Sunday, November 20, 2016

US becomes a natural gas exporter, press finds "largest oil deposit ever", rigs jump, DUCs increase

we’ll start by noting that the US has hit a major natural gas milestone as of this week, as our exports of natural gas have exceeded our imports, making us a net exporter of natural gas for the first time in our history....this came about as our ongoing imports from Canada were reduced because the discount for Canadian gas compared to US prices had fallen to 36 cents per mmBTU from a prior average of 60-cents per mmBTU, and because the sole operating natural gas liquefaction facility at Sabine Pass Louisiana began to run a third "train" to liquefy gas for export...not many knew that up until this week, we've continued to import copious amount of Canadian gas despite our own overproduction, because it could be had for even lower prices than our own record lows, even as we exported smaller amounts of gas to Mexico...this switch to being an exporter is just the beginning... recall that 5 weeks ago we published a list of 19 LNG export projects that were at various stages along the regulatory process, and that we noted that should they all be completed, they would require more than 30 billion cubic feet of gas per day to meet their combined capacities...since our current natural gas production has been running at around 72 billion cubic feet of gas per day, production of gas from newly fracked US wells would have to increase by more than 40% from current levels if all those projects would be completed...since more than half of the new natural gas production over the past 4 years has come from the Marcellus and the Utica, that suggests that it would be new wells in our region that would be supplying this export the Utica, that new gas supply would generally have to come from the counties east and south of Geauga because, as we showed 6 months ago, the hydrocarbons in the Utica underlying most of our county and points west exist as oil..

that news on our gas exports notwithstanding, the fracking patch story that by far received the most mainstream media coverage this week was that "The largest oil deposit ever found in America was just discovered in Texas", of course, the way that headline and many other headlines put it is just plain nonsense; there was no massive oil deposit in west Texas that had gone undiscovered until this week...what prompted the headline was the first assessment of the Wolfcamp shale in the Midland Basin portion of Texas' Permian Basin by the U.S. Geological Survey, which found that the Wolfcamp "contains an estimated mean of 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas, and 1.6 billion barrels of natural gas liquids" of technically recoverable resources...the Wolfcamp shale is just one of many shale deposits in the Permian basin; others that you might find familiar include the Delaware, the Spraberry, Bone Springs, and the Wolfberry...and the existence of copious oil reserves in this basin isn't new or "just discovered"; drilling in the Wolfcamp has been part of the rig count increase in the Permian basin that we've been seeing since May, which as we've pointed out, has accounted for more than half of the rigs added nationally over the past 5 fact, the USGS itself notes that their assessment came by way of the over 3000 horizontal wells that had already been drilled and completed in the Wolfcamp, and as a result of those wells they found from that that the reserves in Wolfcamp alone were nearly three times larger than the reserves shown to be contained in the Bakken shale, which the USGS last assessed in 2013....what i found most notable in the description of this shale basin was that it's as much as a mile thick in some places, which is more than 10 times the thickness of the Eagle Ford or the that to the thickness of the combined Utica-Point Pleasant formation that underlies Ohio, which is only 225 to 245 feet thick where it's now being worked, and which maxes out at 395 feet thick in the far northeastern corner of the state..

so just how much oil is 20 billion barrels?  matched up against the current US oil production of around 8.7 million barrels per day, 20 billion barrels could replace our current production for 2,325 days, or somewhat less than 6 and a half years...but when considering the US, we have to note that our oil consumption is far in excess of our oil, if we take this year's cumulative daily average of our production plus our net imports (i.e., imports minus exports) from line 1 and line 4 of the weekly U.S. Petroleum Balance Sheet, we find that we've been using about 16.2 million barrels of oil per day throughout 2016... thus, at that rate, the 20 billion barrels of oil in the Wolfcamp would last us 1,234 days, or less than three and a half years....but since our oil has just started to flow overseas this year with the lifting of the oil export ban and much more of it may be destined for export once additional facilities to load oil onto ocean going ships are constructed, we have to consider that the oil found in the US has now become part of the global oil that case, the 20 billion barrels of oil in the Wolfcamp shale is only about 210 days of global oil consumption at current levels, which means that for oil to continue to be a sustainable energy source for entire planet, we'd have to find three world class oil reservoirs the size of the Wolfcamp every two years...

coincidentally, the Drilling Productivity Report for November was released on Monday of this past week, and it showed the first increase in uncompleted wells nationally in the past 7 months, largely as a result of dozens of newly drilled but uncompleted wells (DUCs) in the might recall that as of the September Drilling Productivity Report, the EIA began providing a monthly estimate of the number of drilled but uncompleted wells (DUCs) in the 7 regions that the Drilling Productivity Report covers; at that time, they estimated that such wells had decreased by 34 wells during August, indicative of frackers completing more wells than were being drilled... in September, such DUCs were again down by 27 wells, as higher oil prices continued to result in more fracking than the current report for October, they showed that completion of wells slowed even as the drilling rig count rose, as the total count of DUCs in the US rose from 5097 in September to 5,155 in October...the Permian basin, which includes the Wolfcamp and several other shale plays in EIA stats, saw its total count of uncompleted wells rise from 1,382 in September to 1,467 in October, in keeping with the increase in drilling that we've seen in that basin...on the other hand, DUCs in the Eagle Ford of south Texas fell by 30, from 1339 in September to 1,309 in October...the Marcellus also saw a decrease in DUCs (which means more wells were being fracked than were being drilled) as the Marcellus DUC count fell from 650 in September to 643 in October...DUCs in other basins were little changed; the Utica showed an increase of one uncompleted well and thus had 115 DUCs in October...for the month, DUCS in the 4 oil basins (ie the Bakken, Niobrara, Permian, and Eagle Ford) increased for the first time in 7 months, as drilling in the Permian picked up, while the DUC count in the natural gas regions (the Marcellus, Utica, and the Haynesville) slipped by 2 wells and has generally declined since December 2013, as new natural gas drilling fell to record low levels and has barely recovered.... 

The Latest Oil Stats from the EIA

this week's release of oil data for the week ending November 11th by the US Energy Information Administration indicated the second consecutive big increase in our oil refining since the fall slowdown began, accompanied by a large jump in our imports of oil, which thus resulted in increases in our supplies of both oil and most of the products made from the same report, the crude oil fudge factor that was needed to make the weekly U.S. Petroleum Balance Sheet (line 13) balance fell to +256,000 barrels per day, from last week's +450,000 barrels per day, which means that 256,000 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...that's now the 4th large positive adjustment in a row, and as a result the cumulative daily average of that adjustment has risen to 109,000 barrels per day, meaning the EIA's figures remain out of balance for the whole year, and should by rights be taken with a large grain of salt, if not completely ignored...but these figures still continue to drive oil prices and hence oil field activity, so we'll just continue to track them as long as the market participants continue to believe them...

so, for the week ending November 11th, the EIA reported that our imports of crude oil rose by an average of 981,000 barrels per day to an average of 8,423,000 barrels per day, as our imports still remain inexplicably more volatile than usual after the hurricane induced disruption of 5 weeks ago...those imports were 20.9% more oil than the 6,968,000 barrels per day we imported during the week ending November 13th last year and as a result, the 4 week average of our oil imports reported by the EIA's weekly Petroleum Status Report (62 pp pdf) bounced back up to an average of 8.0 million barrels per day, 12.6% higher than the same four-week period last year...meanwhile, our exports of crude oil rose by an average of 71,000 barrels  per day to an average of 481,000 barrels per day for the week, in data that is not directly comparable to last year's exports of 504,000 barrels per day during the equivalent week

at the same time, the EIA reported that production of crude oil from US wells slipped by 11,000 barrels per day to an average of 8,681,000 barrels per day during the week ending November 11th, the first decrease in 6 weeks, coming after US production had increased by 170,000 barrels per day last week... that happened as output from Alaskan fields fell by 3,000 barrels per day, and production from the lower 48 states was 8,000 barrels per day lower....that left the week's domestic oil production 5.4% lower than the 9,182,000 barrels we produced during the week ending November 13th of last year, and 9.7% below the record 9,610,000 barrels per day of oil production that we saw during the week ending June 5th 2015...our oil production for the week ending November 11th was also 538,000 barrels per day, or 5.8% 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 also reported that the amount of crude oil used by US refineries rose by an average of 309,000 barrels per day to an average of 16,126,000 barrels of crude per day during the week ending November 11th, as our refinery utilization rate rose to 89.2% during the week from last week's 87.1%, but it was still lower than the refinery utilization rate of 90.3% logged during the week ending November 13th last year...US oil refining is still down by 804,000 barrels per day, or by 4.7%, in the 10 weeks since Labor Day, as the refinery utilization rate had fallen from 93.7% from then to 85.2% by the end of October .. the quantity of crude oil refined this week nationally is now up slightly from the 16,076,000 barrels of crude per day US refineries used during the week ending November 13th last year, and up 1.3% from the 15,913,000 barrels per day that were being refined during the equivalent week in 2014... 

however, even with the jump in the amount of crude oil being used by refineries, the EIA reported that refineries’ production of gasoline fell by 302,000 barrels per day to 10,152,000 barrels per day during the week ending November 11th, after it had risen by 632,000 barrels per day to an apparent record high prior week, a record which was facilitated by the change in the fudge factor to correct for the imbalance created by the blending of ethanol with gasoline...thus this week's 'drop' in gasoline production reflects the absence of the big change in that fudge factor, rather than a real decrease...hence, our gasoline output for the week was still 6.2% higher than the gasoline output of 9,558,000 barrels per day during the week ending November 13th last year, and 5.4% higher than the gasoline production during the same week of the same time, the EIA reported that refinery output of distillate fuels (diesel fuel and heat oil) rose by 200,000 barrels per day to 4,984,000 barrels per day during the week ending November 11th....however, that increase still the week's distillates output 1.0% lower than the 5,032,000 barrels per day that was being produced during the same week last year, while it was 4.0% higher than the 4,793,000 barrels per day of distillates we produced during the equivalent week of 2014...     

absent the big swing in the gasoline fudge factor, the EIA reported that our gasoline supplies rose by 746,000 barrels to 221,709,000 barrels as of November 11th, even as our domestic consumption of gasoline rose by 146,000 barrels per day to 9,359,000 barrels per day, largely because our gasoline imports rose by 321,000 barrels per day to 821,000 barrels per day, which looks to be the largest increase in gasoline imports since July 26th a result, November 11th's gasoline inventories were 3.5% higher than the 214,254,000 barrels of gasoline that we had stored on November 13th of last year, and 8.4% higher than the 204,599,000 barrels of gasoline we had stored on November 14th of the same time, our distillate fuel inventories rose by 310,000 barrels to 148,912,000 barrels by November 11th, the first increase in our distillate supplies in 8 weeks....however, even after the withdrawal of 16.1 million barrels of distillates from storage over the past 8 weeks, our distillate inventories were still 6.1% higher than the distillate inventories of 140,318,000 barrels of November 13th last year, and 29.7% above the distillate inventories of 114,794,000 barrels of November 14th, 2014…

finally, with that big jump in our oil imports, our inventories of crude oil rose by 5,274,000 barrels to 490,284,000 barrels by November 11th, the third increase in a row, over which time our supplies of crude oil have increased by 22,126,000 barrels....however, with 2 hurricanes interfering with oil imports in the 8 prior weeks, our oil stockpiles are still nearly 5 million barrels below the 495,238,000 barrels we had stored at the end of August, thus slipping at a time of year when oil supplies are usually rising, and remain 4.3% below their April 29th peak of 512,095,000 barrels...however, we still ended the week with 7.7% more crude oil in storage than the 455,074,000 barrels we had stored as of the same weekend a year earlier, and 40.6% more crude oil than the 348,758,000 barrels we had stored on November 14th of 2014...   

This Week's Rig Count

US drilling activity rose for the 8th time in 9 weeks during the week ending November 18th, bouncing back from last week's one rig decrease to post the largest increase in 31 months....Baker Hughes reported that the total count of active rotary rigs running in the US rose by 20 rigs to 588 rigs by this Friday, which was still down from the 767 rigs that were deployed as of the November 20th report last year, and down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...

rigs deployed drilling for oil rose by 19 rigs to 471 rigs for the week, the most oil rigs we've had working since January 29th, as oil drilling activity has only been down once in the past 21 weeks...oil drilling work is still down from the 564 oil directed rigs that were working on November 20th a year ago, however, and down from the recent high of 1609 oil rigs that were drilling on October 10, the same time, the count of drilling rigs targeting natural gas formations increased by 1 rig to 116 rigs, which still left active gas rigs down from the 193 natural gas rigs that were in use a year ago, and down from the recent natural gas rig high of 1,606 natural rigs that were deployed on August 29th, 2008...another rig that was active was classified as miscellaneous, an increase from a year ago, when no such miscellaneous rigs were active...

offshore drilling activity increased with the activation of two additional drilling platforms in the Gulf of Mexico off the Louisiana coast, where there are now 22 rigs drilling....another driller is working offshore from Texas, so the Gulf of Mexico count is now up to 23, but still down from 30 last year at this time...that's also true of the total US offshore count, because no rigs other than those in the Gulf were active offshore elsewhere this week or during the same week a year addition, a single rig was set up to drill through an inland lake in southern Louisiana this week, bringing the inland waters rig count back up to two, same as a year ago...

the number of working horizontal drilling rigs increased by 13 rigs to 470 rigs this week, which was still down from the 581 horizontal rigs that were in use on November 20th of last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, the vertical rig count increased by 7 rigs to 66 rigs this week, which was down from the 107 vertical rigs that were drilling in the US during the same week last year...meanwhile the directional rig count was unchanged at 52 rigs, which was down from the 69 directional rigs that were deployed during the same week last year... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes which shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas both tables, the first column shows the active rig count as of November 18th, the second column shows the change in the number of working rigs between last week (November 11th) and this week (November 18th), the third column shows last week's November 11th 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 20th of 2015...   

November 18 2016 rig count summary

once again, we can see that the Permian basin increase was behind the near record increase in drilling this week, as once again the 11 rigs added in Permian accounted for more than half of this week's jump...note that at 229 rigs, drilling in the Permian is now up by 4 rigs from a year ago, and accounts for nearly half of the horizontal rigs working in the entire nation...also notice that there were 3 rigs added in the Utica, all of which were drilling for natural gas, as are all of the 19 rigs that were active here this week; that's only 1 rig shy of the 20 active in the Utica a year ago, meaning the Utica is close to joining the Permian and the Cana Woodford as the plays seeing the largest rebound this summer and fall....note that in addition to the state changes shown in the first table above, Alabama also saw a rig start up this week, their first activity since October's also an increase from a year ago, as there was no drilling in Alabama between mid October of 2015 and mid January of this year


Maryland asks EPA to crack down on pollution from Midwest coal plants - Maryland environmental regulators are asking their federal counterparts to crack down on 19 coal plants in five other states whose emissions — carried hundreds of miles by the wind — make the air here unhealthy to breathe on hot summer days. The plants have spent billions of dollars on technology to reduce pollution, but according to Maryland officials, they don't use it every day during the summer, when heat and sunshine cause the pollutant ozone to form and make air quality its worst. Ben Grumbles, the state's environment secretary, is asking the U.S. Environmental Protection Agency to step in before this summer. "We're saying to EPA we know for a fact those power plants have the existing control technologies, they have installed them, but for whatever reason, they're not running them every day during the ozone season," Grumbles said. "That is one very easy way for downwind states like Maryland to benefit." Maryland environmental officials estimate that 70 percent of this state's ozone pollution comes from upwind states. Such air pollution contributes to health problems that include respiratory illness and heart disease. "Any effort to clamp down on that noxious pollution can only be of benefit to breathers in Maryland," said Frank O'Donnell, president of Clean Air Watch, an advocacy group in Washington. "There are multiple tools within the Clean Air Act to deal with interstate pollution." Maryland's petition concerns 36 coal-fired units at 19 plants in Indiana, Kentucky, Ohio, Pennsylvania and West Virginia. Grumbles said the state has been tracking data and air pollution models for the past three years to learn that efforts to cut pollution have fallen short of their potential.

Cuyahoga Council expected to approve wind and solar energy power agreement | - The Cuyahoga County Council is expected Tuesday to approved a 10-year, power-purchase agreement with Cleveland Public Power that includes buying locally generated wind and solar power. The clean energy would come from a yet-to-be-constructed wind farm in Lake Erie and a solar farm to be built on a brownfield in the Cleveland area. "There's no question in my mind that it will pass," Council President Dan Brady said of the legislation. Advocates hope the Icebreaker six-turbine wind farm will encourage the placement of more wind turbines in the Great Lakes and that Northeast Ohio will become a manufacturing center for the industry. The agreement with Cleveland Public Power is complex. It would provide 20 to 23 percent of the electricity to 17 county buildings, including the Justice Center complex in downtown Cleveland and the Juvenile Justice Center at the corner of Quincy Avenue and East 93rd Street. The agreement also calls for the county to construct a solar farm on a brownfield and for the farm to provide power to the county. The location of the brownfield has not been determined, but three in Cleveland and one in Brooklyn are under consideration, said Mike Foley, director of the county's department of sustainability. The 10-year contract with Cleveland Public Power would cost an estimated $68 million, but the expectation is that it will ultimately be extended over 25 years for a total cost of about $166 million. Estimates have the county saving $2.5 million to $3.2 million over that time period, Foley said.

Against the wind: Ohio lawmaker pushes for stricter rules on wind development | Midwest Energy News: An Ohio lawmaker who played a key role in tripling property line setbacks for wind turbines wants regulators to adopt strict rules when implementing the setbacks and other provisions for new commercial wind farms, which industry experts say are already effectively banned in the state. “If wind farms cannot be developed without borrowing or stealing their neighbors’ nonresidential property in order to satisfy the setback, health, and safety requirements, then perhaps they should not be developed at all,” state Sen. Bill Seitz (R-Cincinnati) asserted in comments filed on October 31 with the Ohio Power Siting Board, of which Seitz is a non-voting member. The proposed rules aim to implement setback provisions in Ohio House Bill 483, mandating that each wind turbine be about a quarter of a mile from any adjoining property line. The proposed rules would also require measurements at the property lines for sound and so-called flicker effects, additional bird monitoring, and added studies and technical reports. Critics say the rules are not based on safety or health. “What HB 483 put in place in terms of setbacks essentially functions as a ban on wind energy in Ohio,” said Andrew Gohn at the American Wind Energy Association. The provisions “effectively zoned new wind projects out of the state, decimating the prospect of new wind projects, and injuring clean energy progress,” Before HB 483 came into effect, the required property line setback for turbines on Ohio wind farms was roughly 550 feet, or 110 percent of the height of a turbine. “One hundred ten percent of the turbine height to the property line is what we see pretty universally,” Gohn said. “That’s really sort of the safety-based standard in case of any sort of issue with the turbine.” Beyond that, the law before HB 483 called for a 1,125-foot setback to the outer wall of the “nearest, habitable, residential structure” on neighboring property. That kind of requirement is “really sort of a good neighbor policy of having a separation distance to existing occupied structures,” rather than a safety standard, Gohn said. The new setback terms were a last-minute addition to a massive 2014 budget review bill. Seitz was the only lawmaker to speak in favor of that provision during less than 10 minutes of discussion on the Ohio Senate floor.

It's past time for fracking foes to obey will of people - Once again on Tuesday, voters in Youngstown resoundingly said no to a misguided effort to ban hydraulic fracturing in the city. And once again, the self-righteous leaders of the charter amendment refused to accept defeat and are now contemplating a seventh futile try in the May 2017 primary. The only difference in this fall’s sixth attempt at passing the unconstitutional ballot initiative came in the size of voter turnout. As this was the first time the misnamed Community Bill of Rights appeared on a presidential ballot, some 22,000 voters had their say on the matter, the largest chunk of the city electorate by far since the measure first began polluting municipal elections in 2013.  But bigger wasn’t better for its supporters. Once again, a strong 55 percent to 45 percent majority wisely said no. That clear and hulking defeat should serve as a clue to the FrackFree Mahoning Valley organizers that enough is enough. But some of the clueless organizers of the campaign refuse to respect the clear-cut will of the people and vow to press on.  It’s time now for a concerted effort to explore legal avenues to ban the anti-frackers from continuing their exercise in futility. We would urge city leaders, state legislative representatives and civic groups such as the Youngstown-Warren Regional Chamber to brainstorm options to put in place reasonable limits to the number of times a defeated ballot issue can reappear before voters.

