oil prices fell $4.48 a barrel, or almost 10%, over the first 4 days of this past week, then recovered by almost 3% from there on Friday, after a weak jobs report decreased the likelihood of a Fed September interest rate hike, meaning the dollar would remain weak, thus boosting prices for internationally traded commodities like oil...after closing the prior week at $47.64 a barrel, oil fell 66 cents a barrel, or 1.4% on Monday to close at $46.98, on prospects of peace in Nigeria and expectations that crude stockpiles rose for a 2nd week in a row...after moving up slightly on Tuesday morning, oil prices then dropped a dollar a barrel in the afternoon after the American Petroleum Institute reported a modest crude buildup and a 3 million barrel addition to distillates stockpiles, more than 10 times what was expected, leaving oil prices at $46.35 a barrel at the close...on Wednesday it was more of the same, as oil prices fell 3% to close at $44,70 a barrel after EIA data showed a larger-than-expected weekly buildup of crude and distillate stockpiles and a smaller-than-expected drawdown of gasoline supplies...that report brought the reality of the oversupply glut back into focus, driving US crude prices down another $1.54, or 3.4%, to settle at $43.16 a barrel at the close of trading Thursday...Friday then brought a Putin interview with Bloomberg in which he said he’d like OPEC and Russian producers of half of the world’s oil, to reach a deal to freeze supply, which brought out the buyers hopeful for a OPEC deal, who then drove oil prices up $1.28 a barrel in spite of a rising rig count, to close the week at $44.44 a barrel...
since a lot has happened since we last looked at a graph of oil prices, we'll include one here now...
the graph above shows the daily prices per barrel over the past 3 months for the October contract of the US benchmark oil, West Texas Intermediate (WTI) as traded for delivery at the Cushing Oklahoma depot...when we last looked at this graph, September oil contracts had just completed a two week run-up from around $39 a barrel to $48.50, and it looked like $50 a barrel oil was a certainty...but the rally ran out of steam last week, and then October contract prices started falling when last week's reports showed building gluts of oil and all of its products...this week, oil prices were in virtual freefall during all the high volume hours, while the volume of trading underlying the price recovery on Friday was not very convincing...fundamentals would seem to call for $40 oil, but until the OPEC - Russian freeze issue is resolved one way or the other, we can expect more volatility like we've seen here going forward...
The Latest Oil Stats from the EIA
as we mentioned, the oil data for the week ending August 26th from the US Energy Information Administration showed increases in our supplies of oil and of distillates, as our oil imports rose to a 47 month high, and as our refinery operations slowed, in keeping with the approaching end of summer...meanwhile, this week's crude oil fudge factor needed to make the weekly U.S. Petroleum Balance Sheet (line 13) balance was at +233,000 barrels per day, down from 523,000 barrels per day last week, but which still meant that 233,000 more barrels of oil per day showed up in our final consumption and inventory figures this week than were accounted for by our production or import figures, meaning one or several of this week's metrics were off by that amount...the EIA did announce that as of this week, they're shifting to real time reporting of oil exports as provided by U.S. Customs, which should improve the weekly reporting somewhat; previously, they'd been estimating exports based on monthly export data published by the U.S. Census Bureau, and the numbers in that series always looked like they'd been woven out of whole cloth...nonetheless, we've now seen 10 weeks in a row with a large positive oil adjustment, bringing this year's cumulative daily average of that weekly statistical adjustment to a positive 97,000 barrels per day, a reversal of the negative adjustment we saw through the first 6 months of this year, when much of what we had appeared to have produced or imported wasn't showing up in the final consumption or inventory figures...
so, with that new accurate data this week, the EIA reported that our exports of crude oil rose by an average of 21,000 barrels per day to an average of 698,000 barrels per day during the week ending August 26th, which is a new high in the EIA records, not really unexpected since restrictions on US oil exports were only lifted earlier this year...ie, while our oil exports are up 46.3% from the 477,000 barrels per day we were exporting a year ago, at that time only exports to Canada and Mexico were permitted.....but while our exports were up 21,000 barrels per day, the EIA also reported that our imports of crude oil for the week ending August 26th rose by an average of 275,000 barrels per day to an average of 8,917,000 barrels per day, which was the most oil we've imported in any week since September 14th of 2012....this week's oil imports were also 13.5% more than the 7,855,000 barrels of oil per day we imported during the week ending August 28th a year ago, and the 4 week average of our oil imports reported by the EIA's weekly Petroleum Status Report (62 pp pdf) averaged more than 8.5 million barrels per day, 11.4% higher than the same four-week period last year...
the EIA also reported that our field production of crude oil fell by 60,000 barrels per day to an average of 8,488,000 barrels per day during the week ending August 26th, as output of Alaskan oil fell by 10,000 barrels per day and production from the lower 48 states was 50,000 barrels per day lower...that left the week's domestic oil production down by 7.9% from the 9,218,000 barrels we produced during the week ending August 28th of 2015, and 11.7% lower than the record 9,610,000 barrel per day oil production that we saw during the week ending June 5th last year...our oil production for the week ending August 26th is now 731,000 barrels per day lower than what we were producing at the beginning of this year...
meanwhile, the amount of that crude oil used by US refineries fell by an average of 64,000 barrels per day to an average of 16,615,000 barrels of crude per day during the week ending August 26th, even though the US refinery utilization rate rose to 92.8% for that week, up from 92.5% of capacity during the week ending the 19th, but the same as the refinery utilization rate during the week ending August 28th last year..refining on the glutted east coast increased by a nominal 18,000 barrels per day, but the refinery utilization rate there remained depressed at 86.7%, in contrast to last year's 96.2% east coast capacity utilization...nonetheless, crude refined this week nationally was still 1.4% more than the 16,389,000 barrels of crude per day US refineries used during the week ending August 28th last year, and 1.3% more than the equivalent week in 2014, so we can see that crude refining normally tails off at this time of year, as the summer driving season comes to a close with the labor day weekend ...
with the drop in crude being refined, US refineries production of gasoline slipped by 14,000 barrels per day to 10,021,000 barrels per day during week ending August 26th, which was still 222,000 more barrels per day, or 2.6% above the 9,799,000 barrels of gasoline per day being produced during the week ending August 28th last year, and 4.7% more than our gasoline production of 9,572,000 barrels per day during the week ending August 29th, 2014....and even with the operations cutback, east coast refineries still managed to produce an average of 3,294,000 barrels of gasoline per day, 18,000 barrels per day more than last week and 1.2% more than a year earlier....concurrently, refinery output of distillate fuels (diesel fuel and heat oil) rose by 124,000 barrels per day to 4,973,000 barrels per day during the week ending August 26th, which lifted our distillates output to 1.0% more that the distillates production of 4,923,000 barrels per day during the week ending August 28th of last year, while it still lagged the distillates output of 5,080,000 barrels per day during the week ending August 29th 2014 by 2.1% ......
with the modest downturn in gasoline production, our gasoline inventories fell by 691,000 barrels to 232,004,000 barrels as of August 26th, which was still less than the normal late August drawdown...that was as our gasoline imports rose by 31,000 barrels per day to 832,000 barrels per day and as domestic demand for gasoline fell by 148,000 barrels per day to 9,511,000 barrels per day...that left this week's gasoline inventories 8.3% higher than the 214,163 ,000 barrels of gasoline that we had stored on August 28th last year, and 10.5% higher than the 209,992,000 barrels of gasoline we had stored on August 29th of 2014...meanwhile, our distillate fuel inventories rose by 1,496,000 barrels to 154,753,000 barrels by August 26th, which left our distillate inventories 3.2% above the distillate inventories of 149,951,000 barrels of August 28th last year, and 24.8% above the distillate inventories of 122,794,000 barrels of August 29th, 2014...
end of the week inventories of the other major refined products were mixed....our stockpiles of propane/propylene rose by 2,375,000 barrels to 98,51,000 barrels last week, which meant they were 2.2% above the 96,344,000 barrels stored as of August 28th last year, and 29.4% higher than the propane/propylene inventories of the same weekend in 2014...inventories of NGPL (Natural Gas Plant Liquids) and LRG (Liquefied Refinery Gases) other than propane/propylene rose by 1,684,000 barrels to 149,770,000 barrels as of August 26th, 17.5% higher than the 127,428,000 barrels we had stored as of August 28th last year, and 14.2% higher than the equivalent week in 2014...but inventories of kerosene type jet fuel fell by 717,000 barrels to 41,034,000 barrels as of August 26th, 3.5% below our jet fuel stockpiles of 42,546,000 barrels on August 28th last year, but 18.5% higher than our 34,636,000 barrels of jet fuel supplies we had stored on August 29th of 2014...and stockpiles of residual fuel oils fell by 467,000 barrels to 40,026,000 barrels as of August 26th, a bit below the 40,161,000 barrels we had stored a year earlier, but 9.5% higher than the 36,541,000 barrels of residual fuel oils we had stored on August 29th of 2014...
and of course, with the near record oil imports and the refinery slowdown, our inventories of crude oil that has yet to be refined into any of the above products also rose, increasing by 2,276,000 barrels to 525,870,000 barrels as of August 26th, the 5th oil inventory increase in 6 weeks, at a time of year when oil stockpiles are usually being used up....thus we ended up with 15.5% more crude oil in storage than the 455,428,000 barrels we had stored as of the same weekend a year earlier, and 46.2% more crude oil than the 359,570,000 barrels we had stored on August 29th of 2014...
lastly, adding the barrels of oil products inventories to the amount of crude oil in storage, we find the aggregate of our Total Crude Oil and Petroleum Products Supplies (not including the Strategic Petroleum Reserve) to be at a record high of 1,404,679,000 barrels, up by 4,503,000 barrels from last week....that's the 24th new record high for total supplies set in 2016, and we've now set new records for total supplies 9 consecutive weeks in a row, adding a total of 32.8 million barrels of oil and oil products to the record we already had stored over that 9 week stretch....that leaves our total supply up by 115.77 million barrels, or 9.0% from a year ago, and 24.9% higher than the total supplies of 1,124,415,000 that we had stored two years earlier on the same weekend..
This Week's Rig Count
the rig count for the week ending September 2nd was impacted by the movement of hurricane Hermine through the eastern Gulf of Mexico, and therefore a number of the oil platforms that we'll see were shutdown this week will likely be up and running again next week, so it wont be until then that we can get a firm count on rigs in the area...even so, Baker Hughes reported that the total count of active rotary rigs running in the US rose by 8 rigs to 497 rigs as of Friday, the 12th increase in 14 weeks and a 7 month high...still, the total count was down by 367 rigs from the 864 rigs that were deployed as of the September 4th report last year, and down from the recent high of 1929 rigs that were in use on November 21st of 2014...the number of rigs drilling for oil was up by just 1 rig this week at 407, but was still down from the 662 oil directed rigs that were in use a year earlier, and down from the recent high of 1609 oil rigs that were drilling on October 10, 2014, while the count of drilling rigs targeting natural gas formations rose by 7 rigs to 88 rigs this week, which was the largest increase in gas rigs since 8 gas directed rigs were added during the week ending April 24th 2015, and probably the largest percentage increase in gas rigs this century ...but gas rigs were still down from the 202 natural gas rigs that were drilling on September 4th a year ago, and down from the recent high of 1,606 rigs that were drilling for natural gas on August 29th, 2008...there also remained two rigs drilling this week that were classified as miscellaneous, unchanged from last week but up from none the same week a year ago...
seven of the platforms that had been drilling offshore of Louisiana in the Gulf of Mexico were shut down this week, with no indication in the Baker Hughes data as to the reason, which we nonetheless suspect was due to the hurricane in the Gulf, which was said to have idled 11% of Gulf production, which we'll likely see in the EIA data next week...that still left 10 rigs active in the Gulf of Mexico and offshore nationally at the week's end, down from 31 rigs drilling in the Gulf and a total of 33 rigs offshore nationally a year ago...however, there was also another rig set up to drill through an inland lake in southern Louisiana, which brought the inland waters rig count up to 5 rigs, which was up from 4 inland waters rigs a year earlier..
in an indication of what was going on away from the Gulf, the number of working horizontal drilling rigs rose by 16 rigs this week, which brought the count of active horizontal rigs up to 395 rigs, which was still down from the 659 horizontal rigs that were in use on September 4th of last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count dropped by 2 rigs to 60 rigs this week, which was exactly half of the 120 vertical rigs that were drilling in the US during the same week last year...meanwhile, the directional drilling rig count fell by 6 rigs to 42 rigs, which was down from the 85 directional rigs that were deployed during the same week last year...
the details on this week's changes in drilling activity by state and shale basin are included in our screenshot below 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 for the major producing states, and the second table shows weekly and annual rig count changes for the major geological oil and gas basins...in both tables, the first column shows the active rig count as of September 2nd, the second column shows the change in the number of working rigs between August 26th and September 2nd, the third column shows last week's August 26th rig count, the 4th column shows the change in the number of rigs running this Friday from the equivalent Friday in September 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 week's case was September 4th of 2015:
the first thing that sticks out in the tables above is the shut down of 7 offshore rigs in Louisiana, most of which we believe to be due to the hurricane...otherwise, it's a fairly normal week in that Texas saw an increase of 4 rigs, and the 2 Texas basins, the Permian of west Texas and the Eagle Ford in the south, both saw increases of 3 rigs...but right offhand, we can only account for 3 of the 7 new gas directed rigs that were started up this week; there were two rigs added in the Marcellus, and one in the Utica, but since the Utica rig did not increase the Ohio count, we'd have to guess that was a Utica shale well in Pennsylvania...furthermore, since Pennsylvania only saw two additional rigs, we have to believe one of the new Marcellus rigs was set up in West Virginia...that still leaves 4 gas rigs unaccounted for....pulling up the historical data by basin from Baker Hughes (XLS), we see there are 5 gas wells in the Eagle Ford, but none of those are new...but it does appear that a gas rig was added in the Haynesville of Louisiana, while an oil rig was shut down there, which appears as a net no change above...the other 3 gas directed rigs appear to have been set up in basins not listed above, as the gas rig count in the "others" category rose from 23 rigs to 26 rigs as of September 2nd...both Wyoming and Oklahoma are thus suspect, with increases of 4 rigs in each state, as N. Dakota, the only other state with an increase, added an oil rig in the Williston basin...
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FirstEnergy Says Its Headquarters Is Worth $568 Million to Ohio - Bloomberg: FirstEnergy Corp., Ohio’s homegrown utility with roots in the state that date to 1930, wants its customers to pay to ensure it stays there. In the latest twist in a two-year battle for aid, the company has asked regulators to approve as much as $568 million a year for eight years in customer surcharges to compensate for the economic impact of having its headquarters in Akron. FirstEnergy is among utilities across the U.S. struggling amid flat demand and low power prices bought on by cheap natural gas, and growing supplies of solar and wind energy. That hasn’t swayed manufacturers, consumer advocates and environmental groups who said they were left flabbergasted by the proposed hike. "When they first told me that was in there, I thought it was a joke," said Eric Burkland, the president of the Ohio Manufacturers’ Association, which opposes the fee increase. "From a manufacturing ratepayer’s perspective, it’s just bizarre."While governments often offer tax breaks to lure businesses, Burkland said he was unaware of another utility asking ratepayers for payments tied to the company’s headquarters. The company had initially asked the commission to approve a power-purchase agreement for its Sammis coal plant and Davis-Besse nuclear plant, which were struggling in the competitive regional power market.
Remain vigilant on fracking - The Star Beacon -- Though not totally unexpected, it is still a disappointing blow to hear a fracking regulation bill championed by State Rep. John Patterson will not move forward in this General Assembly. At a fracking discussion hosted by the Ashtabula County League of Women Voters Tuesday, Patterson said House Bill 422 had gotten its one promised hearing and that was as far as it would advance this session. The oil and gas lobby has the ear of many powerful lawmakers, and with legislators only expected back for a short lame duck session following the Nov. 8 election, the fracking bill isn’t a priority to most lawmakers — or at least not the ones in the majority with the power to grease the wheels. That means the process starts over again in 2017, so in all likelihood the state is probably looking at 2018 before any significant regulations of the fracking industry get introduced. While not a perfect bill as proposed, House Bill 422 certainly would have taken real, meaningful steps toward regulating the fracking industry. A few of the proposals the bill aimed to address included setbacks and access to deeds, requiring the state notify local entities of new proposed wells and prohibiting wells in 100-year flood plains. Even those small, reasonable steps are too much for some lawmakers, apparently. Depending on what happens after the November election, it will be worth monitoring what changes might come in the General Assembly’s makeup that could push the legislation forward. Patterson urged those at Tuesday’s meeting to review the bill and “see what holes are in it” before it’s reintroduced during the next General Assembly in January. So in that light, whatever form the new bill takes in the next General Assembly, we encourage Patterson and his co-sponsors to go big. . Oil and gas companies, citing “proprietary information,” adamantly refuse to disclose what potentially hazardous chemicals first responders might encounter if there is a fire or spill. They have called such proposals a non-starter for any regulations they would be willing to accept. But anything that can significantly lessen the dangers emergency crews face — or reduce the risk of serious environmental contamination — shouldn’t just be on the table, it should be law of the land.
Charter supporters ask Ohio Supreme Court to change its prior ruling -The Ohio Supreme Court is being asked to overturn, or at least clarify, part of a decision it rendered last year on county charters. On Monday, supporters of proposed county charters in Athens, Meigs and Portage Counties submitted legal arguments in a lawsuit they filed Aug. 19. The lawsuit asks the Supreme Court to order election boards in the counties and Ohio Secretary of State Jon Husted to put the charters on the November ballot. The election boards had ruled the charter initiative petitions invalid, and Husted upheld those rulings. In their filing, charter proponents argue that the election boards and Husted exceeded their authority by looking at the substance of the proposed charters, rather than limiting their inquiry to whether the form of the initiative petitions was correct. It’s undisputed that the petitions had enough signatures. Proponents argue that in a ruling last year (on 2015 charter proposals), the Supreme Court said that boards, the secretary of state and courts cannot, before an election, assess the legality or constitutionality of a charter. They also argue that the Supreme Court in the same decision then “weakened this proscription nearly to the point of eliminating it” by saying that pre-election invalidation can occur if charters do not meet the threshold requirements that define a charter initiative — which, charter proponents argue, requires an improper examination of the constitutionality and legality of the charter. “By authorizing such review, (the Ohio Supreme Court’s) decision last year was unconstitutional and must be overturned (or clarified) to that extent,” the charter supporters assert. Charter supporters argue that they have a constitutional right to local community self-government that prevents the state and county from ruling on the substance of charters until after the people have voted on the charters.
