Sunday, October 23, 2016

oil hit 15 mo high, imports at 16 mo low, refinery utilization at 43 mo low, gasoline use at 9 mo low, rigs up at fastest rate since 2010, DUCs down, et al

driven by a falling dollar and reports of falling crude supplies, oil prices rose to a 15 month high midweek, before dropping back on Thursday, when the dollar jumped to an 8 month high and trading in the November oil contract expired...after closing last week with a small gain at $50.35 a barrel, US WTI oil prices opened higher Monday morning before later falling on word that Iran planned to boost its oil output to 4 million barrels, as they joined Iraq in protesting that the OPEC production estimates coming out of the Algiers meeting were too low, with prices ending the day below $50 at $49.94 a barrel...prices then rose on Tuesday after the American Petroleum Institute reported a 3.8 million barrel drop in crude supplies while the dollar fell, sending WTI prices higher to close at $50.29 a barrel...oil prices then spiked on Wednesday after the EIA reported an even larger inventory drop of more than 5 million barrels, as oil rose 2.6% to close at at a 15 month high of $51.60...with the dollar resurgent on Thursday and traders noticing concurrent large increase in gasoline supplies, oil gave up most of its Wednesday gains, with the expiring November contract down $1.17, or 2.3 percent, to finish at $50.43 a barrel, while the new front month December contract simultaneously slid $1.19 to settle at $50.63 a barrel....oil for December, now the quoted contract, then steadied on Friday as the dollar eased off eight-month highs while the weekly oil rig count showed drilling still growing, and closed the week at $50.85

meanwhile, natural gas prices, which had hit a 22 month high at $3.341 per mmBTU on Thursday of last week, slowly retreated early this week until Friday, when they fell  nearly 15 cents in a week that saw the November contract price drop 10% from last weeks high...falling from last week's close of $3.285 per mmBTU to close at $3.244 per mmBTU on Monday, gas prices then inched back to $3.263 per mmBTU on Tuesday as analysts continued to cite lower gas production and forecasts for a colder winter...but prices slipped to $3.170 on Wednesday and then to $3.141 per MMBtu on Thursday, after the EIA reported there was a 77 billion cubic feet injection to storage in the week ended October 14th, 5 billion cubic feet more than analysts had expected... prices then fell 14.8 cents, or 4.7%, to $2.993 mmBTU, to a new two-week low on Friday, pressured by those high stockpile levels and "concerns over demand amid warm weather forecasts", while there isn't much news on what drives natural gas prices, we would note that as prices rose over the past few weeks, market commentary was that prices were rising due to forecasts of much warmer than normal weather, which traders apparently believed would translate into greater electricity generation than normal to meet an unseasonable demand for air conditioning (presumably in states south of us)....this week that story was turned on its head, as we're now being told that natural gas prices fell due to warmer-than-normal weather for this time of the year.

The Latest Oil Stats from the EIA

this week's oil data for the week ending October 14th from the US Energy Information Administration indicated a drop of nearly a million barrels per day in our oil imports, largely due to disruptions caused by Hurricane Matthew, and hence a large drop in our supply of oil by the end of the week...however, the crude oil fudge factor that was needed to make the weekly U.S. Petroleum Balance Sheet (line 13) balance swung to -312,000 barrels per day, from last week's +415,000 barrels per day, which means that 312,000 barrels of oil per day that we appeared to have produced or imported last week did not even show up in the final oil consumption or inventory figures....needless to say, that -726,000 barrel per day swing in the balance sheet adjustment will mean most of our week over week comparisons will be virtually meaningless, and moreover, since the year ago adjustment was at +451,000 barrels per day, the year over year comparisons will be similarly distorted...still, it is this data and those distorted comparisons which move oil prices and hence drilling activity, so we'll continue to review them for whatever insights they provide into what the oil traders are looking at.....year to date, the cumulative daily average of that fudge factor has fallen to -25,000 barrels per day, so it appears that most of oil that disappears from the statistics over one period still seems to be finding its way back into the data in subsequent weeks...

with that in mind, then, the EIA reported that our imports of crude oil fell by an average of 954,000 barrels per day to an average of 6,907,000 barrels per day during the week ending October 14th, which was the least oil we've imported in any week since the week ending June 19th 2015, a time when US oil production was at it's peak...widely seen as the result of the disruption to ship traffic into the Gulf coast ports caused by Hurricane Matthew, this week's oil imports were 564,000 barrels per day, or 7.5% lower than the 7,471,000 barrels of oil per day we imported during the corresponding week a year ago and the first week this year that our imports fell below year ago totals a result, the 4 week average of our oil imports reported by the EIA's weekly Petroleum Status Report (62 pp pdf) fell to an average of 7.6 million barrels per day, now just 3.1% higher than the same four-week period last year...meanwhile, our exports of crude oil were also lower, falling by an average of 42,000 barrels per day to an average of 439,000 barrels per day for the week, in data that is not directly comparable to last year's exports of 526,000 barrels per day in the same week, since the EIA has recently switched to reporting Custom's export data, rather than use estimates based on untimely export stats from the Census Bureau..

for the same week, the EIA reported that production of crude oil from US wells rose by 14,000 barrels per day to an average of 8,464,000 barrels per day, as output from Alaskan fields rose by 8,000 barrels per day while production from the lower 48 states was 6,000 barrels per day higher....that still left the week's domestic oil production 6.9% lower than the 9,096,000 barrels we produced during the week ending October 16th of last year, and 11.9% below the record 9,610,000 barrels per day of oil production that we saw during the week ending June 5th last year...our oil production for the week ending October 14th was also 755,000 barrels per day, or 8.2% lower, than what we were producing at the beginning of this year, which was an interim high after our otherwise declining production had also been rising in the last few months of 2015...

meanwhile, the amount of crude oil used by US refineries fell by an average of 182,000 barrels per day to an average of 15,370,000 barrels of crude per day during the week ending October 14th, the sixth significant refining cutback in a row, as our refinery utilization rate fell to a 43 month low of 85.0% for the week, down from 85.5% of capacity the prior week, and down from the refinery utilization rate of 86.6% seen during the week ending October 16th last year...US oil refining has now slowed by 1,552,000 barrels per day, or by 9.2%, in the 6 weeks since Labor Day, as the refinery utilization rate has dropped from 93.7% over that span ...nonetheless, the amount of crude oil refined this week nationally was still up a bit from the 15,345,000 barrels of crude per day US refineries used during the week ending October 16th last year, and 1.1% more than was refined during the equivalent week in 2014 ... 

with the moderate drop in the amount of oil used by refineries for the week, the EIA reported that refineries’ production of gasoline fell by 437,000 barrels per day to 9,498,000 barrels per day during the week ending October 14th, as our gasoline output fell nearly a percent below the gasoline output of 9,579,000 barrels per day during the week ending October 16th last year, while it remained 2.0% higher than the gasoline production during the equivalent week of the same time, refinery output of distillate fuels (diesel fuel and heat oil) rose by 103,000 barrels per day to 4,599,000 barrels per day during the week ending October 14th....however, the week's distillates output was still 2.7% lower than the 4,728,000 barrels per day that was being produced during the same week last year, and a bit less than the 4,604,000 barrels per day of distillates we produced during the equivalent week of 2014...   

however, even with the large drop in gasoline production, our gasoline supplies rose by 2,469,000 barrels to 227,967,000 barrels as of October 14th, the largest one week increase in gasoline supplies since the 12th of February....that happened as our domestic demand for gasoline fell by 466,000 barrels per day to 8,798,000 barrels per day, the lowest weekly consumption since January, and as our imports of gasoline rose by 109,000 barrels per day to 871,000 barrels per day....with this week's increase, our gasoline inventories were thus 3.7% higher than the 219,784,000 barrels of gasoline that we had stored on October 16th of last year, and 11.5% higher than the 204,374,000 barrels of gasoline we had stored on October 10th of the same time, our distillate fuel inventories fell by 1,240,000 barrels to 155,732,000 barrels by October 14th, which nonetheless still left our distillate inventories 7.4% above the distillate inventories of 145,008,000 barrels of October 16th last  year, and 23.9% above the distillate inventories of 125,671,000 barrels of October 17th, 2014....

lastly, with the large drop in oil imports, our inventories of crude oil fell by 5,247,000 barrels to 468,711,000 barrels as of October 14th, the 6th drop in our oil supplies in 7 weeks...with two hurricanes disrupting imports over that span, our oil supplies have thus fallen 5.4% over 7 weeks at a time of year when supplies usually rise, and are now down 8.5% below their April 29th peak of 512,095,000 barrels...nonetheless, we still ended the week with 5.4% more crude oil in storage than the 444,618,000 barrels we had stored as of the same weekend a year earlier, and 35.3% more crude oil than the 346,414,000 barrels we had stored on October 17th of 2014...  

This Week's Rig Count

US drilling activity increased for the 5th week in a row during the week ending October 21st, and has now increased 17 out of the last 20 weeks, following a 39 week stretch that hadn't seen any drilling increases...Baker Hughes reported that the total count of active rotary rigs running in the US rose by 14 rigs to 553 rigs by Friday, an eight month high, which was still down from the 787 rigs that were deployed as of the October 23th report last year, and down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...we've now seen 29 drilling rigs added over the last two weeks, the most rigs added in a two week period since April of 2014, and percentage wise an increase we'd have to go back to early 2010 to match...

the number of rigs drilling for oil rose by 11 rigs to 432 rigs this week,  as oil rigs have now been rising for 17 straight weeks without a retreat, but they're still down from the 594 oil directed rigs that were in use a year ago, and down from the recent high of 1609 oil rigs that were drilling on October 10, the same time, the count of drilling rigs targeting natural gas formations was up by 3 rigs to 108 rigs, which still left active gas rigs down from the 193 natural gas rigs that were drilling a year ago, and down from the recent natural gas rig high of 1,606 natural rigs that were deployed on August 29th, 2008...two working rigs also remain that are classified as miscellaneous, in contrast to a year ago, when no such miscellaneous rigs were active...

offshore drilling activity was again unchanged at 23 rigs, now down from 34 a year earlier, while 1 rig which had been drilling on an inland lake in southern Louisiana was removed, leaving two rigs still active on inland waters, down from 3 such rigs a year ago...the number of working horizontal drilling rigs increased by 14 rigs to 445 rigs this week, which was still down from the 591 horizontal rigs that were in use on October 23rd of last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...meanwhile, the vertical rig count was unchanged at 57 rigs this week, which was down from the 109 vertical rigs that were drilling in the US during the same week last year, and at the same time, the directional rig count was also unchanged at 51 rigs, which was down from the 87 directional rigs that were deployed during the same week last year...

the details on this week's changes in drilling activity by state and by 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 year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas both tables, the first column shows the active rig count as of October 21st, the second column shows the change in the number of working rigs between last week (October 14th) and this week (October 21st), the third column shows last week's October 14th active rig count, the 4th column shows the change in the number of rigs running this Friday from the equivalent Friday 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 for October 23rd of 2015           

October 21 2016 rig count summary

it's pretty clear from the above that the major story in this week's drilling increase took place in the Permian basin of western Texas, where 11 rigs were added, and hence accounted for most of the Texas increase of 10 wells...noting the two rig increase in the Eagle Ford of south Texas, and no other obvious Texas reductions, we'd have to assume that the two rigs added in New Mexico were also in the Permian, just on the other side of the Texas border...also noteworthy is the addition of three rigs in Wyoming, especially since the Niobrara of the Rockies's front range lost a rig, apparently in Colorado...the two rig drop in Louisiana included the aforementioned lake rig, and two southern Louisiana land rigs, while a gas rig was added in the Haynesville in the northern part of the state...we should also note that of the states not shown above, Indiana saw another rig added this week, and they now have two, up from none a year ago, while Alabama had their only active rig removed, and they now have none, same as a year ago...

DUC Wells for September

you might recall that as of last month's September Drilling Productivity Report, the EIA began providing a monthly estimate of the number of drilled but uncompleted wells (DUCs) in the 7 regions that the Drilling Productivity Report covers, and that we felt it would be a useful metric to track, being that drillers would not feel pressured to return to the field as long as there was a large inventory of uncompleted wells remaining...the October Drilling Productivity Report was released on Monday of this past week, and it continued show a small overall decrease in uncompleted wells nationally, from 5,096 DUCs in August to 5,069 DUCs in September, with most basins seeing a decline...however, the large Permian basin of western Texas saw an increase of 52 uncompleted wells for the month and they now have 1,378 such uncompleted wells, the most of any basin in the nation (the Eagle Ford basin had the most as of July, but they're now down to 1,276 uncompleted, as they saw 36 more wells completed in September than were drilled) our area, the Utica saw another small drop in uncompleted wells, from 126 DUCs in August to 120 DUCs in September, while the Marcellus saw their uncompleted well inventory fall from 665 DUC wells in August to 650 in September...DUCS over the 4 oil basins (ie the Bakken, Niobrara, Permian, and Eagle Ford) have now been lower in each of the last 6 months, as oil well completions started picking up when oil prices first started rising in the spring, while the DUC count in the natural gas regions (the Marcellus, Utica, and the Haynesville) has generally declined since December 2013, as new natural gas drilling fell to record low levels...


FirstEnergy ‘bailout’ raises questions of corporate separation - A new charge ordered by Ohio regulators last week could add up to $1 billion into FirstEnergy’s coffers without requiring the company to do any specific work in return. While the company says the order is “disappointing” and will provide “insufficient” funds, competitors and advocates call it a “bailout” that raises serious questions about corporate separation in the electricity market.  “The decision is setting a dangerous precedent for Ohio families,” said Trish Demeter of the Ohio Environmental Council. “It’s not good for the environment because it’s essentially rewarding the company for bad bets that it made on coal.” As first proposed two years ago, FirstEnergy’s case before the Public Utilities Commission of Ohio asked for a different charge altogether to make utility customers guarantee electricity sales by its unregulated generation affiliate from certain coal and nuclear plants. Critics said the plan could cost consumers up to $4 billion. The PUCO approved a slightly modified version of that plan in March 2016 despite widespread objections. After the Federal Energy Regulatory Commission ruled it would require strict scrutiny of any electricity purchases under the plan, FirstEnergy dropped any reference to a power purchase agreement that might trigger federal review, but still sought to collect the same amount of charges.  The PUCO’s 190-page order and opinions last week rejected FirstEnergy’s modified request, but nonetheless imposed on customers a charge of $132.5 million per year, plus whatever corporate taxes would have to be paid, for a total of about $204 million per year.

Ohio deserves better - The Blade: At first glance, it appears that the Public Utilities Commission of Ohio put its proverbial foot down when it rejected FirstEnergy Corp.’s request for funding to improve its power grid. But closer scrutiny reveals that the utility seems to have been handed a “cash grab” and no requirement to upgrade the grid after all. And though PUCO did not give FirstEnergy everything it wanted, its 1.9 million customers will still soon start being charged $36 a year to fund a multimillion-dollar annual rate increase. PUCO’s unanimous decision on Oct. 12 to support the rate hike has not pleased the energy company or its critics, which is no surprise. The Akron-based energy firm wanted $558 million a year over eight years, for a total of $4.5 billion. Instead, PUCO agreed to let it collect $132.5 million annually in new surcharges. By the time taxes are included, the customers will have shelled out a total of about $204 million a year. Customers have only a little to be thankful for: the commission told the utility to come back in 2018 if it wants to make the case to extend the surcharge. The plan will cost the average residential customer, who uses about 750 kilowatt hours, about $3 a month over a three-year period. The surcharge will soon appear on the bills of customers who obtain their electricity from FirstEnergy and those who buy their power from competitors too. That will make them as unhappy as other FirstEnergy customers. And while $3 a month is nominal to a good number of the utility’s customers, it adds up. Those customers are not likely to look kindly on the commission for granting even a scaled-back version of the power company’s request. All this will surely raise eyebrows because the company had the audacity to express its disappointment when it did not get all that it wanted. Opponents maintain that the plan is effectively a financial bailout for the utility’s poor business decisions. You have to wonder whether they are right. The Federal Energy Regulatory Commission rejected PUCO’s approval of the original plan in which customers would have been required to subsidize FirstEnergy’s power plants. The Davis-Besse nuclear power plant near Oak Harbor and the W.H. Sammis coal-fired plant near Steubenville have struggled to compete against natural gas and other less expensive sources of energy. .

Ohio Judge Rejects Use Of Eminent Domain In Construction Of Ethane Pipeline  -- A Wood County judge has ruled a company seeking to build an ethane pipeline across Ohio for a Canadian company does not have the right acquire property through eminent domain. The ruling could hinder Pennsylvania-based Kinder Morgan's plans to build a 12-inch pipeline from eastern Ohio shale fields across the state to an existing Michigan pipeline that ends at a Windsor, Ontario, chemical plant. Kinder Morgan had sued Wood County property owners to obtain paid easements to their land. Ethane is a byproduct of fracking that's used to produce plastics. The judge says forcing property owners to grant easements would violate their constitutional rights. Kinder Morgan has filed an appeal with the U.S. 6th Circuit Court of Appeals in Cincinnati. The company also gave Ohio State University 200 thousand dollars that will partially fund a study of the Utopia East pipeline's impact on soil and agriculture.

Hydraulic Fracking, Pipelines and Land Rights: Ohio Judge Rules against Pipeline Consortium — A Wood County Common Pleas judge ruled today that the company behind the Utopia East pipeline project does not have eminent domain rights, throwing a potentially expensive roadblock into the project’s path. Judge Robert Pollex ruled that Kinder Morgan’s plan to pipe ethane from the Utica shale region in eastern Ohio to a chemical company in Windsor, Ont., is not necessary and not for a public use, and thus the company cannot use eminent domain to force Wood County landowners to give easements on their property. Kinder Morgan, North America’s largest energy-infrastructure company, has been negotiating with landowners in 14 Ohio counties to build the 12-inch pipeline, which would transport the ethane — used in the production of plastics — to a pipeline in Michigan that then heads to Canada. The product would solely be used by NOVA Chemicals Corp., a Canadian company. Wood County Common Pleas Judge Robert Pollex ruled today that the company behind the Utopia East pipeline project does not have eminent domain rights, throwing a potentially expensive roadblock into the project’s path. For property owners who have not been willing to sell, or sell at the price Kinder Morgan proposed, the company has petitioned Ohio courts for the right to appropriate the property at fair value. Some of those cases are in Wood County, including one involving PDB Farms of Wood County, which is south of Pemberville. The product Kinder Morgan wants to transport is a byproduct of hydraulic fracturing of shale to extract oil and natural gas. Mr. Mayle said that pipeline companies are becoming increasingly aggressive, asserting eminent domain rights as they build pipelines across the Midwest.  “It’s probably the most important eminent domain case in the United States right now,” he said.

Supreme Court Grants Teter's Request For Stay in Pipeline Fight - Harrison News Herald – In the ongoing struggle with Sunoco Pipeline and their pushing of eminent domain, Carol Teter, last Friday, was granted a stay by the Ohio Supreme Court preventing Sunoco from conducting any work on the Teter property going forward. The appellate court in Youngstown had recently ruled against Teter upholding Harrison County Common Pleas Judge, T. Shawn Hervey’s decision earlier this year granting Sunoco Pipeline the right to eminent domain therefore allowing pipeline work on Teter’s property.  John Lovejoy, Teter’s partner, expressed via email, excitement at the quick decision, which states: “Upon consideration of appellant’s emergency motion to stay execution of court of appeals’ judgment, it is ordered by the court that the motion is granted. No bond is required to be posted for this stay. Lanzinger (Judith Ann) and French, JJ. (Judith L.), dissent.” Though, the decision for a stay is only temporary, the major decision is yet to come and could open the floodgates for many other companies, not only for access to the Teter property but also around the fracking world in Ohio with oil and gas companies using the Sunoco decision, if upheld by the Ohio Supreme Court, as precedent to run roughshod through other properties. The chain reaction may already be in place as thirteen plaintiffs filed a joint lawsuit back in April against Kinder Morgan in an attempt to fight off eminent domain. And the same two attorneys butting heads over Sunoco vs. Teter, are also on opposites sides in the Kinder Morgan case (Gregory Brunton-Sunoco and Nicholas Andersen representing the 13 plaintiffs as well as Teter). Just last week though, Kinder Morgan suffered a blow when Wood County Common Pleas Judge, Robert Pollex ruled against Kinder Morgan in that territory for use of eminent domain. Kinder Morgan has filed numerous claims on an individual basis where they are spread out over various jurisdictions. Pollex ruled that the pipeline “is not necessary and not for a public use, and thus the company cannot use eminent domain to force Wood County landowners to give easements on their property,” according to a report in the Toledo Blade.

Residents speak out against proposed NEXUS pipeline (video and photos) - -- Dozens of Ohio residents had one message for the Ohio Environmental Protection Agency on Wednesday evening -- say no to the proposed Nexus natural gas pipeline that would run from Ohio to Canada.  Northeast Ohio property owners from many counties attended a hearing of the EPA at Elyria High School to voice their concerns about the 255-mile, 36-inch pipeline being proposed to run from Kensington, Ohio, to upstate Michigan, where it would connect with an existing pipeline into Ontario, Canada.  The EPA held the hearing to determine residents' concerns that the pipeline running through hundreds of private properties in two states could affect water quality in streams and wetlands. While the Ohio EPA must approve the project, the primary approval rests with the Federal Energy Regulatory Commission (FERC). Nexus and its parent company, Spectra, have said they want to begin construction of the pipeline in early 2017 and complete it by November 2017. "The EPA will consider technical, economic, social and environmental aspects of the project before deciding on whether to issue or deny a water quality certification," an EPA news release said.  "The amount of natural gas produced, which will be caused by fracking, could destroy society. We need the EPA to protect us from this pipeline." Several groups of Ohio landowners, like the Coalition to Reroute Nexus (CORN), have formed to oppose the pipeline, maintaining that it would affect their property value. They also fear that the high-pressure natural gas could explode, causing injury and damage to their homes and property. CORN member Debby Christy of Medina handed out information about the "pipeline blast zone," which is the area on either side of the pipe (1,500 feet on either side) that would be affected in the event of an explosion. While dozens of people testified their objections to the pipeline, two men spoke in favor of it. One was Mike Chasey of the Ohio Oil and Gas Association, who said that gas pipelines were necessary.  "This winter, when you people are crying for more heat, when the windmills and solar energy cells fail, you'll want the natural gas," he said.

