Sunday, April 24, 2016

what we learned from Doha, a new push for gas exports, new oil glut and rig count records again, etc

the meeting at Doha was a dud...there was no agreement between OPEC and other oil producers meeting at the Qatari capital last Sunday to freeze production or to take any other action whatsoever to control oil output...in fact, contrary to their intended purpose of limiting oil output, both the Saudis and the Russians indicated after the meeting that they'd be increasing their output... furthermore, now that we understand the issues in play, we can see that there is no chance that there’ll be any kind of agreement to freeze oil production at any time in the foreseeable future...

initial news from the conference early Sunday was that the 16 oil producers meeting in Doha, including the Saudis and the Russians, would agree to freeze their oil output until October, at which time they'd have another meeting and renegotiate from there...but before the meeting actually started, the Saudis said they wanted all OPEC members to participate, including Iran, despite previously insisting on excluding Iran because Iran had refused to freeze production....so they delayed the meeting till later in the afternoon in an attempt to address the differences between the Saudis position and the earlier draft agreement which excluded Iran....but that was to no avail, as the Saudis were uncompromising, and by evening the meeting fell apart without a freeze agreement or even an agreement to meet again at some time in the future...the early Asian market reaction, wherein quotes for U.S. crude for May fell 6.7% to $37.70 a barrel and the global benchmark Brent crude was down 6.9% to $40.14, was short-lived, as news that oil workers in Kuwait went on strike, threatening to take nearly 2 million barrels per day off the global market, steadied prices, which then closed Monday at $39.78 a barrel in the US and at $42.91 a barrel in Europe, both down less that one percent from last Friday...

now that the dust has settled, it's pretty clear what had happened....over the 2 months leading up to the meeting, confidence that a deal to freeze output would get done was pretty high, as both Russian energy minister Alexander Novak and Ali al Naimi, the long time Saudi oil minister, had taken part in the original meeting with Qatar and Venezuela, and had voiced support for an agreement in the interim weeks...however, at the same time, and especially during the week prior to the Doha meeting, 30 year old Saudi Crown Prince Mohammed bin Salman insisted there would be no deal without Iran's participation...we can now see that it was bin Salman who was calling the shots at last Sunday's meeting....the tell is from reports from Venezuela oil minister Del Pino, who said that Saudi representatives at Sunday's meeting didn’t have authority to negotiate a freeze, and hence they followed the dictates of bin Salman, and presumably his father the king, that there would be no deal unless their regional arch enemy Iran was also forced to freeze their output (at depressed levels)

thus, young Mohammad bin Salman has emerged as the power behind the Saudi crown...his father King Salman, who rose to the throne when King Abdullah died last January and who has often been described in reports as somewhat senile, is still active domestically, presiding over the largest jump in political beheadings in 20 years...but his favored son Mohammend, who often speaks of Saudi Arabia in the first person singular, has been gradually assuming all the important positions in the Kingdom, including Minister of Defense and Chief of the Royal Court...the outcome of this meeting at Doha confirms that he is in charge of Saudi energy policy as well, and that Ali al Naimi, who for 21 years has not only been the Saudi oil minister but also the voice of OPEC, is now answering to the young Crown Prince...fighting proxy wars with Iran in Syria and Yemen, the Saudis thus appear willing to cut off their nose to spite their face, and will do all in their power to drive the price of oil down, just to deny Iran full remuneration for their oil as they return to the global export markets...

New Energy Bill Fast Tracks Gas Export Facilities

back in the US, the Republican controlled US Senate passed a broad-ranging energy bill promoting everything from renewable energy to exports of fossil fuels by an 85-12 vote...delayed for 2 months over an impasse on providing emergency aid to Flint, this so-called Energy Policy Modernization Act had broad bi-partisan support because it was turned into a Christmas tree with something on it for everyone, including a provision to designate forests as a carbon-neutral energy source that was introduced by senators Susan Collins from Maine and Amy Klobuchar from Minnesota, presumably at the behest of their timber interests...the earlier House passed version of this bill was more aimed at restricting Federal oversight and thus drew a veto threat from the White House, so it appears that this Senate version will be closest to what survives the reconciliation process and ends up as law..

while there's undoubtedly much pro and con in this bill that we haven't seen, what has attracted our attention are the provisions to speed the permitting process for liquefied natural gas exports...when i first read about those provisions, i assumed they were similar to others that had been included in other energy proposals, wherein a permit to build an export facility had to be granted within a year after a completed application, but i serendipitously stumbled onto SEC. 2201 in the text, under "Action on applications to export liquefied natural gas" which reads in part  "the Secretary shall issue a final decision on any application for the authorization to export natural gas under section 3(a) of the Natural Gas Act (15 U.S.C. 717b(a)) not later than 45 days after the later of— (1) the conclusion of the review to site, construct, expand, or operate the liquefied natural gas export facilities required by the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.); or(2) the date of enactment of this Act."  thus it’s clear that someone seems to be in quite a hurry to get those LNG export facilities built and start shipping our natural gas to Asia and Europe, where gas prices still remain much higher than in the US...

that provision is particularly important to us here in Ohio because we are on the cusp of becoming the fastest growing natural gas producing state in the nation...last Friday, in the "Today in Energy" blog post from the Energy Information Administration (EIA) titled U.S. natural gas production reaches record high in 2015, they examined the states that are contributing the most growth to the increased output of natural gas in the US in 2015, and Ohio came in second, just a bit behind Pennsylvania...but while growth of natural gas production is slowing in Pennsylvania, it is still growing in Ohio, a fact which is most clearly illustrated by a bar graph from that EIA post which we're including below...

April 16 2016 natural gas by state

the above bar graph was taken from the EIA "today in energy" blog post of last Friday and it shows the 5 states that have contributed the most to the increase in natural gas output over the past six years...the annual increase in the output of gas in billions of cubic feet per day is represented by a bar for each of those 6 years for each of those 5 states (in some cases as a negative)...understand, Texas still produces more gas than Pennsylvania, but Texas gas output is falling, and this graphic only shows the states where the major growth has been....in 2015, Pennsylvania's natural gas output grew by 1.5 billion cubic feet a day, down from the 2.6 billion cubic feet a day growth the state logged in 2014...meanwhile, Ohio's natural gas output grew by 1.4 billion cubic feet a day, up 41% from the less than 1 billion cubic feet a day growth we saw in 2014...assuming these trends continue, Ohio's natural gas output growth will almost certainly surpass the growth of Pennsylvania natural gas in the coming year...thus, while the LNG exports that may be leaving from the Gulf Coast, New Jersey or Washington state will not necessarily have originated in Ohio, it will be Ohio where the rest of the country will be looking for the new gas to pick up the supply deficit created by those exports...

The Latest Oil Stats from the EIA

according to the latest reports from the Energy Information Administration, our imports of oil increased by nearly a quarter of a million barrels per day, which was almost the same amount of oil that we added to our record supplies of oil in storage over that period....however, oil traders took note of an even larger drawdown of our inventories of distillates, and drove the new June contract price of oil up to $43.73 a barrel, a new high for the year, despite the Doha failure earlier in the week...also contributing to the strength in the price for oil was another decrease in the rig count, and a 24,000 barrel per day drop in our field production of crude oil, which fell to an average of 8,953,000 barrels per day during the week ending April 15th, which was 4.4% lower than the 9,366,000 barrels per day we were producing during the same week last year...output of oil from US fields has now fallen 12 out of the last 13 weeks and is now 6.8% off the peak of last June 10th, the lowest it's been since the week ending October 10th of 2014...

at the same time, our imports of crude oil averaged 8,178,000 barrels per day during the week ending the 15th, 247,000 barrels per day higher than the previous week and 5.4% higher than the 7,765,000 barrels per day we were importing during the week ending April 17th last year...but as this week replaced an even higher import week in the 4 week moving average of imports reported by the weekly Petroleum Status Report (62 pp pdf), and thus our oil imports still remain at the 7.8 million barrel per day level, just 2.1% above the same four-week period last year...   

meanwhile, US refineries, which had slowed processing by nearly a half a million barrels per day last week, picked up a bit this week, processing 16,104,000 barrels of oil per day during the week ending April 15th, 163,000 barrels per day more than the 15,941,000 barrels of oil per day they were using during the week ending April 8th....that was also up a bit from the 15,982,000 barrels of oil per day US refineries were using during the same week of 2015, even though the US refinery utilization rate only rose to 89.4%, up from 89.2% last week, which was still lower that the 91.2% refinery utilization rate of the same week last year....

with more oil being refined, our refinery production of gasoline rose by 170,000 barrels per day, averaging 9,738,000 barrels per day during the week ending April 15th, up from the average 9,568,000 barrels of gasoline per day produced during the week ending April 8th...oddly, though, that was still lower than the one week spurt to 9,763,000 barrels per day production we saw during the week ending April 17th of 2015, which set the record for gasoline output for any week in April...on the other hand, our refinery output of distillate fuels (diesel fuel and heat oil) fell by 72,000 barrels per day to 4,712,000 barrels per day during week ending the 15th, which was also 63,000 barrels per day, or 1.3% lower than our distillates production during the same week of 2015...    

even with the increased output of gasoline, our gasoline inventories fell for the second week in a row, slipping from 239,761,000 barrels on April 8th to 239,651,000 barrels on April 15th...however, this week's gasoline supplies were still 6.2% higher than the 225,738,000 barrels of gasoline that we had stored on April 17th last year, which were at the time the highest for the third weekend in April since 1993...thus our gasoline stores are still categorized as "well above the upper limit of the average range" for this time of year...at the same time, our distillate fuel inventories also fell, as you might recall the cold snap that week, dropping by 3,554,000 barrels to end the week at 159,935,000 barrels, which oddly was widely reported as the impetus for a 3.8% jump in the price of crude oil...however, as we've pointed out all winter, distillate inventories also remained "well above the upper limit of the average range" for this time of year as of April 15th, still 23.7% greater than the 129,336,000 barrels of distillates we had stored as of April 17th last year..   

finally, largely on the 247,000 barrel per day increase in our imports, we had an additional 2,080,000 barrels of surplus oil supply this week, and hence our stocks of crude oil in storage, not counting what's in the government's Strategic Petroleum Reserve, rose once again to a new record of 538,611,000 barrels as of April 15th, up from the record 536,531,000 barrels of oil we had stored on April 8th...that was 10.4% higher than the then record of 489,002,000 barrels of oil we had stored as of April 17th, 2015, which at the time was the highest level of 2015, and 35.4% higher than the 397,659,000 barrels of oil we had stored on April 18th of 2014....we've now increased our inventories of crude oil by by nearly 56.3 million barrels since the beginning of this year, while setting new records for the amount oil we had in storage in the US in 9 out of the last 10 weeks... 

This Week's Rig Count

and guess what else? for the 7th week in a row, we have another all-time record low for the number of active drilling rigs working in the US...Baker Hughes reported that their total count of drilling rigs running in the US was down by another 9 rigs to 431 rigs as of April 22nd, which was also down from the 932 rigs that were working on April 24th of 2015, and down from the recent high of 1929 rigs that were deployed on November 21st of 2014... the count of rigs drilling for oil fell by 8 to a 6 year low of 343, which was down from 734 a year earlier, and down from the recent high of 1609 working oil rigs that we saw on October 10, 2014, while the count of drilling rigs targeting natural gas fell by 1 to a record low of 88, down from the 217 natural gas rigs that were drilling a year ago, and down from the recent natural gas rig high of 1,606 that was set on August 29th, 2008... 

two of the rigs that were shut down this week had been drilling in the Gulf of Mexico, reducing the Gulf rig count to 25 and the total offshore count to 26, with the other offshore platform working off the Cook Inlet in Alaska...that's down from the 33 Gulf of Mexico platforms and 34 total offshore that were in use on April 24th of 2015...however, there was a new rig set up on an inland lake in southern Louisiana this week, which brings the inland waters rig count up to 4, up from the 3 rigs deployed drilling on inland waters last year at this time...

a net of 3 horizontal rigs were pulled out this week, leaving the count of rigs drilling horizontally at 332, which was down from the 720 horizontal rigs that were in use on April 24th of 2015, and down from the recent record of 1372 horizontal rigs that were drilling on November 21st of 2014...at the same time, 3 more directional rigs were also stacked, leaving 48 directional rigs still running, which was down from the 91 directional rigs that were in use at the end of the same week a year earlier...in addition, a net of 3 vertical rigs were also shut down, cutting the vertical rig count back to 51, which was down from the 121 vertical rigs that were in use nationally the same week last year... 

5 of the rigs that were shut down this week had been working the Permian basin of west Texas, which still has 136 rigs working there, down from the 246 rigs that were deployed in the Permian last year at this time, and down from the high of 568 rigs that were working the Permian on November 14, 2014....two rigs were also idled in the Eagle Ford of south Texas, which still has 40 rigs running, down from 115 a year ago and down from that basin's peak of 259 rigs hit on May 25 of 2012...a rig also came out of the Cana Woodford of Oklahoma, which still has 29 rigs working it, down from 41 a year ago...and a single rig was also pulled from the Utica shale of Ohio, which has 11 working rigs remaining, down from the 26 rigs working the Utica a year ago at this time, and down from the Utica peak of 50 rigs last seen on December 26th of 2014....

with the reductions in the Permian and Eagle Ford, the state count tables thus indicated that Texas had the largest drilling rig decrease, as they saw a net of 7 rigs pulled out this week, leaving 187 rigs still working the state on April 22nd, which was down from the 393 rigs that were working in Texas on April 24rd last year…Louisiana, with the loss of 2 offshore rigs and the addition of a rig on an inland lake, was down by a net of 1 rig to 47 for the week, which was down from 74 rigs working there a year earlier...and lastly, Ohio also saw a single rig pulled out, leaving 11 still running in the state, which was down from the 25 rigs working Ohio last year at this time...

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Plan delays Ohio renewable energy targets another 3 years (AP) — An as-yet-to-be-introduced bill that would extend a freeze on Ohio’s renewable-energy requirements for an additional three years is already drawing opposition. State Sen. Bill Seitz, a Cincinnati Republican, said the draft legislation circulated last week tacks another three years onto a current two-year delay in phasing in state targets for use of solar, wind and other forms of renewable energy by Ohio power companies. Seitz tells The Associated Press he sent the bill to interested parties on different sides of the debate and “I’m giving all the Hatfields and all the McCoys the opportunity to comment” before introducing the final bill. The law that’s on hold requires utilities to generate 25 percent of electricity from alternative and advanced sources by 2025 and to meet certain energy efficiency targets. A compromise struck at the urging of Republican Gov. John Kasich prevented a permanent freeze of the law, as some lawmakers wanted. Instead, phase-in was delayed for two years to give lawmakers time to study the issue. If legislators fail to act by 2017, the deal calls for the law to resume as planned. Seitz said the extra three years are needed to allow time for federal regulations to be sorted out. The U.S. Supreme Court has stayed implementation of the federal Clean Power Plan at the request of the state of Ohio and 26 other states. The senator said the legislation supports “a greener energy future for Ohio” with program and incentives, but without mandates.

Pipeline plan drawing little controversy - Toledo Blade -  Kinder Morgan, North America’s largest energy infrastructure company, hopes to wrap up negotiations with landowners in 14 Ohio counties this year so it can start building a 240-mile, 12-inch diameter pipeline it calls its Utopia East project.The $500 million venture, while enormous in its own right, is not expected to draw as much controversy as the proposed $2 billion NEXUS Gas Transmission pipeline. Kinder Morgan wants to move ethane and ethane-propane mixtures from eastern Ohio to Windsor, Ont., starting in January 2018. Most construction is expected in 2017.  NEXUS, meanwhile, is trying to build a 255-mile, 36-inch diameter pipeline to move natural gas from eastern Ohio to southwestern Ontario. It has proposed a controversial compressor station near Waterville.Even Paul Wohlfarth, one of the region’s most outspoken pipeline activists, said there is “hardly the same risk” between the two projects.“Not the same animal by a long shot,” he said.Ethane, used as feedstock to make plastics, is a byproduct of the process energy companies use to hydraulically fracture shale so they can extract previously untapped reserves of oil and natural gas.The fracking boom in eastern Ohio has led to major pipeline projects.  Kinder Morgan is building its pipeline to transport ethane products from the Utica shale region to NOVA Chemicals Corp., a project that will help make use of waste products

Rep. Phillips introduces law to tighten injection-well regulation - Legislation introduced last week by state Rep. Debbie Phillips, D-Albany, seeks to tighten regulations on fracking-waste injection wells in Ohio. “Our state and our region have become a dumping ground for waste produced in other states, exposing our citizens to toxins and carcinogens,” Phillips said announcing the legislation. Last year, Athens became the most heavily injected county in Ohio. With eight fracking-waste injection wells, Athens County took in more than four million barrels of fracking waste in 2015, more than any other county in the state, according to data from the Ohio Department of Natural Resource. That’s an increase of 1.1 million barrels from the previous year, or nearly 40 percent. The number of barrels injected in Athens County represents about 16 percent of the total fracking waste pumped into Ohio injection wells in 2015. Over 90 percent of the waste injected in Athens came from out-of-state oil and gas wells, mostly from Pennsylvania and West Virginia. The bill proposed by Phillips would ban the use of Class II injection wells for fracking waste and instead require the use of Class I injection wells, which are designed for hazardous materials and require monitoring for leaks. “We know the waste going into these wells contains dangerous chemicals and has a troubling history of spills,” Phillips said. While the U.S. and Ohio Environmental Protection Agencies have deemed the Class II injection well regulatory program in Ohio acceptable, concerns remain about oversight and potential contamination of drinking water.

Michigan sand is used in fracking, but details hard to come by - When you think of hydraulic fracturing, Michigan may  not be the first state that comes to mind. But according to The FracTracker Alliance in Cleveland, Ohio – a group that studies the global oil and gas industry – Michigan is playing an increasing role in fracking. That’s because the fracking process requires a special kind of sand that’s found near the Great Lakes.  Ted Auch is an environmental scientist who works for FracTracker. In a new report, he says the Midwest has become the primary source of silica sand for the oil and gas industry. But trying to figure out how much sand is going where is a daunting task.  "We are really in the dark with regard to mine productivity," says Auch. "We know how much is being demanded from these wells but we don't know how much is being produced [and] we don't know the methods by which it's traveling. So there's a lot of unknowns." Auch spoke us during 'All Things Considered' about his efforts to document sand mining in the Midwest.

Pennsylvania, Ohio Could Avoid Oil, Gas 'Resource Curse' by Creating Permanent Trusts, Says Brookings - To avoid the unavoidable price volatility that accompanies oil and natural gas development, states that have become dependent on energy revenues should consider creating permanent trust funds that overcome boom-and-bust price cycles, the Brookings Institution said Tuesday. The Metropolitan Policy Program at Brookings, in the report "Permanent Trust Funds: Funding Economic Change with Fracking Revenues," outlined what states could do -- if they haven't already -- to prepare for the inevitable "resource curse" of unconventional horizontal drilling and hydraulic fracturing. Authors Mark Muro and Devashree Saha reviewed the current bust in unconventional oil and gas extraction and surveyed the resulting budgetary problems in multiple states. For those energy-rich states that have not already, enacting severance taxes and permanent funds help to better navigate future unconventional drilling downcycles, the researchers said. Permanent funds may offer a way to avoid a U.S. version of the third-world "resource curse" by managing revenue to invest in economic diversification. Debates on whether to enact production taxes "are underway in Pennsylvania, Ohio and New Mexico, while multiple states are in bad straits," Muro said. "The boom-bust cycle of unconventional oil and gas development highlights the need for strategic management by state governments of fracking-related revenues, not only to minimize the less desirable aspects of the boom-bust cycle but also to enhance long-term prosperity."States can address these challenges by imposing a reasonable severance (extraction) tax on their oil and gas industry and channeling a portion of the revenue into permanent trust funds. In doing so, states can convert volatile near-term revenues from unconventional oil and gas development into a longer-term and continuous source of investment funds for building sustainable and dynamic economies."