Ohio Supreme Court receives arguments over charter proposal -- The Athens County Board of Elections is arguing that it acted in conformity with the law when the board unanimously denied for the ballot a proposal to form a charter government earlier this summer. The election board’s argument appeared in an answer brief filed with the Ohio Supreme Court last Friday. The group proposing the charter, the Athens County Bill of Rights Committee, in the meantime has filed a 54-page merit brief to the Supreme Court, arguing that the high court should overturn the Ohio Secretary of State’s affirmation of the Athens County election board’s decision to keep the issue off the ballot Nov. 8. The local Board of Elections voted unanimously in July to reject the anti-oil and gas fracking charter proposal from the ACBORC. It was the second such rejection in two years. Last year, the group appealed that decision to Athens County Common Pleas Court, and a local judge OKed the proposal for the ballot. But then a private citizen appealed that decision to the Ohio Secretary of State, who knocked the proposal off the ballot. This year, the Bill of Rights Committee protested the elections board decision directly to Ohio Secretary of State Jon Husted, and in mid-August he issued a decision rejecting the Athens County proposal along with similar proposals for Meigs and Portage counties. All three counties appealed that decision to the Ohio Supreme Court. Last Friday, the Athens County Board of Elections filed an answer to the complaint with the court, arguing the board acted within the law when rejecting the proposal as invalid. The answer filing is similar to most answers filed in lawsuits, acknowledging the truth of certain facts such as the identities of the elections board members and the circumstances that led to the complaint, but denying wrongdoing on the part of the Board of Elections.
Well permit issued despite concerns - Despite concern from area residents, the Ohio Department of Natural Resources has issued a drilling permit for the NuKonKord No. 1 injection well in Guernsey County. The site is in Westland Township, south of New Concord on the east side of Ohio 83. It is the fourth injection well in the New Concord vicinity. Three of the four wells are in Guernsey County, and one is in Muskingum County. Meghan Wynne heads the Concerned Citizens of New Concord, a group opposed to fracking wastewater injection sites in the area. Earlier this year, Wynne wrote a letter to ODNR requesting the permit be denied because of health and safety risks posed by fracking wastewater injection wells. "There have been well over 600 articles written providing evidence of widespread contamination from radioactive poisoning due to fracking wastewater," Wynne said. "There is also lots of written scientific evidence that fracking wastewater causes serious environmental and safety concerns." "Pennsylvania has banned injection wells because they are unsafe, so they truck the wastewater into southeast Ohio," Wynne said. "Look at the issues they are having in places like North Dakota." In the Bakken region of North Dakota, surface waters are showing unsafe levels of radium, selenium, thallium, lead and other toxic chemicals, according to the Environmental Protection Agency's Office of Research and Development. The fracking boom, which peaked in 2012, generated nearly 10,000 wells for oil and gas production. Along with them, about 4,000 wastewater spills were reported. Toxic pollution was found in the ground as well as in the water. According to a study released earlier this year by Duke University, the highest level of radium found in soil measured more than 4,600 becquerels per kilogram. That translates to roughly two and a half times the levels of fracking-related radioactive contamination discovered in Pennsylvania in 2013, which drew national attention.
Fracking activity continues despite end of boom - The fracking frenzy in Eastern Ohio has come and gone, and it might never be back again in quite the same way. Spurred by high energy prices, improvements in drilling technology and an abundance of gas beneath Ohio, oil and gas companies began rushing to drill in Ohio in 2011. They brought with them an unprecedented surge in economic optimism: high-paying jobs, windfalls for land owners and new business for a range of establishments in an economically challenged region. But after a crash in fuel prices in late 2014 and early 2015 slowed new drilling, and the economic benefits that come with it, the outlook in the shale region has shifted. While shale fracking is expected to provide an economic boost to eastern Ohio for years to come, a more measured mindset has taken hold for both drillers and communities as energy prices have begun to tick up. Accustomed to striving for 5 percent year-over-year growth in the auto business, Dunning Motor Sales saw annual sales growth approaching 30 percent during the boom times of 2012 through 2014, he said. Indeed, when the oil and gas industry set its sights on Ohio, it moved quickly — and the economic benefits rushed in. In 2011, just 25 shale wells were drilled in the state, but that number jumped to 198 in 2012, 389 in 2013 and 521 wells drilled in 2014, according to data from the Ohio Department of Natural Resources. Activity dipped slightly in 2015 to 451 new wells. Ohio has seen 192 new shale wells drilled in 2016 as of Aug. 25. The vast majority of Ohio's fracking wells are located in the eastern and southern parts of the state. As drilling increased, so did Ohio jobs serving the industry. Those jobs reached 16,463 at the end of March 2015, more than double the 7,426 industry jobs at the end of 2011, according to data from the Ohio Department of Job and Family Services. But those numbers dropped 26 percent by the end of 2015 as the industry slowed amid crude oil prices that dropped from $113.39 a barrel in April 2011 to $26.19 a barrel in February 2016, according to data from the U.S. Energy Information Administration.
MPLX's plan for moving northeast condensate and natural gasoline - MPLX LP and the midstream limited partnership’s subsidiaries (collectively referred to as “MPLX”) are stepping up to address a lingering hydrocarbon-delivery issue in the Utica and “wet” Marcellus plays, namely, how to more efficiently transport the field condensate and natural gasoline produced there to refineries, Western Canadian heavy-crude shippers and other end-users. Currently, condensate and natural gasoline are moved within and out of production areas in eastern Ohio, northern West Virginia and western Pennsylvania via truck, rail or barge. MPLX’s three-part, $500-million plan, the first elements of which are nearing completion, is mostly about pipelines—a mix of new ones and creatively repurposed existing ones. It looks like a win-win for condensate and natural gasoline producers and buyers. Today we begin a series on improving the flow of these two close relatives in the hydrocarbon family to buyers in the Midwest and beyond.
Living Near a Fracking Site Is Tied to Migraines, Fatigue - The New York Times: Living near a natural gas hydraulic fracturing site is associated with increased rates of sinus problems, migraines and fatigue, according to new research.Scientists had 7,785 randomly selected participants in a large Pennsylvania health system fill out health questionnaires. About a quarter met criteria for one or more of three disorders: chronic rhinosinusitis, migraine headaches and severe fatigue.The study, in Environmental Health Perspectives, ranked participants according to how closely they lived to fracking sites and larger wells. Compared with those in the bottom one-quarter by this measure, those in the top one-quarter were 49 percent more likely to have sinusitis and migraines, 88 percent more likely to have sinusitis and fatigue, 95 percent more likely to have migraines and fatigue, and 84 percent more likely to have all three symptoms.The senior author, Dr. Brian S. Schwartz, a physician and environmental epidemiologist at the Johns Hopkins Bloomberg School of Public Health, acknowledged that there may be variables the researchers did not account for, and that this was an observational study that does not prove cause and effect. But, he said, “there have now been seven or eight studies with different designs and in different populations, and while none is perfect, there is now a growing body of evidence that this industry is associated with impacts on health that are biologically plausible. Do we know the exact mechanism? No. That requires further study.”
Living near fracking sites can double the chance of making you ill | Daily Mail Online: Living near a fracking site almost doubles the risk of migraines, chronic sinus problems and severe fatigue, suggests new research.The study in the United States found residents with the highest exposure to the natural gas wells are nearly TWICE as likely to suffer from the combination of conditions.The findings add to a growing body of evidence that fracking worsens air quality, contaminates water sources and harms public health. More than 15 million Americans live within a mile of a fracking site that has been drilled in the past 15 years. While it has not yet taken place on anything like the same scale in the UK, the government here has granted more than 300 licences for firms to carry out shale gas exploration. Previous research has suggested fracking poses threats to residents living close by which is backed by the new findings published in Environmental Health Perspectives. Dr Aaron Tustin, of Johns Hopkins University in the US, said: 'These three health conditions can have debilitating impacts on people's lives. 'In addition they cost the health care system a lot of money. Our data suggest these symptoms are associated with proximity to the fracking industry..' The study of 7,785 adults found 1,765 (23 per cent) suffered migraines, 1,930 (25 per cent) severe fatigue and 1,850 (24 per cent) chronic rhinosinusitis - three or more months of nasal and sinus symptoms).
New Fracking Study Pulls Rug Out From Under "Safe" Fracking Study: Whenever a new fracking study comes out, you can be sure that fossil industry stakeholders will run over to the history machine and crank out a purported decades-long safety record. The problem is, until recent years fracking was confined mainly to low-population areas in the western US. Now that fracking has flooded into Pennsylvania and other northeastern states, researchers finally have a big enough data pool to draw some conclusions, and they ain’t pretty. Last year, researchers at Johns Hopkins University linked fracking to increased risk of premature birth in Pennsylvania (fracking is short for hydrofracturing, a formerly unconventional gas and oil drilling method that involves pumping high volumes of chemical brine into shale formations). In a stunning twist of irony, earlier this summer researchers at the same school found an increased risk of asthma linked to fracking in Pennsylvania — just in time for the Pennsylvania-based company Mylan to face withering criticism for price gouging related to its EpiPen asthma relief product. Deepening the irony, the Mylan CEO who oversaw the price increases is the daughter of US Senator Joe Manchin (D), a vigorous advocate for fracking who represents the neighboring state of West Virginia. The latest study from Johns Hopkins just turned up this week in the journal Environmental Health Perspectives. Here’s the money quote: …Pennsylvania residents with the highest exposure to active natural gas wells operated by the hydraulic fracturing — or fracking — industry are nearly twice as likely to suffer from a combination of migraine headaches, chronic nasal and sinus symptoms, and severe fatigue.Ouch!
The Evidence Of Fracking’s Health Effects Keeps Mounting - Hydraulic fracturing has over the past few years been associated with ground water pollution, spills, and earthquakes in various states. Now, a study led by John Hopkins University researchers found that fracking in Pennsylvania may be associated with migraines, fatigue, and sinusitis. The study, published Thursday, adds to a growing body of scientific work that on regular basis links the controversial extraction process with adverse effects on the environment and people. It also stands out as previous studies on the health effects of fracking have suffered from small sample sizes, and difficulties on how to assess exposure. Researchers chose to evaluate migraines, fatigue, and sinus symptoms due to their high prevalence, large economic costs, and possible link to environmental risk factors like chemical toxicity, or odors. Fracking can produce air pollution, odors, noise, bright lights, and other factors known to be linked to migraines and respiratory problems. For instance, odors can trigger migraines in some people. To reach their conclusions researchers evaluated the responses of nearly 8,000 people on the Geisinger Health System, a health care provider that covers about 40 counties in north and central Pennsylvania. Participants were reached via questionnaires through 2014. The questionnaires did not mention fracking, a process where drillers inject massive amounts of chemicals, sand, and water into wells to break shale rock and extract oil or gas. Researchers then used residential addresses and data on Pennsylvania’s fracked wells from state agencies and other sources, to rank participants depending on how close they lived to fracking operations. According to the report, respondents living closer to wells were 49 percent more likely to report sinusitis and migraines, 88 percent more likely to report sinusitis and fatigue, and 84 percent to report all three conditions.
Fracking and Health: What we Know from Pennsylvania's Gas Boom -- The fracking industry has been an energy success story: Natural gas prices have decreased as fracking has skyrocketed, and natural gas now produces more electricity than coal does, which has resulted in improved air quality. The first states to begin unconventional natural gas development with fracking have cited potential economic, energy and community benefits. Yet early on, communities where fracking spread raised doubts. Nearby residents reported a variety of common symptoms and sources of stress. Public health professionals trumpeted their concerns, and epidemiologists launched health studies of the industry. States like Pennsylvania, where almost 10,000 wells have been drilled since 2005, continued development. But other states, including Maryland and New York, have not permitted drilling because of the potential for environmental and health impacts. Tensions between economic development, energy policy and environmental and health concerns are common in public health’s history. Often, economic and energy development trump environmental and health concerns, leaving public health playing “catch-up.” Indeed, only recently have rigorous health studies on the impact of unconventional natural gas development on health been completed. We have published three studies, which evaluated birth outcomes, asthma exacerbations and symptoms, including nasal and sinus, fatigue and migraine headache symptoms. These, together with other studies, form a growing body of evidence that unconventional natural gas development is having detrimental effects on health. Not unexpectedly, the oil and gas industry has countered our findings with pointed criticism.
Health News - Exposure to Chemicals Released During Fracking May Harm Fertility - More than 15 million Americans live within a one-mile radius of unconventional oil and gas (UOG) operations. Scientific studies, while ongoing, are still inconclusive on the potential long-term effects fracturing has on human development. Today, researchers at the University of Missouri released a study that is the first of its kind to link exposure to chemicals released during hydraulic fracturing to adverse reproductive and developmental outcomes in mice. Scientists believe that exposure to these chemicals also could pose a threat to human development.“Researchers have previously found that endocrine-disrupting chemicals (EDCs) mimic or block hormones — the chemical messengers that regulate respiration, reproduction, metabolism, growth and other biological functions,” said Susan C. Nagel, Nagel, an associate professor of obstetrics, gynecology and women’s health in the School of Medicine. “Evidence from this study indicates that developmental exposure to fracking and drilling chemicals may pose a threat to fertility in animals and potentially people. Negative outcomes were observed even in mice exposed to the lowest dose of chemicals, which was lower than the concentrations found in groundwater at some locations with past oil and gas wastewater spills.” Researchers mixed 23 oil and gas chemicals in four different concentrations to reflect concentrations ranging from those found in drinking water and groundwater to concentrations found in industry wastewater. The mixtures were added to drinking water given to pregnant mice in the laboratory until they gave birth. “Female mice that were exposed to commonly used fracking chemicals in utero showed signs of reduced fertility, including alterations in the development of the ovarian follicles and pituitary and reproductive hormone concentrations,” “Our studies suggest adverse developmental and reproductive health outcomes might be expected in humans and animals exposed to chemicals in regions with oil and gas drilling activity.”
Appeals court: State can weigh impact of gas drilling wells (AP) — A Pennsylvania appeals court says state environmental regulators can continue weighing the effects gas drilling wells have on public and natural resources. The court ruled Thursday in favor of the state Department of Environmental Protection and against the Pennsylvania Independent Oil and Gas Association. The industry group includes hundreds of members mainly involved in conventional drilling operations. The group had said the state Supreme Court threw out the public resource protection sections when it struck down other parts of an oil and gas law. Commonwealth Court rejected the argument and says the high court allowed those powers to survive by inserting language separating the public resource protections from the enjoined parts of the law. The association says it believes the court erred and will review its options.
State OKs use of gas drilling waste on hunting club road (AP) — State regulators are allowing nearly 4,000 tons of natural gas drilling waste to be used in a road project in north-central Pennsylvania. StateImpact Pennsylvania reports (http://n.pr/2bVa1fW) the Department of Environmental Protection has approved a plan from waste handler Clean Earth Inc. to use the materials on a road at the Bobst Mountain Hunting Club in Lycoming County. StateImpact, a project of radio stations WITF and WHYY, says it’s the first time drill cuttings are being used in an area that is not an industrial site. The waste dirt and rock from drilling deep underground may contain chemicals and naturally occurring radiation. Most ends up in landfills. The DEP has allowed the repurposing of some waste through research and development permits. But StateImpact reports future projects will go through a standard permitting process requiring full public review and comment.
Gas leak prompts evacuation order in central Pennsylvania (AP) — A gas leak has prompted an evacuation order for parts of one central Pennsylvania community. The Pennsylvania Emergency Management Agency issued the order Thursday evening for residents within a half-mile of the reported leak in Hamilton Township in Adams County. Officials say the leak was caused when the driver of a truck backed up and hit a pipe at a Columbia Gas regulator station. Motorists and pedestrians are being asked to avoid the area as a safety precaution. A temporary shelter has been set up at a nearby fire station. No injuries have been reported.
How Congress Makes Regular Taxpayers Foot the Bill for Oil Pipeline Fat Cats - A regulation has forced Americans to pay the corporate income taxes of an industry that Congress exempted from that tax in 1986, an outrage I have chronicled for years. Now a federal court has determined that this taxpayer abuse is worse than I reported. In fact, it’s twice as bad. Yet despite the latest court ruling in a long-running case, this rip-off may continue.The idea that any business could force you to pay its taxes may strike some readers as beyond belief. When I first heard about this more than a decade ago my skepticism meter hit high alert. Then I started reading the laws, regulations, and official proceedings, none of which made the news. I’ve been writing about it ever since, hoping the public will demand an end to this abuse. The way it works is simple: The Federal Energy Regulatory Commission (FERC) sets the rates that monopoly pipelines can charge. The rates are based on all of their costs—people, equipment, taxes, and the corporate income tax. But that last expense is fake. The pipelines are exempt from that tax. No industry benefits more from the forced payment of taxes for private gain than the pipelines that are the subject of the latest court ruling. Pipelines are monopoly rights-of-way granted by government. The rates that oil pipelines charge shippers—oil companies, airlines, chemical companies—to move their product across the country are regulated under a law first enacted in 1887, the Interstate Commerce Act, which was designed to protect shippers from abuses by railroads—and was partly drafted by those railroads. Natural gas pipelines are regulated under updates to a 1938 law. FERC chooses to set pipeline profits on an after-tax basis. This means that for every dollar of authorized after-tax profit, a monopoly pipeline adds 54 cents to cover the “grossed up” federal income tax of 35 percent of profits. Thus, a monopoly pipeline authorized to earn $1 billion after tax actually collects $1.54 billion. If it actually owed the 35 percent income tax rate, it would be left with a net profit of $1 billion.
Too Much Pipe On My Hands?? - Marcellus/Utica Takeaway Capacity to the Gulf -- Of all the demand markets in the U.S., the biggest prize eyed by Marcellus/Utica natural gas producers is the Gulf Coast region, where a combination of industrial demand, LNG exports and power generation projects is driving a need for more and more gas. And beyond the U.S. Gulf Coast states, there lies still another market capable of gobbling up even more of the excess Northeast gas supply: Mexico’s rapidly growing gas-fired generation sector ––that is, assuming pipelines in Texas can get it all the way there. There is over 4.0 Bcf/d of Marcellus/Utica-to-Gulf-Coast takeaway capacity planned to be completed over the next few years. Today, we look at the status and timing of Northeast pipeline takeaway projects targeting the Gulf Coast. With the Northeast producing region hoping for access to close to 18 Bcf/d of incremental takeaway capacity over the next several years, the question now becomes, will there be too much takeaway capacity out of the Northeast? To answer this, we first looked in Part 1 at the RBN Northeast production outlook and prospects for supply growth under three commodity-price scenarios, concluding that efficiency gains and the uncompleted well inventory (DUCs) indicate that even the low production case will lead to at least some supply growth in the region. With that in mind, we turned our attention in Part 2 to upcoming takeaway capacity projects, organized into five outbound flow corridors that we defined for our analysis. Of the 24 projects RBN is tracking in our Midstream Infrastructure Database Interface (MIDI), six projects totaling 3.3 Bcf/d are headed to the New England and Mid-Atlantic states, or along what we call the East corridor; two projects adding up to 0.65 Bcf/d are planned for the Canadian corridor and four projects totaling 4.3 Bcf/d to the Midwest via Ohio (covered in Part 3);and four projects with a combined 5.2 Bcf/d to the Southeast along the Atlantic Coast are under development (see Part 4). We also started our examination of what some of this new gas supply will do to natural gas markets along the Gulf Coast in the first part of our latest Drill Down report titled I Saw Miles and Miles of Texas. Today, we look at each of the projects that will flow Marcellus/Utica gas along the fifth and final corridor — the Gulf Coast via Ohio, aka the Promised Land of future natural gas demand.
