reasoning which was very beneficial to me,” said Commissioner James Booth. “You need to listen to what the people say and then gather information. This moratorium will allow us time to gather more information.” Commissioner Leon Inman provided a history of how the board had addressed the issue, noting that they had authored a resolution opposing fracking several years ago.

Lee Commissioners may seek fracking 'timeout' — Lee County commissioners are expected to consider a moratorium this month that could keep fracking out of the county for two years. Amy Dalrymple, chairwoman of the county Board of Commissioners, said a moratorium similar to the one adopted last month by Chatham County commissioners will be on the Lee County commissioners’ agenda for their Sept. 21 meeting. “I don’t know how the board is going to vote on it on the 21st, but it’s something the citizens have been calling on us to consider,” she said. Fracking, which is short for hydraulic fracturing, is a controversial method of horizontal drilling that involves injecting water, sand and chemicals under pressure to fracture rocks and release natural gas. Lee County has gained attention in the debate over fracking because geologists believe prehistoric formations of rock under the county and the surrounding area hold large deposits of natural gas. Dalrymple said the moratorium will include fracking, but also will cover other forms of mining. It will not be a ban, she said. “It is simply kind of a timeout.” State law prohibits local governments from banning fracking. Lee County is considering an update to its land use plan and unified development ordinance, Dalrymple said. The process is a huge undertaking, she said. “It’s not something you can do overnight,” she said. “It really takes months, if not more than a year.”

Application filed for Atlantic Coast Pipeline - : A formal application for a 564-mile natural gas pipeline into eastern North Carolina, backed in part by Duke Energy and Piedmont Natural Gas, was filed Friday with federal regulators. The Federal Energy Regulatory Commission will decide whether the Atlantic Coast Pipeline benefits the public and is needed. FERC and other agencies will weigh the environmental and social impacts of the line. The $5 billion project was announced a year ago. The new line will tap rich shale-gas reserves in West Virginia, Ohio and Pennsylvania and send fuel south. The sole existing line into North Carolina runs from Texas to New York City, cutting across western North Carolina, including Charlotte. The 30,000-page application includes environmental reports and exhibits on the hotly-debated route of the line. Dominion Energy, which will build and operate the pipeline, says hundreds of route adjustments have been made. The project has prompted bitter protests in Virginia. A final route for the line has not yet been announced. The pipeline will be 42 inches in diameter in West Virginia and Virginia, and 36 inches in North Carolina. The North Carolina portion will require a right-of-way 110 feet wide during construction and 50 feet wide permanently.

Louisiana oil and gas lease sales slump in September — Sales of oil and gas drilling rights on Louisiana state and local lands fell to $476,400 in September. The state saw relatively lucrative lease sales in June and August despite falling oil prices. Times-Picayune reports the Louisiana Mineral and Energy Board awarded 10 leases covering nearly 1,600 acres during the Sept. 9 sale. The four participating companies nominated 36 tracts covering more than 54,000 acres to be included in the sale. Bonus revenue collected in June hit $3.7 million, a two-year high, according to state records. Sales fell below $10,000 in July before surging to more than $3 million in August. Sales rise and fall depending on the amount of data oil and gas companies have on reserves on state and local land.

Texas drilling permits down in Aug -  Drilling permits have plummeted in Texas from the same time one year ago according to numbers reported by the Railroad Commission of Texas (RRC). According to the RRC, the regulation authority issued a total of 864 original drilling permits in August 2015 compared to 2,440 in August 2014. The August total included 730 permits to drill new oil or gas wells, 14 to re-enter plugged well bores, and 120 for re-completions of existing well bores. In August 2015, Commission staff processed 1,113 oil, 172 gas, 36 injection and 11 other completions compared to 2,157 oil, 303 gas, 92 injection and four other completions in August 2014. In addition, total well completions for 2015 year to date are 14,665, down from 20,657 recorded during the same period in 2014. Last week, Baker Hughes Inc. reported that the Texas rig count as of September 11 was 366, representing about 43 percent of all active rigs in the United States. Overall, Baker Hughes reported 848 rigs were in operation in the nation. For comparison, the U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999. Last year at this time, 1,931 rigs were active.

Royalty checks shrivel in Texas as oil, gas prices tumble (AP) - Once-lucrative royalty checks for mineral rights owners across Texas are shriveling as oil and natural gas prices tumble.The Dallas Morning News reported Saturday that land owners who leased their property to drillers during the oil and gas boom with the promise of steady income are starting to feel the pinch. Jerry Simmons, executive director of the National Association of Royalty Owners, says there's a perception that all mineral rights owners are rich. But he says the average owner is 67 years old and receives less than $500 a month in royalty checks. The Federal Reserve Bank of Kansas City found that landowners living in the Eagle Ford Shale received about $3 billion in royalty payments last year. Economists say that worked out to roughly $12,000 for every resident.

Battle Over Flaming Water and Fracking Reignites As Analysis Prompts Call for Renewed EPA Investigation --  For years, Steven Lipsky, a Texas homeowner who has appeared in a viral video with a garden hose spewing flames, has fought legal battles — most often with federal EPA investigators finding his claims of contamination credible, while Texas regulators and the drilling company, Range Resources, taking the opposite view. An analysis released this week, describing research by scientists at the University of Texas at Arlington, may open this case once again. It offers new evidence that the tests taken at Mr. Lipsky’s well water by Range Resources and Texas regulators, who reported little or no contamination, were flawed and potentially inaccurate. In the videotaped presentation, Zacariah Hildenbrand, a visiting scholar at the University of Texas at Arlington, lays out a detailed case that the Lipsky family’s water carries high levels of contamination, including methane matching that found in the gas from two nearby Range Resources Barnett shale gas wells, and presents evidence that past test results reported by the Texas Railroad Commission and Range were not reliable. Much of the research he describes in the video was conducted by a team from the University of Texas at Arlington , and Dr. Hildenbrand was later hired by Mr. Lipsky’s legal team to explain those findings on tape.  The Lipsky case was also at the center of a jurisdictional showdown between Texas and the federal government, after the EPA stepped in and issued an emergency order over the water contamination, and then Texas pushed back and the EPA dropped its investigation. The video also further complicates Range Resource’s ongoing defamation lawsuit against Mr. Lipsky over footage showing him holding a flaming garden hose hooked to a gas vent on the well that Range Resources says misled viewers into thinking the Lipsky’s water was on fire. “This is incredibly compelling evidence that something horribly wrong has happened here,” Dr. Hildenbrand said in the video, which Mr. Lipsky sent this summer to the EPA’s internal watchdog, the Office of Inspector General, as part of a request that the EPA re-open his case.

MAJOR CLEANUP: EPA working 'time critical emergency' pollution site - An Environmental Protection Agency team is cleaning up thousands of leaky oil drums left for years in industrial east Odessa that investigators say threatened groundwater, risked dangerous runoff to a nearby neighborhood and created a fire hazard after a local businessman abandoned them when his company failed. The site, about 4.5 acres at the intersection Market Street and Marco Avenue, contained about 15,000 oil drums in various states of disrepair, said William Rhotenberry, a federal on-scene coordinator with the EPA overseeing cleanup efforts on Tuesday. There are also open container pits, tanks containing unidentified material, stained soil from barrels that apparently leaked and a water well that Rhotenberry said has more than a foot of oily sludge on top of the water column in the well. The business was Ector Drum, which also operated under the name Lone Star Drum, at 2525 and 2604 North Marco Ave., just outside the Odessa city limits. It specialized in drum recycling operations for the oilfield. Ector Drum existed until 2012, at least on paper filed with Texas Secretary of State. But Rhotenberry said it appears to have gone out of business in 2010 or 2011. “In terms of threat, No. 1 would be the water well situation,” Rhotenberry said. “And the second is fire. If this thing were left just another two years untouched, chances are it would catch fire one way or another.”

Oil drilling boom brings trouble to farm, ranch lands - Carl Johnson and son Justin, who have complained for years about spills of oilfield wastewater where they raise cattle in the high plains of New Mexico, stroll across a 1½acre patch of sandy soil – lifeless, save for a scattering of stunted weeds. Five years ago, a broken pipe soaked the land with as much as 420,000 gallons of wastewater, a salty drilling byproduct that killed the shrubs and grass. It was among dozens of spills that have damaged the Johnsons’ grazing lands and made them worry about their groundwater. “If we lose our water,” Justin Johnson said, “that ruins our ranch.” Their plight illustrates a side effect of oil and gas production that has worsened with the past decade’s drilling boom: spills of wastewater that foul the land, kill wildlife and threaten freshwater supplies. An Associated Press analysis of data from leading oil- and gas-producing states found more than 175 million gallons of wastewater spilled from 2009 to 2014 in incidents involving ruptured pipes, overflowing storage tanks and other mishaps or even deliberate dumping. There were some 21,651 individual spills. And these numbers are incomplete because many releases go unreported.Though oil spills get more attention, wastewater spills can be more damaging. Microbes in soil eventually degrade spilled oil. Not so with wastewater – also known as brine, produced water or saltwater. Unless thoroughly cleansed, salt-saturated land dries up. Trees die. Crops cannot take root. “Oil spills may look bad, but we know how to clean them up,” said Kerry Sublette, a University of Tulsa environmental engineer. “Brine spills are much more difficult.”