Local activists and others deliver 92000-signature petition opposing national forest drilling - Athens NEWS -Anti-fracking activists from southeast Ohio and around the country on Monday personally delivered a petition signed by more than 92,000 people asking the U.S. Bureau of Land Management (BLM) to stop its auction of 1,600 acres of Wayne National Forest for oil and gas development. The activists traveling to Washington, D.C. to deliver the petition included two leading anti-fracking activists from Athens County – Andrea Reik and Roxanne Groff. The federal government last month announced it had scheduled the oil and gas lease sale to start on Dec. 13. The decision dealt a blow to area environmentalists who oppose oil and gas development on the national forest.On Oct. 14, Dean Gettinger, district manager of the Northeastern States District of the federal Bureau of Land Management (BLM), signed a finding of no significant impact (FONSI) for drilling on 40,000 acres in the Marietta Unit, which covers parts of Washington, Noble and Monroe counties, northeast of Marietta.  At that point, oil and gas companies had thus far filed expressions of interest to drill for natural gas on 18,000 of those acres, with 1,600 acres contained in the first round of land entering the lease program.

Protest Calls on BLM to Reject Fracking Plan in Ohio's Wayne National Forest - Center for Biological Diversity (press release) - Conservation groups just filed an administrative protest asking the Bureau of Land Management to halt an oil and gas lease auction next month in Ohio’s Wayne National Forest due to its failure to address concerns over fracking, climate change and effects on endangered species.The plan to allow dangerous hydraulic fracturing, or “fracking,” on 1,600 acres of the state’s only national forest would degrade streams and groundwater, fragment wildlife habitat and worsen climate change, the groups said. The BLM also ignored the likelihood that opening these parcels to development would facilitate more fossil fuel extraction on adjacent private land.The groups highlighted the Bureau’s failure to address groundwater and surface-water contamination risks from wastewater disposal and other fracking operations. “This will be bad for wildlife, bad for recreation and bad for the health of Ohio's only National Forest,” said Nathan Johnson of the Ohio Environmental Council.  “The BLM failed to do its duty to take a ‘hard look’ at the impact these new fossil fuel leases would have on other fracking on private land nearby. In fact, the agency seems to be actively facilitating this new extraction,” said Wendy Park, a senior attorney with the Center for Biological Diversity. “At this critical time, the Obama administration should act to halt all new leasing of public lands for oil and gas fracking.”“The proposed Wayne National Forest leasing in Appalachia Ohio continues the extraction paradigm of centuries past,” said Loraine McCosker of the Ohio Sierra Club. “The legacy of this past extraction continues to negatively impact southeast Ohio economies. We simply must demand that the Wayne not be leased by the BLM and that the Forest Service withdraw these parcels for leasing." “Public lands are for the people, not for the benefit of Big Oil and Gas,” said Lena Moffitt, director of the Sierra Club’s Beyond Dirty Fuels campaign. “Drilling for oil and gas means more fracking, and fracking means poisoning our air and water, and threatening the health of our communities and our environment. At a time when clean energy like solar and wind is proving to be safest, healthiest and most cost-effective way to power our country, it's high time we recognized that we need to leave dirty fuels like coal, oil and gas in the ground.”

Study: Old gas wells are major emitters of methane: Certain types of Pennsylvania’s scores of abandoned oil and gas wells are associated with higher emissions of the greenhouse gas methane, according to a study published Monday that could help government agencies prioritize efforts to plug the biggest leaks. The study of 88 wells across Western Pennsylvania led by Mary Kang, a postdoctoral fellow at Stanford University, revealed that high-emitting wells tend to be natural gas wells that are either unplugged or that are plugged but vented in coal-rich areas. Abandoned oil wells had consistently lower emissions than the abandoned gas wells in the study. Proximity to active natural gas storage fields or new shale gas wells appeared unrelated to methane flow rates from abandoned wells, according to the report in the Proceedings of the National Academy of Sciences. The highest emitters are a particularly valuable target in efforts to curb releases of the powerful greenhouse gas, which has 86 times the heat-trapping potential of carbon dioxide in the atmosphere over a 20-year period. Researchers found that wells with high methane emissions were leaking at steadily high rates across years of sampling, indicating that they “may have been emitting at these levels for many decades and will likely continue for decades into the future.” Ms. Kang and her fellow researchers first reported the significant but largely uncounted contribution that abandoned wells can have on total methane emissions in a 2014 paper. That drew the attention of state and federal regulators, who are now trying to begin to account for abandoned wells in their official inventories of emissions.

Doctors to Gov. Wolf: For the Sake of Human Health Ban Fracking-- A comprehensive report , authored by Nobel Peace Prize-winning organization Physicians for Social Responsibility and Concerned Health Professionals of New York , was released Thursday demonstrating the tremendous amount of scientific evidence of the health impacts, water contamination and climate risks of fracking . The Compendium of Scientific, Medical and Media Findings Demonstrating Risks and Harms of Fracking brings together findings and studies from scientific and medical literature, government and industry reports, and journalistic investigations. "The available evidence overwhelmingly indicates that fracking is incredibly harmful," said Sandra Steingraber , PhD, co-founder of Concerned Health Professionals of New York. "Scientific studies have demonstrated that drilling and fracking can increase risk of cancer , respiratory conditions and migraines in communities surrounding fracking sites. Fracking pollutes the air, water and land in nearby towns and cities, and has resulted in explosions and earthquakes . There are least 17 million Americans living within one mile of a fracking site, whose lives will be negatively impacted and potentially shortened, by fracking."  There are now more than 900 peer-reviewed studies on the impacts of fracking, the vast majority of which indicate risks and adverse impacts. The new compendium includes summary and analysis of the trends in the scientific findings over the years. With the release of the compendium, a group of doctors gathered in Harrisburg, Pennsylvania to hand-deliver it and more than 100 of the most recent studies—many about public health—demonstrating the harms of fracking to Gov. Wolf. Pennsylvania is the focus of many of the scientific studies, where drilling and fracking have been linked to widespread water contamination and health impacts.

Chesapeake Energy Divests Natural Gas Assets -- Chesapeake Energy Corp. (CHK) announced last week that it will divest natural gas holdings in the Devonian shale in Kentucky and West Virginia. Although it has not been confirmed by either company, the potential buyer is most likely US junior Core Minerals, a privately held company. (See also: Chesapeake Energy by the Numbers.) The deal includes the divestiture of some 882,000 acres with 5,600 wells, as well as related infrastructure and other assets. The move is in line with the company’s earlier decision to leave Barnett Shale in northeast Texas; sources say that Chesapeake also plans to rid itself of assets in the Haynesville play in Louisiana. The company has 73,000 acres in northern Sabine and southern DeSoto parishes up for bid, as well. (See also: Chesapeake Energy Rebounds after Investor Day.) The Appalachia divestiture deal includes a volumetric production payment (VPP), which guarantees the operator will sell Chesapeake rights to a defined amount of production over a specific period of time in exchange for an upfront payment. Chesapeake plans to use funds from the sale of the assets to purchase the VPP. Chesapeake reported third quarter earnings on Nov. 3, when it declared EPS of $0.09 compared to Street estimates of -$0.03. Revenue was $2.28 billion, beating consensus estimates of $2.18 billion, down 22% from last year at this time, but up from last quarter’s $1.62 billion. Analysts are predicting total 2016 revenue of $7.93 billion. The median 12-month price target is $7.13, with a low of $2.50 and a high of $11.

Which Way Did Marcellus Shale Natural Gas Go in October? - In its Drilling Productivity Report on November 14, 2016, the EIA (U.S. Energy Information Administration) estimated that the Marcellus Shale’s natural gas production totaled ~18.1 Bcf (billion cubic feet) per day in October 2016. That’s a marginal ~0.1% lower than September 2016’s production level, but ~9% higher than its production in October 2015. Month-over-month, natural gas production growth in the Marcellus Shale has been relative steady in the past year.Over a longer period, natural gas production growth at the Marcellus Shale has been outstanding. Natural gas production rose from ~1.5 Bcf per day in October 2008 to ~18.1 Bcf per day in October 2016. The number of active rigs in the Marcellus Shale increased to 35 in October 2016 compared to 31 in September. In October 2015, there were 46 drilling rigs in the region. The EIA calculates that the average Marcellus Shale rig added production of ~11.9 million cubic feet of natural gas per day in October 2016, a 19% rise compared to October 2015. In the past eight years, the gain amounts to ~16x.

The Weather Forecast For Gas - The year is already over if you happen to be long U.S. natural gas. At this point, all that matters is whether 2016 offers any chance of clearing the crushing glut weighing on the market.The short answer: Don't get your hopes up. Just like the oil market, a gas rally requires supply to diminish, consumption to rise, or a combination of both. With gas, weather can make or break the market: Over the past five years, U.S. gas demand in the first quarter has averaged as low as 81 billion cubic feet a day and as high as 97 billion. This winter has been exceptionally mild in the northeast. Put that together with resilient U.S. gas production and you get today's depressed gas market.As of December 11, there was roughly 3.85 trillion cubic feet of gas in storage in the U.S., or 322 million above the five-year average, according to the Energy Information Administration. Those inventories should keep declining until March, which for the gas market is when the winter season ends and gas starts flowing back into storage in preparation for the next winter. The key to understanding how prices will fare next year rests largely on how much of that stored gas gets used up in the next three months or so, and then how much heads back into storage between April and November. In its latest short-term projection, the EIA estimated gas inventories would end the year at 3.38 trillion cubic feet. Mild weather makes that look suspect already: Inventories would need to drop by more than 150 million cubic feet a week through the last three weeks of this month, much higher than the five-year average for late December. If you assume instead that inventories drop at the low end of the range for the past five years -- roughly 105 million cubic feet a week -- then they should end 2015 at 3.53 trillion cubic feet.Truism or no, 3.53 trillion of anything is a lot. In this case it would be even higher than the level at the end of 2011 -- just a month or so before the price of natural gas made its last nosedive below $2.The chart below takes that storage figure as the starting point and maps out 2016 using a few different assumptions. The central case takes the EIA's own estimates of gas withdrawals from, and injections into, storage. The high case assumes that weather effects mean withdrawals run about 3 billion cubic feet a day lower than that during the winter and injections run about 2 billion cubic feet a day higher in the summer due to mild weather. The low case assumes the opposite.

US emerges as net exporter of natural gas -  In a historic first, the US in early November began seeing small net volumes of natural gas exports that recently climbed above 1 Bcf/d, an analysis of data from Platts Analytics' Bentek Energy showed Monday. The emergence and rapid acceleration in export volumes comes amid a recent decline in Canadian imports and a ramp up in feedgas volumes delivered to the Sabine Pass LNG export terminal. In November, imports of Canadian gas have averaged just 4.5 Bcf/d and are down 21% from imports that averaged 5.7 Bcf/d in October. Over the same period, feedgas deliveries to Sabine Pass have climbed to record highs, averaging 1.5 Bcf/d month to date, up from an average 249 MMcf/d in October.The balance of gas imports and exports that began shifting in November was accompanied by a recent rise in Canadian gas prices and the restart of liquefaction processes at Sabine Pass. In November, prices at Canada's AECO hub in Alberta have climbed to an average 36 cents/MMBtu discount to Henry Hub and are up 40% from an average 60-cent discount in October, S&P Global Platts data showed. From the start of November, rising Canadian gas prices have prompted a dropoff in imports, most noticeably to the Midwest market area and the Pacific Northwest. Month to date, imports of Canadian gas to the Midwest are down 765 MMcf/d from the month prior and are averaging just below 2.3 Bcf/d. Imports of Canadian gas to the Pacific Northwest, meanwhile, have fallen over 380 MMcf/d on average in November and are down about 12% from October. The dramatic ramp-up in feedgas deliveries to the Sabine Pass LNG export terminal comes following the end of maintenance activity in late October and the introduction of commissioning-feedgas volumes to Train 3.

US natural gas storage increases 30 Bcf to 4.047 Tcf: EIA - US natural gas in storage increased 30 Bcf to 4.047 Tcf in the week ended November 11, the US Energy Information Administration reported Thursday, breaking the previous all-time high of 4.017 Tcf set the prior week. The net injection was exactly in line with a S&P Global Platts survey of analysts expecting a 30-Bcf injection. In the corresponding week last year the EIA reported a 26-Bcf injection, while the five-year average is a 3-Bcf build. This was the first build of the 2016 injection season that was larger than both the corresponding week last year and the five-year average. As a result, stocks were 51 Bcf, or 1.3%, higher than the year-ago level of 3.996 Tcf, and 216 Bcf, or 5.6%, more than the five-year average of 3.831 Tcf.

Normal winter weather could push US gas prices higher in Q1 2017 - Platts Snapshot video -- The winter approaches, more heating demand — and more natural gas demand — is expected to shape American markets, as Bob Yu demonstrates in an analysis of the fundamentals. US gas storage stocks have climbed over 4 Tcf, but various scenarios point toward the first quarter of 2017 being tighter than the first quarter of 2016, which will have implications for prices.

The pivotal role of the Perryville Hub in transforming US natural gas flows. -  Natural gas pipeline takeaway projects under development out of the U.S. Northeast would enable ~10 Bcf/d to flow south from the Marcellus/Utica supply area. About half of that southbound capacity is geared to serve growing power generation demand directly south and east via the Mid-Atlantic states. But another nearly 5.0 Bcf/d is headed southwest to the Louisiana and Texas Gulf Coast for growing LNG export and Mexico demand—and that is on top of about 4.4 Bcf/d of reversal (or backhaul) capacity already added over the past two years. Much of the Gulf Coast-bound backhaul capacity will converge on the Perryville Hub, a market center located in northeastern Louisiana, about 220 miles north of the U.S. national benchmark Henry Hub. As such, the ability for gas to move through Perryville and get to downstream demand market centers will be key to balancing the natural gas markets. Today, we take a closer look at the historical and future pipeline capacity in and around the Perryville Hub. The Perryville Hub pricing location has long been a pulse-point for gas flows through the Gulf Coast region, although arguably an under-appreciated one, given that it sits in the shadows of Henry Hub. One of the touchstones of a successful trading hub is optionality, and Perryville has no shortage of that. For one, it is a highly connected, high-capacity hub. For another, its location gives it just about 360-degree access to supply regions. Much like Henry Hub (as described in our blog Henry the Hub I Am, I Am), the Perryville pricing hub is not a hub-and-spoke system in the classic sense. Rather it is a collection of pipeline interconnects starting in Ouachita Parish, LA and extending as far east as Madison Parish, LA, but for the most part the supply converges at two major nodes: around Perryville, LA, on the western side of the hub and near Delhi, LA, on the eastern side. The multitude of interconnects allow gas to hop from one pipeline to the other on its way from supply to demand market areas, changing direction along the way if need be.  Although a large volume of gas physically moves through Perryville, comparatively little of that gas changes hands at the hub.

Enterprise's plan to help move gas to Texas export markets - Intrastate natural gas pipelines in Texas reach far and wide, and can transport extraordinary volumes of gas. The problem is, the traditional supply/demand dynamics that spurred the development of all that pipe decades ago are being up-ended by burgeoning Marcellus/Utica production headed to the Gulf Coast and the demand-pull of gas to planned LNG export terminals along the Texas coast and to Mexico. Lone Star State pipelines that for years have flowed north and east to the Houston Ship Channel and beyond now must flow south and west. Today, we continue our review of efforts to rework and expand key elements of Texas’s intrastate gas pipeline network to meet growing export needs, this time with a look at plans by Enterprise Products Partners.  As we said in Part 1, planned liquefaction/LNG export facilities along the South Texas coast and growing demand from Mexico’s electric power sector together will require several billion cubic feet/day of additional U.S. natural gas over the next three to five years. These export markets are being targeted by gas producers across the country, from the Marcellus/Utica to the Permian Basin, but a lingering question is whether Texas’s existing pipeline infrastructure is sufficient to deliver all that gas. Reversed interstate pipelines can move increasing volumes of gas from Pennsylvania, Ohio and West Virginia to Louisiana and into Texas, but that’s not enough. A critically important part of the solution will be optimizing the use of Texas’s vast network of intrastate pipelines, many of which are operated by three major players in the market: Enterprise, Kinder Morgan and Energy Transfer Partners. Last time we looked at Kinder Morgan’s recently completed Tejas Crossover Pipeline Project, a 52-mile, 36-inch-diameter connector between the company’s two primary intrastate systems that will enable up to 1 Bcf/d of gas to flow south from the Katy, TX gas hub (about 30 miles west of downtown Houston) and Kinder Morgan’s 1 Bcf/d Houston Central Complex gas processing facility in Colorado County, TX to the Agua Dulce hub in Nueces County, TX (near Corpus Christi), the starting-off point for two major pipelines to Mexico: NET Midstream’s nearly two-year-old 2.1-Bcf/d NET Mexico Pipeline to the U.S.-Mexico border.

Texas natural gas pipeline capacity, flows, and basis -- the fretboard model. - The natural gas pipeline grid in Texas is undergoing a historic transformation as interstate pipelines designed to move gas north and east from the Gulf Coast region are being reversed, enabling Marcellus/Utica gas to flow to LNG export markets in Louisiana and Texas, and via Texas for pipeline export to Mexico.   With a history of oil and gas production going back more than 100 years, no region in the world has a more convoluted network of pipelines than Texas.  The state can be viewed as a dense “spaghetti bowl” of interconnected interstate and intrastate systems that defies traditional gas market analysis, in part because intrastate pipelines do not post receipts and deliveries on their systems as required by federally regulated interstate pipelines.  However, it is possible to assess the dynamics of regional flows and capacities by examining the morass of flow data available from interstate pipelines in the region that connect to the intrastates. To help make sense of this data, RBN has developed a simplified model that facilitates an understanding of Texas natural gas flows and capacities that we call (unsurprisingly since it’s RBN) the Fretboard Model because the region’s interstate pipelines and capacity constraints look (with just a bit of artistic license) very much like a guitar fretboard.  In today’s blog, we introduce this model. We’ve discussed the interstate pipeline reversals that will move increasing volumes of Marcellus/Utica gas to Louisiana in several blogs (most recently in Two Much Pipe on My Hands) and in Part 1 and Part 2 of our three-part Drill Down Report, “Miles and Miles of Texas,” which takes a big-picture look at U.S. LNG exports and pipeline gas deliveries to Mexico. We’ve examined major enhancements to Texas’s intrastate pipeline systems in our ongoing “Over, Under, Sideways, Down” blog series, Part 1 of which focused on Kinder Morgan’s Tejas Crossover project, which will enable about 1.0 Bcf/d of natural gas to zig-zag over to and down the Texas coast to export markets; Part 2 addressed Enterprise Product Partners’ plan for expanding capacity on its intrastate system.   And we covered the connections between Texas intrastate and interstate pipelines to the LNG export terminals being developed at Freeport and Corpus Christi in Last Mile of the Way.

Texas Now Has As Many Oil Rigs As Rest Of The Country Combined - The majority of new oil and natural gas drilling in the U.S. is happening in Texas, according to a report published Tuesday by the federal Energy Information Administration (EIA). American oil and gas drilling is increasingly concentrated in the Permian Basin, which spans parts of western Texas and southeastern New Mexico. The Permian now has nearly as many active oil rigs as the rest of the U.S. combined, according to an EIA report.  Oil production in the region has spiked drastically since early 2015, while production in other areas has fallen due to low oil prices. Permian oil is relatively cheap to access and refine since it’s close to most American refineries. Fracking for oil and natural gas in Texas produces $11.8 billion each year and creates more than 107,000 permanent jobs, according to a report published by the industry group North Texans For Natural Gas. Texas’s Barnett Shale is estimated to hold 172 million barrels of shale oil and 176 million barrels of natural gas liquids, twice as much natural gas and oil as expected, according to a December study by the U.S. Geological Survey (USGS). To put those reserves in some context, Saudi Arabia’s total proven oil reserves are estimated to be 268 billion barrels, according to the CIA. The Barnett Shale is not the only formation reassessed by the USGS to have double the reserves expected thanks to fracking. An updated assessment of the Bakken Formation in North Dakota came to a similar conclusion in 2013, as did a 2011 assessment of the Marcellus Shale.

As drilling jumps, Wolfcamp has 20 billion barrels of oil: USGS -  The Wolfcamp shale formation in Texas' Permian Basin contains an estimated 20 billion barrels of crude oil, almost three times as much oil estimated to be in the Bakken-Three Forks formation, the US Geological Survey said Tuesday. The estimate, the largest estimate of continuous oil that the agency has ever assessed in the US, comes as government data shows that US oil drilling continues to climb in the Permian, while it continues to fall in the Eagle Ford and Bakken, amid persistently low prices. In its estimate, USGS said the Wolfcamp play in the Permian's Midland Basin also contains 16 Tcf of associated natural gas and 1.6 billion barrels of natural gas liquids. "The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more," Walter Guidroz, program coordinator for the USGS Energy Resources Program, said in a statement. "Changes in technology and industry practices can have significant effects on what resources are technically recoverable, and that's why we continue to perform resource assessments throughout the United States and the world." The Wolfcamp play has seen a spate of recent unconventional drilling, including more than 3,000 horizontal wells which have been drilled and completed. This has been particularly positive in the Wolfcamp since continuous oil and gas can be found throughout the formation "than existing as discrete, localized occurrences, such as those in conventional accumulations," the USGS said.

