Sunday, August 13, 2017

OPEC oil production jumps to 7 month high; US oil refining at a new record...

oil prices trended lower this week, mostly on a report that OPEC producers had increased their crude oil output for the 4th month in a row, reaching their highest level since their production cut pact was initiated...after closing last week little changed at $49.58 a barrel, oil prices headed lower on Monday after a report of higher oil output from Libya's largest oil field, with the contract for September US oil closing down 19 cents at $49.58 a barrel...oil prices continued falling Tuesday, ending down another 22 cents at $49.17 a barrel, on a report that several OPEC producers had increased exports, despite the loudly orchestrated export cuts by the Saudis...contract prices then recovered on Wednesday, after the weekly EIA report showed another huge draw from US oil supplies, with oil closing up 39 cents at $49.56 a barrel...oil prices continued heading higher on Thursday morning, reaching as high as $50.22 a barrel on heavy trading volume, before reversing and falling to as low as $48.35 a barrel, after the August OPEC monthly market report revealed that OPEC output rose by 172.6 thousand barrels per day to 32.87 million barrels per day, their highest monthly production this year, with oil prices finally stabilizing at $48.59 a barrel at the close for a loss of 97 cents on the day, in the heaviest trading in September oil in the history of the contract...after continuing to fall to a 2½ week low of $48.01 a barrel on Friday morning, oil prices then moved higher on reports of instability in Nigeria and higher global demand for oil, closing the week at $48.82 a barrel, still logging the 2nd consecutive weekly decline...

OPEC's July oil report

with OPEC's increased production a major factor in this week's lower oil price, we'll start by quickly reviewing OPEC's August Oil Market Report (covering July OPEC & global data), which as we noted was released on Thursday of this week....the first table from the August report that we'll include here is from page 62 of that OPEC pdf, and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to resolve any potential disputes that could arise if each member reported their own figures...  

July 2017 OPEC cude output via secondary sources

from this table of official oil production data, we can see that OPEC oil output increased by 172,600 barrels per day in July, to 32,869,000 barrels per day, from a June oil production total of 32,696,000 barrels per day, a figure that was originally reported as  32,611,000 barrels per day (for your reference, here is the table of the official June OPEC output figures before this month's revisions)...as we can see in the far right column, the entirety of the July OPEC increase of 172,600 barrels per day came as a result of a 154,300 barrel per day increase from Libya, and a 34,300 barrel per day increase from Nigeria, the two OPEC countries that are exempt from the production cuts because their production had previously been driven lower by domestic strife...in addition, the relatively large decrease of 33,100 barrels per day by Iraq, who still remains well over their production quota, was almost entirely offset by a 31,800 barrels per day increase in oil output from Saudi Arabia, who produced 10,067,000 barrels of oil per day in July, which is now slightly over their quota too, as can be seen in the table below:

August 12 2017 OPEC production and targets via Platts

the above table is from the "OPEC guide" page at S&P Global Platts: the first column of numbers shows average daily production in millions of barrels of oil per day for each of the OPEC members over the first seven months of this year (the targeted period) and the 2nd column shows the allocated daily production in millions of barrels of oil per day for each member, as they agreed to at their November meeting, and the 3rd column shows how much each has averaged over or under their quotas for the seven months of this year that OPEC has curtailed production...the problem with this is that the current publication of this table had erroneously placed data on the lines for Iran and Iraq, and although i have notified Platts of their error, a corrected table is not yet forthcoming...so what i did was insert the Iran and Iraq data from the previous iteration of this table onto the Iran and Iraq lines, so we at least have an accurate representation of the daily quotas for each of the OPEC members...

the next graphic we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from August 2015 to July 2017, and it comes from page 63 of the August OPEC Monthly Oil Market Report....the light blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale...the last bar, mistakenly marked Jun 17, actually shows July 17 data...

July 2017 OPEC report global supply

the preliminary data graphed above indicates that total global oil production rose to 97.30 million barrels per day in July, up by 0.17 million barrels per day from a June total of 97.13 million barrels per day, which was revised .54 million barrels per day higher than the 96.59 million barrels per day global oil output for June that was reported a month ago...the July figure was also 1.99 million barrels per day higher than the 95.14 million barrels of oil per day that was being produced globally in July a year ago (see last August's OPEC report for year ago data)...OPEC's July production of 32,869,000 barrels per day thus represented 33.8% of what was produced globally,  a small decrease from the revised 33.9% OPEC share in June...OPEC's July 2016 production, excluding Indonesia, was at 32,369,000 barrels per day, so even after the alleged production cuts, the 13 OPEC members who were part of OPEC last year, excluding new member Equatorial Guinea, are still producing nearly 1.1% more oil than they were producing a year ago, when they were supposedly producing flat out...

furthermore, even with the seven months of production cuts we can see on the above graph, there is still a small surplus of oil supply being produced globally, as the next table that we'll include will show us..     

July 2017 global oil demand estimate via OPEC copy

the table above comes from page 37 of the August OPEC Monthly Oil Market Report, and it shows regional and total oil demand in millions of barrels per day for 2016 in the first column, and OPEC's forecast for oil demand by region and globally over 2017 over the rest of the table...on the "Total world" line of the fourth column, we've circled in blue the figure we're interested in, which is their estimate for global oil demand for the third quarter of 2017... 

OPEC's estimate is that during the 3rd quarter of this year, all oil consuming areas of the globe will use 97.28 million barrels of oil per day, up from the 95.65 millions of barrels of oil per day the world was using in the 2nd quarter, and up from the 95.12 millions of barrels of oil per day they were using in 2016...that's typical for summer, since the most heavily populated regions of the globe are in the Northern Hemisphere, and demand for gasoline and power for air conditioning rises in the summer...however, as OPEC showed us in the oil supply section of this report and the summary supply graph above, even with the OPEC and non-OPEC production cuts, the world's oil producers were still producing 97.30 million barrels per day during July, which means that even during the period of greatest demand, there continued to be a surplus of around 20,000 barrels per day of global oil production in July, even after 7 months of OPEC and NOPEC production cuts...also note that global production for June was concurrently revised higher, to 97.13 million barrels per day, so that means the global oil surplus during June was therefore around 1,480,000 barrels per day,  based on the revised second quarter global demand figure of 95.65 million barrels per day shown above...at the same time, May's global oil surplus was reduced by the upward revision of 2nd quarter demand to 270,000 barrels per day....that revision also means that April's global oil supply was roughly 40,000 barrels per day less than the revised demand, so there is now one month out of the seven when OPEC cuts were effective at reducing supply....prior to that, however, we saw that the global oil surplus during March was around 780,000 barrels per day, and nearly a million barrels per day in January and February, as we've shown when reviewing revisions to these reports in prior months...taken together, this data means that despite the seven months of OPEC production cuts, more than 135 million barrels of oil have been added to the global oil glut since the 1st of the year..   

last, we'll include a graph of the total OPEC oil output for the 13 long term OPEC members included in this report, so we can see how this month's production stacks up compared to historical figures...

July 2017 OPEC oil production historical graph

the above graph, taken from the 'OPEC July Production Data" post at the Peak Oil Barrel blog, shows total oil production, in thousands of barrels per day, for the 13 members of OPEC, for the period from January 2005 to July 2017, using the same official data from secondary sources as we saw in the first table above...here we can obviously see that OPEC's July production of 32,869,000 barrels per day is up quite a bit from their previous production this year and is even approaching the record of 33,374,000 million barrels per day the cartel produced in November, a level achieved as they all over produced so that their cuts would be off a higher base...so even as they've cut their oil production from that level, their output for the seven months of this year was actually higher than in the same seven months a year ago, leaving OPEC well on track to exceed their 2016 production this year, even as they continue to orchestrate the oil markets with reports of their "reduced" production...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending August 4th, indicated a big drop in our imports of crude oil, accompanied by a record amount of oil used by US refineries, and hence a large withdrawal from our commercial stocks of crude oil to meet the needs of that refining...our imports of crude oil fell by an average of 491,000 barrels per day to an average of 7,762,000 barrels per day during the week, while at the same time our exports of crude oil rose by 5,000 barrels per day to an average of 707,000 barrels per day, which meant that our effective imports netted out to 7,055,000 barrels per day during the week, 496,000 barrels per day less than during the prior week...at the same time, our field production of crude oil fell by 7,000 barrels per day to an average of 9,423,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 16,478,000 barrels per day during the cited week... 

during the same week, refineries used a record 17,574,000 barrels of crude per day, 166,000 barrels per day more than they used during the prior week, and hence at the same time 922,000 barrels of oil per day had to be pulled out of oil storage facilities in the US...however, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was still 174,000 fewer barrels per day than what refineries reported they used during the week...to account for that discrepancy, the EIA needed to insert a (+174,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as "unaccounted for crude oil"...

details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports still rose to an average of 8,014,000 barrels per day, which was 4.9% below the imports of the same four-week period last year...the 922,000 barrel per day decrease in our total crude inventories was all withdrawn from our commercial stocks of crude oil, since the amount of oil stored in our Strategic Petroleum Reserve remained unchanged....this week's 7,000 barrel per day decrease in our crude oil production resulted from a 22,000 barrel per day decrease in oil output from Alaska, which was partially offset by a 15,000 barrels per day increase in oil output from wells in the lower 48 states...the 9,423,000 barrels of crude per day that were produced by US wells during the week ending August 4th was 7.4% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 11.6% more than the 8,445,000 barrel per day of oil output during the during the same week a year ago, while it was still 1.9% below the June 5th 2015 record US oil production of 9,610,000 barrels per day... 

US oil refineries were operating at 96.3% of their capacity in using those 17,574,000 barrels of crude per day, which was up from 94.5% of capacity the prior week, and the highest refinery utilization rate in 12 years...the record amount of oil refined this week was 5.9% more than the 16,597,000 barrels of crude per day.that were being processed during week ending August 5th, 2016, when refineries were operating at 92.2% of capacity, and roughly 12% above the 10 year average of 15.75 million barrels of crude refined per day this time of year....since we have a new record for oil refining, we'll include a graphic of what that looks like below...

August 9 2017 refinery throughput for week ending August 4

the above graph comes from a weekly emailed package of oil graphs from John Kemp, senior energy analyst and columnist with Reuters...the graph shows US refinery throughput in thousands of barrels per day by "day of the year" for the past ten years, with the past ten year range of our refinery throughput for any given date shown in the light blue shaded area, and the median of our refinery throughput, or the middle of the 10 year daily range, traced by the blue dashes over each day of the year....the graph also shows the number of barrels of oil refined for each week in 2016 traced weekly by a yellow line, with our year to date oil refining for 2017 represented in red...thus we can see that for most all of 2016, US oil refining was either at seasonal record highs or near the top of the average range...furthermore, we can also see that this year's oil refining has thus been beating last year's record levels by a large margin since the beginning of April, setting several record highs, each of which has subsequently been topped as the year progressed...

with the record level of oil refining, gasoline production from our refineries increased by 6,000 barrels per day to 10,301,000 barrels per day during the week ending August 4th, short of the record set two weeks ago, but still 2.0% higher than the 10,098,000 barrels of gasoline that were being produced daily during the comparable week a year ago....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 73,000 barrels per day to 5,305,000 barrels per day, which was also short of the record set 4 weeks ago, but still 11.9% more than the 4,739,000 barrels per day of distillates that were being produced during the week ending August 5th last year....

even with small increase in our gasoline production, our end of the week supply of gasoline increased by 3,424,000 barrels to 231,103,000 barrels by August 4th, the first increase in gasoline inventories in 8 weeks and the largest increase in 7 months…the major factor in the gasoline supply increase was an increase of 559,000 barrels per day to 1,108,000 barrels per day in our imports of gasoline, the most gasoline we've imported in any week since the week ending July 3rd of 2011...in addition, a drop of 45,000 barrels per day to 9,797,000 barrels per day in our domestic consumption of gasoline and a decrease of 55,000 barrels per day to 454,000 barrels per day in our gasoline exports also both contributed to the week over week increase in supplies....however, following 7 weeks of gasoline supply withdrawals prior to this week, our gasoline inventories are still 1.8% below last year’s seasonal high of 235,383,000 barrels for this week of the year, but they are now 7.2% higher than the 215,482,000 barrels of gasoline we had stored on August 7th of 2015...