Interior Dept.: High-risk oil, gas wells checks lack funding -- (AP) — The U.S. Bureau of Land Management lacks sufficient resources to inspect high-risk oil and gas wells on federal land as a drilling boom continues in Wyoming, Colorado and other states, Interior Secretary Sally Jewell said Tuesday. The Obama administration has proposed a fee on oil and gas drillers that would allow the land management agency to hire more than 60 inspectors, but the proposal has not gained traction in Congress. The land bureau faces a “major backlog of inspections” as it tries to keep pace with a drilling boom that has sharply increased U.S. oil and gas production in recent years, Jewell said. “We do not have the resources necessary to do the job,” Jewell said at a breakfast sponsored by the Christian Science Monitor. The Associated Press reported last year that 40 percent of new wells on federal and Indian land with a higher pollution risk were not inspected from 2009 to 2012. Asked if the situation had improved since then, Jewell said no, adding: “We are under-resourced.” While the proposed fee has stalled in Congress, Jewell said it remains the agency’s best option to whittle its inspections backlog. “It makes no sense not to match supply and demand,” she said, adding that if the drilling boom slows or fizzles, the need to charge a fee would go away. Jewell also lamented a practice in which energy companies “flare” or burn off vast supplies of natural gas as they drill for oil. A report by the Government Accountability Office said 40 percent of the gas being burned or vented could be captured economically and sold.

Koch Addicts: University of Colorado Frackademics -- An investigation by Greenpeace and the Boulder Weekly has found troubling ties between the University of Colorado Boulder and Colorado public relations firms working on behalf of the  fracking industry and theKoch brothers. The controversy centers on the partnership between the University of Colorado Leeds School of Business and the Common Sense Policy Roundtable (CSPR), a front group funded by the oil and gas industry. This partnership was formed to produce economic studies that benefit the fracking industry’s PR strategy. CSPR paid the university to host the studies and fully controlled the priorities of the researchers. Documents obtained by Greenpeace reveal that the studies were conceived of, edited and strategically used by PR firms to influence fracking policy in Colorado, yet CSPR’s financial ties to the oil and gas industry were not disclosed to the media or in thepublished studies. The studies provided seemingly third-party validation for the oil industry’s attack on environmental regulations.

Fracking leads to spill at neighboring well -  A valve that failed during hydraulic fracturing operations caused a neighboring oil well to release fluids for 36 hours, leading to a spill of more than 600 barrels of produced water.  Burlington Resources Oil & Gas Co. reported the spill Tuesday at a well in Dunn County about 13 miles north of Killdeer, the Department of Mineral Resources said Thursday. Spokeswoman Alison Ritter said the company had shut down the well and crews were monitoring it while fracking a neighboring well owned by the same company. A valve failure in the frac operation caused an uncontrolled release of produced water to occur at the neighboring well, starting about 8 a.m. Tuesday, Ritter said. An estimated 630 barrels, or 26,460 gallons, of produced water and 20 barrels, or 840 gallons, of oil were released but contained on the well location, Ritter said. All but 20 barrels had been recovered Thursday, she said. Additional fluid being released was diverted into tanks, Ritter said. Crews regained control of the well about 8 p.m. Wednesday after pumping heavy saltwater down the well, Ritter said.

Fracking and fire cause two Bakken spills - Last week the North Dakota Oil and Gas Division reported two spills in Dunn and Williams counties, caused by a valve failure during a nearby hydraulic fracturing operation and a fire, respectively. According to the Forum News Service (FNS), on Tuesday Burlington Resources Oil & Gas Co. reported the valve failure and resulting spill in Dunn County, approximately 13 miles north of Killdeer. Department of Mineral Resources Spokeswoman Alison Ritter said a valve failure in the frac operation resulted in an uncontrolled release of produced water and oil from an adjacent well. The failure caused the release of an estimated 20 barrels, or 840 gallons, of oil and 630 barrels, or 26,460 gallons, of produced water. The water and oil were contained within the well location, and by Thursday, nearly all of the spill had been recovered. Other fluid being released was redirected and gathered into tanks while crews worked to regain control of the well, which they accomplished Wednesday after pumping heavy saltwater down the well. Petroleum geologist with the DMR, Richard Suggs, told the FNS that the high pressure at which fluids are injected during hydraulic fracturing operations can increase pressure in nearby wells. Ritter said, “We do have rules in place to try to prevent something like this from happening. This was a case where the valve failed and it couldn’t be prevented.” On Wednesday, in Williams County, Enduro Operating LLC reported that a fire resulted in approximately 460 barrels, or 19,320 gallons, of saltwater to be released at a saltwater disposal well roughly 7 miles southeast of Wildrose. The company reports nearly all of the released saltwater has been recovered. The DMR says state inspectors have been to both locations and will continue to oversee additional clean-up and remediation efforts.

Bakken flaring up in July -   While North Dakota oil production dipped slightly during the month of July, the volume of flared gas jumped, reports the Bismarck Tribune. During a monthly media briefing on state oil and gas production, North Dakota Department of Mineral Resources Director Lynn Helms reported that in terms of percentage of gas flared, July saw flaring rates of 20 percent compared to the 18 percent seen the month prior. Helms said, “On the flaring side, we took a step back. Every month, we’ve seen a slight increase in flared volume. Less gas flared is the real goal.” The record amount of gas flared peaked at 36 percent in September 2011. Last year, with the implementation of a new flaring policy, that percentage has been on a steady decline. As reported by the Tribune, Helms said the increase in flaring was anticipated as infrastructure capacity was reached. However, two natural gas processing plants are expected to come online next year, which should alleviate the current strain placed on existing infrastructure. Helms said, “The key to reducing volume is building infrastructure in the core area,” where operators have shifted focus amidst the oil price decline. Preliminary natural gas production figures for July estimate that statewide, nearly 1.66 billion cubic feet per day has been captured, up from the 1.65 billion cubic feet per day the previous month. Also up for the month of July was the number of total producing wells. The initial count for July was 12,940, compared to the 12,868 in June. Of these wells, 10,240 are producing in the Bakken and Three Forks shale formations.

North Dakota oil output down only slightly in July – North Dakota’s daily oil production fell less than 1 percent in July, state regulators said on Monday, a drop far less than many feared and one showing the state’s Bakken shale formation could continue pumping high volumes of crude for the foreseeable future despite sliding prices. The state, the No. 2 U.S. crude producer, had output of 1,201,920 barrels of oil per day (bpd) in July, down from 1,211,328 bpd in June, according to the Department of Mineral Resources, which reports on a two-month lag. The slight dip in output came despite a more than 50 percent plunge in crude prices in the past year that has eroded the oil industry’s profitability. Indeed, North Dakota’s drilling rig count has dropped alongside the price of oil, and is 12 percent below June levels. Yet advances in technology and efficiencies have helped the productivity of each drilling rig roughly double in the past year, helping the industry do more with less. Highlighting that gain, the number of producing wells in North Dakota hit 12,940 in July, an all-time high. Natural gas production rose slightly in the month to about 1,657,138 million cubic feet per day, also an all-time high.

Random Update Of A Well Still Flowing Since Spud Six Years Ago -- September 18, 2015  -- The well:

  • 17147, 2,101, XTO, Boucher 41X-21, Hofflund, t4/09; F; cum 690K 7/15;
This is a Three Forks well. There are some minor sundry forms but the last major sundry form was dated March 23, 2009. No work on this well since -- or at least not enough work to require a report. It is still flowing at 5,000 bbls per month. Very little water being produced. Multiple payzones were evaluated when drilling this well; middle Bakken was felt to be economical. Gas readings while drilling gradually increased to 750 to 10,000 units; it was noted that the "abnormally high readings while drilling the lateral tangent to casing point may have been due in part to the close proximity to the recently frac'd DeAngelis 41X-21. For most of the lateral, the high volume of gas required the mud to be diverted through the gas buster, resulting in consistently strong flares. Extremely strong flares, at times exceeding 50 feet, were observed with trip gas and downtime gas kicks." It was a challenge to control the gas.  Open hole frack with 900,000 lbs of sand in six stages. Sometimes paperwork fails to catch up with what is happening in the field; in this case I do not see any evidence this well is on a pump.

Breaking even in the Bakken: Dunn County boasts lowest cost -- Of the core counties in the Bakken, Dunn County boasts the lowest break-even costs for oil production, reports the Forum News Service (FNS). According to figures from the North Dakota Department of Mineral Resources, producers operating in Dunn County are able to begin collecting revenue after the $24 per barrel mark. In comparison, to the northwest in McKenzie County, the break-even price came in at $27 per barrel. To the north of McKenzie in Williams County, the cut-off is $38 per barrel, and due south of Dunn in Stark County, the price is $41 per barrel. The counties with the highest break-even costs were listed at $85 per barrel in Bowman and Slope Counties, located in the southwest corner of North Dakota, and Bottineau and Renville Counties in the north-central region bordering Canada. As reported by FNS, Department of Mineral Resources Director Lynn Helms calculated the costs and said that in Dunn County, the Bakken formation is shallower than other areas, making it a more cost-effective area in which to operate.   A main factor, Commissioner Daryl Dukart said, is the amount of produced water that is associated with the produced oil. Less water means less needs to be separated from the oil, and “the formula just becomes cheaper to separate it.” Dunn County is one such area that doesn’t produce much water, making the process of hydraulic fracturing easier. Dunn County also features shale that is denser than other areas, creating conditions which are more conducive for oil production.

