Sunday, September 11, 2016

refining at a 13 month high, oil imports fall to 11 month low as Hermine leads to largest drop in oil supplies in 17 years; global rigs for August

two stories dominated the US fracking patch news this week; the first was that Oklahoma experienced a 5.8 earthquake, the largest in state history, near the national oil depot in Cushing, which currently stores 64 million barrels of crude, and subsequently shut down 54 injection wells operating in the region...the other story involved the standoff between the Standing Rock Sioux of the Dakotas and those who would build a crude oil pipeline under their water supply... that situation escalated last weekend after the Sioux's injunction to stop construction was ignored and sacred Sioux burial grounds were bulldozed...over 5000 have gathered, including Green Party presidential candidate Jill Stein, who spray painted a bulldozer and faces charges...we have included below at least a dozen links to the big OK quake story, and more than that on the Dakota Access / Sioux confrontation (including videos) case you hadn't noticed, i tend to start each week's links with Ohio oil patch news, followed by news from the nearby states, then organize fracking related news from other US states in a northeast to south to northwest order, so the Oklahoma and Texas links precede those for the Dakotas...the order that has evolved for the rest of the links in these weekly bundles follows the US with Canada and the Americas, and goes through oil and gas issues in other countries before a series of market related news items are included...finally, news from the Persian Gulf and near Middle East, and related military confrontations, are include at the end of the collection each week... 


oil prices were remarkably volatile this past week, as we saw two price spikes of nearly 5%, each followed by price retreats of almost the same magnitude...early on Monday morning, a holiday in the US markets, news of a meeting between Russian ol minister Alexander Novak and his Saudi counterpart Khalid al-Falih.was announced, and prices for US oil, which had drifted from last week's close of $44.44 a barrel to near $44.10 a barrel in European and US off-market trading, suddenly spiked up by more than $2 in the first few hours of trading, briefly hitting $46.53 a barrel on production freeze speculations, only to crash right back down to near where they started the day after the joint statement from the meeting was released, which only said that the parties agreed to work together on stabilizing the oil market, with no specifics...then, with the official US markets open on Tuesday, US crude slipped back to below $44 a barrel in the morning, on news of Saudi budget cuts, before gradually recovering in the afternoon to end the day down 7 cents, or 0.2% lower than the prior Friday, to close at $44.38 a barrel on the New York Mercantile Exchange...prices continued to meander on Wednesday morning, then spiked over to $46 a barrel in the afternoon, after the American Petroleum Institute reported a 12 million barrel drawdown from our stockpiles of crude, against market expectations of a million barrel increase in supplies...after closing Wednesday at $45.50 a barrel, oil prices hovered in that range early Thursday until the EIA report, delayed a day because of the holiday, showed a 14.5 million draw down in our supplies of crude, the largest weekly crude-supply drop since 1999, which sent oil prices soaring 4.7%, to close Thursday at a two-week high of $47.62 a barrel...then on Friday, as traders realized the big drop in supplies was likely just a temporary aberration caused by the hurricane of that week, and as hopes for a production freeze faded, oil prices gave up most of Thursday's gains and closed down $1.74 at 45,88 a barrel, or 3.7% lower on the day, but up 3.2% for the week..

The Latest Oil Stats from the EIA

as we noted, the oil data for the week ending September 2nd from the US Energy Information Administration indicated that our supplies of oil and gasoline nosedived, as our oil imports fell to an 11 month low on tropical storm related shipping disruptions on the east coast and in the Gulf of Mexico and an unrelated shutdown of the Houston ship channel...furthermore, this week's crude oil fudge factor needed to make the weekly U.S. Petroleum Balance Sheet (line 13) balance swung to -169,000 barrels per day, down from + 233,000 barrels per day last week, which meant that 169,000 barrels of oil per day that we appeared to have produced or imported last week did not show up in the final consumption or inventory figures....that breaks the string of 10 weeks wherein we'd seen a large positive adjustment each week, and lowers this year's cumulative daily average of that weekly statistical adjustment to a positive 90,000 barrels per day, which means that on average this year, 90,000 more barrels of oil per day were showing up in our final consumption and inventory figures than were accounted for by our production or import figures.... 

after we reported last week that our imports had hit a 47 month high during the week ending August 26th, the EIA reported this week that our imports of crude oil fell from there by 1,848,000 barrels per day to an average of 7,069,000 barrels per day during the week ending September 2nd, the least oil we've imported in any week since the 7,068,000 barrels per day we imported during the week ending October 19th last year....although this week's crude imports were 5.2% lower than the 7,459,000 barrels of oil per day we imported during the week ending September 4th last year, the 4 week average of our imports reported by the EIA's weekly Petroleum Status Report (62 pp pdf) was still at an average of 8.2 million barrels per day, 7.4% higher than the same four-week period last year... 

at the same time, EIA data showed that production of crude oil from US wells fell by 30,000 barrels per day, from an average of 8,488,000 barrels per day during the week ending August 26th to an average of 8,458,000 barrels per day during the week ending September 2nd, as output of Alaskan oil fell by 45,000 barrels per day while production from the lower 48 states was 15,000 barrels per day higher...why there wasn't also a curtailment in domestic production due to the storms is a mystery to me, since we know from last week's Baker Hughes data that a large percentage of Gulf of Mexico platforms were shut down during this same week... at any rate, this week's nominal output drop left the week's domestic oil production down by 7.4% from the 9,135,000 barrels we produced during the week ending September 4th of last year, and 12.0% 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 September 2nd was thus 761,000 barrels per day lower than what we were producing at the beginning of this year...  

meanwhile, the amount of crude oil used by US refineries jumped by an average of 315,000 barrels per day to an average of 16,930,000 barrels of crude per day during the week ending September 2nd, which was the most oil we've refined in 13 months and our 3rd highest refinery throughput in history...that was as the US refinery utilization rate rose to 93.7% for the week, up from 92.6% of capacity during the week ending August 26th, and up from the 90.9% refinery utilization rate during the week ending September 4th last year..refining on the glutted east coast rose by 40,000 barrels per day as the refinery utilization rate there rose from 86.7% to 89.6%, while the Midwest refineries picked up the slack with a 98.4% utilization rate and Gulf coast refineries took in 165,000 more barrels of crude per day than they did last a result, the amount of crude refined this week nationally was 5.1% more than the 16,110,000 barrels of crude per day US refineries used during the week ending September 4th last year, and 3.7% more than the equivalent week in 2014, being that we're at a time of year that crude refining normally tails off, as “the summer driving season” apparently comes to a close with the labor day weekend ...   

with more oil being refined, our refinery production of gasoline rose by 152,000 barrels per day to an average of 10,173,000 barrels per day during the week ending September 2nd, which was the 5th highest gasoline output in any week on record, and 6.1% higher than our gasoline production during the equivalent week of the same time, our refinery output of distillate fuels (diesel fuel and heat oil) also increased, rising by 58,000 barrels per day to 5,031,000 barrels per day during week ending the 2nd, which was 237,000 barrels per day, or 4.9% higher than our distillates production during the same week of 2015...    

however, even with the near record output of gasoline, our gasoline inventories fell for second week in a row, dropping by 4,211,000 barrels to 227,793,000 barrels as of September 2nd, the largest one week drop in gasoline supplies since mid-March....that was as our imports of gasoline fell by 225,000 barrels per day to a 21 week low of 607,000 barrels per day during the week, and as the gasoline supplied to US markets rose by 84,000 barrels per day to 9,595,000 barrels per day, apparently in one last consumption surge before the holiday... nonetheless, this week's gasoline supplies were still 6.2% higher than the 214,547,000 barrels of gasoline that we had stored on September 4th last year, and 7.3% higher than our gasoline supplies of September 5th, 2014, and thus our gasoline stores are still categorized as "well above the upper limit of the average range" for this time of year.. 

meanwhile, our distillate fuel inventories rose by 3,382,000 barrels to 158,135,000 barrels as of September 2nd, which pushed our distillate inventories to a level 4.8% above the then 4 year high of 150,903,000 barrels of September 4th last year, and 24.0% above the distillate inventories of 127,493,000 barrels of September 5th, 2014... that increase thus changed the EIA characterization of our distillate inventories to "above the upper limit of the average range for this time of year"

lastly, after that big 1.848 million barrel per day drop in oil imports, refineries found it necessary to withdraw 14,513,000 barrels of oil from our stockpiles of crude oil in storage to meet their needs, and hence our oil inventories as of September 2nd fell to 511,357,000 barrels, the largest one week drop in oil supplies since the week ending January 1st 1999...from where we sit, it's impossible to tell if that drop in supplies is just a one week aberration or not, and whether that supply will be restored in the weeks ahead, once all the ships that were forced to anchor offshore come in and unload...even so, this week's 511,357,000 barrels of crude supplies is still 11.7% higher higher than the 457,998,000 barrels of oil we had stored as of September 4th, 2015, and 42.6% higher than the 358,598,000 barrels of oil we had stored on September 5th of 2014.... 

This Week's Rig Counts

whereas this week's EIA oil data for September 2nd was impacted by the movement of hurricane Hermine through the eastern Gulf of Mexico and up the East Coast, this week's rig count report for the week ending September 9th was influenced by the reversal of last week's storm impacts...Baker Hughes reported that the total count of active rotary rigs running in the US was up by 11 rigs to 508 rigs as of Friday, which was still down from the 848 rigs that were working as of the September 11th report last year, and down from the recent high of 1929 rigs that were deployed on November 21st of 2014... the count of rigs drilling for oil rose by 7 rigs to 414, which was down from the 652 oil directed rigs running a year earlier, and down from the recent high of 1609 working oil rigs that was reported on October 10, 2014, while the count of drilling rigs targeting natural gas formations rose by 4 to 92, which was still down from the 196 natural gas rigs that were drilling a year ago, and down from the recent natural gas rig high of 1,606 rigs that were deployed on August 29th, 2008...  

while last week we saw 7 platforms that had been drilling offshore in the Gulf of Mexico shut down, this week saw the startup of 8 such platforms, all of which are logged in as being offshore of Louisiana...thus, without the temporary hurricane effect, we have the net addition of one Gulf of Mexico rig over two weeks, bringing the Gulf count and the total offshore nationally up to 18 rigs, which is down from 29 rigs drilling in the Gulf and a total of 31 rigs offshore nationally a year ago...

meanwhile, the count active horizontal drilling rigs was up by 1 rig to 396 rigs this week, which was still down from the 652 horizontal rigs that were in use on September 11th of last year, and down from the recent record of 1372 horizontal rigs that were deployed on November 21st of the same time, 6 more directional rigs were also added, bringing the directional rig count up to 48 rigs, which still was down from the 81 directional rigs that were in use at the end of the same week a year addition, the vertical rig count was up by 4 rigs to 64 rigs, which was still down from the 119 vertical rigs that were up and running in the US 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 US geological oil and gas both tables, the first column shows the active rig count as of September 9th, the second column shows the change in the number of working rigs between last week (September 2nd) and September 9th, the third column shows last week's September 2nd 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 11th of 2015:     

September 9 2016 rig count summary

from the state table we see that the biggest change is the restarting of 8 rigs in Louisiana, 7 of which had just been shut down a week earlier...elsewhere, Texas added 4 rigs, none of which were horizontal by the looks of the basin count, while Oklahoma saw 4 rigs shut down, possibly as a result of the earthquake and subsequent shutdown of the injection wells, leaving frackers with no place to dispose of their wastewater, which in Oklahoma amounts to ten times the quantity of oil they produce...also note the addition of another rig in the Utica in Ohio, and two more nearby, in the Marcellus in West Virginia...otherwise, changes in activity in the shale basins was pretty subdued, as would be supported the addition on just one horizontal rig, a stat which sometimes masks much more activity when we peel back the all in all, an uneventful week, once we get past the return of drilling to the eastern Gulf of Mexico…

International Rig Counts for August

this week also saw the monthly release of the international rig counts for August, which unlike the weekly count, is an average of the number of rigs running in each country during the month, rather than the total of those rig drilling at month end....Baker Hughes reported that an average of 1547 rigs were drilling for oil and natural gas around the globe in August, which was up from the 1,481 rigs that were drilling around the globe in July but down from the 2,226 rigs that were working globally in August of last year...increased North American drilling again accounted for the global increase, as the average US rig count rose from 449 rigs in July to 481 rigs in August, which was still down from the average of 849 rigs working in the US in August a year ago, while the average Canadian rig count rose from 94 rigs in July to 129 rigs in August, again still down from the 206 Canadian rigs that were deployed in August a year earlier....outside of Northern America, the International rig count fell by a single rig to 937 rigs in August, which was also down from 1,118 rigs a year ago, as a pullback in drilling in the Middle East region offset small increases elsewhere..

drilling activity in the Middle East fell for the 6th time in the past 8 months, as countries included in this region idled a net of 11 rigs, leaving an average of 379 rigs still drilling, which was down from the 393 rigs deployed in the Middle East a year earlier....the largest regional drilling cutback was in Pakistan, where their active rig count dropped from 29 rigs in July to 21 rigs in August, with the idling of 6 rigs targeting oil and 2 rigs targeting natural gas; however, that drop only left the Pakistanis two rigs shy of the 23 rigs they were running a year ago, as the 30 rigs they had active in June was their most in the recent record...meanwhile, Qatar saw the idling of 2 of the 7 rigs they had active in July; the 5 rigs they had running in August was down from 9  rigs a year the same time, both the Saudis and the Iraqis saw their rig count drop by a single rig; the Saudis went from a total of 125 rigs in July to 124 in August with the idling of 3 rigs targeting natural gas and the start up of 2 rigs targeting oil, while the Iraqis, who only have oil rigs deployed, dropped from 39 rigs to 38....while that left Iraq down from the 48 rigs they were running last August, the Saudi count was up from 120 rigs a year earlier, and up from the 106 rigs they had working in August of 2014...meanwhile, Abu Dhabi was the lone Middle East country to add a rig; they now have 48, which is up from the 38 rigs they had deployed a year ago...

while the Middle East was cutting back, the Asia-Pacific region added 8 rigs and thus had 194 rigs deployed in August, up from the 186 drilling rigs working in July, but down from the 220 rigs working the region a year earlier, as the Asia-Pacific offshore rig count also rose by four rigs to 92...Australia doubled their active rig count from 3 rigs to 6 in August, but they were still down from the 15 rigs they had working a year earlier...India, Indonesia, and Thailand each added two rigs in August; for India, that brought them back to 115 rigs, the same as they had working a year earlier, for Indonesia, it brought them back to 19 rigs, which was still down from the 25 they were using last August, while for Thailand, their count rose to 13 rigs, which was still short of the 15 rigs they had in use a year addition, Malaysian drillers also added a rig, giving them 4 rigs active, which was down from 9 rigs in August of 2015...on the other hand, Brunei cut back from 2 rigs to 1, the same as a year earlier, while the Japanese idled their lone active rig, leaving none, same as year the same time, the rig count offshore from China dropped from 28 rigs to 26, which was still up from 25 rigs in August of 2015...

meanwhile, the Latin American countries netted an increase of 1 rig, after adding 8 rigs in July, in the region's only increases this year; prior to July, the region had idled 92 rigs over the first 6 months of 2016…in August, Latin America drillers averaged 187 rigs, which included 37 offshore, down from the average of 319 rigs, which included 53 offshore rigs, that were active in Latin America in August of 2015....that single rig increase masked a lot of changes in the individual countries, however, as Brazil, Mexico and Venezuela each added 3 rigs in August...for Brazil, that increase brought them up to 18 rigs, which was still down from the 39 rigs they had in use a year earlier; for Mexico, their increase brought them back up to 26 rigs, which was down from 41 rigs a year earlier and down from the 81 rigs they were running in August of 2014, and for Venezuela, it brought them back to 53 rigs in August, still down from 72 rigs a year addition, Colombian drillers added 2 rigs and now have 8 rigs working, but that's still way down from the 30 rigs they were using last year at this time...offsetting those increases, Argentina's drillers idled 7 rigs in August, after they had started up 9 rigs in July, which left them with 65 active rigs, down from the 108 rigs that were drilling in Argentina a year earlier...3 other Latin American counties idled one rig: Bolivia cut their count to 4 rigs, which was still up from last years 2 rigs, while Chile cut back to 3 rigs, same as as a year ago, and Trinidad cut back to 3 rigs, down from last year's 6 rigs..

elsewhere, countries in Africa reduced their net activity by 1 rig in August, leaving 81 rigs still in drilling, down from the 96 rigs working the African continent last year at this time...Angola shut down 1 rig, leaving 4 rigs, which was down from the 8 rigs that they had active a year earlier...Morocco and Tunisia both shut down the only rigs they had active, a cut from 1 rig in Morocco and 2 in Tunisia a year earlier...meanwhile, both Algeria and Nigeria added rigs; that brought the Algerian count up to 56, also up from 52 rigs a year earlier, and brought the Nigerian count back to 6 rigs, down from 9 rigs a year earlier...

and lastly, the net rig count in Europe increased by 2 to 96 rigs in August, which was down from the 109 rigs working in Europe a year ago at this time...Poland saw their rig count double from 4 rigs to 8, which was up from 7 rigs a year earlier...Romania added 2 rigs, so the 5 rigs they were running in August was the same as they had active a year earlier...Turkey also added 2 rigs, and at 31 rigs rigs in August they were up from the 28 rigs they had active a year earlier...both Germany and the Netherlands increased their drilling activity from 2 rigs in July to 3 rigs in August; for the Germans, it was up from 1 a year earlier, while for the Dutch, that was down from last year's 7 rigs...on the other hand, Norway cut its drilling activity from 20 rigs to 17, still up from 16 rigs a year earlier, and the Czechs idled both of the rigs they had been running over the past 12 months... elsewhere, UK offshore was cut back from 10 rigs to 9, down from 12 platforms offshore a year ago, and Hungary shut down 1 rig, leaving 1 rig, down from 2 rigs a year earlier.....finally, note that Iran, Russia, and China rig counts are not included in Baker Hughes international data, although China's offshore area, with an average of 26 rigs active in August, down from 28 from July, were included in the Asian totals here...   


Ohio elections chief, anti-fracking groups dispute ballot issues - Youngstown Vindicator - Attorneys for Ohio’s elections chief are arguing in the Ohio Supreme Court that he acted properly in sidelining county anti-fracking measures proposed for fall ballots. Election boards in Athens, Meigs and Portage counties invalidated initiative petitions seeking to put the measures on 2016 ballots and Secretary of State Jon Husted upheld those decisions. Supporters filed suit arguing Husted may decide the validity of their petitions, but not the merits of the “community rights county charters” they propose. A similar fight happened last year. Husted and the counties contend the charters would leave counties without an authorized form of government. The charters call for restricting the use of water for hydraulic fracturing, or fracking, used in oil-and-gas development and prohibiting disposal of fracking wastewater.

Husted, Athens County elections board file arguments in charter case - Decisions to keep county charters off the Nov. 8 ballot in Athens, Meigs and Portage counties were made in accordances with the Ohio Constitution, state law and a prior ruling of the Ohio Supreme Court, according to arguments Ohio Secretary of State Jon Husted filed with the court on Thursday. The Athens County Board of Elections took the same stance in its filing Thursday with the Ohio Supreme Court. Election boards in the three counties rejected initiative petitions seeking to put the charters on the ballot, and Husted upheld their actions. Supporters of the charters are asking the Supreme Court to issue a writ of mandamus ordering Husted and the election boards to place the charters on the ballot. Husted and the Athens County Board of Elections state that to get a writ of mandamus the charter supporters must show: a clear legal right to what they are requesting, that Husted and the boards have a clear duty to put the charters on the ballot and that there is no other remedy. The charter supporters have failed to show that, assert the briefs filed by Husted and the Athens County board.Husted’s main argument is that under the Ohio Constitution there is a threshold requirement that a charter form of government invest in county officials all the powers and duties they currently have by law. Husted argues that wording in the proposed charters does not accomplish that requirement. 

Supreme Court orders Meigs commissioners to put 2015 charter on ballot - — The Ohio Supreme Court has ordered the Meigs County Commissioners to put a 2015 charter proposal on the Nov. 8 ballot. The ruling, though, doesn’t guarantee the measure will actually make it to the ballot. The 4-3 split opinion was issued in a case that is separate from the 2016 Meigs County charter case that is currently before the Ohio Supreme Court. The Meigs County Home Rule Committee attempted to get a proposed Meigs County charter on the 2015 ballot, but the county commissioners would not pass a resolution to put it on the ballot. In July 2015, the commissioners said that the Meigs County Board of Elections had missed a deadline for certifying to the commissioners that the charter petition was valid and had enough signatures. The elections board had submitted a letter to the commissioners before the deadline, but the commissioners said that the content of the letter did not meet the requirements of Ohio law. A majority of the Ohio Supreme Court disagreed. “The plain intent of the letter was to certify both the validity and the sufficiency of the petition,” wrote Chief Justice Maureen O’Connor. The court issued a writ of mandamus compelling the commissioners to adopt a resolution placing the proposed charter on the Nov. 8 ballot. However, Tuesday’s opinion issued by the court indicates that Ohio Secretary of State Jon Husted may have an opportunity to rule on the validity of the 2015 charter proposal. The charter is nearly identical to a charter proposed in Athens County in 2015 that Husted ruled would not be on the ballot. That decision was upheld in 2015 by the Ohio Supreme Court in its Walker decision, although the court did not fully agree with Husted’s reasoning. “...The significance of Walker is that it affirmed the secretary of state’s discretionary authority to decide whether certain measures belong on the ballot,” O’Connor wrote in Tuesday’s opinion. “We will not intrude into the process before the secretary has had a chance to exercise his discretion.” 

Issue 3 in Waterville is designed to try to stop the Nexus pipeline - 13abc Action News  WATERVILLE, Ohio (WTVG) - Going up against Nexus is proving to be no easy feat. But the people, who find themselves face to face with the project, are exhausting every option to slam on the brakes.  "The ultimate goal is to get them to just abandon the project," David Bourland, President of Protecting Air for Waterville said about Issue 3.  The community action group is just one of many working to stop the pipeline project.  The opposition has packed auditoriums and given their statements to the Federal Energy Regulatory Commission over and over. They've held awareness events, encouraging the community to speak up and now, they're going to the ballot in November."The referendum is to prohibit future pipelines, oil or natural gas, from actually being construction and built in the city limits of Waterville," Bourland told 13abc. As the plan stands now, the underground pipeline will have to go through the village. Plus, the construction of the compressor station just off of 24 in Waterville township.  There are a handful of reasons why people are saying no. "[There's] the long term effects of what we're breathing in,"  "My kids both go to Anthony Wayne, they're right in the blast zone and that makes me uncomfortable." "I'm totally against a private company taking land from citizens for the benefit of their company," But, it is important to mention that the pipeline plan won't be dead in the water just because voters approve the change to the city charter. "What Nexus has done in the past is, if there is something or someone attempting to keep a pipeline out, they will go to court," says Bourland.  He adds that the opposition is willing to fight it out in the courtroom.  Many say if they don't stand up, who will.

Report: Buckeye Fracking Leads to Asthma Attacks - -- Environmental advocates cite a new study to suggest drilling and fracking in eastern Ohio leads to thousands of asthma attacks in Cleveland and Columbus, but industry officials say the research ignores the reduction in carbon emissions resulting from greater natural gas use.  According to the Ohio Environmental Council and the Clean Air Task Force, children in the Columbus metro area suffer 7,129 asthma attacks per year due to smog resulting from oil and natural gas operations, with another 7,558 youngsters experiencing these symptoms in the Cleveland area every year. “What this report clearly shows us is that air pollution from the oil and gas industry can have a significant impact on children’s health even in areas far from oil and gas production,” Melanie Houston, director of oil and gas at the council, said. “As the mother of a young child, I can’t stress enough that safeguards are urgently needed to protect our children and communities from this dangerous pollution. Cutting methane pollution from oil and gas will have an immediate benefit for our children.”  Methane is the primary constituent in the consumer product commonly referred to as natural gas. Officials with the U.S. Environmental Protection Agency want to cut methane emissions from the oil and natural gas industry 45 percent by 2025.

NE Ohio Injection Well Operation To Stay Halted Amid Litigation | WCBE 90.5 FM: A Youngstown-area wastewater injection well at the center of a dispute over Ohio's authority to regulate oil-and-gas operations will remain closed during litigation by judge's order. Judge Kimberly Cocroft denied a request to allow the Weathersfield Township well to resume short-term operations while its legal appeal proceeds. Arguments are scheduled Novenber 1. Well operator American Water Management Services disputes the legal authority of the oil-and-gas chief at the Ohio Department of Natural Resources. The company also claims state actions against its well -which disposes of fracking wastewater - defy science. At least 20 small seismic events occurred near the well in 2014. State regulators believe they tapped the same fault as a 4.0-magnitude quake in Youngstown in 2011.

