Sunday, December 11, 2016

OPEC & Russian oil production at new highs, NOPEC deal completed, largest rig count jump in 31 months, global rigs, etal

less than a week after both OPEC and Russia committed to lowering their oil production in order to stabilize oil prices, we learned that both were producing oil at record levels in November, even as they were preparing to meet to hash out the details of their planned output reductions...that news knocked the wind out of the oil price rally that saw oil prices rise 16% to 16 month highs over the four days following the OPEC meeting in Vienna on November 30th, and oil prices subsequently fell more than $2 a barrel, or nearly 4%, over Tuesday and Wednesday following those reports, before steadying and retracing most of that loss, ending the week at $51.50 a barrel...

as you'll recall, the proposed OPEC production cutback announced last week generally amounted to a commitment by most OPEC members to reduce their oil output by 4.5% from October levels, which had already risen to a record high of 33.643 million barrels per day in October, from levels of around 32.5 million barrels per day earlier this year...the new November OPEC production data, from a Reuters survey of shipping data and industry sources, indicated that OPEC production had risen to 34.19 million barrels per day in November, from a revised 33.82 million barrels per day in October, as Angola, Nigeria, Libya, Iran, and Iraq all increased output significantly (note that there are several estimates of OPEC production; their own reports cite two estimates other than this one, and the key takeaway from this Reuters survey is that OPEC output rose by 370,000 barrels per day from their previous record high)...meanwhile, Russian oil production rose by 2,000 barrels per day to 11.23 million barrels per day in November, a new post Soviet era record for Russia as a stand alone country, which means they've increased output by 500,000 barrels per day since first committing to cutting 300,000 barrels per day in August ...not only do the November record levels of production add to the current oil glut, but new highs in production for both countries means the cuts announced for January will have to come off of a higher output level than previously estimated..

pushing oil prices higher going into the weekend was the anticipation of the meeting of Russia and other non-OPEC oil producers on Saturday, which were expected to contribute another 600,000 barrels per day in production cuts, on top of the 1.2 million barrel per day cut that OPEC had agreed to last i write this on Saturday evening, the Wall Street Journal is reporting that a deal was struck between Russia and 10 countries outside of OPEC to cut their production by a total of 558,000 barrels per day, with Russia as expected contributing 300,000 barrels per day of that reduction...details on the other countries involved in that deal are still sketchy; Oman, Azerbaijan and Sudan are other producers mentioned as committing to cuts, but i've seen no country by country quantities given...Brazil had already opted out of attendance, so they obviously wont be cutting, nor will Canada, China or Norway, who hopes to ramp up their own production to steal European market share from Russia..

before we move on to the weekly oil data, we should make note that there has been a run-up in natural gas prices with the advent of colder weather...the easiest way to explain what happened is with a graph, which we'll herewith include below...

December 10th natural gas prices

the above graph shows the contract price over the last 3 months for a million British thermal units (mmBTU) of natural gas at or contracted to be delivered in January at the Louisiana interstate natural gas pipeline interconnection known as the Henry Hub, which is the benchmark location for setting natural gas prices across the you can see, natural gas contract quotes have increased by nearly $1 per mmBTU over the past month to reach their highest level since December 2014, with forecasts of winter weather being the primary driver, as natural gas stores have remained well above normal and the weekly drawdowns have been close to expectations...the last time we looked at natural gas prices, contract prices for November gas delivery had fallen to $2.731 per mmBTU just as exchange trading in gas for delivery in November expired on October 27th, while at the same time natural gas for delivery in December was being quoted at $3.046 per mmBtu...from this graph we can see that January gas never got that low, which exposes the seasonal price variation typical for gas and heat oil...however, up until recently, even gas prices for January had been held down by the ongoing gas glut and the warmest Fall in US weather history, which even prompted that November nonsense suggesting increased air conditioning would cause higher natural gas consumption by electric utilities...that's by the boards now, as we are heading into a La Nina winter, which tends to be colder than normal...finally, driving prices to a record high on Friday was a forecast of a return to "life-threatening lows the polar vortex brought to parts of the country in 2014"...again, for natural gas, this is a seasonal price spike, and while it may result in some of the drilled but uncompleted (DUC) wells being completed, is not certain to cause an attendant spike in drilling...that's because natural gas prices are in backwardation, meaning futures prices are lower, and thus newly drilled gas wells wont get this current price for their future of this weekend natural gas futures prices indicate that the contract price for April 2017 gas is at $3.453 per mmBTU , but by April 2018 the contract price falls to $2.928 per mmBTU, and that forward natural gas prices after that remain below $3 for most of the next dozen years...

The Latest Oil Stats from the EIA

the US Energy Information Administration's release of oil data for the week ending December 2nd indicated a large jump in our imports of crude and a modest increase in refining, which nonetheless left our supplies of crude oil somewhat lower than last week...what happened was that the crude oil fudge factor that was inserted to make the weekly U.S. Petroleum Balance Sheet (line 13) balance swung to -425,000 barrels per day, from last week's +384,000 barrels per day, which which means that 425,000 barrels of oil per day that we appeared to have produced or imported last week did not show up in the final oil consumption or inventory figures, meaning one or several of this week's metrics were in error by that quantiy....with a week to week swing of 809,000 barrels per day in that fudge factor, it goes without saying that our week over week comparisons involving crude are meaningless...moreover, the cumulative daily average of that adjustment is still listed at +116,000 barrels per day for the 3rd week in a row, which certainly can't be right, even though we know that the EIA's week figures remain out of balance by nearly that magnitude for the whole year...

so quickly, for the week ending December 2nd, the EIA reported that our imports of crude oil rose by an average of 755,000 barrels per day to an average of 8,303,000 barrels per day, as the 4 week average of our oil imports reported by the EIA's weekly Petroleum Status Report (62 pp pdf) rose to an average of 8.0 million barrels per day, now 5.8% higher than the same four-week period last year...meanwhile, our exports of crude oil rose by an average of 25,000 barrels  per day to an average of 499,000 barrels per day for the week, for an increase of 730,000 barrels per day in our net imports, with export data that is not directly comparable to last year's exports of 445,000 barrels per day during the week ending December 4th, ...

at the same time, the EIA reported that production of crude oil from US wells slipped by 2,000 barrels per day to an average of 8,697,000 barrels per day during the week ending December 2nd, only the 2nd decrease in 9 weeks...that was as output from our Alaskan fields was unchanged while production from wells in the lower 48 states was 2,000 barrels per day lower for the 2nd week in a row....that left the week's domestic oil production 5.1% lower than the 9,164,000 barrels of crude we produced during the week ending December 4th of last year, and 9.5% below the record 9,610,000 barrels per day of oil production that we saw during the week ending June 5th 2015...

meanwhile, the EIA also reported that the amount of crude oil used by US refineries rose by an average of 134,000 barrels per day to an average of 16,417,000 barrels of crude per day during the week ending December 2nd, as our refinery utilization rate rose to 90.4% during the week, after last week's dip to 89.8%, which still left it down from the refinery utilization rate of 93.1% during the week ending December 4th last year...US oil refining is still down 3.0% from the pre Labor Day high of 16,930,000 barrels per day, at which time the refinery utilization rate had peaked at 93.7%...the rate of crude oil refined this week nationally is also down 1.4% from the 16,652,000 barrels of crude per day US refineries used during the week ending December 4th last year, and down 1.3% from the 16,627,000 barrels per day that were being refined during the equivalent week in 2014... 

however, despite the increase in the amount of crude oil being refined, the EIA reported that refineries’ production of gasoline fell by 73,000 barrels per day to 9,913,000 barrels per day during the week ending December 2nd...however, the year over year comparison still shows that our gasoline production was up about a half percent from the 9,869,000 barrels per day of gasoline produced during the same week a year ago, and up by 8.1% from the 9,169,000 barrels per day of gasoline produced during the week ending December 5th 2014...the EIA also reported that refinery output of distillate fuels (diesel fuel and heat oil) fell by 133,000 barrels per day to 5,083,000 barrels per day during the week ending December 2nd, which was 2.8% lower than the 5,228,000 barrels per day that was being produced during the week ending December 4th last year, and also 2.8% lower than the 5,231,000 barrels per day of distillates produced during the equivalent week of 2014...     

even with the drop in gasoline production, the EIA reported that our gasoline supplies rose by 3,425,000 barrels to 229,548,000 barrels as of December 2nd, as our domestic consumption of gasoline fell by 323,000 barrels per day to 8,757,000 barrels per day, the lowest since the week ending January 29th, even as our gasoline imports fell by 199,000 barrels per day to 652,000 barrels per a result, our gasoline inventories as of December 2nd were 5.5% higher than the 217,653,000 barrels of gasoline that we had stored on December 4th of last year, and 5.9% higher than the 216,764,000 barrels of gasoline we had stored on December 5th of the same time, our distillate fuel inventories rose by 2,501,000 barrels to 156,697,000 barrels by December 2nd, leaving our distillate inventories 4.9% higher than the distillate inventories of 149,413,000 barrels of December 4th last year, and 28.7% above the distillate inventories of 121,751,000 barrels of December 5th, 2014…

finally, even with the big jump in our oil imports, the EIA reported that our inventories of crude oil fell by 2,389,000 barrels to 485,756,000 barrels by  December 2nd, which left our supplies 5.1% below their April 29th peak of 512,095,000 barrels...however, we still ended the week with 7.1% more crude oil in storage than the 453,553,000 barrels we had stored as of the same weekend a year earlier, and 39.5% more crude oil than the 348,313,000 barrels we had stored on December 5th of 2014...   

This Week's Rig Count

US drilling activity rose for the 11th time in 12 weeks during the week ending December 9th, possibly reacting to the OPEC deal 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 27 rigs to 624 rigs by this Friday, which was still down from the 709 rigs that were deployed as of the December 11th 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 in the US rose by 21 rigs to 498 rigs during the week, which was the most oil rigs we've had working in any week since January 29th, as oil drilling activity has only retreated once in the past 24 weeks...but oil drilling was still down from the 524 oil directed rigs that were working on December 11th a year ago, and down from the recent high of 1609 oil rigs that were drilling on October 10, the same time, the count of drilling rigs targeting natural gas formations increased by 6 rigs to 125 rigs, which still left active gas rigs down from the 185 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, rig that was classified as miscellaneous also remained active, technically an increase from a year ago, when no such miscellaneous rigs were working...

drilling on bodies of water was unchanged from last week, as both the Gulf of Mexico rig count and total offshore count remained at 22 rigs, down from 23 offshore rigs a year ago...the number of working horizontal drilling rigs increased by 18 rigs to 503 rigs this week, which was still down from the 554 horizontal rigs that were in use on December 11th of last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, 5 directional drilling rigs were added, bringing the directional rig count back up to 51, which was down from the 64 directional rigs that were deployed during the same week last year...meanwhile, the vertical rig count increased by 4 rigs to 70 rigs as of December 9th, which was still down from last December 11th's deployment of 91 vertical rigs..

as usual, 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 December 9th, the second column shows the change in the number of working rigs between last week's count (December 2nd) and this week (December 9th), the third column shows last week's December 2nd 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 reporting week a year ago, which in this case was for December 11th of 2015...    

December 9th 2016 rig count summary

again we see that this week's drilling increase was led by an 11 rig increase in the Permian of west Texas, which has now seen a 109 rig increase since the last week of May, and thus accounts for nearly half of the 220 drilling rig increase that we've seen over that span...furthermore, with 246 rigs deployed targeting that shale basin, the Permian alone accounts for nearly half of the 503 horizontal drilling rigs currently in use...with additional increases in the Eagle Ford of south Texas and in the Granite Wash tight sand of the panhandle region, Texas managed a 17 rig increase, the largest we've seen in any one state in any one week....the other big jump in shale targeted drilling this week was in the Denver-Julesburg-Niobrara of the Rockies front range, where 6 rigs were added, which is likely reflected by the 6 rig increase in Colorado, since Wyoming has been adding conventional rigs of late...meanwhile, the only natural gas rig increases noted above are in the Marcellus, as of the 6 rigs targeting natural gas added this week, 4 were logged in the unnamed "other' column...however, those two were enough to increase the Pennsylvania rig count to 31, now topping their 30 rigs a year ago...we should also note that outside of the major producing states shown in the summary table above, Indiana saw two rigs started up, having none working last week and none a year ago, while Kentucky saw its two rigs pulled out, leaving none, down from one last year…in addition, Illinois saw one rig stacked, leaving one, in contrast to none a year ago, and Mississippi saw its rig count reduced from 4 rigs to 3, also down from 4 rigs a year ago...

International Rig Count for November

Baker Hughes also released the international rig counts for November this week, which unlike the weekly North American count, is an average of the number of rigs that were running in each country during the month, rather than the total of those rig drilling at month end....Baker Hughes reported that an average of 1,678 rigs were drilling for oil and natural gas around the globe in November, which was up from the 1,620 rigs that were drilling around the globe in October, but down from the 2,047 rigs that were working globally in November of last year...increased North American drilling again accounted for most of the global increase, as the average US rig count rose from 544 rigs in October to 580 rigs in November, which was still down from the average of 760 rigs that were working in the US in November a year ago, while the average Canadian rig count rose from 156 rigs in September to 173 rigs in November, again still down from the 178 Canadian rigs that were deployed in November a year earlier....outside of Northern America, the International rig count rose by 5 rigs to 925 rigs in November, which was also down from 1,109 rigs a year ago, as increases in drilling in Europe and Eastern Asia more than offset a decrease in Middle East activity.. 

drilling activity in the Middle East fell for the 7th time in the past 11 months, as the countries included in this region pulled out a net of 11 rigs, reducing their active rig average to 380 rigs for the month, which was also down from the 419 rigs deployed in the Middle East a year earlier....most of the cutback in drilling could be accounted for by reductions in Oman, and by OPEC members Qatar and Abu Dhabi, who each removed 3 rigs...Oman's cut was from 64 rigs to 61, which was also down from the 72 rigs deployed in Oman last November, while the Qataris cut back to 9 rigs from 12, which was up from the 5 rigs they had deployed a year ago, and Abu Dhabi reduced their active rigs to 47, which was down from the 52 they had active last November...two other OPEC members also cut their drilling back by a single rig; Iraq's drilling was down from 42 rigs to 41, which was also down from 51 rigs a year earlier, and Kuwait cut back from 48 rigs to 47, which was still up from the 43 rigs the Kuwaitis were running a year addition, Egypt cut back their drilling from 23 rigs in October to 22 rigs in November, well down from the 45 rigs running in Egypt a year earlier...however, the Saudis added a rig in November and thus were running 127 rigs, the same as they were running a year we've mentioned previously, the Saudis have continued to increase drilling throughout this period of lower prices, increasing their rig counts from in the 80s in 2013 to average 105 rigs in 2014, and gradually increasing from there to average 125 rigs this year...

in addition to the cuts in the Middle East, the Latin American region saw its active rig count reduced by a net of 2 rigs to 181 rigs, while they were also down from 284 rigs in November of 2015, as the region had idled 92 rigs over the first 6 months of 2016...the region's November change also included shutting down 2 more offshore platforms, after they had shut down 8 offshore rigs the prior month, leaving Latin American offshore activity at 28 rigs, which was also down from 52 offshore last November...Brazilian drillers continued to cut back, reducing their active count from 14 rigs to 10, which was down from the 36 rigs deployed in Brazil a year earlier...Mexican drillers shut down 3 rigs in November, leaving an average of 18 rigs active, down from 38 rigs last November...Bolivia, Chile, OPEC member Ecuador, and Peru also each shut down a rig in November; for Bolivia, the 4 rigs remaining were down from 7 rigs a year earlier; for Chile, their remaining 2 rigs were the same as last year's count; for Ecuador, their 5 rigs were up from last years 4 rigs, and Peru had no rigs remaining active, down from 1 rig in November of 2015...on the other hand, drillers in Columbia added 5 rigs in November, bringing their count up to 16 rigs, which was also up from 15 rigs a year earlier...OPEC member Venezuela started up 3 more rigs and thus had 51 rigs running, still down from 70 rigs a year earlier, and Argentina also added a rig, bringing them back to 70, still down from 101 rigs last November..

meanwhile, drilling activity in the Asia-Pacific region increased by 6 rigs to 188 rigs in November, as their offshore deployment rose from 84 rigs to 92, which was down from the 208 rigs working the region a year earlier, which included 85 working offshore at that time....India added 5 rigs, bringing their total to 117 rigs active nationwide, which was up from the 105 rigs they had deployed in November of last year...both Vietnam and Papua New Guinea added 2 rigs, bringing their counts up to 4 rigs and 3 rigs respectively, up from 4 rigs last year for Vietnam but down from 3 rigs last year for Papua New Guinea...other Asian Pacific countries adding one rig included Australia, Brunei, and Myanmar, bringing their totals up to 4 rigs, 2 rigs and 1 rig respectively, down from 14 rigs a year ago for Australia, unchanged from last year for Brunei, and up from none last year for Myanmar...on the other hand, Indonesia idled 3 more rigs after shutting down 2 in October and hence were down to running 14 rigs, down from the 24 rigs they had working in November a year addition, single rig reductions were seen in Malaysia, Thailand and the Philippines...for Malaysia, that left 4 rigs, down from last year's 7 rigs; for Thailand, that left 10 rigs still working, down from 17 a year ago, and for the Philippines it left no rigs active, in contrast with the 3 rigs they were running a year earlier...

oddly, the net rig count in Europe saw the largest jump in November, rising by 10 rigs to 97 rigs, which was down from the 108 rigs working in Europe a year ago at this time, as offshore drilling that was shut down in October returned in November, as the European offshore count rose to 33 rigs from 24 rigs a month ago...Norwegian drillers accounted for most of that, as they reactivated 6 of the 7 North Sea platforms that were shut down in October, and now have 15 active, up by 1 rig from last year's the same time, the UK also added 3 offshore rigs, and now have 10, which was down from the 12 platforms they had working offshore a year addition, Germany added 2 rigs, and now have 4 rigs active, up from 3 last year, and Italy and Spain added one rig each...for Italy, the 4 rigs active in November was also up from 3 rigs last year, while the rig the Spaniards added was their first drilling since October 2012...partially offsetting those increases, Turkish drillers shut down 2 rigs and thus had 29 active in November, up from 28 rigs a year earlier, while the Dutch shut down 1 rig, leaving 3 rigs active, the same number that were active in the Netherlands a year ago....

lastly, the African continent saw an addition of 2 rigs in November, although at 79 rigs their activity was still down from the 90 rigs working in Africa last year at this time...three African nations added 1 rig each: Angola, the Congo Republic, and OPEC member Nigeria...that brought Angola back to 3 rigs, still down from last year's nine; brought the Congo Republic back to 3 rigs, same as a year ago, and brought Nigeria back up to 5 rigs, also down from 9 rigs a year the same time, the last active rig in Cote d'Ivoire was shut down; a year ago, the Ivory Coast had 3 rigs active....finally, note that Iranian, Russian, and Chinese rig counts are not included in this Baker Hughes international data, although China's offshore area, with an average of 28 rigs active in November, were included in the Asian totals here... 


Critics: Jobs will be in jeopardy if Ohio energy bill becomes law | Midwest Energy News: On the same day that a new study reported that more than 300 companies in Ohio are part of the supply chains for the wind and solar industries, lawmakers voted a bill out of committee that would make compliance with the state’s clean energy standards voluntary until 2020. If House Bill 554 becomes law, critics say the state would lose out on business opportunities and jobs. In their view, the bill would also discourage competition, keep electricity prices high and promote pollution that causes health problems and contributes to climate change. “We’re either going to move in a clean energy direction that produces new jobs related to solar and wind and efficiency,” said Rob Kelter of the Environmental Law & Policy Center, which released the supply chain report on Nov. 30. “Or we’re going to let other states and other countries manufacture these new products.” According to the supply chain report, 207 Ohio companies supply the solar energy industry, 134 manufacture things for the wind energy industry, and 20 serve as suppliers for both industries. For example, the report notes, Art Iron in Toledo fabricates steel supports for solar canopies and wind turbine main frames. Dyson Corporation in Painesville makes hardware that can be used in wind turbines. Dupont’s facility in Circleville makes Tedlar film, which is used in backsheets for solar panels. Rittal Corporation in Urbana provides enclosures that protect equipment for solar and wind energy from the elements.

‘Giveaway’ for utilities included in bill to make Ohio energy standards voluntary | Midwest Energy News: An energy bill that would make compliance with the state’s clean energy standards voluntary until 2020 now heads to the Ohio Senate with a new provision that critics call an added “giveaway” for utilities. House Bill 554 passed in the Ohio House of Representatives yesterday by a vote of 56 to 41. The bill now now heads to the Ohio Senate’s Energy and Natural Resources Committee for committee testimony this afternoon at 4 p.m. EST and tomorrow morning at 9 a.m. A vote by the full Senate could take place as early as tomorrow afternoon. “Ohio’s residential and business consumers should be concerned with energy legislation passed by the Ohio House today,” said Ohio Consumers’ Counsel Bruce Weston in a statement released yesterday. “The proposed law would cost consumers many millions of dollars in charges for higher utility profits without a corresponding public benefit.” The bill, which would delay the return of enforceable renewable energy efficiency and renewable energy provisions for three more years, has already been the target of extensive criticism from environmental groups and advocates for the wind and solar industry. Opponents have noted that the current freeze on Ohio’s clean energy standards has already had a negative effect on investments in the state’s renewable energy industry and makes the state less attractive to companies in other industries as they look to site new facilities. If either HB 554 or a companion Senate version were to pass, critics say the bill would also cost the state jobs, while increasing pollution and causing continuing health costs.

Federal Government Will Auction Public Land in Ohio to Oil and Gas Drillers - The Bureau of Land Management will auction leasing rights to 1,676 acres of the Wayne National Forest via online auction on Dec. 13. It’s not quite like eBay, though; this land is earmarked expressly for oil and natural gas drillers — private companies that will use the forest for non-renewable energy production.The news signals a deep and ongoing commitment among Ohio politicians and the federal government to inextricably tie the state’s public (and private) land to fossil fuel production and infrastructure. The BLM’s stance manages to shoe-horn the word “sustainable” twice into its public explanation: “The oil and gas leasing program managed by the BLM encourages the sustainable development of domestic oil and gas reserves which reduces the dependence of the United States on foreign sources of energy as part of its multiple-use and sustainable yield mandate.”  Still, though, the impending loss of acres in Ohio’s only national forest (distinct from a national park) has prompted environmental advocacy groups across the state to fight back. “This fall, we’ve been continuing to try and educate the public and influence the forest supervisor, Kathleen Atkinson,” says Heather Cantino, member of the Athens County Fracking Action Network, one of the most active groups working against drilling in southeast Ohio. Based on recent BLM auctions, an acre of federal public land can sell for as little as $1.50. But average U.S. residents can’t just sign in and bid on these acres; these properties are meant only for private mineral extraction.  Environmental advocates have successfully placed bids in other federal auctions, only to have their leases revoked. A Utah man spent 21 months in prison for placing the winning bids on 14 parcels of land in that state. The concerns don’t end on auction day, however.The idea, also, is that the lease rights will open up access to private land in the vicinity — access to mineral rights that will now be easier for energy companies to negotiate. (Fracking companies need contiguous access to get at specific underground natural gas supplies. The process is also known as “horizontal drilling,” so one might easily imagine how vast swaths of shale can be reached from one particular drilling location.) “Those are cumulative impacts that are not addressed at all in the EA [environmental assessment],” Cantino says of the scope of this inevitable drilling.