Ohio Enviros Pushing Same Local Fracking Bans That Failed 5 Times Before - -- Ohio environmentalists are trying to get local governments to ban fracking again this election, despite past failures to get such a state law on the books.  The Community Environmental Legal Defense Fund (CELDF) have gotten a measure to ban fracking on the ballot Youngstown and Waterville. The measure is opposed by the local government, unions, business leaders and even the local media.The city’s lawyers have already determined that any ban would probably be illegal and “will not be enforceable.”  “The City of Youngstown taxpayers have already spent over $80,000 just to put the measure on the ballot, only to have the voters say ‘no’ five consecutive times,” Jackie Stewart, the Ohio director of the pro-industry group Energy In Depth, told The Daily Caller News Foundation. “CELDF knows the amendment is not enforceable and would not hold up in court, yet they continue their antics. Even in a polarizing political year, members of both parties, business leaders, unions, and elected officials have loudly reject the amendment, and even the media is calling the measure a ‘potentially destructive community bill of goods.’”  Even if the measure is enacted, it could not be enforced because the Ohio Supreme Court has already ruled in another case that only the state government has authority over oil and gas drilling in the state. This means that any ban would be “preempted by state law and therefore, is invalid and unenforceable.”

Democracy Deferred: Ohio Removes Anti-Fracking Measures From County Ballots - Truth-Out -  Ohioans are not nearly as conservative as their gerrymandered state legislature might have one think. To fight back, many progressive Ohioans are going local to make gains on issues like the minimum wage and fracking. For this reason, the local ballot initiative process -- by which citizens write, petition for and vote on legislation -- has taken on increased significance. But after years of local battles, the future of this basic mode of resistance is in jeopardy. This September, county-level "community bills of rights" in Medina, Portage, Athens and Meigs were removed from these Ohio counties' respective ballots, despite all four gathering enough signatures to qualify for the ballot. The bills of rights would have banned fracking-related projects, established enforceable rights for ecosystems and carved out powers for localities to improve state protections for health, safety and welfare. Some, like Medina's, would have halted construction on the fiercely contested NEXUS fracked-gas pipeline. But as a result of the removal of these measures from local ballots, no votes will be cast. They were removed by county boards of elections working closely with the Secretary of State to apply stringent pre-election requirements. It is a virtual repeat of 2015, when the Ohio Supreme Court sided with Secretary of State and gubernatorial hopeful Jon Husted in a decision that effectively pulled four county-wide initiatives -- in Medina, Fulton, Meigs and Athens counties -- from their ballots, ahead of the November 2015 elections.  Decisions, such as this, which sidestep the democratic process, maintain predictable "investment climates" for the oil and gas industry, and perpetuate the illusion of consensus and the notion that somehow issues regarding the oil and gas industry are democracy-immune. The industry -- wary of a domino effect -- does not want the thought that oil and gas extraction can be governed by citizen-crafted law to spread, for fear that if it does, it will do so rapidly. The very concept of putting fracking to a vote is dangerous to the oil and gas companies' agenda. It is why they worked so hard to squelch attempts at 2016 statewide anti-fracking ballot measures in Colorado and Michigan.

Fed official signs plan to allow oil-gas leasing on Wayne - The federal government has scheduled a lease sale for 1,600 acres of public land in the Wayne National Forest’s Marietta Unit for this December, dealing a blow to area environmentalists who oppose oil and gas drilling on the national forest. On Friday, Dean Gettinger, district manager of the Northeastern States District of the federal Bureau of Land Management (BLM), signed a finding of no significant impact (FONSI) for drilling on 40,000 acres in the Marietta Unit, which covers parts of Washington, Noble and Monroe counties, northeast of Marietta. Oil and gas companies so far have filed expressions of interest to drill for natural gas on 18,000 of those acres, with 1,600 acres contained in the first round of land entering the lease program. “Based upon a review of the EA (Environmental Assessment) and supporting documents, I have determined that the proposed action is not a major federal action, and will not significantly affect the quality of the human environment, individually or cumulatively, with other actions in the general area,” the signed FONSI states. The document says “the BLM plans to lease some parcels now and make the rest available in the future.”

Wayne forest could be used for fracking - Columbus Dispatch - The federal government has given notice that it plans to auction oil and gas lease rights for 1,600 acres of Wayne National Forest near Marietta, a step that could lead to fracking on public land. Energy industry officials are applauding the decision, which affects parts of Monroe and Washington counties, while environmentalists are criticizing it. With the notice, a 30-day clock starts in which opponents can file a formal protest. The government will review the objections before moving ahead with an online auction scheduled for Dec. 13. The affected land is part of Ohio's only national forest, which covers more than 240,000 acres in the southeastern part of the state. The proposed leases are "a step in the right direction," said Shawn Bennett, executive vice president of the Ohio Oil and Gas Association, a trade group. "It opens up lands that are required to be leased by several federal statutes." Many environmental groups oppose the leases, saying this would be a step toward allowing widespread hydraulic fracturing, or fracking, on public lands. "This decision is bad for wildlife, bad for recreation, and bad for the overall health of the Wayne," said Nathan Johnson, an attorney for the Ohio Environmental Council, in an e-mail. He said his group will appeal the decision on the grounds that the government has not done enough to consider environmental concerns. The land to be leased is in the far eastern part of the forest, where there are substantial oil and gas reserves and less public opposition to drilling for energy. The Bureau of Land Management, one of the federal agencies handling the process, is not leasing land in the part of the forest in and around Athens County, where public opposition has been strong, and where energy companies are showing less interest.

Wayne National Forest could soon be fracking site - (WTAP) The federal government plans to auction oil and gas lease rights for 1,600 acres of the Wayne National Forest near Marietta. The Bureau of Land Management released a notice of a competitive oil and gas internet-based lease sale. It says there would be no significant environmental impact to the forest because of drilling. It's the only national forest in the state of Ohio, which covers more than 240,000 acres. Oil and gas extraction has taken place there for a while, but on a smaller scale. Industry workers favor the decision, while environmentalists plan to appeal it. "This is opportunity for those landowners to have a better and brighter future and that is very important. Again, that's through leasing of land and royalties and they can use those royalties to reinvest back into their selves, their farms, or back into the community," says executive vice president of the Ohio Oil and Gas Association, Shawn Bennett. "This will be bad for wildlife. It will be bad for recreation and bad just for the health of the forest, generally. Another problem is the federal government isn't following its own laws. This is heavy, industrial development we're talking about and most people don't want that in their backyards or their publicly owned forests," says an attorney for the Ohio Environmental Council, Nathan Johnson. The notice allows opponents 30 days to file a formal protest.

EPA continues to clean up gas line leak - -WLIO- Lima, OH -- Workers are in the process of cleaning up a Sunoco gas line leak on the south side of Lima. The Ohio Environmental Protection Agency responded to the leak near McClain Road and Commerce Parkway around 9pm Monday night. Officials tell Your New Now that crews were able to identify the source of the leak and remove any contaminated soil. The director of Allen County Emergency Management says they aren't sure exactly how much gas leaked, but the public should not be worried.

Marcellus Shale Coalition sues to block new Pennsylvania drilling rules - As it had previously indicated, the Marcellus Shale Coalition on Friday filed suit to block implementation of some of the new rules the Pennsylvania Department of Environment Protection implemented on Saturday, claiming the rules would add an average of $2 million to every well drilled in the state with little environmental benefit. The suit, filed in the Commonwealth Court of Pennsylvania, challenges aspects Chapter 78a of the Pennsylvania Code, which regulates many aspects of unconventional gas drilling and which was published in the Pennsylvania Bulletin and went into effect on Saturday. "This approach, which we had hoped we would not have to pursue, was necessary to assert the legal rights of our members directly impacted by final rulemaking's provisions, which conflict with the Pennsylvania Department of Environmental Protection's statutory authority as well as Supreme Court precedent," MSC President David Spigelmyer said in a statement Friday. The suit marks the first time the coalition, which represents segments of the oil and gas industry active in the Marcellus Shale play, has taken direct legal action against a state entity."Pennsylvania's natural gas industry is governed by some of the nation's most stringent laws and regulations, and our members continue to follow all relevant Pennsylvania and federal environmental statutes and regulations," Spigelmyer said. "To be absolutely clear, the MSC and its members support fair, consistent and clear regulation of the industry while protecting the environment and ensuring safety," he said. "However, certain provisions conflict with DEP's legal authority granted by the Pennsylvania General Assembly while other provisions are vague and not clear how they will be implemented by the agency.

Pennsylvania ruling on eminent domain puts contentious pipeline project on alert -- The Pennsylvania Supreme Court has unanimously ruled unconstitutional a section of state law that lets companies seize private land for certain natural gas projects, with potentially major implications for one of the biggest proposed pipelines in the state. Under the original rule, passed in 2012, any company has the authority to take private land through eminent domain for the purpose of storing natural gas underground. The justices unanimously decided on Sept. 28 that this section of the law unconstitutionally lets private companies profit from taking people's land with no direct or obvious benefit to Pennsylvanians. The oil and gas companies argued the projects could benefit the state by creating new jobs, for example, but the justices were not convinced. "The Commonwealth does not claim, nor can it do so reasonably, that the public is the 'primary and paramount' beneficiary when private property is taken in this manner," the justices wrote. "Instead, it advances the proposition that allowing such takings would somehow advance the development of infrastructure in the Commonwealth. Such a projected benefit is speculative, and, in any event, would be merely an incidental one and not the primary purpose for allowing these types of takings." The high court's decision reversed a lower court's ruling that upheld this part of the rule. This decision is the latest victory for property rights owners and environmental activists who are increasingly challenging energy companies nationwide as they seek to use eminent domain for pipelines and other large infrastructure projects. Earlier this year, the Georgia legislature passed a bill that would have stalled construction on Kinder Morgan's Palmetto Pipeline until 2017 due to property rights concerns; before the bill was signed into law, the company suspended construction on the pipeline.

U.S. natgas production to decline for first year since 2005: EIA STEO | Reuters: The U.S. Energy Information Administration on Thursday projected year-over-year dry natural gas production in 2016 would fall for the first time since 2005 as low energy prices reduced drilling activity, according to its Short Term Energy Outlook (STEO). EIA reduced its output projection for 2016 to 72.49 billion cubic feet per day (bcfd) in its October outlook from 74.06 bcfd in September. That compared with an all-time high of 74.14 bcfd in 2015. EIA forecast dry gas production would return to a record high in 2017, rising to 76.23 bcfd. The last time year-over-year gas production declined was in 2005 when Hurricanes Katrina and Rita slammed into the Gulf Coast, damaging energy infrastructure. In 2005, more than 20 percent of annual U.S. dry gas output of 49.45 bcfd came from the federal waters in the Gulf of Mexico. Since then, producers have figured out how to use horizontal drilling and hydraulic fracturing and other technologies to unlock more gas trapped in shale rocks. Today, the seven biggest U.S. shale fields provide more than 60 percent of the nation's dry gas production, while the Gulf of Mexico accounts for just 4 percent of the total. EIA also forecast U.S. gas consumption would slip to 75.97 bcfd in 2016 versus the 76.38 bcfd it forecast in September. That would still top the 2015 record high for gas demand of 74.81 bcfd and would be the seventh annual record in a row.

Some US producers stomp on the gas. - The past production profiles of the ten companies in RBN’s Gas-Weighted E&P peer group are dramatically different from the Oil-Weighted and Diversified U.S. E&Ps, boosting production by over 18% from 2014 to 2015, while the output of the other two peer groups was virtually flat. The group as a whole finally put on the brakes in early 2016 because of mounting debt and persistent low gas prices, cutting capital investment by 49% to dampen production growth to 4%. However, a small group of producers with solid balance sheets and strong hedging protection continue to target double-digit output growth. And with gas prices over $3.00/MMbtu, more growth is on the way.  In today’s blog we discuss 2016 capital spending and production for our representative group of E&Ps whose operations are primarily focused on natural gas. Here in the RBN blogosphere we have been reviewing U.S. upstream capital spending and production trends for the past couple of years. Back in August, we analyzed the second quarter 2016 capital spending and production guidance for 46 of the top U.S. E&Ps that we segregated into three peer groups––Oil-Weighted E&Ps, Diversified E&Ps, and Gas-Weighted E&Ps.  That analysis was contained in the blog titled Been Down So Long - U.S. E&P Upstream Capex Bottoms, Signs of Growth Emerge and we showed that total capital spending in 2016 was expected to be about 50% lower than in 2015 after a 40% reduction in 2014. Based on the company’s financials and investor presentations we calculated an expected 4% decline in production for 2016, we also pointed out that second quarter 2016 production guidance was stronger than original 2016 estimates because of an increase in oil prices from the lows in early 2016. Next, we took a deep dive into the Oil-Weighted E&Ps in a blog titled You Go Your Way, I'll Go Mine - Oil-Weighted E&Ps Put the Brakes on Capex Cuts, But Location Matters. In that analysis, we noted that while capital spending was expected to be down 51% in 2016, there was a new feeling of optimism driven by the reduction in drilling and completion costs and lease operating expenses, which contributed to the 20% increase in the U.S. rig count in late May 2016. Then we took an in depth look at the Diversified E&Ps in a blog titled  Different Strokes by Different Folks:  Unconventional Investment Rises, Conventional Falls among Diversified U.S. E&Ps. In that analysis, we saw that this peer group has reduced capital investment by 70% since 2014, or almost $40 billion. And the cumulative effect of these spending cuts is an estimated 5% decline in production or nearly 100 MMboe in 2016.

NYMEX November gas settles at $3.141/MMBtu, down 2.9 cents - Natural Gas | Platts News Article & Story: The NYMEX November natural gas futures contract fell Thursday after the US Energy Information Administration estimated a build to gas storage stocks that was slightly higher than analysts expected. The November contract ended trading Thursday at $3.141/MMBtu, down 2.9 cents. The front-month contract traded in a range between $3.101/MMBtu and $3.201/MMBtu. The EIA said there was a 77-Bcf injection to storage in the week ended October 14. The injection was 5 Bcf higher than analysts' consensus of a 72-Bcf build. The cumulative storage volume now stands at 3.836 Tcf. The total working gas in storage is 175 Bcf, or 4.8%, higher the five-year average storage volume of 3.651 Tcf. The storage stocks are also 46 Bcf higher than last year at this time."Look at where we've been recently," Jay Levine, analyst/principal with Enerjay, said in an interview. "The improving technicals have put the bears on notice. We should be careful now as, perhaps, $3 may become the new bottom." Meantime, dry gas supplies for the Lower 48 states on Thursday are expected to be about 70.4 Bcf, according to Platts Analytics' Bentek Energy. However, daily demand will also drop by 1 Bcf as the eastern US received another day of warm temperatures.

EPA Agrees Its Emissions Estimates From Flaring May Be Flawed - The U.S. Environmental Protection Agency has agreed to re-examine the accuracy of its 33-year-old estimates of air pollution from flaring near refineries and at oil and gas drilling sites. The decision has health advocates and some people in South Texas hoping relief from the effects of foul air is coming. The agreement comes in the wake of a lawsuit against the EPA by four environmental organizations. They claimed that air samples near oil refineries in Houston showed elevated levels of volatile organic compounds, chemicals associated with threats to public health and smog-forming pollution. Those levels, the plaintiffs said, were 10 to 100 times higher than being reported under outdated and inaccurate formulas that estimate levels of air pollution. Although the lawsuit focused on refineries in Houston, the agreement could have consequences nationwide. Booming oil and gas drilling in Pennsylvania, Colorado, North Dakota and other states have been blamed for noxious emissions that residents say has sickened them. The EPA said it will re-examine, and if necessary revise, the emissions formulas for flares at many of the estimated one million natural gas drilling and production sites across the country, according to the consent decree filed with the U.S. District Court for the District of Columbia. The EPA has until February 2018 to complete its review and issue any revisions to the emissions equation. The agency did not respond to a request for comment.

Court to rule if gas expansion plan needed environment study (AP) — The state Supreme Court is considering whether Connecticut’s environmental protection agency and state regulators were wrong for not studying the potential environmental impact of a major natural gas expansion plan before they approved it in 2013. The high court’s review comes in a lawsuit filed two years ago by the Connecticut Energy Marketers Association, a group of more than 500 energy marketers who sell gasoline and heating fuel to residents and businesses across the state. The association claims the Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority violated the Connecticut Environmental Policy Act by approving the gas expansion plan without first performing an environmental impact evaluation. The plans call for making natural gas available to up to 300,000 additional homes by building about 900 more miles of gas mains over the next decade. “The conversion process will have an unprecedented impact on the environment, principally by significantly increasing the amount of methane, a greenhouse gas, that is emitted each year by Connecticut’s gas companies,” lawyers for the association wrote in a brief to the Supreme Court. The association says the state Environmental Policy Act requires an environmental impact evaluation any time a state agency proposes or initiates any activities that may adversely affect the environment. It’s seeking a court order stopping gas expansion projects until an environmental assessment is done.

Con: Clean energy the only answer - Evansville Courier & Press -The use of unconventional and environmentally damaging methods to eke out of the ground finite supplies of oil and natural gas is a foolhardy method for ensuring the nation’s energy needs. The most expensive and ecologically destructive method for extracting natural gas and shale oil from the ground is hydraulic fracturing, commonly called fracking. Fracking relies on a witch’s brew of trillions of gallons of clean water and dangerous toxic and carcinogenic chemicals that is  injected into the ground at high pressure in order to extract natural gas and oil. Moreover, fracking produces toxic waste, such as formaldehyde and acetic boric acids, which, added to the fracking chemicals used by drillers, threatens the fresh water supplies of many states like Pennsylvania, Ohio, Texas, Colorado and West Virginia, where fracking is commonplace.In Oklahoma and other states, fracking has been directly linked by scientists to increased earthquake activity — thus increasing the danger to public safety.
However, the fracking industry, through various political action committees, has showered pro-fracking candidates with large sums of campaign cash. Candidates who oppose fracking and tar sands oil production, both of which entail the building of pipelines across pristine wilderness and high-yield agricultural and livestock grazing areas, often come up short in their efforts to defeat their well-heeled opponents. It’s hard to believe, but there actually are elected officials who oppose applying the federal Clean Water and Safe Drinking Water Acts to the fracking and tar sands industries, even though these sectors pose the greatest threat to the purity of the nation’s water supply. Thousands of cases of contamination of fresh water supplies located near fracking wells have been reported across the United States. Wastewater from fracking cannot be redirected for other purposes, such as crop irrigation or water treatment, because of its high concentration of dangerous chemicals.

Key pieces still absent from Mackinac straits oil spill cleanup readiness  — In a meeting last week, federal officials acknowledged key shortfalls in the ability of Enbridge Inc. to clean up an oil spill from its Line 5 pipeline under the Straits of Mackinac within the critical first 12 hours.  According to emergency planners, not enough large local boats have agreed to help with cleanup, training on new equipment hasn't happened yet, real-time hydrodynamic current modeling in the straits is missing, and controlled open water burning couldn't occur if oil were to spill from the pipeline today. Burning floating oil is an offensive maneuver spill responders use to keep it from dispersing into the water column and reaching shore, but the U.S. Coast Guard only began planning for that in June, according to the sector commander. In-situ burning, as it's called, would send huge amounts of harmful smoke into the air and could involve evacuating people who live downwind. The technique requires heat-resistant equipment and pre-positioned air quality monitors. Neither of those things are now present in the area.

The U.S. Department of Energy’s approval of U.S. natural gas export overseas from two proposed Canadian export terminals last week: The U.S. Department of Energy’s approval of U.S. natural gas export overseas from two proposed Canadian export terminals last week confirms Congressman Edward Markey’s “long-standing warnings that the ultimate goal of some natural gas pipeline proposals being made in New England is not to help our residents with expanded infrastructure but to use New England as a throughway to export U.S. natural gas to Canada and ultimately to overseas markets.” Markey said, “The companies who are proposing these pipeline projects need to be fully forthcoming about the ultimate fate of the gas that would be transported through these pipelines in order for these proposals to be examined in their entirety.” DOE’s authorization is Bear Head LNG and Pieridae LNG to export up to 0.8 billion cubic feet a day equivalent U.S.-sourced natural gas to Canada for liquefaction and re-export as LNG to any country with which the United States lacks a free-trade agreement requiring the national treatment for trade in natural gas. The 20-year agreements would make use of the Maritimes and Northeast US Pipeline, which runs between Dracut and the Canadian border at Woodland, Maine. The controversial Kinder Morgan Northeast Energy Direct pipeline through Franklin County connects to facilities in Dracut, and for this reason many pipeline critics argue its’s primary purpose is to export natural gas not feed New England.

US Natural Gas Exports Are About to Take a Huge Leap Forward - The shale revolution has changed the U.S. natural gas production and trade dynamics forever. Domestic output and exports have been rising, to the point where the U.S. is poised to become a natural gas net exporter in the second quarter of next year, the EIA said last month. In this scenario of abundant resources, U.S. companies have been planning on building pipelines and LNG export terminals to ship domestically-produced natural gas to Mexico, Canada and to future LNG export hubs along the coast. These exports hubs will be used for further LNG shipments to markets in South America, Asia, Europe, and the Middle East. Since Cheniere Energy (NYSEMKT:LNG) shipped the first U.S. LNG commissioning cargo out of its Sabine Pass LNG terminal en route to Brazil in February of this year, the terminal has exported an estimated 113 Bcf of LNG to 12 countries worldwide, the EIA said last month. More than half of those exports were bound to South America and the Caribbean, followed by India and China in Asia, the Middle East (UAE, Kuwait, and Jordan), Europe (Portugal and Spain), and Mexico. The Sabine Pass LNG terminal is currently the U.S.’s only LNG export terminal, but four other export terminals are currently under construction. As of September 21, 2016, seventeen others had been proposed or were pending various authorizations. Almost all of the proposals are for terminals along the Gulf Coast, which will benefit from the expanded Panama Canal, now that it is able to accommodate 90 percent of the current LNG tankers in the world, compared to just 6 percent before the expansion. The extended canal is also significantly shortening travel time and transportation costs for the U.S. Gulf LNG exports, which docked in China for the first time in late August.