Big Oil: Feds Call West Texas Deposit ‘Largest’ in History - A western Texas oil and natural gas shale formation was labeled the “largest” of its kind by the U.S. Geological Survey on Tuesday. Federal surveyors announced that the Wolfcamp shale in the Midland Basin portion of Texas’ Permian Basin now holds the record for most oil, natural gas, and gas liquid deposits that are “undiscovered, technically recoverable resources.” The USGS notes that within its survey spanning from north of Lubbock to remote regions southwest of San Angelo, an estimated and previously unaccounted for 20 billion barrels of crude oil; 16 trillion cubic feet of natural gas; and 1.6 billion barrels of natural gas liquids are able to be extracted by means typically involving slant drilling and hydraulic fracturing, commonly known as “fracking”. The figures are based on official methods that project untapped resources amid formations already surveyed and exploited. A government spokesperson underscored the historic nature of the finding in a release. “The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more,” said Walter Guidroz, for the USGS Energy Resources Program. “Changes in technology and industry practices can have significant effects on what resources are technically recoverable, and that’s why we continue to perform resource assessments throughout the United States and the world.” The USGS notes that it does not account for the profitability of new deposit extractions. The previous discovery record dates back to 2013 for North Dakota’s Bakken-Three Forks oil accumulation. Texas’ latest discovery dwarfs the northern high plains state by a factor of three.

Shale oil in Permian’s Wolfcamp formation called biggest field in U.S. - In a troubled oil world, the Permian Basin is the gift that keeps on giving. One portion of the giant field, known as the Wolfcamp formation, was found to hold 20 billion barrels of oil trapped in four layers of shale beneath West Texas. That’s almost three times larger than North Dakota’s Bakken play and the single largest U.S. unconventional crude accumulation ever assessed, according to the U.S. Geological Survey. At current prices, that oil is worth almost $900 billion. The estimate lends credence to the assertion from Pioneer Natural Resources CEO Scott Sheffield that the Permian’s shale could hold as much as 75 billion barrels, making it second only to Saudi Arabia’s Ghawar field. Irving-based Pioneer has been increasing its production targets all year as drilling in the Wolfcamp produced bigger gushers than the company’s engineers and geologists forecast. “The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more,” Walter Guidroz, coordinator for the geological survey’s energy resources program, said in the statement. Oil explorers have been flocking to the Permian Basin in West Texas and New Mexico to tap deposits so rich that they can generate profits even at lower oil prices. A race to grab land in the Permian has been the main driver of a surge of deals in the energy patch and the industry’s main source of good news. Although the Permian has been gushing crude since the 1920s, its multiple layers of oil-soaked shale remained largely untapped until the last several years, when intensive drilling and fracturing techniques perfected in other U.S. regions were adopted. The Wolfcamp, which is as much as a mile thick in some places, has been one of the primary targets.;

The largest oil deposit ever found in America was just discovered in Texas - The US Geological Survey said Tuesday that it found what could be the largest deposit of untapped oil ever discovered in America.  An estimated average of 20 billion barrels of oil and 1.6 billion barrels of natural gas liquids are available for the taking in the Wolfcamp shale, which is in the Midland Basin portion of Texas' Permian Basin.  Based on a West Texas Intermediate crude oil price of $45 per barrel, those deposits are worth about $900 billion.  US oil exploration companies have flocked to the superrich Permian Basin in recent years and used shale-drilling technology to create an oil boom that simultaneously helped trigger a price crash two years ago. The count of active oil rigs fell with prices, but has risen over the past few months, mostly in the Permian. Bloomberg noted that the Wolfcamp, where this deposit was found, has been one of the primary targets of shale drillers. "The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more," Walter Guidroz, program coordinator for the USGS Energy Resources Program, said in a statement.  More than 3,000 horizontal oil wells have already been drilled and completed in the Midland Basin Wolfcamp section, according to the USGS. To get the oil, producers fracture, or "frack," the earth below with a high-pressure liquid mixture to untap oil and gas from shale rock.  This map from the USGS shows the area where the deposit was found:

Why The Permian Just Got Even Hotter | The U.S. Geological Survey just published an assessment of oil reserves for a section of the Permian Basin, revealing the largest estimate of continuous oil that the agency has ever assessed. The Wolfcamp shale in the Midland Basin, which is part of the Permian Basin, is one of the most prized shale formations in the United States, and for good reason. The USGS estimates that the West Texas shale formation could hold an estimated mean of 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas, and 1.6 billion barrels of natural gas liquids. Those figures are the largest for any single continuous pool of oil the USGS has ever surveyed. Other areas of the country have seen oil booms and busts over the past half-decade. The Eagle Ford in South Texas and the Bakken in North Dakota each had their heyday, but they pale in comparison to the Permian basin right now. Output from the Bakken has dipped below 1 million barrels per day (mb/d) in recent months, dropping to a two-year low of 971,000 barrels per day in September. The Eagle Ford has seen an even more dramatic decline – it is expected to fall below the 1 million-barrel-per-day mark next month, down from a peak of 1.7 mb/d reached in March 2015. Meanwhile, the Permian is going in the other direction, having seen output steadily rise over the past several years to break through 2 mb/d this year. And there is still more potential for the Permian. The USGS believes that the oil sitting in the Wolfcamp is almost three times larger than what is located in the Bakken-Three Forks, according to a 2013 assessment of the region. Not only that, but the current estimate only covers a portion of the Wolfcamp located in the Midland Basin; the USGS did not look at the Wolfcamp in the neighboring Delaware Basin.

Obama administration cancels 25 Colorado oil, gas leases -  The Obama administration Thursday formally cancelled 25 undeveloped oil and natural gas leases and put new conditions on 40 other leases in Colorado's Thompson Divide, a decision which drew criticism from industry. The leases, which are located in the Mancos Shale in the Piceance Basin of Colorado, were granted over a decade ago, but were fought by environmental groups due to "deficiencies in the original environmental analyses and process used to support the initial issuance of oil and gas leases in the region," the US Interior Department said in a statement. "This resolution strikes the right balance by protecting one of Colorado's most spectacular places and important watersheds, and ensuring that any future development is done responsibly and held to high standards," Interior Secretary Sally Jewell said in the statement. In that statement, Colorado Governor John Hickenlooper, a Democrat, said the resolution is one that "protects the beautiful environment of the Thompson Divide, that acknowledges the investments companies have made in the area and lets people get back to business."But Kathleen Sgamma, a vice president with Western Energy Alliance, an industry group, said the leases were cancelled and conditions were changed due to a minor technicality in the environmental review, not a substantial issue which impacted the environment. "As a federal lease holder you are subject to the whims of the federal government, let's face it," Sgamma said. "It's like adding clauses to your homeowners' contract ten years after you buy your house."

Obama Administration Finalizes Rule to Reduce Methane Pollution, But What Will Trump Do? -- The Bureau of Land Management (BLM) announced a final rule on Tuesday to cut natural gas waste and methane pollution from oil and gas operations on public lands.  A new federal rule seeks to curb significant waste and benefit our nation by reducing the output of one of the largest contributors to global warming—methane gas.  The new rule aims to reduce natural gas waste and its associated methane pollution from all oil and gas operations on lands the BLM leases to oil and gas companies for drilling.  If implemented correctly, over several years the BLM rule is expected to reduce the waste of natural gas from federal oil and gas operations by more than 40 percent.   This is a major victory in the fight against climate change , but like other Obama administration orders and priorities, we expect it may come under attack in the Trump administration.

Production Declines in Big Seven Plays to Continue Next Month, EIA Says - Oil and natural gas production from the nation's seven largest unconventional plays, which has been trending lower for months, is expected to decline once again in December, according to data from the Energy Information Administration (EIA). Total oil production out of the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian and Utica plays will be an estimated 4.49 million b/d in December, down from an estimated 4.52 million b/d this month, EIA said in its latest Drilling Productivity Report (DPR), which was released Monday.EIA forecast December oil production out of the Permian (2.07 million b/d) and Niobrara (404,000 b/d) to be up slightly compared with November, and oil production out of the Marcellus (38,000 b/d) and Haynesville (43,000 b/d) to be unchanged. But the estimated total was dragged down by declines expected in the Bakken (918,000 b/d, compared with 932,000 in November), Eagle Ford (978,000 b/d, compared with 1.01 million b/d) and Utica (52,000 b/d, compared with 54,000 b/d).Natural gas production from the Big Seven is expected to fall to 46.96 Bcf/d, compared with 47.05 Bcf/d this month. As it has several times this year, EIA said it expects the biggest decline in gas production to be in the Eagle Ford, with the agency forecasting 5.56 Bcf/d in December, down 196 MMcf/d from 5.76 Bcf/d this month.Declines are also expected in the Bakken (1.60 Bcf/d, compared with 1.61 Bcf/d), Haynesville (5.92 Bcf/d, compared with 5.94 Bcf/d), Niobrara (4.16 Bcf/d, compared with 4.19 Bcf/d) and Utica (4.09 Bcf/d, compared with 4.11 Bcf/d). Two plays should see increases in natural gas production next month, EIA said: the Marcellus (18.30 Bcf/d, compared with 18.17 Bcf/d in November) and the Permian (7.32 Bcf, compared with 7.27 Bcf/d).EIA released its first DPR in October 2013,but didn't forecast month-to-month production declines until September 2015. Since then, the agency's production forecasts have followed a steady downward trend. The seven regions during 2011-2014 accounted for 92% of domestic oil production growth and all gas production growth. Drilled but uncompleted (DUC) well counts as of the end of October totaled 4,232 in the four oil-dominant regions -- Permian, Bakken, Eagle Ford and Niobrara -- an increase of 48 from September, EIA said. There also were 922 DUCs in the three gas-dominant regions -- Haynesville, Marcellus and Utica -- a decline of 2.

US shale oil production declines continue to slow - US shale oil production declines over the past year and a half are forecast to slow to 20,000 b/d in December, down from a 30,000 b/ddrop in November, US Energy Information Administration data showed Monday. December’s shale oil output is estimated to be at 4.498 million b/d, compared to 4.518 million b/d in November, the EIA said in its monthly Drilling Productivity Report. This compares to a decrease of 118,000 b/d to 4.949 million b/d over the same time period a year ago. Production peaked at 5.618 million b/d in March 2015, according to the EIA. But crude oil production in two of the four the main producing shales areas covered by the report, the Permian in West Texas and New Mexico, and Colorado’s Niobrara are forecast to increase production, while Texas’ Eagle Ford, and the Bakken Shale of North Dakota and Montana are expected to see production fall. The Permian is expected to increase production 27,000 b/d to 2.065 million b/d in December, while the Niobrara is forecast to raise output by 2,000 b/d to 404,000 b/d. The increases in those two regions would be offset by drops of 33,000 b/d to 978,000 b/d and 14,000 b/d to 918,000 b/d in the Eagle Ford and Bakken Shales, respectively. Greater output in the Permian has been expected by analysts due to the dramatic run up in rigs over the last six months. The Permian had 218 rigs operating as of last week, which is up by 86 from when the rig count bottomed out there in April this year, according to Baker Hughes.

North Dakota Oil Production Falls To 31-Month Low -- November 16, 2016 --Link here.

  • North Dakota’s crude oil output in September fell to the lowest level in more than two years, staying below the 1M bbl/day level for the second month in a row
  • production fell 1.1% for the month to 971K bbl/day in September, the most recent month for which data is available, 10K bbl/day less than August and the lowest level since February 2014, when output was 952K bbl/day
  • natural gas production in North Dakota fell 1.7% in September to 1.61B cf/day, the state also reports
Director's Cut is here

North Dakota Crude Output Drops To Lowest Since Feb. 2014 | Rigzone  - Oil production in North Dakota dropped more than 10,000 barrels-per-day (bpd) in September, the state Industrial Commission reported on Wednesday, citing continued weakness in oil prices. The state pumped nearly 972,000 bpd in September, the lowest level since February 2014, data showed. In August, output dropped below the 1 million bpd mark for the first time in over two years. The latest figures from November show North Dakota's current drilling rig count is 38, up from 33 in October. Going forward, "operators are shifting from running the minimum number of rigs to incremental increases throughout 2017 as long as (U.S.) oil prices remain below $60/barrel," Lynn Helms, head of the state's Department of Mineral Resources (DMR), said in a statement. U.S. crude prices hovered just below $46 a barrel on Wednesday. The state issued 82 drilling permits in October, a large increase from 63 in September, although down from 99 in August, data showed. "Operators are maintaining a permit inventory that will accommodate a return to the drilling price point within the next 12 months," Helms added.Bakken Update: Adding To The Glut With Bakken Oil Production Per Well Increasing 27.3% - Summary:

  • Mega-Frac style wells continue to show impressive production results, with an increase of 27.3% from 2013 to 2015.
  • Enhanced well designs are still in its infancy, and should continue to accelerate from a production standpoint.
  • From 2014 to 2015, the number of completions decreased by 30% but oil production decreased just 16% and natural gas 1.5%.
  • These improvements have been seen in all US plays and we will cover the Eagle Ford in our next submission.
  • Trump is bullish the US oil industry and we expect protectionist policies will accelerate oil production growth in all US plays.

Oil and gas has been through significant changes since the price of oil dropped from north of $100/bbl. Prices have stabilized, but volatility is expected. In the short term, prices could pull back to $40, and take the US Oil ETF with it. Longer term we think the price is moving higher. Whether the price of oil stays around $50/bbl. in 2017, or heads to $70/bbl., it is important to know the difference in operator economics. Every operator is unique with respect to costs and production, but the main identifier to success is geology. Geology is better understood when isolated by location. Pulling production and cost over several counties is not helpful when looking at one company. Significant changes in production can be seen from one section to the next, so it is important to know the specifics of each prospect to get an idea of value. Each prospect should be examined specifically, as this provides insight to operator viability.

Analysis: Bakken discounts deepen as competition heats up - Oil | Platts News Article & Story: Bakken Blend differentials at terminals close to North Dakota wellheads held their lowest assessment since December Tuesday, closing at the calendar-month average of the NYMEX light sweet crude oil contract (WTI CMA) minus $6.25/b. While one factor dragging on Bakken differentials has clearly been a tight Brent/WTI spread -- trading around 42 cents/b Tuesday, well in from the steady $2/b seen this summer -- the return of Louisiana Light Sweet to the Midwest market may also be having an impact, according to traders. One trader said there was an increase in volumes heading up the Capline pipeline, however, differentials suggest LLS is still too expensive, at least compared to Bakken. Platts assessed LLS at WTI plus $1.15/b Tuesday. Considered by some to be the "champagne of crudes," it is unclear what appeal LLS still has for a Midwest refiner as margins for LLS actually -- and unusually -- lag those for Bakken.S&P Global Platts data shows LLS cracking margins in the Midwest closed at $3.30/b Monday, compared to Bakken cracking margins of $6.37/b. In fact, the advantage of cracking Bakken has grown steadily since August. Platts margin data reflects the difference between a crude's netback and its spot price. Netbacks are based on crude yields, which are calculated by applying Platts product price assessments to yield formulas designed by Turner, Mason & Co. What is clear however, is that the steeper discounts available for Bakken provide the biggest incentive for a Midwest refiner. The cost of getting Bakken to this market is around $3.48/b, according to Platts netback calculations, compared to just $1.02/b for LLS.

EOG Reports High-Volume Proppant Well -- 21 Million Lbs; "1.5 Section" -- 960-Acre Drilling Unit -- November 17, 2016 -- Note, 21 million lbs of sand, in a lateral that was not a "two-section lateral":

  • 31248, 1,272, EOG, West Clark 104-0136H, Clarks Creek, middle Bakken, 36 stages, 21 million lbs, t5/16; cum 86K 9/16; drilling unit: 960 acres; TVD around 10,600 feet; TD, 18,185 feet; total lateral, 7,338 feet; target total, 7,338 feet (100%); KOP December 4, 2015; cease drilling December 8, 2015; from surface, well was sited in southwest corner of section 1-151-95; proceeded northeast and then northnortheast under section 1-151-95, ending just short of the halfway mark in section 36-151-95W (according to diagram on page 29 -- but it obviously ended in section 36-152-95).
  • 21,029,167 lbs; 36 stages; 7,338 feet: 584K lbs/stage; 2,866 lbs/foot

DAPL Ignores 2nd Army Corps Request to Stop Construction for 30 Days - The U.S. Department of Justice is about to announce next steps on de-escalating the standoff regarding construction of the Dakota Access Pipeline, according to the Standing Rock Sioux Tribe. "Today, the Department of Justice announced in federal court that it will be announcing the next steps on a ‘path forward’ for the Dakota Access Pipeline crossing at Lake Oahe,” said Standing Rock Sioux Chairman David Archambault II in a statement on November 10. Energy Transfer Partners is refusing to stand down on its construction plans despite two requests from the U.S. Army Corps of Engineers that it do so. The company, builders of the Dakota Access Pipeline (DAPL), said on Tuesday November 8 that it planned to begin drilling in two weeks—even though at the moment it does not have the easements necessary for it to tunnel under the river legally. Building without approved easements is a violation of federal law, the Army Corps emphasized. "Any work must adhere to federal regulations,” the Army Corps said. “Failure to comply can bring legal action. Construction without proper permits or easements in place can result in fines and legal action." The tribe said nothing will do but a complete environmental impact statement at the least, and a rerouting of the pipeline.“The only possible path forward for the Standing Rock Sioux Tribe is a decision that denies the easement or subjects it to a full environmental impact statement and tribal consultation,” Archambault said. “The only urgency here arises from DAPL’s reckless decision to build to either side of the Missouri River without a permit. It even continued construction when the U.S. Government asked it to voluntarily stop.”

Trump’s Personal Investments Ride on Completion of Dakota Access Pipeline --Donald Trump's surprise election win has encouraged Energy Transfer Partners's Kelcy Warren, the CEO of the parent company of Dakota Access LLC, which is building the Dakota Access Pipeline (DAPL). In an interview with CBS This Morning, Warren said he is "100 percent" confident that the president-elect will help the company finish the project.  The Standing Rock Sioux and their allies have been trying to block the controversial project since spring. The planned route cuts through the Missouri River, and protestors fear that a potential spill will contaminate the tribe's main source of drinking water and destroy sacred sites.  More than 80 percent of the pipeline has already been constructed. The final phase is an easement to build a tunnel beneath the federally protected river, but it first needs approval from the Obama administration.  "We will get this easement and we will complete our project," Warren insisted in his CBS interview. The U.S. Army Corps of Engineers is mulling alternative routes and has requested a temporary halt to the $3.8 billion project but Dakota Access LLC is pushing ahead with construction. According to a Nov. 8 release, the company said it is "currently mobilizing horizontal drilling equipment to the drill box site" and will commence drilling activities upon completion of mobilization in about two weeks. Yesterday, Army Corps's Omaha office said it was "concerned" that the company plans to continue building despite the Corps's request.  Trump has not spoken about the DAPL but holds stocks that are directly funding the Dakota Access Pipeline. According to Trump's financial disclosure forms, The Guardian reported that he has invested between $500,000 and $1 million in Energy Transfer Partners. The ardent supporter of fossil fuels wants to bring back the Keystone XL and announced plans to undo President Obama's climate change and environmental policies.

Whose Pipeline? - Volatility by Russ - Letter to all the people exercised about the Dakota Access Pipeline and cheering on the fighters, but who also support the Democrat Party and are even asking questions like, “Where is Obama on this?” (And of course those who voted for Clinton.*):  Those are Obama’s cops, in case you were too clueless to notice.Of course energy projects of this scale require all kinds of federal regulatory approval. And it is, of course, impossible for a significant energy project to exist without massive federal subsidies. So in both ways, it’s impossible for such a project to exist against the will of the president. On the contrary, it requires lots of action from the executive branch to make anything happen at all. All that corporate welfare doesn’t hand itself out, and all those federal thugs and federally subsidized and equipped thugs don’t outfit and deploy themselves. You do know, right, that there’s barely a cop in America who isn’t dependent upon the federal gravy train. Certainly not the kind of cop the corporations deploy against the faithfully active people at a place like this. But then, we know that almost everyone engaged in social media meta-“activism” on the occasion of the pipeline fight, which basically means circulating memes and clicking on the “Angry” button, really supports Big Oil and voted for it this last circus as they’ve voted for it every previous circus. After all, progressive opinions are fine to have, but those personal cars won’t fuel themselves.

