Sunday, November 15, 2015

oil prices crash again, more oil companies report 3rd quarter losses, et al

oil prices took a major hit this week, while natural gas prices came close to 3 year lows before recovering and closing higher...the recent drop in oil prices really began in the middle of last week, when oil prices fell from $47.68 a barrel to close at $45.55 on Wednesday, after EIA stats showed an ongoing buildup of oil inventories and a continuing increase in US crude oil production; prices for oil then slid both Thursday and Friday to close last week at $44.29  a barrel...Tuesday of this week saw the only increase, as oil prices rose from Monday's close of $43.87 a barrel to $44.21, but they then dropped steadily the rest of the week, culminating in a 5.2% drop to $40.74 a barrel over Thursday and Friday, in the fastest 8 day slide in oil prices since help you visualize how that relates to the other oil price changes we've seen, we'll include a graph that tracks the daily closing price of the current US oil contract on the NY Mercantile Exchange over the past year:.

November 14 2015 oil prices

the above graph shows the past year's track of the December contract price per barrel of the US benchmark oil, West Texas Intermediate (WTI), when it's stored at or contracted to be delivered to the oil depot in Cushing Oklahoma...this week's closing prices of $40.74 a barrel is now near the 6 year lows hit at the end of August, when oil prices briefly dipped below $40 a barrel for 3 days...this one year chart also captures the collapse of oil prices following the Thanksgiving OPEC meeting, when the cartel decided to continue their level of oil production in the face of a global glut, and the couple months this summer when oil prices flirted with rising above $60 a barrel, and US drillers restarted a small number of their idled rigs...other than the brief drop to $35 a barrel during the darkest days of the 2009 global financial crisis, we'd have to go back a dozen years to find a time when oil prices were regularly below this level..

although it's virtually impossible to say for sure what caused oil prices to drop without interviewing every major trader who sold oil at a lower price, one factor that seemed to weigh heavily all week were reports of loaded oil tankers queuing outside of major global oil ports, waiting for space to unload...first reports early this past week of more than 50 commercial vessels anchored outside of Houston identified 41 oil tankers waiting to discharge their loads, double the normal volume of traffic for the ports in that area of the of this writing, most of those tankers are still there; this live marine traffic interactive map shows oil tankers anchored in the area outside of Galveston and Port Author as red rectangles, and oil tankers that are underway are indicated as ship shaped icons; i count 26 that are, in the middle of the week, news broke of a two mile long caravan of ten oil tankers carrying 19 million barrel of oil which had been loaded in Iraq and were headed for the same oversupplied US Gulf ports, apparently filled with a heavier grade of oil which the Iraqis had offered at a discount of $5.85 a barrel from the corresponding benchmark...lastly, a major report from the Financial Times that examined satellite data indicated more than 100 million barrels of crude oil and heavy fuels are being held on ships at sea, including around 35 million barrels on tankers outside of ports in Indonesia, Malaysia and Singapore, another five heavy VLCCs, each carrying more than 2m barrels of oil, anchored offshore China, where they've run out of land based oil storage space, and around 40 million barrels of light oil on Iran's fleet of supertankers near the Strait of Hormuz, waiting to be shipped...

More 3rd Quarter Reports

two weeks ago, we looked at 3rd quarter results from several oil & gas frackers, including most of the large vertically integrated oil companies, whose exposure to low prices is tempered by their so-called "downstream" operations of refining and marketing, which may be profitable even when the exploration and exploitation end of their business is not...over the past two weeks, we got the results from most of the independent frackers, who don't have that cushion of a profitable business to fall back on when their drilling goes south...since a long string of 3rd quarter earnings and losses numbers such as we looked at previously doesn't tell us a lot without some context, we try to compare them to last year's numbers, when oil prices were near $100 a barrel and frackers were profitable, and we'll also often show revenues if they're easily available, since a company like Eagle Ford driller Murphy oil, who reported a net loss of $1,595 million on revenues of just $715 million, is clearly in financial trouble...

so we'll start with Chesapeake Energy, the 2nd largest US natural gas producer and operator of more than half of Ohio's wells...last Thursday they reported losses of $4.7 billion on third quarter revenues of $2.89 billion, largely as the result of a $5.42 billion write down on some of the oil and gas assets they overpaid for during the oil bubble years...that's on the heels of a $4.02 billion writedown of their assets in the 2nd quarter, at which time they stopped paying dividends and put Ohio natural gas production on hold because of low the third quarter a year ago, they booked income of $169 million on revenues of $5.7 billion...the market has responded to their performance by making them the 7th most shorted company in the S&P 500, and their bonds are now selling at 50.38 cents on the dollar...

other major exploration and exploitation companies that took large writedowns on the value of their oil and gas properties in the 3rd quarter included Devon Energy and Apache Petroleum...Devon reported a loss of $3.51 billion, in contrast with profits of $1.02 billion a year earlier....Apache Petroleum reported a 3rd quarter loss of $5.56 billion on a $3.7 billion write down of assets, in contrast to their profits of $1.33 billion, or $3.50 per share, a year earlier..their 3rd quarter losses also included a $1.5 billion charge related to deferred tax addition, EOG Resources reported a third quarter loss of $4.1 billion, all of which was due to a $4.1 billion writeoff, compared to net income of $1.1 billion in the third quarter of 2014...

Pioneer Natural Resources, meanwhile, reported their net income rose to $646 million, compared with $374 million in last year’s third quarter, as they managed to sell off operations in the Eagle Ford Shale and implement aggressive cost-cutting measures in their drilling operations...on the other hand, Gulfport Energy reported a third quarter loss of $388.2 million, on revenue of $230.6 million in the period, compared to a net profit of $6.9 million in the same period last year...with 209 wells drilled in Ohio’s Utica Shale, they've announced they're voluntarily cutting production of oil and natural gas through early 2016 while they hope to wait out low commodity prices..

the 2nd largest Bakken shale operator, Continental Resources, reported a $82 million loss in third quarter, down from a profit of $534 million in the year-ago period, as their revenues fell to $683 million, down from $1.6 billion one year ago...Noble Energy, Colorado's second largest oil and gas producer, reported a $283 million third-quarter loss, compared to $419 million net income in the same period last year... Noble's third quarter revenues were $801 million, down from $1.27 billion a year addition, Stone Energy Corporation reported a net loss of $292.0 million for the third quarter, all but $8.4 million of which was due to a writedown of oil and gas properties, on oil and natural gas revenue of $128.4 million, compared to a smaller net loss of $29.4 million a year ago, on revenue of $175.0 million..

several other smaller independent drillers and oil service companies also reported 3rd quarter losses, most of whom were profitable a year ago...those included Denver-based SM Energy Company, PetroQuest Energy from Lafayette, Louisiana, C&J Energy Services of Houston, Parsley Energy Inc, based in Austin, Texas, Sandridge Energy of Oklahoma City, and PDC Energy Inc of Denver...

This Week's Oil Stats from the EIA

US Energy Information Administration data published Wednesday for the week ending November 6th showed a large jump in crude oil imports and another incremental increase in our field production of crude, the 4th in a even though usage of crude oil by US refineries rose by the most that it had this fall, there was still another large increase in the amount of surplus oil that had to be stored...US imports of crude oil rose to 7,377,000 barrels per day for the week ending November 6th, an increase of 434,000 barrels per day over the 6,943,000 barrels per day we imported during the week ending October 31st...that was 7.3% more than the 6,877,000 barrels per day we imported during the first week of November a year ago, and now the 4 week average of our imports, which we find in the weekly Petroleum Status Report (62 pp pdf) has risen to 7.2 million barrels a day, 2.5% higher than the same 4 week period a year ago...that import increase came even as our field production of crude oil rose to 9,185,000 barrels per day in the first week of November, an increase of 25,000 barrels per day from the production of 9,160,000 barrels per day during the prior week, which was 1.3% greater than our production of 9,063,000 barrels per day during the same week last year...that was also our highest weekly production of crude oil since the last week of August, but it was still about 4.4% below the modern weekly record production of 9,610,000 barrels per day that was set in the first week of June this year...

meanwhile, the amount of crude oil used by US refineries jumped by 302,000 barrels per day for the week, rising to an average of 15,939,000 barrels per day during the first week of November, up from the 15,637,000 barrels per day that refineries took in during the week ending October 30th, and the largest one week increase in refinery inputs in 8 weeks...refinery utilization was back up to 89.5% of their operating capacity, up from 88.7% last week and as low as 86% during the second week of October, as the regular fall maintenance downtime seems to have concluded, although we can probably expect further increases, as December like July seem to be a seasonal peak...much of this week's refining increase went into gasoline production, which was up by 156,000 barrels per day to 9,693,000 barrels per day, while output of distillate fuels fell by 9,000 barrels per day to 4,873,000 barrels per day...and while our ending gasoline inventories fell by 2,012,000 barrels to 213,245,000 barrels as of November 6th, that was still 4.8% more than the 203,565,000 barrels of gasoline we had stored as of November 7th last year, and the most gasoline we had stored any week in November since the depth of the recession in those gasoline supplies still remain above the upper limit of the average range for this time of year..

however, even with this week's large jump in refining, we were swamped by the incoming imports, which left us even more oil to put into storage than we had leftover last week...our stocks of crude oil in storage, not counting what's in the government's Strategic Petroleum Reserve, rose by 4,240,000 barrels to 487,034,000 barrels on November 6th, which means  we now have 28.7% more oil in storage than 378,470,000 barrels we had stored on November 7th a year we've now added roughly 43.0 million surplus barrels of oil to storage in just the past 7 weeks, leaving us with the most oil we ever had stored anytime in November in the 80 years of EIA record keeping, which had never seen more than 400 million barrels stored before this year...

The Latest Rig Counts

in a shift from recent weeks, the week ending Friday November 13th saw the first increase in rigs drilling for oil in 11 weeks, and the first cut in the number of rigs drilling for natural gas in 5 weeks....Baker Hughes reported that the total active rig count fell by 4 to 767, as their count of active oil rigs rose by 2 to 574 while their count of active gas rigs fell by 6 to 193; that's down from the 1578 oil rigs and 350 gas rigs that were in use on November 14th of 2014....rig changes this week included the addition of a rig in the Gulf of Mexico, where there are now 33, down from 50 a year earlier, and shutting down two rigs that were operating on inland lakes, where there are now just 3, all in southern Louisiana, down from 13 rigs set up on inland waters a year ago...

strangely, both horizontal and vertical rig counts increased, while directional rigs fell by 9 to 72, which was down from 205 directional rigs working November 14th of 2014...a net of 2 horizontal rigs were added this week, bringing their total up to 587, which is still well less than half of the 1369 horizontal rigs that were working in the US the same week a year addition, the week's vertical rig count rose by 3 to 108, which was still well down from the 354 vertical rigs that were in use a year ago....

of the major shale basins, the Permian of west Texas saw the largest cutback of 3 rigs, leaving them 229, which was down from 568 last year at this time...single rig reductions were seen in the Williston shale of North Dakota, the Mississippian lime of the Kansas Oklahoma border, and the Granite Wash of the Oklahoma-Texas panhandle region...the Williston now has 63 rigs, down from 193 a year ago, the Mississippian has 12, down from 77 a year earlier, and the Granite Wash shows 13 rigs, down from 58 a year earlier...meanwhile, 2 rigs were added in the Haynesville of the Texas-Louisiana border region, where they now have 27 running, which is down from 42 a year addition, single rig additions were made in the Eagle Ford of South Texas, where the count is at 73, down from 208 last year, and the Barnett shale of the Dallas-Ft Worth area, where the count of 6 rigs is down from 23 a year earlier...

the state count tables show both California and Texas with 2 fewer rigs; the former is now down to 10 from 47 rigs a year ago, while the latter is now down to 338 from 902 a year earlier....there were also single rig reductions in Colorado, Louisiana, and North Dakota; Colorado now has 32 active rigs, down from last year's 75; Louisiana has 69 working (including 32 offshore) down from 110 a year earlier, and North Dakota has 62 rigs, down from 181 rigs last year at this time...states seeing increases were Oklahoma, where they were up to 85, but still down from 207 a year earlier, and New Mexico, where the addition of 1 rig brought them up to 38, which was still down from the 99 rigs they had in use at the end of the 2nd week of November last year...


A look at John Kasich's energy plan - Want to know what’s happening in Ohio government and politics from Columbus to Washington, D.C.? We’ve got you covered. As Gov. John Kasich continues on the campaign Republican presidential nomination trail, Dispatch Washington bureau chief Jack Torry and Washington reporter Jessica Wehrman took a closer look at his energy plan. “John Kasich’s energy plan is aimed at sparking the economy by expanding production, but environmentalists say the Republican presidential candidate’s idea would increase pollution and the carbon emissions blamed for climate change,” Torry writes. “In an economic speech last month in New Hampshire, the Ohio governor outlined an approach likely to resonate with American industry, including abandoning a plan by the Obama administration that would force electrical utility plants to slash their carbon dioxide emissions by 32 percent by 2030.” What the critics say: “John Kasich is a moderate in tone, but not in policy,” said Dan Weiss, senior vice president for campaigns at the League of Conservation Voters in Washington. ” His plan is a big-oil wish list that would increase carbon pollution and other pollution, ignores the biggest environmental threat to Ohio and the rest of the country, and would increase our dependence on oil.” What the campaign says: Scott Milburn, a senior campaign adviser, said, “The energy policy is not a stand-alone idea; nor is the regulatory policy. They are subsets which work together with his overall economic policy.

Kasich energy plan has critics hot - John Kasich’s energy plan is aimed at sparking the economy by expanding production, but environmentalists say the Republican presidential candidate’s idea would increase pollution and the carbon emissions blamed for climate change. In an economic speech last month in New Hampshire, the Ohio governor outlined an approach likely to resonate with American industry, including abandoning a plan by the Obama administration that would force electrical utility plants to slash their carbon dioxide emissions by 32 percent by 2030. In addition, Kasich called for a one-year freeze on new federal nonsafety regulations, including those that affect the environment, while insisting that federal agencies study whether the financial costs of future rules imposed on industries would outweigh the environmental benefits. He backs construction of the Keystone XL pipeline — rejected on Friday by President Barack Obama — that would carry oil from Canadian tar sands to Gulf Coast refineries. And he would press to open up oil and gas exploration on millions of acres of federal land, although he would exclude national parks.

Ballot board splits clean energy plan - A state panel on Tuesday doubled the amount of work that backers of a $14 billion borrowing proposal for green energy projects must do to get on the ballot. The Ohio Ballot Board, by a 3-1 party-line vote, determined that the proposed Ohio Clean Energy Initiative would change two sections of the state constitution, which would require those behind it to gather at least 306,000 signatures twice. This marked the fourth time that the backers have been before the board with a similar proposal. But this time they added a provision that, assuming voters approve the borrowing, would allow them to come back later and fix any errors flagged by a court without having to again gather hundreds of thousands of signatures. “Essentially, what they want to do is prescribe themselves a provision that says I can put a new thing on the ballot to amend the constitution with 1,000 signatures,” said Secretary of State Jon Husted, the board’s Republican chairman. “It’s 305,000 approximately now.”   Potentially, three different questions could appear on the ballot dealing with the same issue if the board decides later that the plan is also affected by a constitutional amendment voters approved just last week. Voters might be asked first to waive the constitution’s new ban on writing special business interests into the constitution before voting on the other two parts of the issue. The committee’s backers could challenge the board’s decision before the Ohio Supreme Court. They could also dust off their last proposal, which lacks the change in the signature requirement. The prior proposal had already been certified by the board as a single ballot question.

Commission dismisses appeal related to injection well -- Athens County Fracking Action Network’s latest attempt to appeal a permit related to a Troy Twp. injection well has been dismissed. In a decision earlier this week, the Ohio Oil & Gas Commission dismissed an appeal filed against a state permit that was issued in connection with K&H Partners’ third injection well in Troy Twp. Earlier, the commission had dismissed an appeal related to K&H Partners’ second injection well in Troy Twp. The Ohio Division of Oil & Gas Resources Management issued a permit on March 18 that allowed K&H Partners to proceed with drilling its third well in the township. ACFAN appealed to the commission, but the state and K&H Partners filed motions to dismiss the appeal — which the commission granted Monday on grounds it does not have jurisdiction to hear the appeal. Although ACFAN argued that the issued permit was an injection well permit over which the commission would have jurisdiction, the commission ruled that it was a drilling permit. Under state law, a drilling permit cannot be appealed to the commission. “The Ohio Supreme Court has held that the Commission lacks jurisdiction over permitting decisions that address drilling permits under O.R.C. 1509.06, and the Commission will not exercise jurisdiction over such decisions,” the commission ruled. ACFAN had argued that the permit was an injection well permit issued under the authority of a different portion of Ohio law.

Forest's neighbors deserve their mineral rights - Since 2011, my private-property rights have been held hostage because we’ve been blocked from developing energy resources under the Wayne National Forest. I’ve fought to free our mineral rights and, in building a grassroots campaign, I came to realize that my neighbors in southeastern Ohio faced the same problem.  That’s why, on behalf of southeastern Ohioans whose land has been held hostage, it’s a welcome relief to see the Bureau of Land Management making progress toward approving shale development in the Wayne National Forest. Since energy companies have the ability to drill from a well on private land more than 2 miles horizontally beneath the surface, prohibiting energy development beneath the Wayne prevents people such as me from realizing the full value of our mineral rights. Mineral development in the Wayne National Forest is nothing new as there are more than 1,200 active oil and gas wells on the surface of the forest. In fact, according to Wayne National Forest officials, “mineral development is an important component of resource management on the WNF.” Four years ago, we had an opportunity to approve energy development in the Wayne, but a small group of radical environmentalists hijacked the debate, halting energy development and trampling our private-property rights. Now we have another opportunity, with hearings in Marietta, Athens and Ironton on Tuesday, Wednesday and Thursday, respectively, for federal officials to listen to the people who approve of energy development in the forest that will restore landowner rights and provide an economic boost for Monroe and Washington counties.

Mahoning supervisors deny zoning change, fearing well pad development - Mahoning Township Supervisors denied a zone change Tuesday, saying they fear it could open the way for a well pad. The request was from Norma W. Hoffmaster, who wants about half of a 62.32 acre parcel on the south side West State Street near Route 551 to be changed from residential to agricultural. Hoffmaster did not attend the hearing but was represented by attorney Alan D. Wenger of Harrington, Hoppe and Mitchell, in Warren Ohio. Wenger said that the total parcel as it exists has three separate zoning classifications including conservation, residential and mixed use highway. Part of the property is currently farmed. He said Hoffmaster wants the zoning to be consistent. He said the property is under lease to an oil and gas company. He told supervisors that there are no current plans for a well pad on the property but said there were talks about a year or two ago about one. The supervisors questioned the reason for a zone change if no well pad is planned. Wenger said there were some tax considerations in changing the zoning to agricultural. But the supervisors ended up unanimously denying the change out of concern for a nearby house bout 300 feet from the east end of the property line along State Street, near Route 551.“In the last few months we have dealt with issues of wells encroaching on residential property,”

Fracking opponents are willing to put money where mouths are: While supporters of the Youngstown anti-fracking charter amendment contend they aren’t looking at a return to the ballot, it would be shocking to not see the proposal in front of voters in 2016. It’s a presidential election year, and the proposal lost by only 2.94 percentage points in this last election. That margin of defeat is according to unofficial but final results during the Nov. 3 election. Frackfree Mahoning Valley backed the anti-fracking Community Bill of Rights in each of its five times on the city ballot. Some anti-fracking supporters recently ridiculously questioned the validity of the November 2014 vote, which lost by 15.4 percentage points, based on a flawed poll – or at least the misreading of that poll. The margins of defeat the three other times this was on the ballot were 8.3 percentage points in May 2014, 9.7 percentage points in November 2013, and 13.7 percentage points in May 2013. As the results of the Nov. 3 vote were significantly closer than the four other efforts, Frackfree is asking and will pay for a hand recount. The proposal lost 6,028 to 5,683 on Nov. 3. The board will include provisional and late-arriving overseas absentee ballots in its official count. The board will certify the results next Friday, but it won’t turn the loss into a victory for Frackfree. So why conduct a recount? “We’re not targeting this board of elections staff, but there are so many voting machine discrepancies,” said Susie Beiersdorfer, a FrackFree member. “We want to make sure everybody’s vote counts.”