Regulatory reviewers approve major update to Pa. drilling rules: — Pennsylvania’s Independent Regulatory Review Commission approved a wide-ranging update to the state’s oil and gas drilling rules on Thursday, voting 3-2 that the changes proposed by the state Department of Environmental Protection are in the public interest. The divided vote capped a seven-hour-long meeting that demonstrated the deep split between oil and gas industry representatives, who believe the new regulations impose unjustified and costly new burdens, and members of environmental and citizens groups, who support the changes even as they push for greater protections. The long-germinating rules have been in development since 2011 and include separate chapters for the state’s Marcellus Shale operations and smaller, conventional oil and gas companies. The regulations now face another challenge in the Legislature where energy committees in both chambers are expected to advance a resolution that could block the rules from taking effect. If the Republican-controlled House and Senate pass the resolution, it could be vetoed by Democratic Gov. Tom Wolf, who supports the regulations. DEP Secretary John Quigley said he was pleased with the vote. “This validates five years worth of tremendous public service by a tremendous group of public servants,” he said. Scores of representatives from the state’s traditional, shallow oil and gas industry attended the meeting to share their broad disagreement with the substance of the rules and how they were developed. Often flanked by family members who help run their small businesses, they used poster-sized exhibits to illustrate their case that specific aspects of the rules are flawed, harmful or unsupported by facts.

Horses are being born without the ability to swallow — and fracking could be to blame -  In New York’s Southern Tier, local newspapers are investigating the connection between a local racetrack owner’s sick foals and the fracking fluids present on his farmland. The Ithaca Journal featured a report by Tom Wilber in which he investigated the ongoing issue with foals being born without the ability to swallow — seventeen of them so far — on the breeding farm of Jeff Gural, owner of the Tioga Downs, Meadowlands Racetrack, and Vernon Downs.  The foals have survived, although all of them have had to be transported to Cornell’s School of Veterinary Medicine, located fifty miles north in Ithaca, New York. An earlier study by Cornell professor Robert Oswald and Cornell veterinarian Michelle Bamberger linked the presence of the byproducts of hydraulic fracturing to numerous animal deaths and stillbirths. Their research included twenty-four case studies of multiple farm animals who had either been killed outright by the cocktail of chemicals or later proved unable to successfully reproduce after exposure.  The vets are conducting their own study of what may be causing the epidemic of horse birth defects. The veterinary team cite the presence of a gas well adjacent to Gural’s land that was drilled by Chesapeake Appalachia LLC as the “prime suspect” in the Gural farm problems. The Pennsylvania Department of Environmental Protection confirmed that the farm’s water is contaminated, although they failed to cite Chesapeake as the cause.

MYSTERY OF SICK FOALS: Was fracking to blame on PA farm? - From a mile away, Allerage Farm’s magnificent barn can be seen amid rail fences, rolling pastures and red and white outbuildings on a hill rising some 1,500 feet from the Susquehanna River basin. Yet for all its beauty, Gural's horse-breeding farm holds a disturbing mystery health experts and the federal government are working hard to solve. For three years, the mares have been bearing foals with dysphagia — a rare, life-threatening condition preventing them from swallowing properly. Although researchers have yet to pinpoint a cause, a Cornell University veterinary team that saved 17 of Gural's standardbred foals has identified a primary suspect — a gas well drilled directly next to the farm by Chesapeake Appalachia LLC. An investigation by the Pennsylvania Department of Environmental Protection confirmed the farm’s water was contaminated. However, it concluded Chesapeake operations was not the cause. Big money, land rights and health hazards have been salient story lines in Pennsylvania’s shale gas bonanza. The mystery on Gural’s farm, however, represents a new twist in the power play between landowners, regulators and the gas industry.  For years, farmers have been dealing with water contamination and illnesses that common sense tells them is caused by nearby shale gas operations. But they generally face a burden of proof requiring legal and scientific resources beyond their means. Regulators, industry and health officials, meanwhile, often explain problems like polluted water wells as resulting from natural and pre-existing phenomenon.  But Allerage is not your average farm, and the foals are not your typical animals.  With some horses potentially worth six figures, Gural wants answers. His lawyers have filed an appeal with the Pennsylvania Environmental Hearing Board demanding state regulators conduct a more thorough investigation of his farm’s water.

Is Fracking Causing the Epidemic of Horse Birth Defects at Breeding Farm? -- In New York’s Southern Tier, local newspapers are investigating the connection between a local racetrack owner’s sick foals and the fracking fluids present on his farmland. The Ithaca Journal featured a report by Tom Wilber in which he investigated the ongoing issue with foals being born without the ability to swallow—seventeen of them so far—on the breeding farm of Jeff Gural, owner of the Tioga Downs, Meadowlands Racetrack and Vernon Downs. The foals have survived, although all of them have had to be transported to Cornell’s School of Veterinary Medicine, located 50 miles north in Ithaca, New York. An earlier study by Cornell professor Robert Oswald and Cornell veterinarian Michelle Bamberger linked the presence of the byproducts of hydraulic fracturing to numerous animal deaths and stillbirths. Their research included 24 case studies of multiple farm animals who had either been killed outright by the cocktail of chemicals or later proved unable to successfully reproduce after exposure.  The vets are conducting their own study of what may be causing the epidemic of horse birth defects. The veterinary team cite the presence of a gas well adjacent to Gural’s land that was drilled by Chesapeake Appalachia LLC as the “prime suspect” in the Gural farm problems. The Pennsylvania Department of Environmental Protection confirmed that the farm’s water is contaminated, although they failed to cite Chesapeake as the cause. Gural is on record as a supporter of gas shale exploration in the Southern Tier. . But he is mad that so far, companies have not had to disclose what comprises fracking fluid because of the so-called “Halliburton Loophole.”  “That they don’t have to tell you what chemicals they are using is ridiculous,”

The Scientists Who Are Telling The EPA Fracking Is Safe Have Oil Industry Ties, Groups Say - In the summer of 2015, the Environmental Protection Agency said in a much-anticipated draft report that hydraulic fracturing has not led to “widespread, systemic impacts” on drinking water. That statement was for many as divisive as it was bold, for it invigorated the industry’s position that fracking is safe while angering critics who say it actually creates a long list of environmental problems, including an increase in greenhouse gas emissions.Since that draft report was released, the EPA’s independent Science Advisory Board panel has questioned it twice, most recently saying the panel is “concerned” that major findings “are ambiguous and appear inconsistent with the observations, data, and levels of uncertainty presented and discussed in the body of the draft assessment report.” As the SAB’s final peer review nears, a draft dissent from at least four board members with ties to the oil and gas industry is being challenged by the Americans Against Fracking Coalition. In a letter sent Wednesday to EPA Administrator Gina McCarthy, the advocacy group, which includes Food and Water Watch along with hundreds of other organizations, said dissenting members’ connections with the fracking industry mean they “have clear conflicts of interest.” While urging the EPA to reject the dissent, the coalition claimed members “do not have any scientific basis for their dissent.”  “The [EPA’s statement] itself is a political line without scientific basis, and so as a result, it becomes a political statement,”

Frackers Admit: “We don’t frack near rich people.”  This is pretty funny. Don’t frack near the fracking 2% Range Resources Exec: “We Don’t Frack Near Rich Neighborhoods”  Pittsburgh Post-Gazette  Two environmental organizations will ask the state’s Office of Environmental Justice to review Range Resources’ past and future shale gas development practices to determine if the company has avoided drilling in wealthier neighborhoods and targeted poorer areas of the state.The Center for Coalfield Justice and the Pennsylvania Chapter of the Sierra Club raised that question after they said Terry Bossert, Range’s vice president for legislative and regulatory affairs, told a Pennsylvania Bar Institute gathering in Harrisburg earlier this month, that the company tries to avoid siting its shale gas wells near “big houses” where residents might have the financial resources to challenge the industrial-type developments. “We heard Range Resources say it sites its shale gas wells away from large homes where wealthy people live and who might have the money to fight such drilling and fracking operations,” said Patrick Grenter, an attorney and Center for Coalfield Justice executive director, who attended the lawyers’ forum. A handful of attorneys in the audience confirmed that account  Joanne Kilgour, an attorney and director of the Pennsylvania Chapter of the Sierra Club, who attended the meeting, said Mr. Bossert’s statements “pose significant environmental justice issues, and raise the question whether the companies coming into communities are really operating in the best interests of those communities.”

Constitution pipeline ready to go, Kinder Morgan project shelved (AP) — While one company has shelved plans for a natural gas pipeline from New York into New England, another project following a similar route is poised to proceed. Constitution Pipeline spokesman Christopher Stockton says Thursday that the pipeline from Pennsylvania’s shale gas fields to eastern New York is supported by firm customer commitments. Project partners include Cabot Oil and Gas Corp. and Piedmont Natural Gas. On Wednesday, Houston-based Kinder Morgan Inc. cited low gas prices and a lack of contracts with gas distribution companies as it announced it was mothballing its Northeast Energy Direct project. Constitution’s construction timetable has been delayed pending New York action on a water quality permit. Both pipelines faced opposition from environmental groups and landowners along their routes. Local pipeline supporters cite construction jobs, tax revenues and access to cheap natural gas.

Sanders opposes Constitution pipeline between Pennsylvania, NY | Reuters: Democratic presidential candidate Bernie Sanders on Monday said he opposes a proposed natural gas pipeline between Pennsylvania and New York and called on New York officials to reject the project. "The possibility of methane leaks from the proposed Constitution Pipeline would be catastrophic to our air and our climate — and if this pipeline were approved, eminent domain would be used to seize land from farmers and homeowners," he said in a statement. U.S. pipeline company Williams has delayed the start up of the pipeline to the second half of 2017 from the fourth quarter of 2016.

Gov. Cuomo Rejects the Constitution Pipeline, Huge Win for the Anti-Fracking Movement  -- In a win for climate activists and the anti-fracking movement, and a blow to fossil fuel polluters and the federal regulatory agencies that enable them, the New York State Department of Environmental Conservation (DEC) denied a key permit to companies seeking to build a 124-mile fracked gas pipeline.   The Constitution Pipeline Project—a joint venture between four oil and gas companies—was proposed to transport fracked natural gas from Susquehanna County in Pennsylvania through Broome, Chenango, Delaware and Schoharie counties in New York to existing interstate pipelines. The pipeline route would have crossed hundreds of streams and wetlands, including those supplying drinking water to families along the proposed route. Using the power granted under the Clean Water Act, DEC officials rejected the companies’ permit application, citing damage the project would do to water supplies along the pipeline route.  The nonprofit environmental law organization Earthjustice has been staunchly opposed to the project and represented a coalition of groups—Catskill Mountainkeeper, Clean Air Council, Delaware-Otsego Audubon Society, Delaware Riverkeeper Network and the Pennsylvania and Atlantic chapters of Sierra Club—in pipeline approval proceedings before the Federal Energy Regulatory Commission (FERC.)

CONstitution Fail: Frackers Mistake Upstate New York for Ohio!  - The frackers went about the wholly redundant CONstitution gas line project like they were back in Oklahoma. They clear cut trees, trespassed on people’s property and got way ahead of the regulators – who they routinely ignored. All to export some fracked gas to Brazil ?    But they were not in Oklahoma. Nor Texas. They weren’t even in Ohio. They were in Upstate New York, which votes like Vermont: Today, officials from the New York State Department of Environmental Conservation announced the denial of the Clean Water Act Section 401 Water Quality Certification for the proposed Constitution Pipeline. Although DEC has granted certificates for other projects, the application by Constitution for these certificates fails to meet New York State’s water quality standards. The full decision is outlined in a letter by John Ferguson, Chief Permit Administrator with DEC’s Division of Environmental Permits and Pollution Prevention. That letter can be viewed here. In New York State, the project proposed to include new right-of-way construction of approximately 99 miles of new 30-inch diameter pipeline, rather than co-locating within existing rights-of-way. Although DEC requested significant mitigation measures to limit affecting the state’s water bodies, this new right-of-way construction would impact approximately 250 streams across New York State. Many of those streams are unique and sensitive ecological areas, including trout spawning streams, old-growth forest, and undisturbed springs, which provide vital habitat and are key to the local ecosystems. DEC had repeatedly requested that Constitution provide a comprehensive and site-specific analysis of depth for pipeline burial to mitigate the project’s environmental impact – but the company refused – providing only a limited analysis of burial depth for 21 of the 250 New York streams.

Impact of the Current Natural Gas Storage Surplus on Summer Prices The U.S. natural gas market ended the winter withdrawal season with inventories carrying a record high overhang and an enormous surplus versus previous years. Since then, the historic surplus has begun to contract, and the CME/NYMEX Henry Hub futures contract has responded, rallying 11.2 cents since April 1st to settle at $2.068/MMBtu Thursday. Now, well into the third week of injection season, the big questions are whether the recent bullishness can be sustained and what it will take to relieve the surplus in storage. In today’s blog, we assess how the existing surplus will impact summer storage activity and prices. This is Part 2 in our “Carry That Weight” supply/demand update series. In Part 1, we recapped the winter withdrawal season, in which mild weather suppressed demand even as production set new record highs, resulting in oversupply and some of the lowest daily futures settlement prices in 17 years. U.S. natural gas storage inventories ended the winter heating season at a record high of 2,480 Bcf as of April 1, 2016, which translated to a 1,004-Bcf surplus to the corresponding week in 2015. Daily futures prices this winter averaged just $2.05, $1.175 (36%) lower than last winter.  As we noted in Part 1, storage inventory levels at the end of the winter season typically set the tone for storage activity and prices through the injection season, which runs from April 1 through October 31. Natural gas storage has a seasonal pattern as regular as clockwork, driven largely by fluctuations in weather. In the winter, daily gas demand is historically higher than daily production, resulting in withdrawals from storage – spurred by contractual obligations of storage capacity holders and higher winter prices that entice gas out of storage to help meet heating demand. 

NY organizations call for federal oil rail transport ban - — A coalition of environmental groups and public officials gathered last week to call for a federal ban of oil transport by trains along the shorelines and communities of Lake Champlain and the Hudson River. Up to 30 million gallons of explosive crude oil is transported by train through New York communities and along the shores of Lake Champlain each week. Several organizations, businesses, foundations, cities and community leaders signed a letter to the state’s senators and representatives revealing the dangers of transporting this substance. “I feel this is a bold action,” Plattsburgh City Councilor Rachelle Armstrong said. “We need to stand up.” Explosive crude oil is a danger in itself and can cause “massive damage,” said Jim Murphy, senior counsel for the National Wildlife Federation. Outdated rail cars and aging infrastructure are other concerns. A number of tanker cars date back to the post-Civil War era, each carrying about 30,000 gallons of crude oil, accompanied by up to 100 other cars. Each train carries more than 2 million gallons of oil. “The trains snake miles over Lake Champlain,” said Lori Fisher, executive director of the Lake Champlain Committee. “It’s a huge threat.” Derailments have occurred.

Louisiana and Mississippi driller Goodrich files bankruptcy (AP) — One of the oil companies most active in drilling wells in the Tuscaloosa Marine Shale formation in Mississippi and Louisiana has sought bankruptcy protection. Houston-based Goodrich Petroleum filed for Chapter 11 bankruptcy Friday after securities owners rejected swapping their holdings for common stock to lower debt payments. The company cites $99 million in assets against $507 million in debts. Law firm Haynes & Boone says 60 North American petroleum companies have sought bankruptcy since 2014. Goodrich says it wants to shed $400 million in debt during restructuring, pre-negotiated with creditors owning $175 million in debt. Those secured creditors would get new stock, while the company would pay nothing to owners of $224 million in unsecured debt. The company also has interests in the Haynesville Shale gas fields of northwest Louisiana and east Texas, with a total of 193 wells across eight states. Law firm Haynes & Boone says nearly 60 North American oil and natural gas companies have sought bankruptcy since 2014. Goodrich is a small player in the oil world, and had focused on developing the Tuscaloosa shale formation. Wells in that region of southwest Mississippi and the Florida Parishes of Louisiana were among the highest-cost oil wells being drilled when prices began to fall, and drilling activity quickly dwindled. A number of wells were drilled but not hydraulically fractured, as companies wait for higher prices to start pumping.

Federal Offshore Drilling Plan: From Injury to Insult --- In New Orleans, the Bureau of Ocean and Energy Management (BOEM) hosted a public hearing earlier this week on the proposed Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022. The U.S. Department of Interior is offering up hundreds of millions of acres in the Gulf of Mexico to allow for deeper oil and gas drilling in the region. On a contradictory note, later this week the U.S. is slated to sign the Paris accord acknowledging the need for national action as part of a global imperative to combat the impending impacts of climate change.We already feel the powerful impacts of climate change here in Louisiana. More than 10 years after Hurricane Katrina, we are still haunted by the fact that climate change worsens chronic justice issues and poses a particular threat to the way of life for residents of the Gulf Coast. While BOEM holds its hearing to do more drilling in the Gulf of Mexico, Native American tribes in south Louisiana like the United Houma Nation are relocating from their historical homelands due to sea level rise and historic African American communities in New Orleans like Residents of Gordon Plaza are fighting multi-generational court battles to relocate due to the poisoning of their land and toxic exposure during extreme weather.

Earthquake issue not as easy as flipping switch, Commissioner Murphy says - – Speaking in a soft but firm tone, Oklahoma Corporation Commissioner Dana Murphy is adamant the agency she helps oversee is doing all it can to stop the manmade earthquakes created by wastewater disposal wells. “If there was an earthquake off-switch, we would have already flipped it,” she said in a recent interview with Red Dirt Report. Earthquakes and OCC’s apparent failure to regulate the oil and gas industry in a timely fashion has sparked controversy around most of the state, the agency’s critics contend. Homes from Fairview to Edmond have been damaged, federal lawsuits are pending against some of the state’s largest oil and gas companies and controversial earthquake insurance issues have been raised. “When someone’s house is shaking, they want faster results,” said Murphy, who has spoken to numerous civic groups about the commission’s attempts to deal with the oil and gas industry and reach solutions to the onslaught of earthquakes. “There are others who believe I’ve been too hard on the oil and gas industry. Personally, we could have moved a little faster, but given the data and lack of resources we were unable to do that.” The earthquake dilemma hasn’t been an easy topic to deal with, said Murphy, a Republican who is seeking another full term in office. Murphy is opposed by term-limited legislator Richard Morrissette (D-OKC). Morrissette placed himself at the center of the earthquake issue by hosting two public forums, one in Edmond and another at the state Capitol. In both instances, Morrissette said the Oklahoma Corporation Commission had the power to shut down every wastewater disposal well causing the earthquakes, but failed to take action. “Where was he when we needed funding?” Murphy asked. Murphy contends the issue isn’t as simple as shutting down wells like Morrissette believes. There are a multitude of technical and legal reasons action was delayed, she said. In addition, the commission’s earthquake division didn’t exist until 2013 and funding has been almost non-existent.

New Mexico land commissioner opposes flaring rules (AP) — New Mexico State Land Commissioner Aubrey Dunn isn’t a fan of the Obama administration’s plan to clamp down on oil companies that burn off natural gas on public land. Dunn announced Thursday that his office has submitted comments in opposition of the proposed venting and flaring regulations. Dunn says a committee was formed in New Mexico last year to study flaring reductions and assess the feasibility of capturing gas for new drilling permits. One of the findings was the amount of time required to obtain federal rights of way from the Bureau of Land Management contributed to flaring on federal lands. Dunn argues it’s hypocritical for BLM to fault producers and impose costly new rules when the agency’s own actions have been responsible for a large part of the problem.

Just Months After The Largest Natural Gas Leak In U.S. History, Porter Ranch Is Hit With Another Leak - Porter Ranch already experienced the largest recorded natural gas leak in U.S. history over the winter, when a leak at the Aliso Canyon Storage Facility spewed more than 97,000 metric tons of methane into the atmosphere. Thousands of families were evacuated during the nearly four-month long leak, which was sealed in February. Over the weekend, the neighborhood was hit with another natural gas leak. “This is horrible,” Porter Ranch resident Gabriel Khanlian told ThinkProgress. “This issue is not over with in any way.”  Residents had been complaining that the smell of natural gas, recognizable by a potent odorant, was again wafting through their Los Angeles neighborhood. On Saturday, their claims were validated when Southern California Gas (SoCalGas), which owns the facility and the well that failed over the winter, reported that a separate company was responsible for another natural gas leak at Aliso Canyon. Earlier today we become aware that a third party company that operates at the Aliso Canyon site experienced a localized oil spill with gas venting at their petroleum well. This well is not owned or operated by SoCalGas,” the company told residents in an email notification Saturday. A spokesman for Crimson Resource Management told CBS Los Angeles that it was not a significant leak. “It’s something we work very hard at avoiding, but things happen."