Chesapeake Energy Declares 'Propageddon' With Record Frack - Chesapeake said Thursday at an analyst conference that it set a record for fracking by pumping more than 25,000 tons of sand down one Louisiana natural gas well, a process the shale driller christened "propageddon.” The super-sized dose of sand -- known as "proppant" -- is able to prop open bigger and more numerous cracks in the rock for oil and gas to flow. Output from the well increased 70 percent over traditional fracking techniques, Jason Pigott, vice president of operations, said during a presentation. “What we’re doing is unleashing hell on every gas molecule downhole,” Pigott said. Shale drillers aren’t holding back in North American shale fields, where the average amount of sand used for each well has doubled since 2014, according to Evercore ISI. At the same time, the length that wells are drilled sideways underground has grown by 50 percent, and the number of zones for hydraulic fracking are also up by half. Each zone of the well isolated for each frack is also growing larger as service companies attempt to break down more of the oil-soaked rock into rubble and cram more sand into the crevices for the hydrocarbons to escape. Explorers are taking advantage of the larger frack jobs while prices for oilfield work remains low. Halliburton Co. , the world’s largest fracking provider, told analysts and investors Wednesday on a conference call that about 70 percent of the industry’s fleet of frack pumps are being put to use. Halliburton confirmed it executed the record frack for Chesapeake. "This emerging trend has already created a significant increase in the uptake of our high-end drilling technologies," Kibsgaard said. "We have therefore shifted focus from maintaining presence to now gaining market share for our drilling business in North America land." The rush to jam as much sand as possible into a well is creating cost inflation for buying and shipping the granules, Kibsgaard said. That will "further obstruct and delay the hydraulic fracturing industry’s path toward restoring profitability" for service companies, he said. Southwestern Energy Co. isn’t letting up. It’s currently testing frack jobs with as much as 5,000 pounds per foot in a well, Jack Bergeron, senior vice president of operations, told analysts and investors Friday on a conference call.

A climate activist tried to buy oil and gas land in Utah. The federal government just said no. - When the environmental writer Terry Tempest Williams offered up $2,500 for 1,120 acres of federal land in rural Utah earlier this year, she didn't expect to spend months fighting President Barack Obama's Bureau of Land Management. She saw her spur-of-the-moment decision to lease the land as a statement: Rather than drill for oil and gas, as the federal government intended, she would keep those planet-warming fossil fuels in the ground, her own small contribution to the fight against human-caused climate change. Federal officials had other ideas. This week — eight months after the Salt Lake City oil and gas lease auction Williams attended — the Bureau of Land Management's Utah branch rejected her bids and said it would return most of her money. The rejection was a small but symbolic blow to the "keep it in the ground" movement, which has urged the Obama administration to stop allowing new fossil fuel extraction on federal land. ""Keep it in the ground" activists have pointed to studies showing that if the world hopes to avoid the most dangerous effects of global warming, the vast majority of coal, oil and natural gas reserves can never be burned. But while Obama has made climate a top priority, his administration has taken a dim view of the activists' argument. In an interview with The Desert Sun earlier this year, Interior Secretary Sally Jewell called the "keep it in the ground" movement "naïve." "It's going to take a very long time before we can wean ourselves from fossil fuels, so I think that to keep it in the ground is naïve, to say we could shift to 100 percent renewables is naïve," Jewell said at the time. "We really have to have a blend over time, and a transition over time, that recognizes the real complexity of what we're dealing with."

Dakota Access protests come to Houston as the light crude market keeps shifting - The fight to halt construction of the Dakota Access crude pipeline made its way to the US energy capital as dozens of activists marched and chanted through the streets of downtown Houston. Carrying signs decorated with oil derricks, solar panels and tombstones, a group of around 75 activists marched for about six city blocks on October 12. The procession was headed by people in traditional Native American dress carrying incense burner.The display is the latest in the ever-escalating pushback against crude oil pipelines. Similar satellite protests have been held in Dallas, Detroit, Denver and other sites across the nation. Actress Shailene Woodley, star of “Snowden,” “Divergent” and “Once Upon a Mattress,” was arrested in North Dakota on October 10 and the celebrity opposition pool includes Susan Sarandon, Ben Affleck, Jason Momoa, Leonardo DiCaprio and Pharrell among others. The Dakota Access pipeline cleared a key hurdle October 9 when a federal appeals court denied the Standing Rock Sioux Tribe’s request for an injunction to block construction of the 1,172-mile pipeline that will transport Bakken and light Canadian crude across North Dakota, South Dakota, Iowa and Illinois. Developer Energy Transfer Partners said October 11 that it plans to immediately resume construction but still needs the blessing of the Army Corps of Engineers, which is reviewing the line’s crossing of the Missouri River. Analysts expect startup of the line to be delayed into mid-2017, while climate activists have pledged to continue their opposition to the project.

Impacted Communities Take Fight Against Dakota Access to Corporate Heads - Activists from oil-impacted communities around the country are descending on Energy Transfer Partners' corporate offices in Houston, Texas, to protest the company's Dakota Access Pipeline and other controversial pipeline projects. Despite ongoing, growing protests against the Dakota Access Pipeline and the federal government's repeated requests that Energy Transfer Partners halt its construction, the company has reiterated its intentionto continue building the pipeline, undaunted. Wednesday's action is a part of nationwide protests against the corporate powers behind Dakota Access. The demonstration will see members from communities affected by the fossil fuel industry from Richmond, Calif., Chicago, Ill., the Gulf Coast, and others joining local Texas organizers to voice their collective opposition to Energy Transfer Partners' pipeline projects, and to push for a just transition to renewable energy. "Energy Transfer Partners has drawn national attention for driving both the Dakota Access Pipeline and the equally controversial Trans Pecos Pipeline, that has also violated the rights of Indigenous peoples in West Texas, and poses significant threat to the water and land for many communities in Texas," Grassroots Global Justice Alliance, an organizer of the demonstration, noted in a press statement.

Fire Damages Dakota Access Equipment, Arson Suspected (AP) — Authorities suspect arson in the latest burning of heavy equipment being used in the construction of the four-state Dakota Access pipeline in central Iowa. The Jasper County Sheriff’s Office says the blaze late Saturday near Reasnor, Iowa, caused about $2 million damage to an excavator and three bulldozers. The equipment is operated by a contractor for Dakota Access, a subsidiary of Dallas-based Energy Transfer Partners. Opponents have for months been protesting the $3.8 billion, nearly 1,200-mile project pipeline, warning its construction could jeopardize water supply and damage cultural artifacts. Another suspected arson of construction equipment happened on Aug. 1 at the same site, about 30 miles east of Des Moines. No arrests have been made in either fire. The Iowa Fire Marshal Division and the FBI are investigating.

Journalists Face Charges for Dakota Pipeline Protest Coverage - Two journalists are facing jail time for covering protests against oil and gas pipelines in North Dakota. The better-known of the pair, Amy Goodman, host of the television and radio program Democracy Now!, will appear in court today to face charges that she participated in a riot while covering Dakota Access Pipeline (DAPL) protests last month. The protests, attended by thousands, are being led by Native American groups and environmental activists. While Goodman and her crew were filming, private security guards pepper sprayed and unleashed dogs to attack protestors. Goodman’s report went viral; one Facebook posting of the video has 14 million views. Five days after that report was recorded, a warrant was issued for Goodman’s arrest. Initially, she was charged with trespassing, but that count was dropped by North Dakota state prosecutors, who admitted it likely would not stand up in court. They then charged Goodman with participating in a riot. If convicted, she could be fined and serve jail time. Her appearance is set for 1:30 Central Time in Morton County court. “I came back to North Dakota to fight a trespass charge. They saw that they could never make that charge stick, so now they want to charge me with rioting,” Goodman in a statement posted to Democracy Now!’s website on Saturday. “I wasn’t trespassing, I wasn’t engaging in a riot, I was doing my job as a journalist by covering a violent attack on Native American protesters.”  But Goodman is not the only journalist to face charges for filming protests against the state’s fossil fuel infrastructure. Just last week, Deia Schlosberg, a producer on the film How to Let Go of the World and Love All the Things Climate Can’t Change, was arrested and charged with three felonies, all conspiracy charges, that carry a sentence of up to 45 years in prison. The charges stemmed from Schlosberg’s filming of an Oct. 11 protest that briefly shut down five oil pipelines that bring about 15 percent of the oil used each day to America from Canada’s tar sands. The director of Schlosberg’s film, Josh Fox (famous for his 2010 film Gasland and a sequel to it), is circulating a petition asking the state to drop the charges against her. Along with 20,000 others, actors Mark Ruffalo and Daryl Hannah, musician Neil Young and environmental activist Bill McKibben have signed it.

Judge Rejects 'Riot' Charges Against Amy Goodman for Coverage of Dakota Access Pipeline -  A North Dakota judge today refused to authorize riot charges against award-winning journalist Amy Goodman for her reporting on an attack against Native American-led anti-pipeline protesters.  "This is a complete vindication of my right as a journalist to cover the attack on the protesters, and of the public's right to know what is happening with the Dakota Access pipeline," said Goodman. "We will continue to report on this epic struggle of Native Americans and their non-Native allies taking on the fossil fuel industry and an increasingly militarized police in this time when climate change threatens the planet."  District Judge John Grinsteiner did not find probable cause to justify the charges filed on Friday, Oct. 14 by State's Attorney Ladd R Erickson. Those charges were presented after Erickson had withdrawn an earlier charge against Goodman of criminal trespass. Goodman had returned to North Dakota to turn herself in to the trespassing charge.  The charges in State of North Dakota v. Amy Goodman, stemmed from Democracy Now!'s coverage of protests against the Dakota Access pipeline. On Saturday, Sept. 3, Democracy Now! filmed security guards working for the pipeline company attacking protesters. The report showed guards unleashing dogs and using pepper spray and featured people with bite injuries and a dog with blood dripping from its mouth and nose.  Democracy Now!'s report went viral online and was viewed more than 14 million times on Facebook and was rebroadcast on many outlets, including CBS, NBC,NPR, CNN, MSNBCand the Huffington Post.  "These shifting charges were a transparent attempt by the prosecutor to intimidate Amy Goodman and to silence coverage of the resistance to the pipeline," said Reed Brody, an attorney for Goodman. "Fortunately, these bully tactics didn't work and freedom of the press has prevailed."

Judge Rejects Riot Charge Against Amy Goodman of ‘Democracy Now’ Over Pipeline Protest - The radio journalist Amy Goodman spent the weekend with the threat of a riot charge hanging over her, arising from protests over a planned oil pipeline in North Dakota. But on Monday a judge rejected the case for lack of evidence. Ms. Goodman, the host and executive producer of the syndicated radio, television and web show “Democracy Now!” on Pacifica Radio, had planned to enter a not guilty plea on Monday, but District Judge John Grinsteiner declined to sign the charging document, bringing the case to a stop — at least for now. She and her lawyers declared victory on Monday, but Ladd Erickson, a state prosecutor who is assisting the Morton County state’s attorney’s office in the case, said other charges were possible. “I believe they want to keep the investigation open and see if there is any evidence in the unedited and unpublished videos that we could better detail in an affidavit for the judge,” he said via email. “The Democracy Now video that many people have seen doesn’t have much evidence value in it.” Mr. Erickson had informed the broadcaster of the planned riot charge. Ms. Goodman had characterized that as a threat to journalism and the First Amendment. Appearing in a Facebook Live video from outside the courthouse in Mandan, N.D., on Monday after it became clear she would not face the riot charge, Ms. Goodman said she and her program would continue to cover the pipeline protests. “The state’s attorney was attempting to stop journalism,” she said. “The state’s attorney must respect freedom of the press and the First Amendment.”

Bernie Sanders called for a halt to the Dakota Access Pipeline. Why won’t Hillary Clinton? -- The Dakota Access pipeline currently hangs in a state of uncertainty. On October 9, a federal appeals court dismissed the Standing Rock Sioux tribe's request for a permanent injunction to stop to the project. Meanwhile, Obama administration officials continue to stall; one day after the court ruling, the departments of Justice, Interior, and the Army issued a joint statement refusing to authorize construction along part of the proposed route.  And while a federal review of the permitting process began this week, a handful of Senate Democrats, led by Vermont Sen. Bernie Sanders, have now penned a powerful letter to President Barack Obama, calling on him to suspend all construction permits for the project and to order a full environmental impact statement. Check it out below.

Journalism group wants charges dropped against pipeline protest filmmakers | Reuters: A press freedom group on Thursday urged prosecutors in two states to drop charges against three documentary filmmakers who were arrested while filming activists as they sought to shut down major oil pipelines from Canada to the United States. The Committee to Protect Journalists said Lindsey Grayzel, Carl Davis and Deia Schlosberg were acting as journalists, not protesters, when they were taken into custody at pipeline sites in Washington state and North Dakota, and were protected by free speech rights. "Recording civil disobedience and arrests is news-gathering, not conspiracy," Robert Mahoney, deputy executive director of the committee, said in a written statement. "Prosecuting filmmakers for covering protests sends a chilling message. We call on authorities in North Dakota and Washington to drop these troubling charges and to stop interfering with journalists doing their jobs," Mahoney said. A North Dakota judge earlier this week dismissed charges against journalist Amy Goodman, who was arrested while filming demonstrations there. During the protests, activists broke into valve stations at five remote locations near the U.S.-Canada border on Oct. 10 to stop the flow of crude through arteries that pump about 15 percent of the oil consumed in the United States daily. Companies operating the pipelines shut down their lines for five to seven hours as a safety measure before restarting them, according to Reuters estimates and company representatives.

Dakota Access Pipeline Coalition Lashes Out At Obama's Attempt To "Ignore The Rule Of Law" -- Despite a federal court decision issued on October 9th allowing the continued construction of the Dakota Access Pipeline, the massive infrastructure project remains on hold today after the Obama administration caved to the demands of protesters and shut down access to federal lands.  According to a letter written by a coalition of industry groups impacted by the construction halt and obtained by the Washington Examiner, the Obama administration's refusal to allow construction workers access to federal land is a blatant abuse of power that"ignores the rule of law." "We write to express our deep concerns over recent actions that took place in North Dakota to effectively ignore the rule of law in an attempt to halt infrastructure development," the letter reads, reminding Lynch that "one of our nation's founding fathers, John Adams, once wrote that the United States is a 'government of laws, and not of men.'""This North Dakota project has complied with the procedures laid out in law, engaged in more than two years of federal review and has received the necessary federal approvals," the letter added. "Additionally, the project has been fully approved by all four states it traverses.""Throughout this entire process, there are multiple opportunities for stakeholder engagement, whether through public fora or through written submittal," the letter states. "If stakeholders disagree with the government's final decision, there is a judicial process in place to address those concerns.""Despite the federal judge's opinion, your agencies then jointly denied access to federal property necessary to complete the pipeline until the administration 'can determine whether it will need to reconsider any of its previous decisions' under various federal laws," the groups said. "The previous decisions now being 'reconsidered' were properly considered and made through a fair and thorough process on which the company and others are entitled to rely.""In our 'nation of laws,' when an established legal process is complete, it is just that — complete" the letter added. "When your agencies upend or modify the results of a full and fair regulatory process for an infrastructure project, these actions do not merely impact a single company. The industries that manufacture and develop the infrastructure, the labor that builds it, and the American consumers that depend on it all suffer." Of course, the Dakota Access Pipeline has gained national attention over the past couple of months as protests by the Standing Rock Sioux Tribe of North Dakota have grown in size and become increasingly violent.  According to reports from Anti Media, protesters recently trespassed on to construction sites and destroyed nearly $2mm worth of equipment.

100+ Militarized Police Deployed Against Native American Water Protectors -- On Saturday, hundreds of people temporarily stopped work at multiple construction sites at the site of the $3.8 billion Dakota Access Pipeline . One person reportedly delayed work for up to six hours by locking to an excavator. At least 14 people were arrested. Democracy Now! began covering the action just after dawn, from the main resistance camp in Cannon Ball, North Dakota. Watch here: A federal appeals court recently rejected a bid by the Standing Rock Sioux Tribe to permanently halt construction on part of the Dakota Access pipeline, paving the way for the Dakota Access company to resume construction on private lands adjacent to Lake Oahe on the Missouri River. A decision on whether the pipeline can proceed under the river rests with the Army Corps of Engineers. The Standing Rock Sioux Tribe argued that construction of the $3.8 billion pipeline is destroying cultural artifacts and sacred sites , including a sacred tribal burial ground that was bulldozed on Sept. 3, Labor Day weekend, when Dakota Access pipeline's guards unleashed dogs and pepper spray on the Native Americans. Since then, members of the Standing Rock Sioux Tribe and others have set up a permanent encampment across the street from the bulldozed burial ground. They call it the Sacred Ground Camp and say they'll continue to fight the Dakota Access pipeline.  We are joined by Dave Archambault II, chair of the Standing Rock Sioux Tribe. Watch here:

Oil and Gas: Nearly 3,000 gallons of oil, brine spill in Mountrail County: . (AP) — State Health Department officials say cleanup is underway after the spill of nearly 3,000 gallons of oil and saltwater in Mountrail County. Officials say about 40 barrels of oil and 30 barrels of brine were released Monday at a site operated by Arsenal Energy USA Inc. near Stanley. A barrel holds 42 gallons. An unknown amount of oil and brine flowed into a stock pond. State officials are monitoring the cleanup. The spill was blamed on a treater leak. A treater is used to separate and condition oil-gas-saltwater mixtures so the oil can be transported.

Natural gas released from McKenzie County well after mechanical failure - – An unknown volume of natural gas released from a well in McKenzie County this week after a mechanical failure caused crews to lose control of the well, the North Dakota Department of Health said Thursday. A Continental Resources well about 10 miles north of Watford City was releasing natural gas and other hydrocarbons from about 10 a.m. until it was stabilized around 7 p.m. Tuesday after a blowout valve malfunctioned, said Bill Suess, spill investigations program manager. No one was hurt in the incident and no water sources were affected. The release was primarily natural gas. The spill is under investigation to determine how much oil and produced water were released and the extent of the impact, Suess said. Law enforcement and the county emergency manager blocked traffic from the area until the well was stabilized.  “If that had ignited, that could have been an issue,” Suess said. “We got pretty lucky on this one. The wind kind of was in our favor on that.” The release affected an area about 500 yards off the well pad, including trees, Suess said. Health department officials will work with the company on cleanup plans. Continental Resources spokeswoman Kristin Thomas said the situation is under control and the company continues to cooperate with state agencies.

Where Has the Waste Gone? Fracking Results in Illegal Dumping of Radioactive Toxins - Over the last 10 years North Dakota has been home to an unprecedented surge of industrial oil extraction activity. New technologies, such as fracking and horizontal drilling, have allowed companies to access previously inaccessible deep oil shale reserves. Between 2006 and 2012 North Dakota rose from eighth to second in oil production nationally. In 2006, the state produced 39 million barrels of oil. By 2014 that number had grown to over 390 million barrels of oil per year. "All that oil," Novak told Truthout, "produces a lot of waste. And it has to go somewhere." In January of 2016, Novak found out that the "special" waste landfill -- which is what the state of North Dakota calls landfills that are permitted to accept oil field waste -- just six miles north of his ranch applied to receive a permit from the state to accept oil field waste that had higher levels of radioactivity. That landfill, known as the IHD waste disposal plant, sits in the middle of a miles-wide oxbow of the meandering Missouri River. A pile of dirt, 10 stories high, overlooks the wide-open spaces of the prairie, and underneath is waste from the oil fields."The landfill operator and the health agency tell us that this is as safe as having banana peels in the landfill. That it is just as safe as having granite counter tops in your house," Novak said. "That insulted my intelligence."  "There are rural water lines that run under that facility, in plastic pipes, not lead. There are people that live within a mile of it. Dust blows off the waste pile toward their homes. This is not okay, and the health department won't lift a finger for us," Novak told Truthout.

Bakken Update: 30 Of The Best US Oil Wells Show Why Operators Can Compete Internationally -- Mike Filloon - There was a time when most thought the oil business in the lower 48 was done. Natural declines and only small conventional reservoirs remained, leaving US production with the Gulf and Alaska. This was not enough to keep production from declining. This decline continued for decades until technologies were developed to tap shale for natural gas and then oil. No one could have guessed how quickly production would increase, nor the effect it would have on world oil markets. Not only did shale production aid in the US getting closer to energy self-sufficiency, it tipped the world supply/demand balance. Summary:

  • The best unconventional wells in the US continue to get better, with some locations producing over 60,000 bbls of oil in the first month
  • Shale production has pushed the US closer to energy self-sufficiency, and has tipped the balance of world oil markets
  • Operators continue to produce play best type wells through enhanced well designs or mega-frac's, and we expect these types of results to continue going forward
  • Improving shale economics have made it competitive on an international level, as production from deep water is losing out on operator cap ex.

Just One Random Example Of Bakken 2.0 -- From The November, 2016, Hearing Docket Agenda --Case No. 25459:Application of Continental Resources, Inc. for an order authorizing the following for the Dimmick Lake-Bakken Pool, McKenzie County, ND: (i) the drilling, completing and producing of a total not to exceed twelve wells on an existing 1280-acre spacing unit described as Sections 1 and 12, T.150N., R.97W.; and (ii) the drilling, completing and producing of a total not to exceed twenty-four wells on an existing overlapping 2560-acre spacing unit described as Sections 30 and 31, T.151N., R.96W. and Sections 6 and 7, T.150N., R.96W., eliminating any tool error requirements and such other relief as is appropriate.  From the very beginning, the MillionDollarWay suggested that if "you" had one well, you would eventually have four wells, probably eight wells, and possibly, many more than that. In this case, some folks with mineral rights in the area described above might have 24 wells plus 8 existing wells = 32 wells (so far). That's a lot of mailbox money.  And remember, operators are not drilling wells if the EURs are not at least 500,000 bbls; some operators require more. The eight wells in the two current 1280-acre drilling units are the Kennedy-Miles wells, which I track here.

Crude by rail shipments down by half as North Dakota oil production hits two-year low - Rail shipments of petroleum from Midwestern oil fields to East Coast refineries have plummeted as North Dakota’s oil production has fallen to a two-year low. Production dropped below 1 million barrels per day for the first time in more than two years, officials said Thursday — yet another reminder that the drilling boom is over in the country’s No. 2 oil state due to the slump in world oil prices. The state produced an average of 981,039 barrels of oil daily in August, down from 1.029 million in July, the state Department of Mineral Resources said. Oil production numbers typically lag at least two months. Those numbers are reflected in the crude shipment data collected by the U.S. Energy Information Administration, which show rail shipments from the Midwestern region were down 49 percent from the previous year in July. Shipments from the Midwest to the East Coast — which represent more than half of the region’s production and move over rail lines crossing Minnesota and Wisconsin — were down by similar numbers. The 5.4 million barrels that traveled to East Coast refineries in July was even 15 percent lower than in July 2013 when production was on the rise. That works out to fewer than three trains per day, about half the number that railroads reported to state officials in 2014. East Coast shipments peaked in November 2014 at 13.8 million barrels, according to the EIA.

