Sunday, December 18, 2016

review of non-OPEC oil production cuts; projections for global supply & demand; US gasoline exports hit record high, et al

oil prices remained volatile this week, as countervailing waves of avarice and anxiety about the coming Russian and OPEC led production cuts swept over the oil markets, but by the end of the week they were little changed from last week's close...what might have been the largest price move of the year for US oil was unleashed before the week even started, as oil prices jumped $3 a barrel to $54.50 a barrel at the opening of Asian trading at 11 PM on Sunday, as global oil traders reacted to the agreement by Russia and ten other non OPEC oil producers last Saturday to join the cartel in cutting their oil output...prices in New York were as high as $54.51 a barrel after US markets opened, the highest price since July 6, 2015, but fell back from there over the rest of the day to close Monday up just $1.33 at $52.83 a barrel...oil then traded 50 cents higher on Tuesday morning, but slipped back to close at $52.98 a barrel after the American Petroleum Institute reported large increases in crude and gasoline inventories...prices then fell back to close at $51.04 a barrel on Wednesday, despite the EIA report that US crude supplies had actually fallen, as the IEA (International Energy Agency) reported that OPEC had pumped 34.2 million barrels a day in November, a record high that was 300,000 barrels a day higher than their October record....oil prices continued to fall on Thursday as the US dollar hit a 14-year high against other major currencies, briefly slipping below $50 a barrel, before climbing back near the close to settle down just 14 cents at $50.90 a barrel....prices then rose Friday as oil traders regained faith in the OPEC deal and Goldman Sachs raised its oil price forecast to $57.50, and oil closed the week at $51.90 a barrel, for a gain of less than 1% from last Friday's close of $51.50..

this week we finally have some details on the secondary agreement to cut oil production that came out of that meeting of Russia and other non-OPEC oil producers last Saturday, which we didn't have much information about at that time...that agreement is projected to reduce production of the 11 signatories by 558,000 barrels a day, on top of the 1.2 million barrels a day in cuts already agreed to by OPEC, thus amounting to a total reduction of about 1.8% of global oil addition to the 300,000 barrel per day cut expected from Russia, other producers contributing relatively large cuts include Mexico, who will cut 100,000 barrels a day, Kazakhstan, who will cut 50,000 barrels a day, Oman, who will cut 45,000 barrels a day, and Azerbaijan, who will cut 35,000 barrels a day...other participants, all with smaller output cuts, include Bahrain, Brunei, Equatorial Guinea, Malaysia, Sudan and South Sudan....Mexico's participation, especially to that degree, is the one surprising here, at least to me, because i'd thought i'd read that Mexico had opted out...but it does make sense for Mexico to cut output, because their aging giant Cantarell field has been in decline for years, and pushing it to maintain maximum output only risks its viability in the long run...other than Russia, the country to watch among these non-OPEC producers will be Kazakhstan, who just brought their giant Kashagan oil field online in October.. operated by an international consortium including Exxon, Shell, Eni, Total, CNPC, and Japan’s Inpex, Kashagan was projected to add 80,000 barrels a day to Kazakhstan's output, and after spending $50 billion over a dozen years to get it operating, those big oil companies aren't going to want to see it slowed down..

Global Oil Supply and Demand

in addition to this week's release of the aforementioned report on global oil production from the Paris-based International Energy Agency, which is available to subscribers only, OPEC released their Monthly Oil Market Report for December, a free 101 page pdf, which we'll pull a few graphics out of to put this all in perspective....this first table is from page 60 of the OPEC pdf and it shows oil production in thousands of barrels per day for each of the OPEC members over the recent years, quarters and months as labeled...OPEC uses "secondary sources", such as analyst's reports from satellites and shipping data, as an impartial adjudicator for their for their quotas and production cuts, rather than use what's directly reported by the members (shown in Table 5.9, also on page 60), to resolve potential disputes that might arise if each member reported their own figures...what we're interested in here are the October and November 2016 figures, and the change between them, shown in the last column....while they also show a new record for their November production, note that the increase reported here is only half of the 300,000 barrels per day jump to 34.2 million barrels a day that was reported by the IEA... 

November OPEC crude production

the next graphic, from page 61 of the December OPEC Monthly Oil Market Report, shows both OPEC and world oil production monthly on the same graph, from December 2014 to November 2016...the pale blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the green graph represents global oil production in millions of barrels per day, as shown on the right scale...according to OPEC, global oil production reached a new record of 96.84 million barrels per day in November, up by more than half million barrels per day from the 96.32 million barrels per day produced in October, and OPEC accounted for 35.0% of that global total..

November world oil supply via OPEC

next, from page 39 of the same OPEC report, we have global oil demand figures for 2015 and each of the quarters of 2016...this represents how much of that oil being produced that's shown above is being consumed, and basically by whom (FSU is the former Soviet Union countries)...thus, global consumption of oil throughout 2016 averaged 94.41 million barrels per day, and the projected demand for oil in the 4th quarter of this year works out to 95.31 million barrels per day, in contrast to November global production of 96.84 million barrels per day...

November world oil demand via OPEC

finally, we have a graphic from the Public Page of the current IEA Oil Market Report, which shows what they project will happen to global oil supply and demand in the first two quarters of 2017 if OPEC and other oil producers go through with their oil production cuts as announced...the green graph shows oil production globally in millions of barrels per day for each quarter since the beginning of 2013, while the yellow graph shows global oil consumption in millions of barrels per day over that same span...the blue bars in the background of that graph show the difference, also in millions of barrels per day, between the green and yellow graphs, with a blue bar pointing upward representing the amount of oil surplus in a given quarter, while a blue bar pointing downward represents a deficit of oil, necessitating withdrawal of oil from storage, and typically resulting in higher oil prices until such time as some of the demand is squeezed out....thus we can see that the world has been producing surplus oil in various amounts since the 2nd quarter of 2014, from which time oil prices have fallen from above $100 a barrel to as low as $26...the IEA now projects that if OPEC and non-OPEC oil producers implement the oil production cuts they've indicated, there will be an estimated oil deficit of 0.6 million of barrels per day globally during the first two quarters of 2017

IEA November 2016 demand supply balance

The Latest Oil Stats from the EIA

this week's oil data for the week ending December 9th from the US Energy Information Administration indicated a big drop in our imports of crude and a small increase in refining, which thus left our end of the week supplies of crude oil quite a bit lower than the prior week....meanwhile, the crude oil fudge factor that was inserted into the weekly U.S. Petroleum Balance Sheet (line 13) to make it balance swung to +437,000 barrels per day, from last week's -425,000 barrels per day, which means that 437,000 more barrels of oil per day showed up in our final consumption and inventory figures this week than were accounted for by our crude production or import figures, meaning that one or more of this week's metrics were off by that amount.....with a week to week swing of 886,000 barrels per day in that fudge factor, this week's week over week comparisons involving crude are useless...the cumulative daily average of that adjustment has inched up to +117,000 barrels per day, which means the EIA's week figures remain out of balance for the whole year...we've shown that much of that imbalance has been due to under-reported oil production, but guessing how much in any given week is pretty much a crap shoot..

at any rate, for the week ending December 9th, the EIA reported that production of crude oil from US wells rose by 99,000 barrels per day to an average of 8,796,000 barrels per day, the 7th increase in the past 9 weeks, as output from Alaskan fields fell by 2,000 barrels per day while production from wells in the lower 48 states was 101,000 barrels per day higher, which suggests that a number of those drilled but uncompleted wells have now been fracked as oil prices a result, this week's domestic oil production was just 4.1% lower less that the 9,176,000 barrels of crude we produced during the week ending December 11th of last year, and 8.5% below our record 9,610,000 barrels per day of oil production that we saw during the week ending June 5th 2015... 

at the same time, the EIA reported that our imports of crude oil fell by an average of 943,000 barrels per day to an average of 7,360,000 barrels per day during the week ending December 9th, as the 4 week average of our oil imports reported by the EIA's weekly Petroleum Status Report (62 pp pdf) fell back to an average of 7.7 million barrels per day, now 2.0% lower than the same four-week period last my memory, that's the first time our 4 week average of oil imports fell below the prior year's 4 week average in the nearly two years we've tracked that metric, although we're sure it was more common when oil production was rising steadily, and before oil pricing went into contango, making it profitable to import and store oil...meanwhile, our exports of crude oil fell by an average of 14,000 barrels  per day during the week ending December 9th to an average of 485,000 barrels per day, in data that is not directly comparable to last year's oil exports of 445,000 barrels per day during the week ending December 11th... 

meanwhile, the EIA also reported that the amount of crude oil used by US refineries rose by an average of 57,000 barrels per day to an average of 16,474,000 barrels of crude per day during the week ending December 29th, as our refinery utilization rate inched up to 90.5% during the week from last week's 90.4%, which still left it lower than the refinery utilization rate of 91.9% during the week ending December 11th of last year...the amount of crude oil being refined this week nationally was down 0.8% from the 16,611,000 barrels of crude per day US refineries used during the week ending December 11th last year, while it was up 1.1% from the 16,301,000 barrels per day that were being refined during the equivalent week in 2014... 

however, despite another increase in the amount of crude oil being refined, the EIA reported that our refineries’ production of gasoline fell again, by 85,000 barrels per day to 9,828,000 barrels per day during the week ending December 9th...our gasoline production was thus down 1.4% from the 9,963,000 barrels per day of gasoline produced during the same week a year ago, but it was still up by 1.8% from the 9,652,000 barrels per day of gasoline produced during the week ending December 12th 2014...the EIA also reported that our refineries' output of distillate fuels (diesel fuel and heat oil) fell by 74,000 barrels per day to 5,009,000 barrels per day during the week ending December 9th, which was 1.9% lower than the 5,107,000 barrels per day that was being produced during the week ending December 11th last year, and also 3.9% lower than the 5,214,000 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 497,000 barrels to 230,045,000 barrels as of December 9th, as our domestic consumption of gasoline increased by 117,000 barrels per day to 8,874,000 barrels per day...that was as our gasoline imports fell by 28,000 barrels per day to 624,000 barrels per day while our gasoline exports rose by 139,000 barrels per day to a record high 1,131,000 barrels per day, which was only the 2nd week in history that our gasoline exports topped 1 million barrels per day...still, our gasoline inventories as of December 9th were 5.5% higher than the 217,653,000 barrels of gasoline that we had stored on December 11th of last year, and 5.9% higher than the 216,764,000 barrels of gasoline we had stored on December 12th of 2014....

at the same time, our distillate fuel inventories fell by 762,000 barrels to 155,935,000 barrels by December 9th, as our exports of distillates rose by 193,000 barrels per day to 1,321,000 barrels per day, the most distillates we've exported since September 23rd....nonetheless, our distillate inventories remained 2.6% higher than the distillate inventories of 151,976,000 barrels of December 11th last year, and 28.3% above the distillate inventories of 121,544,000 barrels of December 12th, 2014…

finally, mostly due to the big drop in our oil imports, our inventories of crude oil fell by 2,563,000 barrels to 483,193,000 barrels by  December 9th, which thus left our oil supplies 5.4% below their April 29th peak of 512,095,000 barrels...however, we nonetheless ended the week with 5.4% more crude oil in storage than the 458,354,000 barrels we had stored as of the same weekend a year earlier, and 39.1% more crude than the 347,466,000 barrels of oil we had in storage on December 12th of 2014...   

This Week's Rig Count

US drilling activity rose for the 12th time in 13 weeks during the week ending December 16th, as higher prices continue to draw more frackers out to the oil fields....Baker Hughes reported that the total count of active rotary rigs running in the US rose by another 13 rigs to 637 rigs by this Friday, which was still down from the 709 rigs that were deployed as of the December 18th 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 increased by 12 rigs to 510 rigs during the week, which was the first time US oil rigs topped 500 rigs since January 22nd of this year, as oil drilling activity has only retreated once in the past 25 weeks...but oil drilling was still down from the 541 oil directed rigs that were working in the US on December 18th 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 1 rig to 126 rigs, which still left active gas rigs down from the 168 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, in contrast to a year ago, when no such miscellaneous rigs were deployed...

both the Gulf of Mexico rig count and total US offshore count remained unchanged at 22 rigs, down from 24 offshore rigs a year ago, which were also all in the Gulf at that time...the number of working horizontal drilling rigs increased by 9 rigs to 512 rigs this week, which was still down from the 559 horizontal rigs that were in use in the US on December 18th of last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, 3 directional drilling rigs were added, increasing the directional rig count to 54, which was down from the 63 directional rigs that were deployed during the same week last year...meanwhile, the vertical rig count increased by a single rig to 71 rigs as of December 16th, which was still down from last December 18th's deployment of 87 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 that 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 16th, the second column shows the change in the number of working rigs between last week's count (December 9th) and this week's (December 16th), the third column shows last week's December 9th 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 18th of 2015...     

December 16th 2016 rig count summary

once again, the entire increase in the oil rig count could be accounted for by the 12 rig increase in the Permian, which at 258 rigs now accounts for more than half of the horizontal drills working in the US...notice that the Louisiana Haynesville now joins the Utica and the Permian with rig counts above their year ago level, whereas the Cana Woodford of Oklahoma, which had been ahead of its year earlier total for several weeks, has now slipped behind, as 3 rigs were shut down in that basin this week even at its year ago total rose...and while the 40 rigs now drilling in the Marcellus is still below last year's 41 rig deployment, the number of those rigs working in Pennsylvania has risen to 31 from last year's 26 rigs, while drilling in West Virginia has dropped from 16 rigs a year ago to 10 rigs currently....also note that outside of the major producing states shown in the summary table above, Alabama also saw a drilling rig start up last week, and thus they now have two rigs working, in contrast to a year ago, when there was no drilling going on in the state...


Will Gov. Kasich Save Ohio's Clean Energy Economy? --In the final hours of Ohio's lame-duck session, lawmakers passed House Bill 554 late Thursday night, which will freeze clean energy mandates for another two years if Gov. John Kasich signs the bill. More than 25,000 jobs could be at risk .  The state's original Renewable Portfolio Standard (RPS), SB 221 , was passed in 2008. It set a target for the state to get 25 percent of its electricity from "advanced energy sources" by 2025, with a requirement that at least half (12.5 percent or more) would be generated from "renewable energy resources," including one-half of one percent from solar and 50 percent of the energy to be generated within the state.  A two-year freeze was enacted when Gov. Kasich signed SB 310 on June 13, 2014. HB 554 now seeks to extend that freeze, making renewable energy targets voluntary for utilities. Ohio is the only state in the nation that has frozen its RPS. To date, 38 states have adopted RPS targets. "Ohio's renewable energy and energy efficiency standards have been frozen for the past two years, costing the state its place as a national leader in the clean energy economy by hampering energy innovation, investment, and jobs," said Dick Munson, director of Midwest Clean Energy. "Before the freeze, these standards saved families money and brought huge investments into the state, supporting more than 25,000 jobs, saving Ohioans over $1 billion on their electricity bills, and slashing the Buckeye State's air pollution."  A 2015 survey by Environmental Entrepreneurs (E2), a national, nonpartisan group of business owners and investors, showed that job growth in the clean energy sector in Ohio slowed to just 1.5 percent following implementation of the freeze in 2014. Moreover, those firms that did grow had to find business out of state.  "Investments in renewable energy in Ohio have dried up," stated the E2 report . "Solar development has ground to a halt, with new solar resources dropping below 100 kW per month when industry averages for the six months prior stood at 1 MW or more per month."  The question now is whether Gov. Kasich will sign or veto HB 554.

Ohio advocates hope Kasich follows through on promise to veto clean energy freeze | Midwest Energy News: Ohio lawmakers have passed a bill to weaken the state’s clean energy standards and make compliance with their requirements voluntary until 2019. After House concurrence this morning on Senate amendments made Thursday night, which reduce the voluntary time period from three years to two, that leaves the fate of Ohio’s renewable energy and energy efficiency standards in the hands of Republican Gov. John Kasich, who has opposed efforts to extend the state’s clean energy “freeze.” Ohio’s renewable energy and energy efficiency standards have been frozen at their 2014 targets for the past two years. If Kasich vetoes the bill, then current law says the standards will resume and be fully enforceable next year. “A hallmark of lame duck is a flood of bills, including bills inside of bills, and we will closely examine everything we receive,” said Kasich’s press secretary, Emmalee Kalmbach. HB 554 would prohibit any enforcement on the standards for two more years, “which in my mind is just another extension of the freeze for two years,” said Frank LaRose (R-Hudson). Clean energy advocates agree. “Today after a two-year freeze on money-saving energy efficiency and job-creating renewable energy, the Ohio Senate decided to kick the can down the road some more,” said J.R. Tolbert at Advanced Energy Economy, shortly after the Senate’s 18-13 vote. “We are encouraged by the Governor’s repeated promise to veto a freeze extension that is bad for business and bad for Ohio.”

Critic of Ohio clean-energy requirements getting solar panels at home | The Columbus Dispatch: A state legislator who has long battled the renewable-energy industry caused gasps and laughter Thursday night when he revealed he, of all people, is getting solar panels at his house. Sen. Bill Seitz, R-Cincinnati, made the comments in response to critics who say he doesn't like clean energy. His point was that he opposes energy mandates, not the energy itself. "For four years, I've listened to the slings and arrows of the enviro-socialist rent-seeking left claiming somehow that I am against clean energy," he said, speaking on the Senate floor about a bill that will weaken clean-energy standards. "Well ladies and gentlemen, before I came down here for this fun week, this fun parade, I signed a contract to put rooftop solar on my house. So to all of you who say, 'Oh, my grandchildren, my grandchildren, I want clean air,' I put my money where my mouth is." He has been the face of a movement in Ohio to reduce or eliminate rules that require utilities to meet annual standards for investing in renewable energy and for helping customers reduce energy use.

Dozens Rally at Wayne National Forest to Protest BLM Online Oil and Gas Lease Auction: Native American water protectors joined dozens of Ohio activists Saturday to protest a Bureau of Land Management plan to auction off oil and gas leases in the Wayne National Forest.BLM on Dec. 13 will auction off 1,600 acres of Ohio’s only national forest to private energy companies for oil and gas fracking and drilling that threaten to fragment wildlife habitat and contaminate groundwater and Ohio River and its tributaries with pollution. Protesters gathered at the entrance to the forest for a peaceful “Save the Wayne” rally in which they shared information about the destructive effects of fracking and related infrastructure construction. "The Wayne lives and breathes. The water in and around it means life. It is a special place, a national forest, there for the enjoyment of everyone, even creatures. It should not be leased or sold to the highest bidder for virtually what amounts to its destruction,” said Kimberly Dawley of #SavetheWayne. “We are inspired by everyone we see around the country who are speaking out about these issues, particularly at Standing Rock, and are following in their footsteps." Many of the publicly owned lease parcels are near the Ohio River and its tributaries, which will be at risk of contamination from increased transport of fracking chemicals and wastewater via trucks and pipelines, and runoff pollution from new roads and well pads. Increased injection of fracking wastewaters underground also poses a risk to groundwater in a state with some of the weakest safeguards against toxic wastewater injection.

Portions of Ohio's only national forest up for lease --Roughly 719 acres of Wayne National Forest, the only national forest in Ohio, went up for lease Tuesday.The properties, which represent less than 0.3 percent of the forest, would be leased by companies that do hydraulic fracturing, or fracking, to tap underground natural gas. The U.S. Bureau of Land Management (BLM) listed 17 parcels for lease. Up until Monday, it had advertised auctioning off the leasing rights for about twice as much land, according to Davida Carnahan, a spokesperson for the bureau, which is managing the leasing for the U.S. Forest Service.On Tuesday morning, the bureau released information that it had withdrawn 16 parcels, another 881 acres, in order to "resolve questions of ownership and existing rights for minerals."Once questions are resolved, the federal government could again decide to offer the properties for lease, according to the document.Environmental groups have challenged the leasing of the public lands. Some pledged to continue the fight Tuesday. "This is Ohio's only national forest," Ohio Environmental Council Executive Director Heather Taylor-Miesle said in a prepared statement. "We need to do all we can to protect it."

Federal Government Auctions Oil And Gas Leases In Wayne National Forest - Mineral rights in parts of the Wayne National Forest in Southeastern Ohio went up for auction, held by the Bureau of Land Management, Tuesday morning. It covers the first 680 acres out of a possible 40,000 in the park that could be opened to drilling.Almost all of the land is in Monroe County, where hydraulic fracturing, or fracking, for natural gas is already widespread. There are 493 active wells in the national forest, but according to the BLM, none are fracked wells. Nathan Johnson is a lawyer at the Columbus-based advocacy organization Ohio Environmental Council. The group plans to fight development in Wayne National Forest in the courts every step of the way. A Bureau of Land Management report says with mitigation efforts, drilling in the national forest will have minimal negative impacts. The BLM estimates that development would likely be limited to 10 drilling sites in the affected part of the park, with multiple wells drilled at each site. About 40 percent of the mineral rights under the national forest are privately owned. The rest is owned by the federal government. And Shawn Bennett from the industry group the Ohio Oil and Gas Association said the auction is a kind of housekeeping by the federal government. The auction would open up the affected parts of the park to exploration, any drilling or construction would require separate permits from both federal and state governments.