State Supreme Court denies driller's request for order saying local zoning can't restrict fracking -- A potentially pivotal case in Ohio’s continuing debate over whether local communities can ban or zone oil and gas drilling activities hit a wall at the Ohio Supreme Court on Tuesday. The high court dismissed without comment a complaint for mandamus (court order) filed by Beck Energy of Ravenna, Ohio, against the Akron suburb of Munroe Falls. The lack of explanation by the Supreme Court, though not at all unusual, makes it difficult to interpret the significance of the decision, though it definitely didn’t favor the oil and gas industry. Beck, the lead plaintiff in a landmark Ohio case involving local oil and gas regulations, Morrison (Munroe Falls) vs. Beck Energy, sought an order from the Ohio Supreme Court stating that Munroe Falls cannot use its zoning ordinance “to prohibit drilling for oil and gas in 99.06 percent of the city’s territory.”The recent debate over Ohio cities and counties’ efforts to ban or regulate oil and gas drilling, fracking and/or waste disposal has mainly involved proposed community bill of rights that assert an innate right of local citizens to pass laws to protect their environment. So far, those efforts haven’t had much luck with Ohio courts, including the highest one, the Supreme Court. The courts have backed up state officials and the oil and gas industry’s contention that only the state, not local government, has the authority to regulate oil and gas. However, Beck Energy’s request for a Supreme Court order  involved a different question – whether traditional zoning can dictate where oil and gas activities can go, just as it does with other industrial, commercial and residential activities. When Beck filed the mandamus action in June, it was seen as having the potential to finally sort out that crucial question. The court’s noncommittal decision on Tuesday dampens that expectation, however.

Fairmount Santrol Announces Third-Quarter 2015 Results - -- CHESTERLAND -- Fairmount Santrol today announced results for the third quarter ended September 30, 2015. Third-quarter 2015 revenue totaled $171.0 million, down 54% from $373.5 million for the same period in 2014, and down 23% from $221.3 million in the second quarter of 2015. Overall sales volumes were 2.0 million tons for the quarter, compared with 2.6 million tons in the third quarter of 2014 and 2.2 million tons in the second quarter of 2015. For the third quarter, the Company had a net loss of $46.2 million, or $(0.29) per diluted share, compared with net income of $54.1 million, or $0.32 per diluted share, for the same period a year ago and net income of $14.1 million, or $0.08 per diluted share, in the second quarter of 2015. The Company had a $28.1 million non-cash tax expense in the third quarter. The adjustment is primarily driven by changes to the current and forecasted business levels, the variability of book income (or loss) between quarters, and a proportionately greater impact on taxable income from the statutory percentage depletion allowance. The Company expects to show a cumulative annual tax benefit for the full year 2015.  Total Proppant Solutions volumes for the third quarter of 2015 were 1.5 million tons, down 25% compared with the prior-year period and down 8% compared with the second quarter of 2015. Raw frac sand volumes were 1.3 million tons, down 15% compared with volumes for the same period a year ago and down 6% sequentially. Coated proppant volumes were 0.15 million tons, down 61% from the prior-year period and down 25% versus the second quarter of 2015. During the third quarter, the Company experienced an average decline in selling prices of 8% sequentially across all product lines.

Utica Shale: the best and the worst? - Over the past few weeks, the buzz around the Marcellus Shale has actually been about its deeper neighbor, the Utica, where a handful of companies have drilled record-setting wells for record-high costs. That has been making some people very nervous — not because the dry portion of the Utica underlying southwestern Pennsylvania, eastern Ohio and the West Virginia Panhandle might be too expensive to drill. Instead, it’s because, as some companies predict, it might soon be the least expensive. “If there’s a shoe to drop that makes things worse, it’s the dry Utica working,” said Jim Crockard, CEO of the newly-formed Marcellus startup Lola Energy Operating Co.The glut of natural gas produced from shale wells over the past five years has inundated the market. Each new shale play seemed to outshine the last, with bigger wells and better economics. The price of natural gas futures at the national benchmark, Henry Hub, dipped below $3 per million British thermal units in January and has stayed there, inching closer to $2 in the past few months. Now, here comes the Utica, another giant gas field. The so-called dry portion of the Utica contains methane, the fuel used for heating and cooking. “Wet” portions contain methane as well as other natural gas liquids, including ethane and propane. “If it does work, if you start flooding the market with economic Utica wells,” Mr. Crockard said, the benchmark price of gas will stay at $2 per million British thermal units. More to the point: “It will wipe out all the economic Marcellus wells.”

Magnum Hunter warns of bankruptcy for gas companies  - About a month after Magnum Hunter Resources Corp. said it had hired advisers to help boost the struggling company’s financial position, the oil and gas producer warned that it may be heading toward bankruptcy. It joins other oil and gas companies reeling from the body blows dealt by plummeting commodity prices — many have announced layoffs, suspended drilling in some areas or sold assets. In a filing with the U.S. Securities and Exchange Commission this week, Magnum Hunter said seeking protection under Chapter 11 of the bankruptcy code “may be unavoidable.” Magnum Hunter has operations in the Marcellus Shale in West Virginia and Ohio, and the Utica Shale in southeastern Ohio and western West Virginia. During the first quarter of 2015, the Texas-based company suspended its drilling operations and said it didn’t expect to resume “until our liquidity position has been stabilized.” Meanwhile, the New York Stock Exchange said Tuesday it would begin delisting the common stock of Magnum Hunter due to “abnormally low” price levels. NYSE requires that the average closing price be at least $1 per share over a consecutive 30 trading-day period. As of Nov. 6, its average closing price over the preceding 30 trading-day period was 36 cents per share. Leo Mariani, an analyst for RBC Capital Markets, noted the company had been working on asset sales for months, “but they don’t seem to have anything to show for it.”

Eclipse Resources to Idle Rig Through 1Q2016, Focus on DUCs For Growth - Eclipse Resources Corp. will idle its one-rig drilling program through 1Q2016 as it looks to its inventory of drilled but uncompleted (DUC) wells to maintain production growth while waiting out the pricing downturn. The State College, PA-based exploration and production (E&P) company announced its plans to halt drilling activities during a third quarter earnings call with investors Thursday. “As we look towards the 2016 plan and where commodities currently are, given our inventory of wells that we’ve already paid to drill and still need to complete, it didn’t seem to make a lot of sense to us to go ahead and continue to add to that inventory of DUC wells, when we can go complete wells essentially at half the capital cost of what it costs to drill and complete a new well from scratch,” CEO Benjamin Hulburt said. Hulburt said the company has 20 net DUC wells currently in its inventory. Eclipse will focus on bringing seven wells from its Fuchs/Dietrich pad online through the rest of 2015 and into 1Q2016, he said. Despite idling its drilling program, Eclipse is well-positioned to continue realizing production growth into 2016, Hulburt said, though he cautioned that commodity prices will dictate the company’s capital spending.

Pennsylvanians getting drilled all over again -— Pennsylvania's natural gas industry has fended off higher taxes for yet another year, while a potential deal to end a budget stalemate now in its fifth month would make the state's sales tax the nation's second highest.Gov. Tom Wolf's top priority has been a record increase in education funding, and an agreement by top Republican lawmakers on that issue was enough for the first-term Democrat, his press secretary, Jeff Sheridan, said Tuesday.In a brief statement to reporters, Wolf acknowledged that many details in the proposed budget remain unsettled, and his ambitious hope is to have work on it finished and through the Legislature by Thanksgiving.Some Democrats are restless over the tax trade-off.House Democratic Whip Mike Hanna, D-Clinton, said it may be hard for Democrats to support a deal in which companies like Exxon Mobil Corp. — a major gas-exploration company — will not pay more, but every resident will when they buy everything from a car to an outdoor grill.  So we tax grilling, but not drilling. Is this a great state or what? 

Dartmouth study says fracking benefits extend 100 miles - Akron Beacon Journal - Here’s the link to the study: – Supporters and opponents of fracking have been debating over the degree to which fracking is benefiting the economy versus affecting the health and environment of our communities. In a new National Bureau of Economic Research study, Dartmouth professors focus on the income and employment consequences of fracking. They find that over a third of fracking revenue stays within the regional economy. For the study, researchers analyzed data from oil and natural gas production from 2005 to 2012 and found that within 100 miles of new production, $1 million of extracted oil and gas generates $243,000 in wages, $117,000 in royalties and 2.49 jobs— an economic impact three times larger than within the county of a fracking site. The impact on jobs and income at the state level was approximately five times larger than the county impact.  Within the county, every $1 million generates $66,000 in wage income, $61,000 in royalty payments and 0.78 jobs within the county. Of the $66,000 in wage income, $39,000 are wages to oil and gas industry workers, and $27,000 are wage spillovers to workers in other industries. Over 3,000 counties in the U.S. are evaluated in the study, which includes a focus on the top fuel producing states and counties. The most active producers of oil are: Calif, Colo., Kan., La., N.M., N.D., Ohio, Okla., and Texas; and the most active producers of shale gas are: Colo., La., N.M., Penn., Utah, Texas, W.Va., and Wyo. Unlike other studies to date, which may rely solely on a county-based analysis, the study examines the impact of fracking within 100 miles of new drilling sites, which takes into account workers who commute to a site, and other spillover economic activity experienced by neighboring counties.

Cuomo Gives Thumbs-Down To Off-Shore LNG Terminal - Gov. Andrew M. Cuomo has vetoed a proposed natural gas transfer station off Jones Beach, killing a venture whose projected fuel cost savings had been drowned by fears of fracking, terrorism and environmental damage.In a letter sent Thursday to the federal Maritime Administration, Cuomo wrote of unanswered questions on security on Port Ambrose, potential “catastrophic” damage from a superstorm, disruption to the squid and scallop industry, and a conflict with an offshore wind farm proposed there by the New York Power Authority.“My administration carefully reviewed this project from all angles, and we have determined that the security and economic risks far outweigh any potential benefits,” Cuomo said in a statement. “Superstorm Sandy taught us how quickly things can go from bad to worse when major infrastructure fails — and the potential for disaster with this project during extreme weather or amid other security risks is simply unacceptable.”Port Ambrose also would “hinder the local maritime economy in a way that negatively impacts businesses throughout Long Island, and that is simply unacceptable. This is a common-sense decision, because vetoing this project is in the best interests of New Yorkers.”His decision, to be announced at 12:15 p.m. at the Long Beach Recreation Center, is not entirely unexpected because Cuomo came out last year against the controversial fracking of natural gas upstate and has frequently linked extreme weather to climate change in the wake of Sandy.

US shale oil output will be less resilient than gas - – U.S. natural gas production hit a new record in August, despite the deepening slump in gas prices and a fall in the number of rigs targeting gas formations. The failure of gas production to respond to lower prices and a falling rig count has left many analysts wondering if it heralds the same problem in the oil market – worsening oversupply. The number of rigs drilling for oil has plunged almost two-thirds over the last 12 months, but crude production is unchanged since October 2014 and down by less than 5 percent compared with its peak in April. Like shale gas producers, shale oil drillers have managed to raise output while cutting costs by concentrating on the best-known and most productive formations and areas. They have also standardized and accelerated the drilling process, drilled longer horizontal wells with more fracking stages, and employed more horsepower to fracture larger areas underground from the same hole. But closer examination reveals important differences between the two markets that suggest oil output will be less resilient than gas to lower prices.

Straits of Mackinac pipeline draws concern at UT water talks - Pipelines are gaining more of the public’s attention these days, from President Obama’s rejection of the proposed Keystone XL pipeline to the concerns many Ohio property owners have expressed over how the new era of shale fracking is creating bigger demands to move natural gas through their state. But one of the Great Lakes region’s biggest pipeline battles is over a line that has been used to move oil under the highly sensitive Straits of Mackinac since 1953 with hardly anyone noticing.  Enbridge Line 5 is a 645-mile, 30-inch-diameter pipeline running from Superior, Wis., to Sarnia, Ont.  It’s the five-mile stretch between Michigan’s Upper and Lower Peninsulas that garners the most attention. A spill or rupture there could ruin millions of gallons of fresh water in lakes Michigan and Huron.  “Since the Kalamazoo River spill, pipelines have gotten more and more scrutiny,” Noah Hall, a Wayne State University law professor and the panel’s moderator, said. He said the movement of fossil fuels has become a bigger environmental issue, especially in the industry-heavy Great Lakes region. The Kalamazoo River oil spill occurred in 2010, the same year as BP’s much higher-profile Deepwater Horizon spill in the Gulf of Mexico. The latter was the largest spill in U.S. history; the Kalamazoo River oil spill was the largest to ever affect an inland U.S. river. Enbridge also owns the pipeline that spilled into the Kalamazoo near Marshall, Mich., about a two-hour drive northwest of Toledo.  Though the company was cited by federal regulators for waiting too long to report the Kalamazoo spill, Enbridge said it has “paid special attention to the Straits of Mackinac,” has never had a leak there, and is “working hard” to ensure it never does.

Sanders speaks against Bakken pipeline through Iowa -- Vermont Sen. Bernie Sanders, a Democratic presidential hopeful, has criticized the proposed Bakken crude oil pipeline, which is set to go before the Iowa Utilities Board beginning later this week. “I’m opposed to the construction of the Bakken ‘crude oil’ pipeline because as a nation, our job is to break our addiction to fossil fuels, and not increase our dependence on oil, coal, and other carbon pollution sources,” Sanders said in a statement released Tuesday. Sanders also advocated against the Keystone XL pipeline, which has gained more national attention. Sanders and Sen. Rand Paul, R-Ky., are the only presidential candidates who’ve spoken against the Bakken pipeline, which is being sponsored by the Dallas-based Dakota Access. The 1,100-mile pipeline would cut diagonally through Iowa and carry up to 570,000 barrels a day from North Dakota to a terminal in Illinois. The proposal has generated backlash from a cross section of Iowans, including farmers, environmentalists and property rights advocates, who oppose using eminent domain for the pipeline. Others support the effort, saying it would be a financial boon for the state.

Resistance on the Land: Natural Gas Pipeline Plans Opposed - Carolyn and Ian Reilly and their four children left Florida's sprawl in 2010 to farm 58 acres in rural Virginia, raising beef cattle, chicken and hogs. Then a year ago, they learned a natural gas pipeline would slice through part of their farm and their lives took another dramatic turn.  They've shooed pipeline surveyors from their pastures, made anti-pipeline signs for a protest at the county courthouse and at appearances by the Virginia governor. They've also kept up pressure on local officials. From New England to North Carolina, scattered insurgencies have formed in opposition to a spider web of pipelines up and down the Eastern Seaboard as the nation's energy industry seeks to move pent-up natural gas supplies.Behind the pipeline boom: vast deposits of natural gas being drilled in West Virginia, Pennsylvania and Ohio and ready for shipment to U.S. and international markets.  "Essentially, the takeaway is they're re-plumbing the whole United States," .The battle has emerged as the East Coast version of the environmental and political drama over the Keystone XL Pipeline, which became a line in the sand for environmentalists who argue the time has passed for the world to end reliance on fossil fuels. With President Barack Obama killing that 1,179-mile energy project Friday, the snarl of proposed pipelines carrying natural gas is likely to generate more attention — from proponents and opponents alike.

Obama Administration Approves Pipeline Expansion Set to Feed First Ever Fracked Gas LNG Export Terminal -- Steve Horn -- The Obama Administration has quietly approved expansion of a major pipeline carrying fracked gas destined for the global export market. The Gulf Trace pipeline, owned by The Williams Companies, is set to feed into Cheniere Energy's Sabine Pass LNG export terminal in Louisiana. As first reported by Reuters, LNG tankers loaded with super-chilled liquefied naturalgas obtained via hydraulic fracturing (“fracking”) will set sail for the first time from Sabine Pass in January 2016.  In a statement, Williams said it had received approval for Gulf Trace from the U.S. Federal Energy Regulatory Commission (FERC) and had set a date of the first quarter of 2017 for the project to be in service.  The statement said Gulf Trace was part of $5.1 billion worth of transmission projects targeting the eastern U.S.   Gulf Trace will feed gas obtained from fracking in Pennsylvania's Marcellus Shale basin to Sabine Pass.   Pipeline company giant Energy Transfer Partners (ETP) recently purchased Williams Companies for $32.6 billion. ETP — whose assets include both hotly-contested proposed Dakota Access LLC pipeline and the Trans-Pecos Pipeline — is run byCEO Kelcy Warren, who served as an advisory committee member and donor to former Republican Party presidential candidate Rick Perry. Perry sits on ETP's Board of Directors.  Sabine Pass LNG Terminal owner Cheniere Energy, the first company in the fracking era to receive an export permit from the Obama Administration back in 2012, also has a politically connected Board of Directors. Among its members is Obama's former climate czar, Heather Zichal.   FERC has come under fire of late for rubber-stamping nearly every project proposal landing on its desk.

Florida Legislature's green light to fracking is the wrong signal -- Bravo to the Palm Beach County commissioners who voted last month for a resolution calling for a statewide ban on fracking. And to the dozens of other counties — including Miami-Dade, Broward, St. Lucie, Martin and Monroe — that have similarly declared this controversial method of extracting oil and natural gas off-limits in their own jurisdictions or demanded a statewide prohibition. Too bad that their responsible efforts to protect their communities may be crushed by state officials who seem hellbent on caving to the drilling interests.  The Florida Legislature is advancing a bill that would nullify local efforts to bar fracking or even to regulate it. House Bill 191 would completely preempt local governments from regulating or prohibiting oil or gas exploration. All decisions on exploring, drilling, processing, storing and transporting oil and gas would be up to the state. On Tuesday, the bill sailed through a House subcommittee on a party-line 9-4 vote despite roughly 50 environmentalists on hand to oppose it. In favor were business groups like the Florida Petroleum Council. Brewster Bevis of Associated Industries of Florida asked what proved the pertinent question: “Will this create jobs in Florida? Of course it will.” A similar bill passed the House last spring but died in the Senate. Its backers said prudence demands having regulations in place in case the fracking industry sets its sights on Florida.

Oil tankers queueing in U.S. Gulf seen as symbol of glut -- A traffic jam of oil tankers has emerged along the U.S. Texas coast this month, a snarl that some traders see as the latest sign of an unyielding global supply glut. More than 50 commercial vessels were anchored outside ports in the Houston area at the end of last week, of which 41 were tankers, according to the Houston Pilots, an organization that assists in the navigation of larger vessels in and around port areas. Normally there are between 30 to 40 vessels anchored offshore, of which two-thirds are tankers, according to the pilots. Although the channel has been shut intermittently due to fog or flooding in recent weeks, pilots said those issues were not significant enough to create the backlog. “It’s not because of a lack of pilots or tug boats,” according to JJ Plunkett, a Port Agent with the Houston Pilots. As of Nov. 6, more than 20 million barrels of crude were sitting in vessels anchored outside the U.S. Gulf Coast waiting to discharge, double the volume that typically discharges each week, according to Matt Smith, Director of Commodity Research at ClipperData. “We’re seeing ships idling off the coast of China, Singapore, (the) Arab Gulf, and now the U.S. Gulf. It appears that the glut of supply in the global market is only getting worse,” Smith said. Oil traders in the U.S. cash market pointed to everything from capacity constraints at Gulf Coast storage tanks to a lack of buyers for the imported barrels. While U.S. data show Gulf Coast inventories hit a record 251.7 million barrels just over a week ago, major facilities at Corpus Christi, Houston, the Beaumont-Nederland area, and St. James, Louisiana, were still barely two-thirds full at the end of October, according Genscape data. Several traders said some ships may have arrived without a buyer, which can be hard to find as ample supply and end-of-year taxes push refiners to draw down inventories.