The U.S. has its own ‘oil curse’ - The term “oil curse” — coined to describe petro-rich developing countries where the “black gold” came with the heavy price of economic and political instability — is now being adapted for use in the U.S., where “petrostates” and cities are seeing shrinking tax revenues, budget deficits, negative credit ratings, rising unemployment and even outright recession as oil prices have fallen. Alaska, North Dakota, Wyoming, New Mexico, Louisiana, Oklahoma, and Texas, which enjoyed the feast of the shale revolution, are now threatened with famine. How they weather the storm, analysts now say, could largely determine their fiscal and economic fortunes for the next decade. In Alaska, poster child of oil-dependent states, lawmakers spent two contentious summer legislative sessions debating how to cover a $4 billion budget deficit. They weren’t alone: Plunging oil prices have drilled holes into state budgets — $2 billion in Louisiana, $1.3 billion in Oklahoma, $1.3 billion in North Dakota — that left lawmakers bickering over how to close the gaps. “We spend about $1 billion per year on our schools,” Pat Pitney, director of Alaska’s Office of Management and Budget, said in an interview with MarketWatch. “We could close every school in the state and that still wouldn’t be enough to close the budget gap.” Tumbling tax revenue Oil prices dropped a whopping 46% in 2014, then another 31% in 2015. They bottomed in February 2016 at $27.45 per barrel, and while they have since recovered to around $50 a barrel, they are still down 60% from 2014 highs. These declines have caused a huge revenue gap for states that rely on so-called severance taxes to fund operations. As oil prices plunged, severance taxes declined nationwide up to 50% in the last year, Moody’s said in September. And severance taxes fell 46% from 2014 to 2015, according to the U.S. Census Bureau.

The Deadly Global War for Sand - In scores of countries across the globe, a crisis is building around the world’s most important and yet most overlooked commodity: sand. We use more of this humble natural resource than any other except water and air. Sand is the thing modern cities are made of. Every apartment block, office tower and shopping mall from Beijing to Lagos is made at least partly with concrete, which is basically just sand and gravel stuck together with cement. Every yard of asphalt road that connects all those buildings is also made with sand. So is every window in every one of those buildings. Sand is the essential ingredient that makes modern life possible. And, incredibly, we are starting to run out. That’s mainly because the number and size of cities is exploding, especially in the developing world. Since 1950, the world’s urban population has ballooned to over 3.9 billion from 746 million. To build those cities, people are pulling unprecedented amounts of sand out of the ground. There’s so much demand that riverbeds and beaches are being stripped bare, ocean beds denuded, and landscapes devastated. (Desert sand, shaped more by wind than by water, generally doesn’t work for construction.) Governments are cracking down in response—which in turn has spawned a worldwide black market in sand. In a shocking number of countries, people are being imprisoned, tortured and murdered over sand. Still, the amount of sand being mined worldwide is increasing—at terrible costs to people and the planet.

New analysis of natural gas storage warns of ‘significant’ consequences from leaks -- Nearly a year after the record-breaking rupture at the Aliso Canyon natural gas storage facility in Los Angeles, which prompted thousands of people to evacuate and released 97,100 metric tons of methane into the atmosphere, a White House task force has issued a report on the state of the country’s natural gas storage. It’s a troubling picture. The report found that “while incidents at U.S. underground natural gas storage facilities are rare, the potential consequences of those incidents can be significant and require additional actions to ensure safe and reliable operation over the long term.” The Aliso Canyon leak, for instance, can be blamed on both poor design and lack of monitoring. The report offers 44 recommendations to protect health and the environment from the risks of natural gas storage and was authored by staff from the Department of Energy, the Department of Transportation, the EPA, the Federal Energy Regulatory Commission (FERC), and other agencies. “This new report accurately describes the serious safety and environmental hazards involved with these crumbling links in our energy infrastructure. The challenge now is taking action,” said Mark Brownstein climate and energy vice president at the Environmental Defense Fund.  Currently, there are no federal guidelines to regulate natural gas storage, even as it has become a bigger and bigger portion of America’s energy portfolio. The Department of Transportation’s Pipeline and Hazardous Material Safety Administration is expected to issue an interim final rule regarding natural gas storage later this year.

Aliso Canyon task force recommends new rules for natural gas storage -  The multi-agency federal and state task force, which was convened in the wake of the Aliso Canyon natural gas release, on Tuesday announced recommendations designed to prevent such incidents from occurring in the future. In addition, Pipeline and Hazardous Materials Safety Administration will issue an interim final rule by the end of the year, which would incorporate two American Petroleum Institute recommended practices, and would apply to the more than 400 underground natural gas storage wells in the US. The API practices call for operators of underground storage facilities to conduct a systematic evaluation of their wells, including compiling and standardizing all available well records; instituting an integrity testing program that includes usage of leakage surveys and cement bond and corrosion logs; creating and documenting a risk management plan to guide future monitoring; establishing design standards for new well casing and tubing; and establishing safe operating pressures for existing casing and tubing. PHMSA will conduct the rulemaking under the new powers given to the agency in the Protecting our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2016, which was signed into law by President Barack Obama in June. The law, which was passed in response to the four-month release of methane from Southern California Gas' Aliso Canyon storage field, gives PHMSA the authority to act quickly to address urgent safety concerns.

After Calif. leak, feds seek to curtail natural gas blowouts (AP) — A year after a blowout at a natural gas well near Los Angeles spewed tons of noxious gas and drove thousands from their homes, a federal task force is recommending dozens of safety changes for the nation’s 400 underground natural gas storage facilities. A report released Tuesday recommends that operators of gas-storage sites conduct strict risk assessments and develop robust safety procedures, including ensuring that storage wells have backup systems to contain gas flows in the event of a leak. The leak at the Aliso Canyon well was the largest-known release of climate-changing methane in U.S. history, spewing an estimated 107,000 tons of methane before being controlled in February. The blowout sickened residents in the Porter Ranch neighborhood and surrounding suburbs. Many complained of headaches, nausea, nosebleeds and other symptoms from the foul-smelling gas. “Natural gas plays an important role in our nation’s energy landscape, and we need to make sure the associated infrastructure is strong enough to maintain energy reliability, protect public health and preserve our environment,” said Franklin Orr and Marie-Therese Dominguez, who co-chaired the interagency task force. The failed Aliso Canyon well was one of 115 wells at a sprawling storage facility operated by Southern California Gas Co. The well was built in 1953 to pump oil and converted in the 1970s to store natural gas. It used a design that made it dependent on a single barrier to contain the gas. When that barrier failed, a blowout reported Oct. 23 spewed methane uncontrollably for nearly four months.

CAMPAIGN 2016: Oil bets big to hold GOP Congress, sits out Trump-Clinton brawl -- Oil and gas executives are pouring record amounts of money into electing Republicans this year, even though they're largely sitting on their wallets in the presidential race. Oil and gas has pumped more than $70 million into federal races so far this year, according to But Democratic presidential nominee Hillary Clinton and GOP nominee Donald Trump have picked up less than $1 million of that (Greenwire, Sept. 7). Clinton seems hostile to their interests, and although Trump offers kind words, the industry's politically active members figure he can't win. So instead, they're pouring their money into the Republican effort to keep control of Congress. "The executives of these companies are pragmatic," said one energy industry executive. "There's a recognition that you're going to have to work with the [Clinton] White House. So you put your money where you can make a difference." He added that oil executives have many reasons to worry about Democratic control of Congress, or even just the Senate. They might shudder to think of climate change hawk Sen. Sheldon Whitehouse (D-R.I.) leading a committee. Advertisement "If Sheldon Whitehouse has a gavel, he's going to be hauling energy CEOs up there all the time for hearings," he said.

'Get A Life': Clinton Bashed Anti-Fracking Activists During Private Labor Meeting - At a private meeting with the Building Trades Council, Hillary Clinton bashed environmentalists who oppose natural gas fracking and insist the United States must keep all fossil fuels in the ground. She said these environmentalists need to “get a life.”A transcript of a part of the meeting, which took place on September 9, 2015, was published by WikiLeaks. It was attached to an email from Clinton campaign chairman John Podesta’s account, which he says was hacked. Clinton met with the Building Trades Council, which is part of North America’s Building Trades Unions (NABTU). She sought their endorsement, however, she wanted to be clear about what she was willing to support in the way of new pipeline construction. The labor organization is very pro-pipeline because its members work on pipelines.“Bernie Sanders is getting lots of support from the most radical environmentalists because he’s out there every day bashing the Keystone pipeline,” Clinton stated. “And, you know, I’m not into it for that.”“My view is I want to defend natural gas. I want to defend repairing and building the pipelines we need to fuel our economy. I want to defend fracking under the right circumstances,” Clinton added. She made it clear she was willing to defend new, modern energy sources. Then, on environmentalists, Clinton shared, “I’m already at odds with the most organized and wildest. They come to my rallies and they yell at me and, you know, all the rest of it. They say, ‘Will you promise never to take any fossil fuels out of the earth ever again?’ No. I won’t promise that. Get a life, you know.”

WikiLeaks: Hillary's Conflicted Comments on Fracking – One of the recent WikiLeaks email dumps revealed some interesting things about hydraulic fracturing, also known as fracking. (This enhanced drilling technology is a big part of America’s new era of energy abundance.) First, they add to the growing question about what Hillary Clinton really believes: her public comments, or her private positions?Regarding fracking, the leaked emails offer a glimpse into speeches she made to closed groups that we’ve previously been unable to access. One such speech was given to the troubled Deutsche Bank on April 24, 2013. There, she praised fracking as a tool to “make even more countries more energy self-sufficient.” She told the audience: “I’ve promoted fracking in other places around the world.” She bragged about “the advantages that are going to come to us, especially in manufacturing, because we’re now going to produce more oil and gas.”  Yet, everything she’s said in the campaign, paints a different picture.  Her stated energy policies are decidedly anti-fossil fuel. The party platform calls for “a goal of producing 100 percent of electricity from renewable sources by 2050.” In addition to promoting “enough clean renewable energy to power every home in America within ten years,” Hillary’s website outlines her desire to “reduce the amount of oil consumed in the United States and around the world.” She’s declared that banning fossil fuel extraction on public lands is: “a done deal.” While she won’t come out and clearly state that she’d ban fracking, at a March 6 CNN debate with Bernie Sanders in Flint, Michigan, she proudly stated: “By the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place.” And, she has pledged to “stop fossil fuels.”  Then there’s her comment about green-group funding, as coming from Russia. It’s long been suspected that Russia is protecting its national oil-and-gas interests by funding anti-fracking activism—while not a new idea, the current attention makes it worth revisiting.

WikiLeaks: Hillary's Conflicted Comments on Fracking – Breitbart - Regarding fracking, the leaked emails offer a glimpse into speeches she made to closed groups. One such speech was given to Deutsche Bank on April 24, 2013. There, she praised fracking as a tool to “make even more countries more energy self-sufficient.” She told the audience: “I’ve promoted fracking in other places around the world.” Yet, everything she’s said in the campaign, paints a different picture. Her policies are decidedly anti-fossil fuel. The party platform calls for “a goal of producing 100 percent of electricity from renewable sources by 2050.” In addition to promoting “enough clean renewable energy to power every home in America within ten years,” Hillary’s website outlines her desire to “reduce the amount of oil consumed in the United States and around the world.” She’s declared that banning fossil fuel extraction on public lands is: “a done deal.” While she won’t come out and clearly state that she’d ban fracking, at a March 6 CNN debate with Bernie Sanders in Flint, Michigan, she proudly stated: “By the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place.” And, she has pledged to “stop fossil fuels.” Then there’s her comment about green-group funding, as coming from Russia. It’s long been suspected that Russia is protecting its national oil-and-gas interests by funding anti-fracking activism—while not a new idea, the current attention makes it worth revisiting.  The idea that Russia is funding anti-fracking groups, such as the Sierra Club and the Natural Resource Defense Council, has popped up in a variety of outlets including the 2013 movie FrackNation, and in 2014 comments from NATO secretary general, Anders Fogh Rasmussen, the former Prime Minister of Denmark. And then, in late 2014, the New York Times featured a story titled: “Russian money suspected behind fracking protests.” In 2015, The Washington Free Beacon reported on a Bermudian firm that had connections to Russian oil interests and was funneling money to anti-fracking groups in the U.S.

U.S. crude oil imports increase during first half of 2016, the first increase since 2010 U.S. gross crude oil imports increased by 528,000 barrels per day (b/d), or 7%, during the first half of 2016 compared to the first half of 2015. This increase reverses a multiyear trend of decreasing U.S. crude oil imports as a result of increasing U.S. production.  Imports from Nigeria, Iraq, and other members of the Organization of the Petroleum Exporting Countries (OPEC) rose by 504,000 b/d. Declining imports from Mexico, which fell 118,000 b/d, more than offset the increase in imports from Canada, limiting the net change in imports from non-OPEC countries to an increase of less than 24,000 b/d.  Changes in crude oil price spreads were a significant factor in the rise of U.S. oil imports during the first half of 2016. The narrowing price differences between U.S. crudes and international benchmarks provided an incentive for increased imports by refiners in areas where imported crudes now had a delivered cost advantage relative to similar domestic crudes. Additionally, lower overall crude prices contributed to a decline in U.S. crude production from an average of 9.5 million b/d in the first half of 2015 to 9.0 million b/d in the first half of 2016, resulting in higher net crude oil imports.  As a result of shifting price, supply, and logistical dynamics, East Coast (defined as Petroleum Administration for Defense District, or PADD, 1) crude imports rose by 244,000 b/d (41%) in the first half of 2016 compared to the same period in 2015, nearly three-quarters of which were supplied by Nigeria. Nigerian production actually declined during the first half of 2016 as a result of elevated supply disruptions. However, falling U.S. production and increasing competitiveness for seaborne light sweet crudes into the East Coast more than offset lower production levels, enabling imports from Nigeria to displace crude oil received from the Midwest (PADD 2).  In the Midwest (PADD 2), crude imports rose by 104,000 b/d (5%) during the first half of 2016 compared with the same time last year. Canada accounted for almost all of the increase despite wildfires in Alberta that disrupted production later in the second quarter. Canada is the largest source of crude oil imported into the United States, and its heavy crude is particularly well suited for U.S. refiners in the Midwest and Gulf Coast.  Gulf Coast (PADD 3) imports increased 88,000 b/d (3%), with rising imports from Middle East and African countries offsetting declines from Latin America. Imports from Iraq increased by 142,000 b/d, more than the next four countries combined. Iraq’s production in 2015 rose by 700,000 b/d, enabling more of their production to be exported to the United States.

ConocoPhillips CEO Lance says flexible US shale oil can serve as swing producer - US shale oil can serve as a swing producer in the global market due to its flexibility and speed to market, ConocoPhillips CEO Ryan Lance said Tuesday. "Not only is it possible [to be a swing producer], when you think about the marginal barrel required to satisfy demand today, I think it falls right in the cost of supply that onshore tight oil and shale is in," Lance told the Oil & Money Conference in London. He said US shale production has declined in recent months due to the oil price slump. However, that has left an inventory of drilled but uncompleted wells that can serve as de facto spare capacity, he said."It doesn't take long to drill new wells, and usually there's infrastructure nearby due to the previous drilling," he said. "As prices fall, you stop drilling. You can ramp up or ramp down along with commodity prices." Lance's assessment contrasted with that of Hess CEO John Hess, who told the same conference that US shale could not be considered a swing producer akin to Saudi Arabia, highlighting the obstacles that make shale a "short cycle" producer, with a lag of six-12 months between investment decision and first oil production. "When we say short cycle, one of the things that make it not like a light switch is in North Dakota it takes maybe three months to get permits," Hess said. "The logistical planning is huge. You need hundreds of trucks ... to get the rigs set up, to get the frac equipment there and have the water and sand necessary for the hydraulic fracturing." While Hess said the US shale industry needs $50/b oil to keep current production levels flat, Lance said ConocoPhillips has already gained enough efficiencies to bring its break-even costs below $50/b Brent. He said tight oil plays will draw capital away from longer term drilling projects and added that the US has "enormous" tight oil resources remaining.

BP can operate in $50-$60/b oil range next year: Dudley - Oil | Platts News Article & Story: BP can now balance the books in 2017 at "just south of $55/barrel" compared to its previous guidance of $60/barrel thanks to greater cost discipline, CEO Bob Dudley said at the Oil & Money conference in London on Tuesday. "We can operate in the $50 range, we have to," he said, adding that the business needs to be resilient to price cycles, can adapt and is agile. "In practical terms, this means standardizing what we do, make things safer, simpler, and cheaper," Dudley said.He warned that while demand may be strong, supply is even stronger and this has led to a renewed focus on competitiveness. Dudley also said the market is essentially in balance and "as long as oil demand grows at 1-1.2 million b/d we're going to see a tightening. There's probably 18 months of storage out there." "We'll see a steady tightening of the price. Next year...somewhere between $50 and $60 next year. We can plan our company against $50-60 next year. That feels right, the fact that the OPEC members are talking to each other and have reached some just a further sign of tightening of the market," Dudley said.

"Big Oil" - The Crude Market Is Larger Than All Metals Markets Combined -- Ever since the invention of the internal combustion engine, oil has been one of the most crucial commodities on Earth. Without it, modern transportation as we know it would not be possible. Industries such as aviation, aerospace, automobiles, shipping, and the military would look nothing like they do today. Of course, as we now know, this has all come with some extreme drawbacks from an environmental perspective. And while new green technology and the lithium revolution will aid in eventually reducing the role of oil in transportation, the fact is we still use 94 million barrels per day of crude worldwide. As a result, Visual Capitalist's Jeff Desjardins details, the energy industry continues to have huge amounts of influence on our lives. Special interest groups with a focus on energy have influence on a domestic level. Meanwhile, from a foreign policy angle, countries like Saudi Arabia and Russia wield additional geopolitical and economic power because of their natural resources. It’s even arguable that everything from the Gulf War to the more recent Middle East interventions in Libya, Syria, and Iraq have been at least partially to do with oil. This week’s chart of the week aims to help explain the influence that oil has on countries and markets by using a very simple perspective: the size of the crude oil market vs. all metal markets combined.

Oil industry needs $10 trillion to meet coming demand, says OPEC’s Barkindo - The global oil industry needs an astronomic investment injection over the next two decades or risk jeopardizing it’s ability to meet future oil demand, the Organization of the Petroleum Exporting Countries warned on Tuesday. Speaking at the “Oil & Money” conference in London, the cartel’s Secretary-General Mohammed Barkindo said the recent oil crash has already taken a serious toll on investments, particularly the exploration-and-production sector, and poses a “serious threat” to both producers and consumers.“It affects all of us,” he said. “Hence the need to restore balance in this market and to restore investments on a sustainable basis.” “According to our world oil outlook report that will be officially released next month in Abu Dhabi, we estimate that by 2040 this industry will need in the region of $10 trillion dollars of investment in order to sustain production as well as supply,” he added. The slump in oil prices since the summer of 2014 has dramatically hampered money flowing into the industry, both when it comes to current production and finding new fields for future supply. Barkindo said investments which dropped 26% in 2015, are projected to slide 22% this year and are forecast to continue to contract in 2017. If the contraction continues, “then the global community—not only the industry—should really take this seriously and join hands in order to ensure the much needed security of supply going forward,” the OPEC chief said. Fatih Birol, executive director at the International Energy Agency, agreed. He said supply each year drops by 2 million barrels a day, removing the equivalent of Iraq’s entire production from the global oil market every two years. That means the industry won’t be able to meet the expected rise in energy demand in the coming years, even if demand surprises to the downside, he explained. Birol pointed out that both the number of oil discoveries and new oil projects are at historic lows. “And this will have implications in the next years to come and therefore it’s something we all need to bear in mind. It’s a major issue we all need to monitor very closely,” he said.

Exxon CEO: world needs oil of five Saudi Arabias by 2040 - Global demand for energy will grow 25% in the next 25 years and countries will guzzle oil five times the size of Saudi Arabia’s reserves. Exxon Mobil CEO Rex Tillerson was on bullish form in London on Wednesday, dismissing any concerns that the UN’s new climate treaty will limit near-term consumption of oil and gas. His scenario would blow efforts to contain global warming to below the 2C danger zone sky high, unless nascent carbon capture technologies come online fast. While greenhouse gas emissions in developed countries will likely peak in 2030, developing economies will struggle as they burn more fossil fuels, Tillerson told the Oil and Money conference.As a company Exxon “shares the view that addressing climate change is serious and warrants thoughtful action,” he said, citing projects on carbon capture, efficiency and waste heat conversion. Tillerson also said he supports a price on carbon, noting that Exxon already operates with an average internal carbon cost of $80 per tonne, double that of Shell.

OilPrice Intelligence Report: Oil Heavyweights Worry About Future Oil Supply: The top oil officials and executives gathered in London this week for the Oil & Money conference, jointly hosted by the New York Times and Energy Intelligence. Several headlines came out of the conference. ExxonMobil’s CEO Rex Tillerson said that he does not see a supply shortage several years from now even though so many voices are warning about the shortfall in investment today. "I don’t necessarily have the view that we are setting ourselves up for some big collapse in supply within the next three, four, five years," Tillerson said. That comes despite warnings from the IEA and even Saudi energy minister Khalid al-Falih. In fact, the diverging perspectives about future supply is turning out to be one of the hottest debates right now. OPEC’s Secretary-General Mohammed Barkindo said that the global oil industry will need around $10 trillion in investments through 2040 to meet oil demand, but the low levels of investment today because of low oil prices poses a “serious threat.” If investment continues to fall “then the global community—not only the industry—should really take this seriously and join hands in order to ensure the much needed security of supply going forward,” Barkindo said. Others at the conference echoed his worries about future supply shortages.  The European Central Bank kept its quantitative easing program intact, and Mario Draghi said that the ECB has not discussed altering the stimulus. The comments pushed up the dollar and putting downward pressure on oil prices as a result. Separately, the chief of Russia’s Rosneft, Igor Sechin, hinted at the fact that his company could boost production “significantly.” He said that Russia has the ability to add roughly 4 million barrels of oil per day at some point in the future if there is enough demand. Also, Nigeria slashed the price that it is selling its crude for by $1 in order to offload a glut of cargo. Altogether, these developments pushed down oil prices by more than 2 percent on Thursday. 