Asked for info on bridge conditions, railroad carrying Bakken crude tells cities no -  Despite urging from a federal agency that railroads hand over more information on safety conditions of bridges, a carrier moving Bakken crude oil through Milwaukee says it doesn’t plan to provide such details. Sen. Tammy Baldwin (D-Wis.) distributed a letter from Sarah Feinberg, acting administrator of the Federal Railroad Administration, in which the regulator urged railroad carriers to provide more information to municipalities on the safety status of bridges. Milwaukee officials have complained about the lack of information on the structural integrity of railroad bridges used by Canadian Pacific in the city. “When a local leader or elected official asks a railroad about the safety status of a railroad bridge, they deserve a timely and transparent response,” Feinberg wrote. “I urge you to engage more directly with local leaders and provide more timely information to assure the community that the bridges in their communities are safe and structurally sound.” “CP’s position has not changed,” said Andy Cummings, a manager of media relations for the company. “It is our policy to work directly with the Federal Railroad Administration, which is our regulator, on any concerns they have with our infrastructure.”

Court: Environmental study required for pipeline certificate — The Minnesota Court of Appeals has reversed regulators’ decision to grant a certificate of need for the proposed Sandpiper oil pipeline, saying Monday that state regulators must complete an environmental impact statement before the certificate can be issued. The appeals court sent the issue back to the Minnesota Public Utilities Commission to conduct an environmental review and reconsider whether a certificate should be granted. Minnesota regulators granted the certificate in June, saying the $2.6 billion, 610-mile pipeline from North Dakota’s Bakken oil fields to Superior, Wisconsin, was necessary and in the public interest. A lengthy environmental review of Enbridge Energy’s project was set to take place as officials determined the pipeline’s final route. But a three-judge panel of the appeals court said Monday that the certificate constituted a major governmental action, so state law requires the environmental impact statement be completed before that certificate is granted. No one disputed that the pipeline would be subject to environmental review, but the timing of a review was at issue. Traditionally, the certificate of need and routing permit proceedings for pipelines are conducted at the same time, but in this case, the commission conducted certificate of need proceedings first.

US senate committee probes pipeline safety after oil spills — A U.S. Senate committee is holding a field hearing on pipeline safety following spills that fouled a Montana river and the coast of Southern California. Senators are examining whether the government has enough safety inspectors to manage a boom in U.S. energy production that’s led to a rise in oil pipeline accidents after years of declines. More than 30,000 gallons of oil spilled into the Yellowstone River in January from a Bridger Pipeline Co. line near Glendive, Montana, shutting down the city’s water supply. In May, a corroded pipeline owned by Plains All American ruptured and released at least 101,000 gallons of crude along the scenic coastline of Santa Barbara, California. Both accidents remain under investigation.

Republicans oppose new safety rules on offshore drilling — Republican lawmakers on Tuesday criticized an Obama administration move to toughen standards for offshore drilling, saying the new rules would be costly for drillers and threaten to shut down oil and gas exploration off the nation’s coasts. The Interior Department is preparing to issue standards to close what it says are gaps in blowout preventer rules. A blowout preventer is a piece of equipment designed to shut an out-of-control well. Such a device failed catastrophically when a BP well blew out in 2010, causing a massive oil spill. But the Republicans blasted the new rules at a field hearing of the U.S. House Committee on Natural Resources in New Orleans. No Democratic members showed up. The Republicans complained the rules are too government-driven and costly to industry. The Republicans also questioned whether the new rules would make drilling safer. They also argued that drillers have proven they’re safe under current regulations. Besides aiming to strengthen blowout preventers, the rules require more record keeping by drillers, force companies to do real-time monitoring of drilling operations and take steps to dig safer wells. The rules are expected to be phased in over years. The new drilling rules — which critics say have been slow to be handed down — grew out of calls for increased safety in offshore drilling following the massive BP spill in 2010.

Fracking Boom Bursts in Face of Low Oil Prices -- The oil cartel, OPEC, has confirmed what has been obvious to many for months: U.S. shale production is in deep, deep trouble as the fracking boom bursts in the face of low oil prices. The cartel published its latest monthly oil market report yesterday revealing that it believes it is winning the price war it started with the U.S. shale industry. The numbers speak for themselves as the U.S. drilling rig count continued its decline this month, dropping 13 rigs to 662. The overall rig count is now down 864 units year on year.  The report is seen as a must-read for people within the oil industry. “In North America, there are signs that U.S. production has started to respond to reduced investment and activity,” says the report. “Indeed, all eyes are on how quickly U.S. production falls.” The numbers speak for themselves as the U.S. drilling rig count continued its decline this month, dropping 13 rigs to 662. The overall rig count is now down 864 units year on year.  As if to re-iterate the point, OPEC cut its forecast for U.S. productionin 2015 by 100,000 barrels a day to 13.75 million and is also revising downwards U.S. shale production for next year by about 100,000 barrels a day, too.

US shale crude cash markets offer ray of hope amid global gloom - In shale strongholds of North Dakota and Texas, physical crude grades are trading at the highest premiums to futures prices in years, offering a glimmer of hope that a pickup in global oil markets might follow. While crude futures hover around 6-1/2-year lows, the cash markets, where producers and refiners buy and sell physical barrels of oil, are sending a more optimistic, if short-term, signal. West Texas Intermediate crude delivered to Midland, Texas , at the heart of the Permian Basin, is trading at a record $2.75 premium to benchmark U.S. futures. North Dakota’s Bakken crude fetches more than 50 cents more, the highest in two years. The two areas produce more than 60 percent of U.S. shale oil. Many cash crude traders say the relative strength of these markets most likely reflects local, short-term factors: newly built pipelines in Texas are increasing demand for local crude, while Midwest refiners are snapping up Bakken supplies following unexpected month-long outage in Canada. But as the gains persist, some are wondering if that could also be a sign that a year-long supply glut is beginning to ease, helping put a floor under world prices that have tumbled to their lowest since 2009. They point out that supply at Cushing, Oklahoma – the delivery point of the U.S. futures contract – continues to fall, defying expectations it would keep rising because of weak demand, refinery closures and maintenance season shut-downs.

Game-Changing, Cost-Saving Oil-Drilling Innovations That Are Keeping Shale Alive -- Multi-pad drilling is a major time- and cost-saver for oil and gas producers, since the drilling rig only has to be moved as little as 20 feet before the next well can be drilled. Think about it this way: Every individual oil well requires access roads, pipelines to collect the oil, electricity, and worker facilities while drilling is taking place. If a driller only has to deploy these resources once for four or more wells, versus having to do it every single well, we're talking potentially millions of dollars in savings for each well drilled, not to mention the reduced time.Chesapeake Energy went from 35 days to drill a well and move to the next location down to just 21 days this year. By cutting two weeks out of its drilling time, the company is not just saving money on the dayrate on the rig, but is also reducing "man hours" both for its staff and its contractors. This is why its well costs are steadily falling as it picks up drilling speed. The net result is that Chesapeake Energy's drilling costs in this particular play are down 42%, which really helps to mitigate some of the sting of lower commodity prices. One potential way to do to maximize returns on investment, which is already being used by major oil companies such as Devon Energy and Chesapeake Energy, is refracking older wells. In fact, according to Bloomberg, there are 50,000 U.S. oil wells that are candidates for refracking, which can cost around 75% less than drilling and fracking a new well.

This Is Why Americans Will Pay More For Gasoline If U.S Export Ban Is Lifted - -- They say that the first casualty of war is truth. And, on both sides of the fight over lifting the ban on exports of U.S. crude oil, the truth has already fallen into a coma. The ban was instituted in 1975 in order to make America less subject to swings in international oil supply after suffering the price shock associated with the Arab oil embargo in 1973Last week a committee in the U.S. House of Representatives voted to end the ban after a Senate committee voted in July to do the same. A vote by the full House and Senate could be near.  The proponents are careful NOT to say that the United States is energy-independent and so has oil to spare. Such claims made in the past backfired because it is too easy to look this up.Net U.S. imports of crude oil were almost 7 million barrels per day (mbpd) in the week ending September 4. That's out of about 15.6 mbpd of liquid fuels consumed domestically.*  Yet, it is this state of affairs that the proponents of lifting the export ban label as "abundance." Here's the relevant quote from the website of the Domestic Energy Producers Alliance (DEPA), a consortium of U.S. oil drillers: "Thanks to the genius of America's independent oil and natural gas producers, the world is moving from a concept of 'resource scarcity' toward 'resource abundance.'" (So, the world is not moving toward actualabundance, just the concept of abundance.)  In another piece entitled "From Scarcity To Abundance: Why The Strategic Petroleum Reserve Is Unnecessary" the group is more bold, saying that the supposed "abundance" is right here in the United States:  The site also includes a graph deceptively labeled "U.S. Crude Oil Production Potential" showing what looks like a rise in production to 20 mbpd by 2025. DEPA can always claim that that graph just represents estimates by its backers. The graph, however, stands in stark contrast to the latest "Short-Term Energy Outlook" just released by the U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy.  Even the ever-optimistic EIA forecasts that U.S. crude oil production will fall next year by 400,000 barrels per day to 8.8 mbpd.