Video Shows Wild Buffalo Held Without Food or Water Near Dakota Access Pipeline Construction Site -- A new video appears to show wild buffalo corralled behind razor wire and 8-foot deep trenches near the Dakota Access Pipeline (DAPL) construction site in Standing Rock, North Dakota. The video, posted on Facebook by Indigenous Rising Media on Nov. 11 with more than 1.2 million views, accuses DAPL builders of fencing off the animals in order to finish construction of the controversial pipeline.  "As of today, Dakota Access pipeline has fenced our sacred wild buffalo and they are building a razor wire wall to protect the last stretch of construction," the Facebook post's accompanying text states.  Reports claim that the buffalo are being held without access to food or water.  According to the fact-checking site Snopes , "Bison are not necessarily a rare sight at the reservation. The Standing Rock Sioux have long-range plans to increase the size of their buffalo herd to 1,000. To handle a herd of that size, the tribe would need 20,000 acres of rangeland."  Buffalo are sacred to the Sioux. "Buffalo ( Tatanka in Lakota) are a significant animal to Sioux and other plains peoples, who use it for food and clothing ," Snopes writes.  The Animal Legal Defense Fund (ALDF) has since launched an investigation into the matter.  "It has been reported that wild buffalo are being corralled and held behind razor wire fencing without food or water near the Dakota Access Pipeline—and that there have been threats of killing the buffalo by the construction company," the ALDF wrote on their Facebook page . "The Animal Legal Defense Fund is confirming reports, collecting additional information and investigating the legality of the treatment of these buffalo."

Reports from Standing Rock detail horrific conditions | TheHill: A couple weeks ago one of my best students disappeared from the argumentation and advocacy class I teach at the local community college. I emailed to see if she was ok. I learned she was on her way to Standing Rock to protest the Dakota Access Pipeline. I had just made a donation to the Standing Rock legal defense fund earlier that week. I was supportive of the fact that she was going to go out into the world to practice advocacy; the real world experience is valuable, and it strikes me as fair that if the people of Bismarck have the right to reject the pipeline, the people of Standing Rock deserve the same right. On November 17, I received a follow up email from my student thanking me for the donation I had made to the Standing Rock Legal Defense Fund, because they had bailed her out of jail. The content that followed disturbed me. “I'm back at camp now, but they did put us in actual dog kennels. There were photos of the types of dogs on the walls and piss stains on the floor. They also didn't read me my rights or even say I was under arrest. I was arrested along with 28 others of the 400+ protesting on the 15th.” This sparked an email exchange between Miranda and me that lead to a phone call. During the call she passed the phone to a fellow protester who with a slight quiver in her voice told me she was afraid to share her name because she feared for her safety. If my writing identified her, maybe law enforcement would target her or her friends; she had been arrested, they had her identity, and she didn’t know what to expect. “There’s danger everywhere here,” she said.

On the Knife-Edge of Western Globalization: A Stint at Standing Rock -- Armed men in jackboots, some masked and toting assault rifles, stand mockingly, defiantly, heavily on the mound of graves – a sacred indigenous burial ground.  A site non-natives can understand as similar to Arlington National Cemetery.  How US nationalists would feel if the situation were reversed, and people were occupying or plowing up Arlington to bury a pipeline that will hasten the destruction of the planet and likely poison a major water-source, does not, at this time, seem to matter or occur to the militants trampling the bones.  While some appear to be “just following orders”, the infamous defense, ruled invalid, of many Nazi grunts who were then executed by the US at Nuremberg, others are smiling – apparently enjoying themselves, enjoying the near absolute power over their unarmed victims – people trying to protect water, indigenous sovereignty, and the global environment.  The thought occurs that there may be an equivalent between some of these armed invaders and Internet trolls, a personality type exposed a couple of years ago in a spate of psychological evaluations as sadists – people who derive pleasure from causing others pain and anguish.  There is certainly a place for sadism in the armed wings of a social system founded on murder, enslavement, and theft.  Many of the nation’s founding atrocities took place on and near, and proudly lend their names to, these very grounds.  While traditionally the indigenous people here would simply have been sent to concentration camps or murdered, often after being hog-tied, today, with cameras and white faces behind the natives, the militants employ mostly torture weapons – tools to erect a living wall of pain and suffering between the protectors and the expanding tide of smog, death, destruction, and desecration they are attempting to halt.   As the militants look down at their victims, I recall that we are told by the US corporate state that we should be outraged when ISIS forces destroy religious sites in the Middle East, but intentionally ignorant, suspicious of the natives, or, at most, neutral, when occupying forces desecrate “solemn” treaties and religious sites in the US – more founding practices without which the US would not exist in its current form.  While such facts are often consigned to Orwell’s “memory hole”, perhaps a more common approach historically has been for the society to celebrate them, as was done, for example, by popular author Christopher Hitchens in the left-liberal bastion The Atlantic.

Army Corps to Engage Standing Rock Sioux on Dakota Access Pipeline -- The U.S. Army Corps of Engineers announced today that it would delay a decision on granting an easement to Energy Transfer Partners for the Dakota Access Pipeline.  The Army Corps determined that discussion with the Standing Rock Sioux Tribe and analysis are warranted, and "construction on or under Corps land bordering Lake Oahe cannot occur because the Army has not made a final decision on whether to grant an easement."  The Army Corps informed the Standing Rock Sioux Tribe, Energy Transfer Partners and Dakota Access, LLC, that it "has completed the review that it launched on September 9, 2016" and "determined that additional discussion and analysis are warranted in light of the history of the Great Sioux Nation's dispossessions of lands, the importance of Lake Oahe to the Tribe, our government-to-government relationship and the statute governing easements through government property."  The Army Corps went on to say that it "invites the Standing Rock Sioux Tribe to engage in discussion regarding potential conditions on an easement for the pipeline crossing that would reduce the risk of a spill or rupture, hasten detection and response to any possible spill, or otherwise enhance the protection of Lake Oahe and the Tribe's water supplies." The agency's remarks concluded by saying, "We fully support the rights of all Americans to assemble and speak freely, and urge everyone involved in protest or pipeline activities to adhere to the principles of nonviolence."  The $3.8 billion pipeline project is now entering its final stretch. More than 80 percent of the pipeline has already been constructed . Last week, Energy Transfer Partners's Kelcy Warren, the CEO of the parent company of Dakota Access LLC, told CBS News he is confident the pipeline will finish despite the ongoing protests now that Donald Trump will be America's next president.

Feds call for further discussion before Dakota pipeline can move forward -- The Army Corps of Engineers will not grant an easement for construction of the controversial Dakota Access Pipeline until it has discussed the matter further with the Native American tribe that is suing to stop it. In a Monday statement, the Army Corps said it has completed its two-month review of the permitting decisions that went into the Dakota Access Pipeline project. That review approved of the permitting process, with the Corps saying in a letter to Dakota Access developers and tribal opponents that its “previous decision comported with legal requirements.” But the agency said it would not issue the easement necessary for construction of a stretch of the project until it has had a chance to discuss the pipeline with the Standing Rock Sioux Tribe. “We take seriously our government-to-government relationship with the tribe,” Assistant Secretary for the Army Jo-Ellen Darcy wrote in the letter. “This history, the importance of Lake Oahe to the tribe and our government-to-government relationship call for caution, respect and particular care regarding the proposed DAPL crossing at Lake Oahe.” The letter said “additional discussion with the Standing Rock Sioux Tribe and analysis are warranted.” The Standing Rock Sioux Tribe has sued against the pipeline, warning that it threatens cultural heritage sites and the tribe’s drinking water supply at North Dakota’s Lake Oahe. A federal judge in September ruled in favor of the Army Corps’ permitting process for the pipeline, a decision that allowed construction on most of the line to move forward. But the Army Corps has not granted an easement for construction at Lake Oahe. Amid tribal and environmentalist protests against Dakota Access, the Army Corps said it would review its approval process for the pipeline and decide afterward whether to issue the easement.

Dakota Access pipeline protests spread, firms fight back | Reuters: Demonstrators fanned out across North America on Tuesday to demand the U.S. government halt or reroute the Dakota Access pipeline as the companies behind the controversial project asked a federal court for permission to complete it. In what organizers said were the largest demonstrations to date against the pipeline, thousands of people rallied outside Army Corps of Engineers offices, banks and energy companies, a day after the Obama administration delayed granting a permit needed to finish the project. There were arrests in North Dakota, where the most heated protests took place. The $3.7 billion Dakota Access project has drawn opposition from the Standing Rock Sioux tribe as well as environmental activists who say it could pollute water supplies and destroy sacred historic tribal sites. Morton County Sheriff's Department reported 26 arrests in Cannon Ball, North Dakota near the path of the pipeline, and said demonstrators attempted to block a railroad with a pickup truck then tried to set the vehicle on fire. "Their job is to protect us, but instead they're protecting corporate interests and profits and money," said Cannon Ball protester Fumi Tosu, 38, of San Jose, California, adding that police used mace on demonstrators. Robert F. Kennedy Jr, founder and president of Waterkeeper Alliance, said the Dakota Access pipeline was an "environmental crime." "There's real victims," Kennedy told reporters at the Cannon Ball protest.Energy Transfer and its subsidiary, Sunoco Logistics Partners, filed papers in U.S. district court in Washington, D.C., seeking to "end the Administration's political interference in the Dakota Access Pipeline review process." Energy Transfer asked the court to declare that the project had the legal right to proceed and needed no further government approvals. "To propose, as the Corps now does, to further delay this pipeline and to engage in what can only be described as a sham process sends a frightening message about the rule of law,"

Construction of Dakota Access Pipeline Continues Despite Army Corps Delay on Permit Decision -- At approximately 3 a.m. Nov. 16, independent media makers from Digital Smoke Signals spotted a horizontal drill at the highly militarized drill site next to the Missouri River. This sighting comes two days after the Army Corps statement made on Nov. 14. The Army Corps alerted Dakota Access Pipeline (DAPL) that "Construction on, or under the corps land bordering Lake Oahe cannot occur because the Army has not made a final decision on where to grant an easement." The response from Dakota Access was to sue the Standing Rock Sioux Tribe, the Cheyenne River Sioux Tribe and the Army Corps of Engineers claiming all permits were granted. Despite the Army Corps statement that DAPL construction "cannot" continue, Dakota Access has moved in a horizontal drill and prepares to bore under the Missouri River at their highly fortified drill site.Dakota Access builds militarized construction site w/ hesco walls & razor wire to protect oil pipeline from water protectors. #NoDAPL — Unicorn Riot (@UR_Ninja) November 11, 2016 Water protectors continue to gather in prayerful resistance at Oceti Sakowin against the Dakota Access Pipeline and prepare for the first winter storm of the season.

New Front Line for NoDAPL Attorneys: Criminal Courts - I drove through police barricades, past Bureau of Indian Affairs (BIA) command centers and DAPL mercenaries with cameras, guns and who knows what else aimed at me. I prayed each day that the snipers perched in the nearby prairie didn’t determine it was a good day to fire. None of that deterred me from my purpose—to assist the efforts of the Water Protector Legal Collective (WPLC, formerly the Red Owl Legal Collective), to interact with individuals within the camp and to listen and record the stories of water protectors. None were easy to hear, but all shared a common theme of increased, indiscriminate, and excessive use of militarized force against a Native community and its allies. These, and subsequent stories, highlight the extent of force and intimidation used: security dog attacks, tear gas and mace, sound cannons and flash-bang grenades, armored vehicles, rubber bullets and snipers. Once arrested, the individuals face strip searches, being kept in pens resembling dog kennels, the ransacking of impounded cars, personal property “lost,” and sacred items destroyed. More recently, the WPLC reports, “a dumpster-load of seized property was recovered at a Bureau of Indian Affairs checkpoint . . . When protectors returned for their things, they found sacred item after sacred item had been defaced, with apparent intentionality. One item, a bull skull, had its horns snapped clean off.” All contribute to the ongoing civil, human and religious rights violations endured by the water protectors. The next frontline for some of them will be in courtrooms, first to defend themselves from criminal complaints and then to hold authorities accountable for human and civil rights violations. That’s where we attorneys come in.

Dakota Access pipeline decision unlikely until early 2017 - A federal judge likely won't decide until early next year whether to give the developer of the Dakota Access oil pipeline permission to finish the $3.8 billion project, according to court documents. That leaves open the possibility that a resolution to the matter might still come through federal regulators rather than the courts. But it also creates the potential for many more weeks of protests in southern North Dakota, where opponents have started digging in for winter, and millions more spent on law enforcement-related costs. Dallas-based Energy Transfer Partners asked U.S. District Judge James Boasberg on Tuesday to declare it has the legal right to lay pipe under a Missouri River reservoir in southern North Dakota, the remaining unbuilt chunk of the 1,200-mile pipeline to move North Dakota oil to a shipping point in Illinois. The company's move was spurred by the U.S. Army Corps of Engineers calling Monday for more study and input from the Standing Rock Sioux before deciding whether to approve an easement for the pipeline to cross under Lake Oahe, the reservoir from which the tribe draws drinking water. The tribe believes the pipeline threatens water and cultural sites. Company lawyers have proposed a schedule under which a hearing would be held "on or about" Jan. 3, and Boasberg would make a decision sometime after that. When the tribe asked Boasberg in August to temporarily stop pipeline construction, he ruled 12 business days after a hearing. If he follows a similar timeline, a decision on ETP's request would come Jan. 19 — one day before Donald Trump, who has said he wants to rebuild energy infrastructure and owns stock in ETP, assumes the White House. Attorney Jan Hasselman with environmental group Earthjustice, which is representing the tribe in its lawsuit, doesn't think the Obama administration will leave the matter to Trump.

Oil market latest pressure for Dakota Access pipeline (UPI) -- There are concerns about how exposed the Dakota Access oil pipeline is to financial risk in the energy market, a group with ties to climate research said.Energy Transfer Partners, one of the main companies behind the $3.7 billion pipeline, filed a legal challenge against alleged "political interference" in the project. With nationwide protests against the project mounting, the company said more delays that followed a lengthy review process were contrary to the rule of law."Dakota Access Pipeline has been granted every permit, approval, certificate, and right-of-way needed for the pipeline's construction," Energy Transfer Partners CEO Kelcy Warren said in a statement.With only a few hundred feet left in construction, the U.S. Army Corps of Engineers ordered a halt to the process to take time for "additional discussion and analysis" of the potential threat to the interests of the Sioux tribe and area waters.The last few hundred feet of construction requires drilling under the Missouri River. Outside of the environmental and tribal concerns, the Institute for Energy Economics and Financial Analysis said there were concerns about the economic risks for the project.According to the IEEFA, if the pipeline isn't completed by Jan. 1, the project consortium may have to revisit some of the contracts for shipping oil through the 1,110-mile pipeline. The institute said further that crude oil prices being about 50 percent lower than they were at the height of the U.S. shale era means the regional economic prospects are far from certain.

Judge throws out felony charges against several north camp protesters - A judge has thrown out felony charges against several Dakota Access Pipeline protesters arrested during a raid of the northern camp on Oct. 27. After the raid, 139 people were charged with one felony count of conspiracy to endanger by fire or explosion and two misdemeanor counts. The prosecutors filed a single complaint and supporting affidavit against all of them on Nov. 10. The affidavit alleges protesters at least implicitly agreed to set multiple fires throughout the day, thereby endangering law enforcement, firefighters and nearby pastureland. But South Central District Judge Cynthia Feland was not convinced the prosecutors had made a case against each person. She notes that the prosecutor failed to specifically name who committed the crime, how and when they committed it or how they agreed to commit the crime together. "As far as the court can tell from the facts alleged in the affidavit, these fires were set sporadically, at different locations, by different individuals, seemingly at random. The state has not alleged facts sufficient to show an explicit or implicit agreement between the 139 defendants to commit the offense charged," Feland wrote in an order to dismiss the felony charge against Yenglin Jeysien Verdugo. Court records show identical orders also are filed with nine other protesters. Four additional protesters, whose cases were assigned to Feland, will also have their felony charge dropped, according to the Morton County Clerk's office. It is not clear yet whether felony charges will stand against the other 125 people named in the complaint, whose cases are assigned to different judges.  The felony charge was dismissed without prejudice, meaning a prosecutor can re-charge the case if the prosecution can provide probable cause.

U.S. native groups promised input on development as pipeline... (Reuters) - The United States plans to gather more input from native people as officials contemplate projects like the Dakota Access Pipeline, according to a White House notice posted on Thursday that could delay the controversial plan. The Army Corps of Engineers plans to "revise its regulations" to ensure its consultations with sovereign tribes are "confirmed by the U.S. Constitution, treaties, statutes, executive orders, judicial decisions and presidential documents and policies." The proposed change comes in the form of what is known as an Advance Notice of Proposed Rulemaking, which states an agency's intention to issue a new regulation. The Army Corps of Engineers, which manages many federal infrastructure projects, did not immediately respond to a request for comment Thursday evening. The pending rule is being contemplated in the final weeks of President Barack Obama's term when the administration is mulling whether or not to allow the Dakota Access crude pipeline. President-elect Donald Trump is due to be sworn in on Jan. 20. Under federal law, the incoming president has authority to invalidate many last-minute decisions from an outgoing administration. The notice, which was posted on the website of the U.S. Office Information and Regulatory Affairs, said the public will be able to comment on the proposal until Jan. 1, 2017. The Obama administration has been in a quandary over whether to issue a permit to allow the completion of the final leg of the pipeline. Demonstrators fanned out across North America on Tuesday to demand that the U.S. government either halt or reroute the pipeline, while Energy Transfer Partners, the company behind the controversial project, asked a federal court for permission to complete it.

Developer says Dakota Access pipeline will not be rerouted: AP | Reuters: Energy Transfer Partners LP Chief Executive Officer Kelcy Warren said the company will not consider rerouting its Dakota Access oil pipeline despite concerns voiced by U.S. native groups, according to an Associated Press interview published on Friday. President Barack Obama said earlier this month that the government was examining ways to reroute the pipeline. Energy Transfer did not immediately respond to calls and emails seeking comment. Warren did tell the AP that he would like to meet with tribal leaders to ease their concerns about the project. The Dakota Access Pipeline has been delayed since September, when federal regulators including the Army Corps of Engineers decided to re-review permitting under Lake Oahe, a federally owned parcel of land where the pipeline needs to cross. The stoppage came after protests from the Standing Rock Sioux tribe, whose reservation is adjacent to the federal land where the pipeline runs. The U.S. Army Corps of Engineers elected to review their permitting again, and this past week deferred a decision, citing concerns about the tribe having been moved off its lands in the past. On Friday, North Dakota Governor Jack Dalrymple asked the Army to resolve the permitting issues, citing protests that have sometimes turned violent at Cannon Ball, where the Standing Rock Sioux have erected a large camp that they plan to man throughout the winter. He also asked for assistance in law enforcement from federal authorities. “Further delays simply prolong the risks to public safety, prolong the hardships endured by area residents and increase costs incurred by the state of North Dakota and Morton County,"

US Department Of The Interior Cancels 15 Oil And Gas Leases On Sacred Sites | 15 oil and gas leases that were issued 30 years ago are now in the process of being cancelled. The Department of the Interior made the move to preserve 130,000 acres of land near Glacier National Park, in Montana. Located in the Badger-Two Medicine area, the land is held sacred by members of the Blackfeet Indian Tribe in Montana, and the Blackfoot tribe in Canada. In addition to the spiritual component, the area is also home to grizzly bears and bighorn sheep. Interior Secretary Sally Jewell commented on Wednesday that the leases, which date back to the late 1980s, should never have been issued in the first place, adding that the move sets the tone for how leases should be issued in the future. The leases in question were held by Devon Energy, and the company has not drilled on them. Company president David Hager agreed with Jewell, noting that Devon will receive around $200,000 in compensation. Montana Senator Jon Testor praised Devon for its willingness to cooperate with the decision by the Department of the Interior (DOI). This is not the first cancellation in the Badger-Two Medicine area. In March of this year, the DOI cancelled a 6,200-acre lease owned by Solenex LLC of Baton Rouge. Unlike Devon, Solenex, which had plans to drill for gas on its lease, has challenged the decision by the DOI in U.S. District Court in Washington, D.C. There are still two oil and gas leases in the area, which are also slated for cancellation. But the cancellation efforts have been slowed by the fact that the federal government is so far, unable to locate the owners.