Scientists Discover New Genus of Bacteria Unique to Fracking Sites  - A new study from the Ohio State University revealed a never-before-seen genus of bacteria believed to be unique in shale oil and gas wells made by hydraulic fracturing.  The study, published in the journal Nature Microbiology, showed that the new genus is one of the 31 microbial members found in two separate fracking sites. Despite the great distance between the wells and different shale formations, the researchers were able to find almost similar microbial communities in the two sites.  "We think that the microbes in each well may form a self-sustaining ecosystem where they provide their own food sources," explained Kelly Wrighton, assistant professor of microbiology and biophysics at Ohio State, in a press release. "Drilling the well and pumping in fracturing fluid creates the ecosystem, but the microbes adapt to their new environment in a way to sustain the system over long periods." Most of the organisms found in the two wells is believed to be come from the surface ponds being drawn to fill the wells. The researchers also noted the possibility that the organisms they found in the wells are already living in the shale deposits even before the fracking operations began.The new genus of bacteria, dubbed as Candidatus Frackibacter, was named as a play of words in the owrd fracking. Scientists use the term Candidatus to classify new organism that is being studied for the first time using genomic approach, not an isolated culture from the lab. If the Frackibacter bacteria are living in the well before fracking operations began, it needs to be highly tolerant of high temperatures, pressure and especially salinity. High salinity levels in the fracking sites could force microbes synthesize organic compounds called osmoprotectants to avoid bursting.

New genus of bacteria found living inside hydraulic fracturing wells - Researchers analyzing the genomes of microorganisms living in shale oil and gas wells have found evidence of sustainable ecosystems taking hold there—populated in part by a never-before-seen genus of bacteria they have dubbed "Frackibacter." The new genus is one of the 31 microbial members found living inside two separate fracturing wells, Ohio State University researchers and their colleagues report in the Sept. 5 online edition of the journal Nature Microbiology. Even though the wells were hundreds of miles apart and drilled in different kinds of shale formations, the microbial communities inside them were nearly identical, the researchers discovered.  Almost all the microbes they found had been seen elsewhere before, and many likely came from the surface ponds that energy companies draw on to fill the wells. But that's not the case with the newly identified Candidatus Frackibacter, which may be unique to hydraulic fracturing sites, said Kelly Wrighton, assistant professor of microbiology and biophysics at Ohio State.In biological nomenclature, "Candidatus" indicates that a new organism is being studied for the first time using a genomic approach, not an isolated organism in a lab culture. The researchers chose to name the genus "Frackibacter" as a play on the word "fracking," shorthand for "hydraulic fracturing."Candidatus Frackibacter prospered alongside the microbes that came from the surface, forming communities in both wells which so far have lasted for nearly a year.  By sampling fluids taken from the two wells over 328 days, the researchers reconstructed the genomes of bacteria and archaea living in the shale. To the researchers' surprise, both wells—one drilled in Utica shale and the other drilled in Marcellus shale—developed nearly identical microbial communities. In addition, the two wells are each owned by different energy companies that utilized different fracturing techniques. The two types of shale exist more than a mile and a half below ground, were formed millions of years apart, and contained different forms of fossil fuel. Yet one bacterium, Halanaerobium, emerged to dominate communities in both wells.

Rare species lurks down fracking wells  -- For environmentalists, it is a dilemma. On the one hand, they don’t like fracking for gas. On the other hand, they don’t like destroying fragile ecosystems and making species extinct. Which is why a bacterium called Candidatus frackibacter may prove to be a problem. Scientists have found that the drilling technique used for fracking has created unique habitats deep beneath the surface populated by bacteria that have never been seen before. “We think that the microbes in eachwell may form a self-sustaining ecosystem where they provide their own food sources,” Kelly Wrighton, from Ohio State University, said. Professor Wrighton believes that the ecosystem is based on bacteria adapting to the extremely briny conditions in fracking fluids. The research is published in the journal Nature Microbiology.

The $10 Billion Petchem Growth Engine for Appalachia - Supporters of a proposed massive infrastructure project in Appalachia say that it would provide a strong impetus for growth in the region's petrochemicals sector. "The Appalachian Storage Hub is needed to take full advantage of chemical and plastic raw materials found in the Marcellus, Utica and Rogersville shales," Kevin DiGregorio, executive director of the economic development non-profit Chemical Alliance Zone, Inc. (CAZ), said of the proposed $10 billion natural gas transmission and storage project that would provide regional access to natural gas liquids (NGL) from shale plays in West Virginia, Ohio, Pennsylvania and Kentucky. The storage and distribution system would comprise underground storage facilities for ethane – and possibly other NGL such as propane and butane – as well as pipelines to move ethane and other raw materials to cracker and other manufacturing facilities, DiGregorio explained. "The proposed 'six-pack' pipeline system would transport methane, ethane, ethylene, propane, propylene and chlorine to manufacturing facilities throughout the region," he said. NGL likely would be stored in depleted natural gas fields, depleted salt domes or other natural underground caverns, noted DiGregorio. Exactly where the hub would be located remains undetermined, but experts reportedly are exploring candidate sites. Geology researchers from universities in West Virginia and Ohio are compiling a list of the top three to five potential locations in the quad-state region based on various technical criteria. Much of Appalachia's existing chemical and plastic manufacturing capacity straddles the corridors of the Ohio River and its main tributaries. New capital projects – particularly Shell's ethane cracker near Pittsburgh and PTTGC America's proposed ethane cracker in Belmont County, Ohio – would also enjoy easy river access to facilitate transport of raw materials, products and equipment. The benefits of having a multibillion-dollar storage hub would extend well beyond the locality and state hosting it.

US Gulf Coast September distillate exports to Europe at 920,000 mt -  Exports of distillates from the US Gulf Coast to Europe in September stand at 920,000 mt so far, according to data from cFlow, S&P Global Platts trade flow software. By comparison, a total of 1.21 million mt crossed the Atlantic during the same period in August, the data shows. The inbound clean products are set to arrive in European ports in 22 cargoes, with eight of these comprising 340,000 mt heading towards Mediterranean destinations. In a reversal of the usual flow of distillates from US to European ports, some cargoes have been crossing the Atlantic laden with product in the opposite direction. Exports out of Europe to Latin America were helping clear some summer volumes from Amsterdam-Rotterdam-Antwerp, where vessels were seen loading product from Primorsk, Amsterdam and Rotterdam. A strong Gulf Coast market has been put down to some unexpected refinery outages both there and in Latin America, which have provided a price floor for spot barrels. LyondellBasell's 263,776 b/d Houston facility reported a plant-wide power outage Thursday after a fire at the plant Wednesday, while PDVSA reported that it was gradually restarting its 310,000 b/d Cardon refinery in Venezuela after a blackout Thursday. "Demand is good, it's the end of winter... it's always more or less the case... plus there are still some problems in Venezuela so refining is down so [they] import instead of exporting, it changes the balance," a trader said.

What will happen to normal butane exports during motor gasoline winter blending season? - We are rapidly approaching September 15, when summer blend motor gasoline changes over to winter blend, allowing the increased use of high vapor pressure normal butane in the blending.  However, the spread between Reformulated Blendstock for Oxygenate Blending (RBOB, the benchmark unleaded gasoline) and normal butane was down to 85 cents/gal as of the end of August, reducing the incentive to blend as much butane into motor gasoline as possible to its lowest level in recent years.  Sure, 85 cents/gal is still 85 cents.  But what impact might that smaller RBOB/normal butane spread and other market factors have on butane exports?  Today we examine the state of the gasoline blending and normal butane markets, and the effect that current dynamics –– a gasoline glut and strong butane prices among them –– ­­may have. Let’s begin our look at winter blending of motor gasoline, the RBOB/normal butane spread, and butane exports with a review of the physical performance limitations to the amount of butane that can be blended into motor gasoline and the regulations that govern the practice of blending.  There are two primary boundaries regarding normal butane related to engine performance: (1) in the summer, too much butane in the gasoline can cause flashing (vaporization) in the fuel lines and as a result prevent the fuel pump from sending gasoline to the engine (a.k.a. vapor lock); and (2) on cold winter days and nights, insufficient levels of butane in the gasoline can cause the engine to have difficulty starting, since vaporized gasoline is needed for initial combustion.

5,300-Gallon Oil Spill Being Cleaned in South Louisiana - ABC News: The Coast Guard says a south Louisiana pipeline has been secured and authorities are investigating what caused roughly 5,300 gallons of crude oil to leak near Bay Long. The Coast Guard in New Orleans received a report Monday about the leak from a pipeline owned by Harvest Pipeline Company. The pipeline was struck by a Great Lakes Dredge and Dock Company vessel that was doing excavation. An oil spill response organization, ECM Maritime Services, has been contracted to manage cleanup. About 3,000 feet of hard boom have been put out, and sorbent material and skimmers are collecting the oil. The Coast Guard and Louisiana Department of Wildlife and Fisheries are also helping supervise the response. Coast Guard crews have conducted aerial assessments of the site and nearby areas

Oil spill caused by contractor working on island restoration  (AP) — An oil spill found in south Louisiana this week was caused by a contractor working on an environmental restoration project funded after the larger BP oil spill. The Coast Guard learned Monday that roughly 5,300 gallons of crude oil had leaked into Bay Long, part of Barataria Bay. Times-Picayune reports ( an excavating marsh buggy operated by Great Lakes Dredge & Dock Co. accidentally cut through a pipeline and released the oil while rebuilding Chenier Ronquille Island. The $36 million barrier island reconstruction project is funded by part of the $1 billion that BP made available for early Natural Resource Damage Assessment projects a year after the Deepwater Horizon oil rig caught fire and sank in April 2010, releasing millions of barrels of oil into the Gulf of Mexico.

Apache Has High Hopes for New Oil-Field Discovery in Texas - WSJ: Apache Corp. said it has discovered the equivalent of at least two billion barrels of oil in a new west Texas field that has the promise to become one of the biggest energy finds of the past decade. The discovery, which Apache is calling “Alpine High,” is in an area near the Davis Mountains that had been overlooked by geologists and engineers, who believed it would be a poor fit for hydraulic fracturing. It could be worth $8 billion by conservative estimates, or even 10 times more, according to the company. Shares rose by as much as 13% after U.S. markets opened Wednesday. Apache started acquiring mineral rights in the area two years ago and subsequently discovered its potential. The company then quietly went about locking up more land in the field, believed to be up to 450,000 acres overall. Its position now exceeds 300,000 acres, or roughly two-thirds of the field, and is about 20 times the size of Manhattan. The company has begun drilling in the area and says the early wells, which produce more natural gas than oil, are capable of providing at least a 30% profit margin at today’s prices, including all costs associated with drilling. Some are so prolific that they can break even at a price of 10 cents per million British thermal units, according to the company. Natural gas futures closed Tuesday at $2.72. “This is a giant onion that is going to take us years to unveil and peel back,” Apache Chief Executive John Christmann IV said in an interview. “The industry dogma about this area, all the fundamental premises that most people had about it, were just wrong.”It remains to be seen whether Alpine High delivers on its potential; some oil and gas discoveries touted as game-changers have historically produced less than advertised. Some analysts said they were concerned about the need for infrastructure in West Texas to process and ship gas, oil and other products from the discovery. “They are close to the Gulf Coast and to Mexico, where there will be significant demand growth, but this could be big enough that they could see price realization problems,” said R.T. Dukes, an analyst at energy consultancy Wood Mackenzie. Still, the field, which Apache estimates could hold the oil-and-gas equivalent of as much as 8.1 billion barrels of oil, underscores the potential of new drilling methods to unlock vast new resources in North America. The discovery is likely to transform Apache, currently the nation’s sixth-largest independent energy company with a market capitalization of $20.1 billion. Alpine High may now be the biggest asset for Apache, known in the industry for its frugality and record of buying assets from other companies rather than finding its own. The company is planning to direct one-fourth of its capital budget this year toward the field, but will require several years to ramp up production because of the need for pipelines and processing equipment. Apache has so far drilled 19 wells in the area.

See where Apache Corp. says it found billions of barrels of oil - Apache Corp. stock was among the top gainers Wednesday after the oil and gas company revealed an “immense” oil and gas reserve in a relatively unknown corner of west Texas. Apache estimated that its more than 300,000 contiguous acres in the region hold about 3 billion barrels of oil and 75 trillion cubic feet of natural gas. It called the field Alpine High. Alpine High is located in the Delaware Basin, the southwest corner of the Permian Basin. The Permian itself is mostly located in west Texas, with a small area straddling southeastern New Mexico.  Texas estimates the Permian already has produced 29 billion barrels of oil, and says industry experts estimate it to contain “recoverable oil and natural gas resources exceeding what has been produced over the last 90 years.”. Oklahoma has experienced an influx of earthquake activity in the past decade that seismologists have tied to the underground disposal of wastewater from oil and gas drilling. Thus far, however, the Delaware Basin had been the relative slacker in the Permian, which accounted for nearly 20% of total U.S. oil production a few years back. Formations like Spraberry and Wolfcamp had been way more prolific as seen in this map from the Energy Information Administration:

France’s Total Buys Bigger Piece of Barnett Shale in Texas — French oil major Total is taking full control of the Barnett Shale oil-and-gas leases in Texas that it shared with joint-venture partner Chesapeake Energy, after the U.S. shale producer decided to exit the once-prolific gas field to shore up its finances. Total said on Friday it is exercising rights to acquire a 75% share in the Barnett Shale assets to become the sole owner and operator of 215,000 partially developed acres of the field near Fort Worth in North Texas. The move follows Chesapeake’s agreement last month to pay $334 million to Williams Partners to get out of its pipeline contract with the pipeline operator in the Barnett Shale formation. At the time, Chesapeake said it was transferring its interests in the fields to Saddle Barnett Resources LLC, a private equity-backed company based in Dallas. Total, which is pre-empting Saddle’s deal, said its U.S. exploration and production unit will add $420 million to what Williams is receiving to achieve “a fully restructured, competitive gas-gathering agreement,” in addition to paying $138 million to be released from three other contracts. The company said it expects to complete the deal in the fourth quarter, subject to “third-party consent of the arrangement.” “With the new conditions created by the exit of Chesapeake and the associated restructuring of the midstream contracts, we believe that we can extract significant value from the substantial, well-located resource base of the play,” Total E&P USA President José Ignacio Sanz said in a statement. The Barnett Shale was once a big-producing gas field, but in recent years drilling for new wells has waned amid low natural gas prices. At the start of September, there were just three rigs drilling in the Barnett, compared with 202 rigs drilling in the Permian Basin of West Texas,

Permian oil output could grow 300,000 b/d/year at current price range: Pioneer CEO - Production in the Permian Basin, the US' most active oil play, could grow significantly at current or slightly higher prices, but boosting Eagle Ford and Bakken output requires a step change in crude prices, Scott Sheffield, CEO of major Permian player Pioneer Natural Resources, said Thursday. Located in West Texas and New Mexico, the Permian could add 300,000 b/d a year at a $47/b to $57/b WTI price to domestic supply, Sheffield said in webcast remarks at the Barclays 2016 CEO Energy-Power Conference in New York."I don't think the Eagle Ford or Bakken at a price of $47 are going to start up," Sheffield said of those basins respectively sited in south Texas and North Dakota/Montana. "I think [they] will be flat at a $50 price," he said. "Once you get to $55-$60, I think the Eagle Ford and Bakken start up at that time." But Permian production, which is just under 2 million b/d, will grow at $50/b, even though US conventional oil will decline, he added. "You start moving toward $60, and it will take a year to get going, but the US could easily [incrementally] supply 500,000-750,000 b/d" annually, Sheffield said. "At $60, rigs will come back to work and the Eagle Ford and Bakken will take off."

‘Preemption’ Is Major Obstacle Across the Country as Progressive Laws Like Fracking Bans Passed in Liberal Cities Are Immediately Crushed by Right-Wing State Legislatures - When Denton, Texas, passed a fracking ban in November 2014, it was national news. The story seemed out of a movie, a David-and-Goliath tale in which a scrappy band of citizens goes up against big industry and wins. But Frack Free Denton was aware that electoral victory wouldn’t be enough. The activists knew that with a single measure, the Texas state legislature could invalidate their local ban. What’s more, in doing so, the legislature would be acting under a completely legal state prerogative that reminds cities how limited their lawmaking power really is.  Sure enough, despite widespread local support, it only took months to make Denton’s fracking ban history. The GOP-dominated Texas state legislature, under pressure from the oil and gas industry, passed a law forbidding any locality from banning fracking. Denton’s own state representative voted for the measure. “We were so excited it passed, but I think we knew then we were up against a challenge because of the wave of folks who were voted up alongside the ban,” says Hunter. “We got a hard lesson in the state of our democracy, the state of our government.” PREEMPTION” LAWS ARE not new, nor are they necessarily about undoing local legislation. But with some notable exceptions, past preemption laws have generally enforced what can be called “minimum preemption”: They force localities to do something where they might otherwise have done little or nothing. As it’s often said, they set a “floor” for regulation. For instance, the federal government has been setting minimum standards of environmental protection for years, preempting the states from allowing lower environmental standards. Most current preemption laws, by contrast, are what one might call “maximum preemption.” These laws aren’t about setting minimums; instead, they prohibit local regulation. States have prevented localities from creating paid sick leave requirements for businesses, or raising the minimum wage. Many who oppose these measures blame their proliferation on the conservative American Legislative Exchange Council, known as ALEC, which has drafted “model” preemption bills for state lawmakers to use. “Pretty much anything you can think of that matters to the American family is under assault by local preemption,”

Karnes County, Texas - Leading The Eagle Ford In Spite Of The Downturn -- High-grading is leading the way to honey wells in the core fields in the most productive oil & gas plays. For an example, let’s take a look at oil & gas permitting activity for the last 30 days across the USA, This heat map clearly shows the development of some defined “honey spots” for drillers. We see the dual Permian foci on the Midland and Delaware Basins in West Texas and New Mexico; a continuing Marcellus/Utica concentration of activity in southwestern Pennsylvania and eastern Ohio; Niobrara basin activity tightening up around a few parts of Colorado and Wyoming; the Bakken in western North Dakota; and the ongoing drilling in California. The deepest orange in the southern part of Texas is the honey spot of the Eagle Ford, Karnes County, TX. If we look at Cumulative Production (20:1 BOE) in the Eagle Ford broken down by county for the past five years, we see that Karnes has always been the best yield, followed by Dewitt, LaSalle and Dimmit Counties.Drillinginfo’s DI Index of New Production Capacity, along with its accompanying perspective for the month of October, highlights how much heavy lifting Karnes County is doing vs. the rest of the Eagle Ford – historically Karnes accounts for 15-20% of New Production Capacity, however in September that percentage has spiked to 30%!

Record-tying Oklahoma earthquake felt as far away as Arizona: (AP) — A record-tying earthquake in the edge of Oklahoma's key energy-producing areas rattled the Midwest from Illinois to the southwest part of Texas on Saturday, bringing fresh attention to the practice of disposing oil and gas field wastewater deep underground. The United States Geological Survey said a 5.6 magnitude earthquake happened at 7:02 a.m. Saturday in north-central Oklahoma, on the fringe of an area where regulators had stepped in to limit wastewater disposal. That temblor matches a November 2011 quake in the same region. An increase in magnitude 3.0 or greater earthquakes in Oklahoma has been linked to underground disposal of wastewater from oil and natural gas production. The Oklahoma Corporation Commission, which since 2013 has asked wastewater-well owners to reduce disposal volumes in parts of the state, is requiring 37 wells in a 514 square-mile area around the epicenter of the earthquake to shut down within seven to 10 days because of previous connections between the injection of wastewater and earthquakes. "All of our actions have been based on the link that researchers have drawn between the Arbuckle disposal well operations and earthquakes in Oklahoma," spokesman Matt Skinner said Saturday. "We're trying to do this as quickly as possible, but we have to follow the recommendations of the seismologists, who tell us everything going off at once can cause an (earthquake)." Skinner said the commission's "area of interest" includes another 211 square miles in Osage County. However, he said the commission doesn't know how many wells may be involved because the area is under the jurisdiction of the Environmental Protection Agency, and the commission is working with that agency. "EPA decides on the wells in Osage County. We don't know anything about Osage County, legally we're not even allowed to ask," Skinner said.People in Kansas City and St. Louis, Missouri; Chicago; Gilbert, Arizona; Fayetteville and Little Rock, Arkansas; Des Moines, Iowa; Memphis, Tennessee; and Big Lake in the southwest part of Texas, all reported feeling the earthquake. Dallas TV station WFAA tweeted that the quake shook its studios, too.

Oklahoma Earthquake Felt in Several U.S. States, as Oil Wells Draw Scrutiny - WSJ: A 5.6-magnitude earthquake rattled Oklahoma on Saturday, damaging buildings and tying for the strongest temblor ever recorded in the state, which has experienced a rash of earthquake activity in the past decade that U.S. seismologists have tied to the underground disposal of wastewater from oil and gas drilling. Oklahoma Gov. Mary Fallin said via Twitter TWTR 0.26 % on Saturday afternoon that state regulators were contacting operators of 37 disposal wells in a 500-square-mile area and asking them to shut down following the quake. The earthquake took place around 7:02 a.m. central time near Pawnee, Okla., a town of about 2,200 people roughly 55 miles northwest of Tulsa, according to the U.S. Geological Survey. It was felt widely through the middle of the country, with reports coming from as far as Houston and Kansas City, according to the USGS. There were no reports of serious injuries, but officials reported damage to some buildings in Pawnee. It wasn’t clear whether the temblor was natural or triggered in part by human activity. An assessment deemed six buildings in the Pawnee Nation reservation uninhabitable, Gov. Fallin wrote on Twitter. In rural Pawnee County, three homes were damaged and a homeowner was taken to the hospital after suffering minor injuries in the quake, she wrote. Staff from the Oklahoma Department of Emergency Management were in Pawnee assessing damage to buildings, said Keli Cain, spokeswoman for the department. Residents in Oklahoma City and Stillwater, a city southwest of Pawnee that is home to Oklahoma State University, have also reported building damage via social media, Ms. Cain said. “We’re monitoring social media, and we’ve seen some reports,” she said. The department hadn’t received reports of serious injuries.

Record-equalling quake hits US state of Oklahoma, sparking fears about fracking | One of the strongest earthquakes ever recorded in Oklahoma rattled a state where seismic activity linked to energy production has become a growing concern and sent tremors through six neighbouring states, a federal agency said on Saturday. The quake, which struck 14 km northwest of Pawnee in north-central Oklahoma at 7.02am (1.02am Sunday NZ Time), had a magnitude of 5.6, matching in strength a temblor that hit the state in 2011, the United States Geological Survey reported on its website. There were no immediate reports of injuries in Pawnee, where about 25 percent of the residents are Native Americans. Damage in the town appeared to be minor.The earthquake, which had a depth of 6.6 km, could fuel concerns about the environmental impact of oil and gas drilling, which has been blamed for a spike in minor to moderate quakes in the region. Oklahoma's economy is heavily dependent on energy production, which accounts for one of every four jobs in the state.Pawnee Mayor Brad Sewell said the tremor lasted nearly a minute, far longer than previous ones that lasted only a second or two. Part of the façade of an early 20th-century bank building had fallen into a downtown street, he said. "We have had a spate of quakes over the last several years, but nothing like this," he said. "It was a long, sustained quake."

Oklahoma Quake Matches Record Even After Fracking Waste Restricted – Oklahoma registered one of its biggest earthquakes Saturday even after state regulators have beefed up limits on disposing oilfield waste and the rate of tremors had started to slow somewhat from unprecedented levels last year. The tremor in central Oklahoma was felt from Texas to Illinois, measuring 5.6 in magnitude and tying a state record set in 2011, according to the U.S. Geological Survey. The number of earthquakes measuring 3.0 or higher reached 890 last year, followed by 375 this year through June 22. At that rate, the number of earthquakes would fall to less than 800 this year, still a far cry from only two in 2008. As oil production surged in the state, with the Scoop and Stack areas among the most coveted new plays in the country, so too did the disposal of wastewater from fracked fields that scientists have tied to earthquake activity. Several producers, and now the U.S. Environmental Protection Agency, are facing lawsuits because of seismic activity allegedly linked to oilfield wastewater disposal in Oklahoma and other states. “Without studying the specifics of the wastewater injection and oil and gas production in this area, the USGS cannot currently conclude whether or not this particular earthquake was caused by industrial-related, human activities,” the agency said Saturday in a statement. “However, we do know that many earthquakes in Oklahoma have been triggered by wastewater fluid injection.” Disposal Wells The Oklahoma Corporation Commission, which regulates oil and gas activity in the state, has been issuing restrictions for more than a year aimed at cutting down on the amount of wastewater injected into underground wells. There are about 35,000 active wastewater disposal wells, though only a few dozen have been linked to quakes, according to a Bloomberg Intelligence report in May, citing the USGS. Saturday’s earthquake, near a complex of oil-storage facilities, led the regulator to order the suspension of about 37 wastewater-disposal wells. The commission was contacting the operators of the wells in a 500-square-mile area around the town of Pawnee, Governor Mary Fallin said in a Twitter post. Oil storage and pipeline facilities at Cushing, 25 miles (40 kilometers) south of Pawnee, were undamaged, according to the commission and four of the companies that operate there.

