Sunday, June 19, 2016

oil rallies on murder of British MP, gasoline consumption at a record high, rig count up again

after falling from 2016 highs above $51 on Thursday and Friday of last week, US oil prices continued to drift lower each day early this week, dropping to close at $48.88 a barrel on Monday, $48.49 a barrel on Tuesday, and then $48.01 on Wednesday...however, there weren't any changes in oil fundamentals from the prior weeks that drove the change from rising to falling prices, rather, the most common reason given for the downturn was market fears that Britain would leave the European Union, possibly precipitating a global recession...(on June 23rd, British citizens are due to vote on whether to leave the EU or not; up until last week, polls had indicated they would stay; this week, the "leave" voters swung to a 10 point majority)...on Thursday, heightened fears of the repercussions of an EU breakup hit markets worldwide, with a flight to US assets driving the dollar up and oil down, as oil fell another 4% to close at $46.21 a barrel...however, on Thursday afternoon, pro-European British lawmaker Jo Cox was shot and stabbed by a crazed man yelling "Britain first", which had the perverse effect of turning global markets around, as traders believed her murder would lessen the popularity of the separatist movement (a writer at the Wall Street Journal even penned an op-ed defending the stock market's celebration of Ms Cox's death)...with the British campaigning on the EU referendum thus suspended, global markets and oil rallied on Friday as fears of a British exit subsided, and oil regained most of the previous day's losses, to close the week at $47.98 a barrel..

The Latest Oil Stats from the EIA

this week's oil data from the US Energy Information Administration indicated a modest drop in our oil output, a relatively small drop in our oil imports, a corresponding drop in the amount of the oil that we refined, and a relatively small drawdown from our stored oil inventories...however, the crude oil fudge factor included on the weekly U.S. Petroleum Balance Sheet (line 13) was + 335,000 barrels per day, which means that 335,000 more barrels per day showed up in our final consumption and inventory figures than were accounted for by our production or import figures, meaning one or several of this week's metrics were incorrect by that amount, likely due to errors in reporting or gathering that data...

so, given the data that was reported this week, it appears that our field production of crude oil fell by 29,000 barrels per day, from an average of 8,745,000 barrels per day during the week ending June 3rd to an average of 8,716,000 barrels per day during the week ending June 10th...that followed the 10,000 barrel per day increase of last week, which had been only the second increase in 20 weeks, and which now looks more like an outlier than the beginning of a trend....this week's oil output was 9.1% lower than the 9,589,000 barrels per day we were producing during the week ending June 12 last year, and down by 9.3% from our record 9,610,000 barrel per day oil production that we saw during the week ending June 5th of 2015...

at the same time, our imports of crude oil fell by 83,000 barrels per day to average 7,622,000 barrels per day during the week ending June 10th, down from the average of  7,705,000 barrels per day we were importing during the week ending June 3rd....that was 7.9% more than the 7,067,000 barrels of oil per day we imported during the week ending June 12th a year ago, but since oil imports are typically volatile week to week, the EIA's weekly Petroleum Status Report (62 pp pdf) reports imports as a 4 week moving average...that showed that the 4 week average of our imports was still above the 7.6 million barrel per day level, and 9.8% higher than the same four-week period last year... 

meanwhile, U.S. refineries used an average of 16,317,000 barrels of oil per day barrels during the week ending June 10th, 100,000 barrels per day less than the 6,417,000 barrels per day they used during the week ending June 3rd...while that was a bit less than the 16,282,000 barrels of per day that refineries processed during the week ending June 12th last year, that year ago week was an outlier in a month that averaged almost 16.5 million barrels of oil per day of oil refinery inputs....the US refinery utilization rate fell to 90.2% of operable capacity last week, down from a 90.8% capacity utilization rate during the week ending June 3rd, which is very low for this time of year; even with the slow week of June 12th a year earlier, the refinery utilization rate was still at 93.1% at that time...

with less oil being refined, the output of gasoline from refineries fell by 415,000 barrels per day, as gasoline output averaged 9,707,000 barrels per day during the week ending June 3rd, the lowest gasoline production since April 22nd and down from the average of 10,122,000 barrels per day of gasoline produced during the week ending June 3rd...still, that was 0.6% more than the 9,651,000 barrels of gasoline per day we were producing during the same week last year, which was the slowest week of June....however, our refinery output of distillate fuels (diesel fuel and heat oil) increased at the same time, rising by 146,000 barrels per day to 4,984,000 barrels per day during the week ending June 10th...however, that was still half a percent below our distillates production of 5,011,000 barrels per day during the week ending June 12th of last year, as 2015 distillates inventories were somewhat tighter, encouraging more production...      

with the large decrease in gasoline production, our end of the week gasoline inventories fell by 2,625,000 barrels to 237,004,000 barrels on June 10th, following the increase of 1,010,000 barrels during the week ending June 3rd....the drop in supplies was exacerbated by a 68,000 barrel per day drop in our gasoline imports to 747,000 barrels per day and a record amount of gasoline supplied to US markets, which rose by 196,000 barrels per day to 9,762,000 barrels per day, 6.4% higher than the 9,176,000 barrel per day consumption during the week ending June 12th last year, and matching the previous record set during the week ending August 17, 2007...we've thus come full circle on this proxy for gasoline consumption, despite the better fuel economy of newer cars...our gasoline consumption averaged over 9.6 million barrels per day during the summer of 2007, and fell to average below 9.0 million barrels per day during the summers of 2012 and 2013...however, at the rate we're going so far, it looks like that we'll set a new record for gas guzzling this year...

still, even with that big increase in consumption, our gasoline supplies remained 8.8% higher than the 217,814,000 barrels of gasoline that we had stored on May 29th last year, and 10.6% higher than the 214,267,000 barrels of gasoline we had stored on June 13th of 2014...thus our gasoline supplies are still categorized as "well above the upper limit of the average range" for this time of year.. 

at the same time as gasoline supplies were falling, however, our distillate fuel supplies were rising for the 2nd week in a row, increasing by 786,000 barrels to end the week at 152,163,000 barrels, as the seasonal agricultural related consumption of diesel fuel has slowed...with distillate inventories already above normal after our warm winter reduced heat oil consumption, our distillate inventories were thus 13.9% higher than the 133,591,000 barrels of distillates we had stored on June 12th last year, and 27.5% higher than our distillates supplies as of June 6th 2014...thus they're also characterized as "well above the upper limit of the average range" for this time of year...   

finally, since the drop in crude imports and crude production was matched by a decrease in refining, we only needed to draw 933,000 barrels of oil from our stocks of crude oil in storage, at a time of year when are stored supplies are usually being used up twice as fast....thus our oil inventory level of 531,543,000 barrels on June 10th was 13.6% higher than the 467,927,000 barrels of oil we had stored as of June 12th, 2015, and 37.6% higher than the 386,348,000 barrels of oil we had stored on June 13th of 2014...hence, since our oil inventories continue to build higher than the seasonal records we set every week in 2015, it goes without saying that our crude oil supplies are also  "well above the upper limit of the average range" for this time of year..." 

This Week's Rig Counts

drilling activity increased for the third week in a row during the week ending June 17th, after the industry had gone the prior 41 weeks without seeing a net increase in total active rigs.....Baker Hughes reported that the total count of active rotary rigs running in the US increased by 10 rigs to 424 rigs as of June 17th, which was still down by more than half from the 857 rigs that were deployed as of the June 19th report last year, and down from the recent high of 1929 rigs that were in use on November 21st of 2014...the count of rigs drilling for oil rose by 9 rigs to 337, which was still down from the 631 oil directed rigs that were in use a year earlier, and down from the recent high of 1609 working oil rigs that was reported on October 10, 2014, while the count of drilling rigs targeting natural gas formations rose by a single rig to 86 this week, which was down from the 223 natural gas rigs that were drilling a year ago, and down from the recent high of 1,606 rigs that were drilling for natural gas that was set on August 29th, 2008...there was also still one rig running this week that was classified as miscellaneous, unchanged from last week but down from the 3 miscellaneous that were operating a year ago....

one of the rigs added this week was drilling from a platform in the Gulf of Mexico, which brought the Gulf rig count back up to 21, which was still down from the 27 rigs working in the Gulf on last June 19th... that also brought the total offshore count up to 22 rigs, as we still have an offshore platform drilling off the Cook Inlet in Alaska, whereas a year ago all offshore drilling was in the Gulf...horizontal drilling increased for the third week in a row, after going since November 2015 without an increase, as the count of working horizontal rigs rose by 3 rigs to 326 rigs, which still was down from the 662 horizontal rigs that were in use on June 18th of last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, 7 more vertical rigs were also added, bringing the vertical rig count up to 53, which was down from the 101 vertical rigs that were in use at the end of the same week a year earlier...meanwhile, the directional rig count was unchanged at 45 rigs, which was down from the 95 directional rigs that were in use during a year earlier.

for the details on which states and which shale basins saw changes in drilling activity this past week, we will again include a screenshot of that part of the rig count summary from Baker Hughes, which shows those changes...the first table below shows weekly and annual rig count changes by state, and the second table shows weekly and annual rig count changes for the major geological oil and gas both tables, the first column shows the active rig count for each state or basin as of June 17th, the second column shows the change in the number of working rigs from the prior week, the third column shows last weeks rig count, the 4th column shows the change in the number of rigs running from  the same week a year ago, and the 5th column shows the number of rigs that were drilling at the end of that week a year ago, which in this case was June 19th of 2015:  

June 17 2016 rig count summary

it's pretty obvious from the above that most of the increased drilling activity was in the various basins of Texas, with the Barnett shale in the Dallas-Ft Worth area seeing it's activity rise from 2 rigs to 7, and with the Eagle Ford of south Texas and the Permian basin of west Texas both seeing an increase of 4 rigs...and while the Cana Woodford of Oklahoma saw an increase of three rigs, the state total was unchanged, so rigs elsewhere in the state must have been pulled down....this week also saw changes in activity in a few states not listed above...first, Illinois saw it's rig count double, from 1 rig to 2, which is also up from the single rig they had active a year ago...then both Kentucky and Mississippi saw their rig counts drop from 3 rigs to 1....for Kentucky, that's still new activity, as a year ago, they had no drilling...for Mississippi, that puts them right back to where they were a year ago, although the state had seen drilling activity levels as high as 7 rigs in November and December of last year...

we'll also include a copy of a graph from Steven Kopits of Princeton Energy Advisors which was published Friday at Calculated Risk...this graph shows the recent horizontal oil rig count by basin since November of 2014, the month the oil price crash began after OPEC flooded the global markets, with the weekly number of active oil rigs in each basin color coded in a stacked graph as indicated in the key...;set on top of that is a graph of the price of oil over this same period, showing how the falling price of oil has preceded the drop in drilling activity three months later...we've covered all these changes at they happened, most weeks explaining the rig count changes in detail, but had never seen a graph that laid out that history in one place like this graph's pretty clear from this picture that over this year and a half period, the largest percentage decreases in drilling occurred in the Williston basin (Bakken) of North Dakota and the Eagle Ford of south Texas, while basins like the Cana Woodford of Oklahoma have been relatively unchanged...even the Permian, which has seen the largest total rig count drop, still has a relatively large number of rigs still working...

June 17 2016 horizontal rig count by basin


Ohio PUC chairman seeks balance in tackling carbon emissions -- As Ohio pursues parallel -- and contrary -- paths in response to U.S. EPA's Clean Power Plan, one central person who will help determine the state's energy future is Asim Haque, chairman of the Public Utilities Commission of Ohio. But the quirky energy politics of this purple state are not going to make it easy. Haque on May 9 was elevated to chairman of the commission by Gov. John Kasich (R) following the resignation of Andre Porter. Haque had been appointed to the commission in 2013 and was reappointed earlier this year to serve until 2021. He identifies with neither major political party and calls himself an independent.  Kasich has made a political departure from Republican gospel by publicly acknowledging the need to combat climate change, Haque noted in a recent interview with EnergyWire. "But while one can believe in climate change, how to attack it can vary from person to person," he said. "What we don't want to have happen is for there to be dire economic consequences associated with either legislation or regulation to curb carbon emissions. So trying to find that balance is challenging." Republicans in the Ohio Legislature have been pushing for legislation that would require an agency to get approval from lawmakers before submitting a state plan to comply with the federal carbon rule for power plants. GOP leaders also want to extend a freeze on renewable energy and efficiency standards until 2020. Lawmakers adjourned before sending a bill to Kasich.

Feds charge Warren man with dumping fracking waste into Mahoning River tributary - Youngstown Vindicator  — A former employee of a Youngstown-based company has been charged with violating the federal Clean Water Act by directing another employee to dump fracking waste into a Mahoning River tributary, the U.S. Attorney said Monday. David N. Jenkins, 34, of Warren, was charged via criminal information with one count of making unpermitted discharges in violation of the act.  Ben Lupo, owner of Hardrock Excavating LLC, directed Jenkins to contact employees about emptying the stored waste liquids into the stormwater drain at night, which Jenkins did, the U.S. Attorney said. Lupo is serving a 28-month federal prison term and was fined $25,000 after he pleaded guilty to violating the act.Located at 2761 Salt Springs Road, Hardrock provided services to the oil-and-gas industry in Ohio and Pennsylvania, including the storage of brine and oil-based drilling mud used in hydrofracturing, or fracking.The facility had about 58 mobile storage tanks, each holding about 20,000 gallons.  Lupo, of Springfield Township, directed employees to empty some of the waste liquid stored at the facility into a nearby wastewater drain on or about Nov. 1, 2012, when they were alone after dark.  The last time an employee emptied some of the waste liquid into the drain was Jan. 31, 2013, federal authorities said.

Fifth oilfield waste dumping defendant charged - Youngstown Vindicator A fifth defendant has been charged with violating the federal Clean Water Act in the dumping of oilfield waste into a Mahoning River tributary late in 2012 and early in 2013. David N. Jenkins, 34, of Warren, was charged via criminal information with one count of violating the act by directing Michael P. Guesman, another employee of Hardrock Excavating LLC, of 2761 Salt Springs Road, to dump fracking waste into a storm drain flowing into that unnamed tributary without a permit, the U.S. attorney said Monday. Ben Lupo, Hardrock’s owner, directed Jenkins to contact employees about emptying the stored waste liquids into the stormwater drain at night, the U.S. attorney said. Lupo is serving a 28-month prison term and was fined $25,000 after he pleaded guilty to violating the act. He is scheduled to be released Oct. 11 from the Federal Medical Center, Devens in Ayer, Mass. Hardrock provided services to the oil and gas industry in Ohio and Pennsylvania, including the storage of brine and oil-based drilling mud used in hydrofracturing, or fracking. The facility had about 58 mobile storage tanks, each holding about 20,000 gallons. Lupo, 65, of Springfield Township, directed employees to empty some of the waste liquid stored at the facility into the drain on or about Nov. 1, 2012, when they were alone after dark.

Monroe County Man Sentenced For Dumping Fracking Byproduct - This week, Donald Hercher was sentenced in U.S. District Court after the resident of Sycamore Valley — a small village southwest of Woodsfield — pleaded guilty to dumping 50 gallons of oily brine water per week into a roadside ditch near Rias Run, which eventually flows into the Ohio River.Court documents state the 67-year-old Hercher owned Hercher Oil Co., which operates about 30 oil and natural gas wells. April 6, 2011 is the day investigators caught Hercher dumping, according to U.S. Attorney for the Southern District of Ohio spokeswoman Jennifer Thornton.The brine water Hercher admitted to dumping can contain numerous substances that could be either naturally occurring from the shale formation, or chemicals added during the fracking process. Brine water can also contain traces of radioactive elements released from the shale formations, such as radium and uranium.Although drillers now recycle much of their brine, the substance eventually needs to go to an injection well site.Hercher pleaded guilty to unpermitted discharge under the federal Clean Water Act. As part of the agreement, Hercher will pay a $70,000 fine, serve four days in prison and serve two years probation. He will also be required to complete 104 hours of community service, as well as pay $5,000 to the National Fish and Wildlife Foundation.Hercher also must submit a statement to Southeast Ohio Oil and Gas Producers and Ohio Oil and Gas Association that urges other companies to avoid similar dumping. He has been ordered to prepare an article to be published in at least three trade journals to educate readers on the “Waterways of the U.S.”