B.G. city council rejects NEXUS pipeline plans - Toledo Blade — In a slam dunk for Ohio pipeline activists, the Bowling Green City Council rejected Spectra Energy’s request to build part of its NEXUS Gas Transmission pipeline on city-owned land by a 7-0 vote tonight. The vote came one day after activists in North Dakota scored a major victory when the Army Corps of Engineers denied a permit for the construction of a key section of the 1,172-mile Dakota Access Pipeline just north of the Standing Rock Sioux Reservation. That project is a much different one, in that would transport oil — not natural gas — and was in close proximity to Native American land where protestors had demonstrated for months. In Bowling Green, the city council was asked by Spectra to grant easement access to a portion of 29 acres of city-owned land several miles northwest of Bowling Green.The request was made to accommodate plans for a 255-mile pipeline Spectra and other companies want to build between southern Ohio and southwest Ontario to move natural gas fracked from Ohio’s Marcellus and Utica shale. The land, on State Rt. 64 and King Road north of Haskins, Ohio, was acquired by Bowling Green in 2015. Spectra offered $151,000, and was willing to follow existing utility easement where power lines exist. Now, the company will likely either reroute that segment of its proposed pipeline, or seek to acquire the Bowling Green-owned land it wants through eminent domain. The Bowling Green council rejected the offer to a standing-room only crowd so large the state fire marshal's office had about 30 people listen from another floor in the building, and another 30 listen from outside while standing in the cold. Joe DeMare, a Green Party candidate for U.S. Senate in the most recent election, was escorted out of the meeting by security when he objected to Council President Mike Aspacher's decision to take a vote without more public comment. Only council members spoke.

A Last Resort That Might Work: Small Town Votes In Community Bill of Rights to Ban Fracking - The summer turned out to be a busy one for Kelly Jacobs of Waterville, Ohio. Back in March, the EPA held a hearing to discuss a proposed natural gas pipeline that would run through the township. After learning about the risks of the project, Jacobs became concerned. Over the next few months, she and her kids went door to door, bringing a clear message to her neighbors: If the pipeline was built, Waterville residents would bear the brunt of the risks and reap none of the benefits. She wanted them to vote for a community bill of rights that would block the proposed pipeline and guarantee their right to clean air, water, and soil.  At issue was the NEXUS pipeline, a 255-mile transmission system that would bring fracked natural gas from eastern Ohio to southeastern Michigan. A project of Spectra Energy, a company based in Houston, the pipeline would run under the Maumee River and through several Waterville neighborhoods. The company also wants to build a compressor station there that would move gas along the pipeline.   “The [supporters of the pipeline had] way more money,” says Jacobs. “They tried to paint us as out-of-state radicals that are bad for business. When my kids and I went through all these different neighborhoods, we had people saying, You obviously aren’t from out of state. If you were, you’d have fancier signs.” But Jacobs’ side scored a win on November 8, when residents passed the community bill of rights, amending the town’s charter. It’s an unconventional strategy, and it was not residents’ first choice. But, like many other cities and towns that have passed similar laws against extractive industries, they chose it as a last resort—and it just might work.Although it’s unclear how the community bill of rights will fare in court, it’s already having effects. A Waterville city employee told citizens in a November 14 council meeting—the first since the charter amendment was passed—that pipeline officials had sent a letter to the city requesting permission to survey. He said he’d declined permission because Waterville has a new law banning the pipeline.  Yet, a few weeks later, FERC moved the pipeline one step forward, saying that its effects on environmental systems will be “reduced to acceptable levels” by the company’s mitigation plan. CELDF expects the commission to formally issue a permit for the project in January, at which point the fight is expected to move to the courts.

Tallgrass's REX set to boost northeast gas takeaway capacity. - Takeaway capacity out of the Marcellus/Utica shale producing region is about to get another significant boost. Tallgrass Energy’s Rockies Express Pipeline (REX) expects to bring the first 200 MMcf/d of its 800-MMcf/d Zone 3 Capacity Enhancement project (Z3CE) in service any day now, and ramp up to the full 800 MMcf/d by end of the year. Moreover, the pipeline operator has hinted that it may be able to eke out incremental Zone 3 operating capacity over and above the new design capacity in the near future. The Z3CE expansion will mark the third time in as many years that REX will increase westbound takeaway capacity out of the Marcellus/Utica region. With each capacity boost, Northeast production volumes have risen to the occasion and the capacity has filled up. Today we examine this latest expansion and what it will mean for U.S. gas production. U.S. natural gas production growth in recent years has gone hand-in-hand with takeaway capacity additions out of the Northeast region, and the reversal of flows on REX—originally built for west-to-east flows out of the Rockies—has played no small part in that. REX began reversing flows on its eastern-most sections of its Zone 3 segment—from Clarington, OH in Monroe County west to Moultrie County, IL—back in mid-2014, initially providing small volumes (about 0.25 Bcf/d) of backhaul capacity to move production received from new interconnects in the Marcellus/Utica region, west along the pipe to interconnects with other long-haul pipes that were also in the process of reversing flows. By early 2015, that westbound capacity on REX was expanded to 0.6 Bcf/d, and later in 2015, that was followed up by the East-to-West (E2W) expansion, which allowed a full 1.8 Bcf/d in westbound forward-haul capacity starting in August 2015 (see Waiting For a REX Like You). At first, there wasn’t sufficient interconnect capacity to receive incremental production on the eastern end. But with each expansion, new receipt points were added near the eastern terminus and the new bidirectional capacity allowed Marcellus/Utica gas supply to move farther west along Zone 3—with that last expansion reaching as far west as Moultrie County, IL. As the graph in Figure 1 shows, since that last mainline expansion in August (2015), operating receipt capacity (blue line) has increased from about 1.4 Bcf/d to about 3.1 Bcf/d, allowing flows (green area) to ramp up to the mainline capacity of 1.8 Bcf/d (black line).

State report: Shale oil production falls again; natural gas rises - Columbus Dispatch Ohio oil production continued to suffer in the third quarter, while natural gas production had a small increase according to shale energy figures issued today by the state.Oil production was 3.95 million barrels, down 18 percent from the prior quarter and down 34 percent from the third quarter last year. Gas production was 361 billion cubic feet, up 8 percent from the prior quarter and up 46 percent from a year ago.The results, from the Ohio portions of the Utica and Marcellus shale, show that oil production is seeing the effects of low market prices.Gas prices continue to grow despite low prices, largely because energy producers are shifting their resources to areas that are rich with gas, such as Belmont and Monroe counties along the Ohio River.Sixteen counties reported at least some shale oil production, led by Harrison County. Seventeen counties had gas production, led by Belmont. Portage County reported some gas production but no oil.All of the production can be found in a band of counties in the eastern and southeastern parts of the state. A total of 1,464 shale wells reported some production for the quarter.

Letter from Pennsylvania: Allegheny County's Shale Gas Reserves are Huge But 'Forced Pooling' Should Be Off the Table - Simply put, the numbers are stunning: In Allegheny County, Pa., alone, estimates of “totally technically recoverable reserves” of shale natural gas exceed 150 trillion cubic feet. “This is nearly five times the minimum required for classification as a super-giant gas field and enough natural gas to provide all of America’s needs for more than five years,” recently wrote Gregory Wrightstone and Justin Skaggs in Oil and Gas Investor.  “the total value of this resource exceeds $400 billion and the value of potential royalty payments to landowners in (Allegheny County) is more than $60 billion.” The Keystone State’s Allegheny, Washington and Greene counties are situated within the “core of the core” of the recently named Appalachian Mega-Giant Gas Field, they note. “Each county has recoverable natural gas reserves likely ranking them at or near the highest county natural gas reserve base in the nation,”  Of the three counties, Allegheny provides the greatest challenges primarily due to its majority urban/suburban nature, they say.   Only 4 percent of Allegheny County’s acreage appears to have “viable” drilling locations, they note.  One part of the solution, the authors argue, would be to allow for “forced pooling” in Pennsylvania’s Marcellus shale play, which currently is not permitted.  In forced pooling, those mandated to participate in the production unit are compensated (though, some argue, to a lesser degree than those who willingly have negotiated), in a process akin, loosely, to eminent domain. But instead of government taking your property (with “just” compensation) for a “public purpose,” a forced pooling law would allow a private concern to, with compensation, frack your property to benefit those who have willingly allowed fracking. “With no forced pooling in Pennsylvania,” Wrightstone and Skaggs say “an operator would be required to acquire a lease agreement with each owner that a lateral would cross, requiring the leasing of possibly hundreds of leases for each proposed lateral drilled.” Forced pooling by a private entity to benefit another private entity (or entities) is an unlawful taking. It must remain incumbent upon fracking operators to gain voluntary cooperation with property owners -- or to develop new fracking techniques that make forced pooling a non-issue-- and not the state to determine whose property rights are more pre-eminent.

New England natural gas pipeline capacity increases for the first time since 2010 - Spectra Energy Corporation has almost completed the first two natural gas pipeline projects in New England since 2010. On November 1, Spectra placed part of the Algonquin Incremental Market (AIM) project into service, following the late-October approval from the Federal Energy Regulatory Commission (FERC). The remainder of the project is expected to be completed this month. Spectra placed another pipeline project—Salem Lateral—into service on November 1, according to PointLogic Energy, but it is not expected to be used until June 2017. The $972 million AIM project will bring additional natural gas from the Appalachian Basin into New England. The project is the largest pipeline project since 2007 to transport natural gas into New England from outside the region. The pipeline will provide an additional 342 million cubic feet per day (MMcf/d) of pipeline capacity to the New England market. The $63 million Salem Lateral Project will provide capacity for the Salem Harbor Power Plant, a converted coal-to-gas electric power plant due to be in service in June 2017. Once completed, the 674 megawatt power plant will use up to 115 MMcf/d of natural gas to generate electricity for New England consumers. The AIM project entered commercial service in November 2016 and added capacity to a constrained New England pipeline infrastructure system ahead of upcoming winter demand and ahead of the anticipated increase in demand from the Salem Lateral project. The increase in pipeline capacity is expected to continue offsetting decreasing natural gas imports into New England. Liquefied natural gas (LNG) imports into New England have typically met a significant portion of natural gas demand, but they have declined because of a variety of market conditions, including demand for LNG from other markets, and the expiration of previous long-term LNG contracts. LNG shipments to the Algonquin Northeast Gateway Lateral project (built in 2007 to deliver regasified LNG into the metropolitan Boston and New England market) and shipments to the LNG terminal in Everett, Massachusetts (built in 1971) have decreased over the past several years.

NYMEX January gas settles at $3.603/MMBtu, down 3.2 cents -  After trading in positive territory for much of Wednesday, the NYMEX January natural gas futures contract slid 3.2 cents to settle at $3.603/MMBtu as the market consolidates ahead of the US Energy Information Administration's weekly gas storage report. The January contract peaked 11.3 cents above Tuesday's settle, trading between $3.581/MMBtu and $3.748/MMBtu. Wednesday marked the second most active trading day for the January contract with an estimated volume of 223,133 Dth, the most active being Tuesday's trading session with 233,251 Dth. The initial upward movement in the market was attributed to what Timothy Evans, energy futures specialist with Citi Futures, notes as a "firming back up [of the natural gas market] on what looks like an even more intense cold weather pattern" than previously thought. The latest National Weather Service eight- to 14-day outlook lent additional credence to this trend by projecting a high probability of below average temperatures over the Upper Midwest and Northeast markets, supporting Platts Analytics' Bentek Energy latest national demand projections of 100.8 Bcf/d over the next eight-14 days.However, projections for a below-average injection in the upcoming US EIA weekly gas storage report may have weighed on the prompt-month contract. According to a consensus of analysts surveyed by S&P Global Platts, the upcoming report will show a withdrawal of 40 Bcf, significantly below both the 69 Bcf withdrawn during the same time period in 2015 and the five-year average of 61 Bcf. Further along the curve, the February contract slid 3.7 cents to $3.589/MMBtu, the third day in a row the February contract traded at a discount to the prompt-month. Backwardation persists throughout the remainder of the winter contracts, with a 5.3 cents spread between March and January.

Jeff Sessions, Trump’s Attorney General Pick, Introduced First Bill to Exempt Fracking from Drinking Water Rules - U.S. Senator Jeff Sessions (R-AL), President-elect Donald Trump's nominee for U.S. Attorney General, introduced the first so-called “Halliburton Loophole” bill back in 1999 before it was ever known as such.Sessions co-sponsored the bill (S.724) with the climate change-denying Senator James Inhofe (R-OK). The bill called for theU.S. Environmental Protection Agency (EPA) to exempt enforcement of the Safe Drinking Water Act as it relates to hydraulic fracturing (“fracking”).The bill's language eventually became a provision in the Energy Policy Act of 2005, known today as the “Halliburton Loophole” because the company's ex-CEO and then-Vice President Dick Cheney headed up the industry-loaded Energy Policy Task Force which helped pen the bill's language.S.724 was introduced in 1999, in the middle of the years-long Legal Environmental Assistance Foundation (LEAF) v. EPA legal battle, which was heard in the U.S. Court of Appeals for the 11th Circuit.LEAF v. EPA centered around whether fracking should be regulated by the EPA as a form of “underground injection” as defined by the Safe Drinking Water Act. The oil and gas industry, which had legal intervenors, including Halliburton, in the LEAF v. EPA case, saw Sessions and Inhofe's Senate bill as a congressional remedy for the sticky legal situation. Contamination of drinking water originally spurred the lawsuit for LEAF, a now-defunct pro-environmental law firm run at the time by the Florida-based attorney David Ludder.  “At least a dozen Alabama residents complained that coalbed methane production activities have caused a degradation in the quality of the water produced from their drinking water wells,” continued Ludder. “To silence others, landowners often evicted or threatened to evict those that complained.”

US Gulf Coast gasoline soars to six-month high on scheduling day - Outright prices for US Gulf Coast gasoline shot to a six-month high Monday, the last day of trading for Colonial Pipeline's 66th cycle. Conventional gasoline was assessed at $1.5775/gal, its highest price since June 1, as a strong front-month futures contract combined with a cash price that climbed 8.25 cents/gal on the day. The benchmark's cash differential was assessed at NYMEX January RBOB plus 2 cents/gal, the first time it held a premium to the futures contract since mid-October. Scheduling day for Colonial often spurs a buying spree as traders look to secure barrels to meet their commitment and maintain shipper status on the perpetually full pipeline.Market sources provided mixed reasons for the spike other than scheduling day, including a lack of offers in the spot market and traders looking to buy pipeline barrels after sending out gasoline cargoes. Value for space on Colonial's Line 1, which typically has an inverse relationship to gasoline prices, fell 3 cents/gal to be assessed at plus 3 cents/gal, a one-month low.

Front-month LOOP sour crude storage hits seven-month high of 63 cents/b in auction - Oil | Platts News Article & Story: Storage at Louisiana Offshore Oil Port's Clovelly Hub was valued at 63 cents/b for January, a seven-month high for the front-month contract, according to Tuesday auction results published by Matrix Markets, which hosts the auction in partnership with LOOP and CME. The auction results showed a willingness to pay more for storage at the US Gulf Coast terminal on a monthly basis versus during the November auction. Several scheduled refinery turnarounds have encouraged increased physical crude storage, as refiners take less crude to accommodate seasonal maintenance periods. Quarterly strip prices also experienced modest gains. Second-month physical forward agreement storage was 65 cents/b, up from 55 cents/b in November. Third-month physical forward agreement storage, however, was down by 6 cents/b to 50 cents/b. The front strip (Q2 2017) was up 2 cents/b to 33 cents/b, and the second strip (Q3 2017) was 4 cents/b higher at 28 cents/b. The total volume auctioned Tuesday was 6.8 million barrels for January 2017 to March 2017 and for the second-, third- and fourth-quarter 2017 strips. The auctionable total is fixed ahead of time.The storage contract, launched in March 2015, is based on crude storage capacity at LOOP's Clovelly Hub, which has roughly 72 million barrels of storage. Each capacity allocation contract auctioned gives the buyer the right, but not the obligation, to store 1,000 barrels of LOOP sour crude at the facility, which is north of Louisiana's Port Fourchon.

Oklahoma regulators looking at new earthquake protocols for energy companies - Oklahoma regulators for the first time are expected to release industry guidelines on the small number of earthquakes possibly linked to hydraulic fracturing, a departure from their recent focus on the connections to wastewater disposal wells used in oil and gas development. The hydraulic fracturing plan is expected to be released along with tougher, new directives on wastewater disposal wells linked to seismic activity near Cushing and Pawnee, Corporation Commission spokesman Matt Skinner confirmed to The Oklahoman on Thursday. Recent earthquakes south and west of the Oklahoma City area prompted scientists and regulators to look again at possible links to hydraulic fracturing. Those areas fall outside two regional wastewater reduction plans for disposal wells unveiled earlier this year by the Oklahoma Corporation Commission. Four earthquakes ranging from magnitude 3.4 to 3.0 struck south and southwest of Blanchard this summer. In Canadian County, three earthquakes of magnitude 3.3 and 3.1 hit south of Calumet in November. Both areas are in the fast-growing SCOOP and STACK plays.  "The bulk of our concern is obviously up in the main earthquake areas like Cushing and Pawnee. But we have been providing data and working with the Oklahoma Geological Survey on the issue of hydraulic fracturing and seismicity. It is something we hope to complete work on soon, but quite frankly, our highest priority is up in the main earthquake area." Skinner said regulators want to take a proactive approach to the possibility of earthquakes related to hydraulic fracturing in the SCOOP and STACK areas of the state. The enhanced regulatory response on hydraulic fracturing comes after Oklahoma officials, scientists and industry representatives have worked for the past couple of years to keep the seismic focus on wastewater disposal wells. A growing body of scientific research has linked the increase in seismicity in Oklahoma to higher volumes of wastewater disposal into the deep Arbuckle formation.

Oklahoma Oil Regulators Adding Limits on Fracking to Earthquake-Reduction Plan - Oklahoma’s oil and gas regulator for the first time will issue guidelines designed to reduce earthquake activity linked to hydraulic fracturing.To date, the state’s earthquake response has centered around curtailing earthquakes linked to wastewater injection wells. Hydraulic fracturing — the well-completion technique known as “fracking” — is known by researchers to trigger earthquakes, both in Oklahoma and in oil and gas fields around the world. But scientists and officials believe the potential size and scale of fracking-related earthquake activity is significantly smaller than that posed by wastewater injection.“Frack-quakes are very short-lived and they’re only possible when the frack is going,” says Matt Skinner, spokesperson for the Oklahoma Corporation Commission. “It sometimes lasts for a day, sometimes it lasts for several days, but that’s it. If there is seismicity related to fracking it stops when the fracking stops.”The commission is preparing to release the fracking guidelines along with a new package of restrictions on wastewater injection wells crafted to reduce earthquakes in and around Pawnee and Cushing, where 5.8 and 5.0-magnitude quakes caused minor injuries and widespread damage in September in November. A string of earthquakes ranging from 3.0 to 3.4-magnitude that shook over the summer and fall near Blanchard and Calumet spurred the fracking-related guidelines, The Oklahoman’s Paul Monies reports. One potential complication for the energy industry: The epicenters of the suspected fracking-related earthquakes are located in the SCOOP and STACK, currently the most active and promising oil and gas plays in Oklahoma:

Trump’s pick for Interior Secretary wants to sell off public lands -  Another climate-denying nominee will be named Friday for a key environmental position in the Trump administration, multiple sources are reporting. Rep. Cathy McMorris Rodgers (R-WA) will likely be tapped to lead the Department of the Interior, which oversees all of the U.S. public lands, including forest management, the Parks Service, and fossil fuel extraction. McMorris Rodgers is strongly in favor of developing the United States’ fossil fuel resources. She has also opposed federal ownership of public lands and voted to make it more difficult for the president to create national monuments. McMorris Rodgers is the author of a bill that would have directed the Department of the Interior to sell off federal lands in Arizona, Colorado, Idaho, Montana, Nebraska, Nevada, New Mexico, Oregon, Utah, and Wyoming.  The selection is not surprising, in what is shaping up to be the most anti-environmental administration — Republican or Democrat — in modern times. The Interior Department transition team has been led by Doug Domenech, the director of a pro-fossil fuels project at the conservative Texas Public Policy Foundation. McMorris Rodgers has repeatedly expressed her support for oil. She supports expanding offshore drilling, voted for drilling in the Arctic National Wildlife Refuge, and voted against raising the royalty rates for oil and gas that comes from public lands. The Department of the Interior includes the Bureau of Offshore Energy Management, which permits offshore drilling and renewable energy. A proposed plan to include parts of the Atlantic in the bureau’s five-year plan was scrapped earlier this year after community opposition. If confirmed under the Trump administration, McMorris Rodgers will have a key role in shaping the next plan.

The Bakken: How Things Stand Near The End Of The Year, 2016 -- December 4, 2016 -- IN PROGRESS - Both Whiting and Oasis consider 900,000 boe EURs the new norm, and are on track to go significantly higher, to 1.5 million boe EURs.  Drilling times:

  • two huge changes since the beginning of the boom
  • the first change, of course, is the huge decrease in time it takes to drill a two-mile horizontal; at the beginning of the boom, 45 - 65 days. 
  • the second change: the way some operators are measuring drilling times. Whiting tracks the time from spud-to-spud: the clock starts ticking when the first well is spud, and continues to tick, until the rig is moved to the next well, and the next well is spud. Whiting has that spud-to-spud time down to 14 days or so; in the Niobrara, Whiting has it down to 7 days. In the old days it could take a week or so just to "tear down" rig once a well had been cmopleted, load it on a truck and move it to the next location, and then set it up again. During the muddy season -- spring thaw -- roads were closed and rigs did not move. Now, even in the spring thaw, rigs can continue pad drilling
Cost per completed well:
  • costs have come way, way down, but there is a twist
  • some operators are "advertising" the costs to complete a DUC, in effect not providing the sunk costs in drilling the well to TD; costs to complete a DUC are in the range of $3.8 million total costs are in the range of $6.8 million
  • I remember at the beginning of the boom, talking about $10 million wells -- and some of those were short laterals.