5 Million U.S. Homes Near Underground Gas Bombs -- Porter Ranch Home Sales Down 44 Percent in Three Months Following Gas Leak Discovery, Cash Sales Share Up 50 Percent. 4.8 Million Homes Worth $1.3 Trillion Within 10-Mile Radius of 319 Similar Facilities Greenfield Advisors (www.greenfieldadvisors.com), a leading economic and real estate research firm, today released an analysis of the unprecedented gas leak in Porter Ranch, California, on the local housing market, and also calculated the potential impact on other local housing markets from 319 underground natural gas storage facilities across the country.  Out of the 117 million homes available for search on RealtyTrac’s property pre-diligence website, www.HomeDisclosure.com, 4,826,374 (4 percent) worth an estimated $1.3 trillion in cumulative market value are within a 10-mile radius of an underground natural gas storage facility like the one that leaked in Porter Ranch. The website allows consumers to find out if a home they own or are interested in buying is within a 10-miles radius of an underground natural gas storage facility and provides detailed information about each of these facilities. The Porter Ranch analysis shows that in the three months following the discovery of the gas leak in late October 2015, home sales in the Porter Ranch zip code (91326) plunged 44 percent while the share of all-cash sales spiked 50 percent during the same time period. Meanwhile, the median home sales price in Porter Ranch in the three months following the discovery of the gas leak dropped 1 percent. “Such a spike in the percentage of cash sales in an area in such a short period of time certainly indicates a market disruption,” said Dr. Clifford A. Lipscomb, Director of Economic Research at Greenfield Advisors. “Market disruption is further signified by the number of families that requested relocation out of the Porter Ranch area as well as the number of health effects reported by area residents. Also, with further research, you might find that lenders are less willing to lend on a property located in the Porter Ranch area.”

Fracking rule in hands of federal judge in Wyoming -- The future of federal rules aimed at protecting land, water and wildlife from energy-production practices including hydraulic fracturing now rests with a judge in Wyoming. U.S. District Judge Scott Skavdahl last year blocked implementation of rules drafted by the U.S. Bureau of Land Management. He acted in response to a legal challenge from the states of Colorado, North Dakota and Utah and Wyoming. The states claim the BLM lacks authority to regulate hydraulic fracturing.   The federal rule would require petroleum developers to disclose to regulators the ingredients in the chemical products they use to improve the results of fracking. The BLM and a coalition of environmental groups are arguing in Skavdahl's court that the rules are necessary to protect the environment. The BLM and other rule supporters also have appealed Skavdahl's decision to block implementation of the rules to a federal appeals court in Denver. It's unclear whether the appeals court will act before Skavdahl reaches a decision.  Sierra Club Executive Director Michael Brune issued a statement after Skavdahl blocked implementation of the rules. "Our public lands belong to all Americans, and they should be managed under strong national standards that protect our water, land, and wildlife," . "Not just to benefit oil and gas companies."  The Ute Tribe stated in its brief that it agrees with the states that the BLM lacks rulemaking authority and also has additional arguments that the BLM lacks authority to regulate fracking on land that the United States holds in trust for the Indian tribes and tribal members.

Montana oil and gas lease cancellation challenged in US court (AP) — A Louisiana company challenged the cancellation of an oil and gas lease in northwest Montana on Friday, after federal officials said drilling would disturb an area sacred to the Blackfoot tribes of the U.S. and Canada. The 6,200-acre lease owned by Solenex LLC of Baton Rouge is in the Badger-Two Medicine area of the Lewis and Clark National Forest. It’s just outside Glacier National Park and the Blackfeet Indian Reservation. Attorneys for the company want U.S. District Judge Richard Leon in Washington, D.C., to reject the Interior Department’s March 17 cancellation of the lease. Leon has been sympathetic to Solenex’s arguments in prior court hearings, lambasting officials for decades of bureaucratic delays since the lease was issued in 1982. It was suspended because of a legal challenge in 1985, and the issue had remained unresolved ever since. Solenex sued the government seeking to lift the suspension in 2013. The lease is within a 165,000-acre area deemed by the government to be a Traditional Cultural District of the Blackfoot tribes. It’s the site of the creation story for the Blackfoot tribes of southern Canada and the Blackfeet Nation of Montana. Attorneys for Solenex say the establishment of the cultural district was simply a pretext to deny the company its right to drill.

Montana to create rail safety plan after critical audit (AP) — Montana’s Public Service Commission hopes to come up with a rail safety plan within six months after a report criticized the agency for having never written one, even as the train traffic carrying volatile crude from the Bakken oil patch has increased. The commissioners voted unanimously Tuesday to complete a risk assessment and safety plan by November, which would give them enough time to request money from the 2017 Legislature to hire more inspectors, if necessary. A report released in October by the Legislative Audit Division faulted the PSC for not identifying rail safety risks, not having a safety plan, not having enough inspectors to adequately cover the state and not participating in regional safety issues. It said the agency is not actively engaged in rail safety, and its lone goal seems to be meeting a minimum number of inspections each year. The report also found there’s a lack of statewide emergency planning and hazardous-material response capability should an oil spill occur. It recommended more coordination with local, state and national planners, as well as adding a third inspector to check rail lines, cars and engines. Since the audit came out, one of the state’s two inspectors retired. PSC spokesman Eric Sell said the commissioners’ vote Tuesday authorized the agency to replace that inspector, but it will take at least two months to do so. “It’s our goal that we can hire someone already … certified so they can start inspecting on day one,”

North Dakota oil output drops 4K barrels daily in February (AP) — North Dakota’s Department of Mineral Resources says the state’s oil production decreased by about 4,000 barrels a day in February. The agency says the state produced an average of 1.11 million barrels of oil daily in February. The production was about 110,000 barrels per day less than the record set in December 2014. North Dakota also produced a record 1.69 billion cubic feet of natural gas per day in February, up from 1.64 billion cubic feet daily in January. The February tally is the latest figure available because oil production numbers typically lag at least two months. There were 29 drill rigs operating in North Dakota’s oil patch on Friday — the lowest number since October 2005.

Bakken crude sold as export first time since ban lifted -  Hess Corp. confirmed last week that it has sold Bakken crude to a buyer in Europe, the first shipment of North Dakota’s light crude since U.S. Congress lifted the decades-old oil export ban last December.  As reported by Reuters, the shipment consisted of 175,000 barrels of Bakken crude. In early April the crude was loaded at a terminal in St. James, Louisiana before being transported to a European refinery. Hess declined to name the buyer or the transportation vessel. The announcement came days after Exxon Mobil said it is shipping about 18,000 barrels of crude produced in the Gulf of Mexico to its refinery in Rotterdam, Netherlands. This shipment will be the first export of U.S. offshore oil since the ban was lifted, according to Reuters. Before embarking on its journey across the Atlantic, the Bakken crude was transported over 1,500 miles to the Louisiana coast. The Exxon shipment came from initial tests in the Julia field located about 200 miles south of New Orleans, Louisiana. These wells are expected to come online by mid-year.After the ban was lifted and prior to these shipments, the only U.S. crude exported was light onshore oil. The first export of liquefied natural gas (LNG) left from Cheniere Energy’s Sabine Pass terminal in late February of this year. The fuel was sent to Brazil to be received by Brazilian state-owned Petrobras. At the IHS Energy CERAWeek conference in Houston, Cheniere President of Marketing Meg Gentle said she anticipates that by 2020 the domestic industry will sell nearly half of its volumes on a short-term basis.

U.S. Senate passes bill to bolster power grid, speed LNG exports (Reuters) - The U.S. Senate passed the first broad energy bill in nine years on Wednesday, legislation containing modest measures popular with both Republicans and Democrats to modernize the power grid and speed the permitting process for liquefied natural gas exports. The bill, which passed 85-12, attempts to protect the power grid from extreme weather events such as ice storms and hurricanes, and from cyber attacks. It also aims to spur innovations in storage of power from wind and solar energy. The House of Representatives passed a similar bill last year. The Energy Policy and Modernization Act would increase U.S. exports of liquefied natural gas (LNG), eventually helping to give European consumers alternatives to relying mainly on Russia for gas. After disagreements held the bill up for months, senators last week dropped measures from the bill to aid Flint, Michigan overcome a drinking water crisis, in which children have been exposed to dangerous levels of lead, and on offshore drilling. Lawmakers from both the House and Senate will next iron out differences over the bill. The Senate bill, for instance, requires the Department of Energy to issue a decision on LNG projects within 45 days of an environmental assessment, while the House bill directs the DOE to make the decision on permits after 30 days. Senator Maria Cantwell, a Democrat from Washington state who co-sponsored the bill, said shortly before it passed that she hoped the chambers would move quickly "so that we can realize the opportunity to help our businesses and consumers plan for the energy future."

Documents: How IOGCC Created Loophole Ushering in Frackquakes and Allowing Methane Leakage -- Earthquakes caused by injection of shale oil and gas production wastes — and methane leakage from shale gas pipelines — have proliferated in recent years, with both issues well-studied in the scientific literature and grabbing headlinesinnewspapers nationwide. Lesser-mentioned, though perhaps at the root of both problems, is a key exemption won by the Interstate Oil and Gas Compact (IOGCC) via a concerted lobbying effort in the 1980's. That is, classifying oil and gas wastes as something other than “hazardous” or “solid wastes” under Subtitles C and D of the Resource Conservation and Recovery Act (RCRA), thusexempting the industry from U.S. Environmental Protection Agency (EPA) enforcement.  The RCRA exemption has played a front-and-center role in two recent federal lawsuits on both of these issues — the frackquake case just started and the pipeline emissions one recently resulted in a favorable judgment for the industry. Those cases, Sierra Club v. Chesapeake Operating LLC, Et Al and Northern Illinois Gas Company (a Nicor subsidiary) v. City of Evanston, offer an opportunity for a history lesson. At the center of that history, a DeSmog investigation reveals, is theIOGCC. IOGCC, a recent InsideClimate News investigation demonstrated using documents obtained by DeSmog and GreenpeaceUSA, is a constitutionally-authorized interstate compact that more or less has served as a Congress-chartered industry lobbying node since signed into law way back in 1935.

Could a Democratic President End Fracking?: Love it or hate it, hydraulic fracturing, or fracking, has become central to the United States' energy portfolio. Fracking has unlocked vast domestic fossil fuel reserves over the past decade, and plenty of oil and gas still remains in the ground. Whether it stays there or not is the question now facing the politicians scrambling to curb climate disruption, and the debate over fracking has driven a wedge down the middle of the Democratic Party. The scope of fracking in the United States is staggering. Since 2005, the oil and gas industry has used high-volume fracking technology to pump 239 billion gallons of water laced with 23 billion pounds of toxic chemicals underground at 137,000 fracking wells across the country, according to a new report by Environment America. The fracking boom rapidly industrialized rural areas, damaging 679,000 acres of land and bringing controversy along with it. The US Geological Survey now estimates that 7 million people in six states are at risk of experiencing fracking-related earthquakes, and fracking has been linked to water contamination, air pollution and climate-warming methane emissions.  Polls show that more people in the United States now oppose fracking than support it, including many Democrats. Obama's decision to put a transition to clean energy on hold in favor of another fossil fuel set the stage for a fierce showdown between Hillary Clinton, who seems content to continue down Obama's path, and Bernie Sanders, who opposes fracking and the fossil fuel industry's powerful influence on politics.

Devon is latest energy company to sell assets to shore up finances - Devon Energy Corp. has agreed to sell northern Oklahoma oil and gas fields to White Star Petroleum for $200 million, the company said Wednesday. Devon is the latest energy company to sell assets to try to improve its balance sheets amid depressed oil prices. Earlier this month, Marathon Oil Corp. said it planned to sell $950 million worth of oil fields and other assets to focus on lower-risk U.S. resources, and other companies have announced similar moves.  The company aims to sell $2 billion to $3 billion in assets this year, Devon’s Chief Executive Dave Hager said in a statement. The deal “accelerates Devon’s efforts to focus exclusively on its best-in-class resource plays in onshore North America,” he said.Analysts at Citigroup said Devon may have sold its assets, which included parcels in Oklahoma’s Mississippi Lime oil formation, for cheap. The oil and gas area straddles northern Oklahoma and southern Kansas and has been one of the most adversely affected by lower oil prices, with several producers reducing or eliminating their presence there. The $200 million announced is “significantly below” Citi’s estimate that the assets would be worth $450 million, the analysts said. Management had expected the Mississippi Lime assets would be among the tougher to sell, they said.

Schlumberger Cut Another 2,000 Jobs in First Quarter as Profit Fell 49% - WSJ: Schlumberger Ltd. on Thursday said it laid off another 2,000 employees during the first quarter as it reported that earnings for the period dropped 49% on significantly lower sales. Since November 2014, when the oil bust started to take hold of the energy industry, Schlumberger has cut 36,000 jobs, or 28% of its workforce. The first three months of the year were some of the worst yet in this downturn, as oil company customers continued to slash their spending and drilling and other well work ground to a halt, the company said. Schlumberger, the largest oil-field services outfit in the world, booked a profit of just $501 million amid tumbling revenue as energy producers dialed back their orders for the company’s services drilling and fracking wells. “The decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis,” said Paal Kibsgaard, chief executive. Companies that sell oil-field services are considered a bellwether for the health of the oil and natural gas sector, and Schlumberger is the first big firm of the sort to report first-quarter results. Halliburton Co. and Baker Hughes Inc., competitors that have a pending merger deal, are set to report Monday and Wednesday, respectively.

It's A "Full-Scale Cash Crisis" In Oil Schlumberger CEO Admits --For the latest indication of how bad the recession in the US sector field is, we took a look at last night's Schlumberger results which were modestly better than expected, beating expectations of $0.37 by one cent, however as usual the non-GAAP adjusted bottom line did not tell the full story. The Company's net income plunged nearly 50%, to $501 million, or 40 cents a share, from $975 million, or 76 cents, a year earlier.  Profit fell in the first quarter as the company, which helps explorers find pockets of oil underground and drill for it, adjusts to shrinking margins in North America as customers scale back work. Customers are slashing spending by as much as 50 percent in the U.S. and Canada. "It’s a weak beat mainly because they guided estimates down," Rob Desai, an analyst at Edward Jones in St. Louis, who rates the shares a buy and owns none, said in a phone interview. "North America came in weaker than we expected."The world's No.1 oilfield services provider said its costs to do business in North America exceeded the revenue it earned there in the quarter, the first time it had negative margins in the region since oil prices started falling in mid-2014. "North America was the biggest surprise to the downside, with negative margins, which did not occur during 2008-2009 oil drop,"

Halliburton Fires One Third Of Global Staff: "What We Are Experiencing Today Is Far Beyond Headwinds" -- In a brutally frank and painfully honest first quarter operational update, Halliburton president Jeff Miller poured freezing cold water all over the "oil is stabilizing, and everything is going to be awesome" narrative. After explaining that the firm has laid off one-third of its global employees, and pointing to the collapse in sequential revenues across every business unit, Miller exclaimed: "What we are experiencing today is far beyond headwinds; it is unsustainable."  Due to the deadline of its merger agreement with Baker Hughes Halliburtion has delayed its earnings conference call until May 3rd and so gave an operational update. The healdlines were horrific:

  • *HAL SEES OVER 30% DROP IN YR GLOBAL DRILLING, COMPLETION SPEND
  • *HALLIBURTON CUT ABOUT 1/3 OF STAFF GLOBALLY
  • *HALLIBURTON CUT OVER 6,000 JOBS DURING 1Q
  • *HALLIBURTON SEES ADDITIONAL 50% DECLINE IN NORTH AMERICA SPEND '16

Dave Lesar, Chairman and CEO, began the dismal update... "Life has changed in the energy industry, especially in North America, and over the past several quarters we have taken the steps to adapt to that fact.  Operators globally are under immense pressure, and many of our North America customers are fighting to maintain some value for their shareholders. Our. Our customers have taken defensive actions to solidify their finances including significant reductions to headcount and capital spend. While these were necessary actions, it clearly will result in production declines in the back half of 2016. But even when operators feel better about the markets, they will still face issues of balance sheet repair and we believe they will be cautious in adding rigs back." And then President Jeff Miller unloaded... What we are experiencing today is far beyond headwinds; it is unsustainable. My definition of an unsustainable market is one where all service companies are losing money in North America, which is where we are now.

Seventy Seven Energy Plans to File for Bankruptcy - Oil-field services provider Seventy Seven Energy Inc. said Tuesday that it plans to file for Chapter 11 bankruptcy protection and that it has reached a restructuring agreement with many of its lenders, becoming the latest casualty of the energy-price downturn. Seventy Seven's planned bankruptcy is slated to convert debt into common shares of a new company. Seventy Seven Energy said operations will continue and that suppliers, contractors and employees will continue to be paid throughout the bankruptcy process. Seventy Seven said it has already reached an agreement with some of its lenders. Lenders of a $650 million 2019 note will receive 96.75% of the company's new common stock to be issued, pending a vote by other lenders. Holders of a $450 million 2022 note will vote on whether to accept 3.25% of the company's new common stock and warrants worth up to 15% of the new company's value. The company intends to start a prepackaged Chapter 11 proceeding on or before May 26.

Why Are Bankrupt Oil Companies Still Pumping?  -- A central tenet in the thesis by analysts about the oil markets rebalancing has been that as prices declined, oil companies would be forced into bankruptcy. That in turn would lead to declining production, and eventually a rebalancing of supply and demand in the market, followed by higher prices. That process is already taking longer than many expected, and it looks like more time is needed. That additional time to balance the market is being driven by an unexpected factor; bankrupt oil companies are still pumping.  Reuters cited Magnum Hunter as a primary example of this reality.  Nearly all of Magnum Hunter’s 3000 wells are still producing crude, and that makes sense for several reasons. First, daily costs for operating wells remain well below current spot prices. While drilling new wells is not economical, it is perfectly logical to keep exploiting existing wells. Fracked wells usually start to see a significant decline in production after about two years of operations. So eventually Magnum Hunter and other companies will see their production fall, but two years can be a very long time to pump. Second, creditors want to extract maximum value from the company and the best way to do that in the current environment is to keep the oil flowing. This oil can either be stored leading to a large risk free profit, or it can be sold on the spot market. Either way, Magnum Hunter and other bankrupt producers are acting in the best interests of their creditors by continuing to pump. Third, management at bankrupt producers also have little reason to do anything other than keep the crude flowing. In the current energy market, getting a job is very difficult, especially for top managers coming from a bankrupt producer. As a result, managers rationally want to make sure they stay useful in Chapter 11 and that means trying to convince creditors to keep the company operating rather than converting to a Chapter 7 liquidation. Not all O&G firms should be kept operating – some firms are better off being liquidated – but creditors often lack the necessary industry expertise to be able to distinguish between firms that have a future after emerging from Chapter 11, and those that don’t and are better off in a Chapter 7 sale.

Will the Upheaval in Fossil Fuel Industry Take the Rest of the Economy Down With It? - It’s not looking good for the global fossil fuel industry. Although the world remains heavily dependent on oil, coal and natural gas—which today supply around 80 percent of our primary energy needs—the industry is rapidly crumbling.This is not merely a temporary blip, but a symptom of a deeper, long-term process related to global capitalism’s escalating overconsumption of planetary resources and raw materials.New scientific research shows that the growing crisis of profitability facing fossil fuel industries is part of an inevitable period of transition to a post-carbon era.But ongoing denialism has led powerful vested interests to continue clinging blindly to their faith in fossil fuels, with increasingly devastating and unpredictable consequences for the environment.Bankruptcy EpidemicIn February, the financial services firm Deloitte predicted [3] that over 35 percent of independent oil companies worldwide are likely to declare bankruptcy, potentially followed by a further 30 percent next year—a total of 65 percent of oil firms around the world. Since early last year, already 50 North American oil and gas producers have filed bankruptcy.The cause of the crisis is the dramatic drop in oil prices—down by two-thirds since 2014—which are so low that oil companies are finding it difficult to generate enough revenue to cover the high costs of production, while also repaying their loans.Oil and gas companies most at risk are those with the largest debt burden. And that burden is huge—as much as $2.5 trillion [4], according to The Economist. The real figure is probably higher. At a speech at the London School of Economics in February, Jaime Caruana of the Bank for International Settlements said [5] that outstanding loans and bonds for the oil and gas industry had almost tripled between 2006 and 2014 to a total of $3 trillion. This massive debt burden, he explained, has put the industry in a double-bind: In order to service the debt, they are continuing to produce more oil for sale, but that only contributes to lower market prices. Decreased oil revenues means less capacity to repay the debt, thus increasing the likelihood of default.