Crude Oil Supply Risks In Cushing - A 5.6-magnitude earthquake struck Oklahoma Saturday. That was tied for the strongest-ever quake recorded in the state. It is the largest one in the continental U.S. so far this year, according to Lucy Jones, a quake expert and seismologist formerly with the U.S. Geological Survey. Its epicenter was just about 25 miles from the key oil hub in Cushing, which currently stores 64 million barrels of crude oil. Oil companies checked-out their facilities in Cushing and reported no damage. However, the Oklahoma Corporation Commission ordered at least 37 wastewater injection wells in the area to immediately shut down. The commission has linked wastewater injection wells to seismic activity.Of the thirteen strongest earthquakes recorded in Oklahoma, seven of them have occurred in 2015-16. The oil-and-gas industry has acknowledged that injecting water underground at high pressure may help trigger movement along geologic fault lines. Injections are believed to weaken fault lines, causing them to break. Wastewater injection wells are a means for the fracking industry to dispose of toxin-laden fracking fluid that is the byproduct of enhanced recovery of oil and gas extraction. Because of the environmental concerns over the practice, companies are looking for an alternative way to dispose of, or recycle, these fluids.

Oklahoma Quake Triggers Close of Fracking Waste-Disposal Wells –  A 5.6-magnitude earthquake struck early Saturday near the town of Pawnee, Oklahoma, close to key oil-storage facilities, leading state regulators to order about 35 fracking waste-disposal wells in the area to be shut down. The Oklahoma Corporation Commission, which regulates the oil industry in the state, is contacting the operators of the wells in a 500-square-mile area around Pawnee, Governor Mary Fallin said in a Twitter post. The complex of oil storage and pipeline facilities at Cushing, Oklahoma, just 25 miles from Pawnee, was undamaged, according to the commission. The quake hit the area about 7:02 a.m. Oklahoma time, the U.S. Geological Survey said in a statement, adding that it was the largest in the state since 2011. The surrounding region of Oklahoma and Kansas -- a center of oil exploration using hydraulic fracturing, or fracking, technology -- has seen close to 80 other magnitude-4 quakes or larger events over the past decade.The surge in earthquake frequencies has been tied to waste water disposal wells used in oil and natural gas drilling operations. Last week, the crude storage levels at Cushing stood at nearly 64 million barrels, according to the Energy Information Administration data.Officials for Enterprise Products Partners LP, Kinder Morgan Inc., Magellan Midstream Partners LP and Enbridge Inc., which operate petroleum terminals, pipelines and storage facilities in Cushing, said their sites sustained no damage and that operations were normal.  A spokesman for the Oklahoma Corporation Commission, Matt Skinner, offered similar comments.

Oklahoma earthquake: 37 wells ordered to shut down after scientists' warning | The Independent: A magnitude 5.6 earthquake in Oklahoma has brought fresh attention to the practice of disposing oil and gas field wastewater deep underground. The United States Geological Survey said the quake happened at 7.02am on Saturday, in north-central Oklahoma, on the fringe of an area where regulators had stepped in to limit wastewater disposal. The shallow quake struck nine miles northwest of Pawnee, where there were no immediate reports of injuries. Damage in the town appeared to be minor. An increase in earthquakes in Oklahoma that are magnitude 3.0 or greater has been linked to underground disposal of wastewater from oil and natural gas production.Saturday's earthquake led the Oklahoma Corporate Commission to order 37 wells in an area around the epicentre of the quake of 514 square miles to shut down within seven to 10 days. "All of our actions have been based on the link that researchers have drawn between the Arbuckle disposal well operations and earthquakes in Oklahoma," spokesman Matt Skinner said Saturday. "We're trying to do this as quickly as possible, but we have to follow the recommendations of the seismologists, who tell us that everything going off at once can cause an [earthquake]."

Oklahoma Earthquake's Magnitude Raised to 5.8 - Oklahoma Earthquake’s Magni: The U.S. Geological Survey on Wednesday revised the official magnitude of the earthquake that shook Oklahoma on Saturday to 5.8 from the initial estimate of 5.6, making it the strongest temblor ever recorded in the state. The USGS said it was updating the strength of the quake near Pawnee, Okla., which damaged some buildings but didn't cause any major injuries, in response to additional analysis of seismic recordings. Such revisions aren't uncommon in earthquake science, as seismologists and geophysicists review more data. But the USGS said it also was raising the official magnitude of a 2011 earthquake near Prague, Okla., to a 5.7-magnitude event, after initially measuring it at 5.6, saying questions about their relative size prompted a re-analysis. “USGS analyses indicate that the two earthquakes are very similar in size—to within typically cited uncertainties of 0.1 magnitude units,” said Gavin Hayes, a USGS research geophysicist. “However, the 2016 Pawnee event is slightly larger than the Prague earthquake in 2011.” The USGS noted that ranking the largest earthquakes in state history is difficult because “seismic instrumentation has vastly improved over the last several decades.” The state also had a sizable earthquake in 1952, and in 1882, before the era of seismic instruments. While Oklahoma has a history of seismic activity, it has stepped up regulation of underground disposal of wastewater from oil and gas production after seeing a dramatic increase in quakes in recent years. . In 2015, the USGS recorded 2,500 quakes with a magnitude of 2.5 or higher in the state, up from just three in 2005.

USGS Upgrades Pawnee, Oklahoma, Earthquake Magnitude to 5.8, Making It Strongest in State's History - A large earthquake that struck northern Oklahoma Saturday morning and rattled most of the Great Plains has been upgraded by the U.S. Geological Survey and is now the strongest tremor to hit the state since records began.  The USGS announced the 5.6 magnitude quake has been upgraded to 5.8, according to a press release sent Wednesday. The decision to upgrade the temblor was made after further studies of the seismic recordings, the USGS also said. Saturday morning's earthquake was reportedly felt in at least seven states and left some structural damage in Pawnee County, especially to older buildings. The tremor struck at 7:02 a.m. CDT and was just 3.3 miles deep, according to the USGS. Almost immediately, state officials ordered the shutdown of 37 disposal wells used for fracking, which has been proven to be responsible for the increase in earthquakes in several states, including Oklahoma. The shutdown affects wells in a 725-square-mile area near the epicenter of Saturday morning's quake.In addition to the upgrade, a different earthquake was downgraded during the analysis, the USGS also said. A 5.7 magnitude tremor that was centered near Prague, Oklahoma, on Nov. 7, 2011 has been downgraded to 5.6, making it the second-largest quake in state history.

Oklahoma Shuts More Oil Fracking Waste Wells as Quake Upgraded - Bloomberg: Oklahoma drillers are being ordered to shut more fracking wastewater wells just as the U.S. Geological Survey is upgrading last weekend’s earthquake to a record magnitude. The Environmental Protection Agency said Wednesday it has ordered the closure of 17 additional disposal sites under its jurisdiction in Osage County. The move follows the suspension of 37 wells by the Oklahoma Corporation Commission and comes on the same day the USGS upgraded the tremor to 5.8 in magnitude, the highest ever for the state, from 5.6 previously estimated. Oklahoma regulators had already been limiting the disposal of oilfield wastewater, which scientists have linked to seismic activity, before the tremor that was felt from Texas to Illinois on Saturday. The number of earthquakes measuring 3.0 or higher reached at least 890 last year, up from just two in 2008, before the state’s fracking boom started. The USGS has not determined an official cause for the earthquake. “At this point, we don’t want to attribute it specifically to any phenomena,” George Choy, seismologist at the U.S. Geological Survey, said Wednesday in a phone interview. “We need to get more data to make sure everything is lined up before we say anything definitive.”The Oklahoma Corporation Commission, which regulates oil and gas activity in the state, has been issuing restrictions for more than a year aimed at cutting down on the amount of wastewater injected into disposal wells. The measures may raise costs for drillers. “In $45 oil, every little bit of cost increase makes a difference,” Chad Warmington, President of the Oklahoma Oil & Gas Association, said Wednesday in an e-mail. “It becomes prohibitively more expensive when you have to truck water for any significant distance versus disposal on the site of your oil and gas production.”

After Okla. quake, search is on for new ways to use fracked well water - - Saturday's Oklahoma earthquake that shook people from Texas to North Dakota put a new dent in the idea that fracking-linked temblors were too small to matter. Oklahoma and federal officials quickly ordered the closing of water disposal wells that may have caused the largest quake ever measured in the state. And that leaves the question: What else can be done with that wastewater? Industry experts say there are some answers. Some are already being tried. Some could be expensive. But either the water gets managed or there's the risk of shutting down thousands of oil and gas wells in Oklahoma and in other states, including Texas, where scientists have drawn links to earthquakes. "The answers are not easy, by any means. There is a whole lot of economy at stake," Saturday's 5.8-magnitude quake was the biggest ever measured in Oklahoma and mostly shook lightly populated areas. Pawnee was most affected, but other towns reported damage ranging from cracks in walls and foundations to food on grocery shelves tossed to the floor. Two smaller quakes were reported Tuesday. The state ordered 37 water wells to be closed. Federal authorities expanded the closure to 17 wells on Native American land nearby that the state has no authority over. "This was an emergency response," said Matt Skinner, spokesman for the Oklahoma Corporation Commission. "We don't consider this a final step." Oklahoma has experienced a sharper rise than Texas in the number and strength or earthquakes. But both states have experienced significant increases over the past decade, as the number of oil and gas wells has increased. . Geologists estimate that as much as ten times more water comes out of U.S. wells during their lifetimes as oil. And while conventional wells have produced water for years, the boom in fracking has vastly increased the number of active wells in the U.S.

Lloyd’s Wins Right to Fight in N.Y. Over Oklahoma Quake Coverage - Bloomberg: Lloyd’s of London has kept its lawsuit against New Dominion LLC over fracking out of the state where the ground is shaking. A federal judge in New York agreed Wednesday to decide the lawsuit by Lloyd’s seeking to be released from liability for earthquake damage in Oklahoma blamed on fracking. U.S. District Judge Denise Cote in Manhattan said a clause in the Lloyd’s insurance policies requires disputes to be resolved in New York.New Dominion had hoped to litigate the insurance question in its home state of Oklahoma, where it sued in June to try to force Lloyd’s to provide coverage for earthquake claims. The decision comes as Oklahoma drillers are being ordered to shut more fracking wastewater wells and the U.S. Geological Survey upgraded an earthquake last weekend to 5.8 in magnitude, a record for the state. The Environmental Protection Agency said Wednesday it has ordered the closure of 17 additional disposal sites under its jurisdiction in Osage County in Oklahoma. The move follows the suspension of 37 wells by the Oklahoma Corporation Commission. Oklahoma regulators had already been limiting the disposal of oilfield wastewater, which scientists have linked to seismic activity, before the tremor that was felt from Texas to Illinois on Saturday. The number of earthquakes measuring 3.0 or higher reached at least 890 last year, up from just two in 2008, before the state’s fracking boom started. The USGS hasn’t determined an official cause for the earthquake. Arguments in the Lloyd’s case focus on whether pollution insurance policies it sold to the oil company in 2014 cover earthquakes. This year, New Dominion was hit with five lawsuits seeking compensation for damage caused by earthquakes in Oklahoma. The suits blamed the earthquakes on the company’s injection well operations. Injected Chemicals Lloyd’s declined to pay for the damages, saying its insurance only covered the company for injuries caused by pollutants and that the water and chemicals injected into the wells as part of the fracking process didn’t qualify as pollution under the policy.

Fracking Didn't Cause Oklahoma Earthquake - American Thinker - The earth moved for environmental extremists Saturday when a 5.6 magnitude earthquake struck Oklahoma. As soon as the first aftershock, the greenies were in full voice blaming fracking, the technology that has fueled America’s oil and natural gas boom. Oklahoma state regulators ordered 37 disposal wells used by frackers shut down and Green Party presidential candidate Dr. Jill Stein tweeted: Fracking causes polluted drinking water + earthquakes. The #GreenNewDeal comes with none of these side effects, Oklahoma. #BanFracking Hydraulic fracturing, the technical term, does not cause earthquakes nor has there ever been evidence that it contaminates drinking water. Fracking has been used in oil and gas production in Oklahoma since 1949 and now, more than six decades later, the chicken littles of the left are claiming it now causes major destructive earthquakes? As Investor’s Business Daily editorialized:  So desperate have the greenies become to stop the oil and natural gas boom produced by the use of fracking that they resorted to claims that fracking can cause earthquakes. A recent report by the National Research Council dispelled that notion. U.S. Geological Survey seismologist William Ellsworth says he agrees with the research council that "hydraulic fracturing does not seem to pose much risk for earthquake activity." The mixture used to fracture shale is in fact a benign blend of 90% water, 9.5% sand and 0.5% chemicals such as the sodium chloride of table salt and the citric acid of the orange juice you had for breakfast. Shale formations in which fracking is employed are thousands of feet deep. Drinking-water aquifers are generally only a hundred feet deep. There's a lot of solid rock between them….

Are Induced Earthquakes In Oklahoma Caused By Fracking? USGS Determines 21 US Areas Now At Risk - Induced earthquakes in Oklahoma reached a 5.6 magnitude. A total of 11 quakes were recorded on Saturday. In recent years, earthquakes in the region have become increasingly common. Though there was significant debate about the safety of hydraulic fracturing or fracking, the process gained enough support to proceed in many parts of the United States. Fracking is a highly controversial practice, supported and condemned almost equally. A poll in early 2015 showed a nation evenly divided. It was good for the economy, and no one could really prove it would cause ecological damage. According to the March 2015 Gallop poll, the population of the United States was 40 percent for and 40 percent against fracking, while 20 percent said they were undecided.  Induced earthquakes are earthquakes caused by human actives. The United States Geological Survey, or USGS, stated plainly in a report issued in March that increases in Oklahoma earthquakes are a direct result of fracking-related activities.  Induced earthquakes in Oklahoma are being caused by the practice of disposing of wastewater beneath the Earth’s surface. Wastewater disposal from fracking is commonly hidden away far below ground. That wastewater disposal is the primary cause of increasing seismic activity in Oklahoma and surrounding states, according to the USGS report.  Fracking wastewater disposal methods are causing a significant increase in the number of earthquakes recorded in the central United States. The USGS report records a significant increase in seismic activity in recent years compared to years 1973 to 2008. Induced earthquakes in Oklahoma and other central U.S. states, with a magnitude over 3.0, numbered 1,010 from March 2015 to March 2016. Comparing that to an average of 24 natural quakes in years prior to 2008 shows an alarming escalation, as explained in this passage from the USGS report. “The central U.S. has undergone the most dramatic increase in seismicity over the past six years. From 1973 to 2008, there was an average of 24 earthquakes of magnitude 3.0 and larger per year. From 2009 to 2015, the rate steadily increased, averaging 318 per year and peaking in 2015 with 1,010 earthquakes. Through mid-March in 2016, there have been 226 earthquakes of magnitude 3.0 and larger in the central U.S. region.”

Fracking Takes A Hit -- "There were no reports of injuries, though the earthquake reportedly damaged a 100-year-old historic building in Pawnee," according to 9/3/16 story from UPI. Well, the 100-year-old building may have sustained what is now said to be "cosmetic" damage, but the fracking industry took a much more substantial hit to its reputation last week when frack-heavy Oklahoma was jiggled by a 5.8 magnitude earthquake, the second worst in its history. Hydraulic Fracturing may have invigorated huge swathes of America and basically removed the problem of "energy insecurity" from the American psyche but it remains an embattled technology and last week's earthquake though hardly major (earthquakes tend to be designated "major" around 7.0) gave its armies of enemies material which they will no doubt be using for a long time. As Seeking Alpha puts it in an article titled "Major Earthquake Threatens Fracking," "[t]he 5.60 magnitude earthquake that rattled Oklahoma in the outskirts of Cushing may be felt further than six states away as regulators begin to question the unusually high number of earthquakes occurring since fracking began." "The...incident...may jolt regulators into reconsidering the benefits of fracking. The US Geological Survey recorded seven additional tremors in the aftermath. Oklahoma Governor Mary Fallin issued a state of emergency and oversaw the shutdown of wells in a 725 sq. mile area...While Governor Fallin signed into law a bill preventing towns and cities from banning fracking and the White House's position on this extraction method remains unchanged, it is possible that these stances could be reversed as communities in shale basins tire of the earth shaking."Judging from a cascade of news articles and agitated opinion pieces, the anti-fracking movement certainly seems reinvigorated.

Search is on for ways to use fracked well water, and Texas may have an answer -- Saturday's Oklahoma earthquake that shook people from Texas to North Dakota put a new dent in the idea that fracking-linked temblors were too small to matter. Oklahoma and federal officials quickly ordered the closing of water disposal wells that may have caused the largest quake ever measured in the state. And that leaves the question: What else can be done with that wastewater? Industry experts say there are some answers. Some are already being tried. Some could be expensive. But either the water gets managed or there's the risk of shutting down thousands of oil and gas wells in Oklahoma and in other states, including Texas, where scientists have drawn links to earthquakes.  "The answers are not easy, by any means. There is a whole lot of economy at stake," said John Veil, a consultant who started studying the connections between water and petro-production when he worked for the Argonne National Laboratory. Veil did a study of what is called "produced water" from 2012. He estimates that about 20.3 billion barrels of water came out of onshore wells that year. Much of the waste is a greasy brine carrying the salt of ancient oceans plus toxic minerals dissolved over millions of years. So it can't simply be dumped into a lake or river. Nationally, about 46 percent of that water got recycled directly in the oil fields. A lot of it is used to boost the pressure near conventional wells, which increases the oil and gas flow. Some of can be processed and used to frack another well. Neither of those have been tied to earthquakes in Texas or Oklahoma. Some states re-use much more than others. Ohio, for instance, is recycling almost all of its oilfield water,   But about 47 percent gets injected into wells that are much deeper than the oil formations and underground drinking water reservoirs.  Unless oil and gas operators can get rid of that wastewater, they'll have to close down production. Several companies across the country have developed options beyond injection. Clane LaCrosse, head of Fort Worth-based Bosque Systems, says his company has solutions. His company processes about 30 million barrels of fluid a month in oil fields across the U.S. All of it goes back into the ground for newly fracked wells. And as long drilling stays active in the fields, he says, a lot of the produced water can be reused. "In the Permian Basin, you can reuse 100 percent of the water," he said.

Texas oil and gas regulators slow to react to earthquakes --  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 man-made, 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.

Texas energy regulators should halt injection well activity that causes earthquakes - Dallas Morning News - 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. In the last eight years, Texas has experienced more than 150 earthquakes. Startlingly, these earthquakes appear to be man-made, 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 North Texas, in the middle of the Barnett Shale, a hotspot for fracking and wastewater disposal wells. Earthquakes were reported near the DFW International Airport beginning in 2008 -- the first reported earthquakes in the region since 1950 -- while Cleburne experienced 50 quakes in 2009 and 2010. Oklahoma in 2014 experienced more earthquakes than California, some causing extensive damage to buildings. Peer-reviewed studies have linked the Oklahoma earthquakes to disposal wells. Just this weekend, Oklahoma regulators ordered 37 disposal wells shut down after a 5.6 magnitude quake -- equal to the strongest in the state's history -- rocked the state and could be felt as far as Dallas and Chicago.  Though regulators in Oklahoma and Ohio have recognized that disposal wells can trigger earthquakes and have closed or limited their use, Texas public officials have been slower to act. The Railroad Commission of Texas, which oversees fracking and disposal wells, has curtailed or ended wastewater injection at only a handful of sites and in general has refused to acknowledge the extensive evidence that high-pressure injection of wastewater into disposal wells can trigger earthquakes.

Permit for exploratory drill near Lake Houston raises concerns about hydraulic fracturing - An oil drilling operation planned near Lake Houston has some residents concerned about the possibility of hydraulic fracturing, and the effects it would have on one of Houston’s main drinking water sources. The company planning the drill and the city of Houston say the use of hydraulic fracturing for this operation is not likely. Tri-C Resources LLC, a privately owned oil and gas exploration company, was issued a permit July 26 by the Texas Railroad Commission to drill a directional exploratory oil well 1.6 miles northwest of Huffman near Lake Houston. Tri-C representatives Cullen Cone and Ben Balagia of Houston confirmed the surface hole location is planned at the southwest corner of Smith Road and East Lake Houston Parkway near Lakewood Heights. Public concern about drilling arises from water and air quality issues associated with hydraulic fracturing, also known as “fracking.” The process involves injecting fluid containing water and chemicals into certain rock formations to increase oil flow and extraction, which can result in negative environmental impacts according to some individuals and organizations including the Environmental Protection Agency.Cone, Tri-C operations engineer, and Balagia, Tri-C business development manager, stated that the company has no plans to conduct any hydraulic fracturing during the drill. Fracking may be considered in the circumstance that what they believe to be sand turns out to be tight shale, but they say that is highly unlikely.

Enable Midstream - In the middle of STACK/SCOOP -- Enable Midstream Partners stands at a crossroads. It has great assets –– natural gas gathering and processing operations in the Anadarko, Arkoma, and Ark-La-Tex basins; a crude oil gathering system in the Williston Basin; and interstate/intrastate gas pipelines that ship natural gas from its gathering regions to the Texas Panhandle and Illinois.  The company also has an excellent position in gathering systems and processing plants in the prolific STACK and SCOOP plays in Oklahoma.  But everything is not rosy.  Earnings from STACK/SCOOP are being offset by production declines in its other areas of operation. On top of that, CenterPoint Energy, which owns 55.4% of Enable’s limited partnership units, is seeking to divest its shares, which would bring a new majority owner into the picture. In today’s blog we review our latest Spotlight analysis. Spotlight is a joint venture of RBN Energy and East Daley Capital Advisors. With the support of Oil & Gas Financial Analytics, Spotlight provides “deep dives” into the fundamentals that shape the outlook for midstream energy companies. In each report, we “spotlight” a midstream energy firm, typically one operating within a master limited partnership (MLP) structure, and provide a comprehensive view of the company’s assets and operations.  Please note that Spotlight should not be viewed as investment advice. Neither RBN Energy nor East Daley Capital is an investment advisor. Spotlight is included as part of our Drill Down report series to RBN Backstage Pass members. For more about Spotlight, see the paragraph at the end of this blog.

Bakken Pipeline System represents latest in trend of combined midstream efforts - Enbridge has abandoned its Sandpiper project and gotten onboard the joint-venture Bakken Pipeline System in a move that is starting to become familiar in the market: midstream companies merging their efforts in order to reduce capacity without giving up a region entirely. Enbridge said late Thursday it is dropping Sandpiper's regulatory application in favor of a buy-in with Marathon -- which would have been a joint-venture partner shipping on Sandpiper -- to Sunoco, Phillips 66 and Energy Transfer's 540,000 b/d joint-venture Bakken Pipeline System. The Bakken Pipeline System is made up of two pipeline projects, the Dakota Access Pipeline and the Energy Transfer Crude Oil pipeline, which will carry crude from North Dakota all the way to the Gulf Coast, passing through Patoka, Illinois, along the way. Enbridge's move bares similarities to the recent combination of the Grand Mesa and Saddlehorn pipelines in the Rocky Mountains -- there wasn't enough market to support two competing pipelines, so the companies instead combined their efforts, Lipow Oil Associates President Andy Lipow said Friday. That reduced the overall capacity entering the market without forcing any of the companies out of the space.Part of the issue is that Enbridge doesn't expect long-term Bakken production to decline; rather, it doesn't expect crude output to rise as much as it once did, Turner, Mason and Co. Executive Vice President John Auers said. "The forecast now is much lower than two or three years ago when they started Sandpiper,"

Iowa Landowners Sue to Stop Dakota Access Construction, Say Pipeline Provides No Public Service | Democracy Now! (video & transcript)  The Dakota Access pipeline is also facing legal resistance in Iowa, one of four states through which it passes. We go to Des Moines to speak with Bill Hanigan, an attorney representing 15 Iowa landowners who are contesting the project’s use of eminent domain under the guise that it would provide a public service, even as it threatens to pollute the state’s farmland and water supplies.