Zoning may be valid strategy against local drilling - While the Ohio Supreme Court has ruled that state regulation of oil and gas drilling overrides local permitting or bans on that activity, the high court has not ruled on whether local municipalities can use traditional zoning to control where oil and gas drilling can occur in a town or city. This unanswered question could be an important one for many communities in oil- and gas-rich areas of Ohio. It could determine whether these communities have any control over high-impact oil-and-gas development within their borders.  In the meantime, a small city in Northeast Ohio, Munroe Falls, filed a lawsuit May 27 that eventually could lead to a speedier clarification on this issue, if not its resolution.  In its precedent-setting ruling in Morrison (Munroe Falls) vs. Beck Energy in February 2015, the Supreme Court hinted that traditional zoning might be a constitutionally valid way to dictate where oil and gas activities are allowed in a municipality, though that wasn’t the prime thrust of the ruling. The Supreme Court mainly ruled that Munroe Falls could not set up its own permitting system that forbids or controls what the state allows in ORC 1509 – in this case, the drilling of oil and gas wells. With the 4-3 split vote on the ruling, all it would take is one justice on the majority side of Morrison vs. Beck Energy – one who thinks that traditional zoning is compatible with state oil and gas regulation – to flip the opinion in the other direction if the right case came along. Enter Munroe Falls, yet again wading into this crucial debate. The city on May 27 filed a complaint against Beck Energy (of Ravenna, Ohio) in an attempt to keep the company from drilling an oil and gas well in the middle of town, not far from a wellfield that supplies water to Munroe Falls, Cuyahoga Falls and Silver Lake, all suburbs on the northeast edge of Akron. The lawsuit seeks a declaratory judgment in Summit County Common Pleas Court on “whether Munroe Falls has the right to enforce its zoning ordinances relative to oil and gas wells within its municipal jurisdiction; to declare whether Beck Energy is required to obtain a zoning certificate and/or zoning variance from Munroe Falls prior to drilling (its sought-after well); and further requests a stay (suspension) of all drilling activities by Beck until such a time as this court determines all matters in controversy…”

Fracking Effects Worry Doctors in Barnesville, Freeport - — Dr. Russell Lee-Wood said when he began practicing family medicine in the Barnesville and Freeport areas 21 years ago, the breathing problems he diagnosed in patients were relatively rare or minor. During the last six years — as Marcellus and Utica shale frackers have installed well sites, compressor stations, processing plants and related infrastructure in eastern Ohio — Lee-Wood said cases of asthma and emphysema have become more common and severe. The situation is especially bad when there is significant flaring taking place, he said. “These industrial leaks are like an invisible oil spill happening every day. I have seen firsthand that this pollution can cause significant health problems in my patients who live in the communities surrounded by oil and gas development,” Lee-Wood said. Three national environmental advocacy groups joined Wednesday to launch the “Oil & Gas Threat Map.” The sponsors include the Clean Air Task Force, Earthworks and the Fractracker Alliance. “The Oil & Gas Threat Map shows that oil and gas air pollution isn’t someone else’s problem, it’s everyone’s problem,” Earthworks Executive Director Jennifer Krill said. “Our homes and schools are at risk while most state regulators do nothing. Although completely solving this problem ultimately requires ditching fossil fuels, communities living near oil and gas operations need the U.S. Environmental Protection Agency to cut methane and toxic air pollution from these operations as soon as possible.” In multiple legal advertisements during the last few years, natural gas producers have confirmed the potential to discharge various materials into the air from the operations at well sites, compressors and refineries. Now, residents can view for themselves how close they may live to areas with such pollution at  “The trouble is that it hangs over the area,” Lee-Wood said of the pollution from flaring. “Maybe you can stay indoors, but that is like being in prison. I really wish the EPA would start doing some air monitoring to deal with this.”

New map shows methane threat from drilling in Ohio - Akron Beacon Journal - The Ohio Environmental Council, Earthworks, and Clean Air Task Force (CATF) launched, a new tool that maps the locations of the 90,313 oil and gas facilities operating in Ohio and the populations, schools and hospitals within a half mile radius of those facilities. Peer-reviewed science shows that living near polluting oil and gas facilities is associated with negative health impacts, including fetal defects and respiratory ailments. “This is an important new tool for Ohioans, who can enter their own address, find out if they live within a threat zone, and see if their community has an increased risk of cancer and respiratory health problems due to oil and gas related air pollution” stated Melanie Houston, Director of Oil and Gas for the Ohio Environmental Council. The Obama administration recently finalized the first national standard for new sources of methane pollution from the oil and gas industry but this new standard fails to address the impacts of existing sources of methane pollution. In Ohio, more than 3.1 million people - nearly one third of the state’s population - live in areas within a half mile of oil and gas facilities associated with negative health impacts, including fetal defects and respiratory ailments. Safeguards are urgently needed to protect the public from existing sources of methane and other air pollution. To access the map, visit

12.4 million Americans live within a half mile of oil, gas wells - Akron Beacon Journal - Two eco-groups have released a new United States map that shows 12.4 million Americans living within a half-mile of gas and oil facilities.  Air quality in 238 counties is impacted by drilling and there are 1.2 million wells in the U.S., according to Earthworks and the Clean Air Task Force.  Here is an announcement from Earthworks that arrived today: For the first time, you can see all the oil & gas wells nearby. Search our new map to see if your home, school or medical facility is within 1/2 mile of oil & gas facilities  Today, Earthworks and our partners launched a groundbreaking new tool that documents every oil and gas well in the country, in addition to many of the compressor and processing plants.  Nothing like this has ever be compiled before. We took publicly available and privately held data to create the most comprehensive, searchable fracking threat map ever created.  And you helped make it possible. Earthworks members and friends contributed their stories and lent their time to helping us document this pollution on the ground. The map includes interview videos with people directly impacted by drilling and fracking, as well as infrared video showing the otherwise invisible pollution associated with these sites. SEARCH THE MAP: Find your home and see if you are in the threat radius. Then share it with your friends, family and neighbors.

Interactive Map Shows Where Toxic Air Pollution From Oil and Gas Industry Is Threatening 12.4 Million Americans -- Two leading national environmental groups—Clean Air Task Force (CATF) and Earthworks—unveiled a suite of tools Wednesday designed to inform and mobilize Americans about the health risks from toxic air pollution from the oil and gas industry. For the first time, Americans across the country can access striking new community-level data on major health risks posed by oil and gas operations across the country. The oil and gas industry is the country’s largest and fastest-growing source of methane emissions. And its facilities emit numerous other hazardous and toxic air pollutants along with methane—including benzene, formaldehyde, acetaldehyde and ethylbenzene. That toxic pollution presents significant cancer and respiratory health risks, underscoring the need for the U.S. Environmental Protection Agency (EPA) to clean up existing sources of toxic air pollution without delay.. The EPA’s current regulations addressing the industry’s toxic air pollution are limited and the NSPS does not cover the 1.2 million existing facilities in 33 states. CATF’s report, Fossil Fumes, and Earthworks’ Oil & Gas Threat Map focus specifically on toxic pollutants from those facilities and their resulting health impacts.The Oil and Gas Threat Map maps the nation’s 1.2 million active oil and gas wells, compressors and processors. Using the latest peer-reviewed research into the health impacts attributed to oil and gas air pollution, the map conservatively draws a half mile health threat radius around each facility. Within that total area are:

  • 11,543 schools and 639 medical facilities
  • 184,578 square miles, an area larger than California

For each of the 1,459 counties in the U.S. that host active oil and gas facilities, the interactive map reports:

  • instances of elevated cancer and respiratory risk
  • total affected population (with separate counts for Latino & African-Americans)
  • total affected schools and medical facilities

Hot Mess: How Radioactive Fracking Waste Wound Up Near Homes And Schools - The energy that lights up, turns on, cools and heats our lives leaves a trail of waste. Natural gas is no exception. The waste from the gas drilling known as “fracking” is often radioactive. The gas industry produces thousands of tons of this “hot” waste and companies and state regulators throughout the Ohio River valley and Marcellus Shale gas region struggle to find safe ways to get rid of it. Last August a convoy of trucks carrying a concentrated form of this waste traveled from northern West Virginia to Irvine, Kentucky. The small town in Estill County lies near the Kentucky River, where Appalachian hills give way to rolling farm country. The trucks were headed for a municipal waste facility called Blue Ridge Landfill. Just across Highway 89 from the landfill is the home where Denny and Vivian Smith live on property where their ancestors have lived since the 1800s.  From their sun porch, facing east, the Smiths can see the entrance to Blue Ridge Landfill. From their front door, facing west, they can see Estill County High School and Estill County Middle School, with a combined enrollment of about 1,200 students. The trucks that arrived in Irvine last summer left more than 400 tons of low-level radioactive waste in a facility that was not engineered or permitted to accept that sort of material. That has left the community, the parents of schoolchildren, and especially the Smiths with a lot of questions and concerns. The question now reverberating through Irvine and the state agencies investigating the incident: How did this happen? The answer, in part, lies in the weak federal oversight and patchwork of state regulations regarding this type of waste. A report from the Center for Public Integrity calls the radioactive waste stream from horizontal oil and gas operations “orphan waste” because no single government agency is fully managing it. Each state is left to figure out its own plan. Ohio, for example, hasn’t formalized waste rules, while New York, which banned fracking, still allows waste disposal “with little oversight,”

Federal Report Appears to Undercut EPA Assurances on Water Safety in Pennsylvania - Since 2009 the people of Dimock, Pennsylvania, have insisted that, as natural gas companies drilled into their hillsides, shaking and fracturing their ground, their water had become undrinkable. It turned a milky brown, with percolating bubbles of explosive methane gas. People said it made them sick.  Their stories — told first through an investigation into the safety of gas drilling by ProPublica — turned Dimock into an epicenter of what would evolve into a national debate about natural gas energy and the dangers of the process of “fracking,” or shattering layers of bedrock in order to release trapped natural gas.  But the last word about the quality of Dimock’s water came from assurances in a 2012 statement from the U.S. Environmental Protection Agency.. The agency’s stance was widely interpreted to mean the water was safe.  Now another federal agency charged with protecting public health has analyzed the same set of water samples, and determined that is not the case.  The finding, released May 24 from the Agency for Toxic Substances and Disease Registry, a part of the Centers for Disease Control and Prevention, warns that a list of contaminants the EPA had previously identified were indeed dangerous for people to consume. The report found that the wells of 27 Dimock homes contain, to varying degrees, high levels of lead, cadmium, arsenic, and copper sufficient to pose ahealth risk. It also warned of a mysterious compound called 4-chlorophenyl phenyl ether, a substance for which the agency could not even evaluate the risk, and noted that in earlier water samples non-natural pollutants including acetone, toluene and chloroform were detected . Those contaminants are known to be dangerous, but they registered at such low concentrations that their health effects could not easily be evaluated. The water in 17 homes also contained enough flammable gas so as to risk an explosion. The new conclusions appear to call into question the EPA’s assurances, and could well reignite a smoldering controversy over whether the agency had prematurely abandoned its research into the safety of fracking in Dimock and other sites across the country. ProPublica reported in 2012 that the agency had curtailed investigations it had begun into potential water contamination in Pennsylvania, Texas and Wyoming.

EPA bans disposal of fracking waste water at public treatment plants -- The U.S. Environmental Protection Agency has banned the disposal of hydraulic fracturing waste water at public sewage plants, formalizing a voluntary practice that removed most fracking waste from Pennsylvania plants starting in 2011. The EPA on Monday finalized a rule that prevents operators from disposing of waste from unconventional oil & gas operations at publicly owned treatment works [POTW's]. The rule is designed to prevent the entry into public water systems of contaminants such as heavy metals, chemical additives and high concentrations of salt that are associated with fracking, and which public water systems are typically not equipped to treat. Most energy companies stopped sending fracking waste water to public treatment plants starting in 2011 when the administration of former Pennsylvania Gov. Tom Corbett called on the industry to end the practice. Myron Arnowitt, Pennsylvania Director for the environmental group Clean Water Action, said compliance with the Corbett administration’s request was “not 100 percent” but that most energy companies have since then found other ways of disposing of or treating the water, including industrial treatment plants, underground injection wells, and recycling. “It’s not going to affect tons of sources right this second,” Arnowitt said. But the existence of the new rule will deter any renewed effort to dispose of waste at public treatment plants if and when gas production recovers from its current slump, putting more pressure on disposal facilities in the region of the Marcellus and Utica Shales, Arnowitt said.

EPA Bans Fracking Wastewater from Sewage Treatment Plants  - The U.S. Environmental Protection Agency (EPA) has banned fracking wastewater from public sewage plants, citing the inability of these plants to handle toxic and radioactive pollutants. Clean water and public health advocates, along with more than 30,000 Americans, had submitted comments in favor of the EPA rule, finalized earlier this week. The final rule formalizes a practice in place since 2011, when fracking chemicals were detected in some Pennsylvania rivers and officials ordered 15 treatment plants to stop accepting and treating fracking waste.. Much of the fracking fluid mixture returns to the surface as toxic wastewater, often with radioactive elements.  Municipal water treatment plants, which treat waste and then release it into drinking water supplies, aren’t suited to treat such hazards. The mixture of bromides in wastewater and the chlorine used at sewage treatments plants also can produce a toxin linked to bladder cancer, miscarriages and still-births.  Even under the rule issued this week, fracking wastewater disposal still presents a conundrum for public health and safety. Plants designed to treat fracking waste are far from foolproof, as Duke University researchers found in Pennsylvania. Waste often spills into rivers and streams during storage and shipment. And studies show injecting the waste deep underground is likely causing earthquakes.

EPA Bans Frack Filth From Public Water Treatment Plants -- The EPA has finally banned something that is illegal even in Texas – dumping frack filth in public water treatment plants. The fact that this was done at all in Pennsylvania and was attempted in New York confirms my suspicion: Texans may be a bunch of neolithic thugs that are going to vote for Trump like so many mindless zombies  – but we are not as ignorant about frack filth as the frack babies and frack shills of Fracksylvania. Be grateful for the small things. The U.S. Environmental Protection Agency has banned the disposal of hydraulic fracturing waste water at public sewage plants, formalizing a voluntary practice that removed most fracking waste from Pennsylvania plants starting in 2011. The EPA on Monday finalized a rule that prevents operators from disposing of waste from unconventional oil & gas operations at publicly owned treatment works [POTW’s]. The rule is designed to prevent the entry into public water systems of contaminants such as heavy metals, chemical additives and high concentrations of salt that are associated with fracking, and which public water systems are typically not equipped to treat.

Pennsylvania counties see less money from gas drilling fee (AP) — Pennsylvania counties and municipal governments will see less money from a state fee on Marcellus Shale gas wells, as expected. The Pennsylvania Public Utility Commission said Wednesday that impact fee revenue from Marcellus Shale wells dropped by $36 million to about $188 million. That’s the lowest annual payment in the five-year history of the impact fee, and it’s the second year of decline. A persistent slump in natural gas prices and the aging of Pennsylvania’s Marcellus Shale wells have reduced the value of the fee, according to the utility commission, which collects the fee and distributes it. Checks will go out before July 1. Most of the money, about $102 million, will go to county and municipal governments where the gas wells are drilled. About $68 million will be earmarked for environmental programs, roadway repairs, water and sewer infrastructure upgrades and other projects. The rest, about $18 million, goes to state agencies. Among counties, the biggest recipients will be Washington County at $5.7 million, down more than $800,000 from the year before, Susquehanna County at $5.3 million and Bradford County at $4.9 million. Among municipalities, Morris Township in Greene County will receive the most, at $848,000, followed by Auburn Township in Susquehanna County, at $805,000, and Cogan House Township in Lycoming County, at $799,000. Under the impact fee law, counties and municipalities can choose to use the money in more than a dozen ways. Typically, they put most of it in rainy-day funds or spend it on infrastructure projects and public safety and emergency preparedness.