Oil's Biggest Threat: 'Peak Demand' Within 15 Years? -- For more than two years the oil industry has suffered through its worst down cycle since the 1980s, and relief may not come until the middle of 2017 at the earliest. Some argue that oil prices may take even longer before they rebound. But while oil executives are focusing on the next few years, a much bigger threat looms over the long-term: Peak oil demand. A new report from the World Energy Council predicts that global demand for crude oil could hit a peak in 2030 at 103 million barrels per day. The scenario would require rapid and substantial advancements in electric vehicles, efficiency, renewable energy, and digital technologies – developments that are no longer difficult to imagine. Additionally, the report envisions a scenario in which global primary energy demand – which includes energy demand for everything including transportation and electricity – could also peak before 2030. These conclusions fly in the face of the prevailing assumptions within the oil and gas industry, which assumes consistent and stable growth in demand for decades to come. The oil market has always gone through cycles, in which demand spikes or flattens out. The cyclical nature has overwhelmingly been due to the changing nature of global or regional economic growth. But while demand has always been a bit volatile in the short-term, oil demand has grown inexorably for more than a century as population and GDP expand. Recessions hit demand, but once economies recover, demand resumes its upward trajectory. This constant, almost a law of nature, makes it difficult for many to picture a structural, rather than just a cyclical, decline in oil demand. But many analysts, including the WEC, say that such a development is underway. "Historically people have talked about peak oil but now disruptive trends are leading energy experts to consider the implications of peak demand,” Ged Davis, executive chair of scenarios at the World Energy Council, said in a statement.

USGC natural gasoline climbs to 15-month high with crude, gasoline blending - Natural gasoline on the US Gulf Coast climbed to a 15-month high Wednesday as crude futures ended the day almost 3% higher on a surprise US crude stocks draw. Market sources said a slight uptick in demand -- for gasoline exports and diluent for Latin America -- are also supporting prices. "I wouldn't call it a huge pickup but just enough to perk up everyone's mood regarding the spreads," a broker said.Natural gasoline, or C5, and light naphtha are similar products used for blending into gasoline or as heavy crude diluent, although natural gasoline is largely fractionated from the natural gas stream while naphtha comes from the refining process. Non-Targa natural gasoline from the Enterprise terminal in Mont Belvieu, Texas, rose 3 cents to $1.1525/gal based on an offer at $1.1550 left standing at the end of the S&P Global Platts Market on Close assessment process. It was last assessed higher at $1.1795 on July 2, 2015, at a $7.4/b discount to crude futures. In comparison, C5 was at a $3.2/b discount to WTI on Wednesday. A natural gasoline trader echoed that sentiment, noting "good buying" of Gulf Coast light naphtha for gasoline blending.

New crude oil pipelines and new diluent pipelines and storage capacity in Alberta - Several oil-sands expansion projects committed to when crude oil prices were double what they are today are finally coming online, and midstream companies active in Alberta are building new crude/diluent pipelines and storage capacity to keep pace. New storage caverns for natural gas liquids are also in the works, giving a much-needed boost to Canada’s Energy Province. Today we conclude our series on midstream infrastructure under development in or near Western Canada’s oil sands region that move and store hydrocarbon liquids. Alberta––sometimes called “the Texas of the North”––has experienced as many ups and downs in its oil patch as the Lone Star State, and lately, with crude prices hovering near $50/bbl and the Fort McMurray, AB area still rebuilding from the wildfires of May 2016 (see Back in the High Life and Over the Hills and Far Away), it’s fair to say that times have been better. The good news is that oil prices have been inching up; a number of the projects committed to a few years ago to boost oil sands production are approaching commercial operation; and the expected output increases are spurring the development of new midstream infrastructure. In Part 1 of this series, we discussed the challenges that oil sands producers have faced (low crude prices, the wildfires, the extra costs associated with moving bitumen and heavy oil to market, etc.), as well as the fact that Alberta producers decided a few years ago (when Western Canadian Select – WCS - crude prices topped $70 to $90/bbl) to undertake a combined 850 Mb/d or so of oil sands capacity-expansion projects that would come online in the 2015-19 period.  In Part 2, we discussed how the need for more diluent has encouraged natural gas producers in Alberta to focus on “wet” gas and field condensate production in the province’s Montney and Duvernay plays, and how that shift has spurred the development of new natural gas processing capacity (to extract NGLs and remove impurities from raw gas) and fractionation capacity (to separate mixed NGLs into purity products like ethane, propane, butane and natural gasoline––the leading diluent material).

Mexico eases terms for deepwater joint venture with Pemex - Terms have been eased for an upcoming tender for foreign companies seeking a deepwater oil partnership with Mexico's state-owned Pemex in the Trion Block. Mexico's upstream regulator, the National Hydrocarbons Commission, ruled Friday that consortia can be composed of three companies, instead of four. Until Friday, the rules stipulated that consortia had to have four companies: Pemex, two operators and a financial partner. The December 5 auction is for a joint-operation agreement in the Trion Block in Mexican Gulf waters of the Perdido Fold Belt. The Trion block sits close to the maritime border with the US in the Gulf of Mexico and has certified proven, probable and possible reserves of 480 million barrels of light crude, with water depths of 2,200-2,500 meters (7,200-8,200 feet), according to Pemex. Ten companies have begun prequalification for bidding. They are BHP Billiton, BP, Chevron, ExxonMobil, Inpex, Mitsubishi, Shell, Total, PC Carigali and Lukoil. Companies had pressured for the change in the consortium rules because they were concerned that a larger consortium would mean dilution of profits. Commissioner Sergio Pimentel welcomed the change but said that more companies would have wanted to take part in the auction if the terms had been eased earlier.

EU natural gas demand set to rise by 6% year on year in 2016 to 447 Bcm: Eurogas - EU natural gas consumption is expected to increase by 6% this year compared with 2015 to around 447 Bcm, industry group Eurogas said Friday, as gas demand in Europe continues a robust trend following year-on-year growth last year. The rise is due to increased demand for gas in power generation following signs of revival in industrial activity, as well as greater use of gas in transport, Eurogas said. The group pointed to the rise of gas use in power generation in France, Germany, Italy and the Netherlands as a key factor supporting the expected yearly demand increase."In France, for example, gas demand in this sector doubled in the first half of the year, compared with the same period last year," it said. In Germany, it added, several new gas-fired power plants have started to operate "due to the competitive price" of gas. "This increase in the use of gas in power generation is also a quick and cost-effective way to reduce greenhouse gas emissions substantially," it said. Eurogas also pointed to increased economic growth in parts of Europe, such as the Czech Republic. This, it said, has led to higher gas consumption.

SEA\LNG: LNG Sector Ready to Meet Shipping Industry Demand | World Maritime News: The cross-industry coalition SEA\LNG has highlighted the ability of the liquefied natural gas (LNG) sector to meet the future emissions requirements of the global shipping industry ahead of the 70th Session of the IMO’s Marine Environment Protection Committee (MEPC). “Independent of the timing of the IMO’s implementation of the 0.5% global sulphur cap, today LNG is already a clean, safe, practical and economically viable fuel for the shipping industry,” SEA\LNG Chairman, Peter Keller, said. He added that the industry is making “big steps” in creating the infrastructure to enable quick, safe and cost effective LNG bunkering in key global ports, diminishing the price premium for LNG-fuelled vessels, as well as working with regulators to establish consistent international and national regulations. SEA\LNG coalition, which supports the implementation of the MARPOL Annex VI for the prevention of air pollution by ships, said that it believes the implementation date decision for the marine fuel sulphur cap needs to rest with the Member States comprising the MEPC. “LNG as a marine fuel is a proven and available solution with available technologies to meet the project needs. There are already 86 LNG-fueled ships in operation worldwide (excluding LNG carriers) and a further 95 on order,” SEA\LNG said.

Indonesia may have 63 excess LNG cargoes next year: official - Indonesia is forecast to have 63 excess LNG cargoes next year from the Tangguh and Bontang LNG plants due to the rise in natural gas production, which the domestic market is unable to absorb because of lack of infrastructure, a senior government official said Friday. "We are in the middle of negotiating the sale of 13 cargoes of the 63. We aim to sell the cargoes to existing buyers rather than on the spot market," oil and gas director general Wiratmaja Puja said, adding that excess cargoes are expected to rise above 63 in 2018. In 2016, Indonesia is still has 11 cargoes that have not been sold. The government is still seeking buyers for these cargoes, Puja said. Indonesia's LNG plants are Tangguh in Papua, Bontang in East Kalimantan and Donggi Senoro in Central Sulawesi. Bontang plans to produce 147 LNG cargoes this year or the equivalent of 8.3 million mt. The planned output is less than 2015's 189 cargoes or 10.6 million mt/year.State-owned oil and gas company Pertamina has forecast Indonesian LNG demand is likely to be 12 million mt/year in 2019-20 because domestic gas demand will increase by 4% a year. Pertamina has secured LNG import commitments totaling 3 million mt/year, including 1.52 million mt/year under a 20-year contract from Houston-based Cheniere Energy. The first phase of supply from Cheniere of 76,000 mt/year will start in 2018, with the second phase starting by 2019. Indonesia has to import LNG to cover domestic demand because a substantial part of its own production is earmarked for export under long-term contracts.

The People vs. Arctic Oil -- An unprecedented legal case was filed today against the Norwegian government for allowing oil companies to drill for new oil in the Arctic Barents Sea. The plaintiffs, Nature and Youth and Greenpeace Nordic, argue that Norway thereby violates the Paris agreement and the people's constitutional right to a healthy and safe environment for future generations.  "We will argue in court that the Norwegian government has an obligation to keep its climate promises and will invoke the people's right to a healthy environment for ours and future generations. This is the People vs. Arctic oil," Ingrid Skjoldvær of Nature and Youth said.  The lawsuit demands that Norway uphold its constitutional guarantee for future generations as it is written in article 112 of Norway´s Constitution:  "Every person has the right to an environment that is conducive to health and to a natural environment whose productivity and diversity are maintained. Natural resources shall be managed on the basis of comprehensive long-term considerations which will safeguard this right for future generations as well. The authorities of the state shall take measures for the implementation of these principles."  Norway was among the first countries in the world to ratify the Paris agreement which is about to enter into force. By ratifying, Norway has promised to ambitiously reduce its emissions and help limiting the temperature increase to 1.5 C. At the same time Norway has opened up new oil license rounds, allowing the state-owned Statoil and other oil companies to start a major new exploration campaign in the Barents Sea, where they want to drill up to 7 new exploratory wells in 2017.

Oil From $50 Billion Kashagan Field Starts Flowing to Export - Kashagan, a vast oil field in the Caspian Sea, sent its first crude for export after about 16 years in development and more than $50 billion of investments. The venture loaded 26,500 metric tons of crude for export into the country’s pipelines, Kazakhstan’s Energy Ministry said in an e-mailed statement Friday. Of that, 7,700 tons was sent to the Caspian Pipeline Consortium. Reaching stable production will take “some time” as commissioning work continues both offshore and onshore, the ministry said. The project has been plagued by multiple delays and cost overruns. A 2008 budget estimate of $38 billion jumped to $53 billion by the end of last year as the partners replaced undersea links after sulfurous gas corroded and cracked the pipes after a brief startup in 2013. The crude from Kashagan is reaching an already saturated market, with prices at less than half the level of three years ago. Expectations for the field’s exports even prompted OPEC to flip supply predictions for next year. “Restarting production even in this low oil price environment is good because it means beginning to see some returns on that massive investment,” Andrew Neff, Paris-based principal analyst at IHS Energy, said by e-mail. “The real payoff will be phase two,” which has the potential to increase output to 1 million barrels a day, he said. North Caspian Operating Co., which took over running of the field from Eni SpA in 2009, said it’s working to gradually increase production capacity to a target level of 370,000 barrels a day by the end of 2017. U.K. consulting firm Wood Mackenzie Ltd. forecasts only about 154,000 barrels a day from the field on average next year.

Kazakhstan's Kashagan ships first oil for export. (Reuters) - The first batches of oil from Kazakhstan's giant offshore Kashagan field were shipped on Friday for export via two pipelines, the Central Asian nation's Energy Ministry said. Energy companies developing the field have shipped 7,700 tonnes of oil through the private CPC pipeline and 18,800 tonnes through a pipeline operated by state-controlled firm KazTransOil, it said in a statement. The ministry said start-up work and testing was continuing at field and getting it into "stable operations mode will take some time". Kashagan has also shipped 22.8 million cubic metres ofgas into the state-run gas pipeline system, it said. Energy Minister Kanat Bozumbayev said on Wednesday four wells at Kashagan were producing a total of 90,000 barrels per day, although it was unclear how much was oil and how much was gasthat would then be shipped separately, flared or injected back into the reservoir. The field off Kazakhstan's Caspian coast has cost about $50 billion to develop and first started production in 2013 but output was suspended shortly afterwards because of technical problems with the gas pipelines. The NCOC consortium developing Kashagan is made up of China National Petroleum Corp, Exxon Mobil, Eni , Royal Dutch Shell, Total, Inpex and KazMunaiGas. Kashagan was initially expected to produce 75,000 barrels per day (bpd) in October, rising to between 150,000 bpd and 180,000 bpd in November and December.

Russia is planning for low oil prices for years - Russia is betting oil prices will stay low for a long time.President Vladimir Putin's government has just set a draft budget for the next three years based on the assumption Russia will be able to sell its oil for $40 a barrel. That's $10 below current world prices. Russia is the second biggest oil exporter after Saudi Arabia. It has been talking to the Saudis and other OPEC producers about restraining supply to support prices. Putin's budget suggest he wants to be prepared if a preliminary OPEC production cut agreed last month is not implemented, or proves ineffective. He may also have learned a painful lesson. In 2015, the Russian government originally based its budget on an average price of $100, double what it actually was. The slump in oil prices forced the government to slash spending. That hurt everyday Russians, who were already struggling with rising prices and falling wages. Some even took to the streets in rare public protests. The budget for 2016 predicted $50 oil, $10 above the average price in the first nine months of the year. And once again, the government was forced to change its plans. It amended the budget earlier this month, to accommodate higher defense spending and a one-off bonus for pensioners to be paid in January. That will push up borrowing: the budget deficit is now expected to reach 3.7% of GDP, well above the official target of 3%. The government is now expecting the deficit to fall to slightly above 3% of GDP next year.

What It Takes to Be the World’s Biggest Crude Producer --Russia’s oil industry has proved its strength over the past several years, raising production while powering through the Great Recession, a round of international sanctions, and the steepest drop in oil prices in a generation. In September, Russia set a post-Soviet record for crude output, pumping 11 million barrels a day. Next year its oil companies should be able to produce even more, if the Kremlin wants them to. On Oct. 10, Russian President Vladimir Putin said a freeze, or even a cut, would be the proper response to the currently oversupplied market. This followed a September agreement between members of the Organization of the Petroleum Exporting Countries to finalize a small production cut in November. Setting aside any deals with OPEC, analysts had anticipated that Russia would increase its 2017 production by 1 percent to 3 percent. Investments made during the years of $100-a-barrel oil are still bearing fruit. Russia’s largest producers, Rosneft and Lukoil, have poured billions of dollars into Siberia, where they’ve been able to slow the decline rates of aging fields and in some instances revive growth. “Russia has a lot of oil that can be produced at competitive prices, so it will look to muscle in on higher-cost competition where it can,” says Christopher Haines, head of oil and gas at BMI Research. That means taking market share from countries that rely on oil sands and deepwater projects. Low oil prices have battered Russia’s economy, leading to a recession, the widest budget deficit since 2010, and a sharp drop in the value of the ruble—it’s down about 50 percent against the dollar since 2013. But the cheaper currency is a plus for Russian oil companies. BBecause they get dollars for the oil they sell, and they pay for services, including drilling, in rubles, they’ve been able to raise the value of their earnings while cutting costs. Losses from lower oil prices are mainly borne by the government, which gets 37 percent of its revenue from oil and gas. Last year the government responded with a surprise tax increase on oil companies. That helped slow the deterioration of public finances. The threat of another hike looms over 2017. Vagit Alekperov, the billionaire chief executive officer of Lukoil, predicted last month that the nation’s output would flatline next year and potentially decline in 2018 or 2019 because of the state’s tax plans. “The cow that is giving milk today is not being fed,” Alekperov told reporters in Sochi on Sept. 30.

Force majeure on Bonny, Forcados crude oil terminals slashes Nigeria Sep revenues: ministry - Declining oil production and export volumes due to militancy and large-scale crude theft cut the Nigerian government's gross revenue in September by about 12% from August to Naira 279.75 billion ($8 billion), the finance ministry said Friday. The ministry said that despite the rally in global oil prices averaging $48.43/b in June, Nigeria's export volume declined by 1.15 million barrels in that month, resulting in a $46.52 million drop in oil export sales for the government. Nigeria's oil exports sales are accrued to the government's account two or three months later. "Force majeure was declared at the Bonny Terminal and there was a subsisting force majeure at the Forcados Terminal," the ministry said in a statement. "Shut-in and shutdown of pipeline for repairs and maintenance also contributed to the drop in revenue."Oil exports account for about 80% of the Nigerian government revenue. Nigerian oil output plummeted to near 30-year lows of around 1.4 million b/d in May from 2.2 million b/d earlier in the year as attacks on oil facilities in the Niger Delta rose at an alarming pace amid resurgent militancy. The Nigerian Navy said Friday that it has arrested 13 suspected oil thieves who illegally tapped into pipelines in the Escravos area of the Niger Delta, to siphon about 900 mt of crude oil. "The suspects and exhibits have been handed over to officials of [state security] for necessary action,"

India eyes investment in Nigeria's hydrocarbon sector -  India is exploring an option to invest $15 billion in Nigeria's hydrocarbon sector in lieu of its annual crude oil imports from the West African nation, the petroleum ministries of both countries said Tuesday. Emmanuel Kachikwu, Nigeria's minister of state for oil who is currently on a three-day visit to India, discussed the potential of diversifying the engagement in the oil sector with his Indian counterpart Dharmendra Pradhan. The two countries are working on a memorandum of understanding to enable the participation of Indian companies in Nigeria's upstream and downstream oil and gas sector. The deal being negotiated by Kachikwu will also have the Indian government make an upfront payment for the purchase of Nigeria's crude on a long-term term basis as well as Indian public sector companies investing in Nigerian refineries, the Nigerian oil ministry said in a statement.An agreement is expected to be signed in early December during Petrotech 2016, India's flagship biennial oil conference and exhibition. Nigeria, a major crude oil producing nation, needs funds to bolster its dwindling oil reserves and production after seeing its revenues dropped sharply due to low global crude prices and declines in production. It recently revealed it was also in talks to secure over $70 billion worth of investment in its oil sector from Chinese companies. India is the largest buyer of Nigerian crude, which is largely light and sweet, rich in gasoline and diesel and low in sulfur, and meets the appetite of the Indian refiners. In 2015-16, India imported nearly 23.7 million mt of Nigerian crude, nearly 12% of India's overall oil imports.

Nigeria Slashes Oil Prices, Admits There Is A "Huge" Cargo Glut -- Something ironic happened on the way to OPEC's alleged production cut: the world finds itself drowning in excess oil. We touched on this first last week when we observed that according to the latest OPEC monthly production numbers, OPEC had produced a record 33.4mmbpd, with some expectations that by the time the November Vienna OPEC summit takes place, there will be another million barrels in output.  And while the market, or at least the marginal price setting algos have been reluctant to admit the excess supply reality and adjust prices accordingly, OPEC member Nigeria has found the hard way that when there is a glut, the only way to gain market share is to underprice the competition. Nigeria National Petroleum Corporation lowered by at least $1 a barrel its official selling prices (OSPs) for 20 out of 26 oil grades monitored by Bloomberg, according to pricing lists. Qua Iboe, Nigeria’s largest export crude under normal circumstances, was reduced by the most since 2014.  NNPC cut the selling price of Qua Iboe for November to a 17 cent premium to the benchmark Dated Brent, according to the price list, from $1.07. It reduced the price of Bonny Light to a 7 cent premium and Forcados to a 41 cent discount to Dated Brent. The reason for the dramatic price cuts according to Mele Kyari, group general manager for the oil-marketing division at NNPC, the state oil company, is a  “huge cargo overhang”, the same overhang we cautioned back in March as much of the land-based storage has moved to sea, which is preventing the country from regaining market share.

Libya's NOC plans Nov Es Sider crude oil cargo, first since Dec 2014 - Libya's Es Sider is set to resume exports in the coming weeks, with the first cargo potentially being lifted by Libya's National Oil Corporation (NOC) during the first week of November, a source at NOC told S&P Global Platts on Thursday. Several trading sources active in the Libyan crude market also said they had heard similar news. This would be the first cargo lifted since force majeure was declared on loadings from Es Sider port in December 2014. Following the restart of production at the eastern Waha fields of around 50,000 b/d, whose pipelines feed into the main Eastern oil terminals Es Sider (320,000 b/d) and nearby Ras Lanuf (240,000 b/d) trading sources said that NOC has been planning to lift a cargo of Es Sider crude from Ras Lanuf terminal. "We hear it's an end of October-loading NOC cargo, and as far we know, they've not found a buyer yet," one sweet crude trader said. "The laycan will be during the first [week] of November," said the NOC representative, adding that the Es Sider cargo will likely be lifted from nearby Ras Lanuf terminal. Ras Lanuf came out of force majeure on September 14 and several cargoes of Sirtica and Amna crudes have since been loaded over the course of the past month. Loadings from Es Sider port remain suspended, due to infrastructure damage, including fire damage, that occurred during the civil war over the past few years and has not yet been repaired to enable crude exports.