UN body says Sioux must have say in pipeline project: (AP) — The Standing Rock Sioux Tribe must have a say with regard to a $3.8 billion oil pipeline that could disturb sacred sites and impact drinking water for 8,000 tribal members, representatives of the United Nations Permanent Forum on Indigenous Issues said Wednesday. In a statement, the forum's chairman Alvaro Pop Ac called on the U.S. to provide the tribe a "fair, independent, impartial, open and transparent process to resolve this serious issue and to avoid escalation into violence and further human rights abuses." Dalee Dorough, an Inuit member of the forum, which provides representation at the world body for indigenous peoples around the globe, said failure to consult with Sioux over the project violated the U.N. Declaration on the Rights of Indigenous Peoples. Article 19 of the declaration, which the U.S. endorsed in 2010, says: "States shall consult and cooperate in good faith with the indigenous peoples concerned in order to obtain their free, prior and informed consent before adopting and implementing legislative or administrative measures that may affect them." "There has been a lack of good faith consultation with the indigenous people who will more than likely be impacted," Dorough said in telephone interview from Anchorage Alaska. "The U.N. declaration is fundamental because President Obama pronounced support for it and that they haven't been consulted consistent with the rights of that declaration is highly problematic." Native Americans from reservations hundreds of miles around have joined the growing protest against the Dakota Access Pipeline, which will pass through Iowa, Illinois, North Dakota and South Dakota, causing the company to temporarily halt construction. Over the past few weeks, nearly 30 protesters have been arrested.

Native Americans Protesting Pipeline Attacked By “Goon Squad” Using Dogs And Pepper Spray - In a shameful and terrible scene reminiscent of police attacks against civil rights advocates and union busting of the 1920’s, the Dakota Access pipeline company dispatched its “goon squad” which unleashed attack dogs and pepper spray, injuring several Native American protesters. What began as a peaceful protest deteriorated into a new and shameful moment in today’s America, symbolized quite fittingly with images of Native Americans’ blood in the teeth of Corporate America’s attack dogs. The latest outrage against Native Americans reportedly occurred on Saturday when the Dakota Access Pipeline Company attacked protesters opposed to construction of the $3.8 billion dollar pipeline linking North Dakota’s Bakken Oilfield to Illinois. Democracy Now! provided on the ground footage of the confrontation that injured several and shows to many a telling picture of how Dakota Access (a wholly owned subsidiary of Energy Transfer Partners) approaches those who object to its corporate interests. The demonstration began with a gathering of perhaps a hundred or more demonstrators advocating their opposition to the pipeline, standing at a road adjacent to a line of bulldozers clearing earth for future construction. Many of those in attendance expressed their surprise at how suddenly construction began, considering the pending legal challenges facing the project. The firm hired security guards and even went so far as to have a helicopter circling the vicinity.A few men in hard hats began talking to some who crossed over but, as shown in the below video, one of the construction workers threw a demonstrator to the ground–sparking a confrontation. Later, the bulldozers pulled back but the company’s “security team” called in reinforcements armed with attack dogs and pepper spray to intimidate and push back the demonstrators. This led to many being bitten and sprayed. One person reported the dogs were so out of control, that even some of the construction workers were bitten.

Video: Hired Dakota Access oil pipeline security officers attack Native American protesters with dogs and pepper spray – ‘I saw dogs biting people indiscriminately’ –  several videos - On Saturday, 3 September 2016, water protectors from the Red Warrior Camp near the Standing Rock Sioux Reservation went to a construction site for the Dakota Access oil pipeline. There, they said, they were confronted by guard dogs and pepper spray, wielded by private security guards employed by Energy Transfer Partners, the pipeline builder’s parent company. Photographer Matika Wilbur, of Project 562 fame, was at the scene and compiled this video of some of the events of that afternoon. One protester said, "They set the dogs on us, and they started spraying … Before I got sprayed, I saw dogs biting people indiscriminately."

Sacred burial sites desecrated by Dakota Access pipeline construction – ‘This demolition is devastating’  (Native News Online) – Sacred places containing ancient burial sites, places of prayer and other significant cultural artifacts of the Standing Rock Sioux Tribe were destroyed Saturday by Energy Transfer Partners, Tribal Chairman David Archambault II said. “This demolition is devastating,” Archambault said. “These grounds are the resting places of our ancestors. The ancient cairns and stone prayer rings there cannot be replaced. In one day, our sacred land has been turned into hollow ground.” The desecration came one day after the Tribe filed court documents identifying the area as home to significant Native artifacts and sacred sites on Friday, before the Labor Day weekend. Construction crews removed topsoil across an area about 150 feet wide stretching for two miles, northwest of the confluence of the Cannon Ball and Missouri Rivers.  “I surveyed this land and we confirmed multiple graves and specific prayer sites,” said Tim Mentz, the Standing Rock Sioux’s former tribal historic preservation officer. “Portions, and possibly complete sites, have been taken out entirely.”

What Dakota Access Destroyed: Standing Rock Former Historic Preservation Officer Explains What Was Lost [Video] This interview was recorded on September 3, 2016. Former Standing Rock Sioux Tribal Historic Preservation Officer Tim Mentz explains the destruction of burial grounds and sacred sites by Dakota Access Pipeline LLC. This sacred site is what people were trying to protect when Energy Transfer Partners brought in aggressive dogs to attack unarmed people. “This demolition is devastating,” said Standing Rock Sioux Tribe Chairman David Archambault II. “These grounds are the resting places of our ancestors. The ancient cairns and stone prayer rings cannot be replaced. In one day, our sacred land has been turned into hollow ground.”

Did the Dakota Access Pipeline Company Deliberately Destroy Sacred Sioux Burial Sites?: Only hours after lawyers representing the Standing Rock Sioux Tribe filed evidence in federal court documenting how some of the Dakota Access pipeline's proposed route would go through a sacred burial site, the company unexpectedly began working on that very site. As bulldozers cleared earth, hundreds of Native Americans from many different tribes rushed onto the construction site to protect the sacred site. In response, the company's security forces attacked the Native Americans with dogs and pepper spray. Now the tribe's lawyer is requesting an emergency temporary restraining order to halt construction on this area of the pipeline. For more, we speak with Jan Hasselman, staff attorney with Earthjustice, who is representing the Standing Rock Sioux Tribe at today's hearing in federal court. And we speak with Dave Archambault, the chairman of the Standing Rock Sioux Tribe.

Oil pipeline protest turns violent in southern North Dakota - CBS News: - A protest of a four-state, $3.8 billion oil pipeline turned violent after tribal officials say construction crews destroyed American Indian burial and cultural sites on private land in southern North Dakota. Morton County Sheriff’s Office spokeswoman Donnell Preskey said four private security guards and two guard dogs were injured after several hundred protesters confronted construction crews Saturday afternoon at the site just outside the Standing Rock Sioux reservation. One of the security officers was taken to a Bismarck hospital for undisclosed injuries. The two guard dogs were taken to a Bismarck veterinary clinic, Preskey said.Tribe spokesman Steve Sitting Bear said protesters reported that six people had been bitten by security dogs, including a young child. At least 30 people were pepper-sprayed, he said. Preskey said law enforcement authorities had no reports of protesters being injured. There were no law enforcement personnel at the site when the incident occurred, Preskey said. The crowd dispersed when officers arrived and no one was arrested, she said. The incident occurred within half a mile of an encampment where hundreds of people have gathered to join the Standing Rock Sioux Tribe’s protest of the oil pipeline that is slated to cross the Missouri River nearby. The tribe is challenging the Army Corps of Engineers’ decision to grant permits for Dallas-based Energy Transfer Partners’ Dakota Access pipeline, which crosses the Dakotas and Iowa to Illinois, including near the reservation in southern North Dakota. A federal judge will rule before Sept. 9 whether construction can be halted on the Dakota Access pipeline. Energy Transfer Partners did not return phone calls and emails from The Associated Press on Saturday seeking comment.

Dakota Access Pipeline Saga Turns Violent -- The fight over the fate of the 1,168-mile Dakota Access pipeline (DAPL) intensified on Saturday, when a clash between private security agents defending the construction site and Native American protestors led to several injuries for both parties. A crew from Democracy Now! posted a video of the incident on YouTube, which showed the mouth of one of the several guard dogs, reportedly managed by private security personnel, covered with the blood of a protestor. A total of six people - including a young child – were bitten by dogs, according to Steve Sitting Bear, a spokesperson from the Standing Rock Sioux Reservation, who also said the private guards pepper-sprayed at least 30 protestors. Four private security agents and two guard dogs also suffered injuries, according to the Morton County sheriff’s office spokesperson Donnell Preskey. One member of the private security team sought medical attention at the Bismarck hospital due to undisclosed injuries, the Associated Press reported. In what has become the largest gathering of Native Americans in more than 100 years, a coalition of dozens of tribes across the country oppose the pipeline’s construction, citing concerns that it would put the Missouri River – as well as the network of lakes and tributaries that the “Big Muddy” is connected to - at risk of contamination via oil spill and lead to the destruction of culturally significant sites for the Sioux tribes in the area. "This is the first time the seven bands of the Sioux have come together since [the Battle of] Little Bighorn [in 1876]," Hawste Wakiyan Wicasa, a Native American man living in a tent at protest camp in the Standing Rock Sioux Reservation, told the BBC. "Now, we have no weapons, only prayers. We are here for what our ancestors fought and died for. We have endured 250 years of betrayal by the white man.”    The Standing Rock tribe filed the injunction as part of a larger lawsuit against the Corps for authorizing the pipeline’s construction permits in violation of the Clean Water Act, National Historic Preservation Act and the National Environmental Policy Act.

Company Led by Donald Trump’s Energy Aide Says Its Oil Will Flow Through Dakota Access Pipeline – Steve Horn -  Continental Resources — the company founded and led by CEO Harold Hamm, energy adviser to Donald Trump's presidential campaign and potential U.S. Secretary of Energy under a Trump presidency — has announced to investors that oil it obtains via hydraulic fracturing (“fracking”) from North Dakota's Bakken Shale basin is destined for transport through the hotly-contested Dakota Access pipeline. The company's 37-page September 2016 Investor Update presentation walks investors in the publicly-traded company through various capital expenditure and profit-margin earning scenarios. It also features five slides on the Bakken Shale, with the fifth one named “CLR Bakken Differentials Decreasing Through Increased Pipeline Capacity” honing in on Dakota Access, ETCOP and how the interconnected lines relate to Continental's marketing plans going forward. In a section of that slide titled, “Bakken Takeaway Capacity” a bar graph points out that the opening of Dakota Access would allow more barrels of Continental's Bakken fracked oil to flow through pipelines.  Dakota Access is slated to carry the fracked Bakken oil across South Dakota, Iowa and into Patoka, Illinois. From there, it will connect to the company's Energy Transfer Crude Oil Pipeline (ETCOP) line, which terminates in Nederland, Texas at the Sunoco Logistics-owned refinery.  Previously, Harold Hamm was as an outspoken supporter of TransCanada's Keystone XL pipeline, deploying the lobbying group he founded named the Domestic Energy Producers Alliance to advocate for KXL and a Bakken on-ramp which would connect to it. Once he realized the northern leg was doomed politically, Hamm began singing a different tune on Keystone.  “We’re supporting other pipelines out there, we’re not waiting on Keystone. Nobody is,” Hamm, also an energy adviser to Mitt Romney’s 2012 presidential campaign, told Politico in November 2014. “That thing … needed action on it six years ago. I just think it’s too late and we need to move on.” One of those 'other pipelines' Hamm appears to have taken an interest in is Dakota Access (DAPL). Although to date, neither Hamm nor Trump have commented publicly on the DAPL project. Continental Resources told DeSmog that it does not comment on pipeline shipping contracts.

Judge grants partial stop on North Dakota pipeline work - — An American Indian tribe succeeded Tuesday in getting a federal judge to temporarily stop construction on some, but not all, of a $3.8 billion four-state oil pipeline, but its broader request still hangs in the balance. U.S. District Judge James Boasberg said Tuesday that work will temporarily stop between North Dakota’s State Highway 1806 and 20 miles east of Lake Oahe, but will continue west of the highway because he believes the U.S. Army Corps of Engineers lacks jurisdiction on private land. He also said he will rule by the end of Friday on the Standing Rock Sioux Tribe’s challenge of federal regulators’ decision to grant permits to the Dallas, Texas-based operators of the Dakota Access Pipeline, which will cross North Dakota, South Dakota, Iowa and Illinois. A weekend confrontation between protesters and construction workers near Lake Oahe prompted the tribe to ask Sunday for a temporary stop of construction. Four private security guards and two guard dogs received medical treatment, officials said, while a tribal spokesman noted that six people — including a child — were bitten by the dogs and at least 30 people were pepper-sprayed. Dakota Access attorney Bill Leone said during Tuesday’s hearing that if it weren’t for the stoppages, the section in question would be finished by the end of this week. Standing Rock Sioux tribal chairman Dave Archambault II issued a statement after the ruling, saying: “Today’s denial of a temporary restraining order ... west of Lake Oahe puts my people’s sacred places at further risk of ruin and desecration.” Attorney Jan Hasselman with Earthjustice, who filed the broader lawsuit on behalf of the tribe, noted the tribe will “know more by the end of the week about where we’re heading.”

Corps won't oppose tribe's request to stop work on pipeline (AP) — The Army Corps of Engineers won’t oppose the Standing Rock Sioux tribe’s request for a temporary work stoppage on part of the Dakota Access Pipeline. The tribe has requested a halt to the construction of a 2-mile stretch of the pipeline near Lake Oahe, North Dakota, to prevent the destruction of sacred and culturally significant sites. A hearing is scheduled Tuesday in Washington, D.C. A protest of the $3.8 billion oil pipeline from North Dakota to Illinois turned violent on Saturday. Court documents filed Monday say the Corps “acknowledges that the public interest would be served by preserving peace near Lake Oahe.” The pipeline company hasn’t responded to the tribe’s motion. The judge will also consider the tribe’s challenge to permits for the pipeline granted by the Corps. A decision is expected by Friday.

Jill Stein Spray Paints a Bulldozer and More Protesters Lock Down at #NoDAPL - Over two thousand Natives have gathered in Standing Rock, North Dakota, in what some are calling the largest Indigenous convergence in more than a century. More than 100 nations are represented at multiple camps, with Natives travelling to Standing Rock from reservations and cities around the country, all with one aim: to thwart construction of the Dakota Access pipeline. If constructed, the Dakota Access pipeline would transport crude oil from the North Dakota Bakken region through South Dakota and Iowa into Illinois -- crossing the Missouri in treaty lands. On Tuesday, Green Party Presidential Candidate Jill Stein also joined protesters on the frontline, speaking alongside Indigenous movement leaders and vandalizing a bulldozer as protesters cheered. Stein spray-painted the words "I approve this message" on a piece of equipment that had been shut down by protesters.  Morton County Sheriff Kyle Kirchmeier said Tuesday that Stein would be charged with trespassing and vandalism.  "This is a human-rights crisis," Stein stated on Twitter.   Since April 1, Natives have encamped and held space along the proposed route of the Dakota Access pipeline. As the legal battles around the pipeline continue to unfold in court, Natives who have converged in Standing Rock are escalating their tactics to stop construction. Last week, a Native man halted pipeline construction for 6.5 hours by locking himself to a piece of construction equipment with a blockade apparatus. Over the weekend, a large group of Natives, including families with children, was attacked by dogs and pepper-sprayed by pipeline security for stepping into a work area.

Green Party candidate faces charges in graffiti protest  (AP) — Authorities say they will charge Green Party presidential candidate Jill Stein, who is accused of spray-painting construction equipment during a protest against the Dakota Access Pipeline in North Dakota. Morton County Sheriff Kyle Kirchmeier said Tuesday that Stein will face trespassing and vandalism charges. A spokeswoman for Stein says activists invited her to leave a message at the protest site Tuesday. Stein sprayed “I approve this message” in red paint on the blade of a bulldozer. As of late Tuesday, Stein was not arrested or charged in the incident. The Standing Rock Sioux Tribe is trying to stop construction of a section of the pipeline that tribal leaders say would violate sacred and culturally sensitive grounds. Angry protesters faced off with construction workers at the site on Saturday.

The Latest: North Dakota activates Guard for protests - Gov. Jack Dalrymple is activating the North Dakota National Guard ahead of a federal judge’s impending ruling on a request by the Standing Rock Sioux to stop the four-state Dakota Access oil pipeline. Dalrymple says a handful of Guard members will help provide security at traffic checkpoints near the site of a large protest. Maj. Gen. Alan Dohrmann, the head of the Guard, says another 100 Guard members will be on standby if needed to respond to any incidents. U.S. District Judge James Boasberg is expected to rule by Friday on the tribe’s request to temporarily stop construction on the Dakota Access pipeline. The tribe has been leading a protest for weeks at a site where the route passes near its reservation near the North Dakota-South Dakota border. The protest has included tense confrontations at times, and violence broke out Saturday between private security guards and protesters. North Dakota’s chief archaeologist plans to inspect an area along the route of the $3.8 billion Dakota Access pipeline where Standing Rock Sioux officials say they’ve identified cultural artifacts. Paul Picha (PEE’-kuh) told The Associated Press that the trip likely won’t happen until next week. If any artifacts are found, pipeline work would cease. Picha says state officials earlier surveyed the route, but not the disputed site, which is on private land west of State Highway 1806.

Green Party candidate Jill Stein wanted on trespassing, mischief charges after oil pipeline protest -- Green Party presidential candidate Jill Stein visited several places in the Chicago area Thursday, even as a warrant has been issued for her arrest.But Stein won't be there for long; a warrant is out her arrest. Stein tweeted a photo Wednesday that shows her spray-painting a bulldozer at an oil pipeline protest in North Dakota. I hope ND presses charges against the real vandals who bulldoze sacred burial sites. #NoDAPL "Our lawyers are working with legal authorities in North Dakota. We will participate respectfully with dignity in the legal system," Stein said. Court records show Stein was charged Wednesday in Morton County with misdemeanor counts of criminal trespass and criminal mischief. The same charges have been filed against her running mate, Ajamu Baraka. Activists invited Stein to leave a message at the protest site near the Standing Rock Sioux Tribe's reservation on Tuesday, Figueroa said, and Stein sprayed "I approve this message" in red paint on the blade of a bulldozer. A court document shows Baraka painted the word "decolonization" on a piece of construction equipment. Morton County Sheriff's Office spokesman Rob Keller said the warrant has been filed and if authorities were to come across Stein, "they would arrest her."

Who’s Banking on the Dakota Access Pipeline? - When the Army Corps of Engineers issued a permit for the 1,100-mile Dakota Access Pipeline in July, executives at the corporations behind the plan probably thought their path forward was clear. They’d moved easily through the permit process, seemingly dodging the concerns of people affected by the pipeline, and were ready to go ahead with construction.  But the communities in the pipeline’s path, especially local tribes, had other ideas. Thousands of people, mostly Native Americans, have converged at the Standing Rock Sioux Reservation in North Dakota in an effort to stop the pipeline from being built. The Standing Rock Sioux call the pipeline a black snake, and they know that if it were to rupture and spill — a serious risk, given the well-documented history of pipeline leaks in the U.S. — it could poison their drinking water and pollute their sacred land. Powerful oil and gas companies are taking appalling steps to override the Sioux’s objections, using their immense financial resources to push for building this pipeline, which will further line their pockets. But behind the companies building the pipeline is a set of even more powerful Wall Street corporations that might give you flashbacks to the 2007 financial crisis. Here are the financial institutions banking on the Dakota Access pipeline: (graphic) Seventeen financial institutions have loaned Dakota Access LLC $2.5 billion to construct the pipeline. Banks have also committed substantial resources to the Energy Transfer Family of companies so it can build out more oil and gas infrastructure:

All told, that’s $10.25 billion in loans and credit facilities from 38 banks directly supporting the companies building the pipeline. These banks expect to be paid back over the coming decades. By locking in widespread drilling and fracking in the false name of U.S. energy independence and security, the banks are increasing our disastrous dependence on fossil fuels.

Judge Rules That Construction Can Proceed On Dakota Access Pipeline - That's the result of two separate developments today – a federal court decision, and a statement by three federal agencies.A federal judge denied the Standing Rock Sioux Tribe's request for an injunction that sought to temporarily stop construction on the pipeline, set to carry crude oil across four states. Immediately after the ruling, the federal agencies announced a halt to work in one area significant to the tribe.The Dakota Access Pipeline route crosses under the Missouri River near the Standing Rock Sioux Reservation, which straddles the Dakotas. The tribe says this puts its drinking water and sacred lands at risk. Outrage over the pipeline has galvanized Native American tribes and environmentalists across the U.S.The Standing Rock Sioux tribe says it wasn't adequately consulted by the federal agency that authorized permits for the pipeline, and sued the U.S. Army Corps of Engineers in July In Friday's ruling, U.S. District Judge James E. Boasberg acknowledged that "the United States' relationship with the Indian tribes has been contentious and tragic." But he went on to say that the Army Corps "likely complied" with its obligation to consult the tribe, adding that the tribe "has not shown it will suffer injury that would be prevented by any injunction the Court could issue." On the heels of that ruling, however, the Justice Department, the Department of the Army and the Interior Department announced that construction in an area of Army Corps' land that is particularly significant to the tribe will not go forward pending further evaluation. "The Army will not authorize constructing the Dakota Access pipeline on Corps land bordering or under Lake Oahe until it can determine whether it will need to reconsider any of its previous decisions regarding the Lake Oahe site under the National Environmental Policy Act (NEPA) or other federal laws," the statement read

US Government Voluntarily Halts Construction On Portion Of The Dakota Oil Pipeline -- A federal judge denied Friday a Native American tribe’s attempt to halt construction on part of the Dakota Access Pipeline, which would transport millions of gallons of crude oil from North Dakota to Illinois each day. But the US Government issued a statement Friday saying they are voluntarily stopping construction until the land under a lake near the tribe’s reservation is assessed because “important issues raised by the” tribe remain. The Standing Rock Sioux Tribe filed a lawsuit against the US Army Corps of Engineers in July attempting to stop the construction, arguing that the pipeline “crosses areas of great historical and cultural significance,” and “crosses waters of utmost cultural, spiritual, ecological, and economic significance.” The tribe argued that the US Army Corps violated regulations with it approved the pipeline and therefore construction should be stopped. The court “concludes that the Corps has likely complied with the [National Historic Preservation Act] and that the Tribe has not shown it will suffer injury that would be prevented by any injunction the Court could issue,” the judge’s opinion reads. A major concern for the tribe was the fear than an oil spill would contaminate drinking water since the pipeline would run beneath a lake near the tribe’s reservation. On Friday, the US government said it will not authorize construction of the pipeline bordering or under Lake Oahe until “it can determine whether it will need to reconsider any of its previous decisions regarding the Lake Oahe site under the National Environmental Policy Act (NEPA) or other federal laws.”

Feds halt work on part of oil pipeline despite court ruling | Boston Herald: — An American Indian tribe's attempt to halt construction of an oil pipeline near its North Dakota reservation failed in federal court Friday, but the government ordered work to stop on one segment and asked the company to "voluntarily pause" work on a wider swath that tribal officials say holds sacred artifacts. The Standing Rock Sioux, whose cause has drawn thousands to join their protest, had challenged the Army Corps of Engineers' decision to grant permits at more than 200 water crossings for the $3.8 billion Dakota Access pipeline. Tribal leaders say the project violates several federal laws and will harm water supplies. The tribe also alleges that ancient sites have been disturbed during construction. U.S. District Judge James Boasberg in Washington denied the tribe's request for a temporary injunction in a 58-page opinion. A joint statement from the Army and the Departments of Justice and the Interior said construction "bordering or under Lake Oahe will not go forward at this time" and asked the pipeline builder, Energy Transfer Partners, to "voluntarily pause" work 20 miles to the east and west of the lake while the government reconsiders "any of its previous decisions." The statement also said the case "highlighted the need for a serious discussion" about nationwide reforms "with respect to considering tribes' views on these types of infrastructure projects." Attorney Jan Hasselman with the environmental group Earthjustice, who filed the lawsuit in July on behalf of the tribe, said before the ruling that any such decision would be challenged. "We will have to pursue our options with an appeal and hope that construction isn't completed while that (appeal) process is going forward," he said. "We will continue to pursue vindication of the tribe's lawful rights even if the pipeline is complete."