even with the increase in our distillates production, our supplies of distillate fuels still dropped by 1,729,000 barrels to 147,685,000 barrels over the week ending August 4th, the 6th drop in seven weeks…that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 370,000 barrels per day to 4,510,000 barrels per day, and as our imports of distillates fell by 67,000 barrels per day to 41,000 barrels per day, the least we've imported in over a year...however, there was also a 138,000 barrel per day decrease to 1,083,000 barrels per day in our exports of distillates at the same time, more than offsetting the decrease in imports….after this week’s decrease, our distillate inventories were 2.3% lower than the 151,196,000 barrels that we had stored on August 5th, 2016, and fractionally lower than the distillate inventories of 147,806,000 barrels of distillates that we had stored on August 7th of 2015, even as they are roughly 5.7% above the 10 year average for distillates stocks for this time of the year

finally, the big drop in our oil imports and the record level of oil refining meant our commercial crude oil inventories again shrunk, decreasing for the 16th time in the past 18 weeks, falling by another 6,458,000 barrels to 475,437,000 barrels as of August 4th, leaving us with the least oil we've had in storage since early February of 2016...thus, our oil inventories as of August 4th were also 3.6% below the 492,969,000 barrels of oil we had stored on August 5th of 2016, even as they were still 12.7% more than the 421,822,000 barrels in of oil that were in storage on August 7th of 2015...compared to historical figures at the same time of year, before our oil glut began to build up,  this week's oil supplies were still 41.7% higher than the 335,568,000 barrels of oil we had in storage on August 8th of 2014, and about 42.2% above the 10 year average of oil supplies for the first week of August ... here is a graph from John Kemp of what that looks like over the last 4 years:

August 9 2017 crude oil inventories as of August 4

This Week's Rig Count

US drilling activity decreased for the 4th time in 7 weeks during the week ending August 11th, following a string of 23 consecutive weeks of increases earlier this year, as natural gas drilling tanked while oil drilling increased....Baker Hughes reported that the total count of active rotary rigs running in the US fell by 5 rigs to 949 rigs in the week ending Friday, which was still 468 more rigs than the 481 rigs that were deployed as of the August 12th report in 2016, even though it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil increased by three rigs to 768 rigs this week, which was up by 372 oil rigs over the past year and the most oil seeking rigs deployed since April 2nd, 2015, while it was still far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations decreased by 8 rigs to 181 rigs this week, which was still 98 more rigs than the 83 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

the Gulf of Mexico rig count rose by one rig to 17 rigs this week, after falling by 7 rigs during the prior week....there were reports last week's drop was due to the movement of Tropical Storm Emily through the eastern Gulf, but since the Gulf rig count didn't recover after the storm was passed, we now doubt that was the case...the 17 rigs now active in the Gulf now matches the 17 rigs that were working in the Gulf the same week last year, but since there is also a rig drilling offshore from Alaska this year, this week's total US offshore rig count of 18 rigs is up by 1 rig from the total offshore last year..

active horizontal drilling rigs fell by 6 rigs to 807 rigs this week, the largest horizontal rig decrease since April 29th, 2016...however, this week's horizontal rig count was still up by 426 rigs from the 375 horizontal rigs that were in use in the US on August 12th of last year, while it was also still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the vertical rig count was down by 1 rig to 72 vertical rigs this week, which was still up from the 62 vertical rigs that were deployed during the same week last year...meanwhile, the directional rig count was up by 2 rigs to 76 rigs this week, which was also up from the 44 directional rigs that were deployed on August 5th of last year.... 

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 pdf 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 basins...in both tables, the first column shows the active rig count as of August 11th, the second column shows the change in the number of working rigs between last week's count (August 4th) and this week's (August 11th) count, the third column shows last week's August 4th active rig count, the 4th column shows the change between the number of rigs running on Friday and 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 week’s case was for the 12th of August, 2016...   

August 11 2017 rig count summary

other than the major producing states shown on the above table, Mississippi also saw a rig added this week, and they now have two rigs drilling in the state, which is still down from the 3 rigs they had deployed last August 12th..

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Youngstown Residents Push to Oust Corporations from Election Campaigns, Cap Contributions at $100 - In These Times - In their seventh attempt to put an end to the environmental threats the oil and gas industry pose to their land, water and right to self-governance, a community rights group in Youngstown, Ohio, is attempting to amend their city’s charter in order to ban corporate interference in their local elections.  With assistance from the Community Environmental Legal Defense Fund (CELDF)—a non-profit, public interest law firm that provides legal services to communities facing outside threats to their local environment, local agriculture, local economy and quality of life—the Youngstown Community Bill of Rights Committee has gathered and submitted the signatures required to get the initiative, explained below, on their November ballot.   The Aug. 7 CELDF press release, in part, reads:  The Youngstown Community Bill of Rights Committee drafted the initiative with the support of the Community Environmental Legal Defense Fund (CELDF). CELDF has been assisting Youngstown residents to advance their democratic and environmental rights since 2013, when residents launched their community rights work to protect themselves from fracking activities. Fracking threatens their drinking water and has caused earthquakes in the area.  The initiative states that the people of Youngstown recognize that “corporations use their disproportionate wealth to frame important issues and influence elections.” Therefore, the measure removes corporations from the election process. It also places candidate selection in the hands of voters rather than powerful political parties. It reinforces the separation of powers between the judiciary and other branches of government by removing the initiative’s content as grounds for blocking it from the ballot. Thus, if technical requirements are met, initiatives must be placed before voters. Tish O’Dell, the Ohio community organizer for CELDF, says, “The right to community self-government is an inalienable right—one that the American Revolutionaries fought and died to uphold. The right to vote is supposed to reflect our right to self-government. In Youngstown, that right is rendered meaningless when the people in the community are outspent in their issue campaigns 50:1 by corporate entities. Residents are ready to level the playing field and bring inalienable rights back to the real people who live here.”

New law could take failed anti-fracking issue off Youngstown ballot - (WYTV) – The Youngstown Community Bill of Rights expects to have two measures on the ballot in November but a new state law could block one or both from getting to voters.The anti-fracking proposal has failed six times in Youngstown but last month, the petition was presented again.“Ohio has had the right of citizen initiatives since 1912 so chartered municipalities, citizens, can do petitions when they feel the government is not protecting them,” said Susie Beiersdorfer, a member of the Mahoning County Board of Elections.One measure asks to prohibit fracking within city limits and that water funds be used for water quality and infrastructure, not downtown development.The second issue is for free and fair elections, taking out corporate money. Registered voters in Youngstown can donate up to $100 for candidates and ballot measures. The State Supreme Court ruled unanimously that citizens’ initiatives must be put on the ballot. That was right after a Community Bill of Rights measure was kept off the ballot. Now, a new Ohio law gives boards of election the chance to invalidate local proposals if they don’t follow state law. “This is not just about fracking and the oil and gas industry. We’ve seen it in education, seen it in health care, big AG with pesticides. So there’s many areas where citizens’ rights and nature’s rights need to be elevated above corporate rights,” Beiersdorfer said.  She anticipates the two measures could be kept off the ballot, which would start another legal challenge. “We believe this is an unjust law but until you can challenge a law, you just can’t say, ‘This is a bad law, get rid of it,'” she said. Beiersdorfer said the board is obligated to investigate if a petition falls within the scope of authority.

Through this beige office runs the Kremlin cash that funds U.S. anti-fracking activists, Republicans say -- – A couple of influential Republicans from Texas see a long trail of Kremlin money leading to a beige office building on a palm-lined street in Bermuda – and it has nothing to do with the investigations of Russian election meddling. The cash, tagged to an offshore shell company housed in a law office inside, was not intended for the 2016 presidential election. Rather, they believe, it was part of a “covert anti-fracking campaign” to foster global dependence on Russian gas. The theory, long a staple of alt-right websites and conservative groups, has been given new life in a recent letter from Texas U.S. Reps. Lamar Smith and Randy Weber, lawmakers with strong ties to the energy industry that has been the target of climate change activists opposed to hydraulic fracturing.In a case of dueling Russian conspiracy narratives, Smith and Weber are asking the Trump administration to investigate allegations that the Bermuda entity served as a secret cash conduit for environmentalists in the U.S.The allegations, spelled out in a letter to U.S. Treasury Secretary Steven Mnuchin, come amid growing public angst about Russia as a disruptive force on the world stage, not only in elections, but in Syria, the wider Middle East, and world energy markets. They also illustrate the unsettling confluence of fact versus fiction in an age of political polarization and competing media narratives.

Fracking is spreading invasive plant species, Penn State research says fracking is spreading non-native plants | Centre Daily Times: Researchers at Penn State have discovered in a recent study that Marcellus Shale fracking activity can aid in the spread of invasive, non-native plant species. The findings, published in July in the Journal of Environmental Management, are a result of research that began in 2012 and focused on 127 natural gas well pads on state forest land in the north-central part of the state. Lead researcher Kathryn Barlow, a doctoral candidate in Penn State’s department of plant sciences, said the team found that 61 percent of the wells studied have at least one invasive, non-native plant species growing around the edges of the well pads or along the sides of the access roads. Of the wells that are being colonized by invasive plants, 19 percent have more than one non-native plant, such as Japanese stiltgrass, reed canary grass and crown vetch, according to the study. In addition to tracking the plants using the survey protocol, Penn State analyzed the role fracking vehicle traffic plays in spreading the seeds. To reach the desired well depth, about 1,200 one-way truck trips are required to deliver the fluid needed for the process, Barlow said. The Penn State team measured how far the invasive plant seeds can blow based on the wind speed created by a passing vehicle. The team also discovered that the seeds can stick to the undercarriage of the vehicles, which Barlow said accelerated the spreading rate of the plant colonies. 

Driller files $5M suit against ‘Gasland’ resident, lawyers - A gas driller that was targeted with allegations that it polluted residential water wells in Pennsylvania has filed a $5 million lawsuit against a Pennsylvania resident and his lawyers, asserting they tried to extort the company through a frivolous lawsuit. Cabot Oil & Gas Corp. said Dimock resident Ray Kemble and his lawyers sought to harass and extort the Houston-based driller, attract media attention and "poison" the community by recycling "stale, settled claims" against the company. "Cabot will protect its rights and pursue justice against those who irresponsibly and maliciously abuse the legal system," George Stark, the Houston-based driller's director of external affairs, said in a statement Tuesday. Cabot's suit, filed Monday in Susquehanna County Court, takes issue with a federal lawsuit that Kemble and his lawyers filed in April but withdrew two months later. That suit accused Cabot of continuing to pollute Kemble's water supply. The company said the claims in Kemble's suit were the subject of a 2012 settlement between Cabot and dozens of Dimock residents — including Kemble — and were barred by the statute of limitations. Cabot's suit also alleged Kemble had breached the 2012 settlement by publicly talking about the company. Kemble, who's long been one of Pennsylvania's most visible and outspoken anti-drilling activists, did not immediately return a phone message Tuesday. Nor did the attorneys named as defendants in the suit, Charles Speer of the Speer Law Firm in Kansas City, Missouri, and Edward Ciarimboli and Clancy Boylan of Fellerman & Ciarimboli, which has offices in Philadelphia and northeastern Pennsylvania. Cabot's suit is the latest sign of a rekindling battle in Dimock, the small village that became ground zero in the national debate over drilling and fracking after residents accused Cabot of polluting the water nearly a decade ago. The community was featured in the Emmy-winning 2010 documentary "Gasland," which showed residents lighting their tap water on fire. Cabot said the methane in their water was naturally occurring.