No plans to hedge Continental oil output yet, half of gas covered: Hamm - Continental Resources has no plans at the moment to lay on hedges for its crude oil production, but it is keeping an eye on market values and may do some hedging in the future, chairman and CEO Harold Hamm said Thursday. The US producer has no oil production hedged at the moment, and has covered around half of its gas production through forward derivatives trades, said Hamm. Hamm noted that there is relatively limited liquidity in oil futures beyond two years forward, which has been a factor when thinking about covering forward sales through trades in the futures market.While he stressed that he did not have a specific price target in mind when thinking of possible oil hedges, Hamm noted that WTI crude futures are generally trading below $55/b further forward along the curve, whereas he believes OPEC appears to be targeting benchmark crude prices of $50-$65/b through its recently agreed production cuts. Continental produced on average 208,000 boe/d of oil and gas in the third quarter from its US production assets, down from about 219,000 boe/d in Q2 and 228,000 boe/d in Q3 2015, according to company results issued in November.

EPA orders $2.1 million fine in air pollution settlement | North Dakota News | The U.S. Environmental Protection Agency has issued a $2.1 million fine for air pollution at oil and gas wells primarily on the state’s Fort Berthold Indian Reservation. But the settlement against Slawson Exploration Co. announced Thursday stems from just one of many enforcement actions underway against state operators for air quality violations. Slawson agreed to pay the fine under a settlement agreement after the EPA claimed the company violated the Clean Air Act by not properly controlling emissions at 170 well pads in the state. The violations primarily stem from storage tanks that were releasing volatile organic compounds into the atmosphere, first observed by EPA inspectors in 2014. The EPA said VOCs are a pollutant that irritates the lungs, exacerbates diseases such as asthma and can increase susceptibility to respiratory illnesses. The company also agreed to spend about $4.1 million on system upgrades, monitoring and inspections and at least $2 million to fund environmental mitigation projects under the settlement with the EPA and the Department of Justice. The improvements ordered in the settlement, including monitoring of emissions using infrared cameras, will significantly reduce air pollution in the state, the EPA said.

Video by New York Times reporter shows just how massive the Standing Rock protest camp is -  The camp housing protesters of the Dakota Access Pipeline have come to resemble a small city with "streets" crisscrossing the prairie between the tents, teepees, and quickly-erected shacks where the protestors have dug themselves in, according to photos and videos posted by reporters on the ground.  Thousands of protesters have gathered in Cannon Ball, North Dakota since August to protest the building of the Dakota Access Pipeline, a proposed 1,172-mile pipeline enabling North Dakota-produced oil reach refining markets in Illinois. USA Today estimates that there are between 1,000 and 3,000 protestors living in the camp. Another 2,000 veterans are set to join the protestors, as well as relieve those who have endured weeks of sub-zero temperatures.  Here's New York Times reporter Jack Healy's video from the camp: jack healy @jackhealyNYT The "streets" are a grid of ice. Sounds of generators, drumming, chainsaws. Parades of arriving cars adding to thousands already here. The federal government announced in November that they would close public access to the area on December 5, but authorities have since said they don't have plans to forcibly remove activists.

Veterans Travel to Standing Rock to Join Protesters, Lend Aid | -- Hundreds of veterans will arrive at Standing Rock Indian Reservation this weekend to join the months-long protest of the Dakota Access Pipeline, bringing with them an influx of resources and attention. The movement, called "Veterans Stand for Standing Rock," will last from Dec. 4 through Dec. 7. The veterans are going with the goal of "protecting the protesters," said Anthony Diggs, a Marine Corps veteran who is acting as a spokesman for the group. As of Monday afternoon, the group had raised more than $495,000 that Diggs said will go toward establishing services at the protest camps, such as medical and supply tents, secure lines of communication and heating systems to help protesters through the winter. Diggs confirmed hundreds of veterans from across the United States were registered to participate, and the number could reach up to 2,000 -- a cap set by organizers. Veterans are a good fit for the job, Diggs said, because they're organized and know how to handle emergency situations and extreme weather. There's also a "symbolic value" in veterans taking a stand, he added. "There is a lot of power in veterans from all over, from all branches of the military, coming together to create a protecting front against the police, who are militarized themselves," Diggs said.

Thousands of Veterans Arrive at Standing Rock to Act as 'Human Shields' for Water Protectors - As tensions grow in North Dakota, with multiple eviction orders facing the Standing Rock Sioux Tribe in their battle against the Dakota Access Pipeline , U.S. military veterans begin arriving at the Oceti Sakowin protest camp. The 2,000 veterans , which include Rep. Tulsi Gabbard (D-Hawaii), plan to act as an unarmed militia and peaceful human shields to protect the Indigenous activists from police brutality. "I signed up to serve my country and my people and I did that overseas," Indigenous U.S. Navy veteran Brandee Paisano told the CBC. "I didn't think I'd have to do it here, on this land, so here I am. This is what I need to be doing." The "deployment" is officially planned for Dec. 4-7, but veterans who have arrived early have already taken their stand in front of the militarized police blockade stopping traffic into and out of the camp: The "Veterans Stand for Standing Rock" action has garnered widespread support, with the National Nurses United (NNU) union sending $50,000 to fund their expenses and a popular fundraiser surpassing $1,000,000 Sunday morning.  "We salute the brave veterans who are standing up for the rights of the water protectors, and all of us who support this critical defense of the First Amendment right to assemble and protest without facing brutal and unwarranted attacks," said NNU co-president Jean Ross. 

Sense of Duty Draws U.S. Veterans to Dakota Pipeline Protest - In the back reaches of the Dakota Access Pipeline protest camp, U.S. military veterans, armed with saws, hammers and other tools, are quietly building barracks, an infirmary and a mess hall. Despite the bitter cold and an evacuation order from the U.S. Army Corps of Engineers, the veterans hope to erect enough space to house at least several hundred peers making their way into the Oceti Sakowin Camp here in Cannon Ball. Veterans interviewed by Reuters gave a plethora of motives for traveling here. Some felt it was their patriotic duty to defend protesters, especially since Native Americans have historically had an active presence in the U.S. military. For others, coming here offers a sense of purpose they have lacked since returning to civilian society. For all, the camaraderie with those who have also shared military service was important. “Our commitment has not expired because we took off the uniform,” said Charles Vondal, 51, an Army veteran and Native American from Turtle Mountain, N.D. “We understand what it means to put our lives on the line.” The response last month to a call for 2,000 veterans to act as a barrier between activists and law enforcement was much swifter than expected – with organizers having to stop accepting volunteers. The veterans arriving say their presence will make it less likely that police will resort again to aggressive tactics, after water cannons and tear gas were used on a group of protesters in sub-freezing temperatures two weeks ago. More than 500 activists have been arrested over the last several months. “I felt it was our duty to come and stand in front of the guns and the mace and the water and the threat that they pose to these people,” said Anthony Murtha, 29, from Detroit, who served in the U.S. Navy from 2009 to 2013. Local law enforcement said the specter of having thousands of military-trained veterans in the area was of concern, but they were not expecting any melees.

US Army Corps of Engineers denies DAPL easement for Lake Oahe - The US Army Corps of Engineers has denied the final permit of the Dakota Access Pipeline. Some outlets are reporting the denial is to allow for a full environmental impact study and a possible reroute.  In a statment, Standing Rock Tribal Chairman Dave Archambault II says, “Today, the U.S. Army Corps of Engineers announced that it will not be granting the easement to cross Lake Oahe for the proposed Dakota Access Pipeline. Instead, the Corps will be undertaking an environmental impact statement to look at possible alternative routes. We wholeheartedly support the decision of the administration and commend with the utmost gratitude the courage it took on the part of President Obama, the Army Corps, the Department of Justice and the Department of the Interior to take steps to correct the course of history and to do the right thing.  Rep. Kevin Cramer, R-N.D., responded to the news, saying in a statement, "“I hoped even a lawless president wouldn’t continue to ignore the rule of law. However, it was becoming increasingly clear he was punting this issue down the road. Today’s unfortunate decision sends a very chilling signal to others who want to build infrastructure in this country. Roads, bridges, transmission lines, pipelines, wind farms and water lines will be very difficult, if not impossible, to build when criminal behavior is rewarded this way.Sen. Heidi Heitkamp, D-N.D., says in a statment, "“It’s long past time that a decision is made on the easement going under Lake Oahe,” said Heitkamp. “This administration’s delay in taking action -- after I’ve pushed the White House, Army Corps, and other federal agencies for months to make a decision -- means that today’s move doesn’t actually bring finality to the project. The pipeline still remains in limbo. The incoming administration already stated its support for the project and the courts have already stated twice that it appeared the Corps followed the required process in considering the permit. For the next month and a half, nothing about this project will change. Gov. Jack Dalrymple, R-N.D., says in a statement, "“The decision today by the Obama Administration to further postpone any action on the easement for the Dakota Access Pipeline is a serious mistake. It does nothing to resolve the issue, and worst of all it prolongs the serious problems faced by North Dakota law enforcement as they try to maintain public safety. The administration’s lack of action also prolongs the dangerous situation of having protesters camping during the winter on U.S. Army Corps of Engineers’ property.

US Army Corps denies easement to Dakota Access Pipeline, calls for new review -  The US Army Corps of Engineers said Sunday it would not issue an easement for the Dakota Access Pipeline to cross Lake Oahe in North Dakota and urged the company to look at alternate routes. Jo-Ellen Darcy, the army's assistant secretary for civil works, said in a statement that a full-scale environmental review was the best way to consider alternate routes across the Missouri River. In a longer memo to the company, Darcy gave a timeline of the Army Corps' review and said several documents from the company's environmental assessment related to potential oil spills were marked as confidential and were withheld from the public and the Standing Rock Sioux Tribe. The tribe has been at the heart of protests against the project for months, arguing the pipeline crossing half a mile north of its reservation puts its drinking water source at risk.The Army Corps met for five hours Friday with the company and the tribe to discuss concerns about pipeline spills and possible conditions that could be added to the federal easement to reduce the risk of accidents. They reached no agreement. Darcy said the project should undergo an environmental impact statement under the National Environmental Policy Act, which looks at the entirety of the project, alternatives and mitigation strategies. "I have concluded that a decision on whether to authorize the Dakota Access Pipeline to cross Lake Oahe at the proposed location merits additional analysis, more rigorous exploration and evaluation of reasonable siting alternatives, and greater public and tribal participation and comments," Darcy said. The memo did not rule out the possibility that the current route could again emerge as the best option after a more rigorous review. Representative Kevin Cramer, Republican-North Dakota, said in a statement that the decision has no legal basis and rewards criminal activity by protesters. Cramer was an energy adviser to President-elect Donald Trump during the campaign and has been floated as a potential appointee to his cabinet. Cramer said Trump would "restore law and order" when he takes office in January.

North Dakota Tribes, Activists Win After US Denies Permit Needed To Complete Dakota Access Pipeline - After months of protests by the Standing Rock Sioux Tribe of North Dakota, among others, the U.S. Army Corps of Engineers today effectively shut down the project by refusing to approve the last remaining permit required to complete a segment running under Lake Oahe.  PerReuters, the permit denial was heavily celebrated by protesters in Cannon Ball, North Dakota but means that Energy Transfer Partners will have to go back to the drawing board to identify a new route for the last segment of the 1,172 mile pipeline that is largely already complete.The U.S. Army Corps of Engineers said on Sunday it turned down a permit for a controversial pipeline project running through North Dakota, in a victory for Native Americans and climate activists who have protested against the project for several months.A celebration erupted at the main protest camp in Cannon Ball, North Dakota, where the Standing Rock Sioux tribe and others have been protesting the 1,172-mile (1,885-km) Dakota Access Pipeline for months.The line, owned by Texas-based Energy Transfer Partners LP, had been complete except for a segment planned to run under Lake Oahe, a reservoir formed by a dam on the Missouri River.That stretch required an easement from federal authorities, which delayed a decision on the permit twice, in an effort to consult further with the tribe."The Army will not grant an easement to cross Lake Oahe at the proposed location based on the current record," a statement from the U.S. Army said.

Standing Rock Celebrates as Army Corps Denies Key Permit, Halts Project -- The Obama Administration and the Army Corps of Engineers officially denied the easement to cross under Lake Oahe in North Dakota after a many months-long campaign by the Standing Rock Sioux Tribe and allies against the Dakota Access Pipeline . The Army Corps will undertake an environmental impact statement (EIS) to look at potential alternative routes for the pipeline. "Although we have had continuing discussion and exchanges of new information with the Standing Rock Sioux and Dakota Access, it's clear that there's more work to do," Assistant Sec. of the Army (Civil Works) Jo-Ellen Darcy said in a statement . "The best way to complete that work responsibly and expeditiously is to explore alternate routes for the pipeline crossing." Standing Rock Sioux Tribal Chairman Dave Archambault II celebrated the news. "We wholeheartedly support the decision of the administration and commend with the utmost gratitude the courage it took on the part of President Obama, the Army Corps, the Department of Justice and the Department of the Interior to take steps to correct the course of history and to do the right thing," he said. "The Standing Rock Sioux Tribe and all of  Indian Country will be forever grateful to the Obama Administration for this historic decision. We want to thank everyone who played a role in advocating for this cause. We thank the tribal youth who initiated this movement. We thank the millions of people around the globe who expressed support for our cause. We thank the thousands of people who came to the camps to support us, and the tens of thousands who donated time, talent and money to our efforts to stand against this pipeline in the name of protecting our water. We especially thank all of the other tribal nations and jurisdictions who stood in solidarity with us, and we stand ready to stand
with you if and when your people are in need."

The Lesson from Standing Rock: Organizing and Resistance Can Win – Naomi Klein - The climate movement already knew that mass organizing could get results. We learned it, most recently, in the Keystone XL fight and the resistance to Shell’s Arctic Drilling. Victories usually come incrementally, however, and at some delay after mass action.Standing Rock is different. This time the movement was still out on the land in massive numbers when the news came down. The line between resistance and results is bright and undeniable. That kind of victory is rare precisely because it’s contagious, because it shows people everywhere that organizing and resistance is not futile. And as Donald Trump moves closer and closer to the White House, that message is very important indeed. The youngest person here is someone many people credit with starting this remarkable movement: 13-year-old Tokata Iron Eyes, a fiercely grounded yet playful water-warrior who joined with her friends to spread the word about the threat the pipeline posed to their water. When I asked her how she felt about the breaking news she replied, “Like I got my future back”—and then we both broke down in tears.Everyone here is aware that the fight is not over. The company will challenge the decision. Trump will try to reverse it. “The legal path is not yet clear, and the need to put financial pressure on the banks invested in the pipeline is more crucial than ever,” says Chase Iron Eyes, Standing Rock Sioux Tribe attorney and member (and a recent congressional candidate).  Nor does today’s victory erase the need for justice and restitution for the string of shocking human-rights violations against the mainly Indigenous water protectors—the water cannons, the dog attacks, the hundreds arrested, the grave injuries inflicted by supposedly non-lethal weapons.  Still, there is more physical and psychic relief in this room than I have witnessed in my life. As Cody’s father, Don Two Bears, says when he arrives at the house, “It’s not over, but it’s a good day.”

Sioux chief asks protesters to disband, Trump to review pipeline decision | Reuters: A Native American leader asked thousands of protesters to return home after the federal government ruled against a controversial pipeline, despite the prospect of President-elect Donald Trump reversing the decision after he takes office. A coalition of Native American groups, environmentalists, Hollywood stars and veterans of the U.S. armed forces protested the $3.8 billion oil project. They said construction would damage sacred lands and any leaks could pollute the water supply of the Standing Rock Sioux tribe. The tribe still wants to speak with Trump about the Dakota Access Pipeline to prevent him from approving the final phase of construction, Standing Rock Sioux Chairman Dave Archambault told Reuters. "The current administration did the right thing and we need to educate the incoming administration and help them understand the right decision was made," he said.Trump's transition team said on Monday it would review the decision to delay completion once he takes office Jan. 20. "That's something that we support construction of and we'll review the full situation when we're in the White House and make the appropriate determination at that time," Trump spokesman Jason Miller said at a transition team news briefing. Archambault said nothing would happen over the winter before Trump takes power, so protesters should leave. Many had dug in for the harsh winter of the North Dakota plains, where a blizzard hit on Monday and 40 miles-per-hour (64 kmh) winds rattled tipis and tents. "We're thankful for everyone who joined this cause and stood with us," he said. "The people who are supporting us ... they can return home and enjoy this winter with their families. Same with law enforcement. I am asking them to go."

As blizzard mounts, Dakota Access Pipeline protesters 'not going anywhere'— As blizzard conditions mounted, a representative of the protest camps just south of the Dakota Access Pipeline construction zone issued a clear message Monday, Dec. 5. “As water protectors, we have a responsibility to be stewards of the water,” said John Bigelow, head of the camp’s media committee and a member of the Standing Rock Sioux. “We declare here today, we are not going anywhere.” Bigelow spoke at an afternoon press conference held in the large central dome used as a gathering and meeting hall by protesters in the Oceti Sakowin camp based at the confluence between the Missouri and Cannonball rivers north of the Standing Rock Sioux Reservation. His declaration came on the heels of a victory for protesters following the Sunday decision by the Army Corps of Engineers to deny an easement to Energy Transfer Partners — the Texas-based company building the pipeline — to drill beneath the Missouri River to provide a crucial crossing for the near-complete infrastructure project. Bigelow described the easement denial as “one battle in a larger movement against injustice” and said he found it unlikely that President-elect Donald Trump, who has voiced support for the pipeline, would prioritize enforcement of the Corps decision. He also doubted the Trump administration would apply punitive action if Energy Transfer Partners defied the Corps and drilled beneath its intended route below the Lake Oahe reservoir on the Missouri River without an easement. A statement from Energy Transfer Partners issued in response to the Corps decision stated the denial will not change its plans and the company will not consider rerouting the pipeline. Earlier Monday, Standing Rock Sioux Chairman David Archambault said protesters should leave the camps, Reuters reported. Archambault anticipated that no additional construction work would go forward over the winter season and said he would focus efforts on communications with Trump.

Dakota Access Pipeline operator lashes out at decision to halt construction -The operator of the Dakota Access Pipeline said this week that it remains committed to completing a section of the project that would run near the Standing Rock Sioux reservation, despite the US government’s decision to pursue alternative routes. In a sharply worded statement released early Monday, Energy Transfer Partners and Sunoco Logistics Partners criticized what it described as a “political” decision from the Army Corps of Engineers, suggesting that it will seek to complete the original route once President Obama leaves office.  “The White House’s directive today to the Corps for further delay is just the latest in a series of overt and transparent political actions by an administration which has abandoned the rule of law in favor of currying favor with a narrow and extreme political constituency,” the statement reads. The decision to halt construction on the contentious section of the Dakota Access Pipeline was welcomed by the Standing Rock Sioux tribe and environmental activists who have been protesting the project for months. The Sioux and other Native American groups have opposed construction of the pipeline under a part of the Missouri River known as Lake Oahe, amid concerns that it would contaminate drinking water and run through sacred burial grounds.  The Army Corps last month delayed a decision that would have allowed Energy Transfer Partners to access and drill under the reservoir, saying that additional study was needed to determine its environmental impact. Sunday’s decision brings construction to a halt and calls for environmental impact studies of alternative routes, though President-elect Donald Trump could seek to complete the original route when he takes office.  Trump, who owns stock in Energy Transfer Partners, has said he supports completing the project, though his transition team has insisted that his support has nothing to do with his personal investment. It appears Energy Transfer Partners is pinning its hopes on a more favorable position from the incoming administration.

Ryan blasts decision to block Dakota Access pipeline route | Fox News: House Speaker Paul Ryan called the U.S. Army Corps of Engineers’ decision Sunday to deny a government permit for the Dakota Access oil pipeline in southern North Dakota “big government decision-making at its worst.” Ryan, R-Wis., tweeted out his displeasure hours after the decision was made. He added that he looks "forward to putting this anti-energy presidency behind us." The decision handed a victory to the Standing Rock Sioux tribe and its supporters, who argued the project would threaten the tribe’s water source and cultural sites. Ryan comments echoed the sentiments of other North Dakota leaders. Gov. Jack Dalrymple called it a “serious mistake” that prolongs the dangerous situation” of having several hundred protesters who are camped out on federal land during the bitter winter season. U.S. Rep. Kevin Cramer said it's a "very chilling signal" for the future of infrastructure in the United States. The company building the pipeline, Dallas-based Energy Transfer Partners, slammed President Obama’s administration in a statement, calling the move political. The company said the decision was "just the latest in a series of overt and transparent political actions by an administration which has abandoned the rule of law in favor of currying favor with a narrow and extreme political constituency."

Trump Supports Dakota Access Pipeline. Did We Mention He’s Invested in It? -  President-elect Donald Trump favors completing the Dakota Access Pipeline, not because of his stock ownership in the companies building it but because it’s good policy, according to an aide’s memo to supporters.  Trump’s support for the divisive pipeline “has nothing to do with his personal investments and everything to do with promoting policies that benefit all Americans,” according to the memo this week reported by The Associated Press, Reuters and other news outlets.  “Those making such a claim are only attempting to distract from the fact that President-elect Trump has put forth serious policy proposals he plans to set in motion on Day One,” according to the memo to supporters and congressional staff. Trump’s extensive financial portfolio has raised worries that he will find it difficult to separate personal business from the national interest. He had pledged to remove himself from his company to avoid conflicts of interest, yet he hasn’t provided details on how the arrangement will work. The incoming Republican president has a multitude of business interests, and one sliver of his pie included investing in the companies behind the 1,172-mile pipeline that will link the North Dakota oil fields with existing energy infrastructure in Illinois. In May 2015, according to campaign disclosure reports, Trump owned between $500,000 and $1 million worth of shares of Energy Transfer Partners, the pipeline’s lead developer, but had less than $50,000 invested when he sold off the remainder of his shares this summer, according to The Washington Post.