NC WARN alleges criminal fraud in methane studies at fracking sites -- NC WARN, a Durham environmental advocacy group, and a Fayetteville engineer have teamed up to lodge federal allegations of scientific fraud against a Texas engineering professor who led key studies into methane leakage at shale gas drilling sites around the country.  NC WARN filed the charges with the Environmental Protection Agency, asking the agency’s Office of Inspector General to investigate what the Durham group describes as misleading science that gives the fossil fuel industry political cover to continue spewing methane into the atmosphere.  NC WARN is pressing the EPA to start regulating methane emissions at the thousands of natural gas drilling and production sites around the country. In its EPA complaint, the organization is demanding a zero-emission standard on valves and pipes that are releasing the methane, a greenhouse gas that has 84 times the heat-trapping power of carbon dioxide. Touché Howard, the Fayetteville engineer who also works as a firefighter in Durham, is involved because he’s a retired chemical engineer who had worked for decades as monitoring natural gas leaks for the oil and gas industry. Howard, 54, invented the HiFlow technology in 1993 that was used in two studies that NC WARN wants the EPA’s inspector general to investigate.“We used the terms scientific fraud and coverup because we believe there’s possible criminal violations involved,” said NC WARN executive director Jim Warren. “The consequence is that for the past 3 years the industry has been arguing, based largely on the 2013 study, that emissions are low enough that we shouldn’t regulate them.”

State Senate wants moratorium on fracking in Massachusetts - The Massachusetts Senate is backing a 10-year moratorium on fracking in the state. The bill was approved unanimously on Thursday. It would also bar the disposal in Massachusetts of wastewater from fracking. Also known as hydraulic fracturing, fracking involves the injection of millions of gallons of water along with sand and chemicals to shatter underground rock and free shale gas or oil. There are currently no fracking operations in the Bay State. Critics of the process hope to ensure that no drilling occurs around the Hartford basin, a rock formation in the Connecticut River Valley that may contain gas deposits. Democratic Sen. Marc Pacheco, who sponsored the bill, argues fracking can release harmful chemicals, contaminate groundwater and cause small earthquakes. The measure now goes to the House.

Supporters tout pipeline benefits - The planned Atlantic Coast Pipeline set to run through Nash County will make natural gas more affordable in the region, according to a local energy official and a utilities representative. Rocky Mount Energy Resources Director Richard Worsinger and Tammie McGee, a Duke Progress Energy spokeswoman, contend the pipeline will be safe, reliable and efficient, countering claims made by members of the newly-formed nonprofit action organization Nash Stop The Pipeline. The proposed Atlantic Coast Pipeline is a partnership between Duke, Dominion Transmission and other utility companies to deliver approximately 2 billion cubic feet of natural gas for 592 miles through pipeline from West Virginia through Virginia into North Carolina. Worsinger has worked in the electric and natural gas utility industry for 32 years. He serves on the Gas Pipeline Advisory Committee of the Pipeline and Hazardous Materials Safety Administration, under the U.S. Transportation Department, which regulates natural gas. He’s also the chairman of the American Public Gas Association, a nonprofit organization that advocates for municipal and community-owned natural gas utilities like Rocky Mount. He said natural gas is helping the return of various industries from overseas back to the United States, a reduction in the nation’s dependence on foreign oil and is supplanting coal as the preferred fuel to generate electricity. “Natural gas pipelines are the safest form of energy transportation. Period,” Worsinger said.

Federal agencies hold key to proposed route of Atlantic Coast Pipeline - The circuitous path of the Atlantic Coast Pipeline now loops through nine properties protected by Virginia conservation easements on its way to a critical proposed crossing of the Blue Ridge Mountains above the Wintergreen resort in Nelson County, where the natural gas transmission line would traverse at least one other state conservation easement. All but one of the affected easements came into the 42-inch pipeline’s path under a new route proposed this year in response to concerns expressed by the U.S. Forest Service. That is the same federal agency that holds the key to the proposed crossing of the Appalachian National Scenic Trail by drilling through the mountain near Wintergreen’s sole entrance. Dominion, the Richmond-based energy company that leads the $5 billion pipeline project, has proposed to compensate for crossing state-protected properties by offering conservation easements on an 1,100-acre farm in Highland County and 85 acres along the Rockfish River in Nelson. But the state foundation that holds the easements isn’t sure it will have the final say on whether to accept the land swap for a route that ultimately would be determined by the Federal Energy Regulatory Commission, or FERC. “The scale of the proposal is unprecedented,” said Jason McGarvey, communications and outreach manager for the Virginia Outdoors Foundation. “The fact that we’re dealing with a federal entity making a federal decision about where to site the final pipeline also is unprecedented.”

A rare tour of the Strategic Petroleum Reserve - The world’s largest emergency stockpile of crude oil is quickly falling apart. The stockpile’s infrastructure, which currently stores 695.1 million barrels at four sites along the US Gulf Coast, is nearing the end of its design life and in need of a roughly $2 billion makeover, US Department of Energy officials claim. “We’ve had several significant equipment failures over the last couple years that have affected our operational capability,” said Bob Corbin, the DOE deputy assistant secretary who oversees the stockpile, formally known as the US Strategic Petroleum Reserve. In April, a water pipe at the DOE’s Big Hill site in Winnie, Texas failed, less than a year after a crude oil storage tank failed at the Bryan Mound SPR site near Freeport, Texas. Throughout the system, pipes are corroding, tank floors need to be replaced, wells are failing mechanical integrity tests and pump motors, after decades of dealing with harsh weather and salty air off the Gulf of Mexico, are breaking down beyond repair, DOE officials claim. Corbin said these issues complicate the ability of DOE to both drawdown and distribute crude oil at times of severe supply distributions, which is the primary reason the SPR was created more than four decades ago. They also complicate US’ ability to meet obligations under international agreements and could endanger energy security.

In Oklahoma, $50 oil may test new quake regulations | Reuters: Oil producers around the country enticed by crude's jump to $50 a barrel are hoping to get production back on line, but for producers in Oklahoma, new regulatory barriers may keep key parts of the state shut due to worries about earthquakes. Crude's recent rebound will mark the first test of more stringent regulations recently implemented in Oklahoma - and already, companies are looking for workarounds. Seismic activity has soared in the state in the last five years, linked to disposal of saltwater from fracking activity. Fracking is the process of drilling down into the earth and injecting liquid at high pressure in order to extract oil or gas, which has prompted environmental concerns. In Oklahoma, those concerns revolve around the increased seismic activity which is tied to the creation of wastewater wells. Oklahoma officials were eventually forced to take action through directives - initially voluntary – that have since become hard mandates designed to limit earthquakes. Scientists are uncertain about whether the regulations can stop the phenomenon, which has serious implications for Oklahoma, one of the top U.S. energy-producing states. Until now, low oil prices meant producers were not drilling anyway. But that might change now that crude has posted its first sustained climb to $50 in nearly a year.  At the end of May, the state finalized plans to cut saltwater disposal from oil and gas drilling in north-central and central Oklahoma, just one month after it implemented a similar plan to cut injection in northwestern Oklahoma.

New Mexico wrestles with cleanup costs at oil wells (AP) — New Mexico regulators overseeing oil leases on state trust lands are seeking to set aside more funding as they grapple with repairing damage in the wake of spills of oily salt water by a Texas-based company. State Land Commissioner Aubrey Dunn unveiled proposed legislation Wednesday to create a fund that could accumulate up to $5 million to help restore state trust lands after unforeseen damage from oil-industry spills along with illegal dumping, wildfires and even invasive plant species. Dunn said the restoration and remediation fund would divert 1 percent of revenues from the state’s land maintenance fund, or roughly $700,000 a year. The maintenance fund receives money from renewable resources — such as grazing, rights-of-way and business leases — along with rental payments from oil and natural gas developers. It is the source of the State Land Office’s operating budget. “We need to build up a fund to handle things that aren’t going to be covered by annual appropriations” from the state general fund, Dunn told the Associated Press. “Our goal at the Land Office is to maintain the land for future generations. We feel like we need that type of fund.” The State Land Office is locked in litigation with Siana Operating of Midland, Texas, on accusations that the company trespassed and spilled waste at a well site on state trust lands where it stopped making lease payments several years ago. In all, the agency says it is owed $284,000 in fees, cleanup costs and penalties. Siana Operating representatives could immediately be reached. The company is disputing the claims.

Colorado studying the health effects of fracking | The Salt Lake Tribune: New data on air pollution from fracking wells in Colorado will be a big help in assessing whether the emissions are harmful to human health, state officials say. A three-year study released Tuesday measured methane — a greenhouse gas — and ozone-causing compounds that were released from new natural gas wells in western Colorado. The research, by Colorado State University professor Jeff Collett, didn't measure the emissions' health effects, but state officials will use the data in computer modeling to assess the risks, said Mike Van Dyke of the Colorado Department of Public Health and Environment. "This study is incredibly useful," said Van Dyke, chief of environmental epidemiology, occupational health and toxicology for the health department.The state expects to hire outside researchers by the end of next month to begin modeling the human health risks, using the western Colorado research as well as data from a second study Collett is conducting at wells near the state's urban Front Range. The state risk study is expected to be completed in January 2018. Collett's study is the first time researchers have been able say with certainty they were measuring pollution only from drilling operations and not from other sources, Van Dyke said. Van Dyke believes Collett's study is the first of its kind in the country.

Colorado Scientists Detail Results of Fracking Air Pollution Study:  A study of air pollution from western Colorado fracking wells found the highest rate of emissions came just after fracking was completed. The research released this week didn’t measure the effects on human health, but it will help state officials devise such a study later.Fracking, or hydraulic fracturing, uses pressurized water, sand and chemicals to break open underground formations and release oil and gas. The study looked at methane and ozone-causing compounds released from new fracking wells. Jeff Collett, a professor of atmospheric science at Colorado State University, said the study found the emissions rate was highest when gas began to flow from the well, pushing the water and chemicals back out. The $1.7 million study was funded by Garfield County and drilling companies. Collett discussed it with county commissioners Tuesday.

The Continued Attempt to End Shale Development in Colorado – This Time Through the Voter Initiative - An attempt to put restrictions on shale development, so as to effectively end it, is nothing new in Colorado. Just this year, several Democrats attempted to push a bill through the Colorado House of Representatives that would have given local governments specific authority to regulate the siting of oil and gas facilities. The Colorado House voted down that bill. But that has not stopped other efforts to end new shale development activities in the state. There are currently three voter initiatives in the signature-gathering stage that could have substantial impacts on Colorado’s oil and gas development – Initiative #78, Initiative #63 and Initiative #75.

Fracking and Drinking Water: the Connection Is Becoming Clear --While not necessarily a new practice, fracking has certainly garnered its fair share of headlines—due in part to both an increase in its implementation as well as the level of aggressiveness in which it is used. One side effect of fracking, and the one that is quite controversial in certain areas of the country where fracking occurs, is that it is believed to be the source of increased seismic activity. In other words, areas of the country like Texas, Oklahoma and Colorado—rarely known for earthquakes prior to the introduction of fracking—are now experiencing a record number of tremors. Activists against the practice claim that it all makes sense; inject a high-pressure solution of water, sand and emulsifiers into a brittle, laminated, fracturable layer of earth (shale) and things can get slippery—literally you can have huge sections of earth “sliding” into a new position, otherwise known as an earthquake. Now for the lesser known result that’s a much bigger risk to the population—the contamination of groundwater. To understand this threat, let’s revisit what we know about fracking; it’s the injection of a high-pressure slurry of water, particulates and chemicals deep into the earth. And it is this cocktail of contaminants that’s making its way into drinking water, according to a peer-reviewed study recently published in Environmental Science and Technology. The catalyst for this study started eight years ago in Pavillion, Wyoming. Residents of this community atop one of the state’s numerous natural gas basins first noticed an odd taste and smell to their drinking water. The Environmental Protection Agency (EPA) came in and determined that the local water contained toxic chemicals, yet they dropped the matter without publishing a final report as to the source. It was only through the perseverance of the former EPA scientist behind the initial testing that comprehensive results were recently made public.

Mysterious Gas Leak In A Town Surrounded By Wells | Inside Energy: The search is continuing for the source of a gas leak that shut down a school in Midwest, Wyoming at the end of May. Fleur de Lis, the company that operates the neighboring Salt Creek oil field, says it has plugged one leaking well near the school, worked on another six and is continuing to monitor as many as 30 other wells in the area. The Salt Creek field is the oldest in Wyoming, and an Inside Energy analysis of the state oil and gas database shows there are more than 700 active and abandoned wells in a one mile radius around the Midwest school. Many of those wells were drilled decades ago, and those that have been abandoned may or may not be properly plugged. In the past, it was common for companies to abandon wells by filling them with mud or even fence posts. It's also possible that not all well locations are known. A 2006 study by the National Energy Technology Laboratory identified several dozen wells in a single square mile of the Salt Creek Field that were not in company databases. Staff at Midwest School first reported a strange odor on May 25 and initial air quality testing detected high levels of carbon dioxide as well as volatile organic compounds inside the school. Students finished out the school year at the old North Casper Elementary School.

Toxic Chemicals Found in Residents Living Near Oil and Gas Operations in Pavillion, Wyoming --A coalition of community and environmental health groups released Thursday a first-of-its-kind research combining air monitoring methods with new biomonitoring techniques to determine if toxic air emissions from natural gas operations could be detected in the bodies of nearby residents. The study, When the Wind Blows: Tracking Toxic Chemicals in Gas Fields and Impacted Communities, found evidence of eight hazardous chemicals emitted from Pavillion, Wyoming gas infrastructure in the urine of study participants. Many of those chemicals were present in the participants’ bodies at concentrations far exceeding background averages in the U.S. population. “If your drinking water is contaminated with toxic chemicals you might be able to make do with another source, but if your air is toxic you can’t choose to breathe somewhere else,” Deb Thomas, director of ShaleTest who lives in Wyoming and was one of the study leaders, said. “No matter which way the wind blows, gas development involves so many emissions sources that people can’t help but to be exposed to toxic chemicals from their operations. Unfortunately, this is what everybody who is living with oil or gas drilling now has to look forward to if that drilling leads to production.”

Natural Gas Flaring In North Dakota Has Declined Sharply Since 2014 -- The volume of North Dakota’s natural gas production that is flared has fallen sharply in both absolute and percentage terms since 2014. In March 2016, 10% of North Dakota’s total natural gas production was flared, less than one-third of the January 2014 flaring rate, which was at 36%. Flaring rates and volumes have significantly decreased as North Dakota’s total natural gas production has continued to grow, setting a monthly total natural gas production record of 1.71 billion cubic feet per day in March 2016. The North Dakota Industrial Commission established targets in September 2015 to reduce natural gas flaring.  Natural gas is flared (burned) rather than vented (released into the air) without combustion for both safety and environmental reasons. Vented, unprocessed natural gas contains hydrocarbons that are heavier than air, such as propane and butane, which can be hazardous if ignited. Methane, the primary component of natural gas, is also a potent greenhouse gas. Flaring natural gas produces carbon dioxide, which, while also a greenhouse gas, has a much lower global warming potential (a measure of how various gases can affect the atmosphere’s radiative balance) than methane. Natural gas flaring in the United States is not confined to North Dakota, but since 2012, North Dakota has had the highest volumes of flared natural gas. By law, North Dakota prohibits natural gas venting.

North Dakota oil output drops 70,000 barrels daily in April -- (AP) — North Dakota’s oil production decreased by about 70,000 barrels a day in April. The Department of Mineral Resources says the state produced an average of 1.04 million barrels of oil daily in April. North Dakota’s production record was set in December 2014 at 1.22 million barrels daily. North Dakota also produced 1.61 billion cubic feet of natural gas per day in April, down from a record 1.71 billion cubic feet daily set in March. The April tally is the latest figure available because oil production numbers typically lag at least two months. There were 28 drill rigs operating in North Dakota’s oil patch on Wednesday — the lowest number since July 2005.