Signs of dissent, desperation amid food shortages and rising prices in Egypt - Despite a widespread government crackdown on dissent, some Egyptians are resorting to drastic measures to express their desperation over the food shortages and double-digit inflation that have made many of life’s necessities hard to come by.  Nearly six years ago, a frustrated and destitute Tunisian street vendor, Mohamed Bouazizi, set himself ablaze, sparking a series of popular revolts across the region now collectively known as the Arab Spring. Following on the heels of Tunisians, Egyptians took to the street in January 2011 and succeeded in overthrowing President Hosni Mubarak, the repressive military dictator who ruled the country for almost 30 years. But whereas Tunisians managed to build a functioning, if flawed, democracy in the aftermath of their revolt, Egyptians today find themselves under an even more repressive military regime coupled with dwindling food supplies and skyrocketing prices. The price of rice has gone up by 48 percent over the past year while the cost of cooking oil – which is increasingly hard to find – has gone up 32 percent. And despite a draconian clampdown on dissent, Egyptians are increasingly expressing their desperation. On Saturday, a 30-year-old taxi driver named Ashraf Mohammed Shaheen self-immolated in front of an army centre in Alexandria. According to press reports citing witnesses, he criticised the government and rising prices before dousing himself in gasoline and setting himself alight. He suffered burns on 95 percent of his body and was rushed to a nearby hospital. News of the incident spread quickly on social media under the Arabic hashtag #Bouazizi_Egypt, a reference to the Tunisian vendor who took similarly desperate measures nearly six years earlier. “The economic situation in Egypt continues to intensify and worsen – and in a country where the majority is around the poverty line, that has meant the impact is felt the most by the most vulnerable,”

Saudi Aramco's halt of oil product supply to Egypt surprises markets --In early October Saudi Aramco stopped its open credit line to Egypt's EGPC halting the supply of refined products, according to traders. What led to this decision, and how does this fit into the political context in the Middle East? Ned Molloy, managing editor European fuel oil, George Shaw, editor European gasoil, and Adal Mirza, senior writer Middle East, discuss developments with a focus on the impact on the oil markets.

The World’s Biggest Oil Kingdom Reverses Course - Bloomberg: Next year will be a test of strength for Saudi Arabia, the world’s largest oil exporter, as it tries to regain control of the market and lift prices. After two years of pumping at full blast, and helping drive prices to 12-year lows in January, the Saudis now appear willing to pull back. In September, at a meeting in Algiers, the Organization of the Petroleum Exporting Countries agreed to the outlines of a plan to lower the group’s production by as much as 750,000 barrels a day. Although the details won’t be final until the cartel’s Nov. 30 meeting in Vienna, the Saudis are expected to make most of those supply cuts.The retreat signals an end to the kingdom’s foray into free-market economics. Two years ago, with prices already falling in response to a growing supply glut, Saudi Arabia, against the wishes of its fellow OPEC members, refused to lower output. The move was a direct challenge to other oil producers. By flooding the world with its low-cost crude, the Saudis bet that they could withstand lower prices longer than other countries and oil companies and force them out of the market. The strategy worked to a degree. The Saudis are pumping and selling record amounts of oil. Output hit almost 10.7 million barrels a day in July. At the same time, other producers have had to cut back: U.S. shale production has fallen, and non-OPEC oil supplies are set to drop in 2016 by the largest amount in 30 years. In April 2016 the powerful deputy crown prince, Mohammed bin Salman, said the kingdom no longer cared whether oil cost $60 or $20 a barrel. Rather than keeping prices high, the Saudis seemed resigned to cheap oil and made plans to use that revenue to fund other investments in a bid to diversify the kingdom’s economy and reduce its reliance on crude. But the economic consequences of cheap oil have been severe for Saudi Arabia. Riyadh is burning through foreign-exchange reserves, government contractors have gone unpaid, and civil servants, who make up two-thirds of the labor force, will get no bonus this year. The country’s fiscal deficit is more than 10 percent of gross domestic product, the highest ratio of any Group of 20 nation. The International Monetary Fund forecasts that Saudi economic growth will slow to about 1 percent next year, the worst since 2009. A few banks predict a recession.

OPEC’s Oil U-Turn Missed Looming Peak Demand -  OPEC’s decision last month to reverse its policy of unfettered production and cut oil output to boost prices may be at odds with the industry’s most important long-term trend: demand for what they produce could start falling within 15 years. If rapid improvements continue in renewable energy, electric vehicles and other disruptive technologies, petroleum consumption will peak in 2030 and decline thereafter, according to a report from the World Energy Council. As the globe’s largest producers gather in London this week for the Oil and Money conference, they might want to check their assumption that the market will grow for decades to come.The plunging cost of renewable energy -- with solar-module costs falling 50 percent since 2009 -- is already upending the business model of utilities. Disruption could spread to the oil industry as electric vehicles become more economic than gasoline or diesel cars, potentially displacing millions of barrels of daily fuel use by the late 2020s. Projections for decades of demand growth that underpin investments in oil projects could be misplaced.“The longer-term outlook, beyond 10 years, is certainly less rosy,” said Alex Blein, London-based energy-portfolio manager at Amundi, which holds more than $1 trillion of assets. “Given the advances in battery technology, by 2030 carbon-powered vehicles will be the exception rather than the norm. This will inevitably impact on oil demand.” When the Organization of Petroleum Exporting Countries last cut production to support prices in 2008, the decision made economic sense. At that time, the phrase “peak oil” described the growing fear that the world was running out of petroleum, so the group’s 1 trillion barrels of reserves would be guaranteed to fetch a higher price in the future. That calculation may be changing, with a growing risk that some resources might not be needed. This is evident in demand estimates from the International Energy Agency, which have been revised down over the past 20 years, just as projections for renewable energy increased, said Michael Liebreich, founder of Bloomberg New Energy Finance. He predicts the growth of electric vehicles and improvements in fuel efficiency mean oil demand will peak around 2025 and decline in the 2030s.

Kuwait's emir dissolves parliament, cabinet resigns over oil price dispute (UPI) -- Disputes over fuel price increases in oil-rich Kuwait have prompted the country's emir to dissolve its parliament. Every member of Kuwait's cabinet had already resigned. Emir Sheikh Sabah al-Ahmad al-Sabah issued an emergency government decree Sunday afternoon "given the circumstances in the region," BBC reported. The emir's decision has prompted early elections, but no date has been set. Members of parliament would otherwise have remained in office through July 2017, Al Jazeera reported.  The ruling al-Sabah family has the last word over all key decisions in Kuwait and has dissolved the legislature repeatedly over the years over various disputes. While oil prices around the world remain low, Kuwait has cut subsidies to its citizens. One of the ways it accomplished that was to raise fuel prices by nearly 80 percent. The nation's parliament, typically considered pro-government, has filed three requests to ask the government about the price increases. The global price of oil has been cut in half from heights of over $100 a barrel during the summer of 2014. Security in Kuwait has also become a major issue lately. Kuwait has recently faced the threat of attacks with the rise of the Islamic State militant group.

Iran Boosting Oil Production in Possible Hitch to OPEC Deal - Iran, OPEC’s third-biggest member, plans to boost its oil output to 4 million barrels a day this year, potentially complicating the producer group’s plan to cut supply in an effort to prop up prices. Oil Minister Bijan Namdar Zanganeh said he hopes the Organization of Petroleum Exporting Countries will agree next month at a meeting in Vienna to limit output. Iran is seeking about $200 billion of investment in its oil, natural gas and petrochemicals industries to raise production and sales, according to figures Zanganeh presented Monday at a conference in Tehran. The country is targeting an average daily output of 4.28 million barrels of crude and 1 million barrels of condensate within four years, he said. OPEC members will meet next month to seek agreement on how to put into effect a planned cut in the group’s output. OPEC decided last month in Algeria to reduce its collective production to between 32.5 million and 33 million barrels a day to rein in a global glut and support prices, though it may exempt Iran from any cuts. Iran lost its position as OPEC’s second-biggest producer after international sanctions were tightened in 2012 and has defended its steps to ramp up output to return to prior levels. “The difficulty in implementing the deal will be with the potential for production increases within OPEC,” Giovanni Staunovo, a commodities analyst at UBS Group AG, said by phone from Zurich. “It may also be a bargaining chip, as what everyone wants is to get into the OPEC talks with a higher level of production from which to cut or freeze.” Iran aims to raise production from 3.89 million barrels a day currently, Ali Kardor, managing director of National Iranian Oil Co., said at the conference in Tehran. Amir Hossein Zamaninia, deputy oil minister for international affairs, told reporters the country pumped 4.085 million barrels a day before sanctions were imposed on its economy. “We need to reach pre-sanctions production levels,” he said.

Iran hopes to hit 4 million b/d crude oil output in two weeks: NIOC - Oil | Platts News Article & Story: Iran hopes to raise its crude oil production to around 4 million b/d in the next two weeks, up from the current level of 3.89 million b/d, a senior National Iranian Oil Company official said Monday. The Islamic Republic also aims to increase its exports to 2.4 million b/d, from 2.2 million b/d currently, NIOC managing director Ali Kardor told journalists on the sidelines of a conference in Tehran. "We think we will be able to export 2.5 million b/d [by the end of the Iranian year], and gas condensates will be 500,000 b/d then," Kardor said. Oil minister Bijan Zanganeh said in a speech to the conference Iran was aiming to reach a production capacity of 4.03 million b/d by the end of the current Iranian year in March 2017.This is just below Iran's pre-sanctions production of 4.085 million b/d, Deputy Oil Minister for International and Commercial Affairs Amir Hossein Zamaninia told reporters. He stressed that the OPEC member needs to reach the pre-sanctions level before it can talk of freezing production. "We will talk about figures in November," Zamaninia said when asked if Iran would freeze at this level or cut from it. Zanganeh said in September Iran would be willing to discuss an OPEC move to stabilize the market when its output reaches "close to 4 million" b/d. Along with Nigeria and Libya, Iran is one of three countries exempt from a deal that OPEC brokered in Algiers in which it agreed to cut production to between 32.5 million b/d and 33 million b/d.

Iran Disagree With OPEC Production Estimates As Hedge Fund Oil Longs Hit 2 Year High - As we reported last week, just as OPEC announced a new monthly production record, with total cartel output rising by 220kbpd to a record 33.4mmbpd... ... driven by a jump in production in Iraq, Nigeria and Libya, more confusion emerged regarding the recently concluded OPEC Algiers "deal", according to which production would be cut back to 32.5-33.0 mmbpd, as opposition to OPEC's secondary production estimates rose, as Venezuela join Iraq in disagreeing with the cartel's third-party production estimates. To wit: Venezuela reported crude output of 2.33m b/d in Sept. to OPEC, 245k more than secondary source estimates, while Iraq reported 4.78m b/d in Sept., 320k above secondary source estimates. Making matters worse, during last week's Istanbul meeting, OPEC secretary general Mohammed Barkindo told reporters that "OPEC has still hasn't decided yet whether OPEC and non-OPEC would make cuts at the same time, or OPEC would move first" while adding to the confusion, Putin said that Russia would only join OPEC if the organization agreed on a freeze, while Rosneft suggested it would only join a price freeze, not cut.' Today, the rising OPEC discord hit a crescendo when Iran, one of the few nations exempt from the OPEC production freeze agreement, said it plans to boost its oil output from the current 3.89 mmbpd to 4 mmbpd by the end of the year, complicating the producer group’s plan to cut supply in an effort to prop up prices. Shortly thereafter Oil Minister Bijan Namdar Zanganeh added that new Iranian petroleum contracts are meant to help the country reach an even higher production plateau, somewhere in the 5 million bpd range. Iran is seeking about $200 billion of investment in its oil, natural gas and petrochemicals industries to raise production and sales, according to figures Zanganeh presented Monday at a conference in Tehran.

OPEC Deal Still Wobbly, But Oil Investment Takes Off - Oil prices wobbled to start off the week, rebounding a bit during early trading on Tuesday. A slightly weaker dollar supported prices, while energy analysts suggested the oil market is not as oversupplied as some think. "Global oil inventories (industry and government) increased by 17 million barrels to 5.618 billion barrels in 3Q16. This is the smallest build since 4Q14, confirming that inventory builds are slowing as the market comes back into balance," Bernstein Energy analysts said, according to Reuters. Wood Mackenzie is even more aggressive, predicting a balanced market by the end of the year. Iran became the third OPEC member to question the data being used to calculate baseline production figures for the group. Venezuela and Iraq already said that OPEC was underestimated their production levels, an important point that would affect what the countries can produce after the pending deal to cut output is finalized in November. The head of the National Iranian Oil Co. said on Monday that it is actually producing 300,000 barrels per day more than it is getting credit for. The fight over data threatens to undermine the whole deal, and a failure in Vienna in November could reverse the latest oil price rally. “If nothing concrete emerges on production control, the market will lose patience, with the risk of an end-year price bloodbath,” David Hufton, CEO of PVM Group, told Bloomberg. Iran wooing oil and gas investment. Iran is soliciting interest from international oil and gas companies, asking them to submit documents to pre-qualify as bidders for future oil auctions. Iran is hoping to attract $100 billion in investment over the next decade in order to increase output by some 1 million barrels per day. In the short run, Iran plans on increasing production to 4 mb/d by the end of this year, up from 3.8 to 3.9 mb/d currently.

Why Algeria Will Be A Key Part Of Any OPEC Deal―  At the 23rd World Energy Congress in Istanbul last week, talks regarding the OPEC crude oil production freeze took a surprising turn. Energy Minister Noureddine Boutarfa from Algeria has taken the lead on this deal, having facilitated prior negotiations between Saudi Arabia and Iran. Informal meetings took place in Algeria leading up to the announcement on September 28th that the two competing nations could proceed to accept a production freeze. Countries aiming to participate in the deal have failed to agree on key aspects but are now coming to the table. Algeria has been described as one of OPEC’s most negatively affected countries in response to low oil prices. Low oil prices hinder exports and earnings for oil majors, putting their respective countries into economic decline. In order to regain stability, it’s in Algeria’s best interest to make the production freeze succeed. Algeria has a long-standing relationship with Saudi Arabia and Iran that helped bring these competitors together diplomatically. Boutarfa was with Saudi Arabia and Iran for the duration of their private talks and is believe to have prompted their unified agreement. Concerns exist for other countries as well. If the price of oil doesn’t rise fast enough, member nations may decide to return production output to their higher levels. Countries are skeptical on whether the agreement will succeed and may decide not to participate whatsoever. Any rising concerns with respect to other countries’ participation may deter those pondering participating as well. Vladimir Putin has mentioned how eager Russia is to work with OPEC on their oil production freeze. Other Russian leaders, however, weren’t as stoked. Igor Sechin, Vice-Chairman of the Board of Directors for state-owned oil company Rosneft and close ally of Putin’s, shared a different opinion. At the WEC, he questioned why Russia should participate and potentially detriment from the deal. On October 7th, Energy Minister Alexander Novak also opposed the notion that this deal will succeed. The lack of agreement from the leading nation in energy exports shows there’s still much to discuss

WTI Surges Above $51 After Unexpected Crude Inventory Draw - Seasonally, expectations are for continued builds in inventories (following last week's biggest build in 6 months) but API reported a massive 3.8mm drawdown (against 2.1mm build expectations) sending WTI prices soaring. Distillates also saw a notable draw as Gasoline built modestly. Cushing saw the biggest draw since Feb 2014. API

  • Crude -3.8mm (+2.1mm exp)
  • Cushing -1.96mm (-1.4mm exp)
  • Gasoline +929k
  • Distillates -2.3mm

As Bloomberg added, “We’ll see what happens with the weekly DOE’s. People will look for confirmation tomorrow about how much refining capacity is offline,” Sam Margolin, energy markets analyst at Cowen & Co., says by phone.

Oil Prices Gain as Dollar Retreats - WSJ: Crude-oil prices flipped from losses to gains Tuesday, pivoting around the $50 mark, as the dollar retreated and market participants continued to evaluate OPEC’s proposed production cuts. U.S. crude for November rose 35 cents, or 0.7%, to $50.29 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 16 cents, or 0.31%, at $51.68 a barrel on ICE Futures Europe. Hedge funds and other big money managers have increased their bets that oil prices will rise since the Organization of the Petroleum Exporting Countries announced an agreement to cut production in late September. “There are a lot of people who believe we’re going higher and are willing to buy the dips,” said John Kilduff, founding partner of Again Capital. Crude also got a boost from the weaker dollar, which makes oil cheaper for buyers who deal in foreign currencies. The WSJ Dollar Index, which tracks the dollar against a basket of other currencies, was down 0.21%. Oil prices have been trading in the $48 to $53 a barrel bracket since OPEC’s agreement was announced. Many watchers say the news has been largely priced in and the market now has little fuel to sustain momentum. “It’s just going to be erratic until we get clearer definition regarding OPEC’s intentions,”

WTI Crude Spikes After Major Crude Inventory Draw Trumps Production Increase - Oil held gains overnight following API's surprise crude inventory draw, DOE data surprised even more with a massive 5.247mm draw (2.1mm build exp). Cushing saw the biggest draw in 6 months but we note that Gasoline inventories rose 2.469mm barrels - the biggest build since Feb. Production rose very modestly but hovers around the 8.5mm b/d level. DOE:

  • Crude -5.247mm (+2.1mm exp)
  • Cushing -1.635mm (-1.4mm exp) - biggest in 6 months
  • Gasoline +2.469mm - biggest in 8 months
  • Distillates -1.24mm

Following last week's big build, DOE reports an even bigger draw than API. However the huge swings in Cushing (draw) and Gasoline (build) are notable.

Oil down 2 percent, strong dollar knocks U.S. crude off 15-month highs | Reuters: Oil prices settled down more than 2 percent on Thursday, as a resurgent dollar encouraged players to take profit on the previous day's rally that sent U.S. crude to 15-month highs. The dollar hit seven-month highs against a basket of currencies and a three-month peak versus the euro after the European Central Bank kept interest rates unchanged and U.S. data showed home resales surged in September. Benchmark Brent crude for December delivery LCOc1 settled down $1.29, or 2.5 percent, at $51.38 per barrel. U.S. West Texas Intermediate (WTI) crude's November contract CLc1, which expired as the front-month, fell $1.17, or 2.3 percent, to finish at $50.43. WTI's December contract CLc2, which will be front-month from Friday, slid $1.19 to settle at $50.63. On Wednesday, oil rallied after the U.S. government reported an unexpected drawdown of more than 5 million barrels in weekly crude stockpiles that drove WTI's November contract to a 15-month high of $51.93. "This is predominately being driven by the dollar's strength," Matt Smith, director of commodity research New York's ClipperData said, referring to Thursday's retreat. "It's also to do with the dust settling on yesterday's report and the realization that it wasn't quite as bullish." Some market participants noted that despite the crude drawdown, the EIA also reported an unexpected build of 2.5 million barrels in gasoline stockpiles instead of the drop that was forecast.

Baker Hughes Rig Count Up 14 as Oilfield Services Stocks Tumble - Baker Hughes reported Friday, Oct. 21, that U.S. oil and natural gas drillers brought 14 rigs online in the latest week as positive sentiment continues to build among operators that a recovery is on the horizon. The Houston oilfield services giant said the count is up to 553 this week, while oil rigs climbed 11 to 443 and natural gas rigs rose by 3 to 109. Miscellaneous rigs were flat at 2. The news indicates that drillers are continuing to bolster activity as crude oil prices hover above the psychologically significant $50 per barrel mark. Crude was fluctuating Friday, however, as an OPEC-fueled rally has died down and traders continue to look for more evidence of fundamental supply and demand support after the U.S. Energy Information Administration reported Wednesday that crude inventories fell by 5.2 million barrels last week. Global benchmark Brent crude futures were trading up about 0.3% Friday afternoon to $51.68 per barrel, while U.S. benchmark West Texas Intermediate crude contracts for December delivery were up slightly to $50.70. Meanwhile, the U.S. offshore industry continues to show little signs of life as Baker Hughes said Friday that count remains flat at 23, but down 12 from this time last year. Offshore markets remains challenging at the moment, according to Stephens analyst Matthew Marietta, as the backlog of orders continues to erode and an overall lack of notable contracting activity persists. Marietta noted in a recent report that 12 offshore rigs have received contracts or extensions in the prior 30 days, but 10 of those have a duration of less than 6 months. All told, Baker Hughes' U.S. rig count is down by 234 from last year's count of 787, with oil rigs down 151, gas rigs down 85, and miscellaneous rigs up 2.

Permian And Eagle Ford Recover As Rig Count Rises To 8 Month High -- This week’s Baker Hughes report shows an 11-rig increase in the United States oil count, marking 17 straight weeks of no-decline in the active rig figure.  The streak suggests a strong recovery for the U.S. drilling sector, which was hit hard when oil prices dropped for the first time two years ago due to a global supply glut. The last time the Houston-based oilfield services company reported an oil-rig count this high was in its February 5th report, meaning the figure has reached an eight-month record. Still, the oil rig count sits 151 rigs below the 594-rig figure reported during the same period last year.“Apparently $45/50 oil is high enough for shale producers to come storming back in,” Zero Hedge said.The gas count saw a three-rig increase to 108 rigs, but is still 85 rigs lower than the count last year. Texas’ rigs increased in number by 10 sites, after losing 3 in last week’s report. Wyoming gained three, while Alaska and Utah saw a one-rig jump. The Permian and Eagle Ford basins saw a combined increase of 13-sites, after losing six rigs last week. Mississippian and Haynesville gained one rig each, and the DJ-Niobrara site lost one, becoming the only basin to lose a rig this week. West Texas Intermediate traded flat at $50.63 after the count was released, and Brent traded up 0.41 percent at $51.59 at the time of the report’s writing.

Oil steadies after early loss on dollar; US oil rig count rises again: Oil prices steadied on Friday as the dollar eased off eight-month highs and the weekly U.S. oil rig count showed drilling remained on the upswing with crude trading above $50 a barrel. Russia's reiteration of its commitment to join OPEC in curbing output helped support crude, although some viewed signs of a post-Soviet high in crude production as bearish. Ahead of Friday's settle, oil prices threatened to record the first weekly loss since mid-September. Global benchmark Brent crude futures rose 24 cents to $51.62 a barrel by 1:45 p.m. ET (1745 GMT). The contract is down about 0.6 percent for the week. U.S. West Texas Intermediate (WTI) crude was trading 1 cent higher at $50.64 a barrel, and were up 0.6 percent on the week. The November contract expired at the close of trading on Thursday.The dollar surged to a seven-month high against a basket of currencies, its third straight week of gains. A stronger greenback means dollar-traded commodities become more expensive to hold, making it less attractive for investors to buy them. The U.S. oil rig count rose by 11 rigs to a total of 443 in the last week, compared with a count of 594 rigs at this time last year, oil services firm Baker Hughes reported. The rig count has now gone 17 weeks without registering a decline. Some analysts think oil drillers will ramp up activity soon with crude rising above $50 this month. Others say it will take more time to get the double-digit rig additions that will significantly boost production.