Documentary tracks effects of fracking -- During the eight-year Obama presidency, there has been an extreme fossil fuel development that has put Americans in harm’s way. An estimated 17 million Americans live within one mile of at least one oil or gas well.  With this massive new drilling, rural America has been industrialized with pollution of air and water, leakage of methane at high rate into the atmosphere, and loss of property values and quality of life. Chemicals, heavy machinery, and violent explosions have injured the lowest paid workers. Because of poor training and lack of protective clothing, workers are being exposed to the toxic chemicals from the bedrock. The chemicals include heavy metals such as arsenic, radioactive substances, and hydrocarbons such as carcinogenic benzene. High pressure injections of waste water deep into the earth are causing earthquakes from Ohio to Texas.Drilling is tearing communities apart. Some residents make money, but others have had their property values ruined and have had their health compromised. Local communities such as Abida Springs, La., have found that zoning laws mean nothing. Landowners’ rights are superseded by ground and mineral leases. Fracking occurs under homes and property owners have no say over drilling on their property. California is the third largest oil producer of all the states. Because of the increased drilling of oil wells in farming areas, volatile chemicals are getting into the water for irrigation. Those chemicals are then getting into human food such as oranges and almonds. In Los Angeles, oil wells are being drilled in urban areas. The fumes are causing nausea, nosebleeds, headaches and respiratory problems in the residents of those neighborhoods.

New York's Fracking Ban Was Supposed to Set a Precedent-- but Gov. Cuomo Is Going Back on His Word -- New York banned high-volume hydraulic fracturing (fracking) two years ago, in a victory for persistent anti-fracking activists and a potential precedent for other states. Now, however, the state is poised to begin operating a power plant that will make fracking infrastructure fully operational throughout the state, completely undermining the ban. The $900 million power plant planned by Competitive Power Ventures (CPV) in Orange County, New York, requires permits for only two short pipelines before it may begin operating. CPV will be among the largest of New York's nearly 500 gas- and oil-fired power plants. Like more than half of currently proposed electricity generation in the state, this power plant will burn fracked gas from Pennsylvania's Marcellus Shale.Opponents charge that the plant is not needed and serves only to further push a warming world to the tipping point of climate-change catastrophe.On October 8, 2015, speaking with former Vice President Al Gore, New York Governor Andrew Cuomo said he would cut greenhouse gas emissions by 40 percent in the next 13 years, but climate scientists and engineers tell us CPV will emit 7 million tons of carbon-dioxide-equivalent pollution annually and add a full 10 percent from power generation to the state's current greenhouse gas inventory.  Natural gas produces less carbon dioxide to generate electricity than coal, but the methane leaked from gas wells, pipelines and compressor stations make fracked gas worse than coal for accelerating climate change.

Pipeline company could resume drilling in Pennsylvania under deal | TheHill: The developer of the Marine East 2 pipeline in Pennsylvania has reached a settlement agreement with the state and environmentalists that could let it resume underground boring. Under the deal, Sunoco Pipeline would have to re-evaluate construction plans for high-risk areas in an effort to prevent the clay slurry spills that occurred dozens of times in recent months during pipeline construction, particularly in vulnerable areas like wetlands, the Pittsburgh Post-Gazette reported. Regulators last month ordered a halt to all underground boring for the cross-state project in response to environmentalists’ challenges, which cited the spills. Sunoco, the developer, is a unit of Energy Transfer Partners, best known recent as the operator and developer of the controversial Dakota Access oil pipeline. The settlement was reached Tuesday night, but it still must get approval from a judge. A hearing on the matter had been scheduled for Tuesday, but it was postposed so the Judge Bernard Labuskes Jr. could review the deal, the Post-Gazette wrote. Sunoco agreed in the settlement to review 47 sites close to drinking water supplies, important natural features and other utilities, and to submit reports to the state about each review, along with the steps crews plan to take to reduce risk. The company also would have to notify nearby landowners before drilling and offer to test their water supplies. Energy East 2 is planned to carry natural gas liquids from drilling areas in the western part of Pennsylvania to the Philadelphia area for refining or further transportation. 

Pipeline Work Moving Steadily Across Valley - Pipeline work to move Marcellus and Utica shale natural gas continues in nearly every corner of the Upper Ohio Valley, as new data show the industry supported more than 333,000 jobs in Ohio and West Virginia in 2015, while contributing nearly $46 billion to the two states’ economies.Meanwhile, there are several billion dollars’ worth of interstate pipeline projects that are in some stage of development, whether they are still in the permitting process or construction is ongoing. These include the $5.1 billion Atlantic Coast Pipeline, the $3 billion Atlantic Sunrise, the $1.4 billion Leach XPress, the $2 billion Nexus Pipeline, the $4.3 billion Rover Pipeline, the $3.5 billion Mountain Valley Pipeline and the $2 billion Mountaineer XPress. These giant pipeline systems do not include the “transmission lines” that move natural gas from well sites and processing plants to the interstate pipelines, nor do they count the “gathering lines” that connect individual well sites to transmission lines.For several years, pipeliners have been working in both northern West Virginia and eastern Ohio. This work, combined with drilling and fracking, was part of the 10.3 million jobs and $1.3 trillion impact the industry made throughout the U.S. in 2015, according to the Washington, D.C.-based American Petroleum Institute. In fact, the API shows the number of jobs the natural gas industry supports has grown by 500,000 since 2011.    The average salary for one of these jobs is $101,181, according to the U.S. Bureau of Labor Statistics. (this, of course, is BS; as of July, oil and gas extraction only employed 180,000 in the US)

Energy Transfer executives see Rover Pipeline in home stretch -- Energy Transfer Partners' beleaguered Rover Pipeline natural gas project is expected to be in service by the end of November or early December, with full commercial service in January, company executives said Wednesday. Phase 1A of Rover -- from Cadiz to Defiance, Ohio -- is nearly done, with completion expected by the company in the coming days, executives said during a second-quarter earnings conference call. When finished, Rover will seek US Federal Energy Regulatory Commission permission to place those facilities into service.Phase 1B is awaiting FERC approval for one directional drill. With that approval in hand, the drill should be completed in about 40 days, and in-service authorization will be sought immediately after that, executives said. Rover Phase 2 is held up at FERC as well. "Assuming quick resolution by FERC regarding Phase 2, we expect to be in service by the end of November or early December with full commercial service in January," Energy Transfer CFO Tom Long said. Rover has faced regulatory setbacks after drilling releases into Ohio wetlands and demolition of a farmhouse that had been eligible for listing on a national historic registry. FERC initiated investigations related to both matters and ordered a stop to some directional drilling. The Ohio EPA has also proposed fines related to environmental mishaps and ordered remediation. And West Virginia regulators last month halted some operations in light of erosion and runoff problems. Any signoff to bring parts of the project into service will require first satisfying FERC. The agency on July 12 gave Rover a substantial list of environmental restoration work it would require before allowing Mainline A of the project to enter service. In addition, FERC has said that prior to authorizing future HDDs, commission staff "anticipates the development of a set of protocols to prevent future drilling and mud contamination."

Dominion: Cove Point LNG 95 percent complete - Dominion Energy said work on the Cove Point LNG export facility near Lusby, Maryland is 95 percent complete and on track to start service in the fourth quarter of 2017. All of the major equipment has been set in place with the focus now turning on commissioning activities, Dominion said in its July report. All of the five tower cranes used to transfer equipment onsite have been taken down and transported offsite, Dominion said, adding that all the barge loads and heavy haul deliveries have been transported. Thomas F. Farrell II, chairman, president and chief executive officer of Dominion Energy, said the company received “FERC authorization for hydrocarbon entry into four additional project areas, adding that over 90 percent of the project’s systems are now in the commissioning phase.” Speaking during the company’s second quarter conference call, Farell II said the company has received FERX permit to export the LNG produced during commissioning. “We have an agreement with a third party to provide the commissioning natural gas and to export commissioning LNG from a facility,” he said. He added that the facility will have a period of sustained LNG production during the fourth quarter before it starts commercial operations later in the year.Once it is completed, the liquefaction facility being built at its existing LNG terminal will have the capacity to produce 5.25 million metric tons of liquefied natural gas per year. The production capacity has been fully subscribed with Pacific Summit Energy, a U.S. unit of Sumitomo Corporation, as well as with GAIL Global (USA) LNG, a U.S. unit of India’s utility GAIL, under 20-year terminal service agreements.

Plan for natural gas pipeline under Potomac River in Western Maryland draws scrutiny - Baltimore Sun - A proposed 3.5-mile underground natural gas pipeline crossing far below the Potomac River in Western Maryland would provide a critical link, proponents say, between gas producers in Pennsylvania and manufacturers in West Virginia’s Eastern Panhandle.But opponents are calling on Gov. Larry Hogan and the Maryland Department of the Environment to reject the project because it would carry gas produced by hydraulic fracturing, or “fracking,” a practice state lawmakers voted to ban, while also threatening a river that provides drinking water to millions.  A group of activists in kayaks — “kayaktivists,” they call themselves — will paddle the Potomac with signs on Friday, the most recent action in a campaign against the project they hope will echo last summer’s protests of the Dakota Access oil pipeline in Standing Rock, N.D., and capture the governor’s attention.“It does pose a serious threat to drinking water,” said Denise Robbins, spokeswoman for the Chesapeake Climate Action Network. “This pipeline and fracked gas pipelines in general are becoming the new threat to this country. … It’s not going to benefit Marylanders whatsoever.” Maryland Environment Secretary Ben Grumbles said in a statement that state officials are “taking a hard look” at the proposal, which would run a pipeline underground across the narrowest part of the state near Hancock and under the Potomac River to Berkeley Springs, W.Va. The state will host a public hearing in the upcoming months to gather input before making a decision, Grumbles said.

In new trend, U.S. natural gas exports exceeded imports in 3 of the first 5 months of 2017 - The United States exported more natural gas than it imported in February, April, and May of 2017 according to the latest EIA’s Natural Gas Monthly. The United States has been a net natural gas importer (on an average annual basis) for nearly 60 years. Declining net pipeline imports from Canada, growing natural gas pipeline exports to Mexico, and increasing exports of liquefied natural gas (LNG) are all contributing to the nation’s ongoing shift toward being a net exporter.   The United States began importing more natural gas than it exported in 1958, when total natural gas trade volumes were much smaller. In October of that year, the TransCanada pipeline was completed, allowing Western Canadian natural gas to enter northeastern U.S. markets. Net U.S. natural gas imports from Canada peaked in 2007, averaging over 10 billion cubic feet per day (Bcf/d). More recently these volumes have been declining as domestic natural gas production from shale gas and tight oil formations has increased and displaced Canadian natural gas. Border crossings in Idaho and Montana make up the largest portions of natural gas entering the United States from Canada by pipeline, making up about 25% and 20%, respectively, in 2016.  While the United States remains a net importer of natural gas from Canada, U.S. exports to eastern Canada have been increasing steadily since 2000, when the Vector pipeline began service. The Vector pipeline, with a capacity of 1.3 Bcf/d, originates in Chicago and is currently supplied by natural gas from western Canada, Texas, Louisiana, and Oklahoma. It delivers natural gas at the border in St. Clair, Michigan, and into Ontario’s Dawn hub. U.S. natural gas exports from Michigan, mainly through the Vector pipeline, make up most of the natural gas export volumes by pipeline to Canada.  Since 2011, several pipeline reversals have contributed to the growing volume of natural gas delivered into Canada from both the Midwest and Northeast. In March 2017, total U.S. natural gas exports to Canada were 3.21 Bcf/d, near the monthly record of 3.25 Bcf/d reached in December 2012; U.S. exports declined in both April and May.  Natural gas exports to Mexico from the United States also reached near-record levels in the first five months of 2017, averaging 4.04 Bcf/d.