Could the Bakken end up with too much pipeline capacity? --For the past five years, crude oil producers in the Bakken have depended on railroads to transport a significant share of their output to market—there simply hasn’t been enough pipeline capacity out of the tight-oil play. Now, construction of the long-awaited, 450 Mb/d Dakota Access Pipeline (DAPL) is finally poised to begin, and a late-2016 online date for DAPL is planned. DAPL’s capacity would enable producers to further reduce their use of crude-by-rail, but with Bakken production on the decline, will DAPL really be needed? And what about additional out-of-the-Bakken takeaway capacity being planned? Today, we consider the challenges and pitfalls of developing midstream infrastructure in fast-changing markets, focusing on Bakken crude. Assuming construction starts in early summer, the Dakota Access Pipeline (an Iowa issue) and Energy Transfer Crude Oil Pipeline (a pipeline reversal, Illinois to Texas) are planned to be operational late this year.  DAPL will give the Bakken sufficient pipeline (and in-region refinery) capacity to receive more than 100% of the Bakken’s crude output.  That won’t make the Bakken’s vast CBR capacity superfluous—far from it.  For one thing, only a few Bakken producers would have direct access to DAPL, and some don’t have access to existing pipeline out of the region either. For another, many producers that signed take-or-pay contracts for CBR capacity have time left on their deals, and would be unlikely to double-pay for takeaway capacity (that is, pay their CBR obligations and pay to use a pipeline). Perhaps the bigger question is whether DAPL’s completion late this year (again, assuming all goes well on its federal permits and during construction) will affect the need for another out-of-the-Bakken pipeline project—Enbridge’s proposed 616-mile Sandpiper Pipeline from near Tioga, ND, to Enbridge’s crude terminal in Superior, WI.  Sandpiper would provide Bakken producers with access to a different set of refineries. Whether that is enough to push the Enbridge project over the finish line remains to be seen, given what may be an emerging surplus of Bakken pipeline takeaway capacity.

Railroad says broken bolt caused Oregon train derailment  -- At least one broken bolt holding the rail in place caused the fiery derailment of a Union Pacific train moving volatile crude oil through the Columbia River Gorge on the Oregon-Washington border, railroad officials say. Union Pacific spokesman Justin Jacobs said Saturday that the company filed a report Friday with the Federal Railroad Administration citing one or more broken bolts as the cause of the June 3 derailment. “We are unaware of any time when this has happened in the past,” Jacobs said. “This is an unusual failure.” He said there’s no evidence of malevolent activity by anyone to damage the tracks. “There’s nothing to indicate that would be the case,” he said. The type of bolt that broke is unique in that it’s only used on curved sections of track, Jacobs said. He noted the train was going 26 mph in a 30 mph zone so it’s not clear why the bolt failed. As a result, he said, the company is now in the process of checking similar bolts in curved sections of its 32,000 miles of track in 23 states. No one was injured in the derailment, but the tiny town of Mosier, Oregon, was evacuated after four cars caught fire. Of the 96 cars all loaded with crude oil, more than a dozen derailed. Mosier Fire Chief Jim Appleton, who fought the blaze after the derailment, said he appreciated Union Pacific’s maintenance and safety procedures but the risk of one broken bolt resulting in such a disaster or potentially worse disasters means regulators should not allow shipments of crude oil to travel by train through the area

More crude oil heads to US West Coast, even as rail permitting delays abound: (video) Shipping crude oil to the US West Coast has never been easy, but moving crude by rail is becoming more difficult as permitting challenges delay projects. Joshua Mann describes how rail compares to pipelines, as well as how financial incentives to bring in crude from other regions can change by the time projects become operational.

Wildfire near California oil refinery burning out of control  (AP) — A California wildfire spurred by strong gusts mushroomed in size and burned out of control Thursday in a remote coastal area west of Santa Barbara, forcing the evacuation of hundreds of campers, some homes and an oil refinery as it crept toward the ocean. Winds and rising temperatures across the dry Western U.S. also worsened wildfires in other states. A blaze in central New Mexico grew to more than 3 square miles and forced residents to flee at least 50 homes after sending up a towering plume of smoke that blanketed the state’s largest city in a thick haze. In eastern Arizona, a small community was evacuated and residents of five others were told to prepare to leave after a wind-whipped wildfire charred nearly 4 square miles within hours Wednesday. Fires also had threatened homes in Nevada and Utah.  Heat and wind were expected to pose problems for crews in those states and California, where there was no containment of the nearly 2-square-mile blaze drawing closer to an ExxonMobil oil facility in a canyon of heavy brush.“The refinery has fire around it, and companies in place protecting it,” Santa Barbara County fire Capt. Dave Zaniboni said, adding that it has a cleared buffer zone. ExxonMobil has evacuated non-essential employees, and those that remain are helping protect it against the flames, company spokesman Todd Spitler said.

Ancient Satellite Busts Massive Gas Storage Leak, Fracking Next -  NASA has just reported that its EO-1 satellite has picked up the trail of emissions from the massive methane leak at a natural gas storage facility near the gated community of Porter Ranch in California. Okay, so they took their time about reporting it — the leak dates back to last fall and it was fixed by February — but the important thing is, this is the very first time that an orbiting spacecraft has confirmed methane emissions from one identifiable facility. That’s significant because it means that orbiting spacecraft could become an effective means of detecting significant, fixable sources of methane on a global basis. That news comes at a bad time for the fracking industry, which is coming under increased scrutiny for bleeding out methane gas from drilling operations among (many) other ills. For those of you new to the topic, the Porter Ranch methane leak involved a SoCal Gas storage facility at Aliso Canyon, resulting in thousands of evacuations from the well-to-do community.The leak began last October and it took crews until February to stop it. Over the winter, NASA’s Jet Propulsion Laboratory set EO-1 to the task of monitoring the methane leak, deploying a spectrometer called Hyperion.. The findings are available at the journal Geophysical Letters under the title, “Space-based Remote Imaging Spectroscopy of the Aliso Canyon CH4 Super-emitter.”  Here in the US, evidence is mounting that there are significant fugitive methane emissions from fracking sites and from conventional drilling sites. Leaks can also occur along transmission pipelines and storage facilities. The problem is finding all of them, and now we know that satellite observation can provide a reliable, efficient way of gathering measurements.

Climate scientists urge Obama to rule out more Arctic oil and gas exploration -- Nearly 400 international scientists called on Barack Obama to rule out further expansion of oil and gas exploration in Arctic waters under US control. The letter, signed by prominent Arctic, marine and climate specialists – including a former member of Obama’s administration, urges the president to rule out any future hunting for oil in the waters of the Chukchi and Beaufort seas. “No new oil and gas leasing or exploration should be allowed in the Chukchi and Beaufort seas in the foreseeable future, including in the next five-year leasing plan,” the scientists write in the letter. The letter follows a series of new heat and melting records in the Arctic, which have stunned scientists. Last week it was warmer in Nuuk, the capital of Greenland, than in New York City. The Danish Meteorological Society said the 75F temperature was the second heat record since April, and followed a very early start to the ice melt season. In addition to putting the entire Beaufort and Chukchi seas off-limits for the next oil and gas leasing offer, from 2017 to 2022, the letter urged the administration to consult native Alaskan groups on any further Arctic developments. The scientists said in the letter that expanding Arctic marine protection would help counter the effects of climate change.

Radioactive Ranchers? Elements Found Downwind of Intensive Fracking --  It began in 2009 when the so-called Cardium oil boom abruptly dotted the rolling landscape with scores of well pads, oil batteries, and new access roads. The companies were drilling lateral wells, which turn 90 degrees and travel for kilometres underground, extending under people's barns and homes. (Tight oil costs more to extract and produces lower quantities of oil.) As industry fracked these deep, far-reaching wells with millions of gallons of water, toxic chemicals, and sand under high pressure and then burned off unwanted raw gas, the Hawkwoods and many of their neighbours began complaining about noxious emissions and earth tremors. Some officials with the Alberta Energy Regulator (AER) initially responded to general complaints in the region by saying fracking was proven and safe and that it couldn't cause earthquakes -- claims now proven false by a variety of scientific studies.Meanwhile, songbirds disappeared from the Lochend area, north of Cochrane where the Hawkwoods live, while the chemistry of local groundwater started to show changes in the amount of sodium, chloride, barium, strontium, and uranium. At their own ranch, the Hawkwoods observed that their well water levels rose during highly pressurized fracking operations and then returned to normal once the fracking stopped. Then came reports from nearly a dozen nearby residents about hair loss, respiratory problems, skin rashes, and rare cancers. Many families later moved from the region.  After losing an unprecedented number of cattle in 2013, the Hawkwoods tested soil where the cattle had urinated and found high levels of radioactive materials. Not even seeds would germinate in the soil. That discovery convinced the couple to test themselves for radioactive elements and to purchase a Geiger counter. The special test, analyzed at the London Health Sciences Centre in Ontario, showed that the ranchers had ''high'' levels of uranium and strontium above the lab's ''reference range'' in their urine, probably due to exposure from soil, water or air.

Internal Documents Reveal How MSNBC Show Worked To Promote Fracking – Steve Horn - Cable TV network MSNBC has made headlines in recent days for apparently moving away from its “Lean Foward” progressive brand, catering instead to a more center-to-right-leaning crowd. “People might start accusing us of leaning too far to the right,” the station says in a new advertisement featuringMSNBC’s conservative personalities — an array of Republican identities such as Michael Steele, Steve Schmidt and Ben Ginsberg. But on the issue of hydraulic fracturing (“fracking”) for shale oil and gas, documents from 2011 obtained under Oklahoma’s Open Records Act demonstrate that the network saw itself as a promoter of both the controversial drilling method and natural gas vehicles. NBCUniversal, at the time, was owned on a 49-percent basis by the natural gas utility and electricity company General Electric (GE) and is now wholly owned by Comcast. The documents, obtained from Oklahoma State University (OSU), relate to the filming of an episode of “The Dylan Ratigan Show” on the OSU campus in April 2011. The episode came two and a half years before the network announced in late-2013 that its website would run native advertisements (content that looks like original news) on behalf of fracking lobbying group America’s Natural Gas Alliance. ANGA is now part of the American Petroleum Institute(API).That episode of Ratigan’s show featured oil and gas industry hedge fund tycoon T. Boone Pickens, who now serves as a fundraiser for Republican Party presidential candidate Donald Trump, and who was stumping at the time for his pro-fracking “Pickens Plan.” The emails offer a rare look inside the making of an episode of a popular MSNBC show and a glimpse into a future business relationship, too.

A bullish EIA storage report signals a big shift in the US natural gas market -  The U.S. Energy Information Administration (EIA) on Thursday (June 9) reported a surprisingly bullish 65-Bcf injection for the week ended June 3—that was 8.0 Bcf below our Natgas Billboard estimate and more than 10 Bcf below the Bloomberg industry average assessment. In response, the CME/NYMEX Henry Hub July natural gas contract screamed about 15 cents higher following the report to a settle of $2.617/MMBtu, the highest daily settle for the prompt month in nearly 9 months. Thursday’s gains extended a rally that began on May 31 (2016) just after the July contract rolled to the front of the futures curve. It’s likely the rally was initially spurred by market participants looking to cover their short positions. But in the past week, an increasingly bullish fundamental picture has emerged prompting us to raise our price outlook (in our June 10 NATGAS Billboard report). In today’s blog, we analyze the fundamentals behind rising natural gas prices.  Ever seen a flash mob? It starts out small and seemingly spontaneous, with one or two brazen outliers busting out in what seem like an involuntary convulsion completely incongruous with what’s going on around them. But it quickly escalates into a well-timed, choreographed and synchronized ambush on unsuspecting onlookers as one after another apparent bystanders start joining in. And then, before you know it, it’s over—everyone and everything looks just as they did before. It’s as if it never happened. And you’re left feeling a little shell-shocked, inexplicably giddy, and also a little bit disoriented.

US shale oil production forecast to fall in July: EIA - Oil  -- Oil output in the biggest producing shale areas in the US is forecast to decrease 118,000 b/d in July from June to 4.723 million b/d, according US Energy Information Administration estimates released Monday. The decrease was in line with the precipitous fall in oils rigs operating in US shale. The rig count peaked in October 2014 at 1,609 and finished last week at 328, according to Baker Hughes data. The steepest drop in production was expected in Texas' Eagle Ford shale where output is anticipated to shrink 58,000 b/d to 1.212 million b/d, followed by a 28,000 b/d decrease in North Dakota and Wyoming's Bakken shale oil to 1.024 million b/d, according to the EIA's Drilling Productivity Report. The largest oil producing shale region in the US, the Permian basin of West Texas and New Mexico, is forecast to lose 10,000 b/d of production to 2.019 million b/d, the report said. While production has continued to trend lower, the rigs still operating are forecast to produce more barrels per day than before as drilling techniques continue to improve. In the Permian new-well oil production per rig is forecast to grow by 13 b/d to 493 b/d, the Bakken is expected to increase new-well output by 17 b/d to 832 b/d, with the Niobrara and Eagle Ford each expected to grow new-well production by 23 b/d to 915 b/d and 994 b/d, respectively.An EIA formula shows the Bakken would need to have 62 rigs operating, up from current 24 rigs, to maintain current production. The Permian basin would need to have 150 rigs, eight more than now. The Eagle Ford would require 89 rigs operating, from 26 currently and the Niobrara would need 31 rigs, 12 higher than its current rig count.

Rising Oil Prices Encourage Shale Producers, Dissuade Investors -  The oil market just hit a yellow light. Crude’s advance of more than 90 percent from a 12-year low earlier this year has U.S. shale producers starting to return to their drilling rigs, threatening to slow further gains. "The $50-to-$60 a barrel area is the sweet spot,"  . "You start to have producers come back at $50, but a lot of them come in at $60." Money managers were cautious in the week ended June 7, betting more heavily on a price drop than on further gains, according to data from the Commodity Futures Trading Commission. West Texas Intermediate rose 2.6 percent to $50.36 a barrel on the New York Mercantile Exchange during the report week and was down 44 cents to $48.63 at 1:56 p.m. New York time on Monday. Prices have climbed enough for Continental Resources Inc. to dispatch fracking crews to unfinished wells in the Bakken shale region, Chief Executive Officer Harold Hamm said June 9. Those wells were left uncompleted as tumbling prices forced explorers to halt projects to conserve shrinking cash flows. Helmerich & Payne Inc., the biggest drilling-rig contractor in the U.S., and Independence Contract Drilling Inc. said last week they were receiving more queries from oil explorers. "Everyone is questioning the price when U.S. rigs come back," Paul Sankey, an energy analyst at Wolfe Research LLC, said June 10 on Bloomberg Radio. "At $55 to $60 we would return to growth in the U.S."

US shale oil producers evolve in survival of the fittest - In the movie Jurassic Park, the most memorable image is the subtlest: the water rippling in a cup that shows the earth-shaking Tyrannosaurus Rex is coming. For oil producers around the world, the rising number of rigs drilling for oil in the US should be seen the same way: as a faint but ominous sign of an approaching threat.The US shale industry has been in decline, but it is far from extinct, and some companies can thrive even with prices at around today’s levels. Any rival producers that need higher prices to be financially viable should be worrying about being eaten alive. The rebound in activity in the US is so far only modest. The number of rigs drilling the horizontal wells used for shale oil production has risen by 13 in the past two weeks to 262, according to Baker Hughes, the oilfield services group, down from a peak of 1,115 in November 2014. The rigs that are being put back to work, though, reflect decisions taken a few weeks ago, when oil prices were lower than they are today. If prices remain stable for a while at about $50 per barrel — and still more if they move higher — more companies are likely to join in the revival. US oil production has been dropping since April last year, and is set to keep falling for the rest of 2016 at least. But Wood Mackenzie, the consultancy, thinks that the decline can be halted with only about 50-100 more rigs starting to drill horizontal wells again. The prospect of the US resuming its position as a growing supplier to global crude markets creates what Paul Sankey of Wolfe Research describes as a “soft ceiling” on prices. Scott Sheffield, chief executive of Pioneer Natural Resources, one of the most active shale drillers, expects a long-term oil price of about $60 per barrel. It will fluctuate around that level, he says, and at times could go to $40 or $80. But any producer that needs oil to be consistently above $60 will be in trouble.