AP Interview: IMF says low oil prices still hurting Mideast (AP) — Oil-producing Mideast countries are coping with low global oil prices though more government reforms are needed, the International Monetary Fund’s chief for the Mideast said as the organization issued a new report Wednesday showing weak economic growth in the region. Masood Ahmed also told The Associated Press that Iran’s economy beat expectations by growing by 4.5 percent this year and could keep up that pace if it can modernize its industries and allow in more foreign investment after its nuclear deal with world powers. Much of the IMF’s new report on the Mideast’s economic outlook won’t come as a surprise to those living in the region since oil prices have been halved following highs of over $100 a barrel in mid-2014. All Gulf Arab countries have cut back on generous subsidies that kept gasoline prices low, while some have reorganized government agencies and halted construction projects. With oil prices expected to remain low, the IMF report estimates growth across Gulf states to be around 1.7 percent this year, while regionally “little improvement” is expected in 2017. It suggests only Iraq, Kuwait and the United Arab Emirates will be able to see budget surpluses by 2021, while the war against the extremist group Islamic State, Yemen’s civil war and the Syrian conflict continue to weaken confidence in the region. “Some countries — Saudi Arabia, Bahrain and Oman — start from a position where they have to make more of an adjustment to be able to balance their budget in five years,” Ahmed told the AP in an interview Tuesday. “They all do have policies that they’re articulating that will help them get there, but they will entail difficult choices.” Among those tough choices will be cutting public sector salaries and jobs in Saudi Arabia and Oman, he said.   Meanwhile, Iran’s economy has charged ahead through boosting oil production close to levels seen before Western nations imposed economic sanctions over its contested nuclear program. Iran will have to modernize both its banking system and its manufacturing industry, as well as allow more foreign direct investment in the country, to continue that growth.

Saudi Bank stress builds as kingdom's cash injection falls short - The Economic Times: Saudi Arabia has work to do to ease pressure in the kingdom’s banking system. The interest rate banks charge one another for loans rose by the most since August on Sunday, extending a trend that’s slowing earnings and corporate borrowing in the world’s biggest oil exporter. The increase is defying the central bank, which has sought to ease the cash crunch by relaxing lending limits, offering new borrowing facilities and injecting funds into the financial system, including 20 billion riyals ($5.3 billion) pledged Sept. 25. “Rates won’t easily come down with one $5 billion injection,” said John Sfakianakis, director of economic research at the Gulf Research Center Foundation in Riyadh. “Bringing them down would require a significant liquidity injection effort. The $5 billion is a good step forward, but given the asset size of Saudi banks it would require several additional injections.” Financial institutions in the Arab world’s largest economy are bearing the brunt of a halving of oil prices since 2014. Economic growth in the kingdom is slowing, curtailing bank deposits just as the government increases borrowing to help plug a budget deficit that last year was the widest since 1991.

Saudi Arabia Launches Sale Of 5, 10 And 30 Year Bonds, Seeks To Raise Up To $15 Billion - Saudi Arabia has officially launched its much anticipated, first international bond sale on Wednesday, as the kingdom turns to debt markets to help ease a fiscal squeeze from the two-year slump in oil prices, which has slammed not only the country's economy, leading to a period of unprecedented austerity resulting in widespread job cuts and a slowdown in local construction and infrastructure projects, but also has impacted the country's bank sector where the largest bank has seen its shares plunge to all time lows, as bets on a currency devaluation continue to rise. As Bloomberg reported moments ago, the sale has officially started, with Saudi Arabia seeking to sell between $10 and $15 billion in three tranches, a 5Y, 10Y and 30Y offering. Pricing is expected to take place tomorrow, Oct. 19; with the books set to close at 5pm in NYT on Tuesday October 15.  According to the FT, Riyadh is thought to be targeting a sale between $10bn and $15bn, making it the largest issue of international debt in the Middle East and a potential rival to Argentina’s record-breaking $16.5bn emerging market bond sale earlier this year.

Saudi Arabia sets record with mammoth $17.5 billion bond issue | Reuters: Saudi Arabia conducted the largest-ever emerging market bond sale on Wednesday, selling $17.5 billion (14.22 billion pounds) of debt in the government's first international offer while attracting investor orders totaling almost four times that amount. The huge demand, larger than many market participants had expected, was partly due to ultra-low global interest rates and funds' frustration with a lack of high-yielding assets around the world. But the sale was also a success for the world's top oil exporter in its efforts to convince investors that it can cope with an era of low crude prices and ultimately reduce its dependence on oil. London-based Capital Economics estimated the U.S. dollar issue would finance around a third of next year’s state budget deficit and almost all of the kingdom's current account gap, meaning its foreign exchange reserves were unlikely to fall much further in coming years. "This should dampen any lingering concerns that the riyal will be devalued. The government’s debt-to-gross domestic product ratio will rise as a result of the bond sale but, given its low starting point, it is hardly on a worrying path," Capital Economics said.

Middle East’s Migrant Population More Than Doubles Since 2005 - Pew Research - Between 2005 and 2015, the number of migrants living in the Middle East more than doubled, from about 25 million to around 54 million, according to a Pew Research Center analysis of data from United Nations agencies. Some of this growth was due to individuals and families seeking economic opportunities. But the majority of the migration surge, especially after 2011, was a consequence of armed conflict and the forced displacement of millions of people from their homes, many of whom have left their countries of birth.The rapid rise in the number of people looking for safe havens and new livelihoods has over the past decade transformed the Middle East into the world region with the fastest growing international migrant and forcibly displaced population, according to a Pew Research Center analysis of data from United Nations agencies.All told, the Middle East’s migrant population increased by about 120% between 2005 and 2015. This far exceeds increases in the combined international migrant and forcibly displaced populations over the same period in continental Africa (91% growth), Latin America and the Caribbean (77%) and the Asia-Pacific region (26%).  Europe’s and North America’s migrant populations also grew more slowly over the 2005-2015 period (about 20% in each region), even though Europe received a record 1.3 million asylum seekers in 2015 – many from the Middle East.

Saudi has little room to slow austerity drive, IMF says | Reuters: The International Monetary Fund feels the pace of Saudi Arabia's austerity drive is broadly appropriate and there is little room for Riyadh to ease up on the spending cuts that have slowed economic growth sharply, a senior IMF official said. Its budget strained by low oil prices, the Saudi government has slashed capital spending this year and delayed payments that it owes to some companies, while last month it announced cuts to allowances for public sector workers. Gross domestic product growth fell to 1.4 percent year-on-year in the second quarter, the lowest in more than three years. The non-oil sector - the part of the economy directly affecting most people's living standards - expanded just 0.4 percent, after shrinking 0.7 percent in the first quarter. Masood Ahmed, director of the IMF's Middle East department, said Riyadh could not soften austerity policies significantly without endangering its goal of balancing its budget in about five years. "I don't see there is a lot of scope for postponing fiscal consolidation," he told Reuters in an interview. Ahmed said the IMF expected Saudi Arabia to run a fiscal deficit of 13.0 percent of GDP this year, compared to an estimated 15.9 percent last year. The Fund projects next year's gap at 9.5 percent. Months-long delays in state payments to construction firms have hit the sector hard, forcing some companies into severe financial difficulties. Ahmed said the delays were "not a preferred method" of cutting the budget deficit but it was hard to impose austerity without pain. The IMF expects Saudi economic growth to bottom out at 1.2 percent this year, rebounding to 2.0 percent in 2017. Some private analysts think growth could be near zero this year.

U.S.-backed, Saudi-led coalition found responsible for Yemen funeral attack that killed more than 100 — A Saudi Arabia-led investigation into an airstrike last week on a Yemeni funeral has concluded that Saudi-led coalition jets “wrongly” bombed the ceremony, killing more than 100 people, after receiving faulty information and not following proper procedures. In a statement Saturday, the Joint Incidents Assessment Team based in the Saudi capital, Riyadh, said that “a party affiliated” with the chief of staff of Yemen’s president, Abed Rabbo Mansour Hadi, “wrongly passed information that there was a gathering of” armed rebel Houthi leaders in the Yemeni capital, Sanaa, on Oct. 8. The party, the investigators said, “insisted that the location be targeted immediately as a legitimate military target.” But the coalition’s air operations center ordered the attack “without obtaining approval from the Coalition command to support legitimacy and without following the Coalition command’s precautionary measures to ensure that the location is not a civilian one that may not be targeted,” the statement said. A coalition aircraft then “carried out the mission.”  “JIAT has found that because of noncompliance with Coalition rules of engagement and procedures, and the issuing of incorrect information a Coalition aircraft wrongly targeted the location, resulting in civilian deaths and injuries,” the statement said.

Hiding US Role in Yemen Slaughter So Bombing Can Be Sold as ‘Self-Defense’ - To hear US corporate media tell it, the US was dragged into a brand new war on Wednesday. US destroyers in the Gulf of Aden launched airstrikes against Houthi rebels, a Shia insurgent group currently withstanding a massive bombing campaign from a Saudi-led coalition in a year-and-half conflict between largely Shia rebels and the Saudi-backed Sunni government in Yemen. The Pentagon insisted that cruise missiles had been fired onto the USS Mason on Sunday and Wednesday from Houthi-controlled territory, and called the airstrikes a “limited self-defense” response. Needless to say, US media followed the Pentagon’s lead. The fact that the United States has been literally fueling Saudi warplanes for 18 months while selling weapons and providing intelligence support to the Gulf monarchy—acts which even the US State Department believes could expose the US to war crimes prosecution—was either downplayed or ignored. Nor did media recall the US’s long history of drone warfare in Yemen, where the military and CIA have been carrying out long-range assassinations since 2002, killing more than 500 people, including at least 65 civilians. So far, most print media reporting has at least bothered to briefly put the attack and counterattack in broader context, noting the US role in the brutal bombing campaign that has left over 4,000 dead, including over 140 bombed at a funeral in Sana’a last week—even as the stories’ framing downplayed the US’s history in the conflict. The New York Times (10/12/16), for example, said in the second paragraph of its report on the airstrikes: The strikes against the Houthi rebels marked the first time the United States has become involved militarily in the civil war between the Houthis, an indigenous Shiite group with loose connections to Iran, and the Yemeni government, which is backed by Saudi Arabia and other Sunni nations.TV news reports, on the other hand, kept the spin and left out the context. They mostly failed to mention that the US has been assisting the Saudi assault on the Houthi rebels for a year and a half, and framed the incident as a US warship being attacked while simply minding its own business in international waters.

Iranian warships deployed off Yemen coast after US bombs Houthi targets - Iran has deployed a fleet of warships to the Gulf of Aden, the republic's naval commander has confirmed. The deployment follows US cruise missile strikes on Yemeni positions thought to be under Houthi rebel control. The Iranian Navy has sent the warships to international waters for a mission that includes entering the area off the southern coast of Yemen, Rear Admiral Habibollah Sayyari confirmed on Wednesday. The area is among the world’s busiest maritime trade routes. “The fleet will provide security to sea ways for Iranian vessels and protect Iran’s interests on the high seas,” Sayyari told Press TV. “The 34th Fleet is comprised of the Bushehr logistic vessel and Alborz destroyer, and will conduct a three-month mission.” The commander said the fleet had departed from the southern port city of Bandar Abbas in Iran. He dismissed claims the fleet has been deployed to intervene in the conflict in Yemen. Iranian ships have been tasked with providing security for civil boat traffic and protecting commercial vessels and oil tankers from pirates in the region, the rear admiral told Iranian television on Thursday.“The Iranians have a permanent presence in that part of the world ... [as] there is a lot of instability in the Red Sea and Iranian ships are there to prevent pirates from boarding Iranian ships and they've been doing that for a number of years now, having also protected the ships of other countries,” political analyst and Tehran university professor Mohammad Marandi told RT, adding that the “real problem is the US presence” in the region. The US military carried out “limited self-defense strikes” in Yemen on Thursday, in retaliation for recent attacks on an American naval destroyer, USS Mason, which has been operating north of the Bab Al-Mandab Strait.

The Story Changes: The Pentagon Is No Longer Sure Yemen Fired Missiles At A US Ship -- Last Thursday, after two consecutive missile attacks on the US Navy ship USS Mason, which allegedly were launched by Houthi rebel forces in Yemen, the US entered its latest military engagement in the middle east, when the USS Nitze launched several Tomahawk cruise missiles aimed at radar installations located by the Bab el-Mandab straight, and which enabled the launch of at least three missiles against the U.S. ship.  As Pentagon spokesman Peter Cook said, "these limited self-defense strikes were conducted to protect our personnel, our ships and our freedom of navigation," adding that "these radars were active during previous attacks and attempted attacks on ships in the Red Sea," including the USS Mason, one of the officials said, adding the targeted radar sites were in remote areas where the risk of civilian casualties was low. That said, as we highlighted, the U.S. said while there growing indications, there was no official proof that Houthi fighters, or forces aligned with them, were responsible for the attempted strikes which targeted US ships. Still, the lack of concrete proof did not bother the US which, cavalier as usual, unleashed the missile assault on Yemeni territory, breaching the country's sovereignty and potentially killing an unknown number of people. However, today - four days after the US "counterattack" - the story changes. According to Reuters earlier today the Pentagon declined to say whether the USS Mason destroyer was targeted by multiple inbound missiles fired from Yemen on Saturday, as initially thought, saying a review was underway to determine what happened. "We are still assessing the situation. There are still some aspects to this that we are trying to clarify for ourselves given the threat -- the potential threat -- to our people," Pentagon spokesman Peter Cook told a news briefing."So this is still a situation that we're assessing closely." And yet, the US had no problem with "clarifying" the source of the threat on Thursday when it fired American cruise missiles at Yemeni targets.

Terrorists Recruit Petro Engineers And Oil Experts -- Unspecified terrorist groups have been caught attempting to recruit university-level students from the Commonwealth of Independent States (CIS) - including up and coming petroleum engineers and energy analysts, according to the head of the bloc’s anti-terror organization.The nine-member bloc consisting mostly of Central Asian nations must develop an anti-radicalization plan to prevent students from joining international terrorist organizations, Andrei Novikov, who heads the CIS Anti-Terrorist Center, said on Wednesday."The attempts to recruit [students] to the international terrorist organizations continue at the universities of the Commonwealth [of Independent States],” he said.“The professional recruiters are targeting not only potential lower level agents, but also highly qualified medicine, transport, oil industry and linguistics specialists as well as, importantly, those who could map out media strategies for the global terrorism projects.”The Kurdish news site Rudaw has previously reported classified ads posted by ISIS in the underground job market offering oil operations experts a salary of $225,000 a year, with perks such as a car and weapons thrown in for good measure. The ads, released in 2014, had been marketed to Saudi Arabian expats.The oil industry is especially vulnerable to terrorism because of the geographic locations of the most active radical groups and weak governments—made ever weaker by the lower price of oil.  The Islamic State (ISIS) reaped hundreds of millions of dollars of profits from selling oil from Iraq and Libya on the black market before the U.S.-led anti-ISIS coalition began targeting oil facilities controlled by the terrorist group over the past year.

US 'Relocated' ISIS Terrorists Out Of Iraq, Into Syria To Fight Assad --  As the Iraqi military with US support closes in on Mosul it is becoming clear that the US plan is to transfer the ISIS troops defending the city to Syria as part of the regime change plan there. The Russian news media RIA Novosti, has revealed that US and Saudi leaders have decided toallow the safe passage of 9000 ISIS terrorists to vacate Mosul in Iraq and, relocate into Syria.The surprising information was leaked by an anonymous diplomatic source. It was also claimed that this decision was conditional on the terrorists agreeing to fight Syrian and Russian troops in Palmyra and Deir Ezzor. In the past two weeks we have witnessed the chaotic musing within the US Political and diplomatic corps once their impotence was exposed in Syria due to the collapse of the ceasefire and, the resumption of hostilities in Aleppo.

Iraq Launches Military Offensive To Retake Mosul From Islamic State With US Troop Support - Moments ago, Iraq's Prime Minister Haider al-Abadi publicly announced the start of an offensive to retake Mosul, the capital of Islamic State's caliphate in Iraq. US troops are said to be playing a "supporting role" in the offensive, with the Iraqi army and Kurdish Peshmerga fighters making up the bulk of the 30,000-strong force. Tonight, PM Abadi issued orders to initiate major operations to liberate #Mosul after two years of darkness under #ISIL terrorists. #?????? — Brett McGurk (@brett_mcgurk) October 16, 2016 Washington recently announced the deployment of 600 additional US troops to help with the city's recapture, bringing the total number of US force management personnel to move than 5,000, according to the Pentagon.  "The hour has come and the moment of great victory is near," Prime Minister el-Abadi said in a speech on state TV, surrounded by the armed forces' top commanders. "I announce today the start of the operation to liberate the province of Nineveh." The assault on Mosul is backed the U.S.-led coalition and could be one be the biggest military operations in Iraq since the 2003 U.S.-led invasion that toppled Saddam Hussein.It is expected to last several weeks if not longer. "We are proud to stand with you in this historic operation," Brett McGurk, U.S. envoy to the coalition against Islamic State, said on Twitter at the start of the Mosul offensive. Mosul is the last major stronghold of ultra-hardline Sunni group in Iraq. With a pre-war population of around 2 million, the northern Iraqi city is the largest city Islamic State has controlled after it declared a "caliphate" in Iraq and neighboring Syria in 2014.

US Troops 'In Harm's Way' as Battle for Mosul Begins | Iraqi and Kurdish Peshmerga forces backed by U.S. air, artillery and forward air controller support began the battle for Mosul on Monday and gained ground in the drive for the city where the Islamic State declared the creation of a "Caliphate" more than two years ago. "The thousands of ground combat forces who will liberate Mosul are all Iraqis," but they were supported by "a wide range of coalition capabilities, including air support, artillery, intelligence, advisers and forward air controllers," said Army Lt. Gen. Stephen Townsend, commander of Combined Joint Task Force-Operation Inherent Resolve. The operation to retake Iraq's second-largest city, where as many as one million civilians remain under the control of the Islamic State of Iraq and Syria, "will likely continue for weeks, possibly longer," Townsend said in a video statement. "There are Americans in harm's way as part of this fight. They're in a support role," Pentagon Press Secretary Peter Cook said, but some were moving forward with Iraqi and Kurdish forces amid reports that ISIS was using suicide car bombers to blunt the assault. "It's fair to say there are Americans on the outskirts of the city," Cook said, but he was vague on how many U.S. troops are embedded with the advancing forces as advisers and Joint Terminal Attack Controllers to call in airstrikes.

More Than 100 US Troops Move Forward With Mosul Attack Force | More than 100 U.S. advisers and forward air controllers are moving forward with Iraqi and Kurdish forces, backed by U.S. airstrikes and rocket artillery fire, in the early stages of the campaign to drive the Islamic State from Mosul, a Pentagon spokesman said Tuesday. The Iraqi Security Forces attacking from the south and Kurdish Peshmerga fighters pushing from the east are essentially moving along four lines of attack toward Iraq's second largest city, where more than a million residents have been under the control of the Islamic State of Iraq and Syria for more than two years. The U.S. has employed the HIMARS rocket artillery system from the Qayyarah Airfield area, the offensive's logistics hub about 40 miles southeast of Mosul, to aid the advance of the Iraqi columns pushing north, said Navy Capt. Jeff Davis, a Pentagon spokesman. "We have the HIMARS" south of Mosul, and "the HIMARS is active," Davis said at a Pentagon briefing. AH-64 Apache helicopter gunships are also available for the Mosul offensive, but they have yet to be employed, Davis said. The U.S. is also using .155mm artillery from the general Qayyarah area to back the advance, he said.

Cars Entering and Leaving Mosul -- What they don’t tell you about the battle for Mosul is how boring it is, hour by hour, day by day. From my vantage point near the Iraqi village of Bartella, ISIS positions are visible in the smoke-filled distance, across the crinkled flatness of Nineveh; in front of me, gangs of weary Peshmerga fighters clump about in their fatigues as an endless line of armored cars trundles slowly through their ranks. I hear orders shouted in Kurdish and Arabic, but there’s nobody around to translate for me. Farther off, tanks and artillery pieces are positioned behind banks of sandbags. Their engines idle, whining in the afternoon heat. They do nothing, I see nothing, I’ve learned nothing. The real action isn’t happening here, but just to the right.  All these events are being streamed on YouTube, and the live chat window boils over with instantaneous analysis and petty grudges. One commenter, “croatia? more like catholic srbija,” is repeatedly announcing that “C R O A T I A I S G A Y.” There’s a lively debate over which European country is the most cucked—Sweden, for instance, has a “prolapsed anus.” As usual, a few dedicated idiots are trying to question the historicity of the Holocaust. Other users spam porn titles (“GirlsDoPorn Ep. 29,” “Lilo DAP Anal GapeThatAss COHF”) and transcribe Green Day lyrics (“bolevourd of broken dreams… a walk alone… a walk alone… aaa aaaa a a”). Welcome to the future of eternal war.  The Mosul offensive is streamed on YouTube by the Kurdish media group Rûdaw and Ruptly, Russia Today’s Berlin-based video agency; the feeds are relayed on Facebook Live by al-Jazeera and Channel 4 News. On Facebook, emojis bubble up from the bottom of the screen in time with the rising pillar of dust as another IED detonates: shocked face, angry face, Zuckerberg-blue thumbs-up sign. This is the first time a war has been turned so directly into an object for public consumption, and the moral questions are obvious. Isn’t this repulsive? People are really dying in and around Mosul; surely it’s grotesque to turn the battle into a piece of entertainment. But the battle for Mosul isn’t at all entertaining. It’s something else.