The companies behind the Dakota Access Pipeline don't think they”ve lost - On Sunday, the Army Corps of Engineers seemed to hand a victory to the Standing Rock Sioux and their fellow protesters, who have been campaigning to stop the construction of an oil pipeline in North Dakota. After delaying a decision on Nov. 14, a week after the election, the Army Corps has now said it won’t grant an easement for the pipeline to travel beneath a dammed portion of the Missouri River. The parties behind the Dakota Access Pipeline should look into alternative routes, the corps said. But the saga is far from over. In fact, the reaction by the two companies constructing the pipeline, Energy Transfer Partners and Sunoco Logistics Partners, was telling. Dismissing the ruling as a “purely political action” that was part of the Obama administration’s desire to avoid making a final decision on the project, the companies insisted it would have no bearing on their plans whatsoever. They said they are “fully committed to ensuring that this vital project is brought to completion and fully expect to complete construction of the pipeline without any additional rerouting in and around Lake Oahe. Nothing this Administration has done today changes that in any way.” In other words, the companies believe that they, not the government nor the Native American tribes whose land could be impacted by the pipeline, make the decision. They’ve deemed the ruling illegitimate because it was made by an administration with which they disagree, and they signaled they will move ahead regardless. Investors seem to agree. The stock of Energy Transfer Partners only fell about 2 percent in early trading. There’s good reason to believe the companies’ analysis of the situation isn’t just posturing—and their confidence is downright terrifying. There are two possible reasons the Army Corps issued this decision. First, it could be that the corps, which is tasked with managing the health of large internal waterways and infrastructure projects, really believes that it is a bad idea to put a crude oil pipeline underneath a dammed portion of the Missouri River. Second, it’s possible that Obama political appointees higher up the chain of command leaned on the bureaucracy to issue a last-gasp environmental protection effort. Either way, it’s easy to see how this could be reversed in a matter of months. President-elect Donald Trump said last week that he favors the pipeline. The fact that Trump owns shares in some of the companies backing the pipeline company doesn’t seem to be a disqualifying issue for him.

The Standing Rock Sioux Will Be Ready To Take a Trump Challenge to Courts --In the wake of the Obama administration’s surprise decision to block a portion of the Dakota Access Pipeline, company reps seem confident they need only wait for President-elect Trump to keep building. But the lawyer who represents the Standing Rock Sioux says it won’t be so easy to overcome the legal hurdles.  “If an agency decides that a full environmental review is necessary, it can’t just change its mind with a stroke of a pen a few weeks later,” EarthJustice attorney Jan Hasselman told Grist. “That would be violation of the law, and it’s the kind of thing that a court would be called upon to review. It doesn’t mean they’re not going to try.”  Trump could force the pipeline through along the dispute route at Lake Oahe. He technically could ignore the Corps’ decision to fulfill a public Environmental Impact Statement with his newfound executive powers, but that might not be wise. “He could in the sense that you can rob a bank, but you’d get in trouble,” Hasselman said.If that were the case, Standing Rock would be prepared to take the matter to courts again, their lawyer told Grist. “Circumventing the environmental assessment now that the agency has determined it’s the right course of action shouldn’t pass muster under legal standards,” he added. For example, the Ninth Circuit has ruled that federal agencies can’t just flip on a dime on settled rulemaking that is based on facts because a new administration has taken over. The Supreme Court this year declined to take up the case, leaving the Circuit’s decision standing that the Bush administration couldn’t exempt the Tongass rainforest in Alaska from a conservation rule, when the agency’s fact-finding found otherwise. Unless a conservative Supreme Court reverses course, then Standing Rock still has that advantage in a Trump era. Going further to weaken environmental regulations overall would require a more robust change to the law with congressional action. With the law on their side for now, environmental justice advocates could challenge administration decisions just as they did in the Bush administration. (Talk about government interference: Trump is reportedly also considering privatizing oil-rich Native American land to boost oil companies.) Energy Transfer Partners has its share of options, too — even if Trump didn’t reverse the decision, it could still sue to maintain the current route.

“We beg for your forgiveness”: Veterans join Native elders in celebration ceremony (video of forgiveness ceremony) Wes Clark Jr., the son of retired U.S. Army general and former supreme commander at NATO Wesley Clark Sr., was part of a group of veterans at Standing Rock one day after the Army Corps announcement. The veterans joined Native American tribal elders in a ceremony celebrating the Dakota Access Pipeline easement denial.Lakota spiritual leader and medicine man Chief Leonard Crow Dog and Standing Rock Sioux spokeswoman Phyllis Young were among several Native elders who spoke, thanking the veterans for standing in solidarity during the protests. Clark got into formation by rank, with his veterans, and knelt before the elders asking for their forgiveness for the long brutal history between the United States and Native Americans: “Many of us, me particularly, are from the units that have hurt you over the many years. We came. We fought you. We took your land. We signed treaties that we broke. We stole minerals from your sacred hills. We blasted the faces of our presidents onto your sacred mountain. When we took still more land and then we took your children and then we tried to make your language and we tried to eliminate your language that God gave you, and the Creator gave you. We didn’t respect you, we polluted your Earth, we’ve hurt you in so many ways but we’ve come to say that we are sorry. We are at your service and we beg for your forgiveness.”Chief Leonard Crow Dog offered forgiveness and urged for world peace: “We do not own the land, the land owns us.” Despite the positive news, there is more work to do. “The black snake has never stopped and if they didn’t stop at desecrating our graves of our ancestors, they’ll stop at nothing.” Young said. “So there will be a motion filed by the Energy Transfer today to continue the pipeline … We are a peaceful movement, but we may have to make a move to protect our territory.”

PHOTOS: Forgiveness Ceremony at Standing Rock brings together Native Americans and Veterans -  9 photos - Denver Post.

Veterans at Standing Rock Heading to Flint Next-  Hundreds of U.S. veterans that joined the historic uprising at Standing Rock at a pivotal moment ahead of a key victory are turning attention to their next act of solidarity, this time to stand with communities suffering from the ongoing water crisis in Flint, Michigan.  One of the main organizers who brought together more than 2,000 veterans to form a human shield around water protectors at Standing Rock in the face of an anticipated violent crackdown, U.S. Army veteran Wesley Clark Jr., said that while details of the trip to Flint aren't finalized, the move is on the agenda.

Oil Pipeline Shut Down After Spill, Just 200 Miles From Standing Rock --A six-inch crude oil pipeline operated by Belle Fourche Pipeline Company in western North Dakota was shut down following discovery of a leak on Monday. The amount of the spill was not immediately known, but oil has leaked into the Ash Coulee Creek in Billings County.  The site of the spill is about 200 miles from the camp where members of the Standing Rock Sioux Tribe and their supporters have been protesting the construction of the Dakota Access Pipeline .  "A series of booms have been placed across the creek to prevent downstream migration and a siphon dam has been constructed four miles downstream of the release point," Bill Suess, spill investigation program manager for the North Dakota Department of health, said. The Belle Fourche Pipeline Co. is part of the family-owned True companies , which also operates Bridger Pipeline LLC. Both pipelines are operated from the same control room in Casper, Wyoming. From 2006 to 2014, Belle Fourche reported 21 incidents, leaking a total of 272,832 gallons of oil. Bridger Pipeline recorded nine pipeline incidents in the same period, spilling nearly 11,000 gallons of crude. "In general, Bridger has a poor compliance history," wrote a federal regulator charged with overseeing pipeline safety in a 2012 order regarding a 2006 oil spill. A Belle Fourche pipeline that spilled 12,200 gallons in May, 2014 occurred on Bureau of Land Management (BLM) land near Buffalo, Wyoming. It was later discovered that Belle Fourche did not have a permit to operate the land. Its sister company, Bridger, was fined $27,029 for trespassing by the BLM.   Bridger was also responsible for dumping up to 50,000 gallons of crude into the scenic Yellowstone River in 2015.

North Dakota Could Be Biggest Loser in Ruling Against Oil PipelineEnergy Transfer Partners, the nation’s biggest pipeline operator, has lost hundreds of millions of dollars from delays in the completion of the Dakota Access Pipeline. And its standoff with the Standing Rock Sioux Tribe over a section running through tribal lands could mean an additional $80 million a month in losses. But it is not the only one paying the price. For North Dakota’s oil producers, once riding high on production from the booming Bakken fields, it is a new blow, after the plunge in oil prices that has shifted the industry’s activity and focus back to more traditional oil regions.  Fields with lower production costs in Texas and Oklahoma have been far more lucrative than North Dakota’s in recent years. The pipeline was meant to give Dakota producers new leverage in the market by reducing their dependence on more costly rail shipments for delivery. “The biggest loser is the State of North Dakota,” said Ron Ness, president of the North Dakota Petroleum Council. “Companies are not going to get as good a price for their Bakken barrels. It’s a significant impact on their revenues.” Bakken producers are forced to ship much of their oil by rail, which adds costs of at least $4 and sometimes as much as $10 per barrel shipped. That created a critical disadvantage for companies like Hess and Whiting Petroleum, which had large stakes in the Bakken. A barrel of Bakken oil now sells for about $1.50 below the American benchmark — $49.77 on Thursday — rarely making it profitable to ship to major markets.

Court to consider forcing approval of Dakota Access pipeline | TheHill: A federal judge will consider whether to require the federal government approve the controversial Dakota Access oil pipeline. Energy Transfer Partners, which is developing the pipeline, argued in court that when the Army Corps of Engineers issued a permit in July to build the line under Lake Oahe in North Dakota, it also took all the necessary steps to issue the easement that the company also needs.Judge James Boasberg of the District Court for the District of Columbia set a briefing schedule at a Friday hearing in Washington for Energy Transfer’s claim that granting the easement is a “ministerial” action and mandated since the company has the related permit. “The final decision on the right-of-way was made on July 25,” David Debold, the attorney representing Dakota Access, told Boasberg at the Friday hearing. Debold said Dakota Access is losing nearly $20 million every week that the Army Corps delays its decision on the easement. He requested “expedited” consideration of the motion, which Dakota Access first formally made in November. Briefs from Dakota Access, the tribes trying to stop the construction and the federal government will be complete by February under Boasberg’s order, and he may schedule oral arguments after that before making a decision.

As Dakota Celebrates, Trump Advisors Propose Privatizing Oil-Rich Indian Reservations --With celebrations continuing at the site of the Dakota Access Pipeline protest (following the "Monumental victory" following the Obama administration's decision not to grant the construction permit), it appears the Trump administration has very different ideas. Having confirmed Trump's support for the pipeline (not to do with his investments), Reuters reports a Trump advisory group proposes the politically explosive idea of putting oil-rich Indian reservation lands into private ownership. As we noted last night, after months of protests by the Standing Rock Sioux Tribe of North Dakota, among others, the U.S. Army Corps of Engineers today effectively shut down the project by refusing to approve the last remaining permit required to complete a segment running under Lake Oahe.  Per Reuters, the permit denial was heavily celebrated by protesters in Cannon Ball, North Dakota but means that Energy Transfer Partners will have to go back to the drawing board to identify a new route for the last segment of the 1,172 mile pipeline that is largely already complete.And now, as Reuters reports, a group of advisors to President-elect Donald Trump on Native American issues wants to free those resources from what they call a suffocating federal bureaucracy that holds title to 56 million acres of tribal lands, two chairmen of the coalition told Reuters in exclusive interviews. The group proposes to put those lands into private ownership - a politically explosive idea that could upend more than century of policy designed to preserve Indian tribes on U.S.-owned reservations, which are governed by tribal leaders as sovereign nations.

Trump advisors aim to privatize oil-rich Indian reservations | Reuters: Native American reservations cover just 2 percent of the United States, but they may contain about a fifth of the nation’s oil and gas, along with vast coal reserves. Now, a group of advisors to President-elect Donald Trump on Native American issues wants to free those resources from what they call a suffocating federal bureaucracy that holds title to 56 million acres of tribal lands, two chairmen of the coalition told Reuters in exclusive interviews. The group proposes to put those lands into private ownership - a politically explosive idea that could upend more than century of policy designed to preserve Indian tribes on U.S.-owned reservations, which are governed by tribal leaders as sovereign nations. The tribes have rights to use the land, but they do not own it. They can drill it and reap the profits, but only under regulations that are far more burdensome than those applied to private property. "We should take tribal land away from public treatment," said Markwayne Mullin, a Republican U.S. Representative from Oklahoma and a Cherokee tribe member who is co-chairing Trump’s Native American Affairs Coalition. "As long as we can do it without unintended consequences, I think we will have broad support around Indian country."The plan dovetails with Trump’s larger aim of slashing regulation to boost energy production. It could deeply divide Native American leaders, who hold a range of opinions on the proper balance between development and conservation.

Mary Fallin Is As Pro-Oil As They Come --Governor Mary Fallin of Oklahoma, a vice-chair of the Trump transition team whose aggressive pro-oil and anti-tax policies have made her an industry darling, has emerged as a top contender to be our country's next Secretary of the Interior. If she is formally nominated in the coming days, Fallin could soon lead a federal department responsible for protecting endangered species, handling Native American affairs, controlling the U.S. Geological Survey, administering lucrative oil and gas leasing programs, and managing more than 440 million acres of public land, including the National Park system. Should Fallin take the reins at Interior, she will have broad power to reshape policies that will impact the future of the United States' most beloved landscapes. Her priorities will undoubtedly be very different than those of current Interior Secretary Sally Jewell, who has used her time in the post to promote the outdoor recreation economy, offset energy development with large-scale land conservation projects, and preserve new national monuments. Johnson Bridgwater, the director of the Sierra Club's Oklahoma chapter, calls Fallin's potential nomination "problematic.""She has basically been an absentee governor on all important environmental issues in our state during her term," he says, specifically highlighting her slow response to the oil-industry-induced earthquakes that have rocked the state as well as her decision to dissolve the Oklahoma Scenic Rivers Commission. Fallin, he adds, has starved the state's environmental enforcement agencies of funding while at the same time prioritizing the desires of fossil fuel developers.   Oklahoma's oil and gas interests, for their part, laud the governor's legacy. Fallin has "balanced competing interests well, including oil and gas producers, environmental concerns, royalty owners and surface," says Chad Warmington, president of the Oklahoma Oil and Gas Association, in a written statement to Outside. "She understands the importance of keeping the United States a number one global competitor in oil and natural gas.”

Trump Shuns Palin, Picks McMorris Rodgers For Interior Secretary -- In what is being touted as further diversification of the president-elect administration, Donald Trump is expected to name Rep. Cathy McMorris Rodgers (R-Wash.) to lead the Interior Department, according to reports. McMorris Rodgers gets the nod ahead of Sarah Palin and Harold Hamm.  The Hill reports, Trump will tap McMorris-Rodgers, a five-term Republican who represents eastern Washington and is the chair of the House GOP Conference, to lead the department, the New York Times and Wall Street Journal reported Friday. McMorris Rodgers is a vice chair of Trump’s transition team and the highest-ranking woman in GOP leadership. She formally met with Trump on Nov. 20. Her office declined to comment Friday.  If confirmed by the Senate, McMorris Rodgers would lead the 70,000-employee, $12 billion Interior Department, which manages federal lands for both preservation and energy and mineral development, controls offshore drilling and oversees national parks. She would be Trump’s point person on public lands energy development, something Trump said he wants to expand as president.  McMorris Rodgers is a booster of hydropower and has pushed legislation to tackle forest fires in the West.  She has voted in favor of expanding fossil fuel development on public lands and in federal areas off-shore. She opposes efforts to change the royalty rates on federal coal mining, something pushed hard by Obama’s Interior Department, and voted for a GOP budget that would allow the sale of public lands to mining companies.  In the past, she has introduced legislation to require congressional approval before the president can designate a national monument, and a bill directing the Bureau of Land Management to release public lands it holds that it has deemed not suitable for wilderness status.

Oil’s Most Popular Trading Products May Soon Be Shut Down --For most retail investors, buying physical crude oil as a commodity is not an option. Instead, many investors turn to exchange traded notes (ETNs) as a way to speculate on changes in oil prices themselves.But direct oil investment products like USO have always been dicey as investment choices.More sophisticated investors with big Wall Street banks who have high speed trading and information advantages can essentially front run products like USO which trade oil contracts on a predictable basis. As a result, USO has been a far from perfect tool to replicate oil’s price movements.By the same token, leveraged structured products including some oil ETNs are an even worse choice. For evidence of that, one need look no further than UWTI, the leveraged exchange traded note run by Credit Suisse. Credit Suisse recently announced that it was shutting down UWTI and a similar but slightly smaller leveraged ETN also focused on oil.The problem with products like UWTI is not that the product is unsuccessful, but rather that it is broken. UWTI was supposed to give investors triple the daily exposure to a crude oil index. That meant gains or losses from speculating on oil could be substantially magnified by investors using the product. For that reason, the daily dollar trading value of UWTI was roughly the same as the dollar value of megacap Exxon Mobil’s daily trading volume. Similarly, UWTI has incredible liquidity – roughly half its shares turned over on any given day. That was largely driven by the fact that ETNs are not appropriate long term investments because of the transactions costs they incur in operations. Unfortunately for traders, those transactions costs add up over time – that’s true in the case of UWTI and virtually all other leveraged ETNs. In the case of UWTI, this meant that the shares lost 99.6 percent of their value over the last four years even as oil has only fallen by 50 percent. The only thing that stopped UWTI from ending up as one of the cheapest of penny stock investments is that the shares went through multiple reverse splits. Investors in UWTI were virtually guaranteed to lose money on the shares if they held them for even a short time, especially when compared to the alternative of investing in less costly alternatives offering exposure to oil.

Oil and gas exploration to turn profitable next year: WoodMac report - Consultancy Wood Mackenzie has forecast a return to profitability for oil and gas exploration next year thanks to sharp cost reductions, but said drillers will avoid exploration geared toward over-supplied LNG markets or in high-cost regions like the Arctic. In a report published Friday, Wood Mackenzie said deepwater well costs would fall to $30 million or less next year, with such drilling proving profitable over the development cycle at oil prices under $50/b. By comparison a single exploration well drilled by BP west of the Shetland Islands in 2012-13 is thought to have cost somewhere between $100 million and $200 million. Exploration "has a good chance of achieving double digit returns in 2017," the consultancy's exploration vice president, Andrew Latham, said.While exploration spending next year would only at best match this year's level, "lower costs mean well counts may hold up close to 2016 numbers," Wood Mackenzie said. It said exploration spending would account for just 8% of upstream investment next year, compared with the historic norm of around 14%, and that as in 2015-16, exploration would be led by the majors and a handful of independents.

U.S. Oil Exports Skyrocket Despite Climate Pacts -- Seven years ago, the U.S. exported its crude oil to just one country — Canada. This year, 22 countries received American crude oil, marking a more than 1,000 percent increase in U.S. oil exports since 2009, according to U.S. Department of Energy data released this week. Since Congress lifted restrictions on American oil exports a year ago, more and more U.S. crude oil has been streaming onto the global oil market to supply the world’s growing demand. It’s happening even as the U.S. and Canada have agreed to cut emissions from oil and gas operations and countries agree to cut their greenhouse gas pollution under the Paris Climate Agreement. The international pact aims to prevent global warming from exceeding 2°C (3.6°F).  The oil-friendly policies of the incoming Trump administration are not expected to significantly affect U.S. crude oil exports because the price of oil will largely determine the pace of  U.S. exports and production. This week, OPEC announced it would cut its production in a move to raise global oil prices, which could boost U.S. exports even more.  Where crude oil is shipped and refined, and how it is burned, are major factors in the emissions that drive climate change. Crude oil is the world’s second-largest source of carbon dioxide emissions — responsible for 33 percent of global carbon emissions. Oil ranks just behind coal, which emits 46 percent of the world’s man-made carbon dioxide, International Energy Agency data show.

More LNG outflows support US as net gas exporter, but position is tenuous - Platts snapshot video - Record-setting LNG exports in November were just enough to make the US a net exporter of natural gas for the first time ever, driven by profit margins to both Europe and Asia. While US LNG netbacks reached record highs, feedgas deliveries also climbed. J. Robinson evaluates the profits to be had and shares a Platts Analytics forecast for exports.

US EIA lowers expected 2017 gas marketed output to 79.94 Bcf/d - The US Energy Information Administration Tuesday lowered its natural gas marketed production estimate for 2017 by 310 MMcf/d to an average 79.94 Bcf/d. Gas production is forecast to average 77.5 Bcf/d in 2016, a 1.3 Bcf/d decline from the 2015 level, marking the first annual decline since 2005, the agency said in its December Short-Term Energy Outlook. But EIA expected production to pick up starting in November because of drilling activity increases and new infrastructure coming online to bring gas to demand centers. "In 2017, forecast natural gas production increases by an average of 2.5 Bcf/d from the 2016 level," the agency said. The agency raised its projections for gas marketed production for the fourth quarter by 450 MMcf/d to 76.89 Bcf/d, and raised its full 2016 estimate 150 MMcf/d to average of 77.48 Bcf/d.For the Q4, EIA lowered its estimate for US natural gas consumption by 1.33 Bcf/d to 75.57 Bcf/d. The agency said that demand for US gas for 2016 is expected to average 75.22 Bcf/d -- 44 MMcf/d below last month's estimate -- compared with 74.65 Bcf/d in 2015. The report noted, however, that natural gas consumption for December 2016 through March 2017 is likely to be 4% above the same time last year, driven by temperatures projected to be 3% higher than normal but still 13% below the same period a year earlier.

Disappointed by Keystone XL setback, Canadians look to Asia. -  It’s been a tough few years for Canadian oil producers. As they ramped up production in the oil sands, Canadian E&Ps faced pipeline takeaway constraints that drove down the price of Western Canadian Select versus Gulf Coast crudes. The Keystone XL pipeline would have largely solved things, but when that project was killed by Canada’s U.S. friends and neighbors, oil sands producers had to settle for a series of smaller, more incremental projects that provided only a partial fix. The devastating Alberta fires of May 2016 reduced production and pretty much eliminated constraints for much of this year. But volumes have recovered, and if oil sands production is to continue growing, more pipelines and new customers will be needed. Today we consider Canada’s long-running effort to ensure there’s enough capacity to move its crude to market, two major projects that just won the backing of the Canadian government, and what may be next.  The “serenity prayer” —a good one to know, in these uncertain times—goes like this, “God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.” As we’ll get to, Canadians appear to be taking these words to heart when it comes to the development of pipeline takeaway capacity.

EU ministers back sharing natural gas contract supply data, not prices -  EU energy ministers have backed sharing supply data from large commercial natural gas contracts with the relevant national authority but stopped short of automatic notification to the European Commission, according to EU Council documents published late Monday. Ministers agreed in principle that companies would have to notify contracts covering 40% or more of national gas demand to the competent national authority. This national authority would assess their impact on national and regional gas supply security, and then choose which, if any, to notify to the EC, based on their security impact, according to the documents published after ministers met Monday in Brussels. The EC proposed in February that companies automatically notify it of all long-term contracts covering or contributing to 40% or more of annual gas demand in the EU country concerned. The proposals were part of the EU's draft update to the EU's 2010 gas supply security regulation. Ministers added that the 40% national demand threshold would have to be "further clarified," given the EU has an integrated gas market. Comparing contracts to national demand is irrelevant when gas can be traded anywhere in the EU market, Germany's energy state secretary Rainer Baake said during a debate at Monday's meeting. He also questioned the value of assessing long-term contracts, given that short-term contracts are becoming more common.