Something Very Strange Is Taking Place Off The Coast Of Galveston -- Having exposed the world yesterday to the 2-mile long line of tankers-full'o'crude heading from Iraq to the US, several weeks after reporting that China has run out of oil storage space we can now confirm that the global crude "in transit" glut is becoming gargantuan and is starting to have adverse consequences on the price of oil.  While the crude oil tanker backlog in Houston reaches an almost unprecedented 39 (with combined capacity of 28.4 million barrels), as The FT reports that from China to the Gulf of Mexico, the growing flotilla of stationary supertankers is evidence that the oil price crash may still have further to run, as more than 100m barrels of crude oil and heavy fuels are being held on ships at sea (as the year-long supply glut fills up available storage on land). The storage problems are so severe in fact, that traders asking ships to go slow, and that is where we see something very strange occurring off the coast near Galveston, TX. (picture)   FT reports that "the amount of oil at sea is at least double the levels of earlier this year and is equivalent to more than a day of global oil supply. The storage glut is unprecedented: Off Indonesia, Malaysia and Singapore, Asia’s main oil hub, around 35m barrels of crude and shipping fuel are being stored on 14 VLCCs.“A lot of the storage off Singapore is fuel oil as the contango is stronger,” said Petromatrix analyst Olivier Jakob. Fuel oil is mainly used in shipping and power generation. Off China, which is on course to overtake the US as the world’s largest crude importer, five heavily laden VLCCs — each capable of carrying more than 2m barrels of oil — are parked near the ports of Qingdao, Dalian and Tianjin. In Europe, a number of smaller tankers are facing short-term delays at Rotterdam and in the North Sea, where output is near a two-year high. In the Mediterranean a VLCC has been parked off Malta since September. On the US Gulf Coast, tankers carrying around 20m barrels of oil are waiting to unload, Reuters reported. Crude inventories on the US Gulf Coast are at record levels. A further 8m barrels of oil are being held off the UAE, while Iran — awaiting the end of sanctions to ramp up exports — has almost 40m barrels of fuel on its fleet of supertankers near the Strait of Hormuz. Much of this is believed to be condensate, a type of ultralight oil.

After White House Rejects Keystone XL, Battle Against Larger Texas Pipeline Intensifies: If a couple of billionaires get their way, a 143-mile-long, 42-inch high pressure natural gas transmission pipeline will be built right through the heart of Texas' starkly beautiful and remote Chihuahuan desert. Plans are currently in the works for the pipeline, which would be larger in diameter than the infamous Keystone XL. Although it has garnered far less media attention than the Keystone XL, this West Texas project has already sparked a massive grassroots resistance movement that has unified ranchers, Tea-Partiers, artists, environmentalists and the vast majority of the residents in this starkly populated corner of the country. Texas billionaire Kelcy Warren, the head of the Dallas pipeline company Energy Transfer Partners (ETP) which now boasts former Texas governor Rick Perry on its board of directors, and Carlos Slim of Mexico, who is reportedly the second-richest person on earth, are the core partners behind the Trans-Pecos pipeline project. The aim of the pipeline is to deliver natural gas from Texas to Mexico, where it is in high demand.Slim and Warren promise that the pipeline will be both safe and environmentally friendly. But Coyne Gibson, who worked for a decade in the oil and gas industry as an electrical and control systems engineer, vehemently disagrees with that claim. "I used to do this kind of work, so I admit to past crimes, so to speak," Gibson told Truthout in Alpine, Texas, where signs of the pipeline's construction are already evident. "I've seen firsthand what this [pipeline] does to the places it touches," he said. "It is horrifically environmentally impactful. The immediate impact is the absolute environmental destruction of every living thing in its path. And that's just to get started."

Legal challenge ties fracking companies in Oklahoma to state's meteoric increase in earthquakes - In a new approach to challenging fracking, the legal group Public Justice and the Sierra Club on Monday jointly filed a "notice of intent to sue" four companies that engage in the practice of hydraulic fracturing in Oklahoma: Sandridge Exploration and Production, New Dominion, Chesapeake Operating and Devon Energy Production Company. The notice contends that the waste fluids the companies inject back into the ground is causing a dramatic increase in seismic activity and gives the companies 90 days to adjust their practices. As the chart below shows, prior to 2009, Oklahoma had experienced a record high 167 earthquakes in 1995; last year 5,000 earthquakes were reported, and an even higher rate is projected for 2015. From the press release: “Since late 2009,” the groups note in their letter, “the rate of magnitude-3 or larger earthquakes in north-central Oklahoma has been nearly 300 times higher than in previous decades.” The letter also notes that “Overlaying the locations of Defendants’ wells onto the places where earthquakes above magnitude 3.5 have been felt shows that earthquakes are occurring in the vicinity of the Defendants’ wells or along fault lines that are close to the wells.” Public Justice executive director Paul Bland explains that the suit represents a completely new approach to using the Resource Conservation and Recovery Act as a way to combat fracking. RCRA has typically been used to prosecute cases where companies dump pollutants into water supplies. But Public Justice has successfully used the law to go after a broader set of environmental issues as it is now doing in Oklahoma. Bland says the group is looking for a “precedent-setting” court ruling that finds “the handling of solid wastes is increasing the number and severity of earthquakes.”

Do Fracking Wastewater Injections Cause Earthquakes -- Legal experts say there are a rising number of lawsuits against the oil and gas industry over earthquakes allegedly linked to fracking operations.  “Sandra Ladra, a resident of Prague, Oklahoma sued New Dominion LLC and Spess Oil Co. alleging that an earthquake triggered by the companies’ disposal of fracking wastewater in wells near her home caused a portion of her chimney to collapse,” the legal intelligence source JD Supra reported. “The decision paves the way for such disputes to be heard by a jury. Several recent reports by academics and regulators purporting to find a link between wastewater injection wells and seismic activity have resulted in the proliferation of similar lawsuits in Oklahoma and in other states like Arkansas where fracking is common,” the report said. Research has linked earthquakes to fracking wastewater injection wells, raising policy and legal questions about the consequences of fracking. According to scientists from the U.S. Geological Survey, the federal scientific agency, "the deep injection of wastewater underground is responsible for the dramatic rise in the number of earthquakes in Colorado and New Mexico since 2001." They published these findings in the Bulletin of the Seismological Society of America last year. And research from University of Colorado scientists concluded that “the massive increase in earthquakes in central Oklahoma is likely being caused by the injection of vast amounts of wastewater from oil and gas operations into underground layers of rock,” according to an announcement from the university. “Under high pressure, fluids can seep into existing faults and pry apart the rocks, allowing them to slip past each other more easily and cause earthquakes."

Recycling Wastewater From Oil And Gas Wells Poses Challenges -- Each year, the oil and gas industry produces more than 800 billion gallons of wastewater. Coupling the massive volumes of wastewater generated over the life of the well and the millions of gallons of water needed to hydraulically fracture each well, it’s easy to see that oil and gas exploration and production is just as much a water issue as it is an energy issue. With growing frequency, this huge volume of oil and gas wastewater – which contains hundreds of chemicals resulting from operations as well as underground water that is usually heavily laden with salt and naturally-occurring pollutants – is being recycled, and some groups are pushing for mandatory recycling policies. Sounds great. After all, recycling is good for the environment, right?On one level, it is great. In drought-stricken parts of the country, water is a scarce resource and beneficially reusing the huge volume of wastewater the oil and gas industry produces could help mitigate impacts on local water sources. In some counties in Texas, for example, over half the water demand in the county is used for oil and gas exploration and production. But recycling this wastewater creates some environmental challenges. And if they are not proactively addressed, we run the risk of trading one environmental problem for a host of new ones.

2014 Colorado oil deaths greater than previously calculated — A new federal database that was developed to more precisely count the number of deaths in the oil and gas industry shows eight workers died in Colorado in 2014. The count by the Fatalities in Oil and Gas Extraction, or FOG, is two more than what was tabulated by the federal Bureau of Labor Statistics for the same year. The discrepancy comes from the different methodology used by the National Institute for Occupational Health in putting together its first FOG findings, which were released in September and included the period between Jan. 1, 2014, and June 30, 2014. “We knew from the Bureau of Labor Statistics data about the basics of what’s killing workers,” Kyla Retzer, an epidemiologist who led the effort to compile the FOG report, said. However, Retzer said they wanted to also find out the type of operations and what equipment was involved in the deaths.

Activists plan protest at BLM's oil-gas auction in Colorado - “Keep it in the Ground” Rally to Target BLM’s Oil and Gas Auction in Colorado.  DENVER—Dozens of people will stage a “Keep it in the Ground” climate rally on Thursday morning outside of the Bureau of Land Management’s oil and gas lease sale in Lakewood, Colo. The Bureau’s “climate auction,” as protesters dubbed it, will allow industry to bid on more than 90,000 acres of publicly owned oil and gas in central and eastern Colorado – which contain upwards of 1 million estimated tons of potential greenhouse gas pollution, and possibly much more. The rally is part of a rapidly growing national movement calling on President Obama to define his climate legacy and ‘keep it in the ground’ by stopping new federal fossil fuel leases on public lands and oceans – a step that would keep up to 450 billion tons of carbon pollution in the ground. Similar “Keep it in the ground” protests are planned for upcoming lease sales in Reno, Nev., Salt Lake City and Washington, D.C.

State considers regulations to reduce oil well emissions - Wyoming regulators are looking at ways to reduce oil well emissions and update the state’s oil and gas regulations. The Casper Star-Tribune reports that the Oil and Gas Conservation Commission on Tuesday unveiled a proposal that would require companies to submit as part of their drilling permits plans to capture natural gas that is flared off from wells, and also would require monthly reports of flaring and venting volumes. The changes leave the threshold for flaring without a permit at the current level of 60,000 cubic feet a day without needing state regulator’s approval. Additional details were unavailable. The commission voted to official open the rule-making process. The proposal will be reviewed by Gov. Matt Mead before moving into a 45-day public comment period.

North Dakota's colleges pitch education to laid-off roustabouts - – North Dakota’s public universities have launched a scholarship program to enroll laid-off oilfield workers in energy classes, contending their best path to a new job is learning mechanical and computer skills. The strategy is designed to raise university enrollment as much as it is to prevent a drain of talent from the second-largest oil-producing state in the country. Hundreds of workers are losing jobs as the number of drilling rigs and hydraulic fracturing crews, the lifeblood of any oilfield, falls along with crude prices. While the state does not tabulate the number of oil-related job cuts, anecdotes abound of laid-off roustabouts opting to leave the Peace Garden State once they get a pink slip. The population of Williston, epicenter of the state’s oil boom, has declined more than 6 percent in the past year. Still, there are more than 200 open oilfield jobs in North Dakota’s four largest oil producing counties, according to state data, including postings for diesel mechanics, well operators and pipeline supervisors. All require advanced training. “Good people are losing jobs, and this is a time for them to go back to school,” said Mark Hagerott, chancellor of the North Dakota University System, who has dubbed the endeavor “Bakken U” after the shale formation underlying most of the western part of the state.

North Dakota natural gas flaring targets challenged by rapid production growth - Increases in North Dakota's crude oil production have resulted in increased associated natural gas production from oil reservoirs, especially in the Bakken region. Because of insufficient infrastructure to collect, gather, and transport this natural gas, about one-fifth of North Dakota's natural gas production is flared rather than marketed. North Dakota's Industrial Commission (NDIC) has established natural gas capture targets in an effort to reduce the amount of flared gas, and they recently issued a revision to the flaring targets in response to faster-than-expected gas production growth in the Bakken region.  Based on the targets established in April 2014, the percentage of flared gas was set to fall to 15% in January 2016 and to remain at that level until 2021. However, on September 24, the NDIC slightly loosened the restrictions in the near term, allowing 22% to be flared through the first quarter of 2016, with the decline to 15% taking place in November 2016. Natural gas is flared rather than vented without combustion for both safety and environmental reasons. Vented, unprocessed natural gas contains hydrocarbons that are heavier than air, such as propane and butane, that can be hazardous if introduced to an ignition source. Also, flaring natural gas produces carbon dioxide, which, while a greenhouse gas, has a lower global warming potential than methane, the chief component of vented (noncombusted) natural gas.  As of August, North Dakota had the second-highest average heat content of natural gas delivered to consumers in the United States, meaning natural gas from the Bakken has higher levels of natural gas liquids (mostly ethane). This high heat content limits additional volumes of ethane that processing plants in the state can leave in processed gas streams. With limited NGPL storage capacity, additional pipeline capacity to move greater NGPL volumes to market is needed for processing plants in North Dakota to avoid reducing throughput volumes, allowing them to keep as much capacity as possible available to reduce volumes of flared natural gas in the future.

Fracking Goes on Trial for Human Rights Violations: As convoys of heavy trucks carry fracking equipment into new oil fields in neighborhoods and wildlands around the world, an alliance of human rights organizations is making plans to put the entire practice of hydraulic fracturing on trial. The court is the Permanent People’s Tribunal, a descendant of the Vietnam War-era International War Crimes Tribunal. The Peoples’ Tribunal is a branch of no government on Earth. It has no power of enforcement. It has no army, no prison, no sheriff. So what’s the point? The point is that it matters to tell the truth in a public place. It matters to affirm universal standards of right and wrong, to clearly say, “There are things that ethical people do not do to one another and to the Earth.” It matters especially when international and national justice systems, even in purported democracies, are seemingly incapable of protecting people and the commons - air, water, fertile soil, stable climate and all the other necessary conditions for the exercise of basic human rights. It is especially important when transnational corporations are allowed to write the laws that regulate their own actions, making their transgressions effectively “legal,” no matter how outrageous.

Portland Bans Fossil Fuel Export -- The City of Portland in Oregon took a stand yesterday against dirty fossil fuels. It passed a resolution—with teeth—against new fossil fuel transportation and storage infrastructure in Portland and on our iconic rivers. Coal, oil and gas companies want to export stunning volumes of dirty fuel through our communities—the City of Portland just made that harder.  Policy resolutions are fine, but Portland’s resolution will make an on-the-ground difference. The city council directs staff to propose changes to the city’s code that will protect Portlanders from dirty fossil fuels. City laws about land use, public health, safety, building, electrical, nuisance and fire can all be updated to prevent fossil fuel exports. In other words, the city council message was: Do something. Write laws that matter.  The Columbia River faces nearly a dozen terminals proposed to ship coal, tar sands oil, Bakken crude and fracked gas overseas. Tesoro, for example, proposes America’s largest oil-by-rail export terminal—42 percent of the capacity of Keystone XL—across the river from Portland. And just downstream, a liquefied natural gas terminal would export more gas each year than the state uses. Building these terminals would ensure the use of fossil fuel infrastructure for decades, while energy giants mine, drill and frack to feed their export terminals.Earlier this year, Portland rejected a propane export terminal by refusing to bend its rules in order to protect the Columbia River. The goal is simple: if the city blocks new fossil fuel export terminals, it also blocks the dangerous trains, pipelines and oil tankers that would serve those terminals.

Obama Should Let Fossil Fuels Lie - The logic is clear. If we don’t extract them, we can’t burn them. Even better, this is a change the president can actually make, without the approval of Congress. With the climate summit meeting in Paris near, and the Keystone decision fresh, the United States can truly take the lead on these fuels by stemming their production, not just their consumption. Most climate debates have focused on cutting the use of fossil fuels. But under President Obama, oil and gas production in the United States has increased substantially. And that increase has been a major bragging point for the administration. “America is No. 1 in oil and gas,” the president boasted in his 2015 State of the Union address. Globally, we will have to use far less of our already proven reserves of oil, gas and coal in the next 35 years if we are to even have a shot at avoiding the most disastrous warming effects. Some say we need to keep a third of the earth’s oil reserves, half its gas and 80 percent of its coal unused. We need to lock up those fuels that would push us past the tipping point. And the most logical place for the United States to start is on our public lands. Most of our fuel-bearing federal lands are either beneath the ocean along our coasts or in the interior West, and are largely controlled by the Bureau of Land Management and other federal agencies. This means the White House has the power to end public-lands extraction of fossil fuels. Mr. Obama has the authority, under federal laws like the Mineral Leasing Act and Federal Land Policy and Management Act, to delay and ultimately stop new leasing of fossil fuels on public lands.But his interior secretary, Sally Jewell, cynically dismissed a recent call by more than 400 groups and scientists asking Mr. Obama to use his authority to keep federal fossil fuels in the ground. Because we continue to use fossil fuels, she argued, we need to keep digging them up.

Shale vs. conventional: Which produces more greenhouse gases? - Oil and gas extracted from tight shale formations such as the Bakken produces greenhouse gas emissions similar to conventional oil fields, according to two studies released by the United States Department of Energy’s Argonne National Laboratory. As reported by The Bakken Magazine, early estimates predicted that shale production might generate up to 20 percent more greenhouse gas emissions than oil produced in conventional oil fields. The research was undertaken in a collaborative effort between the University of California at Davis and Stanford University. The study examined the Eagle Ford Shale in Texas and the Bakken shale in North Dakota. The two separate studies found that once the flaring and venting of natural gas was accounted for, greenhouse gas emissions found in tight oil plays are similar to levels found in conventional operations. Also, the studies determined that the intensity of the emissions stayed consistent throughout the formation’s lifecycle. Adam Brandt, Stanford University professor and lead author of the Bakken study, said, “Drilling and fracturing wells for shale oil is more energy intensive than conventional drilling, but these wells have higher productivity and require less energy to produce and process the crude. Flaring of gas is a key issue in the Bakken, and if flaring were controlled, the Bakken crude would have lower emissions than conventional crude.”

Apache Said to Get Takeover Approach for $18 Billion Company - - Apache Corp., the oil and natural gas company worth more than $18 billion, has received an unsolicited takeover approach, according to people familiar with the matter. The Houston-based company rejected the initial offer and is working with financial adviser Goldman Sachs Group Inc. on defense, said the people, who asked not to be identified because deliberations are private. The potential buyer, who could not immediately be identified, sent a letter to Apache in the past few weeks and it’s unclear whether talks will resume, one of the people said. A spokesman for Apache couldn’t immediately be reached for comment outside of regular business hours. A representative for Goldman Sachs declined to comment. Apache on November 5, 2015, reported a smaller-than-expected adjusted loss and boosted its 2015 production forecast. It’s one of the biggest leaseholders in the Permian Basin in western Texas, the largest U.S. shale play and the only one where oil output has continued to grow even as drillers slash spending and idle rigs. It also explores in Egypt, the Gulf of Mexico, Canada and the Eagle Ford and Woodford shale basins in the U.S. A deal for Apache would be the largest for an independent oil and gas producer in the U.S. this year. Noble Energy Inc. bought Texas shale driller Rosetta Resources Inc. for $3.9 billion, including assumed debt, in an all-stock transaction in July.

Energy Default Alarms Get Louder as Pain Seen Lasting Into 2016 - Eleven months of depressed oil prices are threatening to topple more companies in the energy industry. Four firms owing a combined $4.8 billion warned this week that they may be at the brink, with Penn Virginia Corp., Paragon Offshore Plc, Magnum Hunter Resources Corp. and Emerald Oil Inc. saying their auditors have expressed doubts that they can continue as going concerns. Falling oil prices are squeezing access to credit, they said. And everyone from Morgan Stanley to Goldman Sachs Group Inc. is predicting that energy prices won’t rebound anytime soon. The industry is bracing for a wave of failures as investors that were stung by bets on an improving market earlier this year try to stay away from the sector. Barclays Plc analysts say that will cause the default rate among speculative-grade companies to double in the next year. Marathon Asset Management is predicting default rates among high-yield energy companies will balloon to as high as 25 percent cumulatively in the next two to three years if oil remains below $60 a barrel.“No one is putting up new capital here,” said Bruce Richards, co-founder of Marathon, which manages $12.5 billion of assets. “It’s been eerily silent in the whole high-yield energy sector, including oil, gas, services and coal.”