Low oil prices don't cut into US production by much -  When a commodity costs more to produce than the current market price, producers usually stop producing it. But when it comes to U.S. crude, a global crash in prices hasn't been matched by deep cuts in production. The biggest impact so far has been felt on investment in new wells, as U.S. producers big and small have slashed capital spending and sidelined drilling rigs. As of this month, about 350 rigs were drilling for oil in the U.S. — about a quarter of the peak in October 2014.That pullback has brought economic pain to much of a U.S. oil industry that saw big gains in jobs and wages during a production surge that began in 2012. But while investment in new production has dried up, oil continues to flow from the wells that have already been drilled. Overall output has fallen by about 6 percent since peaking a year ago, but many producers have opted to keep on pumping, even as prices remain stuck at around $40 a barrel — less than half the peak of mid-2014.  In the past, when rising surpluses pushed crude prices lower, major producers like Saudi Arabia cut back output to tighten supplies, boosting prices. But as American and Canadian producers have expanded production, Middle East producers continued to pump, hoping the crash in prices would push higher-cost North American producers out of business.  With North American production holding up, that strategy backfired. Many oil-producing nations have pushed for an output freeze, but after meeting this weekend in the Qatari capital of Doha, 18 exporting nations, including non-OPEC member Russia, were unable to agree to a deal to stabilize output at January levels

Expected decrease in Lower 48 oil production is partially offset by rising GOM output - Today in Energy - U.S. (EIA) In response to continued low oil prices, onshore crude oil production in the Lower 48 states is expected to decline from an average of 7.41 million barrels per day (b/d) in 2015 to 6.46 million b/d in 2016 and to 5.76 million b/d in 2017. Increased production from the federal Gulf of Mexico (GOM) is not enough to offset those declines, with total projected U.S. production falling from 9.43 million b/d in 2015 to 8.04 million b/d in 2017. The sharp decline in oil prices since the fourth quarter of 2014 has had a significant effect on drilling in the United States. The number of active onshore drilling rigs in the Lower 48 states fell 78% (from 1,876 to 412) between the weeks ending on October 31, 2014, and April 15, 2016, according to data from BakerHughes. The decline in active rigs and well completions is projected to result in month-over-month onshore oil production declines of 120,000 b/d through September 2016.  In EIA's April Short-Term Energy Outlook (STEO), the 95% confidence interval for market expectations for prices in December 2017 is relatively wide, with upper and lower limits of $20 per barrel (b) and $100/b, respectively. EIA's April STEO forecasts Brent crude oil prices averaging $35/b in 2016 and $41/b in 2017, with the December 2017 price averaging $45/b. EIA projects that the number of operating rigs in the Lower 48 states will continue to decrease through mid-2016 before beginning to slowly increase. In contrast to the forecast of declining Lower 48 onshore production through 2017, federal Gulf of Mexico oil production is projected to increase from 1.54 million b/d in 2015 to 1.66 million b/d and to 1.82 million b/d in 2016 and 2017, respectively. Alaska's oil production is projected to slightly decrease from 0.48 million b/d in 2015 to 0.47 million b/d in 2016 and to 0.46 million b/d in 2017.

Total U.S. energy production increases for sixth consecutive year - Today in Energy - U.S. (EIA) Total U.S. energy production increased for the sixth consecutive year. According to data in EIA's most recent Monthly Energy Review, energy production reached a record 89 quadrillion British thermal units (Btu), equivalent to 91% of total U.S. energy consumption. Liquid fuels production drove the increase, with an 8% increase for crude oil and a 9% increase for natural gas plant liquids. Natural gas production also increased 5%. These gains more than offset a 10% decline in coal production. The United States saw little change in production from nuclear electric power and renewable energy (across all sectors) in 2015. However, the United States saw shifts in the sources of electricity generation from renewable fuels, as declines in hydroelectric generation were mostly offset by increases in electricity genertation from wind and solar.  Other highlights for electricity generation in 2015 include:

  • Net imports continued to decline. U.S. primary energy net imports declined for the 10th consecutive year. Imports rose 2%, but that increase was outpaced by a 6% increase in exports. Petroleum products accounted for 71% of U.S. primary energy exports.
  • Coal led the decrease in consumption. Primary energy consumption declined 1% between 2014 and 2015. Coal consumption fell 13% over the same period. The decrease was mostly offset by a 3% increase in natural gas consumption and a 1% increase in petroleum consumption.
  • Carbon dioxide emissions fell. After increasing in 2013 and 2014, U.S. carbon dioxide emissions from energy consumption fell by 2% in 2015. An increase in natural gas used for power generation, largely replacing coal, was the primary reason for this decrease, as natural gas is less carbon-intensive than coal.

US shale production will shape the future of global commodity markets (video) During my time at Platts, I've seen the US shale revolution gain ground and then dominate much of the conversation around energy in America. Its growth was so rapid and production so prolific that it drew attention around the world, and US shale is again changing as the world's markets seek a new balance. From crude oil to refined petroleum products, from natural gas to LNG and NGLs, from feedstocks to petrochemical products, US shale made a huge impact on many sectors. In this Snapshot video, I share how shale's products are spreading into markets around the world, and where future demand may lie.

Oil majors show interest in Mexico's offshore auction: Mexico’s forthcoming auction of offshore oil and gas fields is drawing significant interest, according to a report by Fuel Fix. So far, 21 companies have asked to review data on fields within Mexico’s territorial waters in the Gulf of Mexico. Major oil companies, such as ExxonMobil, BP, and Chevron, have expressed interest in the available fields. The country will auction 10 blocks of hydrocarbon resources in December. “Deepwater is the big prize,” Pablo Medina, an analyst at Wood Mackenzie said. Four blocks sit on the maritime border with the United States in the Perdido Fold Belt. Several oil majors have explored this area and produced dozens of commercially successful wells. The other sites are located in the Salina Basin along the southern rim edge of the Gulf of Mexico. The sale is a part of Mexico’s historic privatization of its energy sector. For the first time in 75 years, Mexico will open its deepwater reserves to private companies. Previously, state-owned petroleum giant Pemex dominated Mexico’s energy sector. Shallow water and onshore blocks have already been auctioned off to private drillers. Mexico’s energy ministry awards license contracts. The country’s energy reform began in 2013, effectively ending the decades-long monopoly of Pemex.

Hundreds Evacuated After Massive Explosion Rocks Pemex Oil Facility In Mexico -- Hundreds have been evacuated following a blast at a Pemex oil facility in southern Mexico. The blast occurred in in the port city of Coatzacoalcos. According to Bloomberg, the explosion occurred at Clorados 3 petrochemicals unit of Pajaritos complex in the port of Coatzacoalcos in Veracruz state, says co. spokesperson Alfonso Villalobos on phone.  First responders are attending the emergency, according to tweet from Veracruz civil protection official twitter account. As Breaking News adds, the explosion happened just before 4 p.m. CT on Wednesday at the Pajaritos complex near the Coatzacoalcos River, according to the Civil Protection agency in Veracruz. It said emergency services were at the scene.  Photos from the scene showed huge plumes of black smoke rising from the site, but details about the exact circumstances of the incident were not immediately known. Pemex reported that at least 3 workers had been injured. The cause of the blast is unknown at this time.

24 dead in Mexico petrochemical plant blast, 8 still missing -  (AP) — The death toll from an explosion that ripped through a petrochemical plant on Mexico’s southern Gulf coast is now 24, state oil company Petroleos Mexicanos reported. Pemex raised the toll late Thursday from the 13 fatalities previously known and said eight workers remained missing. It also said 19 people remained hospitalized, with 13 of them in serious condition. In a statement, the company said 12 of the bodies had been identified and eight of them delivered to family members. Earlier in the day, President Enrique Pena Nieto toured the facility in the industrial port city of Coatzacoalcos and met with relatives desperate for word on the fate of loved ones still unaccounted for. “I understand the anxiety, the worry, the anguish you are going through,” Pena Nieto said, assuring them that both Pemex and the Mexichem company, which co-operated the plant, would fulfill their responsibilities and compensate those hurt by the accident. About 30 families gathered at a plant entrance road, where a sharp chemical smell still hung in the air about 2 kilometers (a mile) from where the explosion occurred Wednesday afternoon. Many wore facemasks to ward off the pungent odor. Shoving broke out as people unsuccessfully tried to force their way into the installation. Some shouted at marines and soldiers who were called in to guard the facility, and they threw rocks at a white government SUV when it arrived at the scene.

British shale oil may be ready to boom : (UPI) -- The so-called Gatwick Gusher, a shale basin in the United Kingdom, could add as much as $74 billion to the nation's economy, a study finds. U.K. Oil & Gas Investments commissioned Ernst & Young to examine the future potential of oil production from the Weald shale basin. "Assuming it can be extracted from a development site at the volumes projected by U.K. Oil & Gas, has the potential to generate significant economic value to the U.K. economy," the report read. Oil & Gas U.K., the industry's lobbying group, said the North Sea oil sector is in for a long period of decline, with less than $1.4 billion in new spending expected in 2016. Inland shale, meanwhile, has the potential to add between $10 billion and $74.6 billion to the British economy in gross value, the commissioned report said. Operators are working to assess the potential in the shale area by testing the Horse Hill-1 oil discovery. Preliminary estimates made by the company last year put the entire Horse Hill reserve total as high as 100 billion barrels of oil. If its full potential is reached, the future production from the area could provide as much as a quarter of the nation's total oil demand over its lifespan, based on 2014 demand levels.

Warnings on the health effects of fracking - West Sussex Gazette: A meeting on health and fracking was held by health professionals’ charity Medact and Frack Free Sussex at Clair Hall, Haywards Heath, on Saturday.  Dr Tim Thornton, a retired GP, came down from Ryedale in North Yorkshire. He spoke of the weight of peer-reviewed science gradually accumulating about the health dangers of unconventional oil and gas exploration. Areas where fracking is taking place in the USA can experience a 27% increase in hospital admissions, he said. Would Sussex hospitals cope with this increase in admissions if fracking came to this area, he asked? He spoke of ‘sacrifice zones’ around well sites, where air pollution would be a serious issue as well as potential water pollution, and he addressed the difficulty if not impossibility of adequately treating the highly toxic fluids that flow back from a fracked well. Children, he said, were particularly at risk, along with the unborn. Over 80% of the scientific papers published on fracking have come out in the last two years, he said, and over 80% of those identified health harms. Problems in children included rashes, nausea, headaches, nosebleeds, wheezing and neurological problems, and in adults increased risk of heart attack and stroke. Workers have also been shown to be at risk. Silicosis, a progressive and incurable scarring of the lungs, is one of the hazards because of breathing in the particular rare kind of sand used to ‘prop open’ the new underground fractures. ‘Don’t put your son on a frack pad, Mrs Worthington!’ he advised.

EU dropped climate policies after BP threat of oil industry 'exodus' -- The EU abandoned or weakened key proposals for new environmental protections after receiving a letter from a top BP executive which warned of an exodus of the oil industry from Europe if the proposals went ahead. In the 10-page letter, the company predicted in 2013 that a mass industry flight would result if laws to regulate tar sands, cut power plant pollution and accelerate the uptake of renewable energy were passed, because of the extra costs and red tape they allegedly entailed. The measures “threaten to drive energy-intensive industries, such as refining and petrochemicals, to relocate outside the EU with a correspondingly detrimental impact on security of supply, jobs [and] growth,” said the letter, which was obtained by the Guardian under access to documents laws. The missive to the EU’s energy commissioner, G√ľnther Oettinger, was dated 9 August 2013, partly hand-written, and signed by a senior BP representative whose name has been redacted. It references a series of “interactions” between the two men – and between BP and an unnamed third party in Washington DC – and welcomes opportunities to further discuss energy issues in an “informal manner”. BP’s warning of a fossil fuel pull-out from Europe was repeated three times in the letter, most stridently over plans to mandate new pollution cuts and clean technologies, under the industrial emissions directive. This reform “has the potential to have a massively adverse economic impact on the costs and competitiveness of European refining and petrochemical industries, and trigger a further exodus outside the EU,” the letter said.

Fracking fears in WA 'food basket' Dandaragan - ABC News --  Farmers in the fertile farmlands of Dandaragan in Western Australia's Mid West are taking on the unconventional gas industry, saying the area should be out of bounds to frackers. The area has been earmarked as a possible agriculture hotspot under the WA Government's $40 million Water for Food program. However it is also covered by a gas exploration permit held by Perth-based company Transerv Energy. Farmer Ian Minty, 77, has argued the two land uses were not compatible. "It's not a big proportion of the state that's arable and good farming land," Mr Minty said. "To consider putting that at risk just to get quick bucks, I just think it's totally ridiculous." Mr Minty and his neighbour, potato farmer Mick Fox, have both refused to give Transerv Energy access to carry out an environmental survey, despite the company saying it had no plans to use the controversial gas extraction technique known as fracking.Their fears come as John Fenton, a farmer from Wyoming in the US, who is touring WA farming communities on behalf of the anti-fracking group, Lock the Gate Alliance. Mr Fenton said he had 24 tight wells on his farm in Pavillion, Wyoming. "We can no longer use our bore water, our groundwater has been contaminated, we now have to ventilate our home anytime we take a shower to prevent the build up of methane in our home," Mr Fenton told 720 ABC Perth. "We've suffered health impacts. My wife has lost her sense of smell, her sense of taste."

Watch: River Explodes Into Flames From Methane Coming From Nearby Fracking Sites -- So much methane gas is now bubbling up through the Condamine River in Queensland, Australia that it exploded with fire and held a large flame. Gas seeping into the river began shortly after coal seam gas operations started nearby and is growing in volume and the stretch of river affected is expanding in length. Greens MP Jeremy Buckingham travelled to Chinchilla in South Western Queensland to investigate the impact of the coal seam gas industry on the environment as part of the Greens’ campaign to ban fracking and unconventional gas in Australia.“I was shocked by the force of the explosion when I tested whether gas boiling through the Condamine River, Qld was flammable,” Buckingham said. “So much gas is bubbling through the river that it held a huge flame for over an hour.” Watch here:  Methane was first discovered bubbling through the Condamine River near Chinchilla in 2012 where coal seam gas wells had been drilled by Origin Energy nearby. There are hundreds of wells in the immediate area, with three companies—Origin Energy, QGC and Arrow Energy—all operating coal seam gas fields nearby. Locals say the river has never bubbled like this historically. Government investigations found (page 19) that the source of the gas was “consistent with gas originating from Surat Basin geological formations.” The concern is that depressurising the coal seams for gas extraction has caused methane gas to flow up other cracks, fissures, bores, to the surface—such as through the Condamine River. This is directly polluting the river and the air, but also methane is a potent greenhouse gas and these fugitive emissions are a major concern. Not only is the gas bubbling becoming more intense recently, but it is spreading to a greater length of the river. Origin Energy, which operates wells in close proximity to the gas seep, has installed some monitoring pipework, and the Queensland government has put stakes on the river bank to mark each visible seep.

What Everyone Is Missing In The Oil Supply/Demand Conundrum -- Gail Tverberg -- Oil production can be confusing because there are various “pieces” that may or may not be included. In this analysis, I look at oil production of the United States broadly (including crude oil, natural gas plant liquids, and biofuels), because this is the way oil consumption is defined. I also provide some thoughts regarding the direction of future world oil prices. US oil production clearly flattened out in 2015. If we look at changes relative to the same month, one-year prior, we see that as of December 2014, growth was very high, increasing by 18.0% relative to the prior year.  By December 2015, growth over the prior year finally turned slightly negative, with production for the month down 0.2% relative to one year prior. It should be noted that in the above charts, amounts are on an “energy produced” or “British Thermal Units” (Btu) basis. Using this approach, ethanol and natural gas liquids get less credit than they would using a barrels-per-day approach. This reflects the fact that these products are less energy-dense. Figure 3 shows the trend in month-by-month production. The high month for production was April 2015, and production has been down since then. The production of natural gas liquids and biofuels has tended to continue to rise, partially offsetting the fall in crude oil production. Production amounts for recent months include estimates, and actual amounts may differ from these estimates. As a result, updated EIA data may eventually show a somewhat different pattern.Taking a longer view of US liquids production, this is what we see for the three categories separately: Growth in US liquid fuel production slowed in 2015. The increase in liquid fuels production in 2015 amounted to 1.96 quadrillion Btus (“quads”), or about 59% as much as the increase in production in 2014 of 3.34 quads. On a barrels-per-day (bpd) basis, this would equate to roughly a 1.0 million bpd increase in 2015, compared to a 1.68 million bpd increase in 2014. The data in Figure 4 indicates that with all categories included, 2015 liquids exceeded the 1970 peak by 16%. Considering crude oil alone, 2015 production amounted to 98% of the 1970 peak. Figure 5 shows an approximate breakdown of crude oil production since 1945 on a bpd basis.The big spike in production is from tight oil, which is another name for oil from shale.

Draft Doha agreement would freeze oil output until October: A meeting between OPEC and non-OPEC oil producers on an agreement to freeze output ran into last-minute trouble in Qatar on Sunday due to what looked like a new spike in tensions between Saudi Arabia and Iran, sources told Reuters. Oil ministers met with the Qatari emir, Sheikh Tamim bin Hamad al-Thani - who was instrumental in promoting output stability in recent months - in an attempt to rescue the deal designed to bolster the flagging price of crude. According to two sources, Saudi Arabia said it wanted all OPEC members to participate in the talks, despite insisting earlier on excluding its regional arch-rival Iran because Tehran had refused to freeze production. "The Saudis changed everything early this morning," an OPEC source said. "They want all OPEC members to join first." Failure to reach a global deal - the first in 15 years between OPEC and non-OPEC nations - would signal the resumption of a battle for market share between key producers and likely halt a recent recovery in prices. Brent oil has risen to nearly $45 a barrel, up 60 percent from January lows, on optimism that a deal would help ease the supply glut that has seen prices sink from levels as high as $115 hit in mid-2014. Saudi Arabia has taken a tough stance on Iran, the only major OPEC producer to have refused to participate in the freeze. Tehran says it needs to regain market share after the lifting of international sanctions against it in January. Deputy Crown Prince Mohammed bin Salman told Bloomberg that the kingdom would restrain its output only if all other major producers, including Iran, agreed to freeze production.

Doha Oil-Freeze Talks Delayed to Address Saudi-Iran Differences - Talks in Doha between some of the world’s biggest oil producers on freezing production have been delayed until later Sunday amid changes to the wording of the agreement, in part to address differences between Saudi Arabia and Iran. “The general agreement is in place,” . “Now there is some disagreement on the wording and maybe this afternoon we are going to finish,” he said, adding that details on the monitoring of the agreement and a follow-up meeting were also to be finalized. Sixteen nations representing about half the world’s oil output have gathered in the Qatari capital in a bid to stabilize the global market. On April 14, Saudi Arabia’s Deputy Crown Prince said the nation wouldn’t agree to restrain its production unless other producers, including Iran, agree to freeze. Iran, which isn’t attending the meeting, has ruled out joining the accord for now. Crude oil has rallied since the freeze was first mooted in February. If the group were to fail to reach an agreement it would lead to a “severe” drop in prices, Citigroup Inc. predicted before the meeting.  . “Discussions are at a very high level between the Saudis, Russians and Gulf countries,” over Iran’s output, said Pastor. The Persian nation is restoring exports after sanctions over its nuclear program were lifted in January. It plans to boost output to 4 million barrels a day in the Iranian year through March 2017, Oil Minister Bijan Namdar Zanganeh said April 6. That would be an increase of about 800,000 barrels a day from March production. Iran’s crude shipments have risen by more than 600,000 barrels a day this month, according to shipping data compiled by Bloomberg.