Why Billions in Proven Shale Oil Reserves Suddenly Became Unproven -- Proven reserves -- gas and oil resources that are among the best measures of a company’s ability to reward its shareholders and repay its debts -- are disappearing across the shale patch. This year, 59 U.S. oil and gas companies deleted the equivalent of 9.2 billion barrels, more than 20 percent of their inventories, according to data compiled by Bloomberg. It’s by far the largest amount since 2009, when the Securities and Exchange Commission tweaked a rule to make it easier for producers to claim wells that wouldn’t be drilled for years. The SEC routinely questions companies about their reserves. Now, agency investigators are also on the hunt for inflated reserves estimates, according to a person familiar with the matter. “Reserves make up a large share of the value of these companies, so it really matters,”  “They’re looking even more closely at how companies are booking reserves, how they’re evaluating the quality of those reserves and what their intentions really are. They’re not accepting pat answers.” Drillers face pressure to keep reserves growing. For many, the size of their credit line is tied to the measure. Investors want to see that a company can replace the oil and gas that’s been pumped from the ground and sold. There are two ways to increase reserves: buy more or find more. Fracking made it easier to do the latter, and the industry lobbied the SEC to count more undeveloped acreage as proved reserves, arguing that shale prospects are predictable across wide expanses. The SEC agreed, with two key limits. First, the wells must be profitable to drill at a price set by an SEC formula. The companies got a temporary reprieve for 2014 because the SEC number was about $95 a barrel even though crude had plummeted to less than $50 by the time results were reported in early 2015. That advantage has disappeared. When companies reported their 2015 reserves this year, the SEC price was about $50.  The SEC also requires that undeveloped wells be drilled within five years of being added to a company’s books. The five-year plan can’t just be wishful thinking. “The mere intent to develop, without more, does not constitute ‘adoption’ of a development plan,” the SEC explained in 2009. Despite those limitations, reserves surged 67 percent in the five years after the 2009 rule change, according to 53 companies that have records going back that far. Almost half the gains came from wells that existed only on paper. 

Signs suggest we are in the final phase of the oil cycle - More consolidation in oilfield services is likely and inevitable given the “lower for longer” environment for oil prices, according to top oil analysts. Merger and acquisition activity has already been significant in the sector, the Baker Hughes - Haliburton deal unraveling notwithstanding. Siemens acquired Dresser-Rand in 2014 for $7.6 billion, Schlumberger acquired Cameron in 2014 for $14.8 billion and FMC Corp acquired Technip earlier this year. Oppenheimer analyst Fadel Gheit said he sees an active consolidation environment in the second half of 2016.  “Consolidation is always the last phase in the oil price cycle as companies revise their business model to survive in a lower for longer oil price environment,” he said. Even with oil prices doubling since their lows earlier this year, many in the industry are preparing for “lower-for-longer” levels. “Oil producers are adjusting their capital spending budgets to cope with the new realities for a new ‘normal oil price’ of around $65 per barrel level,” Gheit said. He added that “significantly higher or lower prices likely to trigger market response and the price becomes self-correcting.” Within oil, Gheit said oil service stocks have led other energy industry groups in consolidation. “We think the rest will follow,” he said.

'Insane' U.S. diesel, gasoline prices hard to crack for refiners | Reuters: The hot summer months are the boom time for U.S. gasoline sales, and naturally the season when refiners are all-in on pumping out the motor fuel for drivers on U.S. highways. But an unusual glut of gasoline - just as refiners are ramping up to produce more - has caught them on the wrong side of distillate margins for the second time in less than 12 months. Instead of minting bigger profits on refining gasoline, they are seeing margins shrink because of oversupply, potentially leading to disappointing earnings. U.S. gasoline inventories are currently about 9 percent above their five-year average, according to data from the U.S. Energy Information Administration. The gasoline oversupply has presented refiners with the unusual dilemma of whether to switch summer output towards distillates. It is a mirror image of what happened with distillate products in the winter, when weak demand for diesel and heating oil left a big surplus in those products, and hammered independent refiners' earnings at a time when those products are normally in high use. Typically, gasoline trades at a premium to diesel during the hot months of June, July and August. However, on Wednesday, gasoline's premium to diesel and heating oil fell to a mere one cent, down from a peak of 29 cents in early April. "Gasoline is on the verge of trading under diesel... in JULY!!! That's insane," a trader at a U.S. bank said in an instant message.

Gasoline Profit Margins Sink, Pressuring Refiners to Adjust -- Refiners are considering producing more diesel and jet fuel now that gasoline profit margins have fallen to the narrowest seasonal levels since 2010. Those margins have dropped by $5 a barrel in just over two weeks as high imports have kept U.S. inventories elevated even as gasoline demand rises, said Andy Lipow, president of Houston-based Lipow Oil Associates LLC. The streak of declines wasn’t stopped by yesterday’s U.S. Energy Information Administration projection that summer gasoline demand will rise to a record 9.5 million barrels a day. "We’re seeing the economics change to the point that many refiners along the coast are looking at maximizing jet fuel and diesel at the expense of gasoline," Lipow said. "Refiners will start maximizing diesel output right in the middle of the summer gasoline driving season." Gasoline imports into the U.S. East Coast, which primarily come from the refineries in eastern Canada and Europe, have kept U.S. inventories at the highest levels seen in at least 20 years, EIA data show. East Coast imports, which dropped 77,000 barrels a day to 785,000 last week, are nearly double the year-earlier level. Oil trading company Trafigura Ltd. has added to inventories by bringing more than 1 million barrels of gasoline ashore from floating storage tankers in the Gulf of Mexico since mid-April, according to U.S. Customs data compiled by Bloomberg. Those supplies are unlikely to show up in weekly EIA import figures, William Brown, EIA senior analyst, said by e-mail, as the shipper is responsible for identifying an origin country on the government’s forms. "This has resulted in some oddities," Brown said. The falling margins are hurting refiners. The BI North America Refining & Marketing index fell 4.49 points to 286.90 today, 28 percent below a year earlier.

Yahoo to discontinue legacy Messenger service used by traders - US tech company Yahoo will discontinue its legacy Messenger service used by large sections of the energy and commodity industries for written conversations on August 5, 2016, it said late Friday. The company announced the move in a progress report on product prioritization. It is now focusing on a new messenger service geared to social media users, not traders and energy market professionals. "We encourage you to upgrade to the new Yahoo Messenger ahead of time, as versions 11.5 (Windows), 3.0 (Mac), 1.x (Android) and below, and older versions of Yahoo Messenger for iOS will be discontinued," said Yahoo, adding that a date of August 5 had been set.The new platform records conversations on the cloud and allows users to delete their chat history, something compliance officers at trading companies are unlikely to agree to, market sources have said.

Giant Wildfire Is No Longer the Canadian Oil Industry's Biggest Problem - Harbir Chhina helped develop the game-changing steam technology that allowed companies to tap the world’s third-largest reserves in Canada’s oil sands. It was a moonshot that paid off. Now the oil-sands industry, still recovering from last month’s wildfires, needs another one. Without a technological breakthrough like steam injection three decades ago, the flows that have transformed the country’s economy could slow to a trickle. In a world that has plenty of cheap crude, and increasingly demands cleaner energy, the oil sands look dirty, as well as expensive. The search for cleaner and cheaper techniques may be less urgent than fighting the blaze, which knocked out more than 1 million barrels of daily output and forced the evacuation of an entire city. But in the long run it’s a bigger threat. Will it prove to be a terminal one? Not according to Chhina, who says he’s as optimistic as he was in the 1980s when the oil-sands began to take off, triggering hundreds of billions of dollars of investment. Canada’s spending on research and development has been declining since 2001, and is only about two-thirds of the OECD average. . No other G7 country is so dependent on commodities and their fickle prices. Chhina and colleagues are making a start, experimenting with simpler ways of melting the nearly solid bitumen buried under the boreal forest. Solvents like butanes are currently the likeliest candidates, though microwaves are an intriguing alternative. Researchers are testing a technology that would fire the waves into horizontal bore-holes so that they’d heat the bitumen, like food, without affecting the surrounding container of rock and sand. Another oil-sands giant, Canadian Natural Resources Ltd., is looking at ways of harnessing the carbon dioxide and heat from its operations. Such techniques may have promise, but the challenge is to replicate them on a commercial scale.

Alberta’s abandoned well problem grows with O&G bankruptcy filings -- “They guaranteed us that something would happen in the next six months. We never heard back [from the regulators or the oil companies],” Alberta rancher Tony Bruder told CBC News.  Due to the oil price slump and the resulting O&G bankruptcy filings, Bruder is one of many Canadian landowners that might soon be dealing with the hassle of abandoned oil and gas wells on his own land. As reported by the CBC, the Redwater Energy court decision “ruled that in the case of a bankruptcy, energy companies must use their remaining assets to pay back their lenders before cleaning up old well sites.”A landowner lawyer commented on how the decision “effectively neutralizes” the means developed by state regulators for exceptional environmental cleanup efforts. As of early June, Alberta is home to roughly 69,000 capped wells and another 79,000 wells that have been inactive for a year or more. As reported by the CBC, the cost of sealing and reclaiming a well far exceeds the cost of a year’s lease fees.  As the oil price slump persists, many landowners are realizing they hold no power to say no to a well on their property. Additionally, they are unable to sway companies in their decision to clean and cap an old well. The CEO of a financial company owned by Alberta told the CBC, “I think there’s an issue with abandoned wells in Alberta, period.” However, it was noted that the ruling “was launched for clarity, so that lenders would know if they have appropriate security in place before making loans.” The Alberta Energy Regulator is appealing the ruling. To read more about Alberta’s growing abandoned well problem, read the full story at CBC News.

Oilsands growth makes it nearly impossible for Canada to meet Paris Agreement targets: report - CBC News: Even with provincial climate plans in place, anticipated growth in Alberta's oilsands and British Columbia's natural gas sector will make it nearly impossible for Canada to reduce emissions to agreed-upon levels under the Paris Agreement, according to a new report. "Short of an economic collapse, it is difficult to see how Canada can realistically meet its Paris commitments in the 14 years remaining without rethinking its plans for oil and gas development," author David Hughes, an earth scientist, said in a release. The report comes from the Parkland Institute, a research centre within the University of Alberta, and the Canadian Centre for Policy Alternatives, a left-leaning think tank.  If oilsands production grows to Alberta's new annual limit of 100 megatonnes and B.C. builds the five liquefied natural gas (LNG) export terminals it is proposing, Hughes estimates it would be nearly impossible for the rest of the country to reduce emissions fast enough to compensate. Meeting the Paris Agreement targets under that scenario would require everyone else to reduce emissions 55 per cent below 2014 levels, Hughes said.

House GOP again subpoenas State Department over Keystone  - The House Oversight Committee says it has subpoenaed Secretary of State John KerryJohn KerryAs VP, Warren could lead the way for Democrats Iran video dispute part of pattern at State Department House GOP again subpoenas State Department over Keystone MORE for Keystone XL pipeline documents. In a Friday statement, Oversight Committee Chairman Jason Chaffetz (R-Utah) said the State Department is not cooperating with an investigation into the November decision to block the Keystone oil pipeline. Chaffetz has sent Kerry two letters requesting documents and communications related to the “key determination” that the pipeline would have an impact on climate change and the decision to cite “U.S. climate leadership” in the denial of the project. In a letter to Kerry last week, Chaffetz said the committee would issue a subpoena if the State Department did not respond by today. It is the second Keystone-related subpoena issued by the committee: Last year, it subpoenaed “reports, recommendations, letters and comments” related to the review of the project. While the State Department responded, Oversight requested more documents. “Producing mostly publicly available documents to the committee and calling it responsive is pitiful,” Chaffetz said in a statement. “It demonstrates a contempt of Congress’ constitutional right to conduct oversight. We will use every tool available to obtain the information we need to properly and fully investigate this matter.”

Canada lent billions to oil, gas and mining companies. Then it made a profit -- On the same day that President Barack Obama rejected TransCanada Corp’s proposed Keystone XL pipeline, a Canadian Crown corporation threw the company a lifeline. Export Development Canada (EDC), a taxpayer-owned organization that operates as a commercial investment bank, signed two deals on that day — Nov. 6, 2015 — offering between $150 million to $350 million in loans to TransCanada, a Calgary-based company. The timing was purely coincidental. The deals renewed an annual arrangement with the Crown corporation, which is part of a syndicate of about 20 financial institutions that are supporting TransCanada Pipelines in the U.S. Large multinational corporations regularly take out short-term loans for operations. Some of them in Canada get help from EDC for their activities abroad. But deals like these illuminate the surprisingly symbiotic relationship between industry and the federal government. EDC has provided more than $28 billion worth of financial support to Canadian oil, gas, metals and mining companies since 2015, helping along some of the country’s industry giants. These include companies such as Cenovus, ConocoPhillips, Crescent Point Energy, Enbridge, Encana, Husky, Spectra Energy and Suncor. The deals support industry jobs and the economic benefits that go with them. They also help generate a healthy revenue stream for the government through interest payments.

TransCanada Wins Bid for Underwater Gas Pipeline Across Gulf of Mexico – Steve Horn -  TransCanada, owner of the proposed Keystone XL pipeline currently being contested in federal court and in front of a North American Free Trade Agreement (NAFTA) legal panel, has won a $2.1 billion joint venture bid with Sempra Energy for a pipeline to shuttle gas obtained from fracking in Texas’ Eagle Ford Shale basin across the Gulf of Mexico and into Mexico. The 500-mile long Sur de Texas-Tuxpan pipeline, as reported previouslyby DeSmog, is part of an extensive pipeline empire TransCanada is building from the U.S. to Mexico. The pipeline network is longer than the currently operating southern leg of the Keystone pipeline (now dubbed the Gulf Coast Pipeline). Unlike Keystone XL, though, these piecemeal pipeline section bid wins have garnered little media attention or scrutiny beyond the business and financial press.  The Sur de Texas-Tuxpan proposed pipeline route avoids the drug cartel violence-laden border city of Matamoros by halting at Brownsville and then going underwater across the U.S.-Mexico border to Tuxpan. After it navigates the 500-mile long journey, Sur de Texas-Tuxpan will flood Mexico’s energy grid with gas under a 25-year service contract. That energy grid, thanks to the efforts of the U.S. State Department under then-Secretary of State and current Democratic Party presumptive presidential nominee Hillary Clinton, has been privatized under constitutional amendments passed in 2013.TransCanada and Sempra were the only bidders. TransCanada owns the joint venture with Sempra—coined the Infraestructura Marina del Golfo, Spanish for “marine infrastructure of the Gulf”—on a 60-percent basis.

Eagle Ford shale to benefit from $3.6B pipeline projects - Eagle Ford shale producers are benefiting from Mexico’s need for more electricity. Mexico’s state-owned Federal Electricity Commission recently awarded $3.6 billion in pipeline projects to TransCanada, Spectra Energy and others. The projects will transport shale gas from Texas to Mexico to help meet the country’s growing electricity needs. For decades, Mexico’s electric power infrastructure has been hampered by inefficiency and short supply.  TransCanada announced, along with a Mexican joint-venture partner, that it will construct and operate a $2.1 billion natural gas pipeline in Mexico. The Sur de Texas pipeline will ship natural gas into Mexico’s main gas transmission system from both U.S. shale plays and offshore sources. Its route will deliver natural gas from the border through the Gulf of Mexico and into Tuxpan.  The pipeline project will double TransCanada’s natural gas capacity in Mexico. The company currently owns and operates five other pipelines in the country.“We are extremely pleased to further our growth plans in Mexico with one of the most important natural gas infrastructure projects for that country’s future,” TransCanada president and CEO Russ Girling said in a press release. “This new project brings our footprint of existing assets and projects in development in Mexico to more than $5 billion, all underpinned by 25-year agreements with Mexico’s state power company.” Houston-based Spectra Energy was awarded a $1.5 billion contract to build a pipeline from Nueces County, Texas, to the Mexican border at Brownsville. The Texas portion of the pipeline is planned to be completed in 2018 and will transport up to 2.6 billion cubic feet of natural gas a day.

Mexico to offer farm-out on deep water field in Gulf: (AP) — Mexico’s state-owned oil company announced Friday it will offer a farm-out arrangement to private firms to join in the exploration of a deep-water field in the Gulf of Mexico. It would be the first time that Petroleos Mexicanos has formed an association with a private firm for deep-water drilling. Pemex Director Jose Antonio Gonzalez called it “a watershed moment in Pemex’s history.” The Trion field, located in the Perdido belt just 25 miles (40 kilometers) south of the U.S. maritime border, is estimated to hold the equivalent of 480 million barrels in proved, potential and possible oil and gas reserves. The company, known as Pemex, said the offer will be put up for bid in coming days and a winner will be announced on Dec. 5. Officials estimate it will take $11 billion in investments to develop the field in waters about 8,200 feet (2,500 meters) deep. Farm-outs are agreements where service providers take an interest in field, usually part of the oil and gas production, rather than payment. Gonzalez did not specify what compensation the farm-out scheme would involve.

