Sunday, November 6, 2016

15 million fracking jobs at risk; a 4 year high in oil imports leads to a record jump in oil supplies, et al

on Friday, the US Chamber of Commerce released a report, apparently timed for the weekend before the election when a number of fracking initiatives are on the ballot nationally, which alleged that "14.8 million jobs could be lost, gasoline prices and electricity prices could almost double, and each American family could see their cost of living increase by almost $4,000" if fracking were banned in the US, which they apparently prepared because some candidates had earlier suggested such a ban...the 58 page pdf, “What If Hydraulic Fracturing Was Banned?” covers the recent 10 year history of fracking, then projects what would happen to the US economy over the 2017 to 2022 period if a fracking ban were initiated, and finally wraps up with scary state specific scenarios for Ohio, Pennsylvania, Colorado and Texas...their report is long on conclusions, but pretty short on methodology, and some of the links they cite are already broken...i was hoping to ignore it, but by Saturday morning it was already being picked up by the news services, with dozens of headlines indicating that a fracking ban would kill 15 million jobs....so we'll just quickly make a few points on how outrageous that allegation is...

as of the October employment report from the Bureau of Labor Statistics, which was coincidentally was also released on Friday, direct oil and gas industry employment was at 172,300 payroll jobs...in addition, there were another 283,500 employed in "support activities for mining", a broad category which might include those employed by drilling contractors such as Halliburton...although the labor department doesn't break out the details, let's also imagine that as many as 10% of the 1,072,800 jobs involved in manufacturing of machinery might be working in factories making oil field equipment...so in the most extreme scenario, where every oil and gas company shuts down completely, and all those manufacturers building oil field equipment shutter their factories, we'd lose a maximum of around 563,100 jobs, or less than 4% of the Chamber's stated job-loss total...for perspective, that's on average about as many new jobs as the US economy has been creating every three months over the last couple years...however, we know that even should fracking end tomorrow, there still would be an oil industry, and manufacturers of oil field equipment can be repurposed for other industries, such as building windmills, so many of that maximum of 563,000 jobs would not really be lost at all...

obviously the Chamber's report is projecting knock on effects, wherein they might count jobs in a fast-food restaurant in an oil producing state as at risk should the oil industry go into a slump...but how realistic is the projection of 14.8 million job losses?  as of Friday's employment report, the total seasonally adjusted payroll employment in the US was just under 145 million...that means that the Chamber is projecting that 10.2% of all those who are currently employed in the entire country would lose their jobs with 5 years should fracking be halted...considering that most fracking is only taking place in a handful of states, and that several large states such as New York and Florida have no fracking at all, that more than 10% of those who are now working in the entire US would lose their jobs is absurd on its face...moreover, we have a counterfactual...their own report shows fracking history going back to 2006, at which time less than 10% of US oil production was from fracked wells...10 yeas ago this week, at a time when gas drilling rigs outnumbered oil rigs 5 to 1, when the majority of the drilling rigs in the field were still conventional horizontal rigs, with horizontal drilling rigs only accounting for 18.1% of the 1693 rigs that were active at the time, the unemployment rate in the US was at 4.4%...so in October 2006, when the fracking industry was in it's infancy and most of it was focused on natural gas, the unemployment rate was .5% lower than the 4.9% it's at today...thus, 10 years ago we were surviving quite well without fracking, and i'm sure we will also do so 6 years into the future, should that kind of oil exploitation come to an end in the interim...

while i'm on the subject of studies that fabricate potential job losses to promote an agenda, i'd also like to point out a paper also released just a few days ago by the White House Council of Economic Advisers that has had almost no media coverage...it's a 21 page pdf titled Industries and Jobs at Risk if the Trans Pacific Partnership Does Not Pass, and it's being released at this time because Obama still hopes to push through the TPP during the lame duck session of Congress, when outgoing congresscritters are easiest to buy, since they no longer have to answer to the public...i'm not going to try to refute their paper now, but see if you can detect the same kind of prevarication and exaggeration that we saw in the Chamber report in the following section of their conclusion, where they're projecting millions of imaginary jobs at risk should the Japanese turn to their historical enemies in China to buy the same goods they're now importing from the US...via the White House CEA

In summary, the stakes involved in passage of TPP are high. There are, conservatively, 35 goods-producing industries directly at risk of increased competitive pressure from China in the Japanese market if RCEP goes into effect, taking this one country pair as an example of what may happen to market access in the 16 countries currently engaged in RCEP negotiations. These 35 industries account for just under 10 percent of total U.S. exports of goods to Japan. These industries employ close to 5 million workers and maintain 162,000 business establishments in the United States. There are a number of reasons why this does not capture all of the industries whose exports will come under pressure, and many are already under pressures from headwinds in the broader global economy. Passing TPP can help ensure they have a fair shot if RCEP goes into effect. Further, even if RCEP does not go into effect, U.S. businesses and consumers would forgo significant economic benefits if TPP does not pass. For example, 78 manufacturing, agricultural, and fishing industries export heavily to Japan, making them likely to benefit directly from increased market access under TPP through reduced tariff or non-tariff barriers. We also show that these industries maintain a total of 360,000 business establishments and employ close to 12 million workers across all 50 states.

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otherwise, it's been a pretty interesting week...both the price of natural gas and the price of crude oil were down every day this week, we added more oil to storage than in any other week in our history, and by the end of the week, the OPEC "agreement" to limit production to boost prices deteriorated into Saudi threats to increase their production to punish other OPEC members who wouldn't go along with the proposed limits...you might recall that the contract price for natural gas to be delivered in December closed last week at $3.105 per mmBTU, after the contract price for November gas expired on Wednesday, after from $3.341 per mmBTU on October 14th to $2.731 per mmBTU....this week, natural gas for December, which had traded as high as $3.54 per mmBTU on October 14th, fell every day, closing 2.5% lower than last week on Monday at $3.024 per mmBTU, then dropping another 4.1% to $2.902 per mmBTU on Tuesday, largely on warm weather in key regions of the U.S…prices were then down another 11 cents, or 3.8%, to $2.792 per mmBTU on Wednesday, and fell 2.3 cents to settle at $2.769 per mmBtu on Thursday, even after the EIA gas storage report showed a smaller than expected build of natural gas inventories...while the contract only fell fractionally to close the week at $2.767 per mmBTU, that brought the normally higher priced December contract within pennies of the November contract's closing price, 21.8% lower than it had been 3 weeks earlier..

meanwhile, US oil prices, which had slid 4.3% to close at $48.70 a barrel last week, fell nearly 4% to close at $46.86 a barrel on Monday alone, after a weekend of talks between major oil producers failed to finalize plans to implement an output cut...oil prices then edged up from that one-month low on Tuesday morning, but then fell back to close at $46.67 a barrel, after the American Petroleum Institute's weekly report indicated the largest inventory increase in 8 months...prices then fell hard again Wednesday afternoon, when the EIA reported a 14.4 million barrel addition to supplies, the largest one week jump in the 34 year history of weekly EIA data, and went on to close down 2.9% at $45.34 a barrel...selling on that record buildup of supplies carried into Thursday, as crude prices fell another 68 cents, or 1.5%, to settle at $44.46 a barrel, the lowest since Sept. 23rd....oil prices then fell more than a $1 just after noon on Friday, as the Saudis threatened to raise their production if Iran refused to cut theirs, but recovered near the close to finish the week at $44.07 a barrel, even as OPEC oil production rose to another record, at 33.54 million barrels per day, well over their 32.5 million to 33 million barrel per day target...oil prices have now fallen 9 out of the last 10 days and are thus down around 15% from their intraday high on October 19th near $52 a barrel...

The Latest Oil Stats from the EIA

this week's oil data for the week ending October 28th from the US Energy Information Administration indicated that our crude oil imports jumped to their highest rate in more than 4 years even as our refining of that crude slowed a bit, and as a result we ended up with the most surplus oil put into storage in a any week in the EIA's 34 years of weekly records...meanwhile, the crude oil fudge factor that was needed to make the weekly U.S. Petroleum Balance Sheet (line 13) balance rose to +395,000 barrels per day, from last week's +368,000 barrels per day, which means that 395,000 more barrels of oil per day showed up in our final consumption and inventory figures this week than were accounted for by our crude production or import figures, meaning that one or several of this week's metrics were off by that amount...however, since the change from last week was a nominal 27,000 barrels per day, our week over week comparisons should at least be close to consistent, as will the comparisons to the same week a year ago, when the fudge factor registered +445,000 barrels per day...

for the week ending October 28th, the EIA reported that our imports of crude oil increased by an average of 1,979,000 barrels per day to an average of 8,995,000 barrels per day during, which was the most oil we've imported in any week since the week ending September 14th, 2012...such a unprecedented jump in imports led those who were caught on the wrong side of the oil trade to scream manipulation, but it's pretty easy to understand what happened if you've been paying attention...two weeks ago, with Hurricane Matthew disrupting ship traffic into the Gulf coast ports, our oil imports fell to a 16 month low, and last week they barely recovered, posting their second lowest weekly total for the year..so it now appears that all the oil tankers that had been heading to the US in mid-October and got stuck offshore by the storm all finally arrived and finished unloading last week, resulting in the big import spurt ...as a result, the 4 week average of our oil imports reported by the EIA's weekly Petroleum Status Report (62 pp pdf) rose back to an average of 7.7 million barrels per day, 7.0% higher than the same four-week period last year...at the same time, our exports of crude oil were little changed, falling by an average of 11,000 barrels  per day to an average of 404,000 barrels per day for the week, in data that is not directly comparable to last year's exports of 504,000 barrels per day for 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..

at the same time, the EIA reported that production of crude oil from US wells rose by 18,000 barrels per day to an average of 8,522,000 barrels per day during the week ending October 28th, the 4th US production increase in a row...that was as output from Alaskan fields rose by 9,000 barrels per day and production from the lower 48 states was also 9,000 barrels per day higher, and it means our oil field production is now the highest since July 24th....however, that still left the week's domestic oil production 7.0% lower than the 9,160,000 barrels we produced during the week ending October 30th of last year, and 11.3% 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 28th was also 697,000 barrels per day, or 7.6% lower, than what we were producing at the beginning of this year, which we're citing as an interim benchmark, since 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 104,000 barrels per day to an average of 15,448,000 barrels of crude per day during the week ending October 28th, as our refinery utilization rate fell to 85.2% during the week, down from last week's 85.6%, and down from the refinery utilization rate of 88.7% seen during the week ending October 30th last year...US oil refining is now down by 1,482,000 barrels per day, or by 8.8%, in the 8 weeks since Labor Day, as the refinery utilization rate has tumbled from 93.7% over that stretch .. the crude oil refined this week nationally was also 1.2% below the 15,637,000 barrels of crude per day US refineries used during the week ending October 30th last year, and down fractionally from the 15,485,000 barrels per day that were being refined during the equivalent week in 2014...

even with the drop in the amount of oil used by refineries, the EIA reported that refineries’ production of gasoline fell by just 13,000 barrels per day to 9,824,000 barrels per day during the week ending October 28th, as our gasoline output was still 3.0% higher that the gasoline output of 9,537,000 barrels per day during the week ending October 30th last year, and 1.3% higher than the gasoline production during the same week of 2014....at the same time, refinery output of distillate fuels (diesel fuel and heat oil) rose by 126,000 barrels per day to 4,662,000 barrels per day during the week ending October 28th....however, the week's distillates output was still 4.5% lower than the 4,882,000 barrels per day that was being produced during the same week last year, while it was 1.1% higher than the 4,609,000 barrels per day of distillates we produced during the equivalent week of 2014...    

with little change in our gasoline production, our gasoline supplies fell again, this time by 2,207,000 barrels to 227,967,000 barrels as of October 28th, leaving us with the lowest supplies of gasoline since last Christmas...but even with that large drop in our supplies, our end of the week gasoline inventories were still 3.9% higher than the 215,347,000 barrels of gasoline that we had stored on October 30th of last year, and 10.9% higher than the 201,760,000 barrels of gasoline we had stored on October 31st of 2014....at the same time, our distillate fuel inventories fell by 1,828,000 barrels to 150,550,000 barrels by October 28th, the 6th consecutive large drop in our distillate supplies....however, even after the withdrawal of 18.2 million barrels of distillates from storage over the past 6 weeks, our distillate inventories were still 7.0% higher than the distillate inventories of 140,757,000 barrels of October 30th last year, and 25.8% above the distillate inventories of 119,653,000 barrels of October 31st, 2014, as you should recall we've continuously had large surplus distillates inventories since last year's El Nino winter reduced demand for heat oil....

finally, with the nearly 2 million barrel per day jump in our oil imports, our inventories of crude oil correspondingly rose by 14,420,000 barrels to 468,158,000 barrels by October 28th, the largest one week jump in our oil supplies in EIA weekly records going back to late 1982, and thus probably the largest jump in history...still, with 2 hurricanes interfering with oil imports over the past 9 weeks, our oil stockpiles have still decreased by 12.66 million barrels, or 2.6% over that span, at a time of year when oil supplies are usually rising, and are still 5.8% below their April 29th peak of 512,095,000 barrels...however, we still ended the week with 4.5% more crude oil in storage than the 447,994,000 barrels we had stored as of the same weekend a year earlier, and 34.3% more crude oil than the 348,475,000 barrels we had stored on October 31st of 2014...  

This Week's Rig Count

US drilling activity increased for the 7th week in a row during the week ending November 4th, and has now increased 19 out of the last 22 weeks, following a prior 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 12 rigs to 569 rigs by this Friday, a nine month high, which was still down from the 771 rigs that were deployed as of the November 6th report last year, and down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...

with rigs drilling for oil only cut back in one out of the last 19 weeks, active oil rigs rose by another 9 rigs to 450 rigs this week...nonetheless, oil drilling activity remains down from the 572 oil directed rigs that were working a year ago, and down from the recent high of 1609 oil rigs that were drilling on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations increased by 3 rigs to 117 rigs, which still left active gas rigs down from the 199 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... 

the rig that had been working on a drilling platform offshore from Alaska was finally shut down this week, which reduced the total US offshore rig count to 21, all of which were in the Gulf of Mexico, down from 32 in the Gulf and in total a year ago...the number of working horizontal drilling rigs increased by 9 rigs to 459 rigs this week, which was still down from the 585 horizontal rigs that were in use on November 6th of last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count rose by 5 rigs to 58 rigs this week, which was also still down from the 105 vertical rigs that were in use a year earlier... meanwhile, the directional rig count fell by 2 rigs to 52 rigs, which was down from the 81 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 basins...in both tables, the first column shows the active rig count as of November 4th, the second column shows the change in the number of working rigs between last week (October 28th) and this week (November 4th), the third column shows last week's October 28th 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  case was for November 6th of 2015... 

November 4 2016 rig count summary

it appears from the above that we're back to seeing the Permian basin, with a 6 rig increase, account for the largest part of this week's increase, in what has been the most typical weekly increase over the last 5 months, with only the Eagle Ford of south Texas and the Williston of North Dakota seeing an increase as large as two rigs...the Permian has seen an 81 rig increase since May 13th, and hence accounts for almost half of the 163 rigs that have been added countrywide in the span since...otherwise, the rigs added in the Arkoma Woodford and the Cana Woodford account for 2 of the 3 rig increase increase in Oklahoma, and the Arkoma Woodford addition is a gas rig, the only gas rig added in a major basin; more than likely the other two gas rig set ups were conventional, most likely the two rigs added in Louisiana...we should also note that of the states not shown as major producers above, Mississippi saw one of its three rigs pulled out this week; at two rigs, drilling in the Magnolia state is now down from the 7 rigs they had deployed on November 6th of 2015...

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Energy interests, mostly fossil fuels, give big to Ohio campaigns | Midwest Energy News: With the fate of the state’s clean energy standards and the federal Clean Power Plan still unsettled, utility, fossil fuel and nuclear energy interests spent about $3 million in reported contributions for Ohio political campaigns this year through October. Those figures do not include additional millions funneled through other committees or spending by organizations that are closely aligned with but not clearly identified as representing utility or fossil fuel interests. For example, PolitiFact reported this summer that groups affiliated with conservative donors Charles and David Koch were spending about $30 million to help incumbent Republican Senator Rob Portman defeat his challenger, former Democratic Governor Ted Strickland. These types of campaign spending information should matter to voters, said Pete Quist, research director at the National Institute on Money in State Politics, whose online “Follow the Money” database provides information on campaign contributions for Ohio and other states. “It’s important for the electorate to be able to [put] into context who’s funding a person or running independent ads so they can put those messages into context and [see] who a candidate’s friends or influences might be and what effect on public policy that may have,” Quist explained. For Ohio, those policies include decisions on renewable energy and energy efficiency standards, the fate of the Clean Power Plan and how the state will comply with it, competition in Ohio’s energy market, payments for oil and gas extraction, and more.

Wayne National Forest to be leased to oil and gas companies - The Post - Parcels of land. in the Wayne National Forest will be auctioned off Dec. 13. The Bureau of Land Management released a notice about its plan to lease 1,600 acres of land in the Wayne National Forest for oil and gas purposes, an action that could potentially lead to fracking on public land. Conversations to lease public land on the only Ohio National Forest began in 2015, Chris Rose, a spokesperson for BLM in Washington D.C., said.  After industries and individuals expressed interest, the BLM had to determine if the land was under federal ownership and analyze the land to see if it was suitable for oil and gas leasing. The BLM collaborated with the Forest Service to come to that decision.  The government benefits economically if the land is leased, Rose said.   “When parcels are leased, there are fees and loyalties that get paid to the government and they get returned to the treasury,” he said. “Some of that takes place when the initial lease is issued and if the parcel is ever put into development, payments go to the treasury.”   Rose said if development does take place on the parcels, that motion could provide jobs for people in surrounding areas.  There are significant environmental risks, Nathan Johnson, an attorney for the Ohio Environmental Council, said. Although shale operations do not exist in Athens County, Johnson said one of the highest volumes of wastewater is coming into the county.  “Ecosystem services, clean air, clean water, ecotourism: all of those are going to suffer if we have heavy industry coming in,” Johnson said. “A lot of people are concerned about that.”  A formal 30-day protest period is underway and ends Nov. 14. That time period allows citizens and organizations to submit comments or protests on the parcels that are being offered.

Feds to Auction Off Ohio's Only National Forest to Fracking - Following its final Environmental Assessment and a "Finding of No Significant Impact," the Bureau of Land Management (BLM) has decided to offer 40,000 acres of Wayne National Forest—Ohio's only national forest—up for fracking. The BLM is now planning an online auction on Dec. 13 to lease the first 1,600 acres of the forest near Monroe, Noble and Washington counties to oil and gas development. The minimum acceptable bid can be as little as $2 per acre.  Local environmental groups and activists have unsurprisingly spoken out against the unconventional drilling of their state's sole national forest.  Athens County Fracking Action Network (ACFAN) has criticized the BLM for not considering the full extent of fracking's negative impacts in its final Environmental Assessment posted earlier this month, including fracking's threat to drinking water and its harm to public health and the climate.

Environmentalists and oil developers feud over the future of the Wayne National Forest - In the midst of global environmental change, Athens County and the rest of southeast Ohio are embedded in a local fight for the future of the Wayne National Forest, Ohio’s only national forest.  On Oct. 14, the Bureau of Land Management (BLM) released the official notice of lease sale where interested parties can bid in an online auction for 33 parcels of land — totaling more than 1,600 acres in the Marietta unit of the forest — which is comprised of Monroe, Noble and Washington counties.   The sale is scheduled for Dec. 13 and will presumably lead to oil and gas extraction on these lands. The BLM released an environmental assessment outlining the regulations meant to mitigate environmental harm. According to the assessment, the use of standard operating procedures and best management practices will reduce the amount of environmental degradation oil drilling could have on the forest.  Furthermore, the BLM enforces the use of an application for permit to drill, which would require an inspection of the grounds before drilling to protect the environment. According to Rose, these applications should minimize environmental damage.  Still, many environmental groups believe the BLM has not done enough to prevent environmental safety and oil drilling should stay out of the forest.  On Aug. 11, the Ohio Environmental Council, along with two other environmental organizations, sent a letter to the Forest Service to reject the BLM’s proposal to lease land for oil and gas development. The Forest Service is required to work directly with the BLM on the leasing and management of minerals under federal forest lands. Nathan Johnson, an attorney for the Ohio Environmental Council, said the Forest Service did not directly respond to the letter.  “We did have a conversation with the Forest Service over the phone but I would take the formal response to be the fact that they put those parcels up for lease/sale,” Johnson said.  He argues the BLM has ignored many important factors in the environmental impact drilling in the Wayne could have.  “They completely ignore the construction of pipelines and pipeline buildup which, by many accounts, is considered the single largest source of surface disturbance,”

Judge to consider Ohio authority to regulate injection wells - Toledo Blade — A judge in Columbus is preparing to hear arguments in a dispute over Ohio’s authority to regulate oil-and-gas operations, including wells disposing of fracking wastewater. Attorneys for the Ohio Department of Natural Resources and the operator of a Youngstown-area wastewater injection well address Judge Kimberly Cocroft on Tuesday.  At issue is the department’s power to take action against the well, which disposes of wastewater from hydraulic fracturing and sits nearby at least 20 small seismic events that occurred in 2014.  American Water Management Services disputes the legal authority of the oil-and-gas chief at the department to take action against its well. The company also claims state actions against its well defy science. State regulators believe the 2014 tremors tapped the same fault as a 4.0-magnitude earthquake in Youngstown in 2011.