Gas companies spend $1.7 million for exploration rights to Wayne National Forest in SE Ohio | -- Fossil fuel development companies on Tuesday bid more than $1.7 million for the rights to explore 759 acres of land in the Wayne National Forest for potentially rich deposits of oil and gas held deep underground. The 19 parcels of about 40 acres each in Southeast Ohio attracted bids of up to $5,800 an acre from 22 separate bidders, according to officials at the U.S. Bureau of Land Management. The companies were from Texas, Pennsylvania, West Virginia, Colorado, and Oklahoma. None were headquartered in Ohio. The auction of mineral rights in Ohio's only national forest had sparked controversy, pitting energy industry officials against environmental groups, who fear the anticipated hydraulic fracturing, or fracking, operations will pollute the groundwater and poison the wildlife habitat of the area. Environmental groups had filed formal protests in an attempt to block the auction, but were unsuccessful. Shawn Bennett, executive vice president of the Ohio Oil and Gas Association, said the auction provided the opportunity for property owners in the Appalachian foothills to cash in on the riches that lie beneath their land. An additional 38,000 acres could become available at later dates, beginning at a second auction scheduled for March. The winning bidders have up to 10 years to obtain the drilling rights and extract the fossil fuels from the parcels. Their contract with the BLM requires them to pay royalties of at least 12.5 percent of the value of the oil or gas removed from the site. Nathan Johnson of the Ohio Environmental Council said he won't wait for the drilling applications to be filed before lodging formal protests with the BLM. "It's clear the agency made the wrong decision and is violating environmental laws," Johnson said. "They keep ignoring key data on how large these well pads and pipelines are going to be. All of their analyses are tied to deflated impact estimates on wildlife. We want to make sure the forest remains protected, and we will pursue every avenue to make sure that happens."

700+ Acres of Ohio's Only National Forest Sold for Fracking - Despite heavy opposition from public health and environmental groups, the U.S. Bureau of Land Management (BLM) has leased 759 acres of Ohio's only national forest for fracking.  According to the Associated Press , oil and gas companies from Texas, Pennsylvania, West Virginia, Colorado and Oklahoma forked over $1.7 million for the right to explore parts of Wayne National Forest for drilling operations. Lessees still need to obtain a permit before any drilling can start. The online auction took place on Dec. 13 with the minimum acceptable bid for as little as $2 per acre. The Columbus Dispatch reported that offers made by the 22 registered bidders ranged from the $2 minimum to a high of $5,806.12 per acre.  Opponents of the federal auction, cited concerns over public health impacts and effects on air and water quality, and submitted more than 17,000 comments to the BLM during its 30-day comment period. "Public lands are for the people, not for the benefit of Big Oil and Gas," Lena Moffitt, director of the Sierra Club's Beyond Dirty Fuels campaign, said in a statement last month. "Drilling for oil and gas means more fracking, and fracking means poisoning our air and water, and threatening the health of our communities and our environment. At a time when clean energy like solar and wind is proving to be safest, healthiest and most cost-effective way to power our country, it's high time we recognized that we need to leave dirty fuels like coal, oil and gas in the ground." The BLM reportedly received 100 "valid" complaints but they were a ll denied by the agency on Monday and the auction moved forward.

Wayne National Forest seeking feedback about native hardwood forest regrowth - The Wayne National Forest Athens Ranger District is seeking public feedback by Jan. 9 about a project designed to convert about 490 acres of planted pine trees to native hardwood trees. The 490 acres of pine trees would be harvested and then replaced by native hardwood trees, such as tulip tree, black cherry and maples, as well as other species of hardwood trees. The proposal, which is the Kehota Vegetation Management Project, is designed to establish regrowth of the area’s native forest that would provide habitat for the area’s native wildlife. “The stands that are proposed for harvest were planted in rows of pine 30-65 years ago in order to stabilize soils that were eroding from that past land use,” said Jason Reed, Athens district ranger. Gary Chancey, public affairs officer for the Wayne National Forest, stated in an email that pine trees were planted because they were inexpensive, readily available and grew quickly in almost any soil. However, there was a downside to the planted pine trees. “Pine plantations provide limited benefit to wildlife,” Reed said. If the proposal is approved and the trees are harvested, it would leave “a number of temporary clearings,” according to a statement released by Wayne National Forest. Four of the clearings would be larger than 40 acres. A decision will likely be made in August if the proposal is approved, and timber harvests would take place over the next several years. 

Eastern Ohio Sets Record For Shale Production - Ohio shale drillers set new natural gas production records of 360 billion cubic feet from July 1 to Sept. 30, but industry leaders fear a new U.S. Environmental Protection Agency finding regarding fracking could endanger the future.  Last year, the EPA stated that, despite an average of 9,100 gallons worth of chemicals used for each fracking job, the process does not create “widespread, systemic impacts on drinking water resources.” On Tuesday, however, EPA officials said they “identified cases of impacts on drinking water at each stage in the hydraulic fracturing water cycle.” “It is beyond absurd for the administration to reverse course on its way out the door,” said Erik Milito, who serves as upstream director for the Washington, D.C.-based American Petroleum Institute. “The agency has walked away from nearly a thousand sources of information from published papers, technical reports and peer-reviewed scientific reports demonstrating that industry practices, industry trends and regulatory programs protect water resources at every step of the hydraulic fracturing process.” As the fracking debate continues, Ohio drillers are smashing shale production records. From July 1 through Sept. 30, records provided by the state Department of Natural Resources show companies drew 360 billion cubic feet of natural gas during the period, which is up from the prior three-month record of 334 billion cubic feet set from April 1 to June 30.  Milito and other industry leaders believe fracking helps consumers save an average of $1,337 per household every year, helps curb carbon dioxide emissions because of natural gas replacing coal for electricity generation and supports millions of jobs. “Fortunately, the science and data clearly demonstrate that hydraulic fracturing does not lead to widespread, systemic impacts to drinking water resources. Unfortunately, consumers have witnessed five years and millions of dollars expended only to see conclusion based in science changed to a conclusion based in political ambiguity,” he said.

US natural gas storage whipsaws prices -- again. -  - The CME/NYMEX Henry Hub January contract settled yesterday at $3.54/MMBtu, about 30.8 cents (~10%) above where the December contract expired ($3.232) and 77.6 cents (28%) higher than where November settled ($2.764). The natural gas winter withdrawal season is officially underway—it’s a lot colder and gas demand has spiked. But this week also marks another key bullish threshold: as today’s Energy Information Administration (EIA) storage report will likely show, the U.S. natural gas inventory has fallen below the prior year’s levels for the first time in two years (since early December 2014). That’s in sharp contrast to where the inventory started the injection season in April—more than 1,000 Bcf higher compared to April 2015. Moreover, we expect the emerging deficit to grow substantially over the next several weeks. Today we look at the supply-demand fundamentals driving this shift and what it means for the winter gas market. Our NATGAS Billboard outlook projects that EIA will report a (139)-Bcf withdrawal for last week, which would put the overall U.S. inventory at 3,814 Bcf as of December 9 (2016). That is 32 Bcf below the inventory level in the same week last year, but still 172 Bcf higher than the five-year average for the same week. This marks the first year-on-year deficit in storage since the week of December 5, 2014. By late December, we also expect the inventory to dip below the five-year average, based on the latest weather forecasts—that hasn’t happened since late-May 2015. As we’ve noted previously here in the RBN blogosphere, the U.S. natural gas inventory—as reported by the EIA each week—is regarded as an ever-present bellwether for price direction in the natural gas market. Gas market participants and analysts train their eyes on weather forecasts—and the constant daily, or even intraday, revisions to the forecasts—along with natural gas flow data (see Sooner or Later for more on flow data analysis) and other fundamental factors to see how they might change the storage picture. Market trackers then await the weekly release of the EIA storage report (a benchmark for storage activity in the prior week) for what it says about the cumulative impact of the supply/demand balance on market economics. In the minutes and hours immediately following the EIA release each Thursday at 9:30 a.m. Central Time, the market frequently reacts to the reported withdrawal/injection volume, especially if it differs significantly from industry expectations.

Study shows hydraulic fracturing fluids affect water chemistry from gas wells -- Pressure, temperature and fluid composition play an important role in the amount of metals and other chemicals found in wastewaters from hydraulically fractured gas reservoirs, according to Penn State researchers. “We hope that this work will develop new ways for studying the processes that occur during hydraulic fracturing in a more controlled lab setting,” said Travis Tasker, a doctoral candidate in environmental engineering at Penn State and principle investigator on the study. “This could also have implications for managing the wastewater that returns to the surface or understanding downhole mineral transformations that could form precipitates, clog pores and reduce a well’s gas productivity.” Many gas formations, such as the Marcellus shale, exist several thousand feet below the surface in higher pressure and temperature environments.  After the fracturing occurs, the chemical additives, along with metals associated with the shale itself, flow back to the surface in wastewaters at high concentrations. Since many of the chemicals used for natural gas extraction have acute or chronic health effects in humans, the transport, degradation and transformation of these additives is important to understand when considering the management and disposal of the wastewater that returns to the surface. “The overall goal of our project was to understand how the additives in hydraulic fracturing fluids affect metal mobilization from shale, and how they may be transformed or degraded after being subjected to the high pressures and temperatures during hydraulic fracturing,” Tasker said. We were able to show that fluids with acids, oxidizers and high salinity increased the amount of metals mobilized from shale following hydraulic fracturing,”  The study also determined that many of the additives used in the synthetic fracturing fluids degraded in the high pressure and temperature conditions or absorbed to the shale itself. However, surfactants, a common additive in many household detergents, degraded only minimally under all the tested pH, pressure, shale and temperature conditions. “This suggests that while many hydraulic fracturing additives are degraded downhole, additives such as surfactants or potentially other hydrophilic compounds could return to the surface where they would have to be treated appropriately,”

Fracking can damage drinking water, EPA report says | - A long-awaited U.S. Environmental Protection Agency study has concluded that hydraulic fracturing, a technique for oil and gas extraction commonly called fracking and used widely in Ohio, can damage groundwater. The final version of the report -- which has been in the works for five years -- reverses earlier drafts that said there was no evidence fracking "systemically contaminates water." Tuesday's report said water problems usually happened near oil and gas production wells, and ranged "in severity from temporary changes in water quality to contamination that made drinking water wells unusable." But EPA said data gaps kept the agency from being able to calculate how often fracking affects drinking water, or how severe problems usually are. It said problems most often arose when:

  • Water was used for hydraulic fracturing in areas with low water availability
  • Chemicals, fluids and gasses were spilled or leaked into groundwater from wells with "inadequate mechanical integrity"
  • Fluids used in hydraulic fracturing were injected directly into groundwater
  • Inadequately treated fracking wastewater was discharged into surface water
  • Fracking wastewater stored or disposed of in unlined pits seeped into groundwater.

To reach its conclusions, EPA says it conducted its own research, reviewed over 1,200 cited scientific sources and gathered input from "engaged stakeholders." EPA Science Advisor Thomas Burke said the assessment would provide the "scientific foundation for local decision makers, industry and communities that are looking to protect public health and drinking water resources and make more informed decisions about hydraulic fracturing activities."

Reversing Course, E.P.A. Says Fracking Can Contaminate Drinking Water - NYTimes: The Environmental Protection Agency has concluded that hydraulic fracturing, the oil and gas extraction technique also known as fracking, has contaminated drinking water in some circumstances, according to the final version of a comprehensive study first issued in 2015. The new version is far more worrying than the first, which found “no evidence that fracking systemically contaminates water” supplies. In a significant change, that conclusion was deleted from the final study. “E.P.A. scientists chose not to include that sentence. The scientists concluded it could not be quantitatively supported,” said Thomas A. Burke, the E.P.A.’s science adviser, and deputy assistant administrator of the agency’s Office of Research and Development. The report, the largest and most comprehensive of its kind to date on the effects of fracking on water supply, comes as President-elect Donald J. Trump has vowed to expand fracking and roll back existing regulations on the process.Now that team must contend with scientific findings that urge caution in an energy sector that Mr. Trump wants to untether. Mr. Burke said that the new report found evidence that fracking has contributed to drinking water contamination in all stages of the process: acquiring water to be used for fracking, mixing the water with chemical additives to make fracking fluids, injecting the chemical fluids underground, collecting the wastewater that flows out of fracking wells after injections, and storing the used wastewater. Still, Mr. Burke said that the report remained “full of gaps and holes,” and that the issue required far more study. He declined to offer policy recommendations based on the study, saying that it will “give a lot of information to help communities and decision makers do better in protecting water supplies.”

Final EPA Study Confirms Fracking Contaminates Drinking Water - The U.S. Environmental Protection Agency (EPA) has released its widely anticipated final report on hydraulic fracturing, or fracking , confirming that the controversial drilling process indeed impacts drinking water "under some circumstances." Notably, the report also removes the EPA's misleading line that fracking has not led to "widespread, systemic impacts on drinking water resources."  "The report, done at the request of Congress, provides scientific evidence that hydraulic fracturing activities can impact drinking water resources in the United States under some circumstances," the agency stated in a media advisory.  This conclusion is a major reversal from the EPA's June 2015 pro-fracking draft report . That specific "widespread, systemic" line baffled many experts , scientists and landowners who— despite the egregious headlines —saw clear evidence of fracking-related contamination in water samples. Conversely, the EPA's top line encouraged Big Oil and Gas to push for more drilling around the globe.  But as it turns out, a damning exposé from Marketplace and APM Reports revealed last month that top EPA officials made critical, last-minute alterations to the agency's draft report and corresponding press materials to soft-pedal clear evidence of fracking's ill effects on the environment and public health.

Fracking Can Contaminate Drinking Water, Has Made Some Water Supplies “Unusable,” Long-Awaited EPA Study Concludes -  -The Environmental Protection Agency announced today that it had completed its scientific report on whether fracking puts America's drinking water supplies at risk. The EPA's conclusions were clear: fracking can harm water. And it's not the the hydraulic fracturing process itself that poses risks — problems have emerged at every stage of the water cycle associated with fracking, at times making people's drinking water supplies “unusable.” “The report, done at the request of Congress, provides scientific evidence that hydraulic fracturing activities can impact drinking water resources in the United States under some circumstances,” the EPA wrote in a press release announcing the study's final conclusions. “As part of the report, EPA identified conditions under which impacts from hydraulic fracturing activities can be more frequent or severe.” “EPA identified cases of impacts on drinking water at each stage in the hydraulic fracturing water cycle,” the EPA statement added. “Impacts cited in the report generally occurred near hydraulically fractured oil and gas production wells and ranged in severity, from temporary changes in water quality, to contamination that made private drinking water wells unusable.” EPA honed in on six areas where impacts can be either more likely or more severe, including the use of water in areas with “limited or declining” underground water supplies, spills of chemicals or wastewater, fracking wells with “poor mechanical integrity” (like wells where the steel and cement casings are weak or missing), fracking directly into aquifers, discharging inadequately treated wastewater into rivers and streams, and the use of unlined pits to store wastewater. The agency dropped entirely a highly controversial claim that they had found “no evidence” of “widespread, systemic impacts” on America's drinking water supplies from fracking, language which a recent Marketplace investigation found had been inserted at the last minute into study and press release drafts. That language was heavily criticized by the EPA's Scientific Advisory Board – a mix of experts representing industry, federal agencies, and academia – which found thatEPA's research “did not support” that conclusion (four of the 30 SAB members dissented from that critique).

EPA Concludes: Fracking Harms Drinking Water -- naked capitalism by Jerri-lynn Scofield - The Environmental Protection Agency (EPA) yesterday finally released the final version of a long-anticipated report–initially requested by Congress in 2010- on the impact of fracking on drinking water supplies. In this latest, final report, the EPA walked back earlier findings from a preliminary report issued last year, when the agency concluded that hydraulic fracturing– more widely known as fracking– was not having  “widespread, systematic impacts on drinking water.” The New York Times  described  yesterday’s report as “the largest and most comprehensive of its kind to date on the effects of fracking on water supply while the Wall Street Journal noted, “EPA’s initial draft misled the public about the pollution risks of unconventional oil and gas development,”  That EPA report: : provides scientific evidence that hydraulic fracturing activities can impact drinking water resources in the United States under some circumstances. As part of the report, EPA identified conditions under which impacts from hydraulic fracturing activities can be more frequent or severe. The report also identifies uncertainties and data gaps. These uncertainties and data gaps limited EPA’s ability to fully assess impacts to drinking water resources both locally and nationally. These final conclusions are based upon review of over 1,200 cited scientific sources; feedback from an independent peer review conducted by EPA’s Science Advisory Board; input from engaged stakeholders; and new research conducted as part of the study. To summarize, as per DeSmogBlog: The EPA’s conclusions were clear: fracking can harm water. And it’s not the the hydraulic fracturing process itself that poses risks — problems have emerged at every stage of the water cycle associated with fracking, at times making people’s drinking water supplies “unusable.” The EPA press release issues to accompany release of the final report  provides further specifics: The report is organized around activities in the hydraulic fracturing water cycle and their potential to impact drinking water resources. The stages include: (1) acquiring water to be used for hydraulic fracturing (Water Acquisition), (2) mixing the water with chemical additives to make hydraulic fracturing fluids (Chemical Mixing), (3) injecting hydraulic fracturing fluids into the production well to create and grow fractures in the targeted production zone (Well Injection), (4) collecting the wastewater that returns through the well after injection (Produced Water Handling), and (5) managing the wastewater through disposal or reuse methods (Wastewater Disposal and Reuse). EPA identified cases of impacts on drinking water at each stage in the hydraulic fracturing water cycle. Impacts cited in the report generally occurred near hydraulically fractured oil and gas production wells and ranged in severity, from temporary changes in water quality, to contamination that made private drinking water wells unusable.

The economic benefits of fracking - The new NBER paper by Erik Gilje, Robert Ready, and Nikolai Roussanov shows some truly impressive economic benefits: We quantify the effect of a significant technological innovation, shale oil development, on asset prices. Using stock returns on major news announcement days allows us to link aggregate stock price fluctuations to shale technology innovations. We exploit cross-sectional variation in industry portfolio returns on days of major shale oil-related news announcements to construct a shale mimicking portfolio. This portfolio can explain a significant amount of variation in aggregate stock market returns, but only during the time period of shale oil development, which begins in 2012. Our estimates imply that $3.5 trillion of the increase in aggregate U.S. equity market capitalization since 2012 can be explained by this mimicking portfolio. Similar portfolios based on major monetary policy announcements do not explain the positive market returns over this period. We also show that exposure to shale oil technology has significant explanatory power for the cross-section of employment growth rates of U.S. industries over this period. Do note that $3.5 trillion figure is not a measure of social value.  It does not count the losses to coal companies for instance, nor does it measure the consumer surplus or the “greener energy” benefits from fracking, among other factors.

Exporting more liquefied natural gas in America’s national interest -- There should be no doubt anymore that exporting liquefied natural gas (LNG) is in America’s national interest. But the time to stop talking about our good fortune and start taking action to head off competition from other gas-exporting countries is running short. With the U.S. now the number one natural gas producer in the world, thanks to the shale revolution, LNG exports are undergirding domestic gas production, enabling producers to actually increase gas output, which strengthens the economy and protects the jobs of gas-field workers. Importantly, ramping up LNG exports promises to boost the energy security of central and eastern European countries, since they no longer will have to rely so heavily on Russia for natural gas to run their industries and heat their homes, weakening Russia’s near-monopoly grip on the production and delivery of a critically important fuel. And U.S. shipments of LNG will help the environment by enabling countries like China, Japan and India to switch from dirty coal to natural gas in electricity production, thereby reducing air pollution and global warming emissions.The U.S. is expected to become a top global LNG producer, behind only Qatar in the Middle East, by 2020. But this hinges on how quickly federal regulators approve the growing list of proposed LNG export projects. The window of opportunity is closing. Four U.S. export terminals are under construction, but 30 applications for additional terminals are pending before the Department of Energy. Some have been pending for several years. The Energy Department must determine whether each export application is within the country’s national interest, due to a decades-old statute written when domestically-produced natural gas was scarce. Before an LNG export application can even be submitted to FERC, the applicant must file 13 “resource reports” that are then reviewed by 20 separate federal and state agencies, a process that can take several years. Talk about bureaucracy!

Shale Revolution That Shocked US Markets Heads to Japan  -- The U.S. shale revolution that turned North American energy markets upside down is finally headed to the world’s largest consumer of liquefied natural gas: Japan. Jera Co., a joint venture between Tokyo Electric Power Co. Holdings Inc. and Chubu Electric Power Co., will get its first LNG cargo produced from the formations in early January, spokesman Atsuo Sawaki said. It would be the first supply to reach the Asian nation from Cheniere Energy Inc.’s Sabine Pass terminal. The shipment brings to fruition a contract signed more than two years ago. While U.S. exports are still relatively small, they are having an impact because the contracts are tied to U.S. natural gas prices instead of crude oil that most of the LNG coming to Japan is linked to. They also allow for switching of cargo destinations -- a key concern for importers such as Japan that are pressuring producers for more flexibility. “The first U.S. cargo marks a turning point,” Kerry Anne Shanks, an analyst at Wood Mackenzie Ltd., said by e-mail. “Japan’s LNG imports are almost exclusively priced on an oil-index price. U.S. LNG provides much needed index diversification of Japan’s LNG price.” About 70,000 metric tons of LNG produced at the Sabine Pass terminal was loaded onto the Oak Spirit vessel on Dec. 7, according to Sawaki. Jera has a short-term deal with Cheniere to receive as much as 700,000 tons of LNG from July 2016 to January 2018. Japanese companies have contracted about 14 million tons of LNG on long-term contracts that begin between 2017 and 2022 from U.S. projects in the lower 48 states, according to a November presentation by the Japan Oil, Gas and Metals National Corp. Japan, China and South Korea, which account for more than half of the global LNG trade, will be oversupplied by about 20 billion cubic meters in 2017 to 2018, the International Energy Agency said in a report earlier this year.