White House opposes GOP bill to lift oil export ban - — The White House said Tuesday it opposes a House Republican bill to lift the four-decade-old ban on crude oil exports. A decision on whether to end the ban should be made by the Commerce Department, not Congress, White House press secretary Josh Earnest told reporters. Earnest also took a shot at House Majority Leader Kevin McCarthy and other Republicans pushing to end the oil export ban, which was imposed in the 1970s as the United States responded to an Arab oil embargo that sparked inflation and prompted long lines at gas stations. Earnest accused McCarthy and other Republicans of trying to “cozy up to oil interests” by pursuing policies that benefit the oil and gas industry. He urged Republicans to support efforts to eliminate subsidies for oil and gas companies and back investments in wind and solar power and other renewable energy. Earnest was responding a speech McCarthy, R-Calif., was scheduled to make in Houston Tuesday to promote the importance of U.S. energy production, including lifting the ban on crude oil exports. The House Energy and Commerce Committee is expected to approve a bill lifting the export ban later this week.

Senators struggle to find path for repealing U.S. oil export ban – U.S. senators who want to reverse the ban on oil exports are struggling to find wide legislation to attach their bill to, a sign that their effort to overturn the trade restriction could face difficulties. Senator John Hoeven, a Republican of North Dakota, the top U.S. oil-producing state besides Texas, said on Tuesday a measure to repeal the legislation would likely have to be attached to a wider bill. Adding the measure to a bill to renew a decades-old law regulating toxic chemicals would be a “good bet,” Hoeven said at a National Journal panel, because that bill is popular with both Democrats and Republicans. But Senator Tom Udall, a New Mexico Democrat and a co-author of the Toxic Substances Control act, wants his bill to move swiftly. Udall is discouraging lawmakers from adding amendments that are not germane to the control of toxics, his spokeswoman told Reuters. Oil producers say the exports ban, passed by Congress 40 years ago after the Arab oil embargo, has to be lifted to keep the U.S. drilling boom alive. Opponents say the ban ensures jobs for refinery workers and ship builders and lifting it could be bad for the environment. The full House of Representatives is likely to vote on a similar bill in coming weeks, with the chamber’s energy panel expected to easily pass the bill this Thursday. The White House said on Tuesday President Barack Obama, a Democrat, does not support the House bill advanced by Joe Barton, a Texas Republican.

House panel votes to lift 40-year-old US ban on oil exports — A key House committee endorsed a bill Thursday to lift the four-decade-old ban on crude oil exports, setting up a likely vote by the full House on a bill President Barack Obama opposes. The House Energy and Commerce Committee approved the legislation, 31-19, with three Democrats joining 28 Republicans to back the bill. The White House opposes the bill, arguing that a decision on whether to end the ban should be made by the Commerce Department, not Congress. Lawmakers who support the bill say an ongoing boom in oil and gas drilling has made the 1970s-era restrictions obsolete. “Numerous studies, including those from the Congressional Budget Office, Government Accountability Office and Energy Information Administration, all conclude that (allowing) oil exports would be a net jobs creator,” said Fred Upton, R-Mich., chairman of the energy panel. Lifting the export ban would also boost energy production and lower prices at the gasoline pump by increasing the overall crude supply, Upton said. Opponents said lifting the ban would benefit big oil companies at the expense of U.S. consumers and even national security. The United States still imports about 25 percent of oil used by businesses and consumers, a figure that could rise if some U.S. oil is diverted to international markets.

Members who voted to lift crude oil export ban have taken $11.5 Billion from the oil and gas industry throughout their comgressional careers -  Today, the House Energy and Commerce Committee voted to lift the crude oil export ban, a critical 40-year old policy that blocks a majority of raw American crude oil from being exported to foreign countries. The measure will now go to the full House of Representatives for a vote expected later this month. Allied Progress, an organization that has led campaigns in several states urging lawmakers to oppose ending of the policy, released the following statement from executive director Karl Frisch slamming Members of the committee who voted to repeal the ban: “Over the years the oil and gas industry have showered these Members of Congress with more than $11 million in campaign cash – it wouldn’t be a stretch to say they’ve been bought and paid for by big oil.”“Repealing the crude oil export ban could raise gas prices by more than a dime per gallon. It could send thousands of good-paying jobs overseas to foreign countries. Our hope of achieving American energy independence – something virtually every Member of Congress has called for – could be squandered for generations to come.”“Big oil and its Congressional shills may want this repeal to happen as quickly and quietly as possible but the American people will not be silent, nor will they forget. When gas prices go up, when jobs are lost, when we become even more dependent on foreign oil suppliers, they will know precisely who to blame.” According to an Allied Progress analysis of campaign disclosures maintained by Center for Responsive Politics, the 31 committee Members who supported repeal of the ban have accepted at least $11,546,338 in campaign contributions from the oil and gas industry throughout their Congressional careers: (list w/ amounts)

Oil Industry Influence Waning Amid Oil Price Slump - One unexpected victim of the oil price downturn seems to be the U.S. lobbying industry. The group of firms, whose business revolves around making sure government officials hear the concerns of U.S. companies, have long counted the oil and gas industry as a big customer. Now that seems to be changing as lower U.S. oil prices leave energy companies looking to cut costs wherever they can. Lobbying by oil and gas companies has dropped 10 percent on a year over year basis while lobbying by E&P firms fell a more dramatic 25 percent. What’s interesting though is how little cash the industry as a whole is spending to lobby the government and what an outsized influence that cash has. The oil and gas industry as a whole spent just under $24 million in the second quarter for instance, putting it on track to spend roughly $100 million for the entire year. The energy and natural resources industry in its entirety has spent a total of about $165 million so far in 2015 versus about $350 million in all of 2014. Those numbers, while large to an individual firm, are trivial in the context of an entire industry. In 2014 for instance, Exxon Mobil alone earned over $32 billion in profit or roughly 100 times the entire lobbying budget for the industry. Yet despite the low level of spending on lobbying, there is little doubt that Congress has tremendous power to help or hinder entire industries. In addition to obvious corporate issues like repatriation of foreign earnings and the corporate tax rate, smaller issues like the use of the country’s strategic petroleum reserve, the ethanol and solar tax credits, and the oil export ban all could dramatically change the face of the energy industry. In that sense then, either lobbying is very ineffective to accomplish these priorities, or U.S. energy firms are making a big mistake by not spending much more on lobbying.

"There's Just No Cash" Oil Price Increase Will Not Come Fast Enough To Save Alberta -- “There’s just no cash.” That’s the Coles Notes from a senior banker describing the book of oil service loans he manages for one of Alberta’s leading lenders. There’s simply not enough cash flow to support current levels of debt. Bankers and borrowers have kicked the can down the road about as far as they can as more oilfield service (OFS) and exploration and production (E&P) companies default on their loans and seek more relief on lending covenants. While a significant oil price increase to lift all the sinking boats will surely come, it won’t happen soon enough. More of the same won’t work. Oil industry debt is everyday news. But the discussion is about the symptoms, not the ailment. Companies cannot borrow their way out of debt. Equity capital is only available at distressed valuations. Specialized OFS assets will fetch only a fraction of replacement cost—if somebody actually wants them. Although oil and gas reserve valuations are down by half, borrowers are being forced to sell them anyway to repair balance sheets. The last four months of 2015 will be very difficult for any company with meaningful amounts of debt. Same for their lenders, the other signatories to the loan agreement. As the banker said, “There’s just no cash.” Here’s what it means.

For Canadian Oil Sands It's Adapt Or Die -- That low oil prices are squeezing out oil sands producers is not breaking news. But in spite of a grim oil price outlook, production out of Calgary has continued to grow, defying both expectations and logic. The implications are serious, not just for the future of Canada’s energy industry and economy, but also North American energy relations. In June 2015, the Canadian Association of Petroleum Producers (CAPP) revised down its 2030 production forecast to 5.3 million barrels per day (mbd). A year earlier the group predicted Canada would be able to produce 6.4 mbd by 2030. This is compared to the 3.7 mbd produced in 2014. Most experts agree that capital intensive oil sands projects are marginal – if not loss-making – in the $45 – $60 range. Yet production continues apace. Of course, the nature of capital intensive operations such as the oil sands is that they are also prohibitively expensive to shut down. Producers are left in limbo, praying that prices will rise. The implications for Canada should not be understated. Of the nation’s estimated 339 billion barrels of potential oil resources, oil sands account for around 90 percent. The Canadian dollar is at a decade low, which softens the blow for exporters in the short term but the long-term economic consequences are less rosy.

Gulf of Mexico lease sales to offer 42 million acres for drilling | The federal government will offer more than 42 million acres off the coasts of Louisiana, Mississippi, Alabama and western Florida for oil and gas drilling in a March lease sale. The sales will be the ninth and 10th under the Obama administration's five-year offshore leasing plan. The government will offer more than 7,900 lease blocks in the central and eastern Gulf of Mexico in waters ranging from 9 feet to more than 11,000 feet in depth. The sale will be held in March at the Mercedes-Benz Superdome in New Orleans. The Bureau of Ocean Energy Management estimates the proposed lease acreage in the central Gulf could hold up to 894 million barrels of oil and 3.9 trillion cubic feet of natural gas. Acreage in the eastern Gulf -- the waters off of Mississippi, Alabama and parts of Florida -- could hold up to 71 million barrels of oil and 162 billion cubic feet of natural gas. Federal lease sales for drilling rights in the Gulf slumped at the most recent sale in August amid low oil prices. Just five companies placed $22.6 million in bids, the smallest sale in nearly 30 years. The Obama administration has offered more than 60 million acres for oil and gas exploration under the current 2012-17 lease plan. Federal sales have drawn nearly $3 billion in bonus revenue.