Oil freeze deal faces trouble as Saudi-Iran tensions spike | Reuters: A spike in tensions between arch-rivals Saudi Arabia and Iran appeared on Sunday to ruin prospects of the first binding oil output deal in 15 years between OPEC and non-OPEC nations, and looked set to prompt another fall in the price of crude. Some 18 OPEC and non-OPEC oil producers, including Russia, had been meant to meet in the Qatari capital of Doha on Sunday morning and quickly rubber-stamp a deal to freeze output at January levels until October 2016. But the meeting was postponed after OPEC's de facto leader Saudi Arabia told participants it wanted all OPEC members to take part in the freeze, according to OPEC sources. Riyadh had earlier insisted on excluding Iran from the talks because Tehran had refused to freeze production, seeking to regain market share after the lifting of Western sanctions against it in January. With the deal running into trouble, oil ministers in Doha met with the Qatari emir, Sheikh Tamim bin Hamad al-Thani - who was instrumental in promoting output stability in recent months. But a new draft seen by sources thereafter contained none of the binding points of the previous outline. Ministers are due to start talks at around 1200-1230 GMT (8:00-8:30 am EDT), according to sources. "I am not sure you can call it a freeze," one OPEC source said. A senior oil industry source said: "The problem now is to come up with something that excludes Iran, makes the Saudis happy and doesn't upset Russia." Failure to reach a global deal would signal the resumption of a battle for market share between key producers and likely halt a recent recovery in prices.

Saudi Insistence on Iranian Input Casts Doubt on Oil Deal - Oil producers that supply nearly half of the world’s output started a day of negotiations over a possible freeze with what participants described as a draft deal. But Sunday’s meeting quickly turned to sniping and confusion after Saudi Arabia’s delegation appeared to step back from any agreement without rival Iran.  Ahead of the meeting, delegates circulated a draft accord that calls for freezing output at January levels until October 1, 2016, to gauge its effect on prices. The freeze, first suggested in February by big producers like Saudi Arabia and Russia, is intended to limit global supply and bolster prices. It seems to be playing out pretty much as expected: sniping among the tribes. And confusion.  The draft, reviewed by The Wall Street Journal, calls for a monitoring committee comprising members of the Organization of the Petroleum Exporting Countries and other countries that would be charged with ensuring compliance among signatories.  Ryadh has publicly signaled it won’t consider a freeze without Iran. Saudi Crown Prince Mohammed bin Salman, the country’s top economic official, repeated that view over the weekend, in an interview by Bloomberg published Saturday. That tone contrasted with the kingdom’s delegation here, led by longtime Saudi Oil Minister Ali al-Naimi. He landed in Doha Saturday and has declined to comment ahead of the meeting.  But people familiar with the Saudi delegation’s thinking said Riyadh was willing to sign a deal despite what they described as “political” statements from Prince Salman.

"I Am Not Sure You Can Call It A Freeze" - OPEC Deal In Jeopardy As Saudi-Iran Tensions Spike: All The Latest -- Following last night's leaked draft Doha document, which envisions a non-binding, "gentleman-like" oil freeze agreement, that caps production at January levels until October, with zero enforcement or oversight, moments ago the formal Doha talks started: However, even before the start, things did not look good, when Saudi Arabia delayed the start of the meeting in what seemed to be a redrafting to account for the inclusion of Iran as part of the freeze, something which Iran has clearly said it won't do. Doha oil meeting delayed after Saudis request changes Furthermore, we already know what the next strawman: yet another meeting which will keep the headline scanning algos busy

  • OIL PRODUCERS SAID TO PLAN NEXT FREEZE MEETING IN RUSSIA OCT.20

Or as one commentator put it, "more meetings, more jawboning.It's OPEC's OMT program. Freeze won't happen,but they hope pretending it will, will do the trick" which is exactly the point. So where are we now? According to Reuters things are not as "optimistic" as Ecuador, Venezuela and many of the other high-cost, and quite desperate, OPEC producers had hoped ahead of the meeting. According to the wire service, "a spike in tensions between arch-rivals Saudi Arabia and Iran appeared on Sunday to ruin prospects of the first binding oil output deal in 15 years between OPEC and non-OPEC nations, and looked set to prompt another fall in the price of crude."But the meeting was postponed after OPEC's de facto leader Saudi Arabia told participants it wanted all OPEC members to take part in the freeze, according to OPEC sources.Riyadh had earlier insisted on excluding Iran from the talks because Tehran had refused to freeze production, seeking to regain market share after the lifting of Western sanctions against it in January.With the deal running into trouble, oil ministers in Doha met with the Qatari emir, Sheikh Tamim bin Hamad al-Thani - who was instrumental in promoting output stability in recent months.But a new draft seen by sources thereafter contained none of the binding points of the previous outline. Ministers are due to start talks at around 1200-1230 GMT, according to sources. "I am not sure you can call it a freeze," one OPEC source said. 

Oil meeting in Qatar collapses without freeze as Iran absent (AP) — A meeting of oil-rich countries in Qatar that had been expected to boost crude prices by freezing production fell apart Sunday as Iran stayed home and vowed to increase its output despite threats by Saudi Arabia. Oil prices, which hit a 12-year low in January by dipping under $30 a barrel, had risen above $40 in recent days, buoyed by the bullish talks surrounding the Doha summit. But instead of a quick approval of a production freeze, the meeting of 18 oil-producing nations saw hours of debate and resembled the dysfunction of an unsuccessful meeting of the Organization of the Petroleum Exporting Countries in December that sent oil prices tumbling. The fact that producers couldn’t agree to a freeze, let alone a production cut, likely means oil prices will drop again as markets open Monday. “Prices will trade lower. Maybe sharply lower,” said Robert Yawger, director of energy futures at Mizuho Securities USA, noting the failure to reach agreement in Doha. He noted that other factors were negatively impacting prices: U.S. crude oil storage remaining at all -time highs, Iran increasing production, and Libya looming on the horizon to boost output.

Saudi Arabia is the OPEC Villain (Video) - Saudi Arabia really should negotiate a Production Freeze agreement where Iran can get back to producing 4 Million Barrels per day. Russia and Saudi Arabia both need to start cutting Oil Production and not just freezing oil production at all time production highs. They should be following what the Shale Industry is doing with regard to production cuts in the United States. It is unreasonable to expect Iran after 20 years of sanctions not to be able to ramp up some production as Saudi Arabia (A fellow OPEC Member) has gained much oil market share at Iran`s expense over the last 20 plus years of international sanctions.

Goldman On Doha: "Bearish For Prices ", Expect "High Price Volatility"; Saudi Oil Production May Jump --  The one piece in the below report that is not pure "duh" (or rather "D'oh") is Goldman's warning that "we view risks to our Saudi forecast as skewed to the upside" - if indeed the warning by the Saudi deputy crown prince Mohammed bin Salman is a hint of what's coming, and Saudi Arabia does boost oil production by 1MM barrels overnight as bin Salman casually hinted earlier in a Bloomberg interview, then watch out below. Here is Goldman's take: OPEC and several non-OPEC producers failed to reach an agreement to freeze production in Doha today, Sunday April 17. Participants commented on requiring more time to reach a dealalthough the key stumbling block appears to be the requirement by Saudi Arabia that Iran participates. Saudi’s stance is consistent with comments by deputy crown prince Mohammed bin Salman during two interviews with Bloomberg this month (April 1 and Thursday April 13) and goes against Iran’s long held goal to quickly increase production to recover market share. On its own, we view this outcome as bearish for oil prices given consensus expectations for a “soft guidance” freeze at January production levels. But this lack of an agreement does not imply that OPEC production will recover in the short-term, as the year-to-date stabilization owes to ongoing disruptions and maintenance rather than coordination. It is further of no impact to our forecasts as year-to-date production of OPEC (ex. Iran) and Russia have remained close to our 2016 average annual forecast of 40.5 mb/d.

Oil price falls after Doha summit of OPEC, other producers ends without output freeze deal:.Oil prices tumbled more than 5 percent, after the world's largest oil-producing countries failed to strike a deal to freeze output. During Asian hours on Monday, U.S. crude futures fell 5.72 percent at $38.05 a barrel, while global benchmark Brent was down 5.22 percent at $40.85.  Energy stocks in the region tumbled, with shares of Santos falling 6.95 percent, Oil Search down 5.08 percent and Woodside Petroleum easing by 2.64 percent. Japan's Inpex tumbled 7.39 percent while Japan Petroleum fell 6 percent.  A deal between nearly 20 of the world's largest oil exporters, including Saudi Arabia and non-OPEC member Russia, had been hoped to formalize an output freeze at January levels. In February, Russia, Saudi Arabia, Qatar and Venezuela agreed to freeze output if other producers would join them. Optimism of an agreement was hit early after Iran made a last minute decision not to attend, and OPEC's defacto leader Saudi Arabia vowed not to freeze production unless other major producers did the same. Angus Nicholson, a market analyst at IG, pointed to the geo-political dynamic in the Middle East as a contributing factor for the failure to agree to a deal. Nicholson said the Saudis will have little inclination to "freeze their own production and make way for newly sanctions-free Iran to increase their market share," given the proxy wars the two countries are fighting in Yemen and Syria-Iraq. Iran has consistently maintained that it would not consider freezing or reducing production level until it regained its market share, following the lifting of the international sanctions in January.

Oil Prices Fall After Producers Fail to Reach Deal at Doha - WSJ: Oil prices opened sharply lower in Asian trading hours on Monday after major oil producers ended their meeting in Doha, Qatar, over the weekend without reaching an agreement to cap production. Hopes for a deal among major producers, including several from the Organization of the Petroleum Exporting Countries and Russia, were a main driver in a rally that lifted U.S. crude prices more than 50% from their February lows. U.S. crude settled at $41.50 a barrel on Friday. Now, much of those gains could be eroded in a market that has already endured a turbulent year, analysts say. U.S. crude plunged 6.7% at $37.70 a barrel and Brent was down 6.9% at $40.14 a barrel in early Asian trading. “This is an extremely bearish scenario,” said Abhishek Deshpande, oil analyst at Natixis. “Prices could touch $30 a barrel within days.” Steep falls in crude could also weigh on equity markets more generally. Stocks have often moved alongside oil this year. Bank shares, for instance, many of which have large energy portfolios, have been pressured by the declines in oil.

Saudi Arabia says it can flood the oil market with over 1 million extra barrels right away - Saudi Arabia says it can flood the market with a lot more oil. Immediately. Deputy Crown Price Mohammed bin Salman said The Kingdom could increase output to 11.5 million barrels a day right away, and up to 12.5 million within six to nine months "if we wanted to." "I don’t suggest that we should produce more, but we can produce more,” he said. “We can produce 20 million barrels of oil per day if we invested in production capacity, but we can’t produce beyond 20 million," he added. Data compiled by Bloomberg indicates the Saudis produced about 10.2 million barrels a day in March.  Mohammed bin Salman's comments come ahead of Sunday's meeting among oil producers in Doha, Qatar to discuss a potential production freeze. It is not clear to what extent his comments reflect the thinking of the Saudi leadership and king, but they could raise tensions ahead of the meeting after several weeks of mostly conciliatory statements from market players.  Notably, most analysts aren't getting their hopes up ahead of the talks — especially since the Saudis keep reiterating that they won't cut production unless others (read: Iran) do, too. However, Iran isn't even going to the meeting. "As it stands now, we believe that the most likely outcome is that producers fail to close the deal and announce a freeze on Sunday, but that they instead pledge to continue to conversation and even possibly put an additional OPEC/non-OPEC meeting on the calendar for later in the year," Helima Croft, the head of commodities research at RBC Capital Markets, wrote in a note to clients on Thursday. "Saudi Arabia and Iran do not appear ready to give sufficient ground to get a comprehensive freeze agreement done by Sunday, given current information," she explained.

The Day After Doha -- April 18, 2016  -- It's my understanding that Kuwait did not support a freeze. The Kuwaiti government has financial challenges of its own -- due to low price of oil -- and are cutting back on oil workers' pay/benefits. Those workers go on strike, threatening to take a million bopd off the global export market. ABC News is reporting: Oil workers in Kuwait went on strike Sunday to protest proposed government cutbacks as the OPEC nation grapples with a prolonged slump in crude prices. Thousands of workers gathered for demonstrations at the start of the local workweek in the town of Ahmadi, where the state-run Kuwait Oil Co. has its headquarters, some 40 kilometers (25 miles) south of Kuwait City. Protesters held signs reading "Stop meddling with the rights of the oil sector workers!" and "We will not allow you to take away our rights," witnesses said.   Oil worker unions approved the strike last week after failing to reach common ground with Kuwait's Oil Ministry. Kuwait produces, in round numbers, 3 million bopd crude oil and exports 2 million bopd. In round numbers, about 250,000 bopd of Kuwait crude oil ends up in the US

Volatility Returns to Oil Market After OPEC Deal Fails - It’s back to Square 1 for the oil markets.The failure of major producers to agree on an output freeze at a highly anticipated meeting in Doha, Qatar, this weekend underscored the still long and painful road to stabilize energy markets.The news pushed down oil prices as traders were caught flat-footed by the lack of agreement. The markets had assumed that a deal was close when energy ministers from members of the Organization of Petroleum Exporting Countries as well as Russia met on Sunday.But the last-minute absence of Iran, one of the OPEC’s biggest producers, helped scuttle any deal after Saudi Arabia insisted that the entire group participate in an agreement. Eager to increase oil output to its pre-sanction levels, Iran had ruled out a production freeze and on the eve of the meeting decided not attend the Doha gathering.While the Doha meeting might have helped set the stage for a smooth recovery in energy markets, the road ahead promises to be much more bumpy, given the glut of oil in the system. Energy analysts now expect oil markets to take longer to rebalance, as production ebbs more slowly and demand growth eventually catches up.AdvertisementContinue reading the main story Without a deal, uncertainty weighed on the markets on Monday.Crude oil futures in New York fell 1.4 percent to $39.78 a barrel. In London, Brent crude futures fell almost 7 percent in early trading but recovered most of their losses by the end of the day. Monday’s declines were limited because of an oil workers’ strike in Kuwait that significantly crimped production there.“The weekend headlines will further support the already high level of price volatility,” analysts with Goldman Sachs wrote in a report on Monday.

U.S. oil investors rush for protection at $35 as Doha talks collapse | Reuters: U.S. crude oil investors piled on bearish option bets on Monday, fearing prices may retest 12-year lows as futures prices sank almost 7 percent after talks by major exporters collapsed without agreement, erasing hopes the worldwide glut in oil would be eased. Open interest in the June puts that allow the holder to sell at $35 per barrel hit a record high above 36,000, up 8 percent from Thursday and more than double levels seen in January. Turnover in the contract, the most liquid on the massive U.S. options market, was high, too, with more than 10,000 lots traded by early afternoon, equivalent of 10 million barrels of oil worth about $370 million, as prices sank to as low as $37.61 per barrel. "Whether it's a speculator or a hedger looking to put a floor in place, the $35 strike price makes sense," said John Saucer, vice president of research and analysis at Houston-based Mobius Risk Group. "Given the fact that prices fell as low as $26.05, for people who think those lows might be retested, this gives them a little more wiggle room."

Saudi Arabia targets high-cost oil production:   As oil producing countries meeting in Doha debate the possibility of limiting oil production, the fate of independent oil producers lies in the hands of some countries that have been longtime adversaries of the United States, and we are learning that some of our "friends" may not be as friendly as once thought.  News emerged recently that a report regarding the Sept. 11 terrorist attack included 28-pages that were classified and have not been released to the public. Most of the airline hijackers came from Saudi Arabia; questions have been raised about the financing of the hijackers and what, if any, role the Saudi government played in the attack. Saudi Arabia, the world's largest oil exporter, led a charge within OPEC to not reduce oil production in 2014. As a matter of fact, Saudi Arabia's oil minister publicly said that they expected oil prices would continue to decline, and they hoped to drive the "high-cost" producer out of business. The U.S. became the largest oil producer in 2015, and since 2008, oil production in the U.S. has increased dramatically because of technological improvements in drilling horizontally and hydraulic fracturing shale. Oil production in the U.S. increased from roughly 4 million barrels per day to more than 9 million barrels per day. All of the new oil created a huge oversupply in the U.S. and throughout the world. Since U.S. oil production peaked at 9.9 million barrels per day in March 2015, production has declined roughly 500,000 barrels per day to 9.4 million barrels per day in January, the most current figures quoted by the Energy Information Administration. Some of the decline has come from a drop in shale production, and some of the drop has come from low producing wells, called stripper wells. In most cases, stripper wells are the highest of the high-cost wells, because they produce less than 15 barrels of oil per day and they are marginal economically.

Saudi's Other Warning Makes Oil Traders Sweat After Doha Failure (BBG) After his comments thwarted supply negotiations in Doha, oil traders are weighing another implied warning from the Saudi deputy crown prince: the threat of an intensifying clash with Iran over market share. It was Mohammed Bin Salman’s repeated assertions that the kingdom wouldn’t join an output freeze without Iran that derailed talks between 16 producing countries on April 17. In interviews with Bloomberg News, the prince cautioned that if other producers increased output, Saudi Arabia could respond in kind. Iran is restoring exports after international sanctions over its nuclear program were lifted in January. Oil prices dropped on Monday after Saudi Arabia resolved that an oil-supply freeze was possible only with the support of all OPEC members, including Iran, causing talks in the Qatari capital to unravel. Tensions between the two regional antagonists have flared as they take opposite sides in bloody conflicts in Yemen and Syria. In an interview published on April 1, Prince Mohammed said that while Saudi Arabia was ready to cap output in concert with other countries, "if there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door.” The world’s largest oil exporter could increase output by more than 1 million barrels a day, or about 10 percent, to 11.5 million if there was demand for it, the prince, chairman of the Supreme Council of Saudi Arabian Oil Co., said on April 14. It could increase further to 12.5 million in six to nine months, he added. The country pumped 10.2 million a day last month, according to data compiled by Bloomberg. “This just shows how central the tensions and the rivalry in the region between Iran and Saudi Arabia are,” Dan Yergin, vice chairman at IHS Inc., said in a Bloomberg Television interview. “There’s zero trust between these two countries right now.”

The unpredictable new voice of Saudi oil -- As the fallout from collapsed oil talks in Doha reverberates, Saudi Arabia’s Mohammed bin Salman has emerged as the unpredictable new voice of the kingdom’s energy policy.The 30-year-old deputy crown prince and favoured son of King Salman was not even in the Qatari capital, where many of the world’s biggest oil producers had gathered in hopes of brokering the first global output deal in 15 years in an effort to arrest a prolonged price slide. Still, his message echoed through the marble halls of the Sheraton: there would be no production freeze without Iran.Around 3am on Sunday morning — just hours before the talks were due to begin — Prince Mohammed called the Saudi delegation, according to people briefed on the matter, and ordered them to come home. The Saudis ultimately remained, but the talks were effectively dead.The episode has left Ali al Naimi, the kingdom’s technocratic oil minister for the past 21 years, looking increasingly sidelined. While the Saudi royal family has always had the final say on oil policy, rarely has a member spoken so publicly — or freely — on its direction. Delegates from other countries had been assured Mr Naimi was there to deliver a deal.“Saudi Arabia’s oil policy is now firmly in the hands of Deputy Crown Prince Mohammed bin Salman,” said Sean Evers, managing partner of Gulf Intelligence in Doha. On Monday, Venezuela’s oil minister Eulogio del Pino said the Saudi delegation gave the impression of having “no authority to decide on anything.”

Grand Oil Bargain Is Victim of Saudi Arabia's Iran Fixation - In the end, the outcome of Sunday’s summit of 16 oil ministers at Qatar’s Sheraton hotel turned on one country that wasn’t there. Iran’s decision, on the eve of the meeting, not to attend signaled things wouldn’t go well. When ministers assembled the next day, Saudi Arabia stunned some of them by insisting every OPEC member, including Iran, must subscribe to the deal to freeze oil production. When the meeting finally broke up without a deal just after 9 p.m. local time, it fell to the host minister, Qatar’s Mohammed Al Sada, to announce the result at a press conference for the dozens of reporters who’d flown in to cover the talks. The freeze deal, mooted in February as the first coordinated action between OPEC and non-OPEC producers for 15 years, had fallen victim to tensions between Saudi Arabia and its main regional rival Iran, a relationship soured by proxy conflicts from Syria to Yemen. Mohammed bin Salman, the young Saudi deputy crown prince who’s taken control of economic policy in the world’s top oil producer, had publicly warned twice that no deal was possible without Iran’s participation. In turn, Iran insisted on its right to boost crude production to the level it pumped before it became subject to international sanctions. Iran had no intention of voluntarily sanctioning itself, the nation’s deputy oil minister said on Saturday. The government in Tehran had decided there was no point in turning up to Doha on Friday after Qatari officials contacted Iran to say only countries intending to sign up to the freeze should attend, according to a person with direct knowledge of the deliberations. Unable to meet those terms, Iran took that as a withdrawal of Qatar’s invitation and decided to stay away. Still, ministers gathered on Saturday evening in a positive mood. There was no indication Saudi Arabia had any problems with a draft text committing attendees to keep production at January levels, according to one of the participants. Russian Energy Minister Alexander Novak, who’d spoken to his Saudi counterpart by phone earlier in the week, told reporters he was “optimistic” about a deal.