What could $65/b WTI mean for oil production in the Permian? -  Clearly, the alleged deal between OPEC members and other cooperative nations has generated a fair amount of optimism among market participants.  Nonetheless, as prices are expected to rise, there is upside potential for production and internal rates of return (IRR), particularly in premier basins like the Permian. To no surprise, the Delaware and Midland basins in the Permian are generating some of the best returns in the country. Platts Bentek’s Well Economics Analyzer estimates that the IRR for a typical well in the Permian Delaware is currently 37% and is generating the best returns in North America. Let’s assume the stars align and OPEC along with cooperating countries are compliant with supply cuts and prices reach $65/b; what does this mean for IRRs in the Permian? If this scenario were to play out, returns in the Permian Delaware would increase 14 percentage points to 51% IRR, holding regional price differentials constant. Well economics in the Delaware surpass those of competing plays with a robust oil initial production (IP) rate of 575 b/d, $6.0 million estimated drilling and completion (D&C) cost and a production mix that is heavily weighted towards oil at 76%. In the neighboring Midland basin, the second most profitable play in North America, returns are currently 34% and would jump to 48% at $65/b WTI. Oil IP rates in the Midland are roughly 100 b/d below those in the Delaware. However, on average, the play enjoys a D&C cost of $5.5 million, half a million dollars less than the Delaware and also reaps the financial benefit associated with proximity to refining centers along the Gulf Coast. So what does $65/b WTI mean for production in the Permian? Platts Bentek estimates total Permian crude production will average a little less than 2 million b/d in 2016. However, given $65/b crude prices, production has the ability to increase 120,000 b/d in 2017. From a strictly quantitative standpoint, this estimate is more than reasonable. However, in reality, this estimate is rather conservative given accelerating efficiency gains and a vast inventory of drilled but uncompleted wells.

OPEC Threatened by a Tiny Oklahoma Town  - For OPEC, there are few enemies more fearsome than the tiny Oklahoma town of Cushing. With oil inventories at Cushing creeping near an all-time high, U.S. benchmark futures prices are struggling to advance despite the promised production cuts agreed to by OPEC, Russia and other producers. And the storage tanks are likely to stay full as refiners park crude in Oklahoma to lower their tax bills. Cushing, which prides itself as the “pipeline crossroads of the world,” is the delivery point for the West Texas Intermediate crude contract. With tanks that can hold 77 million barrels of crude, enough to supply France for two months, it’s the biggest storage hub in the U.S. The last high point there came in May. Now, after a brief hiatus, the tanks are filling up once again. For the OPEC-led efforts to boost prices, that’s a major problem.  “Part of what OPEC, and in particular the Saudis want to do, is drain the swamp,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “To do that they will reduce deliveries to the U.S. That will eventually be felt at Cushing, but not in a long time.”  Stockpiles rose by 1.22 million barrels last week, following a 3.78 million jump the previous week that was the biggest since 2008. The inflows have pushed up stocks to 66.5 million barrels, within a whisker of the all-time record of 68.3 million set in May. With the promise of production cuts sending forward prices up, that’s encouraging traders and refiners to hold onto inventories, the last thing the Organization of Petroleum Exporting Countries wants to see.

Shake, Rattle and Roll - Oklahoma Earthquakes and Risks to the Crude Oil Hub at Cushing - In 2015, Sooners held on tight as Oklahoma was rocked by 890 earthquakes with a magnitude of 3 or higher—up sharply from only 43 earthquakes in 2010 and an average of less than two earthquakes per year in the previous quarter-century. Oklahomans have experienced hundreds of earthquakes this year too, including a record-breaking 5.8 event on September 3 and, on November 6, a 5.0 quake very near Cushing, OK, which serves as the delivery point for the CME/NYMEX Light Sweet Crude contract and which has earned the nickname “Pipeline Crossroads of the World”. Today we look at the latest quake near Cushing and other recent pipeline disruptions to assess the resilience of critical crude-delivery systems. Around 8 p.m. Central Standard Time on November 6, a “moment-magnitude scale” (MMS) 5.0 earthquake struck less than two miles west of Cushing. (The MMS, an updated version of the old Richter scale, has been used by seismologists—including the U.S. Geological Survey­­—as the standard for 14 years now. Who knew?) In the following hours, several pipelines were shut down to determine if the quake caused any damage. Genscape data showed that nearly 3.6 MMb/d of Cushing-connected pipeline capacity was taken offline following the quake, with the majority of the pipelines coming back online within the next three hours. (Figure 1 shows hour-by-hour flows on Cushing-area pipes the day of the event.) No damage to pipelines or storage terminals was reported, so business returned to normal relatively quickly. Even though there was some minor damage to buildings in Cushing, the overall impact of the event turned out to be minimal, all things considered. But what would happen if there was a more severe quake, infrastructure actually was damaged and pipeline outages were more extensive?

CLR Reports Record STACK Meramec Well -- December 13, 2016 -- From company press release, headline: Angus Trust 1-4-33XH Flows at 4,642 Barrels of Oil Equivalent (45% Oil) in 24-Hour Initial Production Test; Located Immediately North of Boden 1-15-10XH Company Raises Expected 2016 Production Exit Rate to 213,000 to 218,000 Barrels of Oil Equivalent per Day  Story:  Continental Resources, Inc. today announced a new company record well in the over-pressured oil window of the Oklahoma STACK play.  The Angus Trust 1-4-33XH produced 4,642 barrels of oil equivalent (boe) per day in a 24-hour test, comprised of 2,088 barrels of oil (bo) and 15.3 million cubic feet (MMcf) of natural gas. During this initial production test, the Angus Trust flowed at 5,200 psi (pounds per square inch). Continental has a 78% working interest in the well. The Angus Trust well is located immediately north of Continental's Boden 1-15-10XH in south central Blaine County. The Boden produced an initial 24-hour test rate of 3,508 Boe, 28% oil, at a flowing casing pressure of more than 5,000 psi. The Boden was Continental's first completion in the condensate window of the over-pressured STACK. In just over a year, the Boden has produced 591,000 Boe, 26% oil.The Boden is currently producing 1,815 Boe per day, 22% oil, at a flowing casing pressure of 2,900 psi. To compare this record IP in the Meramec with the record IP in the Bakken, see FAQ #9From the Whiting 1Q15 transcript: The Flatland Federal 11-4TFH well produced at an initial rate of 7,800 BOEs per day during a 24-hour test of the Three Forks formation, making this the very best well in the basin. The Flatland Federal 11-4HR well produced at an initial rate of 7,100 BOEs per day during a 24-hour test of the Middle Bakken formation.

Oil Pipeline: Judge hears landowners' challenge to Dakota Access pipeline (AP) — A group of Iowa landowners forced to allow a Texas oil company to put a crude oil pipeline under their farmland is asking the state courts to throw out what they consider "illegal easements" through their land and some say if they win they want the pipeline dug up and removed. A district court judge in Des Moines heard arguments Thursday in the lawsuit challenging the Dakota Access pipeline. About a dozen landowners seek to overturn the project permit approved by the Iowa Utilities Board and they claim it was illegal for the board to take farmland when the pipeline provides no public service to Iowans. The pipeline attorney argued the project is completed making the case moot. He says Iowa law gives the utilities board authority to issue pipeline permits. Any decision is likely to be appealed.

Iowans Make U-Turn Against Trump In Dakota Access Pipeline Fight - Iowans who voted for Donald Trump will soon be fighting against him, as anti-establishment Iowans come to see his “true colors” on property rights, climate change and native sovereignty, environmentalist Ed Fallon, who has been leading the fight against the Dakota Access Pipeline in Iowa, told teleSUR.Trump’s Cabinet appointments so far represent “the antithesis” of what a coalition of anti-pipeline activists have been rallying for, Fallon said after a march and rally on Thursday brought in over 200 protesters. “The amount of heat generated at this very cold rally was amazing,” he said, pointing out the weather was at 7 degrees Fahrenheit.Fallon’s group, Bold Iowa, joined a coalition to show their opposition to the pipeline company’s seizure of rancher and farmer land at a court hearing in Polk County. The case has 14 plaintiffs, including landowners and environmentalists like the local chapter of the Sierra Club, and could be “historically significant” to eminent domain law across the state, said Fallon. The judge has a month to reach a decision.Besides suing to prevent the pipeline from deteriorating their land, the farmers are challenging eminent domain law at-large to protect all lands from for-profit seizure, arguing against the claim that the pipeline is a public utility.The pipeline, whose construction is near completed, runs through North Dakota, South Dakota, Iowa and Illinois and would transport over half a million barrels of crude oil a day. The Army Corps of Engineers denied easements earlier this month that would allow the company, Energy Transfer Partners, to drill below Lake Oahe, where thousands of Native Americans and allies from around the world camp to resist environmental and cultural damage. A more comprehensive Environmental Impact Assessment will be conducted in North Dakota, but not in Iowa — though Fallon pointed out that the Missouri River does not end at the state border.

Pipeline spills 176,000 gallons of crude into creek about 150 miles from Dakota Access protest camp - A pipeline leak has spilled tens of thousands of gallons of crude oil into a North Dakota creek roughly two and a half hours from Cannon Ball, where protesters are camped out in opposition to the Dakota Access pipeline. North Dakota officials estimate more than 176,000 gallons of crude oil leaked from the Belle Fourche Pipeline into the Ash Coulee Creek. State environmental scientist Bill Suess says a landowner discovered the spill on Dec. 5 near the city of Belfield, which is roughly 150 miles from the epicenter of the Dakota Access pipeline protest camps. The leak was contained within hours of the its discovery, Wendy Owen, a spokeswoman for Casper, Wyoming-based True Cos., which operates the Belle Fourche pipeline, told CNBC.It's not yet clear why electronic monitoring equipment didn't detect the leak, Owen told the Asssociated Press.Owen said the pipeline was shut down immediately after the leak was discovered. The pipeline is buried on a hill near Ash Coulee creek, and the "hillside sloughed," which may have ruptured the line, she said."That is our number one theory, but nothing is definitive," Owen said. "We have several working theories and the investigation is ongoing." Last week, the Army Corp of Engineers said it would deny Dallas-based Energy Transfer Partners the easement it needs to complete the final stretch of the $3.7 billion Dakota Access pipeline. United States Assistant Secretary of the Army Jo-Ellen Darcy said the best path forward was to explore alternative routes for the pipeline, something Energy Transfer Partners says it will not do.

North Dakota Pipeline Spill Estimated at 176,000 Gallons -  A pipeline just two and half hours' drive from the Indigenous water protectors' ongoing stand against the Dakota Access Pipeline has leaked more than 170,000 gallons of crude oil into a tributary of the Little Missouri River and into a hillside, according to reports late Monday.  Monitoring equipment failed to detect the leak and it is unknown how long the spill near Belfield, North Dakota had gone on before a local landowner discovered it on Dec. 5.  At least two cows have been confirmed dead near the site of the spill, reports the Pioneer Press.  The Belle Fourche pipeline is operated by the Wyoming-based True Companies, which is the same company behind the 2015 pipeline rupture in Montana that sent more than 40,000 gallons of crude into the Yellowstone River. Indeed, at that time it was reported that the operator had a "checkered environmental history," with 30 recorded pipeline leaks and multiple federal fines on its record.  Bill Seuss, an environmental scientist with the North Dakota Health Department, told the Associated Press that the investigation into the cause of the most recent spill is ongoing and cleanup efforts may last into the spring.  Energy Transfer Partners, the company behind the controversial Dakota Access Pipeline, has repeatedly insisted that the pipeline is "safe," but water protectors have argued that it is not a question of if it will leak, but when .  "But it will be safe THIS time, right?" wrote Honor the Earth national campaigns director Tara Houska on Facebook, sharing a report of the latest spill.

Dakota Access protesters say major oil spill validates their concerns   - Opponents of the Dakota Access Pipeline say a major oil spill in North Dakota "validates" their months-long struggle to stop pipeline construction near an important waterway.The oil spill occurred just 150 miles outside the Dakota Access protest camps near Lake Oahe on the Standing Rock Sioux reservation.   State officials estimate that the Belle Fourche Pipeline in western North Dakota spewed more than 176,000 gallons of crude oil into a creek after electronic monitoring equipment failed to detect the leak.Dakota Access protesters — who call themselves water protectors — have argued for months that plans to run the new pipeline beneath Lake Oahe, a large Missouri River reservoir, would jeopardize the region's water supplies and threaten sacred sites.The Belle Fourche spill "is proof that we're right," Allison Renville, an activist and member of the Sisseton Wahpeton Oyate Sioux tribe, told NBC News this week. "It validates our struggle," she said. Tara Houska, a Native American environmental activist who has stayed at the protest camps since August, said the recent oil spill "gives further credence to our position that pipelines are not safe," NBC News reported.

Pipeline spill cleanup still ongoing in Billings County -- A pipeline spill last week in Billings County released around 4,200 barrels or 176,000 gallons of crude oil from the Belle Fourche Pipeline, approximately 16 miles northwest of Belfield.  Reuters reported that Bill Seuss, program manager for the North Dakota Department of Health, said approximately 3,100 barrels of the 4,200 spilled slid into Ash Coulee Creek, which feeds into the Missouri River. Approximately 5.4 miles of the creek have been impacted. Seuss said more than 100 people are working to clean up the spill, reported CNN.  Seuss told Reuters that cleanup has been difficult due to the extreme cold, but temperatures also slowed the movement of oil down the creek since the water is frozen. The Pipeline and Hazardous Materials Safety Administration (PHMSA) continues to investigate the incident. The company is working with a remediation company out of Alberta that specializes in cold weather cleanup. The Belle Fourche Pipeline is 6 inches in diameter and carries approximately 1,000 barrels of oil per hour, 24,000 barrels per day, according to Wendy Owen, spokesperson for True Companies, the company that owns the pipeline. True Companies is based out of Casper, Wyoming. Owen said cause of the leak is unknown, and monitoring equipment did not detect the leak, likely because of intermittent flow. The pipeline is located in very rough terrain in the Badlands of North Dakota, and Owen said the remote area and the topography itself makes access points difficult, reported Forum News Service reporter Amy Dalrymple on Monday. Seuss said the pipeline is located in a hill that is slumping, which may have caused the leak. Dalrymple noted that it’s unknown how long the Belle Fourche Pipeline was leaking before the landowner had discovered it, despite reports by Kevin Connors, pipelines program supervisor for the North Dakota Oil and Gas Division, that the pipeline had gauges and meters to monitor for leaks. Connors also said the company does aerial inspections of the pipelines once a month.

Leaked Audio: 'Election Night Changed Everything,' Dakota Access Pipeline 'Is Going Through' – Steve Horn - Shaun King, a writer for the New York Daily News, has uploaded what appears to be a recorded audio file of Energy Transfer Partners' Chief Operating Officer saying that "election night changed everything" for the company as it relates to its embattled Dakota Access Pipeline .King stated on social media and on the SoundCloud page on which he posted the file that a source sent him the file on Dec. 13, hours after Matthew Ramsey —COO of Energy Transfer Partners—gave his speech. The source who gave King the audio, he explains on SoundCloud, "claimed to be in a corporate meeting at Energy Transfer Partners" and told him that the person speaking was Matthew Ramsey, the COO of Energy Transfer Partners. King also wrote that the recording was made during a mandatory company meeting.   Listen below:  […] "I've got to tell you, election night changed everything," Matthew Ramsey , COO of Energy Transfer Partners, apparently said in the 10-minute clip, the authenticity of which DeSmog could not independently verify. "We now are going into a transition where we are going to have a new President of the United States who gets it. He understands what we're doing here and we fully expect that as soon as he gets inaugurated his team is going to move to get the final approvals done and we'll begin to put [Dakota Access] across Lake Oahe."  Dakota Access has yet to receive the easement permit it needs from the U.S. Army Corps of Engineers in order to cross Lake Oahe, which the company has publicly decried . Ramsey said in the clip, one in which the voice sounds similar to his voice heard in a Nov. 21 company conference call , that it will take about 65 days to cross the lake once they get the permit.

Lawyers for Standing Rock protesters are pleading for more help -- Trials for Dakota Access Pipeline protesters begin next week, but there aren’t enough attorneys to take their cases. The Morton County Sheriff’s Department lists 264 people who have no lawyer at all, and the 265 people who have been assigned public defense attorneys aren’t receiving adequate counsel. In order to fix the problem, advocates from North Dakota and Minnesota are now trying to convince the North Dakota Supreme Court to give the green light to lawyers from other states — who have no license to practice in North Dakota — to come in and help. A group of 10 legal organizations, including the American Civil Liberties Union (ACLU), and lawyers from both states filed an official petition to the the court on Wednesday. There have been mass arrests of DAPL protesters since August, when thousands of protesters set up camps on the Standing Rock reservation. The protesters, who call themselves Water Protectors, faced persistent, militarized policing by the Morton County Sheriff’s Department over the past few months. More than 550 people were detained for trumped up misdemeanor charges — including disorderly conduct, inciting a riot, and trespassing — and felony charges for reckless endangerment and conspiracy charges. Some people were arrested more than once. Demonstrators are adamant that the vast majority of them were peaceful, fighting for sacred land and safe water. But they will soon appear in court with insufficient legal representation.

Not Just North Dakota: Here Are 10 More States Where Activists Are Fighting Pipeline Projects – With the Dakota Access Pipeline nearly 90% complete, developers are focusing their attention elsewhere. Meanwhile, protests against additional pipelines throughout the country have yet to receive a tenth of the airtime.  “If you draw a line from Chicago to the Gulf Coast — Houston, Port Arthur, Baton Rouge — that line goes through Patoka, Illinois,” John Moody, a spokesman for the Association of Oil Pipelines told the Chicago Sun Times. “Then start in Cushing, Oklahoma, and draw a line across to Cleveland and Detroit and central Ohio, and that line goes through Patoka. Patoka is a crossroads for energy delivery.”   Beyond North Dakota, here are 10 states that have also been battling pipeline projects.

  • 1. Ohio. Construction of the 255-mile Nexus Gas Transmission project, a partnership between Houston-based Spectra Energy and Detroit’s DTE Energy, is expected to begin by early 2017.
  • 2. Iowa. The Dakota Access Pipeline project faced resistance in Iowa long before it reached Standing Rock. In July 2015, landowners in its path urged the Iowa Utilities Board to reject permits needed for the project to proceed.
  • 3. Texas. Standing Rock's success this December reinvigorated a more than two-year battle to half construction of the Trans-Pecos pipeline, a 148-mile joint venture with Mexico's federal electricity commission, the Comisión Federal de Electricidad.
  • 4. Louisiana. The company behind the Dakota Access Pipeline is currently planning a 162-mile pipeline that would cut through the Atchafalaya Basin and 11 Louisiana parishes. But resistance to the Bayou Bridge Pipeline has already spread worldwide.
  • 5. Florida. The Sierra Club, Chattahoochee Riverkeeper and Flint Riverkeepers filed a motion in late October to expedite review of the Southeast Market Pipelines Project, which includes the $3.2 billion Sabal Trail gas pipeline. Protests have continued for the past month and 16 demonstrators have been arrested thus far.
  • 6. Alabama. On November 15, outside the Army Corps of Engineers building, Huntsville protesters gathered in solidarity with the thousands at Standing Rock. The Sabal Trail pipeline is set to cross three states and cover 500-plus miles (86 in Alabama, 162 in Georgia, 268 in Florida).
  • 7. Arkansas. Diamond Pipeline is a planned 440-mile oil pipeline by Plains All American Pipeline and Valero Energy Corp across 14 counties and five rivers in Arkansas. The project is set to begin by the end of 2016.
  • 8. North Carolina. A nearly 600-mile proposed pipeline drew protests in three cities on November 19. In Pembroke, Fayetteville and Nashville, hundreds marched in opposition to the Atlantic Coast Pipeline which awaits a review by the Federal Energy Regulatory Commission. Dominion Power and Duke Energy's $5 billion project would carry natural gas to North Carolina from fracking operations in West Virginia, Ohio and Pennsylvania.
  • 9. Pennsylvania. Sunoco Logistics pushed back the timeline for its Mariner East 2 natural gas liquids pipeline on November 12. The $2.5 billion project has not yet received the necessary approvals, even months after charging Huntingdon County residents who objected to the pipeline being built on their property.
  • 10. New York. The National Fuel Gas Supply Corp. awaits approval from the Federal Energy Regulatory Commission to begin its proposed $410 million Northern Access Project in Western New York. Meanwhile, 50 miles outside of NYC, Spectra Energy’s pipeline expansion project continues to face controversy.

Veterans at Standing Rock Ready to Take Clean Water Fight to Flint - The veterans who deployed to the Standing Rock Sioux Tribe reservation in North Dakota to support the water protectors in their battle against the Dakota Access Pipeline are now looking to take their successful mobilization to another community fighting for clean water: Flint, Michigan. "We don't know when we are going to be there but we will be heading to Flint," U.S. Army veteran Wes Clark Jr., one of the organizers of the veteran action in Standing Rock, told MLive earlier this week. "This problem is all over the county. It's got to be more than veterans. People have been treated wrong in this county for a long time." Since the U.S. Army Corps of Engineers announced Sunday that it would not allow the Dakota Access Pipeline an easement to tunnel under the Missouri River, many have speculated that the arrival of the thousands of veterans that weekend may have spurred the government agency into action. Activists hope that veterans—who also played a role in several 20th century leftist protest movements—will bring similar success to the embattled community of Flint, which still does not have access to clean drinking water. "I feel that by the veterans coming out and leading up to it all the media attention," said Flint resident Arthur Woodson, a veteran who traveled to Standing Rock, to MLive. "All the media attention that was there brought more attention to Standing Rock. The government had a change of heart." Flint-based community activist and founder Jay Ponti told MLive that he hoped the veterans would bring that same media attention to Flint, which has seen waning coverage as the national media has focused on the presidential election. "Our people are suffering. They are suffering in Standing Rock. They are suffering in Flint. They are suffering in Louisiana," Ponti said.