Harold Hamm, Anti-Keystone Oil Billionaire, Could Be Trump's Energy Secretary: An oil billionaire who has been saying for years that the U.S. doesn’t need Canada’s Keystone XL pipeline is a leading candidate to be the next energy secretary of the United States. According to documents obtained by the Associated Press, Harold Hamm, an entrepreneur in North Dakota's Bakken oil shale fields, is one of three people being considered for the post, along with Rep. Kevin Cramer, an early Trump supporter from North Dakota, and venture capitalist Robert Grady, who worked in President George H.W. Bush's administration. The fact that two of the three potential choices for energy secretary are linked to North Dakota’s shale oil fields could be bad news for Keystone XL builder TransCanada, and for Canada’s oilsands as a whole, which are in direct competition with North Dakota’s oil fields. Hamm, who is CEO of Continental Resources and whose net worth is estimated at more than US$11 billion, has argued that the Keystone XL pipeline has become irrelevant to the U.S., thanks to the development of shale oil.  Donald Trump campaigned on a vow to approve the Keystone XL pipeline, though on the condition that the pipeline’s builder, TransCanada, would share the profits with the U.S. government. Some analysts said that idea could be legally problematic.

Palin over Hamm for Energy Secretary? -- Oil and gas website The Surge threw around the idea of Sarah Palin as energy secretary. Last week, we touched on the notion of Harold Hamm, CEO of Continental Resources and the “fracking king” of oil and gas taking the post. And while Sarah Palin might have been governor of one of the biggest oil producing states, she said her first objective would be to get rid of the department. According to Sarah, the first thing she would do as head of the Department of Energy would be to get rid of it. Huh? I’ve heard of the phrase “physician, heal thyself” but never “Cabinet member, fire thyself”. Palin believes her skills are in line with the needs of the department. Rigzone reports: Eight years ago when Palin was running for vice president, her mantra on the road was, “Drill, baby, drill.” Although it was unsuccessful in 2008, Trump’s victory has revived those who voice the conviction. It does seem, in fact, that Trump’s administration will strongly support policies that encourage an increase in drilling, removing many of the regulations that industry folks say get in the way of successful and productive operations. But abandoning all energy regulations isn’t necessarily the panacea that some argue, said Ed Hirs, economics fellow at the University of Houston. “The industry doesn’t go out and deliberately blow regulations,” Hirs said. “What sort of regulations are going to be necessary to remove? What are you going to do – let people who are stoned get on the rigs? You’re going to let guys who are stoned and drunk handle $28 million rigs drilling $8 million wells? I don’t think so. You’re not going to relax all of those regulations.”

Senate GOP leader says he asked Trump to back keystone: The Senate's top Republican said Friday he asked President-elect Donald Trump to move swiftly in approving construction of the Keystone XL pipeline, which has drawn strong opposition from environmentalists. Senate Majority Leader Mitch McConnell of Kentucky told reporters he made the request during his Capitol Hill meeting with Trump a day earlier. "That's the kind of thing that I hope he'll be looking at, and we're helping him look at - things that he can do quickly on his own," McConnell said. "Because much of what President Obama did that slowed our economy he did on his own, either executive orders or regulations." "So one of the ways to get this economy growing again, I think, is to deal with regulatory changes," McConnell added. Trump touted the stalled Keystone project during a late October campaign swing through Florida, saying: "We're going to approve energy infrastructure projects like the Keystone pipeline and many more." He listed the project among his top priorities for the first 100 days of his administration, saying it could provide "a lot of jobs, a lot of good things." McConnell said he's confident the new Trump presidency will "get off to a good start." Obama rejected the proposed Keystone XL pipeline last November, declaring it would have undercut U.S. efforts to clinch a global climate change deal at the center of his environmental legacy. The 1,700-mile pipeline would carry oil from tar sands in Alberta, Canada, to refineries in the Houston area, passing through Montana, South Dakota, Nebraska, Kansas and Oklahoma.

What's ahead for the energy railway industry after crude by rail went bust? -  The crude by rail landscape must be in a dire state when delegates from the railway industry are toying with the idea of hauling water to draught-prone regions or shale production sites in order to repurpose the currently 113,000 rail tank cars — 28% of the entire 400,000 strong fleet — sitting idle on offline tracks or in storage amid declining CBR volumes. Lease rates for the 287,000 tank cars that are still moving have declined to $300-375/month from a high of over $2,400/month during the CBR boom in 2013-2014 and $700-800/month a year ago. The one faction that didn’t mind the downturn in the CBR landscape were the rail car service companies that are cleaning the tank cars, in order to prevent corrosion during storage. BNSF’s executive chairman Matthew Rose opened the conference, held October 27-28, by pointing to the structural decline in both the oil and coal business and that natural gas liquids could well be the next commodity for the railroads. Shortline companies, such as Omnitrax, were optimistic about railing frack sand to shale producing fields, as the increased use of sand below ground resulted in higher yields above ground. In other words, alternatives to crude by rail was on the forefront of delegates’ minds, in order to circumvent the current bust cycle of the crude by rail landscape.According to the Energy Information Administration, total CBR shipments, not including Canada, have more than halved in the past two years from a peak of 1 million b/d in late 2014 to 348 MBD in August 2016. 85% of that volume is sourced in PADD 2 railing Bakken crude to those US refinieries where there is no pipeline capacity.

Reversing Middle East Dependence: U.S. Begins Exports Of Shale Gas To Oil-Rich UAE And Kuwait -- Here’s a crazy thought: Imagine that exports of American energy began flowing to importing countries in the Middle East, and that those countries were growing increasingly dependent on U.S. exports. Sound bizarre? Since March of this year, that is exactly what has been happening. Amid all the election tumult, the United States quietly began exporting natural gas to the Middle East. Two cargoes of shale gas liquefied at Cheniere Energy’s Sabine Pass terminal in Louisiana were exported to Kuwait. A third went to the United Arab Emirates. Jordan imported two more. This ought to sound odd to the average American. Kuwait and the UAE are two of the most petroleum-rich countries on earth, with a combined 12% of global oil and 4% of global gas reserves. The usual narrative suggests that America is dependent on the Middle East for energy, not the other way around. President-elect Trump is even suggesting we reduce our dependence by halting imports from Saudi Arabia. Why would Kuwait and UAE need American gas? They sit in a region that holds more than 40% of global gas. Iran alone owns 18% of known reserves. Qatar has 13%. And, just 90 miles from Kuwait City, Iraq flares off 700 million cubic feet per day of associated gas from its southern oilfields. Estimates put the value of the wasted gas at $1.8 billion per year. How on earth is it possible that these two countries are importing shale gas all the way from America? Even though Kuwait and the UAE each hold more than 100 years of gas reserves at current rates of production, they are genuinely short on natural gas. The root cause is government subsidies that fix domestic natural gas prices at very low levels – less than $2 per million BTUs. At those prices, demand for gas is rampant. So is demand for electricity, which is also subsidized. But with prices fixed at a dollar or two, nobody wants to invest in natural gas production. There is no money in it.

Trump adviser promises a return to ‘Drill, Baby, Drill’  An adviser to President-elect Donald Trump has now promised that the incoming administration will collect “hundreds of billions of dollars” in revenue by “opening up” federal lands and oceans to oil, gas, and coal development.But the fact is that vast majority of federal fossil fuel resources are already open to energy companies for mining and drilling. Opening more lands won’t significantly increase revenues, but could put sensitive habitats, human health, and the recreation business at risk.“We think we can raise significant amounts of revenues for the federal government by opening up more of our federal lands for leases for oil and gas development and coal development,” Stephen Moore, one of Trump’s economic advisers, said in an interview with NPR.“And the energy companies will actually pay the federal government to be allowed to drill and mine on some of these lands. We’re not talking about environmentally sensitive lands, but lands that just have been taken off the grid. We think we could raise hundreds of billions of dollars over the next 10 years,” he said. In reality, oil companies recently cut back on drilling because of an oil glut and correspondingly low global prices. Coal companies are failing because of declining demand for their high-pollution product and competition from cheaper and cleaner alternatives.

US Interior offshore oil and natural gas leasing plan may be complicated by Trump win -  The Interior Department is expected this week to unveil its final five-year plan for offshore oil and natural gas lease sales and both industry and environmental sources believe proposed Arctic sales are more likely to be eliminated due to Republican Donald Trump's electoral victory. The plan, with the proposed sales in the Beaufort and Chukchi seas cut out, could put the incoming Trump administration in the precarious position of scrapping the plan but halting all offshore oil and gas sales for the bulk of his four-year term or going forward with a limited number of sales, potentially only in the Gulf of Mexico. Interior's Bureau of Ocean Energy Management is expected to unveil the final plan for offshore lease sales between 2017 and 2022 as early as Wednesday, according to sources, who spoke on the condition of anonymity. BOEM unveiled the proposed plan in March and while a planned sale for the Atlantic included in an earlier version was removed, it still included 10 Gulf of Mexico sales, a 2020 Beaufort sale, a 2021 Cook Inlet sale and a 2022 Chukchi sale. The Obama administration has faced intense pressure from environmentalists to cut the Beaufort and Chukchi sales from the program. Interior spokespeople did not respond to requests for comment Friday and the White House has given very little indication on whether it plans to cut these Arctic sales from the five-year plan.

Trump may open up Arctic drilling   - Much has been made about President-elect Donald Trump’s plans to dismantle environmental regulations and streamline regulations that could lead to the construction of more pipelines. But there are a few other controversial energy issues that President Trump might ram through a Republican Congress, which would hand the oil and gas industry new areas for drilling that have long been off limits. No other place has been more contentious, more fought over, than the Arctic National Wildlife Refuge (ANWR), a large swathe of territory in northeast Alaska, east of Prudhoe Bay where much of the state’s drilling is located. As its name suggests, the refuge is home to scenic mountains, rivers and lakes rich in wildlife and biodiversity. But it is also thought to hold large volumes of oil and gas reserves, and has been the subject of heated debate since the late 1970s over whether or not oil and gas companies should be allowed to drill. Republicans have long sought to open ANWR up for drilling, but Democrats have stymied them for decades. But that deadlock could be broken with the unusually brazen President-elect, who is hoping to deregulate large sectors of the U.S. economy. And he has the allies in Congress to take on hugely controversial items. Alaska Dispatch News reports that the Alaskan congressional delegation, led by the powerful Senator Lisa Murkowski (R-AK), who chairs the Senate Energy and Natural Resources Committee, was shocked on election night (as was everyone else), and quickly thought to put ANWR on the table for President Trump’s agenda in his first 100 days. When asked about ANWR by a reporter on election night in Anchorage, Sen. Murkowksi voiced cautious optimism. "Well, as you know, we have been working to advance ANWR for decades now. And we need to have the support of the Congress," Murkowski said. "But if the numbers continue for us with the Senate and you have a president who has expressed support, I will be chairing the energy committee again, and I am going to look to push that early on," she added.

Alaska Sees 'Astounding' Rise in Temperature as 'Drill, Baby, Drill' Planed for Arctic -   As 2016 is set to be the warmest year on record , Alaskans are seeing an " astounding " rise in temperature. Throughout October, average temperatures in Alaska ran 6.7 degrees above normal.  Barrow , the northernmost community in the U.S., set its warmest October on record. Its monthly average came in at 30.1 degrees Fahrenheit, an astonishing 12.9 degrees warmer than the 1981-2010 average. Oct. 10 was the warmest October day ever, with a high of 44. The Arctic is warming twice as fast as the rest of the world. This year, the sea ice tied for its second-lowest extent after a record-early spring melt set in. And it's having a lot of trouble reforming for the winter.  In October, the sea ice covered 2.5 million square miles, the lowest October ever seen. It remains low in the Beaufort, Chukchi, East Siberian and Kara Seas, where water temperatures were above normal. It's the slowest regrowth of Arctic sea ice on record.  With new oil discoveries in Alaska and a fossil-fuel friendly president about to enter the White House, the future looks even darker.  Here are seven key concerns when it comes to drilling in the Arctic:

  • 1. Smith Bay: Caelus Energy announced what it called a "world-class" find in Smith Bay that could prove to be one of the largest oil fields in Alaska. The site, just 50 miles from Barrow, could produce 200,000 barrels per day of light, highly mobile oil, the company said.
  • 2: Moose Pad: Hillcorp Alaska is set to drill up to 44 wells in an area 25 miles from Prudhoe Bay. The company expects to begin drilling in 2018.
  • 3. Liberty Field: Another Hillcorp site in the North Slope, this one on the outer continental shelf, could add up to 70,000 barrels of oil per day to the 40-year old trans-Alaska pipeline .
  • 4. North Slope and Beaufort Sea: Alaska is conducting a lease sale now on state-owned land on the North Slope and state-owned waters of the Beaufort Sea.
  • 5. Beaufort and Chukchi Seas: Alaska Gov. Bill Walker has asked the U.S. Department of the Interior to include the two Arctic seas in the federal offshore leasing program. These include areas where Shell drilled in 2015.
  • 6. Fiord West: Last month, ConocoPhillips ordered a monster new drilling rig that can radiate outward to reach oil within 125 square miles from a single site. It will use the rig to develop the Fiord West field on the North Slope.
  • 7. Arctic National Wildlife Refuge: A political battleground for decades, with the control of the federal government now squarely in Republican hands, "pro-development Alaskans could already taste oil," wrote Alaska Dispatch News following the election.

Obama's Offshore-Oil Plan Forces Drillers to Focus on US Gulf -- The Obama administration’s decision to forgo auctions of new oil and gas drilling rights in U.S. Arctic waters deals a blow to energy companies seeking to lock up new territory beyond the long-explored Gulf of Mexico. Interior Secretary Sally Jewell said the move, announced Friday, strikes the right balance, by sustaining oil and gas development in the Gulf, while blocking the activity in remote and fragile Arctic waters that could be devastated by an oil spill.   "The plan focuses lease sales in the best places -- those with the highest resource potential, lowest conflict and established infrastructure -- and removes regions that are simply not right to lease," Jewell said in a statement. "Given the unique and challenging Arctic environment and industry’s declining interest in the area, forgoing lease sales in the Arctic is the right path forward." The Interior Department already had abandoned plans to offer leases in the Atlantic Ocean in a proposed version of its 2017-2022 offshore oil plan but had maintained the option of auctioning tracts in the Chukchi and Beaufort seas north of Alaska. However, those waters were left out of the final version of the five-year program released Friday, leaving only 10 auctions in the Gulf of Mexico and one in Alaska’s Cook Inlet. The U.S. Arctic is estimated to hold 27 billion barrels of oil and 132 trillion cubic feet of natural gas, but energy companies have struggled to tap resources buried below icy waters at the top of the globe. Friday’s announcement fell short of fulfilling environmentalists’ pleas for more enduring protections that would keep U.S. Arctic, Atlantic and Pacific waters permanently off limits, though President Barack Obama could issue such a declaration any time before leaving office on Jan. 20. President-elect Donald Trump’s administration can rip up the five-year plan, but substantially replacing it and putting the Atlantic and Arctic back on the auction block would take years because of legally required public comment periods and environmental reviews. Some Alaska residents and former military leaders had joined oil companies in arguing that drilling could drive the development of critical infrastructure in the Arctic, helping ensure the U.S. can protect its interests in the region, as melting sea ice opens up once-clogged waterways. Arctic drilling also could yield new sources of crude to fill the aging Trans-Alaska Pipeline System.

Oil From BP Spill Has Officially Entered the Food Chain - Researchers in Louisiana have found carbon from the BP Deepwater Horizon oil spill in the feathers and digestive tracts of seaside sparrows, proving for the first time that oil from the disastrous 2010 spill has entered the food chain. The study , published today in Environmental Research Letters, was conducted by scientists from Louisiana State University and Austin Peay State University in Tennessee. They found oil carbon signatures consistent with the Deepwater Horizon event in each of 10 birds tested. These marsh-dwelling sparrows inhabit an area known to have been contaminated by the spill. Sediments from the site also tested positive for oil with the same fingerprints as that found in the tested birds. The Deepwater Horizon accident followed the blowout of the wellhead at the Macondo oil rig and lasted for 87 days. Eleven workers died and 4.9 million barrels of oil flowed into the Gulf of Mexico. It became the largest oil spill in U.S. history and was called the "worst environmental disaster the U.S. has faced" by White House Energy Adviser Carol Browner. Oil sheens continued to be seen as much as three years after the event. The source of many were never discovered, but the containment dome failed and had to be plugged in 2012. The immediate effects of such major spills are readily apparent. Oiled birds, dead fish and beaches covered in crude-oil sludge are often the first, horrific results. Disasters like Exxon Valdez, Deepwater Horizon and the Santa Barbara oil spill damage critical wildlife habitat and destroy fisheries.  Longer-term, the pernicious oil enters the food chain. The first signs of Deepwater Horizon oil were found in blue crab larvae in 2010. Oil likely entered the food chain through zooplankton. A 2012 study found traces of oil in zooplankton impacted by the BP oil spill.

RIN costs and their widely varying impact on refiners and refining. - Over the past few weeks, publicly traded independent refining companies reported their latest quarterly results, and nearly all lamented on a common theme: the cost of Renewable Identification Numbers (RINs) is out of control. However, the financial burden is not felt equally across the industry, as companies with integrated marketing operations (refining, blending and retailing) don’t face the same RINs-cost albatross as merchant refiners who don’t have retail operations. Today we review the escalating RIN costs that obligated parties have endured this year and explain how the degree of financial pain depends on the level of refiners’ downstream integration.  RINs have become a leading topic of conversation—and angst—in the refinery sector, and we’ve been exploring the matter in the RBN blogosphere. In our initial blog a few years ago (A Market of Contradictions: Ethanol Mandates, Motor Gasoline and the Blend Wall), we described the evolution of ethanol mandates and the limits on how much ethanol can be blended into gasoline without affecting engine performance. We followed that up with The RIN and Stimpy Show and, more recently, with a two-part series: Magical Mystery Tour - Turmoil in U.S. Gasoline Markets and the Arcane World of RINs and Magical Mystery Tour - Is a Showdown on the RFS and RINs in the Offing?

Trump presidency seen as favorable for oilfield services sector: analysts -  The election of Donald Trump to the US presidency last week should further help an already upturning domestic E&P sector through his backing of oil and gas development and potentially streamlining the permitting process on US federal lands, analysts said. Even as many sectors of the US remain wary of billionaire celebrity Trump, a Republican, his presidency that begins next year is "clearly a net positive" for oilfield services since he has said he wants a fossil fuel revival, Evercore ISI analyst James West said. "This will add a little bit of fuel to the fire on the North American side," West said during a Wednesday conference call by his investment bank on the implications of the election on drilling. "If everything Trump as president-elect wants to do is done, this will only add more growth [in that arena]." North American land drilling has already been moving to what longtime oilfield services analyst West believes will be a robust recovery next year. "We're in the early stages now, and expect to see continued rig count, well count and pricing traction ... as [oilfield services regain] some economic rent they lost to the E&P industry during the last two years of the downturn," he said.

Exxon's Oil Sands Reserves Announcement May Mean Little for the Climate --ExxonMobil's recent warning to investors that it might slash the estimate of its Canadian tar sands reserves could undermine investor confidence in the company's future. But the shift appears unlikely to affect the oil giant's climate impact any time soon. In a financial disclosure filed Oct. 28, Exxon warned shareholders that after nearly quadrupling its reserves in the oil sands over the past decade and defending its assessment of their worth, it may be forced to erase most of those deposits from its books. Exxon said that the average price of oil this year has been so low that 3.6 billion barrels of oil at its Kearl tar sands field, as well as 1 billion barrels of oil and gas equivalent elsewhere in North America, may no longer be claimed under accounting formulas imposed by the Securities and Exchange Commission. The total represents nearly 20 percent of its global reserves.Exxon is already posting lower earnings as a result of sinking oil prices, and any resulting write-downs could further depress its reported income.It was a remarkable concession by a company that has long defended its reserve accounting as conservative and unwavering. The disclosure came as Exxon is under pressure from the New York attorney general and the SEC, which separately are examining whether the company has kept investors informed about the value of its assets. For critics who say Exxon has been reckless in the face of a global attempt to create a clean energy economy, the announcement was momentous—a sign that carbon-heavy tar sands operations are likely to remain bad economic bets for the foreseeable future.