Israel, Greece, Cyprus to push for gas pipeline to Europe: sources -  Israel, Greece, and Cyprus have decided to take their proposal for a pipeline from gas fields offshore Israel and Cyprus to Europe, Israeli energy sources said late Thursday. This followed talks in Jerusalem between senior government officials of the three countries. The sources said representatives of the three countries would hold talks soon with European Union Climate Action and Energy Commissioner Miguel Arias Canete to promote the proposed pipeline that would run from offshore Israel via Cyprus and then on to Greece, approximately 1,400 km (868 miles). The EU has been looking for ways to reduce its dependence on Russian gas. "A common pipeline is one of the strategic options for exporting gas to Europe from the Eastern Mediterranean and additional gas discoveries in Israeli and Cypriot waters will make this attractive," Israeli Energy and Water Minister Yuval Steinitz said at the end of the talks.Greece was represented by Economy, Industry, and Tourism Minister Giorgos Stathakis and Cyprus by Energy, Commerce, Industry, and Tourism Minister Georgios Lakkotrypis. A feasibility study conducted by IGI-Poseidon for the European Commission put the cost of the pipeline at $5.7 billion. Israel is pinning its hopes of export gas on the development of the huge Leviathan field, which is expected to begin commercial production at the end of 2019. The Leviathan partners are also considering gas exports via pipeline to Turkey and largely idle LNG plants in Egypt.

Millions of West Africans to benefit from ban on toxic fuel imports: U.N. | Reuters: - Five West African countries have agreed to stop importing toxic fuels from Europe in a move that could improve the health of more than 250 million people, according to the United Nations. Nigeria, Benin, Togo, Ghana, and Ivory Coast have pledged to introduce strict standards to ensure they use cleaner, low-sulphur fuels for their vehicles, effectively stopping Europe from exporting its dirty fuels, the U.N. Environment Programme (UNEP) said. European trading firms have been exploiting weak regulations in West Africa to export fuels with levels of sulphur up to 300 times higher than is permitted in Europe, campaign group Public Eye said in a report published in September. Public Eye described the issue as a "ticking time bomb" as cities grow across Africa and populations boom in major hubs including Nigeria's Lagos and Ghana's Accra. "West Africa is sending a strong message that it is no longer accepting dirty fuels from Europe ... they are placing the health of their people first," said UNEP head Erik Solheim. "Air pollution is killing millions of people every year and we need to ensure that all countries urgently introduce cleaner fuels and vehicles to help reduce the shocking statistics," Solheim said in a statement released late on Monday. Sulphur is responsible for deadly heart and lung diseases, health experts say.

Nigeria, Morocco wealth funds sign pipeline deal to bring natural gas to Europe - A new pipeline project to bring Nigerian gas through Africa to Europe has been launched by the sovereign wealth funds of Nigeria and Morocco, the latest attempt to link Nigeria's vast gas resources with the lucrative European gas market. The Trans-African Pipeline will be developed jointly by the Moroccan sovereign wealth fund Ithmar Capital and the Nigeria Sovereign Investment Authority, the partners said Monday. Nigeria has huge gas reserves totaling some 5.1 Tcm, according to the latest BP Statistical Review of World Energy, but few options for monetizing the gas other than its LNG export facility.A previous pipeline project -- the Trans-Saharan Gas Pipeline -- was agreed on between Nigeria's NNPC and Algeria's Sonatrach in 2002, and an intergovernmental accord signed in 2009. But there has been little progress on the project since, given the huge distances involved and the high cost of developing such a vast pipeline project. On Monday, the governments of Nigeria and Morocco announced they would jointly develop a new regional gas pipeline "connecting the two countries, bringing the resources of Nigeria to Morocco, its neighbors and Europe." It is unclear exactly the route the pipeline would take, though the developers foresee it following the coast. "The pipeline will run an estimated 4,000 km along the west coast of Africa and the countries through which it runs and the exact route will be determined as the project moves forward, based on further research," a spokesman for Ithmar told S&P Global Platts.

India pushes Nigeria for more oil term contract volumes - Indian state-run oil refiners have called for Nigeria to increase its total term contract volumes next year by more than 20% as demand from the South Asian country climbs, an official from Nigeria's state-owned Nigerian National Petroleum Corporation said. This request comes a few weeks before Nigeria's crude oil term lifting contracts for 2017 are finalized, which will be decided by mid-December. India as the largest buyer of Nigerian crude, has always said it should have a longer-term arrangement with NNPC to ensure security of supply. "Three Indian companies mentioned that they are looking for a combined total of 11 million mt [in 2017] from 9 million mt [this year]," Anibor O. Kragha, group executive director at NNPC, told S&P Global Platts in an interview on the sidelines of the Petrotech conference in New Delhi late Monday."Now what they will get is a balance between term contracts and [spot] sales contracts," he added. The Nigerian crude oil term contracts involve the export of around 1.17 million b/d of Nigerian crude, out of the 2.2 million b/d the country can theoretically produce. They are then sold by contract holders to end-users, refiners and other buyers. But with Nigerian oil output sharply down due to renewed militancy, the term volumes could be much lower for 2017 if output does not rebound.

Indian PM pledges easier policies to woo foreign investors to oil, natural gas sector --Indian Prime Minister Narendra Modi Monday pledged to continue working on oil and gas policies to make them more attractive to foreign and private investors and step up efforts to boost domestic production in an effort to meet the country's growing demand for energy resources. With the Indian economy expected to grow five-fold by 2040, India will account for one-fourth of the incremental global energy demand until that period, Modi told the opening session of the three-day Petrotech conference in New Delhi. "India is expected to consume more oil in 2040 than the whole of Europe. We expect manufacturing to account for 25% of the GDP by 2022 against 16% now," he said. India has made good policy progress since October 2014, when it deregulated diesel prices. The government then moved to boosting LPG penetration to reduce reliance on subsidized kerosene, while at the same time revamping the LPG subsidy system. This was followed by the announcement in March this year of a new upstream policy to attract much-needed investment in exploration and production.Modi added that current commercial vehicle population of 13 million would multiply to reach 56 million by 2040. And in the global civil aviation market, India, which is currently the eighth-largest market in the world, would become the third-largest by 2034. "Growth in the aviation sector is expected to raise demand for aviation fuel four times by 2040," he said. India's oil products demand grew 8.5% year on year in 2015 to 177 million mt, or 3.81 million b/d, as gasoline, LPG and naphtha saw double-digit growth in consumption, according to India's Petroleum Planning and Analysis Cell. The International Energy Agency expects Indian oil demand to average at 4.3 million b/d in 2016.

Beijing expected to end oil product export quotas for independent refiners - China's independent refineries likely have to rely on state-owned trading companies to export oil products in 2017 as Beijing is likely to stop awarding them quotas to export directly, informed sources said Friday. "It [stopping awarding quotas] is to restrict the growth of exports from independent refineries," said a source from a state-owned trading company, adding that the Ministry of Commerce had already held talks with the state-owned company about matter. "The independent refineries are still allowed to export, but need to sell through the state-owned trading houses which have normal trade permission," he added. The normal trade permissions were expected to be awarded only to the trading arms of Sinopec, CNPC, CNOOC and Sinochem, sources said. The ministry was not available to comment on Friday.But several factors support the suspension, the foremost of which is that the policy of allocating export quotas to independent refiners is temporary. "We are not sure whether the government would still allow us to export after the end of this year," said Zhang Liucheng, VP of Dongming, the country's biggest independent refinery. During the APPEC meeting in September, Zhang said oil product exports by independent refineries were expected to rise with more investment for better infrastructure if the government continued to issue them with export quotas. The Ministry of Commerce in mid-November last year said it would allow independent refiners that had already won crude import quotas the right to export oil products, but the permission only ran until the end of 2016. This year, 12 independent refineries hold a total 1.675 million mt of oil products export quotas. Under the quotas, they are allowed to directly sell their oil products -- which must be processed from imported crude oil -- to overseas buyers.

Arab producers to keep Asia term crude oil, apply OPEC cut to extra supplies: sources -  Major Arab oil producing countries are looking to keep their term crude supplies into Asia at least for January loadings, while coping with OPEC's production cut agreement first with their incremental supply volumes, sources with direct knowledge of the matter said Monday. A number of major Arab oil producers told S&P Global Platts that producers intend to keep their term crude supply volumes with Asian customers and implement last week's OPEC agreement with their incremental supply volumes where necessary. The Arab producers' intended move came to light as some Asian refiners were trying to assess if OPEC's announced production cut would go beyond the tolerance flexibility clause in their term contracts with Middle East suppliers.While major national oil companies in the Middle East sell the majority of their crude production on a term basis, there are typically incremental volumes sold to refiners on a case by case basis. With OPEC looking to maintain its policy of keeping market share balanced by cutting surplus oil supplied into the market, national oil companies are seeking to minimize any impact to their key buyers across Asia, sources said. "Most [term] contracts [have been] renewed already [for 2017], [I] don't think the term commitments will be affected," a source at a national oil company within the Gulf Cooperation Council said. This was echoed by another major oil producer within the GCC. "We are still working through [the cuts] right now, we will protect the term [sales] the rest [incremental sales] will not be possible [due to the cuts]," the source said. A source at another GCC member state's national oil company noted that they had been preparing for the potential of an OPEC cut for a number of months and there should be no major impact on key term buyers.

Do the numbers behind the Opec production deal add up? -- The supply agreement agreed by Opec on Wednesday sent oil prices soaring above $50 a barrel but there are many reasons for caution, not least in making sure no one cheats and producers from outside the cartel also contribute. While the deal looks straightforward, it is anything but and the devil is in the detail. The conference documents released on Wednesday evening show Opec countries, except Libya and Nigeria, reducing production from the start of January by 1.2m barrels a day to 32.5m for an initial period of six months. But extrapolating the numbers from the statement produces a production ceiling of 32.68m b/d, which is almost 200,000 b/d higher than the new target. “The difference might come from production estimates from Nigeria and Libya,” Another number that stands out relates to Iran.Because Tehran has spent years under sanctions, Opec agreed to award it an output baseline of 3.975m b/d — the highest pre-sanctions level it produced in 2005 — unlike most others whose baseline is what they pumped in October. A 4.5 per cent reduction from this level arrives at almost 3.8m b/d, which delegates say is an average level at which it has finally agreed to freeze for six months from January. Iran’s current output is closer to 3.7m, which gives the country room for an increase of at least 90,000 in theory at least. The reason for this fudge was to placate hardliners in Iran who wanted to make sure the country did not commit to any production cuts and meet demands from Saudi Arabia that Tehran had to be part of any deal. By using this convoluted formula, both sides can save face. Analysts have also suggested Opec may have miscalculated due to Angola’s production target being derived from its output in a different month than other members. It was agreed that, due to field maintenance affecting Angola’s output by about 200,000 b/d in October, the African country’s target would instead be based on what it produced the previous month. But Opec does not appear to have added the 200,000 production to its starting point.

Saudi Arabia Surrenders To U.S. Shale - The new OPEC deal to cut oil output – the cartel’s first since 2008 – amounts to nothing less than Saudi Arabia’s surrender to the power of American shale.It has come about due to Riyadh’s belated, horrified understanding that it has utterly lost control over the energy market, running through its capital reserves in the process. Rather than young, feckless Deputy Crown Prince Mohammed bin Salman using Saudi Arabia’s John D Rockefeller strategy to permanently drive U.S. shale out of the energy market, the exact opposite result has occurred. Unwittingly, the Saudis have made the Americans the new global energy swing producer, the permanent ceiling for the global price of oil.This, in its way, is as momentous a shift in global power as the stunning recent Brexit and Donald Trump votes. Whereas Brexit showed Europe to be in absolute decline, while the election of Trump brings to an abrupt end 70 years of the U.S. as the global ordering power, the Saudi’s meek surrender brings to a close the long age of OPEC domination of the world’s energy market. This year truly has seen the death of one world order, along with the uncertain birth of another.The details of the new OPEC pact make it clear that even this belated effort to quell the self-imposed bleeding brought on by Saudi attempts to drive U.S. shale out of the energy market – by, in Rockefeller style, over-producing to drive down prices and eradicate their competitors – is problematic at best.OPEC as a whole agreed to cut 1.2m barrels per day (bpd) from production from the beginning of the new year, with the Saudis themselves bearing the brunt of the cuts with a personal reduction agreed to at just under 500,000 bpd. But as OPEC now accounts for less than half of all energy output in the world, it is a very weakened cartel, dependent on the kindness of strangers to survive.Externally, this means Russia. The new global energy reality has been forthrightly addressed in the accord, as the interim deal is contingent on securing a further 600,000 bpd in cuts from non-OPEC members, with Russia expected to contribute 300,000 bpd to this total. Unsurprisingly, the Kremlin is less than enthused, as Russian oil minister Alexander Novak blandly said that at best his country would only cut its production gradually, due to “technical problems”. OPEC isn’t much of a cartel if it is utterly dependent on major (and generally unwilling) outside players such as Russia to make its internal agreements work.

Exclusive: How Putin, Khamenei and Saudi prince got OPEC deal done | Reuters: Russian President Vladimir Putin played a crucial role in helping OPEC rivals Iran and Saudi Arabia set aside differences to forge the cartel's first deal with non-OPEC Russia in 15 years. Interventions ahead of Wednesday's OPEC meeting came at key moments from Putin, Saudi Deputy Crown Prince Mohammed bin Salman and Iran's Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani, OPEC and non-OPEC sources said. Putin’s role as intermediary between Riyadh and Tehran was pivotal, testament to the rising influence of Russia in the Middle East since its military intervention in the Syrian civil war just over a year ago. It started when Putin met Saudi Prince Mohammed in September on the sidelines of a G20 gathering in China. The two agreed to cooperate to help world oil markets clear a glut that had more than halved oil prices since 2014, pummeling Russian and Saudi government revenues. Oil prices are up 10 pct this week topping $53 a barrel. The financial pain made a deal possible despite the huge political differences between Russia and Saudi over the civil war in Syria. "Putin wants the deal. Full stop. Russian companies will have to cut production," said a Russian energy source briefed on the discussions. In September, OPEC agreed in principle at a meeting in Algiers to reduce output for the first time since the 2008 financial crisis. But the individual country commitments required to finalize a deal at Wednesday's Vienna meeting still required much diplomacy.

Russia Proves Consummate Dealmaker in Bringing About OPEC Production Cut.-- Russia's efforts were key to getting the OPEC cartel to reach last week's agreement, and included Russian President Vladimir Putin's meetings with his counterparts in Saudi Arabia and Iran, the Russian newspaper Vzglyad reported.On Wednesday the 14 members of OPEC agreed a deal to cut production, ending several years of discord within the cartel. Leading exporter Saudi Arabia, which blocked a production cut in November 2014 that would have bolstered global oil prices, has now managed to agree a deal with Iran, Venezuela and other members of the cartel. OPEC has agreed to cut production from January 1 by about 1.2 million barrels per day, or about 4.5 percent of current production, to 32.5 million barrels per day. The price of oil surged nine percent after Wednesday's announcement, and has continued to rise since then. On Friday Brent crude was trading at $54.46 per barrel, 13 percent higher than at the start of the week. The deal was reached despite serious differences within OPEC. Iran, having recently had economic sanctions connected with its nuclear program lifted, was keen to increase its production to pre-sanctions levels. In Libya and Nigeria, political instability and terror attacks on oil infrastructure have decreased output, making them reluctant to agree to a freeze limiting their oil output at current levels. All three countries have been granted an exemption from the deal, which is contingent on securing the agreement of non-OPEC producers to lower production by 600,000 barrels per day.

How Russia Outsmarted OPEC - OPEC’s historical deal to cut production has been sealed, and oil prices have jumped as a result, comfortably above the $50 per barrel mark. According to Lukoil’s vice president, Leonid Fedun, the average price of crude in 2017 could reach US$60 a barrel, thanks in no small part to that agreement. According to some observers, the effect won’t be so noticeable, and prices will continue to hover around US$50. In any case, Russia will certainly benefit from the cut agreement, as the chief of VTB, one of the country’s largest banks, said recently. Andrey Kostin said that the decision to cut production will, on the one hand, prop up international prices, which of course is good news for Russia, and on the other hand, it will benefit the ruble, an outcome which was also to be expected given the central place crude oil occupies in Russia’s export mix.What’s perhaps more interesting is that Russia did not, in fact, obligate itself to cut from essential production. It surfaced last week that the country’s total output had reached a new post-Soviet record of over 11.2 million barrels per day. The precise figure, according to Deputy Energy Minister Kirill Molodtsov, was 11.231 million barrels, and it is from this production level that Russia will take off the 300,000 bpd it agreed to cut to help OPEC in its market rebalancing efforts.Incidentally, Libya, which has been granted an exemption from the agreement, plans to ramp up its own output by 300,000 bpd by the end of 2016. To compare, Saudi Arabia pumped 10.6 million bpd in November, and now has to cut 486,000 bpd from that figure. Its friends in the region, including Iraq, Kuwait, Qatar, and the UAE, will cut a combined 510,000 bpd from their output.

Ahead of promised cut, Russia's oil output hits record high | Reuters: Russia plans to use its November oil production, which was its highest in almost 30 years, as its baseline when it cuts output under this week's deal with OPEC, Deputy Energy Minister Kirill Molodtsov said on Friday. Russia has promised to gradually cut output by up to 300,000 barrels per day (bpd) in the first half of 2017 as part of a deal with other producers aimed at supporting oil prices. Its daily oil production rose to an average of 11.21 million bpd in November, Russia's highest since the Soviet era, energy ministry data showed on Friday. That was 500,000 bpd higher than in August, the month before Russia and OPEC reached a preliminary agreement in Algiers to cap production. Under this week's follow-up agreement, the first between OPEC and Russia since 2001, specific cuts for individual states were set, with almost all OPEC members agreeing to cut from October levels. But Russia will use its November-December output levels, Energy Minister Alexander Novak told reporters on Thursday. November's production rose only slightly from October, by just 10,000 bpd, ministry data showed. "The peak of daily production for November was 11.231 million barrels," Deputy Energy Minister Molodtsov told a conference in Moscow. "All our agreements will clearly be formed around this figure," he said. According to his presentation, Russian production could grow to 11.3 million bpd in December.

The Wider Ramifications Of The OPEC Deal - Contrary to many analysts’ expectations, OPEC successfully reached a deal to cut production on Wednesday. The deal, while still contingent upon non-OPEC production cuts, would see total OPEC production drop to 32.5 million bpd. There are winners and losers in the deal, with the largest cuts born by Saudi Arabia (486,000 bpd), the UEA (139,000 bpd) and Iraq (210,000 bpd). Iraq and Iran, initially resistant to major cuts, got away with only minor changes to their overall production, though Iran won’t be able to pass that golden 4 million bpd threshold Bijan Zanganeh had been insisting upon since August. The wider ramifications of the OPEC deal, should it prove durable, will be felt across the industry as two years of untrammeled OPEC (and particularly Saudi) pumping comes to an end. The first tremors will be felt on the U.S. patch, where production has been falling for most of the year. Outside of the Permian basin, conditions among American drillers haven’t been all that encouraging, though the decline in production had stabilized in recent months and markets saw a bump after the election of Donald Trump as U.S. President. Higher prices could help U.S. producers with high costs claw back some market share, but competition will be fierce. An initial bump in prices may prove temporary as it gives U.S. producers incentive to pump more, sending the price back down. Encouraging signs that the OPEC deal will lead to a resurgence in U.S. shale production could prove enduring, however, and the rig count reached a high in the wake of the news. American shale has been the major factor in how this price crash endured long past the point Saudi estimates predicted: it’s a little unclear what the long-term effect will be.

OPEC to meet non-OPEC oil producers in Vienna December 10: Barkindo - OPEC has invited 14 non-OPEC oil producers to finalize details of coordinated cuts on Saturday December 10, at the oil producer group's headquarters in Vienna, secretary general Mohammad Barkindo said Monday. "We will have our joint ministerial level meeting with non-OPEC countries this coming Saturday, December 10, at the OPEC Secretariat in Vienna -- the first such meeting since 2002," Barkindo said at the Petrotech conference in New Delhi. OPEC decided on November 30 to hold production at 32.5 million b/d starting January 1, 2017 -- the first coordinated cut since 2008 -- amounting to an approximate 1.2 million b/d cut from current output levels. The deal exempts Libya and Nigeria and is contingent on key non-OPEC producers also agreeing to cut 600,000 b/d in total. Members of the OPEC delegation in New Delhi also confirmed with reporters that 14 countries had been contacted to attend the meeting on December 10.The list of the countries that have been invited and are expected to participate in the cuts include Azerbaijan, Bahrain, Bolivia, Brunei, Colombia, Russia, Mexico, Turkmenistan, Oman, Trinidad and Tobago, Egypt, the Republic of Congo, Kazakhstan and Uzbekistan. Barkindo, speaking at a press briefing in New Delhi, also said that he was "very confident" that non-OPEC would agree on a 600,000 b/d cut. "A lot of consultations have taken place between us and non-OPEC. This is a collective resolve by both parties to jointly to act and save this industry," he said. Barkindo also rebutted criticism from some analysts who did not expect OPEC to collectively agree on a cut. "Give us some credit. This is the first agreement that I know of between ourselves OPEC and non-OPEC countries that has in it a provision, a joint monitoring committee... To monitor and issue compliance to the agreement, this is the first time this has happened, this has guaranteed the integrity of this agreement," he added.