Native Waters, Native Warriors: From Standing Rock to Honduras - Around the globe, land has become gold-standard currency. As a result, Indigenous and other land-based peoples face threats to the natural commons on which they live, produce food and sustain community, culture and cosmovision. In some places, organized Indigenous movements have stood up and fought off extraction and corporate development, winning protection of waters, forests, territories and more. In most places, the resistance has been met with assassination and violent repression by state security forces and corporate-financed hit squads. Two of the fiercest Native battles in the Americas today are closely connected. They are led by the Standing Rock Sioux in North Dakota and by the Lenca people in Honduras, organized through the Civic Council of Popular and Indigenous Organizations of Honduras (COPINH). Both are hard at work defending their territories and waters from further theft and desecration: At Standing Rock they are struggling against an oil pipeline being laid under their ancestral Missouri River, which they use for ceremony, drinking water and sustaining other life; on Lenca lands they are resisting the damming of their ancestral Gualcarque and other rivers. In both cases, the movements face enormous stakes. And they both know that, as Howard Zinn said, "The power of the people on top depends on the obedience of the people below." So they are challenging the power on top with shared strategies of mass mobilization and direct action. They both have the capacity to inspire the world, as seen by an outpouring of active solidarity with their uprisings from around the globe. Each is enduring tremendous assault. Standing Rock Water Protectors have suffered dog attacks, water cannons in sub-freezing temperatures, rubber bullets and tear gas. COPINH founder and leader Berta Cáceres was slain this past March by the Honduran government and an internationally financed dam company, with at least implicit backing from the US government, which funds the Honduran military. More than 90 additional COPINH members have been killed, and another 90 or so permanently injured, over the group's 23-year history, according to Lenca Indigenous coordinator Tomás Gomez. Gomez himself has survived three assassination attempts and been beaten by soldiers twice since March

Trump's Pick for Energy Secretary Sits on Board of Dakota Access Pipeline Company - Steve Horn - Former Texas Republican Gov. Rick Perry , a board member of Energy Transfer Partners—owner of the Dakota Access Pipeline (DAPL) —has been named U.S. Secretary of Energy by President-elect Donald Trump .  Perry, the former chairman of the Interstate Oil and Gas Compact Commission (IOGCC) , ran for president as part of the Republican Party primaries in 2015, but his campaign ended quickly . He announced his run for the Oval Office in 2015 while facing felony charges for official state corruption in Texas.  As reported by DeSmog at the time, at a 2015 town hall meeting in Iowa during his short-lived presidential run, Perry was asked by someone in the audience about his Energy Transfer Partners board position. Perry said that he thought his ties to DAPL were "irrelevant, frankly" in response to the question.  "All of our sources of energy in this country will be important," Perry said at the town hall. "If America is going to be energy secure, we're going to have to have infrastructure. I happen to think it's important for us as a country to have these sources of energy."  One of Perry's donors for his short-lived presidential run was Kelcy Warren, CEO of Energy Transfer Partners, who also served as a major donor to Trump's presidential campaign. Warren also sat on the advisory board for Perry's 2015 run for president.   Ironically, the U.S. Department of Energy ( DOE ) Perry will now head up is an agency he said he would get rid of during his run for the presidency during the 2012 election cycle. In a 2011 GOP primary debates, in a now unforgettable gaffe, Perry actually forgot the name of it when he proclaimed he'd throw it by the wayside. Perry, a vocal supporter of slashing regulations as applied to the oil and gas industry, is also a climate change denier .

U.S. oil industry cheers Trump energy pick, seeks gas export boost | Reuters - The U.S. oil and gas industry on Wednesday welcomed President-elect Donald Trump's choice of former Texas Governor Rick Perry to head the U.S. Department of Energy, and wasted no time making its first specific request of him: to support increased exports of America's natural gas overseas. Trump named Perry as his pick for the top U.S. energy job on Wednesday morning, handing the portfolio to a climate change skeptic with close ties to the oil and gas industry, and who previously proposed abolishing the department. The choice adds to a list of drilling proponents who have been tapped for top jobs in Trump's administration, worrying environmental groups but fitting neatly with Trump's promise to revive oil and gas drilling and coal mining as president by cutting back on federal regulation. Jack Gerard, president of the Washington-based American Petroleum Institute representing oil and natural gas companies, said he welcomed Perry's nomination, and called on him to make increasing exports of U.S. natural gas a "top priority." "As the former governor of Texas, Rick Perry knows the important impact that energy production has on our nation's economy. In his new role at the Energy Department, he has the opportunity to encourage increased exports of domestically produced natural gas," he said in a statement. Natural gas companies are eager to access foreign markets for their supply after a decade-long drilling boom that triggered a domestic glut and depressed prices. The oil industry successfully lobbied for an end to a decades-old crude oil export ban in December 2015 following a slump in prices, a move meant to help American companies weather lower prices at home. There is no ban on natural gas exports, but U.S. law requires American companies to obtain authorization from the Energy Department before being able to ship it overseas, and there are tough permitting requirements for building the specialized facilities that make shipping gas possible.

Fossil Fuel Allies May Run DOE and DOI --Rep. Cathy McMorris Rodgers, R-WA, will likely be offered the top job at Interior, outlets reported Friday. McMorris Rodgers has opposed action on climate change and has voted in favor of expanded offshore drilling and legislation, making it easier to drill within tribal territories.  Meanwhile, former Texas Gov. Rick Perry, who once forgot the name of the Department of Energy while attempting to say he'd abolish it during a presidential debate, is the leading contender to head the agency.  Perry is also opposed to climate action, has taken more than $12 million in donations from the oil and gas industry and sits on the board of the Dakota Access Pipelineparent company Energy Transfer Partners.

Trump nominees back claims to boost oil, natural gas -  With less than six weeks before his inauguration, President-elect Donald Trump has shown he is serious about his campaign pledge to bolster US oil and natural gas and gut federal regulation of the industry with his expected picks for at least three key posts in his administration. The picks, which will all likely face resistance even in the Republican-controlled Senate, indicate that Trump's early priorities will be focused on attempting to dismantle President Barack Obama efforts to combat climate change and to ease federal reach over oil and gas operations. "Trump's cabinet represents a who's who of climate deniers and fossil fuel hacks," said Sierra Club Director Michael Brune in a statement Saturday.To head the Environmental Protection Agency, Trump has appointed Oklahoma Attorney General Scott Pruitt who has sought to undo much of the agency's most substantial, and most oil and gas industry-criticized, work under the Obama administration. To lead the Interior Department, the agency which manages the federal lands and waters the incoming administration is expected to open to more drilling, Trump has chosen Republican Washington Representative Cathy McMorris Rodgers, who has voted against expanded federal oversight of the fossil fuel industry.To head the State Department, Trump is expected to nominate Rex Tillerson, who has been chairman and chief executive of ExxonMobil since January 2006.And while Trump has reportedly yet to decide on whom he wants to head the Department of Energy, a list of 74 questions Trump's transition team recently sent to the agency may indicate that the new administration has plans for DOE's core mission on science and technology. "How does [DOE's Energy Information Administration] ensure quality in its data and analyses?" asks one question. "Where does EIA think most improvement is needed in its data and analyses?" asks another.

Tillerson to push energy security, fight sanctions as top US diplomat - ExxonMobil CEO Rex Tillerson's nomination to secretary of state signals a potential shift in US diplomacy away from isolating countries through sanctions to one that puts US energy security front and center, analysts said Tuesday. Tillerson is expected to draw on personal relationships in geopolitical hot spots around the world with an aim toward lifting trade barriers and bringing countries into energy markets. He could influence Arctic drilling in Russia, the Iran nuclear deal, Saudi relations and other areas important to the oil industry. The nomination will have to overcome strong resistance in Congress, especially against Tillerson's close ties to Russian President Vladimir Putin and ExxonMobil's interest in rolling back US sanctions there that have cost it $1 billion. If confirmed, Tillerson could then face the challenge of implementing President-elect Donald Trump's foreign policy goals that may be unrealistic, said Richard Nephew, former principal deputy sanctions coordinator at the State Department in the Obama administration. That could include forcing Iran to accept radical cuts in its nuclear program or antagonizing China about Taiwan while expecting it to change its trade practices with the US. "The problem is going to be having to support and promote policies from Trump that are potentially dramatically inconsistent with those countries' own interests," Nephew said. "I don't care how good a diplomat you are, you're not going to be able to do those because your mission is unachievable."

Global Deals That Made Exxon’s CEO Now Pose Big Test – WSJ -Rex Tillerson rose to the top of Exxon Mobil Corp. partly by negotiating a deal with Russia’s Vladimir Putin to kick-start an oil project on the Pacific Ocean island of Sakhalin, which had been tied up in bureaucratic knots for years.He also led Exxon into Iraq’s semiautonomous Kurdistan region against the wishes of Baghdad and the State Department, and kept pumping oil in Chad after international oil profits were being used to support the autocratic government’s military operations.In many ways, Mr. Tillerson’s record since becoming chief executive in 2006 makes him the international energy equivalent of President-elect Donald Trump’s claim to fame in real estate: a shrewd, opportunistic businessman who amassed daring investments and valuable assets around the world. Those same qualifications will also pose a test for Mr. Tillerson’s nomination by the president-elect as secretary of state. The Exxon CEO’s dealings outside the U.S., particularly in Russia, will be a feature of his confirmation review, testing whether Mr.Trump’s affection for corporate chieftains as cabinet chiefs will fly in the world of international diplomacy. Mr. Trump has praised Mr. Tillerson, 64 years old, for having “relationships with leaders all over the world [that are] second to none.” Other prominent supporters acclaim his wide knowledge of the world and note his experience outside corporate America, including as president of the Boy Scouts of America. “It’s a mistake to pigeonhole him as another CEO with a very narrow background,” said former Defense Secretary Robert Gates in an interview. Mr. Gates, a principal in a consulting firm that has Exxon as a client, said he recommended Mr. Trump consider Mr. Tillerson for the job.

Trump taps Montana congressman for Interior secretary - President-elect Donald Trump is planning to name Montana’s Rep. Ryan Zinke (R) to lead the Interior Department.Zinke was offered the Interior secretary position Tuesday, a source close to Trump’s transition efforts confirmed to The Hill. A transition official told CNN that Zinke had accepted the offer. Zinke’s office and Trump’s transition team did not return requests for comment. On Twitter, a spokeswoman in Zinke’s congressional office retweeted an early report on his selection for the post. If the Senate confirms him, Zinke would be in charge of a department with some 70,000 employees and a wide range of responsibilities, from managing huge swaths of federal land in the West to enforcing treaties with American Indian tribes and studying the nation’s geography.  Zinke, a freshman lawmaker, has been a critic of numerous Obama administration environmental initiatives, including a moratorium on new leases for coal mining on federal land that accompanied a review of the coal leasing program. Montana is among the leading states for coal mining on public lands. He has slammed the Obama administration's policies cracking down on greenhouse gas emissions from power plants and oil and gas wells, and has pushed for Indian tribes to get more leeway in how they permit drilling on their land. An avid hunter and fisherman, Zinke bucks many of his GOP colleagues in his strong support for the Land and Water Conservation Fund, a program that uses fees from offshore oil and gas drilling to improve parks and public recreation.  He resigned his position in the committee writing the GOP platform earlier this year due to a provision in the platform advocating for transferring federal land to states.  The League of Conservation Voters gives him a 3 percent on its scorecard, which is meant to measure lawmakers’ environmental friendliness.

Trump Agenda: EPA, State Picks Aligned With Fossil Fuels Industry - naked capitalism by Jerri-lynn Scofield -  Jerri-Lynn here: In this Real News Network interview, DeSmogBlog’s Steve Horn discusses the fossil-fuel friendly history of President-elect Trump’s choices for Environmental Protection Agency (EPA) administrator and Secretary of State. Note that although the interview aired before the formal announcement of President-elect Trump’s selection of ExxonMobil CEO Rex Tillerson as his nominee for Secretary of State, Horn anticipated that Trump would make that choice, and described some implications of that decision.  This post reiterates some points that were also made in this December 8 post, Trump EPA Pick: Scott Pruitt as EPA Head Signals Agency Will Ignore Climate Change, which also discussed Pruitt’s legal efforts as Oklahoma’s  Attorney General to thwart the Clean Power Plan and the EPA’s methane emissions caps.  Interested readers might also want to look at Horn’s original article for DeSmogBlog, The Billionaire Energy Investor Who Vetted Trump’s EPA Pick Has Long List of EPA Violations, which sparked this Real News network interview. I should also mention that I quibble with Horn’s throwaway comment about possible Russian intervention in the US election– but not enough to prevent me from crossposting this interview, which contains sufficient useful information not so well collected elsewhere to offset my concern about Horn giving excessive credence to that claim.

Gov. Brown asks President Obama to permanently ban new drilling off California's coast -- Seeking swift action before the arrival of a new president, Gov. Jerry Brown urged President Obama on Tuesday to make permanent the existing ban on new oil and gas drilling along the California coast. "Now is the time to make permanent the protection of our ocean waters and beaches," wrote Brown in the letter released by his office. The governor later participated in a San Diego event to mark California joining a regional effort to combat ocean acidification. Brown's letter comes almost two weeks after a similar request by legislative Democrats. Whether Obama could act in a way that could not be revisited by President-elect Donald Trump next year remains unclear, though a growing chorus of Democrats and environmental activists are urging an attempt by the president before he leaves office. The governor also raised the issue of climate change in his letter to Obama. Clearly, large new oil and gas reserves would be inconsistent with our overriding imperative to reduce reliance on fossil fuels and combat the devastating impacts of climate change," Brown wrote.

Five people could block Trump’s pipeline promises -  Donald Trump has said he’ll speed up approvals for energy infrastructure projects when he gets to the White House. Standing at least partly in the way: An obscure panel of technocrats he’ll have little sway over. The Federal Energy Regulatory Commission, or FERC, is charged by law with approving new natural gas pipelines, an industry priority as gas unseats coal for power generation. While Trump can make some changes within the agency, his ability to quicken approvals is offset by the longstanding laws that drive the commission and its current makeup, with three Democrat-appointed members on a five-person board. "Short of, literally, an act of Congress," making any big changes in how FERC operates is "wishful thinking," said Christi Tezak, managing director of ClearView Energy Partners, a Washington-based industry consultant, in a telephone interview. Commissioners serve 5-year terms. The earliest any of the Democrats’ terms will end is seven months away. Beyond that, FERC operates under economic and environmental laws that carry specific approval guidelines that have been tough to overcome, even as pipeline opponents grow increasingly sophisticated in using them to their advantage. Last year, a deeply-divided Senate didn’t even bother to take up a House-passed measure that would automatically approve pipeline applications still pending after a year. With an even slimmer majority post-election, Republicans may find it equally as difficult to pass similar legislation next year.

Battle over drilling in Arctic refuge expected to heat up in next Congress -- in the fierce partisan politics that dominate Congress, Alaska Republican Sen. Lisa Murkowski and Washington Democratic Sen. Maria Cantwell have displayed a rare ability to find common ground. For more than a year, they labored to piece together an energy bill that sailed through the Senate before foundering in the final days of this session. Next year, though, the two will be on opposite sides of a great policy divide, as Congress again considers whether to open the coastal plain of the Arctic National Wildlife Refuge (ANWR) to oil exploration or continue to protect an area conservationists view as a crown jewel of America's public lands. The old fight is back, and fresh, because of the presidential election victory of Donald Trump, who will preside over a Republican-controlled Congress. In his campaign, Trump advocated boosting U.S. oil production as he spurned the science linking climate change to fossil fuel combustion, all of this whipping up hopes among his industry supporters. He would be expected to embrace any legislation to drill in the refuge that makes it through Congress. And, his executive choices such as Oklahoma Attorney General Scott Pruitt an ally of the fossil fuel industry nominated to lead the Environmental Protection Agency will try to pare back federal regulations to speed energy development. For Alaska politicians, the decadeslong quest to open the 1.5 million-acre coastal plain to drilling has been as elusive as finding the Holy Grail. It now takes on new urgency as the state economy is shaken by low oil prices and a steep decline in crude flowing through the Trans-Alaska Pipeline.

Tell Me Again How Oil Extraction Is the Panacea for Employment Growth? The top chart shows the total number of employees in the oil extraction area. Yes, it increased from 120,000-200,000 between 2005 and 2015. That's a whopping 80,000. But as the bottom chart shows, the total number of oil jobs is still less than 1% of all payroll jobs. Let's assume a 4-1 multiplier effect -- for every 1 oil extraction job created, 4 additional jobs are created. That would only be a total of 320,000 jobs -- about 2-3 months of job gains at the current pace of creation. There's just not much here from an employment perspective.

Expected Jan month-on-month gain in US shale oil output first since Apr 2015: EIA --US shale oil production should rise overall by 2,000 b/d to 4.542 million b/d in January -- the first month-on-month projected overall increase since April 2015, the US Energy Information Administration said Monday. Even so, crude production in two of the bigger domestic oil plays, the Bakken in North Dakota and Montana and the Eagle Ford Shale in south Texas -- should continue to drop overall as rig counts in those plays remain low relative to two years or even one year ago, EIA said in its monthly Drilling Productivity Report. Even so, the decreases in those plays, particularly the Eagle Ford, are slowing. There, for example, January production is pegged to fall 23,000 b/d to 980,000 b/d. That is less than the 33,000 b/d drop predicted for December, 35,000 b/d in November, 46,000 b/d for October and 53,000 b/d for September. Likewise, the Bakken is forecasted to decrease just 13,000 b/d for next month to 905,000 b/d, below the 14,000 b/d output drop predicted for December, 21,000 b/d for November and 28,000 b/d in October. Positive oil output forecasts for the Permian Basin continued for January, the fifth month of predicted increases for that region which is the most active in the US. There, EIA forecasts production to jump by 37,000 b/d next month to 2.126 million b/d. US shale production has been decreasing for about 20 months during a two-year industry downturn that has seen severe drilling cutbacks and has affected energy companies along the value chain. The number of drilling rigs globally has dropped worldwide, although the impact was most severe in the US where shale output was frenzied in mid-2014. That was when oil prices that were over $100/b began to drop and reached half that figure by year-end.

U.S. Shale Set To Kill Oil Price Rally -  The resurgence of U.S. shale will undermine the OPEC-fueled price rally, capping oil prices at roughly $50 per barrel through 2017. That is the conclusion from the EIA’s latest Short-Term Energy Outlook, which forecasts WTI to average $50.66 per barrel and Brent to average just $51.66 per barrel next year. The agency also cast doubt on OPEC’s ability to follow through on its deal. “The extent to which the announced plans will be carried out and actually reduce supply below levels that would have occurred in their absence remains uncertain.” But even if they do, any price rally above $50 per barrel will merely spark a revival in U.S. shale drilling, which will “encourage a return to supply growth in U.S. tight oil more quickly than currently expected.” In other words, the OPEC deal won’t fuel the sustained rally that oil bulls have hoped for. In fact, the oil bust could persist for another year, according to the EIA. Rising U.S. oil production next year will postpone the projected withdrawals in oil inventories, pushing drawdowns off until 2018. In fact, the EIA actually projects inventories to climb once again, rising by 0.8 million barrels per day (mb/d) in the first half of 2017. For the entire year, inventories could build at an average rate of 0.4 mb/d. In other words, the EIA does not expect the global supply/demand equation to come into balance until the end of next year, a much more pessimistic prediction than the markets have come to expect, especially following the OPEC agreement. One prevailing theory about the state of the oil market before the OPEC deal came from the IEA, which forecast a convergence of supply and demand by the middle of 2017. The OPEC deal was supposed to accelerate that adjustment, tightening the market and moving up the “balance” to early 2017.

Why the Peak Oil Movement Failed - John Michael Greer - The standard model of the future accepted through most of the peak oil scene started from a set of inescapable facts and an unexamined assumption, and the combination of those things produced consistently false predictions. The inescapable facts were that the Earth is finite, that it contains a finite supply of petroleum, and that various lines of evidence showed conclusively that global production of conventional petroleum was approaching its peak for hard geological reasons, and could no longer keep increasing thereafter. The unexamined assumption was that geological realities rather than economic forces would govern how fast the remaining reserves of conventional petroleum would be extracted. On that basis, most people in the peak oil movement assumed that as production peaked and began to decline, the price of petroleum would rise rapidly, placing an increasingly obvious burden on the global economy. The optimists in the movement argued that this, in turn, would force nations around the world to recognize what was going on and make the transition to other energy sources, and to the massive conservation programs that would be needed to deal with the gap between the cheap abundant energy that petroleum used to provide and the more expensive and less abundant energy available from other sources. The pessimists, for their part, argued that it was already too late for such a transition, and that industrial civilization would come apart at the seams.  As it turned out, though, the unexamined assumption was wrong. Geological realities imposed, and continue to impose, upper limits on global petroleum production, but economic forces have determined how much less than those upper limits would actually be produced. What happened, as a result, is that when oil prices spiked in 2007 and 2008, and then again in 2014 and 2015, consumers cut back on their use of petroleum products, while producers hurried to bring marginal petroleum sources such as tar sands and oil shales into production to take advantage of the high prices. Both those steps drove prices back down. Low prices, in turn, encouraged consumers to use more petroleum products, and forced producers to shut down marginal sources that couldn’t turn a profit when oil was less than $80 a barrel; both these steps, in turn, sent prices back up.