Russia Frustrated After Doha Breakdown: "How Can Iran Be The Reason For Failure When It Wasn't Even Here?"- After a fierce run of chaotic headlines leading up to the Doha meeting, where speculation of deal or no-deal was enough to make blood shoot out of your eyes, the results of the meeting are finally in. As we learned earlier in the day, despite a leaked draft 24 hours earlier stating that there was in fact at least a gentleman's agreement to freeze production at January levels, the talks broke down, oil futures crashed and crushed those who got long into the weekend, and all participants left the 12 hour session without agreeing on anything except that there is still a lot of work to be done if a deal is ever going to be reached.  Aside from setting up a lot of hedge funds for a bloody Monday morning, the breakdown in talks clearly frustrated Russia, who came out and blamed OPEC states for presenting demands on the morning of the talks in Doha and "undoing months of negotiations."  As Russia Today reports, Russian Energy Minister Alexander Novak spoke to Russian media following the conclusion of the talks, and it was evident he was quite frustrated. Mr. Novak explained that the 11 OPEC states and seven outsiders present during the meeting had spent two months drafting an agreement that would cap oil production at January levels in an effort to stabilize oil prices, and it was all undone by the fact that Saudi Arabia, Qatar, UAE, and "predominantly other Gulf States" insisted that Iran be included in the deal (Iran did not attend the talks). The official was quoted as saying the following about the situation: "Some OPEC countries decided to change their terms at the last moment, trying to get concessions from countries that are not here. We were insisting on trying to concentrate on the countries which are." "How can Iran be the reason for the talks' failure, when it wasn't even here?"

Analysts Respond To Doha Meeting Failure: "Blow To Sentiment" - Failure to proceed with crude output freeze plan seen as a "serious blow" to oil-market sentiment by Energy Aspects; Barclays expects mounting tensions between Saudi Arabia and Iran to boost volatility. Separately, Kuwait oil workers strike viewed as price-supportive.  Here, courtesy of Bloomberg, is a summary of what analysts have said so far on meeting’s outcome as well as comments on Kuwait:

  • Barclays analysts including Miswin Mahesh:Meeting was a “complete failure” in terms of building trust among producers regarding future action; shows how hard it would be to ever coordinate production cuts; Event exposed “political rift” between Saudi Arabia and Iran  “The uncertainty in the market with regards to the next meeting and the developing geopolitical backdrop with regards to Iran and Saudi Arabia, will continue to lead to oil market volatility”
  • Energy Aspects analysts including Amrita Sen - Failure of talks is “serious blow” to sentiment even if freezing would have had little impact on supply/demand balances.  Saudi demands over Iran’s participation in any potential freeze deal “hints at influence from either domestic or regional politics”
  • Morgan Stanley analysts including Adam Longson:  Saudis can push oil market rebalancing to 2018; Morgan Stanley sees growing risk of higher OPEC supply amid lack of agreement.  Rebalancing seen in 2018 if Saudi Arabia boosts output to >11m b/d as “threatened”
  • Bloomberg First Word strategist Julian Lee:  Saudi Arabia won’t shed tears over breakdown of talks; Surge in supplies from Iran, Iraq just before meeting gave Saudi Arabia perfect excuse to refuse to freeze its own output.  Saudi Arabia probably didn’t want oil price to go much higher since that might encourage return of higher-cost production
  • Goldman Sachs analysts including Damien Courvalin: Outcome bearish because consensus was for “soft guidance” on a freeze at Jan. levels.  Kuwait oil worker strike is bullish; “can lend further support to the recent strength in Brent and Dubai timespreads”

Oil Worker Strike Cuts in Half Kuwait Crude Production - WSJ: Kuwait’s crude production dropped by more than half on Sunday as thousands of its oil industry employees began an open-ended strike over government plans to cut wages. The country’s output fell to 1.1 million barrels a day, Kuwait Oil Co., the state-owned production company, said on its official Twitter account. The Organization of the Petroleum Exporting Countries member usually produces nearly 3 million barrels per day. Exports remain normal and production is “on the rise,” oil ministry spokesman Sheikh Talal al-Khaled said in a post on the Twitter account. Workers are protesting a proposal to cut wages and benefits for all public-sector employees, as the oil-dependent country considers measures to cushion the effect of falling prices on its budget. Kuwait has lagged other oil producers in the Persian Gulf in cutting spending while attempting to make up for a nearly 30% drop in oil prices last year amid a global glut. The strike comes as delegates from more than a dozen oil producing countries who gathered in Doha hoping to freeze crude output failed to clinch a deal, according to ministers leaving the meeting late Sunday. A Kuwaiti oil official said the strike could inadvertently benefit the oversupplied market. State-owned refiner Kuwait Petroleum Corp.’s output fell from 930,000 barrels a day Sunday to 520,000 barrels.

Oil Back On Track As Markets Dismiss Doha: The Doha talks collapsed over the weekend as Saudi Arabia refused to sign on to the production freeze agreement without Iran. The events were bizarre and completely defied everyone’s expectations for the summit. OPEC would have been better off if it had never agreed to stage the negotiations to begin with. Saudi Arabia backed away from the Doha talks after Iran refused to sign on. But Iran was never going to agree, so it seemed odd that Saudi Arabia tentatively agreed to a production freeze deal heading into the Doha negotiations, only to back out at the last second. Other participants, including Russia and Venezuela, had thought they were traveling to Doha to sign a deal that would be merely a formality not a debate. They certainly did not think that the meeting would end in failure. Saudi Arabia’s hostility towards Iran was in full view as it appears that the Saudi government was willing to scuttle a very weak agreement that would involve almost no sacrifice simply to avoid handing Iran a victory through modestly higher oil prices. OPEC’s official announcement was that they needed more time to discuss the agreement and would reconvene at its normally scheduled meeting in Vienna in June.The collapse of the talks illustrate the discord within the cartel, and it is hard to imagine the group taking any controversial decisions together. With Saudi Arabia once again sticking to its strategy of pursuing market share, all OPEC members are more or less left to fend for themselves. On the one hand, this leaves OPEC’s credibility in tatters. On the other, since 2014, the Saudis have put a much higher priority on the strategy to fight for market share and push out high-cost oil production around the world. OPEC’s credibility has been less important. In that sense, Saudi Arabia is not exactly upset to see Doha fall apart. While all OPEC members could be hurt from low oil prices in the interim, the real victims will be U.S. shale companies will continue to bear the brunt of the market “rebalancing,” a process that is gradual but already well underway. Why save U.S. shale now? Saudi Arabia will emerge from the oil bust with its market share intact.

Venezuela Accuses The U.S. Of Blocking Doha Oil Production Freeze -- While much of the blame for the failed Doha agreement (which impacted the price of oil for about 12 hours before another squeeze pushed both Brent and WTI back to unchanged for the day), a new allegations has emerged, this time from the Venezuela oil minister Del Pino who, after saying that he is disappointed with the Doha results (but why - oil is basically unchanged) accused none other than the US for sabotaging the Doha deal, saying that the US acted to block the Doha oil production freeze accord.   Perhaps this is just more populist rhetoric; however it is curious that as many noted on Saturday, a tentative deal was effectively concluded, and only a last minute breakdown due to a spike in tensions between Iran and Saudi Arabia led to the failure of the deal. Did the State Department have anything to do with that, and if so why would Saudi Arabia cave to US pressure now that US - Saudi relations appears increasingly stretched, and with Saudi Arabia threatening the US should Obama seek to find the culprit behind Sept 11. In addition to this surprising allegation, the Venezuela minister who just spoke to reported in Moscow, said that Saudi Arabia tried to use Doha meeting to pressure Iran, adding that Saudi representatives in yesterday's meeting didn’t have authority to negotiate (so if not they, then who?)  He also said that he sees Venezuela sees Iran’s position as "logical", and said that "we are going to try to recover the trust."  Finally, when asked if non-OPEC producers will come to June OPEC meetings, he said that "first, we need to work inside OPEC."

Saudis Mix Politics and Oil Policy - -Saudi Arabia’s decision over the weekend to refuse to freeze oil output without Iran’s participation indicates a heightened willingness in the kingdom to mix politics and oil policy amid tensions with Tehran and Washington. Deputy Crown Prince Mohammed bin Salman’s intervention into the talks among oil-producing countries in Doha was seen by analysts as a surprisingly open display of influence over oil policy that risked being seen as political jab at Iran. Iran refused to participate in the talks and the deputy crown prince reaffirmed during the meeting that the kingdom wouldn’t do a deal without Iran, communicating that both via the media and directly to a Saudi delegation headed by the country’s long-serving oil minister, Ali al-Naimi. That was a move away from what had seemed to be a growing willingness on the part of the Saudis work with Russia and many members of the Organization of the Petroleum Exporting Countries. It comes just days before President Barack Obama’s meeting Wednesday with King Salman bin Abdul Aziz in Riyadh. Riyadh is seeking new assurances that the U.S. hasn’t ditched loyal Gulf allies in favor of Iran. Mr. Obama has made the case that Saudi Arabia and Iran should reduce longtime tensions between their two countries to help tamp down instability in the Middle East. But the kingdom’s decision instead to go it alone on oil-production policy highlighted its increasingly fierce rivalry with Iran. “The signs of tensions within the kingdom and the willingness to politicize oil production, the mixed signals and flip-flopping really have an impact,”

Collapse of Doha talks highlights the rise of Mohammed bin Salman - Ali al-Naimi has been the king of oil for more than two decades. Markets rose and tumbled on the Saudi oil minister’s words. The 81-year-old technocrat always carefully chose the words and his timing. His statements were dissected and widely commented on, as were the occasional leaks which reflected his thinking. As part of the sweeping changes in Saudi Arabia since King Salman took over as head of state last year, the words of another official should be taken most seriously: Mohammed bin Salman, the 30-year-old deputy crown prince, favourite son of the king, and decision maker in chief. For those who had not noticed, the immensely powerful MbS, as he is referred to by foreigners, likes to talk. And in Saudi tradition, a royal’s word is more important than that of any technocrat, however many years he’s been in the job, and however authoritative he has been until now. MbS, moreover, is not your typical royal. King Salman, his father, has essentially handed him the economic keys to the kingdom, including oil policy, which had been run until now by oil ministers answering directly to the king. Had markets listened carefully to MbS, the collapse of the Doha talks to freeze output would not have come as a surprise. Officials in the oil ministry suggested the meeting would end with a freeze on output even if Iran, which is only now ramping up its oil production after the lifting of sanctions, did not join in. MbS, however, told Bloomberg last week— in an interview published on Saturday — that there would be no deal unless all major producers, including Iran, were on board. In Tehran, the government has never wavered in its position that it would not join a freeze. As oil prices slipped on Monday, speculation about what happened in Doha — from a draft agreement in the morning to a collapse in talks in the evening — was rife. Was there a disagreement between the oil ministry and the royal palace? Did the ministry miscalculate the prospect of an Iranian change of heart?

Worldwide Oil Production Outages Bump Up Oil Prices | OilPrice.com -- On Sunday, many thought the collapse of Doha would have provided that catalyst, leading to a sell off when the markets opened on Monday. Instead, prices only moved down briefly before bouncing back up. The most likely reason is that oil traders saw other geopolitical events that more than made up for Doha. First came the news that oil workers in Kuwait knocked off somewhere around 1.5 million barrels of oil production per day (mb/d). The IEA estimated in its April Oil Market Report that the global supply overhang is only set to be 1.5 mb/d through the first half of 2016, and could fall to only 0.2 mb/d in the third and fourth quarters. In other words, Kuwait’s oil workers have temporarily removed the entire worldwide oil glut. The outage in Kuwait may not last long, as the government has ordered replacement workers. The country’s oil production fell from about 2.8 mb/d to 1.1 mb/d over the weekend. Output was back up to around 1.5 mb/d by Tuesday, but according to the latest reports, the strike is still ongoing. A smaller but potentially more permanent outage could be unfolding in another OPEC country. The Financial Times reported that the electrical blackouts plaguing Venezuela, which stems from low water levels at some of the nation’s dams, could cut into its oil production. A dam that provides more than one-third of Venezuela’s electricity might need to be shut down because the water levels are so low. If that occurs, it could not only cut off some oil production, but also force Venezuela to burn some of its oil for electricity, hitting oil exports with a double whammy. “We have to consider that Venezuela is less than 20 days away from a major power production disruption,” Olivier Jakob of Petromatrix wrote in a recent report. “Crude and product production could be negatively impacted and the country might have to increase imports of petroleum products for generators.”

NYMEX crude oil price jumps more than $1/bbl as May contract expires - Light, sweet crude prices for May delivery rose more than $1/bbl on the New York market Apr. 20, which was the last day of trading for that futures contract. Analysts attributed the price support to traders making short-covering transactions before the contract’s expiry and also to a weakening US dollar. Oil trades in dollars, and a declining value in the dollar makes crude less expensive to buyers using other currencies. Meanwhile, Kuwait’s oil workers ended their 3-day strike on Apr. 20. Analysts said the resumption of Kuwait’s crude oil production could cause downward pressure on oil prices in coming days. US natural gas prices fell by the Apr. 20 settlement after hitting a 2-month high of nearly $2.14/MMbtu in earlier trading that same day.  The US Energy Information Administration estimated gas levels in underground storage across the Lower 48 at 2.484 tcf as of Apr. 15. This represents a net increase of 7 bcf from the previous week, the Gas Storage Report said Apr. 21. “We see the current storage outlook as more neutral than bullish,”  On Apr. 20, EIA’s Petroleum Status Report estimated US commercial crude oil inventories, excluding the Strategic Petroleum Reserve, gained 2.1 million bbl to 538.6 million bbl for the week ended Apr. 15 compared with the previous week.

Oil Shocker: Bulging Inventory Beats Scary Headlines - WSJ: What happens in Doha stays in Doha. The only shocker from last weekend’s summit of major oil exporters in Qatar’s capital was how emphatically Saudi Arabia rejected an output freeze without Iran’s participation. Indeed, oil prices made up their 6% postmeeting plunge within a matter of hours with the help of an actual surprise: A strike by oil workers in Kuwait cut its output by a meaningful 1.7 million barrels a day. Naturally, oil prices then went into reverse on Tuesday eveningU.S. time when the strike was lifted, but even that headline wore off quickly. By midday Wednesday, prices had resumed their climb. Oil supply shocks just aren’t what they used to be. There is a good reason for that: a world awash in petroleum. The developed world alone has well over 3 billion barrels of commercial crude and refined-product inventory on hand, according to the International Energy Agency. And supply still slightly exceeds daily demand of 96.8 million barrels of crude.

API: Strong US gasoline demand continued in March - US petroleum deliveries, a measure of demand, gained 0.4% in March from the same period last year to average 19.3 million b/d, the American Petroleum Institute said. These were the highest March deliveries since 2008. Gasoline demand rose 2.2% from the same time last year. Distillate deliveries in March fell 11.3% to average just below 3.6 million b/d, API said. “Historically low gasoline prices continued to drive strong demand for gasoline in March,” said Erica Bowman, API chief economist. “In fact, demand for gasoline in March was the highest ever recorded for the month.” At just below 9 million b/d, US crude oil production decreased 6.8% from March 2015 but remained the second-highest March production level since 1986. Natural gas liquids production in March averaged nearly 3.4 million b/d—the highest level for the month on record. US total petroleum imports in March averaged nearly 10 million b/d, the highest total petroleum imports level for any month since September 2013. Gasoline production averaged 9.7 million b/d, which was up 1.6% from March 2015 and the highest ever for the month. Production of distillate fuel in March fell 1.2% from year ago levels to average 4.8 million b/d but remained the second highest March output level on record. Refinery gross inputs rose 2.8% from last year to a record high for the month at 16.3 million b/d. Exports of refined products were up from the prior year. The refinery capacity utilization rate averaged 89.5% in March. API’s latest refinery operable capacity was 18.125 million b/d, up 341,000 b/d from last year’s capacity.

March petroleum demand sets record after strong Feb. - Total petroleum deliveries, a measure of demand, rose 0.4 per cent in March from March 2015 to average 19.3 million barrels per day, according to the American Petroleum Institute. These were the highest March deliveries in eight years, since 2008. Total motor gasoline deliveries, a measure of consumer demand, rose 2.2 per cent from March 2015. Distillate deliveries fell 11.3 per cent to average just below 3.6 million barrels per day. Total petroleum deliveries, a measure of consumer demand, rose 2 percent in Feb. from year ago levels to average 19.8 million b/d. These were the highest Feb. deliveries in eight years. Click here for Feb. story. “Historically low gasoline prices continued to drive strong demand for gasoline in March,” said Erica Bowman, API chief economist. “In fact, demand for gasoline in March was the highest ever recorded for the month.” At just below 9 million barrels per day, U.S. crude oil production decreased by 6.8 per cent from March 2015 but remained the second highest March production level in 30 years, since 1986. Natural gas liquids production in March averaged nearly 3.4 million barrels per day, which was the highest level for the month on record.

Crude Slides After Russia Warns Of Production Increase: "Was Never Ready To Cut Output" - Perhaps upset at the weekend's development, Russia has decided to rattle the global crude complex cage. Amid hopes of a freeze, Russia's energy minister Alexander Novak has reversed course and stated that Russia could "in theory" increase oil output and "was never ready to cut production." It appears things are rapidly breaking down between Russia and The Kingdom - which perhaps explains Obama's rapidly arranged trip to kiss the ring in Riyadh. The oil market is not transparent enough, which leads to the demand-supply mismatch, Russia’s Deputy Prime Minister Arkady: "The policy of certain countries regarding diversification of energy sources aimed at supporting local production is sometimes implemented inefficiently as it creates extra costs for consumers and changes the oil and gas market balance. From our viewpoint, the situation is not transparent enough as not the whole information is provided to consumers," he said.

U.S. crude stockpiles rise, distillates post surprise drawdown: EIA | Reuters: U.S. crude oil inventories rose slightly less than expected last week, while distillate stockpiles posted an unexpected and huge drawdown, data from the Energy Information Administration showed on Wednesday. Crude inventories rose 2.1 million barrels in the week to April 15, compared with analysts' expectations for an increase of 2.4 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures fell 248,000 barrels, EIA said. Brent and U.S. crude futures both rose after the data, with Brent reversing losses and turning positive. [O/R] "Distillates are the standout bullish element of the report and gasoline is the disappointment," said Matt Smith, director of commodity research at New York-headquartered energy data provider ClipperData. "Distillate throughput jumped last week, meaning demand is only down 0.7 percent on the 4-week moving average." Distillate stockpiles, which include diesel and heating oil, fell 3.6 million barrels, versus expectations for a 304,000-barrel increase, the EIA data showed. "This pocket of demand might be a bright spot in terms of helping to sop up some of the global glut of diesel,"

Oil Rallies as Distillate Stockpiles Shrink -- Oil prices surged to a five-month high Wednesday after an unexpected and sharp decrease in U.S. distillate stockpiles convinced traders to shrug off a rising crude surplus and the end of a Kuwaiti oil-workers’ strike.  The U.S. Energy Information Administration said Wednesday that distillate stocks, which include heating oil and diesel, fell by nearly 3.6 million barrels when analysts expected no change. It was enough to balance out an addition to crude stockpiles and send total oil and petroleum stockpiles lower—though barely—for only the sixth time in 24 weeks dating back to the start of November. Diesel rallied the most on the news, hitting gains of 5.5% on the day and its highest settlement since Dec. 4. U.S. oil ended the day up 3.8%, but the rally was actually much stronger, having started from losses that had been as deep as 3% in overnight trading. The combined stockpiles of crude, gasoline and other petroleum products have become a key indicator for many analysts and traders. Production is retreating from record highs in the U.S. but stockpiles there and around the globe are still at record highs. Prices are unlikely to rebound until the massive supply in those stockpiles starts to drain, signaling that a glut that has lingered for two years is finally about to ease, analysts and traders have said. The change in U.S. stockpiles was barely positive, but maybe enough to keep fueling a rebound in investor interest in commodities, Several markets from natural gas to gold have rallied in recent weeks as investors have started betting that a weaker dollar and slower production make these markets more likely to come into balance than in past years.  “It’s not the quantity. It’s the perception,”

WTI Crude Spikes Above $42 As US Production Drops To 18-Month Lows - Following API's 3.1mm reported build overnight, expectations were for a 3mm build and DOE reported a 2.08mm build. Cushing saw a 235k draw from API and was expected to drop 1mm barrels but DOE reported just 248k drop in inventories as Gasoline inventories drewdown just 110k barrels (drastically less than the 1mm exp) and Distillates saw a large 3.55mm draw - the most in 3 months. Production appears more of a focus for now and fell once again last week to 8.953mm barrels (down 4.41% YoY) - lowest since Oct 2014. Crude prices had slipped overnight as Kuwait's strike ended and Russia threatened to increase supply but the production slowdown and lower than expected inventory data sent WTI back above $42.  API:

  • Crude +3.1mm
  • Cushing -235k
  • Gasoline -1mm
  • Distillates -2.5mm

DOE

  • Crude +2.08mm (+3mm exp)
  • Cushing -248k (-1mm exp)
  • Gasoline -110k
  • Distillates -3.55mm

Production fell once again last week to its lowest since October 2014...