Dakota Pipeline Will Proceed As Feds Undertake Smoke and Mirrors Policy Reconsideration - Jerri-lynn Scofield - The Department of Justice, the Department of the Army, and the Department of the Interior waded into the controversy over construction of the Dakota Access oil pipeline (DAPL) yesterday, shortly after U.S. federal court judge James E. Boasberg denied a request for a preliminary injunction to halt its construction in his Standing Rock Sioux Tribe v U.S. Army Corps of Engineers ruling.   DAPL is designed to transport light sweet crude oil from the Bakken Shield in North Dakota — an area not served by existing pipelines — through South Dakota, Iowa, and Illinois. Oil from this source is currently largely shipped by train. Those behind the project emphasize that it represents a $3.78 billion investment and will create 8,000-12,000 jobs. From the joint statement by the three federal agenciesThe Army will not authorize constructing the Dakota Access pipeline on Corps land bordering or under Lake Oahe until it can determine whether it will need to reconsider any of its previous decisions regarding the Lake Oahe site under the National Environmental Policy Act (NEPA) or other federal laws. Therefore, construction of the pipeline on Army Corps land bordering or under Lake Oahe will not go forward at this time. The Army will move expeditiously to make this determination, as everyone involved — including the pipeline company and its workers — deserves a clear and timely resolution. In the interim, we request that the pipeline company voluntarily pause all construction activity within 20 miles east or west of Lake Oahu.”   The three agencies clearly anticipated that Judge Boasberg’s decision would not grant the tribe the injunctive relief it asked for and thereby halt the pipeline’s construction. So, they almost certainly prepared this statement to deflect protests that have arisen over construction of the pipeline, spearheaded by the Standing Rock Sioux tribe and that have drawn participants from more than 250 tribes and various environmental organisations. The statement has been well-received by the tribal leadership. “A public policy win is a lot stronger than a judicial win,” said Standing Rock Sioux Tribal Chairman Dave Archambault II.  The key question is, how much of a win does the agency statement actually represent? Well, as with so many other aspects of policy during the Obama administration, the devil is truly in the details. So, while headlines are declaring the pipeline blocked — and it certainly looks like construction in a small portion of it will be delayed, for the time being — but please be aware of the following points. First, the three agency decision only halts construction in a limited area, and only if the pipeline company elects to “voluntarily” comply. Second, federal regulatory authority over construction of the DAPL is limited– and much more so than you might expect.  [and] if you thought that the federal government was looking out for the public interest here, you would be wrong. To quote from Judge Boasberg’s ruling (p.2): Domestic oil pipelines, unlike natural-gas pipelines, require no general approval from the federal government. In fact, DAPL needs almost no federal permitting of any kind because 99% of its route traverses private land. Let’s just pause here to take that statement in.

Bakken Update: Significant Oil Production Increases Seen In Subpar Bakken Geology Due To Mega-Fracs -  Summary

  • Enhanced completions continue to improve initial production rates in US unconventional plays.
  • Mega-fracs were only used sparingly in 2015, but still improved 270-day production year over year by 22%.
  • As oil prices improve, we will find that improvements in well design provide a much larger footprint of development in US plays.
  • If correct, production increases could be much more substantial at lower prices than analysts expect.

Mega-fracs continue to improve unconventional production in the US. The changes to well design are significant, and many do not understand how much it may be changing the world oil markets. OPEC has tried to crush the US oil business, and spent a significant number of calendar days during this process. In the past, the Saudis had done an excellent job of evaluating breakeven prices of other plays. As the low cost producer of crude, it used this to push others out of business when too much production entered the market. I'm not saying this is wrong or right, as I believe in supply and demand. The point I would like to make, is this may not work. Current technologies are improving oil extraction at a much faster rate than anyone has expected. We believe this will continue for several reasons.

Judge puts hold on plan to open California lands to fracking   (AP) — A federal judge on Tuesday tentatively rejected a plan by the federal Bureau of Land Management to open more than 1,500 square miles of lands in central California to oil drilling and fracking. The BLM failed to take a "hard look" at the environmental effects of the estimated 25 percent of new wells that would be devoted to fracking, U.S. District Judge Michael W. Fitzgerald wrote in the ruling. The process, formally known as hydraulic fracturing, uses high-pressure mixtures of water, sand and chemicals to extract oil and gas from rock. Fitzgerald ruled that the BLM must provide more study on the effects fracking will have in the area. He gave the agency's attorneys until Sept. 21 to argue why he should not issue an injunction stopping the plan. The ruling came in a lawsuit brought by a pair of environmental groups, the Center for Biological Diversity and Los Padres ForestWatch. "This is a huge victory in the fight to protect our water and wildlife from fracking pollution and dangerous drilling," Brendan Cummings, director of the Center For Biological Diversity, said in a statement. "As California struggles against drought and climate change, we've got to end fracking and leave this dirty oil in the ground." After-hours phone and email messages left seeking reaction from the Bureau of Land Management and the Western States Petroleum Association, an oil-industry group, were not immediately returned. The land involved in the decision is about 1.1 million acres of public lands and federal mineral estate in the mostly agricultural central valley, the southern end of the Sierra Nevada, and parts of the central coast.

2 Pipeline Companies, Enbridge and Spectra Energy, to Merge -  Two pipeline companies agreed on Tuesday to merge in a deal that could create the largest energy-infrastructure company in North America.The companies, Enbridge and Spectra Energy, signed a stock-for-stock deal, where Enbridge shareholders will own about 57 percent of the combined company and Spectra’s will own 43 percent, according to a statement released by the companies on Tuesday.Spectra shareholders will get 0.984 shares of the combined company for each share they own, valued at about $40.33 a share, based on share prices on Sept. 2. The transaction values Spectra’s common stock at about $28 billion.Pipeline companies help transport oil, natural gas and other liquids across the country. Pipeline companies had traditionally been seen as an energy investment relatively immune from the price swings of the commodities they carry because they lock in long-term contracts. But after a plummet in energy prices last year, investors became skittish about pipelines as well because many of their customers were on the brink of bankruptcy.The pipeline industry’s stock prices have been recovering, but the ability to combine gives these companies the chance to bulk up and diversify their offerings. Enbridge and Spectra will also have a utility portfolio and midstream energy business after they combine. Their customer base is largely low risk, the companies said, with 93 percent of customers holding investment grade or equivalent ratings.  “Bringing Enbridge and Spectra together makes strong strategic and financial sense, and the all-stock nature of the transaction provides shareholders of both companies with the opportunity to participate in the significant upside potential of the combined company,” Al Monaco, president and chief executive of Enbridge, said in Tuesday’s statement.After the transaction closes, Mr. Monaco will continue in that role, while Gregory L. Ebel, Spectra’s president and chief executive, will serve as nonexecutive chairman. The headquarters will be in Calgary, where Enbridge is based.

How Enbridge and Spectra Inked a Clean Pipe Deal - WSJ: Pipeline companies can’t always handle the pressure. Investor demand for chunky, rising payouts became a challenge as volumes, hydrocarbon prices, and even customers’ creditworthiness sank over the past two years. Their response, a wave of proposed mergers, has seen as many failures as successes. The latest, a $28 billion proposed deal between announced Tuesday between Canada’s Enbridge Inc. and Texas-based Spectra Energy Corp. looks like an example of the latter. The proof was in Spectra’s share price, which jumped above the original $40.33 value of the all-share offer to as much as $42.33 early Tuesday afternoon. That reflected a rise in Enbridge’s shares and a merger arbitrage spread of less than 5% for a deal expected to close in early 2017. Traders clearly are betting that antitrust and financing concerns are minimal and that the premium paid for Spectra was modest considering potential synergies.Complexity and commodity exposure, not size, have been the obstacle to getting deals done. The resulting company would be the largest energy infrastructure company in North America, but there is limited overlap and little financing or tax risk. Two years into the energy slump, there have been plenty of approaches that didn’t lead to deals and one spectacular failure, the megamerger of Energy Transfer Equity and Williams Cos. The big cash sweetener that Energy Transfer threw in to secure agreement would have meant a hefty cut to payouts at the combined firm. It also created a tax complication that Energy Transfer’s management used as an excuse to drop its offer. A chastened Williams later rejected an overture from Enterprise Products Partners.

US natural gas production stable for Q3, Q4, despite Hermine: EIA - Despite some impacts to natural gas production in the Gulf of Mexico from Hurricane Hermine in August, the Energy Information Administration Wednesday held steady its overall projections for third and fourth quarter US production. "Hurricane Hermine led to the evacuation of several offshore oil and natural gas production platforms and caused some shut-in production," EIA Administrator Adam Sieminski said in a statement about the agency's September Short-Term Energy Outlook. "The hurricane-related shut-ins contributed to estimated Gulf of Mexico natural gas production in August that was 5% lower than the July level, but overall US production was still up slightly." According to the September outlook, gas marketed production in June averaged 77.5 Bcf/d, down 2.7 Bcf/d from record daily averages seen in February. But the agency said preliminary daily data from third-party sources suggests production rose in July and August. The agency's estimates for marketed gas production remained the same as August's projections for the third and fourth quarters, but EIA lowered its estimate for the full year 2016 by 7 MMcf/d to 79.21 Bcf/d.

Americans Drive to a New Record in Gasoline Consumption - Americans fueled up this summer at levels not seen since the recession began almost nine years ago, new data shows. But before you raise your Icee in salute to the U.S. economy, consider this: Nine years is a stunningly long road to recovery in gasoline consumption for an economy that replaced all the jobs and output lost during the deep recession several years ago. Americans purchased about 406 million gallons of gasoline per day, on average, in June, according to data the U.S. Energy Information Administration released last week. That just surpassed a previous record set in July 2007. Given that fuel consumption typically peaks for the year in July or August, when road-trip season is in full swing, Americans likely purchased an all-time record volume of gasoline this summer. The thirst for fuel shows gasoline is relatively cheap and that Americans are working, vacationing and driving more. But the recovery was long, even by the standards of the current sluggish expansion. U.S. consumer spending recovered to its peak level in two years. Overall economic output recovered to the level where it stood in late 2007, when the recession began, in three years. The U.S. replaced all the jobs lost in the wake of the recession by early 2014, more than six years after the recession began. 

EIA's Short Term Energy Outlook; US Gasoline To Set Records; US On Glide Path To Net Exporter Of Natural Gas By 2Q17 -- September 7, 2016

  • U.S. retail gasoline prices are expected to continue falling through the end of 2016, even though gasoline demand this year is expected to be the highest ever.
  • The average pump price for December is on track to be the lowest for the month in eight years. [Prices would be still lower if it weren't for ethanol mandates.]
  • Gasoline retail prices are down this year because of a combination of modest crude oil prices and abundant supplies of gasoline from high levels of refinery production.
  • The decline in U.S. oil production this year and in 2017 is not expected to be as steep as in previous forecasts, because of improved drilling rig efficiencies and more rigs drilling.
  • Builds are expected in global oil inventories during the second half of 2016. However, the pace of builds will be slower than in 2015 and early 2016, but this should still limit upward pressure on oil prices in the months ahead. [Great news for consumers.]
  • Drawdowns in global oil inventories are expected to start in mid-2017, which will contribute to higher oil prices in the second quarter of next year. [Self-fulfilling prophecy.]
  • After a brief slowdown in early 2016, U.S. natural gas production is expected to increase during the second half of this year and continue rising through 2017.
  • The United States is on track to become a natural gas net exporter in the second quarter of next year.
  • Hurricane Hermine led to the evacuation of several offshore oil and natural gas production platforms and caused some shut-in production. The hurricane-related shut-ins contributed to estimated Gulf of Mexico natural gas production in August that was 5% lower than the July level, but overall U.S. production was still up slightly.

EIA: "The average pump price for December is on track to be the lowest for the month in eight years" --The EIA released the Short-Term Energy Outlook yesterday. From the STEO:

• Benchmark North Sea Brent crude oil spot prices averaged $46/barrel (b) in August, a $1/b increase from July. This was the fourth consecutive month in which Brent spot crude oil prices averaged between $44/b and $49/b.
• Brent crude oil prices are forecast to average $43/b in 2016 and $52/b in 2017. West Texas Intermediate (WTI) crude oil prices are forecast to average $1/b less than Brent in 2016 and 2017.
• U.S. regular gasoline retail prices are expected to decline from an average of $2.18/gallon (gal) in August to $1.92/gal in December. For the year, U.S. regular gasoline retail prices are forecast to average $2.08/gal in 2016 and $2.26/gal in 2017.
• U.S. retail gasoline prices are expected to continue falling through the end of 2016, even though gasoline demand this year is expected to be the highest ever.
NYMEX October gas futures settle at $2.806/MMBtu, up 13 cents - Natural Gas | Platts News Article & Story: The NYMEX October natural gas futures contract settled at $2.806/MMBtu Thursday, up 13 cents, as the market reacted to a smaller-than-expected weekly gas storage injection. The US Energy Information Administration reported a weekly natural gas storage injection of 36 Bcf for the week ended September 2. The injection was below the expectations of analysts surveyed by S&P Global Platts, who were expecting a storage build of around 41 Bcf. Additionally, the weekly build was below the 78-Bcf prior-year injection as well as the 64-Bcf five-year average injection. Looking deeper into storage injection season, Gene McGillian, senior analyst at Tradition Energy, said the market will be waiting to see if storage injections increase as temperatures drop to seasonal levels, and if at the end of the storage injection season there is a lot of gas in the ground that could weigh on the market. "We continue to see room for a downward correction linked to the seasonal decline in power sector demand, but the constructive storage trend represents a challenge to that view," Citi Futures Tim Evans said in a market note Thursday morning.The latest weekly EIA report marks the 18th consecutive injection that came in below both the prior year and five-year average. Total US power demand is forecast to average around 30.3 Bcf/d over the next week, in line with the prior-week average, according to data from Platts Analytics' Bentek Energy. Looking ahead to the eight- to 14-day range, power demand is expected to ease, falling by 1.5 Bcf/d to average around 28.8 Bcf/d. The October contract traded in a range between $2.679/MMBtu and $2.821/MMBtu. Ukraine since November 2015 has been importing European gas only, but throughput capacity of these pipelines will probably not be enough to boost reserves to 17 Bcm by November 1. Ukraine had 12.56 Bcm of gas in its underground storage facilities as of September 1, according to Naftogaz. Taking into account imports from Europe and domestic gas output, Ukraine will be able to store up to 16.5 Bcm by November 1. This means that Ukraine may need to import at least 500 million cu m of gas from Russia by November 1 to meet the target.

Hillary Clinton Raises More Than Donald Trump From Oil Industry - WSJ: —Democratic presidential candidate Hillary Clinton has raised significantly more money than Donald Trump in the heart of the Republican fundraising territory—the oil and gas industry. Individuals who work for oil and natural-gas companies donated $149,000 to Mr. Trump’s GOP campaign through July 30, the end of the most recent fundraising period, compared with $525,000 to Mrs. Clinton. The industry’s executives and employees also have donated $470,000 to a fundraising account Mr. Trump established with the Republican National Committee, compared with $650,000 to a similar account Mrs. Clinton set up with the Democrats, according to new calculations provided to The Wall Street Journal by the nonpartisan Center for Responsive Politics. Taken together, oil and gas donors have contributed roughly twice as much to support Mrs. Clinton’s campaign as Mr. Trump’s. Election rules bar corporations from giving directly to candidates, but donations from an industry’s employees can provide a reflection of where it stands.At Exxon Mobil Corp. XOM -0.37 % , the world’s largest publicly traded oil company, employees have made 175 donations to Mrs. Clinton’s campaign, totaling roughly $18,000, while Mr. Trump’s campaign has received just one donation from an Exxon employee. At the American Petroleum Institute, the oil industry’s Washington lobbying group, no one has contributed to Mr. Trump. (These figures include donations of $200 or more.) Mr. Trump’s supporters noted that Mr. Trump paid for much of his Republican primary campaign out of his own pocket, and they said that he is picking up the pace of his fundraising. Still, Mr. Trump’s fundraising deficit among oil and gas donors is notable, because the industry has for decades been one of the GOP’s biggest backers. Since 1989, the industry has pumped $500 million into U.S. elections, with 60% of that going to the Republican Party and its candidates, according to the Center for Responsive Politics.

Trump's energy plan overstates benefits of more drilling: economists -- Donald Trump has promised to roll back regulations and unleash an energy revolution in America — but economists have their doubts about the plan. The Republican presidential candidate says he will boost America's economic output, create millions of new jobs, and put coal miners back to work. But the windfalls Trump touts originate from a report commissioned by a nonprofit with ties to the energy industry and whose findings rely on a forecasting model that often overstates the benefits of increased drilling, according to economists who have researched the U.S. shale oil and gas revolution. ... While outlining his economic blueprint last month, Trump said that lifting restrictions on oil and gas would increase GDP by more than $127 billion, add about 500,000 jobs, and increase wages by $30 billion each year over over the next seven years. Those figures come from the Institute for Energy Research, a nonprofit that advocates for a free-market approach to energy. It typically casts fossil fuels as the most economic form of energy generation, promotes research that says green energy jobs are unsustainable, and claims there is an "enormous volume of sensationalized, simplistic and often plain wrong information" on climate change. ... The IER study does not actually attribute the gains to a lifting of restrictions, as Trump indicated, but to opening all federal lands to oil, gas, and coal leasing. It is currently barred or temporarily blocked in some parts of the U.S. lower 48, the outer continental shelf, the Gulf of Mexico, and the Arctic National Wildlife Refuge. ... The IER report uses a method of forecasting called the input-output model, which is frequently used by consultants and government agencies to make projections about the effects of economic activity. But a number of economists say that model is not well-suited to predicting how more drilling will produce windfalls in other sectors, and academics are skeptical of the method because the results, or outputs, rely so heavily on the assumptions, or inputs.

Donald Trump’s oil man urges Russia and Opec to cut output - Harold Hamm, Donald Trump’s top energy adviser, has urged Russia and Opec to rein in oil production in an effort to raise prices, saying US companies have already lowered output during a two-year price war that has upended the energy industry. Mr Hamm, a billionaire pioneer of the North American shale boom who has been tipped as a potential energy secretary should Mr Trump win the US presidential election, said Opec and Russia should agree to freeze production when they meet this month to discuss ways to stabilise the market.His comments mark a rare backing from someone advising a US presidential candidate for market intervention by Opec, which is still closely associated in the US with the Arab oil embargoes of the 1970s. This week Russia, the largest oil exporter outside Opec, signed a pact with Opec kingpin Saudi Arabia to work together in the oil market. “I think it would be high-time for them to come to an agreement,” Mr Hamm told the Financial Times at a conference in Singapore. “US producers have cut back, we’ve done our part. It would finally make sense for a freeze in production to be implemented.” As the founder and chief executive of Continental Resources, one of the largest US shale producers, Mr Hamm would stand to gain personally from any effort to raise oil prices. Opec ministers are due to meet Russian officials in Algiers this month to discuss a possible output freeze, with the aim of raising or at least stabilising oil prices, which fell below $30 a barrel at the beginning of this year amid a long-running glut. Mr Hamm’s comments may also reflect a growing dichotomy in the US. While low prices have long been feted as a boon for consumers, the oil price crash has been painful for energy-producing states such as Texas and North Dakota. Lower prices have also slowed plans to wean the US off imported oil, with domestic production falling and drivers turning back to gas-guzzling cars.

House votes for online lease sales for offshore drilling  - The House voted Tuesday to mandate that the federal government move to an internet-based auction system for offshore drilling rights. The bill from Reps. Garret Graves (R-La.) and Alan Lowenthal (D-Calif.) aims to increase efficiency and modernize the auction system that the Bureau of Ocean Energy Management (BOEM) uses to sell rights offshore to oil and natural gas companies. The legislation passed by voice vote Tuesday with no objections stated on the House floor. Federal officials have for years held biennial in-person auctions with paper bids read orally, but last month, they started broadcasting the events online. The bill, dubbed the Innovation in Offshore Leasing Act, would give BOEM a year to move the entire system, including bid submissions, onto the internet. In moving the events online, the government would thwart environmental activists who have started to protest at lease sale events. Government and industry representatives say the protests, organized under the Keep it in the Ground movement, have been extraordinarily disruptive to auctions. “What this bill is designed to do is to bring us into the 21st century, to allow for potential bidders to go online to broaden access, to allow for the taxpayers’ resource, for the American public’s resource, to have more bidders, to have more competition, to ultimately make sure that the full value of that resource is realized by taxpayers,” Graves said on the House floor.

Anticosti fracking could cause earthquakes, expert says -  CBC News: A 5.6-magnitude earthquake that shook the U.S. Midwest on Saturday is being linked to the same kind of fracking proposed for Anticosti in the Gulf of St. Lawrence. Maurice Lamontagne, a seismologist with the Geological Survey of Canada, said the earthquake in and around Oklahoma was caused by fractures in the bedrock due to fracking. He said it's something that has been happening recently in British Columbia and Alberta and could happen on Anticosti if a fracking project there goes ahead. The Quebec government quietly issued drilling permits on the island to oil company Hydrocarbures Anticosti earlier this summer. The company, which is a joint venture between the Quebec government and several other oil companies, said last month it would begin preparing several sites for hydraulic fracking. But if the fracking operation gets off the ground, and wells become widespread on the island, Lamontagne said it could become the site of the same type of earthquake that shook Oklahoma. "If there were an earthquake it would be extremely local," Lamontagne said. "It would be very close to the site of injection."

Suncor Energy Seeks Permission to Abandon Some Oil-Sands Assets - WSJ: — Suncor Energy Inc., Canada’s largest oil producer, is in talks with government officials for permission to “strand,” or abandon, some high cost and greenhouse gas-intensive crude-oil deposits, the company’s chief executive said Wednesday. The Calgary-based company is seeking an easing of rules designed to maximize oil-sands production from leases on government land, CEO Steve Williams said at a Barclays BCS 1.76 % energy conference in New York, reiterating a strategy he first announced in July. “We’ve begun to have conversations with the government of Alberta and the current regulators about the design of their policy, which actually requires the maximum amount of resource to be extracted regardless of the economic or environmental value,” he said. The request comes as Suncor and other oil producers struggle to cut costs amid slumping commodities prices. Oil sands are one of the world’s most expensive and are also among the most carbon dioxide-intensive forms of crude-oil extraction. The cost of that carbon is becoming a bigger barrier for oil-sands producers, as the province is set to double its so-called carbon tax on them, and has vowed to cap greenhouse-gas emissions from oil-sands operators at 100 million metric tons. Oil-sands producers currently emit 70 million metric tons of greenhouse gas a year—about a quarter of the province’s overall emissions. Those efforts to curb emissions have made Alberta a test case for energy companies’ attempts to reduce their carbon footprint. But the policy also calls into question the ability of major oil companies to fully develop their leases in the Canadian oil sands, the world’s third-largest oil reserves, over the long term.

Statoil Renews Push into Arctic Oil Basins - WSJ: Norway’s Statoil AS STO 0.49 % A said Tuesday that it was pushing deeper into the Arctic, shopping for Barents Sea drilling licenses in a bid to add resources and maintain output over the coming decades. The 67% state-owned company said it had acquired stakes in four licenses in Norway’s far north from Tullow Oil TUWOY 0.68 % PLC, after entering or boosting its holdings in five other Arctic licenses in the past months, through deals with companies including OMV AG OMVKY 3.30 % and ConocoPhillips, COP 1.17 % at undisclosed prices. “We’re doing this in a very countercyclical manner, meaning that we were able to pick up these licenses at what we consider to be very attractive terms,” Jez Averty, Statoil’s head of exploration in Norway and the U.K., told The Wall Street Journal in an interview Tuesday. As part of the deal with Tullow, Statoil increased its stake in the 241-million-barrel Wisting discovery in the Hoop area of the Barents Sea to 35% from 15%, enlarging its footprint in one of the most promising provinces in Norway’s far north, Mr. Averty said. “The Wisting discovery has opened up a new petroleum province in the Barents Sea,” he said. “What we’re looking to do is to establish ourselves as one of the leading companies in that area.” As production in the mature North Sea depletes, the Barents Sea may hold the key to maintain Statoil’s output in the coming decades. The Arctic basin has been drilled since the 1980s, but at a slow pace. Companies are still hoping for huge finds in the Barents Sea, unlike in the North Sea where they are now mainly looking for smaller discoveries near existing infrastructure, Mr. Averty said.Despite a disappointing drilling campaign in 2013 and 2014 to find additional resources near the Johan Castberg discovery in the Barents Sea, Statoil is pushing ahead with a significant drilling campaign in the sea area next year—including the northernmost well ever drilled off Norway in the Korpfjell prospect, 420 kilometers (261 miles) north of the northern coastline.