What if the Fracking Boom Is Just a Bubble? - Post Carbon Institute has released two reports authored by Earth scientist J. David Hughes assessing the U.S. Energy Information Administration's (EIA) most recent projections for domestic tight ("shale") oil and shale gas production. The reports 2016 Tight Oil Reality Check and 2016 Shale Gas Reality Check evaluate the EIA's increasingly optimistic projections in light of actual production data (through June 2016) and the agency's own previous estimates. The reports raise critical questions about the veracity and volatility of the EIA's estimates, questions that are especially important as the Trump Administration sets its domestic energy policy. "The EIA kindly provided the play level projections that make up its Annual Energy Outlook reference case forecasts," said Earth scientist and the reports' author J. David Hughes. "This allowed a comparison to the administration's previous projections and my own forecasts, which were based on an analysis of well productivity by subarea within each play and other fundamentals such as the number of available drilling locations and decline rates. I was also able to assess the EIA's most recent projections in light of actual production data from the field. Simply put, when looked at on a play-level, the EIA's forecasts are highly unlikely to be realized."  The Annual Energy Outlook (AEO) published yearly by the U.S. Energy Information Administration is taken by media, policymakers, investors and general public at face value. Yet the EIA's projections for future energy prices and production are very often wrong (like when it revised its own estimate for the Monterey shale downward by 96 percent after just three years) and tend to show a consistent optimism bias.

Mexico eyes USWC gasoline cargoes again as differentials plunge -   Los Angeles gasoline differentials trended to their lowest levels since February early Wednesday as stocks hit a nearly four-month high, although the trend could be short-lived with five empty cargoes soon arriving from Mexico to the West Coast. Energy Information Administration data released Wednesday showed inventory up 48,000 barrels week on week to 29.24 million barrels for the week ended December 9. It was the 1.79 million barrels higher than the same week last year and highest weekly level since 29.88 million barrels for August 26. "It is winter, that time of year when gasoline stocks are high," one market source said. "That's why they're shipping out gasoline." Market sources said Los Angeles CARBOB was talked down 1.75 cents to NYMEX January RBOB futures minus 17.50 cents/gal early Wednesday in quiet trading, the lowest level since minus 26 cents/gal on February 23. Los Angeles suboctane dropped from a 2-cent discount to a 4.50-cent discount to the California-specific CARBOB grade.Suboctane is an export grade not allowed for road use in California. It is sent to neighboring states, but mostly Mexico. Platts trade flow software, cFlow, showed five ships heading up empty from Mexico to the West Coast for loading, mostly likely with gasoline. Only one or two have been typically seen on the route in recent months. "There's a reason Mexico is buying a lot of gasoline now. Because it's cheap," the source said. "PBF Torrance is back in the mix. They're a big producer of suboctane gasoline." The 151,300 b/d Torrance plant near Los Angeles has experience a power outage in October and fire in November that kept it from full rates until recently. The Los Angeles CARBOB differential reached plus 39.75 cents/gal on October 28 and has been slowly declining since then.

How to make mine operators pay for the mess they make -   Operators of resource extraction industries are typically required to post bonds, or contribute to an "orphan well fund" or a "mine financial security program." If an company walks away from a toxic waste site once operations have ended, the funds from the security program can be used to pay for site clean-up.  The only problem is that the amounts in these clean-up funds are typically tiny relative to the potential costs of site clean-up. This point has been raised by the Pembina Institute, in their report on How Albertans Could End Up Playing for Oil Site Mine Reclamation. It's been raised in an expert panel report on Environmental and Health Impacts of the Oil Sands Industry, commissioned by the Royal Society of Canada. It has been noted by the Auditor General of Alberta and the BC Auditor General. The risks associated with future toxic waste from the oil sands are, in some ways, more worrying than the much more widely known global warming ones.  Humans could possibly adapt to a warmer climate. But the arsenic-laced water around the NWT's Giant Mine? That's unequivocally, inevitably lethal. The issue is more pressing than ever this year, given the federal government's decision to approve the Trans Mountain Pipeline, and their announcement that they will be welcoming more foreign investment (if it's hard to stop a Canadian operator from walking away from a toxic waste site, how will it be possible to stop a foreign one?).  Why hasn't more attention been paid to the environmental risks of resource extraction? My theory is that the human brain is just not very good at processing low-probability, ultra-high-cost events. We can't differentiate, at an emotional level, between someone defecating on our driveway, and someone contaminating the entire Athabaska watershed. We just can't grasp - or don't want to grasp - the enormity of the environmental disaster the oil sands could create.  The Sydney Tar Ponds show how expensive that clean-up can be. Although the Sydney site totalled just over 100 hectares, the 2004-14 clean-up operations cost federal and Nova Scotia taxpayers $400 million – about $4 million per hectare. Alberta’s oil sands are hundreds of times bigger than the Sydney Tar Ponds. To pre-commit companies to paying for the eventual costs of reclaiming oil sands sites, the Alberta government has created a “Mine Financial Security Program”. Companies wishing to mine the oil sands must post a base amount of security for each project. In theory, they could be required to post additional securities. In practice that never happens.

Analysis: Iran emerges as high sulfur gasoil supplier for ARA refining hub - Northwest Europe has opened its doors to the first shipments of Iranian gasoil after a 10-year hiatus, and these nascent flows are adding to the desulfurization opportunities within the Amsterdam-Rotterdam-Antwerp refining hub. The specifications of the recent fixtures put Iranian gasoil as a prime candidate for desulfurization and blending within the ARA hub, market sources said. So far this year, the HSGO shipments have been straight run 0.7-0.9% gasoil from Bandar Mahshahr, middle distillates traders and sources close to the parties involved said. In aggregate, high sulfur gasoil exports from Iran have amounted to approximately 100,000 mt each month, booked for the West of Suez, the Mediterranean, Northwest Europe and West Africa, a source with knowledge of the matter said.The latest fixture to Northwest Europe was on board the Glorious, a 60,000 mt cargo, which discharged into Amsterdam on November 26, having left Bandar Mahshahr, Iran, on November 12, S&P Global trade flow software CFlow showed. The Mahshahr Oil Terminal is used to store products from the Abadan Refinery to the west. This vessel was laden with 0.7% sulfur gasoil, sources said. The identity of the charterer remains unclear. Among the other Iranian ports, Bandar Abbas exports 6-7 cargoes of 5,000 ppm (0.5%) gasoil each month, National Iranian Oil Company said, while port Lavan Island supplies one cargo on average of maximum 500 ppm gasoil.

Almost 12,000 Jobs at Risk on Norwegian Continental Shelf in 2017 - Almost 12,000 jobs are at risk on the Norwegian Continental Shelf in 2017, with several rigs finding themselves out of contract next summer, according to media reports. Norwegian daily newspaper Stavanger Aftenblad stated that three out of four rigs on the Norwegian shelf will be without a contract by the middle of next year, which could see up to 11,400 jobs lost, according to a number of reports.  Earlier this month Scottish National Party MSP Gillian Martin said that more investment was needed if the oil and gas sector wants to avoid the risk of losing key workers in the North Sea.   The developments follow a prediction by the Aberdeen & Grampian Chamber of Commerce's latest Oil and Gas Survey, which stated that further job cuts were likely to come in the near future, but insisted that the crisis could be reaching a turning point. More oil and gas contractors had reduced both their permanent and contract staff than at any other point in the history of the AGCC’s Survey,  As the industry has worked to drive down costs and adapt to the new low oil price landscape, the survey also reveals that 43 percent of respondents have reduced pay in the past year, including 15 percent who cut it by an average of 10 percent. In addition, 40 percent of all firms - compared to 25 percent in the previous survey - reported making significant changes to terms and conditions. This is not only salary and bonus payment reductions, but also in changes to shift pattern and working hours, pension contributions, medical plans and benefits packages. The total number of layoffs since the onset of the industry downturn is more than 350,000 globally, according to a report by Houston-based consulting firm Graves & Co. The report, which includes layoff numbers as of noon May 6, details 351,410 layoffs.

WoodMac: Oil Exploration Spending May Drop Further Next Year | Rigzone - Global spending on oil and gas exploration in 2017 could fall below this year's $40 billion, but lower costs mean profitability will increase, consultancy Wood Mackenzie said in a report on Friday. Faced with a 30-month-long oil price downturn, oil companies including Exxon Mobil and Royal Dutch Shell have slashed spending budgets in recent years, with exploration bearing the brunt. According to Wood Mackenzie, the share of exploration in overall oil and gas production investment will dip to a new low of 8 percent in 2017. "Overall investment will at best match 2016 year's spend of around $40 billion, and may yet fall further," said Andrew Latham, vice president of exploration at Wood Mackenzie. That compared with a 2014 peak of $95 billion. Lower costs of drilling rigs, simpler wells designs and cheaper seismic imaging mean well counts may nevertheless hold up close to 2016 numbers while returns improve. "After a decade in the doldrums, the majors' returns from conventional exploration improved to nearly 10 percent in 2015. The rest of the industry is heading in the same direction. Fewer, better wells promise a brighter future for explorers," Latham said. The rate of discoveries is not expected to fall next year and to average around 25 million barrels of oil equivalent per well.

Chile offers to resume gas exports to Argentina in 2017 - Chile could resume exports of natural gas to its neighbor Argentina next year, the countries' energy ministers said Thursday. Argentina's state energy firm ENARSA is currently studying a proposal from Chile's ENAP to pump 3 million cu m/d of gas across the Andes between mid-May and the end of August, which is the Southern hemisphere winter, on "very similar terms" to those for gas exports this winter. "It will depend whether we can come to an agreement on the prices and what the conditions should be," said Argentina's Energy and Mines Minister Juan Jose Aranguren, following a meeting with Chilean counterpart Andres Rebolledo in Buenos Aires. "We see no inconvenience of repeating the process in 2017 as long as it benefits the buyer as much as the seller," Aranguren added.

African Energy Economist: Subsidizing Nigerian inefficiency - Fuel subsidies in Nigeria remain a thorny issue. State support for gasoline and diesel prices, both directly at the pump and through subsidies for fuel imports, places a huge burden on the national finances. A government report calculated that $8 billion out of total federal state expenditure of $22 billion in 2013 was spent on fuel subsidies. Much of that subsidized fuel does not even benefit Nigerians, as it is smuggled across the border into neighboring states where prices are higher. The lower price of oil this year means that the current bill is likely to be much less, but the government’s ability to continue paying out is also greatly reduced. Nigeria is entering what will be its first recession in 25 years and remains as reliant on hydrocarbon revenues as ever. Successive governments have sought to increase fuel prices, often very clumsily, but have been forced to backtrack by national strikes. On some occasions, prices have more than doubled overnight. It is almost as if the government were actually trying to fail. The popular view is that cheap fuel is one of the very few things that the bulk of the population can expect from their government. Raising prices would also stoke inflation. Many politicians are so keen to secure popular support and depress inflation that they want to increase subsidies. On November 30, the House of Representatives voted for a maximum gasoline price of N70 ($0.29) a liter. . The population needs to have some expectation that the state can manage its finances for their benefit. In the long term, a massive cultural change is needed. The population needs to have some expectation that the state can manage its finances for their benefit. In addition, the view needs to change that wealth can only be secured by tapping the oil industry, whether by working in the sector, working in government or in the countless forms of petro-crime that permeate Nigerian society. More immediately, the government can also help to address the fuel import situation. Nigeria has four state-owned refineries that have either been out of use or operating at reduced capacity for the past 15 years. At the same time, vast amounts of money are made by importing refined petroleum products, including through scams such as round tripping, which involves physically importing the same consignment of fuel more than once. As a result, there are vested interests in keeping the refineries out of action.

Shell starts oil production from Malaysia's Malikai deepwater platform - Oil | Platts News Article & Story: Shell has started oil production from the Malikai Tension-Leg Platform, located 100 km offshore Malaysia's Sabah state, the company said Wednesday. Malikai will be Malaysia's fourth deepwater project after the Kikeh, Siakap-North Petai, and Gumusut Kakap fields, and is expected to have a peak production of 60,000 b/d. The project start-up has arrived at a time when oil producers are coordinating efforts to reduce global supply. Malaysia is targeting an output cut of 20,000 b/d from its estimated production of 700,000 b/d over the period January-June 2017.With this decision, Malaysia became one of 11 non-OPEC oil producers to agree an output cut, following OPEC's announcement in late November to freeze the group's supply at 32.5 million b/d with the aim of speeding the market's rebalancing and boosting producer coffers. Malikai is Shell's first TLP facility in Malaysia and second deepwater project in the country, following the start-up of the Gumusut-Kakap platform in 2014. Shell's deepwater business currently produces 600,000 b/d of oil equivalent globally, with another two Shell-operated projects under construction or pre-production commissioning, Coulomb Phase 2 and Appomattox in the US Gulf of Mexico. "Deepwater production is expected to increase to more than 900,000 boe/d by the early 2020s from already discovered, established reservoirs," Shell said.

India data: Nov oil products demand rose 12% on year to 4.3 Mil b/d - Oil | Platts News Article & Story: India's demand for oil products in November rose 12% year on year to 16.6 million mt, or 4.35 million b/d, latest provisional data from the Petroleum Planning and Analysis Cell showed. The higher growth in November was the second straight month of positive growth, after a negative growth in September when demand fell 0.8% year on year to hit a two-year low of 14.6 million mt, or 3.82 million b/d. In October, demand for oil products rose 6.6% year on year to 16.5 million mt, as demand for transport fuel rose after the rainy season ended in September. "Half of the November 2016 demand growth was due to higher petrol/diesel sales, which had been elevated as fuel stations continued accepting old high-denomination currencies," said a Credit Suisse report Wednesday.On November 8, India scrapped its Rupees 1,000 and Rupees 500 currency notes with immediate effect nationwide, except at fuel stations where the notes were allowed to be used for a slightly longer period. The rise in demand for transport fuels was the main reason for the increase in November, with diesel consumption rising 10.5% year on year to 6.75 million mt and gasoline consumption rising 14.3% to 2 million mt. LPG demand continued to be strong in November, rising 16.5% year on year, reflecting the government's thrust on providing new household connections for the economically challenged sections. Focus on the reduction in government subsidy on kerosene led to a cut in kerosene demand by around 32% year on year in November. The Credit Suisse report forecasts LPG demand to sustain more than 10% growth over the near term, due to the government action on increasing LPG penetration in rural households.

Offshore oil regulator hires former oil firm boss as head of safety and integrity -  Environmentalists have criticised the offshore oil regulator for appointing a recent head of the Australian arm of a major oil company to a senior position, saying the move is “like putting the fox in charge of the henhouse”.Derrick O’Keeffe spent the past four years as country manager in Australia for Murphy Oil, which under his watch entered into a joint-venture with Santos to explore for oil in the Great Australian Bight.This week the National offshore petroleum safety and environmental management authority (Nopsema) announced he had been appointed to the position of Head of Division, Safety and Integrity, which reports directly to the chief executive.The role includes the assessment of safety cases and well operations management plans, such as those that Nopsema controversially approved for BP to drill for oil in the Great Australian Bight. O’Keeffe’s LinkedIn profile boasts of expanding Murphy Oil’s number of offshore oil permits from three to 10.  Murphy Oil has had its environmental plans approved by Nopsema to explore for oil in the Great Australian Bight, and is expected to submit drilling safety cases and well operation management plans to Nopsema in the near future, which would now be assessed by O’Keeffe.“When the company he worked for has an active permit, putting an oil advocate in charge of regulating oil spill risk is like putting the fox in charge of the henhouse,” said Greenpeace campaigner Jonathan Moylan.

Japan's oil and LNG price evolution: On the path to transparency (10 pp pdf) In this special report, Platts looks at the ongoing changes in Japan's refining sector, potential development of new spot oil products price benchmarks, and the possible development of a spot LNG price benchmark.

Japan's average price for LNG spot cargoes contracted in Nov jumps 15% on month -  The average price Japanese buyers paid for spot cargoes contracted in November jumped 15% month on month to $7.0/MMBtu, the highest since January this year, the Ministry of Economy, Trade and Industry showed Friday. METI gathers data from utilities and other LNG buyers in Japan to publish a simple average of contract prices, but the delivery months of the cargoes are not disclosed. Platts JKM averaged $7.181/MMBtu in November, reflecting spot deals concluded for December and January deliveries to Japan and South Korea. The ministry also said the average price of cargoes delivered into Japan in November was $5.9/MMBtu, up 3.5% from the previous month. Meanwhile, the Platts JKM for November delivery averaged $5.977/MMBtu. The November JKM was assessed from September 16 to October 14, during which prices rose, thanks to firm demand from end-users.

Asia spot LNG: Feb JKM starts at $9.20/MMBtu amid limited supply - The Platts JKM for cargo delivery in February, the new front month, kicked off at $9.20/MMBtu Friday as the market continued to be supported by limited supply. The January JKM ended its assessment period on Thursday at $9.10/MMBtu up 10 cents/MMBtu from Friday last week. A couple of tenders were in focus this week as market participants sought price indications for future trades.Kogas bought most cargoes that were offered into the tender and most of them were January delivery, said traders. They added that Kogas awarded those cargoes in the low to mid $9s/MMBtu. In another tender, Russia's Sakhalin LNG tender offering February and March cargoes closed December 13. It was heard awarded both cargoes to two Japanese utilities, with the February cargo heard awarded at $9.30/MMBtu to Tohoku Electric and the March cargo awarded at $8.10/MMBtu to $8.20/MMBtu to another Japanese buyer. Tohoku Electric lost the 1 GW coal-fired unit at its Haramachi power plant which was shut Sunday on suspicion of a steam leak inside the boiler. Prospects of supply became more clear toward the end of the week as Gorgon Train 2 restarted operations after a temporary halt. Gorgon LNG Train 1 went also offline at the beginning of December and no updates have been heard. South Korea's Kogas closed its tender for December 15 to February 20 delivery. The Korean utility was initially looking for two cargoes, but was heard to have awarded somewhere between six and ten cargoes in the end.

Japan refiners receive notice of crude supply cuts after OPEC deal: PAJ chief - Japanese refiners have received notices of crude supply cuts from "some producers" for January loading, following OPEC's November 30 decision to cut production, Petroleum Association of Japan President Yasushi Kimura said Thursday. "It is true that we have received notices from some producers about reducing crude loadings from January," Kimura told a press conference in Tokyo. But Kimura added that Japanese refiners were not under immediate pressure to seek alternative crudes. Kimura is also chairman of JX Holdings, the parent of largest Japanese refiner JX Nippon Oil & Energy.

Shell, Iran agree on future oil and gas development | Reuters: Royal Dutch Shell signed a provisional agreement on Wednesday to develop Iranian oil and gas fields, an Iranian official said, the first deal by the world's second biggest listed oil firm in Iran since sanctions were lifted. The Anglo-Dutch company confirmed it had signed a memorandum of understanding with National Iranian Oil Company (NIOC) on Wednesday "to further explore areas of potential cooperation", declining to give further details. Analysts said the agreement underscored major oil companies' willingness to keep doing business with Iran despite the risk that U.S. President-elect Donald Trump could scrap the nuclear deal that ended the sanctions earlier this year. Earlier on Wednesday, an Iranian Oil Ministry official said Shell would sign three memoranda of understanding (MoUs) in Tehran to develop the South Azadegan, Yadavaran oil fields and the Kish gas field. The South Azadegan and Yadavaran fields both straddle Iran's border with Iraq. A Shell spokesman said after the signing that, "details of specific opportunities are confidential". Total, which last month signed the first deal by a Western energy firm since sanctions were lifted, will start talks about new oil and gas projects but will not be signing any deals on Wednesday, the Iranian official said.

Glencore and Qatar take 19.5% stake in Rosneft - FT -Russian banks will help finance the €10.2bn purchase of shares in state oil company Rosneft by Glencore and the Qatar Investment Authority that was signed on Saturday, the trading house said. The deal, which was unveiled by Rosneft chief executive Igor Sechin and president Vladimir Putin live on state TV on Wednesday evening, is the largest foreign direct investment into Russia since the US and EU imposed sanctions on the country over its actions in Ukraine in 2014. The revelation that Russian banks are playing a key role in financing the deal highlights the difficulty Rosneft had attracting foreign investors amid weak oil prices and western sanctions against it. Mr Sechin, who Rosneft insiders say has been working nonstop to secure the deal in recent weeks, said it was “unprecedented in its complexity”. “Under extremely unfavourable external circumstances a major effort was undertaken to search for interested strategic investors, taking into account the long-term interests of the Russian oil and gas sector and of the government in general,” Mr Sechin said in the statement. Under the structure of the deal, Qatar will invest €2.5bn and Glencore €300m for equal stakes in the a special purpose vehicle that is buying a 19.5 per cent stake in Rosneft from its government-owned parent company Rosneftegaz. Italy’s Intesa Sanpaolo will provide the “bulk” of the debt financing for the remainder of the €10.2bn deal, according to Rosneft, but Russian banks will also be “providing financing and credit support”, Glencore said.

Glencore and Qatar buy $11.3bn stake in Russia's largest oil company - BBC News: The Kremlin has announced that commodities trader Glencore and Qatar's sovereign wealth fund are together buying a 19.5% stake in Rosneft, Russia's largest oil company. "It is the largest privatisation deal, the largest sale and acquisition in the global oil and gas sector in 2016," President Vladimir Putin said. The surprise move sees Glencore and Qatar paying $11.3bn for the stake in Rosneft, where BP already owns 19.75%. Moscow will keep the controlling stake. The long-planned sale is part of the Russian government's efforts to sell some state assets to help balance the budget amid a two-year recession caused by a drop in global oil prices and Western sanctions. A deadline for the sale was missed, and speculation grew that Rosneft was struggling to find a buyer. The deal also marks a turnaround for London-listed Glencore, which had seen a collapse in its share price amid a plan to sell assets and cut its huge debts. Glencore's shares have rebounded this year. The Qatar Investment Authority is one of the biggest investors in Glencore.Russia, although not a member of Opec, has agreed to cut its output in line with the cartel, and will attend a meeting with its member countries on Saturday to discuss specific details. Mr Sechin said that Glencore and the Qatari fund will form a consortium and have equal stakes. He added that Rosneft had conducted talks with more than 30 potential bidders before striking the deal.