End Of The U.S. Major Oil Industry Era: Big Trouble At ExxonMobil - The era of the mighty U.S. major oil industry is coming to an end as the country’s largest petroleum company is in big trouble.  While ExxonMobil has been the most profitable U.S. oil company in the past, it suffered its worst year on record.For example, just four years ago, ExxonMobil enjoyed a $45 billion net income profit in 2012.  Now compare that to a total $5 billion net income gain for the first three-quarters of 2016.  If Exxon continues to report disappointing results for the remainder of the year, its net income will have declined a stunning 85% since 2012.Actually, the situation at Exxon is much worse if we dig a little deeper. To understand the real profitability of a company we have to look at its cash flow, or what is known as free cash flow.  Free cash flow is calculated by deducting capital expenditures (CAPEX) from the company’s cash from operations.  ExxonMobil’s free cash flow declined from $24.4 billion in 2011 to $1 billion for the first nine months of 2016:So, here we can see that Exxon’s free cash flow of $1 billion (2016 YTD) is down 95% from $24.4 billion in 2011.  The reason for the rapidly falling free cash flow is due to skyrocketing capital expenditures and falling oil prices.  But, this is only part of the picture. If we include dividend payouts, Exxon’s financial situation drops down another notch.  While free cash flow does not include dividend payouts, the money Exxon pays its shareholders must come from its available cash.  By including dividend payouts, the company was $8.3 billion in the hole in 2015:

Does the oil-and-gas industry still need tax breaks? - AEI: The call to eliminate tax deductions for the oil and natural-gas industry is no less absurd today than it was in 2013, the last time the issue was a headline-maker. These incentives have encouraged domestic investment in energy production and enabled U.S. companies to compete with overseas rivals, allowing the American petroleum industry to flourish. But the tax breaks haven’t just been good for oil-and-gas firms; they’ve also led to billions of dollars in savings for American consumers and businesses from lower energy costs. Have no illusions about it: Tax incentives are essential for unconventional oil-and-gas production, and there would have been no shale revolution without them. Incentives such as the intangible drilling deduction and the special percentage depletion allowance encouraged energy firms to invest hundreds of billions of dollars in the advanced technologies needed to tap shale formations richly endowed with oil and natural gas. Tax breaks also enabled producers to unlock sizable deposits of oil and gas in ultradeep waters. Together, these investments have put the U.S. on the path to becoming energy independent, a hopeless quest only 15 years ago. Oil powers more than 90% of the transportation sector, while natural gas heats almost half of our homes, powers much of the manufacturing sector and now generates the largest share of our electricity. Considering oil and gas are indispensable to our economy, we should be looking for ways to encourage more production, not looking for ways to punish producers.

China Oil Companies’ Push Into U.S. Faces Uncertainty With Trump Victory — China’s beleaguered oil sector could face fresh challenges following DonaldTrump’s election as president, with some in the industry warning that a harder U.S. line toward China could stymie potential investment in the U.S. energy patch. State-owned giants such as PetroChina Co. and China Petroleum & Chemical Corp. long viewed the U.S. as the golden egg of their global deal making ambitions, with its huge oil-and-gas reserves and a stable regulatory and political climate. Now Mr. Trump’s election is brewing new uncertainty in the energy patch as experts see an inherent contradiction between Mr. Trump’s pledge to promote oil-and-gas drilling and his campaign rhetoric decrying globalization. “Nobody knows what he’ll do,” said a person with ties to China’s top oil executives who has promoted the idea of more Chinese energy investment in the U.S.  It has been “a constant barrage of questions about what does this really mean,” On one hand, Mr. Trump and his team could likely be convinced of the value to the U.S. economy of exporting more energy, he said.“But as you start to think about Asian investment—Chinese or otherwise—into U.S. energy infrastructure, and taking a stronger role perhaps in the U.S. energy market, and then having the ability to export the commodity to their home country, I think it becomes a bit of a guessing game at this point,”  As a candidate, Mr. Trump pledged to slap a 45% tariff on Chinese imports and to brand China a currency manipulator. Either one would likely trigger retaliation by China’s government, and sour bilateral ties between the countries.

In Canada, a Direct Link Between Fracking and Earthquakes - The New York Times: In the debate over fracking of oil and gas wells, opponents often cite the risk that the process can set off nearby earthquakes. But scientists say that in the United States, fracking-induced earthquakes are not common. In Canada, however, a spate of earthquakes in Alberta within the last five years has been attributed to fracking, or hydraulic fracturing, in which water, chemicals and sand are injected at high pressure into a well drilled in a shale formation to break up the rock and release oil and gas. Now, scientists at the University of Calgary who studied those earthquakes, near Fox Creek in the central part of the province, say the quakes were induced in two ways: by increases in pressure as the fracking occurred, and, for a time after the process was completed, by pressure changes brought on by the lingering presence of fracking fluid. “The key message is that the primary cause of injection-induced seismicity in Western Canada is different from the central United States,” said David W. Eaton, a professor of geophysics at the University of Calgary. In their work, Dr. Eaton and Xuewei Bao, a postdoctoral researcher, looked into the links in more detail, analyzing seismic data from a series of quakes at Fox Creek in late 2014 and early 2015, and records from wells where fracking was occurring at the time. Advertisement Continue reading the main story They found two patterns to the seismicity. To the east in the fault zone, most of the earthquakes occurred during the fracking process itself, which lasted up to a month. To the west, there were few immediate quakes; they occurred intermittently over several months after the fracking ended. Dr. Eaton said the fracking process could be likened to small underground explosions, shocks that travel into the rock formation and rapidly change the stress patterns within. “If there is a critically stressed fault, those stress changes are sufficient to push it over the edge,” he said. That appears to be what happened in the eastern direction. Once the fracking stops, those stresses relax fairly quickly, he said. But they found that to the west, much of the fracking fluid remained underground in the fractured shale. That would lead to more persistent pressure within the fault zone, and more earthquakes over time.

Groundbreaking Study Shows Direct Link Between Fracking and Earthquakes -- Geoscientists have revealed a direct link between hydraulic fracturing, or fracking , and earthquakes in Canada . The groundbreaking study found that earthquakes can even occur intermittently over several months after drilling operations end. According to a new study published in the journal Science , seismic activity in northwest Alberta over the last five years were likely caused by fracking, in which chemically-laden water and sand is injected at high pressures into shale formations to release oil or gas.  The article, Fault activation by hydraulic fracturing in western Canada , was authored by Xuewei Bao and David Eaton from the University of Calgary.  For the study, the researchers mapped out more than 900 seismic events near Duvernay shale drilling sites around the Fox Creek area dating back to December 2014. This included a 4.8-magnitude earthquake in January in northern Alberta that's likely the strongest fracking-induced earthquake ever. They found that there were two main causes for quakes. The first was immediately from pressure increases as the fracking process occurred. "We were able to show that what was driving that was very small changes in stress within the Earth that were produced by the hydraulic fracturing operations," Eaton told DeSmogBlog . The second cause comes from pressure changes from lingering fracking fluid. According to the Globe and Mail , a fault shakes when fluids infiltrate tiny spaces in the porous rock and increases pore pressure. "If that pressure increases, it can have an effect on the frictional characteristics of faults," Eaton told the Globe and Mail. "It can effectively jack open a fault if the pore pressure increases within the fault itself and make it easier for a slip to initiate."

Trudeau Clears Path for Canada to Approve Kinder Morgan Pipeline - Bloomberg: Prime Minister Justin Trudeau has set the table for Canada to approve Kinder Morgan Inc.’s Trans Mountain pipeline expansion by announcing environmental measures aimed at placating opposition to the project. Trudeau unveiled a national carbon price in October, and over the past few weeks has pumped billions into marine protection and “green” infrastructure, as well as begun an overhaul of the federal energy regulator and granted crown protection to a rainforest that essentially blocks a rival proposal. He regularly says it’s his job to get Canada’s resources to market while balancing the environment and economy. The Liberal prime minister has also backed a hydro dam and natural-gas project favored by British Columbia Premier Christy Clark, as any quid-pro-quo support from her for Kinder Morgan would help him claim consensus ahead of the Dec. 19 deadline for a final decision by the Trudeau cabinet. However, opposition from Vancouver’s mayor, indigenous communities and environmentalists will test Trudeau’s resolve to approve the pipeline and defend the decision against a likely court challenge by its detractors. “You could interpret all these signs as part of a grand design to make construction of one or two pipelines possible,” said Tom Flanagan, a former adviser to Stephen Harper, Trudeau’s Conservative predecessor. “Let’s hope he has the stomach to see it through if the opposition continues after the announcement of cabinet approval, because I think it will.”The election of Donald Trump as U.S. president has also raised hopes that TransCanada Corp.’s Keystone XL pipeline will be revived, giving Canada -- home of the world’s third-largest proven oil reserves -- another option for its growing crude production. While Trudeau supports Keystone, he and his officials regularly stress Canada’s need to get its resources to “tidewater,” suggesting the TransCanada project isn’t enough. Alberta Premier Rachel Notley has echoed that, saying the oil-producing province still wants a pipeline to the ocean regardless of Keystone and will back Trudeau’s carbon pricing plan if he gets “energy infrastructure” built.

Wall Or No Wall: Trump Needs The Mexican Oil Industry - Two of Donald Trump’s main pledges during the presidential race were building a wall along the border with Mexico, and making the U.S. energy-independent. Now that the election is over, these issues are coming to the fore. First, the president-elect said that the wall, which he mentioned on the campaign trail and in numerous debates, is still very much on the table, though what type of “wall” that may be is an unknown. Second, he said he planned to start deporting illegal aliens—those with criminal records—which could amount to as many as three million individuals. And if NAFTA is no more, tariffs will rise for all imports. What does all this mean for the future of oil imports to the U.S.?  The United States imported over 670,000 bpd of crude and fuels from Mexico in August, according to the EIA. Another 773,000 bpd came from Venezuela. Together, the two countries ranked third in the U.S. oil and products import mix, after Canada and Saudi Arabia. While supplies from Canada are unlikely to be threatened, thanks to traditionally warm bilateral relations with the country, the situation is different for both Mexico and Venezuela because of the illegal immigration issue and the blatantly anti-U.S. Caracas regime. Whether Trump is successful in cutting back—or cutting entirely—imports from Saudi Arabia is yet another unknown And while it’s possible that Mexico and Venezuela could suffer a drop in exports to the U.S., if Trump stays true to his campaign promises, other forces are also influencing the matter. The situation in Venezuela remains highly volatile, but there is a ray of hope on the horizon as the government of President Nicolas Maduro and the leaders of the opposition party MUD begrudgingly discusses the direction Venezuela should take. But no matter the outcome of these talks, the starving country will need markets for its crude oil, and the U.S. happens to be the largest one, so it is very unlikely that anyone there would seek to antagonize Trump. Things are a bit different in Mexico, since many of the illegal immigrants Trump wants to deport come from the southern neighbor—a factor that may stress relations. But with the liberalization of the Mexican energy market in the last few years, Mexico is turning out to have lucrative opportunities for the U.S. energy industry, to include oil and gas production, refining, marketing, and, of course, transportation—the full deck. And U.S. energy businesses need these opportunities to sustain their profitability, just as Mexico needs to sell its crude. In short, the neighbors need each other.

USGC distillate exports to Europe at 1.14 million mt in Nov to date - About 1.14 million mt of distillates have left the US Gulf Coast for arrival in Europe and North Africa in November, according to an estimate based on Platts trade flow software cFlow. S&P Global Platts calculates cargo volumes based on the size of each ship and standard diesel export sizes from the US to Europe. In October, a total of 1.16 million mt had been tracked loading from the USGC for discharge into European and North African ports. This month, the 1.14 million mt are split into 28 clips, 19 of which are currently heading towards Northwest Europe including 10 towards the Amsterdam-Rotterdam-Antwerp hub.Of the remaining nine vessels, four -- potentially carrying high sulfur gasoil -- are expected to discharge into Algeria, Egypt and Libya. In October, no USGC cargoes were seen going into North Africa, and in September, only two were spotted discharging into Libya's Zawiyah and Tunisia's La Skhirra ports, according to cFlow. While a trickle of cargoes continues to make its way to Europe, the US-Europe arbitrage for middle distillates has been shut for weeks and remains unworkable this week, according to traders. "We're not seeing any US [product], but it was the same last month, so there's no real change on that front," a source said.

Analysis: US under Trump may pump more oil, but economics key for export to Asia -  Asian refiners are hopeful that US President-elect Donald Trump's policies might boost US crude production and back out imports, leading to an increase in available crude supply halfway around the world. But, sources say, US crudes will remain an arbitrage choice and how much of it comes to Asia will depend on economics. Trump will not be able to directly influence the volume of US crude exports during his administration but policies that stimulate US oil production or help move more crude to Gulf Coast refiners and terminals, for example, could play an indirect role in boosting exports. "To some extent, [we] can expect the new Trump government to support US producers to pump more, sell more, export more to Asia," an Asian crude trader said. "But honestly, no matter how much government backing they [US producers] get, US crudes will remain just one of many arbitrage choices for Asia -- they are not going to become a regular import option," the trader said, referring to the complexity of economics of different crude benchmarks, delivery timing and freight rates. Trump has said he wants to open more federal lands to drilling, roll back environmental regulations on industry and approve major infrastructure projects -- all of which could increase production. He is expected to quickly approve the 470,000 b/d Dakota Access Pipeline that will move Bakken light crude from North Dakota to Illinois before linking with another pipeline to Texas. Trump has also encouraged TransCanada to refile its application for the dormant Keystone XL project, which proposed carrying 700,000 b/d of diluted bitumen from Alberta to Nebraska, then linking with a since-built pipeline to the Texas Gulf Coast.

Pakistan eyes doubling oil product storage capacity with foreign investment - Pakistan's government is aiming to double the country's oil product storage capacity by inviting foreign and local companies to build additional facilities, a Ministry of Petroleum official said Thursday. The country's current storage capacity equates to around 20 days of consumption at 1.2 million-1.3 million mt, and oil marketing companies typically maintain stock levels below that to minimize inventory losses due to price volatility, the official said. The government will both invite privately-owned domestic and foreign companies to build additional storage capacity and ask oil marketing companies to increase their storage volumes, he said. "We will provide tax benefits and companies could acquire loans at lower interest rates to hasten the process of increasing the capacity," the official added.Pakistan's motor gasoline consumption has increased sharply in the past two years as the economy gathers pace, he said. Consumption averaged 557,000 mt/month over July-October, up from 365,000 mt in fiscal 2015-16 (July-June) and 311,000 mt in fiscal 2014-15. Raising storage capacity was necessary given the sharp increase in the consumption of oil products in Pakistan, especially gasoline, said Zeeshan Afzal, director of research at Insight Securities. It would also help meet any shortfall in supply or delay in seaborne cargo arrivals, he said.

Indonesia offers three unconventional natural gas blocks - Indonesia has invited bids for three unconventional gas blocks as part of government efforts to meet future domestic demand, the energy and mines ministry's spokesman, Sujatmiko, said Tuesday. The blocks comprises one shale gas and two coalbed methane blocks, Sujatmiko said. The shale gas block, Batu Ampar in onshore East Kalimantan, is being offered through a regular tender. Two coalbed methane blocks, Bungamas and Raja in onshore South Sumatra, are being offered through a direct tender. Indonesia has two mechanism of block tender. Under the regular bidding system, the government would offer the blocks and interested companies submit their proposal. Under the direct offer mechanism, a company interested in acquiring a certain block, which was not offered under regular bidding, may express its interest to the government.The government then looks for a better offer from other firms. If certain blocks draws no other bidder or the other bidder's offer is less favorable, then the company would automatically get the block. Indonesia is making concerted efforts to ramp up exploration and development activity, having seen its crude output fall because of natural decline at ageing fields. Indonesia's oil and gas proven reserves stand at 3.7 billion barrels and 101.54 Tcf, respectively. The country is estimated to contain 574 Tcf of shale gas.

Red tape, not militancy, putting Nigeria's oil future at risk - The Barrel Blog: Nigeria, mired in some of its toughest battles yet to halt resurgent militancy in the oil-rich Niger Delta, is facing longer term threats to its oil wealth; the government’s failure to endorse fiscal and regulatory reforms needed to keep oil investors interested. While militancy and pipeline vandalism remain the short-term major headache, it is the uncertainty around fiscal terms and the slow progress in implementing key oil and gas legislation that has been the major handbrake on oil growth in sub-Saharan Africa’s largest crude producer. Lauded as the biggest shake-up in Nigeria’s oil industry for decades, the Petroleum Industry Bill (PIB) aims to bring in sweeping reforms of the country’s dysfunctional sector. But it has been stuck in Nigeria’s legislature for eight years, held up by political wrangling and objections by the IOCs which argue that the significantly higher fiscal terms envisaged in recent PIB drafts are unacceptable, especially in the current low oil price environment. Nigeria is ripe for a comprehensive review of the fiscal and regulatory framework applicable to its oil and gas industry. Existing laws are severely outdated and in need of change. Though oil and gas accounts for about 80% of government revenues, the state-run Nigerian National Petroleum Corporation (NNPC) is considered one of the most corrupt corporations of any oil-producing nation. Oil minister Emmanuel Kachikwu, who has been given the task with overseeing the restructuring of the NNPC, wants to break up the corporation into seven units, with each given responsibility for overseeing 20 separate NNPC divisions. But the NNPC has proven remarkably resilient to past reform initiatives. Faced with plummeting global oil prices and dwindling state coffers, how long can the government afford to allow the NNPC to operate much as it did before?

Iran eyes natural gas exports to Oman with international oil companies - Senior officials from state-owned National Iranian Gas Exports Co have met with Oman's oil ministry and three international oil companies -- Shell, Total and Korea Gas Corp -- to look at the potential to pipe gas from Iran to Oman, the students ISNA news agency reported Monday. The officials held a two-day meeting in Tehran examining cooperation in the project, the reports said without giving further details. In 2013, Tehran and Muscat agreed on a 15-year gas exports plan via a seabed pipeline. The pipeline, estimated to cost around $1.5 billion, will have the capacity to transport 1 Bcf/d of Iranian natural gas to Oman. "We can confirm that Shell is a member in the Advisory Task Force of the Iran/Oman gas pipeline Project. The scope of the work of the project is subject to confidentiality", a spokesman for Shell said Monday.Total did not respond to a request for a comment, while Kogas could not be reached for comment. The details of the project are yet to be finalized. Iran plans to build a 200 km onshore pipeline from Rudan to Kooh Mobarak in the southern Hormozgan province on the Persian Gulf. An offshore pipeline of roughly the same length would extend from Kooh Mobarak to Oman's Sohar port. The construction of the pipeline is expected to take two years. Iran is considering two shallow and deep sea routes, including one which would circumvent any maritime borders and therefore would not require permission from its neighbors.

Saudi Arabia Warns Trump Not To Block Oil Imports -  As the FT reports, "Saudi Arabia has warned Donald Trump that the incoming US president will risk the health of his country’s economy if he acts on his election promises to block oil imports." In a sign of the difficulties Mr Trump faces over his campaign pledges to create “complete American energy independence” from “our foes and the oil cartels”, Saudi Arabia’s energy minister pointedly reminded the president-elect that the US “benefits more than anybody else from global free trade”, adding, “energy is the lifeblood of the global economy”. The veiled threat is obvious: should you proceed to stimulate and subsidize the US shale industry - whose resurgence under Obama drastically cut the amount of US oil imports - in a bid for energy independence, there will be consequences.  And just like that we can add Saudi Arabia to the long list of countries - like China first and foremost - that is engaging in veiled threats that preserving the status quo is in the best interest of America. “At his heart President-elect Trump will see the benefits and I think the oil industry will also be advising him accordingly that blocking trade in any product is not healthy,” Khalid al-Falih, who is also chairman of Aramco, the state-run oil company, told the Financial Times in Marrakesh, where he is leading Saudi Arabia’s delegation in UN climate talks. The Saudi minister said that although the US imported millions of barrels of oil, it had also “benefited hugely” from being able to freely sell “significant amounts” of exported products. This free trade had underpinned a thriving refining industry and a shale revolution that had been able to “create a lot of jobs and value”, he said. Appealing to Trump's patriotism, the Saudi added that “the US is sort of the flag-bearer for capitalism and free markets." The gambit is risky: if Trump pushes hard with restoring shale production and providing economic benefits to US energy companies, which in turn would lead to a surge in global oil supply and a sharp drop in oil prices, Saudi Arabia - whose budget deficit has already soared in the past two years due to low oil prices - faces a financial, economic and social crisis.

IEA Sees Peak Oil Demand After 2040 - WSJ: Global oil demand won’t stop growing before 2040 despite pledges made at the Paris climate change summit last year to cap greenhouse-gas emissions, the head of the International Energy Agency said. IEA Executive Director Fatih Birol’s comments have added to a debate over when oil consumption—which has steadily grown for decades—will begin a sustained decline, a change known as peak demand. Royal Dutch Shell PLC’s Chief Financial Officer Simon Henry caused a stir earlier this month when he said the company believes demand for oil could stop growing within the next two decades and as soon as five years. Mr. Birol said demand will keep rising for longer because there are currently scant alternatives to oil for road freight, aviation and petrochemicals, despite increasing investment in renewable energy. Even efficiency gains in petrol engines and an increase in the number of electric vehicles on the road won’t be enough to halt a rise in oil demand, he added. “The era of fossil fuels appears to be far from being over,” Mr. Birol said. Mr. Birol’s remarks were made as the IEA publishes its annual report, forecasting global energy supply and demand to 2040. Oil companies have started to look at a future in which consumer demand for their core product could stop growing due to climate policies and efficiency gains. “We’ve long been of the opinion that demand will peak before supply,” Mr. Henry of Shell told analysts this month. “And that peak may be somewhere between five and 15 years hence and it will be driven by efficiency and substitution.”Saudi Arabia, the world’s largest exporter of crude oil, has begun preparing for a day when oil is no longer the dominant fuel. The kingdom is planning to publicly list a small piece of its giant state-run petroleum company, Saudi Arabia Oil Co., and use the money to invest in developing its economy away from crude. However, Saudi Arabia hasn’t put an estimate on the timing of peak demand.