United States expected to become a net exporter of natural gas this year - EIA’s latest Short-Term Energy Outlook projects that the United States will export more natural gas than it imports in 2017. The United States has been a net exporter for three of the past four months and is expected to continue to export more natural gas than it imports for the rest of 2017 and throughout 2018. The United States’ status as a net exporter is expected to continue past 2018 because of growing U.S. natural gas exports to Mexico, declining pipeline imports from Canada, and increasing exports of liquefied natural gas (LNG). The United States is currently the world's largest natural gas producer, having surpassed Russia in 2009. Natural gas production in the United States increased from 55 billion cubic feet per day (Bcf/d) in 2008 to 72.5 Bcf/d in 2016. Most of this natural gas—about 96% in 2016—is consumed domestically. Abundant natural gas resources and large production increases have created opportunities for U.S. natural gas exports. With a near doubling of U.S. export pipeline capacity to Mexico by 2019, EIA expects U.S. natural gas exports to increase, though they should remain well below the available pipeline capacity. Mexico’s national energy ministry (SENER) expects to increase its natural gas use for electric power generation by almost 50% between 2016 and 2020. Mexico's domestic natural gas pipeline network is undergoing a major expansion, primarily to accommodate new natural gas pipeline imports from the United States. In addition, supplies of natural gas out of Appalachia into the Midwestern states are likely to gradually displace some pipeline imports from Canada as well as increase U.S. pipeline exports to Canada from both Michigan and New York. Several new pipeline projects, including the Rover and Nexus Gas Transmission pipelines, are also being developed to increase takeaway capacity from the Marcellus and Utica supply regions that span parts of New York, Ohio, Pennsylvania, and West Virginia into the U.S. Gulf coast, Midwestern states, and eastern Canada.  EIA expects exports of liquefied natural gas (LNG) to increase. U.S. liquefaction capacity continues to expand as five new projects currently under construction—Cove Point, Cameron, Elba Island, Freeport, and Corpus Christi—come online in the next three years, increasing total U.S. liquefaction capacity from 1.4 Bcf/d at the end of 2016 to 9.5 Bcf/d by the end of 2019.

Biggest US Fuel Pipeline Fills Up as East Coast Tanks Drain -- Colonial Pipeline is back to business as usual -- with more demand to move fuels to the East Coast from Houston than it has space for.After running below capacity about 45 days starting in July, the largest gasoline pipeline in the U.S. has restarted its practice of rationing space. The company froze shippers’ ability to nominate more fuels this month to maintain the line’s five-day cycle shipping frequency, spokeswoman Malesia Dunn said by email.To be a big player in the U.S. gasoline market, it’s essential to have a gateway to the high-demand center surrounding New York City. Some traders supply that hub with foreign imports, but 1.3 million barrels a day move north on the Colonial Pipeline from the refining hub near Houston.Last week the arbitrage, or selling opportunity for European gasoline exports to New York, fell to the lowest level since January 2016, according to PVM Oil Associates Ltd data. Upcoming imports from Europe will also be stifled as the region’s largest refinery shut unexpectedly. Royal Dutch Shell Plc will attempt to restart one of two crude units at the Pernis refinery Friday. “Inventories of gasoline have been drawing down across the East Coast and now it makes sense to take more barrels through Colonial’s pipeline,”. There were big profits available to Colonial shippers in the early 2010s when New York gasoline prices were normally 10 to 30 cents a gallon higher than the Gulf Coast. But only the committed shippers were getting a piece of the action. It was like an overcrowded subway train -- outsiders were so desperate to ride that they’d pay the regulars for their seat. As more shippers began selling their space on the pipeline, a “line space” spot market emerged.The market’s fundamentals have since changed and Gulf Coast gasoline no longer carries a wide discount to New York as exports boom. Demand to ship on the line fell below capacity in July for the first time in six years.

Flood of gasoline supply heads to U.S. Northeast as driving season ends (Reuters) - As the U.S. summer driving season winds down, a wave of gasoline barrels is headed for the Northeast market from Europe and the U.S. Gulf Coast, which will squeeze profit margins for local refiners in the country's biggest fuel-consuming region. A string of inventory draws in the United States and a revival in gasoline demand alleviated a longstanding glut in the New York gasoline hub, drawing interest from shippers in Europe at a time when buying historically eases at the end of August. Expectation for increased flows pushed gasoline futures and margins to a two-week low after they surged last week to a more than three-month high. European exports to North America of gasoline and naphtha, which is used for blending into gasoline, will jump in the coming weeks to the highest in months. "Arbs were open for weeks in July and I think the paper hedges were put in place, but the ships were not fixed. So now you are seeing the ships getting fixed," one East Coast trader said. U.S. gasoline imports into the East Coast more than doubled to 910,000 bpd in the week ended Aug. 4, according to the U.S. Energy Information Administration. East Coast inventories jumped by 1.4 million barrels and remain above the five-year average. The Colonial Pipeline, which connects the Gulf Coast to the populous Northeast, also signaled that demand to haul fuel on its gasoline line recovered after falling below capacity in June for the first time in six years. Tuesday's restart of Europe's largest refinery, Royal Dutch Shell's 404,000 bpd Pernis refinery in Rotterdam, is expected to support European gasoline exports. Total East Coast imports are set to reach nearly 850,000 barrels per day (bpd) by the end of August, doubling from a month earlier, according to traders and shipping data.

USGC crude Mars climbs to 23-month high as market eyes OPEC technical meeting -- US Gulf Coast medium sour crude Mars rose to its highest assessed level in almost two years Monday on market anticipation of possible Venezuela crude sanctions, continued export demand and an OPEC meeting to discuss production cut compliance. S&P Global Platts' Mars assessment increased 10 cents/b day on day to WTI cash minus 45 cents/b, its highest level since August 31, 2015, when it reached minus 35 cents/b. The strength coincided with an OPEC meeting Monday to discuss stricter compliance with its production cut deal with 10 non-OPEC producers, as total output reached about 920,000 b/d above its normal ceiling of around 31.9 million b/d. Increasing output from Libya and Nigeria, both of which were exempt from compliance with cuts, has contributed to the rise in production. However, much of the crude produced by Nigeria is sweet, meaning any further production cuts on the part of OPEC members could serve to tighten an already stretched global sour crude market, according to a source. 

Permian Natural Gas Processing Plants and NGL Pipelines, Part 2 The utilization of NGL takeaway pipelines out of the fast-growing Permian is determined to a significant degree by the natural gas processing plants that the pipes are connected to. Midstream companies prescient — or lucky — enough to own NGL pipelines that extend out of the hottest, most productive sub-regions within the Permian’s Midland and Delaware basins are benefiting not only from higher NGL volumes now, but the likelihood of even fuller pipes as Permian production continues to ramp up. Today we continue our blog series on the NGL side of the Permian phenomenon with a look at existing gas processing plants in the play and their connections to NGL pipelines that move y-grade to storage and fractionators.  As we said in Part 1, it is primarily the pursuit of crude oil — not natural gas or natural gas liquids (NGLs) — that is driving the frenzy of drilling and investment in the multistacked, hydrocarbon-packed Permian’s Midland and Delaware basins. But the oil-focused wells being drilled and completed there also are producing large volumes of associated gas, most of it liquids-rich, wet gas loaded with NGLs that — once processed, delivered and fractionated into purity products like ethane, propane, butanes and pentanes+ — add considerable monetary value of their own. The Permian already is producing 2.3 million barrels a day (MMb/d) of crude oil, 6.5 billion cubic feet per day (Bcf/d) of dry natural gas and nearly 800 Mb/d of NGLs. Under RBN’s Growth Scenario, crude production is expected to rise to 3.7 MMb/d (~60%) by 2022, while gas output is seen rising to 12 Bcf/d (~90%). NGL production is projected to increase 75% over the next five years, to ~1.4 MMb/d.

West Texas Ranchers Threaten Lawsuits Over Fracking - The Permian Basin, which by several accounts is the world’s second-largest oil field, still has plenty of oil and gas lying beneath its surface. Much of it still untapped because for decades, it has been difficult to extract. In recent years, however, fracking has made those deposits easier to harvest. And as explained recently in the Houston Chronicle, compared to other shale oil fields, that energy is relatively cost-effective to extract, even during this stubborn three-year spell of low fuel prices. Extracting that oil, on one hand, sounds like a great way to revitalize many economically struggling communities. As a result, established companies and startups alike seek to build pipelines that would transport fuel and water alike across long distances in order to tap into these resources. But companies leading this effort, including the Dan A. Hughes Company, are running into opposition by more and more citizens, ranchers, farmers and environmentalists – all of whom share a bevy of worries, from the lack of water for cattle and crops to potential threats that could be inflicted on popular recreation areas such as Balmorhea State Park. They cite concerns over water scarcity, as estimates have suggested the amount of water harvested to support the West Texas fracking boom has surged from 5 billion gallons in 2011 to almost 30 billion gallons last year – and that amount could double by the end of this year and more than triple by the end of this decade. Ranchers and farmers fear that the Permian Basin’s aquifers, most of which are believed to be interconnected, could all dry up as that water is diverted elsewhere – leaving ranches, farms and communities dry.

Millennials Are Killing the Oil Industry -- According to a recent report by pollsters EY, 57 percent of teens now see the fossil fuel industry as bad for society, and 62 percent of those aged 16 to 19 say working for oil and gas companies is unappealing. Other findings suggest that millennials dislike the oil industry the most of any potential employer, with only 2 percent of college graduates in the United States listing the oil and gas industry as their first-choice job placement. Given that a majority of millennials now also reject capitalism, the fact that we don't feel too much warmth towards the industry that’s been at its dirty, beating heart of it for 300 years shouldn’t come as a surprise. Millennials are now the largest part of the U.S. workforce, meaning their flight could spell massive problems down the road for the world’s most destructive companies. To win back the youth, a series of recent ads from the American Petroleum Institute, the fossil fuel industry’s lobbying arm, announced “This ain’t your daddy’s oil…Oil strikes a pose. Oil taps potential. Oil pumps life,” flashing pictures of products made with oil—like spray paint! Because young people like graffiti, right? Not more than we like being able to breathe air and drink water. Aside from having a few suspicions about an industry whose business model stands directly at odds with a habitable planet, millennial workers also want more from their jobs than a paycheck—including a sense of doing something halfway decent for the world. As the consulting group McKinsey wrote in its report on the industry’s future, “Millennials don’t just want personal career growth; they expect to make a positive contribution to society … If companies want to attract the best and brightest, they must design ways for employees to make an impact beyond the walls of the company.” As is the case with a host of other progressive issues, the overwhelming majority of millennials—91 percent—believe in climate change, and the vast majority support government action to do something about it. Because of this, there have been massive, millennial-led campaigns targeting the fossil fuel industry, like the one to divest major institutions’ holdings from coal, oil and natural gas companies.

Reading, Writing And Fracking? What The Oil Industry Teaches Oklahoma Students – NPR - It's a Saturday at Choctaw High School, but for hundreds of Oklahoma teachers, there's a training class in session. Carrie Miller-DeBoer is among 14,000 teachers in Oklahoma being trained to instruct a K through 12 education curriculum funded by the oil and gas industry. The lesson plans, created by the Oklahoma Energy Resources Board, have been used in Kansas, and the overall model has been pitched to at least five other states. The program centers on teaching math and science through oil-centric lessons and labs. That includes things like calculating the mileage of tanker trucks, or the slope of pipelines.  "Half of our budget is restoration, half is education," says Dara McBee, communications director with the Oklahoma Energy Resources Board. Since the 1990s, the energy board – funded by oil and gas taxes – has spent $40 million on the education program. But an investigation by the Center for Public Integrity and StateImpact Oklahoma, a collaboration of local NPR member stations, reveals there's a blurry line between industry promotion and education. Documents show educators had some role in creating the plans, but it's unclear how the lessons are written and updated each year. The board's education director does not have a background in education or science. Here are just a few of those lessons:

Fracking Brings Challenges to Local School Systems - School districts in the United States face special challenges when fracking operations draw new students to their communities and administrators have difficulty planning for resources and funding in cycles of boom and bust, according to a new study released on Thursday.The six-state study found that K-12 school districts adjacent to hydraulic fracturing sites do not fare any better economically than schools in non-fracking areas.Scholars from Resources for the Future, an independent, nonpartisan economic research organization, examined how school districts in Pennsylvania, Ohio, West Virginia, North Dakota, Montana and Colorado fared between 2000 and 2013.The conclusion was based on an evaluation of data and interviews from parents and students in the districts. The boom-and-bust cycle of the industry was found to create overwhelming stress on local districts as students and teachers were moving in and out of a region to meet the economic demands of drilling, study co-author Laura Zachary said in a webinar presentation Thursday. The student and teacher turnover rate, along with corresponding economic volatility in educational resources at the local level and an inability of local communities to absorb rapid economic fluctuations, created an uneven balance between costs and benefits, said Nathan Ratledge, the study's lead author."New teachers must be hired, and principals had to conduct long, expensive nationwide searches," Ratledge said at the web conference hosted by RFF and Penn State University. "High housing prices were a fact of life, and within two or three years, the new teachers used their experience and went back home. There was a consistently high turnover rate. This puts up red flags for student learning and also principals are constantly trying deal with the costs to restaff and retrain."