Distressed Eagle Ford, Bakken asset sales seen soon - Anadarko CEO – Financial distress is soon expected to trigger long-awaited sales of oil and gas properties in North Dakota’s Bakken and Texas’ Eagle Ford basin, the chief executive of Anadarko Petroleum Corp said on Tuesday. A prolonged downturn in crude oil prices has generated lots of chatter that companies laboring under heavy debt that operate shale fields with high break-even costs will have to sell assets to generate much-needed cash. As low crude oil prices linger for more than a year, distress is intensifying and may finally bring some of those properties to market. “We’ve not really seen good distressed assets make their way into the market,” CEO Al Walker told investors at Bank of America Merrill Lynch’s Global Energy Conference. “For companies that have positions in the Bakken, they probably will start to see that sooner than others.” Distressed Eagle Ford asset sales are also likely in the near-term, said the CEO of the Houston-based company that has shale wells in Eagle Ford. Still, Anadarko is most interested in adding assets in areas where it already had access to pipelines and other infrastructure needed to bring oil to gas to market like Colorado’s DJ Basin and West Texas’ Delaware Basin, said Walker. Pioneer Natural Resources Co CEO Scott Sheffield said at another conference on Tuesday that he believed the Permian Basin “is the only place long-term to grow oil in this country.”

Encana swings to loss on $1-billion charge; to hike Permian basin spending - Canadian oil and natural gas producer Encana Corp reported a quarterly loss on Thursday but reported an increase in oil production and said it is speeding up spending in the Permian basin in Texas. Encana plans to spend an extra $150-million in the Permian shale field in the current quarter that was originally earmarked for 2016. The company expects total capital spending of $2.2-billion this year, the upper end of its earlier forecast. Even so, Encana is continuing to clamp down on costs as the oil price slump drags on. “I’m very confident our efficiencies will be even better next year than this year. We’ll build off the operating performance we’ve achieved,” said chief executive Doug Suttles. Encana has cut its work force by 40 per cent since the end of 2012 and Permian horizontal drilling and completion costs are down about $2-million per well this year. It has been restructuring its portfolio to diversify production away from low-value natural gas towards oil and expects asset divestitures to total $2.8-billion in 2015. In August, Encana sold its Haynesville natural gas assets in northern Louisiana for $850-million and said in October it would sell its Denver Julesburg basin oil and gas assets in Colorado for $900-million. The Calgary-based company has booked impairment charges of $3.62-billion so far this year, including $1.07-billion in the third quarter, to write down the value of assets amid a prolonged slump in global crude prices.

BP says oil majors have axed 80 projects this year | Reuters: Oil majors have cancelled a total of 80 projects across the globe this year because of low oil prices and cut capital expenditures by as much as $22 billion (15 billion pounds), BP's head of exploration and production Lamar Mckay said on Tuesday.

Train derailment spilled thousands of gallons of ethanol — Crews are working to clear a freight train derailment in western Wisconsin that spilled thousands of gallons of ethanol. BNSF Railway said crews continued Sunday to transfer ethanol from the derailed cars and get the cars back on the tracks. The train derailed Saturday about two miles north of Alma, a town along the Mississippi River. Some of the 25 derailed cars were empty auto racks and tanker cars. BNSF says railroad crews stopped the leaks from five tanker cars and placed containment booms along the shoreline. One tanker released an estimated 18,000 gallons of ethanol, and the other four released an estimated 5 to 500 gallons each. No one was hurt. BNSF expects the tracks to return to service Monday morning.

Crews cleaning up after train derails in Watertown, spilling crude oil --The Federal Railroad Administration has sent in six staff members to investigate the cause of Sunday’s train derailment in Watertown, which resulted in a spill of crude oil and evacuation of 35 homes. But as of Monday morning, authorities were not sure what caused the 110-car Canadian Pacific train to derail around 2 p.m., nor could they say when local residents might return to their homes. Officials said they plan to meet again at 6 p.m. to discuss progress on the cleanup and investigation and to determine whether it is safe for residents to return. No injuries or fires resulted from the derailment. A total of 13 cars derailed, though a spokesman for Canadian Pacific said only one car was punctured, spilling less than 1,000 gallons of crude oil. CP reported Sunday night that all of the spilled crude oil was contained and siphoned off. None reached waterways. There was damage to the other derailed cars and to the tracks. The railroad company expressed regret for the accident and the inconvenience to residents. Spilled crude oil will be hauled away and disposed. In addition, the company will develop a soil remediation plan to handle any contaminated soil.

Another Buffett-Owned Oil Tanker Train Derails In Wisconsin, One Day After Obama Kills Keystone XL Pipeline - It must be somewhat ironic for the U.S. progressive moment that a day after Obama officially slammed the seal shut on Transcanada's Keystone XL pipeline after a seven year "review" (and days after the company itself withdrew its application, something which the admin ignored just so it could have the final say on the mater), moments ago an oil tanker train derailed north of Alma, Wisconsin along the Mississippi River 80 miles south of Minneapolis, with at least 32 cars off the tracks. The train belongs to BNSF - a company owned by Warren Buffett, and best known being directly involved in most of the recent oil train accidents. As such, this is the latest accident involving a "safe" Warren Buffett-owned train carrying toxic commodities, in a year where this "safe" Buffett-endorsed medium of transportation has already seen a record number of accidents.  As an reference point, here is a smattering of comparable headlines from just this year:

And here is the latest one. According to Fox9, the Buffalo County sheriff's office says 32 cars derailed north of Alma around 8:50 am prompting several road closures and a voluntary evacuation of the affected area, according to the Buffalo County sheriff's office. There are no reports of fire, smoke or injuries, BNSF Railway  told the Associated Press.

Third Freight Train Derails (Second Owned By Buffett) Days After Obama Kills Keystone Pipeline -- On Saturday, we noted with great irony, that just a day after Obama - with great pomp and even more preaching - killed the Keystone XL pipeline, that a freight train with 32 cards, belonging to Warren Buffett's BNSF, had derailed north of Alma, Wisconsin prompting several road closures and a voluntary evacuation of the affected area. Then on Sunday, barely 24 hours later, in another Wisconsin derailment incident, a train, this time with 100-car, carrying crude oil, derailed near the intersection of S. Montgomery St. and West St. in Watertown on Sunday afternoon. The Mayor said the derailment happened around 2:00 p.m. While this train did not belong to BNSF but to Canadian Pacific Railroad instead, that was hardly comforting to the people.  The spokesperson said 13 cars tipped over, one of which was punctured and oil.  And then, moments ago in what we initially thought was a joke, KCRG reported that close to two dozen train cars derailed after a crash Monday morning. Lt. Brett Grimshaw of the Des Moines County Sheriff’s Office said the crash happened a little after 8 a.m. when a coal train hit a road grader that had been backed up onto the tracks.  And before you ask, yes, this train, too, belongs to BNSF, which in turn belongs to Warren Buffett,  BNSF railroad spokesman Andy Williams said two locomotives and 21 of the 135 cars being pulled derailed near mile marker 249 of Highway 34, which is between Danville and New London close to the Henry County line.  The grader was backed up onto the rails while doing repairs on Highway 34 and didn’t see the train coming, Grimshaw said. The grader’s operator was thrown about 40 feet by the impact of the crash and was checked by paramedics.

Three Trains Derail Just Days After Buffett's BNSF Beats Back Railroad Regulations -- There's this... Last week, under pressure from companies including Buffett’s BNSF Railway Co, which has spent more money lobbying Congress this year than any other railroad, U.S. legislators passed, and President Obama signed, a law that delays the so-called positive train control mandate for at least three years, with the possibility of an additional two-year delay.– From the Reuters article: Buffett’s BNSF Helped Lead Fight to Delay Train Safety Technology.  And then there's this... A freight train derailed near Alma in western Wisconsin, spilling thousands of gallons of ethanol. BNSF Railway said crews continued Sunday to transfer ethanol from the derailed cars and get the cars back on the tracks.  BNSF said railroad crews stopped the leaks from five tanker cars and placed containment booms along the shoreline. One tanker released an estimated 18,000 gallons of ethanol, and the other four released an estimated 5 to 500 gallons each. We learn from ABC News: A Canadian Pacific Railway train derailed Sunday, spilling less than 1,000 gallons of crude oil and prompting evacuations in Wisconsin, the second day in a row a freight train derailed in the state. Thirteen cars of an eastbound CP train went off the tracks around 2 p.m. in Watertown, in the southeastern part of the state, the railroad said. One tank car was punctured and leaked oil. And then, this morning... BNSF Coal cars derailed in freight train crash near Danville, Iowa

Wisconsin lawmakers introduce rail safety bill in wake of two derailments -- Wisconsin lawmakers have introduced new rail safety legislation after a weekend during which two trains derailed about 200 miles apart in the state, spilling oil and chemicals. Rep. Jill Billings, D-La Crosse, announced Tuesday that she is circulating a bill that would fund more state rail inspectors and training for first responders while requiring railroads to submit emergency prevention and response plans detailing how they would handle incidents like the derailment of a BNSF freight train Saturday morning that spilled up to 20,000 gallons of ethanol in Mississippi River backwaters near Alma. “Derailments are becoming all too common,” Billings said while standing with about two dozen local rail safety advocates in front of BNSF tracks that were recently upgraded through the city of La Crosse to eliminate a bottleneck in the railroad’s network. A Canadian Pacific train carrying crude oil left the tracks Sunday in Watertown, Wis., spilling hundreds of gallons and prompting an evacuation in the southern Wisconsin city. The law would also establish response timelines for such disasters. Billings said the legislation is modeled after a Minnesota law enacted last year.

25 Million Americans at Risk From Oil Train Traffic in Their Communities  --Waterkeeper Alliance, ForestEthics, Riverkeeper and a national network of Waterkeeper organizations released a new investigative report yesterday, DEADLY CROSSING: Neglected Bridges & Exploding Oil Trains, exploring the condition of our nation’s rail infrastructure and how it is being stressed by oil train traffic. From July to September 2015, Waterkeepers from across the country documented potential deficiencies of 250 railway bridges in 15 states along known and potential routes of explosive oil trains, capturing the state of this often neglected infrastructure in their communities. The Waterkeepers identified areas of serious concern on 114 bridges, nearly half of those observed. Photos and video footage of the bridges inspected show signs of significant stress and decay, such as rotted, cracked or crumbling foundations and loose or broken beams. Waterkeepers were also present when crude oil trains passed and observed flexing, slumping and vibrations that crumbled concrete. “Waterkeepers boarded their patrol boats to uncover what is happening to the structural integrity of our nation’s railway bridges, a responsibility our federal government has shirked,” said Marc Yaggi, executive director of Waterkeeper Alliance. “People deserve to know the state of this infrastructure and the risks oil trains pose as they rumble through our communities.”This effort was initiated out of concern for the threat posed by the 5,000 percent increase in oil train traffic since 2008. Oil train traffic increases both the strain in rail infrastructure, as well as the likelihood of a rail bridge defect leading to an oil train derailment, spill, explosion and fire.

Feds reject call for tougher fire-resistance for crude oil tank cars -  Federal officials have rejected a call to toughen the fire-resistance of railroad tank cars that carry highly flammable crude oil, hundreds of which pass through the Chicago area each day. The U.S. Department of Transportation is standing by its decision issued last spring that new and retrofitted tank cars be required to withstand being engulfed in a pool of burning liquid for 100 minutes without exploding. Critics say slightly more than an hour and a half is too little time for police, firefighters and other first responders to react to the fiery derailment of a train hauling crude oil or ethanol. Response time is of critical importance in the Chicago area, the nation’s railroad hub. Scores of trains pass through each week hauling highly flammable crude oil from North Dakota’s Bakken shale fields to refineries, generally on the East Coast. When a BNSF train hauling 103 cars of crude oil derailed near Galena on March 5, witnesses said it took about only an hour for tank cars to explode, sending fire balls hundreds of feet into the sky. The explosions were so dangerous that firefighters couldn’t get close enough to extinguish the flames, officials said. The Association of American Railroads had urged the U.S. to reconsider its decision, issued in May. The association sought adoption of a tougher standard of thermal protection — up to 800 minutes, more than 13 hours — to give responders adequate time to react to an incident.

Keystone XL would have helped N.D. move some of its oil -  The rejection of Keystone XL is a setback for North Dakota’s oil industry, even though falling oil prices and the drop in Bakken drilling and oil production have lessened the immediate need for it. “It is a good time to say ‘No, we don’t want a pipeline’ when you really don’t need it,”  . TransCanada’s proposed 1,200-mile crude oil pipeline from Alberta through Montana and South Dakota to Nebraska would have carried mostly Canadian oil sands crude. The takeaway capacity of a planned Bakken leg was 100,000 barrels per day, just under 10 percent of North Dakota’s current production. But North Dakota officials believe that more Bakken pipelines still will be needed to carry future oil volumes. “We will be talking to TransCanada and to others to understand how that need can be met,” Justin Kringstad, director of the North Dakota Pipeline Authority, said in an interview. Both Canadian and North Dakota oil producers are hurting because of persistent low crude oil prices. On Friday, North Dakota reported just 64 active drilling rigs, a 71 percent drop from the peak in May 2012. North Dakota’s production fell 1.7 percent in August in the latest decline since peaking last December.   Kringstad said Keystone XL was one of four proposed pipelines intended to boost the state’s pipeline capacity. Nearly half of that state’s crude oil is shipped by rail, much of it on long oil trains that pass through Minnesota cities, including Minneapolis and St. Paul.

Without Keystone, industry must find new paths for oil — Following the Obama administration’s rejection of the Keystone XL pipeline, the oil industry faces the tricky task of making sure the crude oil targeted for the pipeline still gets where it needs to go. The pipeline, first proposed by TransCanada Corp. in 2008, was projected to carry 800,000 barrels a day of crude from Canada and North Dakota down to Nebraska, where existing pipelines would bring it to refineries on the Gulf Coast. Keystone XL was expected to come online toward the end of this decade. Until then a combination of existing pipelines and railroads was expected to be enough to handle anticipated production. Now the question becomes whether there will be enough pipeline capacity to move the oil and keep costs from getting too expensive. Skip York, vice president of integrated energy at consultancy Wood Mackenzie, said the oil industry “didn’t need Keystone today,” but will need the capacity in the future. President Barack Obama’s decision means shipping the oil will require “a more expensive form of transportation than it would have with Keystone XL,” he said. At the moment, the biggest impediment to the flow of oil is low prices. Oil has averaged about $50 this year, making many projects in the Canadian oil sands uneconomical. According to Wood Mackenzie, projects totaling about 485,000 barrels a day have been delayed this year. Canadian oil producers still expect production to rise to 5.3 million barrels a day in 2030, up from 3.7 million barrels a day in 2014, even after lowering their forecast to take into effect the impact of lower prices. The U.S. imports more crude oil from Canada than from any other country, about 3.4 million barrels a day as of August, according to the U.S. Energy Information Administration.

Keystone XL Wasn’t About Jobs Or The Climate — It Was All Politics -- During Keystone XL’s seven-year review process, the pipeline’s political significance ballooned far beyond its measurable consequences. In partisan narratives, it was often framed as a fight pitting jobs against the climate and energy security against environmental concerns. In reality, the pipeline stood to make little difference in any of these arenas. On Friday, President Obama announced that he was rejecting TransCanada’s request to build the 1,179-mile Keystone XL pipeline. Obama’s rationale essentially came down to this: There’s not much in it for us. “The pipeline would not make a meaningful long-term contribution to our economy,” Obama said. “Shipping dirtier crude oil into our country would not increase America’s energy security.” Proponents of Keystone XL, who include most of the Republican Party and all of its presidential candidates, said the pipeline would create jobs — about 42,000 of them, according to a State Department report on the pipeline’s environmental impacts published in January. But most of those jobs would have been temporary and related to the pipeline’s construction. Once the pipeline was built, according to the State Department report, the number of jobs created would fall to just 50. The overall economic benefits of the pipeline were slim, as well. Although some counties with project facilities could have seen revenues from property taxes rise 10 percent or more, the construction itself projected to add just $3.4 billion, or 0.02 percent, to the gross domestic product. With gasoline prices near multiyear lows, in part because of the increased U.S. supplies obtained by fracking, the pipeline would have made little difference for most American consumers.  In the end, it comes down to money. The oil sands will be extracted if and when it’s economically viable to do so. Obama’s rejection of Keystone XL gives him a badge to showcase his environmental credentials going into the U.N. climate talks at the end of this month.

The Keystone Victory - Dave Cohen - Last Friday Barack Obama followed the recommendation of the State Department that the Keystone XL pipeline would not "serve the national interest of the United States," and thus he rejected it. I didn't think that would happen, so Obama's decision came as a mild surprise.   And now a curious thing is happening. Environmental activists are celebrating, certainly, but victory in this case simply highlights the fact that Obama's rejection of the pipeline will have only a trivial (if any) effect on humanity's climate change problem. Whoops! And so Dave Roberts, who is perhaps the most thoughtful climate change journalist working today, felt compelled to write a long defense of the Keystone campaign. Roberts' defense is convoluted, but I am not going to review it because it is also silly.  The same invisible elephant—the inevitable consequences of global economic growth—is still taking up a lot of space in the room, and humans continue to tip-toe around it. Roberts alludes to the not-so-hidden agenda which drove the protests at the end of his article. That's what the Keystone campaign was, what all supply-side campaigns are: sand in the gears.  The question is what effect will it have on fossil fuel investors to realize that any new supply-side proposal risks being met with a loud and furious grassroots movement that has hundreds of thousands of people on its mailing lists and a few high-profile victories under its belt? Sand in the gears? Of what? Some mythical machine which runs the world?  Roberts' colleague Brad Plumer wrote about the worldwide rise in coal-fired capacity in July, 2015. Let's talk about India. India is building coal plants because they need access to low-cost electricity to help light up homes, offer an alternative to indoor wood-burning, power heavy industry, and lift people out of poverty. If we believe Wild Bill and Dave Roberts, then every time India proposes a coal-fired plant, that proposal will be "met with a loud and furious grassroots movement that has hundreds of thousands of people on its mailing lists and a few high-profile victories under its belt."

How the Keystone XL Decision is Neither “Irrelevant” Nor “Just Symbolic” - The rejection of Keystone XL today marks a turning point for energy decisions: in future, policymakers will be under pressure to consider climate impacts of any new policies and infrastructure.  But it is not only setting a bar for future energy decisions: the climate impact of stopping this pipeline is real. Last week we released analysis finding that the existing pipelines out of Alberta are already 89% full: if no more are built, tar sands production cannot grow.  Just hours after we published, Shell cancelled its 80,000-barrel per day Carmon Creek tar sands project, which was already half-built. The sole reason it gave was “the lack of infrastructure to move Canadian crude oil to global commodity markets”. Keystone XL was one of five proposed new tar sands pipelines. We now see a real prospect that all of them will be stopped:

  • Since the Canadian election result last month, Enbridge’s proposed Northern Gateway – opposed by Justin Trudeau’s Liberal Party – is now generally considered dead.
  • Kinder Morgan’s Trans Mountain Expansion, also proposed to the British Columbia coast, faces increasing opposition and legal challenges from First Nations, the public and large municipalities, and extensive criticism of failings of the NEB approval process has led to a running series of delays
  • A set of expansions to the Enbridge Mainline system have recently been delayed following objections from landowners, indigenous groups and local regulators, as public opposition intensifies. The Alberta Clipper expansion, part of that system, is awaiting a State Department decision, and the company’s attempt to circumvent with a routing trick is currently being considered by federal courts following a legal challenge.
  • The Energy East pipeline – having already been delayed by two years, this week abandoned its search for a second port terminal, putting the project’s economics on the line, and further reinforcing the Quebec Government’s view that the project offers the province no economic advantage to offset the spill risk; last month, a survey of Montreal residents found 96% against it.