OPEC Cheating Will Cap Oil At $52 -- OPEC succeeded in pulling off what many thought was impossible, overcoming mutual disdain and mistrust to reach a deal on reducing its oil output. Oil prices skyrocketed on the news, up more than 12 percent since the agreement was announced last week. But what if there is much less to the deal than meets the eye? What if OPEC does not actually follow through on the promised production cuts? Several days of strong price gains ran into a wall of skepticism on Tuesday, after fresh data showed that OPEC’s November production was much higher than anticipated. The cartel’s output jumped from 33.6-33.8 million barrels per day (mb/d) in October to a record high 34.19 mb/d in November. The gains came from Angola, Gabon, Indonesia, Libya, Nigeria, Iran and Iraq. If OPEC is to succeed in bringing production down to its stated target of 32.5 mb/d by January, it will now need to cut 1.7 mb/d, not just the 1.2 mb/d that it announced last week. But a few of those countries (Libya, Nigeria, Indonesia) are exempted from the limits agreed upon in the latest deal. That means that the rest of OPEC will need to shoulder steeper cuts if the cartel is to hit the 32.5 mb/d threshold. However, the group did not discuss this contingency – who should cut even deeper – so there is little reason to think that any individual member will voluntarily cut more than they agreed to just so that the collective output comes in lower. On top of all of that, two key OPEC countries exempted from the deal – Libya and Nigeria – have a large volume of oil production capacity offline. Libya has already added 200,000 barrels per day in production gains this year, taking output above 500,000 bpd. They are hoping to ultimately bring output up to 900,000 bpd next year. In a sign that they could be on their way to that target, ISIS was ousted from Sirte, its last major foothold in Libya. The war-torn country still suffers from a political vacuum and splintered allegiances, but the risk to supply is likely on the upside. Nigeria too has roughly 0.5 mb/d of capacity offline because of pipeline attacks. It won’t be easy but Nigeria could bring output back online in 2017. The two OPEC countries could overwhelm the effect of the deal.

Oil prices settle down on Monday - - Oil prices reached a new, one-year high by mid-day on Monday, as last week's rally from the Organization of Petroleum Exporting Countries (OPEC) agreement to cut production continued apace U.S. crude for January delivery this morning gained 20 cents, or 0.4%, to $51.88 a barrel on the New York Mercantile Exchange (NYMEX). The price had been as high as $52.42 a barrel for Crude Oil, the best intraday price since July 2015. Brent Oil, the global oil price benchmark, gained 44 cents, or 0.8%, to $54.90 a barrel on ICE Futures Europe market. But oil prices settled down for the day. Crude oil settled at 51.08, down 1.24%. Brent oil was down for the day, 54.24%, 0.40%. The market contineus to gain as some investors anticipate that OPEC is more likely to keep this pledge than in past pacts. OPEC members are famed for surpassing production plans. Huge inventories of oil today are most likely, analysts said, to encourage the oilmen to keep their promises. "They only must be on their best behavior for a few months to get the market into a daily supply deficit," Phil Flynn, senior market analyst at the Price Futures Group in Chicago, said in a note to investors.

OPEC Oil Production Hits New All Time High As Brent Surges To 16 Month High --The greatest trick OPEC ever pulled was convincing the world to buy oil even as production kept rising to new all time highs. Case in point, just out from Reuters:


Meanwhile, oil rose to fresh 16 month highs, with Brent rising above $55 for the first time since mid-2015. More details from Reuters: OPEC's oil output set another record high in November ahead of a deal to cut production, a Reuters survey found on Monday, helped by higher Iraqi exports and extra barrels from two nations exempted from cutting supply - Nigeria and Libya.  The latest rise in supply means the Organization of the Petroleum Exporting Countries will have a bigger task in complying with a plan to cut supply starting in 2017 - its first production-reduction deal since 2008. Supply from OPEC increased to 34.19 million barrels per day (bpd) in November from 33.82 million bpd in October, according to the survey based on shipping data and information from industry sources. Brent crude rose above $55 a barrel on Monday, trading at a 16-month high, on prospects of a tighter market next year following OPEC's deal. Prices are still half their level of mid-2014."OPEC's decision to cut production has removed a lot of downside risk for 2017," said Bjarne Schieldrop, chief commodities analyst at SEB, even though "some cheating is a natural habit among OPEC's members".  Based on the November survey, OPEC is pumping 1.69 million bpd above the 32.50 million bpd production target that it agreed last week to adopt from January 2017,following an outline agreement reached in September. This means that OPEC will need to find an addition half a million barrels to scrap to reach its "promised" quota.November's supply from OPEC excluding Gabon and Indonesia, at 33.23 million bpd, is the highest in Reuters survey records starting in 1997. At last week's meeting, Indonesia suspended its membership again. In November, Angola provided the largest supply boost as  planned maintenance on the Dalia crude stream ended. Output also climbed in Iraq due to record exports, lifting supply to 4.62 million bpd in November according to the survey.

Oil falls 2 percent on output cut skepticism, OPEC and Russia output rise | Reuters: Oil prices on Tuesday fell for the first session since OPEC agreed to cut output last week after data showed crude production rose in most major export regions and on growing skepticism that the cartel would be able to reduce production. After rising over 15 percent over the four sessions since the Nov. 30 OPEC meeting, Brent futures fell $1.06, or 1.9 percent, to $53.88 a barrel by 1:26 p.m. EST (1826 GMT). U.S. West Texas Intermediate crude futures fell $1.05, or 2 percent, to $50.74 per barrel. The Brent front-month contract has outperformed the U.S. contract since the OPEC meeting, with its premium over WTI reaching $2.29 a barrel earlier on Tuesday, its widest since August. "Reaction to the OPEC news was overdone. All they did was agree to cut output that they had added recently," said Phil Davis, managing partner at venture capital firm PSW Investments in Woodland Park, New Jersey. OPEC's output set another record high in November, rising to 34.19 million barrels per day (bpd) from 33.82 million bpd in October, according to a Reuters survey. Russia reported average oil production in November of 11.21 million bpd, its highest in nearly 30 years. That means OPEC and Russia alone produced enough to cover almost half of global oil demand, which is just above 95 million bpd. Market watchers had said OPEC's decision to cut output marked an about-face for Saudi Arabia, which has been battling to keep market share for the past two years by selling more, if cheaper, barrels rather than bolstering prices. But in a sign the fight for market share is not over, Saudi Aramco cut the January price for its Arab Light grade for Asian customers by $1.20 a barrel from December.

Oil Prices Retreat As OPEC, Russia Bump Up Output Ahead Of Cuts - Having rallied to 16-month-highs on the back of OPEC’s deal to cut oil supply, oil prices dipped on Tuesday after figures showed that November output at both OPEC and Russia had reached record highs in November. As of 7:46 AM (EST), WTI Crude had dipped 1.49 percent at US$51.02, while Brent Crude was trading down 1.04 percent at US$54.37. OPEC’s November production jumped by 370,000 bpd from October to stand at 34.19 million bpd, a Reuters survey based on shipping data and information from industry sources found on Monday. Within OPEC, output rose mainly in Angola, Nigeria, Libya, Iran, and Iraq. This figure is way higher than the 32.5 million bpd OPEC set as a ceiling in its deal to reduce collective production. In that agreement, OPEC said that its cuts, which are to begin in January, are contingent on non-OPEC nations, including Russia, cutting around another 600,000 bpd. Another worry to traders was the fact that Russia’s output increased to 11.21 million bpd last month—the highest level since the Soviet era. Deputy energy minister Kirill Molodtsov said Russia would use the November figures as reference to cut 300,000 bpd it has pledged to help OPEC cut global supply. Analysts are already seeing that the euphoric rally since last Wednesday’s deal is starting to wane after seeing high production figures being reported for OPEC and Russia.

OilPrice Intelligence Report: Oil Tanks On Record OPEC Production - Oil prices fell back from 16-month highs on Tuesday, after fresh data showed that OPEC hit another record high in production in November. Brent briefly rose above a key threshold of $55 per barrel on Monday for the first time since the summer of 2015, but retreated on Tuesday to $53 per barrel. Since the OPEC agreement was announced last week, WTI climbed 19 percent and Brent prices are up 16 percent. "OPEC sentiment continues to support oil markets. Speculative short positions are still at elevated levels and as more traders unwind these positions they could trigger more support for oil prices," Hans van Cleef, senior energy economist at ABN Amro, told Reuters. But OPEC’s collective production set a record high in November, rising to 34.19 million barrels per day. That means the group will need to cut 1.69 mb/d from their production levels, not just the 1.2 mb/d in announced cuts last week in Vienna. However, the problem for OPEC is that a lot of the gains came from countries that are exempted under the November deal. Angola, Libya and Nigeria all added output in November from the month before. To offset those gains, OPEC would have to make deeper cuts, but since that was not specified in the agreement, there is little chance that it will happen. The data caused oil prices to fall more than 2 percent on Tuesday. . OPEC is set to meet with non-OPEC producers to finalize the technical details of their agreement. Non-OPEC producers have agreed to cut 600,000 barrels per day beginning in January, which will come on top of the 1.2 mb/d cut from OPEC. Russia alone will cut 300,000 barrels per day, although Russian officials have said that they would do so gradually. By any measure, OPEC’s latest meeting was its most successful in years. But there is still some uncertainty surrounding the cartel’s ability to implement the deal, and the willingness of individual members to adhere to their prescribed production allotments. OPEC has a history of not living up to agreements, with each member having the individual incentive to produce more than they say they will. The markets rallied last week on the severe cuts OPEC agreed to, but if the cuts are not carried out as promised, it will eventually undermine the effectiveness of the deal. "The only tool they have is to constrain production," former Saudi oil minister and legendary OPEC icon Ali al-Naimi saidat an event in Washington, D.C last week. "The unfortunate part is we tend to cheat."

WTI Pops Despite Biggest Cushing Inventory Build Since 2008 - With OPEC behind us, perhaps the market's focus will swing back to fundamentals (as opposed to headlines) and following last week's huge build across products, API reported the second week in a row of crude inventory draws (bigger than the expected 1.37mm drop). However, Gasoline and Distillates saw major builds but Cushing inventories rose over 4mm barrels - the most since 2008. WTI seemed to focus on the crude draw at first... API:

  • Crude -2.21mm (-1.37mm exp)
  • Cushing +4.01mm (+2.87mm exp)
  • Gasoline +828k (+1.59mm exp)
  • Distillates +4.08mm(+1.24mm exp)

A second week of bigger than expected draws in crude inventories but Cushing saw the biggest weekly build since 2008...

Oil Market’s New Engine Losing Steam on Modi Cash Crackdown -- Oil demand growth in the world’s fastest-growing crude market may weaken as the government’s cash crackdown slows the economy. Diesel and gasoline use, which account for more than half of India’s oil demand, will slow or contract this month and possibly early next year, according to Ivy Global Energy Pte., FGE and Centrum Broking Ltd. Expansion in the world’s fastest-growing major economy is widely expected to ease temporarily after Prime Minister Narendra Modi last month withdrew high-value currency notes in a country where almost all consumer payments are in cash. “As the Indian economy largely depends on various cash-intensive sectors, the demonetization saga will no doubt slow down economic growth in the near term,” said Sri Paravaikkarasu, head of East of Suez oil at FGE in Singapore. “Moving into the first quarter, an expected slowdown in the economic growth should marginally drag down oil consumption, particularly that of transport fuels.” India’s $2 trillion economy imports more than 80 percent of its crude requirement and the International Energy Agency expects it to be the fastest-growing consumer through 2040. At a time when oil prices have hovered around $50 a barrel, the slowdown of a key demand center may take some steam out of an Organization of Petroleum Exporting Countries-driven price rally after the group approved its first supply cut in eight years. Brent crude, which added 15 percent last week, lost 0.9 percent to $53.97 a barrel at 12:17 p.m. Singapore time on Monday. Diesel consumption could fall as much as 12 percent and gasoline demand as much as 7 percent this month, according to Tushar Tarun Bansal, director at Ivy Global Energy. “I expect to see a much smaller growth in diesel demand of about 2 percent in the first quarter,” Bansal said. “But as the year ticks on, growth is expected to pick up further and normalize in the second quarter.”

Oil falls on output cut skepticism, OPEC and Russia output rise | Reuters: Oil prices on Tuesday ended lower for the first time since OPEC agreed on Nov. 30 to cut output, as data showing record high production in the producer group fed skepticism that it would be able to reduce supplies. Brent futures slid $1.01 to settle at $53.93 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 86 cents to $50.93 per barrel. Crude had surged more than 15 percent in the four sessions since the Nov. 30 OPEC meeting. "Prices fell for the first day in five in reaction to news that OPEC's output hit a record high last month," said James Williams, president of energy consultant WTRG Economics in Arkansas. OPEC's output set another record high in November, rising to 34.19 million barrels per day (bpd) from 33.82 million bpd in October, according to a Reuters survey. Oil prices pared losses slightly after inventory data released late Tuesday from the American Petroleum Institute showed U.S. crude stocks dropped more than expected last week despite a hefty build of 4 million barrels in Cushing, Oklahoma. [API/S] If the Cushing build is reinforced in Wednesday's report from the U.S. Energy Information Administration, that would signal the largest weekly rise since January 2009, data showed. As part of last week's decision, OPEC said major oil producers outside the group would cut 600,000 bpd of production on top of OPEC's 1.2 million bpd reduction. Those countries and OPEC meet this weekend to finalize the terms. Russia reported average oil production in November of 11.21 million bpd, its highest in nearly 30 years. That means OPEC and Russia alone produced enough to cover almost half of global oil demand, which is just above 95 million bpd.

Russian oil-indexed gas prices set to rise on OPEC decision, oil rally - Natural Gas | Platts News Article & Story: The price of oil-indexed Russian gas is expected to rise through the course of 2017 following the recent oil price rally triggered by the decision by OPEC and non-OPEC countries to cut production from the start of next year, according to an S&P Global Platts analysis. The rise in the oil-indexed price range makes prices on the European hubs more competitive more quickly with Russian gas in Q1 2017, suggesting European buyers may maximize their nominations in the next two months or so. Oil prices have surged almost 20% in the week since the decision by OPEC to cut production by 1.2 million b/d, accompanied by a pledge by non-OPEC producers to remove 600,000 b/d from the market, including a 300,000 b/d Russian cut. Although oil-indexed gas contracts typically operate with a 6-9 month time lag, the impact of the oil price rally on Russian gas -- and how it competes against European gas hubs -- is sharply felt along the forward curve.The Dutch TTF price was assessed Tuesday by Platts at Eur16.25/MWh for January 2017 and Eur16.325/MWh for February 2017, while the top of the oil indexed range is estimated by Platts Analytics' Eclipse Energy at Eur17.02/MWh for January and Eur17.60/MWh for February. The top of the oil indexed range has been cheaper than TTF month-ahead prices through October, November and December, which has seen Russian gas exports to Europe hit repeated all-time highs as buyers maximize their purchases under long-term contracts.

EIA Weekly Crude Oil Inventory Report Shows Draw of 2.4 Million Barrels: Today’s Energy Information Administration (EIA) inventories report showed a slightly larger draw than expected, declining 2.4 million barrels during the week ending December 2. Analyst on average were looking for a smaller draw of 1.03 million barrels, according to a Thomson Reuters survey. The total stockpile now stands at 485.8 million barrels. On Tuesday, the American Petroleum Institute reported a similar draw of 2.2 million barrels. U.S crude oil imports averaged 8.3 million barrels per day last week, up by 755,000 barrels from the week before. Crude oil refinery inputs averaged 134,000 more barrels per day than the prior week’s average, bringing the average inputs to 16.4 million barrels per day. Gasoline production decreased for the week, averaging over 9.9 million barrels per day. Distillate production (fuel and diesel oils) also fell, averaging 5.1 million barrels per day. The total motor gasoline inventories increased by 3.4 million barrels last week. Inventories for both finished gasoline small blending components increased. Distillate fuel inventories rose by 2.5 million barrels while propane/propylene fell 1.5 million barrels. The total for commercial petroleum inventories increased by 1.4 million barrels from the week before. In response to today’s report, crude oil initially spiked higher then declined by about 60 cents in the minutes following. The WTI contract is trading down by about 1.6% to $50.04 at the time of this writing.

Oil slips on bearish U.S. inventory report, doubts over OPEC cut | Reuters: Oil prices slid on Wednesday on bearish U.S. petroleum inventory data and doubts that production cuts promised by OPEC and Russia would be deep enough to end a supply overhang that has weighed on markets for more than two years. Brent futures LCOc1 fell 93 cents, or 1.7 percent, to settle at $53.00 a barrel, while U.S. crude CLc1 lost $1.16, or 2.3 percent, to settle at $49.77. The U.S. Energy Information Administration EIA said crude inventories fell 2.4 million barrels during the week ended Dec. 2, which was more than the 1 million-barrel draw analysts had forecast in a Reuters poll. [EIA/S] Stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures, however, increased by a hefty 3.8 million barrels last week, the most since 2009, the data showed. Reaction to the EIA report was muted, analysts said, in part because the results were similar to the data published by the American Petroleum Institute (API), an industry group, late on Tuesday. "Focus at the moment is on the key producers and OPEC and growing doubts non-OPEC producers will be able to come up with 600,000 barrels of cuts," said Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky. The Organization of the Petroleum Exporting Countries last week agreed to slash output by around 1.2 million barrels per day beginning in January to reduce global oversupply and prop up oil prices. OPEC hopes non-OPEC countries will contribute a further 600,000 bpd of cuts. Russia has said it would reduce output by around 300,000 bpd.

Oil futures fall after builds in US products, Cushing stocks -  Oil futures declined Wednesday after US Energy Information Administration data showed product stocks built by more than anticipated, while the key storage hub of Cushing, Oklahoma, saw its biggest rise since 2009. That bearish set of data led the oil complex lower, even though US crude stocks fell for the third straight week. NYMEX January crude settled $1.16 lower at $49.77/b. ICE February Brent settled down 93 cents at $53.00/b. Refinery demand picked up last week, helping draw crude stocks lower. The refinery utilization rate increased 0.6 percentage point to 90.4% of capacity. However, inventories at Cushing, Oklahoma -- the delivery point for the NYMEX crude futures contract -- built 3.783 million barrels, which was the largest weekly increase since January 2009. Cushing stocks had fallen to 58.362 million barrels in mid-October, but now stand at 65.285 million barrels, above 65 million barrels for the first time since August. A likely factor behind last week's build was reduced flows from Cushing to the Gulf Coast, as USGC refiners try and mitigate state ad valorem taxes on year-end crude stocks. Likewise, Gulf Coast imports dropped 403,000 b/d last week to 2.931 million b/d. As a result, USGC stocks fell 6.911 million barrels last week to 246.450 million barrels. Crude stocks declined 2.389 million barrels to 485.756 million barrels in the week ended December 2, EIA said. Analysts S&P Global Platts surveyed Monday were looking for a draw of 1.7 million barrels.

Crude Tumbles Below $50 After Biggest Cushing Build Since Jan 2009 -Crude prices are lower this morning following API's huge reported build at Cushing (biggest since 2008) and fears over OPEC deal realities. With expectations for a crude draw (on lower imports), DOE confirmed a bigger than expected overall draw but also Cushing saw a 3.78mm barrel build - the biggest since Jan 2009. Both Distillates and Gasoline (most since Jan) also saw bigger than expected builds as US production dropped very modestly. DOE:

  • Crude -2.389mm (-1.37mm exp)
  • Cushing +3.783mm (+2.87mm exp) - biggest since Jan 2009
  • Gasoline +3.425mm (+1.59mm exp) - biggest since Jan 2016
  • Distillates +2.501mm (+1.24mm exp)

Biggest Cushing build since Jan 2009 offsets the bigger than expected draw in crude overall... As the US rig count continues to rise so the trend of US crude production has turned, but it dropped very modestly over the last week...

OPEC crude output hits new record of 33.86 mil b/d in Nov-Platts survey - OPEC crude oil production for November rose for the sixth straight month, to a record 33.86 million b/d, an S&P Global Platts survey showed Wednesday, largely on the return of Angola's Dalia field from maintenance and recovery in war-torn Libya. The November production figure was a 320,000 b/d rise from October output and illustrates the challenge OPEC faces implementing a production cut it finalized in Vienna last week with the aim of accelerating the global oil market's rebalancing. Many members appear to be pumping at or close to their full capacity to maximize revenues before the OPEC deal goes into force January 1. Under that plan, the organization will, for six months, cut 1.2 million b/d from its October output level, as calculated by an average of OPEC's six secondary sources, including Platts, and freeze production at around 32.5 million b/d. Saudi Arabia, which has committed to holding its output at 10.046 million b/d, saw its November production drop slightly to 10.52 million b/d, indicating it has a way to go before complying with its target. Exports of Saudi crude have been high in recent months and output has defied the usual seasonal decline, even with the peak summer air conditioning season long over, though experts say they expect the country to return to more typical winter consumption patterns to comply with the production cut. Iraq, OPEC's second largest producer, saw November output hold steady at 4.56 million b/d. The country had disputed secondary source estimates of its production as too low and sought an exemption from the OPEC cuts due to its war against the Islamic State. But Iraq ultimately agreed to the OPEC plan, which calls for the country to bring production down to 4.351 million b/d, as calculated by secondary sources. Iran, meanwhile, raised its November production slightly from October to 3.69 million b/d. Iran, which also sought an exemption from the cuts as it aimed to regain its pre-sanctions market share, is allowed to produce up to 3.797 million b/d under the OPEC plan.

Oil above $50 on hopes for non-OPEC output cuts | Reuters: Oil rebounded from the week's lows to close above $50 a barrel on Thursday, on growing optimism that non-OPEC producers might agree to cut output following a cartel agreement to limit production. Both Brent and U.S. benchmarks rallied after the former secretary general of the Organization of the Petroleum Exporting Countries made comments supportive of non-member production cuts. The benchmarks remain more than $1 below the highs reached Dec. 5 in the wake of the OPEC deal. Brent settled up 89 cents, or 1.7 percent, at $53.89 a barrel. U.S. light, sweet crude settled up $1.07, or 2.2 percent, at $50.84 a barrel. Oil producers will meet in Vienna on Saturday to see if non-OPEC countries will cut production to reduce a global supply glut that has pressured prices for more than two years. At a conference in New York, former OPEC Secretary General Abdalla El-Badri said a non-OPEC production cut of about 600,000 barrels per day (bpd) was "a must." OPEC has agreed to slash production by 1.2 million bpd in the first half of 2017, a deal that bolstered crude futures despite doubts over whether the amount was enough and whether the cuts would be effectively implemented. "There will be a significant amount of slippage in the amount of cuts that occur as we get into first part of 2017," said Andrew Lipow, president of Lipow Oil Associates in Houston. Russia, which is not an OPEC member, has signaled it was ready to cut production by 300,000 bpd and on Thursday Azerbaijan said it would come to Vienna armed with proposals for its own reduction.