From a Little-Known Shale Play in New Mexico, BP Gets a Gusher  (Bloomberg) -- While other natural gas drillers are paying a premium for acreage in prized U.S. shale formations across Texas and Pennsylvania, BP Plc may have just found a gem in a largely ignored corner of New Mexico. The London-based oil giant started producing from a gas well in New Mexico’s Mancos shale that could turn out to be a “significant new source of U.S. natural gas supply,” according to a statement Monday. The well averaged 12.9 million cubic feet a day in its first month, the highest output achieved in the San Juan Basin in 14 years, the company said. The well could bring gas explorers one step closer to unlocking a shale play that, according to the U.S. Geological Survey, is home to one of the nation’s largest reserves of the fuel. The shale boom that’s turning the U.S. into a net exporter of the heating fuel has so far left the Mancos behind as explorers seek out cheaper plays. But with acquisition costs in proven fields rising, they’re turning to less popular regions to get more for their drilling dollars. "Everyone is trying to find another play," James Sullivan, analyst at Alembic Global Advisors, said by phone Monday. BP bought assets in the Mancos in 2015. At the time, there were no gas rigs operating in the basin, according to data from oilfield service provider Baker Hughes. WPX Energy Inc. also has approximately 105,000 net acres in the basin, according to a company filing with the Securities and Exchange Commission. The well “gives us confidence to pursue additional development of the Mancos Shale, which we believe could become one of the leading shale plays in the U.S.,” Dave Lawler, chief executive officer of BP’s U.S. onshore oil and natural gas business, said in the statement.

Fracking New Mexico: BP Just Found 'Significant New Source of U.S. Natural Gas Supply' -- Amidst the continued dire warnings about climate change , censored scientists and stranded assets , the oil industry keeps on doing what it does best: keeps on belligerently looking for more oil and gas. Earlier this week, BP announced it had discovered what it is labelling a "significant new source of U.S. natural gas supply" in New Mexico in the Mancos Shale, just across from the Colorado border. "We are delighted with the initial production rate of this well," said Dave Lawler, CEO of BP's U.S. Lower 48 onshore business. "This result supports our strategic view that significant resource potential exists in the San Juan Basin , and gives us confidence to pursue additional development of the Mancos Shale." BP, which bought the lease only two years ago, said the area could become one of the U.S.' main shale areas. The San Juan Basin sprawls across the Colorado-New Mexico border. "While other natural gas drillers are paying a premium for acreage in prized U.S. shale formations across Texas and Pennsylvania, BP may have just found a gem in a largely ignored corner of New Mexico," Bloomberg reported.  For anyone fighting fracking , climate change and the shale industry in the U.S., it is significant because it could open up a whole new area of shale. According to the U.S. Geological Survey (USGS), "The Mancos Shale is a significant potential source of natural gas." A report the USGS published last year concluded that the wider Mancos Shale basin "contains an estimated mean of 66 trillion cubic feet of shale natural gas, 74 million barrels of shale oil and 45 million barrels of natural gas liquids ... This estimate is for undiscovered, technically recoverable resources." The previous estimate was just 1.6 trillion .

Keystone XL pipeline fate in balance as Nebraska opens hearings (Reuters) - Nebraska regulators opened a final hearing on TransCanada Corp’s (TRP.TO) proposed Keystone XL pipeline on Monday, a week-long proceeding that marks the last big hurdle for the long-delayed project after President Donald Trump approved it in March. The proposed 1,179-mile (1,897-km) pipeline linking Canada’s Alberta oil sands to U.S. refineries has been a lightning rod of controversy for nearly a decade, pitting environmentalists worried about spills and global warming against business advocates who say the project will lower fuel prices, shore up national security and bring jobs. Trump's administration handed TransCanada a federal permit for the pipeline in March, reversing a decision by former President Barack Obama to reject the project on environmental grounds. But the line still needs a nod from regulators in Nebraska – which would be the last of three states to approve its proposed path into the heartland. A lawyer for opponents of the line opened the hearing in front of the five-member Nebraska Public Service Commission on Monday morning by grilling an executive for the Canadian company about how the pipeline will be disposed of after its anticipated 50-year lifetime. "Do we have to clean up TransCanada’s abandoned pipeline?" attorney David Domina asked TransCanada executive Tony Palmer. 

Keystone XL foes question proposed route through Nebraska - The 1,179-mile crude oil pipeline has faced relentless criticism from environmental groups, Native American tribes and a well-organized minority of Nebraska landowners who don't want the project cutting through their property. Business groups and some unions support the Keystone XL, saying it will provide jobs and property tax revenue for local governments. Opponents argue that, if it wins approval, the Keystone XL should run along the same path as the original Keystone pipeline, a line through eastern Nebraska that was completed with little opposition in 2010. TransCanada's preferred route would carry crude oil roughly 275 miles through Nebraska, whereas the original Keystone route only stretches 210 miles, said Brian Jorde, an attorney for the landowners. Company officials have said their preferred route is the most direct way to transport oil from Alberta, Canada, to an existing pipeline in Steele City, Nebraska. Rerouting the pipeline would add millions of dollars to the project's $8 billion price tag. Because it would travel along a nearly straight path, company officials said their preferred route would affect the least amount of land. TransCanada considered other routes, including one that would have run along Interstate 90 in South Dakota, but rejected them because they were longer, said Meera Kothari, a company engineer. The most direct path "lends itself to a diagonal route through Alberta, Montana, South Dakota and Nebraska," Kothari said. The company has also argued that the route through neighboring South Dakota is already set, thus requiring it to cross the border at a point near Mills, Nebraska.

Trump promised to build the Keystone XL. Three votes in Nebraska could stop it. - In an Oval Office ceremony after pushing through the approval of TransCanada’s controversial Keystone XL tar sands pipeline, President Trump asked the company chief executive Russ Girling when work would start. The answer wasn’t that simple. TransCanada still needs to win the approval of state regulators. This week they got a taste of how difficult that could be as the Public Service Commission kicked off public hearings in Nebraska, the state where opposition to the $8 billion pipeline project has been strongest. Two days featuring TransCanada experts are to be followed by two days of experts who are opposed to the pipeline, claiming that the steel line would pose environmental dangers and arguing that there was no reason to force landowners to allow it to cross their property. At the same time, TransCanada must find oil producers ready to fill the 830,000 barrel-a-day 36-inch diameter pipeline running from Canada’s oil sands to a pipeline nexus in southern Nebraska. Nebraska might be TransCanada’s biggest obstacle. The pipeline, first proposed more than eight years ago, has touched a populist nerve and aroused concerns that a leak could contaminate farm land and pasture, the delicate Sandhills, or water supplies. “We still have a bunch of family farmers on the land that their ancestors homesteaded,” said Jane Kleeb, chair of the Nebraska Democratic Party and a long-time organizer of opposition to the Keystone XL .“They have a deep emotional and cultural tie to the land and feel a responsibility that they must protect it.” Many farmers and ranchers are angered by the idea of a foreign pipeline company using eminent domain, which the 2016 Republican Party platform criticized, to force them into letting large construction equipment plow a 50-foot-wide right of way to bury the pipeline about four feet below the surface.

Tribes ask court to shut down Dakota Access pipeline | TheHill: A pair of American Indian tribes are asking a federal court to immediately shut down the controversial Dakota Access oil pipeline. The Standing Rock Sioux and Cheyenne River Sioux tribes, whose reservations are near the route of the North Dakota to Illinois line, say that since a Washington, D.C., court found the Army Corps of Engineers did not conduct a proper environmental review of the project, shutting it down is the only proper course of action. “The question before the court now is whether the pipeline should continue operating, exposing the tribes to the very risks that the Corps will be examining, while this remand is underway,” the tribes wrote, referring to certain parts of the environmental review that the agency is redoing. “Under both the law of this Circuit as well as the history of this action, the answer is no,” they continued. “The Corps must prepare a new [environmental] analysis of key issues at the heart of this dispute and make a new decision based on a full and objective analysis. The only way to ensure the integrity of that process, and reduce the risks to the tribes that the process is supposed to be analyzing, is by applying the default remedy of vacatur — as virtually every court to face a similar situation has done.” The brief, filed late Monday in the District Court for the District of Columbia, came after Judge James Boasberg’s June ruling that the Army Corps’ review leading to its approval of the final piece of the pipeline was inadequate. Boasberg said the review was acceptable for the most part, but the Army Corps “did not adequately consider the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.”

Tribes want Dakota pipeline shut, but offer fallback plan  -  bismarcktribune.com: American Indian tribes fighting the Dakota Access oil pipeline are asking a judge to shut down the line while more environmental review is conducted, but they've also presented a fallback plan should the judge disagree. The "alternative relief" that Standing Rock Sioux attorney Jan Hasselmen "reluctantly" proposed in court documents filed Monday includes increased public reporting of pipeline issues such as repairs, and implementation of a spill response plan — including equipment staging — at the Lake Oahe reservoir on the Missouri River, from which the tribe draws its water. The $3.8 billion pipeline built by Texas-based Energy Transfer Partners began moving oil from western North Dakota to a distribution point in Illinois on June 1, after President Donald Trump earlier this year pushed through its completion. U.S. District Judge James Boasberg later in June ruled that the Army Corps of Engineers largely complied with environmental law when permitting the pipeline but didn't adequately consider how an oil spill under Lake Oahe might affect the Standing Rock Sioux tribe. He ordered the corps to reconsider certain areas of its environmental analysis and is deciding whether to shut down the 1,200-mile pipeline through the Dakotas, Iowa and Illinois while the work is done. The corps and ETP have advocated for keeping the pipeline operating. The company maintains a shutdown would cost it $90 million each month and also impact the energy industry, consumers and government tax revenue. The corps says the agency expects to be able to substantiate its earlier determination that the pipeline poses no significant environmental threats. "Neither the corps (of Engineers) nor DAPL has ever communicated with the tribes about spill response planning," Hasselman wrote.

Dakota Access pipeline: Land restoration, cleanup 100% done in Iowa -   The Dakota Access pipeline project is 100 percent finished in Iowa, including cleanup and restoration of farmland, according to documents filed with the Iowa Utilities Board.Crude oil from North Dakota's Bakken oil patchbegan flowing through the pipeline in four states on June 1, but final restoration work has been underway since spring in four counties in north-central and northwest Iowa.Those counties included Calhoun, Sac, Buena Vista and Cherokee. Most of the pipeline project was finished in other parts of Iowa last summer and fall.Brant Leonard, an attorney representing Dakota Access in Des Moines, filed a letter with the Iowa Utilities Board last week which said all final right of way clean up has been completed in Iowa. However, certain construction repairs not included in categories of reportable work continue, including spot repairs to drainage tile or ditch lines, fixing low spots and reseeding specific areas, he said.The state board had issued an order in August 2016 that had required Dakota Access to file weekly statewide construction progress reports. The pipeline crosses diagonally through 18 Iowa counties for 346 miles. Because the required work has been finished, Leonard said Dakota Access will stop filing the weekly reports. Lisa Dillinger, a spokeswoman for Dallas-based Energy Transfer Partners, which developed the pipeline, said Monday that restoration work is now complete in all four states, including Iowa, North Dakota, South Dakota and Illinois. But certain post-construction activities continue in all four states, such as reseeding and site-specific repairs, she added.

Judge Accepts No-Jail Deal for Jill Stein in Pipeline Protest Case - NBC News: — A North Dakota judge on Wednesday accepted a plea agreement that spares former Green Party presidential candidate Jill Stein any jail time for protesting the Dakota Access oil pipeline nearly a year ago. Judge Gail Hagerty accepted a plea deal in which Stein pleaded guilty to misdemeanor criminal mischief and prosecutors dropped a misdemeanor criminal trespass charge. Stein will be on unsupervised probation for about six months and must pay $250 in fees. She had faced a maximum punishment of two months in jail and $3,000 in fines. Stein and her attorney did not respond to phone and email messages seeking comment. Morton County Assistant State's Attorney Brian Grosinger also did not respond to messages seeking comment on why prosecutors chose not to take the case to trial. Stein was charged for spray-painting a bulldozer at a construction site last September. She told The Associated Press in March that it was "very problematic to have this hanging over my head" and that she wanted the case resolved. She also said that she was willing to go jail but that's "not my preference, obviously."