Venezuela #1 Beneficiary Of Blocked Keystone XL -- Bloomberg -- Back on November 5, 2015, I selected a few countries to see where the US was getting its imported oil. Venezuela stood out; while imports have been decreasing overall, US imports from Venezuela have been increasing. See data at the link which will also provide links to official government sites. I have talked about this before. US refiners along the Gulf Coast need heavy oil to off-set the glut of light oil. US refiners along the Gulf Coast invested $6 billion to optimize their operations for heavy oil from Canada before the Bakken shale revolution. Refiners scrambled to figure out what to do. It turns out a blend of heavy oil and light oil works (though not as good as what the refiners had expected if using only heavy oil from Canada). Now we have a Bloomberg story that says the same thing -- regular readers of the blog and RBN Energy were already well aware of this. From the Bloomberg story: President Barack Obama’s rejection of TransCanada Corp.’s proposed Keystone XL pipeline could give Venezuela’s ailing economy a lifeline.    With the world’s largest oil reserves, the South American country produces heavy crude that’s similar in consistency to the one coming from Canada’s oil sands, and its economy relies largely on shipping it to the same U.S. Gulf Coast refineries that Keystone XL was meant to supply.  “The number one beneficiary of all this will be Venezuela and other suppliers of heavy oil that ship to the Gulf Coast by tanker,” IHS Energy Inc. Vice President Jim Burkhard said by e-mail.

Oil Supply Picture Has Changed Since Keystone Was Proposed - — When the Obama administration began considering the Keystone XL pipeline seven years ago, oil production in the United States was falling and most analysts thought it would never recover.  Canada, and its expanding oil sands industry, seemed like the perfect solution. But so much has changed in the oil patch since then that many energy experts say the Keystone pipeline, which the Obama administration rejected on Friday, matters far less than it once did. Domestic production has nearly doubled and has flooded the market with so much crude oil that prices have plummeted. Refineries along the Gulf Coast still need the heavy crude Canada produces, but they are finding new ways to obtain it, and storage facilities are filled to the brim. “Keystone XL is not nearly as important as it seemed to be a few years ago,”  In just the past three years, two million barrels of new crude pipeline capacity has been built around the Gulf of Mexico region, and more pipelines are on the way, capable of transporting Canadian crude along with domestic oil.  Rail connections from Canada, built to move oil in part because of the Keystone delays, have multiplied. And with crude prices expected to stay relatively low for years, the expansion of Canadian oil sands production has slowed. South of the border, Mexican officials are putting in place a change in the Constitution to allow foreign oil companies to invest in their fields, opening the possibility  of a rebound in Mexican production over the next decade. Even without the Keystone XL, total American imports of Canadian crude — from oil sands as well as more conventional varieties — have increased to 3.8 million barrels a day from 2.5 million barrels a day since 2008 while imports from OPEC countries have plummeted.

Editorial: Keystone XL fight over, but look now to Canada for next possible pipeline - President Obama’s decision on Friday to reject the proposed Keystone XL pipeline reorients the oil spigot, from north-south to east-west. It’s the law of unintended consequences, and the ripple effect may be felt as far West as the Salish Sea. As The Seattle Times reports, oil from the Alberta tar sands is intended for maritime export, and two proposed Canadian pipelines could make tanker trips along the Strait of Juan de Fuca a near daily event. The Westridge Marine Terminal in Burnaby, B.C., where Alberta crude is exported to Asia and California, sees five oil tankers a month. If Kinder Morgan’s Trans Mountain Pipeline Expansion Project is approved and pumping by 2019, that tanker number would spike to 34 a month. Obama’s Keystone XL move, predicated on an invigorated anti-carbon agenda, forces Canada’s hand. Now, the onus is on its newly minted Prime Minister, Justin Trudeau, and whether his professed concerns about energy diversification and climate change are more than rhetorical. A new surge of Canadian crude would compel the state Department of Ecology to double-down its watchdogging of shared waters, with Washington’s oil-spill contingency plans vastly superior to Canada’s. British Columbia, with its provincial capital of Victoria still dumping 34 million gallons a day of raw sewage into the Salish Sea, will, in the very least, need to update its oil-spill resources. In addition to the Kinder Morgan pipeline, there is the proposed $6.5 billion Enbridge Northern Gateway Pipeline, which would deliver Alberta oil to the port at Kitimat, B.C. Enbridge is vehemently opposed by Canada’s First Nations as well as by Trudeau. The project is freighted with environmental dangers and deserves a quick death. But the Kinder Morgan pipeline might be tough to stop, unless Trudeau is willing to cash in a chunk of his political capital.

Whistleblowers Think They Know Why Canadian Pipelines Are Exploding -- On a cold night in Otterburne, Manitoba, near the Canada-US border, a giant fireball erupted from a TransCanada pipeline carrying natural gas, ejecting debris 100 meters from the site and blasting a crater as long as two city buses.  . It took 12 hours for the blaze to burn out, and in the meantime, five nearby homes were evacuated and the highway was closed to traffic. As is the case across much of North America, the pipeline ran through a sparsely populated area, with the nearest town holding 120 residents. No injuries were reported. But that hasn't stopped two whistleblowers who worked at TransCanada from worrying that a dangerous explosion could one day happen in someone's backyard.The Otterburne fireball was one of 74 reported fires and explosions — 9 explosions and 65 fires — at TransCanada-owned facilities in Canada since 2008. TransCanada, the same company that wants to build the Keystone XL and Energy East pipelines, has tallied more than 300 "reportable incidents," including ruptures, leaks, fires, explosions, serious injuries, and one death, at its facilities since 2008 — a number that far outstrips any other Canadian pipeline company in that time period. The federal regulator, the National Energy Board (NEB), told VICE News the numbers are higher for TransCanada because they own almost 60 percent of the pipeline in Canada. For those two former TransCanada workers, though, those numbers are a reflection of rampant safety problems they say they witnessed when they worked at the company, including poor inspection practices, cracks in pipelines, and inexperienced workers. Both were let go after they repeatedly complained to the company about those issues. They say they were never told why they were fired. They reported their concerns to the NEB and also shared their allegations with VICE News.

Canada's Oil Producers Brace for Latest Test: Higher Carbon Taxes —Canadian oil producers, pummeled by the prolonged slump in oil prices and a string of political setbacks, now face another challenge: higher carbon taxes.  The nation’s oil-sands developers have been hit particularly hard by lower oil prices, because they are among the most expensive oil plays in the world. Already facing a corporate tax hike and the possibility of higher royalty payments in Alberta—the province richest in oil sands—the industry was dealt another blow by the Obama administration’s rejection last week of the Keystone XL pipeline, which was designed to transport oil-sands output to Gulf Coast refineries.  All major oil-sands operators in recent weeks posted losses or steep declines in profit for the most-recent quarter, as shrinking revenue outpaced cost cuts. Some global giants are rethinking future development. Late last month Royal Dutch Shell shelved an 80,000-barrel-a-day project, following similar moves by Total of France and Norway's Statoil.  Now, ahead of a United Nations climate-change conference in Paris starting Nov. 30, oil companies await the details of moves—including possible new taxes on carbon—pledged by new governments in Ottawa and Alberta to rein in greenhouse-gas emissions, making the oil sands a global test case for climate policy. “Canada’s years of being a less-than-enthusiastic actor on the climate-change file are behind us,” Prime Minister Justin Trudeau, who took office last week, said at a news conference on Oct. 20, the day after his Liberal Party won national elections. Mr. Trudeau promised to start working on a framework for regulating greenhouse-gas emissions within 90 days of the Paris summit.

Five whoppers British Columbians are being sold on LNG | British Columbians have heard many "too good to be true" claims about the benefits the province will receive by launching a liquefied natural gas (LNG) export industry. Let's take a look:

  • 100,000 jobs! The B.C. government has repeatedly claimed LNG will create 100,000 jobs in B.C. However, if Petronas' Pacific NorthWest LNG becomes a reality, it would create only 200-300 permanent jobs. The smaller Woodfibre LNG facility, proposed near Squamish, would create only 100 permanent jobs.
  • Debt-free B.C. (aka $100 billion Prosperity Fund)! This claim is based on a fantasy world where (a) B.C. launches a massive LNG industry that is equivalent to one-third of all current world LNG exports; (b) those exports fetch top dollar in Asia; and (c) B.C. puts in place a tax and royalty regime that captures a fair share of those gains.
  • Over 150 years of gas supply! - While there may be this much gas in the ground, most of it will never be profitable to extract. Typically no more than 10-20 per cent of what is called "in-place resources" can be recovered from shale gas deposits.
  • Water impacts will be minimal Today's intensive horizontal drilling and hydraulic fracturing ("fracking") practices bear no resemblance to the traditional natural gas industry. . Once used in fracking operations, water is so contaminated it must be kept in tailings ponds.
  • LNG will reduce global greenhouse gas emissions. While this is plausible, there is no guarantee this substitution would actually take place. In other potential markets like Japan, LNG could displace nuclear power, thereby adding substantially to GHG emissions.

TransCanada selected to build $500-million Tuxpan Tula gas pipeline in Mexico - Mexico’s federal power company Comision Federal de Electricidad (CFE) has let a contract to TransCanada Corp. to build, own, and operate the Tuxpan Tula pipeline in Mexico. The company will invest $500 million in the project, whereby construction is supported by a 25-year natural gas transportation service contract between the entities. The 36-in. pipeline, expected to be in service in fourth-quarter 2017, will be 250-km long and have contracted capacity of 886 MMcfd. It will originate in Tuxpan, Veracruz, and extend through the Puebla and Hidalgo states, supplying natural gas to CFE combined-cycle power generating facilities in each of those jurisdictions as well as to the central and western regions of Mexico. The pipeline will serve new power generation facilities as well as those currently operating with fuel oil that will be converted to use gas as their base fuel, the company says. Construction is expected to start in 2016.  TransCanada also owns and operates the Tamazunchale and Guadalajara pipeline systems (OGJ Online, Feb. 24, 2012); and is completing construction of the Topolobampo and Mazatlan pipelines (OGJ Online, Nov. 2, 2012; Nov. 6, 2012). By 2018, with Tuxpan-Tula, TransCanada will have five major pipeline systems, with $3 billion invested in Mexico. The company adds it “will continue to pursue additional opportunities for new energy infrastructure projects in Mexico going forward.”

TransCanada’s Next Move After KXL: Flood Mexico with Fracked Gas with State Department Help - , the owner of the recently-nixed northern leg of the Keystone XLtar sands pipeline, has won a bid from Mexico's government to build a 155-mile pipeline carrying gas from hydraulic fracturing (“fracking”) in the United States to Mexico's electricity grid.  The company has benefited from Mexico's energy sector privatization promoted by the U.S. State Department, the same agency that denied a permit to the U.S.-Canada border-crossing Keystone XL. TransCanada said in a press release that construction on the $500 million line will begin in 2016 and it will be called the Tuxpan-Tula Pipeline.  This is not the first pipeline system TransCanada will oversee in Mexico. The company already owns four other systems, with two operational and two under construction. But it is the first pipeline the company will own during Mexico's energy sector privatization era, a policy in place due to constitutional amendments passed in 2013.“By 2018, with the Tuxpan-Tula Pipeline, TransCanada will have five major pipeline systems, with approximately US$3 billion invested in Mexico,” TransCanada stated in a press release. Tuxpan-Tula connects to a series of pipelines originating in Nueces, Texas and eventually crossing the U.S.-Mexico border via the Sur de Texas–Tuxpan gas pipeline, a $3.1 billion project slated to cross underwater through the Gulf of Mexico. The set of pipelines will move gas obtained from fracking in Texas' Eagle Ford Shale to Mexico's electricity grid. The lines are part of a broader package of 12 gas pipelines and infrastructure projects worth $10 billion planned by the Mexican government, which, if all built, will total more than 3,100 miles of pipelines.  Though the Mexican government publicly denied the U.S. had any involvement in helping to usher in privatization of Mexico's energy sector, as first revealed by DeSmog, it appears the State Department has tracked gas pipeline developments in Mexico closely.

Argentina Pulling Ahead In The Race To Be The World’s Next Shale Hotspot - Billions of dollars are riding on the race for international shale production -- and the competition has been coming down to Australia and Argentina the last several months. And Argentina just got a big boost. The country's state-run oil and gas firm YPF told local press late last week that it is making substantial progress on unconventional production. With the company noting that its output from shale leaped 7 percent during the third quarter -- equating to a rise of 2,900 barrels of oil equivalent per day, to a total output of 46,200 boe/d from unconventional sources. That's an encouraging performance and it looks like the coming months could bring even more good news for Argentina's emerging shale industry. YPF said it has just completed two wells targeting a completely new shale field called La Ribera -- a step out from the company's existing projects in the Vaca Muerta play of Argentina's western region. If successful, the La Ribera play could add substantially to output and reserves already coming from YPF's established unconventional fields which include joint ventures with major international players such as Chevron and Petronas. YPF also noted that another of its shale joint ventures -- with natural gas end-user Dow Chemical -- is also set for a significant rise in output. With production from this play expected to top 1 million cubic meters per day (35.3 MMcf/d) by the end of 2015.

Fears for Sherwood Forest from fracking - Anti-fracking campaigners fear Sherwood Forest will be damaged by plans to frack for shale gas around it – despite a double U-turn by ministers which will supposedly protect important countryside sites. The result of a consultation held in the summer to allow fracking to take place in nine licensed areas around Sherwood Forest is still to be published by the Department for Energy and Climate Change. The Government had been set to do a U-turn on plans that would have banned fracking in protected wildlife areas and drinking water protection zones.However, a new consultation was launched last week, with the Government now “seeking to ensure surface activities associated with hydraulic fracturing will not occur in specified protected areas”. This new law could, however, mean fracking could still take place under these protected areas, with the surface drilling occurring outside of their boundaries. Greg Hewitt, a member of campaign group Frack Free Nottinghamshire, said Sherwood Forest could still be affected by many of the problems associated with fracking. He said: “People say it’s not on the surface so it’s all okay. “Our main concerns are that fracking can affect the surface and the drinking water supply and the effect it will have on wildlife.

Fracking warning for South West - WA FARMERS and landowners risk losing land to petroleum companies if minerals or oil exists under their soil. A new land access agreement between farmers, landowners and petroleum companies was released last week by the Australian Petroleum Production and Exploration Association.The document is a guide to enable petroleum companies and landowners to negotiate compensation if petroleum activities occur on their land.Release of the land access agreement was welcomed by the WA minister for mining and petroleum and came after the state government announced the South West was unsuitable for fracking.However, a warning issued by Greens Senator Rachel Sierwert indicated otherwise when she confirmed oil and gas companies were still seeking permits to frack in the South West.Ms Sierwert said fracking and drilling in the area would potentially spoil land and put people’s health, the environment and agriculture at risk.“A landscape dotted with fracking wells [presents] a significant risk of contamination and disruption of groundwater systems,” she said.

Is The Political Climate Shifting Against The Oil And Gas Industry? - Oil and gas companies have had a tough time over the past year trying to weather the storm of falling oil prices. But the political and financial winds are moving in the wrong direction for the industry, raising more “above ground” problems at a time that they can ill-afford it.  Drilling oil and gas wells requires a lot of money. For companies that have seen their revenues vanish because of collapsing oil prices, access to credit is obviously critically important. But U.S. financial regulators are growing concerned about a pile of energy debt that is deteriorating in quality. A reportfrom the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Reserve singled out the oil and gas sector when it concluded that credit risk was rising across the United States. For example, there is at least $34.2 billion in loans in the banking sector that have a credit rating suggesting they are “substandard,” “doubtful,” or “loss.” That figure is up from just $6.9 billion in 2014. Put another way, about 12 percent of all loans to oil and gas companies are rated “substandard” or worse. Low oil prices are undermining the ability of some companies to pay back their debt.  However, increased oversight from banking regulators could force banks to take corrective measures, which could mean reducing their exposure to high-risk energy debt. Such a development does not bode well for oil and gas drillers. Tighter credit conditions – which could also be impacted by a pending rate increase by the Federal Reserve in December – will make drilling more expensive.  In the political arena, things are not any better, with last week being a particularly rough one for the energy sector. First, the attorney general in New York announced an investigation into ExxonMobil, for what it sees as evidence that the company lied about the dangers of climate change. The probe comes on the heels of reports from InsideClimate News that the oil major’s own scientists knew about the threat of climate change decades ago.  Finally, President Obama rejected the Keystone XL pipeline on November 6, which will only come as news to readers living under a rock. The immediate reaction is to look at the effect on oil markets; analysis that has been beaten to death over the past seven years. Still, as of the fourth quarter of 2015, there’s good reason to think that the rejection hurts oil sands producers because of limited pipeline capacity. Even Keystone XL’s proponents agree.

US Shale Producers See Big Budget Cuts for 2016  (Reuters) – U.S. shale oil producers, having slashed fat from 2015 budgets after a 50-percent drop in crude prices, risk cutting to the bone next year as they pare spending further and get ready for a prolonged downturn. Top shale companies including Devon Energy Corp, Continental Resources Inc and Marathon Oil Corp this week released preliminary 2016 plans for capital spending that may fall by double digits. The cuts, following reductions of 30 percent to 40 percent by many in the industry this year, would leave budgets at a fraction of levels seen during the height of the shale boom that lasted to mid-2014. Lower costs and improved productivity would allow them to hold shale oil production largely flat. While he did not provide a specific figure, Doug Lawler, the Chief Executive Officer of Chesapeake Energy Corp, said 2016 spending would be "cut in a meaningful way" at the Oklahoma-based company. Moody's expects capital spending cuts of at least 10 percent to 15 percent in 2016. Devon said it expects to spend $2 billion to $2.5 billion on exploration and production next year, down from about $4 billion this year. Marathon Oil is cutting about $1 billion from its projections. Oasis Petroleum Inc, which produces oil in North Dakota, said it expects to spend $350 million in 2016 on drilling and completion of new wells, roughly $200 million below what it plans to spend for those services this year. About half of the spending reduction is due to lower well costs, with the Houston-based company pushing down well costs 30 percent so far this year, and the other half coming from vendor cost cuts, Oasis executives said. Continental Resources, North Dakota's second-largest oil producer, said it will need to spend $1.5 billion to $1.6 billion next year to maintain output of roughly 200,000 barrels of oil equivalent per day. That would be less than half the roughly $3.4 billion the company expects to spend this year.

U.S. shale oil output to fall for 8th month in December: EIA -- U.S. shale production is expected to fall for an eighth consecutive month in December, according to a forecast on Monday from the U.S. Energy Information Administration (EIA). Total output is set to decline 118,000 barrels per day (bpd) in December, the biggest monthly decline on record, to 4.95 million bpd, the least since Sept. 2014, according to EIA data going back to 2007. Oil production from the Eagle Ford play in South Texas was expected to fall 78,000 bpd to 1.28 million bpd. Bakken oil output in North Dakota was expected to slide 27,000 bpd to 1.11 million bpd. Oil production from the Permian Basin of West Texas, which continues to buck the trend, was projected to rise 11,000 bpd to 2.02 million bpd. U.S. natural gas production, meanwhile, was expected to fall for a sixth month in a row. Total output was set to decline almost 0.4 billion cubic feet per day, the biggest monthly decline since March 2013, to 44.3 bcfd in December, the lowest level since February, according to the EIA data. The biggest decline was expected to be in the Marcellus region in Pennsylvania and West Virginia, down 0.2 bcfd to a forecast 15.7 bcfd in December. That would be the first year-on-year decline in the Marcellus region, the nation’s biggest shale gas play, since at least 2008, around the time of the start of the shale boom.