In the Pipeline's Path - Mountainous, thickly forested, with a population of just over 4,600, Bath County borders West Virginia in the Allegheny Mountains, and is known for its small farms, scenic beauty, and great stretches of intact forest. It also lies along the proposed route of the Atlantic Coast Pipeline (ACP), a 600-mile-long behemoth that would carry some 1.5 billion cubic feet of gas through their community every day. The proposed pipeline will cross the central Allegheny Highlands, the Blue Ridge Mountains, and the adjacent valleys. It will cut through 30 miles of national forest and cross numerous rivers, streams, and wetlands. The people of Appalachia, well accustomed to exploitation from moneyed outside corporations, are rallying against the loss of land, home values, and safety posed by the pipeline proposal. In fact, the pipeline has united communities across political and social spectra, in a fierce defiance against the project and a common goal to defeat its proponent, Dominion Resources. The furor over the proposed Keystone XL pipeline may have abated since President Obama vetoed the project last November, saying that the transborder infrastructure project “would not serve the national interest of the United States.” But while Keystone has certainly been the most well-recognized fossil-fuel transmission project, many other potentially disastrous pipelines are now under consideration, yet are receiving far less public scrutiny. The bulk of these pending pipelines would transport natural gas. Domestic natural gas production reached a record high in 2015, and the US Energy Information Administration (EIA) projects that US production will increase 55 percent by 2040. Much of this increase has and will come from the Marcellus and Utica shale formations in the Appalachian Basin, particularly in West Virginia, Pennsylvania, and Ohio. According to the EIA, West Virginia alone – the eighth-largest natural gas-producing state in the nation – had more than 28 trillion cubic feet in gas reserves in 2014. Production in the Appalachian Basin has increased thirteen-fold since 2009, and is projected to double again by the early 2030s, at which point the region could provide 50 percent of all US gas production. In the past year or so, several new pipeline projects to move gas out of the Northeast, mainly to the Mid-Atlantic and the Gulf Coast have been completed. Still, pipeline infrastructure projects have not kept pace with production in Appalachia, which means there is not currently enough pipeline capacity to move gas out of the region. Industry is looking to fill this gap, and there are dozens of Appalachia pipeline projects pending before the Federal Energy Regulatory Commission (FERC). Four of these proposed pipelines would cut through West Virginia and Virginia. The Atlantic Coast Pipeline is one of them.
WVU study looks closely at fracking waste – WOWK - A recent study undertaken by the West Virginia Water Research Institute at West Virginia University takes a detailed look at what chemicals and compounds are in waste from hydraulic fracturing. The findings suggest fracking wastes are below federal guidelines for radioactive or hazardous waste if properly cared for. Research was conducted on two wells near Morgantown to study both the solid and liquid wastes associated with fracking. “Two wells do not mean we have fully representative samples from across the state,” said Paul Ziemkiewicz, director of the Water research institute. But Ziemkiewicz said he was encouraged by the study’s results. There are three basic types of wastes generated in a fracking operation, Ziemkiewicz told members of the West Virginia Legislature during legislative interim meetings in August. There’s water — in the case of the study, water drawn from the Monongahela River — injected into wells to fracture subterranean rock and release gas; the mud that results from the injection or used to lubricate drills; and the rock fragments or cuttings that the drills bring up to the surface. “The cuttings are only very mildly radioactive,” Ziemkiewicz said. “The water itself was very mildly radioactive.” Much of the water used in fracking is recycled throughout the process. Mud and cuttings are typically landfilled. “These are certainly materials that have to be handled with respect and have to be treated very carefully,” Ziemkiewicz said. But he said some of the fracking waste may not be as dangerous as previously suspected. The worst contamination from traditional fracking wells comes from the lubricating mud used with the drills. Ziemkiewicz told legislators that gas drillers typically use diesel fuel in the mud mix to help the drills cut through rock. The mud that comes back up is therefore highly contaminated with benzene, heavy metals and other chemicals.
BLM Issues Rule on Online Oil, Gas Lease Sales - The Bureau of Land Management issued a rule on Tuesday announcing the agency’s intent to hold online lease sales for oil and gas drilling, starting in September. The agency’s first online lease sale will be Sept. 20, offering 4,398 acres of land in Kentucky and Mississippi, the agency said. Congress gave the agency the authority to hold the auctions online, rather than in person, in an amendment in the National Defense Authorization Act for fiscal year 2015. The agency “believes that online sales have the potential to generate greater competition by making participation easier, which has the potential to increase bonus bids,” it said in its announcement. The rule, which formalizes the plan to hold online lease sales, takes effect immediately. It doesn’t require a public comment period because it simply restates language from the NDAA legislation and only changes the agency’s own operations. The decision is part of a broader push by the Obama administration and lawmakers to move onshore and offshore lease sales online rather than in person. The possibility of attracting more bids is one reason for such a shift. Another is that it stops anti-fossil fuel protesters from disrupting lease sales. The Bureau of Ocean Energy Management held its first live-streamed offshore oil and gas lease sale last week, prompting complaints from protesters who weren’t allowed to attend the event.
About 11% of US Gulf of Mexico oil output shut-in as storm threatens area: BSEE - About 11% of US Gulf of Mexico oil production has been shut-in as operators evacuate platforms in the possible path of a tropical depression expected to pass through the Central-Eastern and Eastern Gulf of Mexico, the US Bureau of Safety and Environmental Enforcement (BSEE) said Monday. Offshore operator reports submitted to BSEE as of late Monday morning show operators had shut-in a total 168,334 b/d of oil output as they evacuated crews from a total of six production platforms, the agency said in a statement. There is a total of 781 manned platforms in the US Gulf. Total Gulf of Mexico production was almost 1.62 million b/d in May, the latest month for which data was available from the Energy Information Administration. Tropical Depression 9 is currently off the west coast of Cuba, but the National Hurricane Center expects it to become a tropical storm on Tuesday and veer to the northwest. It is then forecast to head to the northeast and could make landfall in western Florida later in the week, the NHC said. BSEE said shut-in production figures are estimates based on the amount of oil and natural gas the companies plan to produce that day.Operators have also shut in about 190,000 Mcf/d of gas output, BSEE said, or 5.51% of total US Gulf gas production.
Shale and demand uncertainty put Big Oil on its back foot - The Barrel Blog - Under pressure from low oil prices and their rising debt levels, top oil executives at the ONS 2016 conference this week might well have found the blunt message of shale driller Scott Douglas Sheffield unsettling. The chief executive of Pioneer Natural Resources seemed to enjoy the role of spoiler-in-chief, harrying Big Oil with some uncomfortable assertions. The bad news, for those in the industry who missed out on shale and expected it to fade in the face of low prices, is that the Permian basin should be able to increase its output from 2 million b/d to 5 million b/d in the next 10 years, assuming prices reach $56/b in 2025, Sheffield said. Pioneer itself is growing its output by 27-30% annually. “It’s in that [price] strip that I see the Permian adding 300,000 b/d per year in US supply,” he told the Offshore Norwegian Seas conference, held Aug. 29 through Sept. 1 in Stavanger. Ramming home his contrarian stance, he said he was skeptical of some of the higher forecasts of long-term oil demand growth due to global warming, alternative energy and electric vehicles, while boasting of the company’s use of renewables in its own operations and the solar panels on his home. In Sheffield’s view, the dip in US production has been misconstrued, with some in the industry underestimating the Permian basin as output falters in the Eagle Ford and the Bakken. Some have failed to appreciate that rig reductions in the Permian have happened partly because of reduced drilling at conventional, non-shale sites, rather than in the shale plays, he said. The Spraberry-Wolfcamp shale, where Pioneer operates, remains resilient and Pioneer’s own breakeven price is below $25/b. Prices paid for shale acreage have been rising, in some cases, to levels higher than in 2013-2014, he said. “In the Permian we still have about 600,000 b/d of conventional production that’s declining — it’s arresting the growth. [However] there’s one field in the Midland basin, six fields in the Delaware basin that make up most of the growth in production. The Permian is still growing,” he said. With the Permian accounting for over half of US oil rigs, he forecast another 50-75 would be added.
Blackstone Unleashes Cash Hoard in Texas Shale Oil Land Grab - Bloomberg - Blackstone Energy Partners LP is partnering with two oil and gas companies as it targets assets in the sought-after Permian shale formation. Jetta Permian, formed with Jetta Operating Company Inc., plans to acquire leaseholds in the Permian’s Delaware Basin in West Texas and southern New Mexico, Blackstone said in a statement Thursday. The partnership has $1 billion of capital committed. Blackstone has also designated $500 million in a partnership with Guidon Energy to acquire assets in the Permian’s Midland Basin "with the potential to commit significantly more with future acquisitions." Guidon purchased about 16,000 net acres in Martin County, Texas, in April. Blackstone Energy’s private equity business, led by partner David Foley, raised $7 billion across two funds in the past four years. The most recent vehicle, which finished gathering $4.5 billion last year, had only spent about 5 percent of its money as of June 30, according to Blackstone’s second-quarter earnings statement. The partnerships underscore the industry’s interest in one of the few regions where drilling remains profitable at current prices. The Permian has dominated acreage deals among independent drillers this year. PDC Energy Inc. bought into the Permian with a $1.5 billion acquisition announced this week. Meanwhile Parsley Energy Inc. and Concho Resources Inc. also added holdings in the play this month.
Study finds air contamination near fracking sites result of operational inefficiencies: Chemists at the University of Texas at Arlington have published a new study that indicates that highly variable contamination events registered in and around unconventional oil and gas developments are the result of operational inefficiencies and not inherent to the extraction process itself.The study, published today as "Point source attribution of ambient contamination events near unconventional oil and gas development" in Science of the Total Environment, found highly variable levels of ambient BTEX, or benzene, toluene, ethyl benzene, and xylene compounds, in and around fracking gas drilling sites in the Eagle Ford shale region in South Texas. BTEX compounds in high concentrations can be carcinogenic and have harmful effects on the nervous system. "These variable contamination events, attributable in many cases to specific natural gas flaring units, condensation tanks, compressor units and hydrogen sulfide scavengers, indicate that mechanical inefficiencies, and not the inherent nature of the extraction process as a whole, result in the release of these compounds into the environment," said Kevin Schug, UTA Shimadzu Distinguished Professor of Analytical Chemistry and director of the University's Collaborative Laboratories for Environmental Analysis and Remediation, or CLEAR lab. "These results therefore suggest that air contamination events from fracking can be monitored, controlled and reduced," Schug said. "We hope that this research would help producers and other upstream operators improve the efficiency and reduce the environmental impact of unconventional drilling."
EPA: North Texas earthquakes likely linked to oil and gas drilling: Federal regulators believe "there is a significant possibility" that recent earthquakes in North Texas are linked to oil and gas activity, even if state regulators won't say so. That's according to the U.S. Environmental Protection Agency's annual evaluation of how the Texas Railroad Commission oversees thousands of injection and disposal wells that dot state oilfields — underground resting places for millions of gallons of toxic waste from fracking and other drilling activities. "In light of findings from several researchers, its own analysis of some cases and the fact that earthquakes diminished in some areas following shut-in or reduced injection volume of targeted wells," the Aug. 15 report states, "EPA believes there is a significant possibility that North Texas earthquake activity is associated with disposal wells." Scientists have known for decades that injecting fluid deep underground could trigger earthquakes, and a growing body of research has linked disposal wells to seismicity in Texas and other states, which has grown more frequent. Jim Bradbury, a Fort Worth-based oil and gas attorney who has closely followed the earthquake saga, said he could not recall the EPA explicitly tying Texas earthquakes to industry activity. "It's a big deal they said that," he said. Texas, home to thousands of such wells, is the third-most at-risk state for man-made earthquakes, according to the U.S. Geological Survey — behind only Oklahoma and Kansas. Several Texas drilling regions have recently felt more earthquakes, most of them small. But temblors in the Dallas-Fort Worth area have drawn the most attention, particularly those that struck in the past two years.
Commentary: Railroad Commission should improve earthquake monitoring -- Earlier this year, the U.S. Geological Survey raised its official earthquake risk level for Texas, a decision that would have been surprising until a few years ago. But in the last eight years, Texas has experienced more than 150 earthquakes. Startlingly, these earthquakes are manmade, caused by injecting wastewater from oil and gas production into disposal wells. Numerous studies have found that pumping such huge volumes of wastewater into the ground can cause existing faults to move, triggering earthquakes. Frequent earthquakes are a new problem in Texas, coinciding with the growth of fracking — and massive volumes of fracking wastewater requiring disposal. Before 2008, Texas experienced relatively few earthquakes, and those quakes were spread across the state, such as a 1964 quake near the Texas-Louisiana border, quakes in West Texas in 1931 and 1969, and numerous small earthquakes over the decades in the Panhandle. Since the fracking boom, the story has been very different. Researchers at the University of Texas have found that an average of 12 earthquakes of a magnitude 3.0 or higher now shake Texas every year. Recent earthquake activity is concentrated in the Dallas-Fort Worth area, in the middle of the Barnett Shale and a hotspot for fracking and wastewater disposal wells. Earthquakes were reported near the Dallas-Fort Worth Airport beginning in 2008 — the first reported earthquakes in the region since 1950 — while Cleburne, just to the south, experienced 50 quakes in 2009 and 2010.
Why is Oklahoma seeing fewer earthquakes? Scientists point to new oil & gas rules - PBS The number of earthquakes in Oklahoma have decreased since peaking last year, a development geologists have said this month may be linked to stricter regulations on wastewater created by the oil and gas industry. The U.S. Geological Survey announced that the state has experienced 461 3-magnitude earthquakes or larger in 2016, down from 592 during the same period a year ago. After historically averaging two 3-magnitude earthquakes or above each year, Oklahoma saw those numbers surge around 2013, soon after domestic production of oil and gas grew along with the price. That year, 109 earthquakes were recorded and by 2014 that number shot up to 585. By 2015, more than 900 earthquakes were documented on that scale, as growing consensus among scientists pointed to wastewater injection as the reason behind the uptick. The wastewater is routinely pumped deep within the earth and into the nooks and crannies of the vast Arbuckle formation, a 7,000-foot-deep sedimentary rock layer under Oklahoma. Fault lines rooted in place, sometimes for millions of years, lie below it. “It looks like the majority of water, about 68 percent, was going into the Arbuckle zone,”The water fills into holes in the rock, increasing pore pressure, according to George Choy, a USGS seismologist. “So you have a fault that might have been locked for millions of years and would have stayed that way indefinitely,” Choy said. “[The wastewater] counteracts the pressure that’s holding these faults together.” Murray said that in 2009 the industry moved about 50 million gallons of wastewater a day into the earth. By 2014, the peak of the wastewater disposal, that number nearly tripled to an estimated 126 million gallons per day.Todd Halihan, a professor of geology at Oklahoma State University, said the vast amount of water reduced friction between faults, releasing energy and causing the the earth to shudder.
Colorado's anti-fracking measures fail to qualify for ballot | Reuters: Environmental groups have failed to gather enough signatures to put two measures on Colorado's ballot in November that aim to curb fracking and oil and gas work, the state said on Monday. The ballot initiatives would have transferred regulatory control of oil and gas development to local governments and created more stringent setback requirements to keep new oil and gas facilities further away from occupied structures. Proponents gathered more than 98,492 signatures required to make the ballot, the state said, but failed to gather enough to offset the number that would possibly be rejected during a random sample that examines the validity of the signatures. Proponents of the measures have 30 days to appeal the decision. Earlier this year, the state's Supreme Court struck down local fracking bans approved in the cities of Fort Collins and Longmont. Oil companies in Colorado, one of the top U.S. oil and gas producing states, had spent several million dollars trying to derail the campaign. Protect Colorado, the industry-backed issues committee fighting the measures, praised the outcome in a statement released Monday morning. “Colorado voters recognized that these extreme measures would destroy the state’s economy and take away private property rights,"
Colorado Voters Won’t Get To Decide On New Fracking Rules - After celebrating a last-ditch effort earlier this month to put fracking regulations on the November ballot, Colorado environmental groups were dealt a blow on Monday when Secretary of State Wayne Williams ruled not enough of the submitted signatures were valid. Measures aimed at oil-and-gas fail to make the ballot. https://lnks.gd/2/2N5x_b Energy measures 75 & 78 fail to make ballot. #copolitics — @colosecofstate Under Colorado law, 98,492 valid signatures — 5 percent of the number of votes cast for the office of Colorado secretary of state in the most recent election— are required to get a measure on the ballot. The state then verifies a random sample of submitted signatures and calculates the overall validity of the submission.In this case, the state audit found that support for Initiatives 75 and 78 fell short. Organizers on Monday said they would review the ruling and determine whether to challenge the state’s decision in court.“We want to assure our volunteers and supporters that we are as committed as ever to giving the residents of Colorado a say this November on whether their communities can regulate fracking,” Tricia Olson, executive director of Yes for Health and Safety Over Fracking, said in a statement emailed to ThinkProgress. “Today’s announcement is not the final action on this issue as countless residents are now committed to protecting their children’s schools, parks, and homes.”
Groups challenge federal oil, gas leasing on climate grounds (AP) — Two environmental groups say in a lawsuit the federal government needs to consider the potential effects of climate change before allowing oil and gas drilling on public land. The federal lawsuit filed Thursday in Washington, D.C., challenges almost 400 oil and gas leases the U.S. Bureau of Land Management recently has issued in Wyoming, Utah and Colorado. The groups WildEarth Guardians and Physicians for Social Responsibility say almost 10 percent of U.S. greenhouse gas emissions trace back to publicly owned oil and gas reserves. BLM spokeswoman Cindy Wertz declined to comment, citing agency policy not to comment on pending litigation. Several groups have joined in a movement to end fossil-fuel extraction on public lands. The U.S. Chamber of Commerce says doing so would wipe out thousands of jobs.