Changing crude flow landscape boosts Bakken differentials in Guernsey, Wyoming -- Bakken shale crude in Guernsey, Wyoming, traded this week at a premium to the front-month WTI calendar-month average for the first time since 2015. Traders said that the spike in value is the result of shifting crude flows in the region since the startup of the 520,000 b/d Dakota Access Pipeline. Bakken in Guernsey was heard traded between WTI CMA plus 10 cents/b and flat to the average late Wednesday and Thursday. "I think it will go stronger," one Bakken crude trader said. "Traders need an incentive to ship there."Differentials for Bakken in Guernsey have been narrowing steadily since Dakota Access began commercial deliveries in June. The average for Bakken ex-Guernsey in July was WTI CMA minus 42 cents/b, compared to a pre-Dakota Access average of minus $1.31/b in May, according to S&P Global Platts data. Crude traders and analysts said that the price increase in Guernsey is not unexpected since more Bakken crude is being pulled over to Dakota Access, which carries crude from North Dakota to markets in the Midwest and Gulf Coast. "During the 2014 to 2016 timeframe we saw quite a bit of pipeline capacity added in PADD IV, which was followed shortly after by production falling in both the DJ and Bakken due to lower prices," said Jenna Delaney, an analyst with Platts Analytics' Bentek Energy. "This has resulted in the overall pipeline system in PADD IV being utilized at around 50% over the past year. Then, you throw Dakota Access on top of that, and even more barrels are diverted away from Guernsey. With so much spare takeaway capacity available, it's not surprising that differentials have compressed.

As Hilcorp plans to drill in Arctic waters, a troubling trail of violations surfaces —In the energy industry, Hilcorp has built a reputation for fast growth, big profits and making people rich.  Founder Jeffery Hildebrand has become a billionaire, rising up the ranks of the hundred richest Americans.  In regulatory circles, however, and among environmentalists, Hilcorp has become known for different reasons. As the company has bought up older oil and gas fields from bigger companies, a business strategy known as "acquire and exploit," it has amassed a troubling safety and environmental track record in Alaska and several other states. As soon as the company started working in Alaska in April 2012, it began to accumulate violations. By October 2015, the Alaska Oil and Gas Conservation Commission (AOGCC), the main industry regulator in the state, had documented 25 instances in which Hilcorp violated its regulations, prompting a reprimand that had little of the bureaucratic blandness typical of regulatory notices. "The disregard for regulatory compliance is endemic to Hilcorp's approach to its Alaska operations and virtually assured the occurrence of this violation," the chair of the commission wrote to the company in November 2015. "Hilcorp's conduct is inexcusable." Whether Hilcorp is a model for its industry or a business with an endemic disregard for rules is a question that will only grow in importance. The company is already the biggest producer in Cook Inlet, where it bought up some of Alaska's oldest oil and gas facilities. Next it plans to drill new wells in pristine Arctic waters, pursuing a technically challenging project acquired from BP in 2014. This undertaking would expand North Slope production into the federal waters of Alaska's Outer Continental Shelf for the first time, just as the Trump administration tries to open more of the Arctic, including the nearbyArctic National Wildlife Refuge, to petroleum development. A review by InsideClimate News of thousands of pages of government documents, along with interviews of people who work in, regulate and watchdog the industry, reveals a string of Hilcorp incidents that harmed the environment or put workers in danger. The regulatory record portrays a company that critics say prioritizes an aggressive expansion in Alaska while repeatedly falling short on compliance.

Oil company works to contain leak in Alaska’s North Slope (AP) — A Texas-based oil and gas company that last year said it discovered at least 6 billion barrels of oil under its land in northern Alaska is cleaning up more than 7,000 gallons (26,500 liters) of oil that leaked from a well.Alaska's Energy Desk reports (http://bit.ly/2vRX1SC ) that Caelus Energy originally thought the spill in mid-June was just 5 gallons (19 liters).Tom DeRuyter, who is overseeing the response to the leak, says the Alaska Department of Environmental Conservation thinks most of the spill was contained to the surrounding gravel pad, but about 3 gallons (11 liters) of oil made it out to the tundra.Cleanup on the spill is ongoing. Caelus officials declined to be interviewed, but the company stated it is working with the state department to minimize damage.

U.S. shale breakeven price revealed around $50: Kemp (Reuters) - U.S. shale producers need a WTI oil price around $50 per barrel to break even, according to an analysis of financial statements for the second quarter.Fifteen of the largest shale oil and gas producers reported total net losses of $470 million for the three months between April and June when benchmark WTI prices averaged $48.Total losses were down from $3.7 billion in the first three months of the year and $7.4 billion in the same period in 2016, according to earnings statements published in the last week (http://tmsnrt.rs/2ftmgnd).Nine of the companies in the sample reported positive net income in the second quarter, down from 10 in the first quarter, but well up from none in the same period last year.Shale companies have staunched the losses thanks to a combination of cost cutting, improved efficiency and the rise in oil prices.But there is considerable controversy about how high prices need to be for shale producers to cover all their costs and earn a return for their investors.Some firms claim they can break even and even make large profits with benchmark WTI prices below $50 or even $40 per barrel.It remains unclear if these figures apply to full lifecycle costs (including overheads) and all the parts of all the shale plays (or just the most productive sweet spots).However, Harold Hamm, chief executive of Continental Resources CLR.N, a large shale producer in North Dakota and Oklahoma, has said prices need to be above $50 to be sustainable.Prices below $40 would cause drillers to idle rigs again, Hamm said in a television interview earlier this summer ("Harold Hamm warns oil prices below $40 will idle U.S. drilling", CNBC, June 28).Following a cyclical downturn between the middle of 2014 and the middle of 2016, the oil market has discovered the breakeven price for the U.S. shale sector. Some shale producers have lower breakeven prices than the average, and some higher, but the sector as a whole seems to need around $50 to grow production profitably.

$50 oil ‘magic’ boosts sea drillers’ hopes of vying with shale | GulfNews.com: The “magic” of $50 oil is now in the sights of deep-sea drillers as they try to lure customer spending from shale wells on land.And after more than three years of pain, that prospect has some investors excited. Transocean Ltd rose the most in more than eight months after the world’s biggest provider of offshore rigs predicted explorers could soon shift their spending from land to sea as crude futures inch closer to the key level. Shares of other deepwater service providers like Diamond Offshore Drilling Inc and Noble Corp Plc also surged on the heels of Transocean’s rally.“Break-even costs in multiple deepwater basins around the world are consistently coming in below $50 and are now often around, if not below, $40,” Chief Executive Officer Jeremy Thigpen told analysts and investors Thursday on a conference call. “Deep-water break-evens are starting to compare favourably with onshore, which by the way is now experiencing some fairly significant price inflation across most products and services.”The global oil downturn hit offshore drillers with the double whammy of a drop in customer demand for their services and a glut of new rigs rolling out of shipyards. More than three quarters of Transocean’s sales have been carved away since hitting a peak of $3.3 billion at the end of 2008, according to data compiled by Bloomberg.A little more than half of the oil industry’s 817 offshore rigs were working in the second quarter, down from the 92 per cent utilisation rate for global rigs in 2008, Jud Bailey, an analyst at Wells Fargo, wrote last month in a note to investors. 

US crude output to average 9.35 mil b/d in 2017, 9.91 mil in 2018: EIA - Higher production of light sweet crude from Libya, Nigeria and the US in July could be contributing to a price squeeze between light and medium crudes, the US Energy Information Administration said Tuesday. Libyan crude output jumped 19% to 1.01 million b/d in July, from 850,000 b/d in June. Nigerian production increased 6% to 1.66 million b/d in July, from 1.56 million b/d a month earlier, EIA said in its Short-Term Energy Outlook. US crude production increased a more modest 1% to 9.43 million b/d, compared with 9.32 million b/d in June, the report said. The increases come as voluntary production cuts by OPEC and non-OPEC countries tightens supply of medium sour and heavy sour barrels. "As a result, over the past several months, the usual premium that light sweet crude oils command over medium and heavy crude oils has declined in many regions around the world," the report said. EIA continues to expect US production to rise over the next two years and cross the 10 million b/d threshold in November 2018. It sees output averaging 9.35 million b/d in 2017, up 20,000 b/d from last month's outlook, and 9.91 million b/d in 2018, up 10,000 b/d from last month. "US oil production growth could slow as some US energy companies plan less investment spending for the rest of this year and the number of drilling rigs has recently increased at a slower clip," EIA Acting Administrator Howard Gruenspecht said in a statement. OPEC crude production held steady in July at an average 32.93 million b/d, compared with 32.61 million b/d in June, despite the sharp increases in Libya and Nigeria. Saudi Arabia produced 10.2 million b/d in July, steady from 10.15 million b/d a month earlier. The agency expects OPEC output to average 32.53 million b/d in 2017 and 32.96 million b/d in 2018.

Are Strong U.S. Crude Inventory Draws Sustainable? - Arthur Berman - The decline in U.S. comparative inventories since February is the most significant oil market development since prices collapsed three years ago. It means that U.S. demand has exceeded supply for most of the last 5 months. The main cause is lower net imports, not higher domestic consumption, and that is probably not sustainable.  Comparative inventory (C.I.) is the difference between current storage levels of crude oil plus a select group of refined products, and their 5-year average for the same weekly time period (Figure 1). It is an indicator that normalizes seasonal variations in production, consumption and refinery utilization. Figure 1. Comparative Inventory Is The Difference Between Stock Levels & Their 5-Year Average. C.I. is the key to understanding oil prices yet few analysts use or even discuss it. Instead they try to explain price fluctuations by events in the daily news cycle or by simple year-over-year comparisons. The negative correlation between C.I. and WTI price is strong. The 121 million barrel (mmb) increase in C.I. that began in June 2015 corresponded with a decrease in oil prices from $60 to $28 per barrel (Figure 2). The subsequent decrease in C.I. from April to July 2016 corresponded to an increase in oil prices from $28 to $50 per barrel. Figure 2. Strong correlation between Comparative Inventory and WTI Prices.  U.S. comparative inventories have fallen more than 104 million barrels since mid-February 2017. Average weekly withdrawals of 4.3 mmb of crude oil and refined products indicate that demand has exceeded supply by almost 600,000 barrels per day (b/d) over the past 24 weeks. Figure 3 shows the same C.I. vs. price data as a cross-plot (with the time dimension suggested by the light blue connecting lines). The resulting “yield curve” (Bodell, 2009) offers a structure for organizing seemingly random variations in oil prices. The yield curve does not provide a precise solution to comparative inventory vs. price trends. Nor does it represent a simple regression fit although the data correlate systematically in time. Interpretation based on experience is required because much of the apparent data scatter is due to sentiment-based fluctuations in price. Nevertheless, the C.I. vs. price yield curve presents a unique framework and context for prices and price trends. Because it reflects movement of oil volumes in and out of storage, it integrates true demand and supply variations with price. It also places probabilistic constraints on future price movements.