Weathersfield well operator fights ODNR after state shut well down - Warren Tribune Chronicle -  — The operator of an injection well here used for fracking wastewater is challenging the authority of Ohio’s oil-and-gas chief to regulate its operations, calling his actions illegal and contrary to science.American Water Management Services on Tuesday argued in a case before Franklin County Judge Kimberly Cocroft that the official acted unreasonably against its Weathersfield Township well. The facility was shuttered after at least 20 small seismic events occurred nearby in 2014.The injection well operator is fighting for permission to reopen a brine deep injection well that has been idled in the township for about two years.The Ohio Oil and Gas Commission ordered the well along state Route 169 closed after a 2.1 magnitude earthquake on Aug. 31, 2014. State regulators believe the tremors tapped the same fault as a 4.0 magnitude earthquake in Youngstown in 2011 that prompted a temporary injection moratorium in the area.In September 2014, the Ohio Department of Natural Resources, which regulates class II injection wells, ordered AWMS, a subsidiary of Avalon Holdings Inc. of Howland, to shut down the well. A shallow well that also was shut down temporarily at the site was permitted to resume operations. American Water Management contends the law doesn’t give the chief the right to suspend its permit based on speculation about the possibility of future earthquakes — “not actual and reliable scientific evidence.”

Judge considering Ohio authority to regulate injection wells – Daily Journal: — The operator of a Youngstown-area injection well for fracking wastewater is challenging the authority of Ohio’s oil-and-gas chief to regulate its operations, calling his actions illegal and contrary to science. American Water Management Services argues in a case before Franklin County Judge Kimberly Cocroft on Tuesday that the official acted unreasonably against its well in Weathersfield Township. The facility was shuttered after at least 20 small seismic events occurred nearby in 2014. State regulators believe the tremors tapped the same fault as a 4.0 magnitude earthquake in Youngstown in 2011 that prompted a temporary injection moratorium in the area. American Water Management contends the law doesn’t give the chief the right to suspend its permit based on speculation about the possibility of future earthquakes — “not actual and reliable scientific evidence.” The Ohio Department of Natural Resources argues that the chief’s role includes protecting the public from the threat of human-induced earthquakes and other public safety hazards. “Should the chief of the Division of Oil and Gas Resources Management have to wait for a damaging earthquake to hit a community before issuing a chief’s order suspending operations? Of course not,” the state asserts in its brief. That “would lead to an absurd result,” attorneys argue. In its brief, the state says the chief was concerned about earthquakes “continuing to escalate in magnitudes — threatening public health, safety, and the environment.” The company’s plan for restoring operations would have made the community “an experimental testing area,” it says.

City Council to Governor: Bring Home Our State Troopers - Cincinnati City Council members have sent a strongly-worded letter to Ohio Gov. John Kasich demanding the recall of 37 state troopers from the escalating Dakota Access Pipeline protests in North Dakota.  "The images of militarized police facing off against unarmed Native Americans protecting their water and their history recalls back to the worst time period of American history; a time when the Federal government committed genocide against native tribes in an attempt to gain control over their land and their resources," the letter states.  The letter was signed by a majority of city council members including Vice Mayor David Mann, President Pro-Tem Yvette Simpson as well as councilmembers Chris Seelbach, P.G. Sittenfeld and Wendell Young—was sent to Gov. Kasich on Tuesday.  "As you know, this pipeline was originally routed near Bismarck, ND, but changed after residents of Bismarck opposed the pipeline coming near their homes," the letter continues. "Instead, the pipeline was routed from mostly white Bismarck, to native lands bordering a reservation. This is a sensitive and delicate situation that Ohio voters have not taken a position on."  The 37 Ohio State Highway Patrol troopers were sent to the Standing Rock protests on Saturday. The letter urges state troopers to come home so they can focus on Ohio issues, such as the heroin epidemic, increased traffic fatalities and other issues that "need greater attention within our state."  Ohio State Highway Patrol spokesman Lt. Robert Sellers said that Ohio simply answered a call for support from North Dakota law enforcement.  "We are going there to support the people of North Dakota," Sellers told Cincinnati.com . "More specifically, to provide safety and protect everyone's rights."

Consol returns to drilling in dry Utica as Q3 oil/gas output jumps 12% on year -  Appalachian Basin natural gas producer Consol Energy on Tuesday posted a 12% increase in oil and gas production in the third quarter compared with Q3 2015, reflecting its return to drilling in the dry Utica play early in the quarter. During the quarter, the company produced 96.4 Bcfe, or 1.05 Bcfe/d, compared with 86.1 Bcfe, or 936,000 Mcfe/d, produced in the year-earlier quarter. Marcellus Shale production volumes, including liquids, in Q3 were 51.8 Bcfe, or 563,000 Mcfe/d, about 13% higher than the 45.9 Bcfe, or 499,000 Mcfe/d, produced in Q3 2015. Meanwhile, Consol's Utica Shale production volumes, including liquids, in Q3 were 22.5 Bcfe, or 245,000 Bcfe/d, up about 47% from 15.3 Bcfe in the year-earlier quarter. Consol had resumed drilling operations in August, adding two rigs in the Ohio dry Utica play, after calling a pause to drilling late last year, in the wake of months of rock-bottom oil and gas prices. The quarter's results reflected the producer's strategy of "maximizing free cash flow and using this cash to de-lever our balance sheet," President and CEO Nicholas Deluliis said during a conference call to announce the quarter's results Tuesday. "In the quarter, we saw strong free cash flow of $103 million, our third consecutive quarter of free cash flow. Year to date we generated of free cash flow of $608 million," he said. In addition, Deluliis said the quarter's results reflected the producer's continued efforts to transform itself from primarily a coal producer to a pure-play oil and gas exploration-and-production company.

New England keeps lid on new natural gas access.  Natural gas utilities and power generators in southern New England will have access to additional gas supplies this winter as Spectra Energy brings its 342-MMcf/d Algonquin Incremental Market (AIM) project into service. But Kinder Morgan’s planned 72-MMcf/d Connecticut Expansion has been set back a year (to November 2017) due to permitting delays and, more important, a multi-state effort to enable electric distribution utilities (EDUs) to contract for gas pipeline capacity for generators appears to have died, and with it prospects for at least one major project. Is New England destined to remain gas-supply constrained for years to come?  Today we consider recent developments regarding gas supply in the northeastern corner of the U.S., and what they may mean for Marcellus/Utica producers. New England would seem to be a natural market for natural gas produced in the nearby Marcellus/Utica. Not only is the six-state region close to some of the most prolific shale gas reserves in the world, in recent years New England has been shutting down a number of its coal-fired and nuclear units, ramping up its use of renewables, and developing new gas-fired power plants to replace the retired coal and nuclear plants and to back up the variable output of solar and wind farms. Midstream companies most active in the region (Spectra Energy and Kinder Morgan chief among them) have been working tirelessly to advance pipeline projects that would significantly enhance the capacity of New England’s existing network, but only with limited success. We’ve written extensively about these efforts, both in Drill Down reports (Please Come to Boston and 50 Ways to Leave the Marcellus) and blogs (Don’t Give Up on Us and Time in New England), largely because 1) pipeline constraints during Polar Vortex-like events in the past have caused spectacular spikes in regional natural gas prices, and 2) Marcellus/Utica gas producers need incremental gas demand if they are to continue growing and, as we said, New England seems like such a logical candidate.

Sell-Off in Natural Gas Prices Continues -- The period of stabilization during the latter part of last week in natural gas prices proved short-lived, as the contract for December delivery on the New York Mercantile Exchange fell sharply on Monday, losing 2.54%, and declined another 4.1% today with a close at $2.902. Warm weather conditions in key regions of the U.S., the driver of the October decline, are once again weighing on prices.The decline in natural gas futures from the October peak through the October 26th close was driven by the liquidation of long contracts rather than by new money entering the market, as open interest dropped steadily, for a total decline of 4.7%. This is compared to a 5.7% expansion in open interest that took place during the advance from the early October low. Monday’s sell-off appears to have also been driven by liquidations, as open interest fell 0.44%. The decline in open interest, combined with the extreme oversold reading on the Stochastic, a price momentum indicator, signals natural gas is susceptible to a quick, snap-back rally. However, the sustainability of such a rally appears questionable given the technical deterioration that has taken place as a result of the sell-off from the October peak, as the contract has solidly penetrated the up trendline which had defined price action throughout the majority of 2016.

NYMEX December gas futures settle at $2.769/MMBtu, down 2.3 cents -  The NYMEX December natural gas futures contract fell 2.3 cents to settle at $2.769/MMBtu Thursday after a government storage report that showed a smaller than expected inventory build failed to stop prices from sliding for a fourth straight day. Over the last four trading sessions, the prompt-month contract has shed a combined 33.6 cents. Thursday's settlement price was the lowest the December contract has closed at since reaching $2.768/MMBtu on April 15. "Cash has been a drag on prices and perhaps that continues but eventually the market will come to grips with the concept of winter and it going to come. Production is down from the end of Oct, as to be expected, and with no severe cold weather in front of us there is little reason for prices to rally," EcomEnergy said in its Daily Call email Friday. Henry Hub spot prices fell to $2.285/MMBtu on Wednesday, their lowest price since early June, according to S&P Global Platts data. Spot prices made a small rebound Thursday, rising about 7 cents to reach $2.36/MMBtu.The latest six- to 10-day outlook from the US National Weather Service, issued Thursday afternoon, was bearish for gas demand as it showed above-average temperatures across almost the entire continental US. The latest forecast showed below-average temperatures shrinking from the Southeast coast to now only cover portions of Florida. Total US dry gas production is forecast to reach 70.7 Bcf/d over the next seven days, down less than 200 MMcf/d from the prior week, data from Platts Analytics' Bentek Energy showed. The US Energy Information Administration, in its weekly natural gas storage report Thursday morning, showed total inventories rose to 3.963 Tcf in the week that ended October 28, a 54 Bcf build from the prior week. The injection was slightly below the expectations of analysts surveyed by Platts, who were predicting a storage build of 57 Bcf.

UK Gas: NBP spot deflates amid dramatic length -  NBP spot deflated Friday morning as higher Norwegian deliveries and imports from the continent pushed the system deep into oversupply, leaving the market seemingly comfortable with the colder-than-average weather that the weekend and the start of next week have in store for European gas markets. Within-day, weekend and day-ahead contracts were assessed at 47.25 p/th, 49.65 p/th and 50.40 p/th respectively at 1100 GMT compared with the day-ahead price assessed at Thursday's close at 50.95 p/th. The UK gas system was 45 million cu m/d long in the morning, the strongest state of oversupply seen this winter to date. Behind part of the length, Norwegian imports to the UK jumped from 127 million cu m/d to 136 million cu m/d at the start of Friday's gas day and 131 million cu m/d at 1100 GMT. In contrast to the summer, when the Norwegian supply swing to the UK typically emanated through the Langeled pipeline, so far this winter deliveries to the St. Fergus terminal have seen the most day-on-day flux. Also behind the UK's length, the combined imports from the continent through the IUK and BBL pipelines stood at 65 million cu m/d, up from 53 million cu m/d Thursday, putting pressure on NBP spreads to the continent. LDZ demand is set rise to 180 million cu m/d and 186 million cu m/d Saturday and Sunday respectively, reaching the height of 192 million cu m/d Monday, according to Platts Analytics' Eclipse Energy data.

Colonial Gas Pipeline Explodes In Shelby County, Alabama - Live Stream - A massive plume of smoke is filling the skyline after a gas pipeline exploded in Helena, Alabama according to CBS42. Fire units are headed to the scene, according to McAdory Fire Station #2. Alagasco has stated that the fire is from a petroleum line. According to the Shelby County Sheriff's office, the blast was on the Colonial Line, with 8-9 people injured. The Sheriff adds that the blast happened during crew work.The explosion took place near 334 Highway 13. At this time, a response team has been called in from Jefferson County as well as a tanker from the McAdory Fire Department. 7 victims now going to UAB: 6 people severely burned after reported gas line explosion https://t.co/TNcIGRujDA pic.twitter.com/83TyLP6Cqk — carol robinson (@RobinsonCarol) October 31, 2016 Vestavia Hills Fire Department has also arrived on the scene, along with Shelby County’s Sheriff’s Department. UAB has received five patients associated with the explosion who arrived by LifeFlight helicopter. At this time, there is no word on their condition, but CBS42 has learned that they are being treated for burns. Helena police are stating that there was an explosion in the Shelby County Jurisdiction, and that no Helena residents are in danger.

1 Dead, Several Injured in Colonial Pipeline Explosion - Less than two months after the Colonial Pipeline in Shelby County, Alabama, spilled 336,000 gallons of gasoline, the same pipeline exploded , killing one and injuring at least five. The pipeline is shut once again, threatening gasoline supplies in the East and sending prices soaring .  The explosion occurred about one mile from the site of the previous leak. A crew of nine were conducting maintenance on the pipeline when a track hoe , similar to an excavator, struck Line 1. Gasoline exploded, killing one worker at the scene. Five others were transported to UAB Hospital in Birmingham. Several others, who were not in critical condition, were expected to be sent to area hospitals and many will need decontamination .  Fires from the explosion continue to burn as of this morning. Two wildfires set off by the accident burned 37 acres, and forestry crews were reported to have established a three-mile perimeter.  Colonial Pipeline shut down its two main lines, which feed gasoline, diesel and jet fuel to markets in the East. Colonial supplies about one-third of the 3.2 million barrels per day of gasoline consumed on the East Coast.  Gasoline prices immediately spiked as news spread, with futures prices up as much as 13 percent last night and more than 10 percent this morning. The Georgia chapter of the AAA said they expect to see fuel prices jump in the Southeast and Mid-Atlantic.  Thick smoke around the area of the fire and explosion led to aircraft flight restrictions, which is due to be lifted at 10 a.m. Eastern time this morning.  The troubled pipeline company has had five spills in Alabama so far this year and 128 across its 5,500-mile system since 2010. This incident is the first known to have caused death or injury. By conservative estimates, Colonial has spilled at least 450,000 gallons of fuel into the environment since 2010.

Gasoline Prices Spike Most Since 2008 After Pipeline Explosion --Following last night's Colonial Pipeline explosion which killed 1 and injured several more, Wholesale gasoline prices have spiked most since Dec 2008 to 16-month highs as the closure of the largest fuel pipeline in America forces traders to book cargoes from Europe. Prices spiked almost immediately - flash-smashing 15% higher before fading back... only to drift back to the highs this morning as reality sinks in... Dramatically decoupling from Crude prices... Leaving Gasoline prices at 16 month highs... As Bloomberg reports, a spill in September closed the Colonial pipeline for 12 days, cutting supplies to 50 million Americans in the Southeast. Gasoline traders responded immediately to the possible shortages, rushing to book extra tankers for replacement fuel supplies from Europe, according to two shipbrokers directly involved in the trade. Freight costs for cargoes across the Atlantic surged to the equivalent of about $17 per metric ton from about $12.40, according to data compiled by Bloomberg. The southeastern U.S. is “highly dependent on pipeline supplies from Colonial, and, ultimately, Colonial flows form the baseline of U.S. East Coast supply,” Robert Campbell, head of oil products research at Energy Aspects Ltd. in New York, said in a note. The longer the mainlines are offline, “the more upward pressure will be placed on U.S. East Coast fuel prices, while downward pressure will be exerted on U.S. Gulf Coast product prices.”

Gasoline Prices Tumble, Erase Spike As Colonial Resumes Line 2 Operations -- Wholesale gasoline prices are tumbling back from post-pipeline-explosion peaks after Colonial reports the resumption of Line 2 operations and confirms Line 1 will restart on Saturday (although they warn that projection may change).As Bloomberg reports, Colonial response crews isolated fire, site access still limited and ability to predict repair schedule "very limited," company says in a notice to shippers. Pipeline schedules being updated to reflect noon restart Saturday, but projection may change when additional information is available. Colonial will evalaute crossover of gasoline into Line 2.

Factbox: Colonial Pipeline's Line 1 gasoline pipeline outage - - Colonial Pipeline's Line 1 gasoline pipeline remained shut Tuesday after a fire was reported Monday evening. Colonial is projecting a weekend restart for the gasoline line, having already resumed operations on its distillate Line 2 Monday night.
WHAT'S SHUT? * Line 1, which moves 1.37 million b/d gasoline from Pasadena, Texas, to Greensboro, North Carolina, and then carries product to Linden, New Jersey.
WHY IS IT IMPORTANT? * Colonial is considered the main artery connecting Gulf Coast refiners with customers along the US Eastern Seaboard. The Atlantic Coast is net short refined products, with local refinery capacity unable to meet demand, and is home to the New York delivery and pricing point for NYMEX RBOB and ULSD futures. The USAC relies heavily on USGC barrels via Colonial, as well as waterborne imports from Europe.
MARKET IMPACT * NYMEX December RBOB settled 6.46 cents higher at $1.4841/gal Tuesday, although that was down from $1.6351/gal late Monday following initial reports of the Colonial outage. * Physical gasoline prices for prompt delivery were even higher, with Platts assessing New York RBOB barges at $1.579/gal, up 11.36 cents/gal. In contrast, prompt US Gulf Coast RBOB pipeline was assessed just 96 points higher at $1.3766/gal, as the line outage caused a build up of supply in the region.

Gas Pipeline Blast Shows East Coast Shackled to Precarious Lifeline  - A 40-inch-wide pipeline that snakes its way from the oil-soaked Gulf Coast to the tank farms of northern New Jersey carries a quarter of the gasoline used by East Coast motorists. On Monday, that thin lifeline snapped after an explosion and fire in Alabama. The fallout: For the second time in two months, the price of fuel for truckers, commuters and soccer moms threatened to jump, even as global crude prices decline. Why is such a huge, economically dynamic region so dependent on one pipeline network for so much of its gas, jet fuel and other petroleum products? Think economics, and the environment. “The economic case isn’t giving you a reason to build and the environmental opposition is the reason you don’t,” said Kevin Book, managing director at Washington-based consultants Clearview Energy Partners LLC. “At this particular point in history, no products pipeline is going to be an easy build.” A spill in September shut the gasoline line for 12 days, cutting supplies to 50 million Americans in the U.S. Southeast. Monday’s explosion is expected to close the line until Saturday, according to Colonial Pipeline Co., which operates the system. It’s pushed up futures prices and sent gasoline traders scrambling for other ways to supply East Coast states with fuel. Tighter Supplies Even if the pipeline restarts on Saturday, major southeastern cities like Nashville, Tennessee; Atlanta; and Charlotte, North Carolina, will face shortages, according to Andy Milton, senior vice president of supply and distribution at Mansfield Oil Co., a Gainesville, Georgia-based fuel supplier.

Dems call for probe of company after Alabama pipeline blast - A group of House Democrats on Wednesday urged federal officials to investigate the company that owns an Alabama pipeline that exploded this week. The Democrats — Energy and Commerce Committee ranking member Frank Pallone (NJ), Transportation Committee ranking member Peter DeFazio (Ore.) and three subcommittee ranking members — said the Department of Transportation should probe the Colonial Pipeline Company after a pipeline it owns caught fire and exploded in Shelby County, Alabama.The Monday incident killed one person and sent five others to the hospital. The explosion — coupled with a spill and a supply disruption two months ago — warrants an investigation, the members wrote in a letter to Transportation Secretary Anthony Foxx. “This is an unacceptable situation, and we are concerned that the number, frequency and severity of significant incidents on Colonial's system over the past five years could be symptomatic of severe underlying problems with the system and the company's management of that system,” the members wrote. Colonial’s Shelby County pipeline caught fire and exploded shortly before 3:00 p.m. on Monday. The company said on Wednesday that the fire has “reduced significantly” over the last day and is no longer a hazard to the public. Nine contracted workers were at the pipeline site during the blast. One died, five went to the hospital and four remain hospitalized, the company reported in a Wednesday afternoon update. Colonial said there is “no observable impacts” from the blast on waterways or drainage paths. The company said it hopes to begin work toward bringing the pipeline back online as soon as the fire is extinguished.