Greens sue Obama to stop fossil fuel production on federal land | TheHill: A pair of environmental groups is suing the Obama administration to try to stop oil and natural gas production on federal lands. The lawsuit filed Thursday by WildEarth Guardians and Physicians for Social Responsibility seeks to block drilling on nearly 380,000 acres of public lands that were leased to oil and gas companies since 2015.They say that the drilling unacceptably threatens the climate, public health and the integrity of the lands. It’s part of the Keep it in the Ground movement, a project that’s taken hold in recent years to pressure the federal government to stop fossil fuel production on federal lands and waters, and to eventually stop fossil fuel production altogether. “President Obama seems to get climate change, but he has an unexplainable blind spot when it comes to leasing public lands to oil and gas companies,” Tim Ream, WildEarth Guardians’ climate and energy campaign director, said in a statement. “The Obama administration leases a million acres of public lands a year to dirty energy companies, but hasn’t bothered to disclose the inevitable climate pollution? That’s not just immoral, it’s illegal, and we’re going to stop it,” he continued. “Americans want and expect their public lands to be managed to protect pristine air and crystal clear water, not creating smog alerts and fracking waste spills,” said Catherine Thomasson, executive director of Physicians for Social Responsibility. The green groups are asking the administration for an immediate moratorium on new oil and gas leases, similar to the moratorium on coal leases that the Interior Department instituted earlier this year.
BLM Moves Onshore Oil and Gas Lease Auctions Online To Stymie ‘Keep It In The Ground’ Protests - Steve Horn - On August 30, the U.S. Department of Interior’s Bureau of Land Management (BLM) announced that it would utilize Congress’ blessing, given to it in the form of passed legislation, to proceed with online bidding for oil and gas located on U.S. public lands. The industry push to make online bidding the norm — as opposed to standard in-person, oral bidding — began with a fervorous pitch in 2009 in reaction to the “Bidder 70” civil disobedience action of activist Tim DeChristopher at an auction in Utah. It has culminated seven years later in reaction to another movement, this one involving the U.S. environmental movement at-large and not just a single person, otherwise known as the Keep It In The Ground campaign. As of late, another industry-funded group — theWestern Energy Alliance (WEA), of which EnergyNet sits as a member — has launched an aggressive public relations campaign to “end the circus” of protests outside of BLM oil and gas bids and move toward online bidding. EnergyNet will conduct an online-based bid for oil and gas on U.S. public lands on September 20. “If protesters disrupt a lease sale, we suggest BLM hold additional auctions online within that same quarter,” WEA proclaims on its website. “Online auctions also have added cost-savings benefits as venues and security personnel do not have to be enlisted to handle potentially unruly crowds.” WEA and EnergyNet share the same federal-level lobbyist, Tim Stewart, whose brother Chris is a Republican U.S. Representative for Utah. Their nephew Cody Stewart is an energy aide for Utah’s Republican Governor Gary Herbert, who recently served as Chairman of the Interstate Oil ad Gas Compact Commission. Furthermore, Spencer Kimball — a staff member on the Federal Lands Subcommittee of the U.S. House Natural Resources Committee — formerly worked for WEA as a Manager of Government Affairs. Tim Stewart formerly served as served as Chief of Staff for the House Natural Resources Committee. In a press release, WEA lobbyist Kathleen Sgamma praised the BLM’s online bidding decision. “We’re pleased BLM is moving forward with online oil and natural gas lease auctions to take advantage of well-established technology,” she said. “Transitioning auctions from in-person to online will enable BLM to meet its obligations under existing law, reduce administrative costs, and eliminate disruptions from Keep-It-in-the-Ground protesters.”
NB: also see my comments on this post: FAQ: How Much Sand/Ceramic Is Used To Frack A Typical Well In The Bakken? -- Over at FAQs, this was the posting as of August 30, 2016, and obviously needs to be updated: When I first started blogging, one million lbs of sand was common and then, as noted, BEXP pushed it to 4 million lbs. Maybe two years or three later EOG, with its own sand mines in Wisconsin pushed it to 10 million lbs for a long lateral. Now, EOG has used almost 20 million lbs in a long lateral.] Updates: August 20, 2016: Mike Filloon talks about mega-fracks --
- Mega-fracs continue to use large volumes of sand per well, with some operators now using up to 3,000 lbs/ft
- The combination of increased locations completed in the STACK, Delaware and Midland basins with enhanced completions using up to 30,000,000 lbs per well could aid in increasing sand pricing
- Frac sand producer stock prices have improved, significantly from earlier this year but with demand growing at its current pace there could be extended gains into year end
- number of stages: 35 - 45 stages seems typical; there are few exceptions on the low side; more exceptions on the high side
- sand/ceramic: 4 million lbs to 8 million pounds seems typical; again, there are few exceptions on the low side; more exceptions on the high side.
Pipeline company seeks restraining order against protesters (AP) — The company building an oil pipeline across Iowa is asking a federal judge to issue a restraining order against two protest groups and their leaders. Dakota Access filed the action in Des Moines on Monday against Iowa Citizens for Community Improvement, Bold Iowa and their directors including former state lawmaker Ed Fallon, who leads Bold Iowa. The groups are planning acts of civil disobedience along the pipeline route to protest its construction. The company seeks a court order keeping protesters at least 25 feet away from construction easements which it says will “permit the meaningful opportunity to exercise protected First Amendment speech while ensuring the safety of all involved.” Dakota Access says protesters have burned its equipment causing $3 million in property damage and delaying construction in two counties.
Amidst protests, Energy Transfer sells shares of Bakken Pipeline - In the midst of protests across North Dakota and Iowa in recent weeks, Energy Transfer Partners (ETP) and Sunoco Logistics (SXL) announced an agreement to sell 36.76% of the Bakken Pipeline Project, according to Iowa’s Chronicle Times on August 31. The two companies have agreed to sell their shares to MarEn Bakken Company LLC, jointly owned by Marathon Petroleum Corporation and Enbridge Energy Partners. Enbridge is already involved in several pipeline projects across the U.S. and Canada. You can read Energy Transfer’s press release here. According to press release, upon closing, ownership in the Bakken Pipeline Project will be as follows: ETP/SXL – 38.25%, MarEn 36.75% and subsidiaries of Phillips 66 – 25%. ETP continues to oversee construction of the pipeline, which is expected to be ready for service at the end of this year. Once in operation, Sunoco will be the operator. Marathon and Enbridge paid $2 billion for the minority share of the Dakota Access Pipeline (DAPL) and its sister pipeline, the Energy Transfer Crude Oil Pipeline. The DAPL will bring Bakken crude oil from western North Dakota through South Dakota and Iowa to Patoka, Illinois. Once the oil hits Patoka, it will be transferred to the ETCOP, which travels from there to Nederland, Texas. Currently, oil travels mostly by rail from Western North Dakota, but the DAPL is scheduled to move 470,000 barrels of crude per day. Currently, North Dakota produces over a million barrels a day, so over half of that crude will still move by rail. In recent years, increased rail traffic has caused congestion on the tracks, causing shipping difficulties for other industries, including agriculture. In addition, rail accidents, such as the one near Casselton in December 2013 and the crash near Heimdal May 2015, have many citizens concerned about the manner in which crude oil is transported. Pipeline transport is considered safer and more economical than crude-by-rail. Yet construction of the DAPL has prompted protests both in Iowa and North Dakota, from landowners as well as citizens who are concerned that pipeline leaks and spills could harm drinking water and pose other environmental risks. Advocates for the DAPL insist that the pipeline is constructed under the highest standards, and environmentalists should be more concerned about aging pipelines than new ones.
Can a protest against oil happen without oil? -- Protests against the Dakota Access Pipeline continue to mount, causing work stoppages both in southern North Dakota near the Standing Rock Sioux Reservation as well as in Iowa. Today, the Iowa Utilities Board ordered a work stoppage around the property of 15 landowners to give the board time to review legal issues. Landowners argue against “forced condemnation of farmland for a privately owned pipeline project under eminent domain laws.” In North Dakota, the protests have gained momentum, even attracting the attention Hollywood stars Shailene Woodley and Susan Sarandon. Yesterday, a report from MintPress News that supplies and drinking water were removed from the protest site has fueled the fire across the Internet. The article stated that the North Dakota Division Homeland Security Division removed water tanks from the protest site on Monday afternoon, with Director Greg Wilz claiming “the removal was based on alleged unlawful activity” and that the equipment wasn’t secure. However, there are always two sides to the story. Not everyone is in favor of stopping construction of the Dakota Access. Some supporters cite safer oil transport over transport by rail. Others just support the petroleum industry and its economic benefits. Bakken Backers, a North Dakota coalition that supports the oil industry in North Dakota, submitted this video Tuesday, showing why they believe protesters need the Dakota Access. They asked the question: Can a protest against oil happen without oil? You can view the video on Facebook and make your own conclusions about the Dakota Access.
Tribe trucks totem pole 4,800 miles in fossil fuels protest — A Pacific Northwest tribe is traveling nearly 5,000 miles across Canada and the United States with a 22-foot-tall totem pole on a flatbed truck in a symbolic journey meant to galvanize opposition to fossil fuel infrastructure projects they believe will imperil native lands. This is the fourth year the Lummi Nation in northwest Washington has embarked on a “totem journey” to try to create a unified front among tribes across North America that are individually fighting plans for coal terminals and crude oil pipelines in their backyards. The highly visible tours, which include tribal blessing ceremonies at each stop, fit into a trend of Native American tribes bringing their environmental activism to the masses as they see firsthand the effects of climate change, said Robin Saha, a University of Montana associate professor who specializes in tribal issues and environmental justice. “I wouldn’t go as far as to say there’s an anti-development movement, but tribes are feeling the effects of climate change quite dramatically and are responding in a lot of different ways,” Saha said. “Some of them feel as if they’re not going to survive.” In North Dakota, for example, people from across the country and members of 60 tribes have gained international attention after gathering in opposition to the four-state Dakota Access oil pipeline. The totem pole heads to that site, near the Standing Rock Sioux’s reservation, next week.
Far-reaching tribal solidarity displayed at pipeline protest (AP) — Native Americans from reservations hundreds of miles away from North Dakota have joined the Standing Rock Sioux Tribe’s growing protest against a $3.8 billion four-state oil pipeline that they say could disturb sacred sites and impact drinking water for 8,000 tribal members and millions further downstream. About 30 people have been arrested in recent weeks and the company has temporarily stopped construction. A federal judge will rule before Sept. 9 on whether construction can be halted on the Dakota Access pipeline, which will pass through Iowa, Illinois, North Dakota and South Dakota. Meet a few of the people camping out near the confluence of the Cannonball and Missouri Rivers in southern North Dakota:
Native Americans encouraged as judge delays North Dakota pipeline ruling - Native American activists have said they are still hopeful they can halt the construction of a controversial oil pipeline that will run from North Dakota to Illinois, after a federal judge said he needed more time to decide whether indigenous rights were violated when the project was approved. Judge James Boasberg of the US district court said he will make a decision by 9 September on whether to stop work on the pipeline during tribal leaders’ lawsuit against the US army Corps of Engineers for approving the Dakota Access project.The pipeline will run close to the Standing Rock Sioux tribe’s reservation in North Dakota and across several rivers, including the Missouri and the Mississippi, that supply drinking water for millions of people. “Whatever the final outcome in court, I believe we have already established an important principle – that is, tribes will be heard on important matters that affect our vital interests,” said Standing Rock Sioux chairman David Archambault, who has previously said the project would “knowingly poison water”. The attempt to force a temporary halt to the project came amid vociferous protests on the prairies of North Dakota and outside the court in Washington DC, where tribal members were joined by famous faces, including actors Susan Sarandon and Shailene Woodley, to decry the 1,000-mile-long pipeline.
Dakota Pipeline Was Approved by Army Corps Over Objections of Three Federal Agencies — Senior officials at the U.S. Environmental Protection Agency and two other federal agencies raised serious environmental and safety objections to the North Dakota section of the controversial Dakota Access oil pipeline, the same objections being voiced in a large protest by the Standing Rock Sioux tribe that has so far succeeded in halting construction. But those concerns were dismissed by the U.S. Army Corps of Engineers, which relied on an environmental assessment prepared by the pipeline's developer, Dakota Access LLC, when it approved the project in July,according to public documents. The 1,134-mile pipeline would carry approximately 500,000 barrels of crude per day from North Dakota to Illinois along a route that did not originally pass near the Standing Rock reservation, public documents show. After the company rerouted the pipeline to cross the Missouri River just a half-mile upstream of the reservation, the tribe complained that the Army Corps did not consider threats to its water supply and cultural heritage. The EPA, the Department of the Interior and the Advisory Council on Historic Preservation echoed those concerns in public comments on the Army Corps' draft environmental assessment. Citing risks to water supplies, inadequate emergency preparedness, potential impacts to the Standing Rock reservation and insufficient environmental justice analysis, the agencies urged the Army Corps to issue a revised draft of their environmental assessment. "Crossings of the Missouri River have the potential to affect the primary source of drinking water for much of North Dakota, South Dakota, and Tribal nations," Philip Strobel, National Environmental Policy Act regional compliance director for the EPA,wrote in a March 11 letter to the Army Corps. The current route of the pipeline is 10 miles upstream of Fort Yates, the tribal headquarters of the Standing Rock Sioux tribe and the county seat. The Standing Rock Sioux rely on the Missouri River for drinking water, irrigation, and fish.
Dakota Access Pipeline Tribal Liaison Formerly Worked For Agency Issuing Permit To Cross Tribal Land – Steve Horn - The Standing Rock tribe has filed a lawsuit against the U.S Army Corps of Engineers for using the controversial Nationwide Permit 12 to fast-track authorization of the hotly contested Dakota Access pipeline. Slated to carry oil obtained via hydraulic fracturing (“fracking”) from North Dakota's Bakken Shale basin to Patoka, Illinois, the plaintiffs say not only was the Army Corps' permitting of the Energy Transfer Partners and Enbridge Corporationjointly owned pipeline a violation of the National Environmental Policy Act (NEPA) and the Clean Water Act, but also a violation of the National Historic Preservation Act's (NHPA) Section 106. A review of court documents for the case currently unfolding in the U.S. District Court in Washington, D.C. has revealed that the tribal liaison for Energy Transfer Partners tasked with abiding by Section 106 passed through the revolving door and formerly worked for the Army Corps. The finding also raises key ethical questions in the field of archaeology. That liaison — Michelle Dippel — technically works for a Dakota Access LLC contractor named HDR, a company which helps pipeline companies and other oil and gas industry infrastructure companies secure permits for their projects. Dippel, the South Central Region Environmental Services Lead for HDR, began her career as a project manager for the Army Corps' Fort Worth District and also formerly worked for the natural gas pipeline company Spectra Energy. An archaeologist by academic training and a member of the Register of Professional Archaeologists, a biographical sketch for Dippel tracked down on the Florida Department of Transportation's website lists her job sub-title as “Project Streamlining” on behalf of the DOT. Dippel lists Section 106 consultation as an area of expertise on her LinkedIn page. Section 106, in turn, serves as a major part of the focus of the lawsuit, the recently completed occupation of a Dakota Access Pipeline construction site in Cannon Ball, North Dakota, and the push by the Standing Rock Indian Reservation for a court-ordered injunction to halt pipeline instruction.
‘This Is the Only Way That Pipelines Will Be Stopped’ - Inside the courthouse, in Courtroom Number 19, where there were no seats to be had, District Judge James Boasberg was conducting a hearing in the matter of The Standing Rock Sioux Tribe v. U.S. Corps of Engineers. At issue was an injunction which would delay the construction of the Dakota Access pipeline through the tribe's land. Ever since April, members of the Standing Rock nation in North Dakota have been demonstrating and blocking the construction of the pipeline, arguing that it is profaning lands that the tribe considers to be sacred. The pipeline is meant to carry Bakken oil from North Dakota through Iowa to Illinois. The confrontations between the protesters and the people who are building the pipeline have grown increasingly touchy. Governor Jack Dalrymple, in charge of one of the continent's few petro-states, has declared the demonstrations to be a threat to the public order and has declared a state of emergency along the pipeline route. Electric power to the protest camp, as well as its water supply, have been cut off. In front of the courthouse on Wednesday, people who had come to Washington from North Dakota expressed concerns for their people back home, because nobody was quite sure what steps Dalrymple might take to enforce the state of emergency he declared. There seems little question that the Dakota Access pipeline has replaced the defunct Keystone XL pipeline as ground zero for the multi-faceted battle over pipelines and, therefore, over energy policy going forward. After the president canceled Keystone, it seemed that a little of the air went out of the anti-pipeline forces. Major environmental groups moved on to other issues. However, on the ground in places like Iowa and the Dakotas, local grassroots activists looked at the campaign against Keystone and drew their own lessons from it. Purely through the dint of the efforts of local ranchers and Native tribes along the proposed route, the Dakota Access pipeline is the new Keystone XL. "What should have happened after Keystone got rejected was a huge influx of resources to local and state groups fighting pipelines, and that hasn't happened. What has happened is landowners and tribes on the ground are fighting with everything they have and there have been 20-plus projects that have been cancelled."
Judge to hear arguments in Sacagawea pipeline case -- North Dakota’s oil-rich Three Affiliated Tribes say a Texas company didn’t get tribal permission to put an oil pipeline and a natural gas pipeline beneath Lake Sakakawea. The tribes ordered the project halted last month, saying they had no assurances from the company that water supplies would not be harmed. Sacagawea Pipeline developer Paradigm Energy Partners says it has federal permission to run the pipelines beneath the lake that’s the largest of the six reservoirs on the Missouri River. A hearing on the issue is slated Thursday in federal court in Bismarck. Paradigm wants Judge Daniel Hovland to continue an injunction against the tribe so construction can proceed. North Dakota’s Public Service Commission approved construction of the $125 million, 70-mile-long oil pipeline project in January and it’s nearly complete.
Over 10K gallons of oil-saltwater mixture spills by Fryburg (AP) — The North Dakota Department of Health says about 10,710 gallons of an oil and water mixture has spilled in Billings County. The spill happened Friday at a site almost five miles southwest of Fryburg. The spill resulted from a tank leak at a site operated by Texas-based Denbury Onshore LLC. The agency estimates about 9,240 gallons of produced water have been recovered. Produced water is a mixture of saltwater and oil that can contain drilling chemicals. The department says no surface water has been impacted.