Argentina to receive 12 LNG vessels in September: Enarsa - Argentina is scheduled to receive 12 ships carrying LNG in September, state energy company Enarsa said Friday. It also said it had canceled one LNG cargo and deferred three others due in August into 2017. Enarsa said that a rise in temperatures for the first three weeks of August -- the last month of winter in the Southern Hemisphere -- prompted the changes, since the warming weather meant lower gas demand than previously anticipated. "For this reason [higher temperatures], and because there is no place to store LNG, Enarsa had to cancel the import of LNG shipment and reprogram another three for 2017" the company said. Currently, LNG shipments are automatically injected into the national gas network to meet existing demand, the company said.For September, Enarsa said it would receive 12 vessels with LNG, arriving at Bahia Blanca and Escobar ports. Big suppliers have been and continue to be BP, Glencore, Gazprom, Shell and Trafigura, among others.

Japan buyers pay $5.40/MMBtu for spot LNG cargoes delivered in Aug: METI - Natural Gas | Platts News Article & Story: The average price Japanese LNG buyers paid for spot cargoes delivered into Japan in August was $5.40/MMBtu, down 10% from $6/MMBtu in July, data released by the Ministry of Economy, Trade and Industry showed Friday. METI however, did not publish the average price for spot cargoes contracted in August due to a lack of reported trades. The ministry releases two sets of prices every month.The latter is calculated by the ministry by collecting data from utilities and other LNG buyers, but the delivery months of the cargoes into Japan are not disclosed. The Platts JKM for cargoes delivered in August averaged $5.273/MMBtu. The assessment period started June 16 when August JKM stood at $5.05/MMBtu, and ended on July 15 with the JKM at $5.55/MMBtu, partly due to firm demand. The JKM also averaged $5.582/MMBtu during the month of August, which reflects spot deals done for September and October. One is the average delivery price and the other is the simple average of contract prices.

Ukraine set November 1 as new deadline to collect 17 Bcm of gas - Natural Gas | Platts News Article & Story: Ukraine extends the deadline for gas accumulation in its underground storage facilities by two weeks to November 1 from October 15 as it seeks to collect more gas, according to a government resolution published Friday. The government last week set a new target to accumulate 17 Bcm of gas by the start of the high-demand season. The resolution urges the energy and coal industry ministry, the finance ministry, the economy ministry and Naftogaz Ukrayiny to draft and approve by September 15 a new gas accumulation schedule. The new forecast suggests that Ukraine will have to accelerate imports of gas within weeks, and perhaps to resume imports of Russian gas to meet the target.

LNG exports from Australian Gladstone port hit all-time high of 1.51 mil mt in Aug - LNG exports from Australia's Gladstone Port in Queensland edged up 5% from July to an all-time high of 1.51 million mt in August, data from the Gladstone Ports Corporation showed Tuesday. This is the first time in record that LNG exports from the port, which is home to three LNG wharves -- Australia Pacific LNG, Gladstone LNG and Queensland Curtis LNG -- has breached the 1.50 million mt mark, GPC said. Exports were between 1.43 million-1.50 million mt since May when Santos announced its GLNG Train 2 had started production. Over January-April, LNG exports from Gladstone had averaged at 1.24 million mt/month, data showed. Shipments to the port's biggest export destination, China, were stable compared to July, the data showed.Volumes shipped to China in August edged up to 667,957 million mt, from 663,878 million mt in July, after having surged to 922,754 million mt in June, the data showed. South Korea, which has been the second biggest receiver of Gladstone LNG in 2016 with a year-to-date average of 229,573 million mt/month, saw volumes rise 6% month on month to 182,963 million mt in August, but its volumes continued to lag behind the January-March average of 333,796 million mt/month. Exports to South Korea fell below 200 million mt/month in April and have not gone above that since.

11,700 Petrobras Employees Sign Up To Get Fired -- Over 11,700 Petrobras employees signed up to get fired through the Brazilian energy firm’s voluntary dismissal program, according to a new report by Bloomberg. The government-owned company set up the program to reduce debt and reduce operational costs by $10 billion in the coming years as global oil prices stay low.  Petrobras workers had until August 31st to sign up for the voluntary dismissal program,through which they would be eligible for severance benefits. Paying out the benefits for the 12,000 workers the company plans to let go will cost $1.23 billion, an official statement said Friday. So far, the company has pulled out of major investments and stabilized fuel prices in Brazil in order to keep revenues up as the bear market for oil passes. President Michel Temer - who replaced Dilma Rousseff after she was officially removed from office earlier this week - has vowed to limit government meddling in the affairs of the national energy company. Instead, Temer has called for liberal policies that lower industry costs and increase competition between rival firms. Temer has also been named in a major national corruption scandal involving Petrobras’ management and a web of kickbacks and campaign donations. A major Brazilian oil union has said the mass firings have caused a massive brain drain within the company. Experienced workers are needed to extract resources from the deep waters of the Atlantic Ocean, union leaders argue. "The company is giving up a work force of 20,000 in only two, three years. You would need more than a decade to restore this kind of knowledge," Jose Maria Rangel, from the oil workers’ federation, told Bloomberg in an interview.

Nigeria's NNPC says unrest in Niger Delta could cripple oil producing region -  State-owned Nigerian National Petroleum Corp said on Sunday that security challenges in the oil producing Niger Delta region, where production facilities have been hit by militants, could cripple the company and the Nigerian economy, if the unrest is not urgently checked. "If the current situation [in the delta] remains unchecked, it could lead to the crippling of the Corporation and the nation's oil and gas sector, the mainstay of the Nigerian economy," NNPC said in a statement. Nigeria has already slipped into a recession, as its oil output slumped to 1.69 million b/d in the second quarter of this year due to renewed militancy in the Niger Delta, according to data released August 31 by the National Bureau of Statistics. "Insecurity is threatening production and damaging the Niger Delta environment. There is the urgent need for government and security agencies to refocus as well as engage the various host communities ... toward finding a lasting solution to the present unrest," NNPC said.NNPC, which manages government interest in joint venture oil businesses with foreign companies, recorded a deficit of Naira 26.51 billion ($84 million) in June due to attacks on oil pipelines, S&P Global Platts previously reported.

Dick Cheney To Be Charged in $180 Million Bribery CaseNigeria's anti-corruption police said on Thursday they planned to file charges against former U.S. Vice President Dick Cheney in a $180 million bribery case involving a former unit of oil services firm Halliburton. The Economic and Financial Crimes Commission (EFCC) on Tuesday summoned the country chief of Halliburton and last week detained 10 Nigerian and expatriate Halliburton staff for questioning after raiding itsLagos office. "We are filing charges against Cheney," EFCC spokesman Femi Babafemitold Reuters, but declined to give any further details on what the charges were, or where they would be filed. Houston-based engineering firm KBR, a former Halliburton unit, pleaded guilty last year to U.S. charges that it paid $180 million in bribes between 1994 and 2004 to Nigerian officials to secure $6 billion in contracts for theBonny Island liquefied natural gas (LNG) project in the Niger Delta. KBR and Halliburton, which was once headed by Cheney, reached a $579 million settlement in the United States but Nigeria, France and Switzerland have conducted their own investigations into the case. Halliburton split from KBR in 2007 and has said that its current operations in Nigeria are unrelated.

Limited Spare Capacity Could Lead To An Oil Price Spike - Oil prices have continued to languish below $50 per barrel as a glut of crude oil and gasoline persist even as global demand continues to rise. The IEA still predicts that oil consumption will expand by another 1.4 million barrels per day in 2016, while production stagnates. That dynamic suggests that the market is converging towards some sort of balance, although the speed with which that takes place is hotly debated.  But in the short-term the record levels of crude oil and refined products sitting in storage have prevented oil prices from rebounding. The U.S. had 525 million barrels of crude oil inventories at the end of August and 232 million barrels of gasoline. Both figures are sharply higher than the running five-year average and higher than even year-ago levels. And inventories are only down slightly from their peaks hit earlier this year. Until oil and refined product inventories start to draw down much more forcefully, oil prices will struggle to rise above, say, $50 per barrel.  While extraordinary levels of crude oil and gasoline inventories seem to point to a frustratingly oversupplied market, there is a case to be made that the world could soon suffer from the opposite problem. Several oil analysts believe that the near record low for spare production capacity around the world actually suggests that the oil market is a lot tighter than it seems at first glance. “Yes, storage tanks are higher than they’ve ever been, but you’ve got to consider that collectively with how much spare capacity that you have,” said Jackie Forrest, vice-president of energy research at ARC Financial Corp., according to The Financial Post. Most of the world’s spare capacity is located in Saudi Arabia, the one country that has the ability to substantially ramp up or down output over the course of a few weeks. But Saudi Arabia, in a battle for market share, ratcheted up production to a record high this summer, exceeding 10.6 million barrels per day, which dumped more supply on the market but left it with less spare capacity. OPEC as a whole has pushed output to a record high. The IEA and the EIA both estimate that OPEC’s spare capacity has dipped to just 1.4 million barrels per day, about half of what it was a few years ago and extraordinarily low by historical standards. The last time spare capacity was this low, it was between 2004 and 2008, a period of time that saw a dramatic run up in oil prices.

Putin Pushes for Oil Freeze Deal With OPEC, Exemption for Iran - Bloomberg: 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. “From the viewpoint of economic sense and logic, then it would be correct to find some sort of compromise,” Putin said in an interview in Vladivostok. “I am confident that everyone understands that. We believe that this is the right decision for world energy.”While talks collapsed in April over whether Iran should join in, countries now recognize the nation -- freed just months ago from international sanctions -- should be allowed to continue raising production, Putin said. The Russian president said he may recommend completing the plan when he meets with Saudi Deputy Crown Prince Mohammed bin Salman at the Group of 20 summit in China next week. Oil rallied more than 10 percent last month on speculation the Organization of Petroleum Exporting Countries will reach an accord with non-members at an informal meeting in Algiers this month. The prolonged slump in crude prices -- stuck at half the levels seen two years ago -- is battering the economies of producer nations, giving oil-market rivals cause to cooperate. “I would very much like to hope that every participant of this market that’s interested in maintaining stable and fair global energy prices will in the end make the necessary decision,” said Putin. Prince bin Salman “is a very reliable partner with whom you can reach agreements, and can be certain that those agreements will be honored,” he said.

Oil price jumps on Russian and Saudi plans - BBC News: The price of oil jumped after Russia and Saudi Arabia agreed to discuss ways to stabilise the oil market. The announcement was made by the countries' energy ministers, Alexander Novak and Khalid al-Falih. The price of Brent crude initially jumped by 5% but then fell to to stand 1.6% higher at $47.56 a barrel. A statement said the plan was to support the "stability of the oil market ... ensuring a stable level of investment in the long term". At the start of 2016 the price of oil fell to its lowest level in nearly 13 years due to a production glut and is still far below the $110 a barrel price hit just two years ago. Mr Novak said the agreement, which might include attempts to limit oil output, was a "historical moment" between members of Opec, the oil producers' cartel, and non-members such as Russia. He added that Russia was willing to join an oil output "freeze". 'Getting better' The outline agreement, to set up a joint task force, was announced at a news conference at the G20 summit in the eastern Chinese city of Hangzhou. However, Saudi Arabia's Mr al-Falih said that freezing output was not "necessary" now. "Freezing [production levels] is one of the preferred possibilities, but it's not necessary today," he said after the cooperation agreement was unveiled.

Oil Soars Ahead Of Disappointing Saudi, Russian "Joint Statement" Which Fails To Freeze Oil Output -  As the G-20 summit drew to its conclusion, a moment of sheer drama erupted earlier this morning as oil exploded higher following speculation Saudi Arabia was prepared to make a “significant” joint announcement with Russia (the market promptly assumed this meant a preliminary oil production freeze) following discussions over promoting market stability. As the chart below shows, oil futures soared by several dollars in a matter of minutes, after Saudi Arabia and Russia agreed to work together to stabilize prices following Sunday’s meeting between Deputy Crown Prince Mohammed bin Salman and President Vladimir Putin. Saudi Energy Minister Khalid Al-Falih will make the announcement at the G20 summit in China on Monday, according to his chief of staff. Crude rose the most in two weeks on Friday as Putin said he’d like OPEC and Russia to agree to an output freeze. “The market seems to be positioning for the vague possibility of a substantial statement” by Saudi Arabia, Axel Herlinghaus, senior commodities analyst at DZ Bank AG said by e-mail. And sure enough, this is what happened in advance of the announcement: The actual announcement, however, when delivered was somewhat disappointing as Russia and Saudi Arabia announced they have signed a joint statement aimed at stabilizing the crude market, which would see the two nations create... working groups and monitor the market. In other words, more of the same.  The document was signed by Russian Energy Minister Alexander Novak and Saudi Minister of Energy, Industry and Mineral Resources Khalid Al-Falih. According to the painfully vague "agreement", the two countries will develop cooperation in the oil and gas sector to implement new technologies, and could create a joint database on advanced energy technologies. Russia and Saudi Arabia would also set up a working group to monitor the crude market and hammer out recommendations for providing its stability. According to the statement, the first working group meeting will be held in October. The energy ministers of the two countries will meet in October in Algeria, and in November in Vienna.

Oil pares gains after Saudi, Russia sign pact | Reuters: Crude oil futures pared gains on Monday after top producers Russia and Saudi Arabia confirmed they had agreed to cooperate on stabilizing the oil market, including limiting output. Brent crude futures for November delivery were up 44 cents per barrel at $47.27 a barrel at 9.13 a.m. ET. They earlier hit a session high of $49.40 in anticipation of the Russia-Saudi deal. U.S. crude for October delivery was up 60 cents at $45.04 a barrel, after reaching a high of $46.53 a barrel earlier. Saudi Arabia and Russia said on the sidelines of the G20 summit in China they had signed an agreement to set up a task force to review oil market fundamentals and to recommend measures and actions that would secure market stability. Russian Energy Minister Alexander Novak said the two countries were moving to a strategic energy partnership and a high level of trust would allow them to address global challenges. Saudi energy minister Khalid al-Falih told a UAE-based television channel he was optimistic about cooperation with other producers ahead of a meeting this month in Algiers, adding freezing production was not the only solution. Saudi deputy crown prince Mohammed bin Salman told Russian President Vladimir Putin on the sidelines of the same summit that cooperation between the two countries would bring benefit to the global oil market.

Crude Retraces Saudi-Russia Hope Spike As Traders Slash Bullish Bets By Most In 2 Years Having spiked over 5% on hopes of a "significant" announcement at a joint Russia-Saudi statement at the G-20 meeting, bulls were quickly disappointed, sending WTI back to a $44 handle as the two nations stopped short of taking any concrete steps to limit output.  The inability to hold these gains on an illiquid day (with a US holiday) confirms the short-squeeze ammo is out. Furthermore 'longs' are losing faith as leveraged speculative positioning plunged by the most in over 2 years last week. With that hope blown out of the water, we suspect 2015's analog will continue as the glut remains bigger than ever and positioning technicals now worn out... Charts: Bloomberg

Is The Saudi-Russia Deal For Real?  --The main news at the start of this week was the announcement from Russia and Saudi Arabia that they would cooperate to stabilize the oil markets. On the sidelines of the G20 summit in China, Russia and Saudi Arabia said that they would setup a “working group” to advance cooperation on reducing volatility in the oil markets. The accord raised some new questions even as the two countries promised closer coordination. They did not explicitly state that they would support a production freeze in Algeria in a few weeks, although there have been signals from both sides that they would be pleased with such an outcome. Oil prices rocketed upwards in the early hours on Monday, surging more than 5 percent. But oil prices retreated after the oil ministers from both countries failed to clarify the significance of their cooperation. Russia’s oil minister appeared more willing to back a freeze deal, but his Saudi counterpart seemed to suggest that a freeze is not necessary. Even as the promise of closer cooperation raises the chances that OPEC and Russia could reach a production freeze deal at the end of the month, oil prices fell during midday trading on Tuesday after the markets continued to doubt the significance of the Russian-Saudi announcement.  Earthquake in Oklahoma suspected to be linked to oil drilling. A large 5.6-magnitude earthquake struck Oklahoma over the weekend, a magnitude that is tied for the strongest quake to ever hit the state. No major injuries were reported, but the U.S. Geological Survey is investigating whether or not the event can be definitively linked to the use of disposal wells. Oklahoma has been dealing with an upsurge in seismic activity in recent years, a trend that is thought to be instigated by the proliferation of wastewater disposal wells. In 2005, Oklahoma only had three earthquakes with a magnitude of 2.5 or greater. By 2015, that figure exploded to 2,500. In response to the quake this past weekend, state regulators ordered the shutdown of 37 disposal wells.U.S. natural gas production declines. Four consecutive months of declining natural gas production raises the prospect of a much tighter market than previously anticipated. While gas inventories are still at a record high for this time of year, they have been rising much slower than expected and even declining at times this summer. As the WSJ notes, one extremely cold winter could erase the supply surplus and push up natural gas prices. Higher natural gas prices would affect an array of industries, including power generation, petrochemical production, and other industries that use gas as an input.

Oil Edges Lower After Output-Freeze Hopes Dashed - WSJ: Oil prices traded near flat Tuesday on skepticism that major producers can reach a deal to freeze production, which would reduce the global oversupply of crude. Prices erased earlier losses after a data provider reported a decline in crude supplies in a key U.S. storage hub. U.S. crude for October delivery recently fell 7 cents, or 0.2%, to $44.38 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 81 cents, or 1.7%, to $46.82 a barrel on ICE Futures Europe. Prices surged briefly Monday morning following talks between Russia and Saudi Arabia, on the hopes that the two major producers would announce a joint initiative to freeze or reduce output. However, the countries made only vague promises of greater cooperation. Saudi Arabia and Russia agreed to form a working group to monitor the oil market, but “whether or not this so-called pact will eventually turn out to be something where both of these major oil producers will do something to limit production is a major question,” said Dominick Chirichella, analyst at the Energy Management Institute, in a note.The Organization of the Petroleum Exporting Countries is set to meet later this month to discuss a coordinated output agreement. But several members of the group, including Iran, Nigeria and Libya, are looking to increase output from current levels and will likely be unwilling to freeze production, analysts say. Gatherings of large producers in the past two years have failed to yield any coordinated agreements.

Oil Slide Stalls As Saudi Hints At Massive Budget Cuts -- WTI crude has dropped back to a $43 handle this morning - erasing the Saudi-Russia statement hype ramp - after China inventories and disappointing 'freeze' talk but for now the plunge has stalled as Saudi Arabia is set to review thousands of contracts aiming to cancel up to $20 billion of projects. This suggests hope for higher oil prices (improved revenues) are fading. Crude resumed its fall…As Bloomberg reports, Saudi Arabia is intensifying efforts to shrink the highest budget deficit among the world’s biggest 20 economies, aiming to cancel more than $20 billion of projects and slash ministry budgets by a quarter, people familiar with the matter said. The government is reviewing thousands of projects valued at about 260 billion riyals ($69 billion) and may cancel a third of them, three people said, asking not to be identified as the discussions are private. The measures would impact the budget for several years, two of the people said. A separate plan includes merging some government ministries and eliminating others, two people said, also speaking on condition of anonymity. The world’s biggest oil exporter has taken unprecedented steps to rein in a budget shortfall that ballooned to 16 percent of gross domestic product last year, curtailing fuel and utility subsidies as well as cutting billions of dollars in spending. The International Monetary Fund expects the shortfall to drop to below 10 percent of GDP in 2017. The Finance Ministry declined to comment, while officials at the Ministry of Economy and Planning weren’t available for comment when contacted by Bloomberg. Several senior government officials are accompanying Deputy Crown Prince Mohammed bin Salman on an Asian tour. Notably, expectation for a Riyal devaluation/depegging appear to have faded dramatically (a positive response to these budget decisions?)

Saudi Arabia Raises Pricing for October Crude to Asia on Demand - Saudi Arabia, the world’s largest crude exporter, raised pricing for October oil sales to Asia and the U.S. in a sign of strengthening demand.State-owned Saudi Arabian Oil Co., known as Aramco, increased its official selling price for Arab Light crude to Asia by 90 cents a barrel, to 20 cents below the regional benchmark, it said Sunday in an e-mailed statement. The company had been expected to raise Arab Light prices by 50 cents a barrel, to 60 cents less than the benchmark for Asian buyers, according to the median estimate in a Bloomberg survey of seven refiners and traders in the region. Brent crude has dropped about half from its average price in 2014, when Saudi Arabia led the Organization of Petroleum Exporting Countries to maintain production to drive out higher-cost suppliers. The group decided at a June 2 meeting in Vienna to stick to its policy of unfettered production, with ministers united in their optimism that global oil markets are improving. OPEC will meet again this month in Algiers. Saudi Arabia won’t boost output to its full 12.5 million barrel-a-day capacity and flood the market, the kingdom’s Energy Minister Khalid Al-Falih said last week. Saudi Arabia isn’t concerned about global demand in spite of a drop in prices and a slower economy, Al-Falih said in an interview with Al-Arabiya television while on a state visit to Asian nations including China and Japan. Saudi Aramco raised pricing for all other crude grades to Asia by a range of 70 to 95 cents a barrel against the benchmark, while it boosted pricing for all grades to the U.S. by a range of 20 to 30 cents. The company cut all prices to Northwest Europe and the Mediterranean region.

Art Berman: Oil Is Heading Lower Near-Term Before "Economically-Crippling Moon-Shot" -- This week’s marked sell-off in crude oil prices came as no surprise to petroleum geologist Art Berman, who has been predicting the price decline for weeks now. More to the point, Berman says it’s not over yet and lower oil prices are still to come. Berman gave an excellent long-form interview for this week’s MacroVoices podcast. Berman begins by observing that it’s Labor Day weekend – the end of summer driving season and historically speaking, what should be the end of a period of seasonal de-stocking of crude oil inventories, which is critically important to make room for the storage demands that predictably come during fall refinery maintenance. But Berman shows that nation-wide crude oil inventories have actually INCREASED to the tune of 6.46mm barrels over the last 6 weeks, a period when inventory levels historically move in the opposite direction! Berman then introduces his Comparative Inventory charts, which measure inventory growth relative to historical norms, effectively factoring out seasonality effects from the data. Seen in this view, the build in inventory over the last 6 weeks is actually 16mm barrels above and beyond seasonally adjusted historical norms, completely anomalous given this time of year: “This has really been a surprising development and this translates into really huge changes in comparative inventory. So, we’re adding millions of barrels a week in terms of comparative inventory, it amplifies that effect, and I think in a lot of ways that helps to put to put the downward price into some context. It also helps to understand how totally artificial this latest price rally has been about sentiment and hope that maybe OPEC is going to do something.”

Crude Spikes After Massive Inventory Drawdown (Most Since Jan 1999) -- Following last week's 2nd build in a row (and 5th of last 6), API reports crude inventories collapse over 12 million barrels - the most since Jan 1999 (against expectations of a 905k barrel build). Crude had rallied on the day early hovering aroung $45.50 for a few hours before the data hit, but spiked above$46 after the print. API:

  • Crude -12.08mm (exp +905k)
  • Cushing -0.7mm (exp -900k)
  • Gasoline -2.388mm (exp -750k)
  • Distillates +944k

The biggest crude inventory draw since Jan 1999... We presume this massive drop is some reflection of the shut-ins from the Gulf thanks to the storms. NOTE - in 2013, there was a 10mm-plus barrel draw during a heavy storm season in The Gulf and also in 2009 during a heavy storm season.  Now all eyes will be on tomorrow's DOE data - better not disappoint after this. After treading water for the last 5 hours - very oddly - crude's reaction to the API data was expectedly a knee-jerk higher towards the Saudi-Russia statement failure highs...“We’ll need to see a significant shock to the market to break out of this range over the next several weeks” leading up to OPEC talks later this month, Michael Tran, a commodities strategist at RBC Capital Markets in New York, says by phone, and we may have just got it.