Colonial Pipeline plan to cut off dirty jet fuel could hit airlines | Reuters: Major airlines including Delta, United and American could face higher fuel costs if U.S. regulators allow Colonial Pipeline Co to stop shipping a dirtier blend of jet fuel by 2018. The Colonial system carries most of the jet fuel that is delivered via pipeline to the East Coast and used by busy airports serving New York, Washington, D.C. and Atlanta, along with U.S. military bases. The pipeline company said earlier this month it would ask the Federal Energy Regulatory Commission for permission to halt shipments of high-sulfur jet fuel and diesel. Preliminary estimates indicate that jet fuel prices could rise significantly if Colonial wins approval, said John Heimlich, chief economist for the industry trade group Airlines for America (A4A). Rising fuel prices could make certain flights unprofitable, forcing airlines to cut service and sell fewer seats - likely at higher prices. It would take jet fuel price increases of 30 to 50 cents per gallon to have a big impact on pricing or flight availability, said Robert Mann, an industry consultant and former executive at American and other airlines. Jet fuel in the New York Harbor traded at about $1.44 per gallon as of Tuesday. A Colonial spokeswoman said the pipeline company was discussing its regulatory proposal with affected airlines but declined further comment to Reuters. The move would allow Colonial, which daily ships more than 3 million barrels of petroleum products, to more efficiently move more low-sulfur products through its pipeline. Cutting down on dirtier fuels would reduce so-called "transmix," which occurs when high-sulfur and low-sulfur products are combined. The resulting mixture has to be refined or blended again.

Energent Group Research Shows Operator Focus on 3,730 Drilled but Uncompleted (DUCs) Wells While US Land Rigs Increase for 5th Straight Week -- Operators show signs of optimism with the West Texas Intermediate (WTI) above $50 per barrel the last two weeks in October. According to Energent Group's report, the drilled but uncompleted (DUC) well count is rising in the major oil shale plays with 1644 DUCs in the Permian Basin, 883 in Eagle Ford, 700 in Bakken, and 530 in the DJ-Niobrara. The DUC Analysis report illustrates the inventory of wells by basin and operator. The US Land Rig count, published by Baker Hughes, increased for the 5th straight week. The Permian Basin added 11 rigs, gaining 5.5% and Eagle Ford put 2 more rigs to work, increasing by 6.5% last week. Haynesville added 1 rig, a 6.5% increase from the previous week. The Cana Woodford, Marcellus, Williston, and Utica were unchanged. DJ-Niobrara released 1 rig, a decline of 5.6%. 84% of rigs, 438, are drilling horizontal wells. Yet, many of these horizontal wells will not be completed until operators work through the backlog of drilled but uncompleted (DUCs) wells. With oil above $50 per bbl and natural gas near $3.00 mcf, the industry will move from capital constrained to labor constrained market. Over 350,000 people were laid off globally during the last two years, according to Graves & Co. report and many of those laid off service company workers left the industry entirely.Drilling rig crews and hydraulic fracture crews require extensive training and screening before going back to work. One drilling rig may require 4 to 6 weeks to staff appropriately. A frac crew (or frac spread) may only require 2 to 4 weeks. As commodity prices recover, operators will need additional frac crews in each shale play to reduce the DUC backlog. Energent Group's frac crew forecast illustrates a rising DUC count until 2017 for the Permian Basin. Analysts are bullish on oil and natural gas for 2017 since shale producers are able to drill and complete wells economically at lower prices. However, operators and service companies must address the labor constraints in the market in order to bring back crews for the long term.

Skyrocketing West Texas Land Prices Have Oilmen Uneasy - WSJ: Wall Street investors have fallen in love with properties in the Permian Basin, and that is making some West Texas oil men nervous. Even though a barrel of oil commands half what it did two years ago, the price being paid by companies for drillable acres in the prolific oil field has shot up to never-before-seen levels. In recent weeks, some have paid upward of $40,000 an acre for drilling leases—about eight times what similar properties fetched two years ago, when oil prices were close to $100 a barrel. Companies such as Pioneer Natural Resources Co. and Occidental Petroleum Corp. have said their land in the Permian Basin, where there are layers of oil-bearing rock stacked on top of each other, holds substantial oil reserves that can be tapped in tandem, making each acre more valuable than in a typical oil field. As others pile into the Permian, veterans of the region’s oil fevers worry that the current lease prices will set off another boom that will be quickly followed by an inevitable bust. The region has experienced booms before, notably in the early 1980s and again in 2008 and 2014, all of which were followed by busts. “I think that [pricing] is absolutely ridiculous,” said Kenny Freeman, the vice president of sales at Petrosmith Manufacturing LLC of Abilene, Texas.

Implications of U.S. vs. State Regulation of Texas Gas Pipelines -- Fundamental, far-reaching changes in natural gas pipeline flows within the Lone Star State to enable increased gas supplies to reach LNG terminals and Mexico cross-border points give new significance to the issue of federal versus state pipeline regulation. Given Texas’s independent streak, it comes as no surprise that federal and state rules are night-and-day, with the Texas regs being largely hands-off and the feds’ being very hands-on. The differences are worth examining because they affect project development, pipeline tariffs, relationships between pipeline owner/operations and gas sellers/buyers—even the degree of transparency regarding shipper contracts and daily pipeline flows. Today we consider the differences between federal and state regulatory oversight of gas pipelines in Texas, and why they matter. Among the many things that the Shale Revolution has up-ended are the historical pipeline flows of natural gas—in the U.S. as a whole and within the state of Texas. These flow changes, which have required a major reworking (and expansion) of interstate and intrastate pipeline networks, result from new sources of gas supply (especially the Marcellus/Utica region), declining production of gas from “conventional” wells (most recently, from the Eagle Ford), and rising gas demand from U.S. power generators, Mexico and liquefaction/LNG export terminals along the Gulf Coast. Soaring gas exports to Mexico—and the coming rise in LNG exports—are pulling huge volumes of Marcellus/Utica gas south and west to Louisiana through newly reversed interstate pipelines, and now into Texas.

Railroad Commission is accused of pay-for-play politics - The Houston Chronicle reported today that Texas Railroad Commission candidate Wayne Christian has collected nearly $300,000 in political contributions this year, with almost $190,000 from oil and gas interests. Among the top contributors are Exxon Mobil PAC, Jeffrey Hildebrand (CEO, Hilcorp Energy), and Pioneer Natural Resources.His opponents in the race include Libertarian Mark Miller, Green Party candidate Martina Salinas and Democrat Grady Yarbrough.Why are campaign contributions a big deal in an office such as Railroad Commissioner? The Chronicle notes that such donations raise questions about whether or not the commission protects the public interest or is protecting the interests of the energy industry.According to the Texas Tribune, that’s exactly what Christian wants to do. He advocates light regulation of the industry and heavily opposes the U.S. Environmental Protection Agency, a group he said were “lying like a bunch of Obama dogs” about the Texas environment at one candidate forum. In a forum in February, he stated, “We need to protect the industry.” He reiterated this message in an interview with KFYO, stating the commissioner’s seat is important because “we need to defend the oil and gas and coal industry in the state of Texas, and that’s why I’m running.” Environmental groups don’t necessarily see it that way. Tom Smith, director of the nonprofit watchdog group Public Citizen, which monitors campaign finance and energy policy, had this to say: “The Railroad Commission is pay-to-play politics at its worst in Texas, and the contributions don’t just pour in during the election season.”

Magnitude 4.5 Earthquake Hits Near Pawnee, OK  — The U.S. Geological Survey confirms a 4.5 magnitude earthquake struck around 11:30 p.m Tuesday night. The USGS says the earthquake’s epicenter was 8.7 miles east-southeast of Pawnee.   The earthquake hit about 162 miles west of Fayetteville and 167 miles northwest of Fort Smith.  5NEWS viewers in Northwest Arkansas and the River Valley reported feeling shaking at their homes. It was the third earthquake stronger than magnitude 3.0 to hit on Tuesday. Tuesday’s quake was centered about 25 miles southeast of the 5.8 magnitude earthquake that hit Sept. 3, which was the strongest in Oklahoma state history and damaged homes in the 5NEWS viewing area.

Another earthquake hits Oklahoma area shook by major temblor - Chicago Tribune A magnitude 4.5 earthquake has shaken north-central Oklahoma, hitting the same area where a record-setting 5.8 magnitude quake struck two months ago.The earthquake occurred at 11:27 p.m. Tuesday. The U.S. Geological Survey reports the epicenter was near Pawnee, about 70 miles northeast of Oklahoma City. Pawnee Police say that preliminary reports show no significant damage. According to social media reports, the quake Tuesday night could be felt as far away as Kansas City and St. Joseph, Missouri. An increase in magnitude 3.0 and stronger earthquakes in Oklahoma has been linked to the underground disposal of wastewater from oil and natural gas production. State regulators have ordered some disposal wells to be permanently shut down and others to reduce the amount of wastewater they return underground.

Oklahoma oil regulators mull new restrictions after quake - (AP) — State regulators in Oklahoma say they're considering new restrictions on some oil and gas activity after a 4.5 magnitude earthquake struck the northern part of the state overnight. The Oklahoma Corporation Commission says its earthquake team is preparing a response following Tuesday night's quake that hit Pawnee, the same area that was struck by a record-setting 5.8 magnitude earthquake two months ago. Scientists have linked Oklahoma's sharp increase in earthquakes to the underground disposal of wastewater from oil and gas production. Already, the corporation commission has shut down some disposal wells and ordered a reduction in the amount of wastewater disposed of in others. The U.S. Geological Survey says Tuesday night's quake was also felt in parts of Kansas and northern Missouri.

Fracking wastewater is mostly natural brine, university study says - Wastewater from fracking sites is mostly natural brine, according to a recent university study in a story at phys.org: "Naturally occurring brines, not man-made fracking fluids, account for most of the wastewater coming from hydraulically fractured unconventional oil and gas wells, a new Duke University study finds. "'Much of the public fear about fracking has centered on the chemical-laden fracking fluids—which are injected into wells at the start of production—and the potential harm they could cause if they spill or are disposed of improperly into the environment,' said Avner Vengosh, professor of geochemistry and water quality at Duke's Nicholas School of the Environment. "'Our new analysis, however, shows that these fluids only account for between 4 and 8 percent of wastewater being generated over the productive lifetime of fracked wells in the major U.S. unconventional oil and gas basins,' Vengosh said. 'Most of the fracking fluids injected into these wells do not return to the surface; they are retained in the shale deep underground.' " ... These brines carry their own risks, Vengosh stressed. They contain varying levels of salts, heavy metals and naturally occurring radioactive elements, and their sheer volume makes disposing of them a challenge

How Fracking Impacts Water-Stressed Regions -- Just north of Denver lies Colorado's most productive agricultural region, Weld County. Its rolling hills, grasslands and South Platte River system provide fertile ground for dairy cows, beef cattle, corn, sugar beets and forage crops.  But Weld County also sits on top of the Niobrara (DJ Basin) shale formation and that makes it the number one hotspot in the U.S. for new hydraulic fracturing activity. Over the past five years, close to 7,000 wells were drilled within its 3,996 square-mile area.  Among the myriad impacts of fracking on county residents is stress on their water supply. To recover the natural gas unevenly distributed throughout the shale formation, the hydraulic fracturing process blasts large volumes of water, fine sand and chemicals into the ground to crack open the formations.  Weld County's nearly 7,000 fracking wells, in fact, used 16 billion gallons of water over the past five years, more than any other county in the U.S., according to new research by Ceres. And that's a concern because Weld County is a region with extremely high water stress, according to the World Resources Institute Aqueduct Map. Extremely high water stress means that more than 80 percent of the county's available water resources are already allocated for municipal, industrial and agricultural uses.  Weld County is not alone. Fracking activity throughout the arid south and west is placing increasing pressure on ever-tighter water supplies, with Colorado and Texas being ground zero.   Ceres researchers mapped water use in hydraulic fracturing across the U.S., using data from FracFocus.org and the World Resources Institute , and found that 57 percent of hydraulically fractured oil and gas wells between Jan. 1, 2011 and Jan. 1, 2016 were in regions of high water competition.  Our newly released interactive map shows water use by shale play and operator. Check it out:

Big Oil and Gas Take Aim at Ballot Initiative Process in Colorado - From criminal justice reform, campaign finance, single-payer healthcare and more, some of the country’s most contentious issues will be put to a vote this November. Unprecedented sums of money are pouring in from all directions.Our August investigation, published with Fusion, focused on ballot initiatives aimed at reigning in fossil fuel extraction in Colorado, and the efforts by the oil and gas industry and the American Legislative Exchange Council to make permanent reforms to the process across the country.Since that was published, the oil and gas industry have scored some major victories. At the time of publication of the Fusion piece, anti-fracking initiatives appeared destined for the Colorado ballot: one to establish new setback distances between new gas wells and occupied buildings, the other to give local governments power over the process. After petitioners turned in their signatures, activists told the New York Times that they had submitted enough signatures. Reuters ran a headline announcing: "Colorado anti-fracking initiatives hit signature target." The oil and gas group Protect Colorado raised more than $16 million to fight the initiatives, 24 times that raised by proponents. According to a Public Citizen review of eight high profile 2016 ballot measures, the 24:1 ratio was the "widest disparity between spending by corporate-backed groups and their mostly non-corporate opposition." Weeks after the signatures were turned in, the Colorado Secretary of State announced that the petitioners had miscalculated; too many signatures were invalid and the measures would not reach the ballot. However, another initiative, heavily backed by the oil and gas industry, had. The "Raise the Bar" initiative — which will be voted on in Colorado next week — takes aim at the ballot initiative process itself. If passed, it would add new requirements for proposed constitutional amendments. Along with the 5 percent of voters currently needed to qualify for the ballot, petitioners would need signatures from 2 percent of voters from each of Colorado’s 35 State Senate districts. And once an amendment gets on the ballot, they would need 55 percent of the vote, rather than the usual simple majority.

After curtailing production, Continental to complete 29 Bakken wells -  Continental Resources' Bakken production averaged nearly 108,000 b/d of oil equivalent in the third quarter of 2016, down 14% or more than 17,000 boe/d from the previous quarter, but the Oklahoma City-based producer plans to boost production in its North Dakota and Montana plays before the end of the year. "We've begun harvesting our valuable Bakken inventories," Harold Hamm, Continental's chairman and CEO, said during an earnings call Thursday. Continental plans to complete 29 gross operated wells in the Bakken, nine more than it planned at the end of Q2, and will double its stimulation crews in the play to four by the end of the year, the company said Thursday. Continental plans to stimulate another 15 Bakken wells this year, but first sales are not expected until 2017. It expects to end the year with about 175 gross operated uncompleted wells in the Bakken.Hamm said the focus was entirely on completing wells in that inventory and said his company would not be adding any new rigs. Continental currently operates four rigs in the Bakken. Continental expects Bakken production to average over 124,100 boe/d this year, down from nearly 137,400 boe/d in 2015. Continental's announced plans for the Bakken come as North Dakota has seen its oil production dip below 1 million b/d for the first time since March 2014. The drop in supply came as producers like Continental restricted production amid persistently low crude oil prices. North Dakota's Department of Mineral Resources reported last month that statewide oil production averaged 981,039 b/d in August, down 49,000 from July. The state agency plans to announce September production statistics next week.

North Dakota Oil Pipeline Battle: Who’s Fighting and Why - NYTimes: For months, tensions have mounted between protesters and law enforcement officials over the fate of an oil pipeline not far from the Standing Rock Sioux Reservation. Last week, they boiled over as officers tried to force the protesters out of an area of private land where they had moved one of their camps. Here is a look at how the battle over the 1,170-mile pipeline has become an environmental and cultural flash point, stirring passions across social media and drawing thousands of protesters to camp out in rural North Dakota. Native Americans from scores of tribes have been gathering since April outside Cannon Ball — a town in south-central North Dakota, near the South Dakota border — to protest the Dakota Access pipeline. Starting with members of the Standing Rock Sioux Tribe, the protest has since grown to several hundred people (estimates vary), most of them from Native American tribes across the country. The protesters criticized law enforcement for what they called an overbearing and rough response to their demonstration. In all, more than 400 people have been arrested since the protests began to attract widespread attention and thousands of followers late this summer. The Dakota Access pipeline is a $3.7 billion project that would carry 470,000 barrels of oil a day from the oil fields of western North Dakota to Illinois, where it would be linked with other pipelines. Energy Transfer says the pipeline will pump millions of dollars into local economies and create 8,000 to 12,000 construction jobs — though far fewer permanent jobs to maintain and monitor the pipeline. Members of the Standing Rock Sioux Tribe see the pipeline as a major environmental and cultural threat. They say its route traverses ancestral lands — which are not part of the reservation — where their forebears hunted, fished and were buried. They say historical and cultural reviews of the land where the pipeline will be buried were inadequate. They also worry about catastrophic environmental damage if the pipeline were to break near where it crosses under the Missouri River. As of early November, the federal government has blocked the pipeline company from crossing the river, saying the Army Corps of Engineers is reviewing approvals previously granted for the project.

Why Dakota Is the New Keystone - Bill McKibben: — The Native Americans who have spent the last months in peaceful protest against an oil pipeline along the banks of the Missouri are standing up for tribal rights. They’re also standing up for clean water, environmental justice and a working climate. And it’s time that everyone else joined in. The shocking images of the National Guard destroying tepees and sweat lodges and arresting elders this week remind us that the battle over the Dakota Access Pipeline is part of the longest-running drama in American history — the United States Army versus Native Americans. In the past, it’s almost always ended horribly, and nothing we can do now will erase a history of massacres, stolen land and broken treaties. But this time, it can end differently.The vast movement of people across the country who mobilized to block fossil-fuel projects like the Keystone pipeline and Shell’s plans to drill in the Arctic need to gather once more. This time, their message must be broader still. There are at least two grounds for demanding a full environmental review of this pipeline, instead of the fast-track approvals it has received so far. The first is the obvious environmental racism of the whole project. Originally, the pipeline was supposed to cross the Missouri just north of Bismarck, until people pointed out that a leak there would threaten the drinking water supply for North Dakota’s second biggest city. The solution, in keeping with American history, was obvious: make the crossing instead just above the Standing Rock reservation, where the poverty rate is nearly three times the national average. This has been like watching the start of another Flint, Mich., except with a chance to stop it. The second is that this is precisely the kind of project that climate science tells us can no longer be tolerated. In midsummer, the Obama administration promised that henceforth there would be a climate test for new projects before they could be approved. That promise was codified in the Democratic platform approved by Hillary Clinton’s campaign, which says there will be no federal approval for any project that “significantly exacerbates” global warming. The review of the Dakota pipeline must take both cases into account.

'Anonymous' Threatens North Dakota Governor After Pipeline Employees Caught Infiltrating Protests To Incite Violence -  You know the Dakota Access Pipeline protests are working when oil interests start resorting to underhanded tricks to paint water protectors in a negative light.TheAntiMedia.org's Nick Bernabe reports that, as the fight against the pipeline grows in North Dakota and around the country, dirty tricks are being deployed in an apparent attempt to delegitimize the opposition. Dakota Access Employee Tries to Incite Violence, Sheriff’s Department Makes False Report That He Was Shot by Protesters Mother Jones journalist Wes Enzinna, who was at the protests, says he witnessed a Dakota Access LLC employee try to infiltrate the Dakota Access Pipeline protests: “An armed security agent employed by the company behind the controversial Dakota Access Pipeline was arrested Thursday after he was caught entering the camp of activists protesting near the Standing Rock Indian Reservation in southern North Dakota. After a car chase and a standoff during which he allegedly pointed his assault rifle at a local Sioux teenager, the man, whose ID indicated he was an employee of Dakota Access LLC, was arrested and handed over to the FBI.” According to an official statement from the tribe, the man fired several shots from his gun before being peacefully apprehended by tribal police. Witnesses at the scene say he pointed his gun at several protesters. The man was clearly trying to provoke violence that could later be used to demonize protesters who have so far remained peaceful. DESMOG, an environmental blog, conducted an investigation and found what it says are “sock puppet” accounts tied to an oil industry lobby operating on Twitter: “A DeSmog investigation has revealed the possibility that a front group supporting the controversial Dakota Access Pipeline (DAPL) — the Midwest Alliance for Infrastructure Now (MAIN) — may have created fake Twitter profiles, known by some as ‘sock puppets,’ to convey a pro-pipeline message over social media. And MAIN may be employing the PR services of the firm DCI Group, which has connections to the Republican Party, in order to do so. And now, as Anonews reports, Anonymous warns the governor to back off or they will release documents showing the conflict of interest and then goes on to say that if one protestor on the Indian side is harmed, Anonymous will “release docs on” the individuals responsible. “We decided to stand with the Native Americans whose land you raped, whose sacred lands you destroyed.” “We know where you live. Everyone you know. And everything there is to know about you.”