Regulator: Dakota Access pipeline worker killed in accident (AP) — A man working on the four-state Dakota Access oil pipeline was killed in an apparent accident in western North Dakota, a state regulator said Saturday. North Dakota Public Service Commissioner Brian Kalk said the man, whose name has not been released, died of his injuries Friday afternoon. The man was working as subcontractor for Dallas-based operator Energy Transfer Partners, which is building the nearly 1,200-mile pipeline from North Dakota to Illinois. “We are saddened to learn that an employee of a subcontractor on the project in western North Dakota has died in an apparent work-related accident,” the company said in a statement. “Our hearts and prayers are with his family. We do not have any additional details at this time.” The pipeline begins in western North Dakota and already is completed there, Kalk said. The site of the death is more than 200 miles away from where hundreds of mostly American Indians are protesting the pipeline in southern North Dakota. Tribal members fear the pipeline will harm water supplies and destroy sacred sites. Kalk said the man was on a tractor Thursday, covering the underground pipeline with soil and grass seed. Kalk said the company reported Friday that the man suffered a serious head injury, apparently while working on equipment. He was taken to a Minot hospital, where he died. The man was working alone and was found by his foreman, Kalk said. “The company no reason to believe this was anything other than terrible accident,” Kalk said.
Tank explodes at California refinery; no injuries reported (AP) — A sulfur storage tank exploded Friday at the largest oil refinery in California, sending a chemical cloud into the air and causing a fire, authorities said. No injuries were reported. There was no immediate word on the cause of the blast at the Tesoro refinery in Wilmington near Long Beach. The fire was quickly extinguished, but the tank continued to send up a cloud of steam for hours afterward, company officials said. “We are currently conducting air quality monitoring around the site,” company spokesman Destin Singleton said. “At this time we have not detected any harmful levels of toxins.” Everyone near the scene was accounted for, Singleton said. The Los Angeles County Fire Department sent in a hazardous materials team. No evacuations were ordered, but the Sheriff’s Department urged people within a quarter-mile of the scene to stay indoors. That advisory was later canceled. The tank rupture didn’t immediately affect other refinery operations. The 930-acre plant near the Port of Long Beach is the largest refinery on the West Coast, according to Tesoro. It produces gasoline, jet fuel, diesel and other fuels.
Three ‘Raging Grannies’ arrested for blocking oil and coal trains - Police arrested three protesters calling themselves “Raging Grannies” on Wednesday after the women blocked BNSF tracks to protest oil and coal trains. “We were willing to be arrested to stop climate change,” said Nancy Nelson, dressed in a blue floral dress with a matching hat. “With the oil and coal trains coming right through our city, this is a very serious issue, which we have to address.” The women – all grandmothers – were the last of about 20 people who blocked rail lines near Trent Avenue and Napa Street. Trains carrying crude oil from North Dakota’s Bakken region and Alberta’s tar sands pass through the city every day. Coal from the Powder River Basin heading to Northwest ports for shipment to Asia also moves through the city on trains. “Climate change is the most urgent issue of our time. Today, short-term profit by fossil fuel corporations is coming at the cost of environmental destruction and our children’s future,” said Margie Heller, a protester and one of the Raging Grannies arrested Wednesday. The others were Nelson and Deena Romoff. All three are members of the activist group Raging Grannies – an international nonviolent group that began in 1987 in Victoria, British Columbia, to protest the environmental impact of a U.S. Navy ship. Membership is restricted to grandmothers, though there is no age limit.
New natural resources commissioner says he’s working to put more oil in Alaska’s future - Alaska Dispatch News: The new head of the Alaska Department of Natural Resources plans to take an aggressive approach to encouraging development in Alaska, one that includes working closely with local communities in an effort to boost oil production, which provides most state income."I am optimistic we can flatten out the (oil) production line, if not increase it over the next few years," said Andy Mack, who was appointed by Gov. Bill Walker in June to replace acting commissioner Marty Rutherford.Though oil production is up slightly in Alaska, years of sagging production as the state's large oil fields have aged has contributed to massive deficits and an uncertain future, though the sharp decline in oil prices has been a larger factor.Mack, a managing director of private equity fund Pt Capital before his move to the state, said he'll be hyper-focused on bringing together communities, regulators and companies to see projects developed in a responsible way."Everyone needs to be on the playing field," Mack said
We Don't Need No Correlation - Big Shift in Energy Fundamentals – Fall 2016... U.S. crude oil prices languish below $50/bbl, but the oil-directed rig count is up by 90, an increase of almost 30% over the past 12 weeks. Natural gas production is down less than 1% from the all-time high hit back in February even though the price of natural gas remains below $3/MMbtu. The price spread between U.S. propane and international markets is far below a level that should justify exports, but LPG exports to overseas markets continue at astronomical levels –– approaching 700 Mb/d, most of which is propane. What’s wrong with this picture? Why does it seem that relationships between energy production, demand and prices have broken down, or at least have undergone some fundamental shift? That is what our upcoming School of Energy Fall 2016 is all about. At first glance, a number of energy market relationships may seem to have shifted, but the reality is that we are just looking at the market from a different perspective than ever before – the recovery from a Shale Revolution crude oil price crash. Two years ago U.S. hydrocarbon markets entered Shale 2.0. (Sorry about using such a tired old metaphor, but it works.) Back in 2007-09 before the Shale Revolution started to impact markets (labeled Pre-shale), gas, NGLs and crude tended to move in tandem. Moving in almost perfect correlation, all three of these markets blew out in the commodity run-up of 2008 and all crashed with the Great Recession. But by then shale had come to natural gas, and pricing for gas, NGLs and crude diverged (the Shale Gas era). Natural gas oversupply kept prices low while crude and NGLs recovered along with the global economy. That motivated producers to move to wet gas – containing lots of NGLs, because NGL prices were still strong. U.S. hydrocarbon markets entered the Wet Gas era.
US distillate exports hit record high in June - The US exported a record high 1.45 million b/d of distillates in June, up 207,000 b/d from May, with increases seen to Latin America and Europe, US Energy Information Administration data showed Wednesday.Distillate exports to the Netherlands jumped 115,000 b/d to 225,000 b/d in June, while exports to France edged up 11,000 b/d to 79,000 b/d. In Latin America, increases were seen across the board. US refiners exported 116,000 b/d of distillate to Brazil in June, up from 97,000 b/d in May. Exports to Mexico jumped 52,000 b/d to 212,000 b/d, while exports to Argentina climbed 46,000 b/d to 118,000 b/d. US Gulf Coast refiners -- notably Marathon, Valero and Phillips 66 -- have increasingly depended on export demand to market their refined products. While sluggish economic growth has sparked concerns that export demand might begin to dry up, threatening USGC refinery margins, the EIA June data showed export demand running strong. The market may be glutted with refined products, making the diesel arbitrage to Europe difficult, but near record low freight rates have helped keep the barrels moving.
US exported 698,000 b/d of crude last week, new record: EIA - While US crude supply continues to decline, the amount of oil the US is exporting continues to rise, the US Energy Information Administration said Wednesday. The US exported an average of 698,000 b/d of crude in the week that ended Friday, more than 8% of the nearly 8.49 million b/d produced in the US over that period. Exports were up 3.1% from the 677,000 b/d average a week earlier, when the US produced nearly 8.55 million b/d. A year ago, when most restrictions on US crude exports were still in place, the US exported 477,000 b/d, which was about 5% of the nearly 9.22 million b/d that was produced in the US that week. The amount of US crude exported last week was a record. In the first six months of this year, the US has exported an average of 482,000 b/d of crude.On December 18, President Barack Obama signed a government spending bill into law that included a provision lifting all limits on US crude exports. The end of these limits, which had been in place for 40 years, was the result of a landmark deal between House of Representatives and Senate leaders. The EIA crude export data was released in the EIA's Weekly Petroleum Status Report which, for the first time, included much more immediate export data from US Customs and Border Protection. EIA had previously used monthly export data published by the US Census Bureau. "By using this near real-time data, EIA is able to provide more accurate market balances and a clearer picture of the weekly consumption of key petroleum products in the United States," said EIA Administrator Adam Sieminski in a statement Wednesday.
First US Gulf Coast ethane cargo departs for Europe -- The first ethane cargo from the US Gulf Coast has departed from Enterprise's Morgan's Point, Texas, terminal, two weeks after loading began. The JS Ineos Intrepid -- which carried the first US waterborne ethane cargo from Sunoco's Marcus Hook, Pennsylvania, in March -- Wednesday left for Rafnes, Norway, and expected to arrive on September 14, according to cFlow, Platts tradeflow software. US Coast Guard officials had confirmed the ethane transfer began late on August 18. The 260,000-barrel Intrepid is one of five ethane carriers in service globally and is one of Ineos' four ethane carriers. Enterprise's 200,000 b/d Morgan's Point terminal began initial flaring in July -- more than two years after the company announced plans to construct the fully refrigerated ethane export facility. The terminal is supported by long-term contracts including those with Ineos, Braskem, Reliance Industries and Sabic. Ineos and Enterprise did not immediately respond to requests for comment. Non-LST ethane, reflecting prices for September barrels at the Enterprise terminal in Mont Belvieu, was trading at 17.75 cents/gal, down 62.5 points from Wednesday assessment. Ethane prices rose as high as 24.875 cents/gal in June, incentivizing recovery from the natural gas stream. The increased supply then pressured prices lower through August.
Inside FERC September US natural gas average climbs 10 cents to $2.52/MMBtu - Natural Gas | Platts News Article & Story: The September bidweek national average natural gas price climbed 10 cents to $2.52/MMBtu, as prices across the country, with the exception of markets in the Northeast, mostly moved higher, according to Inside FERC's Gas Market report Thursday. The September bidweek price at the benchmark Henry Hub rose 18 cents to average $2.85/MMBtu, which came as the NYMEX September contract settled at $2.853/MMBtu, up 18.1 cents from the August contract's close of $2.672/MMBtu.Upstream, prices at Rockies Express Zone 3 jumped 19 cents to average $2.75/MMBtu. Along the West Coast, Pacific Gas and Electric city-gates averaged $3.31/MMBtu, up 23 cents. Elsewhere in the region, El Paso, Permian Basin tacked on 4 cents to average $2.60/MMBtu. Around the Rockies producing region, Northwest Pipeline Rockies rose 11 cents to average $2.62/MMBtu. Prices toward the East Coast mostly fell, led by Transcontinental Gas Pipe Line Zone 6 New York, which dropped 43 cents to average $1.49/MMBtu. Nearby, Texas Eastern Transmission M-3 fell 11 cents to reach $1.27/MMBtu. In the Southeast, Florida Gas Transmission Zone 3 prices rose 18 cents to average $2.91/MMBtu. Elsewhere in the region, Southern Natural Gas, Louisiana rose 17 cents to average $2.79/MMBtu. Toward the Upper Midwest, Chicago city-gates jumped 14 cents to reach $2.81/MMBtu. Nearby, Consumers Energy and Michigan Consolidated city-gates were up even more, rising 23 cents to average $2.85/MMBtu and $2.82/MMBtu, respectively.
Long-term outlook for Asian LNG demand could make region attractive for excess US LNG Snapshot video: With the question about when US LNG will reach Asia answered, the market is now wondering how much more volume will be coming to the region. So what's next? Editor Abache Abreu analyzes the supply-demand situation in Asia, export costs with the expansion of the Panama canal, and the behavior of traditional buyers in the region when it comes to the spot market. Watch now...
Oil glut to ease by 2017, clean energy investment to rise - IEA's Birol | Reuters: The International Energy Agency (IEA) expects oil markets to reach a balance between supply and demand in 2017 as the current oil glut slowly eases, IEA chief Fatih Birol said during meetings in South Korea. The head of the Paris-based agency also exchanged views with energy minister Joo Hyung-hwan on the direction of the world's energy markets in the wake of the renewed commitment to tackle climate change after last year's Paris climate talks, South Korea's Energy Ministry said in a statement on Thursday. The IEA forecast in its August report that oil markets will slowly tighten in the second half of 2016 as global demand growth declines and non-OPEC supplies rebound. "Oversupply of oil markets will gradually be eased and (oil markets) will find a balance between supply and demand in 2017," Birol said in the statement. In a separate interview with Reuters after the statement was released, Birol said he saw two drivers for the rebalancing of the oil market. The first is a drop in production from countries outside of the Organisation of the Petroleum Exporting Countries (OPEC) of about 900,000 barrels per day (bpd), especially in the United States in 2016. The second is "demand that is growing in a healthy way" and that the IEA expects to climb by 1.4 million bpd this year."We may be on a higher side compared to others (forecasts), this is mainly because we're more upbeat when it comes to Europe and emerging Asia demand in demand growth," he said. In the statement, Birol also said there is concern that a decline in upstream oil and gas investments because of the prolonged low oil prices could increase oil price volatility.
NYMEX October gas settles 6 cents higher at $2.887/MMBtu - The NYMEX October natural gas contract headed higher Wednesday, supported by a bullish weather outlook and concerns of tropical storm activity in the Gulf of Mexico. The contract rose 6 cents to settle at $2.887/MMBtu, having traded in a range of $2.808-$2.900/MMBtu. The latest six- to 10-day and eight- to 14-day outlooks from the National Weather Service both call for temperatures above seasonal averages in much of the US, particularly in the heavily populated energy consuming areas of the Upper Midwest and New England. The National Hurricane Center's latest two-day tropical weather outlook issued advisories on Hurricane Gaston, as well as two tropical depressions. Tropical Depression 9 is currently projected to move northeast and make landfall near central Florida on the Gulf Coast. The speed and the direction of this storm have affected production in the Gulf and along the region s coast. The latest five-day track shows the storm possibly affecting the upper Northeast coast near Labor Day.US dry production fell slightly to 71.4 Bcf/d Wednesday from 71.5 Bcf/d Tuesday, nearly 0.8 Bcf/d below the six-day average, with the largest drop in the Southeast Offshore sample on Destin and Discovery pipelines, likely due to adverse weather in the Gulf of Mexico, according to Platts Analytics' Bentek Energy. Over the course of the next few weeks, dry production is expected to rebound to 71.8 Bcf. US demand is slated to decrease over the same time frame from a current estimated 67 Bcf down to 65.4 Bcf, despite warmer-than-normal forecasts for the eastern half of the country.
An update on methane emissions from fracking (in the US) - A relatively large number of research publications has appeared in the peer-reviewed literature since we last updated our readers on fracking and methane, CH4, emissions. We cannot discuss them all here. However, in summary, it can be concluded from these papers that EPA is very likely underestimating fossil fuel related methane emissions in its greenhouse gas inventory, anywhere between 30% and 100%, possibly even more. Meaning, in order for the US to effectively lower its greenhouse gas emissions, it also needs to get fugitive methane emissions under control. The US administration has reacted to the new data, and EPA issued a number of regulatory actions. In addition, EPA has begun to update its inventory. However, a look at the inventoried totals … However, a look at the inventoried totals … … and the “energy” related emissions … … suggests that inventoried methane emission totals have not been increasing over the last ten years. Decreases in “waste” related emissions (primarily from landfills) have been counteracted mostly by increases from “agriculture” related emissions (mostly exhaling cows) and increases in “energy” related emissions. Meanwhile, global atmospheric methane concentrations continue to rise. There is evidence from satellite observations that US emissions have increased by 30% or more in the last decade, and a substantial amount of the global increase could be explained by increasing US emissions.However, there is also indirect isotopic evidence that the global increase is dominated instead by a biogenic source, with the authors highlighting agriculture in East Asia. The latter is somewhat corroborated by where most of the atmospheric methane seems to come from, namely the tropics, but there remain large estimate ranges in part due to limited measurement capabilities at tropical latitudes. Independent evidence comes from global observations of atmospheric ethane, which turns out to be an excellent tracer of fossil fuel related hydrocarbon emissions. While ethane’s abundance had been dropping for decades as the industry’s fossil fuel exploration activities had been becoming more efficient, it appears to be increasing in the atmosphere again, with especially high emissions from shale regions that produce oil. The Nature Geoscience authors estimated an ethane emissions increase of approximately 0.4 million metric tons per year, seemingly all from North America. Since, ethane is typically five to ten times less abundant relative to methane in oil and gas sources (on a molar basis), one can estimate an annual methane emission of 1-2 million metric tons from that, with a likely range of 0.5-4 million metric tons CH4. The best case scenario assumes that relative leak rates, globally, are about 50% higher than what EPA currently estimates (based on Brandt et al., 2014). Since we know by now that even that could be too optimistic, it becomes more and more obvious that a switch from coal to natural gas for electricity production is not likely to curb global warming effectively, but rather delay effective measures further.
Major Insurers to G20 Nations: Stop Wasting Time, Phase-Out Fossil Fuel Subsidies by 2020 - Major global insurance companies are urging G20 leaders to commit to a specific timeline for rapidly phasing out fossil fuel subsidies – something they’ve repeatedly failed to do over the years despite numerous promises to end support for the industry. In a joint statement issued ahead of the G20 conference in China this weekend, insurers with more than USD$1.2 trillion in assets under management warn that support for the production of coal, oil, and gas is at odds with the nations’ commitment to tackle climate change agreed in Paris last December. The statement, signed by Aviva, Aegon NV, and MS Amlin, calls for governments to set “a clear timeline for the full and equitable phase-out by all G20 members of all fossil fuel subsidies by 2020.” It adds that the phase-out should begin by eliminating all subsidies for fossil fuel exploration and coal production. “Climate change in particular represents the mother of all risks – to business and to society as a whole,” said Mark Wilson, chief executive of Aviva. “And that risk is magnified by the way in which fossil fuel subsidies distort the energy market. These subsidies are simply unsustainable.” G20 nations have been pledging to phase out fossil fuel subsidies every year since 2009. Yet, research by the Overseas Development Institute (ODI) and Oil Change International shows governments spending $444 billion in 2013 and 2014 supporting the fossil fuel industry. Shelagh Whitley, lead research fellow working on subsidies at ODI, said: “These subsidies fuel dangerous climate change. If we are to have any chance of meeting the 2C target set at the Paris climate summit then governments need to start a programme of rapid decarbonisation. “It is extremely worrying therefore that the G20 energy ministers earlier this year acted as if Paris hadn’t happened by repeating the same empty promises they have been making since 2009.” In May, G7 nations agreed to phase-out fossil fuel subsidies by 2025. However, when G20 leaders gathered the following month, they were met with criticism for failing to follow the G7 in setting a date to end the subsidies.