No impact from Brazilian oil workers strike: Petrobras - A 24-hour warning strike by Brazilian oil workers has not affected crude oil and natural gas production, despite union claims to the contrary, state-led oil company Petrobras said Friday. "Petrobras informs that the company's activities are normal," the company said in an emailed response to questions. The latest work action to hit Petrobras started at midnight Thursday, when workers refused shift changes at onshore fields in Bahia state that were recently put up for sale, the Federation of Oil Workers, or FUP, said in a strike update. FUP is an umbrella union representing many of Petrobras' 80,000 direct employees. Oil workers were protesting impeachment proceedings underway against President Dilma Rousseff, as well as Petrobras' plans to sell off assets. "The strike is in defense of sovereignty and democracy, and against the dismantling of the company, delivery of the subsalt into foreign hands and attacks against workers' right that are on the agenda of the coup government of Michel Temer and Petrobras Chief Executive Pedro Parente," FUP said in a statement.  Workers carried out a similar 24-hour warning strike May 10 to protest Rousseff's pending impeachment. Brazil's Congress approved the impeachment proceedings, with then-Vice President Michel Temer taking over as president May 12. Temer will finish the remaining two years of Rousseff's second term if the Senate votes to impeach Rousseff at the conclusion of the trial.

Niger Delta Avengers Reject Calls To End Oil Attacks, Warn May Start "Taking Lives" --The always amusing, if quite violent, Niger Delta Avengers (profiled here for the first time one month ago), who as we some sarcastically said "hold the price of oil in their hands", only to realize this was all too real, alongside ever louder questions of just who is funding this brand new splinter group (not to mention its chatty Twitter account and its GoDaddy-hosted website), has again refused to sit down and negotiate a resumption in oil production, much to the chagrin of virtually other Nigerian miliants.  And, in a just issued a press "statement" on its website, it explains that it sees no need to sit down with the government for "any proposed dialogue and last peace talk." As the website notes, the NDA needs "conducive atmosphere” to commit to dialogue for the following reason, grammar mistakes all as per the original: We want the federal government to commit members states of the multi national Oil Corporations to commit independent mediators to this proposed dialogue; we believed that it is only such environment that will engender genuine dialogue that will be aimed at setting up a framework for achieving the short, medium and long term demands of the Niger delta to de-escalating this conflict and bring about a lasting peace.  The NDA also repeats warning to oil companies not to repair pipelines, oil and gas facilities damaged by attacks. We can only assume this is the demand of the NDA's unknown financial backer, who stands to gain much more from keeping Nigeria oil output as low as possible. 

Nigeria: Police dispute new attack claim by oil militants - (AP) — Local police are disputing claims that Nigerian oil militants struck another pipeline in the Niger Delta, saying an explosion was instead caused by a gas leakage. Cordelia Nwawe, police spokesperson for Akwa Ibom state, said Friday that engineers were “working to rectify the leakage” from the pipeline owned by the Nigeria National Petroleum Corporation. The Niger Delta Avengers claimed responsibility for the attack in a Twitter post on Thursday morning. Attacks in recent months have ended years of relative peace in the delta and cost Nigeria its place as Africa’s biggest oil producer, now held by Angola. Last week Nigeria’s government ordered the military to halt attacks in the oil-producing south and urged militants to halt bombings to allow a dialogue, but the Niger Delta Avengers have refused negotiations.

Africa’s largest oil producer might be facing a new threat -- Angola, Africa's largest oil producer, might be facing a new threat.  Reuters' Ed Cropley reports that in late May five militants traveled by speedboat, boarded an offshore Chevron gas platform, and threatened petroleum workers.  The men reportedly claimed that they were part of the rebel group called the Front for the Liberation of the Enclave of Cabinda (FLEC), which wants independence for Angola's oil-rich province of Cabinda.  It's unclear whether or not they were actually FLEC members. Reuters reports that the provincial governor, Aldina da Lomba Catembo, said that although there might still be "some people with guns... FLEC does not exist."  But one of the oil workers who was present at the situation in May "scoffed" at the idea that FLEC no longer existed, according to Cropley.  FLEC is a small, splintered group that's been active in various forms since the 1960s - first against colonial Portugal, and then Angola. It has not done much since 2000, but it became internationally well-known in 2010 after several spokesmen took credit for an attack on a bus shuttling Togo's soccer team to the Africa Cup of Nations.  Notably, the Cabinda province, which accounts for about half of Angola's oil production, is one of the poorest regions in the country - even despite the oil money.

Trouble Is Brewing in Nigeria’s Oil Country — Every attack on an oil pipeline leaves Felix Timileami feeling as if he’s on top of the world. The 39-year-old, who belongs to a recently formed — and as of yet unnamed — militant group, has taken part in raids on a number of oil facilities in the Niger Delta. Last month, they hit one operated by Royal Dutch Shell. “It’s the only means to vent our anger and to draw the world’s attention,” says Timileami, who hails from the Delta city of Warri. For six decades, the people of this swampy southern region have been the sore losers in Nigeria’s scandalous game of crony capitalism. Oil worth billions of dollars is pumped directly through communities here, but residents see almost none of it. For most of the 2000s, an insurgency fueled by bitter resentment claimed thousands of lives and, at its height, cut Nigeria’s oil production in half. Now, after a brief respite, it is beginning to re-emerge. Seven years after an amnesty agreement persuaded most militants to put down their weapons in exchange for monthly stipends — and in some cases, contracts to guard the same pipelines they used to bomb — the Niger Delta, a region of more than 20 million people, is suddenly sliding back into chaos. This month, a militant group calling itself the Niger Delta Avengers has already claimed three separate attacks on oil installations and promised to cut the country’s oil output to zero. The Ijaw Youth Council, an influential grassroots organization that has its roots in the armed struggle of the 2000s and advocates for local control of natural resources, said last week that the security situation is “rapidly deteriorating and getting out of control.” At issue is President Muhammadu Buhari’s perceived abandonment of the region. Already viewed suspiciously in the Delta because he is a Muslim from the north, Buhari has courted trouble by slashing funds for the amnesty program and revoking some of the security contracts. When he abruptly called off his first planned presidential visit to the region last week, people saw it as proof that he does not care about Christians in the south of the country.

Gazprom Neft abandons crude oil supply talks with India due to logistics drawbacks -  Russia's Gazprom Neft is no longer discussing potential crude deliveries to India due to its "difficult" logistics but may return to the issue at a later stage if the market conditions become attractive for such operations, Gazprom Neft CEO Alexander Dyukov said Thursday. India is seeking to secure additional deliveries of energy resources from Russia but supplies have been limited to existing infrastructure that was being used at full capacity and makes it difficult to increase eastbound deliveries for the time being. "Indeed, we discussed the possibility of spot deliveries to the Indian market but did not reach any agreement at the time. It is not exactly our market as logistically it is far away from our key exports ports [located in the western part of Russia]," Dyukov said. But the situation may change and "perhaps at some moment we would return to the discussion of this delivery opportunity," Dyukov told reporters on the sidelines of the St Petersburg International Economic Forum.India and Russia are actively discussing ways to strengthen cooperation, including in the energy sector, with a major Indian delegation headed by oil minister Dharmendra Pradhan presenting at the event.  Indian companies recently inked several cooperation deals with Russian oil producers, including on shareholding in Rosneft's key East Siberian upstream asset Vankor. In August 2015, India's ambassador to Russia, Pundi Srinivasan Raghavan, said his county was discussing a crude supply contract with Gazprom Neft, following the signing of a major supply contract between Rosneft and Indian refiner Essar in July 2015. India "is interested in long-term contracts on deliveries of Russian crude oil," he said at the time, adding that the companies are currently discussing "terms and timeframes for such contracts."

Falling global oil reserves: Pricing blip or panic alarm? - For years global oil majors have brushed off speculation that an imminent peak in global oil reserves spells the beginning of the end of the hydrocarbon age. There is a long-term trend of new oil finds and improved recovery outpacing consumption each year, they say, underpinning future output and returns. BP’s latest benchmark energy review, however, makes this line a tougher sell. The figures show that, since 2011, the world oil reserves have flatlined and are now dropping. Total proven reserves peaked at 1.7 trillion barrels in 2014 and, had BP not revised its 2013 figure downwards, last year’s 1.698 trillion barrel total would have marked the second consecutive fall since BP’s data began in 1980. A key metric for future production potential, proven reserves are notoriously a moving target. By definition they should account for the economic recoverability of the oil at prevailing prices and not everyone uses the same yardstick. To what extent oil prices affect BP’s proven reserves figures is unclear and the historical correlation is weak. Many countries use opaque reserves accounting criteria and apply less rigorous measures for economic recoverability. Others, including the US and Brazil, use more stringent rules. Brazil wrote down a fifth of its proven reserves last year partly due to lower prices, accounting for most of the outright fall in 2015. The price impact makes the recent slowdown in proven reserves even more troubling. Reserves hit their apogee as oil prices surged to all-time highs over $100/b, a move which should make more, not less, oil in the ground worth developing and hence “proven.”

Is $100 oil on the horizon? - Oil investors are buying contracts that will only pay out if crude rises well above $100 a barrel over the next four years — a clear sign some believe today’s bust is sowing the seeds of the next boom. The options deals, which brokers said bear the hallmarks of trades made by hedge funds, appear to be based on the belief that current low prices will generate a supply crunch as oil companies cut billions of dollars in spending on developing fields. The International Energy Agency forecasts that non-OPEC supply will suffer its biggest decline in more than two decades this year. “The market faces a supply crunch in the next 24 months,” said Francisco Blanch, head of commodities research at Bank of America Merrill Lynch in New York. “Some hedge funds are betting that oil prices will need to rise sharply to bring demand down again — that’s why they are buying deep out-of-the-money call options.” Over the last month, investors have bought call options — giving the right to buy at a predetermined price and time — for late 2018, 2019 and 2020 at strike prices of $80, $100 and $110 a barrel, according to data from the New York Mercantile Exchange and the U.S. Depository Trust & Clearing Corp. Even before the most recent flurry, some investors had already built super-bullish positions. The largest number of outstanding contracts — or open interest — across both bullish and bearish options contracts for December 2018 is for calls at $125 a barrel. For December 2020, it’s for $150 calls.

Why the Oil Price Rally Might Falter - - Last year's oil price rally ran out of steam in early May after 112 days. This year's has already lasted longer (140 days so far) and prices have risen further, but there are worries that, it, too, may be running ahead of market fundamentals. While prices seem unlikely to collapse again, there are good reasons to expect a pause in their upward march.Crude prices have nearly doubled from the lows reached in mid-January. Brent rose above $50 a barrel last Monday and stayed there all week. West Texas Intermediate crude narrowly failed to do the same after breaking through the psychological barrier on Tuesday. Brent prices have risen an average 18 cents a day since mid-January, remarkably similar to the 19 cents a day early last year.Sure, there's a real risk of structural supply shortages down the road, as oil companies have slashed spending on new projects, but they're not here yet. What we do have is a number of unforeseen disruptions, most recently in Canada and Nigeria, with a further deterioration in Libya, which have helped eliminate the surplus.  The U.S. Energy Information Administration saw disruptions removing more than 3.6 million barrels a day of potential supply in May, probably more than at any time since Iraq invaded Kuwait in 1990. Many stoppages have lasted years already and may last many more. Some output may never be fully recovered.  But some might return quite quickly. The biggest new disruption is already being resolved: the wildfire that swept through Alberta's oil sands and cut daily production by about 1.2 million barrels. Canadian production is returning slowly and will continue to add supply.  And while even the cheeriest optimist would hesitate to call an end to U.S. output declines, production there has just risen for the first time in three months on a week-by-week basis. Continental Resources has started fracking wells that it had drilled, but left uncompleted as prices collapsed. There were 4,290 such wells in the U.S. at the end of 2015 and others may follow Continental's lead,

ECB: Recent Oil Price Drop Driven by Weakening Global Demand (MNI) - The European Central Bank said in Monday that the decline in oil prices seen between mid-2015 and early 2016 were largely the result of decreasing demand rather than growing supply, leading to less of a boost to global growth than otherwise may have occurred. "While most of the oil price decline in 2014 could be explained by the significant increase in the supply of oil, more recently the lower price has reflected weaker global demand," the ECB wrote in a pre-release of its monthly Economic Bulletin. The implication of this development was that the more recent decline in oil prices would provide a lesser stimulus to economic growth than the previous one, the ECB said. Citing simulations, the ECB estimated that a purely supply-driven drop in oil prices by 10% would boost global GDP by 0.1%-0.2% while an entirely demand-driven drop would correspond with a GDP decrease of more than 0.2%. Knock-on effects on the global economy from oil-exporting countries hit by low oil prices was one reason why the recent oil price shock had not proved to be a bigger boon for global GDP. "The adverse impact on net oil-exporting countries appears to have been rather severe, and has been accompanied by negative spillovers to other emerging market economies," the ECB noted.

Oil prices slide even as IEA bumps up demand forecast -  Oil prices fell Tuesday, pushed lower for the fourth consecutive day as market sentiment continued to turn, despite a bullish report from the International Energy Agency. The global benchmark, Brent, was trading down 1.4% at $49.66 a barrel midmorning in London. Its U.S. counterpart, West Texas Intermediate was down 1.6% at $48.09 a barrel. The International Energy Agency on Tuesday revised its demand forecast upward for this year by 100,000 barrels a day, to 1.3 million barrels a day from 1.2 million barrels a day. The demand will be led by emerging markets in India and China as the manufacturing industry grows, the report said. The IEA also released its first demand forecast for 2017, for 1.3 million barrels a day. But the body warned that should supply be restored in Nigeria and Canada there could be a dip in prices. Nigerian output fell 250,000 barrels a day to 1.37 million barrels a day in June, levels not seen in almost 30 years. Gains to demand were limited as the IEA indicated that supply was strong from elsewhere in the world. Oil output in Kuwait and the United Arab Emirates was up in May by 120,000 barrels a day and 70,000 barrels a day, respectively. Despite the report, market bullishness is dissipating as U.S. production shows signs of recovering. Late on Monday, the U.S.-based Genscape Inc. tipped a 525,000-barrel increase in U.S. crude stockpiles in the week ended June 10. Last Friday, Baker Hughes Inc. reported the number of rigs drilling for oil in the U.S. rose for the second-straight week.

Oil Tumbles To $47 Handle After Unexpected Crude Inventory Builds Across The Entire Complex -- Oil fell today despite a bullish IEA report cutting its estimate for oil surplus (despite 2 weeks running of increasing rig counts and production and builds in gasoline and distillates last week). With crude inventories down 3 weeks in a row, API's print was expected to come in at -2.33mm barrels but instead built by 1.16mm barrels, sending oil prices lower. Cushing stockpiles were expected to drop 600k barrels (despite Genscape's 234k build estimate) but soared 664k barrels. Gasoline and Distillates both saw the biggest builds since January.  API:

  • Crude +1.16mm (-2.33mm exp)
  • Cushing +664k (-600k exp, +234k Genscape)
  • Gasoline +2.254mm
  • Distillates +3.725mm

These are across the board builds with Gasoline and Distillates really ugly... and crude plunge to a $47 handle...Charts: Bloomberg

Oil price unlikely to rise much further, global agency says (AP) — The price of oil is unlikely to rise much further after rallying almost 90 percent since January, as the global market shows signs of stabilizing, the International Energy Agency said Tuesday. The Paris-based agency, which advises the world’s top oil consuming nations, nudged up its estimate for global oil demand this year in its monthly report. It noted, however, that supply and past inventories remain high. “At halfway in 2016 the oil market looks to be balancing,” said the IEA in its monthly market report. After touching a 13-year low in January, the international price of oil has rallied to trade above $50 a barrel in recent days and has struggled to advance any further. On Tuesday, the Brent benchmark for international oil was down 56 cents at $49.79 a barrel. In its report, the IEA raised its forecast for world demand in 2016 to 96.1 million barrels a day, up 0.1 million barrels from its previous prediction. It expects demand to grow next year by 1.3 million barrels a day, the same as this year. However, the IEA noted that large volumes of production remain affected by shutdowns. That’s true particularly in Nigeria, where regional militants have blown up pipelines, and Libya, which is struggling to emerge from conflict. When that oil starts returning to market, it would boost supply, weighing on prices. Inventories are also high globally after three years of overproduction, the agency said. “This is likely to dampen prospects of a significant increase in oil prices,” its report concluded.