The Exxon Valdez Spill Is Still Making Fish Suffer 26 Years Later --  Now, 26 years later, scientists have found that the spill was even more ecologically catastrophic than originally predicted. In a study published this morning in Scientific Reports, researchers led by NOAA toxicologist John Incardona show that even very low levels of oil contamination can disrupt normal development in salmon and herring.  Incardona and his colleagues exposed Alaskan-sourced salmon and herring embryos to varying degrees of crude oil contamination, ranging from a low dose of .023 parts per billion (ppb) to a high dose of 45 ppb. In the months after the fish hatched, the team observed a sliding scale of growth problems and heart defects in them, proportional to the oil exposure level. This is because oil literally gets under the skin of these developing fish through absorption during the pivotal embryonic stage. Even the lowest doses prevented a healthy population from emerging. Given that there are still about 21,000 gallons of oil dispersed throughout Alaska’s Prince William Sound—and lingering contamination hundreds of miles beyond it—it’s no wonder that salmon and herring populations have not significantly recovered.  While some species have recovered to their pre-spill numbers, the overall health of the region is still dire over a quarter century after the disaster. If there’s one silver lining to this grimy oil slick, it’s that scientists have a much more accurate picture of the consequences of oil contamination, and can effectively shut down claims that ecosystems are “healthy and thriving” in their wake.   If the Exxon Valdez disaster is still preventing fish from recovering in Prince William Sound, imagine how much worse the situation will be for the Gulf of Mexico after Deepwater Horizon, which spilt an insane 168 million gallons of oil into the ocean.

Thai villagers say gas drilling sickens them, ruins crops — More than 100 students and villagers crowded into a northeast Thailand college forum to hear about American gas companies conducting drilling operations in their region. A lieutenant colonel and dozens of soldiers and police officers followed them in. The armed police began photographing members of the crowd, a menacing move in a country now run by a military junta that bars protests and routinely cracks down on dissenters. Some in the audience had already viewed the military as part of the problem, since months earlier they had forced demonstrators to make way for drilling equipment. “With soldiers in the meeting room we were scared because we could not criticize the state officers who protect the company,” said Chainarong Sretthachau, a professor who organized the May event at Mahasarakham University. “If I did not agree, they would not allow us to organize the conference.” Villagers in the northeast provinces of Udon Thani, Khon Kaen and Kalasin are trying to stop the drilling operations by American company APICO and its subsidiary Tatex Thailand. Opponents of the operations describe them as fracking, or hydraulic fracturing. The technique requires high-pressure injection of water, chemicals and sand to crack shale rock and allow gas to seep out, but has been criticized for causing water pollution and even triggering small earthquakes. Fracking has boosted fuel production in the U.S. and elsewhere while meeting increasing opposition from affected communities. APICO has said it is not fracking in the Southeast Asian country, though documents relating to its work say fracking was at least attempted there and describe wastewater ponds that are consistent with fracking operations. The Thai government says fracking is going on in the country’s shale-rich northeast but would not say precisely where.

Shell takes gamble hunting for oil on Arctic frontier - With a population of 4,429, Barrow is the major launchpad for helicopters shuttling to and from Transocean's Polar Pioneer, the rig now drilling an oil exploration well for Shell about 70 miles offshore in the Chukchi Sea. If Shell can pinpoint the rich oil reserves it thinks are lying below the sea floor, Barrow will be the main logistics hub for future production. But Odum's $7 billion quest has run smack into opposition. During President Obama's recent visit to Alaska, environmental groups called him to block Shell's Arctic drilling, which they said contradicts his message on slowing climate change. At a couple of points along routes Obama traveled, clumps of protesters held signs saying “Shell No” and “Polar Profiteer.” Obama said that oil use can't be stopped “overnight” and promised that Shell would be held to “the highest standards possible.” Still, the League of Conservation Voters said it was “deeply disappointed.” The Natural Resources Defense Council called the approval of Shell's drilling permits “a move wholly inconsistent with the urgent imperative of curbing carbon pollution.” Lois Epstein, Arctic program director of the Wilderness Society, said: “There are lots of reasons we oppose the drilling. Some of them are technical, some of them are related to the pristine nature of the Arctic Ocean. And some of them are related to the climate change impacts. This is another slug of carbon dioxide and once you have the infrastructure in place it will keep fossil fuels burning that much longer.”

"A Few People Are Going To Drown": Oil Patch Financing Dries Up As BTFDers Back Up The Truck -- To be sure, we’ve had our fair share at the retail crowd over the course of the dramatic decline in crude prices that began to accelerate late last year after Saudi Arabia decided to bankrupt the US shale space once and for all even if it meant killing the petrodollar in the process.  The thing about retail money is that it has a tendency to take the following rather simplistic view of asset prices: “that’s gone down a lot and I’ve heard the guys on TV talking about ‘babies being thrown out with bathwater’ so what I’ll do is conduct some armchair due diligence on the way to snapping up some ‘undervalued’ names.” This mentality is affectionately known as “BTFD,” and make no mistake, when the Fed is, as Jeremy Grantham recently put it, “bound and determined to engineer an asset bubble,” buying the dips isn’t necessarily too bad of a strategy.  The problem, however, is that when it comes to crude, the dynamics are complex, which means there are all manner of things going on behind the scenes, some are readily discernible to someone who understands a few basic concepts and knows how to read a 10K. Of course the muddied waters are just fine by struggling US producers because after all, someone has to be willing to buy into the endless string of secondaries and mom-and-pop’s post-crisis affinity for HY bond funds sure helps out when you’re trying to borrow more money. It’s against this backdrop that we present the following from BofAML which shows that “last week, flows into US stocks were largest in the Energy sector, where inflows were the largest since January and the fifth-largest in our data history, despite the retreat in oil prices following their late-August rebound. Inflows were chiefly from private clients, whose net buying of Energy stocks last week was the largest in our data history.”

Oil production in US seen tumbling due to price drop - Oil supply from the United States, Russia and other non-OPEC countries is expected to drop sharply next year — possibly the steepest decline since the Soviet Union collapsed — because of low prices, the International Energy Agency forecast Friday. In its latest monthly report, the IEA says non-OPEC production is expected to drop nearly half a million barrels to 57.7 million barrels a day. It said that would be the largest annual drop since 1992, when non-OPEC supply shrank 1 million barrels after the USSR fell apart. Amid booming U.S. production and high OPEC output, the benchmark price of oil plunged from over $100 last year to about $45 this week. Global oil demand has also grown, but not enough to absorb the high supply. The agency forecast global oil demand would grow this year to a five-year high of 1.7 million barrels a day, before dropping to 1.4 million next year. The low price is particularly hurting U.S. production, with the decline in output speeding up over the summer, the IEA said. Russian and North Sea supply is also forecast to shrink. The report said OPEC supply remains higher than last year and well above the group’s own production targets. There have been only slight declines in Saudi Arabia, Iraq and Angola, which edged down OPEC’s daily crude supply by 220,000 barrels in August to 31.6 million barrels a day.

The Shale Delusion: Why The Party’s Over For U.S. Tight Oil - The party is over for tight oil. Despite brash statements by U.S. producers and misleading analysis by Raymond James, low oil prices are killing tight oil companies. Reports this week from IEA and EIA paint a bleak picture for oil prices as the world production surplus continues. EIA said that U.S. production will fall by 1 million barrels per day over the next year and that, “expected crude oil production declines from May 2015 through mid-2016 are largely attributable to unattractive economic returns.” IEA made the point more strongly. “..the latest price rout could stop US growth in its tracks.” In other words, outside of the very best areas of the Eagle Ford, Bakken and Permian, the tight oil party is over because companies will lose money at forecasted oil prices for the next year.  IEA data shows that the current second-quarter 2015 production surplus of 2.6 million barrels per day is the greatest since the oil-price collapse began in 2014 (Figure 1).  EIA monthly data for August also indicates a 2.6 million barrel per day production surplus, an increase of 270,000 barrels per day compared to July (Figure 2).   It further suggests that the August production surplus is because of both a production (supply) increase of 85,000 barrels per day and a consumption (demand) decrease of 182,000 barrels per day compared to July. The world oil demand growth picture is discouraging despite an increase in U.S. gasoline consumption (Figure 3). World liquids year-over-year demand growth has fallen by almost half from 2.3 percent in September 2014 to 1.2 percent in August 2015. This is part of overall weak demand in a global economy that has been severely weakened by debt. The news from both IEA and EIA is, of course, terrible for those hoping for an increase in oil prices.

Why it’s not an oil breakdown story, it’s a money story -  Izabella Kaminska -- In their latest research note out this Friday, Goldman Sachs’ commodity analysis team headed by Jeff Currie is now so bearish on oil they think even investment grade E&Ps may have to cut production if any sense of balance is to be restored.  As GS note: the oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth, with risks skewed to even weaker demand given China’s slowdown and its negative EM feedback loop. Oh dear. So, even Goldman Sachs have been caught by surprise. (Inconceivable – we know).  Here’s Goldman’s new outlook for oil prices:   Our new 1-, 3, 6- and 12-mo WTI oil price forecast are $38/bbl, $42/bbl, $40/bbl and $45/bbl from $45/bbl, $49/bbl, $54/bbl and $60/bbl previously. Our 2016 average price forecast is now $45/bbl vs. $57/bbl previously and the forward curve at $51/bbl. On our updated forecast, we expect the sharp deterioration in producer financial conditions that has occurred recently to persist on the recognition that the rebalancing of supply and demand is proving to be far more difficult than previously expected and that such stress is needed until evidence that US shale production growth is required. With the real blow-away conclusion:  Net, while we are increasingly convinced that the market needs to see lower oil prices for longer to achieve a production cut, the source of this production decline and its forcing mechanism is growing more uncertain, raising the possibility that we may ultimately clear at a sharply lower price with cash costs around $20/bbl Brent prices, on our estimates. While such a drop would prove transient and help to immediately rebalance the supply and demand for barrels, it would likely do little for the longer-term capital imbalance in the market with only lower prices for longer rebalancing the capital markets for energy.