Oil rises, but doubt over output deal tempers rally: Oil prices edged 1 percent higher on Wednesday in a volatile session as the market weighs the prospect of higher supplies against the possibility that the world's top producers could agree on a production freeze. Brent futures rose 68 cents, or 1.44 percent, to $47.94 a barrel, by 2:36 p.m. ET. U.S. crude rose 67 cents, or 1.49 percent, to $45.50 per barrel."The market is trying to establish a balance in the mid $40s with supply being relatively high internationally versus the prospect that OPEC and non-OPEC members might come to an agreement that would support markets," said Tony Headrick, energy analyst at CHS Hedging LLC in St Paul, Minnesota. Oil hit a one-week high on Monday after Russia and Saudi Arabia agreed to cooperate on stabilizing the oil market. Prices have since fallen due to uncertainty over a deal, particularly after a meeting in Doha in April among the world's largest producers to discuss output ended in failure. The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russia are expected to discuss an output freeze at informal talks in Algeria on Sept. 26-28. "I think we're going to be headline driven for a while. Generally, I think we'll see lower prices going forward. The upcoming meeting isn't going to do very much. If OPEC freezes at these levels, these are record levels," said

How The Hanjin Bankruptcy Could Impact Oil Prices - The bankruptcy of South Korean shipping company Hanjin is leaving investors scrambling. Recently, the courts in South Korea were asked to decide whether the shipping company should be liquidated, or given a new lease on life via restructuring according to a Wall Street Journal Article reported last week. With limited options available to Hanjin, the company is potentially a concern for investors in the oil and transportation sectors. Global trade has slowed in recent years, yet the pricing of cargo shipments remained constant. If Hanjin was to close its doors and go bankrupt, price hikes could occur to anything shipped overseas. The South Korean shipping company is one of the largest shipping lines in the world, and if they were to go bankrupt, the consequences would likely be severe capacity issues, and strains on other shipment companies. With cargo space at a premium, shipping lines are calling for price increases that should have been implemented years ago. Additionally, large customers who use Hanjin to ship goods may have to turn around and use other transportation methods. It’s unclear how the situation will play out, but a possible implication of this is greater demand for air freight services. By extension, this could lead to a greater demand for oil, since airplanes use more fuel than ships do per pound of goods transported each mile. In theory then, this could lead to a rise in oil prices due to the higher demand from airplane traffic needs.On the other hand, if the company were to fail, this could potentially lead to a lack of confidence in international shipping firms in the industry. That might cause U.S. retailers to turn more towards products manufactured closer to home – in the U.S. and Mexico. That’s a trend that has already been given a lot of press in recent years, but the Hanjin situation might further exacerbate it. To the extent that international trade with China and Asia slows, that would result in a demand-side related fall in oil use leading to a lower price for oil.

Four Scenarios for Oil Producers as They Seek to Boost Prices -- A meeting in Algiers at the end of September between OPEC and Russia -- which together pump more than half the world’s oil -- has raised expectations that a deal could be struck to boost prices.  There may be four potential outcomes from the Algiers talks. A freeze in production by OPEC and Russia would be the most effective way of stabilizing the market, Alexander Novak, the Russian energy minister, said in a joint press conference at the G-20 summit in China with his Saudi counterpart on Sept. 5. Novak said his country is ready to cap output at the level of any month in the second half of this year, a period that so far has delivered record volumes from both Russia and OPEC. A freeze at July levels, the most recent month for which data is available, would mean OPEC keeping production at 33.4 million barrels a day, roughly in line with demand for the group’s crude in the fourth quarter, according to data from the International Energy Agency. The Paris-based adviser already expects Russia to hold output steady for the rest of this year and into 2017.  “If they say a freeze at current levels, but making allowances for Iran, Nigeria and Libya, then you’re effectively freezing at a couple of million barrels above where you are today,” Iran is determined to raise production to 4 million barrels a day this year, from about 3.8 million currently, as it recovers market share after years of sanctions.  Nigeria, which produced 1.44 million barrels a day last month according to data compiled by Bloomberg, is seeking to end the militant attacks and get back to the 2 million barrels a day it pumped in January.  Libya is working to reopen its main export terminals, which could boost output to 1.2 million barrels a day by the end of the year, from about 300,000 a day currently.  Iraq and Venezuela are also pumping less crude now than in January, so could seek a higher cap on their output.  OPEC has on occasion overcome internal divisions and agreed to radical measures, most notably to slash production during the 2008 financial crisis.  Previous cuts worked because Saudi Arabia carried most of the burden, said Spencer Welch, director for oil markets and downstream at IHS Markit in London. Now the kingdom “has been quite clear that they are no longer willing to support prices on their own,” he said. The most likely scenario is that the talks don’t yield any curbs on output, said Pugh. When that happened at the April freeze talks in Doha, prices slid right after the collapsed deal, but the impact was offset by an oil workers strike in Kuwait. The market continued to recover in the following months as wild fires shut down output in Canada and attacks in Nigeria cut production.

Crude Soars Above $47 After Biggest Inventory Draw Since 1999 -- Following last night's API-reported 12mm barrel drawdown (the most since 1999) - likely due to Gulf shut-ins due to storms - EIA reports an even bigger 14.5 million barrel draw (likely due to Tropical Storm Hermine). Production fell for the 3rd week and Distillates saw a big inventory build but the headline crude build dominated algos which spiked WTI above $47.  DOE:

  • Crude -14.5mm (exp +905k)
  • Cushing -434k (exp -900k)
  • Gasoline -4.2mm (exp -750k)
  • Distillates +3.38mm

Distillates saw a big build...  API's reported 12mm draw (which made sense in the context of major draws during 2008 and 2013 storm seasons in the Gulf) and DOE confirmed it with the biggest draw since Jan 1999... Unexpectedly large drop in U.S. crude imports, which led to falling inventories and price surge, may be due to Tropical Storm Hermine, and thus could be temporary phenomenon that may reverse, according to Commerzbank and other analysts.  Following Crude production's sudden dramatic rise 3 weeks ago, US production has fallen back for the 3rd week... Following last night's post-API gains, Iran comments combined with Draghi's letdown were weighing on prices before the EIA data hit... which then exploded above $47...  As Bloomberg noted,  “It’s the numbers from last night that are pushing up oil prices,” says Gerrit Zambo, trader at BayernLB in Munich.  “Even if we see a bullish number this afternoon I wouldn’t bet on rising prices for too long”  Charts: Bloomberg

Oil at two-week high after largest weekly crude-supply drop since 1999 - Oil futures on Thursday logged their highest settlement in at least two weeks after U.S. government data revealed the largest drop in crude supplies since 1999.  The 14.5 million-barrel decline reported by the Energy Information Administration was even larger than the surprise 12.1 million-barrel drop reported by the American Petroleum Institute late Wednesday. Ahead of both reports, analysts polled by S&P Global Platts expected a 425,000-barrel climb.  “The large draw in crude oil inventory was driven by a large decline this week in crude oil imports, primarily weather-related, while refinery runs continued to be quite strong,” Robert Merriam, manager of Petroleum Supply Statistics at the EIA, told MarketWatch. He confirmed that the weekly supply drop was the largest since the week ended Jan. 1, 1999.  Oil prices also found support from Chinese data that showed another big increase in the country’s crude imports.  October West Texas Intermediate crude added $2.12, or 4.7%, to settle at $47.62 a barrel on the New York Mercantile Exchange. That was the strongest dollar and percentage gain since April.  November Brent crude on London’s ICE Futures exchange rose $2.01, or 4.2%, to $49.99 a barrel.  The settlement for WTI was the highest since Aug. 26 and highest for Brent since Aug. 19, according to FactSet data. “Crude supply was down dramatically on lower imports,” said James Williams, energy economist at WTRG Economics. “Imports fell because of ships delayed” by last week’s storm. Weekly net crude imports fell by about 1.8 million barrels a day, the EIA said. “We should see a spike in oil prices gradually reversed after the realization of the shipping delay sinks in,” Williams said. “Next week we will see a spike in imports and crude stocks as the delayed ships are unloaded.”

Oil prices surge as US burns through crude supply at record rate - Tropical storms and Hurricane Hermine combined to slow the movement of oil tankers and shut in offshore drilling, forcing the U.S. oil industry to dip into its massive oversupply at the highest rate for this time of year. In the past week, the industry used 14.5 million barrels in storage, largely from the East Coast and Gulf Coast, according to government data. Analysts blamed wind and rough seas resulting from Gaston, Hermine and other storms that have impeded ships with cargoes headed for U.S. refineries. As a result, there was also a sharp decline of 1.8 million barrels a day in U.S. imports — oil that comes from places like Saudi Arabia and Nigeria. Gasoline stocks also fell by 4.2 million barrels. While the storms threatened the Gulf of Mexico, 12 percent of U.S. oil drilling in the Gulf was temporarily shut in.Oil prices jumped on the weekly Energy Information Administration report, adding to gains made late Wednesday on similar data from the American Petroleum Institute. West Texas Intermediate futures for October settled at $47.62 per barrel, a gain of more than 4.6 percent.  "This is an aberrant report of the first order," said John Kilduff of Again Capital. "I think the East Coast shipments were probably affected by Gaston earlier. There was also a barge that got sunk in the Houston Ship Channel. That also affected the ability of ships to move in and out of the channel."  Kilduff said the runup in oil prices is overdone though there could be further impacts in next week's data from Hermine which swirled off the East Coast. A positive for prices was the fact that oil production declined last week, instead of rising as it has lately. The U.S. produced 8.46 million barrels last week, down from 8.49 million.

Oil Markets Brace As U.S. Looks To Sell 100 Million Barrels From SPR - Aging infrastructure could render the U.S. strategic petroleum reserve (SPR) increasingly ineffective, according to a new report from the Department of Energy. The U.S. has stored roughly 700 million barrels of crude oil in salt caverns in Texas and Louisiana for decades. The SPR was established in the aftermath of the Arab oil embargo in 1973, which painfully revealed U.S. oil dependence as high prices drove up inflation, created fuel shortages and lines at gas stations, and rocked the American economy. The SPR was setup to stash 90 days’ worth of supply into storage for safekeeping, meant to be used in the event of a supply outage. Decades of wear and tear mean that the infrastructure is now in desperate need of an upgrade. The DOE says Congress needs to cough up $375.4 million to make repairs, otherwise the SPR may not be all that effective. “Most of the critical infrastructure for moving crude within the SPR has exceeded its serviceable life, increasing maintenance costs and decreasing system reliability,” the report concludes. For the SPR to last decades into the future, DOE argues, investment in the system is needed. But the SPR’s value and purpose is also starting to wane; the U.S. no longer needs the SPR like it once did. High levels of domestic oil production and flat demand mean that the U.S. is not quite as dependent on crude as it once was, at least in terms of the size of the American economy. Five years ago, U.S. oil imports routinely topped 10 million barrels per day. By 2014 that number had shrunk to below 7 million barrels per day. Imports have crept back up a bit as production has declined because of low oil prices, but the U.S. is still far less dependent on imported oil than it used to be.There is another problem with the SPR in 2016 that was less of an issue in the past.The SPR was designed to release oil from the Gulf Coast region, and pump it to the rest of the country. But most of the pipeline infrastructure completed in recent years was designed to flow from north to south, allowing huge volumes of newly produced oil to flow towards the Gulf for refining. The larger north-to-south oil flow means that the SPR would struggle to actually service the country in the event of an outage. Instead of the 4.4 million barrels the SPR is supposed to be able to release each day, it might only be able to move 2 million barrels per day because of pipeline congestion.

People are almost completely ignoring a looming crisis for oil -- In the current climate, the vast majority of worry in the oil markets surrounds the huge imbalance in supply and demand in the industry. This is understandable, given that the enormous glut of oil in the markets has pushed prices down from more than $100 around two years ago, to less than $50 right now.  However, in a major new research note, HSBC argues that soon we won't be worrying about there being too much supply and not enough demand, but rather, things will be the other way round soon enough, and that is going to cause huge problems.  In the report from HSBC staff Kim Fustier, Gordon Gray, Christoffer Gundersen, and Thomas Himboldt argue that given the finite nature of the physical amount of oil in the world, people should really be paying more attention to falling supply in the future, rather than oversupply right now. Here is the extract from Fustier et al (emphasis ours):  "Given the backdrop of the past two years’ severe oversupply in the global oil market, it’s not surprising that few are discussing the possibility of a future supply squeeze. Indeed, most of the current debate on the long-term outlook for oil seems focused on risks to demand from progress on both the policy and technology fronts.  "Meanwhile, we expect the past two years’ severe crude price weakness to result in a return to balance in the global oil market in 2017. At that stage, we expect global effective spare capacity to fall to as little as 1% of demand. Supply disruptions have had only limited impact on price in 2015-16 due to the global oversupply, but the market will be much more susceptible to interruptions post-2017. In addition, given the almost unprecedented fall in industry investment since 2014, we expect the focus to return to the availability of adequate supply."  HSBC's note is more than 50 pages of detailed, thoughtful research on the state of the markets and how the dwindling availability of oil, along with jumping demand over the coming decades will change the world.  But included within the report is a helpful, ten-point summary of the key arguments the bank makes, and what is going on right now. We have summarised the arguments below:

OilPrice Intelligence Report: Oil Set For A Drop After Inventory Data Excitement - Oil prices surged on Thursday following news from the EIA that showed a colossal drawdown in crude oil stocks. Inventories plunged by 14.5 million barrels for the week ending on September 2, the largest drawdown for this time of year on record. However, before the oil bulls get too excited, it is important to note that the huge drawdown could be a one-off, owing to the hurricane that disrupted shipments in the Gulf of Mexico. Imports were down sharply, leading to a larger-than-usual draw on stocks. "This is an aberrant report of the first order," John Kilduff of Again Capital, told CNBC. Others agree: "I suspect over the next few weeks we're going to see inventories recover to a certain extent, as the imports catch up," said Andrew Lipow of Lipow Oil Associates. "There's still plenty of oil out there. What we're seeing is the result of storm impacts on vessel shipping at the same time we still see members of OPEC to increase their oil production." WTI and Brent pared their gains during early trading on Friday as traders took profits.   Oil prices could remain within a range of $35 to $55 per barrel for years, according to Dennis Gartman of The Gartman Letter. Shrugging off any action from OPEC, Gartman says that the global market is very well supplied, and will continue to be for quite some time. He points to the wide contango in the oil futures market, which indicates a short-term glut in supply.  Apache Corporation announced a massive oil discovery in West Texas this week, which could turn out to be one of the largest finds over the past decade. The “Alpine High” discovery in the Delaware Basin could hold as much as 3 billion barrels of oil and 75 trillion cubic feet of natural gas. Alpine High could be worth as much as $8 billion on the lower end of estimates, or ten times as much on the higher end. The exciting thing for Apache is that it says it can turn a 30 percent profit on wells even at today’s prices. The company also says that some of the best natural gas wells could be profitable with natural gas prices at $0.10 per million Btu. Obviously, with natural gas prices much higher than that, the wells could be hugely profitable. As of Friday, Apache’s share price was up more than 15 percent for the week. Bloomberg estimates that Asia’s five largest oil producers – China, India, Malaysia, Indonesia and Vietnam – could see output fall by a combined 255,000 barrels per day because of low oil prices this year. They could also lose an additional 309,000 barrels per day next year.

Oil Slides As Freeze 'Deal' Hope FaltersOf the four scenarios that we laid out yesterday, it appears "exemptions" or "no deal" are now the only ones left on the table for Algiers - neither of which are good for oil prices. As Bloomberg reports, Iran, Libya, and Nigeria have demanded the right to increase production - a solution that makes a Saudi agreement to 'freeze' less likely and a "no deal" reaction in Algiers more likely. “I think it is normal that Iran has the right to increase production to the pre-sanctions level. It is also the right of Libya, Nigeria to increase,”Algerian Energy Minister Noureddine Bouterfa says in interview in Moscow. “All the solutions are possible” at Algiers talks this mo., Bouterfa says when asked if countries including Iran, Libya, Nigeria may have the opportunity to raise output from current levels within the framework of a freeze deal. “Algeria is ready for any actions to stabilize the market” Paris meeting Friday w/ Bouterfa, OPEC Sec-Gen, Saudi Oil Minister will “evaluate all actions by Iran, Russia, Algeria, Qatar” to prepare for talks in Algiers The reaction in markets is to start giving back the US inventory draw gains...

US rig count up 11 this week to 508; Louisiana up 8 - The number of rigs exploring for oil and natural gas in the U.S. increased by 11 this week to 508. A year ago, 848 rigs were active. Depressed energy prices have sharply curtailed oil and gas exploration. Houston oilfield services company Baker Hughes Inc. said Friday that 414 rigs sought oil and 92 explored for natural gas this week. Two were listed as miscellaneous. Among major oil- and gas-producing states, Louisiana gained eight rigs, Texas was up four, Utah and West Virginia each increased by two and Ohio by one. Oklahoma declined by four and New Mexico was off two. Alaska, Arkansas, California, Colorado, Kansas, North Dakota, Pennsylvania and Wyoming were unchanged. The U.S. rig count peaked at 4,530 in 1981. It bottomed out in May at 404.

UPDATE 2-U.S. oil drillers add rigs in longest streak in 5 years -Baker Hughes | Reuters: U.S. drillers this week added oil rigs for a tenth week in the past 11, according to a closely followed report on Friday, the longest streak of not cutting rigs since 2011, as the rig count recovered to February levels. After falling 206 rigs in the first half of the year, the rig count has increased or held steady every week so far this quarter. The rig count plunged from a high in October 2014 after crude prices collapsed in the biggest price rout in a generation. Drillers added seven oil rigs in the week to Sept. 9, bringing the total rig count up to 414, the most since February, energy services firm Baker Hughes Inc said. That is well below the 652 oil rigs active during the same week a year ago, but is up from the recent bottom of 316 rigs seen in May. All of the rigs added this week were those units located offshore in Louisiana that returned to service after shutting last week due to Tropical Storm Hermine, analysts said. Drillers removed seven offshore rigs during the week ended Sept. 2 and added eight back during the week ended Sept. 9. U.S. crude futures were on course to rise about 4 percent this week on hopes for a global deal on stabilizing crude output after Saudi Arabia, the leading oil producer inside OPEC, and Russia, the biggest producer outside the group, agreed on Monday to cooperate in oversupplied markets. On Friday, U.S. crude was trading at above $46 a barrel, close to the $50-mark that analysts and drillers say makes drilling more viable. Futures for calendar 2017 were trading over $50.

Permian rig count gains stall after 12 weeks -  The Permian Basin’s run of 12 consecutive weeks of rig count gains ended Friday, but the loss was only slight. The Permian idled two rigs, lowering the basin-wide total to 200, according to data from Baker Hughes. The net loss of rigs happened in New Mexico, where Eddy and Lea counties each shed a rig. District 7B was unchanged at five, District 7C fell one to 21; District 8 gained one to 131 and District 8A held steady at 15. The Texas total for the Permian was 172. Midland County still leads all counties nationwide in rig count. The county, which sits at the core of the Midland Basin, saw one fewer rig this week, lowering the total to 36. Reeves County, which is in the heart of the Delaware Basin, finished the week with 23 rigs, down three. There weren’t any rigs in the Permian that saw renewed activity or ceased all activity. The Permian is almost back to where it started. The count on Jan. 8, the first full week of the year was 209. The Sept. 2 count snapped a 32-week streak of sub-200 rig counts. The nation’s most-active basin recorded 250 rigs a year ago this week.  Texas added four rigs, raising the statewide tally to 245. Aside from the Permian, all of Texas’ major basins were unchanged. The Eagle Ford had 38 rigs, the Haynesville marked 14, the Granite Wash held steady at nine and the Barnett stayed at three. There was one offshore rig in Texas, and there weren’t any rigs in inland waters. All of New Mexico’s rigs were operating in the Permian, which totaled 28. At this time last year, there were 366 rigs in Texas and 48 in New Mexico. The U.S. added both oil and natural gas rigs this week. The number of rigs searching for oil rose seven to 414, while natural gas rigs climbed four to 92. The tally of miscellaneous rigs was unchanged at two. In total the U.S. had 508 rigs, up 11. The count marked the first time since Feb. 26 that the count nationwide was in the 500s. All offshore rigs were in the Gulf of Mexico, which rose eight to 18. Rigs in inland waters held steady at five, while rigs on land rose three to 485. By drilling trajectory, there were 396 horizontal rigs, up one; 64 vertical rigs, up four; and 48 directional rigs, up six. The U.S. had 848 rigs at this time last year.

Oil continues decline after data show weekly U.S. oil-rig count up by 7 - Oil futures continued to decline Friday after data from Baker Hughes revealed that the number of active U.S. rigs drilling for oil climbed by 7 to 414 rigs this week. The count has risen in 10 of the last 11 weeks. The total active U.S. rig count, which includes oil and natural-gas rigs, rose by 11 to 508, Baker Hughes said. October crude was at $46.10 a barrel on the New York Mercantile Exchange, down $1.52, or 3.2%, from Thursday's settlement. It traded around $46.26 before the rig data.

Iraq And KRG Agree To Split Kirkuk Revenues 50/50 And Fight ISIS In Mosul - Iraq and the semi-autonomous region of Kurdistan have restarted joint exports of crude from the Kirkuk oil field, after the two parties reached a preliminary revenue-sharing deal earlier this week, industry contacts told Reuters on Thursday. The agreement came to fruition during recent meetings in Baghdad between high-level officials from Baghdad and Erbil, including Iraqi Prime Minister Haider al-Abadi and KRG Prime Minister Nechirvan Barzani. One shipping source said that revenues from Kirkuk’s oil trade would be split 50/50 between Iraq’s State Organization for the Marketing of Oil and Kurdistan under the new deal, though the agreement's final details will be sorted out during upcoming discussions between the Iraqi Oil Ministry and the KRG’s Natural Resources Ministry. The officials also discussed the nearing operation for the liberation of Mosul and the future of the city and its citizens once the Islamic State has been removed. “We have an initial agreement with the Kurdistan Region on the participation of all components in the Mosul liberation operation and the future administration of the city when IS is pushed out,” Salim al-Jibouri, the Speaker of the Iraqi Parliament told Kurdistan24. The two sides agreed to coordinate attacks against the terrorist group in Mosul and will work together to return internally displaced persons to their homes, a joint statement by the Iraqi government and the KRG said.

Iraq needs to review upstream contracts in line with oil prices: Oil minister - Oil | Platts News Article & Story: As Iraq continues to pump record crude oil levels, oil minister Jabbar al-Luaibi, stressed Wednesday the need to review its upstream contracts with international oil companies to account for changes in the oil price. Luaibi met a delegation from Italian oil company Eni led by head of exploration, Antonio Villa, in Baghdad, to discuss his plans for the sector in 2016 and 2017, which he said would focus on the small undeveloped fields in the south of the country.Eni leads the development of the 4 billion barrel Zubair oil field in the south of Iraq, along with South Korea's Kogas and Iraqi state-owned Missan Oil Co. under a technical service contract with the oil ministry. It plans to increase total production capacity to 850,000 b/d over the next few years. But planned investments in the field have been delayed as the company has sought to preserve cash to deal with lower oil prices. He emphasized that his office is working to overcome the obstacles and difficulties faced by oil companies operating in Iraq, adding that it "will open a new page in the development of the oil sector" in a statement released Wednesday. Luaibi reiterated that he has no plans to cancel any of the upstream contracts, but called for the deals to be modified to take into account prices.

Saudi Said To Weigh Canceling $20 Billion Of Projects -- Bloomberg -- September 6, 2016 --Link here to Bloomberg: Saudi Arabia is intensifying efforts to shrink the highest budget deficit among the world’s biggest 20 economies, aiming to cancel more than $20 billion of projects and slash ministry budgets by a quarter, people familiar with the matter said. The government is reviewing thousands of projects valued at about 260 billion riyals ($69 billion) and may cancel a third of them, three people said, asking not to be identified as the discussions are private. The measures would impact the budget for several years, according to two of the people. A separate plan includes merging some government ministries and eliminating others, two people said, also speaking on condition of anonymity. The world’s biggest oil exporter is taking unprecedented steps to rein in a budget shortfall that ballooned to 16 percent of gross domestic product last year, curtailing fuel and utility subsidies as well as cutting billions of dollars in spending. The International Monetary Fund expects the shortfall to drop to below 10 percent of GDP in 2017.