Security Firm Running Dakota Access Pipeline Intelligence Has Ties to U.S. Military Work in Iraq and Afghanistan – Steve Horn TigerSwan is one of several security firms under investigation for its work guarding the Dakota Access pipeline in North Dakota while potentially without a permit. Besides this recent work on the Standing Rock Sioux protests in North Dakota, this company has offices in Iraq and Afghanistan and is run by a special forces Army veteran. According to a summary of the investigation, TigerSwan “is in charge of Dakota Access intelligence and supervises the overall security.” The Morton County, North Dakota, Sheriff's Department also recently concluded that another security company, Frost Kennels, operated in the state while unlicensed to do so and could face criminal charges. The firm's attack dogs bit protesters at a heated Labor Day weekend protest. Law enforcement and private security at the North Dakota pipeline protests have faced criticism for maintaining amilitarized presence in the area. The American Civil Liberties Union (ACLU) and National Lawyer's Guild have filed multiple open records requests to learn more about the extent of this militarization, and over 133,000 citizens have signed a petition calling for the U.S. Department of Justice to intervene and quell the backlash. TigerSwan has offices in Iraq, Afghanistan, Jordan, Saudi Arabia, India, and Latin America and has headquarters in North Carolina. In the past year, TigerSwan won two U.S. Department of State contracts worth over $7 million to operate in Afghanistan, according to USASpending.gov. TigerSwan, however, claims on its website that the contract is worth $25 million, and said in a press release that the State Department contract called for the company to “monitor, assess, and advise current and future nation building and stability initiatives in Afghanistan.” Since 2008, TigerSwan has won about $57.7 million worth of U.S. government contracts and sub-contracts for security services.

10 Images That Perfectly Illustrate The Struggle Against The Dakota Access Pipeline - The struggle to stop the Dakota Access Pipeline has been mired in police brutality and militarization. In fact, many have likened the atmosphere in Standing Rock, North Dakota, to a war zone. The corporate media initially refused to cover the Dakota Access Pipeline protests, though the ongoing story’s virality on social media eventually forced it into the mainstream. Even now that the #NoDAPL movement has developed into a national political narrative, the media continues to whitewash the severity of the crackdown against the Native American protesters, who call themselves “water protectors.”Below are 10 images I have come across (while closely following the Dakota Access Pipeline protests for Anti-Media) that narrate the struggle at Standing Rock:

Standing Rock pipeline protest was absent from Facebook Trends -- A massive social media protest is exploding on Facebook, not Twitter for a change, yet Facebook’s dehumanized Trending system wasn’t picking it up. People around the country are checking in on Facebook at the Standing Rock Native American Reservation in an effort to supposedly hinder local Morton County police from targeting protesters attending in person to fight an oil pipeline through historic tribal lands. [Update 3:15pm PT: About two hours after we published this post, Facebook is finally showing a Trend for #NoDAPL, which stands for “No Dakota Access Pipeline.” The fact that it says 790,000 people are talking about the Trend, between 2X and 100X the chatter of other Facebook Trends, shows just how late Facebook was to surfacing the latest in the Standing Rock protest saga. This article has been edited to discuss the trend’s absence in the past tense.] The Morton County’s sheriff has denied using Facebook for surveillance. Still, the social media protest has proceeded to bring concerns about the environmental and cultural impact of the pipeline to national attention. While some users have taken to masking their posts, explaining their absentee check-ins by using incorrect spellings like “Randing Rock,” there’s still more chatter about the exact term than many other Facebook Trends.

When You’re a Protester, the Color of Your Skin Is All That Matters - Yes, there is a cruel, stupid irony about living in a country when, on the same day, a bunch of gun-toting rubes who have less understanding of the Constitution than a wombat does of nuclear fusion get acquitted after an armed takeover of federal property in Oregon while, half a country away, peaceful protesters doing nothing but praying on land to which they have a right guaranteed by treaty get rousted, roughed up, and hauled away by a militarized police force acting largely at the behest of a private company. For those of you who are sorry you missed the last Gilded Age, hang in there. You're going to get your wish fairly soon. The white privilege embedded in the two competing narratives is almost too garish to contemplate, and it is beyond argument. In Oregon, people with a history of armed sedition were the beneficiaries of a clear case of jury nullification. Even the counsels for the defense had sharply smacked gobs on them when the verdicts were read. From The Washington Post: "I had been telling my client you can count on being convicted," said Matthew Schindler, a lawyer for one of the men on trial for the armed takeover of Oregon's Malheur National Wildlife Refuge. "You don't walk into a federal court and win a case like this. It just doesn't happen…Defendant Shawna Cox issued a call to action: "Wake up, America, and help us restore the Constitution. Don't sleep with your head in the sand." In North Dakota, people with a history of being crushed beneath the wheels of the white man's government got treated to another sample of how that feels. Via NBC News: Authorities used pepper spray and fired bean bags at activists demonstrating against a controversial North Dakota oil pipeline as the standoff there reached a new peak Thursday, according to officials. Armed soldiers and police in riot gear removed the demonstrators using trucks, military Humvees, and buses Thursday afternoon, according to The Associated Press. Two helicopters and an airplane scanned the operation from the air. At least 141 protesters were arrested as of midnight Thursday (1 a.m. ET) after law enforcement slowly closed in and tensions escalated, the Morton County Sheriff's Department said in a statement. (You will note some talk in there from law enforcement about an anonymous woman who fired three shots in the direction of sheriff's deputies. Follow this closely. If no indictment is forthcoming, and if the woman's name is not forthcoming, the story is bullshit.)

At Standing Rock, women lead fight in face of Mace, arrests and strip searches -- Prairie McLaughlin said she has daily flashbacks – “daymares” – about the police. Sitting inside a small tipi where she is camped out while protesting the Dakota Access pipeline, she recounted how officers took her to a North Dakota jail last month where, she says, a group of male and female guards forcibly removed her clothes when she refused to strip in front of them. “I’m beyond traumatized,” the 33-year-old Native American woman said through tears. But, when asked if she was prepared to keep defending the Standing Rock tribe’s water, McLaughlin’s face hardened. “Everyone needs to stand up,” she said. McLaughlin, the daughter of LaDonna Brave Bull Allard, a Standing Rock Sioux tribe member and founder of the Sacred Stone camp, is one of hundreds of women who have led the growing movement to stop the $3.7bn project threatening their land and culture. Her friends have been arrested and subjected to what they describe as cruel and inhumane treatment. Many say that female “water protectors”, in some cases drawing on matriarchal tribal structures, are the core spiritual leaders strategizing how to block the “black snake” pipeline and planning actions to stand up to a police force that has gone to great lengths to defend an oil corporation. “Women are the backbone of every tribe and every indigenous community,” said Caro Gonzales, a 26-year-old member of the Chemehuevi tribe. Gonzales, who also goes by the name Guarding Red Tarantula Woman, identifies as “two spirit”, a term for indigenous queer people. “Whether feeding people or being on the frontlines … it’s all indigenous women and two spirits.” Native women say they are protecting the basic human right to clean water. But for some indigenous activists, the internationally recognized movement has become a larger fight against a history of misogyny, racism and abuse by law enforcement.

Dakota Access Pipeline Protesters Pepper Sprayed in Latest Standoff -- Since last Thursday's violent police raid , which established a militarized zone around Dakota Access Pipeline construction areas, the Morton County Sheriff and supporting agencies have fanned out into the area surrounding the Oceti Sakowin camp. Groups of police vehicles have parked in several areas to monitor the activity at the camp. One such area is a hill behind the main resistance camp, directly across part of the Cannonball river, known as Cantapeta Creek. The original people of the area describe this hill as a sacred site, one that contains ancient burial grounds, which police are desecrating by parking their vehicles on it. On Wednesday morning, a group of water protectors attempted to cross the Cannonball to establish a prayer camp on the sacred hill near Cantapeta Creek. They built a wooden footbridge so that people could cross the water. Law enforcement responded to the footbridge by firing less-lethal projectiles at people attempting to cross. SWAT officers in a boat tore the footbridge away with rope. Several people, including a journalist, said they were shot in the back by police with less-lethal rounds at point blank range. Medics reported that some of these individuals were coughing up blood from internal bleeding. After the footbridge was broken up by police, people remained in the water on the shore of the sacred site. Morton County Sheriff, North Dakota Highway Patrol and unidentified out-of-state law enforcement personnel repeatedly used chemical weapons (pepper spray, OC gas and what we believe was a concussion grenade) on the water protectors who simply stayed standing or sitting in the river. A boat with several heavily armed SWAT officers repeatedly tried to maneuver behind the group of water protectors near the shore. Water protectors used logs and rope to prevent their advance, and ferried people and supplies back and forth across the water using rope lines attached to canoes.

Protesters shot with rubber bullets as tensions over Dakota Access pipeline escalate again - What started nearly 100 days ago as a Native American prayer protest against a massive oil pipeline has turned into near-daily conflicts in North Dakota, as activists move to protect land they called sacred. Officers in North Dakota pepper-sprayed dozens of people and shot two with rubber bullets on Wednesday, as they stood waist-deep in water trying to reach federal land developers have proposed using to run the pipeline under the Missouri River, the largest river in North America. The latest escalation surrounding the embattled $3.8-billion project took place after the Army Corps of Engineers asked law enforcement to remove self-proclaimed water protectors who built a wooden bridge the previous night to reach federal property, the Morton County Sheriff’s Department said. Dakota Access has“Receiving permission and precise guidance from the U.S. Army Corps of Engineers was uplifting today. This simple message gave a clear-cut order to execute a plan to remove unlawful actors and prevent further unlawful actions,” Morton County Sheriff Kyle Kirchmeier, said in a statement. Authorities said Wednesday that activists, who have for months gathered in mass encampments near the confluence of the Cannonball and Missouri rivers, were trying to establish a new camp. Protesters dispute that, saying they wanted to pray and protect sacred sites they claim are being damaged by construction and law enforcement actions, the Bismarck Tribune reported.

Josh Fox: 'I Have Never Seen Anything Like This' -  Police violently cracked down on a peaceful protest led by the Standing Rock Sioux against the Dakota Access Pipeline Wednesday in Cannonball, North Dakota, firing mace, pepper spray and rubber bullets at point-blank range at "water protectors" standing and praying harmlessly in the water.  There were many eyewitnesses to these events, including myself and Erin Schrode , a 25-year old journalist who recently became the youngest person to run for Congress in California. Erin was shot yesterday by police at point-blank range with rubber bullets.  Here's my video footage from yesterday:  We witnessed a very brutal police repression of a very peaceful protest. A line of about 300 peaceful water protectors standing in river water up to their wastes, were confronted by about 100 police with shotguns, riot gear, mace and pepper spray. I have never seen anything like it. It was like witnessing Gandhi's Salt March, then suddenly I am watching people being maced, and I hear a pop and see that they shot Erin with a rubber bullet. How is it possible that from 10 feet away, they are shooting at peaceful protesters, journalists, bystanders, medics?  Erin posted a statement about her experience on Facebook:   We're told that people were dragged from their sweat lodges and prayer circles, their peace pipes broken, thrown into chain link fence enclosures like dog kennels, and numbers put on their arms. It's dehumanizing and unconstitutional. You cannot have a legitimate government that defends an oil company on treaty land against its own people and shoots at them with rubber bullets and maces them in the face, when the people are simply saying, we are here to pray, we are here to be in our own watershed.  This is an emergency situation. Not only do we need more people to come here, but we also need our government to step up. President Obama said , wait two to three more weeks and then they'll make a decision about moving the pipeline route. That's insane. People are being hurt today, civil liberties are getting trampled today, and the kids and elders who are getting arrested are being given harsh felony sentences, and could get locked up for a decade. The president needs to act now .

Tribe prepares to keep up pipeline protest through North Dakota winter | Reuters: The head of a Native American tribe that has led months of demonstrations against the construction of an oil pipeline in North Dakota said on Tuesday the group would keep up its protests through the state's bitter winter. The Standing Rock Sioux Tribe is weighing asking protesters to move to a location with heated buildings or upgrading the infrastructure at the current protest camp on tribal land, tribal chairman David Archambault II said in a telephone interview. The effort to ensure the continuation of protests comes after demonstrators clashed last week with police and as North Dakota allocated millions more in funds to support law enforcement at the pipeline. "We have to make sure we are proactive and find a way to ensure their (protesters') safety," Archambault said, noting the state's "extreme temperatures" in winter. Many are staying in tents of traditional tepees at a camp near the construction site and would require improved accommodation during winter, Archambault said. "There are a lot of people who are committed to this who will stay (through the winter)," he added.The 1,172-mile (1,885-km) pipeline, being built by a group of companies led by Energy Transfer Partners LP, would offer the fastest and most direct route to bring Bakken shale oil from North Dakota to U.S. Gulf Coast refineries. The project has faced months of protest from the tribe, as well as environmental activists, who say it threatens local water supplies and sacred tribal sites.

Lobbyist for Dakota Access Formerly Led Army’s “Restore Iraqi Oil” Program -Steve Horn -- Robert Crear, one of the lobbyists working for Dakota Access pipeline co-ownersEnergy Transfer Partners and Sunoco Logistics, formerly served as a chief of staff and commanding general for the U.S. Army Corps of Engineers.  The Army Corps and other federal agencies are currently reviewing the permit granted for the controversial pipeline's construction near the Missouri River and Lake Oahe in North Dakota, and the Army Corps has reserved final authorization to complete construction on Corps land until after formal government-to-government consultations with the tribes are completed later this month. Before he became a lobbyist, Crear headed up the Army Corps project, “Task Force: Restore Iraqi Oil” during the early years of the U.S. occupation of Iraq under the George W. Bush administration. This finding by DeSmog comes as the law enforcement presence has become increasingly militarized and additional forces pour into North Dakota from states nationwide under the auspices of the Emergency Management Assistance Compact (EMAC).  Thousands of people, including a number of Native American tribes, are protesting this pipeline at the Standing Rock Sioux Tribe's encampments in North Dakota. This week, President Barack Obama stated that his administration is considering rerouting the current Dakota Access pipeline path permitted by the Army Corps. Greenpeace USA, though, has called for Obama to revoke the Army Corps permit granted for the pipeline in July. “The administration seems to be buying time to maintain the status quo and profits for fossil fuel investors,” GreenpeaceUSA spokeswoman Lilian Molina said in a statement.  According to 2016 third quarter lobbying disclosure forms, Crear lobbied his former employer — the Army Corps — on behalf of both Energy Transfer Partners and Sunoco on compliance and permitting issues.

Live Report from Dakota Access Pipeline Protest - A group of Christians came to the camp this morning to ally with the native water protectors. They said there were 524 of them, representing the 524 years since the Doctrine of Discovery. They then offered a copy of the doctrine to the native elders to burn, and marched to the barricades, which is unfolding now. The peaceful activists, who are singing songs like ‘Wade in the Water’ and praying, currently far outnumber the present and visibly deployed pipeline militants.

Obama: US Army Corps Looking at Ways to "Reroute" Dakota Access Pipeline - The US Army Corps of Engineers may consider "ways to reroute" the Dakota Access Pipeline, President Barack Obama said in an interview on Tuesday. Though Obama did not say whether he would intervene in pipeline's construction, he told NowThisNews that his administration was closely monitoring the issue. "As a general rule, my view is that there is a way for us to accommodate sacred lands of Native Americans," said Obama. He later added, "We're going to let it play out for several more weeks and determine whether or not this can be resolved in a way that I think is properly attentive to the traditions of the first Americans."Protests over the pipeline have continued to escalate in recent weeks, with police using tear gas, rubber pellets, and sound cannons against demonstrators occupying the construction site. Protesters say the 1,172-mile pipeline would damage sacred lands and endanger the water supply of the Standing Rock Sioux tribe. Tribal members have also accused the US Army Corps of Engineers, the federal agency that issued the permit for the pipeline's construction, of failing to properly assess its impact. Neither Hillary Clinton nor Donald Trump have taken a clear position on the issue. In October, Bernie Sanders and several other senators called on Obama to halt the pipeline's construction. When asked about some of the police tactics toward protesters, Obama urged both sides to show restraint. "There's an obligation for protesters to be peaceful," he said, "and there's an obligation for authorities to show restraint."

President Obama is considering rerouting the Dakota Access Pipeline - Amidst ongoing controversy over the Dakota Access Pipeline, President Obama has finally spoken out, saying that his administration is looking for a way to "reroute" the pipeline to avoid affecting sacred tribal lands at Standing Rock Indian Reservation. Obama mentioned the strategy during an interview with Now This, saying, “My view is that there is a way for us to accommodate sacred lands of Native Americans. And I think that right now the Army Corps is examining whether there are ways to reroute this pipeline.” m The pipeline would be more than 1,000 miles long and transport crude oil through Standing Rock Sioux Tribe lands.  Environmentalists and indigenous groups have been fighting to stop the project, which if completed would carry 570,000 barrels of light crude oil per day from North Dakota's Bakken and Three Forks shale formations to Patoka, Illinois, passing through South Dakota and Iowa along the way. A section of the Dakota Access Pipeline would run underneath the Missouri River, a federally protected waterway. The Standing Rock Sioux Reservation — home to roughly 15,000 members and spanning 2.3 million acres — lies just upstream from that river crossing.  While protests of the pipeline have been ongoing for months, the controversy remained out of the mainstream media until last week, when authorities cracked down on protesters who were camped out on privately-owned land, using tear gas and rubber bullets to remove them.

Will the Dakota Access pipeline be re-routed? - Re-route the pipeline? A new solution for the dispute near Standing Rock is now on the table, says President Barack Obama. The Huffington Post reported today that Obama commented late Tuesday night on the dispute to the online news site Now This.“My view is that there is a way for us to accommodate sacred lands of Native Americans. And I think that right now the Army Corps is examining whether there are ways to reroute this pipeline,” Obama said in the video interview.Yet ABC News’s Catherine Thorbecke reported that the construction of the pipeline is “likely past the point of no return.” A change in the pipeline’s route would “incur massive costs and logistical obstacles.” Winter construction is only one of those obstacles. New permits and land grants would be another.  According to Afolabi Ogunnaike, a senior analyst at Wood Mackenzie, geography is also an obstacle. Sometimes rerouting a pipeline just isn’t practical when considering the landscape.  Yet if this pipeline, or any pipeline, isn’t built, what are the alternatives? Rail transport and trucking are more expensive than pipelines, and experts generally agree pipelines are safer.  The route of the Energy Transfer Partners Dakota Access Pipeline takes oil directly from the Bakken to refineries on the Gulf Coast. But don’t consider the story over. The DAPL argument is likely only just the beginning over pipeline protests in America, with involvement from both groups and individuals from across the country. Movie stars and presidential candidates, along with environmental activists and local citizens have engaged in the debate that has gone from local to international. Stay tuned.

Obamamometer Whispers DAPL Sweet Nothings to Lure Progressives -- naked capitalism by Jerri-lynn Scofield - Just in time to pander for progressive votes in the home stretch leading into the election, the Obamamometer suggested earlier this week that the U.S. Army Corps of Engineers may be open to rerouting the Dakota Access Pipeline (DAPL), currently the subject of protests organized in support of the Standing Rock Sioux Tribe and other pipeline opponents. The DAPL is designed to transport light sweet crude oil from the Bakken Shield in North Dakota — an area not served by existing pipelines — through South Dakota, Iowa, and Illinois. DAPL would supersede the previous distribution arrangements, under which oil from this source was shipped by train. What’s now occurring follows the playbook I suggested would be used in my September post, Dakota Pipeline Will Proceed As Feds Undertake Smoke and Mirrors Policy Reconsideration. And the administration is still promising to pay us on Tuesday. As reported DeSmogBlog’s Steven Horn, in As President Obama Hints At Dakota Access Possible Reroute, Tensions Swirl at Standing Rock— which is worth a read for the additional details and context it provides, the Obamamometer said the Corps would consider rerouting following a continued consultation process. His key weasel words: right now the Army Corps is examining whether there are ways we can reroute this pipeline, so we’re going to let it play out for several more weeks and determine whether or not this can be resolved in a way that is properly attentive to the tradition of First Americans. The Standing Rock Sioux Tribe has asked the Department of Justice to intervene and investigate alleged civil rights abuses in pipeline policing, which has been conducted by state and local police and private security companies. North Dakota earlier this month approved an additional $4 million for policing the DAPL protest, raising total expenditures to 10 million. The Standing Rock Sioux Tribe issued a press release in which they chose to take the Obamamometer at his word: We applaud President Obama’s commitment to protect our sacred lands, our water, and the water of 17 million others. While the Army Corps of Engineers is examining this issue we call on the administration and the Corps to issue an immediate “stop work order” on the Dakota Access Pipeline. And given the flawed process that has put our drinking water in jeopardy, we also urge the Administration to call for a full environmental impact study. Yet as Horn reported, Greenpeace is made of stronger stuff: The administration seems to be buying time to maintain the status quo and profits for fossil fuel investors,” Greenpeace USA spokeswoman Lilian Molina said in a press release. “There is only one option that is truly attentive to the Native lives and lands at stake: respect the rights and sovereignty of Indigenous communities by revoking the permits immediately.”