What will it take to break Canada's infrastructure logjam? - Western Canada has extraordinary oil and natural gas resources, but producers there have been suffering from a long list of woes. Oil sands producers need higher oil prices to justify expansion projects, and face shortfalls in pipeline takeaway capacity to refineries in Eastern Canada and export markets on both coasts. Natural gas producers can move gas east, but face stiff competition from the Marcellus and Utica plays; meanwhile, their efforts to expand LNG exports from British Columbia have been stymied by the new glut in worldwide LNG supplies and low LNG prices. Today we discuss the challenges in advancing Canadian oil and gas infrastructure projects. Canadian energy production and the pipelines, rail facilities and other infrastructure needed to move oil and natural gas to market have been frequent topics in the RBN blogosphere. In Over the Hills and Far Away, we considered the challenges faced by oil sands producers in Alberta, namely that 1) their hydrocarbon-extraction process is more complicated and costly than their shale-play counterparts; 2) the oil sands are farther away from most major refinery centers than most U.S. shale plays; 3) oil sands producers need to either add diluent to their bitumen to allow it to flow through pipelines, or transport low-viscosity bitumen in special “coil” rail cars that can be heated before unloading; and 4) existing pipelines out of the oil sands to the U.S. Midwest and Gulf Coast—and the existing Trans Mountain Pipeline to British Columbia (BC)—had been bumping up against capacity limits, resulting in significant, margin-erasing price discounts versus West Texas Intermediate (WTI), at least until incremental pipeline capacity started coming online in early 2015. We also noted that—for these and other reasons—RBN’s forecast for Alberta production in 2021 is far less upbeat than the recent 4-MMb/d estimate of Canada’s National Energy Board (NEB); we see the province’s production (now about 3.1 MMb/d) rising to only 3.4 MMb/d over the next five years under our Growth Scenario (with $65/bbl in 2021) and staying flat at best under our Contraction Scenario.
Shell dumps stake in Gulf of Mexico fields for cash - (UPI) -- In a deal that included $425 million in cash, Royal Dutch Shell said it sold off its entire stake in assets held in the U.S. waters of the Gulf of Mexico. Shell said the sale of the 100 percent stake of three blocks known collectively as the Brutus/Glider assets to EnVen Energy Corp. was in line with the company's divestment strategy. In July, the company's chief executive officer, Ben van Buerden, said "significant and lasting changes" were underway as lower crude oil prices continued to present problems for the industry. Moving through the year after its mega-merger with British energy company BG Group, the company reported its net income during the second quarter fell more than 70 percent to $1.18 billion. Shell this year has moved away from other North American projects apart from the Gulf of Mexico decision, saying in July that capital constraints were in part behind a decision to delay a final investment decision for a gas export facility in Canada. This year, the company said it was leaving oil and gas operations in as many as 10 countries, while focusing more heavily on gas-rich Australia and shale opportunities in the United States. Shell said it maintained a strong portfolio of assets in the Gulf of Mexico and plans are to increase output from established reservoirs. The Brutus/Glider assets combine for about 25,000 barrels of oil equivalent in production per day, or less than 5 percent of its total output. Shell this year closed down production briefly after observing sheen in the region. More than 2,000 barrels of oil were released into the U.S. waters of the Gulf of Mexico about 97 miles from the southern tip of Louisiana from operations the company's Glider oil field.
Chevron signs 650,000 mt/year LNG sales agreement with China's ENN - - US-based Chevron Corporation late Monday said its subsidiary Chevron USA has signed a binding LNG Sales and Purchase Agreement with Chinese gas distributor ENN to supply up to 650,000 mt/year of LNG over 10 years. This is the first binding SPA to be signed to import LNG by ENN and marks the next step in the process after Chevron and ENN signed a non-binding Heads of Agreement to supply 500,000 mt/year from its Gorgon LNG project in January.At 650,000 mt/year, the latest Chevron deal is also the largest deal currently on the table, with the Total and Origin deals both expected to send 500,000 mt/year of LNG. Chevron's deal was signed with ENN LNG Trading, a subsidiary of ENN Energy Holdings, one of China's largest gas suppliers. ENN has operations in 150 cities, supplying more than 12 million residential and 56,000 industrial customers. The revised contracted volumes of up to 650,000 mt/year would now not be solely limited to the Gorgon LNG project, but may be sourced from Chevron's LNG portfolio including the company's other Australian LNG interests in the North West Shelf and Wheatstone projects. ENN had previously signed two separate HOAs with France's Total and Australia's Origin Energy in February and March respectively, which have yet to be converted into formal SPAs. The agreement with Total is a binding HOA and with Origin a non-binding HOA.
BP expands push into Chinese shale gas with second CNPC block deal - - BP has signed a new production-sharing contract with China's state-owned CNPC for an onshore shale gas block, its second such deal in less than six months giving it a foothold in China's emerging shale gas sector. The PSC, signed on July 27, covers an 1,000 sq km area at Rong Chang Bei in the Sichuan Basin and lies adjacent to its exiting Neijiang-Dazu shale block, BP said in a statement. BP took its first step into China's onshore shale gas plays in March, agreeing a PSC for the 1,500 sq km Neijiang-Dazu block which also lies in the Sichuan Basin. BP said CNPC will operate both shale PSCs but gave no information on the gas potential of the blocks. The latest shale deal builds on BP and CNPC's framework agreement on strategic cooperation signed in London last October during a state visit by Chinese President Xi Jinping."We are pleased to be making further progress in our strategic partnership with CNPC and deepening our business in China," BP CEO Bob Dudley said in a statement. "...Combining CNPC's operational expertise with BP's technology and experience, we now expect to leverage the synergies between these blocks."
Australia steps up gas fracking bans despite supply crunch | Reuters: Victoria state has gone further than any other in Australia to block shale and coal seam fracking, announcing a permanent ban on Tuesday due to concerns of farmers and green groups on health and water risks despite a looming natural gas supply crunch. The state's Labor government, however, left the door open to allowing onshore conventional gas drilling after 2020. A new Labor government in the Northern Territory is also getting set to ban fracking until it is satisfied the drilling technique does not harm farm land or Aboriginal sites. The bans come despite a large portion of eastern Australia's gas being produced from Queensland and New South Wales coal seam developments, and deal a blow to manufacturers who have been clamoring for more of the fuel to help keep prices down. "Victorians have made it clear that they don't support fracking and that the health and environmental risks involved outweigh any potential benefits," Victoria state Labor Premier Daniel Andrews said in a statement. Farmers and environmental groups are worried that groundwater reserves could be depleted or contaminated by both conventional and unconventional onshore gas drilling. A pipeline networks association said, though, that shale and coal seam gas would be key to supporting Australia's shift to cleaner energy and replacing aging coal-fired power.
Colombian peace deal with FARC won't cure oil industry's problems: analysts - Analysts and industry sources are skeptical that the peace agreement announced this week between the Colombian government and a rebel group with which it has been at war for a half century will provide any short-term boost to the fortunes of Colombia's beleaguered oil industry. Continued violence, logistical difficulties and an expected tax increase later this year on top of an already high government take will continue to make Colombia's oil patch a challenging place to find, produce and transport oil and gas, experts said, particularly compared with more hospitable venues. After nearly four years of negotiations, the government announced late Wednesday it had reached agreement on all major points with the Revolutionary Armed Forces of Colombia (FARC), with which it has been at war since 1964. The accord will be put to a nationwide vote October 2. Public opinion is sharply divided on the proposed accord. FARC declared a cease-fire a year ago and has since halted oil pipeline bombings and oilfield personnel kidnappings, the two banes of the industry over the last several decades. Thus, the peace deal will make more permanent the improvement in oilfield security that has been seen over the last year.Still, Colombia remains a high-cost venue for drilling and producing oil and many wildcatters in recent years have left for greener pastures such as Mexico, Argentina and Peru. It's not just security and logistics that have driven players from Colombia: industry officials complain that the government charges producers a high government take (royalties plus taxes).
Cyprus, Egypt sign deal paving way for gas pipeline (AP) — Cyprus and Egypt signed an agreement Wednesday that paves the way for the supply of gas to the Arab nation via an undersea pipeline that officials hope will create a regional energy hub. Cypriot Energy Minister Yiorgos Lakkotrypis and Egypt’s Petroleum Minister Tarek el-Molla said the deal sets the political framework for additional commercial agreements that will determine of how, where and when the gas will reach Egypt. “This is part of the development of the east Mediterranean gas as a whole and I think our strategy optimally is to position ourselves as an energy hub in the region,” el-Molla said after signing the agreement. It is yet to be determined whether the gas will be used for Egypt’s domestic needs or be liquefied at Egypt’s processing plants for export to other markets. El-Molla said Egypt’s large population and growing industry will need more energy, adding that gas “is the energy of the future” and will increasingly replace other hydrocarbons, like crude and coal. Lakkotrypis said the first gas through the new pipeline should reach Egypt sometime between 2020 and 2022, but officials will try to speed up the timetable. Hopes for energy finds in the region were buoyed last year when Italian firm Eni discovered in Egyptian waters what it touted as the largest ever gas find in the Mediterranean sea. A field off Cyprus’ southern coast is estimated to contain over four trillion cubic feet of gas. Companies including Texas-based Noble Energy, Eni, France’s Total and South Korea’s Kogas are licensed to drill inside Cypriot waters. Last month, ExxonMobil, Qatar Petroleum and Capricorn Oil were among eight companies that applied for a license to conduct more exploratory drilling off Cyprus.Cyprus, Egypt and Greece are already in talks to expand energy cooperation. Cyprus and Greece are in separate talks on strengthening energy ties with Israel. Meanwhile, breakaway Turkish Cypriots have objected to the deal, repeating that such “unilateral” actions by Cyprus’ internationally-recognized government ignore their rights to the ethnically-divided island’s potential mineral wealth.
Zacks' Recap Of Week's Most Important Stories -- August 31, 2016 -- Zacks recap of the week's most important stories:
- the world's largest publicly traded oil company, Exxon Mobil, has decided against investing further in the proposed Alaska LNG facility
- Royal Dutch Shell will sell all US-based properties in the Gulf of Mexico
- Chevron entered a deal with a Chinese distributor for shipping LNG from the company's existing projects in Australia
- Petrobras received government permission to sell 49% stake in its natural-gas distribution unit to Japan's Mitsui & Co
- Chinese energy giant PetroChina reported huge decline in earnings and revenue
- Not mentioned by Zacks, but it was also announced this past week that Chinese oil production may be facing "peak oil" production
Oil Price Spike Inevitable As New Discoveries Hit Seventy Year Low - The oil industry only discovered about 2.7 billion barrels of new supply in 2015, a tiny fraction of the annual average for the past fifty years. The dismal result was one of the worst performances from the oil industry in decades. 2016 could be even worse. The 2015 figure is about one tenth of the annual average dating all the way back to 1960, according to Wood Mackenzie. Shockingly, 2015 saw the least amount of oil discovered in a calendar year since 1947. But with the massive spending cuts extending into 2016, this year the industry is on track to discover even lower volumes. As of the end of July, the global oil industry has only reported 736 million barrels of new oil discovered. Of course, with oil prices trading at less than $50 per barrel, many of the oil fields around the world that have yet to be explored are not economically viable. New discoveries are “at rock bottom,” Nils-Henrik Bjurstroem, a senior project manager Rystad Energy AS, told Bloomberg. Rystad Energy published similar findings earlier this year, concluding that 2015 was the worst year for new oil discoveries in over sixty years. “There will definitely be a strong impact on oil and gas supply, and especially oil.” In another damming statistic from Rystad Energy, the oil industry is very far from even replacing the oil that they are currently producing: in 2016, only about one barrel out of every 20 barrels consumed will be replaced with new discoveries. The shortfall in upstream investment could be a presage of a supply crunch somewhere down the line. The oil industry has slashed about $1 trillion in investment for the period between 2015 and 2020, Wood Mackenzie said a few months ago. The supply gap will only grow over time as demand continues to rise. The EIA expects oil demand to expand to 105 million barrels per day (mb/d) by 2026, up from just 94.8 mb/d this year. Obviously, forecasts that far out are inevitably off the mark, but the estimate at least gives the sense of the problem. If demand continues to increase by more than 1 mb/d annually, as it has for a long time, the oil markets could quickly swing from supply glut to a deficit. Bank of America Merrill Lynch already predicts a deficit next year of about 800,000 barrels per day.
Oil down 1 percent, pressured by glut, dollar, Nigeria outlook | Reuters: Oil prices settled down more than 1 percent on Monday, snapping two consecutive days of gains, on renewed concerns about an oil glut, a stronger dollar and expectations that Nigerian rebels will stop hampering that country's crude output. U.S. crude stockpiles likely rose for a second straight week last week, building by 1.3 million barrels, a Reuters poll showed. That came on top of Iraq's pledge at the weekend to ship more crude after a ramp up of exports from its southern ports in August. Nigerian rebels pledged to end hostilities against the industry in Africa's No. 1 producer, which they repeatedly attacked earlier this year by blowing up pipelines. Fears of a renewed glut offset news that oil and gas operators in the U.S. Gulf of Mexico have shut production equal to 168,334 barrels per day of oil and 190 million cubic feet per day of natural gas as a precaution against a tropical storm. The closures represent 11.5 percent of oil output and 5.5 percent of gas production. Brent crude LCOc1 settled down 66 cents, or 1.3 percent, at $49.26 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 finished down 66 cents, or 1.4 percent, at $46.98.
Oil Tumbles As Market Questions Whether An OPEC Production Freeze Is Even Remotely Possible? --Oil prices enjoyed a bump last week, thanks in part to a weakened dollar and some geopolitical tensions in the Persian Gulf. But a large factor in the recent rally has been the return of apossible OPEC production freeze, a subject that was last tossed around before the organization’s much-publicized, and ultimately unproductive, meeting in Doha last April. The likelihood of a freeze sent markets up on Thursday, though someless-than-confidentcomments from the Saudi oil minister sent them dropping back on Friday. And we noted previously, the short squeeze ammo has been eviscerated in oil, disabling (for now) the 'freeze' headline risk... Whether a freeze occurs or not is likely to be the trending gossip among speculators for the next month, at a time when such talk is exerting greater-than-average pull on the crude price,but as OilPrice.com's Gregory Brew notes, a question worth asking is whether a freeze is even possible, given the state of OPEC and the increasingly divergent interests of its fourteen members. This new attempt at a production freeze comes as Saudi Arabia, OPEC’s largest producer and de facto leader, reaches a new production record of 10.67 million barrels, more than 400,000 more than when the last freeze was discussed, while its oil revenues continue to plummet. OPEC profits have fallen 55 percent since 2014, according to the EIA. Ecuador, Kuwait and other Gulf producers want the price to recover past $50 a barrel. If a production freeze is on the cards, it will be discussed in late September during an informal meeting of the OPEC states at the International Energy Forum in Algeria. Iraq and Iran, OPEC’s number two and three producers, respectively, have offered tacit acceptance of a production freeze, with important caveats.
Oil Extends Losses After Big Distillates Inventory Build --After last week's surprise crude build (biggest in ~4 months) and builds across the entire complex, API reported a crude build of 942k barreles (just shy of expectations of +1.5mm) and while Cushing and Gasoline saw draws, Distillates saw a major 3mm barrel build (+275k exp). The initial reaction in crude was to extend the day's losses, back below $46.50... API
- Crude +942k (+1.5mm exp)
- Cushing -620k
- Gasoline -1.6mm (-1.25mm exp)
- Distillates +3mm (+275k exp)
Another Crude build but the big news was a major Distillates build...
EIA now using near-real-time export data to improve weekly petroleum consumption data - Today in Energy - U.S. Energy Information Administration (EIA) -- Starting with today's release of the Weekly Petroleum Status Report (WPSR), EIA is now publishing weekly petroleum export and consumption estimates based on near-real-time export data provided by U.S. Customs and Border Protection (Customs). EIA previously relied on weekly export estimates based on monthly official export data published by the U.S. Census Bureau roughly six weeks following the end of each reporting month. This new methodology is expected to improve weekly estimates of petroleum consumption (measured as product supplied) by improving estimates of weekly exports of crude oil, petroleum products, and biofuels, which increased from 1 million barrels per day (b/d) in 2004 to nearly 5 million b/d in 2015. The use of near-real-time export data should reduce differences between EIA's weekly data, as presented in the WPSR, and monthly data, as presented in the Petroleum Supply Monthly (PSM). The monthly data that EIA publishes 60 days after the end of each month are based on EIA's comprehensive monthly survey data and the actual Census Bureau export data for that month. Export data are an important component for the calculation of EIA's weekly estimates of U.S. consumption of petroleum products. EIA calculates U.S. consumption (using product supplied as a proxy for consumption) for petroleum products as: CONSUMPTION = PRODUCTION + IMPORTS - STOCKS CHANGE – EXPORTS Three of those components are surveyed directly by EIA each week: refinery and blender net production, stocks change (inventories), and imports. Exports, the remaining component, have become more critical for market assessment and calculation of U.S. consumption of key petroleum products such as gasoline and distillate. Over the first six months of 2016, EIA weekly estimates underestimated total crude oil, petroleum, and biofuel exports by an average of 16%, compared with final data published in the PSM. This underestimation of exports led to the overestimation of total consumption. The new methodology using near-real-time data from Customs significantly reduces the difference between weekly estimates and the actual data for total exports shown in the PSM during the first half of 2016. This improves both the export and total weekly petroleum consumption estimates found in WPSR Tables 9 and 1, respectively.
Oil Prices In Freefall As Fundamentals Worsen | OilPrice.com: Crude prices are softening for a third consecutive day thus far, as a decent ADP employment report out in the U.S. has boosted expectations from Friday's official employment report, as well as for an interest rate hike. The dollar is looking higher again, while oil market digest the build to crude stocks from the weekly EIA report. Hark, here are five things to consider in oil markets today:
- 1) Surging product exports from China are pressuring refining margins lower across Asia, as refiners from India to South Korea and Singapore roll up their sleeves to do battle. Even though Chinese product exports continue to rise as they make inroads into countries such as the Philippines and Australia, impending maintenance and increased regulation / scrutinization of independent teapot refiners in the north of the country is set to stymie their refining activity. This is already being reflected in their import data; with August data nearly complete, imports are down over 20 percent from their peak in March:
- 2) Conjecture continues to swirl relating to China's strategic stockpiling. The latest statement from the National Bureau of Statistics was in December, which stated that its SPR was up to 191 million barrels by mid-last year.According to the chart below, there appears to have been another 250 million barrels accrued since; all the while, the Chinese government say it has pushed back its completion deadline to beyond the current 2020 deadline.
- 3) Not only has Nigeria now entered into a recession, but its inflation is up for a ninth consective month to 17.1 percent year-on-year - the highest since October 2005. Its economy contracted for a second consecutive quarter, down by 2.06 percent in Q2.
Crude Tumbles After Big Crude, Distillates Build -- Having extended yesterday's losses on the back of API's unexpectedly large distillates inventory build, DOE data confirmed an even bigger crude inventory build (+2.276mm vs ~1.3mm build exp.) Gasoline drew down less than API reported and Distillates built considerably more than expected (+1.5mm vs +275k exp). While production slipped lower, crude prices tumbled on the inventory news, back to $45.50. DOE:
- Crude +2.276mm (+1.3mm exp)
- Cushing -1.039mm
- Gasoline -691k (-1.25mm exp)
- Distillates +1.496mm (+275k exp)
The second weekly build in crude and a big build in Distillates...