Oil Spikes After DOE Inventories Data Refutes API For 3rd Week In A Row, Production Drops -- Following last night's across the board inventory builds reported by API, oil prices have bounced modestly but remain lower (below $48) ahead of DOE's data. However, for the 3rd week running, DOE data refuted API showing a smaller than expected 933k draw in crude inventories and a large draw in gasoline (-2.62mm vs API's +2.25mm). Distillates inventories rose for the 2nd week in a row and Cushing saw its biggest build in 5 weeks. However, oil prices are rising on the data as well as the fact that US production resumed its decline after last week's brief increase. API:

  • Crude +1.16mm (-2.33mm exp)
  • Cushing +664k (-600k exp, +234k Genscape)
  • Gasoline +2.254mm
  • Distillates +3.725mm


  • Crude -933k (-2.33mm exp)
  • Cushing +904k (-600k exp, +234k Genscape)
  • Gasoline -2.62mm
  • Distillates +786k

Once again DOE data opposes API data...though we note Cushing saw a large build...Production resumed its decline to fresh multi-year lows after last week's brief rise... And the reaction in crude is to erase the API losses... As Goldman explains, supply may be on the rise... We further believe that at current prices, we can see a pick up in brownfield investment, consistent with our conversations with producers looking to maximize cash flow while limiting incremental spending. Importantly, this is a short-cycle investment which can drive large production rebounds, as was the case in 2009. Further, our European and US Energy equity analysts recently commented on how producers are guiding to even faster and larger cost declines than they had expected. Companies also appear ready to start sanctioning projects again after an 18-month hiatus, aggressively competing for capital and helped by governments ready to reduce tax take or local content requirements to attract investment. Several US producers have also become explicit on reducing their drilled but uncompleted well backlog. Our estimate of the US oil backlog (in excess of normal drilling activity) suggests that it represents 0.5 mb/d of additional production over the next 18 months if brought online by year-end. Further, a few producers have been able to issue high-yield debt for the first time since last October, with the explicit target of increasing drilling, and we have seen over the past two weeks several producers raising guidance as well.

Weekly Crude Oil Inventory Report - Bullish - Summary:

  • Bullish with refiners possibly setting up the market for a future ‘surprise’.
  • Domestic production decreased by 29,000 barrels per day. Almost all of it in the Lower 48.
  • Crude oil inventories decreased by 900,000 barrels.
  • Gasoline inventories decreased by 2.6 million barrels.
  • Distillate inventories increased by 800,000 barrels.

Overall, this was a bullish report mostly because of a material decrease in production in the Lower 48. In terms of inventories, the decrease in crude oil stocks was mostly offset by an equivalent increase in distillate inventories. Gasoline stocks decreased by a moderately large amount but the change was driven by a reduction in refinery utilization at a time when refiners should be increasing production in anticipation of the driving season.

Oil down fifth day; Brexit, Fed hike fears offset U.S. crude draw | Reuters: Oil prices fell for a fifth straight day on Wednesday, their longest losing stretch since February, on worries Britain might leave the European Union while the U.S. Federal Reserve signaled plans for two U.S. rate hikes this year despite slower growth expectations. A weekly draw in U.S. crude stockpiles helped crude futures pare losses during the session, before prices fell again in post-settlement trade. Brent crude futures' front-month LCOc1 settled down 86 cents, or 1.7 percent, at $48.97 a barrel. In post-settlement trade, it fell as low as $48.56 by 3:46 p.m. EDT (1946 GMT). The front-month in U.S. crude's West Texas Intermediate (WTI) futures CLc1 settled down 48 cents, or 1 percent, at $48.01 per barrel. The session low was $47.55. In post-settlement it fell to $47.45. Goldman Sachs said in a note that crude would need to trade at $45-$50 per barrel for the market to reach a supply deficit in the second half of 2016. Oil prices have fallen without a break since June 8, for a total loss of about 7 percent. Just a week ago, Brent hit 2016 highs of nearly $53 a barrel and WTI reached toward $52 after a rash of supply disruptions, mostly out of Nigeria and Canada. Wednesday's decline came as global markets slumped on fears that Britain could vote on June 23 to leave the EU. The dollar .DXY dipped against a basket of currencies but remained close to a June 3 high on worries of the so-called Brexit. A stronger dollar makes crude, priced in the U.S. currency, costlier in the euro and others.

US gasoline demand ties record: EIA : (Argus) — US gasoline demand rose to match a record high last week, helping to draw down national inventories of the fuel despite rising domestic production, according to the Energy Information Administration. Weekly implied gasoline demand rose by 2pc from the previous week to 9.8mn b/d, matching a record set in August 2007, according to the EIA. Ultra-low sulfur diesel demand also rose, higher by 6.7pc to 3.8mn b/d. Gasoline inventories fell by 2.6mn bl to 237mn bl, the strongest drop for the week in at least the past ten years and a draw during a week that over the past decade averaged a 700,000 bl build, according to EIA data. A massive 2.1mn bl draw on midcontinent inventories, followed by a 1.6mn bl draw on the west coast and 191,000 bl decline in the Gulf coast, more than offset a 1.3mn bl build in Atlantic coast gasoline storage. Refinery and pipeline outages roiled the midcontinent last week and sent Chicago-area gasoline prices to a nearly 16.6¢/USG premium to the Nymex gasoline benchmark on 8 June. Prices have since retreated to a 4.2¢/USG premium at yesterday's settlement. Ultra-low sulfur diesel inventories were flat to the previous week. A 319,000 bl draw on the west coast, to 11.7mn bl, neatly balanced a 320,000 bl build in the US Gulf coast, to 41.5mn bl. All other regions were effectively unchanged. Crude throughputs at US refineries held steady at 16.3mn b/d, with rising Atlantic coast and Rocky mountain rates offsetting falling west coast processing. Midcontinent rates were unchanged at 3.7mn b/d. Gasoline production adjusted for ethanol increased above 10mn b/d for the first time since 13 May, according to the EIA, with production rising in every US region. ULSD production increased by 2.5pc from the previous week to 4.7mn b/d, its highest volume since 1 January.

Oil slides 4 percent on worry of market turmoil if UK leaves EU | Reuters: Oil prices slumped about 4 percent and hit one-month lows on Thursday, settling down for a sixth straight day, on fears of global economic turmoil if Britain exits the European Union. It was the longest slide for oil since early January, when prices fell seven days in a row before hitting 12-year lows below $30 a barrel on worries about a global crude glut. This time around, a resurgent dollar is hammering crude futures and other commodities on speculation that Britain could vote to end its EU membership. The dollar hit two-week highs, then eased back on the sterling's strength as Britain suspended campaigning over its EU membership status after a deadly attack on a Member of Parliament. Oil pared losses as the sterling rose, but crude tumbled again in post-settlement trade to reach new lows on the day. Brent crude futures' front-month contact settled down $1.78, or 3.6 percent, at $47.19 per barrel. In post-settlement trade, it fell to as low as $46.94, its lowest since May 12. Brent has lost about $5 a barrel, or around 10 percent, over the past six sessions. Prior to that, it hit an eight-month high of nearly $53 on supply disruptions out of Nigeria and Canada. The front-month in U.S. West Texas Intermediate (WTI) crude futures settled down $1.80, or 3.8 percent, at $46.21 a barrel. It got to a May 13 low of $45.91 after the close. Drawdowns in U.S. crude inventories over the past month have not provided much support to oil with investors focused more on a possible rise in production as Brent and WTI traded above $50 a barrel each. U.S. energy firms added rigs drilling for oil for a second week in a row last week.

U.S. Oil-Rig Count Rises for Third Straight Week - WSJ: The number of rigs drilling for oil in the U.S. rose by nine over the past week to 337, marking the third straight week of gains, according to oil-field services company Baker Hughes Inc. The U.S. oil-rig count, viewed as a proxy for activity in the sector, has fallen sharply since oil prices began to drop in 2014. The number of U.S. oil rigs peaked in October 2014 at 1,609. The nation’s gas-rig count rose by one in the past week to 86. The U.S. offshore-rig count was 21, unchanged from last week but down six from a year ago. Oil prices were rebounding on Friday, snapping a six-day losing streak, as the dollar weakened and markets priced in a higher possibility that the U.K. will vote to remain in the European Union in a referendum next week. U.S. crude recently rose 2.9% to $47.56 a barrel.

US Rig Count Rises 10 This Week to 424 in 3rd Week of Gains - — The number of rigs exploring for oil and natural gas in the U.S. rose by 10 this week to 424, marking the third-consecutive week the count has increased after a slide that lasted months and pushed the count to record-low levels amid depressed energy prices.A year ago, 857 rigs were active.Houston oilfield services company Baker Hughes Inc. said Friday 337 rigs sought oil and 86 explored for natural gas. One was listed as miscellaneous.Among major oil- and gas-producing states, Texas gained 13 rigs and West Virginia increased two.Alaska and Louisiana fell by one apiece.Arkansas, California, Colorado, Kansas, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Utah and Wyoming were unchanged.The U.S. rig count peaked at 4,530 in 1981. It bottomed out last month at 404.

Oil Fears Mount As Rig Count Rises For A Third Straight Week - The U.S. oil and gas rigs count is up today according to today’s Baker Hughes report, marking the third straight week of increases for the oil side of things. The number of active U.S. oil rigs rose by 9 this week, after rising by 3 last week. The total number of U.S. oil rigs in production as of today’s report is 337. When last week’s report came out with the second straight week of increases, oil prices slid. Despite today’s news—and despite those who are worried that more rigs means more oil, which means lower prices—WTI was up $1.34 to $47.55 as of 2:00pm EST today, over the previous close. The number of active gas rigs also rose this week, up one from 85 to 86, bringing the total number of active oil and gas rigs to 424. The increase in the number of rigs, although modest, should come as no surprise—oil prices have shot up almost 80 percent since the dark times of February, and the market is now more attractive. For those who are afraid that this increase will immediately translate into increased production—and inevitably the end of the oil price rally—it may come as some comfort to know that even though the higher oil prices may indeed entice a few players to ramp up production, it is unlikely that today’s prices, which are still disappointingly shy of the $100 per barrel WTI seen just years ago, will create an instant and massive entry back into the production game. For the rig count to return to what it was just a year ago, the U.S. oil and gas industry would have to bring 433 more oil and gas rigs online—more than double today’s total.

Oil: Horizontal Rig Counts Increased Slightly Again: A few comments from Steven Kopits of Princeton Energy Advisors LLC: "US horizontal oil rig counts were up 2 this week to 265, now 17 off the cycle trough five weeks ago. ... US vertical rigs were up sharply, +7 to 48. We can now call the cycle bottom here for May 27." ClickGraph Courtesy of Steven Kopits of Princeton Energy Advisors LLC. CR Note: This graph is horizontal rig count only (not vertical). The increase is still pretty minor.

Crude Slides To $47 Handle As US Oil Rig Count Rises At Fastest Pace In 10 Months -- With oil prices are already sliding quite markedly, it seems traders are questioning demand assumptions (as growth hopes fade), and with the oil rig count now up for 3 weeks in a row (up 9 to 337 this week) it appears supply expectations may not be helping either. The last 3 weeks have seen 21 oil rigs added (the most since Aug 2015) and the biggest percentgae rise in oil rigs since Aug 2010.  The rig count continues to track the lagged oil price perfectly as we have been explaining...The question remains, will a rising rig count stall the oil rally?

OPEC Turmoil Could Turn Balanced Market Into Shortfall -- IEA --  Link here. Data points, observations, comments from the linked article follow:

  • world oil production will nearly match consumption in 2017; will end several years of oversupply
  • to meet demand, OPEC needs to pump an extra 650,000 bopd over the year
  • to do that would require solutions to Nigeria's militant attacks; Libya's political divisions; and, Venezuela's economic crisis -- Bloomberg is not optimistic on any of these
  • by end of next year (2017), OPEC would need to pump nearly 1 million bbls above last month's production level to keep the market balanced 
  • Nigeria: production at a 28-year low of 1.4 million bopd (about 500,000 bbls below full capacity)
  • Libya: at 270,000 bopd in May, just a fraction of the 1.6 million bopd it pumped under Qaddafi in 2011
  • Venezuela: at 2.3 million bopd last month, the lowest since 2009; on track to drop another 100,000 bopd
  • Iran: could provide some relief; currently around 3.7 million bopd
  • global supply: after two years of oversupply, the west has more than 3 billion bbls in storage (sounds like a lot; 3 billion bbls / 100 million bbls = 30 days) -- but that oversupply is said to be "enormous" and "dampens the prospects of a significant increase in prices"
  • OPEC: will pump 33.3 million bopd in 2017 compared to 32.6 million bopd in May, 216 -- IEA
  • but Bloomberg notes that if OPEC output falls short of IEA estimates, those stockpiles would start to shrink rapidly (yes, 3 billion bbls / 100 million bbls = 30 days)

Goldman Sachs hired prostitutes to win Libyan business, court told - Goldman Sachs bankers paid for prostitutes, private jets and five-star hotels and held business meetings on yachts to win business from a Libyan investment fund set up under Gaddafi regime, the high court in London was told yesterday. The allegations came at the start of a legal claim by the Libyan Investment Authority for $1.2bn (£846m) from the investment bank. Lawyers for the LIA are claiming for losses on nine trades that Goldman Sachs executed for the fund between January and April 2008. The LIA lost almost all its investment through the trades – one of which was the largest that the bank had undertaken in a single stock – while Goldman Sachs generated “eyewatering” profits of over more than $200m from the trades, Roger Masefield, a QC for LIA, said. The LIA, Masefield told the court, felt betrayed as the trades generated excessive profits for Goldman and were unsuitable for the LIA, which was staffed by individuals who had not been appointed on merit. Once the losses emerged, Masefield said one Libyan official described Goldman as the “bank of mafiosa”.

'US Ally' Qatar Arrests Dutch Rape Victim For "Having Sex Out Of Wedlock" - If you're itching to go out clubbing in Qatar, make sure you keep your hand over your drink. A 22 year old Dutch woman said she was drugged by a Syrian man during a party in March at the Crystal Lounge nightclub at the W Doha Hotel, and woke up in an unfamiliar apartment. Upon waking up the woman known as "Laura" realized that she had been sexually assaulted, and subsequently reported the incident to the Qatari police. The police, in turn, arrested Laura on March 14 on charges of committing illicit sex acts, and have held her ever since. Brian Lokollo, Laura's lawyer argued: "She went dancing, but when she returned to the table after the first sip of her drink, she realized that she had been drugged. She really didn't feel very well. The young woman remembers nothing more until the following morning, when she woke up in a totally unfamiliar apartment and realized to her great horror that she had been raped." Laura finally learned her fate on Monday, as she was convicted by the Qatari court of "having sex out of wedlock." The court sentenced Laura with a one-year suspended sentence and deportation to the Netherlands, Al Jazeera reports. A court official described the one-year suspended sentence as "lenient", adding "had she been a Muslim woman, she would have received at least five years in jail. No one can get out of such charges here in Qatar."  As far as the man, identified as Omar Abdullah al-Hasan, he was also convicted of having sex outside of marriage, which is a serious offense in Qatar. al-Hasan was sentenced to 100 lashes for illicit sex acts, and another 40 lashes as punishment for public drunkenness - he too will be deported.

Iran Plans Oil-Refinery Expansion to Cut Gasoline Imports - Iran plans to increase its refining capacity for crude and condensate by more than 70 percent within the next four years as it works to improve the quality of fuel sold on the domestic market and wean itself off imported gasoline. The Persian Gulf oil producer will raise capacity to about 3.2 million barrels a day by 2020 from 1.85 million currently by building five plants, Abbas Kazemi, managing director of National Iranian Oil Refining & Distribution Co., said in an interview in Tehran. The country also needs about $14 billion in investment to upgrade units at five existing refineries to produce gasoline that burns more cleanly than grades currently available in the country, he said. Iran, OPEC’s third-largest oil producer, is boosting energy output after international sanctions curbing its access to oil markets were eased in January. Since then, Iran has restored oil production near to pre-sanctions levels and raised output of natural gas at the offshore South Pars field, part of the world’s largest deposit. One of the new refineries, the 360,000 barrel-a-day Persian Gulf Star, is scheduled to start operating by March, Kazemi said. The refinery will process condensate, the light oil found in gas deposits. Iran is seeking to use its condensate to make gasoline for transportation or naphtha for use in chemical plants.