Oil Production Could Have Caused Century-Old California Earthquakes - Southern California suffered a number of big earthquakes in the early 1900s, a pattern that prompted experts to declare the state an earthquake hazard. But new work shows some of the biggest temblors might have been caused by oil and gas production, not nature. The finding could ultimately change scientists’ predictions for earthquakes in the Los Angeles Basin, and how well they understand man-made, or “induced,” earthquakes around the country. . The tools they now use to measure earthquakes were not as sophisticated back then, and historic records are limited. So researchers Susan Hough and Morgan Page at the U.S. Geological Survey relied on a combination of old scientific surveys, crude instrumental data and newspaper accounts to piece together details of quakes in the early 20th century. “It’s not as precise as having seismic data, but that doesn’t mean it’s hopeless,” Hough says. From those documents, they determined the quakes’ magnitudes, the location of their epicenters and other attributes. They eventually narrowed their investigation to the handful of big, damaging earthquakes that hit the region between 1900 and 1935, during the Los Angeles oil boom. (The largest temblors were the best-documented ones.) The pair also dug through old state reports to get statistics on the oil and gas companies’ production volume, along with locations and depths of their wells. They then analyzed the industry and earthquake data to see if they could establish a connection between the two.  Hough and Page found that oil and gas production in the Los Angeles Basin may have caused four out of the five major earthquakes in the region during that time. The largest—the 1933 Long Beach earthquake—was magnitude 6.4, killed 120 people and caused $50 million in damage (in 1933 dollars). Their study, published today in the Bulletin of the Seismological Society of America, explains that the majority of those big earthquakes occurred close to oil wells, often soon after production began. In every case oil and gas companies had drilled the wells more than a thousand meters down, which was unusually deep for that time period. All of these factors, Hough says, provide evidence for a link between the earthquakes and oil and gas activity. But it is important to note the study does not prove any direct causation. “What they showed is that the conditions are such that the earthquakes could well have been triggered by oil pumping activity,”

Deadliest Earthquake in Southern California History Linked to Oil Drilling -- Four out of five large earthquakes in Southern California from 1900 to 1935 may be linked to the state's early oil boom , says a study written by two leading U.S. Geological Survey scientists published Tuesday in the Bulletin of the Seismological Society of America . The 1933 Long Beach earthquake killed 120 and injured 500 people. J. B. Macelwane archives, Saint Louis University The largest of these was the magnitude 6.4 Long Beach earthquake in 1933 that killed 120 people and caused $50 million in damages, measured in 1933 dollars. It occurred along the Newport-Inglewood Fault , as did a magnitude 4.9 quake in 1920 centered in Inglewood. Two other events—a 1929 earthquake in Whittier and a 1930 Santa Monica quake—were also associated with oil extraction, say the study's authors, Susan Hough and Morgan Page . Unlike recent fracking-induced seismic events in Oklahoma and elsewhere, related to the injection of massive amounts of wastewater, the California quakes may have been caused by oil drilling. "People would just pump oil and in some cases the ground would subside—fairly dramatically," Hough told the Los Angeles Times . Oil was discovered in 1892 near the present site of Dodger Stadium in Los Angeles. By 1923, LA Basin oilfields accounted for 20 percent of the world's oil production. Indeed, it was the Newport-Inglewood Fault that trapped 30-million year old petroleum deposits that came to be drilled in the 20th century. Even today, dozens of oil derricks can be seen in Los Angeles, Long Beach and Huntington Beach, which was the epicenter of the 1933 earthquake. The researchers looked at documentation from the five large earthquakes in this period along with data on oil and gas production and well depth. They found that most of these quakes were located close to oil wells and occurred shortly after drilling started. Each of the wells was more than 3,200 feet deep—unusual for the time. The study calls into question assumptions about Southern California's seismic activity. If four of these five events were induced by drilling, it may be that the LA Basin is not as naturally earthquake-prone as believed.

Oil drilling caused killer earthquake in boomtime California, scientists suspect - Several damaging Los Angeles-area earthquakes of the 1920s and 1930s, including the deadliest ever in southern California, may have been brought on by oil production during the region’s drilling boom of that era, US government scientists have reported. The findings of a possible link between oil extraction and seismic events in the LA basin do not apply to modern industry practices but suggest the natural rate of quake occurrences in the region may be lower than previously calculated, the scientists said. The study’s authors, Susan Hough and Morgan Page of the US Geological Survey, stressed a distinction between their results and separate research attributing a growing frequency of quakes in Oklahoma and elsewhere to underground wastewater injection associated with fossil fuel production. The new study, published in the Bulletin of the Seismological Society of America, also noted that early 20th-century industry techniques differed greatly from today, so the findings “do not necessarily imply a high likelihood of induced earthquakes at the present time”. Parts of Oklahoma and Kansas now face earthquake risk on par with California Read more The report suggested four major Los Angeles-area quakes in 1920, 1929, 1930 and 1933 were triggered by early drilling methods in which oil was extracted without water being pumped into the ground to replace it, causing the ground to subside. This could have artificially placed more pressure on seismic faults near oilfields. The most devastating event was the so-called Long Beach earthquake of 10 March 1933, a 6.4-magnitude quake that ruptured the Newport-Inglewood fault along the coast, toppling scores of buildings and killing 115 to 120 people – the highest death toll on record from a southern California earthquake.

Industry closely watches Monterey County fracking ban measure - Fracking bans. It’s not the first time these words have reverberated across the oil and gas industry. It’s two tiny words that could mean that men and women are out of jobs, and oil and gas stays in the ground, since many reserves just can’t be reached through conventional drilling. In the United States, Vermont banned fracking in 2012, the first state to do so. In a highly controversial fracking ban, New York, too, outlawed the practice after a seven year study that began in 2009. Areas bordering Pennsylvania saw the prosperity that ensued, and there were even threats of secession from New York. Yet none of the drama played out, and the ban is still in place. In Maryland, a moratorium on fracking was enacted in 2015, and it is in place until 2017, just around the corner. The bill became law without Gov. Larry Hogan’s signature.In 2015, fracking bans were all over Texas news as Denton’s ban prompted arguments over which entities have the power to legislate the practice. Gov. Greg Abbott signed HB 40 that limited local authority to restrict fracking. So even though the local ban stayed in effect, the state law overruled it, and fracking in Denton resumed, despite the bitter fight that didn’t stop when Abbott stepped in. Similar situations have occurred across other states, such as Longmont and other areas of Colorado earlier this year, and it’s unlikely that other attempts to ban hydraulic fracturing will stop anytime soon. Public awareness of the practice through campaigns by environmentalist groups has definitely fanned the flames of opposition. Which brings us to the latest on fracking bans. The Wall Street Journal reported today that “All Eyes are on Monterey.” Monterey County is smack dab in the middle of California oil and gas country, and the WSJ says a Nov. 8 ballot measure there will test whether fracking bans can win “where it matters most—in places oil and natural gas are produced. Will the measure follow the Texas route? There, the industry proved strong enough to fight back against local protesters who fought a bitter fight against what they deemed “Big Oil” and power-hungry CEOs who care more about money than health.In Monterey, the fight is similar to Denton and Longmont. The Monterey County for Energy Independence has outspent backers of the measure 30 to 1, according to the WSJ, who states spending against the bill has hit nearly $5.5 million from backers like Chevron, Exxon, and Shell. Big names in the industry who stand to lose more than that if they are forced to cease fracking operations. The Monterey ban has citizens divided, with activists on both sides of the issue heavily debating whether the practice of hydraulic fracturing should continue. Those in opposition cite dangers to farming operations, groundwater contamination, and general pollution. The WSJ noted a March Gallup poll found 51 percent of Americans opposed fracking, up 11 points from a survey a year ago.

Climate activists face decades in jail for shutting down oil pipelines - Climate activists from the Pacific Northwest face decades in jail for shutting down oil pipelines across the country last month. They still believe their message is more important than their freedom. "What we are doing is acting on the truth. That's an incredibly powerful thing, and they're scared," Ken Ward said.Ward, a resident of Portland, traveled to Anacortes at the same time Seattle residents Annette Klapstein and Emily Johnston found themselves in Minnesota.Along with several other activists in North Dakota and Montana on October 11, they turned emergency shut off valves for five pipelines that transport tar sands oil from Canada to the USA."We needed something that would be so far outside the bounds of what normally happens that it had some chance of waking people up, at least some people who can wake other people up," Johnston said. "The situation with climate change is so dire that my personal freedom for a period of years is not on the radar for what's important."That day, Kinder Morgan sent KING 5 the following statement about the action in Anacortes:  "Earlier this morning, reckless trespassers broke into a location on Trans Mountain's Puget Sound pipeline system in Washington State.  At the time of the incident, we were not operating through that portion of the line and their actions did not cause the release of any product.  Local authorities responded and three individuals were arrested. We are conducting a thorough inspection to ensure the integrity of the pipeline system." Ward believes his action had an effect regardless of whether the line was in use at the time. "They're saying it's ineffectual because they want it to be ineffectual. What else would they say? This was powerful? It was powerful. Absolutely it was powerful," he said.

Three Weeks Later, Trilogy Admits Pipeline Spilled 250,000 Litres of Oil in Alberta Wetland - A Trilogy Energy pipeline leak has spilled an estimated 250,000 litres of oil emulsion, a mixture of oil and water, into an Alberta wetland near Fox Creek, according to the company.Although the spill was first reported on October 6, neither Trilogy nor the Alberta Energy Regulator (AER) released any information about its size until this week.Trilogy initially reported the spill covered three hectares, the equivalent of 21 tennis courts in a remote wetland location some 15 kilometres outside Fox Creek.“Less than half of that is impacted by actual oil staining,” John Williams, president and chief operating officer of Trilogy, told DeSmog Canada in an interview Friday.Williams said the spill volume estimate was based on aerial surveillance of the spill location as well as measurement on the ground of oil spread and depth.“Oil gets caught in the grass and water tends to flow down and separate,” Williams said.“We provided the AER with our best estimate and AER will validate our numbers based on how we got to that calculation,” he said.“That’s their indirect way of saying ‘that’s not our number, that’s Trilogy’s number, so if there’s a problem don’t get upset with us,’ “ Williams said. An update published on Trilogy's website indicates the company is still working to confirm the volume of the spill.

105 Oil & Gas Bankruptcies: But Production Isn’t Shrinking - The oil price crash has been creating a wave of energy-related bankruptcy filings in the past two years, prompting many U.S. energy companies that were previously sitting comfortably with high oil and commodity prices prior to 2014 to now seek ways to restructure their businesses and debts. But no matter: most of these troubled companies continue to produce oil, natural gas and coal, and despite their desperate financial situation, they’re not out of business. They’re not quite dead, nor are they alive—they are the zombies of the energy industry, some of which have successfully emerged from their Chapter 11 protection (and some which are still just holding on). Contrary to initial expectations that low commodity prices would naturally push a large number of less cost-efficient players out of business, these companies aren’t going anywhere. Many of them are using Chapter 11 bankruptcy protection filings to restructure debts and slash costs, while keeping production levels almost unchanged. This, quite naturally, does not help excess supplies to draw down—an otherwise necessary correction and natural conclusion to the low price of oil. This forestalling of natural events and artificial propping up of the zombies has stunted the recent oil price rally. (Here goes an honorable mention to the OPEC-related rhetoric in recent weeks, which seems to be able to swing crude oil prices up and down in much the same way as the U.S. inventory reports usually tip the market). In addition, basking in the US$100 oil price glory had prevented oil companies from looking too hard for more cost-efficient ways of doing business. These companies have now had to adapt quickly to the new ‘lower-for-longer’ world with cost and expenditure curbs and restructuring, which have helped their mines and oil wells stay profitable and worth digging (and drilling) at.According to Wood Mackenzie’s research analyst Roy Martin, the underlying theory that more bankruptcies mean significantly lower production was wrong from the very beginning,

Zombie Drillers: A Halloween Horror Story For Oil Markets -Investors may not realize it, but the Walking Dead is not the only zombie show running right now. The oil markets are at least as scary and have zombies that are much harder to kill than AMC’s popular program. While about 100 oil companies have gone bankrupt in 2015 and 2016, almost none of those companies have actually “died”. Instead, most of the firms are still pumping oil just as rapidly as before. That, in turn, has significant implications for investors in the market.The 70 bankrupt firms are producing roughly 1 million bpd of oil – about the same level of production they had before bankruptcy. Those zombie firms represent around 5 percent of U.S. production and there are no signs of that production declining. The theory that bankruptcy would reduce oil production was always flawed. Producers have largely gone bankrupt under Chapter 11 provisions, which in turn has allowed them to keep producing oil and paying upkeep expenses, while at the same time shedding their debt burden. Midstates Petroleum provides a good example of the problem with zombie production. The firm filed for bankruptcy on April 30th. It began drilling a new oil well the next day.While Midstates stopped running some rigs ahead of its bankruptcy filing, it kept another going after filing. Firms like Midstates have also continued to honor oil service and rig contracts based on drilling plans that were put in place months in advance. Those drilling plans enable the bankrupt firms like Midstates to continue generating revenue and cash flow on behalf of creditors. Bondholders and banks have every incentive to keep the oil and the cash flowing. The problem with zombie production is that like on the Walking Dead, zombies beget zombies. As oil prices have rebounded, zombies get more incentive to produce which in turn keeps prices from rebounding to profitable levels for most firms. That in turn leads to more bankruptcies and more zombies, and the cycle continues.  The zombie problem is set to become even more acute if Schlumberger, Haliburton, and Baker Hughes make good on the recent implied threat to begin adhering to greater price discipline.   If the major oil services firms hold to that line, then many of the productivity gains and cost cuts that have let E&P firms survive the downturn could prove illusory. Removing the armor of cost cuts would leave the market more exposed to the currently stagnant and still weak oil price. Without that armor, zombies may have greater power in the market.The reality is that these zombie companies are a true nightmare for the oil markets.Being “dead” already, they have nothing to lose and so there only goal is to keep producing as much as possible as fast as possible.

Shell: Peak Oil Demand Could Be Reached In 2021 -- A senior executive for Royal Dutch Shell claimed demand could reach its peak as early as 2021, which is much sooner than anticipated by other analysts.“We’ve long been of the opinion that demand will peak before supply,” said Shell Chief Financial Officer Simon Henry, in a Tuesday conference call.“And that peak may be somewhere between 5 and 15 years hence, and it will be driven by efficiency and substitution, more than offsetting the new demand for transport,” Henry added.Other major oil providers have estimated that peak demand is farther down the line. Exxon Mobil in its annual outlook said “global demand for oil and other liquids is projected to rise by about 20 percent from 2014 to 2040.”The government of Saudi Arabia claimed oil demand would continue to grow based on increasing consumption in emerging markets.Meanwhile, the World Energy Council believes peak demand will arrive in 2030 should renewable energy and other technologies such as electric cars keep their fast level of growth. Yet Henry noted that Shell is in a prime position to adapt to the increased popularity of clean energy options. “Even if oil demand declines, its replacements will be in products that we are very well placed to supply one way or the other, so we need to be the energy major of the 2050s,” Henry said. “That underpins our strategic thinking. It’s part of the switch to gas, it’s part of what we do in biofuels, both now and in the future.”

GE To Combine Oil And Gas Unit With Baker Hughes: New Company To Have $32 Billion In Revenue General Electric agreed to merge its oil and gas business with Baker Hughes, Inc.,  creating a publicly traded energy powerhouse that will have over $32 billion in revenue and would give GE a cost-effective way to play an energy industry rebound as the companies seek to bolster their operations amid a global slump in crude prices.As the WSJ, which first broke the story last week, reports GE will contribute its oil-and-gas business and $7.4 billion through a special one-time cash dividend of $17.50 for each Baker Hughes share. The new company will be publicly traded on the New York Stock Exchange and will be 62.5% owned by GE and 37.5% owned by Baker Hughes. The merger creates a company with more than $32 billion in revenue that could cut costs to better compete with rivals such as Schlumberger to provide equipment and services to oil rigs and wells; it will likely result in even more competition in the sector and lower prices. The deal would enable GE to benefit from a recovery in the industry - assuming the recent OPEC-driven bounce in energy prices persists - without having to pay for a full acquisition of Baker Hughes. It would also enable the companies and their shareholders to benefit from savings and other synergies from putting the two businesses together.  The deal takes place after GE held talks earlier this year about buying pieces of Baker Hughes set to be divested under a sale of the Houston-based company to Halliburton Co., a transaction that collapsed.

Nationwide US fracking ban would cause gas price to spike: study - A nationwide US ban on hydraulic fracturing would have a devastating effect on the natural gas industry and the country's economy as a whole, causing prices to spike to $12/MMBtu and resulting in the loss of 14.8 million US jobs by 2022, according to a report released Friday by an arm of the US Chamber of Commerce. The report, released by the chamber's Institute for 21st Century Energy less than a week before the US presidential election, examines the impacts that a fracking ban, advocated by some environmental groups and some political candidates, would have on the US economy and on the energy-producing states of Pennsylvania, Ohio, Colorado and Texas. "This isn't just about the upstream, the men and women on the drill face. This is about the entire macro effect," Christopher Guith, the institute's senior vice president of policy, said during a conference call with reporters to discuss the study Friday. The report examined the potential economic impacts that would ensue if a fracking ban were imposed in 2017, both short-term and over a five-year period."If we ban fracking, which accounts for two-thirds of all the gas pulled out of the ground and north of one half of oil, that's a huge chunk of production that goes away and that means that prices go up really quick," Guith said. In addition to gas prices soaring back to the double-digit levels not seen since the early 2000s before the onset of the shale revolution, the price of gasoline and electricity would almost double by 2022, he said. "We're on the verge of seeing the first year-on-year decrease in electricity prices. We would flip that on its head," Guith said. Guith and other speakers on the call blamed environmental activists advocating a "keep it in the ground" public policy agenda, and political candidates seeking the environmentalists' support, for threatening the future viability of fracking, which the study identifies as the engine of a US manufacturing renaissance in recent years.

Report: Fracking Ban Would Cost US Almost 15 Million Jobs By 2022 - Any federal ban on fracking for oil and natural gas would cause fuel prices to surge, leading to job losses, higher electricity and gasoline costs and an increased cost of living, especially in top gas-producing states like Pennsylvania, the U.S. Chamber of Commerce said in a report issued on Friday. Four days before the presidential election, the Chamber’s report focused on oil and gas production in the important swing states of Pennsylvania and Ohio, and warned that a nationwide ban on fracking, as proposed by some environmental groups, would produce significant economic damage in both states. It estimated that Pennsylvania would lose 466,000 jobs over the next five years; that the cost of living for the state’s households would rise by an average of $3,500 a year, and that state gross domestic product would drop by $45 billion by 2022 if fracking was banned by an incoming president. “A fracking ban would be a disaster for the U.S. economy, exceeding the economic harm caused by the financial crisis, the housing bust, and the Great Recession, combined,” the report said.It did not explicitly accuse Democratic presidential candidate Hillary Clinton of proposing a ban on fracking but prominently quoted her as saying in a March 2016 speech that: “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.” Hillary Clinton has never called for a fracking ban, and while serving as secretary of state under President Obama, she helped encourage fracking abroad. Her campaign website says she would impose additional safeguards on natural gas production to curb hazards like water contamination and methane emissions, but does not propose a ban on fracking, which differentiated her from her Democratic primary rival Bernie Sanders. Sanders supporters tried to get the Democratic party to adopt a fracking ban but failed. The Clinton campaign did not immediately return a call for comment. Republican candidate Donald Trump says repeatedly he would “unleash” untapped reserves of oil and natural gas, as well as revive the coal industry.

Hillary Clinton and Her Fossil Fuel Reality --Back in September 2015, Hillary Clinton had a chance to attend a private meeting of the Building Trades Union or NABTU.  She was seeking their endorsement for her run as president and had a chance to offer her opinion on how much support she would give to the construction of new pipelines, a matter of critical importance to the NABTU since many of its members spend their working careers building pipelines among other infrastructure.  Pipelines for hydrocarbons, particularly oil, have been a hot topic during the Obama Administration since Washington had to make a very difficult decision on the controversial Keystone XL pipeline.  Let's look at some excerpts from the meeting, focussing on the comments that Ms. Clinton made during a question and answer period about Keystone XL. HILLARY CLINTON: It's symbolic and it's not going to go away. They're all hanging on to it. So you know Bernie Sanders is getting lots of support from the most radical environmentalists because he's out there every day bashing the Keystone pipeline. And, you know, I'm not into it for that. I've been-- 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. I want to defend, you know, new, modern [inaudible]. I want to defend this stuff. And you know, 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. So I want to get the right balance and that's what I'm [inaudible] about-- getting all the stakeholders together. Everybody's not going to get everything they want, that's not the way it's supposed to work in a democracy, but everybody needs to listen to each other."