Oil skids on US crude and distillate stock build; still up on the month: Oil prices fell 3 percent on Wednesday, paring their big gains for August, after government data showed a larger-than-expected weekly build in U.S. crude and distillate stockpiles and a smaller-than-expected drawdown in gasoline. Crude futures remained on track for their best monthly return since April, rising as much as 11 percent, after speculation in recent weeks that the Organization of the Petroleum Exporting Countries and other oil producers could agree to curb output at September talks in Algeria. Even so, oil has fallen since the start of this week as the dollar rallied and expectations for an OPEC-led production freeze fizzled. Wednesday's supply-demand data from U.S. Energy Information Administration (EIA) could trigger a more bearish trend, analysts said. The EIA said crude stockpiles rose for a second straight week, building by 2.3 million barrels last week, compared with analysts' expectations for a rise of 921,000 barrels.Distillate stocks, which include diesel and heating oil, unexpectedly rose 1.5 million barrels, while the gasoline inventory drop of 691,000 barrels was about half the drawdown forecast. "I would call this the trifecta of bearish news," said Tariq Zahir, a trader in WTI timespreads at Tyche Capital Advisors in New York. "We should be getting draws for this time of year. Not only are we getting shocking builds, we're also being squeezed by the bullishness of the U.S. dollar and a hurricane season that's had very little impact thus far on actual crude production." Brent crude oil futures fell $1.33, or 2.75 percent, to $47.04 per barrel. U.S. West Texas Intermediate (WTI) crude futures were down $1.65, or 3.56 percent, at $44.70.
The Truth Emerges: EIA Admits It "Overestimated" Crude, Gasoline Demand In The First Half By 16% -- One of the recurring peculiarities of oil complex data as reported by the EIA was how, during a time of an unprecedented crude glut by OPEC and pronounced economic weakness in the US, was overall US demand of various petrochemical products as strong as the DOE reported on a weekly basis. To be sure, the alleged increase in demand was one of the major catalysts that prompted rising oil prices together with relentless jawboning by OPEC members about a "production freeze" that would never materialize, in turn spurring not one but two record short squeeze across the commodity complex. We now know the answer. In a note released moments ago by the EIA, whose bias to keeping prices as high as possible is no secret, admitted that "over the first six months of 2016, EIA weekly estimates underestimated total crude oil, petroleum, and biofuel exports by an average of 16%, compared with final data published in the PSM." This underestimation of exports "led to the overestimation of total consumption" by a similar amount. The new methodology using near-real-time data from Customs significantly reduces the difference between weekly estimates and the actual data for total exports shown in the PSM during the first half of 2016. So time to fix the mistake then, and as a result, the EIA said that starting with today's release of the Weekly Petroleum Status Report (WPSR), EIA is now publishing weekly petroleum export and consumption estimates based on near-real-time export data provided by U.S. Customs and Border Protection (Customs). EIA previously relied on weekly export estimates based on monthly official export data published by the U.S. Census Bureau roughly six weeks following the end of each reporting month. This new methodology is expected to improve weekly estimates of petroleum consumption (measured as product supplied) by improving estimates of weekly exports of crude oil, petroleum products, and biofuels, which increased from 1 million barrels per day (b/d) in 2004 to nearly 5 million b/d in 2015.
US crude oil falls toward $43 as high stocks offset talk of curbing output: Oil prices fell more than 2 percent on Thursday, heading for their sharpest weekly loss since January, as investors brushed aside talk that OPEC might freeze production and focused on a growing glut from U.S. crude stockpiles. Energy monitoring service Genscape's report of a 714,282-barrel drawdown at the Cushing, Oklahoma, delivery point for U.S. crude futures during the week ended on Aug. 30 did little to bolster sentiment, traders said. Investors focused instead on Wednesday's government data showing a 2.3 million-barrel build in U.S. crude stocks in the last week, more than double what the market had expected. Inventories of distillates, which include diesel and heating oil, rose nearly 10 times as much as forecast, the data from the U.S. Energy Information Administration showed. "The high U.S. inventory data suggest oversupply will remain for longer than expected," said Hans van Cleef, senior energy economist at ABN AMRO Bank N.V. in Amsterdam. "On top of that, anticipation of a higher dollar if the Fed starts to hike rates is negative for oil prices. And there's also uncertainty about the likelihood of OPEC/non-OPEC action at the end of the month."
Oil Prices Slide as Oversupply Comes Back Into Focus - WSJ: Oil prices fell to a three-week low after a second day of steep losses from rising U.S. stockpiles. Crude is now on a four-session losing streak, its longest in a month and an abrupt setback just two weeks after it reached bull-market territory. Speculators had been excited by talk of cooperation and output caps from the world’s largest exporters. But skepticism about those talks has also been widespread and many are now pointing to signs that oversupply is re-emerging as a weight on prices. Losses began accelerating Wednesday when the U.S. Energy Information Administration said U.S. crude stockpiles rose by 2.3 million barrels in the latest week. Analysts surveyed by The Wall Street Journal had expected that crude supplies rose by just 1.2 million barrels. The increase put total stockpiles of crude and oil products at a record high at a time when many thought stockpiles would be dropping and helping crude recover from two years of falling prices.Light, sweet crude for October delivery settled down $1.54, or 3.4%, to $43.16 a barrel on the New York Mercantile Exchange. It has lost 9.4% in its losing streak, the largest four-session decline since early February. Brent, the global benchmark, lost $1.44, or 3.1%, to $45.45 a barrel. Both Brent and U.S. crude reached their lowest settlement since Aug. 10. Commerzbank said Wednesday’s bearish U.S. stock data were merely the starting point for what he believed was a “return to reality” for the oil markets after the price rally that had dominated August. “Investors have finally woken up to the fact that the August rally was driven by speculation and not fundamentals, and what you are seeing is the market correcting itself accordingly,” Mr. Weinberg said. His team is forecasting that prices are heading toward $40 a barrel.
OilPrice Intelligence Report: Oil Down, But OPEC Offers Glimmer Of Hope: Oil prices had a bad week, falling on persistent concerns about a glut in crude oil and gasoline. Crude stocks climbed once again, news that sent oil prices tumbling midweek. On the other hand, U.S. oil production continues to fall, dipping by another 60,000 barrels per day last week. Also, the EIA confirmed monthly figures for June at 8.7 million barrels per day, which was just shy of a 200,000 barrel-per-day decrease from May. The rig count may be up, but the slide in U.S. oil production has not visibly come to a halt yet. Still, while supply and demand continue to adjust in fits and starts, the slowness of the process repeatedly catches the markets by surprise and frustrate oil bulls. OPEC deal looks more likely. Although crude prices performed poorly, the OPEC production freeze deal received a strong boost this week, with several comments from crucial sources in favor of a deal. Iraqi Prime Minister Haider al-Abadi voiced his support for the deal. Saudi Arabia’s foreign minister said at a conference in Tokyo that his country should support a deal if other OPEC members agree to one. And by September 2, the freeze deal had received the support of Russian President Vladimir Putin, who said that Russia would participate if they could all agree. Taken together, OPEC and Russia produce half of the world’s oil. The barrage of comments from OPEC and Russian officials suggest that all parties are warming to the idea of a freeze. They had come close to that agreement in April in Doha, but Saudi Arabia pulled out at the last second, a move interpreted as a decision by the young Deputy Crown Prince’s unwillingness to do anything to aid Iran. This time around, sentiment appears to be changing, increasing the odds that OPEC and Russia agree to something on paper in Algeria later this month.
Putin Joins "OPEC Headline" Fray, Pushes For Oil Production Freeze - Overnight the debate over the fate of the OPEC oil production freeze got a new and unexpected entrant when Russian president, Vladimir Putin said he’d like OPEC and Russia, producers of half of the world’s oil, to reach a deal to freeze supply and expects the dispute over Iran’s participation can be resolved. As Bloomberg first reported, Putin said that “from the viewpoint of economic sense and logic, then it would be correct to find some sort of compromise,” speaking in an interview in Vladivostok. “I am confident that everyone understands that. We believe that this is the right decision for world energy.”
U.S. Oil Producers Calling OPEC's Bluff - Crude futures prices fell $1.29/b (2.7%) in the week ending August 30th (to correspond to the data below), and dropped another $1.79/b through Friday, closing at $44.56. The sell-off came after the initial positive response to a series of statements hinting at a production freeze in late September. Perhaps the market is beginning to call OPEC's bluff. Utilizing the Commodity Futures Trading Commission's (CFTC) Commitments of Traders (COT) reports for crude oil, I was able to dissect how traders were re-positioning in the week ending August 30th. The four groups I follow -- Hedgers (Producer/Merchant/Processor/User) Longs and Shorts, and Speculators (Money Managers) Longs and Shorts -- are defined below: Hedgers: A "producer/merchant/processor/user" is an entity that predominantly engages in the production, processing, packing or handling of a physical commodity and uses the futures markets to manage or hedge risks associated with those activities. Speculators: A "money manager," for the purpose of this report, is a registered commodity trading advisor (CTA), a registered commodity pool operator (CPO) or an unregistered fund identified by CFTC. These traders are engaged in managing and conducting organized futures trading on behalf of clients. The latest data include data for both options and futures combined for the New York Mercantile Exchange (NYMEX). All comments below pertain to each group as a whole, on balance, noting there are exceptions among individuals.
US Rig Count up 8 This Week to 497 - ABC News: The number of rigs exploring for oil and natural gas in the U.S. increased by eight this week to 497. A year ago, 864 rigs were active. Depressed energy prices have sharply curtailed oil and gas exploration. Houston oilfield services company Baker Hughes Inc. said Friday that 407 rigs sought oil and 88 explored for natural gas this week. Two were listed as miscellaneous. Among major oil- and gas-producing states, Oklahoma, Wyoming and Texas gained four rigs each, Pennsylvania was up two, while North Dakota and West Virginia increased by one apiece. Louisiana declined by seven and Colorado was down one. Alaska, Arkansas, California, Kansas, New Mexico, Ohio and Utah were unchanged. The U.S. rig count peaked at 4,530 in 1981. It bottomed out in May at 404.
US oil rig count rises by 1 to 407 for 9th increase in 10 weeks: Baker Hughes: Oil prices rose 3 percent on Friday as a report showing weaker U.S. jobs growth in August suppressed the dollar, but crude futures remained on track for a big weekly loss on glut concerns. U.S. employment growth eased more than expected last month after two straight months of robust gains and wage gains moderated, casting doubts the Federal Reserve Open Market Committee will raise interest rates at its Sept. 20-21 meeting. The dollar index weakened after the jobs report, making oil and other greenback-denominated commodities more affordable for holders of the euro and other currencies. The number of oil rigs operating in U.S. fields rose by 1 to a total of 407, marking the ninth increase in 10 weeks following a flat reading last week, according to a weekly count from energy services provider Baker Hughes. At this time last year, drillers were operating 662 oil rigs.Global benchmark Brent crude futures were up $1.27, or 2.8 percent, at $46.72 a barrel by 1:07 p.m. ET (1707 GMT) but were on course for a decline of more than 6 percent over the week. U.S. West Texas Intermediate crude were up $1.15, or 2.7 percent, at $44.31 a barrel, on track for a 7 percent weekly loss. "With the FOMC likely to stay in September and the dollar dictating where we could go, it's quite likely oil will hold at mid-$40 levels," said Carl Larry Director, director of business development for oil & gas at Frost & Sullivan. "But more telling of how oil performs will be the rig count in coming weeks and OPEC gestures to support prices."
Crude Slides After US Oil Rig Count Rises To 7-Month Highs -- Amid oil's worst week in 2 months (and a big bounce today on the back of Putin's comments) following large inventory builds and disappointing demand factors (PMI, ISM, shipping), Baker Hughes reports the US Oil Rig count rose by 1 to 407 (following last week's unchanged) - the highest in 7 months. This is the 10th straight week no decline in the rig count and crude is sliding on the print...
- *U.S. TOTAL RIG COUNT 497 , BAKER HUGHES SAYS
- *U.S. OIL RIG COUNT 407 , BAKER HUGHES SAYS
The 10th week without a decrease in oil rig counts... And the reaction in crude is much more notable than in recent weeks... Charts: Bloomberg
BHI: US rig count nears return to 500 despite drop in gulf activity - A week in which offshore operators braced for a potential hurricane strike didn’t prevent another rise in the overall US rig count. The tally of active units increased by 8 to 497 during the week ended Sept. 2, according to Baker Hughes Inc. data. The rebound from last week’s 2-unit drop was bolstered by a 14-unit jump in onshore rigs (OGJ Online, Aug. 26, 2016). Exploration and production activity in the Gulf of Mexico is returning to normal after some rig and platform evacuations and production shut-ins due to the threat of Tropical Depression No. 9, which eventually became Tropical Storm and Hurricane Hermine. Albeit temporary in nature, BHI’s gulf tally and overall US offshore tally for the week was down 7 units to just 10 rigs working. Total shut-in oil output in the gulf during Aug. 30-31 surpassed 300,000 b/d, or more than 20% of total gulf output, but has since fallen to less than 200,000 b/d as of midday Sept. 2, the US Bureau of Safety and Environmental Enforcement reported. Currently there are no remaining evacuated production platforms. Personnel have returned to all 11 nondynamically positioned rigs currently operating, and 3 dynamically positioned rigs are back on location after previously moving off. Overall US crude oil production, meanwhile, dropped 60,000 b/d during the week ended Aug. 26 to 8.49 million b/d, the US Energy Information Administration reported on Aug. 31. The Lower 48 accounted for 50,000 b/d while Alaska represented the remaining 10,000 b/d. For June, EIA said US crude output fell 2.2% month-over-month and 6.6% year-over-year to 8.7 million b/d. Production in Texas declined just 0.7% compared with its May level to 3.17 million b/d, still down 8.4% year-over-year.
Saudi Arabia’s Attempts to Boost Bank Liquidity Aren’t Working - Bloomberg: Easier lending rules and direct cash injections are doing little to alleviate a cash shortage at Saudi Arabian banks, now at its worst since the financial crisis. The government is seeking to plug a hole in its finances by withdrawing deposits and selling local currency bonds to lenders in monthly auctions. The country, grappling with lower oil prices, raised 98 billion riyals ($26 billion) from bond sales to domestic institutions last year, with that figure probably set to rise to about 120 billion riyals in 2016, according to Saudi Fransi Capital. That’s draining funds from the system, reflected in interbank rates in Saudi Arabia that are at their highest since 2009 and which climbed 17 straight days through Monday. In addition, the loan-to-deposit ratio has exceeded central bank limits for two months, even after the country boosted the percentage of its deposits that a bank can lend earlier this year. “The authorities are struggling to find an effective way to boost liquidity,” Asim Bukhtiar, the head of research at Saudi Fransi Capital, said by phone from Riyadh. “Any liquidity injection is just being pulled back out by the monthly government bond issues.”The three-month Saudi Interbank Offered Rate, a key benchmark used for pricing loans, rose to 2.318 percent on Aug. 30, its highest since January 2009, according to data compiled by Bloomberg. The Saudi Arabian Monetary Agency increased the limit that banks can lend to the equivalent of 90 percent of deposits, up from 85 percent, people with knowledge of the matter said in February. That figure rose to 90.5 percent in July, according to monthly data released by SAMA, as the central bank is known, even after the regulator offered $4 billion to banks in late June, people with knowledge of the matter said. The kingdom may raise more than $10 billion from its first international bond sale in October, people with knowledge of the matter said.
Saudi Arabia Burns Through Foreign Reserves As Oil Prices Tank - You have to hand it to Saudi Arabia. The Kingdom ruled global oil markets for nearly 40 years, increasing or decreasing production as it willed, playing the role of global oil markets swing producer. The OPEC de facto leader, and the second largest global oil producer now after Russia, has simply lost its footing. The Reason? The U.S. shale oil and gas boom. The problem for the Saudis is that they have been caught in a snare of their own making. When global oil markets first became over supplied in 2014 due to increased U.S. oil production, the Saudis in their now infamous November 2014 decision, decided to not pull back production to support plunging prices. The Saudis have take a step further, actually increasing production in the past two years. The effects have been cataclysmic for the global oil industry. Prices, which topped off at $114 during the summer of 2014 are now trading in the low to mid $40s level, after dipping into the $20s mark earlier this year – a pricing scenario unthinkable just a few years ago. Massive oil industry lay-offs, bankruptcies and a general downturn in the sector has ensued, with little respite on the horizon. Now, the Saudis are having to contend with Iran, post sanctions on Tehran’s energy sector, for market share in both Europe and Asia. Unfortunately, for the Saudis, Iran is willing to cut prices to the bone in order to reach a pre-sanction production level of 4 million barrels per day. Saudi Arabia is also losing market share in Asia to Russia, including China’s vast oil market, which could soon surpass the U.S. as the word’s largest oil importer.
Saudi Arabia Fires 10,000 Substitute Imams To Save Money, As Banking Crisis Looms -- In the latest confirmation of Saudi Arabia's rapidly deteriorating financial situation, having recently sacked 16,000 foreign workers, earlier today the Ministry of Islamic Affairs announced it has terminated the services of 10,000 substitute imams to save 360 million Saudi Riyals, or less than $100 million, the Saudi Gazette reported. The ministry gave the substitute imams the option to either transfer to the position of a full-time imam leading five prayers a day at a mosque or to leave their job all together. “Many criticized the role of substitute imams claiming they do not do anything useful. Substitute imams receive a salary of SR3,000 a month. The ministry is changing the job title and description of substitute imams to cooperative preacher. Cooperative preachers are responsible for giving sermons when needed,” said the source. The Gazette's source also said cooperative preachers must have a bachelor’s degree in Islamic Studies. “The cooperative preacher will receive monetary compensation and reward for his services. He will follow the rules and regulations of a full-time and official preacher. Substitute imams, imams and preachers have the option to also become full-time imams and part-time preachers,” said the source, adding that those who do not wish to be imams will be cooperative preachers assigned to a mosque.
Iraq's August crude oil exports inch up to 3.230 million b/d - - Iraq's crude oil exports from its southern Persian Gulf terminals inched up by 28,000 b/d to 3.230 million b/d in August, provisional data from the oil ministry showed Thursday, but continue to fall short of previous record highs as greater volumes are allocated for domestic use. The average August export figure is up 4.9% year on year. But it is down some 134,000 b/d from the record rate set in April of 3.364 million b/d, despite fine weather in the upper Gulf for the entire month, according to daily terminal status reports from Basra. The fall from record rates is due to increased volumes sent to local power stations during the country's scorching summer months, as well as its refineries.Domestic supplies rose to 615,000 b/d in July, up 147,000 b/d compared to April. Power plants received as much as 194,000 b/d of crude during the month, up from just 124,000 b/d in April. No breakdown for Basrah Heavy and Basrah Light crude exports was given.