Iraqi Kurds May Reject Oil Cuts, Putting Baghdad In Difficult Position - Authorities of the Kurdistan Regional Government (KRG) in northern Iraq have announced that they will most likely not take part in the recently agreed oil output reduction deal made by OPEC, making the Iraqi central government’s ability to meet the cartel’s production cut requirements difficult. Iraq is OPEC’s second-biggest producer, and had heavily lobbied for an exemption from the production freeze, along with its neighbor, Iran. On November 30th, OPEC reached a deal among all 14 member countries to curtail oil production for the first time since 2008. In accordance with this deal, the cartel has agreed to cut its oil production from 33.8 million barrels a day (b/d) to 32.5 million b/d in an effort to prop up prices. Iran succeeded in getting a bump to 3.797 million bpd, but Iraq was asked to cut down to 4.35 million bpd, down from 4.561 million bpd in October, based on secondary sources. Late last month, just days after OPEC decided on the cut, Iraq released detailed data about the crude oil output at each of its 26 oilfields, along with detailed export figures, all of which was meant to serve as evidence that OPEC’s external-source output estimates do not reflect reality. The Iraqi data also included total output from fields in Iraqi Kurdistan.According to these figures, in September, the country pumped 4.7 million bpd, compared to 4.47 million bpd based on OPEC’s secondary sources for that month. To make good on the OPEC deal, Iraq must reduce crude output by 210,000 barrels a day from October levels. Kurdistan controls about 600,000 barrels a day of oil production, or approximately 12 percent of Iraq’s total output. Based on a statement by KRG Minister for Natural Resources, Ashti Hawrami, while the Kurds are signaling that they may not take part in the cut, they have also not definitively ruled out cooperation.

Oil-Producing Countries Agree to Cut Output Along With OPEC —Oil-producing nations struck a deal Saturday 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 agreement would remove 558,000 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 non-OPEC cuts, if carried out as described over the first half of 2017, would represent an unprecedented level of cooperation among oil-producing countries that have been groping for ways to lift oil prices out of a two-year funk. “This is truly a historic event,” Russian Energy Minister Alexander Novak said. ”It is the first time that so many oil-producing countries from different parts of the world have gathered in one room to accomplish what we have done.” The bulk of the cuts -- 300,000 barrels a day—have been pledged by Russia, which produces more crude oil than any other country. Other output reductions are promised by 10 other countries, including Oman, Azerbaijan and Sudan. Big questions remain going forward. OPEC members themselves have a spotty record of enforcing 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 decline rates that were expected. Neither OPEC nor its non-OPEC allies provided a detailed list of production cuts. Saudi Energy Minister Khalid al-Falih said countries could count such natural declines toward the production cut. “This agreement leaves for countries to decide how to implement,” he said.

OPEC, non-OPEC agree first global oil pact since 2001 | Reuters: OPEC and non-OPEC producers on Saturday reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices that overstretched many budgets and spurred unrest in some countries. With the deal finally signed after almost a year of arguing within the Organization of the Petroleum Exporting Countries and mistrust in the willingness of non-OPEC Russia to play ball, the market's focus will now switch to compliance with the agreement. OPEC has a long history of cheating on output quotas. The fact that Nigeria and Libya were exempt from the deal due to production-denting civil strife will further pressure OPEC leader Saudi Arabia to shoulder the bulk of supply reductions. Russia, which 15 years ago failed to deliver on promises to cut in tandem with OPEC, is expected to perform real output reductions this time. But analysts question whether many other non-OPEC producers are attempting to present a natural decline in output as their contribution to the deal. Last week, OPEC agreed to slash output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting as much as 486,000 bpd. Falih said on Saturday that Riyadh may cut even deeper. On Saturday, producers from outside the 13-country group agreed to reduce output by 558,000 bpd, short of the initial target of 600,000 bpd but still the largest contribution by non-OPEC ever. Of that, Russia will cut 300,000 bpd, Novak said. He added it would be gradual and by the end of March Russia would be producing 200,000 bpd less than its October 2016 level of 11.247 million bpd - Russia's highest production estimate so far. Russian output would fall to 10.947 million bpd after six months, Novak said.

Russia is now joining OPEC’s big push to lift crude oil prices worldwide - Vox Some of the world’s biggest oil producers are trying to see if they can hike global crude oil prices by artificially throttling production. So far, they’ve been stunningly successful — with “so far” being the key term here. On Monday, the price of Brent crude rose to $55 per barrel, the highest level since mid-2015. The reason? Russia and other countries just agreed to voluntarily cut their oil output, following a landmark deal in November by the Organization of Petroleum Exporting Countries (OPEC) — which includes Saudi Arabia, Iraq, and Iran — to limit its production: Both OPEC and non-OPEC oil producers are hoping they’ll benefit from a coordinated production cut — that they’ll gain more revenue from higher prices than they lose in foregone output. One big question, however, is whether they can actually enforce this agreement. It’s also unclear how US fracking companies will respond to this move; we might see a big resumption in US drilling that causes prices to slump yet again. Ever since mid-2014, the world has been pumping out far more oil than anyone needs, due in part to the surprisingly resilient fracking boom in the United States and in part to slower-than-expected demand in places like China. For much of that time, OPEC sat by and did nothing as prices fell. The cartel’s most important member, Saudi Arabia, actually thought it would be better to flood the global market with cheap crude in order to drive prices down and put all those high-cost US shale companies out of business. As a result, oil prices plummeted, at one point falling below $40 per barrel. Two years later, however, Saudi officials are switching course. The country has been hurt badly by the slump in oil revenues and resulting budget hole — the government has had to burn through more than $100 billion worth of foreign exchange reserves and cut social services and public salaries, threatening stability in the kingdom. Meanwhile, it’s partly achieved its goals: US production has fallen from 9.6 million barrels per day in 2015 down to 8.6 million barrels per day this year amid the price crash.

Non-OPEC Nations Agree To Cut Oil Production But Many Questions Remain --Non-OPEC oil-producing nations struck a deal in Vienna on Saturday to cut crude output by 600,000 barrels a day, joining a pact meant to reduce a global oversupply of crude, lift prices and lend support to economies hurt by a two-year market slump. The pact, the first between the two sides in 15 years, comes two weeks after OPEC agreed to reduce its own production by 1.2 million barrels a day. If complied with, and that is a big "if" since many of the non-OPEC nations had previously expressly stated they would not actually cut but rather let oil production decline naturally, the deal would amount to a reduction of almost 2% in global oil supply and, as the WSJ notes,"would represent an unprecedented level of cooperation among oil-producing countries." Prior to today's announcement, Russia had already announced it plans to reduce production by 300,000 barrels a day next year, down from a 30-year high last month of 11.2 million barrels a day. In a surprise move, Kazakhstan pledged a modest output cut after coming under strong diplomatic pressure, delegates said, Bloomberg noted. The International Energy Agency expected the Asian nation to boost production in 2017 by 160,000 barrels a day after a giant oilfield started pumping. Still, despite the trumpeted headline, there was little detail and it remains unclear whether the non-OPEC cuts include natural declines from countries such as Mexico, or consist entirely of genuine production cuts.  The breakdown in proposed reduction by non-OPEC country is as follows:

  • Azerbaijan to cut 35,000 barrels a day
  • Bahrain to cut 12,000 barrels a day
  • Bolivia to cut 4,000 barrels a day
  • Brunei to cut 7,000 barrels a day
  • Equatorial Guinea to cut 12,000 barrels a day
  • Kazakhstan to cut 50,000 barrels a day
  • Malaysia to cut 35,000 barrels a day
  • Mexico to cut 100,000 barrels a day
  • Oman to cut 45,000 barrels a day
  • Russia to cut 300,000 barrels a day
  • Sudan to cut 4,000 barrels a day
  • South Sudan to cut 8,000 barrels a day

Indonesia, which until recently was an OPEC member (having returned in 2015) but mysteriously was suspended from the cartel during the November Vienna meeting, did not figure in the negotiations. As the WSJ notes, representatives from a number of countries met Saturday morning for a breakfast and then headed to OPEC’s headquarters in central Vienna where they hashed out an agreement.

Analysis: OPEC's global producer pact could signal oil market metamorphosis - OPEC managed to secure the support of 11 other oil nations in a joint output cut pact Saturday, highlighting a show of strength and unity across global producers that could mark a new era in cooperation aimed at bringing stability back to global oil markets. The deal may only amount to an extra 258,000 b/d to the 1.5 million b/d in cuts agreed between OPEC and Russia on November 30 in Vienna, a relatively small step, but in terms of symbolic importance and psychological shift it represents a huge leap forward. OPEC had tentatively signed off on a deal to cut production by 1.2 million b/d from October levels to around 32.5 million b/d from the start of January along with a commitment from Russia to slash output by 300,000 b/d. Russia said Saturday it would gradually reduce output, snipping 50,000-100,000 b/d in the first quarter and towards a 200,000 cut b/d by end-March. OPEC and Russia also got firm commitments on Saturday from other oil producers to share the burden and send a meaningful signal to the markets. The other key non-OPEC producers on board include Mexico, which has agreed to trim output by 100,000 b/d from its 2.1 million b/d along with Kazakhstan, which will lop off 20,000 b/d from its 1.7 million b/d output, Oman which will cut 45,000 b/d from production of around 1 million b/d and Azerbaijan which will reduce output by 35,000 b/d from its 800,000 b/d. Malaysia has also agreed to cut 20,000 b/d from its estimated production of 700,000 b/d. The remainder of the reduction comes from Bahrain, Brunei, Equatorial Guinea, Sudan and South Sudan.

Oil Surges as Saudis Eye Deeper Cuts While Non-OPEC Joins Deal --  Oil jumped to the highest since July 2015 after Saudi Arabia signaled it’s ready to cut output more than earlier agreed while non-OPEC countries including Russia pledged to pump less next year, strengthening the coordinated commitment by the world’s largest producers to tighten supply. Futures rose as much as 5.8 percent in New York and 6.6 percent in London. Saudi Energy Minister Khalid Al-Falih said Saturday the biggest exporter will “cut substantially to be below” the target agreed last month with members of the Organization of Petroleum Exporting Countries. Al-Falih’s comments followed a deal by non-OPEC countries to join forces with the group and trim output by 558,000 barrels a day next year, the first pact between the rivals in 15 years. Oil has gained almost 20 percent since OPEC announced Nov. 30 it will cut production for the first time in eight years. Saudi Arabia, which led OPEC’s decision in 2014 to pump at will, is leading efforts to take back control of the oil market. The OPEC and non-OPEC plan encompasses countries that pump 60 percent of the world’s oil, but excludes major producers such as the U.S., China, Canada, Norway and Brazil. West Texas Intermediate for January delivery rose as much as $3.01 to $54.51 a barrel on the New York Mercantile Exchange, the highest intraday level since July 6, 2015. The contract was trading at $53.84 at 10:20 a.m. in Hong Kong. Prices gained 3.5 percent over the previous two sessions to close at $51.50 a barrel on Friday. Brent for February settlement jumped as much as $3.56 to $57.89 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $1.93 premium to February WTI.

Saudi "Shock And Awe" Sparks Buying Panic In Crude - WTI At 17-Month Highs -- Despite Saudi Arabia pumping record amounts of crude, the energy complex has spiked 6% higher tonight after two major headlines. First, Russia and other non-OPEC nations agreed to join the OPEC pledge to reduce production; and then, in what some are calling their "whatever it takes" moment, Saudi Arabia surprised the market by saying it will cut more than previously agreed. Saudi Arabia will “cut substantially” below the target agreed last month with OPEC members, Energy Minister Khalid Al-Falih says.Al-Falih’s comments follow a deal by non-OPEC countries to join forces with the group and trim output by 558k b/d next year, the first pact between the rivals in 15 years.“This is a very powerful message that producers want to balance the market higher,” says Chris Weston, chief market strategist in Melbourne at IG Ltd. “As a statement of intent, this is about as bullish as it gets”Oil spiked up to its highest since July 2015... and perhaps most worrying for those inflation-watchers, is up 55% YoY... "This is shock and awe by Saudi Arabia," said Amrita Sen, chief oil analyst at Energy Aspects Ltd. in London. "It shows the commitment of Riyadh to rebalance the market and should end concerns about OPEC delivering the deal." The question is - what happens next? How long can the Saudis keep jaw-boning the market higher in true central bank-inspired 'forward guidance' before 'investors' get wise to them not actually cutting production?

Oil hits highest since mid-2015 on non-OPEC cut agreement | Reuters: Oil rose to an 18-month high on Monday after OPEC and some of its rivals reached their first deal since 2001 to jointly reduce output to tackle global oversupply, though prices slipped late in the day. On Saturday, producers from outside the Organization of the Petroleum Exporting Countries, led by Russia, agreed to reduce output by 558,000 barrels per day, short of the target of 600,000 bpd but still the largest non-OPEC contribution ever. That followed OPEC's Nov. 30 deal to cut output by 1.2 million bpd for six months from Jan. 1. Top exporter Saudi Arabia will cut around 486,000 bpd to reduce the supply glut that has dogged markets for two years. Crude futures have rallied sharply, with U.S. oil futures gaining 23 percent since the middle of November as optimism that an agreement would be reached started to grow. There is some concern amongst analysts that the big move in crude is not sustainable, and that the market may have overshot given the expectation that various producers would not comply with the cuts they agreed upon. "Right now the market is kind of feeding on itself," "The market could push another $1 to $2 up to $55, and Brent could go to about $60, but at that point there are some concerns that are going to start to cap the rally." On Monday, U.S. crude futures settled up $1.33 at $52.83 a barrel, a 2.6 percent gain, though that was sharply off the day's highs. Prices continued to fall following settlement, with crude up just 98 cents to $52.48 at 3:22 p.m. ET. Brent crude futures settled up $1.36 at $55.69 per barrel, a 2.5 percent rise, after hitting a session peak of $57.89, highest since July 2015. "Overnight we had a knee-jerk rally to the highs, but the market is going to try to analyse" the non-OPEC agreement going forward, said Andrew Lebow, managing partner at Commodity Research Group. For the deal to be effective, all parties must stick to their word. Higher prices also raise the chances of other producers boosting output, particularly U.S. shale operators, where rig counts have grown steadily in recent months.

OPEC Jump Starts Oil Bull Market - The EIA released its latest Short-Term Energy Outlook, which contained some bearish predictions for oil prices.
• The agency projects WTI to average $51 per barrel and Brent to average $52 per barrel over the course of 2017, figures that are only slightly up from the previous month. The small upward revision is surprising given that the latest estimate incorporates the OPEC deal.
• But the EIA remains unimpressed by the OPEC agreement. The agency kept its price projections relatively flat, citing the possibility of OPEC cheating, as well as a possible strong response of U.S. shale.
• It should be noted, however, that the EIA figures do not reflect the non-OPEC agreement this past weekend (more on that below).
Oil prices skyrocketed yet again at the start of this week on news that non-OPEC countries agreed to cut production. Russia agreed to cut 300,000 barrels per day as expected, and a handful of other non-OPEC countries all chipped in an additional 258,000 bpd in reductions:
• Mexico -100,000 bpd
• Azerbaijan -35,000 bpd
• Oman -40,000 bpd
• Kazakhstan -20,000 bpd
• Malaysia -20,000 bpd
• And the remainder will come from Bahrain, Brunei, Equatorial Guinea, Sudan and South Sudan.
WTI and Brent surged more than 3 percent on Monday, taking prices up to $53 and $56 per barrel, respectively. Those prices are the highest in a year and a half.Saudi energy minister Khalid al-Falih said over the weekend that his country would be prepared to take production below its promised 10 million barrels per day in an effort to cut into global supplies and ensure that the deal works. "I can tell you with absolute certainty that effective Jan. 1 we’re going to cut and cut substantially to be below the level that we have committed to on Nov. 30," he told reporters after meeting with non-OPEC countries. The comments indicate a level of seriousness on behalf of Saudi Arabia not seen in more than two years – for Saudi Arabia to go beyond what it promised in Vienna is hugely positive for crude oil prices. It also suggests that despite fears over non-compliance and cheating, OPEC might actually deliver. The liquidation of short bets following the OPEC deal continues. Reuters reports that hedge funds and other money managers have established the most bullish position on record, adding 94 million barrels of long positions and cutting WTI and Brent futures and options short positions by 134 million barrels. The net-long position stood at 728 million barrels, according to the most recent data, the most bullish on record. It is not a coincidence that this has occurred at a time when oil prices have rallied more than 20 percent.

Will Russia back up leading role in OPEC, non-OPEC oil output deal with compliance? - Platts podcast - Russia is playing a key role in the agreement between OPEC and non-OPEC countries to remove up to 1.8 million b/d of crude oil from the market to accelerate rebalancing. With the first visible results of the efforts likely to be seen in February or so, Nadia Rodova, managing editor at S&P Global Platts bureau in Moscow, Rosemary Griffin and Nastassia Astrasheuskaya, Moscow-based editors for oil news, discuss how Russia may comply with its obligations, a move crucial for maintaining its new role on the global oil market.

Oil demand to outstrip supply next year on Opec cuts – IEA -- The global oil market will move into deficit as soon as the first half of 2017 if Opec and countries outside the cartel successfully execute the global supply pact agreed in recent days. The International Energy Agency, the Paris-based global energy advisory body, said in its monthly report that the planned output cuts could lead to demand outstripping supply by as much as 600,000 barrels a day. “If Opec promptly and fully sticks to its production target, assessed at 32.7m b/d, and non-OPEC producers deliver the agreed cuts of 558,000 b/d outlined on 10 December, then the market is likely to move into deficit in the first half of 2017 by an estimated 0.6 mb/d.” The IEA’s closely watched monthly report is the first major assessment of the oil market’s supply demand balance since Opec first agreed to reduce production on November 30. Previously the agency had forecast the oil market would not move into deficit until the second half of 2017 at the earliest, with the prospect of the market remaining in surplus for a fourth straight year. The biggest global supply glut in a generation has seen oil prices half since mid-2014, but low prices have this year spurred major producers to action. The IEA said that it was not forecasting how much Opec and non-Opec countries would actually cut by, but basing its assessment on the supply targets announced. Many analysts think full compliance with the proposed curbs is unlikely, though Opec kingpin Saudi Arabia has suggested it could cut output further if necessary, signalling it is serious about speeding the drawdown in near record inventories build up in the last three years.

OPEC deal to push oil market into deficit by mid-2017: IEA -  The global oil market will move into deficit during the first half of 2017, with demand potentially outstripping supply by some 600,000 b/d, if OPEC and non-OPEC producers manage to stick to the historic output cut deal struck in recent weeks, the International Energy Agency said Tuesday. The "assumption" is based on OPEC fully committing to its new effective production target of 32.7 million b/d and key non-OPEC producers delivering agreed cuts of 558,000 b/d, the IEA said in its latest monthly oil market report. The Paris-based agency had previously predicted that global oil markets would only rebalance by the end of 2017, warning that the global oil supply glut would continue to drag on prices next year without a deal by OPEC to curb output.But OPEC's November 30 deal to cut crude output by 1.2 million b/d from January 1 and the December 10 pledge by a Russian-led group of non-OPEC producers to cut 558,000 b/d mark a "dramatic" change, the IEA said.Global oil stocks could draw by 600,000 b/d during the first half of 2017 as a result of the moves and a slightly stronger demand outlook, the IEA said citing a "provisional view."The IEA noted, however, that the pledged output cuts during the first half of 2017 may not play out as planned due to "contractual and logistical reasons." "Clearly, the next few weeks will be crucial in determining if the production cuts are being implemented and whether the recent increase in oil prices will last," the IEA said.
Noting that the OPEC cuts are planned to last for six months and that OPEC's output policy will be reviewed at the group's next OPEC ministerial meeting at the end of May, the IEA also cautioned that high-cost oil producers should not bank on a firmer oil price scenario much beyond 2017.

Oil Tumbles After Big Surprise Crude, Gasoline Build --After two weeks of huge builds at Cushing (most since 2008), expectations were for a 3rd big weekly build at Cushing (and draw in overall crude). Oil prices kneejerked lower as API reported a major build in overall crude inventories (4.68mm build vs expectations of a 1.5mm draw). While Cushing saw a smaller than expected build, Gasoline inventories also soared most since January. API:

  • Crude +4.68mm (-1.5mm exp)
  • Cushing +632k (+3.2mm exp)
  • Gasoline +3.905mm - biggest since Jan
  • Distillates +233k

Biggest gasoline build in 11 months and a big surprise crude build...

OPEC Pumped at Record High as Cartel Agreed Output Cut - OPEC pumped at record levels in November, a top energy watchdog said Tuesday, posing a challenge to the cartel’s plans to slash oil output to support prices. The International Energy Agency also said oil markets could fall into a deficit in the first half of next year if the Organization of the Petroleum Exporting Countries and its allies acted on their pledge to reduce supplies. OPEC agreed Nov. 30 to cut output by 1.2 million barrels a day starting in January, a decision followed by a deal by other producers such as Russia to reduce their supplies by 558,000 barrels a day, at the very moment that many countries were pumping full out.As “OPEC was deciding to cut production, its crude output in November was 34.2 million barrels a day, a record high, and 300,000 barrels a day higher than in October,” the IEA said in its closely watched monthly report. The agency advises major industrialized nations on their energy policies. The increase was partly driven by the group’s kingpin Saudi Arabia, which pumped at a record 10.63 million barrels a day in November, up 70,000 barrels a day from the previous month.OPEC would now have to cut 1.7 million barrels a day to reach its ceiling of 32.5 million barrels a day, much more than the 1.2 million barrels a day initially envisioned. Saudi Arabia would also have to reduce its output by 572,000 barrels a day instead of 486,000 barrels a day. Among the other countries producing more oil, Angola increased output by 160,000 barrels a day to 1.67 million barrels a day following the return of a shut oil field. Libya added 70,000 barrels a day to 580,000 barrels a day after blocked oil ports reopened. As a result, global oil supplies in November edged up to a record high 98.2 million barrels a day, as a drop in non-OPEC output was more than offset by higher OPEC production, the Paris-based agency said.