US EIA raises gas market production estimates -- The US Energy Information Administration nudged up its natural gas production estimates for the fourth quarter and coming year amid rising demand from the generation sector and a boost in exports. The agency, in its August Short-Term Energy Outlook Tuesday, raised by 840 MMcf/d to 82.1 Bcf/d its natural gas marketed production estimate for the US in Q4 2017. "US natural gas production growth is expected to accelerate over the next two years, with growth rates over 2% in 2017 and over 5.5% in 2018," said EIA Acting Administrator Howard Gruenspecht in a statement accompanying the outlook. "Forecast record natural gas production in 2018 coincides with an expected rise in electricity generation from natural-gas fired power plants and a 23% increase in US natural gas exports," he added. From 2017 to 2018, EIA projects US gross exports of gas will rise to 10.62 Bcf/d from 8.66 Bcf/d. The 2018 estimate is up 5.3% from the prior forecast. The agency raised its production estimate 210 MMcf/d to 78.91 Bcf/d for full-year 2017, and raised its 2018 estimate 1.01 Bcf/d to average 83.3 Bcf/d. Overall, it forecast that dry gas production would average 73.5 Bcf/d in 2017, up 1.2 Bcf/d from 2016 levels, and that gas production in 2018 would rise 3.9 Bcf/d above the 2017 level. EIA, however, lowered its Q3 production estimate 150 MMcf/d to 79.65 Bcf/d. Short-term natural gas price estimates were lowered from July's outlook, although EIA is still expecting prices to rise in 2018 on growing consumption and exports. EIA lowered its forecast for Q3 Henry Hub natural gas spot prices to $2.99/MMBtu, 9 cents below its July estimate, and lowered its Q4 estimate to $3.17/MMBtu, 7 cents below its July estimate. "Higher natural gas exports and growing domestic natural gas consumption in 2018 contribute to the forecast Henry Hub natural gas spot price rising from an annual average of $3.06/MMBtu in 2017 to $3.29/MMBtu in 2018," the report said. Those figures were trimmed from EIA's July forecast by 4 cents and 11 cents, respectively.

US natural gas output will be up in 2017; still below the 2015 record --(Reuters) - The U.S. Energy Information Administration (EIA) on Tuesday projected dry natural gas production would rise in 2017 after falling in 2016, while gas consumption would decline in 2017 after rising to a record high last year. EIA projected dry gas production would rise to 73.48 billion cubic feet per day (bcfd) in 2017 from 72.29 bcfd in 2016, according to its Short Term Energy Outlook in August. That EIA production forecast was higher than EIA's 73.30-bcfd forecast in July but shy of the record high 74.14 bcfd produced on average in 2015. Annual production declined in 2016 for the first time since 2005 as low energy prices in 2015 and 2016 reduced drilling activity. EIA also projected U.S. gas consumption would fall to 72.62 bcfd in 2017 from a record 75.11 bcfd in 2016. The 2016 high was the seventh annual demand record in a row. If correct, that would be the first decline in usage since 2009. EIA projected both production and consumption would rebound in 2018 to record highs with output hitting 77.34 bcfd and usage reaching 75.79 bcfd. EIA said the United States would become a net exporter of gas on an annual basis in 2017 as sales of liquefied natural gas and pipeline flows to Mexico increase. The country was last an exporter on an annual basis in 1957.In the electric space, EIA projects coal will retake the title as the primary fuel for power generators in 2017 as gas prices increase. 

Switching from coal to natural gas will not save our planet - Bill McKibben - MOST magic tricks and confidence games mostly work the same way — a little bit of misdirection to get the audience looking in the wrong direction. And some of the finest magicians at large in America today are its natural-gas salesmen, who have worked hard to reassure us that they’re part of the solution to the global warming crisis. To understand why that’s a ploy — to understand why they’re in fact helping drive the heating of the planet — you have to pay close attention. The basic move is to insist that natural gas helps cut carbon emissions.  This is true on the surface. As America’s power plants have replaced coal with fracked gas, carbon emissions have fallen because natural gas produces half as much CO2 as coal when you burn it. The problem is, carbon emissions are not the only thing that drive global warming. There’s another gas that does the job even more powerfully: CH4, or methane, which is the scientific name for natural gas. If it leaks unburned into the atmosphere, then methane traps heat about 80 times more effectively, molecule for molecule, than CO2. The point of this chemistry lesson is: If as little as 3 percent of natural gas leaks in the course of fracking and delivering it to the power plant through a pipe, then it’s worse than coal.  And, sadly, it’s now clear that leakage rates are higher than that. In January 2013, aerial surveys of a Utah fracking basin, for instance, found leak rates as high as 9 percent. Data from a Harvard satellite survey showed that between 2002 and 2014, U.S. methane emissions increased more than 30 percent. In fact, some experts who have reviewed the data say that because of the boom in fracking and the conversion to gas, America’s total greenhouse-gas emissions may actually have gone up during the Obama years. And at least the Obama administration required drillers to keep track of how much methane they were leaking — one of the first acts of the Trump EPA was to scrap that requirement, apparently on the grounds that what you don’t know can’t hurt you. So, to summarize, because this is a subtle point that citizens, politicians and editors need to understand, given the importance of the debate: Natural gas is not reducing the amount of greenhouse-gas emissions. It is doing nothing to slow climate change.

Ethane Asylum Revisited - New U.S. Cracker Demand, Exports Will Strain Ethane Supply, Part 2 -- In the Energy Information Administration’s (EIA) latest ethane production stats — for the month of May — gas plant production of ethane exceeded 1.4 MMb/d for the first time. In the same month, ethane exports also hit a record at 191 Mb/d, and ethane demand for petrochemical production — you guessed it — hit still another all-time high, topping 1.2 MMb/d. All this is just the beginning. These numbers and the throughput of any midstream infrastructure transporting or fractionating ethane will continue to increase over the next two years as new, ethane-only crackers come online, ethane rejection dwindles and overseas exports of ethane ramp up. By 2020, U.S. ethane demand is expected to reach 2 MMb/d — up by two-thirds from where it stands now. Today we continue our series on rising ethane demand, how the new demand will be met and what it all means for ethane prices.  As we covered in Part 1 of this series, ethane is a unique market — it’s the only energy commodity that can morph from being sold as natural gas (for its Btu content) to being sold to petrochemical plants as a liquid feedstock. This chameleon-like attribute contributes to ethane’s volatility, both in terms of production volume and pricing. Because of ethane’s one-of-a-kind niche (and our fondness for ethane in the RBN blogosphere), we’ve been posting lots of blogs on the topic for years, going back to the original Ethane Asylum, which heralded the ramp-up in ethane rejection in the Shale Era. Also in Part 1, we discussed one of the most important market factors that will indicate how the ongoing ethane market transformation will play out. This is the ratio of the Mont Belvieu price of ethane to the Henry Hub natural gas price on a per-Btu basis — an indicator of the relative value of ethane as a petrochemical feedstock versus ethane sold as natural gas (ethane rejection). As a general rule, the higher the ratio of the ethane price to the natural gas price, the greater the volume of ethane recovered as a liquid feedstock for the petrochemical industry.   This time last year, the ratio was about 1:1, that is, ethane at Mont Belvieu was worth about the same as natural gas at Henry Hub. Today, that ratio is closer to 1.4:1, so ethane is worth 40% more than natural gas on a per-Btu basis. That’s a big difference, and so it’s no wonder that ethane production is on the rise.

A new, more competitive era for LNG shipping - Growth in LNG supply and demand, the ongoing restructuring of the LNG sector and other factors are giving new significance to the nearly 500 specialized, oceangoing vessels that transport the supercooled, liquefied natural gas around the world. It used to be that the vast majority of LNG was delivered in milk run-like fashion under long-term contracts between suppliers and buyers, but that’s no longer the case. Now, the LNG market is much less structured and more fluid, with spot-market sales becoming more common and with the captains of some LNG-laden vessels not sure where they will end up as they head out of port. Today we describe the ins and outs of the shipping sector that moves hundreds of millions of metric tons of LNG annually. Five years ago, in Export Boom or Import Echo — one of RBN’s first blogs about the potential for large-scale U.S. exports of liquefied natural gas (LNG) — we explained that the long-distance delivery of natural gas by ship is made possible and economic by liquefaction. Liquefaction is the process of supercooling natural gas into a liquid state, thereby reducing every 600 cubic feet of gas into one cubic foot of LNG. LNG is transported by special, purpose-built tankers with insulated cryogenic tanks that keep the liquid at about minus 260 degrees Fahrenheit, or about minus 160 degrees Centigrade. Cold, cold, cold indeed.

Giant pipes wash up on Norfolk beaches (video) Giant pipe segments have washed up on the coast of Norfolk. The 8ft (2.4m) diameter plastic pipes, with the longest beached segment 1,574ft (480m) long, washed up at Winterton and Sea Palling. They came loose as they were being towed to Algeria for a large project. The Maritime and Coastguard Agency say they pose no danger to the public and will be relocated offshore north of Lowestoft. They will then be towed to Norway.

Big Oil's dream of $65 billion hidden off Norway is fading away -  The oil industry has been salivating for years over Norway’s Arctic Lofoten islands, which could hold billions of barrels of crude. It will likely have to keep dreaming.The general election next month is unlikely to lift a deadlock that’s keeping a ban on drilling off the environmentally sensitive archipelago as more and more Norwegians are turning their backs on the industry that helped make the country one of the world’s richest.     Backed by unions and business, Norway’s two biggest parties, Labor and the Conservatives,  have long favored steps that could open up the area for exploration. But so far they have had to compromise with smaller parties that are determined to keep Lofoten oil-free. That’s because the area is a natural wonder. The waters off the rugged archipelago are home to the world’s biggest cold-water coral reef and a breeding area for 70 percent of all fish caught in the Norwegian and Barents seas, according to WWF. The islands also host mainland Europe’s biggest seabird colony. Opponents of oil exploration argue a spill could cause catastrophic harm and that Norway will run afoul of the Paris climate agreement if it expands exploration more.  Oil companies led by state-controlled Statoil ASA, the biggest Norwegian producer, say gaining access is key if the country wants to maintain production of oil and gas, which is forecast to fall again from 2025 after already dropping 12 percent since a 2004 peak. While the government estimates Lofoten could hold about 1.3 billion barrels of oil equivalent, industry group Konkraft has said resources could top 3 billion barrels. If it’s all crude rather than gas, that would represent at least $65 billion in sales value at current prices.

Uniper CEO dismisses role of US LNG in Europe, slams US sanctions -- The head of Germany's Uniper -- one of the financiers of the planned Nord Stream 2 natuural gas pipeline from Russia to Europe -- on Tuesday dismissed the impact US LNG on the European gas market, saying it was too expensive and unreliable to be able to compete against Russian pipeline gas. Klaus Schafer, speaking to analysts following the release of Uniper's first-half results, also criticized the new US sanctions law that could see measures imposed against companies helping to build Russian energy export pipelines, calling for clarity from Washington on how and whether the sanctions would be implemented. The pipeline element of the new US sanctions law has been interpreted in Europe as a bid by Washington to promote US LNG exports -- President Donald Trump last month on a tour of Europe said US LNG could help European countries reduce their dependence on Russian gas. But Schafer said it was unlikely European gas buyers would warm to US LNG. "In the law's core are US strategic economic interests -- namely America's ambition to dominate the global energy market," Schafer said. "Russian pipeline gas has been a reliable source of supply in terms of both quantity and prices since the 1970s -- that's not the case with LNG," he added. Schafer said delivered US LNG to Europe -- on a full-cost basis -- was up to 50% more expensive than the price at the Dutch TTF hub, or Eur5-10/MWh higher. "Hardly anyone wants to pay this premium," he said. US LNG has been delivered to Europe since exports started in February 2016, with true costs much lower than those cited by Schafer given that companies can consider liquefaction fees and transportation costs as "sunk."

Brazil's promising pre-salt offshore wells costs about $8 per bbls. (Reuters) - Oil extraction in Brazil's promising pre-salt offshore wells costs about $8 per barrel, Petroleo Brasileiro SA Chief Executive Officer Pedro Parente said at an event in Sao Paulo on Tuesday. Discovered only 10 years ago, the pre-salt area has rapidly become the top priority for Petrobras and other oil majors holding exploration rights to some of its large reserves. Output from pre-salt wells surpassed the combined volumes from all other fields in the country for the first time in July. "Pre-salt, today, has an extraction cost of $8 per barrel. The problem was the delay in exploring pre-salt," Parente said. Parente also said the state-controlled company's new fuel pricing policy will reduce the chance of prices reaching below international parity. Petrobras has sharply reduced the price gap between the value of gasoline sold at its refineries and the spot price in the U.S. Gulf of Mexico since early July, when it announced changes to its pricing to adopt almost daily adjustments, according to fuel market experts.