OilPrice Intelligence Report: Doha Is A Distant Memory As Oil Rises To Mid $40’s: It has been a wild week for the oil markets, with the collapse of Doha, a workers strike in Kuwait, and the seeming dissolution of any possibility of cooperation within OPEC. But oil prices have jumped to their highest levels in five months, breaking through a key threshold at the low-$40s per barrel. Can prices continue to rally? Prices have surged on news of supply outages from around the world, particularly from Kuwait (more on that below). But can WTI and Brent hold onto the gains? Oil storage levels jumped once again in the U.S., a bearish sign that the glut continues. On the positive side of the ledger, production fell by another 24,000 barrels per day last week, and declines are expected to continue. The supply/demand adjustment continues apace, and the markets appear to be gaining confidence that the worst is over. OPEC to discuss freeze in June. The collapse of Doha has laid bare the degree of infighting in the oil cartel, but a Saudi official said that OPEC members would resume negotiations over a production freeze at its June meeting in Vienna. OPEC’s Secretary-General downplayed that prospect when he responded, “maybe the ministers will discuss it.” It is hard to imagine OPEC rebounding from the failed Doha talks to secure an agreement. The only thing working in favor of improved cooperation is the possibility that Iran reaches its pre-sanctions level of oil production by then. This week, Iran’s deputy oil minister was quoted in Iran’s state news agency, saying that Iran could achieve pre-sanctions oil production levels by June. Since Iran has previously stated that it would not join a freeze deal until it restored output, the comments raise the possibility that it could come around to a deal when the cartel meets in Vienna.

US rig count drops 9 this week to 431, another all-time low - (AP) — The number of rigs exploring for oil and natural gas in the U.S. dropped by nine this week to 431, again reaching an-time low amid depressed energy industry prices. A year ago, 932 rigs were active. Houston oilfield services company Baker Hughes Inc. said Friday 343 rigs sought oil and 88 explored for natural gas. Among major oil- and gas-producing states, Texas lost seven rigs and Louisiana and Ohio each dropped one. Alaska, Arkansas, California, Colorado, Kansas, New Mexico, North Dakota, Oklahoma, Pennsylvania, Utah, West Virginia and Wyoming were all unchanged. The U.S. rig count peaked at 4,530 in 1981. The previous low of 488 set in 1999 was eclipsed March 11, and has continued to dip.

Oil rig count falls to new 6-year low: The US oil rig count fell by 8 to 343 this week, according to driller Baker Hughes. That was the fifth straight weekly drop. The tally of gas rigs fell by one to 88, taking the total down 9 to 431, a new low. Last week, we saw the combined tally fall to a new low of 440. The oil rig count fell by 3, while the gas rig count was unchanged at 89. Crude oil prices have rallied this week and were headed for a weekly gain of about 11%, even after a meeting of producers to possibly freeze output levels failed. A workers' strike in Kuwait, and a sixth weekly decline in US production, were among bullish catalysts. Here's the latest chart of oil rigs:

BHI: US rig count down 9 in 18th-straight week of losses - The US drilling rig count dropped 9 units to 431 during the week ended Apr. 22, the 18th-straight week in which the count has fallen, according to Baker Hughes Inc. data. Last week’s 3-unit loss was the smallest of the year thus far (OGJ Online, Apr. 15, 2016). The count has declined in 33 of the last 35 weeks, more than halving since a slight rebound during summer 2015, and is down 1,489 units since the overall drilling dive commenced following the week ended Dec. 5, 2014 (OGJ Online, Dec. 5, 2014). Eight of the nine units to go offline this week targeted oil. The new total of 343 is down 1,266 units since its peak in BHI data on Oct. 10, 2014, and its lowest point since Nov. 6, 2009. The current count remains well-above the 2008-09 downturn’s nadir of 179 touched on June 5, 2009. Gas-directed rigs lost a unit to 88, matching their low-point in BHI data last touched 3 weeks ago. Onshore rigs fell 8 units to 401, down 494 year-over-year. Rigs engaged in horizontal drilling decreased 3 units to 332, down 1,040 since a peak in BHI data on Nov. 21, 2014, and their lowest count since Jan. 26, 2007. Directional drilling rigs also lost 3 units, settling at 48. After 3 rigs began operations last week offshore Louisiana, 2 went offline this week, bringing the overall US offshore count to 26. The tally of rigs drilling in inland waters added a unit to reach 4. In Canada, the overall count was unchanged at 40, ending 10 straight weeks of declines. But the oil-directed count gained 2 units for the second consecutive week, bringing its total to 12, still down 122 units since Jan. 22.Gas-directed rigs in Canada lost 3 units for the second straight week to 27. One rig considered unclassified came online. All but two of the units to stop operations in the US were in Texas, which now counts 187 working rigs, down 771 units since a peak in BHI data on Aug. 29, 2008, and the state’s lowest level since the 1990s.

IEA Warns "Saudis, Russians To Pump As Much Oil As Possible" - While the IEA has been urgently pushing an agenda of the oil market "rebalancing" in coming months in order to validate rising oil prices, the reality is that there are two parts to the equation: demand and supply. We will have to say more on demand shortly, because as it turns out most of it may have come from none other than China where commodities are merely the latest speculative bubble while China has been furiously stockpiling oil in what is merely pulling future demand to the present, however on the far more important supply side, where the key variable has become shale production over the coming year, earlier today the head of the Oil Industry and Markets Division at the International Energy Agency, Neil Atkinson, told CNBC that he believed both producers will continue to "pump as much oil as possible." This is what he said:"In the post-Doha world, when we're still in what is essentially a free market for oil, the Russians will pump as much oil out as the market will absorb and the Saudis have said much the same thing."  Which incidentally is also what we have been saying for weeks heading into Doha, a meeting which was doomed from the beginning and which saw record oil supply from not only Russia but also Iraq in the last few weeks. This record production is set to continue. Neil Atkinson painted an even bleaker picture saying that "we're back to where we were before Doha where people produce what they can, sell what they can for whatever price they can achieve and the market takes care of the surpluses in time." Atkinson added something else known to regular ZH readers, namely that "as far as the Russians are concerned, even in the run-up to Doha when they were going to be party to an agreement to freeze production, they were actually pumping up production anyway."The IEA staffer noted that Saudi Arabia had spare production capacity (of up to 2 million barrels a day) as well a couple of other Middle Eastern producers such as Kuwait and the UAE but that "apart from that there is no spare production capacity essentially anywhere in the world."

$315B: Forex Reserves Vaporized by Oil Crash - In the run-up to that Doha meeting of oil producers, Bloomberg presented data on just how much oil exporters had used from their rainy-day funds as the price of oil fell earlier this year to nearly a third of what it was in 2013. True, prices have recovered somewhat these past few weeks, but not to the level necessary to stabilize any number of marginal petro-states. In the meantime, those forex reserves are disappearing faster than sane people at a Donald Trump rally: The world’s top oil exporters are burning through their petrodollar assets at an accelerating pace, increasing the pressure to reach a deal to freeze production to bolster prices. The 18 nations set to gather in Doha on Sunday to discuss a production freeze have spent $315 billion of their foreign-exchange reserves -- about a fifth of their total -- since the oil slump started in November 2014, according to data compiled by Bloomberg. In the last three months of 2015, reserves fell nearly $54 billion, the largest quarterly drop since the crisis started. The petrodollar burn has consequences beyond the oil nations, affecting international fund managers like Aberdeen Asset Management Plc and global currencies markets. Oil nations have traditionally held their reserves in U.S. Treasuries and other liquid securities. Nonetheless, the impact in credit markets has been muted as central banks continue to buy debt.  The bulk of these reserves have been used by Saudi Arabia:

Saudi Arabia's Post-Oil Plan Starts April 25, Prince Says -- Saudi Arabia will announce a comprehensive plan to prepare the kingdom for the post-oil era on April 25, Deputy Crown Prince Mohammed bin Salman said. The “Vision for the Kingdom of Saudi Arabia” will encompass several developmental, economic, social and other programs, Prince Mohammed said in an interview on Thursday at King Salman’s private farm in Diriyah, the original home of the Al Saud royal family. One component of the plan is the National Transformation Program, which will be launched a month or 45 days after this month’s announcement, said the prince, who is the king’s son and second-in-line to the throne of the world’s top oil exporter. The plan to transform Saudi Aramco from an oil company into an energy and industrial conglomerate, as well as the future of the Public Investment Fund, will also be part of the comprehensive vision, he said. Saudi Arabia is seeking to overhaul the economy to reduce the kingdom’s reliance on oil after the plunge in crude prices. Prince Mohammed said in an interview late last month that the plan involves raising non-oil revenue by $100 billion by 2020 as well as turning the PIF into the world’s largest sovereign wealth fund for the kingdom’s most prized assets. Saudi authorities are weighing measures that include more steps to restructure subsidies, imposing a value-added tax, and a levy on energy and sugary drinks as well as luxury items. The National Transformation Program will also focus on ways to boost economic growth, create jobs, attract investors and hold government offices more accountable.

Saudi Arabia close to securing $10 billion bank loan: sources | Reuters: Saudi Arabia is close to securing a $10 billion, five-year bank loan, the government's first significant foreign borrowing for over a decade, as the world's top oil exporter seeks to fill a record budget gap caused by low crude prices. The kingdom had initially aimed to raise between $6 billion and $8 billion, but the Ministry of Finance increased the amount after drawing substantial demand, sources said on Wednesday. They said the loan was expected to be signed before the end of April with lenders including U.S., European and Japanese banks. Two sources said the pricing was around 120 basis points above the London interbank offered rate (Libor). The size of the loan and its pricing reflect improved investor sentiment toward Saudi Arabia since January, when its currency came under pressure because of concern about the ability of its economy to survive an era of cheap oil. Since January, oil prices have rebounded to around $40 a barrel from under $30, while Saudi officials have been putting together a complex plan to raise more non-oil revenues and diversify the economy. Bankers said institutions also wanted to take part in the loan because that would help them bid to arrange an international bond issue that Saudi Arabia is expected to conduct after the loan, perhaps later this year.

Saudi Arabia takes out $10bn in bank loans: Saudi Arabia is raising $10bn from a consortium of global banks as the kingdom embarks on its first international debt issuance in 25 years to counter dwindling oil revenues and reserves. The landmark five-year loan, a signal of Riyadh's newfound dependence on foreign capital, opens the way for Saudi to launch its first international bond issue. It comes as the sustained slump in crude encourages other Gulf governments, such as Abu Dhabi, Qatar and Oman, to tap international bond markets. The oil-rich kingdom, which last weekend blocked a potential deal among oil producers to freeze output and bolster prices, has burnt through $150bn in financial reserves since late 2014 as its fiscal deficit is set to widen to 19 per cent of gross domestic product this year. Strong interest in the loan, especially from Asian banks, came despite rating agency downgrades on Saudi creditworthiness since the oil price collapsed. The government raised the amount it wanted to borrow from $6bn-$8bn to $10bn after the deal was oversubscribed. "The deal is very successful, with very competitive pricing," said " Saudi Arabia may now raise its first global bond in the wake of the loan deal, bankers said. Institutions that loaned the most would be set to benefit from a mandate to help Riyadh raise the bond. "The loan is a way for Saudi Arabia to test the waters and set up an international borrowing profile," said Ewen Cameron Watt, chief investment strategist at BlackRock, the world's largest asset manager. "This is paving the way for the kingdom to transform from a creditor nation into a debtor nation. It's a significant moment of change in debt markets." The strategy of raising debt overseas aims to slow the drawdown of foreign reserves and reduce pressure on local banks, which have been supporting state related companies and buying Saudi domestic bonds for almost a year.

Saudi Arabia Will Create The Single Largest Public Company In The World - It is no secret that Saudi Arabia's largess of oil is approaching its end. Most officials in Riyadh, Saudi Arabia's capital, see a 30-year window before living off the country's oil wealth becomes untenable. Now, the global energy balance will continue to include oil until at least 2100, especially in rapidly growing regions such as Asia. But oil's portion of the demand mix will begin declining by 2040 (or perhaps even sooner). Saudi Arabia still retains immense reserves of oil and one of the cheapest production costs around. But that simply means that they will have a larger portion of what's likely to be a declining energy source by mid-century. Just like the UAE and Qatar, Saudi Arabia will use its oil and gas surplus as a bridge to diversifying its economy. But where the other two Gulf countries chose global real estate and banking as their end targets, Saudi Arabia is aiming at something quite different... There is a new architect for this mission to end Saudi Arabia's reliance on oil, and he is quickly becoming the heir apparent among the next generation of the House of Saud, the Saudi royal family. If you can recall no other Saudi official, remember this one: Mohammad bin Salman Al Saud will not reach 31 until August. But he is already the power behind the throne (which is currently occupied by his father, King Salman). Deputy Crown Prince, Second Deputy Prime Minister, chief of the royal court, and the youngest Defense Minister in the world, Mohammad is also the chair of the Saudi Council for Economic and Development Affairs. That Council, in turn, will establish the Public Investment Fund (PIF), which will receive a windfall of at least $2 trillion from the initial public offer (IPO) of Saudi Aramco, the giant Saudi state oil company. That $2 trillion, by the way, would come from a sale of just 5% of the company.

Obama Administration Makes Stunning Admission: "Seed Money For Al Qaeda Came From Saudi Arabia" -- Following a dramatic deterioration in official diplomatic channels between the US and Saudi Arabia when over the weekend the Saudis threatened the U.S. with dumping billions in Treasuries if Congress were to pass a bill probing into their alleged support of Sept 11 terrorists in the aftermath of last weekend's 60 Minutes report on the classified "28 pages" from the Septemeber 11 commission, moments ago the Obama administration made a stunning admission, when for the first time it revealed on the record that the Saudis were the original source of funding for Al Qaeda. As Politico reports, Obama's deputy national security adviser, Ben Rhodes, while speaking to David Axelrod in Monday's edition of "The Axe Files" podcast said that the government of Saudi Arabia had paid "insufficient attention" to money that was being funneled into terror groups and fueled the rise of Al Qaeda when he was asked about the validity of the accusation that the Saudi government was complicit in sponsoring terrorism.  At first, he tried to tone down what amount to the first official admission of Saudi involvement in September 11, saying "I think that it’s complicated in the sense that, it’s not that it was Saudi government policy to support Al Qaeda, but there were a number of very wealthy individuals in Saudi Arabia who would contribute, sometimes directly, to extremist groups. Sometimes to charities that were kind of, ended up being ways to launder money to these groups." But moments later the truth came out when he said "So a lot of the money, the seed money if you will, for what became Al Qaeda, came out of Saudi Arabia," he added. And then the punchline came out when Axelrod asked if "that happen without the government’s awareness?" To which Rhodes responded that he doesn’t believe the government was “actively trying to prevent that from happening."

Saudi Arabia wants US to kill 9/11 bill, threatens to dump US assets worth $750 bn - report -- Saudi Arabia appears to be blackmailing the US, saying it would sell off American assets worth a 12-digit figure sum in dollars if Congress passes a bill allowing the Saudi government to be held responsible for the 9/11 terrorist attacks. The warning was delivered by Saudi Foreign Minister Adel al-Jubeir last month during a visit to Washington, the New York Times reported. He said his country would sell up to $750 billion in US treasury securities and other assets before the bill puts them in jeopardy. The newspaper said Riyadh's resolve to actually deliver on the threat is dubious, since selling off those assets would be technically challenging and would damage the dollar, against which the Saudi national currency is pegged.  Under the current US law, foreign nations have a degree of immunity from being sued in American courts. The Foreign Sovereign Immunities Act of 1976 is one of the reasons why families of the September 11, 2001 terrorist attacks largely failed to bring to court the Saudi royal family and charities over suspicion of financially supporting the attacks.  The bill introduced in the Senate would waiver the immunity for cases involving terrorist attacks that kill US citizens on US soil. Introduced by Republican Senator John Cornyn and Democrat Senator Chuck Schumer, it managed to overcome partisan divisions in the US legislation and passed without dissent through the Judiciary Committee in January.

Saudi King And Princes Blackmail The U.S. Government: What Happens Next -- Saudi Arabia, owned by the Saud family, are telling the U.S. Government, they’ll wreck the U.S. economy, if a bill in the U.S. Congress that would remove the unique and exclusive immunity the royal owners of that country enjoy in the United States, against their being prosecuted for their having financed the 9/11 attacks, passes in Congress, and becomes U.S. law. As has been well documented even in sworn U.S. court testimony, and as even the pro-Saudi former U.S. Secretary of State Hillary Clinton acknowledged privately, "Donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide.” She didn’t name any of those “donors” names, but the former bagman for Osama bin Laden, who had personally collected all of the million-dollar+ donations (all in cash) to Al Qaeda, did, and he named all of the senior Saud princes and their major business-associates; and, he said, "without the money of the — of the Saudi you will have nothing.” So, both before 9/11, and (according to Hillary Clinton) since, those were the people who were paying virtually all of the salaries of the 19 hijackers — even of the four who weren’t Saudi citizens. Here’s that part of the bagman’s testimony about how crucial those donations were:

  • Q: To clarify, you’re saying that the al-Qaeda members received salaries?
  • A: They do, absolutely.

So: being a jihadist isn’t merely a calling; it’s also a job, as is the case for the average mercenary (for whom it doesn’t also have to be a calling). The payoff for that job, during the jihadist’s life, is the pay. The bagman explained that the Saud family’s royals pay well for this service to their fundamentalist-Sunni faith. Another lifetime-payoff to the jihadists is that, in their fundamentalist-Sunni culture, the killing of ‘infidels’ is a holy duty, and they die as martyrs. Thus, the jihadist’s payoff in the (mythological) afterlife is plenty of virgins to deflower etc. But, the payers (the people who organize it, and who make it all possible) are the Saud family princes, and their business associates — and, in the case of the other jihadist organizations, is also those other Arabic royal families (the owners of Qater, UAE, Kuwait, Bahrain, and Oman). However, 9/11 was virtually entirely a Saudi affair, according to Al Qaeda’s bagman (who ought to know).

Saudi Threats to Sell Assets Loom Over Obama Trip: President Barack Obama will travel to Riyadh, Saudi Arabia on Wednesday amid turmoil over the Saudi government's threats to sell off hundreds of billions of dollars in assets the kingdom holds if Congress goes through with a bill that would allow American courts to hold the Middle Eastern nation responsible for any part in the 9/11 attacks. The Obama administration objects to the bill, reports The New York Times, and has been lobbying to block it, with State Department and Pentagon officials warning senators that there will be both economic and diplomatic issues if the legislation passes. Last month, Saudi Foreign Minister Adel al-Jubeir, personally delivered a message from the kingdom to Washington, saying his nation would have to sell as much as $750 billion in treasury securities and other assets it holds in the United States, before they can be frozen by the courts if the bill is passed. There is no indication that Obama, who will meet with Saudi King Salman and other officials, will discuss the dispute over the 9/11 bill, but his objections are angering not only lawmakers, but families of the attack victims, who blame the administration for blocking information about the part they say some Saudi officials had in the attacks.