Dramatic First Person Footage Captures Intensity Of Fight For Mosul -- As we reported on Sunday night, the Iraq offensive for Mosul - with the support of US forces - has begun, and according to Reuters, the push to kick ISIS forces out of the Iraqi town has met some early success as armed forces closing in on Mosul said on Tuesday they had secured some 20 villages on the outskirts of the city in the first 24 hours of an operation to retake what is Islamic State's last major stronghold in Iraq. With air support from a U.S.-led coalition, government and Kurdish forces edged closer to the city as smoke darkened the blue sky above one IS position, apparently from oil fires ignited to hamper the incursion and make it harder to land air strikes. Reuters reporters said they witnessed Islamic State mortar fire in villages on the plain east of the city as the militants sought to counter a push by Kurdish forces. One car bomb exploded during the fighting, although it was not immediately clear if it had been detonated or hit by incoming fire.  With a population of 1.5 million, Mosul is the largest city under the control of the Islamic State group that seized swathes of Iraq and Syria in 2014, and its recapture would be a "decisive moment" in defeating the militants, according to U.S. Defense Secretary Ash Carter. However, as the International Red Cross warned, the fight for Mosul may lead to as many as 1 million refugees. The U.N. refugee agency said it had built five camps to house 45,000 people and plans to have an additional six in the coming weeks with a capacity for 120,000, that would still not be enough to cope if the exodus is as big as feared.

Islamic State attacks Kirkuk as Iraqi forces push on Mosul | Reuters: Islamic State launched a major attack on the city of Kirkuk on Friday as Iraqi and Kurdish forces pursued operations to seize territory around Mosul in preparation for an offensive on the jihadists' last major stronghold in Iraq. Islamic State's assault on Kirkuk, which lies in an oil- producing region, killed 18 members of the security forces and workers at a power station outside the city, including two Iranians, a hospital source said. Crude oil production facilities were not targeted and the power supply continued uninterrupted in the city. Kirkuk is located east of Hawija, a pocket still under control of Islamic State that lies between Baghdad and Mosul. With air and ground support from the U.S.-led coalition, Iraqi government forces captured eight villages south and southeast of Mosul. Kurdish forces attacking from the north and east also captured several villages, according to statements from their respective military commands overnight. The offensive that started on Monday to capture Mosul is expected to become the biggest battle fought in Iraq since the U.S.-led invasion in 2003. U.S. Defense Secretary Ash Carter said on Friday Turkey and Iraq had reached an agreement in principle that could allow a Turkish role in the Mosul campaign. Speaking in Ankara after talks with Turkish President Tayyip Erdogan, Carter said the details still needed to be hammered out. NATO member Turkey sees Mosul as firmly within its sphere of influence, but Iraq views Turkish military moves on its territory with apprehension.

The World Doesn’t Need More U.S. Interventionism The American Conservative  - Shadi Hamid thinks the world needs U.S. military interventions: If the United States announced tomorrow morning that it would no longer use its military for anything but to defend the borders of the homeland, many would instinctively cheer, perhaps not quite realizing what this would mean in practice. But that is the conundrum the Left is now facing. A world without mass slaughter, of the sort of we are seeing every day in Syria, cannot ever come to be without American power. It’s very likely that a “world without mass slaughter” won’t be realized at all, but it is very doubtful that it is possible only through American use of force. The real question is whether the frequent, violent interference in the affairs of other countries that Hamid is talking about yields better results than non-interference. The answer to that question depends on the circumstances of each case, but in almost every case from the last half-century the decision to interfere, to fuel conflict, and to take sides in the quarrels of others has needlessly inflicted more harm on the affected countries. This is true of U.S.-led interventions and of the wars waged by U.S. clients with our government’s approval and support. If we’re generous, the number of “successful” U.S. interventions can be counted on a few fingers, and they are severely outnumbered by the failures and disasters. Given that shaky record, there has to be a very compelling reason to make the attempt and it has to be one that is worth taking the risks involved.   Even when an intervention can be said to have “worked” according to some definition, there are always some innocents that pay a severe price because they found themselves on the “wrong” side of the fight or because their country suffered from the adverse effects of intervention in a neighboring land. By taking sides in foreign conflicts, the U.S. is choosing to participate in bringing death and destruction upon people who have usually done nothing to us or our allies to provoke such action. That choice is often made for reasons that have little or nothing to do with concern for the well-being of the people in the country in question, and it is almost always made rashly and before other alternatives have been exhausted. At best, the record of our interference shows that we tend to be cavalier and irresponsible in our use of force in other countries, and at worst we leave those places drastically worse off than they were before we “helped.” That is not what the world or the U.S. needs.

The U.S. Has Been Meddling In Other Countries’ Elections For A Century. It Doesn’t Feel Good - Intelligence officials are shocked that Russia appears to be meddling in the U.S. presidential election, but for some supporters of Bernie Sanders, it’s just turnabout.  Lakewood, Colorado, delegate Kim Netherton said it’s beside the point whether agents of Russian President Vladimir Putin hacked the Democratic National Committee’s emails, as reported this month. And it may come with a little poetic justice for Hillary Clinton, according to Netherton. “Isn’t it interesting that her campaign is now experiencing the same thing that she perpetrated on other countries,” Netherton told The Huffington Post, as she awaited Sanders’ speech Monday night.  “She did this in Haiti, she did this in Honduras, and now it’s coming back on her and she’s all verklempt about it,” Netherton added. “It’s a little bit of her own medicine, but unfortunately I don’t think she’s open minded enough to see that for what it is.”   Indeed, meddling in foreign politics is a great American pastime, and one that Clinton has some familiarity with. For more than 100 years, without any significant break, the U.S. has been doing whatever it can to influence the outcome of elections ― up to and including assassinating politicians it has found unfriendly.  The Clinton camp disagrees that whatever happened in Honduras is on the same level as what Russia is up to. “There’s simply no equivalency here,” said Clinton spokesperson Jesse Lehrich. Which is true: the U.S. has meddled in far more foreign elections than vice versa.

Norway Surveillance Photos Show Russian Aircraft Carrier Flotilla On Route To Syria --One month ago we reported that in the latest naval escalation involving the US and Russia, one which would make the eastern Mediterranean a carbon copy of what it looked like three years ago during the peak of 2013 Syrian conflict which almost ended in war between Russia and the US, Russia announced it would deploy its only aircraft carrier, the Admiral Kuznetsov to the coast of Syria. Russia's defence minister said Wednesday that Moscow was dispatching its flagship aircraft carrier to bolster its forces in the eastern Mediterranean off Syria. The Admiral Kuznetsov aircraft carrier would be sent to join Russia's current naval deployment there, minister Sergei Shoigu said during a televised meeting. "At the moment the Russian task force in the Eastern Mediterranean consists of no fewer than six combat ships and three or four logistic ships from all fleets" the minister said adding that "to build up the group’s combat capabilities we plan to reinforce it with an Admiral Kuznetsov-led group,” Shoigu told a meeting of the Defense Ministry’s board. He added that the Russian Navy has been permanently present in the Eastern Mediterranean since 2013.Now, according to a report by the Norwegian military which released pictures taken by surveillance aircraft, we know that the Kuznetsov accompanied by a fleet of Russian warships, is currently on its way to Syria and is sailing in international waters off the coast of Norway near Trondheim. Photos of the vessels, which include the aircraft carrier Admiral Kuznetsov and the Pyotr Velikiy battle cruiser, were taken near Andoya island, in northern Norway on Monday.

Major Russian naval deployment to intensify Aleppo assault: NATO diplomat | Reuters: Russian warships off the coast of Norway are carrying fighter bombers that are likely to reinforce a final assault on the besieged Syrian city of Aleppo in two weeks, a senior NATO diplomat said on Wednesday, citing Western intelligence. The fleet passed by the Norwegian city of Bergen on Wednesday, the diplomat said, while Russian media has said it will move through the English Channel, past Gibraltar and into the Mediterranean Sea to the Syrian coast. "They are deploying all of the Northern fleet and much of the Baltic fleet in the largest surface deployment since the end of the Cold War," the diplomat said on condition of anonymity. "This is not a friendly port call. In two weeks, we will see a crescendo of air attacks on Aleppo as part of Russia's strategy to declare victory there," the diplomat said. Photos of the vessels have been released by the Norwegian military, taken on Monday. A Norwegian newspaper quoted the head of the Norwegian military intelligence service saying the ships involved "will probably play a role in the deciding battle for Aleppo".An intensified air campaign in eastern Aleppo, where 275,000 people are trapped, would further worsen ties between Moscow and the West, which says the Kremlin may be responsible for war crimes.

Theresa May slams Moscow’s ‘sickening atrocities’ as Russian warships steam into British waters -- Theresa May has launched a scathing attack on Russian President Vladimir Putin, accusing the Russian military of "sickening atrocities" in Aleppo, just hours before Moscow’s warships are due to pass through British waters. The Prime Minister highlighted the "appalling" acts which have occurred during a sustained Russian bombing campaign that has pummelled the northern Syrian city.  As she spoke on arrival at her first EU summit as leader, a huge Russian naval taskforce was being shadowed by the Royal Navy as it headed towards the Mediterranean coast of Syria.  The Independent has been told the flotilla – including the nuclear-powered aircraft carrier the Admiral Kuznetsov – maintains current speed, it should enter the Channel before noon on Friday. The EU is now considering threatening Moscow with sanctions over air strikes in Aleppo, according to a draft EU summit communique seen by the Guardian. "The EU is considering all options, including further restrictive measures targeting individuals and entities supporting the regime, should the current atrocities continue," the draft reportedly says. The heightened tension comes after a week of hand-wringing by Western powers about how to address the plight of Syrian civilians trapped in besieged Aleppo. In Brussels, Ms May demanded a "robust and united European stance in the face of Russian aggression". She added: "It is vital that we work together to continue to put pressure on Russia to stop these appalling atrocities, these sickening atrocities, in Syria." Syrian forces, backed by Russian air power, have agreed a temporary humanitarian truce in Aleppo. Mr Putin has held out the prospect of extending it following a meeting with French President Francois Hollande and German Chancellor Angela Merkel. Nato has said the prospect of Russia's fleet heading to the region does not "inspire confidence" that Moscow is seeking a political solution to the Syrian crisis.

Russia Is Preparing for War, While The American Public Slumbers On: In an interview with the Bild newspaper on 8 October, German Foreign Minister Frank-Walter Steinmeier, who is known for his cautious rhetoric, described the present international situation in the following woeful terms: “…unfortunately it is an illusion to believe this is the old Cold War. The new times are different; they are more dangerous. Previously, the world was divided, but Moscow and Washington knew each other's red lines and respected them. In a world with many regional conflicts and dwindling influence of the great powers, the world becomes more unpredictable.” For these reasons, said Steinmeier, “The USA and Russia must continue talking with each other.” He concluded his appeal with fairly balanced recommendations to resolve the humanitarian crisis in East Aleppo, urging both Russia and the other powers to apply their influence with their clients on the ground.Sad to say, this call to reason fell on deaf ears. On the same day, a spokesman for the US State Department explained to journalists Washington’s decision over the weekend to end the joint peace process with Moscow, saying that there was “nothing left to talk about with the Russians.” Meanwhile, the Russian side took as the last straw this unilateral and trumpeted decision of the Americans to bury the deal signed on 9 September between John Kerry and Sergei Lavrov that had taken 14 hours to negotiate and was seen as a triumph of cooperation versus confrontation. De facto, from the Russian view, that deal had been sabotaged on 17 September by the Pentagon when US and coalition aircraft bombed a Syrian government military outpost at Deir Ezzor killing more than 60 Syrian service men. And de facto, the Russians had suspended the implementation of the ceasefire on 23 September when they renewed heavy bombing of East Aleppo in close collaboration with the Syrian air force and ground units. Now that the US had formalized the end of cooperation over Syria, Russia set out its own full-blooded response which it called a ‘radical change in relations’ between the two countries.

Russia to respond to any new US sanctions with ‘painful’ measures – deputy FM -- Moscow will find response measures that would be “painful” for Washington if the US decides to continue toughening its sanctions against Russia, Deputy Foreign Minister Sergey Ryabkov told Russian MPs. “If the US opts to further toughen sanctions in defiance of common sense and in disregard of its experience that has already been quite painful for them, then we will find measures in our toolbox that will have a painful impact, particularly in terms of America’s positioning in the world,” Ryabkov told the deputies of the Russian State Duma, ahead of a vote on a bill suspending the Russian-American deal on reprocessing weapons-grade plutonium.  The Russian deputy foreign minister also said that the US continues to issue threats “on a daily basis” concerning the imposition of new sanctions against Russia “under various pretexts.” He added that 281 Russian legal entities and 81 officials, including a number of high-ranking figures, are now on the US sanctions list. At the same time, the US “continues its efforts aimed at bringing its military infrastructure nearer to Russian borders and forming anti-Russian alliances with its European allies,” he said. Russia’s response moves are “strictly proportionate and adequate” and show that “Russia pursues a rational line and is not guided by emotions,” Ryabkov stressed. He went on to suggest that Russia could always shift gears and resort to “asymmetrical” measures in its response. He pointed to the recently suspended agreements between the US and Russia in the nuclear energy field as an example.The “essence” of the present crisis in relations between the US and Russia lies in the fact that “under the current administration, [US foreign policy] became even more arrogant, forceful and focused on the attempts to impose its will on other countries,” the diplomat said, adding that such policy “is doomed to failure from the start in relations with our country.”

Does America Really Need Overseas Bases? | The National Interest Blog: In the ongoing debate over U.S. grand strategy, one of the key points of discussion is the strategic utility of permanently stationing American forces abroad. Overseas U.S. bases are often thought to be the frontline forces in any outbreak of conflict. We must continue to maintain an indefinite global military base presence, we are told, so that if conflict erupts in any critical region, our forces can get there quickly to stabilize the situation. But a forward-deployed posture has lost much of its operational value in terms of contingency responsiveness. A RAND Corporation report on basing posture reiterates this point for today: “the forces that are forward-deployed are not sufficient of themselves to address conflicts of every scope.” Indeed, “after the initial phase of operations to stabilize or even resolve a situation, the response by the U.S. military to a contingency of any substantial size will come primarily from forces deployed from bases in the United States.”In other words, forward bases are useful mainly for rapid deployment of lighter forces in emergency situations. Anything beyond minor stabilization missions requires reinforcements from the continental United States. What’s interesting about this insight is that thanks to revolutionary technological advances in military capability, transportation, and communications, according to RAND, “lighter ground forces can deploy by air from the United States almost as quickly as they can from within a region.” So for any contingency that truly warrants U.S. intervention, we should be able to handle both minor and major deployments by relying on bases at home. The bottom line is that forces can deploy to virtually any region fast enough to be based in the continental United States. An armored brigade combat team can get from Germany to Kuwait in approximately 18 days, only about four days quicker than if it deployed from the east coast of the United States. As the RAND report explains, “The movement and time advantages for moving light and medium [brigade combat teams] from overseas compared with [the U.S.] by air is minor.”

The Foreign-Policy Elite Are Ready for More War in Syria: In an election cycle that has pushed American politics to new heights of partisan acrimony, the Washington foreign-policy elite has represented a singular bastion of bipartisan comity. A large segment of the GOP’s neoconservative wing broke with Donald Trump in the early days of his general-election campaign. A significant number took shelter in Hillary Clinton’s coalition, where they’ve gotten along amiably with liberal interventionists who share their belief that Obama has betrayed America’s obligation to lead. That point of agreement has now been ratified in a flurry of new reports — from an array of think tanks that span partisan divide — all calling for an escalation in U.S. military involvement in the Syrian civil war. Per the Washington Post: The studies, which reflect Clinton’s stated views and the direction she is likely to take if she is elected, break most forcefully with Obama on Syria. Virtually all these efforts, including a report that will be released Wednesday by the liberal Center for American Progress, call for stepped up military action to deter President Bashar al-Assad’s regime and Russian forces in Syria. The proposed military measures include calls for safe zones to protect moderate rebels from Syrian and Russian forces. Most of the studies propose limited American airstrikes with cruise missiles to punish Assad if he continues to attack civilians with barrel bombs, as is currently happening in besieged Aleppo. So far, Obama has staunchly resisted any military action against the Assad regime.The foreign-policy elite’s frustration with President Obama’s reluctance to engage in a large-scale military intervention in Syria is nothing new. But there are a few problems with the narrative advanced by the papers and foreign-policy thinkers quoted in the Post — which is to say, the notion that the humanitarian catastrophe in Syria illustrates the perils of America withdrawing from the world.

Trump and Obama agree on one thing: Aleppo is a lost cause -- At last night’s debate, Donald Trump falsely asserted that the city of Aleppo has fallen to the Assad regime and its Russian partners and concluded there’s nothing the United States can do about it. “Well Aleppo is a disaster,” he said. “It’s a humanitarian nightmare, but it has fallen from any standpoint. What do you need, a signed document?”   That’s not true today, but given the latest White House decision to delay any action to respond to the crisis, President Obama may be ensuring that Trump’s vision of a fallen Aleppo becomes a reality. And like Trump, Obama seems to have concluded there’s not much the United States can or should do about it.At last Friday’s National Security Council meeting on the Middle East, top Obama administration officials tabled any decisions on whether to increase the U.S. response to the ongoing Syrian and Russian aerial bombardment of civilians in Aleppo, The Post reported earlier this week. The administration prioritized discussing the new Iraqi-led offensive against the Islamic State in Mosul and the future offensive in Raqqa, for which planning is already underway. But despite what Secretary of State John F. Kerry has called ongoing Syrian and Russian war crimes in Aleppo, there was no action on any of the several options discussed at lower-level administration meetings, including but not limited to limited strikes against the Assad regime’s air force or an increase in the quantity or quality of arms provided to the moderate Syrian rebels in the area. One senior administration official pointed toward the slow pace of the bureaucracy in responding to the Aleppo crisis as evidence the White House has decided that Aleppo can’t be saved and therefore the United States should not try. “They are giving the Russians time to finish the job in Aleppo, in part to tie the hands of the next president,” the official told me.

China September Crude Output In Second-Biggest Decline On Record (Reuters) - China's crude oil production fell 9.8 percent in September from a year earlier, marking the second-biggest year-on-year decline on record, government data showed, as major producers shut high-cost wells to rein in spending. Domestic crude output fell to 15.98 million tons, or 3.89 million barrels per day (bpd), near the lowest in six years on daily basis, the National Bureau of Statistics data showed, reflecting both spending cuts at oil fields and the closure of old wells. Oil prices are hovering around $52 a barrel after recovering strongly so far this year, but are still down more than 50 percent since mid-2014 and upstream companies are still struggling to make a profit. China National Petroleum Corp's (CNPC) president Wang Yilin earlier this month promised to adjust the company's crude output plan to reduce "inefficient output" in the fourth quarter, the company's official newspaper reported. Sinopec Oilfield Services Corp, a listed unit of CNPC's upstream business, has forecast a nine-month net loss of 8.9 billion yuan ($1.3 billion) due to low prices and weakness in the sector. This low production partly contributed to record high imports in September, with the robust intake extending to the end of the year as domestic output falls and strategic reserve storage capacities are expanded at newly opened sites. China processed 43.8 million tons of crude or 10.658 million (bpd) in September, up 2.4 percent on a year earlier. In the first nine months, crude oil throughput rose 2.1 percent from a year ago to 399.93 million tons or 10.655 million bpd. China's natural gas production for September rose 0.1 percent from a year earlier to 10.2 billion cubic meters.

Winners of the oil bust: How much oil did China store? - It’s not surprising that in recent years China has been taking advantage of the low crude prices to stockpile strategic and commercial oil reserves. It’s not surprising that official data - if and when authorities decide to make it available – understates said reserves. This lack of information has left oil traders, investors and the market guessing how much crude China has been storing, and how it could use the quantity to possibly swing oil demand growth estimates and oil prices.  U.S. geospatial analytics company Orbital Insight has analyzed satellite images of China’s territory, applying computer algorithms and machine learning to identify and quantify crude storage tanks. Since tanks have floating roofs, the company uses algorithms to detect the shadows on the roofs and calculate how full a storage facility is.  Orbital Insight has found that there were 2,100 commercial and strategic petroleum reserve tanks across China, with capacity to store 900 million barrels of oil as of the end of 2014. That’s four times more than the 500 tanks reported in the industry standard database of tank farms at, Orbital Insight says. The U.S. company’s latest estimates show that China had around 600 million barrels of oil supply on its territory as of May 2016—and that’s not counting underground storage. Although the figure is higher than estimates, some analysts seem unsurprised. Michal Meidan, an analyst with London-based consultancy Energy Aspects, told Bloomberg that her estimate was over 400 million barrels including strategic and commercial stocks, but she was not surprised at Orbital Insight’s figures. “There is more storage available in China than the market is willing to acknowledge,”Meidan says.  Early last year, China had plans to increase its strategic petroleum reserves (SPR) from 30 days to 90 days. According to Reuters, some 90 days of imports are equal to around 600 million barrels. That’s the amount that Orbital Insight’s geospatial analysis has revealed. The U.S. company’s algorithms and data do not differentiate between strategic and commercial reserves. But in view of the lack of regular official and reliable data, it’s a source of data anyways. And it shows that China continues to amass crude oil supplies.

September Global Auto Sales Hit Record High Thanks To China's New Car Bubble - In recent months the US auto industry has been bombarded with a barrage of bad news: starting with Ford's disastrous August sales when the company admitted "sales have reached a plateau", continuing to the surge in delinquent subprime auto borrowers hitting nearly a 7 year high as the marginal creditworthy car buyers disappears, then noting the record $4,000 in industry-wide new car incentives in September as preventing a plunge in last month's auto sales, and recalling last week's downgrade of the US auto sector by Goldman which said that the US "cycle has peaked" would think that global auto sale would follow a similar downward trajectory. One would be wrong.According to data by JPM, global auto sales jumped 3.5%m/m in September on the back of strong gains in July and August. The pace of sales now stands at an all-time high of 78.0 million units per month, annualized. In whole, auto sales jumped 16.2%ar in 3Q (%3m/3m basis). On a %3m change basis, the move is an even more impressive 27% annualized through September. According to the latest data, of the impressive 4.4mn unit rise in global auto sales since June, China alone contributed for 84% of this global increase, or 3.7mn units. How did China manage to blow such a major bubble so fast? JPM explains that as the largest auto sales market in the world, China witnessed a spur in auto sales over the past year. However, this is not due to organic demand, and is almost entirely to a tax cut (by half) on small engine cars implemented by the government in September 2015. Since the cut, China’s auto sales have increased by 33%. Think cash for clunkers on trillions of debt-funded steroids.

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