US oil production from shale may drop by 118,000 b/d in December: EIA -- Crude oil production from US shale plays is forecast to drop in December by 118,000 b/d to 4.94 million b/d, the biggest monthly fall since May, the US Energy Information Administration said Monday. By contrast, the projected aggregate decline in production from the US' seven major shale plays has always been below 100,000 b/d in the previous eight months, EIA said in its latest monthly Drilling Productivity Report. The agency predicted last April that the US' multi-year surge in crude output that has contributed to a global excess of barrels on the market in the past year and a half would begin to reverse the following month. The region likely to show the largest reduction in December is the Eagle Ford Shale in South Texas -- 78,000 b/d, for total production there of 1.278 million b/d, EIA said. That compares with a loss of 71,000 b/d forecast for November. In addition, production in the Bakken Shale of North Dakota and Montana is forecast to fall by 27,000 b/d in December to 1.110 million b/d, compared to a projection of 23,000 b/d this month. And in the Niobara Shale of Colorado and Wyoming, oil production should fall by 22,000 b/d in December to 356,000 b/d. For November, a 20,000 b/d drop was predicted. API data said to show weekly crude supplies up 6.3 million barrels - The American Petroleum Institute reported that crude supplies jumped by 6.3 million barrels for the week ended Nov. 6, according to sources late Tuesday. A Platts survey of analysts forecasted an increase of 500,000 barrels. Following the data, December crude CLZ5, -1.20% was at $43.63 a barrel in electronic trading, down from the $44.21 settlement on Nymex. . The more closely watched EIA report is due Thursday, a day late because of Wednesday's Veterans Day holiday.

EIA: US shale oil output to plunge 118,000 b/d in December - Crude oil production in December from seven major US shale plays is expected to drop 118,000 b/d to 4.95 million b/d, according to the US Energy Information Administration’s latest Drilling Productivity Report (DPR). The agency projected a 93,000-b/d decline for November (OGJ Online, Oct. 13, 2015). The DPR focuses on the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica, which altogether accounted for 95% of US oil production increases and all US natural gas production increases during 2011-13. The Eagle Ford has represented a bulk of the projected oil output losses since EIA began anticipating monthly declines from US shale during the spring. For December, EIA expects Eagle Ford production to fall 78,000 b/d to 1.28 million b/d. The Bakken is projected to drop 27,000 b/d to 1.11 million b/d, and the Niobrara is projected to fall 22,000 b/d to 356,000 b/d. Continued growth is seen in the Permian, which is projected to rise 11,000 b/d to 2.02 million b/d.  New-well oil production/rig across the seven plays is expected to increase by a rig-weighted average of 7 b/d in December to 473 b/d. The Niobrara is again seen leading the way with an 18-b/d jump to 652, while the Utica is seen rising 11 b/d to 269. December natural gas production from the seven plays is projected to drop 394 MMcfd to 44.29 bcfd, EIA says. The bulk of that decline is again expected to come in the Marcellus, which is seen losing 229 MMcfd to 15.66 bcfd. Substantial losses are also projected for the Eagle Ford, down 160 MMcfd to 6.53 bcfd; and Niobrara, down 61 MMcfd to 4.18 bcfd. The Utica is expected to increase 66 MMcfd to 3.13 bcfd.

STEO: Annual non-OPEC oil production to decline in 2016 - Oil & Gas Journal -- Oil supplies from countries outside the Organization of Petroleum Exporting Countries is forecast to decline by 300,000 b/d in 2016, after an increase of 1.1 million b/d in 2015, according to the most recent Short-Term Energy Outlook from the US Energy Information Administration. This would be the first annual decline in non-OPEC production since 2008, EIA said. In last month’s STEO, non-OPEC production was forecast to increase 100,000 b/d in 2016. “The shift in expectation from non-OPEC production growth to declines in 2016 is mostly because of lower expected growth in Canada and larger expected declines in US onshore production,” EIA said. Production growth in Canada is expected to average 100,000 b/d in both 2015 and 2016—levels that are 100,000 b/d and 200,000 b/d, respectively, lower than in last month’s forecast. “The reduction in forecast growth in Canada reflects persistently low oil prices resulting in announced delays or cancellations of projects previously scheduled to come online during the forecast period, including Shell’s October announcement canceling the 80,000 b/d Camron Creek project,” EIA said (OGJ Online, Oct. 28, 2015). OPEC crude oil production is forecast to rise 900,000 b/d in 2015, led by production increases in Iraq, and to increase 200,000 b/d in 2016, with Iran forecast to increase production once international sanctions targeting its oil sector are suspended. EIA estimates that OPEC crude oil production averaged 30.1 million b/d in 2014. In this month’s STEO, EIA expects global oil consumption to rise 1.4 million b/d in both 2015 and 2016, compared with a growth of 1.2 million b/d in 2014. Consumption in countries outside the Organization for Economic Cooperation and Development increased 1.4 million b/d in 2014 and is projected to rise 800,000 b/d in 2015 and 1.2 million b/d in 2016.

Energy Tweets -- November 11, 2015; Saudi Oil Production Dropping

    Platts survey of oil industry officials/analysts estimates Saudi Oct crude oil output at 10.1 mil b/d, 3rd straight month volumes down; see re-posted post below the break.
    OPEC Oct crude oil output drops 120,000 b/d to 31.08 mil b/d, led by Saudi & Iraq falls, Platts survey of industry officials/analysts shows
    Annual non-OPEC oil production to fall in 2016 for first time since 2008, EIAgov STEO says.
    EIA sees US crude oil output losses continuing through Sept 2016, when it avg 8.5MM b/d
    EIA estimates total US crude oil production has dropped 500K b/d since April, averaging 9.1MM b/d in October, 2016
    Midwest US gasoline differentials continued to plummet Tuesday amid an abundance of supply
    US refiners continue to enjoy golden period. Strong gasoline margins more than offset disappointing cracks on diesel

API data said to show weekly crude supplies up 6.3 million barrels - The American Petroleum Institute reported that crude supplies jumped by 6.3 million barrels for the week ended Nov. 6, according to sources late Tuesday. A Platts survey of analysts forecasted an increase of 500,000 barrels. Following the data, December crude CLZ5, -1.20% was at $43.63 a barrel in electronic trading, down from the $44.21 settlement on Nymex. . The more closely watched EIA report is due Thursday, a day late because of Wednesday's Veterans Day holiday.

WTI Tumbles To $43 Handle After API Confirms Huge Inventory Build -- API reported a huge 6.3 million barrel inventory build (notably larger than expected) extending the series of build to seven weeks. Even more worrying was the massive 2.5 million barrel build at Cushing. WTI immediately dropped 35c, breaking back to a $43 handle after-hours.

Crude Turmoils After DOE Confirms Surprise Inventory Build & Production Increase -- With the crude market on tenterhooks since API reported a huge surge in inventories (especially at Cushing), DOE reported a considerable 4.2mm barrel build (less than API's 6.3mm) but way above analyst expectations of a modest draw (7th week in a row). Cushing saw a very significant 2.24mm barrel build (API 2.5mm). Crude Production also rose near 3mo highs, putting further pressure on crude prices which are whipsawing wildly on this data...The imports breakdown:

  • U.S. imports of Canadian crude 3.02m b/d for wk ending Nov. 6 vs 2.77m b/d previous wk, according to preliminary EIA data.
  • Saudi Arabia 1.11m vs 865k
  • Venezuela 944k vs 595k
  • Mexico 637k vs 688k
  • Iraq 401k vs 521k
  • Colombia 264k vs 176k
  • Ecuador 133k vs 263k
  • Angola 79k vs 209k
  • Nigeria 47k vs 18k
  • Total U.S. imports of crude at 7.38m vs 6.94m

As total U.S. crude oil imports fall, Canada’s import supply share rises - Today in Energy - U.S. Energy Information Administration (EIA): Although overall U.S. crude oil imports have been declining since 2005, crude oil imports from Canada have been increasing. As of August, Canada provided 45% of all crude oil imports to the United States, almost three times as much as all Persian Gulf countries combined. The United States has been the primary destination for Canada's crude oil exports since the early 2000s. Based on data through the first half of this year from Canada's National Energy Board, 99% of Canada's crude oil exports were sent to the United States. More than half of these volumes went to petroleum refineries in the Midwest (Petroleum Administration for Defense District, PADD 2). Import data from the U.S. Department of Commerce specify the nearest port of entry but not the mode of transit used to import this crude oil. Based on entry port data and pipeline locations, it is reasonable to expect that most of these imports came through pipeline systems such as Enbridge Mainline, Kinder Morgan Trans Mountain, Spectra Express, and TransCanada Keystone. A smaller portion, about 3%, was transported by rail. Within the United States, the regional destination of crude oil sent by rail is different from other modes of shipping crude oil. While about 65% of Canadian crude oil imports by pipeline and other modes not including rail are shipped to refineries in the U.S. Midwest (PADD 2), imports from Canada by rail go primarily to Gulf Coast (PADD 3) and East Coast (PADD 1) refineries.

Oil Tanker Traffic Jam Off Texas Is Viewed as Sign of Oversupply - A traffic jam of oil tankers, with more than 20 million barrels of crude, has emerged along the Texas coast this month, a snarl that some traders see as the latest sign of an unyielding global supply glut.More than 50 commercial vessels were anchored outside ports in the Houston area at the end of last week, of which 41 were tankers, according to Houston Pilots, an organization that assists in navigation of larger vessels. Normally, there are 30 to 40 vessels, of which two-thirds are tankers, according to the group.Although the channel has been shut intermittently in recent weeks because of fog or flooding, oil traders pointed to everything from capacity constraints to a lack of buyers.“It appears that the glut of supply in the global market is only getting worse,” said Matt Smith, director of commodity research at ClipperData. Several traders said some ships might have arrived without a buyer, which can be hard to find as ample supply and end-of-year taxes push refiners to draw down inventories.

Brent oil hits lowest since late August; dollar dips - Brent crude oil prices hit their lowest since late August on Wednesday on worries about growing U.S. stockpiles, while the U.S. dollar took a breather from recent gains. U.S. stocks ended a choppy session lower, with the drop in oil weighing on energy shares. European shares ended up 0.7 percent. Copper prices ended higher after nearing a six-year low on mixed Chinese data, which showed growth in the world's second-biggest economy was still in low gear. Worries that U.S. crude inventories are building pressured oil prices. American Petroleum Institute data showed U.S. crude stockpiles jumped last week in a seventh week of builds. The build was also above forecasts by analysts in a Reuters poll. The U.S. Energy Information Administration issues official inventory data on Thursday. Brent fell $1.63 to settle at $45.81 a barrel, while U.S. crude dropped $1.28 to settle at $42.93. "You can talk all you want about oil demand being better next year and beyond, but right now we have a heck of a glut on our hands that I think has to be priced in some more,"

Oil drops below $42 as U.S. supplies climb a 7th straight week - Oil prices settled at their lowest level since late August on Thursday, as the U.S. government reported a seventh consecutive weekly increase in crude supplies. Analysts are mostly downbeat about the outlook for oil prices, given ongoing worries about a glut of crude supplies. December West Texas Intermediate crude dropped $1.18, or 2.8%, to settle at $41.75 a barrel on the New York Mercantile Exchange, for its lowest settlement since Aug. 26. December Brent crude on London’s ICE Futures exchange gave up $1.75, or 3.8%, to $44.06 a barrel. The December contract for Brent crude expires Friday. “In a season where declines in [crude] inventory are more common, builds of any degree are negative,” said John Macaluso, vice president of institutional sales at Tyche Capital Advisors. The U.S. Energy Information Administration on Thursday reported an increase of 4.2 million barrels in crude supplies for the week ended Nov. 6. That was less than the 6.3-million-barrel rise reported by the American Petroleum Institute on Tuesday but far more than the 1.1-million-barrel increase expected by analysts polled by The Wall Street Journal. Companies are required to report data to the EIA, while reporting to the API is voluntary.

Oil slumps 4 percent, nears new six-year low as glut persists | Reuters: Oil prices tumbled almost 4 percent on Thursday, accelerating a slump that threatens to test new six-and-a-half year lows, with traders unnerved by a persistent rise in U.S. stockpiles and a downbeat forecast for next year. Benchmark Brent crude fell below $45 a barrel for the first time since August, its sixth decline of a seven-day losing streak of more than $6 a barrel, or 12 percent, in a slump that will vex traders who thought the year's lows had already passed. The latest decline was triggered by data showing that U.S. stockpiles were still rising rapidly toward the record highs reached in April, despite slowing U.S. shale production. Weekly U.S. data showed stocks rose by 4.2 million barrels, four times above market expectations.   In its monthly report, OPEC said its output dropped in October but at current levels it could still produce a daily surplus above 500,000 barrels by 2016. Brent futures settled down $1.75, or 3.8 percent, at $44.06 a barrel. The tumble of the past week has left Brent less than $2 away from its August lows and a new 6-1/2 year bottom. U.S. crude futures finished down $1.18, or 2.8 percent, at $41.75. Its low in August was $37.75. "We're going to have a lot of oil on our hands with the builds we're seeing, talk of rising tanker storage and the yawning discount between prompt and forward oil," 

Rising crude imports point to record US inventories ahead - Fuel Fix: IEA has completed the trilogy of key monthly oil reports. It is very much in keeping with what we heard from OPEC on the inventory front, drawing attention to the ‘3 billion barrel cushion‘ of stockpiles across the world. The agency remains the most bullish on demand versus OPEC and EIA this year, seeing demand growth of 1.8 million barrels per day. Next year it sees it slowing to 1.2 mn bpd (OPEC sees +1.25 mn bpd). But from a supply perspective, IEA highlights how the current supply glut has spread to distillates, as rising demand for gasoline from the US and China has spurred on higher refining runs, causing ‘ballooned‘ distillate inventories. The agency’s view on OPEC production diverged from the cartel’s for last month, seeing production holding up at 31.76 mn bpd. While it mirrored OPEC’s view that production from Iraq and Kuwait dropped (along with a rise in Libyan production), IEA said supply losses were also offset by rising Saudi and Nigerian production. IEA also sees non-OPEC supply losses next year, dropping 600,000 bpd. After yesterday’s sizable crude stock build from the weekly US inventory report, attention shifts to the surpassing of the record level of 490 million barrels, achieved earlier in the year.  As we exit refinery maintenance season, we should be seeing crude demand picking up once more and inventory builds leveling off, likely dropping into the year-end (in a Gulf-Coast-ad-valorem-tax-kind-of-way). But as this week’s 4.2 million barrel build illustrates in the face of rising refining, the US remains awash with crude. This is either due to ongoing strong production or ongoing strength in imports – or both.

"Oil Bears May Not Hibernate" As Inventories Swell To Record 3 Billion Barrels - In true stop-running algo common sense, WTI crude jumped overnight, back above $42 briefly. However, a double whammy of warnings from IEA (of a "massive cushion" of 3 billion barrels worldwide) and the highest volume of supertankers for this time of year since 2013 has sent crude sliding back below $42. As Bloomberg reports, Oil stockpiles have swollen to a record of almost 3 billion barrels because of strong production in OPEC and elsewhere, potentially deepening the rout in prices, according to the International Energy Agency. This “massive cushion has inflated” on record supplies from Iraq, Russia and Saudi Arabia, even as world fuel demand grows at the fastest pace in five years, the agency said. Still, the IEA predicts that supplies outside the Organization of Petroleum Exporting Countries will decline next year by the most since 1992 as low crude prices take their toll on the U.S. shale oil industry. “Brimming crude oil stocks” offer “an unprecedented buffer against geopolitical shocks or unexpected supply disruptions,” the Paris-based agency said in its monthly market report. With supplies of winter fuels also plentiful, “oil-market bears may choose not to hibernate.” Total oil inventories in developed nations increased by 13.8 million barrels to about 3 billion in September, a month when they typically decline,according to the agency.

WTI Crude Tumbles To $40 Handle, Fastest Plunge Since December 2014 - Having fallen for 7 of the last 8 days, WTI Crude just traded with a $40 handle for the first time since August 27th. Oil is now down over 14% in the last 8 days, the fastest collapse since December 2014... This is the fastest 8 day drop since Dec 2014... As we explained previously, here's why... Charts: Bloomberg

U.S. oil drillers add rigs for first week in 11: Baker Hughes | Reuters: U.S. energy firms this week added oil rigs for the first week in 11, data showed on Friday, despite continued weak crude prices. Drillers added 2 oil rigs in the week ended Nov. 13, bringing the total rig count up to 574, oil services company Baker Hughes Inc said in its closely followed report. That total is about a third of the 1,578 oil rigs operating in same week a year ago. Over the prior 10 weeks, drillers cut 103 oil rigs. The additions this week showed that at least some drillers were willing to start drilling again even with U.S. oil prices trading in the $40s a barrel in hopes of higher prices in the future. U.S. oil futures averaged $43 a barrel so far this week, down from $46 last week. Crude futures were on track for their biggest weekly loss in more than two months as swelling stocks weighed on the market. [O/R] In the minutes after Baker Hughes released the report, U.S. crude prices dipped about 20 cents to around $40.50 a barrel. Energy traders noted the rate of weekly oil rig reductions over the past two months, about 10 on average, was much lower than the 19 rigs cut on average over the past year or so since the number of rigs peaked at 1,609 in October 2014, due in part to expectations of slightly higher prices in the future. Higher prices encourage drillers to add rigs. The most recent time crude prices were much higher than now was in May and June, when U.S. futures averaged $60 a barrel. In response to those higher prices, drillers added 47 rigs over the summer.

U.S. oil rig count ticks up after 10 weeks of declines - Fuel Fix: The number of rigs in the U.S. actively drilling for oil increased slightly for the first time since August, but ever-decreasing oil prices are expected to push the count back down again. The American oil rig count ticked up by two to 574 for the week, although the number of rigs seeking natural gas dropped by six down to 193 rigs, according to weekly data released by oil field services firm Baker Hughes. “It’s purely illusory,” said Bill Herbert, an analyst at Simmons & Company International in Houston. “I think the holiday season is going to be exceedingly grim.” Herbert predicts the oil rig count will bottom out around late December, tread water in the first half of 2016 and then begin to recover later next year. “Given where oil prices are, there’s just not really any incentive to press forward,” he said. In September, the natural gas rig count dipped below 200 for the first time in decades. The last time the U.S. oil rig count fell below 570 was in June 2010. The oil rig count had declined for 10 straight weeks until Friday. Oil field operators have pulled back about 65 percent of the rigs that were operating at the peak of the U.S. oil boom in October 2014, when oil rigs totaled 1,609. In Texas, the total rig count dropped by two from last week down to 338 rigs. Texas accounts for nearly 45 percent of the nation’s oil and gas rigs. The Eagle Ford shale gained one rig and West Texas’ Permian Basin lost three, although the Permian still has 229 operating rigs. Oklahoma gained two rigs and its count jumped to 85. The report of the small rig count change came after the price of benchmark U.S. oil dipped throughout the week, ending Friday trading down $1.01 at $40.74 a barrel. The oil price sank below $40 a barrel for a few days in August.

Unsold oil stuck on tankers threatens world market gridlock -– As land storage sites worldwide reach brimming point due to a supply glut, tens of millions of barrels of oil are sitting on tankers looking for homes – threatening logistical paralysis. The International Energy Agency on Friday said stored oil has hit 3 billion barrels. Traders say the excess of crude is leaving tankers queuing at major ports worldwide, lengthening waiting times to days, weeks and even months. The lack of space to unload oil is tying up the tankers needed to keep oil moving, and wells running. The bottlenecks could force oil suppliers into quick, cut-priced sales just to free space, adding more pressure to oil prices already close to six-year lows. The cost to hire a supertanker – each capable of carrying 2 million barrels of oil – recently hit its highest level since 2008 at over $100,000 a day last month and currently remains at over $70,000 a day. “We’re alarmed,” . “There are growing indicators that it’s getting harder to digest this crude.” In the U.S. Gulf, more than 50 commercial vessels were anchored outside ports near Houston at the end of last week, of which 41 were tankers. Trade sources said there were seven aframax tankers – each capable of carrying up to 700,000 barrels of oil – sitting outside Rotterdam waiting to unload. There was also nearly 15 million barrels of unsold West African crude oil either loaded on tankers or waiting to be loaded in the next two weeks. Shipping and port sources, pointing to full onshore storage, said up to 20 supertankers were held up in Iraq’s Basrah terminal, with vessels experiencing loading delays of up to 12 days.