How Hillary Clinton’s State Department Sold Fracking to the World - One icy morning in February 2012, Hillary Clinton's plane touched down in the Bulgarian capital, Sofia, which was just digging out from a fierce blizzard. Wrapped in a thick coat, the secretary of state descended the stairs to the snow-covered tarmac, where she and her aides piled into a motorcade bound for the presidential palace. That afternoon, they huddled with Bulgarian leaders, including Prime Minister Boyko Borissov, discussing everything from Syria's bloody civil war to their joint search for loose nukes. But the focus of the talks was fracking. The previous year, Bulgaria had signed a five-year, $68 million deal, granting US oil giant Chevron millions of acres in shale gas concessions. Bulgarians were outraged. Shortly before Clinton arrived, tens of thousands of protesters poured into the streets carrying placards that read "Stop fracking with our water" and "Chevron go home." Bulgaria's parliament responded by voting overwhelmingly for a fracking moratorium. Clinton urged Bulgarian officials to give fracking another chance. According to Borissov, she agreed to help fly in the "best specialists on these new technologies to present the benefits to the Bulgarian people." But resistance only grew. The following month in neighboring Romania, thousands of people gathered to protest another Chevron fracking project, and Romania's parliament began weighing its own shale gas moratorium. Again Clinton intervened, dispatching her special envoy for energy in Eurasia, Richard Morningstar, to push back against the fracking bans. The State Depart­ment's lobbying effort culminated in late May 2012, when Morningstar held a series of meetings on fracking with top Bulgarian and Romanian officials. He also touted the technology in an interview on Bulgarian national radio, saying it could lead to a fivefold drop in the price of natural gas. A few weeks later, Romania's parliament voted down its proposed fracking ban and Bulgaria's eased its moratorium. The episode sheds light on a crucial but little-known dimension of Clinton's diplomatic legacy. Under her leadership, the State Department worked closely with energy companies to spread fracking around the globe—part of a broader push to fight climate change, boost global energy supply, and undercut the power of adversaries such as Russia that use their energy resources as a cudgel. But environmental groups fear that exporting fracking, which has been linked to drinking-water contamination and earthquakes at home, could wreak havoc in countries with scant environmental regulation. And according to interviews, diplomatic cables, and other documents obtained by Mother Jones, American officials—some with deep ties to industry—also helped US firms clinch potentially lucrative shale concessions overseas, raising troubling questions about whose interests the program actually serves.

US crude shipped to 22 countries over six-month period: EIA - Oil | Platts News Article & Story: The US exported an average of 657,000 b/d of crude oil to foreign markets in August, the second most exported in history, the US Energy Information Administration said Monday. The majority of US exported crude is still going to Canada, but US crude is going to markets it has never been shipped to before, according to data in EIA's newest Petroleum Supply Monthly. US crude was exported to 12 countries in August alone, including 452,000 barrels of US crude which was sent to Liberia and 411,000 barrels to South Africa, neither of which had received US crude before, according to the EIA. March through August, over 100.5 million barrels of US crude was shipped to 22 countries. More than half, about 54.5 million barrels, was shipped to Canada.Since all restrictions on US crude exports were lifted in December 2015, more than 122.6 million barrels of US crude have been exported, or about 495,000 b/d. August's crude export level was the most since May when an average of nearly 662,000 b/d were exported, the most ever. Among the August data, some notable exports included a total of 649,000 barrels sent to Singapore, 1.02 million barrels to Colombia and 1.14 million to Italy, the most ever for those three markets. The Marshall Islands, which has not received a shipment of US crude since April, will likely be a stop for US crude in the future, according to the EIA. In a report last week, EIA said that a combination of infrastructure limits and low tanker rates are compelling US exporters to ship to the Marshall Islands. "Currently, no US port is capable of loading the larger vessels typically used to transport crude oil, so US crude exporters must use more expensive smaller vessels," EIA wrote. "However, with lower tanker rates, exporters may be able to load smaller ships at US ports and transfer the cargoes onto larger vessels offshore for transport to final destinations at an attractive per-barrel cost."

Supplying Mexico's growing natural gas demand, part 3 - New power plants in Mexico have spurred natural gas demand south of the border––and fast-rising gas imports from the U.S, particularly Texas. Thus far, pipeline exports from Texas to Mexico have primarily been supplied by gas produced within the Lone Star State, but a big squeeze is on as nearby Texas production volumes decline (particularly the Eagle Ford) and export demand continues to increase, not just from Mexico but from new liquefaction/LNG export terminals along Texas’s Gulf Coast. Today, we unpack the shifting Texas supply and demand balance and potential implications for the market. This is Part 3 of our “It Takes Two” series. We started in Part 1 with an overview of developing trends in Mexico’s natural gas market. In short, for some time now, Mexico’s thirst for natural gas has been growing. The state-owned ComisiĆ³n Federal de Electricidad (CFE) has been feverishly expanding its fleet of natural gas-fired combined-cycle power plants, and there are big plans to build a gas pipeline network to feed them. No less than 800 miles of gas pipelines are under construction and another 2,500 miles are on the way to facilitate utilization in the power sector, including seven projects totaling 8.0 Bcf/d of transport capacity that have been awarded contracts for construction, all with in-service dates in 2017 or 2018. Several of the pipeline projects—either under construction or awarded—originate at or near the Texas-Mexico border and extend south or west to connect with other projects and Mexico’s existing mainlines, all with the expectation that Mexico’s revamped power generation fleet will rely in large part on supply from Texas. In fact, even as Mexico’s natural gas consumption has been on the rise, its domestic production has slowed. So barring a reversal in that supply trend, much of the incremental gas demand will need to be met by imports.  As we discussed in Part 2, six pipeline projects totaling nearly 8 Bcf/d upstream of Mexico’s natural gas pipelines on the U.S. side are in various phases of development to move gas from Texas’ Agua Dulce Hub in South Texas and from Waha Hub in West Texas into Mexico, all due in service by 2019. With these plans progressing on both sides of the border, all signs point to continued growth in Mexico demand and higher exports to Mexico.

US refineries are the key to rebalancing global gasoline market.  Global demand for motor gasoline is on the rise, and U.S. refineries—as a group, still the most sophisticated in the world—are poised to play a critical role in providing much of the needed incremental gasoline supply to Asia, Latin America and other growing markets. This important topic was the focus of a recent talk at the Center for Strategic and International Studies (CSIS) by our good friend, Dr. Fereidun Fesharaki, chairman of international energy consultant FGE, who also discussed the International Maritime Organization’s (IMO) new (and controversial) decision to limit sulfur in bunker fuel to 0.5% by January 2020—a move that will test the capabilities of refineries worldwide. Today’s blog provides highlights from this presentation. The Shale Revolution’s impact on energy markets extends far beyond increased U.S. production of crude oil, natural gas and natural gas liquids. The new ability to wring vast volumes of valuable hydrocarbons from shale also has had a profound effect on refined-products economics, and on U.S. self-sufficiency regarding gasoline, diesel, and jet fuel. As shown in Figure 1, in only 11 years, the U.S. has flipped from being a major importer (2005 net imports of refined products totaled 2.5 MMb/d) to its new status as a major exporter (2016 net exports totaled 2.5 MMb/d).  Consequently, there has been a 5.0 MMb/d reversal in U.S. refined product flows.  Before the Shale Revolution took hold in 2008-09, the U.S. depended on imports from a variety of sources, including Latin America (yellow bar segments), Europe (green) and Africa (light blue). By 2011, the U.S. had become a net exporter of refined products, with exports to Latin America (yellow) leading the way, and with exports to Asia (dark blue) and Europe (green) on the rise as well. That flow reversal in refined-product flows is extraordinary, and it’s likely that “You ain’t seen nothin’ yet,”.  Figure 1 indicates that net product exports are expected to grow to a total of almost 3.5 MMb/d by 2025, and what is most significant is that much of that growth will come from gasoline exports. 

Big Oil Is in Big Trouble -- Something significant happened on Friday that warrants more than just a few column inches in a newspaper.  The world's largest listed oil company, Exxon, announced that it was going to have to cut its reported proved reserves by just under a fifth—by 19 percent.  It would be the biggest reserve revision in the history of the oil industry. It is yet another sign that Big Oil is in big trouble.  For years people have been warning that Big Oil's business model was fundamentally flawed and was not only putting the climate at risk, but millions of dollars of shareholders' money.  For years the industry's critics warned the industry was ignoring the risks of climate change and was just caring on drilling regardless.  But the oilmen did what the oilmen do: find oil and gas, no matter the consequences.  And the worst oil company has been Exxon which for decades has denied climate change and the impact that climate change will have on its business. For decades it could have invested wisely in renewables but it carried on looking for oil and gas—including unconventional oil which is even more carbon intensive than conventional oil. Its critics warned this was pure folly: but the oilmen carried on drilling anyway. Big Oil is used to doing things its own way. The warnings have kept coming, but the boys from Exxon didn't listen. Oil Change International, 350.org, Carbon Tracker and many others in the #keepintheground movement have been saying for years that large swathes of oil reserves must stay in the ground.

Big Oil Cannot Afford To Ignore Climate Change - Investors have begun to take climate change more seriously now that the Paris climate agreement of December 2015 has created a new set of initials to watch, NDC for “nationally determined contribution”. A study sponsored by the biggest investors in the world claims that only 94 of the more than 1000 companies that answered the sponsored survey have developed coherent strategies to meet their goals and the fossil fuel companies had the most disappointing responses. That should not be a big surprise. And considering that so many of those investors have a policy of buying just about every large capitalization stock (they are index fund or closet index investors), it is not clear what most of them will do with the information until they make some serious investment policy decisions. But the heat is on, at least at the margins, and likely to grow hotter for those investment funds, especially if the regulatory agencies force corporations to discuss climate risk in their reports. Investment committees don’t want to have to explain, afterwards, why they ignored warnings. That brings us to the energy marketplace. Moody’s Investors Services just issued a bond rating report explaining how and why it considers climate change risk in rating energy companies. Among the G20 economies, electricity production and central heating account for 45 percent of the country’s carbon emissions. This is, of course, the economic sector that can utilize renewables right now. The firms in the electric business are capital intensive and issue bonds often. If the rating agencies become negative on the sector and lower the bond ratings, companies will pay more to raise money and a few will not be able to raise money. Moody’s argument could be boiled down to this. The cost of renewable energy is falling, and lower renewable prices will put pressure on wholesale energy prices just as carbon pricing adds to the costs of the carbon-fueled generators. Thus, margins will fall the most for the least efficient carbon-fueled facilities. Unregulated, inefficient and inflexible carbon fuel generators will suffer the most because they will lose market share, face falling margins and they have no regulatory protection. On the plus side, for them, the unregulated markets have had to create capacity payments to keep generators from closing down and leaving the system with insufficient capacity and capacity payments now make up 40 percent of generating gross margin in regions that have such a scheme to pay generators to keep open to prevent emergencies.

Oil giant BP sees profits nearly halve - BBC News: Oil giant BP has reported a near 50% fall in third-quarter profits from last year as the sector continues to struggle with low prices. The company made $933m (£763m) on an underlying replacement cost basis, compared with $1.8bn a year earlier. BP blamed falling oil prices for its fall, saying it was affected by a "weaker price and margin environment". Rival oil company Royal Dutch Shell also warned over oil prices, although its profits rose by 18% from last year. The company reported better-than-expected third-quarter profits of $2.8bn (£2.2bn),. BP's chief financial officer Brian Gilvary said: "We continue to make good progress in adapting to the challenging price and margin environment. "We remain on track to rebalance organic cash flows next year at $50 to $55 a barrel, underpinned by continued strong operating reliability and momentum in resetting costs and capital spending. "At the same time, we are investing in the projects, businesses and options to deliver growth in the years ahead." BP also cut its investment plans for this year. It now expects to spend $16bn on capital expenditure, compared with a previous prediction of $17-19bn. For 2017, it is forecasting investment of $15-17bn.

Russian gas flows to Europe surge in October, up 2.3 Bcm on year: Gazprom -  Russian gas exports via pipeline to Europe and Turkey in the first 10 months of 2016 were 13.05 Bcm higher year on year, data from state-controlled Gazprom showed Tuesday, pointing to a surge in supplies of some 2.3 Bcm in October. Gazprom's deliveries to Europe and Turkey -- but not including the former Soviet Union countries -- were 10.7 Bcm higher year on year in the January to September period. This means October saw a sharp step-up in supplies to its key markets. Russian oil-indexed gas remains competitive against the European gas hubs given the continued low oil prices, with Gazprom's main European customers said to be maximizing their purchases as far as possible under their long-term contractual conditions.October exports were also boosted by a sharp increase in supplies to Turkey after gas flows from Iran were halted by an explosion on a pipeline on Turkish territory on Friday. "Gazprom fully satisfies the increased requests from Turkey -- in the last four days of October, Russian gas supplies to this country exceeded the month's daily average by 14%," Gazprom CEO Alexei Miller said. Sources close to the matter said Monday that Russian gas supplies to Turkey have been running at around 81 million cu m/d since Friday, with around 48 million cu m/d -- or 59% -- sent via the Blue Stream pipeline under the Black Sea. The remaining 33 million cu m/d, or 41%, is entering Turkey via the western route through Ukraine. Gazprom's most recently stated target of total exports to Europe and Turkey in 2016 is 170 Bcm, which would be an all-time high.

Analysis: China's record gasoil exports may have created unforeseen squeeze -  China exported record volumes of gasoil in September, triggering a decline in domestic stocks and leading the market to believe that Asia's biggest oil consumer might have exported more than it should have, and therefore might be forced to limit overseas sales in October. September gasoil exports surged to a record high of 1.6 million mt, or 398,197 b/d, surpassing the previous high of 1.53 million mt, or 368,840 b/d, in July, according to data from the General Administration of Customs. On a daily average basis in barrels, exports in September were 44.4% higher year on year and up 55.4% month on month. "We expect gasoil exports in October to retreat from the highs to just above 1 million mt as good domestic demand is expected to keep the barrels at home," a Beijing-based analyst said.Sinopec, China's leading gasoil exporter, was estimated to have exported around 850,000 mt last month from its refineries in the southern and eastern coasts. It was a big jump from an estimated 440,000 mt exported in August. PetroChina was estimated to have increased gasoil exports significantly to around 428,000 mt in September from its refineries in northeast China, the southwest Yunnan province, as well as from Guangxi province. In August and July, gasoil exports from the regions were 343,000 mt and 385,000 mt, respectively.

OPEC Fails to Finalize Proposal to Implement Production Cut - WSJ: A weekend marathon of talks between major oil producers failed to finalize plans to implement an output cut, threatening the viability of an agreement reached last month to reduce production by as much as 2%. The discussions held at the headquarters of the Organization of the Petroleum Exporting Countries were supposed to pave the way for a detailed proposal on how to cut production by between 200,000 and 700,000 barrels a day, about 1% to 2%. The proposal is scheduled to be submitted to OPEC’s 14 member nations on Nov. 30.The talks were also aimed at securing coordinated cuts with producers outside OPEC, such as Russia, the world’s largest oil producer. Instead, Iraq and Iran’s insistence on exemptions emerged as a big sticking point Friday as those members refused to agree to cut their burgeoning output. Iran wants to keep pumping until it reaches 4.2 million barrels a day, an increase of about 400,000 barrels a day from current levels, according to an Iranian oil official. Iraq says it needs to keep pumping to generate revenue for an intensifying war against Islamic State. Iraqi officials didn’t respond to requests for comment Saturday. But Saudi Arabia—the group’s kingpin and regional rival to Iran—insists Tehran should shoulder at least part of OPEC’s efforts in rebalancing markets, according to oil officials in the group. Exempting Iraq and Iran would put pressure on Saudi Arabia, OPEC’s largest producer, to cut more output than the kingdom wants to. Members also squabbled about the numbers that should be used as a reference for any curb with Saudi Arabia favoring independent estimates which are disputed by Iraq and Iran. The tensions spilled over into a meeting on Saturday between OPEC representatives and producers outside the cartel to discuss their participation in the tentative deal. The Algiers agreement was also dependent on producers outside the group joining the curbs. But the six non-OPEC countries, which included the world’s largest oil producer Russia, refused to commit to any detailed curbs.

Oil Tumbles To 1-Month Lows As OPEC Deadlock Shatters Deal Hopes --Confirming the swirling rumors from Friday, WTI crude is leaking lower (near $47 handle)in early asia trading after Bloomberg reports OPEC's internal disagreements over how to implement oil-supply cuts agreed to last month prevented a deal to secure the cooperation of other major suppliers. More than 18 hours of talks over two days in Vienna yielded little more than a promise that the world’s largest oil producers would keep on talking. Discussions will continue in late November, just days before the Organization of Petroleum Exporting Countries is supposed to finalize the accord that lifted oil prices to one-year highs. Non-OPEC nations ended talks with the group on Saturday without making any supply commitments, Brazil’s Oil and Gas Secretary Marcio Felix said after the meeting. Brazil won’t restrict its oil production, though it’s willing as early as next year to host future OPEC conferences with the world’s biggest producers, he said in a phone interview. A deal wasn’t possible because internal OPEC talks on Friday reached an impasse over the role of Iran and Iraq, both of which want to be exempt from any cuts. While non-member Oman said Saturday it was willing to cooperate in a supply deal, it couldn’t commit to a specific output cut until OPEC had its own agreement. read more here...

Oil Extends Losses To 1-Month Lows ($47 Handle) Amid OPEC/NOPEC Disagreement --WTI Crude has extended losses this morning below $48.00 - a one month low - as more details emerge from the "just conversations" had in Vienna this weekend that tend to indicate no agreement on even a freeze, yet alone cut, in global crude production.Brent crude is also back below $49 (for Dec) and $50 (for Jan). Bloomberg summarizes the latest publicly stated positions of key countries involved in talks that may result in a freeze or reduction in oil supply.

  • IRAQ: Consistent with its view that secondary-source production est. are inaccurate, Iraq’s state marketing agency on Sunday released detailed production data on 26 fields, plus a single output figure for semi-autonomous Kurdish region.  The country’s minister has previously stated that Iraq should be exempted from cutting production because it’s fighting Islamic State
  • BRAZIL (non-OPEC):  Saturday’s talks were “just conversations” with no output commitment reached between OPEC and non-OPEC, Brazil’s Oil Secretary Marcio Felix said after those talks ended
  • AZERBAIJAN (non-OPEC): Outcome of talks depends heavily on Iran and Iraq, which are “more interested in increasing their oil production,” Azerbaijan’s Energy Minister Natiq Aliyev said Saturday morning. After talks ended, he said he was satisfied with progress
  • OPEC SECRETARIAT OPEC said in press release that Friday-Saturday talks were “constructive” and emphazised need for more frequent consultations in November toward implementation of OPEC’s Sept. 28 Algiers deal that aims to limit OPEC supply to 32.5m-33m b/d
  • SAUDI ARABIA: Energy Minister Khalid Al-Falih said Oct. 23 that Gulf nations were working with Russia and others to stabilize market; he mentioned possibility of either a freeze or a cut in an Oct. 19 speech in London
  • IRAN: Deputy Oil Minister Amir Hossein Zamaninia on Oct. 24 said Iran will “go along with” OPEC goal of balancing market, IRNA reported. Didn’t specify what actions Iran might take. Iranian officials have previously said the nation is pumping more than secondary source estimates show, and have argued it should be allowed to produce 4m b/d or more
  • RUSSIA (non-OPEC): Russian Energy Minister Alexander Novak said on Oct. 26 that Russia’s prefered position is an output freeze rather than a reduction; still considering all options
  • OTHER OPEC STATES: Nigeria, Libya already have exemptions from cutting production as part of Algiers deal

Oil Sells Off As OPEC Remains Divided On Deal --Oil prices sank on Monday by more than 2 percent as news emerged from Vienna: OPEC met to discuss the technical details of its proposed production cut and the meeting did not go well. The members could not hammer out specifics on who would cut and by how much. Worse, Iraq continued to object to being included in the cut, arguing that it needs resources to fight ISIS. All reports suggest that little if any progress was made during the lengthy meetings, and OPEC issued a vaguely worded statement with no concrete commitments and merely some words about agreeing to continue to negotiate. The news did not sit well with the markets, casting doubt on the late November meeting in Vienna. With the chances of a meaningful deal starting to fade, oil prices plunged below $50 per barrel. While OPEC is struggling to ink a deal on production cuts, the cartel did manage to approve a document that outlines a long-term strategy. The pact puts forth a strategy to pursue price stability, which is to say intervening in the market to prop up prices. OPEC has been unable to agree to that strategy for quite a while because Saudi Arabia has been arguing since 2014 that the markets should determine oil prices. However, since the replacement of former oil minister Ali al-Naimi and the ascendancy of the Deputy Crown Prince Mohammed bin Salman as one of the kingdom’s most powerful officials, Saudi Arabia’s strategy has shifted. Of course, persistently low oil prices played their part in the Saudi about-face, but Saudi Arabia now backs a more assertive hand in the oil market. The strategy document argues for market management, but stops short of calling for individual country quotas. While OPEC seemingly wants to control prices, its members are still at odds over how to do so.