Debt service uses a rising share of U.S. onshore oil producers’ operating cash flow - Today in Energy - U.S. Energy Information Administration (EIA): Results from second-quarter 2015 financial statements of a number of U.S. companies with onshore oil operations suggest continued financial strain for some companies. Low oil prices have significantly reduced cash flow for U.S. oil producers, and to adjust to lower cash flows, companies have reduced capital expenditures and raised more cash from debt and equity. Because of the large amount of debt accumulated from past years, a higher percentage of operating cash flow is being devoted to servicing debt. Debt service payments consist of principal repayment to creditors and typically are fixed in both amount and frequency, agreed upon before a company receives a bank loan or issues a bond. Some companies have been able to refinance their debt—that is, paying off old debt and taking on new debt, perhaps with a different interest rate or longer maturity. This option has increasingly become more expensive, because interest rates for energy company debt issuance have risen as crude oil prices declined, and rates are now higher than for any other business sector. The spread for energy company bond yields with a credit rating below investment grade averaged 11 percentage points above the risk-free rate since August, indicating higher interest rates for energy companies.  With fixed debt repayments and the large reduction in cash from operations for these companies, the ratio of debt repayments to operating cash flow has increased recently. For the previous four quarters from July 1, 2014 to June 30, 2015, 83% of these companies' operating cash was being devoted to debt repayments, the highest since at least 2012. As the share of debt repayment to operating cash flow increases, a company is left with less cash to use for investment opportunities, dividends, or savings for future use.

Shale Oil's "Dirty Little Secret" Has Been Exposed -- On Friday, on the way to diving into Goldman’s $20 crude call, we recapped our characterization of low crude prices as a battle between the Fed and the Saudis, a battle which is now manifesting itself in budget troubles in Riyadh and a concurrent FX reserve burn. Here’s what we said: Thanks to the fact that ultra accommodative Fed policy has left capital markets wide open, the US shale space has managed to stay in business far longer than would otherwise have been possible in the face of slumping crude. That’s bad news for the Saudis who, after burning through tens of billions in FX reserves to help plug a yawning budget gap, have now resorted to tapping the very same accommodative debt markets that are keeping their competition in business as a fiscal deficit on the order of 20% of GDP looms large.  Still, as we went on to point out, it looks like the Saudis have dug in for the long haul here and the strain on non-OPEC production is starting to show as the IEA now says “the latest tumble in the price of oil is expected to cut non-OPEC supply in 2016 by nearly 0.5 million barrels per day (mb/d) – the biggest decline in more than two decades, as lower output in the United States, Russia and North Sea is expected to drop overall non-OPEC production to 57.7 mb/d.” Citi has more on shale’s “dirty little secret”: Easy access to capital was the essential “fuel” of the shale revolution. But too much capital led to too much oil production, and prices crashed. The growth of North American shale a critical underlying factor in the oil market “regime change” from a $100/bbl world until 2014 to a sub-$50/bbl world today. As a result, the oil markets returned to competitive economics not seen for decades. And the economics of shale in particular are now set to be a decisive factor in balancing global oil markets and setting global prices. The shale sector is now being financially stress-tested, exposing shale’s dirty secret: many shale producers depend on capital market injections to fund ongoing activity because they have thus far greatly outspent cash flow. In the aggregate North American crude producers do not generate positive free cash flow (Figure 1), although some stronger producers do. Capex has consistently exceeded cash flow, causing some prominent critics to argue the business model of shale production is fundamentally unsustainable.

WTI Tumbles To $43 Handle As Iran 'Price Cut' Sparks Supply Surge -- Having traded above $46 on Friday, WTI Crude is back to a $43 handle as it appears Iran's price cut, as we detailed here, sparked demand from China and India driving up Iran exports to 1 million barrels per day.  As Bloomberg reports, Iran is exporting 1m B/D of Crude Oil as China Leads Buyers  China buying 400k b/d, followed by India at 250k b/d, official Islamic Republic News Agency reports, citing Mohsen Ghamsari, dir. of intl affairs, National Iranian Oil Co. S. Korea, Japan, Turkey also importing On a side note, though not reflected in today's pricing, Bloomberg reports that OPEC trimmed estimates for supplies from outside the group in 2016 as the slump in prices takes its toll on the U.S. shale-oil industry. The Organization of Petroleum Exporting Countries cut 2016 estimates for non-OPEC output by 110,000 barrels a day, its Vienna-based secretariat said Monday in its monthly market report. Still, the group sees non-OPEC supply expanding slightly next year, while the International Energy Agency on Friday predicted a contraction of 500,000 barrels a day, the biggest since 1992. Saudi Arabia told OPEC it curbed output in August to a six-month low. “There are signs that U.S. production has started to respond to reduced investment and activity,” OPEC said in the report. “Indeed, all eyes are on how quickly U.S. production falls.”

Gas Bears Rattled by Shrinking Shale Cut Bets to Six-Month Low - Speculators cut bearish bets on natural gas to a six-month low after late-breaking summer heat stoked demand for the power-plant fuel and as shale supplies start to slide. Money managers reduced short-only gas contracts 3.5 percent to the lowest level since March while long wagers rose 2.7 percent in the week ended Sept. 15, U.S. Commodity Futures Trading Commission data show. Their net-short position in four gas contracts shrunk by 34 percent. Energy drillers are idling so many rigs in response to low energy prices that gas supplies may fall short of demand next year, Bank of America Corp. and Citigroup Inc. said this week. Production is set to decline in October for the fourth straight month, a record slump in government data going back to 2007. “What you are seeing now is people a bit worried about natural gas production volumes,” Gas futures rose 0.7 percent to $2.728 per million British thermal units on the New York Mercantile Exchange in the period covered by the CFTC report. Prices briefly jumped to a one-month intraday high of $2.794 on Tuesday before ending the week at $2.605, the lowest settlement since June 5. Gas output from the seven largest U.S. shale deposits will fall 0.5 percent in October to average 44.784 billion cubic feet a day, the lowest since March and the fourth straight decline, the Energy Information Administration said Sept. 14. The biggest declines are projected in oil-rich fields such as the Eagle Ford formation in Texas, where drillers pull associated gas out with crude.

Weekly Crude And Natural Gas Data Points -- September 17, 2015 -- Natural gas fill rate (dynamic link): 73. In the East Region, stocks were 38 Bcf below the 5-year average following net injections of 50 Bcf.  Gasoline demand continues to plummet -- something I did not expect -- but look at the graph at the link at the very bottom of the page.  Gasoline demand this year is exceeding last year's demand but has dropped off remarkably. If one uses gasoline demand as a proxy for the economy of the country / a proxy for the recovery, this is a scary graph. I think this most recent data includes Labor Day weekend which is even more concerning, especially given the price of gasoline -- record lows.

OIL: U.S. production hits a downward slope as prices stay low -- Crude oil production in the United States is finally starting to decline, according to statistics and experts. After months of increases, even in the midst of falling oil prices, total output volumes have been trending downward as production growth in some areas is being outpaced by declines in major shale oil regions. The trend appears to be holding. Government statistics also strongly suggest the United States will not reach record crude oil production figures last set in 1970 as a consequence of the collapse of crude prices. Earlier, it had been difficult to tell whether recorded output declines represented a steady trend or the occasional variance seen month to month. Output continues to expand in the Permian Basin of west Texas and southeastern New Mexico and in federal waters in the Gulf of Mexico. But declines in the North Dakota Bakken Shale, in south Texas' Eagle Ford Shale and from other fields appear to be outpacing growth elsewhere. Data suggest very slow growth is occurring offshore, while the pace of Permian crude production increases may be slowing. Advertisement "There is evidence now that production from the shale plays is declining, not at a rapid rate, but I just recently saw some data for the Eagle Ford and the Bakken which do show production declines over the last couple of weeks," said Bernard Weinstein, an energy economist and director at the Maguire Energy Institute at Southern Methodist University. Even accounting for the Permian Basin and conventional oil production, "you put it all together and we are at the point where production is declining," he added.

Oil drilling rig count falls a third straight week - Oil futures pared losses after data from Baker Hughes released Friday showed that the number of active U.S. oil-drilling rigs fell 8 to 644 as of Sept. 18. The total active U.S. rig count, which includes natural-gas rigs, was at 842, down 6 rigs. Compared to last year, the total rig count has fallen by 1,089, with the oil rig count down 957. Oct. crude  was down $1.39, or 3%, to $45.51 a barrel on the New York Mercantile Exchange. It was trading at $45.45 just before the data.

Weekly US oil and natural gas rig count falls by 6 to 842 — Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. this week declined by six to 842. Houston-based Baker Hughes said Friday that 644 rigs were seeking oil and 198 explored for natural gas. A year ago, with oil prices about double the prices now, 1,931 rigs were active. Among major oil- and gas-producing states, Colorado, New Mexico, Ohio and Utah each gained one rig. Louisiana and North Dakota lost three rigs apiece, Pennsylvania declined by two and Kansas and Texas were down one each. Alaska, Arkansas, California, Oklahoma, West Virginia and Wyoming all were unchanged. The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999.