OilPrice Intelligence Report: Inventory News Puts A Chill On The Oil Markets: The latest clues from global oil markets indicate that prices could remain subdued in the near-term. In its monthly report, OPEC’s output dipped a bit as export problems in Iraq cut into shipments. Iraq’s exports fell from 4.2 million barrels per day (mb/d) to a little over 4 mb/d. Collectively, the group produced 31.38 mb/d in October, falling by 256,000 barrels per day compared to September. Despite the hiccup, OPEC reported that oil supplies from around the world are still exceeding demand. In fact, in a worrying sign, OPEC says that global storage levels are topping off. In OECD countries, crude oil storage hit 2,942 million barrels, which is 210 million barrels above the five-year average. With storage tanks filling up, oil is increasingly being diverted to tanker storage at sea. The Financial Times reported that oil tanker storage has hit 100 million barrels, a rather glaring indication that supplies are exceeding demand and, so much so, that onshore storage space is starting to run down. In short, global oil production continues to exceed demand, even though U.S. shale production continues to decline. For a rather pointed illustration of the problem, see the graph below from OPEC.The news put a chill on oil markets, killing off the notion that a rebound was beginning to form after weeks of oil trading at stable levels in the mid$40s per barrel. This week saw a renewed downturn as rising inventories and persistently elevated production feeds the perception that “lower for longer” is here to stay. At the same time, oil production in the United States is still declining. The EIA expects U.S. shale basins to lose 118,000 barrels per day in production in December, and once again the largest declines (78,000 barrels per day) will come from the Eagle Ford. The Permian Basin could post a small uptick in production as it emerges as one of the few places where production is still profitable. In its latest forecast, the EIA projects WTI to average just $51.31 per barrel in 2016. Hard times for E&P companies could continue a while longer.

Oil majors see low prices persisting for months ahead - The global oil glut is likely to take longer than expected to clear and may depress oil prices for many more months if not years despite steep investment cuts and project cancellations around the world, executives from oil majors said on Tuesday. The views from the top ranks of Exxon Mobil, BP and Total were given at an industry conference in Abu Dhabi as key officials from the Organization of the Petroleum Exporting Countries (OPEC) said they expect better prices in 2016. The discord in views comes as most global majors are slashing their budgets and investments with the aim to be able to generate cashflows with prices as low as $60 per barrel. And while major producing nations are also reducing spending, they are often facing much tougher choices to keep governments popular. “I’m not sure we will exit from low prices before many months,” Total’s chief executive Patrick Pouyanne told the conference. Oil prices more than halved in the past 18 months because of a global oil glut which arose on the back of a U.S. shale oil boom and a decision by OPEC not to cut output to fight for market share with higher cost producers. BP’s and Exxon Mobil’s heads of exploration and production Lamar Mckey and Jack Williams both said low oil prices would stay for a while and BP’s head of the Middle East Michael Townshend said the group saw oil fluctuating around $60 per barrel for the next 3 years.

LNG Glut Set To Worsen Considerably Over Next 3 Years -- LNG supplies are set to boom over the next 3 years. The IEA’s 2015 World Energy Outlook expects LNG export capacity to grow rapidly in the short-term, with major new sources of supply coming mostly from Australia and the United States. Indeed, this first wave of new LNG capacity is already under construction and many projects are nearing completion. Australia is expected to nearly quadruple its LNG export capacity between 2014 and 2018, as it adds 58 million tonnes per annum (mtpa) of LNG export capacity. The U.S. is expected to see its first shipment leave its shores in the first quarter of 2016 when Cheniere Energy’s Sabine Pass facility comes online. By 2020, the U.S. could add 44 mtpa, which could be enough to make it the third largest exporter behind just Qatar and Australia. But the next phase of expansion is less certain. LNG prices have collapsed, in part because of the plummeting value of crude oil. But also because demand is not turning out to be quite as strong as previously anticipated. Take Japan, for instance. Tokyo Electric Power (Tepco), a utility and a major purchaser of LNG in Japan, has actually begun importing less LNG on the spot market and for short-term contracts, with imports down by a third for the period of April to September. The problem of soft LNG demand will grow worse as Japan slowly returns to nuclear power, a trend that has already begun.

EIA's November Short-Term Outlook -- November 10, 2015

  • Winter Fuels: High natural gas inventories and expected warmer weather will lead to lower natural gas prices this winter, which could reduce the heating expenditures for households that heat primarily with natural gas by an average 13% compared to last year.
  • Crude Oil: Total oil production from non-OPEC countries is expected to decline next year for the first time since 2008, because of lower oil output from the United States.
  • Gasoline/Refined Products: U.S. gasoline demand this year is on track to be the highest since record levels were set in 2007, due in large part to low pump prices and more people working.
  • Natural Gas: U.S. natural gas inventories could reach 4 trillion cubic feet for the first time ever in November, especially if above-normal temperatures reduce home heating demand.
  • Electricity:  Milder weather is expected this winter in most of the eastern United States, including the southern states, which will reduce the demand for electric heat and lead to an expected 1.6% decline in retail sales of electricity to the residential sector this winter. While natural gas prices are expected to rise next year, power plants are not expected to switch back to coal as a generating fuel because gas prices will still be low compared to recent years.
  • Renewables: Total utility-scale solar power generating capacity in the United States is expected to more than double between the end of 2014 and the end of next year.  U.S. wind power generating capacity is expected to increase by 14% next year.

Oil price to rise only gradually to $80 by 2020 - IEA (Reuters) -  Oil is unlikely to return to $80 a barrel before the end of the decade, despite unprecedented declines in investment, as yearly demand growth struggles to top 1 million barrels per day, the International Energy Agency said on Tuesday. In its World Energy Outlook, the IEA said it anticipates demand growth under its central scenario will rise annually by some 900,000 barrels per day to 2020, gradually reaching demand of 103.5 million bpd by 2040. The drop in oil to around $50 a barrel this year has triggered steep cutbacks in production of U.S. shale oil, one of the major contributors to the oversupply that has stripped 50 percent off the price in the last 12 months. “Our expectation is to see prices gradually rising to $80 around 2020,” Fatih Birol, the executive director of the IEA, told Reuters ahead of the release of the report. “We estimate this year investments in oil will decline more than 20 percent. But, perhaps even more importantly, this decline will continue next year as well.” “In the last 25 years, we have never seen two consecutive years where the investments are declining and this may well have implications for the oil market in the years to come.” Oil companies have grappled with the downturn and a “lower for longer” price outlook by slashing spending, cutting thousands of jobs and delaying around $200 billion in mega-projects around the world. The IEA estimates investment has already fallen by 20 percent this year.

OilPrice Intelligence Report: IEA Bearish On Oil, Bullish On Gas, Fatalistic On Coal: The International Energy Agency released its annual World Energy Outlook (WEO), a highly anticipated report that lays down benchmarks on supply, demand, and prices for the next few decades. Obviously a lot has happened since November 2014 when the IEA released its last WEO, but the IEA flags a few very critical trends that are emerging: A phase out of fossil fuel subsidies in many parts of the world because of low oil prices; signs of a decoupling between economic growth and carbon emissions; China’s suddenly reduced role as a driver of energy demand as it transitions to a less energy-intensive model of growth; India taking the baton from China as the most important source of energy demand; the return of Iran to oil markets; and of course, a look at oil prices. The IEA predicts that the oil market “rebalances at $80/bbl in 2020, with further increases in price thereafter.” At the same time, the Paris-based energy agency says that a prolonged period of low oil prices cannot be ruled out. In this more pessimistic scenario, the IEA sees oil prices hovering around $50 per barrel through the remainder of this decade, while only gradually moving up to $85 per barrel through 2040. A dark outlook indeed, but investors should not take these long-term figures too seriously as these projections are notoriously inaccurate. The IEA also sees rough waters for coal markets ahead. After predicting strong growth for coal as recently as last year, the IEA declares a “reversal of fortune” for coal. Plummeting prices and a glut of supply have done little to stoke demand, and there appears to be little prospect for improvement. Over the past decade coal captured 45 percent of the increase in global energy demand, but that share falls to just 10 percent through 2040. Moreover, while faring much better than coal, the IEA sees large growth opportunities for natural gas, but also several big question marks. The largest market for natural gas will be in the Middle East and Asia, but it also faces competition from renewables and energy efficiency. Plus, LNG export terminals must reduce costs in order to thrive.

IEA Offers No Hope For An Oil-Price Recovery - The International Energy Agency (IEA) November report offers no hope for an oil-price recovery any time soon. Over-supply and weak demand for oil will dominate through 2016.  The world has a 1.6 million barrel per day oil production surplus (supply minus demand) as the oil glut enters its 8th consecutive quarter (Figure 1).  The supply surplus is 710,000 barrels per day lower than it was in the 2nd quarter of 2015 but is higher than any other quarter since the oil-price collapse began. In fact, it is higher than any other quarterly surplus in the past decade (Figure 2).  The oil demand forecast for 2015 is the only hopeful part of the IEA report with demand growth estimated at 1.8 million barrels per day compared to 2014 (Figure 3).  The current market turmoil has created a once in a generation opportunity for savvy energy investors. Whilst the mainstream media prints scare stories of oil prices falling through the floor smart investors are setting up their next winning oil plays.  There are two important qualifications, however, to this good news. First, the comparison is positive only compared to 2014, the worst year for demand growth since the Financial Collapse in 2008. Second, demand growth of 1.8 million barrels per day includes IEA’s estimate for the 4th quarter of 2015.  The really bad news, however, is that demand growth for 2016 will fall to 1.2 million barrels per day. This, of course, is also a forecast and is in comparison to the estimated 1.8 million barrels per day for 2015. If 2015 demand growth remains at 1.5 million barrels per day, the 2016 forecast will be flat with 2015.

IEA World Energy Outlook: New Hope For Civilization -- The big news overnight was the release of the 2015 International Energy Agency (IEA) World Energy Outlook. It went green, big time. Here is the summary: World energy demand grows in all WEO scenarios, but government policies play a powerful role in dictating the pace of the growth and the degree to which greenhouse-gas emissions follow the same path. In the New Policies Scenario (the central scenario), energy demand grows by nearly one-third between 2013 and 2040, with all of the net growth coming from non-OECD countries and OECD demand ending 3% lower. The links between global economic growth, energy demand and energy-related emissions weaken: some markets (such as China) undergo structural change in their economies, others reach a saturation point in demand for energy services, and all adopt more energy efficient technologies. As the largest source of global GHG emissions, the energy sector must be central to efforts to tackle climate change but, despite signs that a low-carbon transition is underway, energy-related CO2 emissions are projected to be 16% higher by 2040. The single largest energy demand growth story of recent decades is near its end; coal use in China reaches a plateau, close to today’s levels, as the country’s economy rebalances and industrial coal demand falls. The largest oil consumer – the United States – experiences one of the world’s largest reductions in demand from 2013 to 2040 (along with the European Union), declining by around 4 million barrels per day (mb/d), and returning to levels last observed in the 1960s. Broad-based growth in global natural gas demand (up 47%) is led by China and the Middle East. By 2040, oil and coal collectively relinquish 9% of the global energy mix, with renewables growing by five percentage points and gas and nuclear each growing by two.

Oil Stuck Below $80? No Way, or Global Collapse Is Coming - The International Energy Agency has released its yearly energy report, including their projections on oil prices. As usual, their predictions are laughable. For the rest of the decade, they do not see oil prices rising above $80 a barrel. In their low-price oil scenario, they don't see oil prices rising above $80 until 2020. They ought to predict a global economic meltdown to go along with it. The consequences of that kind of extended low oil price that the IEA predicts would not only bankrupt every oil company in the world, but also several sovereign nations. You could almost guarantee a global depression as a result. Before explaining why the IEA must be wrong in these projections, let's remind people of their last few forecasts. In 2013, they expected we'd be at $110 a barrel today -- a far cry from the current $45 oil price. And here is where the IEA must certainly be wrong -- another five years of low oil prices would fully decimate the necessary capital expenditures required to develop new oil sources, collapsing supply. We can already see some of the effects of lowered spending here in the U.S. But with prices that low for that long, not only would U.S. suppliers entirely run dry, but countries like Venezuela, Nigeria, Iraq and even Russia would be unable to continue to support their economies. Sovereign debt in these countries would collapse, credit would run dry and unemployment would be rampant. Even in countries with cheaper break-even prices, oil production would rapidly slow as well.

The Oil Wars Heat Up: Russia, Iraq Steal Saudi Market Share While Oman Blasts OPEC As "Irresponsible" -- Last week, in the wake of S&P’s downgrade of Saudi Arabia and an IMF report which suggests that a number of Mid-East producers will be broke in five years if oil prices remain where they are today, we brought you, i) an in-depth look at Riyadh’s financial situation, and ii) a glimpse at where exporters stand in terms of breakeven prices and budget deficits.  We encourage you to review the full account of the Saudis' situation as Deutsche Bank does a nice job of illustrating what is becoming an exceptionally tenuous scenario, but we think it’s worth reposting the following two graphics here as they serve to underscore the deepening fiscal crisis:  As for who's hurting the worst, here's Deutsche's graphic on deficits in the world of "lower for longer": Note that Oman is among those stinging from the dramatic decline in prices. Well on Monday, the country's oil minister Mohammed Bin Hamad Al Rumhy lashed out at OPEC for - and yes we're going to use this analogy again - Plaxico'ing itself. Here's WSJ with moreDiscontent with the Organization of the Petroleum Exporting Countries spilled into the open Monday, when Oman’s oil minister called current oil production levels “irresponsible” and blamed the group for low oil prices. “This is a commodity that if you have one million barrels a day extra in the market, you just destroy the market,” said Mohammed Bin Hamad Al Rumhy, whose country produces oil but isn’t a member of OPEC. “We are hurting, we are feeling the pain and we’re taking it like a God-driven crisis. Sorry I don’t buy this, I think we’ve created it ourselves.”

Did "Someone" Try To Attack Russia's Go-To Gas Pipeline With An Underwater Drone? -- When last we visited the Nord Stream pipeline story we noted that the prospect of doubling the line’s capacity in conjunction with Western O&G companies was effectively allowing Moscow to adopt a hardline approach in talks with Ankara.  Turkish autocrat President Recep Tayyip Erdogan is keen on seeing Syria’s Bashar al-Assad pushed aside and, as everyone who doesn’t live in a cave knows, Russia and Iran are keen on preserving the Assad government. This makes for a rather awkward scenario. Ankara and Moscow have established deep trade ties and when Russian jets venture into Turkish airspace whilst attempting to bomb some of the very same militants Turkey has supported, the relationship becomes strained. That goes double when Turkey shoots down Russian drones.  Now obviously, there are very real questions about whether Erdogan can support Ankara’s assertion that Turkey can survive without Russian gas. The idea that either Russia or Turkey would jeopardize the Turkish Stream based on differences of opinion about the President of Syria is to a certain extent absurd (although what happens to that President may shape the future of energy transports from the Mid-East to Europe), but whatever the case, the Nord Stream has become key for the Russians.   Well, in what certainly may be a coincidence but in what also looks remarkably suspicious given the current geopolitcal circumstances, an underwater drone "rigged with explosives" (to quote RT) was spotted near the Nord Stream by Sweden. Here's more:   An unmanned military underwater vehicle rigged with explosives was spotted on the seabed in the vicinity of the Nord Stream gas pipeline in the Baltics on Friday, Swedish media report. The device is expected to be disarmed on November 9. An abandoned expendable remotely-operated mine clearance underwater vehicle allegedly with explosives onboard has been detected in multinational waters of the Baltic Sea by the Swedish Navy, Svenska Daglabet reports.

Petrobras cancels oil strike talks, union vows escalation – Brazil’s state-controlled oil producer Petroleo Brasileiro SA canceled talks with union leaders that were planned for Tuesday and aimed at settling a strike that is now in its ninth day. Members of oil union FUP have been on strike at Petrobras, as the company is known, since Nov. 1 in the biggest labor action against it in 20 years. After the cancellation, FUP, the country’s largest oil workers federation, vowed to raise pressure on Petrobras. “This is the moment to intensify,” FUP said in a statement late Tuesday, adding that the walkout was beginning to reduce output from refineries as well as crude oil and natural gas output. The union wants Petrobras to reverse plans to reduce capital spending and force it to cancel asset sales designed to lower the company’s $130 billion debt, the largest of any oil company in the world. In a statement, Petrobras said it is working on “proposals” that could be presented to workers, without giving a timetable. While the initial union salary request was for an 18 percent raise and Petrobras’ initial offer was 8.1 percent, the unions said salary is not the principal aim of the strike. Once a new date for talks is set, workers will be informed, the statement added. In the past Petrobras officials have said it could resist major production cuts from a strike for about 10 days.

Gulf States to lose $275bn in oil exports this year – IMF's Lagarde - The crude exporting countries of the Gulf Cooperation Council (GCC) are expected to lose $275 billion in revenue this year due to falling oil prices, according to the International Monetary Fund (IMF) chief Christine Lagarde. “At the moment, a large share of fiscal and export revenues in the GCC come from oil. With oil prices having declined sharply since mid-2014, export revenues are expected to be nearly $275 billion lower in 2015 than in 2014,” she said, speaking at a meeting in Qatar with the finance ministers and central bank governors of the GCC. "The fiscal and current account balances in the region are deteriorating sharply, with the fiscal balance projected by the IMF to be a deficit of 12.7 percent of GDP in 2015,” she added. The GCC is comprised of Bahrain, Kuwait, Oman, Saudi Arabia, Qatar, and the United Arab Emirates. With Gulf state economies largely dependent on oil exports; global benchmark Brent has fallen in price from $115 a barrel in June 2014 to currently below $50 per barrel. “Growth is also expected to slow, with IMF projection suggesting 3.2 percent in 2015 and 2.7 percent in 2016, compared to 3.4 percent in 2014,” Lagarde added.

The Biggest Threat To Oil Prices: 2-Mile Long Stretch Of Iraq Oil Tankers Headed For The U.S. - After some initial excitement, November has seen crude oil prices collapse back towards cycle lows amid demand doubts (e.g. China exports, China Industrial Production) and supply concerns (e.g. inventories soaring). However, an even bigger problem looms that few are talking about. As Iraq - the fastest-growing member of OPEC - has unleashed a two-mile long, 3 million metric ton barrage of 19 million barrel excess supply directly to US ports in November. Crude prices are already falling... But OPEC has another trick up its sleeve to crush US Shale oil producers. As Bloomberg reports, Iraq, the fastest-growing producer within the 12-nation group, loaded as many as 10 tankers in the past several weeks to deliver crude to U.S. ports in November, ship-tracking and charters compiled by Bloomberg show. Assuming they arrive as scheduled, the 19 million barrels being hauled would mark the biggest monthly influx from Iraq since June 2012, according to Energy Information Administration figures. The cargoes show how competition for sales among members of the Organization of Petroleum Exporting Countries is spilling out into global markets, intensifying competition with U.S. producers whose own output has retreated since summer. For tanker owners, it means rates for their ships are headed for the best quarter in seven years, fueled partly by the surge in one of the industry’s longest trade routes. Worst still, they are slashing prices... Iraq, pumping the most since at least 1962 amid competition among OPEC nations to find buyers, is discounting prices to woo customers.  The Middle East country sells its crude at premiums or discounts to global benchmarks, competing for buyers with suppliers such as Saudi Arabia, the world’s biggest exporter. Iraq sold its Heavy grade at a discount of $5.85 a barrel to the appropriate benchmark for November, the biggest discount since it split the grade from Iraqi Light in May. Saudi Arabia sold at $1.25 below benchmark for November, cutting by a further 20 cents in December.