Saudi Oil Output Said to Drop as OPEC Debates Production Freeze - Saudi Arabia told OPEC that its oil production dropped by 40,000 barrels a day in August to 10.63 million barrels as the group debates a deal to curb output to shore up prices. The figures were submitted to the Organization of Petroleum Exporting Countries, according a person with knowledge of the data, who asked not to be identified because the information hadn’t yet been made public. The country’s output declined from an all-time high of 10.67 million barrels a day in July, according to OPEC submissions. OPEC and Russia are putting cooperation back on the table, after two years of a Saudi-led strategy by the producer group to pump flat out to protect market share against the surge in U.S. shale oil. Their last attempt to do this -- a proposal to freeze output in April -- collapsed after Saudi Arabia refused to proceed without all OPEC states, including regional rival Iran, participating. “The most important issue is whether Saudi Arabia will cut its production to pre-summer levels,” said Anas al-Hajji, an independent analyst and former chief economist at NGP Energy Capital Management LLC in Houston. The kingdom’s production was 10.22 million barrels a day in March, before the hot summer boosted seasonal local demand. Iran insists it will be ready to decide on capping production once output recovers to what it was before international sanctions on the country were tightened in 2012. That level is “slightly” above 4 million barrels a day, and Iran may reach it by the end of 2016 or early next year, Mohsen Ghamsari, director for international affairs at state-run National Iranian Oil Co., said Thursday in an interview in Singapore.  Iran’s production rose to 3.63 million barrels a day in August from 3.62 million barrels a day in the previous month, according the person with knowledge of the data.  Output in Iraq, OPEC’s second-biggest producer, rose to 4.638 million barrels a day in August from 4.606 million barrels a day the previous month, the person said. Kuwait also increased, to 2.987 million barrels a day from 2.95 million barrels a day, he said. Nigeria’s production rose to 1.456 million barrels a day in August from 1.27 million barrels a day, the person said. The Niger Delta Avengers, a militant organization, declared an end to attacks on Nigerian oil infrastructure, according to a statement last month on a website that said it represents the group.

Saudi Arabia’s oil industry has an overlooked risk -- Last week, a rocket originating from Yemen hit a power-relay facility in southern Saudi Arabia, the state-run Saudi Press Agency reported, as was cited by Bloomberg.  Yemeni rebels said they hit Saudi Aramco facilities, but the kingdom's state-run oil company announced that "all of its oil, gas, and refining plants were operating as normal" in the aftermath, according to Bloomberg.  Still, some analysts argued that the episode shows that the Saudis' campaign in Yemen could pose a risk to its oil sector.  "The recent cross-border rocket attacks originating from Yemen are an ominous reminder of the dangers posed by Saudi Arabia’s 18-month military intervention in Yemen," argued Helima Croft, the head of commodity strategy at RBC Capital Markets, in a note to clients.  "Although no ARAMCO facility in the southern region has yet to be hit, the fact that a rocket did strike a power station in Najran last week demonstrates that critical local infrastructure indeed remains vulnerable."   Notably, the RBC Capital Markets team also argued last year that the Saudi campaign in Yemen could also add additional pressures on its finances as it increases security spending. "The military campaign in Yemen, more assertive efforts to roll back Iranian regional influence, and more muscular counter-terrorism efforts will put further pressure on Saudi government finances as they ratchet up security spending," the team wrote back in June 2015.

Obama Faces Humiliation After House Unanimously Passes Bill Allowing Sept 11 Lawsuits Against Saudi Arabia Two days before the 15 year anniversary of the September 11 attack, moments ago the House unanimously passed - to thunderous applause - legislation allowing the families of 9/11 victims to sue Saudi Arabia in U.S. courts,   The bill, which passed the Senate unanimously in May, now heads to President Obama’s desk. And that's where things get tricky for Obama. The White House has fiercely opposed the bill, arguing it could both strain relations with Saudi Arabia and also lead to retaliatory legislation overseas against U.S. citizens. Obama has lobbied fiercely against the bill, and has hinted strongly it will veto the measure. He is not alone: the Saudi government has likewise led a vocal campaign in Washington to kill the legislation. Those efforts have been fruitless in Congress, however. Meanwhile, the legislation saw broad support from both parties, and Congress could override an Obama veto for the first time if he rejects the legislation. Such an outcome would undoubtedly embarrass Obama and divide Democrats ahead of the 2016 elections and a crucial lame-duck session of Congress.  For now, Obama is adamanat: "The Saudis will see this as a hostile act," said Dennis Ross, Obama’s former Middle East policy coordinator. "You’re bound to see the Obama administration do everything they can to sustain a veto.   How Obama will spin such a pro-Saudi, and anti-US decision, which may be overriden anyway, to the US population is unclear.

The War Economy: CNN's Wolf Blitzer Warns About Job Loss If US Stops Arming Saudi Arabia -- Ladies and gentlemen, it appears the long anticipated moment of peak mainstream media stupidity may have finally arrived.   This is what passes for journalism in America today.The Intercept reports:Sen. Rand Paul’s expression of opposition to a $1.1 billion U.S. arms sale to Saudi Arabia — which has been brutally bombing civilian targets in Yemen using U.S.-made weapons for more than a year now — alarmed CNN’s Wolf Blitzer on Thursday afternoon. Blitzer’s concern: That stopping the sale could result in fewer jobs for arms manufacturers.“So for you this is a moral issue,” he told Paul during the Kentucky Republican’s appearance on CNN. “Because you know, there’s a lot of jobs at stake. Certainly if a lot of these defense contractors stop selling war planes, other sophisticated equipment to Saudi Arabia, there’s gonna be a significant loss of jobs, of revenue here in the United States. That’s secondary from your standpoint?” Paul stayed on message.  “Well not only is it a moral question, its a Constitutional question,” Paul said. “Our founding fathers very directly and specifically did not give the president the power to go to war. They gave it to Congress. So Congress needs to step up and this is what I’m doing.”

Top Saudi cleric says Iran leaders not Muslims as haj row mounts | Reuters: Saudi Arabia's top religious authority said Iran's leaders were not Muslims, drawing a rebuke from Tehran in an unusually harsh exchange between the regional rivals over the running of the annual haj pilgrimage. The war of words on the eve of the mass pilgrimage will deepen a long-running rift between the Sunni kingdom and the Shi'ite revolutionary power. They back opposing sides in Syria's civil war and a list of other conflicts across the Middle East. Tensions between them have been rising since Saudi Arabia cut ties with Iran in January following the storming of its embassy in Tehran, itself a response to the Saudi execution of a dissident Shi'ite cleric. Iranian Supreme Leader Ayatollah Ali Khamenei, in a message published on Monday, criticized Saudi Arabia over how it runs the haj after a crush last year killed hundreds of pilgrims. He said Saudi authorities had "murdered" some of them, describing Saudi rulers as godless and irreligious. Responding to a question by Saudi newspaper Makkah, Saudi Arabia's Grand Mufti Sheikh Abdulaziz Al al-Sheikh said he was not surprised at Khamenei's comments. "We have to understand that they are not Muslims. ... Their main enemies are the followers of Sunnah (Sunnis)," Al al-Sheikh was quoted as saying in remarks republished by the Arab News.He described Iranian leaders as sons of "magus", a reference to Zoroastrianism, the dominant belief in Persia until the Muslim Arab invasion of the region that is now Iran 13 centuries ago.

Iran says it'll increase output, ignoring Russia-Saudi oil deal:  - Major oil producer Iran has said it will increase its own oil output to pre-sanctions levels in the next few months, shrugging off the deal between Russia and Saudi Arabia to stabilize oil markets. The National Iranian Oil Company's (NIOC) director for international affairs told CNBC on Wednesday that Iran's oil output had reached 3.8 million barrels per day and that it would increase production. "Our current rate of production is slightly over 3.8 million barrels per day and before sanctions we were over 4 million," said NIOC's Seyed Mohsen Ghamsari, who was speaking at a petroleum conference in Singapore hosted by S&P Global Platts."And as everyone knows in the market, we are soon going to introduce new crude oil to the market by the end of the year, (that means increasing output) by at least 300,000 barrels a day so it means that we can match (our pre-sanction) production in two or three months," Dismissing concerns that an oversupply of oil could dampen a price recovery and delicate rebalancing in oil markets, Dow Jones reported on Wednesday that Ghamsari had said that the oil market would be rebalancing by the fourth quarter of this year or the start of 2017. The comments come after other major oil producers Russia and Saudi Arabia (an OPEC member alongside Iran) announced on Monday that they would form a strategic energy partnership designed to help stabilize oil markets. Although no formal agreement was mentioned on freezing production levels, a move that could help to support global oil prices which slumped on an glut in supply, the agreement was seen as "meaningful" by analysts as it marked a further step towards putting a floor under oil prices.

Oil minister: Iran backs OPEC moves geared toward stability (AP) — Iran’s oil minister says his country would support any decision by the oil producing group of nations that seeks to stabilize the oil market, Iranian state TV reported on Tuesday. The remarks by the minister, Bijan Namdar Zangeneh, came after talks with OPEC chief Mohammad Sanusi Barkindo on Tuesday in Tehran. According to Zangeneh, most OPEC members want to see the price of crude oil at 50 to 60 dollars per barrel. “This price makes production of oil by OPEC members profitable, economical and useful, while preventing the rivals from raising their output,” he said, Iran is trying to regain its share of the global petroleum market after the removal of Western sanctions following Iran’s nuclear deal with world powers. It has said it will participate in talks on a possible production freeze after it reaches an output of 4 million barrels per day by April 2017. In late 2000s, Iran was the second producer in OPEC with a total production of 4.2 million barrels per day, with 2.5 million barrels exported. The current production is at 3.6 million barrels of oil a day, of which Tehran exports 2.2 million barrels a day. The world’s two largest oil producers, Russia and Saudi Arabia, on Monday agreed to act together to stabilize global oil output, though it’s unclear what that might entail. Russia, which is not a member of the oil producing nations’ group OPEC, this year supported calls to freeze production, but the efforts fell through after Iran opposed the plan.

US payment of $1.7 billion to Iran made entirely in cash - The Obama administration is acknowledging its transfer of $1.7 billion to Iran earlier this year was made entirely in cash, using non-U.S. currency, as Republican critics of the transaction continued to denounce the payments. Treasury Department spokeswoman Dawn Selak said in a statement late Tuesday that the cash payments were necessary because of the "effectiveness of U.S. and international sanctions," which isolated Iran from the international finance system. The $1.7 billion was the settlement of a decades-old arbitration claim between the U.S. and Iran. An initial $400 million of euros, Swiss francs and other foreign currency was delivered on pallets Jan. 17, the same day Tehran agreed to release four American prisoners. The Obama administration had claimed the events were separate, but recently acknowledged the cash was used as leverage until the Americans were allowed to leave Iran. The remaining $1.3 billion represented estimated interest on the Iranian cash the U.S. had held since the 1970s. The administration had previously declined to say if the interest was delivered to Iran in physical cash, as with the principal, or via a more regular banking mechanism. Earlier Tuesday, officials from the State, Justice and Treasury departments held a closed-door briefing for congressional staff on the payments, according to a Capitol Hill aide familiar with the session. The officials said the $1.3 billion was paid in cash on Jan. 22 and Feb. 5. The aide was not authorized to speak publicly and requested anonymity. The money came from a little-known fund administered by the Treasury Department for settling litigation claims. The so-called Judgment Fund is taxpayer money Congress has permanently approved in the event it's needed, allowing the president to bypass direct congressional approval to make a settlement. The U.S. previously paid out $278 million in Iran-related claims by using the fund in 1991.

Iran: Secret party scene defies strict Muslim authorities with drink, drugs, mini-skirts and music: In spite of Iran's many strict Islamic laws – heterosexual interaction between men and women is forbidden and punishable by lashings and imprisonment, women aren't allowed to dance in the presence of men, rap music isn't strictly illegal but believed to lead to uncontrollable behaviour –Tehrani nights are rife with secret house parties and techno raves.  Behind closed doors Iranian youngsters see themselves as above the law, not part of it. Girls take off hijabs before stepping through the door. The next stop is the master bedroom where they strip their loose manteaus – another indispensable part of the Islamic dress code – and reveal their miniskirts and high heels.In the living room whisky and vodka flow abundantly while under the kitchen's buzzing hood the first joints are being lit. While obviously at ease with engaging in several illegal activities at once, the crowd does show slight signs of panic each time the doorbell rings. It is always among the possibilities that one of the invitees or the neighbours squealed to the police."It is the hardest thing to trust anyone in Iran", several attendees at the party tell me. Most of them already have been arrested and kept in custody for partying on a number of occasions. But the prospect of getting arrested doesn't deter any of them from partying on. "It is certain that one day you will get arrested if you decide to party," says Gazelle, an art student in her early twenties, "mostly you can bribe the officer at the door. It even has a unofficial fixed price: 50,000 toman." That's the equivalent of £10.

War against Isis: Security services bracing for possible return of thousands of jihadists as group loses territory -  Security services are examining plans for how to deal with thousands of Western jihadists who would seek to return to Europe as Isis continues to lose territory in its “caliphate” and suffer severe losses from pounding air strikes by the US-led coalition and Russia. Although the Islamist group has suffered increasingly from desertion, very few of the foreign fighters who have left its ranks have returned to Europe in recent times. The numbers coming to Britain for instance, The Independent has learned, have been in no more than single figures for the last eight months. These extremists, radicalised, armed and trained, will present a severe threat in the near future, “a ticking time bomb” as they try to break out of the region, say security officials, who stress that a coordinated policy is needed to confront the impending crisis. Turkish military opens up new front against ISIL in Syria. The problem has been compounded by a dramatic increase in the use of children, including those of Western parentage, by Isis to carry out executions of prisoners and other acts of extreme violence. A photo appeared last week of a young boy, said to be British, in the act of shooting Kurdish fighters captured by Isis. The 11-year-old, it has been claimed, was the son of Sally Jones, a British woman who had converted to Islam and joined Isis in Syria

US-Trained Special Ops Fighter Is The Islamic State's New Top Commander In Iraq -- Just days after the news hit that ISIS' main propaganda officer, Mohammad al-Adnani, one of the Islamic State's most prominent leaders, the second in command of Abu Bakr al-Baghdadi, as well as the unofficial spokesman of the terrorist organization, was killed (with a scandal promptly erupting between the US and Russia over who had taken him out), the power vacuum that formed at the top of the Islamic State has been promptly filled, after former Tajik Special Forces colonel Gulmurod Khalimov became the top ISIS battlefield commander in Iraq, after defecting last year and swearing jihad against the West.  Khalimov is set to take the position vacated by Abu Omar al-Shishani, also known as Omar the Chechen, who was killed in the Iraqi city of Shirqat, south of Mosul. in early July and whom the Pentagon described as Islamic State's "minister of war." What makes the ascent of Khalimov particularly embarrassing for the US is that The former paramilitary unit commander of the Tajikistan armed forces received his battlefield training from American advisors and even came to the United States on several occasions to receive special counterterrorism training through the US State Department’s Diplomatic Security/Anti-Terrorism Assistance program.  Then last year, Khalimov defected to ISIS where the Daesh forces in Iraq welcomed the new addition to their ranks with open arms especially since he was acquainted with US military and intelligence tactics. Subsequently, the American trained former Special Forces colonel Gulmurod Khalimov received a promotion within the terrorist organization, and has become the group's Iraqi battlefield commander just weeks after ISIS refused to officially announce that Khalimov had been promoted to the top ranks of the terrorist organization out of concern that he would become a high-priority target of US led strikes in Iraq, but Iraq’s Al Sumaria news agency exposed the promotion through a source in Nineveh province

Isis' oil empire is employing thousands of children - Satellites reveal boom in cottage industry in which tens of thousands of civilian workers are engaged in dangerous, toxic work that props up extremist regime. Satellite images have revealed a huge expansion of makeshift oil refineries and a further human catastrophe for those struggling to survive amid Syria’s civil war. Tens of thousands of black smudges have appeared across the country since the beginning of the war in 2011. A report prepared by the Dutch NGO Pax analysed images of the ground north of the Isis-controlled city of Deir ez-Zor and found 5,791 backyard-style refineries had sprung up since 2012. The refinement of the crude has shifted from large, easily targeted facilities to small household-run furnaces that are toxic, volatile and often manned by children. A shortfall in production means that oil remains one of the few industries in which Syrians can still earn a living. Separate investigations by Unicef, Save the Children and the UN, as well as numerous journalists, have previously raised concerns over the high proportion of children working in the refineries around Deir ez-Zor.Report author Wim Zwijnenburg said the scale revealed by the satellites indicated that tens of thousands of civilians, including thousands of children, are now involved in the cottage oil industry. Many adult men in Syria have gone away to fight. At one site a local doctor claimed 2000 children were working amid 300 refineries. “Considering that in our analysis we found 5800 refineries at 5 locations, and there at 36 known locations, we felt that’s it safe to say that thousands of children are likely working at these sites spread over all of northern and eastern Syria,” said Zwijnenburg.

How the ISIS Recruits And Coerces Children: A few weeks ago the world once again witnessed ISIS’s use of at least one child bomber, perhaps two. A child between the ages of 12 and 14 was reportedly the culprit behind a suicide attack – blowing up the wedding of Besna and Nurettin Akdogan in Gaziantep, Turkey and killing 54 people on August 20. Although now the Turkish government is not certain whether it was a child or an adult, it’s certainly not the only time children have been used by terrorist networks to perpetrate attacks. The following day, a child was caught before he could detonate a suicide bomb at a Shia school in Kirkuk, Iraq. During the course of research for our book, Small Arms: Children and Terror, John Horgan and I have learned how ISIS socialises children into their terrorist network. We have also had the opportunity to meet with children who have been rescued from terrorist groups in Pakistan. There are important differences in how groups engage children in militant activities. Differences between children in terrorist groups and child soldiers include how children are recruited and what role the parents and community play in recruitment. Understanding these differences helps us know how best to approach treating the children’s trauma and figure out which children can be rehabilitated and which ones might be vulnerable for recidivism as adults.

Nearly half of all refugees are children, says Unicef -- Children now make up more than half of the world’s refugees, according to a Unicef report, despite the fact they account for less than a third of the global population.  Just two countries – Syria and Afghanistan – comprise half of all child refugees under protection by the United Nations High Commissioner for Refugees (UNHCR), while roughly three-quarters of the world’s child refugees come from just 10 countries.New and on-going global conflicts over the last five years have forced the number of child refugees to jump by 75% to 8 million, the report warns, putting these children at high risk of human smuggling, trafficking and other forms of abuse.  The Unicef report (pdf) – which pulls together the latest global data regarding migration and analyses the effect it has on children – shows that globally some 50 million children have either migrated to another country or been forcibly displaced internally; of these, 28 million have been forced to flee by conflict. It also calls on the international community for urgent action to protect child migrants; end detention for children seeking refugee status or migrating; keep families together; and provide much-needed education and health services for children migrants.

Obama and Putin unable to reach cease-fire agreement for Syria  - President Obama and Russian President Vladi­mir Putin failed to reach a deal Monday on a cease-fire for Syria, but the two sides have agreed to continue negotiating even as Syrian government forces close in on the beseiged city of Aleppo. Meeting with Putin on the sidelines of the Group of 20 economic meeting here, Obama emphasized the humanitarian importance of and urgent need for a cease-fire, but he was adamant about not striking an agreement that wouldn’t meet his long-term objectives in Syria, said a White House official who spoke on the condition of anonymity under ground rules. The 90-minute unscheduled meeting was described by both sides as longer than usual for the sidelines of a G-20 summit. But an ultimate agreement remained elusive. At a news conference, Obama said the breakdown of a previous cessation of hostilities agreement had prompted Syrian President Bashar al-Assad to resume bombing opposition forces “with impunity.” That has led opposition forces, including those with ties to terrorism, to ramp up recruitment of new fighters, the president said. “That is a very dangerous dynamic,” Obama said. Of his meeting with Putin, he added: “We have had some productive conversations about what a real cessation of hostilities would look like to allow us to both focus our energies on common enemies. . . . But given the gaps of trust that exist, that’s a tough negotiation. We haven’t yet closed the gap.”

A reminder of the permanent wars: Dozens of U.S. airstrikes in six countries -- While Americans savored the last moments of summer this Labor Day weekend, the U.S. military was busy overseas as warplanes conducted strikes in six countries in a flurry of attacks. The bombing runs across Asia, Africa and the Middle East spotlighted the diffuse terrorist threats that have persisted into the final days of the Obama presidency — conflicts that the next president is now certain to inherit. In Iraq and Syria, between Saturday and Monday, the United States conducted about 45 strikes against Islamic State targets. On the other side of the Mediterranean, in the Libyan city of Sirte, U.S. forces also hit fighters with the militant group. On Sunday in Yemen, a U.S. drone strike killed six suspected members of ­al-Qaeda in the Arabian Peninsula. The following day, just across the Gulf of Aden in Somalia, the Pentagon targeted al-Shabab, another group aligned with ­al-Qaeda. The military also conducted several counterterrorism strikes over the weekend in Afghanistan, where the Taliban and the Islamic State are on the offensive. Militants in each of those countries have been attacked before, but the convergence of so many strikes on so many fronts in such a short period served as a reminder of the endurance and geographic spread of al-Qaeda and its mutations. “Now, we’ve got U.S. combat operations on multiple fronts and we’re dropping bombs in six countries. That’s just the unfortunate reality of the terrorism threat today.” In meeting those threats, Obama has sought to limit the large-scale deployments of the past, instead relying on air power, including drones; isolated Special Operations raids; and support for foreign forces.

China Releases Secret Data On Crude Oil Inventories -- China is bothering energy analysts and investors. It’s bothering them because it has been on a buying spree for crude in the last two years but nobody knows for sure how much of it the world’s second-largest consumer of oil has stashed away in strategic and commercial tanks.  At least, that was true up until this morning, when China graciously reported their oil strategic inventory reserves as of the first of the year—31.97 million tons, or between 33 and 36 days’ worth of China imports. The figure, which is higher than analysts had expected, may not mean a whole lot, because we still don’t know anything about how much they have amassed since then, and it doesn’t include any information about what may be stashed away in commercial storage facilities. Knowing how much oil China has put away could be vital for predicting the future moves of the oil market, from analysts’ perspective. Unfortunately, Beijing doesn’t feel that it has to share this vital information with the world. What the world-outside-China knows is that this year, crude oil imports there have reached historic highs, as the country takes advantage of the price rout and teapot refineries gain in prominence – and clients abroad. The world also knows that local production is falling, as E&Ps have to deal with maturing fields and low profitability.  This falling local production is increasing China’s dependence on external sources of crude, which hardly sits well with Beijing and could provide an easy explanation for the inventory boost: buy it cheap while it lasts, have a nice big cushion when prices start climbing back up.Yet, it’s certainly uncomfortable for observers and analysts to not know even approximately how much crude oil there is in China. That’s why some of them have found a way around the fragments of information that the country’s bureau of statistics releases sporadically. Bloomberg writes that analysts at JPMorgan use a simple calculation method to figure out those notorious inventories. They simply subtract what the country consumes from what it produces and imports. The difference over the first half of the year came in at 1.2 million bpd, with total inventories reaching about 400 million barrels by end-June. This falls short of a stated target of 511 million barrels, but the target may have been reached by the end of August and JPMorgan analysts are suggesting Chinese imports this month could fall.

Global Oil Demand Set To Tumble As China Cracks Down On Teapot Refiners -- One week ago we reported (for the second time) that one of the biggest mysteries for the global oil market, and certainly the biggest wildcard for future oil prices, is the current state of China's Strategic Petroleum Reserve. As JPM reported , China's SPR demand was equivalent to approximately 1mm bpd. More importantly, stopping shipments for the reserve would wipe out about 15 percent of the country’s imports. More to the point, according to JPM, and contrary to official data, China's strategic oil reserve was approaching capacity, which going back to JPM's June calculation, meant that "our base case assumes China continuing high volumes of (1mbd) SPR builds through August, while factoring in 7% domestic crude production decline and 2% refinery throughput increase. This means 15% mom decline in China’s crude imports in September, or 1.2mbd loss from the China inventory demand. China’s net oil imports ytd has expanded 16% yoy, versus a flat consumption growth." . According to Oilchem, a Shandong-based industry researcher, China's major refineries cut runs to 70.3% of capacity as of September 1, down -1.43% from Aug. 18. To be sure, a big part of the utilization rates decline emerged as the Sinopec Qilu refinery with 8m ton/yr capacity, started maintenance. Oilchem expects the tuns to rebound in mid-Sept. as some plants will resume after works. That, however, may prove optimistic, because while we don't doubt that China's major refiners do come back on line in short notice, the biggest variable for China's recent oil demand, the blistering pace of refining by China's smaller, "teapot" refiners, may be about to see a steep decline. The reason is that, as Bloomberg wrote over the weekend, suddenly "everyone wants a share of the world’s hottest oil market, including China’s taxman." Which brings us to the teapots: as Bloomberg adds, "purchases by the country’s independent refiners, granted permission last year to buy foreign crude, have soaked up some of the global oil glut and helped revive prices after the biggest collapse in a generation.Sellers from Saudi Arabia to BP Plc have been supplying the plants known as teapots, which account for a third of the nation’s processing capacity." 

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