U.S. oil drillers cut rigs for third week on weak crude prices - Baker Hughes - U.S. energy firms cut oil rigs for a third week in a row this week, data showed on Friday, a sign the latest crude price weakness was causing drillers to put on hold plans announced several months ago to return to the well pad. Drillers removed 8 rigs in the week ended Sept. 18, bringing the total rig count down to 644, after cutting 23 rigs over the prior two weeks, oil services company Baker Hughes Inc said in its closely followed report. Those reductions cut into the 47 oil rigs energy firms added in July and August after some drillers followed through on plans to add rigs announced in May and June when U.S. crude futures averaged $60 a barrel. U.S. oil prices, however, have averaged $46 a barrel so far this week, up a bit from the $45 average last week. Earlier on Friday, U.S. crude prices were down more than 3 percent after the U.S. central bank warned of the health of the global economy and bearish signs persisted that the world’s biggest crude producers would keep pumping at high levels.

Shale Oil’s Retreat Threatens to Leave U.S. Short on Natural Gas - The retrenchment in drilling for U.S. oil is threatening to leave a different market short: natural gas. “The impacts of oil rig counts extend beyond oil: the outlook for U.S. natural gas is critically dependent on the outcome of this balancing act in U.S. oil rigs,” Anthony Yuen, a strategist at Citigroup Inc. in New York, said in a report to clients Wednesday. “If the oil market remains oversupplied and oil-rig counts fall, the decline in associated gas production would leave the market short of gas.” Associated gas is the gas that comes out of oil wells along with the crude. Supplies of this byproduct from fields including the Bakken formation in North Dakota and the Eagle Ford in Texas may fall by about 1 billion cubic feet a day next year as drillers idle rigs in response to the collapse in oil prices, Yuen said. That’s about 7 percent of U.S. residential gas demand.The U.S. Energy Information Administration has already forecast that shale gas production will drop in October for the fourth straight month, a record streak of declines. U.S. oil has lost half its value in the past year amid a worldwide glut of crude. Drillers have responded by sidelining almost 60 percent of the country’s oil rigs since Oct. 10. Crude producers in the lower 48 states may have to keep the number of working rigs low for a while longer to balance the global market, Yuen said. A recovery in the rig count may “exacerbate the current oversupplied environment” and weaken prices, he said. West Texas Intermediate crude futures gained $2.56 a barrel on Wednesday to settle at $47.15 on the New York Mercantile Exchange. Prices have fallen 50 percent in the last year.

OilPrice Intelligence Report: $50 Oil For 15 Years – Can Anyone Take Goldman Seriously Anymore? Goldman Sachs continues to roll out bearish predictions for oil prices. The latest from the investment bank is that oil prices could remain low for 15 years. Goldman made headlines recently when it outlined a scenario in which oil prices would drop to $20 per barrel. Now the bank is outdoing itself with a prediction that oil will remain around $50 per barrel though 2030. For evidence, it points to the bust of the 1980s when oil prices did not rebound until the turn of the century. Goldman gets a lot of attention with these types of headline-grabbing figures, but they seem to be off base on this one. The EIA has confirmed that U.S. oil production is declining, already down 500,000 barrels per day since peaking earlier this spring at 9.6 million barrels per day. At the same time, demand is rising. Throw in some other major sources of expected growth in oil production that won’t pan out – a few million barrels per day of capacity that were expected from both Iraq and Brazil can probably be ruled out – and there is a recipe for a rather strong rebound in oil prices in the coming years. Obviously, the big question is when that will happen. The glut could persist through this year and next, but calling for oil to remain near $50 per barrel for 15 years seems like a stretch.  

Decline rates will ensure oil output falls in 2016: Kemp   – “It takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast,” the Red Queen told Alice in Lewis Carroll’s novel “Through the Looking-Glass.” Oil companies have to invest heavily simply to offset the impact of natural decline rates on their existing fields, and even more if they want actually to increase production. The need for continued investment and drilling to maintain output as a result of the rapid decline rates on shale wells has been widely discussed. But decline rates on conventional oil fields are even more important because they account for more than 90 percent of global production. Decline rates on conventional fields will play a critical part rebalancing the oil market and determining where oil prices settle in the longer term. Decline rates will cut output by several million barrels per day each year in 2016 and 2017 unless oil producers invest to maintain production levels from existing fields and develop replacement fields. But with oil prices below $50 per barrel, almost all companies, from the super-majors to national oil companies and independents, are slashing exploration and production budgets hard to conserve cash. Cuts will hit sustaining expenditure on existing fields as well as frontier exploration. In a typical example, Iraq’s oil ministry wrote to contractors on September 6 warning it will cut exploration and field development spending next year.

Expect US oil output to slump? Better not overlook vertical wells – Easy money, super-sized frack jobs, and desperate drillers offering deep discounts to oil producers – all three have been credited for sustaining U.S. crude output during the worst price slump in six years. Now there appears to be a new factor in the mix: old vertical wells that can quickly be drilled, injected with water or fracked for a second time to increase production at low cost. Overshadowed by the fracking boom that delivered record oil and gas volumes, vertical wells are making a comeback as investors and producers shift focus away from production growth to capital discipline in the downturn. “It makes more sense to develop vertical wells in a lower price environment because they are not growth plays but they are a very strong cash flow asset,” said Benjamin Shattuck, principal analyst at Wood Mackenzie. “They are going to give you that cash flow that you need today.” It is too soon to know how big the long-term supply impact of this trend will be, but there are tens of thousands of older U.S. wells and companies say paying more attention to them is already bringing extra barrels. The industry’s ability to find some workaround every time prices seem too low to keep pumping explains in part why 15 months into the downturn U.S. output stays near highs of around 9 million barrels a day and the government forecasts only modest declines through mid-2016.

Move Over Exxon, Russian Drillers Are Oil World's Top Performers  -- At a time when the collapse in crude prices pushes Russia’s economy into a recession, the nation’s oil producers are managing to beat their western counterparts. On measures including cash flow, profit margins and share prices, OAO Rosneft, Lukoil PJSC -- Russia’s two largest oil producers -- and OAO Gazprom Neft are performing better than Royal Dutch Shell Plc, BP Plc or Exxon Mobil Corp. “When oil goes down, the western companies are hurt more than the Russian companies,” said Maxim Edelson, a Senior Director at Fitch Ratings in Moscow. Because Russian tax rates adjust automatically to lower prices the nation’s companies enjoy a buffer to the slump in crude while “a lot of the hit is taken by the government.” The oil industry is struggling to adapt after prices fell to the lowest level in six years amid a global supply glut. While energy producers have fallen more than any other group this year on the MSCI All-Country World Index, Russian companies have been the most resilient. Rosneft shares gained 2.9 percent and Gazprom Neft added 0.3 percent in London trading this year. Shell’s B shares, the most widely traded, lost 28 percent and BP 18 percent. Russia relies on oil and gas for about a half of its budget income, so the plunge in crude prices of more than 50 percent in the past year has pushed the country into its first recession since 2009. The faltering economy, combined with the effects of international sanctions over Russia’s involvement in Ukraine, has weakened the ruble, benefiting Russian oil companies that earn dollars and pay costs in the local currency.

Checkmate for Saudi Arabia - The debacle of oil prices has greatly exceeded that of the global financial crisis of 2008 and the Asian crisis of 1998. And it is much more severe. At the end of this summer of 2015, OPEC is just a shadow of its former self: simply put, it has been de facto dissolved and this cartel would be better off closing its offices in Vienna in order to save some cash… Similarly, it is easy to see that the Saudi tactic of flooding the market with petrol has backfired. Already in decline and very fragile due to the fact that the only income from exportation comes from the sale of just one product (oil), Saudi Arabia’s war using ancient weapons is dwindling. The oil markets have indeed fundamentally changed since the time when investments became lucrative only after ten years. The Saudis were of course the undisputed masters when vast sums of money had to be handed over to make extractions from oil wells that would only come good many years later. This is why they got up to their dirty tricks in November 2014 when they decided to lower prices in order to stifle American oil shale producers, whom they had been banking on wiping off the map. As for the lost revenue due to the fall in oil prices, they would inevitably gain it back after the renewed rise in prices thanks to the disappearance of US producers. However, this venture, which consisted of making prices drop in order to harm competitors before putting them back up again in order to monopolise and maximise profits, is now an invalid practice. Also, this insane gamble taken by Saudi Arabia last winter to increase its own production to 10.6 million barrels per day at the climax of the fall in prices was already lost because it reveals a deep misconception of fracking, which is by no means a classical resource extraction method, and one which doesn’t require substantial investment nor elevated oil prices in order to be viable.