Exclusive: Cost of pump-at-will oil policy spurred Saudi OPEC U-turn: (Reuters) - Saudi Arabia has long said it could produce as much as 12 million barrels per day (bpd) of oil if needed, but that pump-at-will claim - which would require huge capital spending to access spare capacity - has never been tested. Sources say the kingdom may have stretched its current limits by extracting a record of around 10.7 million bpd this year, which could be one reason why Riyadh pushed so hard for a global deal to cut production. Riyadh, the world's top oil exporter, felt the burn of cheap oil this year when crude was trading below $50 a barrel, as the reality of its costly war in Yemen and the task of shaking up its economy to create thousands of jobs began to sink in. With tight resources, Saudi Arabia found itself weighing the prospect of investing billions of dollars to raise oil output further if it wanted to gain more market share under a strategy adopted in 2014. Instead, cutting production amid a global glut and low prices to take the pressure off its oilfields, secure better reservoir management and save itself unnecessary expenses, seemed the perfect deal. "You invest in raising your production when prices are high, not when they are low," a Saudi-based industry source said. "Choices are tougher now. The question is, would the Saudi government with its tight budget put huge investment in raising production or put it somewhere else where it's needed more?" Oil rose as much as 6.5 percent on Monday to an 18-month high after OPEC and some of its rivals reached their first deal since 2001 to reduce output jointly. On Thursday, oil was trading above $54 a barrel.

WTI Tumbles To $51 Handle After OPEC Warns Glut May Continue Longer Than Expected --On the heels of last night's big crude build, OPEC's overnight report stating that supply cuts won’t re-balance the market until the second half of 2017 has sparked further losses in oil prices, almost erasing the entire OPEC/NOPEC/Saudi cut ramp. As Bloomberg reports, OPEC said its agreement to cut production, while speeding up the re-balancing of the global oil market, won’t result in demand exceeding supply until the second half of next year.The Dec. 10 agreement between the Organization of Petroleum Exporting Countries and non-members such as Russia and Kazakhstan “will accelerate the reduction of global inventories and bring forward the re-balancing of the oil market to the second half of 2017,” OPEC said in its monthly report Wednesday.It’s a more pessimistic outlook than that published Tuesday by the International Energy Agency, which indicated a supply deficit in the first half.Despite a commitment from those countries to lower their output in the first half by 600,000 barrels a day, the organization slightly increased forecasts for supplies from outside OPEC in 2017. It estimates that production in Russia, which pledged half of the non-OPEC cut, and in Kazakhstan, which also agreed to cut, will remain steady for the six months covered by the deal.
And the result is further downside on oil - almost erasing the entire OPEC/NOPEC rally...

Somebody Has To Go Out of Business in the Oil Market (Video) -- Economic theory suggests that ultimately somebody still needs to go out of business in the oil industry, and after 2 plus years of massive declines in prices we seem to be right back where we started with this oversupply crisis in the oil market. US Oil Production seems to have bottomed at 8.4 Million Barrels per day and is rising again, and headed for moving back above 9 Million Barrels per day in 2017. The Trump administration seems to be bullish for more US Oil Production, and I am not sure that is good longer term for the overall price in the market.

Oil Jumps On Surprise Crude Draw Despite Surge In Production  --After API's surprising large gasoline, crude build overnight, prices have been under pressure (not helped by OPEC comments).However, DOE just reported a much bigger than expected draw in crude (complete opposite of API). Cushing saw a bigger than expected build andcrude production surged. This is the 3rd biggest weekly surge in production since the peak in May 2015. Gasoline demand continues to slide. DOE:

  • Crude  -2.56mm (-1.5mm exp)
  • Cushing  +1.223mm (+1.0mm exp)
  • Gasoline +497k (+2.0mm exp)
  • Distillates -762k (+1.0mm exp)

4th weekly crude draw in a row but Cushing continues to see big builds...

US drillers pumped like crazy last week, and that's a 'major concern' for OPEC -- U.S. crude oil production surged by about 100,000 barrels a day last week, providing further evidence that American drillers are responding quickly to the higher prices that OPEC created by agreeing to curtail their own production. The Organization of Petroleum Exporting Countries reached an agreement to cut production by 1.2 million barrels a day last month and got commitments from some nonmembers to 558,000 barrels a day in reductions this past weekend. Hopes for output limits had boosted prices ahead of the agreements. American drillers were not among the nonmembers who agreed to cut. In the lower 48 states, they drove production to nearly 8.8 million barrels a day in the week through Dec. 9, according to the U.S. Energy Information Administration. That is up from about 8.7 million barrels a day the week prior. To be sure, the weekly production figures are preliminary, and big jumps are not too rare. But a steadily rising four-week average for U.S. oil output points to an overall recovery. At 8.72 million barrels a day, the average was at its highest level since June. Analysts warn that OPEC's bid to balance an oversupplied market by cutting production could backfire if it causes oil prices to rise too much. Those higher prices could cause U.S. drillers sidelined by low oil prices to start pumping more oil. The weekly jump in U.S. output is a "major concern" for OPEC members, "This is exactly what several of them had been worried about. This deal gave new life to the shale industry," he told CNBC. "OPEC's going to have its hands full with them for a time." Recent hedging activity has allowed drillers to lock in prices for future deliveries of oil at $55 a barrel, a price that makes more of their acreage profitable, The production surge follows an increase in the U.S. oil rig count of 21 rigs — the biggest one-week jump since a recovery in drilling activity began in June. Drillers have added a net 182 rigs since the count bottomed out at 316 rigs in May, according to data provided by oilfield services firm Baker Hughes.

Oil prices turn higher after drop to lowest levels in a week - Oil prices reversed course to trade higher Thursday, buoyed by renewed confidence surrounding the recent oil-producer pact to cut. Prices turned up after a report from Bloomberg said Kuwait is telling customers to expect less oil, Phil Flynn, senior market analyst at Price Futures Group, told MarketWatch. State-run Kuwait Petroleum Corp. has told customers that it will implement cuts on vessel loadings starting Jan. 1, according to Bloomberg, following the recent agreement among major oil producers to curb output at the start of the year. “Despite skepticism surrounding the historic OPEC/non-OPEC accord, there are signs early on that OPEC compliance may start at a record high,” said Flynn. Tyler Richey, co-editor at The 7:00’s report, meanwhile, linked oil’s turnaround to the day’s expiration of crude-oil options. January West Texas Intermediate crude rose 34 cents, or 0.7%, to $51.38 a barrel on the New York Mercantile Exchange. February Brent crude tacked on 49 cents, or 0.9%, to $54.39 a barrel on the ICE Futures exchange in London. Prices had been set to finish at their lowest levels in a week as the Federal Reserve’s decision to raise interest rates for the first time in 12 months strengthened the dollar and energy traders fretted over recent data showing that the Organization of the Petroleum Exporting Countries’ output has continued to hit record highs.The Fed “not only raised interest rates but increased their outlook for rate hikes in the new year,” said Flynn. Fed Chairwoman “Janet Yellen and her band of Fed elves decided to send a message that the economy was strong enough to get three rate hikes in the new year.” “That caused a big drop across the commodity complex such as gold and silver and ultimately, oil,” he said

Oil complex little changed as US Dollar Index hits 14-year high -  Oil futures were nearly unchanged Thursday after technical support helped lift prices from session lows, as the complex came under pressure from the US dollar rallying to a 14-year high against a basket of major currencies. NYMEX January crude settled down 14 cents to $50.90/b. ICE February Brent settled 12 cents higher at $54.02/b. NYMEX January ULSD settled 15 points lower at $1.6420/gal. NYMEX January RBOB settled 90 points higher at $1.5421/gal. The US Dollar Index jumped Wednesday afternoon when the Federal Reserve said it would raise interest rates for only the second time since 2006.That move was widely anticipated, but what seemed to catch the market by surprise was Fed projections suggesting three rate increases next year, up from two in September, Confluence Investment Management said in a note. "Adding to the hawkish tone was a warning of sorts from Chair [Janet] Yellen who, in the press conference, downplayed the need for fiscal stimulus, a key element of the Trump platform," Confluence said. The US dollar index reached 103.56 Thursday, its highest level since December 2002. A stronger dollar makes crude and fuel imports more expensive for holders of other currencies, putting downward pressure on oil prices. NYMEX January crude fell as low as $49.95/b, while ICE February Brent sunk to $53.15/b at one point, which could have invited some buying interest from traders. "From now until the end of the year, without a lot on the agenda, I don't think prices will move too far from here,"

Kuwait committed to OPEC cuts despite restart for neutral zone: oil minister - Oil | Platts News Article & Story: Kuwait is committed to cutting output by 131,000 b/d in January in line with its commitments under OPEC's output reduction deal, oil minister Essam al-Marzouq said Thursday. That was despite Kuwait's state-owned oil company making preparations to restart around 500,000 b/d of production from the Partitioned Neutral Zone (PNZ) shared with Saudi Arabia, which has been closed for nearly two years. "We started the primary heating and cleaning of operational equipment, pending a final decision from Kuwait's leadership," Marzouqi said, according to comments reported by state-run Kuna news agency. "Any increase in production from certain areas will be balanced by equal reductions in other regions", the minister said.The two countries agreed to restart production from the 300,000 b/d offshore Khafji oil field at the end of March. Some analysts had said resuming production from the neutral zone, which has a combined output of 500,000 b/d, could temper the increased oil prices seen after OPEC reached its output reduction deal at the end of November. "One thing to consider is that one of the reasons why Saudi and Kuwaiti output ramped up so high is they were compensating for the loss of the neutral zone. So, its return may represent a smaller net addition than the gross addition of 200,000 b/d or so", said Michael Cohen, an analyst with Barclays Capital before the announcement from the minister. That followed a December 8 visit by Saudi King Salman bin Abdul Aziz to Kuwait, which was widely thought to have smoothed over the political differences between the neighbors which had caused the fields to be closed.

Aramco Keeps Building Oil Rigs Even as Saudis Agree to Pump Less  - Saudi Arabian Oil Co. signed contracts with U.S. companies to build dozens of oil rigs over 10 years as the kingdom builds for the long-term future of its most prized industry even while coordinating with other producers to cut output for six months to stabilize crude. The Saudi state producer known as Saudi Aramco signed a contract with Nabors Industries Ltd. to form an equally shared joint venture to build 50 onshore rigs over a decade, its Chief Executive Officer Amin Nasser said at an energy event in the eastern city of Dhahran. Saudi Aramco also signed a deal for a similar venture with Rowan construct 20 offshore rigs over 10 years, he said.  Saudi Arabia was the main driver behind the agreement it reached with fellow OPEC members and with other producers including Russia to reduce oil production for six months from January 1 to eliminate a global glut and shore up prices. The world’s biggest oil exporter agreed to trim its output by 486,000 barrels a day to a level of 10.058 million barrels a day. Saudi Energy Minister Khalid al-Falih indicated Saturday that the country was willing to cut further and pump less than a symbolically important 10 million barrels a day. Saudi Aramco pumps all of Saudi Arabia’s crude oil. The government plans to transform Aramco from an oil and gas company into an industrial conglomerate as part of efforts to prepare the kingdom’s economy for a post-oil era, Deputy Crown Prince Mohammed bin Salman told Bloomberg in March. The plan includes selling a stake in the company and transforming its ownership to the nation’s sovereign wealth fund.

The Oil Mystery Behind Saudi Arabia's Production Cut -- Saudi Arabia surprised the world by helping to engineer an unexpectedly strong agreement from OPEC members to cut production by 1.2 million barrels per day, followed by additional cuts from non-OPEC members. While the two agreements incorporate cuts from a wide range of oil producers, Saudi Arabia will do much of the heavy lifting, cutting nearly 500,000 barrels per day and even promising to go further than that should the markets warrant steeper reductions.Depending on one’s perspective, Saudi Arabia demonstrated its diplomatic prowess and made OPEC relevant again, succeeding in talking up oil prices without sacrificing much. After all, Saudi Arabia often lowers production in winter months. Other analysts look at it a different way – Riyadh was actually pretty desperate for higher oil prices, given the toll that the two-year bust has taken on the country’s economy. That led Saudi Arabia to shoulder most of the burden of adjustment, achieving only small concessions from other OPEC members, most notably Iran. Riyadh was the big loser of the deal, the thinking goes, but ultimately had no choice as the government needed higher oil prices. There are arguments to made for both sides, but then there is a third possibility: Saudi Arabia was motivated to pullback because it was actually leaning on its oilfields too hard this year when it pushed output up to 10.7 million barrels per day, an output level that might have strained the reservoirs of some of its largest fields. Producing too aggressively can ultimately damage the long-term recovery of oil reserves. Reuters reports in an exclusive report that Saudi Aramco could have been pushing its oil fields to the limit this year, and had little choice to but to climb down from record high output levels. Saudi Arabia has long maintained that it could ratchet production up to 12 mb/d or more if it wanted to, but such a massive rate of production has never actually been proven or even tested. Reuters raises the possibility that Saudi Arabia might not actually have the ability to go that high. A source told the news organization that Saudi Aramco might only be able to produce at 11.4 mb/d, and going beyond that level would require billions of dollars in new investment in several years of development.

What OPEC Cut? Iraq Is Boosting Its January Oil Exports By 7% – In an "unexpected" twist, the WSJ reports that instead of cutting its crude production by 4% as it "promised" it would do in the Vienna November 30 meeting, Iraq instead plans to increase crude-oil exports in January, according to government records, immediately raising questions about its commitment to the OPEC’s landmark production agreement. The WSJ reports that Iraq’s national oil company, the State Organization for Marketing of Oil, or SOMO, had plans as of December 8, nine days after agreeing to cut production, to instead increase deliveries of its Basra oil grades by about 7% to 3.53 million barrels a day compared with October levels, according to a detailed oil-shipment program viewed by The Wall Street Journal. Those oil shipments represent about 85% of Iraq’s exports. The list of planned tanker loadings has been circulated among potential buyers so they can gauge its availability. When asked by the WSJ to explain this curious discrepancy, SOMO chief Falah al-Amri declined to comment about the company’s January export levels. Iraq’s oil minister, Jabbar Ali al-Luaibi, has said he would instruct SOMO to act on the OPEC output-cut agreement. As a reminder, Iraq agreed to cut its output by 210,000 barrels a day from October levels of 4.561 million barrels a day. The country’s oil officials were among the most reluctant to go along, disputing OPEC’s statistics and threatening to pull out of the agreement until the last minute because it needs the oil revenue to fight its war against Islamic State. Iraq says it has increased its output to 4.8 million barrels a day in 2016, from less than 3 million barrels a day a few years ago, using Western and Chinese oil companies to tap into its deep crude reserves. Realizing that the oil cut charade was in jeopardy, on Wednesday, several hours after a Wall Street Journal article on Iraq’s oil-export plans, OPEC Secretary General Mohammad Barkindo said he planned to ask members in writing on Thursday to announce their future oil-export programs. While OPEC asks members to disclose their production, it would be unprecedented for the cartel to ask countries to announce the levels they export.

OilPrice Intelligence Report: Oil Rises As Markets Regain Faith In OPEC Deal - Oil prices are ending the week largely where they started, with the strong gains from the non-OPEC deal having worn off as the week progressed. The non-OPEC deal strengthened credibility in the collective cuts from OPEC, with an expected 1.8 million barrels per day slated to be pulled off the market in early 2017. However, on Wednesday, the U.S. Federal Reserve poured cold water on the party with its interest rate hike – the strong dollar did a number on commodity prices. Oil prices closed the week in the green as markets regained faith in OPEC’s compliance to the deal.   A key oil export terminal as well as a pipeline in Libya are about to come back online, bringing disrupted oil production back onto the market. Libya has already doubled production from 300,000 to 600,000 bpd since September. Now more capacity is about to come online as the political situation improves. Separately, the Nigerian government signed a deal with ExxonMobil, Royal Dutch Shell, Eni and Chevron to resolve a dispute over back payments of $5 billion on joint ventures. The deal could pave the way to more investment and lead to a resurgence in Nigeria’s output, which is down to 1.8 mb/d from a peak last year of 2.2 mb/d. If the two OPEC countries, Libya and Nigeria, restore capacity, it could threaten the efficacy of the OPEC deal.   In its latest Oil Market Report, the IEA said that global oil demand growth will slow to just 1.3 mb/d next year, down from 1.4 mb/d this year and 1.9 mb/d in 2015. The growth rate will be the smallest since 2014 and it poses a threat to a market on the mend. Other analysts put the 2017 growth rate much lower – Citigroup thinks demand will only expand by an unimpressive 1.1 mb/d.   Goldman Sachs issued a revised oil price forecast for 2017 to reflect the effects of the non-OPEC agreement and greater confidence in the compliance of OPEC members to their historic deal. The investment banks expects WTI to average $57.50 in the second quarter of next year, up from its previous estimate of $55. Brent will average $59 instead of $56.50. Goldman is assuming an 84 percent compliance rate from OPEC, which will lead to cuts of 1.6 mb/d from the cartel instead of the announced 1.8 mb/d. While U.S. oil inventories are slowly coming down, they remain near record highs at the key oil hub of Cushing, OK. Part of that is a seasonal phenomenon as Gulf Coast refiners put extra product in storage in Cushing for tax reasons. But also refiners process less in winter months. Another reasons is that production is booming in Texas, keeping pressure on storage tanks. The inventories are pushing the market into a deeper contango than what has been seen in recent weeks, and also putting pressure on the WTI-Brent differential.

The U.S. Oil Rig Count Continues Its Rapid Climb  - Oilfield services provider Baker Hughes reported a 13-rig increase this week to the number of oil and gas rigs active in the United States, bringing the total number of active oil and gas rigs to 637, just 72 shy of the count this time last year. Last week, the number of oil and gas rigs in operation jumped by 27, with oil rigs accounting for 21 of the 27. Last week’s data revealed that the U.S. had put more oil rigs into play than in any time since July 2015.  The big winner this week was oil yet again, accounting for 12 of the 13 new rigs.While oil-dependent OPEC members find themselves in a precarious position over the balance between not enough and too much with regards to oil prices, the United States has steadily increased the number of active drilling rigs, most notably since the OPEC agreement on November 30 that saw OPEC agree to cut back production to 32.5 million bpd. When it comes to U.S. oil, there is no hotter basin right now than the Permian. Since September 23rd, the Permian Basin has put online 57 oil rigs—a figure that represents more new oil rigs than all the other basins combined. Still, the number of active oil rigs in the Permian, while gaining momentum, is still a far cry from the 550+ oil rigs seen in that basin during most of 2014. WTI was trading up 1.55 percent at $51.69 half hour before the data release, with Brent at $55.05, up 1.91 percent. Oil prices were largely unchanged moments after the release, with unsettled markets still working through how much trust to place on OPEC member promises and non-OPEC collaborations, along with API and EIA data regarding inventory that has come under increased scrutiny as of late.

Goldman Sachs raises 2017 oil price forecast on compliance rethink -  Goldman Sachs raised Friday its oil price forecasts for 2017 after reassessing the likelihood that key global oil producers, led by Saudi Arabia, will stick to output cut pledges under OPEC's efforts to clear the oil market glut. The bank raised its Q2 2017 WTI price forecast to $57.5/b from $55/b and said it sees strong compliance with the announced output cuts pushing average WTI prices to $55/b in the second half of the year, $5/b above previous estimates. The WTI forecast for Q1 2017 was unchanged at $55/b. After analyzing Saudi Arabia's fiscal revenue outlook for 2017, the bank said it sees the motivation for an average 84% compliance with the announced collective OPEC and non-OPEC production cuts which it estimates at a total 1.6 million b/d. "Ultimately, our work on Saudi Arabia's fiscal balance suggests that the kingdom has a strong incentive to cut production to achieve a normalization of inventories, even if it requires a larger unilateral cut, consistent with comments last weekend by the energy minister," Goldman said in a note.Saudi energy minister Khalid al-Falih on Saturday said his country was prepared to slash production below 10 million b/d, after having previously agreed to cut down to 10.058 million b/d. Goldman said it has raised its Brent oil price forecast from $56.5/b to $59/b in the second quarter of next year and expects Brent to average $57.4/b in 2017, a $3.4/b increase from previous estimates. The update comes just five days after Goldman had stuck with its oil price forecasts despite additional output cut pledges by non-OPEC producers over the weekend. At the time, the bank expected compliance with the targets to be low, with an average 1 million b/d impact on global oil production in the first half of 2017. Bank of America and Barclays on Monday also maintained their oil price forecasts citing concerns over compliance and the potential for a rebound in US tight oil production in the second half of the year. Goldman warned Friday that returning crude volumes from Libya and Nigeria in addition to greater dollar strength could also limit the near-term upside for oil prices.