Secret 28 Pages of 9/11 Report Under New Scrutiny - NBC News - When the president leaves for a trip to Saudi Arabia on Tuesday an unresolved issue will go with him: did the Saudis play some role in supporting the hijackers responsible for the attacks on September 11th? The question is being raised in the wake of a renewed push to declassify 28 pages of a 838-page congressional report on the worst terror attack on American soil. The so-called "28 pages" are locked away in a secure basement room at the Capitol and although they can be read by members of Congress, the pages remain classified. That the two of the hijackers involved in the September 11th attacks landed in Los Angeles, moved to San Diego and obtained housing, language lessons and identification is widely known. However, those 28 pages could shed more light on the money and connections used to do so and are said to include information "suggesting specific sources of foreign support for some of the September 11 hijackers while they were in the United States," according to the chapter's introduction in the report. Former Senator Bob Graham told "60 Minutes" in an interview, "I think it is implausible to believe that 19 people, most of whom didn't speak English, most of whom had never been in the United States before, many of whom didn't have a high school education — could've carried out such a complicated task without some support from within the United States."

The Saudi 9/11 Blackmail Explained: The K-Street Lobby Racketeers Have It Covered -- Although scores of us in the alternative media world have been discussing the obvious links between Saudi Arabia and the attacks of 9/11 for many years, this reality has only now started to enter the mainstream consciousness due to a recent report on 60 Minutes. But that’s not the only reason Saudi Arabia has been in the news as of late. In an extraordinary act of blackmail, Saudi officials have warned the U.S. government that it could be forced to sell $750 billion in U.S. assets if a specific piece of legislation currently circulating in Congress becomes law. The New York Times covered the threat on Friday:Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks. The Obama administration has lobbied Congress to block the bill’s passage, according to administration officials and congressional aides from both parties, and the Saudi threats have been the subject of intense discussions in recent weeks between lawmakers and officials from the State Department and the Pentagon. The officials have warned senators of diplomatic and economic fallout from the legislation. Read that last part again. U.S. officials have warned of “diplomatic and economic fallout from the legislation.” So what sort of economic fallout do they envision? Part of the concern is no doubt related to the impact on global financial markets from a Saudi fire sale, but there’s a potentially even bigger concern at play.  Specifically, Saudi Arabia pays Washington insiders an exorbitant amount of money to put the monarchy’s interests ahead of what’s best for the American people. It does this via an elaborate propaganda network, which we first learned about in last year’s post, A Look Inside Saudi Arabia’s Elaborate U.S. Propaganda Machine. Here are a few excerpts:

Does Saudi Arabia Have $750 Billion In Assets To Sell? -- As we reported over the weekend, based on NYT info, the Saudi finance minister said the kingdom would sell up to $750 billion in Treasury securities and other assets if Congress passed a bill that would allow the Saudi government to be held responsible for any role in the September 11, 2001 terror attacks. Senators Chuck Schumer of New York and John Cornyn of Texas introduced the "Justice Against Sponsors of Terrorism Act (JASTA) last fall, but the legislation seemed to gain some new traction after a related segment on 60 Minutes earlier this month. The punchline, of course, was that Saudi officials indicated they would sell its dollar-denominated assets if the law passed to avoid having those assets frozen by American courts.But does Saudi Arabia even have $750 billion of assets to sell? For the answer we go to Stone McCarthy who note that while they can't answer that question definitively - recall that the exact amount of Saudi Treasury holdings remains a mystery as it is not broken out separately - here's what they do know from the Treasury International Capital (TIC) data. First, the Treasury doesn't specifically report Saudi Arabia's holdings of U.S. securities. Instead, Saudi Arabia's holdings are combined with the holdings of the following countries into a category called Asian exporters: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar and United Arab Emirates. At the end of January, Asian oil exporters held $563.6 billion of U.S. securities, with Treasuries and U.S. equities accounting for 92.2% of the total. Treasury holdings totaled $268.2 billion.

Obama Responds To Saudi Threat To Dump Treasuries If Its Role In Sept 11 Is Probed –-- This weekend's biggest, and most shocking story, was the report that in response to a proposed Congressional Bill that would allow a probe into the Saudi role behind the Sept 11 terrorist attack, Saudi Arabia had threatened the US with dumping its roughly $750 billion in Treasury holdings. What was curious about the story is that while Saudi Arabia implicitly admitted it had a role in the September 11, the Obama administration was actively doing everything in its power to prevent the Bill from passing, and thus to keep the truth under wraps, leading many to wonder if Obama was more concerned about his own people or a handful of uber-wealthy Saudi princes. Moments ago White House spokesman Josh Earnest chimed in, and validated all of those fears.

  • EARNEST: BILL WOULD OPEN U.S. TO GLOBAL LEGAL VULNERABILITIES
  • WHITE HOUSE SAYS IT IS CONFIDENT THAT SAUDIS RECOGNIZE THE SHARED INTEREST WITH THE U.S. IN PROTECTING STABILITY OF INTERNATIONAL FINANCIAL SYSTEM

And the punchline:

  • EARNEST: OBAMA WOULDN'T SIGN SUE-SAUDI BILL AS DRAFTED

In short: whether due to the Saudi threat, or just because of its default position on the matter, Obama will block the Bill and no further probes into Saudi involvement in the Sept 11 tragedy will be allowed.

Obama Succumbs To Saudi Pressure, Will Veto Sept 11 Lawsuit Bill -- Following Saudi threats to destabilize the financial system if the US were to enact a Bill that would allow an investigation into Saudi Arabia's support of September 11 terrorist attacks, many were watching closely how Obama would react. The president made it clear last night when as CNN reports, the White House threatened to veto the bipartisan bill to let families victimized by the 9/11 terrorist attacks sue Saudi Arabia while a GOP senator privately sought to block the measure. The White House and State Department are bluntly warning lawmakers not to proceed with the legislation due to "fears" it could have dramatic ramifications for the United States and citizens living abroad to retaliatory lawsuits.  The President lands in Riyadh Wednesday for talks with Saudi Arabia over ISIS and Iran at a time of strained relations between the countries, making the bill's timing that much more sensitive. The move comes as presidential candidates from both parties are seizing on the legislation to score points with New York voters ahead of Tuesday's critical primary there. As reported over the weekend, one of the biggest supporters of the bill is none other than New York democrat Chuck Schumer, the likely next Senate Democratic leader, who has found himself pitted squarely against the Obama administration. As CNN adds, the stepped-up lobbying against the legislation comes as it faces fresh roadblocks on Capitol Hill, with party leaders learning that a GOP senator is objecting to taking up the bill, according to a source familiar with the legislation. The senator's identity has not yet been revealed publicly.

9/11 families hit Obama for 'siding with Saudi Arabia,' want secret report declassified -- Saudi Arabia has threatened to sell some $750 billion in US assets if the bill passes, fearing it could leave the country vulnerable in US courts, the New York Times reported. Many relatives of 9/11 victims believe Riyadh played a role in the attacks, particularly since 15 of the 19 hijackers were Saudi citizens. Officially, the 9/11 Commission Report “found no evidence that the Saudi government as an institution or senior Saudi officials individually funded the organization.” However, a previous Congressional report, which the Commission followed up on, features 28 pages that more closely detail the hijackers’ sources of money and funding, and those documents have been kept classified for more than a decade. Families of 9/11 victims have tried to sue Saudi Arabia in court over the country’s possible role in the attacks before, but US law grants foreign governments protection in domestic courts. Last year, a federal judge dismissed a lawsuit claiming that the country had provided material support to the terrorists, ruling that Riyadh had sovereign immunity. Saudi attorneys argued in court that there was no evidence directly linking the country to 9/11. “If someone you loved was murdered and the person was just able to go away Scott free, would you be okay with that? I don’t think anybody would,” Loria Van Auken said to CBS News. Van Auken’s husband Kenneth worked in the North Tower of the World Trade Center and died in the attacks.

When Media Shill For Saudi Money - A timely Washington Post piece looks at how the Saudis bribe left, right and center: Saudi government has vast network of PR, lobby firms in U.S. The Saudi government and its affiliates have spent millions of dollars on U.S. law, lobby and public relations firms to raise the country’s visibility in the United States and before the United Nations at a crucial time.  ... Five lobby and PR firms were hired in 2015 alone, signaling a stepped-up focus on ties with Washington. The firms have been coordinating meetings between Saudi officials and business leaders and U.S. media, ... The Saudis are getting some bang for their money.

And just today these three well-paid-for pieces appeared. Notice how they have a common, lobby induced theme:

Obama Went From Condemning Saudis for Abuses to Arming Them to the Teeth – In the 2002 speech against the Iraq War that helped propel him to the presidency, then-state Sen. Barack Obama denounced not just the looming invasion of Iraq, but also human rights abuses by our “so-called allies” in Saudi Arabia:  And he spoke out against the U.S.’ role as weapons supplier to the world: "Let’s fight to make sure … that the arms merchants in our own country stop feeding the countless wars that rage across the globe." Thirteen years later, Obama is making his fourth trip to Riyadh, having presided over record-breaking U.S. arms sales to Saudi Arabia while offering only muted criticism of the kingdom’s human rights violations. And don’t expect the president to speak up while he’s there. Obama last traveled to Saudi Arabia in January 2015, cutting short his trip to India after the passing of the former Saudi king, Abdullah ibn-Abdulaziz al-Saud. During that visit, Obama was criticized for not speaking out against the flogging of prominent Saudi blogger and dissident Raif Badawi. In 2014, Badawi was sentenced to 10 years in prison and 1,000 lashes for “insulting Islam” and “going beyond the realm of obedience,” with the first flogging session taking place weeks before Obama arrived. In January, after a record-setting year for Saudi beheadings, Saudi authorities set off protests by executing Shia cleric and regime critic Nimr al-Nimr. U.S. response was muted. The State Department merely said the execution “risks exacerbating sectarian tensions at a time when they urgently need to be reduced” — and then fell silent on the repression of the following protests.

An Awkward Silence in Riyadh - Barack Obama traveled to Saudi Arabia on Tuesday in what could be his last—and likely most futile—visit as president. It’s not just that there’s bad blood over Congress’ effort to make Riyadh liable for lawsuits from the families of 9/11 victims. These days, when the United States and Saudi Arabia look at the region, they see two completely different landscapes and conflicting sets of interests. Riyadh sees a series of conflicts that the United States must resolve and a series of failing states that it must rehabilitate. The Saudis would like a commitment from Obama to defang Iran, change the balance of power in the Syrian civil war to the detriment of Bashar Assad and resolve the Israeli-Palestinian conflict. Washington's gaze is much more narrow and its ambitions more circumscribed. The United States remains committed to its war on terrorism in the region with its reliance on drones. It is seeking to degrade the Islamic State and prevent it from taking over strategic cities of Iraq. And it is hoping that somehow diplomatic meetings in Vienna can come to an agreement easing the Syrian civil war. Beyond that, Obama comes armed with no real new U.S. Middle East policy, apart from the latest developments in the Iran nuclear deal—which is not anything the Tehran-phobic Saudis want to talk about. Obama, who recently expressed his pique over U.S. allies he called “free riders,” plainly is not eager to get any more embroiled in the region than he already is; he has expressed a vague desire that Iran and Saudi Arabia should “share the neighborhood” without saying how he hopes that will be accomplished.

In "Unprecedented Snub", Saudi Arabia Demands "Recalibration Of Relationship" With U.S. -- As Obama concludes his fourth and supposedly final meeting to Saudi Arabia as U.S. president, the White House was quick to explain where relations with the Saudi Kingdom lay, and as CNN reported this morning, moved to tamp down suggestions that ties with Saudi Arabia are fraying, with administration officials saying that President Barack Obama "really cleared the air" with King Salman at a meeting Wednesday. Which is strange because that is not how the other side saw it: even as White House officials stressed that the leaders made progress, a prominent member of the Saudi royal family told CNN "a recalibration" of the U.S.-Saudi relationship was needed amid regional upheaval, dropping oil prices and ongoing strains between the two longtime allies. There is going to have to be "a recalibration of our relationship with America," former Saudi Intelligence Chief Prince Turki Al-Faisal told CNN's Christiane Amanpour. "How far we can go with our dependence on America, how much can we rely on steadfastness from American leadership, what is it that makes for our joint benefits to come together," Turki said in a significant departure from usual Saudi rhetoric. "These are things that we have to recalibrate." The prince made his "unprecedented" in the words of CNN, comments as Obama landed in Riyadh "to a reception that social media critics termed a snub, but U.S. officials strongly disputed." The Saudi government dispatched the governor of Riyadh and Foreign Minister Adel Al-Jubair to shake Obama's hand, a departure from the scene at the airport earlier in the day when King Salman was shown on state television greeting the leaders of other Gulf nations on the tarmac. A U.S. official said Salman's absence upon arrival was not taken as a snub and noted that Obama rarely greets foreign leaders when they land in the U.S. for meetings. Obama went immediately to the Erga Palace to meet the King shortly after landing, but the perceived slight on his arrival was seen as one more sign that a relationship long lubricated by barrels of oil is encountering friction.

Iran Is Ready To Flood The World With Oil... It Just Has No Ships To Deliver It -- Late last week, just ahead of the Doha meeting, we showed that Iran's existing oil tanker armada which until recently had been on anchor next to the Iranian coast and which according to Windward data was storing as much as 50 million barrels offshore.....  had finally started to move. The reason, as Bloomberg reported, was that tankers carrying about 28.8 million barrels of crude, or more than 2 million a day, left the Persian Gulf country’s ports in the first 14 days of April. That compares with a rate of about 1.45 million barrels a day in March. As a result, Iran’s crude shipments have soared by more than 600,000 barrels a day this month, and offsetting the entire production decline by US producers with just half a month's incremental production. However, now that the shipping armada has sailed to its various (most Asian) destinations, it may be difficult to repeat this in the near term. According to Reuters, Iran is struggling to increase oil exports because many of its tankers are tied up storing crude, some are not seaworthy, and foreign shipowners are clearly reluctant to carry its cargoes.  The math: Iran has 55-60 oil tankers in its fleet, a senior Iranian government official told Reuters. He declined to say how many were being used to store unsold cargoes, but industry sources said 25-27 tankers were parked in sea lanes close to terminals including Assaluyeh and Kharg Island for this purpose. Asked how many tankers were not seaworthy and needed to go to dry docks for refits to meet international shipping standards, the senior official said: "Around 20 large tankers ... need to be modernised." A further 11 Iranian tankers from the fleet were carrying oil to Asian buyers on Tuesday, according to Reuters shipping data and a source who tracks tanker movements. That was broadly in line with the number consistently committed to Asian runs since sanctions were lifted in January, putting more strain on the remaining available fleet.

ISIS Tries To Sow Chaos In Libya To Scare Oil Workers Away - As Libya wrangles over who is going to control its oil, the Islamic State is closing in, using sporadic attacks designed to rattle nerves and force oil-field evacuations or worker strikes out of fear. In recent months, ISIS has deployed a large number of fighters at several oil fields, and has been planning attacks on foreign workers as well as oil wells. In February 2015, one of the ISIS-inspired attacks on the Mabruk field killed nearly 12 people including four foreign nationals. In early January, ISIS launched an attack on the Es-Sidra and Ras Lanuf oil export terminals in the Libyan coastal province of Sirte, which is now the ISIS stronghold in Libya. The fear tactics are working. By April 10, 2016, at least three oil fields in eastern Libya were evacuated because of fears of further ISIS attacks. The security sources confirmed the complete evacuation at the Wafa field, while the Tibesti and Bayda fields have been partially evacuated. On 11 April, workers at the Zelten oilfield went on full strike over fears of a possible ISIS attack. Their fears were raised by the spectre of cars bearing ISIS flags in their districts. They fear an attack is imminent. So far, ISIS—which claims to have established at least three caliphate provinces in Wilayat Fizzan, Barqa and Tarabulus—has not yet taken control of a Libyan oil field. This has led to speculation over whether the group is seeking control or destruction. Destruction, however, is unlikely to be on the books. Militarily, ISIS does not have the capabilities in Libya to launch all-out offensives on these oil fields to gain control. Instead, the group is relying on scare tactics—and there is every indication that it’s working.

Europe's Inevitable Intervention In Libya Will Add 1.3 Million Barrels To The World Oil Glut  -- Europe is planning on recolonizing Libya, and so it will send in armed forces in the coming months to restore order and stem the flow of migrants coming from Africa. If this expedition army succeeds in securing parts of the country and restoring law and order, Italian and German engineers from ENI and Wintershall will follow suit to help resume the country’s oil production, which will add 1.3 million barrels per day (Libya produced 1.7 million barrels per day before Muammar Gaddafi was toppled in 2011) to the world oil glut. Until a couple of weeks ago Libya was governed by three governments:

  1. The original government just after the ousting of Muammar Gaddafi, formed by the Muslim Brotherhood residing in Tripoli, the Libyan capital.
  2. The internationally recognized (except for Turkey and Qatar) government in Tobruk. This government, created with the help of the European Union, which organized mock elections, was subsequently driven out of Tripoli;
  3. A kind of ISIS-run government controlling the area around Benghazi.

The real power of any of these groups does not seem to extend beyond the immediate neighbourhood of their residency; it is the chieftains of particular local tribes that de facto rule the rest of the area.

Analysis: Egypt economy 'entered a vicious circle' - The parliament might contribute positively to the consolidation of a political regime in Egypt [EPA]The Egyptian economy has suffered from a general slowdown since the revolution of January 2011.Political uncertainty, macroeconomic instability and global economic turmoil since the 2008 crisis have all contributed to Egypt's prolonged recession, soaring unemployment and foreign currency shortages.Low growth rates led to a sheer drop in state revenue and to an explosion in the budget deficit and public debt.Foreign currency generating sectors such as tourism and foreign direct investment in the energy and property sectors were hard hit by political and security uncertainty, leading to the consistent dwindling of foreign reserves, which dropped from around $35bn in January 2011, to less than $15bn in December 2012.Ever since, the Egyptian government has been dependent on massive capital inflows in the form of aid and cheap credit from the Gulf countries to fill the ever-widening financial gap.This has failed to introduce a structural remedy to the country's balance of payment deficit, however, given the general economic slump.

Oversupply crashes Asian gasoline cracks, lengthens contango - High refinery runs across Asia and a huge amount of arbitrage cargoes for March and April arrival have created severe gasoline oversupplies that have defied the product's seasonal price patterns. "We may not see a gasoline summer peak this year," a trader in the city state said. The benchmark FOB Singapore 92 RON gasoline crack against front-month Brent futures stood at $7.52/b at the Asian close Friday, 55.82% lower from the year-to-date high of $17.02/b saw on January 12. The sharp downward trend in cracks is highly unusual for the fuel's seasonal price movement, which usually starts picking up towards summer as demand goes up and supplies tighten due to turnarounds.   The refinery turnaround schedule is light so far this year with most producers incentivised to run their units at high or full levels to cash in on higher light-ends margins, despite the sluggish middle distillates market.Higher refinery run rates have led to larger export volumes from North Asian countries, with first-quarter shipments up more than 50% year on year from China, about 20% each from Japan and Taiwan, and more than 10% from South Korea, customs data showed.

Soaring oil demand in China rescues OPEC: A dramatic build-up in China’s strategic petroleum reserve and surging demand for imported crude oil are likely to transform the global energy markets this year, regardless of any production freeze agreed by OPEC and Russia this weekend. Chinese credit stimulus and a 20pc rise in public spending has set off a fresh mini-cycle of growth that is already sucking in oil imports at a much faster pace than expected. Barclays estimates that the country will import an average of 8m barrels per day (b/d) this year, a huge jump from 6.7m b/d last year. This is arguably enough to soak up a big chunk of the excess supply currently flooding global markets. Standard Chartered said Chinese imports could reach 10m b/d by the end on 2018, implying a supply crunch and a fresh spike in oil prices as the market is turned on its head. Energy consultancy Wood Mackenzie says $400bn in oil and gas projects have been shelved since the onset of the commodity slump. A great number of depleting fields will not be replaced. Feifei Li, Barclay’s oil analyst, said China is in a rush to fill four new storage sites of its petroleum reserve coming available this year. “It is an urgent priority of the government to fill up the tanks while the price of oil is cheap,” he said. Fresh storage is likely to average 250,000 b/d, five times the level last year. The pace will rise further in the second half of the year. China is building vast underground rock caverns in the interior of the country as a top national security priority, fully aware of the way Japan was squeezed by the US fuel embargo in the late 1930s. It aims to boost reserves to 550m barrels and ensure a 90-day buffer to resist an external supply shock.

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