OPEC Trims 2016 Estimates for Rival Supplies as U.S. Oil Suffers -  OPEC trimmed estimates for supplies from outside the group in 2016 as the slump in prices takes its toll on the U.S. shale-oil industry. The Organization of Petroleum Exporting Countries cut 2016 estimates for non-OPEC output by 110,000 barrels a day, its Vienna-based secretariat said Monday in its monthly market report. Still, the group sees non-OPEC supply expanding slightly next year, while the International Energy Agency on Friday predicted a contraction of 500,000 barrels a day, the biggest since 1992. Saudi Arabia told OPEC it curbed output in August to a six-month low. “There are signs that U.S. production has started to respond to reduced investment and activity,” OPEC said in the report. “Indeed, all eyes are on how quickly U.S. production falls.” West Texas Intermediate crude futures have tumbled more than 50 percent in the past year, triggering an unprecedented cutback in drilling that threatens to end the nation’s shale-oil boom. Prices have collapsed as OPEC follows Saudi Arabia’s strategy of defending its share of the global market against shale and other competitors. WTI traded near $45 a barrel on Monday. Smaller Increase Supplies from non-OPEC nations such as the U.S., Canada, Russia and Brazil will increase by 160,000 barrels a day to 57.6 million in 2016, according to the report. In last month’s report, OPEC had projected that non-OPEC supplies would expand by 270,000 next year. The organization reduced 2016 estimates for U.S. supply by 103,000 barrels a day, projecting the country’s total oil output at 13.97 million.

OPEC says the world will want more of its oil next year – OPEC on Monday predicted higher demand for its crude oil next year, sticking to its view that a strategy of letting prices fall will tame the U.S. shale boom and cut a global surplus. The monthly report from the Organization of the Petroleum Exporting Countries also said a weaker outlook for China would contribute to slower global oil demand growth next year. “U.S. oil production has shown signs of slowing,” OPEC said in the report. “This could contribute to a reduction in the imbalance of oil market fundamentals, however, it remains to be seen to what extent this can be achieved in the months to come.” OPEC said it expected demand for its crude next year to average 30.31 million barrels per day (bpd), up 190,000 bpd from last month, despite the slower demand growth overall due to a weaker outlook for Latin America and China Oil is trading below $50 a barrel, less than half its level of June 2014. But OPEC has refused to cut output, seeking to recover market share by slowing higher-cost production in the United States and elsewhere that had been encouraged by OPEC’s former policy of keeping prices near $100.

Frack Facts: OPEC vs. U.S. Shale -- If you believe all the recent stories about how Saudi Arabia is losing the price war it started against US tight oil producers last year, the new Oil Market Report from the International Energy Agency offers a reality check. The Saudis are winning, though they’re paying a heavy price for it.  The narrative about US shale’s resilience in the face of the Saudi decision to drive up production, prices be damned, centers on the American industry’s ability to cut costs and use innovative technology to repel the brute force onslaught. There is a kind of David versus Goliath charm to this story, but the data don’t bear it out. The IEA, the world’s most respected independent source of information about the oil market, has changed its methodology for measuring US output: It now polls producers, instead of relying on data from states. And the switch has caused the agency to revise production data for the first half of 2015, showing a noticeable slowdown. The US is still pumping more than it did last year, but the output is declining. IEA data show monthly contractions of 90,000 barrels a day in July and almost 200,000 barrels a day in August. Output is dropping for all seven of the biggest US shale plays. The IEA predicts that the US production of light tight oil — the type pumped by frackers — will go down by 400,000 barrels a day next year, about as much as Libya currently produces. That drop will account for most of the 500,000 barrels a day drop in production outside the Organisation of Petroleum Exporting Countries that the agency predicts for 2016. Production is also dropping in Canada: It’s below 4 million barrels a day for the first time in 20 months. The IEA doesn’t believe shale oilers’ incantations about drastically lower marginal cost of producing oil from already drilled wells. It points out that tight oil wells dry up much faster than traditional ones: Recent data show that output drops 72 per cent within 12 months of start-up and 82 per cent in the first two years of operation. “To grow or even to sustain production levels requires continuous investment,” the IEA report says. Low oil prices reduce frackers’ access to the capital they need, and rig counts are falling again — in early September the drop was the steepest since May.

Opec wins as non-cartel oil output suffers biggest drop in 20 years - Oil produced outside the Orgainsation of the Petroleum Exporting Countries (Opec) is slowing at its fastest rate in 20 years as lower prices hit higher cost producers such as the North Sea and US shale drillers, a leading energy think tank has warned. The Paris-based International Energy Agency (IEA) has said that lower production in the US, Russia and the North Sea would result in output outside Opec dropping to 57.7m barrels per day (bpd) in 2016. The majority of the declines would come from US light crude, which is expected to decline by 400,000 bpd. At the same time the IEA is forecasting that global oil demand growth will surge to a five year high this year of 1.7m bpd before moderating in 2016 to 1.4m bpd. "The steep declines in US crude oil production seen since the end of June has created some optimism that we are now finally seeing that start of a steep decline," said Bjarne Schieldrop, chief commodities analyst at SEB. Oil prices have plunged 50pc this year with Brent crude trading well below $50 per barrel, a level which makes it uneconomical for many producers. Opec, under pressure from Saudi Arabia, has allowed oil prices to fall in an effort to protect its shrinking market share especially from the rise of shale oil drillers in the US. However, the strategy has caused deep divisions within the group, which controls a third of the world's crude. Venezuela has formally asked for an emergency meeting of Opec to review its current strategy. The IEA's latest monthly report follows a warning by Oil and Gas UK that 65,000 jobs have been lost in the North Sea since oil prices started to slump last November.

OPEC sees oil prices returning to $80/barrel by 2020 (Reuters) – OPEC forecasters expect oil prices will rise by no more than $5 a barrel a year to reach $80 by 2020, with a slowing in rival non-OPEC production growth not enough to absorb the current oil glut, according to OPEC sources. The sources said the figures came from an updated mid-term strategy report discussed this week by representatives from the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, which has yet to be fully endorsed by OPEC ministers. The report forecasts that non-OPEC supply would amount to 58.2 million barrels per day by 2017, some 1 million barrels per day lower than in the previous forecast. That effectively means OPEC will have to supply the world with 1 million extra barrels per day – good news for the group which last year decided against cutting output to support prices and instead started pumping more to win market share from rival producers. OPEC’s market share has shrunk in the past few years to 33 percent from as much as 40 percent in previous years because of a U.S. shale oil boom and new fields coming on stream in countries such as Canada and Russia. In its latest monthly report OPEC forecasters see rival non-OPEC output growth already slowing this year because of low oil prices, rising by just 880,000 bpd to some 57.43 million bpd after expanding by a record 1.7 million bpd in 2014.

With Congress sidelined on nuclear deal, next moves belong to Iran -- With Senate Democrats effectively blocking congressional efforts to kill the Iran nuclear deal, international attention now shifts to Tehran’s implementation of measures that are designed to cut off its pathways to building nuclear warheads. “The next steps will be Iran’s,” White House Press Secretary Josh Earnest said Friday, a day after Senate Democrats corralled enough votes to prevent passage of a Republican-sponsored resolution disapproving of the deal. For their parts, the United States and the European Union must begin making the “necessary arrangements and preparations” to lift economic sanctions once the U.N. International Atomic Energy Agency verifies that Iran has put in place the restrictions on its nuclear program. The next month includes some key dates to put into effect the so-called Joint Comprehensive Plan of Action, or JCPOA, which was negotiated over two years between Iran and the United States, Russia, China, France, Britain and Germany. On Thursday, the 60-day congressional review period ends, although deal opponents are expected to persist in their efforts to kill the agreement.  By Oct. 15, Iran must provide to the IAEA any followup information sought by agency experts investigating allegations that Tehran researched a missile-borne nuclear warhead until late 2003.

Iran to clients: Buy our oil and get joint ventures too (Reuters) – Iran has unveiled details for long-awaited foreign cooperation contracts which it hopes will attract oil buyers and investors to modernize its aging infrastructure, including offers to take part in joint ventures to extract its huge reserves. The United Nations endorsed a deal in July to end years of economic sanctions on the Islamic republic over its nuclear program, although a removal of those sanctions still requires U.S.-Congressional approval. Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), has some of the world’s biggest oil and gas reserves, and officials have identified around four dozen projects worth $185 billion it hopes to develop by 2020. Pre-sanctions agreements between Iran and foreign energy firms offered partners oil and gas revenue payments in return for cash investment in so-called buyback contracts. But foreigners were barred from joint ventures or from extracting themselves, making these contracts unpopular with investors. Iranian officials say that’s about to change. “Iran is going to apply a new version of oil contract model in order to make it more attractive for foreign investors, with similar terms to a PSA (production sharing agreement),” said Shahrouz Abolhosseini, petroleum products pricing manager at National Iranian Oil Company (NIOC), during a business meeting in the South Korean capital on Wednesday. “NIOC … aims to embark on joint ventures with foreign investors and international companies in the oil and gas industry,” he added.

Interview - S.African oil firms to meet Iranians to discuss crude imports – South African oil companies will meet Iranian officials in October to discuss the resumption of crude imports, the deputy energy minister said on Thursday. International sanctions on Iran could start to be lifted as early as spring next year as Tehran and the West rebuild their ties and potentially open up billions of dollars of trade deals. Iran was once the biggest oil supplier to South Africa, exporting around 380,000 barrels per day that powered up the continent’s most advanced economy. “There is a visit that has already been scheduled for them to come to South Africa in October and they will get the opportunity to speak to the oil companies,” Thembisile Majola told Reuters. Majola also said in a telephone interview that South Africa was planning to build a crude oil refinery, which would use Iranian crude, to add to the existing PetroSA’s gas-to-liquid plant in Mossel Bay. “We are looking to build a refinery and we had already began these kinds of discussion in terms of having a partnership,” she said, adding state-owned PetroSA had agreed to help Tehran build a gas-to-liquid refinery

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