Iran's Khamenei threatens to 'set fire' to nuclear deal if West violates - (Reuters) - Iran's Supreme Leader, Ayatollah Ali Khamenei, threatened on Tuesday to "set fire" to the nuclear deal sealed with world powers if U.S. presidential candidates reneged on the agreement. Presumptive Republican candidate Donald Trump said last August it would be hard to "rip up" the deal, but if elected president he would "police that contract so tough they don't have a chance". Iran can expect a shift in relations with the United States to a more aggressive posture under a Republic president, a reversal of the warming trend nurtured by Democratic President Barack Obama. "The Islamic Republic won't be the first to violate the nuclear deal. Staying faithful to a promise is a Koranic order," Khamenei said, according to state media. "But if the threat from the American presidential candidates to tear up the deal becomes operational then the Islamic Republic will set fire to the deal." He did not identify any candidate and said he did not see a difference between Democrats and Republicans in the comments that state media said he made in a meeting with senior officials including President Hassan Rouhani, who championed the agreement. Hillary Clinton, who Obama has endorsed to succeed him in the Nov. 8 election, said in March in a speech to a pro-Israel lobby group in Washington that Iran still posed a threat to Israel and needed to be closely watched.

OPEC's chasm of doom - OPEC's members are divided by many things: language; size; politics; sometimes outright war. And money. Don't forget money. If you want to understand why OPEC has responded to its current crisis with all the cohesion of cat herding, some numbers in the Energy Information Administration's "OPEC Revenue Fact Sheet," published on Tuesday, provide some important clues. First up, estimated revenue, adjusted for inflation: The estimate for this year, $337 billion in real terms, is barely a third of 2012's peak -- and, uncannily, exactly the same as the consensus forecast for the combined revenue of Exxon Mobil and Chevron in 2016. Of course, those two only have to pay their employees, creditors and shareholders. OPEC's members have about 700 million people to answer to, roughly double the amount in 1980. So, on a per capita basis, those numbers look worse:  What really stands out from that chart isn't just that net oil exports are set to generate less than $500 per man, woman and child this year. It's that even when oil was trading in triple digits a few years ago, the export revenue per person was still less than half what it was at the beginning of the 1980s. The need to diversify away from oil, such as Saudi Arabia is touting, reflects not just an acute crisis but a long-festering, chronic economic condition. The added twist, which is forcing OPEC to crack rather than coalesce, is that while all members are suffering, the degree of pain differs widely: Can it be any accident that Nigeria, sitting at the bottom of that chart, is currently convulsed by violence that has taken the country's oil production to its lowest level in 27 years (which in turn pushes the revenue lower)?

Saudi Arabia tells OPEC it pumped 10.27 mil b/d in May, up from Apr's 10.262 mil - OPEC said Monday the current oversupply on world oil markets will ease over the coming quarters due to the "slowing pace" of US crude inventory builds but it maintained both its both global oil demand growth and supply growth estimates for 2016. In its latest monthly oil market report, OPEC said it expected the call on its crude this year to average 31.6 million b/d, unchanged from its forecast a month ago and representing unchanged year-on-year growth of 1.8 mil b/d. The group also left its forecasts for 2016 world oil demand and supply broadly unchanged, with year-on-year demand growth of 1.40 million b/d and non-OPEC supply expected to fall by 740,000 b/d from the previous year. World oil demand is estimated to average 94.18 million b/d this year, with consumption in Asia, led by India anticipated to be the main contributor to oil demand growth. The report noted US oil demand, mainly supported by rising gasoline requirements, continued to grow, and that the European oil demand outlook for 2016 remains "slightly positive, mainly as a result of improving industrial production and a continuously growing auto market." OPEC expects non-OPEC oil supply for 2016 to average 56.40 mil b/d a fall of 740,000 b/d from last year, the same as its forecast last month, despite various changes in different regions; it is forecast to contract by "Downward revisions were seen mainly in Canada, Brazil and Colombia. These are offset by upward revisions in the US, the UK, Russia and Azerbaijan," it said. OPEC said the re-balancing on the market was gradually occurring as seen in the slowing pace of inventory builds in US commercial crude stocks.

Saudi Arabia’s Weapons Imports Lead Surge in Global Arms Sales -- A surge in weapons purchases by Saudi Arabia, leading a coalition of nations fighting in Yemen, helped push global arms sales up more than 10 percent last year, according to an annual report. The world defense market climbed to $65 billion in 2015, up by $6.6 billion from 2014, the consulting company IHS Inc. said in its Global Defence Trade Report published Sunday. That’s the largest yearly increase in the past decade, according to the Englewood, Colorado-based company. While Saudi purchases jumped about 50 percent to $9.3 billion, growth was seen across much of the Middle East and Southeast Asia.  . The study examined trends in the global defense market across 65 countries. The boost in Saudi weapons imports came as the kingdom led a coalition targeting Shiite Houthi rebels in Yemen and as it works to counter its regional rival Iran. Saudi Arabia’s purchases in the past year include Eurofighter Typhoon jets, F-15 warplanes and Apache helicopters, as well as precision-guided weapons, drones and surveillance equipment, Moores said. Egypt, whose economy has struggled since the 2011 ouster of former President Hosni Mubarak, became the world’s fourth-biggest weapons importer, spending almost $2.3 billion, according to the report. Before 2013, the country spent $1 billion or less annually, but "there’s been this ramp-up,"  Iraq spent almost as much as Egypt as it shifts money from operations and personnel toward procurement, IHS said. The country is battling Islamic State militants in long-troubled Anbar province and is preparing for the eventual battle to retake the northern city of Mosul.

$28 bln invested in cluster weapon producers in 4 years -- More than $28 billion has been invested in the production of deadly cluster munitions over the past four years, according to a report released Thursday. The Cluster Munition Coalition said in a statement that the report on worldwide investments in the weapons -- which release submunitions or bomblets on impact -- found 158 financial institutions involved in funding their production. As a result, the Coalition is calling on the institutions and governments “to put an end once and for all to investment in producers of cluster bombs.” Cluster bombs are banned under international law, but only 100 countries have actually become state parties to that convention. At present, countries like Syria and Yemen are being bombarded with cluster munitions, added the report.  Cambodia-based Denise Coghlan, head of the Cambodian Campaign to Ban Landmines, told Anadolu Agency on Thursday that the use of the weapons in those countries is “an incredible disaster in terms of creating danger for displaced people and refugees”. “ For these financial institutions to be spending this much money perpetuating these weapons is a mortal outrage,” Coghlan stressed. . Munitions produced by Textron were found to have been used by Saudi-led coalition forces in Yemen since 2015. “The vast majority of the financial institutions (138) are from countries that have not joined the 2008 Convention on Cluster Munitions,” It said that between 2015 and this year, 91 percent of the cluster munitions casualties in Yemen “were civilians, including deminers”, and that 22 percent of the civilian casualties were children.

Saudi Arabia invested $3.5 billion in Uber. That could be bad news for the global economy - Uber has raised an astonishing $3.5 billion from Saudi Arabia's sovereign wealth fund. It's one of the biggest venture capital investments in history and brings Uber's overall fundraising haul to $11 billion. But while Uber is bragging about the investment, it could reveal a troubling trend in investment trends overall. In the long run, economic growth depends on our ability to convert cash into productive assets like factories, trucks, machinery, or computer software. But for the most part, recent "investments" in Uber aren't like that. Uber is planning to use its billions to fund brutal, zero-sum price wars with competitors around the world. Those investments might allow Uber to expand its share of the global ride-hailing market and make big profits for its investors. But money spent on money-losing price competition isn't investment. Price wars do nothing to increase the world's productive capacity. So the fact that so much money is being invested in Uber — and in other companies deliberately losing millions in an effort to gain market share — could be an ominous sign. It suggests that it's getting harder and harder to spend money in ways that boost long-term economic growth.

Saudi Arabia Has Funded 20% Of Hillary's Presidential Campaign, Saudi Crown Prince Claims -- In what may be the pinnacle of hypocrisy, moments ago Hillary Clinton, while speaking live on national security and addressing the Orlando shooting took some time from her constant bashing of the Second Amendment and calling for a ban on assault rifles, to say some less than kind words about Saudi Arabia whom it accused of supporting radical organizations.  There is nothing wrong with that statement, as it is the whole truth - Saudi Arabia's involvement in supporting terrorism stretches from Sept 11 all the way through to ISIS - however, where there  is a big, and potentially law-breaking,  problem is what Jordan's official news agency, Petra News Agency, reported on Sunday citing the Saudi crown price, namely that Saudi Arabia is a major funder of Hillary Clinton’s campaign to become the next president of the United States. As MEE notes, the Petra News Agency published on Sunday what it described as exclusive comments from Saudi Deputy Crown Prince Mohammed bin Salman which included a claim that Riyadh has provided 20 percent of the total funding to the prospective Democratic candidate's campaign.  As a reminder, It is illegal in the United States for foreign countries to try to influence the outcome of elections by funding candidates.

U.S. Officials Fear Saudi Collapse If New Prince Fails - NBC News: The Saudi prince who seems to have won a family power struggle is meeting with U.S. officials this week -- some of them the same officials who are concerned his reign could be ruinous and hurt the regional security U.S. officials crave. Officials in the national security establishment believe Saudi Arabia is at a crossroads, and that if the prince doesn't succeed, now and later as king, there could be chaos in the Kingdom. "It's him or it's ISIS," said one Saudi expert who asked that his name not be used. Mohammed Bin Salman, Saudi Arabia's 30-year-old deputy crown prince, is on a tour of the U.S. that will include New York and Silicon Valley. His biggest meetings are with top U.S. officials in Washington, D.C., this week, including Secretary of State Kerry on Monday and a scheduled visit with President Obama at the White House Friday morning. But the big news, suggest U.S. officials, is that bin Salman is here at all, since he's technically second-in-line to his father King Salman's throne. He seems to have gained the upper hand on his cousin and rival Mohammed Bin Nayef, the crown prince and a longtime U.S. favorite. The trip is essentially a state visit without the fanfare. Bruce Riedel, former national intelligence officer for the Mid-East and a member of President Obama's transition team, said that U.S. leaders now need to familiarize themselves with a man who may be king soon. King Salman is 80 and fragile and Bin Nayef, who the U.S. would've preferred as his successor, is seriously ill. "We've put a lot of markers down on Mohammed bin Nayef. It's the smart move to do the same with Bin Salman. It's an opportunity to get to know him."

Country That Executes Gay People Pledges To Help US Avenge Orlando Shooting - Here is further proof that US foreign policy fact is stranger than fiction: one day after the Orlando shooting where some 50 patrons of a homosexual bar were gunned down, US Secretary of State John Kerry sat down to dinner with with Saudi Prince Mohammed bin Salman in Washington, D.C. and, according to the State Department, "discussed this weekend's shooting in Orlando and expressed their shared commitment to continue their cooperation in combatting the spread of violent extremism, both regionally and internationally." Yes, the same country that follows as a matter of official policy the exact treatment of homosexuals as was meted out by the Orlando shooter has expressed concern over extremism! Saudi Arabia's own "violent extremism" doesn't end at its treatment of homosexuals.As the defense minister of the Saudi kingdom, Saudi Prince Mohammed bin Salman is responsible for the brutal and genocidal war on Yemen and for Saudi Arabia's strong backing of radical jihadists -- including al-Qaeda -- who for the past five years have killed tens of thousands in attempt to overthrow secular Syrian president Assad. Also, if reports about the contents of the still-classified "28 Pages" of the 9/11 report are accurate, the Saudi government played a role in the al-Qaeda attacks on the United States. Imagine sitting down to dinner with Mohammed bin Salman and listening with a straight face as he bleated on about human rights and the need to combat violent extremism. Is there enough (non-alcoholic) beverages on earth to make a meal like that go down?

CIA chief expects release of 9/11 documents to clear Saudi Arabia | Reuters: CIA chief John Brennan said on Sunday he expects 28 classified pages of a U.S. congressional report into the Sept. 11, 2001 attacks on the United States to be published, absolving Saudi Arabia of any responsibility. "So these 28 pages I believe are going to come out and I think it's good that they come out. People shouldn't take them as evidence of Saudi complicity in the attacks," Brennan said in an interview with Saudi-owned Arabiya TV, according to a transcript provided by the network. The withheld section of the 2002 report is central to a dispute over whether Americans should be able to sue the Saudi government, a key U.S. ally, for damages. The U.S. Senate passed a bill on May 17 allowing the families of Sept. 11 victims to do so, setting up a potential showdown with the White House, which has threatened a veto. Saudi Arabia denies providing any support for the 19 hijackers - most of whom were Saudi citizens - who killed nearly 3,000 people in the Sept. 11 attacks. Riyadh strongly objects to the bill. It has said it might sell up to $750 billion in U.S. securities and other American assets if it became law. Brennan called the 28-page section merely a "preliminary review."

Exclusive: Venezuela in talks with China for grace period in oil-for-loans deal - sources | Reuters: Venezuela is in talks with China to obtain a grace period in its oil-for-loans deal that would improve the OPEC nation's capacity to make bond payments amid an economic crisis, sources briefed on the proposal have told Reuters. Venezuela has borrowed over $50 billion from China under the financing arrangement created by late socialist leader Hugo Chavez in 2007, in which a portion of its crude and fuel sales to the world's second-biggest economy are used to pay down loans. The two-year rout in oil markets has left the government of President Nicolas Maduro struggling to meet the original terms of the agreement, which require that state oil company PDVSA set aside more barrels for debt services when prices fall. Venezuela is now seeking a one-year grace period in which it would only pay interest on the loans, according to two oil industry sources and one finance industry source who asked not to be identified because they are not authorized to speak about the issue. The sources said state oil company PDVSA would receive cash payments for shipments that currently go to pay principal. The change would improve PDVSA's 2016 cash flow by $3 billion if it took effect this month, two of the sources estimated. That would make it easier for PDVSA to meet heavy bond payments this year amid an ongoing collapse in a socialist economy facing Soviet-style scarcity and daily food riots. It could also ease investor concerns of a default that have made its paper the riskiest of any emerging market debt.

China Wants to Build a Deep Sea 'Space Station'  - China’s plans to secure sovereignty over the South China Sea were illuminated this week in a discovery of the nation’s blueprints for a deep sea “space station.” The manned deep sea platform would sit 9,800 feet under disputed waters in the South China Sea, and would be a key resource in China’s offshore mining efforts, according to a Chinese Science Ministry presentation recently viewed by Bloomberg. Dozens of crew members would be able to survive underwater for up to a month at a time on the station.  Little is publicly known about the project, but China included the construction of an oceanic base in its five-year economic plan, and deep sea exploration was a key priority under the country’s Scientific Innovation 2030 initiative. So far, no one has ever attempted to man an underwater station at this depth for an extended amount of time. In 2012, China announced its intentions to build a mobile, nuclear-powered underwater mining station that would house a crew of 33 people for two months. The Pacific Ocean base was proposed by the China Ship Scientific Research Centre, and likely secured backing from the nation’s 863 Program, a fund known to bankroll military R&D projects. Whether this station has ties to the South China Sea platform is unclear. President Xi Jinping has not been coy about his efforts to assert dominance over the highly disputed waters. China, Taiwan, Vietnam, Malaysia, Brunei, and the Philippines are currently locked in a conflict over territorial and jurisdictional claims to the region’s potential wealth of natural resources. The South China Sea is believed to hold an estimated 11 billion barrels of oil and 190 trillion cubic feet of natural gas, and also possesses one-third of the world’s shipping routes. Approximately $5.3 trillion of total annual trade passes through the South China Sea. China has been visibly flexing its marine science arm for past five years. In 2012, “oceanauts” descended more than 22,000 feet into the Pacific Ocean’s Mariana Trench aboard the manned submersible Jiaolong. The mission was hailed as scientific in nature, but was also a bold demonstration of the country’s deep sea technological capabilities. Over the next five years, China has stated plans to build both manned and unmanned submersibles able to surpass the hadal zone—the deepest parts of the ocean.

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