The Catastrophic Consequences Of Peak Oil Demand - With OPEC’s 2016 World Oil Outlook now grimly forecasting that peak oil demand could become a reality in just over a decade, and natural gas and renewables chomping at the bit to cannibalize commodity market growth, it may be good for the environment, but the trade-off will be global instability on a catastrophic level.The dynamics of the rush to adopt natural gas and renewable energies - launched by the landmark climate change agreement signed in Paris last year – was about protecting our planet. But without an effective back-up plan, resource-cursed nations such as Venezuela, Libya, Nigeria and Iraq—among others—will not survive this evolution and economic destabilization and sociopolitical instability would irrevocably change the geopolitical landscape. Destitution spells disaster in this scenario.  Hundreds of trillions of dollars have been spent worldwide over the past century to develop technologies for the safe transport and use of “black gold,” which, in turn has built energy-driven economies on practically every single continent, aside from Antarctica.Venezuela, Libya, Nigeria and Iraq are the first nations that come to mind when compiling a list of oil-dependent states, mostly because of their current plights caused by the two-year oil price crisis, as well as the political instability, civil war, domestic militancy and terrorism threats that each country faces, respectively.Chronically low prices compromise the ability of oil-addicted economies to tackle domestic unrest, which was brought about by stinted revenues in the first place.If OPEC’s predictions on the imminent-ness of peak oil prove to be true, underdeveloped producers that have not yet planned for a fossil fuel-free world will inevitably face sociopolitical collapse. As oil demand spirals downward, the world’s major exporters are expected to ramp up output in order to profit as much as possible before the commodity becomes a relic of the past. And, as we know from the state of current markets, the bigger the glut, the sadder the prices.

Kemp: Playing Game Of Chicken -- From Reuters/John Kemp: OPEC members are making the task of oil market rebalancing harder by maximising their production ahead of a ministerial conference at the end of November, 2016.OPEC output is actually increasing, putting downward pressure on oil prices, even while the organisation's members are in talks designed to reduce output in future, with the intention of pushing prices up. Not for the first time, OPEC's members are engaged in a high stakes game of chicken.Crude production rose by 240,000 barrels per day (bopd) to a record 33.64 million bpd in October.Output is now between 640,000 bpd and 1.14 million bpd above the production ceiling of 32.5 million to 33.0 bpd ministers agreed at the end of September, 2016.Member countries are all trying to establish the highest possible baseline for their own allocations when it comes to sharing out the production target.In addition, Saudi Arabia is trying to back up its demand for credible production restraint from other countries by signalling that if they do not agree it is ready to flood the market and push prices lower.Saudi Arabia has maintained production close to the record set in July even though the summer power burn season has passed.   And when they finally release their allocation shares, they will cheat anyway. 

Will Trump Send The Price Of Oil Soaring? - In its latest, monthly oil production update, OPEC reported that its crude oil output increased by another 240,000 barrels a day in October to 33.64 million barrels a day, a new record high, with Nigeria, Libya and Iraq driving the supply boost and with total production about 1 million barrels higher than the plateau agreed upon in Algiers at the end of September. As a result of OPEC's relentless increase in total output, the cuts OPEC would needs to enforce to reach the Algiers output target just get bigger and bigger... most of its as a result of soaring Iranian oil exports - by roughly 1 million bpd - since the easing of sanctions by the Obama administration: It is also the reason why oil has continued to slide in recent weeks, as the upcoming OPEC production cut (or even freeze) - which will have to be shouldered almost entirely by Saudi Arabia due to production cut exemptions granted to other states, most notably Iran - has lost almost all credibility with the market. However, suddenly there is a ray of hope in OPEC's dark world, and it comes courtesy of president-elect Donald Trump, who just may eliminate as much as 1 million barrels of OPEC oil output, or the cartel's entire excess production, should he undo the deeply unpopular within GOP circles Iran nuclear agreement, which would also collapse Iranian oil exports and send the price of oil surging. Recall that Trump's stated number one priority from his pre-election circuit has been to dismantle the "disastrous" Iran deal - although as Bloomberg notes, his to-do list might have changed since saying that back in March. And, as Bloomberg's Julian Lee calculates confirming our math from just right after the Algiers (non) deal, tearing up the Iran nuclear agreement would remove almost a million barrels a day of supply at a stroke: a million barrels is about the same size as the cut OPEC needs to make.The next question: can Trump actually undo Obama's landmark Iran nuclear agreement? According to Lee, the answer is yes, "despite assertions to the contrary from Iran's President Rouhani and a slew of analysts." Here's how:

Oil Tumbles After BMI Slashes Probability Of OPEC Deal Due To Trump Victory; Dollar Surge -- Yesterday we reported that there is a small, but not improbable, chance that Trump could end up becoming OPEC's best friend should the president elect seek to undo Obama's landmark foreign policy deal, the Iran Nuclear Agreement: "suddenly there is a ray of hope in OPEC's dark world, and it comes courtesy of president-elect Donald Trump, who just may eliminate as much as 1 million barrels of OPEC oil output, or the cartel's entire excess production, should he undo the deeply unpopular within GOP circles Iran nuclear agreement, which would also collapse Iranian oil exports and send the price of oil surging." It remains to be seen if Trump has changed his view on the Iran deal, and certainly if he would engage in an action that would benefit Saudi Arabia while making millions of US motorists sad once gas prices spike should Iran's 1mmbpd in excess oil supply be taken offline. Some of our readers pointed out that far from sending the price of oil spiking, there was an alternative explanation, to wit:  "if there is a possibility, however slight, of the Iran nuclear deal being torn up in 68 days on 20 January 2017, then what does this mean for Saudi Arabia and the upcoming OPEC negotiations?" It does 4 things:

  1. Further highlights the importance of collective OPEC cuts
  2. Encourages Iran to produce MORE not LESS oil
  3. Further reduces the likelihood of a material deal
  4. Reduces likelihood of material cuts from Saudi Arabia, for if they cut and the Iran deal is torn up, then they will have given away market share that will be reclaimed by Libya, Nigeria, Iraq and Russia

On Friday, Fitch's BMI unit issued a report that corroborated this more bearish perspective on oil as a result of the Trump presidency. According to BMI, "prospects for OPEC members to agree on an output cut or freeze have “reduced notably” following Donald Trump’s victory at the U.S. elections." According to the analysis, BMI now expects a 45% probability of a “wait-and-see” stance and no deal on Nov. 30, vs previous forecast of 25% chance.

Oil Investors Shrug Off U.S. Election While Focused on OPEC - Bloomberg: Oil investors seem to be the only ones uninterested in Donald Trump’s election. Money managers raised bets on falling oil prices by the most in more than four years in the week leading up to Trump’s surprise win, amid waning belief in OPEC’s ability to meaningfully cut production. Members of the Organization of Petroleum Exporting Countries are due to meet Nov. 30 to finalize a deal to curb output. Failure to reach one may send oil lower amid “relentless global supply growth,” the International Energy Agency said Nov. 10.“The market is focused on the OPEC meeting,” said Mike Wittner, head of oil-market research at Societe Generale SA in New York. “It’s looking like the obstacles to an agreement are getting bigger with both Iraq and Iran raising new issues.” The rally that followed OPEC’s preliminary deal reached in Algiers on Sept. 28 has evaporated, sending speculators scrambling. A surge in West Texas Intermediate short positions, or wagers the U.S. benchmark crude will decline, helped send the resulting net-long position to the biggest slump since May 2012 in the week ended Nov. 8, Commodity Futures Trading Commission data show. Brent shorts surged, posting the biggest increase in more than five years. WTI dropped 3.6 percent to $44.98 a barrel in the report week. Prices surged 5.8 percent to $45.81 a barrel on Tuesday, the biggest gain in seven months and a rebound from the lowest close in eight weeks. Futures rose 0.6 percent on Nov. 9 amid speculation Trump and a Republican-controlled Congress will pursue business-friendly policies. The market declined the following three days as the dollar climbed to the highest level in more than nine months against its peers, curbing investor interest in commodities priced in the U.S. currency.

Oil rebounds from three-month lows on renewed hopes for OPEC cut | Reuters: Oil prices were largely steady on Monday, rebounding from three-month lows, on a report saying that OPEC members were seeking to resolve their differences on a deal to cut production ahead of a meeting later this month. OPEC kingpin Saudi Arabia and fellow exporters Iran and Iraq have been at odds over how to rein in supply to reduce a glut in global markets. The lack of agreement within the Organization of the Petroleum Exporting Countries following a tentative deal in September has put pressure on benchmark prices. Qatar, Algeria and Venezuela were leading the push to overcome the divide between the group's biggest producers ahead of an output policy meeting on Nov. 30 in Vienna, according to a Bloomberg report. ( Saudi Arabia, Iraq and Iran are still at odds over how to share output cuts, the report said. Saudi Energy Minister Khalid al-Falih said it was imperative for OPEC to reach a consensus on activating the deal made in September in Algiers to cut production, according to Algeria's state news agency APS on Sunday. Brent crude futures LCOc1 settled at $44.43 per barrel, down 0.72 percent, after falling to as low as $43.57. U.S. crude CLc1 ended the session down 0.2 percent at $43.32, after hitting a low of $42.20. Both benchmarks' session lows were the weakest since Aug. 11. "Record OPEC production clearly has the market nervous about a potential deal, but we believe that most OPEC producers are already producing flat out as much as they can," said Michael Tran, director of energy strategy at RBC Capital Markets in New York.

US crude settles higher for biggest gain in seven months: Oil prices jumped nearly 6 percent on Tuesday, bouncing back from multi-month lows on expectations that OPEC will agree later this month to cut production to reduce a supply glut. Saudi Energy Minister Khalid al-Falih is expected to travel to the Qatari capital, Doha, this week for meetings with oil-producing countries on the sidelines of an energy forum, sources familiar with the matter told Reuters. The Organization of the Petroleum Exporting Countries is due to meet on Nov. 30 to agree to limit output. An outline deal was reached in September but negotiations on the detail are proving difficult, officials say. Traders and analysts also pointed to a report from Monday about a last ditch effort by OPEC to bring the world's top producers together to rein in production, saying it triggered a wave of short covering.North Sea Brent crude oil was up $2.50 a barrel, or 5.6 percent, at $46.93 by 2:38 p.m. ET after hitting a three-month low of $43.57 on Monday. U.S. light crude settled up $2.49 a barrel, or 5.8 percent, at $45.81. It reached a three-month low of $42.20 on Monday. "Clearly the market is now seeing increased chances of an OPEC production cut," Commerzbank analysts said in a note. "There is doubtless considerable pressure to take action, as the oversupply will not reduce itself"

Crude Slides After Biggest Cushing Build Since August - WTI Crude prices are lower after API reported a bigger than expected build in crude inventories (+3.66 vs +1mm exp) and the biggest Cushing build since August. The machines managed to tag the stops at the high of the day for WTI as gasoline drew down (though less than expected) but Distillates saw the biggest build since September. API:

  • Crude +3.65mm (+1mm exp)
  • Cushing +1.13mm (+150k) - biggest since August
  • Gasoline -155k (-1.1mm exp)
  • Distillates +2.98mm - first build in 8 weeks

Bigger than expected Crude and Cushing builds (biggest since August) along with a huge build in Distillates (first in 8 week)...

Oil Surges To 'Algiers' Lows After Obama Statement & Well-Timed OPEC Headline Just as Morgan Stanley warned, be careful getting too bearish into the OPEC meeting as OPEC's ability to engineer a short-squeeze (via well-placed but meaningless headlines) trumps any dismal fundamentals. Sure enough, WTI is surging by the most in 7 weeks to pre-Algiers levels on spurious headlines today, which builds on a reversal yesterday that started as President Obama discussed the Iran Deal. As a reminder, here is what MS said last week... Be Careful About Getting Too Bearish Ahead of OPEC Meeting Poor fundamentals don’t prevent headline-related price reversals.Skepticism about the ability for OPEC to execute on its Algiers agreement is warranted. A number of producers are claiming exemptions, OPEC production is rising, greater cuts may be required to achieve the top end of the range, and OPEC has a poor compliance history. Reuters also suggested that Saudi Arabia threatened to raise production, and former Saudi Energy Minister Ali Al-Naimi stated that OPEC can’t cut by itself. Nevertheless, we would be nervous being short from these levels going into the meeting despite what appears to be a poor fundamental backdrop and our downbeat outlook for 2017. OPEC can still spook markets. Although OPEC’s actions have not matched its words (i.e. promoting the need for production restraint while quietly growing production), the cartel has become adept at talking up declining markets. The group has repeatedly made bullish announcements about OPEC intervention during periods of low liquidity (e.g. US holidays), and whenever short positions become large. Despite the  fact that many investors are skeptical of OPEC’s ability to change the outlook, prices still move on these headlines. Investors have proven that they are not willing to press short positions against OPEC, even if the odds of intervention are low. In essence, this is similar to the old adage of “Don’t Fight the Fed.” And sure enough, OPEC unleashes a slew of headlines...

Oil Panic-Bid To $46 On OPEC Headline Despite Across-The-Board Inventory Builds -- Following API's big builds in Crude, Cushing, and Distillates, DOE reported notable inventory builds across the entire energy complex with a bigger than expected crude build sparking initial selling pressure in WTI. Every segment was 'worse' than expected (from a price perspective) but the machines have decided it is time to panic buy after another spurious OPEC headline. DOE:

  • Crude +5.274mm (+1mm exp)
  • Cushing +691k (+150k) - biggest since August
  • Gasoline +746k (-1.1mm exp) - first build in 4 weeks
  • Distillates +310k- first build in 8 weeks

Crude build bigger than expected but builds across the entire complex for the first time since August...

Oil Fades After Iraq, Iran And Nigeria Oil Ministers All Decide To Skip OPEC Doha Meeting In yet another sign that behind the frequently blasted OPEC headlines meant to suggest a sense of OPEC unity yet which do nothing more than incite a short squeeze (as even Morgan Stanley has now admitted), there is far less cohesion, moments ago we learned that Nigeria's Oil minister Emmanuel Kachikwu is the latest to skip this week's Doha meeting scheduled for November 17 and 18. Earlier today we found that Iraq’s oil minister would likewise bypass the energy talks this week in Qatar, where rival producer Saudi Arabia plans to hold talks with Russia on possible collective action to limit production. Earlier today Bloomberg reported that his Iranian counterpart is also said to be giving the meeting a miss. Iraq and Iran both want exemptions from any OPEC cuts in output, putting pressure on Saudi Arabia, the producer group’s biggest member, to bear the brunt of a possible reduction. The Organization of Petroleum Exporting Countries has yet to find a way to finalize a preliminary deal it reached in September to curtail supply, ending a two-year policy of pumping without limits. The apparent acrimony comes at a time when OPEC is record amounts of oil, and with many countries granted exemptions from an oil production cut, it means that ahead of the Vienna summit in two weeks time, there is absolutely no coordination on who will cut supply, if anyone. As Bloomberg notes, Saudi Arabian Energy Minister Khalid Al-Falih is leading the efforts to rein in global production to support prices. He’ll join several fellow OPEC members in Doha this week for informal consultations with Russia, the biggest energy supplier outside the group. They plan talks on the sidelines of the Gas Exporting Countries Forum. As a reminder, it was headlines from Russia moments after today's DOE report that sent oil surging. However, many of the biggest oil producers will not be present: Iraqi Oil Minister Jabbar Al-Luaibi won’t be traveling to Doha this week, the ministry’s spokesman, Asim Jihad, said Wednesday by phone. Hamed Al-Zobaie, Iraq’s deputy minister for natural gas affairs, will represent the country instead, Jihad said.

OilPrice Intelligence Report: Oil Prices Waver As OPEC Makes Final Push - Oil prices spiked this week on the renewed push by OPEC to overcome differences on a production cut. WTI and Brent rose back above the mid-$40s per barrel, up from lows seen earlier in the week. The bullish move came from news that OPEC is trying hard to actually seal a deal. Saudi Arabia’s energy minister Khalid al-Falih said that OPEC was targeting the lower end of its proposed range of 32.5 to 33.0 million barrels per day. That sparked a rally in oil prices. "I'm still optimistic that the consensus reached in Algeria for capping production will translate, God willing, into caps on states' levels and fair and balanced cuts among countries," Al-Falih said. Oil prices moved down slightly during midday trading on Friday, hovering at $45 for WTI and $46 for Brent. The strength of the U.S. dollar continues to put downward pressure on crude prices.  The two major hurdles to an OPEC deal are the cartel’s second and third largest producers, Iraq and Iran. However, Algeria’s energy minister Nouredine Bouterfa said that Iran would not scuttle a deal. "Iran is not a problem. Iran is a particular situation and needs particular treatment. They will not have the same rule for the reduction. We will study what the best solution is for Iran,” he told Reuters. "There is strong consensus among OPEC producers for a freeze.”  A separate Reuters report finds that Iraq would be forced to compensate international oil companies who operate in country if Iraq signs onto an OPEC cut. Iraq pays private oil companies a fixed fee per barrel of oil produced, and contracts with these companies include stipulations requiring compensation if Iraq forces them to cutback. That could make it much more difficult for Iraq to agree to a cut in Vienna. A source at the Iraqi state-owned South Oil Company said this won’t be a problem because Iraq has no intention of cutting its output. "On the contrary, we're encouraging the foreign companies to raise production as much as they can," the official told Reuters. But to confuse matters even further, Iraq’s oil minister Jabbar al-Luaibi, told the Wall Street Journal on Friday that he is optimistic about a deal on Nov. 30. As always, we won’t know the outcome of the OPEC meeting until it happens.

OPEC moves closer to oil output deal as Iran gets new offer | Reuters: OPEC is moving closer toward finalizing this month its first deal since 2008 to limit oil output, with most members prepared to offer Iran significant flexibility on production volumes, ministers and sources said on Friday. Iran has been the main stumbling block for such a deal because Tehran wants exemptions as it tries to regain oil market share after the easing of Western sanctions in January. Iran's rival Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries, has argued Iran's output has peaked and it should not be granted major concessions. On Friday, several OPEC oil ministers including Saudi Arabia's Khalid al-Falih met in Doha on the sidelines of a gas forum. Iranian officials attended the gathering although minister Bijan Zanganeh did not come. At the meeting, OPEC member countries proposed Iran cap its oil output at 3.92 million barrels per day (bpd), a source familiar with the proposal told Reuters. Iran has previously said it would accept a freeze at between 4.0 and 4.2 million bpd. Gulf OPEC sources have said they wanted Iran to cap output at around 3.6-3.7 million bpd - the volume the Islamic Republic is currently producing, according to OPEC estimates. The source said Tehran had yet to respond to the proposal.

US Gasoline Exports Surging -- November 19, 2016 - From FuelFix, an update on surging US gasoline exports, some data points:

  • Valero Energy Corp shipped excess supplies to Canada instead of Colombia
  • Phillips 66 sent the first gasoline shipment in 16 months to Egypt
  • Mercuria Energy Group is storing 60,000 tons of gasoline blending components produced in India at an offshore site in the Bahamas
  • lower refinery utilization in Latin America + abundant US export capacity = bad news for those foreign refineries
  • US gasoline exports reached 1.07 million bpd, week ended November 4, 2016; first time the figure has topped 1 million bpd (somewhat of an anomaly due to two Colonial Pipeline spills which resulted in closure for six days in October; and in closure for 12 days in September)
    • shipments rose 35% in the week ended November 4, 2016; have almost doubled since the September 9, 2016, Colonial outage
    • the latter move corresponds with a late-August adjustment in how the EIA calculates its export data: the agency shifted to using near-real-time Customs data rather than extrapolating from monthly estimates
  • two other records set simultaneously:
    • US refiners and gasoline blenders churned out 10.5 mllion bbls of gasoline/day
    • Gulf Coast inventories of gasoline climbed to the highest seasonal level ever
  • driving demand slid about 2%

US oil rig count rises by 19 to 471 for biggest jump in 5-month recovery: A stronger dollar and rising U.S. oil rig count weighed down oil prices on Friday, but Brent crude was headed for its first weekly gain in five on hopes that OPEC might agree to limit production cuts at the end of the month. The Organization of the Petroleum Exporting Countries is moving closer to finalizing its first deal since 2008 to limit output, with most members prepared to offer Iran flexibility on production volumes, ministers and sources said. Iran has been the main stumbling block for capping production, and while it has not yet responded to the proposal, it suggests OPEC members may be coming nearer to a consensus ahead of their meeting in Vienna on Nov. 30. Prices, however, were depressed by a stronger U.S. dollar, which reached its highest levels against a basket of currencies since 2003 after U.S. Federal Reserve Chair Janet Yellen said that a rate increase could happen "relatively soon," indicating higher chances of a hike in December. A stronger dollar makes oil, which is priced in the greenback, more expensive to buyers using other currencies. Oilfield services firm Baker Hughes reported the largest weekly rise in its count of oil rigs operating in U.S. fields since a recovery began at the end of June. The count rose by 19 rigs to 471 in the last week.Brent crude oil futures were down 22 cents at $46.27 per barrel at 1:13 p.m. ET, but it was still on track for its first weekly increase in five weeks. U.S. West Texas Intermediate (WTI) crude oil futures were down 35 cents at $45.07 a barrel and were on track for a their first weekly gain in four.