Crude futures rise ahead of weekend OPEC/non-OPEC meeting in Vienna - Crude oil futures settled higher Thursday, with traders focused on a meeting in Vienna Saturday between OPEC and non-OPEC countries to discuss further cuts in oil production. NYMEX January crude settled $1.07 higher at $50.84/b, while ICE February Brent rose 89 cents to settle at $53.89/b. Meeting in Vienna on November 30, OPEC countries agreed to their first coordinated output cuts in eight years, with front-month NYMEX crude rallying $5.61 since (12.4%). "The upstream crude oil market [is] finding some support ahead of weekend meetings in Vienna between OPEC and non-OPEC producers," Tim Evans, energy futures specialist at Citi, said. "Traders may be reluctant to sell crude oil ahead of the OPEC/non-OPEC conclave."The OPEC agreement -- which would require OPEC producers to reduce output by 1.2 million b/d -- called for non-OPEC producers to cut their production by 600,000 b/d, with Russia already offering to shoulder 300,000 b/d of that beginning in March. "The 600,000 b/d from non-OPEC [countries] is a must," Abdalla Salem El-Badri, former secretary general of OPEC, said at the Platts Global Energy Outlook Forum in New York Thursday. Executives at the Forum expressed their optimism regarding the OPEC agreement, as well as Russia's commitment to participating. "I don't have any doubt at all," Harold Hamm, CEO of Continental Resources, said about Russia's participation. Even so, Evans doubted that other non-OPEC countries would be as quick to join the coordinated action, with Colombia and Brazil already ruling out cuts, for example.

OilPrice Intelligence Report: Oil Edges Higher As OPEC Pushes NOPEC For Output Cut: Oil prices seesawed this week on the hopes and fears of whether or not OPEC will be able to fully implement its historic deal, as well as the uncertainty over the additional non-OPEC cuts. Still, WTI and Brent mostly held onto their gains that accrued from the deal, with both benchmarks seemingly holding safely above $50 per barrel. Inventories may not fall as much as expected. The OPEC deal has been billed as a cure for the oversupplied oil markets, potentially setting the market up for a shortfall as soon as early 2017, which would require a drawdown in inventories. But some analysts see stockpiles remaining elevated through next year. The EIA’s latest Short-Term Energy Outlook expects inventory builds over the course of 2017, and a few more voices are coming to the same conclusion. “Even with 100 percent compliance from both OPEC and non-OPEC producers global stocks are unlikely to fall in the first half of 2017," Tamas Varga, analyst at brokerage PVM Oil Associates Ltd., told Bloomberg in an interview. “That should keep oil prices in check.” Calculations and estimates from Bloomberg News also finds very few inventory reductions next year. A lot of the uncertainty comes down to whether or not OPEC members comply with promised production cuts, as well as the commitment of Russia and other non-OPEC countries. Full compliance with the OPEC deal could lead to inventory drawdowns, whereas cheating from members could result in inventories remaining elevated. A follow up meeting with non-OPEC countries is scheduled for Saturday, where they will hash out the details of the promised 600,000 barrels per day of production cuts. Russia alone promised to cut 300,000 barrels per day, although it appears only willing to reduce gradually over the first half of 2017. OPEC invited 14 non-OPEC countries to the meeting in Vienna, but only five so far have said they will attend – Russia, Azerbaijan, Kazakhstan, Oman and Mexico. One OPEC source told Reuters that the stated cuts of 600,000 barrels per day might actually turn out to be just 500,000 barrels per day, an ominous sign that the results could be less impressive than previously thought. So far, aside from Russia, only Oman has expressed a willingness to cut.

The OPEC Effect? U.S. Rig Count Spikes Most In 31 Months -- The number of oil and gas rigs in the United States was up again this week, with an increase of 27. Active oil rigs in the United States increased by 21, while the number of gas rigs increased by 6. The 21-rig increase this week represents the highest spike in the number of active oil rigs in the United States since July 2015. Similar to last week’s Baker Hughes report, the biggest gainer by basin was the coveted Permian, which now boasts 246 oil and gas rigs—up 11 rigs from last week, and 42 more than the same period last year. OPEC has struggled to find the balance between economic calamity for its oil-dependent members and lifting prices to a level that would see U.S. shale players come back online in droves, undoing whatever supply glut easing efforts on behalf of OPEC, but its efforts may be all for naught. Traders have been ever watchful of the OPEC deal that was sealed on the 30th of November, and now of the OPEC/non-OPEC meeting scheduled for the 10th of December. But the industry is also keenly aware of the Baker Hughes rig count figures, which serve as a fair metric of how the U.S. oil and gas industry is responding to the current price fluctuations and the OPEC chatter of the day, rather than how the speculators are responding. Unfortunately for OPEC, the U.S. has been steadily bringing new oil rigs online since late June 2016, well before the Algiers meeting where OPEC agreed to agree on a production cut at a later date, just a few months after the Doha meeting failure.The steadily increasing number of active oil rigs in the U.S. at a time when OPEC had failed to agree on a production cut at the Doha meeting may be a sign that oil and gas players in the U.S. are not waiting for OPEC to correct the market, and that they are behaving independently of the once-revered cartel. What’s more, since early September, before OPEC laid out the details of an agreement to cap production, the increase in U.S. oil rig count shows a marked ambivalence to the OPEC goings on, gaining a net of 91 oil rigs since 2 September until the count today. Compared to the rigs in operation this time last year, the U.S. has only 26 fewer rigs in operation today.

OPEC Oil Deal Faces Test as Cartel Tries to Pin Down Russia on Details of Cuts - WSJ: Two days before OPEC ministers gathered in Vienna on Nov. 30, Iran’s oil minister passed a message to his boss, President Hassan Rouhani, people familiar with the matter said: Saudi Arabia wouldn’t agree to cut production without a commitment from Russia. Mr. Rouhani called Russian President Vladimir Putin that night, the Kremlin said. By the time OPEC met, Russia, which isn’t part of the Organization of the Petroleum Exporting Countries, had told Saudi Arabia’s energy minister that Moscow would join the group’s push to reduce global output. The intervention of the two world leaders underscores how badly all sides wanted a pact that would boost oil prices and their economies. It was also a decisive show by OPEC and its de facto leader, Saudi Arabia, of the group’s demand that all future deals involve coordinated cuts by non-OPEC producers. The reason: The Saudi kingdom isn’t willing to let other producers steal its market share when it pulls back.Russia’s commitment will be put to the test Saturday when it, and at least four other non-OPEC producers, gather at the group’s headquarters in Vienna for a meeting that was put off until OPEC had a deal. The non-OPEC countries—expected to include Sudan, South Sudan, Malaysia, Oman, Azerbaijan, Kazakhstan and Mexico—account for 18% of the world’s daily production. Russian Energy Minister Alexander Novak expressed optimism Friday after arriving in Vienna. “I think we’ll reach agreement,” he told reporters. Saudi Energy Minister Khalid al-Falih said Friday night in Vienna that he expected 10 or 11 non-OPEC producers to contribute to output cuts. OPEC officials said the organization now sees itself as a loose coalition of producing countries, some in OPEC, some not. “The amount of coordination, the amount of meeting with non-OPEC countries, made them, if you like, as if they are part of OPEC,” said Mohammed Bin Saleh al-Sada, OPEC’s president and Qatar’s oil minister, on the day of the deal. “Today’s unity is a very explicit sign.”

OPEC, Russia see smooth road to global deal on output cut | Reuters: Russia and Saudi Arabia said they expect OPEC and non-OPEC producers to reach an agreement on Saturday to curtail oil output and prop up prices in the first such joint move since 2001. "We have a deal already. We are just putting the final touches. Everything is good!" Khalid al-Falih, energy minister of OPEC's de facto leader and top oil exporter Saudi Arabia, told reporters. Russian Energy Minister Alexander Novak, speaking as he joined a breakfast with OPEC and non-OPEC ministers in Vienna, said: "I don't see such risks (of a deal failing)." The Organization of the Petroleum Exporting Countries began a meeting with producers from outside the group at 0930 GMT, hoping non-OPEC will commit to cutting 600,000 barrels per day after its own members agreed a reduction of 1.2 million bpd last week. Oil prices have more than halved in the past two years after Saudi Arabia raised output steeply in an attempt to drive higher-cost producers such as U.S. shale firms out of the market. The plunge in oil to below $50 per barrel - and sometimes even below $30 - from as high as $115 in mid-2014 has helped reduce growth in U.S. shale output. But it also hit the revenues of oil-dependent economies including Saudi Arabia and Russia, prompting the two largest exporters of crude to start their first oil cooperation talks in 15 years. OPEC Secretary-General Mohammed Barkindo said he expected 12 non-OPEC countries to sign a declaration with the organisation and fully contribute to cuts of 600,000 bpd or more.

Oil-Producing Countries Agree to Cut Output Along With OPEC —Oil-producing nations on Saturday struck a deal to cut output along with the Organization of the Petroleum Exporting Countries, a pact designed to reduce a global oversupply of crude, lift prices and lend support to economies hurt by a two-year market slump. The deal will remove about 600,000 barrels a day of crude oil from the market. That would come on top of 1.2 million barrels a day in cuts already agreed to by OPEC, amounting to a total of almost 2% of global oil supply. The deal, if complied with, would represent an unprecedented level of cooperation among oil-producing countries.  Big questions remain going forward. OPEC members themselves have a spotty record of complying with their own agreements, and there is no legally binding way to deter producers inside or outside the cartel from cheating on their pledges. For now, it also remains unknown how much of the cuts promised Saturday would have happened anyway through natural declines that were expected. Oil-market analysts said prices wouldn’t go up if many of the cuts were from countries where production is expected to fall anyway. But the deal represented a diplomatic breakthrough for OPEC as it grapples with a world where other oil producers have as much or more power over the market as the 13-nation cartel. It is the first time since the 1970s that a coalition of countries whose oil production amounts to over half of global supply has come together to influence crude prices. OPEC’s own market share hasn’t been that large since the 1970s and previous deals with non-OPEC producers have been less comprehensive. The deal involved 12 countries outside of OPEC. The bulk of the cuts—300,000 barrels a day—are pledged by Russia, which produces more crude oil than any other country. Other output reductions are promised by Oman, Azerbaijan and Sudan, among others.

Saudi Arabia Starts Telling Refiners Oil Supply Will Be Cut - Saudi Arabia has started to tell its customers it will reduce crude shipments from January, with the curbs focused on Europe and North America while Asian refineries are so far largely spared.Saudi Arabian Oil Co., the state’s company better known as Saudi Aramco, started informing clients on Thursday night, a Gulf oil official said, asking not to be named because the matter is confidential. The focus of the cuts was outside Asia as the region is less oversupplied than others, the person said.PIRA Energy Group and Energy Aspects Ltd., two leading consultants, also told clients that Riyadh has started to reduce the so-called monthly nominations, or the amount that refineries receive under long-term contracts. The official’s comments about Asia are consistent with what buyers are saying. At least five refineries in Asia said they have been told they will receive their normal volumes under long-term contracts in January, officials at the companies said. Moreover, three of the region’s refiners said they also were told they would receive the extra volumes they requested. Saudi Arabia increased oil production to an all-time high of nearly 10.7 million barrels a day in July. Since then, it has reduced slightly to 10.5 million barrels a day in November, according to data compiled by Bloomberg. A year ago, Riyadh was producing 10.3 million barrels a day. Saudi Arabia sells more than 60 percent of its crude into Asia, according to the U.S. Energy Information Administration. The region, home of energy-hungry China and India, has been the focus of a battle for market share between Saudi Arabia, Iran, Iraq, Russia and several other producers.

WORLD ECONOMIES IN TROUBLE: Middle East Oil Exports Lower Than 40 Years Ago - Yes, it's true.  Middle East net oil exports are less than they were 40 years ago.  How could this be?  Just yesterday, Zerohedge released a news story stating that OPEC oil production reached a new record high of 34.19 million barrels per day.  To the typical working-class stiff, driving a huge four-wheel drive truck pulling a RV and a trailer behind it with three ATV's on it, this sounds like great news. Unfortunately for the Middle East, this isn't something to celebrate.  Why?  Well, let's just say, there's more to the story than record oil production. While the Middle East oil companies were busy working hard (spending money hand over fist) to produce this record oil production, their wonderful citizens were working even harder to consume as much oil as they could get their hands on. In the past 40 years, Middle East domestic oil consumption surged more than six times from 1.5 million barrels per day (mbd) in 1976, to 9.6 mbd in 2015.  This had a seriously negative impact on rising Middle East oil production: According to the 2016 BP Statistical Review, the Middle East produced 30.10 mbd of oil in 2015 compared to 22.35 mbd in 1976.  This was a growth of 7.75 mbd.  However, Middle East domestic oil consumption increased from 1.51 mbd in 1976 to 9.57 mbd in 2015.   Thus, the Middle Eastern economies devoured an additional 8.06 mbd of oil during that 40 year time-period. The production data shown in the chart above only represents Middle East oil production.  OPEC members not included are Algeria, Angola, Ecuador, Gabon, Libya, Nigeria and Venezuela.  I only listed the production data for the Middle East as the data was readily available. Regardless, if we look at the two bars on the right side of the chart, we can see that Middle East net oil exports were higher in 1976 at 20.84 mbd versus 20.44 mbd in 2015.  Basically, all the hard work the Middle East oil companies spent on increasing production over the past 40 years went to supplying their own insatiable domestic consumption. Here is a breakdown of the some of the Middle Eastern countries oil consumption:

OPEC deal gives Suez Canal hope for revenue -- Despite higher crude prices being a negative on the surface for net importer Egypt, the Arab world’s most populous country hopes OPEC’s move to cut production will actually breathe life into the moribund traffic in its Suez Canal and provide badly needed foreign currency. Egypt’s has been a net importer of crude since 2012, and lately has started importing LNG to meet the rising demand for fuel and power. Typically energy importers prefer lower energy prices, but Cairo might be keen to see oil and gas prices rise as the market slump for both commodities since 2014 has had a disastrous effect on the government’s plans to raise more revenue from shipping through the Suez Canal. The need for revenue is acute particularly after Egypt fast-tracked an $8.2 billion canal expansion that was inaugurated in August 2015, only a year after the start of construction. Sailing through the 164-km canal can knock 11 days off a typical intercontinental voyage for which the alternative route would normally be around the Cape of Good Hope. However, tariffs are steep, estimated by shipping line Maersk at around $350,000/vessel. The fees are still too high compared to the extra cost of bunker fuel needed for longer voyages around the cape as the price of the heavy marine fuel has fallen by about two-thirds since mid-2014.

Persian Gulf debt creating 'vicious circle' for Arab oil producers: A borrowing bonanza in the Middle East is laying bare just how varied the risks are on the Arab Peninsula.In Qatar, billions of dollars in recently raised sovereign debt will help to accommodate soccer fans when FIFA comes to town. In Bahrain, bond proceeds are expected to keep a lid on simmering social unrest. A second year of low oil prices has left the Arab states of the Persian Gulf with lingering budget deficits, forcing them to borrow money from international lenders. While the six nations of the Gulf Cooperation Council are often discussed as a whole, their experience in debt markets and the implications of the borrowing binge for each country is anything but uniform. Some Gulf states have strong credit ratings but lack experience managing big debt loads. Others are avid borrowers but could see their costs rise as debt becomes larger in proportion to their economic output.The borrowing also comes as Gulf nations embark on ambitious plans to diversify their economies to become less reliant on oil. Moody's warned in August that the short-term relief brought by borrowing could cause Gulf states to delay much-needed reforms. OPEC's decision last week to cut oil production will also bolster the Gulf nations, but Moody's warned the countries would "continue to face economic, fiscal and external challenges" even as crude prices recover to a range of $50 to $60 a barrel.

Saudi central bank hit by hackers' 'digital bomb', risking payments -  State-sponsored hackers who unleashed a digital bomb in key parts of Saudi Arabia's computer networks over the last two weeks damaged systems at the country's central bank, known as the Saudi Arabian Monetary Agency, according to two people briefed on an ongoing investigation of the breach. State-sponsored hackers who unleashed a digital bomb in key parts of Saudi Arabia's computer networks over the last two weeks damaged systems at the country's central bank, known as the Saudi Arabian Monetary Agency, according to two people briefed on an ongoing investigation of the breach. The attacks, which afflicted at least six government entities, used a computer-killing malware known as Shamoon that is linked to Iran, they said. Hitting the targets had the potential to inflict damage across several critical sectors, including finance and transportation. The investigation is still in its early stages and the determination of responsibility could change, the two people said. The number of entities where damage occurred is likely to grow as the probe continues, a third said. Iranian officials didn't respond to repeated requests for comment on the attack. Calls placed to the Saudi Interior Ministry about the targeting of the country's central bank weren't returned. This would be at least the second central bank to suffer a major digital attack in the past year. In February, hackers stole $81m by manipulating the international payment system at the central bank in Bangladesh. The malware, which overwrites the master boot record of a computer, rendering it inoperable, has already destroyed thousands of computers across multiple government agencies, two people familiar with the probe said.

Boris Johnson’s remarks about Saudi Arabia ‘not the government’s view’ -- Boris Johnson was not representing the government’s views on Saudi Arabia when he accused the state of abusing Islam and acting as a puppeteer in proxy wars, Downing Street has said. The foreign secretary was setting out his own views on Saudi Arabia and Iran at a conference in Rome last week, the prime minister’s spokeswoman said on Thursday, but would be sticking to the government’s line when he visited Saudi ministers this weekend. The spokeswoman insisted Downing Street had “full confidence in the foreign secretary” but said Saudi Arabia was “a vital partner for the UK, particularly on counter-terrorism and, when you look at what is happening in the region, we are supportive of the Saudi-led coalition which is working in support of the legitimate government in Yemen against Houthi rebels”. Asked if the prime minister had any sympathy with Johnson’s view of the Yemen conflict, she added: “I’ve set out what the PM views are, and those are the foreign secretary’s views, they are not the government’s views on Saudi and its role in the region.”Johnson’s remarks, published in the Guardian, came at an embarrassing moment for Downing Street, emerging shortly after Theresa May returned from a two-day trip to the Gulf where she spoke repeatedly of the closeness of the relationship between the UK and Gulf states.  The foreign secretary had said: “There are politicians who are twisting and abusing religion and different strains of the same religion in order to further their own political objectives. That’s one of the biggest political problems in the whole region. And the tragedy for me – and that’s why you have these proxy wars being fought the whole time in that area – is that there is not strong enough leadership in the countries themselves.”’

US to Sell $7 Billion of Military Aircraft to Four Arab Nations - - The United States on Thursday approved a series of deals worth more than $7 billion to supply military helicopters, planes and missiles to four of its Arab allies. The green light, announced by the State Department, will mark another windfall for plane maker Boeing and other large US defense manufacturers. But it may face opposition from critics of Saudi Arabia and the United Arab Emirates' controversial role in Yemen's ongoing civil war. The biggest agreement announced Thursday was for the $3.51 billion sale to the Saudi kingdom of 48 CH-47F Chinook cargo helicopters with spare engines and machine guns. Boeing and Honeywell Aerospace will be the main contractors. Up to 60 Americans -- both private and government employees -- will work in Saudi Arabia to maintain the aircraft. Next, the United Arab Emirates want to spend $3.5 billion on 27 AH-64E Apache attack helicopters plus support equipment, made by Boeing and Lockheed Martin. Qatar, meanwhile, has requested eight C-17 military cargo jets and spare engines in a pair of contracts totaling $781 million. And Washington has also approved a contract to sell Morocco 1,200 TOW 2A anti-tank missiles made by US arms giant Raytheon for $108 million. Although the State Department has approved the sales, after consultation with the Pentagon, Congress could still block them in theory. Since all four Arab countries involved are US allies and past major arms purchasers, however, the contracts are expected to be approved without problem -- despite human rights groups' criticism of US support for the Saudi-led coalition campaign against Huthi rebels in Yemen, which has killed many civilians.

Devastating Cholera Outbreak in War-torn Yemen - The war-torn country of Yemen has been battling a significant cholera outbreak since mid-October of 2016. The number of suspected cases doubled over the course of 12 days from 2,070 cases on November 1st, to 4,119 cases on November 13th [2,3,5]. As of November 14th, there has been eight confirmed deaths from cholera and 56 from acute diarrhea across the country (2,5). This cholera outbreak is mostly affecting children, with half of the suspected cases being reported in children under 10 years old [4,6]. Cholera is an acute diarrheal disease caused by ingesting food or water contaminated with the bacterium Vibrio cholera, or from coming in close contact with an infected individual. The food or water often becomes contaminated with V. cholerae through fecal contamination from already infected persons [8]. Most people infected with cholera experience mild or no symptoms [8]. Thus, those who are unaware of their cholera infection living in locations with poor water and sanitation infrastructure can contribute to spread of the disease [7]. Cholera more commonly affects individuals living in slums or refugee camps, due to reduced access to clean water and sanitation facilities [7]. Only one in ten people infected with cholera will experience severe symptoms including severe watery diarrhea and vomiting [8]. Consequently, these symptoms cause severe dehydration, which can be deadly. Symptoms often take between 12 hours and five days to occur after ingestion of V. cholerae bacteria [7]. If left untreated, cholera can result in death within hours after symptoms commence [7].

The Need to Hold Saudi Arabia Accountable – If someone wants to become somebody in Official Washington, there are certain lies that you must assert as undeniable truths, almost like flashing a secret sign to gain entry to an exclusive club. For instance, you must say that Iran is the world’s “chief sponsor of terrorism” though that is patently false. The problem is that a much bigger sponsor of terrorism is Saudi Arabia, with some competition from Qatar, but those two Gulf states are extremely wealthy U.S. “allies” and their hatred of Iran is shared by Israel, which possesses the most intimidating foreign lobby in Washington. So, deviation from the “Iran-chief-sponsor-of-terrorism” mantra marks you as someone who is not part of the club and never will be.Yet, while lies may be the mother’s milk of Official Washington, there are severe costs paid by the American people and even more by the people of the Middle East who have suffered from the bloody consequences of this particular lie because it has been at the root of a series of misguided U.S. interventions, which themselves have spread widespread terror. The U.S. government allied itself with Saudi Arabia in building the modern Islamic terrorism movement in the 1980s when the Reagan administration went in 50/50 with Saudi Arabia to finance and arm the Afghan mujahedeen – a project costing billions of dollars – to fight a merciless war against Soviet troops defending a leftist, secular regime in Kabul. That war not only opened the gates of Kabul to the likes of Saudi jihadist Osama bin Laden and the Taliban but it created the methodology and means for the Saudis to expand their Sunni proxy wars against various Shiite “apostates” and secularists across the region. Though hailed in U.S. propaganda as noble freedom fighters, the mujahedeen routinely sodomized, tortured and murdered captured Russian soldiers and put Afghan women back into prehistoric servitude. After the Taliban prevailed in 1996, they castrated Afghan President Najibullah and hung his mutilated body from a light pole. In the years that followed, there were plenty of public beheadings for violating the Taliban’s fundamentalist teachings, which were shared by Saudi officialdom.