Iraq seeks to relaunch investment plans for refineries, storage tanks - Iraq's oil ministry is revisiting a program announced four years ago to build four new refineries, while dropping a number of previously planned schemes. After years of stalling on its downstream projects, Iraq's new oil minister Jabbar al-Luaibi has invited international oil companies to invest in the construction of a raft of new refineries across the country. Companies would be invited this week to discuss the issue, oil ministry spokesman Assem Jihad said in a statement Sunday. The ministry also plans to double Iraq's crude oil storage capacity to 24 million barrels, over the next few years through international investment, Luaibi said after inspecting a tank farm near the Zubair oil field. Iraq is offering either a build, own, operate or a build, operate, transfer contract model for new refineries, where the private sector constructs the facility, operates it, and eventually hands it over to the government.The country has struggled to attract private investment after finally breaking with its tradition of state control over the oil industry. Baghdad passed a refining law in 2007 which gives foreign companies the right to build refineries and operate them over a 40-year period. It also set out the overall terms of investment. A 2010 amendment to the law was supposed to make it even more attractive.
Iran to launch first tenders under new oil contract in October - Oil | Platts News Article & Story: Iran plans to launch its first hydrocarbon bid round using a newly revised upstream contract in October, a senior official said Tuesday. The new contracts will be issued in the Iranian month of Mehr, which corresponds with September 22-October 21, the managing director of state-owned National Iranian Oil Co., (NIOC), Ali Kardor said in comments quoted by oil ministry news service Shana. "In the last week of Mehr [starting October 15], we will issue the tenders regarding technical documents within the new framework of the oil contracts", Kardor said. "South Azadegan is probably the first of the big oil fields which will be put out for tender under this framework," he said.National Mortgage News - USDA to Lower Fees to Lenders in October: Lenders who use the U.S. Department of Agriculture Rural Housing Service's Single Family Housing Guarantee Program will pay less beginning in October, the department said last week. The USDA will lower the upfront and annual fees charged to lenders starting Oct. 1. The department cited low delinquency and foreclosure rates as the reason why it chose to lower fees. The upfront fee will be lowered from 2.75% of the loan-at-close amount to 1%. And the annual fee will drop to 0.35% of the unpaid principle loan balance from 0.45%. "When our borrowers succeed, the program succeeds," USDA Rural Housing Service Administrator Tony Hernandez said in a news release. "Excellent overall performance in our Single Family Housing Guaranteed Loan Program means we can charge less for the life-changing opportunity to own a home."
U.S., others agreed 'secret' exemptions for Iran after nuclear deal: think tank | Reuters: The United States and its negotiating partners agreed "in secret" to allow Iran to evade some restrictions in last year's landmark nuclear agreement in order to meet the deadline for it to start getting relief from economic sanctions, according to a think tank report published on Thursday. The report, which was released by the Washington-based Institute for Science and International Security, is based on information provided by several officials of governments involved in the negotiations. The group's president David Albright, a former U.N. weapons inspector and co-author of the report, declined to identify the officials, and Reuters could not independently verify the report's assertions. "The exemptions or loopholes are happening in secret, and it appears that they favor Iran," Albright said. (Link to the report: here)
Al Qaeda In Syria Changed Its Name And Now The US Is Arming Them --Though many scoffed when the Al Qaeda affiliate in Syria, Jabhat Al-Nusra, rebranded itself Jabhat Fateh Al-Sham, that cosmetic change was apparently enough to convince the US government to start sending them arms. In the recent push by rebels in the city of Aleppo, Al-Nusra/Al-Sham took a leading role and was reportedly among the rebels groups who received US weapons. Those weapons will first be used to kill Syrian government troops and after that, well, who knows? Many, if not most, of the rebel groups fighting the Syrian government are jihadist and few have any serious objection to Al-Nusra participating in their operations, especially given that Al-Nusra has proven to be one of the most effective groups on the battlefield. If Al-Sham and fellow Sunni jihadists prevail over Syrian government forces, a genocide will likely commence against religious minorities in Syria, starting with the Alawites and moving on to other Shiites. From the Atlantic Council: “According the Syria analyst Charles Lister, there is a significant subsection of the Syrian opposition that does not oppose Fateh al-Sham’s participation in Aleppo related military operations. Moreover, Lister said that opposition forces fighting in Aleppo received for the first time American weapons that are normally designated for forces fighting the Islamic State (ISIS). The opposition’s takeaway is that the United States does not object to preserving the balance on the ground with the Syrian regime, even if doing so indirectly bolsters Fateh al-Sham.” While it would be a mistake to say this is the first time the US gave assistance to Al Qaeda-linked rebels in Syria, it is a pretty stunning digression from earlier claims from US officials that assisting Al Qaeda and ISIS was completely off limits. Now the US is arming them in one of the most crucial battlefields of the Syrian Civil War. Then again, Al-Nusra/Al-Sham claims it no longer is within the Al Qaeda network (though they also appear to still hold much of the same beliefs). I guess a rebrand is all it takes for the US to take a group from sworn enemy to ally worthy of receiving anti-tank weapons. What could go wrong?
Turkey targets Kurdish forces south of Syria's Jarablus - Turkish jets and artillery have targeted Kurdish forces south of the strategic town of Jarablus, according to a monitor and local sources, as Turkey continues a major military offensive inside northern Syria. Turkey first sent tanks across the border on Wednesday as part of a two-pronged operation against Islamic State of Iraq and the Levant (ISIL) fighters, as well as Kurdish-led forces.The UK-based Syrian Observatory for Human Rights said Saturday's air strikes and shelling hit the village of Amarneh, which was captured recently by the US-backed Syrian Democratic Forces (SDF). The strikes came as Turkish-backed Syrian rebels clashed with Kurdish fighters on the ground. The Jarablus Military Council, which is allied with the SDF, said the air strikes in Amarneh marked an "unprecedented and dangerous escalation" after Turkish artillery shelling targeted Kurdish YPG forces, the backbone of the SDF alliance, on Friday. The council said there were injuries, without giving any further details, but warned that the escalation threatened to "endanger the future of the region" and vowed to stand its ground.
Wedding Crashers Who Kill: “In Turkey, Even Joyous Wedding Can Be a Target,” ran the headline in the August 22, 2016 New York Times. Two days earlier, a suicide bomber had struck at a Kurdish wedding celebration in the Turkish city of Gaziantep, close to the Syrian border. The bomber, a boy about 14 years old, killed more than 50 wedding guests, many of them children, and wounded 100 others. Gaziantep was the deadliest bombing in Turkey this year.Turkish President Recep Tayyip Erdogan blames the Islamic State (IS) for the attack. As of late Wednesday, IS had not taken credit for the Gaziantep bombing. However, it’s not IS that I want to discuss. You would never know it from the Times account, but US armed drones and other aircraft have “crashed” weddings in Afghanistan, Iraq, and Yemen. I am not suggesting that the US was behind the slaughter at Gaziantep. Instead, I want to ask a question. Why do we condemn IS for attacking a wedding and not the US for doing the same thing?“The US Has Bombed at Least Eight Wedding Parties since 2001” according to the title of an article by Tom Engelhardt in the December 20, 2013 Nation. Engelhardt comments: “If the Taliban or the Iranians or the North Koreans had piled up such figures … [w]e would classify them as barbarians, savages, evildoers.” Yet US media gives these deaths a pass.There are too many incidents to discuss separately. The following will be enough to sicken any reader.
Syrian Kurds vow to fight to the death to stop Turkey 'invading' their territory - The Syrian Kurdish leadership vows to defend their de facto state in north east Syria to the end, but is fearful of a growing understanding between the Syrian and Turkish governments in opposition to Kurdish separatism at a time when US support for the Kurds is faltering. In an exclusive interview with The Independent, a senior Syrian Kurdish official says that the Kurds will fight to the death to stop Turkey “invading the region” and speaks of possible reconciliation between Damascus and Ankara on the Kurdish question. The Syrian Kurds, who have been the most effective US ally in the war against Isis in Syria, now see themselves as possible victims of international betrayal. The US support for the Turkish military intervention in Syria on 24 August and demand that the Syrian Kurdish People’s Protection Units (YPG), who had just captured the strategic town of Manbij from Isis after a hard-fought siege, should pull back east of the Euphrates river, were bitter blows to the Kurds. Without whole-hearted US support, they are vulnerable to attacks by the numerous enemies who encircle them, notably Turkey and possibly, in future, the Syrian government. Turkey denies reaching ceasefire with Kurdish forces in Syria
The US is pissing off everyone in northern Syria - Vice - When US Secretary of Defense Ash Carter asked Turkey on Monday to "stay focused" in the fight against the Islamic State (IS) and stop attacking US-backed Kurdish forces, Turkish officials responded with a suggestion of their own. "Americans should revise their policy of supporting (the Kurdish-led force) at all costs," Turkish presidential spokesperson Ibrahim Kalin said in a Turkish newspaper on Tuesday. It was the latest rebuke to American damage-control efforts after US-backed Kurdish forces clashed with American NATO ally Turkey over the weekend. The Syrian Kurds blew up a Turkish tank in the north of Syria on Saturday, killing at least one soldier, and Turkish warplanes attacked Syrian Kurds the following day, killing at least 35 people. Experts on the region say the US has mismanaged its relationships with allies who have wildly differing objectives in Syria. And this, says Robert Ford, the last US ambassador to Syria, has created a quagmire that could have been avoided. "We managed to make everyone angry at us: The Syrian kurds, the larger Syrian opposition, as well as the Turks," said Ford, who is now a senior fellow at the Middle East Institute. Ford said this is partly because the US failed to communicate the limits of its support to the Syrian Kurds. Before Turkey launched an unprecedented offensive, code-named "Operation Euphrates Shield," into northern Syria last week. US Vice President Joe Biden visited Turkey and publicly announced that the Kurdish-led Syrian Democratic Forces, or SDF, would need to withdraw to the east of the Euphrates River, as Ankara had requested, or the US would no longer support them. "If the vice president has to say that in Turkey, there's a problem," Ford said
"Apocalyptic Scenes" As Fleeing ISIS Fighters Set Iraqi Town's Oil Wells On Fire -- Back in 1991, when the Iraq army was retreating from Kuwait in the Persian Gulf War, it unleashed a literal "scorched earth" tactic as it set fire to some 600 oil wells, leading to iconic photos such as this one. Twenty-five years later, in an ironic twist, it was ISIS fighters who returned the favor, and while fleeing an Iraqi toawn, they did their best to raze it to the ground by flooding the streets with oil and setting it on fire. Pressured by the latest advance of coalition forces approaching the Islamic State stronghold of Mosul in the north of the country, the jihadists were forced to retreat from Qayyara by Iraqi soldiers. As they fled, they took a page from the Iraq's own army as they ISIS bombed pipelines and set fire to nearby oil wells, creating an endless cloud of black smoke that blocked out the sun, leaving the town shrouded in darkness in an eerie redux of scenes from 1991. Smoke billowing into the sky during a Reuters visit on Monday blotted out the sun in central districts hours before nightfall, producing an "apocalyptic scene" in this desert settlement which lacks electricity amid 49 degree Celsius (120°F) temperatures. While Baghdad wants to retake Mosul before the end of the year, which it says will effectively end the militants' presence in Iraq more than two years after they seized a third of its territory, some officials from countries in the U.S.-led coalition supporting the Iraqi forces have said that timeline may be too ambitious. However, the loss of Qayyara will certainly deal a blow to Islamic State, which had extracted oil from some 60 wells and sold it to help finance its activities.
Saudi Arabia preparing and equipping 5,000 al-Qaeda terrorists to fight Yemeni army in Najran Province -- The Saudi army is preparing, arming and equipping over 5,000 Salafi and Al-Qaeda terrorists in the Southern part of Yemen for war against the Yemeni army and popular forces in the kingdom's Najran province, media reports disclosed on Sunday. "Saudi Arabia has resorted to making direct use of thousands of terrorists to confront the Yemeni forces following its heavy defeats in Najran and Assir provinces," the Arabic-language media quoted unnamed Yemeni military sources as saying on Sunday. Since the Saudi invasion of Yemen nearly one and a half years ago, there have been many reports about coordination and cooperation between the Saudi troops and al-Qaeda and other terrorist groups to attack the popular forces in different parts of the impoverished country. In late May, a senior Yemeni commander disclosed that the Saudi-led coalition has sent large cargos of state-of-the-art military weapons and equipment to the al-Qaeda terrorist group in Yemen. "The Saudi-led coalition has recently sent modern military equipment, including tanks and armored vehicles, through the sea to the port city of Mukalla in Hadhramout province, Southern Yemen,""The al-Qaeda terrorist group has received the military equipment to suppress the revolutionary moves and carry out terrorist operations,"
Russian producers sign deals with Asian, western partners at Vladivostok forum - Russia's oil and gas companies Friday signed a number of upstream and downstream cooperation agreements on the first day of Russia's Eastern Economic Forum in Vladivostok, focused on building ties between Russian and Asian countries. Russia's top producer Rosneft, in particular, agreed with Thailand's PTT to develop cooperation ties in upstream, crude and oil products trading, refining, petrochemical projects, and LNG supplies.The agreement "confirms the intention of both parties to conclude in the near future a long-term contract to supply crude oil and other feedstock to PTT," Rosneft said in a statement. "Through cooperation with the largest energy company in Thailand Rosneft will enter one of the most lucrative energy markets in the Asia-Pacific region," it added. Rosneft sees significant potential in its cooperation with PTT, which could include LNG trading, considering the expansion of the Map Ta Phut terminal and a natural decline in gas production in Thailand, Rosneft CEO Igor Sechin said in a statement, providing no further details. Separately, Rosneft, BP and Schlumberger announced agreements for collaboration on seismic research and developments, under which Rosneft will join as an equal partner BP's ongoing project with Schlumberger's seismic business, WesternGeco, to develop innovative cableless onshore seismic acquisition technology. The technology aims at raising the efficiency of exploration, appraisal and field development.
Analysis: South Korea a bright spot for fuel oil demand - A combination of low prices and extreme weather has seen South Korea's demand for fuel oil, locally known as Bunker-C, rise by almost 40% to 27.91 million barrels in the first seven months of 2016. And with the heat wave showing no signs of abating, it is likely that demand for the fuel, which has fallen out of favor in other top Asian oil consumers such as China and Japan, will continue to remain strong in South Korea. Apparent demand for fuel oil in China fell nearly 21% year on year to an average 749,000 b/d over January-July 2016, and Japan's demand fell 23% to an average 242,139 b/d in the same period, latest data from S&P Global Platts and Japan's Ministry of Economic, Trade and Industry showed.But South Korea's fuel oil demand in July nearly doubled to 3.81 million barrels from 1.95 million barrels a year earlier, led by a heat wave that has swept the country, according to data from state-run Korea National Oil Corp. Fuel oil demand for power generation, which has accounted for nearly half of the country's total fuel oil demand, soared more than 10 times to 1.56 million barrels in July, from 153,000 barrels a year earlier, KNOC's data showed. According to KNOC, the proportion of Bunker-C in total feedstock for power generation has steadily increased to 10% in June from 4.3% a year earlier. "As South Korea has been suffering from scorching heat in August and temperatures for September are forecast to be higher than usual, the country's Bunker-C oil demand for power plants is expected to stay strong for the time being," a KNOC official said.
Analysis: After brief resurgence, China's oil demand falters yet again - China's oil demand fell to 11-month lows in July on the back of erratic weather and feeble industrial growth, crushing hopes of a recovery in consumption which the market had expected after the country in June pulled itself out of the red for the first time in many months. But analysts are hopeful that the fall would be temporary and demand would recover in the remaining months of the year. Total apparent oil demand in the world's second-largest oil consumer fell to 10.75 million b/d in July, dropping 6.9% from June and witnessing the steepest year-on-year decline of 5.4% since January 2009, S&P Global Platts calculations showed. China's apparent oil demand in June had increased 1.8% year on year to 11.54 million b/d, which was 6.1% higher from May."Apparent demand was dragged down by record high oil product exports in July, at around 860,000 b/d, a further reflection of overflowing supplies, overwhelming refiners," said Song Yen Ling, senior analyst at Platts China Oil Analytics. Demand for key oil products grew either in single digits or fell year on year in July. LPG, naphtha and jet fuel have largely been registering double-digit year-on-year growth in recent months.
China’s oil majors scale back output as priorities shift - FT.com: A shift in Beijing’s priorities away from production targets has allowed Chinese oil companies to halt output in maturing oilfields, a previously politically unpalatable decision that leaves them better placed for an eventual recovery in oil prices. International majors routinely scale back production from high-cost fields when oil prices fall, but in China, for decades, the government mandate has been to increase domestic supply and ensure energy security.“In years past, they were under pressure to produce higher numbers every year, even if they were producing uneconomically. Now that pressure is gone,” said Laban Yu, head of Asian energy research with Jefferies. In the past week both PetroChina and Sinopec reported declines in oil production for the first half of the year. Sinopec said domestic crude oil output fell 13 per cent versus a 3 per cent drop in its overseas operations, while PetroChina reported a 4 per cent decline in domestic production. Both managed to turn a profit in the first half, though PetroChina just barely remained in the black, reporting a 98 per cent plunge in first-half net profit to Rmb531m ($79m) while revenue fell 16 per cent to Rmb739bn. Sinopec, whose refining arm benefits more from low crude prices, said net profit declined 22 per cent to Rmb20bn as revenues fell 37 per cent to Rmb880bn. China’s third oil major Cnooc, which had told analysts it would likely cut output by as much as 5 per cent this year, said oil and gas production crept up by less than 1 per cent in the first half and is expected to see crude output fall in the second half of the year. The company lost Rmb7.74bn in the first half, reversing from a profit of Rmb14.73bn a year ago. In the first seven months of the year, Chinese crude oil output dropped 5 per cent compared with the same period of 2015, with production in July falling to levels last seen in late 2011.
Analysis: Tax crackdown on China independents may temporarily slow crude inflows - China has unveiled steps to tighten tax norms for independent refiners and better regulate their crude import quotas, a move that could potentially slow their crude buying plans and throughput in the near future, but the impact over the longer term is unlikely to be substantial, sources said. After an investigation following complaints that some independent refiners were avoiding taxes and reselling their cargoes, the National Development and Reform Commission said Tuesday that it would suspend the use of imported crude for 6-12 months or even cancel the right to use imported crude if any company was found to be avoiding taxes. The statement did not point to any specific company but the announcement was seen as an advance warning to independent refiners in an effort to stop them from resorting to such practices in future."Due to the uncertainty over how tough authorities will be when carrying out the measures, I expect the independent refiners will step back to take a wait-and-see approach for one to three months before reacting further," a Shanghai-based analyst said. Some of the other measures mentioned by the NDRC included the strict examination of applications, a strengthening of the auditing process and the elimination of outdated refining capacity.
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