Rig count jumps by 20; largest increase in two years | Fuel Fix: The number of oil and gas rigs in U.S. fields boomed this week, rising by 20 — the largest jump since the peak of the shale oil boom two years ago. U.S. oil drillers collectively sent 19 more rigs into the patch, the Houston oilfield services company Baker Hughes reported Friday. Gas drillers added one rig. The rise was driven largely by drillers in West Texas’ Permian Basin, which added 11 rigs. The total rig count rose to 588, up from a low of 404 in May. U.S. oil companies haven’t added this many rigs since May of 2014, when oil was still bringing $100 a barrel. The count, however, still lags the same period last year, when 757 drilling rigs were operating in U.S. oil and gas fields. The number of active oil rigs jumped to 471 this week. Gas rigs ticked up to 116. Even the number of offshore rigs rose, by 3 to 23, down 7 year over year. Total rig counts lifted by eight in Texas, four in Louisiana, four in Oklahoma, three in Ohio and two in Colorado. They fell by one in North Dakota, Pennsylvania and Wyoming. Drilling activity has followed the modest rebound in prices, from February’s low of about $26 a barrel to more than $50 in recent weeks. Prices stabilized this week at about $45 a barrel.

Saudi Arabia set to reveal depth of oil reserves FT. Saudi Arabia is preparing to lift the lid on one of the global energy industry’s most closely guarded secrets as it prepares to sell shares in Saudi Aramco: how much crude lies beneath the desert kingdom’s sands.“This is going to be the most transparent national oil company listing of all time,” Khalid al-Falih, the energy minister of Saudi Arabia, told the Financial Times in an interview.Ever since the kingdom completed the nationalisation of the formerly US-controlled Saudi Aramco in the 1980s, the size of proven reserves of the world’s largest oil exporter have remained consistently around the 260bn barrels mark, according to officials.But the profiles of oilfields and reserves estimates have remained a source of intrigue among international energy executives and investors who have been unable to verify the government’s figures. Mr Falih said independently audited numbers would soon be disclosed.“Everything that Saudi Aramco has, that will be shared, that will be verified by independent third parties,” he said, adding this would include financial statements, “reserves … costs [and] profitability indicators”.Speculation about whether detailed data on the kingdom’s reserves — managed by the state oil company — would be given to investors has intensified since January, when Saudi Arabia announced it was looking at a stock market listing of Saudi Aramco as part of a drive to diversify its oil-dependent economy. If the government data proved accurate, this would be significant as it would mean the kingdom has managed to replace each barrel it has produced with oil from new discoveries or higher estimates of the amount of oil it can recover from existing fields.

Are The Saudis About To Reveal The Best Kept Secret In Oil? -- One of the oil world’s longest and best kept secrets may finally be revealed. Saudi Arabia is preparing to unveil how much oil it holds, a closely guarded state secret that has been kept quiet for decades. The decision to bring such important data to light comes as Saudi Aramco is preparing to partially privatize its assets, an IPO that could bring in some $100 billion. The IPO will be a monumental event, one that the Wall Street Journal says could offer Wall Street some of the largest fees in history. Saudi Arabia often trades off with Russia – and more recently, with the U.S. – as the world’s largest oil producer. But while it produces at similar levels as Russia and the U.S., it is long been a vastly more influential player in the oil world. That is because of two reasons – the size of its reserves, and the ability to use latent spare capacity to quickly adjust supply, affording it an outsized influence on crude oil prices. But while everyone believes Saudi Arabia has some of the largest oil reserves in the world, perhaps rivaled only by Venezuela, there has been a lot of uncertainty and skepticism over exactly how much sits beneath the Saudi desert. The world’s largest oil field, Ghawar, has been producing since the 1950s, raising speculation about the longevity of the supergiant oilfield. It alone is thought to hold around 75 billion barrels, and it churns out more than 5 million barrels every single day. Surely, it cannot continue like this indefinitely, but the Kingdom has not revised its official reserves for years, which have stood at 260 billion barrels since the 1980s. It is hard to overstate how valuable this information is, and how fiercely Saudi leadership protected it. However, the collapse of oil prices since 2014 has pushed the Saudi budget deep into the red. The Deputy Crown Prince Mohammed bin Salman is undergoing an historic transformation of the Saudi economy, a multi-decade plan to diversify the country’s economic base and create new sources of revenue. At the heart of the plan is spinning off roughly 5 percent of Saudi Aramco, the most valuable oil company in the world. Saudi officials believe that the company is worth between $2 and $3 trillion.

Global oil market to become more dependent on OPEC crude in long-term, IEA projects -  OPEC's diverse 14-country membership has responded to the oil price malaise of the past two years in contrasting ways, perhaps permanently altering the group's dynamics as the world becomes more reliant on its crude in the long-term, according to the International Energy Agency. OPEC's share of global oil production, including condensate, will approach 50% by 2040, up from its current 42%, the IEA said Wednesday in its World Energy Outlook, as non-OPEC production will significantly drop off after 2020. But any benefits from OPEC's increased market share will be spread unevenly, as its Middle East members figure to grow more influential, at the expense of its African and South American members. Middle Eastern OPEC countries -- Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the UAE -- will see their oil production grow by 8.2 million b/d from 2015 to 2040 to 36.9 million b/d, according to the report. That would represent 77% of OPEC's production, an increase from 73% in 2015.Non-Middle East members will see growth of just 800,000 b/d in the same span up to 11.2 million b/d. "Some countries, including ... Saudi Arabia, have reacted to low prices by pressing ahead with a process of reform, but for others, particularly Venezuela and some parts of the Middle East, instability has been exacerbated," the IEA said in its annual outlook. "Either way, key producer countries are unlikely to emerge unchanged from the downturn, even if prices rebound." The report assumes that OPEC will return to its policy of active market management, which it abandoned the last two years until announcing a preliminary deal in late August to freeze production between 32.5 million to 33 million b/d. The world in 2040 will become more dependent on growth from Iraq and Iran, along with continued robust supplies from OPEC kingpin Saudi Arabia, the IEA said. "In our projections, Saudi Arabia maintains its pre-eminence among OPEC producers and its central role in global oil markets, even though Iran and Iraq enjoy a greater level of growth," the IEA said.

Russia Puts Strategic Bombers On Combat Alert For Imminent Strikes On Syrian Targets -- While America is busy pointing fingers at who exactly failed to predict the Trump presidency, Putin is taking advantage of the chaos and the immediate political power vacuum left in the aftermath of the stunning transition from the Democratic president to a Republican sweep. First, as we reported last night, NATO promptly freaked out after Putin spokesman Dmitry Peskov urged President-elect Donald Trump to begin rebuilding the U.S.-Kremlin relationship "by urging NATO to withdraw forces from the Russian border." Peskov told the Associated Press that such a move  "would lead to a kind of detente in Europe." Second, fast forward to this morning when Russian Tass news agency reported that the crews of Russian strategic bombers Tu-160 and Tu-95 located at the "Engels" airbase, have been put on combat readiness, in preparation for imminent strikes on targets in Syria. Tass adds that the Russian strategic bombers have been armed with cruise missiles. According to a Tass sources, the "engineering staff at the base is loading the aircraft with cruise missiles and preparing them for combat use" adding that the "air strike group at the base is preparing to perform tasks with combat launches of cruise missiles."

Putin & Trump discuss Syria and US-Russia relations in phone call – Kremlin -US President-elect Donald Trump and Russian President Vladimir Putin have held their first telephone call, in which the two leaders discussed Syria and agreed to improve and develop bilateral ties, the Kremlin said in a statement.  In their telephone conversation, the two leaders agreed that they share a common view on “uniting efforts in the fight with the common enemy number one – international terrorism and extremism,” the Kremlin said in a statement published on its website late Monday. The Kremlin added that Putin and Trump also discussed ways to settle the Syria crisis.Putin and Trump paid special attention to the importance of establishing a stable basis for bilateral relations by developing trade and economic ties between the two countries and working toward"constructive cooperation," the Kremlin said.The president and the president-elect agreed to keep in contact by telephone and have discussed the idea of meeting in person.Next year, Russia and the US will celebrate 210 years since the beginning of their diplomatic relations, which might motivate them “reversing towards pragmatic, mutually beneficial cooperation that would satisfy the interests of both countries, promote stability and safety around the world,” the statement also says.Trump’s team has issued a statement saying Putin congratulated the US president-elect on his election victory.Trump is “very much looking forward to having a strong and enduring relationship with Russia and the people of Russia,” the statement said.

Syria's Assad says Trump 'an ally if he fights terrorists' - France 24: Syrian President Bashar al Assad said on Tuesday Damascus would have to "wait and see" if U.S. President-elect Donald Trump would change Washington's policy on Syria but that he was ready to cooperate with him in fighting militants. In his first comments on Trump's election victory, Assad said the Republican leader had made promising comments on the need to battle Islamists in Syria's war but "can he deliver?" "We don't have a lot of expectations because the U.S. administration is not only about the President ... So we have to wait and see when he embarks on his new mission as president in two months' time," he said. "What about the countervailing forces within the (U.S.) administration?" Assad told a Portuguese television channel in remarks released by Syrian state television, pointing to what he said were rival "lobbies and powers" that traditionally influence any incumbent U.S. president.

Former Turkish general: Trump could broker peace in Syria and end the civil war – A former top Turkish general said Donald Trump’s election could hasten the end of the Syrian civil war by opening the door to negotiations with the Syrian government of President Bashar Assad.“I’m thinking that Donald Trump seems a realistic and a pragmatist man,” retired Gen. Ilker Basburg, a former chief of staff of the Turkish military, told reporters Wednesday. “I think he will open a direct link with the central Syrian government.”The United States and Turkey have demanded that Assad step down as part of any agreement to end the five-year Syrian war. However, Trump has said the main U.S. goal in Syria is the defeat of the Islamic State group and not the future of the Syrian government. He said the ouster of Arab strongmen in Eygpt, Yemen and Libya have served to destabilize the Middle East and lead to the rise of Islamic extremists.Basburg’s views do not reflect those of the Turkish government of Recep Tayyip Erdogan. In fact, Basburg was imprisoned for life in 2013 for conspiring against the Turkish government but the courts overturned the conviction in 2014. Nevertheless, Basburg said Turkey’s interests in Syria have evolved since the war began in 2011, in large part because of the role of Kurdish militants, whom the Turks consider an enemy. But the Kurds are supported by the United States, Turkey’s longtime ally. Turkey was alarmed when a Kurdish-dominated rebel alliance seized the border city of Manbij from the Islamic State group.

How Donald Trump will make Russia great again in the Middle East -- Donald Trump has his admirers in the Middle East, in spite of his stigmatisation of Muslims and ostensible tolerance of anti-Semites. Yet the burning question is whether he plans to douse a region already in flames with more petrol. Local citizens find it no easier than anyone else to deduce Trumpian policy from bullet points that are all bullet. But many sense that, even if the next US president turns out to be a blip and most of his rhetoric bluster, he could do real damage in the Middle East. It is not that liberal democracy has had much purchase in the region. But if the west was often regarded with mistrust for its support for tyrants, the US now risks discredit as the spiritual home of illiberal democracy, led by a champion of national populism.  Mr Trump will get along just fine with local strongmen. Abdel Fattah al-Sisi, the Egyptian army chief who took power in 2013 in what was initially a popularly backed coup, was among the first to congratulate him. The president-elect has argued against too much criticism of President Recep Tayyip Erdogan for the purges that followed this July’s failed coup in Turkey. The construction tycoon, in any case, makes them look moderate since neither leader publicly endorses torture or killing the families of terror suspects. In broad terms, a Trump administration will almost certainly de-emphasise human rights, gender equality and the rule of law. Man-made climate change afflicts the ancient fertile crescent but, unlike Mr Trump, its inhabitants probably doubt it is “a hoax” (drought and desertification were factors behind the initial uprising in Syria).  The fixation of Barack Obama’s administration is the defeat of Isis in Syria and Iraq. That will remain true under a Trump administration, but with a difference. President Obama lost interest in helping Sunni rebels topple Bashar al-Assad’s regime. Mr Trump seems inclined towards co-operating with President Vladimir Putin, Mr Assad’s patron and another strongman soulmate, in ways that will do more to make Russia than America great again.

Russian Aircraft Carrier, Frigate Launch "Massive Strikes" On Syrian Terrorist Targets -  Moments ago Russian Defense Minister Sergey Shoigu announced that the Russian military launched a large-scale operation against terrorists stationed in Homs and Idlib provinces of Syria. "Today at 10:30 and 11:00 we launched a large-scale operation against the positions of Islamic State and Al-Nusra [terrorist groups] in the provinces of Idlib and Homs," Shoigu said at a meeting between Russian President Vladimir Putin and the top leadership of the Russian Armed Forces.The Russian "Admiral Grigorovich" frigate located next to Syria's coast targeted terrorists in Syria with Kalibr cruise missile strikes, Shoigu said. The "Admiral Grigorovich [frigate] takes part in the operation. Today, it launched Kalibr cruise missiles on [terrorist] targets that had been confirmed by intelligence data and determined in advance," the minister said at a meeting of Russian President Vladimir Putin with top officials of the Russian Armed Forces.The 'Admiral Kuznetsov' aircraft carrier, the flagship of the Russian Navy, is also taking part. This is the first time the 'Admiral Kuznetsov' has taken part in a military operation according to RT. Sukhoi Su-33 fighter jets have been launched from the deck of the carrier, the defense minister said.The strikes target factories and arms depots operated by the jihadists in Syria, he said. "The main targets of the strikes are warehouses with ammunition, [terrorist] gatherings and terrorist training centers, as well as plants for the production of various kinds of weapons of mass destruction of the population," Shoigu detailed.He stressed that terrorists had actual factories, not merely workshops, for weapons production. "They are factories, not workshops, more specifically the plants for the production of all sorts of rather serious means of mass destruction.""Clearly, this is a well-established industrial production, these are the targets for today's strikes. And they will continue," the minister stated. The minister noted that the Russian military had thoroughly surveilled the targets before striking them, choosing the most important.

The End of American World Order - The Diplomat - By “end of American world order,” I specifically refer to the crisis and erosion of the international order that the United States had built and maintained after World War II, which some call the liberal hegemonic order,meaning a liberal order under U.S. dominance. As I have argued in my book, The End of American World Order, whether the United States is declining as the world’s No. 1 power or not is a matter of much debate, although this has less to do with who is in the White House than long-term structural shifts in the global economy and politics. The United States still leads in the world in terms of the overall military power, and relative economic power (defined more comprehensively than just overall GDP, and taking into account the role of the U.S. dollar as the global reserve currency). So we don’t have agreement on whether or to what degree the United States itself is declining. You can find equally persuasive arguments and evidence from both sides of the debate. But the United States is less and less able to get its way with the international community and shape and control the agenda of global multilateral institutions that it helped to create. U.S. leadership in the world has declined. Hence the real question about world order today is not whether America itself is declining, but that the American world order is coming to an end. I think it’s a very important distinction and that the latter is happening. Furthermore, Brexit and Donald Trump, and the rising tide of nationalism and protectionism they represent, along with the erosion of liberal democracy in the West, signals the decline not only of liberal ideology but more surely of the liberal international order.

USS Trump Pivots to Asia - - Yves Smith  - The latest news from Team Trump is a big departure from the president-elect’s initial stance of favoring more modest ambitions for the US in order to focus resources on domestic priorities. But as soon as Trump won the Republican nomination, he moved sharply to take up more traditional party messages, such as a much greater emphasis on law ‘n order and calling for a military buildup.  The most charitable spin one can put on Giuliani’s priorities, which one would assume mirror Trump’s, is that more better pork is the price of winding down our involvement in the Middle East and de-escalating with Russia. We will presumably have better intel on how this decidedly belligerent posture came about (assuming these press statements are official views, as opposed to more Trump throwing stuff at the wall and seeing what sticks) in coming days and weeks.  From The Australian:The frontrunner to become ­Donald Trump’s secretary of state has revealed the US president-elect is committed to building a “gigantic” military force to thwart China’s ambitions in the Pacific. Rudy Giuliani, the New York mayor during the terror attacks of September 11, 2001, and who is ­assisting Mr Trump’s transition to the White House, said yesterday the military expansion would be designed to allow the US to fight a “two-ocean war’’. The hawkish comments are a strong sign the Trump adminis­tration will not neglect the Asia-­Pacific region, and follow the president-elect’s criticisms during the election campaign that America’s NATO allies and Japan were not pulling their weight.“We (will) take our military up to 550,000 troops (instead of) going to 420,000,’’ Mr Giuliani told global business leaders in Washington. “We (will) take our navy up to 350 ships, (instead of) going to 247. “At 350, China can’t match us in the Pacific. At 247 ships, we can’t fight a two-ocean war; we gave up the Pacific. If you face them with a military that is modern, gigantic, overwhelming and unbelievably good at conventional and asymmetric warfare, they may challenge it, but I doubt it.”

China October crude oil output drops to lowest since May 2009 | Reuters: China's daily crude oil production in October fell to the lowest in more than seven years, statistics bureau data showed on Monday, as producers remain reluctant to drill new wells amid tepid oil prices and as output drops from aging wells. Oil output last month in China, the world's second-largest crude consumer, dropped 11.3 percent from the same time a year ago to 16.05 million tonnes, the National Bureau of Statistics reported. The figure is up slightly from September's 15.98 million tonnes. On a daily basis, October production was 3.78 million barrels per day (bpd), the lowest since May 2009, and down from 3.89 million bpd in September. "Producers have not ramped up output even as oil prices rebounded in October. Many of them see the uptick in prices as unsustainable," a Beijing-based crude trader said. Prices for international crude benchmark Brent climbed to as high as $53.73 a barrel in October though prices ended the month 1.5 percent lower than at the end of September. Brent was at $44.80 on Monday. Sinopec's Chairman Wang Yupu told investors in August that the energy giant would open new discovered reserves if crude prices were between $45 to $50 a barrel to make up for falling output. [nL3N1BP1IP] Major upstream producer PetroChina reported in October that its crude output for the first nine months of 2016 fell to 696.6 million barrels from 722.9 million a year earlier. Offshore oil specialist CNOOC recorded a 7.7 percent decline in net oil and natural gas production in the third quarter

Analysis: Access to major oil, natural gas pipelines unlikely to benefit Chinese independent refiners - China's state-owned oil companies, which control almost all of the country's oil and gas pipelines, recently released a list of lines that will be available for third-party use but the move is unlikely to ease the logistical woes facing the independent refiners given their location and lack of spare capacity. The list released by CNPC, Sinopec and CNOOC includes 14,475 km of crude oil pipelines, 7,812 km of oil products pipeline and several gas pipelines across the country. The move is in response to a requirement by the National Administration of Energy, which is responsible for planning the country's energy sector, to allow third-party access to the country's oil and gas pipelines and is seen as a step towards state-owned companies' reforms."The pipelines were designed and constructed for the three big companies' specific refineries and these are located far away from the independent ones. I also don't think there is spare capacity for the oil giants to share," a Shanghai-based analyst said. China's independent refiners were given access to imported crude in mid-2015, but suffer from high logistics costs compared with their state-owned peers due to lack of pipeline access to move crude oil and refined products. S&P Global Platts China Oil Analytic estimates that three in every four independent refineries in Shandong have to rely "either in part or entirely" on trucks to transport crude, oil products or both. Only one pipeline built by a state-owned company is currently used by the independent sector -- PetroChina's 447 km pipeline to connect Rizhao port and Dongming in Shandong province with a capacity of 10 million mt/year (200,822 b/d). 

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