Rebels defiant as Syrian army nears Aleppo's Old City | Reuters: Syria's army and allied militia advanced towards rebel-held areas of Aleppo's Old City on Sunday in an attack which a military source predicted would be over in a matter of weeks. Western and regional states backing the rebellion against President Bashar al-Assad appear unwilling or unable to do anything to prevent a major defeat for those fighting to topple the Syrian leader, whose campaign to regain all Aleppo has been backed by the Russian air force and foreign Shi'ite militias. Rebel groups in Aleppo have told the United States they will not leave their shrinking enclave, a senior rebel official told Reuters, after Russia call for talks with Washington over a full withdrawal of opposition fighters. But the rebels may eventually have no choice but to negotiate a withdrawal from eastern Aleppo, where tens of thousands of civilians are thought to be sheltering, in the face of relentless bombardment and ground assaults. The army said Sunday's gains, some of which were confirmed by a rebel official with the Jabha Shamiya group, included a strategically important eye hospital. The rebel official said it had yet to fall. Loud explosions were heard in eastern Aleppo as night fell, Reuters journalists in the government-held part of the city said. The Jabha Shamiya official said further advances may force a rebel withdrawal to the southwestern corner of their enclave. "The areas of Old Aleppo will be threatened to a great degree," the official said. "It is scorched earth." Food and fuel supplies are critically low in eastern Aleppo, where hospitals have been repeatedly bombed out of operation.

Our Syrian Rebels Are Issuing Threats Via WaPo – Marcy Wheeler -  This is a striking article in the WaPo. It deals extensively with setbacks rebels in Syria have already suffered at the hand of Russia’s campaign. But it bears this headline, as if Trump’s administration, not Russian intervention (and Obama’s mixed commitment), is the key change. “Fearing abandonment by Trump, CIA-backed rebels in Syria mull alternatives” As I said, the story provides plenty of evidence the real change here stems from Russian involvement, not Trump’s election. But Trump’s election provides a way for a bunch of people to issue threats about what rebels might do in response to their fading fortunes. The story quotes some anonymous US officials which likely includes Adam Schiff, who is also quoted by name, as well as an anonymous “U.S.-vetted rebel commander” who apparently speaks for the thousands the article claims to represent, and Qatar’s foreign minister Mohammed bin Abdulrahman Jassim al-Thani, suggesting that if rebels aren’t helped more America’s alliance with the Gulf States may be in trouble. It also lays out what Trump’s incoming team, including Mike Flynn and James Mattis, might feel about how a Syrian win would help Iran. I’m most interested in this part of the article, in which a single US official lays out a certain narrative about the US backed rebels — basically pretending that the covert program has worked. The possibility of cutting loose opposition groups it has vetted, trained and armed would be a jolt to a CIA already unsettled by the low opinion of U.S. intelligence capabilities that Trump had expressed during his presidential campaign. From a slow and disorganized start, the opposition “accomplished many of the goals the U.S. hoped for,” including their development into a credible fighting force that showed signs of pressuring Assad into negotiations, had Russia not begun bombing and Iran stepped up its presence on the ground, said one of several U.S. officials who discussed the situation on the condition of anonymity because they were not authorized to speak publicly.  The United States estimates that there are 50,000 or more fighters it calls “moderate opposition,” concentrated in the northwest province of Idlib, in Aleppo and in smaller pockets throughout western and southern Syria, and that they are not likely to give up. “They’ve been fighting for years, and they’ve managed to survive,” the U.S. official said. “Their opposition to Assad is not going to fade away.” Not only does this passage far overstate the success of US efforts, but it — like Qatar’s foreign minister — threatens that these armed men won’t go away if the US backs Assad.

Syrian government forces press attack in east Aleppo | Reuters: The Syrian army pressed an offensive in Aleppo on Friday with ground fighting and air strikes in an operation to retake all of the city's rebel-held east that would bring victory in the civil war closer for President Bashar al-Assad. "The advance is going according to plan and is sometimes faster than expected," a Syrian military source told Reuters. The Syrian army and its allies had recaptured 32 of east Aleppo's 40 neighborhoods, about 85 percent of the area, he said. Reuters journalists, rebels and a monitor confirmed the military thrust. There were no reports the Syrian army had made significant gains. Russia's Foreign Minister Sergei Lavrov said the Syrian army had suspended military activity to let civilians leave rebel-held areas, RIA news agency reported. The army and its allies tried to advance on two fronts, a Turkish-based official with the Jabha Shamiya rebel group said. "Helicopters, warplanes and rocket bombardment like every day. Nothing has changed," the official said. Despite the bombardment, "the guys are steadfast," the official added. During a tour of Old Aleppo on Friday, which the Syrian army took control of this week, Reuters journalists counted the sound of nine air strikes in about half an hour. Fighting could be heard from other areas nearby.The Russian air force and Iran-backed Shi'ite militias are fighting in Aleppo on the government side. Rebel leaders have given no sign they are about to withdraw as the civilian population is squeezed into an ever-decreasing area.

Recapture of Mosul 'possible' before next U.S. administration: Pentagon chief | Reuters: While the fight to retake the Iraqi city of Mosul from Islamic State is going to be difficult, it is "possible" it could be complete before President-elect Donald Trump takes office, U.S. Defense Secretary Ash Carter said on Monday. Some 100,000 Iraqi government troops, Kurdish security forces and mainly Shi'ite militiamen are participating in the assault on Mosul that began on Oct. 17, with air and ground support from a U.S.-led coalition. The capture of Mosul, the largest city under control of Islamic State, is seen as crucial toward dismantling the caliphate which the militants declared over parts of the Iraq and Syria in 2014. "That is certainly possible and again it is going to be a tough fight," Carter said when asked if the recapture would be complete before Jan. 20, when Trump starts his presidency. Islamic State fighters retreating in the face of a seven-week military assault on their Mosul stronghold have hit back in the past few days, exploiting cloudy skies which hampered U.S-led air support and highlighting the fragile army gains. In a series of counter-attacks since Friday, the jihadist fighters struck elite Iraqi troops spearheading the offensive in eastern Mosul, and attacked security forces to the south and west of the city.

UN Agrees To Stop Reporting Iraqi Casualties After Military Complains --Following complaints from the Iraqi government, the United Nations has agreed to stop recording casualty figures for the ISIS war in Iraq, meaning that November’s report of 1,959 deaths among Iraqi security forces will be the last deaths you’ll be hearing about from them.The war with the Islamic State militants left at least 5,719 people killed and 1,734 wounded in the last month. The fighting has slowed in Mosul, but the numbers remain high. In October, 5,930 people were killed and 2,463 were wounded. The Iraqi government will not release their casualty figures, so these numbers are rough estimates.At least 1,533 civilians were killed and another 1,113 were wounded across Iraq. These figures are likely low as some witnesses are estimating that over 100 civilians are wounded in Mosul everyday. Many of the dead in Mosul are being buried in gardens and going unreported.At least 216 of the fatalities belonged to military personnel, and 287 more of them were wounded. These figures are likely underreported as well. Workers at the Wadi al-Salam cemetery in Najaf say they take in at least 20 bodies belonging to security personnel, including Shi’ite militiamen, on a daily basis.Militants reportedly lost about 2,227 personnel. Another 171 were wounded. The number of fatalities among ISIS/Daesh may be exaggerated by sources in the Iraqi government seeking to boost morale or to cover the deaths of civilians in the war zone. In any case, due to the nature of the fighting, precise figures are impossible.The United Nations, which has a team on the ground in Iraq, released its figures on Thursday. The team found that 926 civilians were killed, about a third of them in Nineveh province. Another 930 were wounded. The U.N. team apparently has access to verifiable military figures, because they also report that 1,959 security personnel were killed and 450 more were wounded. The U.N. figures do not include casualties from Anbar province. The Anbar Health Directorate, however, reported 292 civilians killed and 98 injured. Combining the highest figures, finds that a total of 5,719 people were killed or their remains were discovered in the last month. Another 1734 were wounded.

Pentagon Paid PR Firm $540 Million to Make Fake Terrorist Videos - The Pentagon paid a UK PR firm half a billion dollars to create fake terrorist videos in Iraq in a secret propaganda campaign exposed by the Bureau of Investigative Journalism. PR firm Bell Pottinger, known for its array of controversial clients including the Saudi government and Chilean dictator Augusto Pinochet’s foundation, worked with the US military to create the propaganda in a secretive operation.The firm reported to the CIA, the National Security Council and the Pentagon on the project with a mandate to portray Al-Qaeda in a negative light and track suspected sympathizers.Both the White House and General David Petraeus, the former general who shared classified information with his mistress, signed off on the content produced by the agency.The Bell Pottinger operation started soon after the US invasion of Iraq and was tasked with promoting the “democratic elections” for the administration before moving on to more lucrative psychological and information operations.Former employee Martin Wells told the Bureau how he found himself working in Iraq after being hired as a video editor by Bell Pottinger. Within 48 hours, he was landing in Baghdad to edit content for secret “psychological operations” at Camp Victory.The firm created television ads showing Al-Qaeda in a negative light as well as creating content to look as though it had come from “Arabic TV.” Crews were sent out to film bombings with low quality video. The firm would then edit it to make it look like news footage. They would craft scripts for Arabic soap operas where characters would reject terrorism with happy consequences. The firm also created fake Al-Qaeda propaganda videos, which were then planted by the military in homes they raided

How Iran closed the Mosul 'horseshoe' and changed Iraq war | Reuters: In the early days of the assault on Islamic State in Mosul, Iran successfully pressed Iraq to change its battle plan and seal off the city, an intervention which has since shaped the tortuous course of the conflict, sources briefed on the plan say. The original campaign strategy called for Iraqi forces to close in around Mosul in a horseshoe formation, blocking three fronts but leaving open the fourth - to the west of the city leading to Islamic State territory in neighboring Syria. That model, used to recapture several Iraqi cities from the ultra-hardline militants in the last two years, would have left fighters and civilians a clear route of escape and could have made the Mosul battle quicker and simpler. But Tehran, anxious that retreating fighters would sweep back into Syria just as Iran's ally President Bashar al-Assad was gaining the upper hand in his country's five-year civil war, wanted Islamic State crushed and eliminated in Mosul. The sources say Iran lobbied for Iranian-backed Popular Mobilization fighters to be sent to the western front to seal off the link between Mosul and Raqqa, the two main cities of Islamic State's self-declared cross-border caliphate. That link is now broken. For the first time in Iraq's two-and-half-year, Western-backed drive to defeat Islamic State, several thousand militants have little choice but to fight to the death, and 1 million remaining Mosul citizens have no escape from the front lines creeping ever closer to the city center. "If you corner your enemy and don’t leave an escape, he will fight till the end," said a Kurdish official involved in planning the Mosul battle.

Rouhani says Iran will not let Trump rip up nuclear deal | Reuters: Iran's President Hassan Rouhani said on Tuesday he would not let U.S. President-elect Donald Trump rip up a global nuclear deal, warning of unspecified repercussions if Washington reneges on the agreement. Trump had said during campaigns for the White House that he would scrap Iran's pact with world powers - under which Tehran agreed to curb its nuclear program in return for lifted sanctions - describing it as "the worst deal ever negotiated". "[Trump] wants to do many things, but none of his actions would affect us," Rouhani said in a speech at University of Tehran broadcast live on state television. "Do you think the he can rip up the JCPOA (Joint Comprehensive Plan of Action nuclear deal)? Do you think we and our nation will let him do that?" Analysts have said Trump's comments could signal a harder U.S. line on Iran, a development that could in turn empower hardliners on Iran's political scene, including rivals of Rouhani. Iran's Supreme Leader, Ayatollah Ali Khamenei, warned against any changes to the nuclear deal after Trump's comments in June, and said last month that an extension of a U.S. sanction regime would be viewed as a violation of the accord. Rouhani echoed Khamenei's comments on the U.S. Congress decision last month to pass legislation to extend the Iran Sanctions Act (ISA) for 10 years to make it easier for Washington to reimpose sanctions if Tehran contravenes the nuclear deal. U.S. President Barack Obama still needs to sign the legislation.

WikiLeaks Documents Reveal Sinister Relations Between Erdogan And ISIS -- Back in November 2015, when the world (or at least parts of it) was trying to answer one simple question: where does ISIS get its money, we first provided the answer in "Meet The Man Who Funds ISIS: Bilal Erdogan, The Son Of Turkey's President." Subsequent articles such as "ISIS Oil Trade Full Frontal: "Raqqa's Rockefellers", Bilal Erdogan, KRG Crude, And The Israel Connection" only shed more light on the illegal cash-for-oil transfer taking place between Turkey's ruling family and the Islamic State. Ultimately, the highly illegal bilateral trade (which the west had quietly averted its attention away from) faded and eventually stopped entirely following the expansion of the Russian bombing campaign which cut off the main trade routes between Turkey and Islamic State oil producers, which in some ways was good news for Turkey, as it avoided being shamed internationally for its role in supporting the terrorist organization. That, however, changed today following today's article by the Press Project which has found WikiLeaks evidence highlighting "sinister relations between Erdogan and ISIS" and transformed yet another conspiracy theory into non-conspiratorial fact. As author Thanos Kamilialis writes, the connection of the Turkish president Recep Tayyip Erdogans family with the oil smuggling of the “Islamic State” is revealed after Wikileaks? revealing of emails from the Turkish energy minister, and Erdogan?s son-in-law, Berat Albayrak. Albayrak?s emails seem to confirm the not-so-recent accusations, since the energy minister is appealing to be the “unofficial” owner of the oil company Powertrance which is importing oil from the Isis land in Northern Irak to Turkey. This is the full story of the relationship between Turkey and the Islamic State:

Erdogan wants Turkey's trade with Iran, Russia, China in local currencies | Middle East Eye: Turkish President Recep Tayyip Erdogan said his country is moving towards allowing trade with Iran, Russia and China to be conducted in local rather than foreign currencies, as he continues his efforts to strengthen the falling lira. "If we buy something from them, we will use their money, if they buy something from us, they will use our currency," he said, ahead of a trip by Turkish Prime Minister Binali Yildirim to Russia for meetings on Tuesday. Erdogan - who previously said discussions were underway with Moscow, Beijing and Tehran on the issue - added that instructions related to this proposal had been given to the central bank. Erdogan has called on Turks to cash in their foreign exchange holdings and buy lira to stem the Turkish currency's decline. The lira has lost a fifth of its value this year, hit by a resurgent dollar and widening concern about a crackdown after the 15 July failed coup."Our Turkish lira is blessed," he told a cheering, flag-waving crowd after opening a museum in the city named after his predecessor and long-time friend Abdullah Gul. Ankara hopes such demands will help the lira win back the losses it has suffered since the failed coup in July, when a rogue military faction tried to oust Erdogan from power. In November alone, the lira declined more than 10 percent while it continues to reach record lows against a stronger US dollar. The lira on Friday reached a record low of 3.58 to the dollar before making up some of the loss. In another televised speech on Sunday, Erdogan urged owners of shopping malls to "change paying their rent in foreign currencies” to Turkish lira" to prove they are "patriotic".

US 'almost certain' to extend Russian sanctions in March: former diplomat - US sanctions against the Russian energy sector are "likely or almost certain" to be renewed in March and again next summer, despite predictions that President-elect Donald Trump will take a softer stance with Moscow, a sanctions expert and former US ambassador to Ukraine said December 6. "The Trump administration is not going to monkey with sanctions," said John Herbst, now director of the Atlantic Council's Eurasia program. "The people that the president-elect has named as national security figures all understand the dangers of [Russian President Vladimir] Putin's aggressive agenda and the need to withstand it." He was speaking at an Atlantic Council event in Washington. If Trump decides not to renew the Russian sanctions through executive action, however, Congress has made clear its willingness to impose sanctions through legislation. "There's going to be a strong majority on both sides of the aisle in favor of sanctions, and perhaps a veto-proof majority," Herbst said."But we can't fool ourselves: Western Europe may not go along," Aufhauser said. "And unilateral sanctions are usually a lousy idea." European sanctions against Russia expire January 31, and EU leaders are expected to vote next week whether to extend them by six months. The Atlantic Council released a study calling into question the effectiveness of the US and European sanctions against Russia. Report author Sergey Aleksashenko, former deputy chairman of the Russian Central Bank and former chairman of Merrill Lynch Russia, recommended tightening sanctions against individuals, expanding financial sanctions and increasing the cost on Russia's energy sector through an embargo on buying crude from state-owned companies.

Trump's Biggest Test So Far -- On December 7th, was posed the biggest test so far of the mettle of America’s President-Elect, Donald Trump. He had said several times during his campaign, that if elected as President, he would seek a new, less-hostile, relationship between the U.S. and Russia. Now the moment has come when he must either make his first move forward with that historic commitment, or else - by his own inaction when the circumstances (such as right now) demand immediate action on this very promise - set his future U.S. Presidential Administration onto exactly the opposite path: following through with and accepting the existing hostilities, even when they are the most blatantly irrational and counter-factual on their American basis (as now is the case). The precipitating event here is this: NATO Secretary-General Jens Stoltenberg and German Foreign Minister Frank-Walter Steinmeier said on December 7th that they want to continue the existing hostilities against Russia: specifically the economic sanctions that U.S. President Barack Obama initiated against Russia after Russia had accepted the overwhelming (90%+) request of the residents in Crimea to restore Crimea’s pre-1954 status, of being for hundreds of years an integral part of Russia. The way Steinmeier phrased it was, “The necessary significant progress” by Russia in the implementation of the Minsk Peace Agreement for Ukraine, has not been achieved, and so the sanctions against Russia “will continue to exist.” By “the necessary significant progress” he was referring actually to the thing that has been blocking the carrying-out of the Minsk agreements: the Ukrainian Government’s refusal to adhere to provision #11 of the Minsk II Accords, the provision that says Ukraine will pass an amendment to its Constitution so as to provide “special administrative status” within Ukraine to the two breakaway regions, Donbass (where 90% of the residents had voted for the Ukrainian President whom U.S. President Barack Obama’s Administration had overthrown in a bloody coup in February 2014, which coup sparked Donbass’s breakaway), and Crimea (where 75% had voted for that deposed President, whose bloody removal by Obama’s operation sparked Crimea’s breakaway on 16 March 2014, three weeks after that coup).What Stoltenberg and Steinmeier ought to be demanding, then, certainly is not continuation of sanctions against Russia for something that Russia isn’t responsible for and actually opposes (a breaking of that promise by the Ukainian Goverment), which is Ukraine’s refusal to comply with provision #11 of the Minsk II Accords, but, instead, sanctions against the Ukrainian Government itself, and perhaps also against the U.S. Government, for their opposing and blocking implementation of that key provision of the Accords (and, perhaps belatedly, also for that coup).

A Major Red Flag? Chinese Oil Demand Growth Could Shrink 60% In 2017 - Chinese growth of crude oil imports may likely shrink by more than 60 percent next year, as storage facilities are filling in and smaller refiners face more scrutiny over taxes and licenses, according to a Bloomberg survey of analysts. According to Energy Aspects analyst Michal Meidan, Chinese crude oil imports are expected to grow by 5 to 9 percent in 2017, compared to an estimated growth of 11 to 14 percent this year.  According to customs data quoted by Bloomberg, Chinese imports increased by 14 percent to average 7.5 million bpd between January and November this year. The median estimate of 8 analysts in the survey showed that China would increase oil purchases by 4.8 percent on the year in 2017.In addition, China has been bumping up crude oil imports while port and pipeline infrastructure has not been keeping up with development fast enough, which could also reduce the growth of imports.For the small refiners, the so-called ‘teapots’, they are allocated import quotas to which they need to stick to. As of October of this year, 17 teapots had been allocated a combined quota of 1.35 million bpd for 2016, while a dozen other small refiners are in the process of being approved.According to Pang Guanglian, deputy secretary general of the China Petroleum and Chemical Industry Federation—one of the associations reviewing import quotas—the amount of additional new quotas for private refiners could fall “significantly” next year compared to this year, Bloomberg said.A few months ago, the Chinese authorities announced an attempt to impose stricter control on taxes paid by independent refineries. According to a Platts analysis, this might potentially result in slowed short-term crude import plans, although it was unlikely to lead to substantial impacts in the longer run.

Analysis: Beijing's silence on oil export quotas creates turmoil in industry - The possibility that Beijing may not award oil product export quotas to independent refiners has created turmoil in the industry and raised questions on the impact this would have on refinery run rates, oil product exports, and the Shandong provincial government's infrastructure investment plans. Reliable trading sources in China told S&P Global Platts last week that the government may not allocate export quotas to independent refiners for 2017. This would leave the independent refiners dependent on state-owned trading companies to export oil products. The Ministry of Commerce, the authority responsible for allocating quotas, has not yet issued a statement. But a formal announcement may not come, given that the export policy for independent refiners is only valid until end-2016.The speculation has stemmed from the fact that the government has not yet asked the independent refiners to submit quota applications, when in fact, to secure quotas for the first quarter of 2017, the applications should have been submitted by mid-November. Industry sources said the government may be looking to control independent refiners' exports. There is also a policy debate going on in the government on whether China wants to and should become a big oil products exporter, as this runs counter to the government's plan to control excess refining capacity and pollution.

China Car Sales Rise 20% as Buyers Rush to Beat Expiring Tax Cut   - China’s passenger-vehicle sales rose for a ninth consecutive month as consumers rushed to buy small-engine autos before a tax cut is due to expire at the end of the year, boosting deliveries at local carmakers including Geely Automobile Holdings Ltd. and Guangzhou Automobile Group Co. Retail sales of cars, sport utility and multipurpose vehicles to dealerships climbed 20 percent to 2.42 million units in November, according to the China Passenger Car Association. Deliveries rose 16 percent to 21.1 million units in the first 11 months. Buyers of small-engine cars in the world’s biggest auto market continued to bring forward their purchases to qualify for a tax cut that’s expiring at the end of this year. While a decision on the extension is awaited, the government this month slapped an additional 10 percent levy on vehicles such as Ferrari GTC4Luzzo and Bentley Bentayga costing more than 1.3 million yuan before a value-added tax as it sought to combat conspicuous consumption and promote more efficient vehicles. “As long as the government doesn’t say anything about carrying the tax cut beyond this year consumers would assume it will run out this month and act on that assumption,”   The sustained demand for cars with engine 1.6 liter or smaller has helped clear inventory at dealerships, according to China Automobile Dealers Association. Geely posted the fastest sales growth among major local automakers with its deliveries almost doubling to 102,422 units led by demand for its New Emgrand cars, while Guangzhou Auto’s sales climbed 34 percent to 174,354 units. Great Wall Motor Co., China’s biggest maker of sport utility vehicles, boosted deliveries 43 percent to 129,087 units.

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