Oil rises on Goldman forecast, signs producers complying with cuts | Reuters: Oil rose on Friday, edging closer to new 17-month highs, after Goldman Sachs boosted its price forecast for 2017 and producers showed signs of adhering to a global deal to reduce output. Brent futures rose $1.19, or 2.2 percent, to settle at $55.21 a barrel, while U.S. West Texas Intermediate crude rose $1, or 2 percent, to settle at $51.90 per barrel. That put both contracts on track to rise for a fourth week in the last five, with Brent up around 23 percent during that time and U.S. crude up about 20 percent. The premium of the Brent front-month over the same U.S. contract closed at $2.26 a barrel, its highest since the end of August. "We're up today because Goldman Sachs bumped up its oil estimates and the Russians said their oil companies would reduce output," said Phil Davis, managing partner of venture capital fund PSW Investments in Woodland Park, New Jersey. The Organization of the Petroleum Exporting Countries agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1, its first such deal since 2008. Russia and other non-OPEC producers plan to cut about half as much. Those deals, clinched over the past two weeks, have boosted expectations that a two-year supply overhang will clear soon and prices remain near highs last seen in July 2015. Russia said on Friday that all of the country's oil companies, including top producer Rosneft, had agreed to reduce output. Other oil producers including Kuwait and Saudi Arabia have notified customers that they will cut from January.

Sovereign funds pulled cash from world markets for third year running (Reuters) - Sovereign investors are set to pull their petrodollars from global stock and bond markets for the third year running in 2016, a process that is unlikely to be reversed next year despite the rebound in oil prices.Sovereign wealth funds (SWFs) redeemed $38 billion from third-party asset managers in the first three quarters of 2016, data from research firm eVestment showed, extending their selling into a ninth consecutive quarter.This followed redemptions of $44 billion in 2015 and $10.7 billion in 2014, as low oil prices forced countries reliant on oil exports, such as Russia, Saudi Arabia and Norway, to raid their savings.Years of oil windfalls brought money into financial markets, boosting asset prices through so-called petrodollar recycling.But SWF flows turned negative in 2014 for the first time in 18 years after oil prices plunged from around $115 a barrel in the summer of 2014 to a low of $27 a barrel in January 2016. ( has now risen to around $57 a barrel thanks to a deal between producers to cut output.But Peter Laurelli, global head of research at eVestment, which collates data from 4,400 firms managing money on behalf of institutional investors, did not think this would be enough to trigger an immediate turnaround in flows."Oil prices have stabilised at half of what they were, so we need to see a meaningful rise before that filters back," he said.

Mosul Dam collapse 'will be worse than a nuclear bomb' - News from Al Jazeera: As Iraqi forces continue their military operation to take Mosul from the Islamic State of Iraq and the Levant (ISIL, also known as ISIS), another equally important battle to save the Mosul Dam, located 60km north of Mosul, is under way.After six months of frantic security and logistical preparations, an Italian company has kicked off the repair works to beef up the dam, under the protection of five hundred Italian soldiers and Kurdish Peshmerga forces.The Italian company,TREVI, will have about 18 months to prevent the foundations of the dam from plunging deeper underground, averting an impending catastrophe. Experts warn that if the dam collapses, up to 11.11 billion cubic-metres of water known as Lake Dahuk, will submerge Mosul and create an inundation that will affect the lives of millions of people living along the banks of the Tigris river. "I don't know if it's a race against time, but we have the know-how and the technology to make the dam safe for the time-being," said a company source.Under a $300m contract, funded by the World Bank, the Italian company is doing maintenance and repair works, in addition to consolidating the foundations of the dam with injections of a cement mix, in a process called grouting. The engineering company is also training local staff to use its technology. But scientists say the repairs are just a temporary solution and that the Iraqi population should get ready to evacuate the Tigris' banks. "No matter how much grouting and maintenance the company will do, it may expand the life span of the dam, but it is just going to delay the disaster," said Nadhir al-Ansari, professor of water resources and environmental engineering at Lulea University in Sweden and a published expert on the Mosul Dam.

Obama Halts Some Arms Sales To Saudi Arabia, Following Alleged "War Crimes" In Yemen --Whether it is retaliation for dumping Treasuries, blackmail to keep to OPEC production quotas, or - more likely - being implicated in war crimes for supporting a Saudi-led air campaign in Yemen that has killed thousands of civilians, President Obama has decided that after shipping billions in weapons to Saudi Arabia, Reuters reports it will halt a planned arms sale to The Kingdom. As we detailed previously, citing government documents and the accounts of current and former officials, Reuters reveals that while the Obama administration and the Pentagon rail against Russian bombing in Syria, State Department officials have been skeptical - in private of course - of the Saudi military's ability to target Houthi militants without killing civilians and destroying "critical infrastructure" needed for Yemen to recover. The findings emerge days after an air strike on a wake in Yemen on Saturday that killed more than 140 people renewed focus on the heavy civilian toll of the conflict. The Saudi-led coalition denied responsibility, but the attack drew the strongest rebuke yet from Washington, which said it would review its support for the campaign to "better align with U.S. principles, values and interests." What Reuters' report reveals is that instead of Russia being the war criminal, as the US has now alleged, the real aggressor would be Saudi Arabia, and the US - whose actions have enabled Saudi war crimes - would be a "co-belligerent" participant. Of course there is also the fact that the Saudis have been dumping Treasuries... Saudi Arabia also continued to sell its TSY holdings, and in August its stated holdings (which again have to be adjusted for MTM), dropped from $93Bn to $89Bn, the lowest since the summer of 2014. This was the 8th consecutive month of Treasury sales by the Kingdom, which held $124 billion in TSYs in January, and has since sold nearly 30% of its US paper holdings.

Thousands flee Aleppo onslaught as battle reaches climax | Reuters: Thousands of people fled the front lines of fighting in Aleppo on Tuesday as the Syrian military hammered the final pocket of rebel resistance and Russia rejected an immediate ceasefire. The rout of rebels from their ever-shrinking territory in Aleppo sparked a mass flight of civilians and insurgents in bitter weather, a crisis the United Nations said was a "complete meltdown of humanity" with civilians being shot dead. The U.N. human rights office said it had reports of abuses, including that the army and allied Iraqi militiamen summarily killed at least 82 civilians in captured districts of the city, once a flourishing economic center with renowned ancient sites. "The reports we had are of people being shot in the street trying to flee and shot in their homes," said Rupert Colville, spokesman for the U.N. office. "There could be many more." Behind those fleeing was a wasteland of flattened buildings, concrete rubble and bullet-pocked walls, where tens of thousands had lived until recent days under intense bombardment even after medical and rescue services had collapsed. Colville said the rebel-held area was "a hellish corner" of less than a square kilometer, adding its capture was imminent. The Syrian army and its allies are in the "last moments before declaring victory" in Aleppo, a Syrian military source said, after rebel defences collapsed, leaving insurgents in a tiny, heavily bombarded pocket of ground.

There is more than one truth to tell in the awful story of Aleppo - Western politicians, “experts” and journalists are going to have to reboot their stories over the next few days now that Bashar al-Assad’s army has retaken control of eastern Aleppo. We’re going to find out if the 250,000 civilians “trapped” in the city were indeed that numerous. We’re going to hear far more about why they were not able to leave when the Syrian government and Russian air force staged their ferocious bombardment of the eastern part of the city.  And we’re going to learn a lot more about the “rebels” whom we in the West – the US, Britain and our head-chopping mates in the Gulf – have been supporting. They did, after all, include al-Qaeda (alias Jabhat al-Nusra, alias Jabhat Fateh al-Sham), the “folk” – as George W Bush called them – who committed the crimes against humanity in New York, Washington and Pennsylvania on 11 September 2001. Remember the War on Terror? Remember the “pure evil” of al-Qaeda. Remember all the warnings from our beloved security services in the UK about how al-Qaeda can still strike terror in London? Not when the rebels, including al-Qaeda, were bravely defending east Aleppo, we didn’t – because a powerful tale of heroism, democracy and suffering was being woven for us, a narrative of good guys versus bad guys as explosive and dishonest as “weapons of mass destruction”. Back in the days of Saddam Hussein – when a few of us argued that the illegal invasion of Iraq would lead to catastrophe and untold suffering, and that Tony Blair and George Bush were taking us down the path to perdition – it was incumbent upon us, always, to profess our repugnance of Saddam and his regime. We had to remind readers, constantly, that Saddam was one of the Triple Pillars of the Axis of Evil.  So here goes the usual mantra again, which we must repeat ad nauseam to avoid the usual hate mail and abuse that will today be cast at anyone veering away from the approved and deeply flawed version of the Syrian tragedy.

Battle for Aleppo: The final goodbyes from a city under siege - As the battle for Aleppo heads towards a conclusion, people trapped in a small area of east Aleppo still held by the rebels have been sending harrowing messages with their final goodbyes.  As the bombing by Syrian government forces intensified, the calls for help from those trapped in rebel-territory have grown more desperate.  Lina, an activist tweeting last night, makes this desperate plea: "Humans all over the world, don't sleep! You can do something, protest now! Stop the genocide". She posted this powerful farewell video message: Others appear to have given up hope, posting messages as bombs fall around them.  One man says it is the last video he will post. "We are tired of talking, we are tired of speeches. No one listens, no one responds. Here comes the barrel bomb. This is the video's ending."  As he signs off, a bomb explodes nearby. And waking up on Tuesday morning, still alive, Monther Etaky writes: "I still here [sic], facing the genocide with my special friends without any comments from the world."  Bana Alabed, the seven-year-old girl who has been tweeting from an account managed by her mother, wrote a heart-breaking message on Tuesday morning.  "I am talking to the world now live from East #Aleppo. This is my last moment to either live or die.  Earlier, she tweeted "Final message. People are dying since last night. I am very surprised I am tweeting right now and still alive." And a few hours later: "My dad is injured now. I am crying."  "It's hell", says a tweet by the White Helmets - a Syrian volunteer group which has been working in East Aleppo - in a harrowing message from late on Monday. "...All streets & destroyed buildings are full with dead bodies". Descriptions of the situation in Aleppo all paint Armageddon-like scenes. Abdul Kafi Alhamado, an English teacher inside one of the remaining rebel-held areas of Aleppo said it felt like "Doomsday" as government forces advanced."Bombs are everywhere. People are running, they don't know where, just running. People are injured in the streets. No-one can go to help them," he told BBC News."Some people are under the rubble, no-one can help them. They just leave them under the rubble until they die - these houses as their graves," he said.

Dramatic Drone Footage Shows East Aleppo Devastation As Air Strikes, Shelling Return --Drone footage has revealed extreme devastation in eastern Aleppo, once Syria's largest city and thriving economic center with its renowned ancient sites, with crumbling homes and deserted streets replacing a once-lively area of the city. The video from Ruptly provides an up-close look at the destruction left behind by the militants in Aleppo neighborhoods after they were pushed out by the Syrian Army in heavy clashes. Collapsed buildings and piles of rubble dominate the landscape, with just a few lone vehicles cruising the empty streets. Buildings that were once home to dozens of apartments have been left windowless and deserted. Meanwhile, air strikes and shelling returned to Aleppo following yesterday's apparent victory of the Syrian regime over the rebel-held territory, stalling the planned evacuation of rebel districts in Aleppo, according to Reuters adds. A ceasefire brokered on Tuesday by Russia, Assad's most powerful ally, and Turkey was intended to end years of fighting in the city, giving the Syrian leader his biggest victory in more than five years of war. But air strikes, shelling and gunfire erupted on Wednesday morning and a monitoring group said the truce appeared to have collapsed.

Fall of Aleppo: "Call the world and tell them to stop the massacre": I escaped Aleppo three months ago. Now, all I feel is sadness and confusion. I'm sitting here safely in Turkey doing nothing while my friends and family are still stranded in Aleppo. They're updating us with what is going on and all I can see is that it's clear they are going to die. They're counting down the hours until they are executed. There are 70,000 people trapped there with no medicine and no food. I feel so guilty that I escaped and they didn't. Our call to the rest of the world is please create a safe road for them to leave. They were told they could leave via western Aleppo but are frightened that the men and boys will be detained or forcibly recruited by the regime. As I write, they are being executed. We just heard that a hospital has been taken and all the doctors and staff were executed. The situation before I left was desperate — checkpoints had sprung up around the city. I’d been told my home was too dangerous to stay in so my mum and I were staying at our relatives’ house — it was empty because they had already fled to Turkey. I was told that apart from going to pick up my university documents and my passport, I must not leave the house. I had lived in Aleppo my whole life but suddenly it no longer felt like home.In west Aleppo, even during most of the war, life was relatively normal. Yes, there would be power cuts or shortages in water but never for long. I would still get up early every day to continue my biotechnology engineering degree. At my university itself though, it felt like there was a revolution inside reflecting that of the outside: there were security guards all over the place, checking your names against the list of those suspected of being involved in activities against the regime. There was always a fear my name was on it, but luckily they waved me through. But when my brother went to work in a field hospital in east Aleppo, things started to change. It wasn’t safe anymore. The government began to tail him and tried to arrest him. He was put on a wanted list. That meant the whole family was in danger: any of us could have been taken by the regime. Then it became too dangerous for us to stay so we decided to flee to Turkey.

Islamic State Fighters Take Control of Syrian Oil Fields | Rigzone- Islamic State fighters have taken control of the Jahar and Jazl oil fields, as well as the al-Mohr area and the al-Mohr company, according to a report from the Syrian Observatory for Human Rights (SOHR). The development follows news from SOHR on Dec. 8 that unidentified warplanes had bombed areas within the al-Omar oilfield in the countryside of Deir Ezzor, which resulted in the outbreak of fire in the field. Syria’s latest oil and gas field clashes follow a spate of attacks throughout the last few years. As of July 2014, Syria’s oil sector was said to have lost around $23.5 billion due to damage to facilities and pipelines, looting and production delays, with Islamist militants and other rebel groups in control of most of Syria’s oil producing regions. IS’ approach in the country, which has revolved around isolating and controlling energy facilities in order to generate revenue, has differed from its strategy in places like Libya, where it has tried to ensure the country remains a failed state and consequently vulnerable to further exploitation, Ruth Lux, a senior consultant within JLT’s credit, political & security risk division consulting team, told Rigzone. The Syrian civil war began in early 2011 as part of the Arab Spring protests, which originated in Tunisia in December 2010 and quickly spread to neighbouring countries such as Egypt, Libya and Yemen. Following the war, Syria’s production figures dipped consecutively, every year, from 2011 to record lows in 2015, according to BP’s latest statistical review of world energy. The country's oil output hit 27,000 barrels per day last year, down from 2010 pre-war levels of 385,000 barrels per day, and its gas production stood at 4.3 billion cubic meters in 2015, compared to 8 billion cubic meters in 2010.

Congresswoman Says US Is Arming ISIS, Introduces Bill To Stop It -- Democratic Congresswoman Tulsi Gabbard has broken free of the corporate media’s narrative by accusing the United States of funding and arming terror groups al-Qaeda and ISIS. “If you or I gave money, weapons or support to al-Qaeda or ISIS, we would be thrown in jail,” Gabbard tweeted on Saturday. Most importantly, however, is her introduction of the “Stop Arming Terrorists Act,” which she presented last Thursday. In her presentation of the bill, Gabbard cited prominent publications such as the New York Times and the Wall Street Journal to show that the rebels the U.S. is supporting in Syria are aligned with al-Nusra (which is essentially al-Qaeda in Syria).  She is co-sponsoring the bill with Rep. Thomas Massie, who says the bill “would prohibit the U.S. government from using American taxpayer dollars to provide funding, weapons, training, and intelligence support to terrorist groups like al-Qaeda and ISIS, or to countries who are providing direct or indirect support to those same groups.” These concerns are not conjectures — they can be verified by none other than suspected war criminal Tony Blair. A think tank founded by the former U.K. Prime Minister released a report in 2015 that concluded it was ultimately pointless to make a distinction between the various rebel groups on the ground since the majority of these groups share ISIS’s core belief system (and would impose Sharia law if they came into power).

Iran Warns Of "World War, The Destruction Of Israel", If Trump Tears Up Nuclear Pact --Ten days ago, we reported that as a result of Obama's vow to extend the Iran Sanctions Act for another 10 years, Iran threatened to retaliate, saying it violated last year's deal with six major powers that curbed its nuclear program.While US officials said the ISA's renewal would not infringe on Obama's landmark nuclear agreement (which may or may not be voided by Trump), and under which Iran agreed to limit its sensitive atomic activity in return for the lifting of international financial sanctions that harmed its oil-based economy, senior Iranian officials took odds with that view.. To be sure, that was merely jawboning by Iran, which has far less leverage and far more to lose if it antagonizes Washington and provokes the US into reimposing sanctions upon the Gulf nation, amounting to the tune of over 1 million barrels per day in foregone oil exports that would be taken offline, should the US impose similar sanctions as those which took the country's crude export production largely offline in the 2013-2015 timeframe. It is also the lesser of Iran's worries: a far bigger concern is whether Trump will tear up Obama's landmark nuclear agreement. This was confirmed today when the Iranian defense minister warned that Donald Trump could trigger a world war and the 'destruction' of Israel and small Gulf Arab states if he provokes the Middle Eastern power.  The warning comes as Trump is signalling he may follow through with his campaign promise to pull out of the nuclear pact.  This has led to panic among US allies in the Gulf, Iranian Defense Minister Hossein Dehghan has claimed quoted by the Mail."Even though a businessman, the assistants that ... (Trump) has chosen may map a different path for him, and this has led to unease, particularly among Persian Gulf countries,' Dehghan told a security conference in Tehran, according to Iran's Mehr news agency.'Considering Trump's character and that he measures the cost of everything in dollars, it does not seem likely that he would take strong action against our country,' he said.

Trump’s Foreign-Policy Appointees Are Set to Provoke War With Iran -- The trio of generals who have so far joined Donald Trump’s national security team—Mike Flynn as national security adviser, James Mattis as secretary of defense, and John Kelly as secretary of homeland security—along with Representative Mike Pompeo as director of the CIA, have unnerved official Washington and leaders around the world. From North Korea to the South China Sea, from the Mexican border to Syria, they’re a cohort likely both to facilitate and to encourage Trump’s instinct for confrontation and bellicosity, and their out-of-the-mainstream approach, even extremism, in military and intelligence affairs is unprecedented in recent US history. And it’s likely that the first target of Trump’s generals and the CIA will be Iran. “Ingredients are falling, tragically, into place for a possible war with Iran,” wrote Paul Pillar, a former CIA analyst who retired in 2005 as chief of the National Intelligence Council’s Near East section, in The National Interest.  Just as the administration of George W. Bush came into office fixated on Iraq—which was the subject of the very first meeting of W.’s National Security Council on January 21, 2001—the Trump administration is likely to direct its fire against Iran. At the very least, its animosity toward Iran could lead to an escalating military confrontation and an aggressive push for regime change, while at worst it could trigger a shooting war between the two countries that could dwarf the wars in Iraq and Afghanistan in both scope and intensity.

Iran Lashes Out At US, Will Build Nuclear-Powered Boats In Retaliation To US Deal "Violation" -- Until now, Iran's angry outbursts in response to alleged breaches of Obama's nuclear deal as well as extensions of the Iran sanctions, have been relegated to verbal outbursts, culminating most recently with the threat by Iran's defense minister Denghan that should Trump end Obama's landmark arrangement with Iran, it would result in a war which "would mean the destruction of the Zionist regime (Israel) ... and will engulf the whole region and could lead to a world war."Overnight, however, Iran moved beyond the merely verbal and in its first concrete response to last month's decision by the US Congress to extend legislation making it easier for Washington to reimpose sanctions on Tehran, Iran's President Hassan Rouhani ordered scientists from the national nuclear agency, and specifically Ali Akbar Salehi, the head of the Atomic Energy Organization of Iran, to prepare a project for development of both reactors for maritime use and fuel production for this purpose in three months."The United States has not fully delivered its commitments in the Joint Comprehensive Plan of Action (the nuclear deal)," Rouhani wrote in a letter published by state news agency IRNA. "With regards to recent (U.S. congress) legislation to extend the Iran Sanctions Act, I order the Atomic Energy Organization of Iran to ... plan the design and construction of a nuclear propeller to be used in marine transportation to be used in marine transportation."Rouhani described the technology as a "nuclear propeller to be used in marine transportation," but did not say whether that meant just ships or possibly also submarines. Iran said in 2012 that it was working on its first nuclear-powered sub.

Netanyahu says Israel 'mightier' as first F-35 fighter jets arrive | Reuters: Israel on Monday became the first country after the United States to receive the U.S.-built F-35 stealth jet which will increase its ability to attack distant targets, including Iran. The much-hyped arrival of the first two fighter jets was overshadowed by U.S. President-elect Donald Trump's tweet that Lockheed Martin's whole F-35 project was too expensive, and the delivery was delayed for hours by bad weather preventing their take-off from Italy. The squadron is expected to be the first operational outside the United States. The planes are the first of 50, costing around $100 million each. "Our long arm has now become longer and mightier," said Prime Minister Benjamin Netanyahu at the Nevatim air base in the southern Negev desert. U.S. Defense Secretary Ash Carter, also attending the ceremony which was delayed until after dark, said the planes were critical to maintaining Israel's military edge in the region. A U.S. squadron of the planes, which have suffered delays and cost overruns, became operational in August. The F-35 program is the Pentagon's largest weapons project.

Don't Tell The Saudis, But China Just Ramped Crude Output By Most In 3 Years --China’s oil output is rebounding. Production in the world’s second-biggest buyer rose from a seven-year low last month as OPEC (and NOPEC) negotiated with each other over an output cut deal. As Bloomberg data shows, November saw the biggest rise in Chinese crude production since October 2013. Chart: Bloomberg  And refining is soaring...  Chart: Bloomberg  All ready to be exported?   Did someone forget to invite China to the 'deal' talks?

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