Which Non-OPEC Producers Can Be Expected To Cut? - Last week, Venezuelan oil minister Eulogio del Pino released a list of states invited to participate in the OPEC ongoing negotiations regarding a much-anticipated output freeze.Russia, Egypt and ten other oil exporters made the list, though the high variation between the economic and political standings of the non-OPEC participants add to the already complicated and delicate orchestration of the deal— if there is to be a deal, that is.This past weekend, several of the invited non-OPEC countries sent representatives to Vienna for consultations regarding the terms of a potential freeze deal. No details have been finalized, but those who participated agreed to meet again before the 30 November OPEC summit.Russian President Vladimir Putin and Energy Minister Alexander Novak have recently agreed to freeze output in coordination with OPEC, if the group’s members can flesh out a plan amongst themselves.According to OPEC Secretary-General Mohammed Barkindo, the bloc is on track to deliver a deal by the end of November. Barkindo also said that Russia has agreed to participate in OPEC’s official meeting this month.As outlined by the Jamestown Foundation last month, Kazakhstan is desperate for a freeze deal to help economic development rebound to the 6-7 percent expansion rate that the former Soviet Republic saw when barrel prices exceeded $100. But just because they are desperate for a cut doesn’t mean they will participate.Kazakh Energy Minister Kanat Bozumbayev said on Tuesday that Kazakhstan itself would not be doing any cutting, because, according to Bozumbayev, their production levels are small in proportion to some of the others at the negotiating table, namely Russia, Saudi Arabia, Brazil, Iran, and Mexico.This year, Kazakhstan does not expect its economy to grow more than 0.1 percent, while 2017 forecasts from the World Bank predict a low one-percent increase in GDP. Kazakhstan – which recently reopened its Kashagan field, depends on oil exports for over 60 percent of total government revenues and a quarter of its GDP.  A failed deal could mean renewed terrorist attacks and political instability for Kazakhstan as the Kazakh economy continues to spiral downwards.  Azerbaijan was also at the table. Halfway through October, Azerbaijan – a country that produced more than half of the world’s oil a century ago – also announced its support of an OPEC/non-OPEC cut, which, as ClipperData noted, is convenient because the country’s September oil production was 10.2 percent lower than its August rate. “Venezuela and Azerbaijan agree that some measures will be taken to stabilize the market,” Azeri Energy Minister Natig Aliyev said this weekend. “We agreed the price of oil can be around $60 per barrel.” Statements revolving around price, however, do not speak to who is ready to share the burden of cutting production, and do little to assuage market fears that a cut is but a wispy goal.Oman wasn’t buying the feasibility of OPEC cuts either, and before the Algiers meeting in September, Oman said as much, stating that it did not believe in the bloc’s ability to solve the pricing crisis due to several failed efforts to freeze output over the past year.

Oil prices could go south of $40 a barrel if OPEC deal fails, expert says: Oil prices could go under $40 a barrel, if the Organization of the Petroleum Exporting Countries (OPEC) production cut agreement doesn't get worked out, according to one expert. The group will likely get its planned production deal done, but Helima Croft, global head of commodity strategy at RBC Capital Markets, said the agreement won't be finalized until the last minute. "I think they'll get it done, but I think they'll get it done right before November 30," Croft said on CNBC's "Power Lunch" on Monday. Oil prices were under pressure on Monday amid market reservations about whether the deal will go through. U.S. West Texas Intermediate crude futures settled down 3.78 percent at $46.86 a barrel, while international Brent crude futures were also trading south of $50 a barrel. Croft explained that even if the deal happens, there are a lot of preliminary meetings between now and the big day, which will create "a lot of noise of negative headlines." One thing that gives Croft assurance, however, is that heavyweight Saudi Arabia has an incentive to help the OPEC deal along. It's in the country's "best interest to have oil above $50" a barrel for its planned initial public offering of a part of state oil giant Saudi Aramco, said Croft, who is also a CNBC contributor. She explained that an OPEC agreement to limit oil production would "firm the case" for higher oil prices. "This IPO is a very big policy priority for the deputy crown prince of Saudi Arabia. I think Saudi Arabia is incentivized to make this work,"

Goldman Warns Oil Headed To Low $40 On "Declining Probability Of OPEC Deal" - With oil finally sliding on the realization that an OPEC production cut (or even freeze) deal looks increasingly improbable (albeit having allowed Saudi Arabia to raise $17.5 billion in a record international bond deal as WTI briefly probed the mid-$50 range), one bank has been warning about the downside risks to the commodity over the past month: back in September, Goldman Sachs explicitly warned that "Not Even An OPEC Deal Will Stop Oil Going Lower, Goldman Warns."Overnight, Goldman's Damien Courvalin released another note that will make oil bulls nervous, in which he reiterated his base case that "growing discord between OPEC producers suggests a declining probability of reaching a deal on November 30" and predicted that a "weakening oil fundamentals warrant oil prices in the low US$40s/bbl in our view if OPEC is unable to deliver a convincing agreement."That said, when Goldman tells its clients to sell, it usually means its "flow" traders are accumulating a position so buyer, or rather seller, beware.Here is Goldman's full note. The OPEC consultation in Vienna last weekend was only a technical meeting, but the lack of progress on implementing production quotas and the growing discord between OPEC producers suggests a declining probability of reaching a deal on November 30. A unilateral cut from GCC producers would be unacceptable to them and the lack of an agreement so far has pushed oil prices sharply lower, with weakening oil fundamentals warranting oil prices in the low US$40s/bbl in our view if OPEC is unable to deliver a convincing agreement. Even if the fear of such low prices leads OPEC to deliver an agreement on November 30, we reiterate our view that the odds of it succeeding are low. Further, we believe that rising OPEC production in October, from both disrupted and GCC producers, and a faster ramp up of new non-OPEC projects into year-end have further reduced the odds that an OPEC agreement translates into a decent draw in inventories in 1H17. Net, both the probability of a cut being announced and the odds of it successfully reducing inventories have declined over the past week, in our view.

Oil hovers above one-month low, prospects dim for OPEC deal - (Reuters) - Oil edged up from one-month lows on Tuesday, following its largest one-day slide in more than five weeks although analysts said the prospect of a more substantial price recovery was limited. The market remains weighed down by record output from the world's largest exporters, and mounting uncertainty that OPEC and its rivals can do much to tackle a two-year global surplus. Oil prices hit their highest in a year in October after the Organization of the Petroleum Exporting Countries said at a meeting in Algeria in late September it had agreed to limit production that is around record highs to help erode the surplus. But a growing number of countries that say they are either unwilling, or unable to cut, has cast doubt on the group's ability to reach an effective deal when it meets on Nov. 30. Brent January crude futures were up 32 cents at $48.93 a barrel by 0925 GMT, having fallen by nearly 3 percent the day before in their biggest one-day drop since Sept. 23. U.S. West Texas Intermediate (WTI) futures were up 5 cents at $46.91 a barrel, after a near-4 percent drop on Monday. "We had a very strong sell-off yesterday and oil is bouncing a little bit this morning," "But Brent has fallen back to the lowest since the meeting in Algiers and basically, most, if not all of the OPEC premium has been wiped out and speculators are still very long in crude oil ... at the end of the month, we do run the risk that (they) will be selling." OPEC has called upon major producers outside of the group to agree to limit output, but with limited success so far. Top oil producer Russia has said it will consider freezing output.

Crude, Gasoline Tumble After Biggest Inventory Build In 8 Months -- Following last week's inventory draws across the entire energy complex, API was expected to report a seasonally 'normal' 1.54mm barrel build but instead printed a massive 9.3mm build - the biggest since March. Distillates saw a 6th straight week of draws but Cushing saw the biggest build in 3 months. Gasoline saw the biggest draw in 2 months (-3.5mm) but RBOB prices are sinking along with WTI. API

  • Crude +9.3mm (+1.54mm avg. exp)
  • Cushing +1mm (-250k exp)
  • Gasoline -3.5mm (-1mm exp)
  • Distillates -3.1mm

As a reminder, crude stockpiles are still 29% above seasonal norms and perhaps today's surprise build reminded a few of the seasonal tendencies from here....

Oil Tanks After Biggest Inventory Build In 34-Year History - Following last night's massive inventory build report from API (biggest in 8 months), DOE piled on by confirming a 14.42mm barrel build - the biggest in the 34 year history of EIA data. Cushing saw a small build but Gasoline and Distillates saw drawdowns. Crude and RBOB prices are tumbling on the news, not helped by the 3rd weekly rise in US Crude production. DOE:

  • Crude +14.42mm (+2mm exp)
  • Cushing  +89k (+235k exp)
  • Gasoline -2.2mm (-1mm exp)
  • Distillates -1.8mm (-1.9mm exp)

API's biggest build in 8 months was nothing compared to the 14.4mm build from DOE - the biggest build ever. Distillates have now drawn down for 6 straight weeks.

Oil Continues To Crash After EIA Reports Biggest Inventory Build In 34 Years - After the API shocked markets by reporting a massive 9.3-million-barrel increase in U.S. inventories yesterday, the EIA added insult to injury, saying inventories instead went up by 14.4 million barrels in the week to October 28, reaching 482.6 million barrels.  Last week, the authority reported a meager 600,000-barrel decline in crude oil stocks, which despite its meagre size, managed to sway the market, pushing up benchmark prices. In other news, in the seven days to October 28, gasoline inventories experienced a 2.2-million-barrel draw, on top of a 2-million-barrel decline for the previous week. They are still above the maximum for this time of year.  Earlier this week, gasoline prices in the U.S. got a 10-percent push after an explosion at Colonial Pipeline’s Line 1 in Alabama that caused one fatality. The accident happened less than two months after the pipeline operator was forced to shut down Line 1 because of a leak, sparking a gas-shortage panic in the East Coast. Refineries, operating at 85.2 percent of capacity, processed 15.4 million barrels of crude in the reporting period, churning out 9.8 million barrels of gasoline and 4.7 million barrels of distillate fuel daily.The EIA’s report is watched even more closely than normal amid shaky markets caused by growing doubts that OPEC will manage to hammer out an output freeze deal. In addition to Iraq’s insistence to be exempted from any such deal because of its urgent need of oil revenues to continue fighting IS, news came that Libya and Nigeria are quickly increasing their output, seeking to make up for lost revenues. Hopes are dwindling that even if an agreement is reached, and even if Russia joins it, it would do little to restore the market balance, as Libya and Nigeria – both already exempt from the freeze talks – added a combined 800,000 barrels to global oil supply last month. Brent crude traded at US$46.87 a barrel at the time of writing, down 2.6 percent, and WTI was at US$45.31, down 2.91 percent.

Oil Falls on 'Most Bearish Report of All Time' - Oil prices extended their slump after data showed the biggest weekly U.S. crude surplus on record, the latest sign of the hurdles facing traders banking on higher prices.The supply data prompted investors to reduce expectations that two years of oversupply in the oil markets is coming to an end. U.S. prices immediately shed nearly $1 a barrel and losses spread into gasoline and diesel futures. U.S. crude futures fell $1.33, or 2.9%, to $45.34 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell $1.28 a barrel, or 2.7%, to $46.86 a barrel on ICE Futures Europe. Both posted their seventh loss in eight sessions and lowest settlement since Sept. 27.  “You could easily make the argument it’s the most bearish report of all time,” said Bob Yawger, director of the futures division of Mizuho Securities USA. “There’s nothing to support the market.”The U.S. Energy Information Administration said crude-oil stockpiles rose by 14.4 million barrels in the week ended Oct. 28--the largest weekly increase in 34 years of data collected by the EIA. Analysts polled by The Wall Street Journal expected a more modest increase of 1 million barrels.U.S. oil has now fallen 12% in just two weeks since hitting a one-year high on Oct. 19. It is the latest in a series of sharp retreats to hit the market this year every time prices hit around $50 a barrel. Many traders consider that a ceiling because supplies are still so strong, coming from both cost-cutting shale-oil drillers in the U.S. and national oil companies abroad fighting for customers. Traders are skeptical about plans from global exporters to cut production. Russian data released Wednesday showed a new post-Soviet era output record, and U.S. government data showed weekly imports climbed to a four-year high.

A Strange 9 Million Barrels Per Day Import Number Screams Manipulation (Video) -- We delve into the EIA Oil Report, which was an inline report overall, the only thing that stood out like a sore thumb, was an unusually large import number that came out of nowhere, and doesn`t match historical patterns. This sure seems like a blatant attempt to negatively influence the EIA Report as opposed to merely a scheduling error. Refiners operating during the maintenance season with an 85% capacity utilization rate don’t schedule Summer Driving Season level of Oil Imports for this time of year. Given the price action in Oil leading up to this number, it seems suspicious like someone knew the number well in advance with 100% certainty, that they were getting an outsized number. Especially given that the rest of the EIA Report was solid, nothing abnormal for this time of year, the only way someone could have this level of confidence is if they were making the number happen. This smells like an example of someone utilizing their physical storage bandwidth capacity to make a guaranteed EIA Result happen through logistics management/manipulation of the physical which they profited from immensely in the paper, electronic market. It is pretty easy to investigate just pull the trading records for the last 10 days, and see if there are matches to import shipments/Oil Tanker Offload manifests for the pertinent EIA Reporting week.

Crude oil, energy stocks crushed after historic inventory surge -

  • Oil prices and energy equities plunged sharply as the latest inventory data showed U.S. stockpiles posted the largest weekly surge in 34 years, after the consensus outlook had pointed to only a modest rise.
  • WTI crude oil -2.9% to settle at $45.34/bbl, its lowest since Sept. 27, and Brent crude -2.7% to $46.86, also its lowest since late September.
  • “You could easily make the argument it’s the most bearish report of all time,” says Bob Yawger, director of the futures division of Mizuho Securities USA. “There’s nothing to support the market.”
  • WTI, which already was turning lower in recent days, has now fallen 12% in just two weeks since hitting a one-year high on Oct. 19 and marks the third retreat from $50/bbl toward $40 within five months.

Oil ends down on U.S. inventory surge, doubts on OPEC resolve - Oil futures fell on Thursday, finishing at a six-week low a day after government data showed a record rise in crude inventories. The Energy Information Administration reported Wednesday that crude stockpiles rose 14.4 million barrels for the week ended Oct. 28. That was the largest weekly increase on record, based on EIA data going back to 1982.  “We are getting EIA hangover,” Phil Flynn, senior market analyst at Price Futures Group told MarketWatch, referring to the supply data. With refiners undergoing scheduled maintenance ahead of the winter season and uncertainty surrounding the Organization of the Petroleum Exporting Countries’s output plan, “buyers are hard to find.” December West Texas Intermediate crude lost 68 cents, or 1.5%, to settle at $44.46 a barrel on the New York Mercantile Exchange. The settlement was the lowest since Sept. 23, according to FactSet data. January Brent crude on London’s ICE Futures exchange fell by 51 cents, or 1.1%, to $46.35 a barrel, set for the lowest finish since Sept. 20. The huge weekly rise in crude supplies was likely tied to oil transport and reporting delays due to the hurricane and tropical storms last month, said Flynn, adding that as a result, the market may be “seeing a few weeks of builds in one week.” “Regardless, the shocking build justifies the recent correction in price and raises the stakes” for OPEC to reach an agreement on an output cut, “especially after the cartel saw record oil output,” said Flynn.  OPEC members announced plans in late September in Algiers to cut production down to a set target of no more than 33 million barrels per day, but also said it didn’t expect the plan to go into effect until the Nov. 30 meeting in Vienna.  In commentary dated Thursday, OPEC said “we remain deeply optimistic about the possibility that the Algiers agreement will be complemented by precise, decisive action among all producers.” OPEC production, however, has been rising since the group’s proposal was announced. Its output hit a record 34.02 million barrels a day in October, led by a 400,000 barrel-per-day increase from Libya, Nigeria and Iran, according to a recent Bloomberg News survey.

WTI Plunges Back To $44 Handle As CS Warns Of Contango "Big Red Flag" -- WTI Crude has tumbled back to yesterday's lows (after the biggest inventory build on record) with a $44 handle. As Bloomberg reports, Credit Suisse analysts including Jan Stuart warns that OPEC ministers “now face a very tall mountain” as they try to reach agreement on member quotas in an agreement to steady oil markets.

  • As oil prices slide, “we would be less worried about OPEC and sentiment if it were not for the nasty widening of Brent’s prompt-to-six contango”
  • Widening spread a “large red flag about near term global crude oil fundamentals” with commercial participants still seeing things weakening
  • Brent M1-M6 spread closed at -$3.15/bbl yesterday vs - $2.96/bbl Nov. 1

Some more from Credit Suisse's Jan Stuart: For a spell, mostly in September, things oil were improving just fine. As falling Brent and WTI prices are passing the 10%-below-the-peak mark, we would be less worried about Opec and sentiment if it were not for the nasty widening of Brent's prompt-to-six contango.

  • Wider than $3 – in a few short days of trading January as the prompt month, the 1-6 month Brent contango has widened back out to $3.10/b. No longer can we blame the December month's approaching expiry for that large red-flag about near term global crude oil fundamentals. Clearly commercial market participants still "see" things weakening, Figure 1.

It's too early to know how much speculators have already sold into the market's weakness, but evidently Opec has done its bit to deflate expectations. And fundamentally, we don't know yet if last week's US import-surge and extreme stock-build were a catch up or the beginning of a bearish year-end.

Exclusive: Saudis could raise oil output again as sparring with Iran returns - sources | Reuters: Old disputes between Saudi Arabia and rival Iran resurfaced at a meeting of OPEC experts last week, with Riyadh saying it could raise oil output steeply to bring prices down if Tehran refuses to limit its supply, OPEC sources say. Clashes between the two OPEC heavyweights, which are fighting proxy wars in Syria and Yemen, have become frequent in recent years. Tensions subsided, however, in recent months after Saudi Arabia agreed to support a global oil supply limiting pact, thus raising the prospect that OPEC would take steps to boost oil prices. But a meeting of OPEC experts last week, designed to work out details of cuts for the next OPEC ministerial gathering on Nov. 30, saw Saudis and Iranian clashing again, according to five OPEC sources who were present at the meeting and spoke to Reuters on condition of anonymity. "The Saudis have threatened to raise their production to 11 million barrels per day and even 12 million bpd, bringing oil prices down, and to withdraw from the meeting," one OPEC source who attended the meeting told Reuters. OPEC headquarters declined to comment on discussions during the closed-door meetings last week. Saudi and Iranian OPEC delegates also declined official comments.

Oil Slammed Lower After Saudi Threatens To Ramp Up Supply -- Follow OPEC's blame-mongering statement earlier today -"observers should not be quick to judge or criticize" the organization - it appears mutiny is occurring within the cartel as OPEC sources report Saudi Arabia threatening to "steeply raise" output following Iran's refusal to cap output. WTI is tumbling on the news, testing towards a $43 handle. OPEC blames analysts for exposing the cartel's impotence:At OPEC, we remain deeply optimistic about the possibility that the Algiers Agreement will be complemented by precise, decisive action among all producers — the kind of action that we need in order to see prices supported and short-term volatility avoided.In the meantime, industry observers should remember that they should not be too quick to judge or criticize the Organization or its Member Countries. Over the years, we have seen how wildly inaccurate their predictions have been.What many of them have failed to recognize is that OPEC’s great strength is its global reach and its diversity. Its great value is found in the continuing willingness of its Member Countries to confer, consult and coordinate actions if and when necessary.As the years have passed and the market has evolved, the importance of OPEC’s role has, in fact, only increased — proving all those unfortunate nay-sayers wrong once more.As a reminder, Goldman said if deal falls apart, as it now seems to be, that "weakening oil fundamentals warrant oil prices in the low US$40s/bbl in our view if OPEC is unable to deliver a convincing agreement."

OilPrice Intelligence Report: OPEC Chaos Sees Oil Prices Fall: Oil prices settled at a six-week low on Thursday following several consecutive days of large price declines. The major catalysts this week were doubts over an OPEC deal and EIA data showing a record build up in crude oil stocks. The EIA said Wednesday that U.S. oil inventories rose by 14.4 million barrels last week, the largest gain in a single week since data collection began in the early 1980s. WTI plunged below $45 per barrel on the news and the five consecutive days of losses was the longest streak since June. The data could be misleading, however. The huge buildup in inventories came largely because weekly imports spiked. Imports rose by about 2 million barrels per day last week after several weeks of hovering at below-average levels. The import spike was partially affected by bad weather, including a hurricane, and could be an anomaly. If that is the case, crude stocks probably won’t gain at similar rates in the weeks ahead. Still, sentiment is negative after such a down week. "The persistent market dynamic of softer demand and stronger supply will become a more dominant driver of prices as the impact of OPEC's verbal interventions begins to fade and expectations for coordinated cuts are readjusted," BMI Research said in a note to clients.  Saudi Arabia and Russia are “hungry for an agreement,” Ed Morse, the head of commodity research at Citigroup, said this week. That means that OPEC and several non-OPEC countries will probably reach a deal at the end of the month to cut oil production. "We’re expecting the parties that need to do something to boost prices to be serious about deciding something," Morse said. For its part, OPEC said it was “deeply optimistic” this week that they would reach a deal.   A Wall Street Journal survey of 14 investment banks predicts that oil prices will not rise above $60 per barrel for another year. The average forecast of the 14 respondents puts Brent oil prices at $56 per barrel in 2017 and WTI at $54. Those figures are down $1 per barrel from last month’s survey, and stand in stark contrast to forecasts from a year ago, which predicted oil to move above $70 per barrel this year.