Saudi Arabia will not stop pumping to boost oil prices -- Saudi Arabia is determined to stick to its policy of pumping enough oil to protect its global market share, despite the financial pain inflicted on the kingdom’s economy. Officials have told the Financial Times that the world’s largest exporter will produce enough oil to meet customer demand, indicating that the kingdom is in no mood to change tack ahead of the December 4 meeting in Vienna of the producers’ cartel Opec. “The only thing to do now is to let the market do its job,” said Khalid al-Falih, chairman of the state-owned Saudi Arabian Oil Company (Saudi Aramco). “There have been no conversations here that say we should cut production now that we’ve seen the pain.” Saudi Arabia rocked oil markets last November when Opec decided against production cuts, making clear that the kingdom was abandoning its policy of reducing supplies to stabilise the price. Since then, the oil price has collapsed from a high of $115 a barrel last year to $50 a barrel. Global oil companies, which have put hundreds of billions of dollars of investment on hold as a result of low prices, will be disappointed by the Kingdom’s stance. The effect on business sentiment has sparked domestic criticism of the market share policy engineered by Ali al-Naimi, the oil minister, and agreed by both the late King Abdullah and the current King Salman, who was crown prince last year and ascended the throne in January. Officials in Riyadh say their policy will be vindicated in one to two years when revived demand swallows the global oil glut and prices begin to recover. They argue that in the past, Opec output cuts raised prices to levels where more expensive production, such as shale and deep-sea oil, could flourish. Moving ahead, Opec — led by Saudi Arabia — plans to pump as much as it can towards meeting global oil demand, leaving higher-cost producers to make up the remainder.

Saudis sees non-OPEC oil supply drop accelerating after 2016 - Oil production from non-OPEC suppliers is expected to drop in 2016, after three years of positive growth, Saudi Arabia's Vice Minister of Petroleum and Mineral Resources Abdulaziz bin Salman al-Saud said Monday, adding that the rate of fall in output from those suppliers would accelerate after 2016. "Beyond 2016, the fall in non-OPEC supply is likely to accelerate, as the cancellation and postponement of projects will start feeding into future supplies, and the impact of previous record investments on oil output starts to fade," Abdulaziz told the 6th Asian Ministerial Energy Roundtable in Doha.Despite the global macroeconomic uncertainty, oil demand continues to grow at a robust pace and is set to increase by 1.5 million b/d in 2015, the strongest growth seen in the past few years, he said. "This is in contrast to the early 1980s when global oil consumption fell between 1980 and 1984 by more than 2.3 million b/d," he said. Explaining why the current oil market scenario was different from the one in the 1980s, Abdulaziz said in 1985, global oil consumption stood at just over 59 million b/d and the available spare capacity was at a historical level of over 10 million b/d, and a ratio of spare capacity to global oil demand was about 17%. But in contrast, oil consumption in 2015 is estimated to reach 94 million b/d, while usable spare capacity, mainly held in Saudi Arabia, is estimated at 2 million b/d, meaning the ratio of spare capacity to oil consumption of about 2%.

Saudi Vice Oil Minister Sees Price Surge After Cutbacks -- The scale of the global oil and gas industry’s spending cuts are making another surge in energy prices possible by diminishing future supply, Saudi Vice Minister of Petroleum & Mineral Resources Prince Abdulaziz bin Salman said. Investments have been cut by $200 billion this year and will drop another 3 percent to 8 percent next year, marking the first time since the mid 1980s that industry cut the spending for two consecutive years, Prince Abdulaziz said in a copy of his speech for delivery to energy ministers in Doha Monday. Nearly 5 million barrels a day of projects have been deferred or canceled, he said in the remarks. Just like high oil prices can’t last, a prolonged period of low prices is “also unsustainable, as it will induce large investment cuts and reduce the resilience of the oil industry, undermining the future security of supply and setting the scene for another sharp price rise,” the prince said in the remarks. “As a responsible and reliable producer with long-term horizon, the kingdom is committed to continue to invest in its oil and gas sector, despite the drop in the oil price.” Oil prices have declined 42 percent in the past year as Saudi Arabia led the Organization of Petroleum Exporting Countries in maintaining production in the face of a global glut rather than make way for booming U.S. output. Supply from outside the 12-member group will start to decline next year and the drop will accelerate after that, according to his speech. Oil demand is expected to be 94 million barrels a day this year, rising 1.5 percent from last year, with about 2 million barrels a day of spare capacity, mainly held in Saudi Arabia, the prince said in the prepared remarks. Growth in Asia’s demand may slow “by efforts to efficiency enhancement and oil substitution,” he said.

A Saudi fracking boom could be a tectonic shift - Great attention has focused on the North American energy boom, driven by fracking and horizontal drilling, and for good reason: It has yielded far more energy than most people expected and has altered energy security by adding more than four million barrels of oil a day to global markets since 2008. But what about Saudi Arabia? We rarely think of the Saudis as in need of new energy technologies, or as pursuing unconventional shale energy. After all, their country holds enormous conventional energy sources. But the House of Saud has launched its own fracking boom, and it could well be the next big thing in global energy. Saudi efforts are more advanced in shale gas than in oil, but both are in motion. In 2011, several years after the U.S. boom was in full swing, Saudi Aramco launched its own unconventional gas program in the northern region (or Empty Quarter, as it is also known). Two years later, Saudi Aramco was ready to commit new shale gas production to a 1,000-megawatt power plant. Ali al-Naimi, Saudi Minister of Petroleum and Mineral Resources, estimated that the kingdom possesses about 600 trillion cubic feet of shale gas reserves, which would place Saudi Arabia fifth in the world in total unconventional reserves. That would be amazing. Saudi Aramco, in its 2014 annual report, spoke of its unconventional gas program as “continuing to gain momentum,” and Mr. al-Naimi added that “the kingdom has made promising shale gas discoveries and acquired the technologies to produce it at a reasonable price.” Notably, in early 2015, Saudi Aramco raised the amount earmarked for its own boom from an original $3-billion (U.S.) to $10-billion.

Venezuela says 'informal' OPEC chat planned before December meeting -  Oil ministers of OPEC nations will hold “candid, informal” talks on Dec. 3, a day before the group’s formally scheduled meeting in Vienna, Venezuela’s oil minister said on Wednesday, adding the idea was suggested by Saudi Arabia. “It’s an informal meeting where we’re going to speak in a very frank way about the market situation, and we’re going to speak frankly about production levels in each country,” Venezuelan Oil Minister Eulogio del Pino told Reuters in a phone interview. Price-hawk Venezuela has been pushing for OPEC action to boost prices. OPEC kingpin Saudi Arabia, however, has rebuffed those calls and is instead focused on defending market share. The informal meeting will be held at the suggestion of Saudi Arabia’s oil minister Ali al-Naimi, del Pino said. “After our calls for the need for OPEC to do something, he himself proposed that we could meet a day before the OPEC meeting to talk, in a candid, informal way, about the situation, what we’re going to do with volumes, what we’re going to do with prices,” added del Pino, who met with Naimi earlier on Wednesday.

How OPEC Just Crushed Oil With One Chart - Just when you thought it couldn't get any worse - amid supply gluts, production surges, market share scrambles, and demand disappointment - it does. OPEC this morning confirmed not only no change in the already weak global demand picture but the current oil inventrory surplus is the largest in at least a decade. This has driven WTI prices down close to a $41 handle this morning (from over $48 a week ago) as simply put, there's too much oil and OPEC's grand strategy for solving this imbalance - pray for a colder winter... Crude is down 7 of the last 9 days... As Bloomberg reports, OPEC's new statement does not bode well for the short- or medium-term future... Surplus oil inventories at highest level in at least a decade on increased global production, OPEC says in Monthly Oil Market report. Stockpiles in developed economies 210m bbl higher than their 5-yr avg Compares w/ 180m bbl overhang in 1Q 2009, which is only other occasion in past 10 yrs when inventory surplus has surpassed 150m bbl Excess supply may be pared in coming mos on slowing non-OPEC supply,rising demand for winter fuels ... Non-OPEC supply to contract next yr for 1st time since 2007; down 130k b/d to 57.11m b/d OPEC keeps 2015, 2016 fcasts for global oil demand unch. And so here, in one simple chart, is why this will not end well... There's too much oil!! Supply and demand growth so far in 2015...

OPEC ready to make needed investments to respond to future needs: secretary general - OPEC Secretary General Abdullah al-Badri said that despite uncertainties, OPEC members were ready to make the necessary investments to respond to the world’s future energy needs. Badri also said that a wave of project cancellations and deferrals in the industry was a “clear demonstration that wide price fluctuations have a detrimental effect on investments and can sow the seeds of future instability”, in a statement on the International Energy Forum’s website. The secretary general said he saw Asia oil demand rising to almost 46 million barrels per day by 2040, an increase of nearly 16 million barrels per day from 2015. Oil-related investment requirements between now and 2040 are estimated at about $10 trillion, he said.

OPEC Challenges Shale Afresh as Iraq Crude Floods U.S. Market - OPEC’s latest challenge to U.S. shale oil producers would be about two miles long, lined end to end, and weigh almost 3 million metric tons. It’s due to reach American ports this month. Iraq, the fastest-growing producer within the 12-nation group, loaded as many as 10 tankers in the past several weeks to deliver crude to U.S. ports in November, ship-tracking and charters compiled by Bloomberg show. Assuming they arrive as scheduled, the 19 million barrels being hauled would mark the biggest monthly influx from Iraq since June 2012, according to Energy Information Administration figures. The cargoes show how competition for sales among members of the Organization of Petroleum Exporting Countries is spilling out into global markets, intensifying competition with U.S. producers whose own output has retreated since summer. For tanker owners, it means rates for their ships are headed for the best quarter in seven years, fueled partly by the surge in one of the industry’s longest trade routes. November crude imports from Iraq will be highest in over three years “In the longer term, we expect the U.S. to have to increase imports next year by some 500,000 barrels to 800,000 barrels a day year on year,” Steve Iraq, pumping the most since at least 1962 amid competition among OPEC nations to find buyers, is discounting prices to woo customers. The U.S. may increasingly become one of them after its own output dropped by as much as 500,000 barrels a day since June. An increase in trade between the two would boost tanker owners. Deliveries take at least 57 percent longer than for those to Asia, the most popular destination. The tanker industry’s biggest ships earned an average of almost $76,500 a day so far in the fourth quarter, which would be the highest since mid-2008 if maintained through year-end, according to data from Clarkson Plc, the world’s biggest shipbroker.

Iraq oil overtakes Saudi in Europe as OPEC battles rage on – IEA -- A market share battle between Russia and OPEC oil producers in Europe is intensifying as Iraq has overtaken Saudi Arabia as the second largest seller there and Iran has already lined up buyers for its crude for when sanctions are lifted. The International Energy Agency cited market sources on Friday as saying Tehran would be able to sell at least an extra 400,000 barrels per day (bpd) to buyers in Asia and Europe when the sanctions are lifted. Customers would include refiners in Italy, Greece and Spain who prefer to use Iranian crude as their baseload feedstock. “For this reason, producers are likely to grow still more competitive on pricing,” the IEA said. Russia has gained market share from OPEC in many Asian markets thanks to a pipeline to the Pacific and China. The shift opened opportunities for rivals in the European markets, traditionally dominated by Russia, and Saudi Arabia has this year sold crude to Polish and Swedish refiners “While the headlines focus on Russia and Saudi Arabia jostling for position on the continent, it is Iraq that has stolen a march on its regional rivals,” the IEA said.

UAE pressing ahead with oil expansion, betting on price recovery – United Arab Emirates, one of the wealthiest Gulf states, is pushing ahead with large new energy projects, betting an oil price recovery will start as early as next year as demand begins to absorb the global glut. “These are times of some hesitancy, times of pain for some … But pain is not new … We will pass it stronger,” energy minister Suhail Al Mazrouei told the UAE’s biggest annual oil show in Abu Dhabi. “That (oil price drop) didn’t change the vision of the UAE … We are not canceling projects,” he added. Oil prices crashed after Saudi Arabia and Gulf allies the UAE, Kuwait and Qatar enforced a decision by the Organisation of Petroleum Exporting Countries (OPEC) to fight for market share with rival producers, abandoning a decade-old policy of cutting output to prop up prices. Prices have more than halved over the past 18 months, and OPEC itself sees the current oil glut persisting well into next year, prompting even the wealthiest OPEC members, like Saudi Arabia, to revise some field development plans. Low prices have also slowed some non-oil projects in the UAE, including the opening of a huge new Louvre museum, while others such as the Abu Dhabi film festival have been canceled. But officials insist that projects in key sectors such as energy, defense and infrastructure continue as planned. On the energy side, the country is pushing ahead with a plan to raise its oil production capacity to 3.5 million barrels per day from the current 3 million within the next two to three years, the head of the national company ADNOC Abdullah Nasser al-Suwaidi said. The UAE is currently producing 2.9 million bpd.

Energy Pipeline: Iran nuclear deal weighs heavy on minds at oil, gas conference— The Iran nuclear deal weighed heavy on oil industry minds in late August as they discussed global and domestic energy policy at the Colorado Convention Center. The 100-page agreement, which would lift sanctions against the country, allowing the country back into the world energy market, and supposedly limit its nuclear powers. It is a deal that’s drawn the ire of many policy makers, and many in the energy industry, and is seeing major opposition in Congress. Speakers attending the Colorado Oil and Gas Associations annual Rocky Mountain Energy Summit, discussed the Iran deal at length, including Colorado’s Sens. Cory Gardner, R-Colo., and Michael Bennet, D-Colo. The two were expected to talk about Colorado’s increased leadership in bipartisan energy leadership but the conversation veered early into the controversial Iran nuclear deal, domestic energy policies and allowing the U.S. to export crude across the globe, bucking decades of energy policy of hording American oil. Many in the oil and gas industry are paying close attention to the Iran Nuclear deal, mostly because it will open up a historic oil and gas field in Iran that some say could put 500,000 to eventually 1 million barrels of oil per day on the market. In a world market that is fueled by an oversupply, mainly in part to the United States’ expanded production in recent years, that’s a scary proposition — especially in an environment where that oversupply has led to decreased prices. In the week of the conference, oil closed under $40 a barrel for the first time in six years.

Oil majors press Iran for sweeter oil terms post-sanctions  – Iran will have to offer lucrative contracts terms to draw back international oil companies at a time when the oil industry is more focused on profitability as it gears up for a longer period of low oil prices, executives said on Tuesday. Iran said in September it had approved a draft of international oil and gas contracts to attract foreign investors and oil buyers once international sanctions are lifted but has not provided details so far. The OPEC member will announce new oil and gas contracts at conferences in Tehran and London on Nov. 21-22 and Feb. 22-24 respectively. “It is not only questions of resources or opportunities, it is a question of profits,” Total’s chief executive Patrick Pouyanne told a conference in Abu Dhabi, capital of the United Arab Emirates. “We will be well positioned to look at opportunities in gas, oil, petrochemicals and marketing. But all that is subject to good contractual conditions, so we will see.”

Making The World A More Dangerous Place - Chris Martenson - Without any doubt, the Middle East has been a very long-simmering region of violent religious and tribal enmity.  In that regard, perhaps today is no different than 1,000 years ago. But given the importance of the remaining oil in the Middle East to the next 20 years of global economic health, the violence and chaos seen there recently is hugely important to the entire world. But it’s also equally without doubt that the US and NATO are inflaming the situation by provoking conflicts and supplying military weapons and training to various extremist groups -- therefore deserving much of the blame for the current tensions, despair and mayhem happening in Iraq, Syria, Yemen, and Libya.  Forget anything you might read about “brutal dictators” that need to go or the importance of “democracy” to the region. That's dumbed-down pablum for the masses and has literally nothing to do with the motivations of the (clinically insane) external power brokers actually driving the events on the ground and crafting the narrative that is faithfully scribed and re-told by the media. In fact, disturbingly often, the scribed narrative is exactly opposite of the truth. If a wider war breaks out between the US/NATO and either Russia and/or China, then massive systemic shocks will result to the economy, oil prices, and the global financial system.

Russia's Rosneft Offers Japan Chance to Join East Siberia, Far East Project -  Rigzone: (Reuters) - Russia's Rosneft, the world's top listed oil producer by output, has offered Japanese companies a chance to join projects in Russia's East Siberia and Far East, Chief Executive Igor Sechin said on Friday. There is a huge potential for cooperation between the two countries, he said, in offering Japanese firms the opportunity to participate in the Verkhnechonskoye, Srednebotuobinskoye, Tagulskoye and Russkoye projects, as well as in other developments already in operation or yet to be launched. "We proposed to our Japanese partners deals with total reserves of six billion barrels and with a resource base of 100 billion barrels," Sechin told an industry symposium in Tokyo. "We would like to work with Japan." Sechin said that with the introduction of improved technology from the Japanese partners, Rosneft has ample room to expand its oil and natural gas output. Japanese exploration companies had huge write-down over the last three years because of investments in hard-to-recover hydrocarbons in the United States and Canada, and unsuccessful projects in the North Sea among others, Sechin said. Instead, he has asked them to invest in Russian projects, whose profitability is well above the global average, Sechin said, although he did not name any of the companies contacted.

China's Oct crude oil imports rise 9.4% on year to 6.23 million b/d - Oil - China's crude oil imports rose 9.4% on year to 26.35 million mt in October, or 6.23 million b/d, preliminary data released by the General Administration of Customs Sunday showed. The October imports were 8.8% lower from September's 6.829 million b/d. China's crude imports in the first 10 months rose 8.9% on year to 274.97 million mt, averaging 6.63 million b/d, down slightly from a rise of 9.2% seen for the year-ago period. China skipped crude exports in October as it had done in October 2014.Total crude exports of 2.29 million mt over January-October were 536.5% higher than the year-ago period. In the first 10 months of the year, net crude imports reached 272.68 million mt, averaging 6.57 million b/d, up 8.1% on year. China exported 3.28 million mt of oil products in October, down 7.6% from the six-year high of 3.55 million mt in September, but still the second highest level since December 2009. Exports were last seen any higher in December 2009 at 3.77 million mt, tracing back customs data till 2005. Exports were also up 4.5% from 3.14 million mt exported in October 2014. Oil product imports fell 11% on year to 2.03 million mt in October, down 24.8% from September.

China power output falls for second month in Oct - stats bureau (Reuters) - China's power output fell for a second month in a row in October, slipping 3.2 percent on a year ago to 445.4 billion kilowatt-hours (kWh), data showed on Wednesday, reflecting a slowdown in industrial demand. Slowing economic growth has hurt demand in downstream industries like steel, with power generation in the first 10 months of the year easing 0.1 percent to 4.651 trillion kWh, according to data from the National Bureau of Statistics. October's decline followed a 3.1 percent drop in September. Stagnant demand has allowed grid firms to reduce the amount of power taken from thermal power plants, which account for about 75 percent of China's generating capacity, as the country tries to ease its dependence on fossil fuels. Thermal power production, predominantly fueled by coal, fell 6.6 percent on a year earlier to 310.7 billion kWh in October. Output was down 2.6 percent for the first 10 months to 3.466 trillion kWh. Hydropower output rose 2.1 percent in October to 99.5 billion kWh, and was up 3.4 percent over the first 10 months at 847.4 billion kWh. Despite a supply glut, China has given environmental approval for the construction of another 155 coal-fired power plants in the first three quarters of this year, according to research from environmental group Greenpeace.

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