Oil Prices Continue To Plunge As U.S. Rig Count Increases - For the oil markets, this week has been nothing short of a Tea Cup ride at some rinky-dink traveling fair, operated by some suspect toothless man wearing overalls with a pocketful of Wild Turkey. And what better way to round out the oil industry’s week by yet another industry report that has the power to send markets spinning for one more round. And so it has. Baker Hughes today reported a 12-site increase in the oil and gas rig count, bringing the total number of active rigs to 569. Oil accounted for most of the gains, with a 9-site increase, with the number of gas rigs increasing by 3. Texas was the biggest winner this week, with a 6-site increase. For Texas, this brings the total oil and gas rig count to 262, which is 78 under this same time last year. The next largest gainer by state is Oklahoma, which had a 3-site increase. Oklahoma is now only 7 sites shy of what it had in operation this same time last year.Alaska was the only state to lose a rig this week. Last Friday, markets were a slightly relieved to hear that Baker Hughes had reported a small, two-rig decline. Small numbers, but a welcomed relief that ended what had been 17 weeks of steady or increasing numbers to the active oil rig count. Before the count released last Friday, prices had been on the decline, reaching losses that had not been seen for over a month. Right before the count, WTI was trading at $49.21 and Brent at $50.02. This week, moments before the release by Baker Hughes, WTI was trading at $43.99—down 1.5% since open, with Brent trading at $45.50—down 1.83% from its opening mark. So going into the count, we were already almost $5 per barrel under last week figures. With the reported increase in the number of active wells in the United States, the market is sure to see even bigger losses heading into the weekend.

U.S. Oil-Rig Count Rises by Nine -- Baker Hughes - WSJ: The number of rigs drilling for oil in the U.S. rose by nine in the past week to 450, according to oil-field services company Baker Hughes Inc.The U.S. oil-rig count is typically viewed as a proxy for activity in the sector. After peaking at 1,609 in October 2014, low oil prices put downward pressure on production and the rig count fell sharply. The oil-rig count has generally been rising since the beginning of summer. The nation’s gas-rig count rose by three to 117 in the past week, according to Baker Hughes. The U.S. offshore-rig count fell by one from last week to 21, which is 11 fewer than a year ago. On Friday, crude-oil prices fell as investor skepticism grew stronger about production cuts from the Organization of the Petroleum Exporting Countries. OPEC has been trying to formulate a deal to cut production, but reports of record output during October have stoked concern. Oil prices were 0.7% lower at $44 a barrel in recent trading Friday.

Prepare for North Sea Oil Flood as OPEC Plans Output Curbs (Bloomberg) – Oil producers in the North Sea, home to one of the world’s key crude-price benchmarks, are poised to ship the most crude in more than four years. The surge takes place just as OPEC tries to contain a global surplus with coordinated output cuts. Shipments of North Sea grades will increase 10 percent month-on-month to about 2.16 million barrels a day in December, according to data compiled by Bloomberg. If all the cargoes load as planned it would mark the most crude oil shipments from the region since May 2012. The increase just from September, when there was field maintenance, would be almost 360,000 barrels a day. The surge poses yet another challenge to the Organization of Petroleum Exporting Countries as it seeks to curb production to steady markets in a world with plenty of oil. OPEC ministers will meet in Vienna on Nov. 30 to decide how to trim output to a range of 32.5 million to 33 million barrels a day. Libya, Nigeria and Iran are claiming exemption from cuts because of their own circumstances, and Iraq has contested how its output has been measured. “Rebalancing the market is going to be an uphill task,” in part because North Sea supplies are adding to the surplus, Ehsan Ul-Haq, senior market consultant KBC Energy Economics, said by phone. “If OPEC is really interested in reducing stocks and bringing the market into balance, they’ll have to make deeper cuts than promised before.” Brent crude fell extending its slide to a sixth day. It was down 7 cents at $46.28 a barrel at 8:41 a.m. in London. While supplies from some nations outside of OPEC are indeed falling, non-members boosting their crude output include Kazakhstan, Brazil and Russia, which last month pumped oil at a post-Soviet era high. OPEC itself increased production to a record 34.02 million barrels a day in October, according to a Bloomberg survey of analysts, oil companies and ship-tracking data. In addition, the U.S. is now freely shipping its oil across the globe, following the removal of export restrictions last year.

OPEC October Output Surged to New Record of 33.54 Mil. Barrels Per Day: S&P Global Platts -- Oil production from the Organization of the Petroleum Exporting Countries (OPEC) rose to another record, at 33.54 million barrels per day (b/d) in October, according to survey of OPEC and oil industry officials by S&P Global Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets. Recoveries in strife-torn Libya and Nigeria significantly boosted the organization's output and more than offset field maintenance in Angola. The gains, which total 300,000 b/d from September and mark the fifth consecutive month of increased production, further complicate the path for OPEC to freeze production between 32.5 million to 33 million b/d in order to support prices and accelerate the drawdown of inventories."OPEC's freeze math has gotten more complicated, as its countries keep pumping more," said Herman Wang, senior writer for S&P Global Platts. "With OPEC having self-imposed a November 30 deadline to finalize the freeze, the pressure will be on to deliver a deal that the market views as credible. Progress towards that goal has been slow, and a fifth straight month of record high production won't help." Libya and Nigeria are exempt from the freeze, according to the plan announced in Algiers five weeks ago, but increases in Iraq and the expected return of Angolan production once the Dalia field maintenance is complete will make it harder. OPEC kingpin Saudi Arabia, which is expected to bear the brunt of any cuts that the producer group implements, saw its output decline to 10.53 million b/d for October, with reduced crude consumption for power generation, as the peak summer air conditioning season ended. Iraq, the organization's second largest producer, had output of 4.56 million b/d in the month, on increased exports. Iraqi oil exports in October were boosted by higher loadings from the southern terminals along with a rise in pipeline exports from the Turkish port of Ceyhan. The country, which has disputed secondary source estimates – including from Platts -- used by OPEC to determine each country's monthly output, invited several media organizations to Baghdad last month to detail its field-by-field production.

OPEC Is Now Irrelevant – This Oil Price Plunge Is Different - In the past, whenever oil prices have slumped OPEC would help them to recover promptly through the sincere and concerted efforts of OPEC members. So, what is different this time?   When oil prices tumbled down after mid 2014, OPEC discovered that the main culprit was the booming U.S. shale oil industry. The cartel had to decide how to deal with this new emerging threat. The decision was between living together in a competitive market or attempting cut the emerging shale industry at the knees by means of sustained low prices. OPEC decided to take the later approach. Instead of taking cost cutting measures to meet the new challenges from U.S. shale oil and diversifying their oil based economies, they flooded the market. A clear intent was to keep oil prices low and knock out U.S. shale oil producers in order to maintain market share. The perception was that in just a few months, the U.S. shale oil industry would have perished, unable to cope with the lower oil price environment over an extended period of time.  The cartel was seemingly unaware of the speed of technological advancement that continues to bring down breakeven prices for shale. Advances in drilling technology, optimized resource management policies and the smart use of hedging have allowed the U.S. shale oil industry as a whole to stay afloat even as bankruptcies pile up. The consequences of a prolonged period of softer oil prices has now started to pinch OPEC nations themselves. The plan to defeat shale oil producers backfired.  With no alternative choice, OPEC went back to its old wisdom of manipulating oil production as it has done so successful in the past.  . Repeatedly, OPEC’s members failed to agree on a tangible production cut, asking to be exempted for their own political and economic reasons.  Mediocre cash flows have pushed oil producers to up output even further. Both Russian and Saudi Arabian production was up over 11 mmbd, despite weaker global oil demand. Consequently, oil prices remained subdued as the supply glut continued unabated. Oilprice.com’s Andreas de Vries and Salman Ghouri recently published an article on the 5-negative factors for oil prices that highlights why oil continues to sell off. U.S. shale oil remains the biggest threat to the industry and oil prices over the short-medium term. While structural changes in the automotive industry and the rising role of renewables are yet another threat that challenges the survival of oil in the medium to long-term.

Saudi oil minister sees demand rising despite renewables  — Global appetite for oil and gas will continue to grow despite intensifying efforts to curb climate change, even as renewable energy plays an increasing role in the energy mix, Saudi Arabia’s powerful energy minister Khalid Al-Falih said.Commitments undertaken as part of the COP21 accord reached in Paris last year will “turn debate into action” and lead to greater efforts world-wide to limit climate change, said Mr. Falih, who is also the chairman of Saudi Arabian Oil Co., known as Saudi Aramco. Even fast-growing energy consumers such as India and China “will play a vital role in meeting global climate change targets,” he told an energy conference in Riyadh.But without technological breakthroughs, renewable energy will not displace more cost-effective fossil fuels, he said. “We see a long future ahead in which” fossil fuels “will be part of the energy mix, with the contribution of renewables growing.”That means “the notion of stranded resources is therefore ill-advised and misleading to markets,” he said.This year, the kingdom unveiled a plan to transform its oil-dependent economy by diversifying into other sectors, with moves that include the privatization of some assets and the public listing of a small minority of Aramco.Mr. Falih called the diversification plan a “holistic approach to problem-solving,” in his speech at the conference, hosted by KAPSARC, a Saudi energy research center.  Mr. Falih said the early stages of Saudi development depended heavily on oil but they were also marked by inefficient consumption. Mr. Falih said the kingdom isn’t reducing the “contributions of oil and gas” but rather increasing the contributions of other sectors to minimize the volatile effects of the commodity cycle and accelerate the growth of the Saudi economy.

Saudi central bank foreign assets shrink $7.4 bln in September | Reuters: Net foreign assets at Saudi Arabia's central bank fell by $7.4 billion to $546.7 billion in September from the previous month, as the government drew down reserves to cover a budget deficit caused by low oil prices, official data showed on Sunday. Assets shrank by 15.5 percent from a year earlier to their lowest level since January 2012. They reached a record high of $737 billion in August 2014 before starting to fall.

Attorney General Lynch 'Pleads Fifth' On Secret Iran 'Ransom Payments’ - Attorney General Loretta Lynch is declining to comply with an investigation by leading members of Congress about the Obama administration’s secret efforts to send Iran $1.7 billion in cash earlier this year, prompting accusations that Lynch has “pleaded the Fifth” Amendment to avoid incriminating herself over these payments, according to lawmakers and communications exclusively obtained by the Washington Free Beacon. Sen. Marco Rubio (R., Fla.) and Rep. Mike Pompeo (R., Kan.) initially presented Lynch in October with a series of questions about how the cash payment to Iran was approved and delivered. In an Oct. 24 response, Assistant Attorney General Peter Kadzik responded on Lynch’s behalf, refusing to answer the questions and informing the lawmakers that they are barred from publicly disclosing any details about the cash payment, which was bound up in a ransom deal aimed at freeing several American hostages from Iran. The response from the attorney general’s office is “unacceptable” and provides evidence that Lynch has chosen to “essentially plead the fifth and refuse to respond to inquiries regarding [her] role in providing cash to the world’s foremost state sponsor of terrorism,” Rubio and Pompeo wrote on Friday in a follow-up letter to Lynch, according to a copy obtained by the Free Beacon. The inquiry launched by the lawmakers is just one of several concurrent ongoing congressional probes aimed at unearthing a full accounting of the administration’s secret negotiations with Iran. “As the United States’ chief law enforcement officer, it is outrageous that you would essentially plead the fifth and refuse to respond to inquiries,”  the lawmakers wrote. “The actions of your department come at time when Iran continues to hold Americans hostage and unjustly sentence them to prison.”

Syrian rebels’ Aleppo offensive could amount to war crimes, UN envoy warns - The United Nations envoy for Syria has said he is “appalled and shocked” by indiscriminate rocket warfare targeting civilians in Aleppo after three days of a fresh rebel offensive in which dozens have died. Staffan de Mistura said: “Those who argue that this is meant to relieve the siege of eastern Aleppo should be reminded that nothing justifies the use of disproportionate and indiscriminate weapons, including heavy ones, on civilian areas and it could amount to war crimes.” Syrian insurgents on Sunday kept up their shelling of government-controlled areas of the city, killing at least seven people, including three children, state TV reported, and used car bombs and tanks to push into new territory in western areas. The Syrian government claimed the opposition fighters used toxic gas. The attacks raised the death toll in the three-day old offensive to at least 41 civilians, including 16 children, according to the Britain-based Syrian Observatory for Human Rights. The observatory said hundreds of mortars were lobbed. The offensive aims to breach a government siege on Aleppo’s rebel-held eastern districts, apparently aiming to push out government troops from frontline areas. A tight siege has been in place since July, trapping nearly 275,000 civilians in eastern rebel-held Aleppo. The dividing lines between government-held and rebel-controlled Aleppo are often streets lined with deserted buildings or extended plastic sheets to mark rival turfs. Russia and the Syrian government have halted their airstrikes on the rebel-held part of Aleppo since last week to allow for the evacuation of wounded and civilians. But no evacuation took place and efforts to allow medical and food supplies into the besieged area also faltered. Meanwhile, pro-government troops kept up a ground offensive against rebel-held areas.

Solution for Syria Requires United States to Concede on Assad -- Normally, I would not post another Real News Network interview with Colin Powell’s former chief of staff when he was Secretary of State, Tom Wilkerson, so close to Yves posting Is the US Headed Towards War in Syria?, another interview with the same subject just last week. Yet given the urgency of the topic, reader interest in last week’s post, and the perhaps Panglossian hope that high-level focus on this issue now might limit the range of future options that hawkish Hillary Clinton can take in future– in what I must admit still looks to be the likeliest scenario, that she is inaugurated come January– I upload this post. Perhaps if the Obamamometer took time off from his rounds of legacy-burnishing interviews and concentrated on this problem, he might have a chance of correcting one specific aspect of his horrendous existing foreign policy legacy before the clock runs out on his administration.  This Real News Network interview with Lawrence Wilkerson, offers some suggestions on what would be necessary to stop the immediate ongoing slaughter and reach a peaceful solution in the longer term. It’s by no means the most comprehensive nor the last word on the subject.

48% Of Russians Fear Syrian Conflict Will Lead To World War III - A recent Russian polls revealed something disturbing: according to almost half of the respondents, the deteriorating relations between Russia and the West caused by the ongoing crisis in Syria could develop into a global military conflict. As RT reports, the share of those who see the probability of World War III in the near future as high or very high is now at 48% and those who appraise it as low or very low comprise 42% of Russian society, according to the privately-owned public opinion research center Levada. The remaining 10% of respondents said they couldn’t give a simple answer to the question. Another question revealed that Russians are skeptical there will be a peaceful solution to the Syrian crisis, with a greater number seeing a non-violent outcome as more likely than not: when poll respondents were asked if they considered it possible that Russia and the West would eventually find a mutually acceptable solution to the crisis, 35% answered that this scenario was likely or very likely. Thirty-nine percent evaluate the probability of such an outcome as low or very low and 26 percent said that they couldn’t answer the question.

Russia Kicked Out Of UN Human Rights Council; Saudi Arabia Reelected - Yesterday, for the first time since 2006, Russia failed to be re-elected for a spot on the UN Human Rights Council (UNHRC) - which until July was chaired by none other than Saudi Arabia - after being narrowly beaten by Croatia in a vote. Meanwhile, Saudi Arabia was successfully re-elected, despite vocal criticism from human rights organizations. The 47 places on the council are distributed on a regional basis, with staggered elections seeing a third of the body re-elected each year. Russia had finished its three-year term, and was running against Hungary and Croatia for the two available seats from Eastern Europe. The decision was close, and came down to just two votes: with Hungary far ahead, Croatia received the votes of 114 of the 193 member countries, and Russia was selected on 112 ballots. "It was a very close vote and very good countries competing, Croatia, Hungary. They are fortunate because of their size, they are not exposed to the winds of international diplomacy. Russia is very exposed. We've been in the UNHRC for several years, and I am sure next time we will stand and get back in," Russia's UN envoy Vitaly Churkin said quoted by RT. Russia is eligible to run next year, against a new set of countries. Ahead of this year’s vote Russia came under concerted pressure from human rights organizations. “The non-election of Russia shows that the nations of the world can reject gross abusers if they so choose,” said executive director Hillel Neuer. “This makes the election of Saudi Arabia, China and Cuba even more preposterous.

US election could reshape Russian sanctions, energy ties  -- US economic policy toward Russia, including sanctions restricting Western oil companies' operations there, could take two sharply different paths, depending on who wins Tuesday's presidential election. Among oil companies, ExxonMobil could have the most at stake, since sanctions halted its partnership with Rosneft, Russia's largest crude producer.Analysts in Russia and the US expect a Trump administration to take a softer approach, potentially easing sanctions the Obama administration leveled against Russia in 2014 over its involvement in the Ukraine conflict. A Clinton administration would likely hold Russia to its international agreements and only let up on the sanctions if Moscow made positive steps at reconciliation. Analysts also see the possibility of Clinton tightening sanctions in response to any new Russian provocation around the world. The US sanctions against Russia represent more of a wild card than sanctions against Cuba and Iran, for example, because no legislation from Congress currently hamstrings the White House from taking executive action to change them. The key casualty of the sanctions has been ExxonMobil's partnership with Rosneft on Arctic, shale and deepwater crude production. Exxon was forced to suspend its involvement in drilling at the Pobeda project in Russia's Arctic Kara Sea. In March 2015, CEO Rex Tillerson estimated potential losses from the sanctions at up to $1 billion. He said they affected joint venture activities with Rosneft, including "exploration in Russian Arctic waters, exploration in the deepwater Black Sea and evaluation of tight oil potential reservoirs in West Siberia." ExxonMobil declined to comment for this story.

Iraq Threatens Turkey With War After Erdogan Deploys Tanks To Iraqi Border - In the latest provocation between Turkey and Iraq, the Turkish military begun deploying tanks and other armored vehicles to the town of Silopi near the Iraqi border, in a move the defense minister said on Tuesday was related to the fight against terrorism and developments across the border.As a reminder, Iraq had previously slammed the presence of Turkish troops on its territory, when on October 5 Baghdad warned of "regional war" if Turkey does not withdraw its force.  That threat, however, was lost on the Turkish defense minister, Fikri Isik who said Turkey had "no obligation" to wait behind its borders and would do what was necessary if Kurdistan Workers Party (PKK) militants took a foothold in northwest Iraq's Sinjar region, around 115 km (71 miles) south of Silopi. "We will not allow the threat to Turkey to increase," he told broadcaster A Haber in an interview.The army deployment, disclosed by military sources, came after President Tayyip Erdogan said on Saturday that Turkey was aiming to reinforce its troops in Silopi. Photos from the sources showed a long column of vehicles, including tanks, tank rescue vehicles and construction vehicles in single file on a dual carriageway. As Reuters reports, the deployment coincides with an Iraqi operation to drive Islamic State from the northern Iraqi city of Mosul and after Iraqi Shi'ite militias launched a related offensive to push the jihadists out of the town of Tal Afar further west. Erdogan said on Saturday Ankara would have a "different response" for Shi'ite militias if they "cause terror" in Tal Afar, home to a sizeable ethnic Turkmen population with historic and cultural ties to Turkey. Sinjar, where Ankara believes the PKK is developing a presence, is situated some 50 km west of Tal Afar. Additionally, Sirnak province, where Silopi is located, is also one of the main areas of conflict between Turkey's army and the PKK, whose main bases are in the mountains of northeast Iraq. Iraq's response, as expected, came fast, and in a tweet by the official Twitter account of the Iraqi Popular Mobilization Units fighting ISIS in Iraq, the PMU said that "Any Turkish invasion of Ezidi Sinjar will face the full force of the Iraqi PMU to defend our lands from Turkey", effectively threatening Turkey with war should Turkey's tanks cross the border.

U.S. State orders family of employees in Istanbul to leave country | Reuters: The U.S. State Department updated its travel warning on Turkey on Saturday, ordering family members of consulate employees in Istanbul to leave the country, citing threats against U.S. citizens. "The Department of State made this decision based on security information indicating extremist groups are continuing aggressive efforts to attack U.S. citizens in areas of Istanbul where they reside or frequent," the department said in a statement. The State Department said the U.S. Consulate General in Istanbul remains open and said the order does not apply to any other U.S. diplomatic posts in Turkey. Saturday's warning updates previous State Department advisories of "increased threats from terrorist groups throughout Turkey." The department advises U.S. citizens to avoid travel to southeast Turkey and also advises caution on the risks of traveling anywhere in the country.

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