Repsol, Statoil Pull Foreign Oil Workers From Venezuela -- One day after Venezuela allegedly squashed a "military rebellion", in anticipation of further political and social turmoil in the socialist nation, energy giant Repsol SA pulled all foreign workers from its fields in Venezuela, Bloomberg reports adding that Norway’s Statoil ASA also removed all expat staff.According to Bloomberg, Repsol field workers left the country in the past few weeks, with a skeleton expatriate staff remaining at the company’s offices in Caracas. Separately, Statoil withdrew its last three foreign workers before the July 30 election to ensure their safety, Erik Haaland, a company spokesman, told Bloomberg by phone. The immediate result of the departures will be an even bigger decline in Venezuela's oil output - the only remaining asset which Maduro can readily exchange for dollars - further exacerbating the country's financial crisis as the inflow of hard currency slows further.The departure of workers will be a concern to the government because oil output, which has tumbled over the past two years, accounts for 95 percent of Venezuela’s foreign-currency earnings. Repsol gets about 10% of its production from the country, where it owns a stake in the Carabobo heavy-oil field. The Spanish company also is a partner in the Perla project, Latin America’s largest offshore gas deposit, together with Eni SpA.  A spokesman for Rome-based Eni said the company is keeping only essential expatriate personnel in the country. It isn’t currently considering an evacuation but continues to monitor the situation, he said. In what some may consider employee discrimination, Repsol said it still has Venezuelan citizens working at its operations without specifying how many foreign staff had been in the country. Statoil also still has Venezuelans - but not foreigners - at its sites, Haaland said.

Hundreds of protesters storm Shell oil facility in Niger Delta   (Reuters) - Hundreds of Nigerians stormed a crude oil facility and gas plant owned by Shell in the Niger Delta on Friday demanding jobs and infrastructure development, a Reuters witness said. Echoing a common complaint in the impoverished swampland that produces most of Nigeria's oil, the protesters said they were not benefiting from the region's oil wealth and wanted an end to the oil pollution that has ruined much of the land. Soldiers and security guards did not disperse the crowd as it entered the Belema Flow Station in Rivers State, which feeds oil into Shell's Bonny export terminal. The company said it had evacuated staff late on Thursday and shut the facility when it became clear the protesters were on their way there. However, the army sent in 30 extra soldiers after protesters said they planned to stay at the facility for two weeks. One of the protest leaders, Anthony Bouye, said: "I am a graduate for about eight years without a job. Shell won't employ me despite us having so much wealth in our backyard." Shell said its "commitment to the welfare of host communities in the Niger Delta remains unshaken" and was working with authorities to resume operations at the facility.

India's BPCL makes its first purchase of US sweet crude for Oct delivery -- India's state-run refiner Bharat Petroleum Corp Ltd bought 1 million barrels of US WTI Midland sweet crude from the US for delivery in October, making it BPCL's first purchase of the sweet variety from the US, oil ministry sources said this weekend.The cargo was purchased from the Emirates National Oil Co., trade sources said. BPCL bought the cargo via a tender floated last month at a price linked to the Brent. The purchase price linked to the Brent was competitive against West African crude. Last Friday, BPCL also bought 1 million barrels of crude via a spot tender, the officials said but didn't provide details on origin and price.During the first half of July, BPCL bought 500,000 barrels each of Mars and Poseidon varieties of medium-to-high-sulfur crude for delivery to its Kochi refinery on the west coast of India between September 26 and October 15, 2017. BPCL bought the quantity via a tender that closed on July 14.BPCL made these purchases as the prices of the US varieties have turned attractive after the recent OPEC cuts and rising Shale oil in the US. BPCL makes 25%-30% of its overall imports of around 25 million mt/year through tenders for its four refineries in Kochi, Mumbai, Bina, and Numaligarh. Another state-run refinery, Hindustan Petroleum Corp. Ltd., also has plans to import US sweet crude in the next few months for its Vizag refinery in South India, company officials said.

Australia's east coast LNG exports to China hit record high in July - Australia's east coast LNG export hub Gladstone saw shipments to China hit a fresh record high in July, data from the Gladstone Ports Corporation released Monday showed. China-bound exports from Gladstone, home to all of Australia's east coast LNG exporters, totaled 1.04 million mt in July, up 1% from the previous high of 1.03 million mt in June and surging 63% year on year, the port data showed. The port ships cargoes from the Origin-ConocoPhillips 9 million mt/year capacity Australia Pacific LNG or APLNG, the Santos-led 7.8 million mt/year Gladstone LNG or GLNG, and Shell's 8.5 million mt/year Queensland Curtis LNG or QCLNG. All six trains across the three terminals have been up and running since APLNG brought its second train online last October. Its first train came online in January last year; QCLNG's two began production in January and July 2015 and GLNG's in October 2015 and June 2016, according to Platts Analytics. Total LNG exports from Gladstone stood at 1.68 million mt in July, down 2% from June but up 16% year on year, the port data showed. The highest monthly export volume to date was 1.75 million mt last December. China has been increasing its consumption of pipeline gas and LNG imports this year in an effort to reduce air pollution by weaning itself off coal. The second largest recipient of LNG from Gladstone in July was Japan at 259,508 mt, up 32% month on month but down 4% year on year, the data showed.

Prospect of Australia's first LNG import terminal gathers steam: AGL -- The prospect of the world's second-largest LNG exporter, Australia, developing its first LNG import terminal has gathered steam, with project leader AGL on Thursday naming a location and size for the facility. AGL has named Crib Point, near Melbourne in the state of Victoria, as the preferred site for the gas import jetty and pipeline that it is considering developing to shore up energy security and supply for customers in the region. "This doesn't signal the end of the feasibility studies for the proposed site but now accelerates the process," AGL's executive general manger for wholesale markets, Richard Wrightson, said. "This project will enable access to the world market for gas, injecting some much-needed competition into the Australian market, and help ease the tight gas supply," he said. The prospect of an LNG import terminal in Australia has raised eyebrows, considering the country is on course to potentially be the world's largest exporter of the fuel by 2019. It is in that same year that AGL, "if all goes to plan," will invest roughly A$250 million and start construction of the project, with an aim to begin operations by 2020-2021, Wrightson said. Australian LNG exports are expected to reach 55.79 million mt in 2017, before surging to 70.92 million mt as projects like Wheatstone LNG and Prelude FLNG go online, according to Platts Analytics. Victoria, where the project would be, is part of the same East Coast Australian gas market that the Australia Pacific, Gladstone LNG, and Queensland Curtis LNG projects at the Port of Gladstone, Queensland, are connected to. In the years since their development (the first LNG cargo departed Gladstone in January 2015, from QCLNG), the East Coast Australia gas market has faced rising costs of domestic gas and forecasts of potential shortages by the end of the decade. The federal government is currently in the process of determining whether or not it will restrict LNG exports next year, as a result.

More than meets the eye as China tops U.S. as biggest crude importer (Reuters) - How impressed should you be by China overtaking the United States as the world's largest importer of crude? The answer is quite a bit, but maybe not as much as you thought. China imported an average 8.55 million barrels per day (bpd) in the first half of 2017, above the 8.12 million bpd by the United States, according to government figures from both countries. The obvious takeaway from this is that the data highlights the shifting dynamics of the crude oil market, with Asia replacing the United States and Western Europe as the main demand centre, as well as the source of most of the growth in oil consumption. However, this trend has been in play for several years. All that has changed is we now have a set of numbers that confirm what was already known. What is more important is trying to understand the underlying drivers of Chinese crude demand and how these may develop in coming years. There are a few factors that, when taken together, give a slightly different perspective on China's rise to the top of global crude importers. These are China's ongoing, and significant, purchases of crude to fill its strategic reserves, the rise of its refineries as major players in the regional export markets for products, and the decline in China's domestic oil output.

Chinese refiners receive 5%-10% Saudi crude oil allocation cuts for Sep -- Various Northeast Asian end-users saw their crude oil term allocations from Saudi Arabia slashed for September, with two South Korean refining companies receiving around 10% cuts in monthly contract volumes for light and medium sour grades, market sources said Tuesday. South Korea's two biggest refiners SK Energy and GS Caltex have received around 10% September allocation cuts from Saudi Aramco, but Hyundai Oilbank is expected to be given full term volume that it had requested for the month, South Korean trade sources with direct knowledge of the matter told S&P Global Platts. The sources indicated that the reduction in crude allocations for September affected various sour grades including Saudi Arab Extra Light, Arab Light and Arab Medium. "Luckily, [Hyundai Oilbank] did not see any notable cuts in September Saudi crude allocation because [the company] only nominated [relatively] smaller amount for the month," a company source said. However, the source added that Aramco seemed to be limiting the volume of its crude exports to Asia, not just the US. "From what I gather, it wasn't just South Korean companies but the rest of North Asia. Margins are good lately and light sweet crude grades in Europe and Africa are all expensive ... [Middle Eastern crude] sellers have the upper hand this month," the source said. Chinese companies also saw significant cuts in their September term contract volumes from Aramco, with Unipec -- the trading arm of China's state-run oil giant Sinopec -- receiving cuts of around 5%-10% for Saudi Arab Light and Arab Heavy crude grades, a market source with knowledge of the matter said. Market sources also indicated that Chinaoil, the trading arm of state-run China National Petroleum Corp., could have received 5% or deeper cuts for medium and heavy grades, but full details could not immediately be verified. 

Nigerian oil output in July climbs to 2.06 million b/d -- Nigeria's average oil production including condensates, increased marginally to 2.06 million b/d in July, the country's petroleum ministry said Monday, as the OPEC member continued to ramp up production.The ministry said the country's crude output stood at 2.06 million b/d in July, up from 2.05 million b/d in June, and a sharp increase over the 1.6 million b/d output a year ago when production facilities were hit by attacks from Niger Delta militants. Nigerian oil output has climbed steadily following a respite in activity by militants demanding control of the region's oil resources. Loading of the popular export grade Forcados has resumed at its terminal in the Niger Delta after shutting for several months over the past year following attacks in February and November 2016. Producers including Seplat Petroleum, Eland Oil and Gas and Nigerian Petroleum Development Co. have all boosted their daily output of the grade.Natural gas production also rose to 7.81 Bscf/d in July from 6.74 Bscf/d in the preceding month. Nigerian National Petroleum Corp. Chief Executive Maikanti Baru said in July Nigeria was well on the way to surpassing its oil production, including condensates, target of 2.2 million b/d for this year, as more facilities shut at the height of militancy in the Niger Delta last year were restarted. Nigeria's Acting President Yemi Osinbajo last week stepped up peace talks following a threat by regional leaders to abandon the discussions that have helped curb violence against oil installations.

Oil slides as output rises at Libya's largest oil field | Reuters: (Reuters) - Oil prices fell as much as 2 percent on Monday on selling triggered by a rebound in production from Libya's largest oil field, along with worries about higher output from OPEC and the United States. Output at Libya's Sharara field was returning to normal after a brief disruption by armed protesters in the coastal city of Zawiya, the National Oil Corporation (NOC) said. The field has boosted Libya's oil production, which climbed to more than 1 million bpd in late June. Global benchmark Brent crude futures LCOc1 were down 26 cents, or 0.5 percent, at $52.16 a barrel at 2:05 p.m. EDT (1805 GMT) after trading as low as $51.37 a barrel U.S. crude futures CLc1 were down 34 cents, or 0.7 percent, at $49.24 per barrel, after seeing a low of $48.54 a barrel. Both contracts stood below levels hit last week, which marked their highest since late May. Doubts have emerged about the effectiveness of output cuts by the Organization of the Petroleum Exporting Countries and other big producers including Russia. OPEC output hit a 2017 high in July and its exports hit a record. "The petroleum markets are tipping toward the lower end of their recent trading range as oil producers meeting in Abu Dhabi have been slow to assure the market that compliance with this year’s production cuts will be improved, although we continue to note that adherence to the limits has actually been quite strong by historical standards,"

Iraq may need to justify OPEC fudge: Fuel for Thought -- Iraq is compliant with neither the spirit nor the letter of the OPEC-led agreement to cut oil production from January 1 this year. The question is whether it should be. With OPEC and non-OPEC technical experts set to meet to discuss faltering conformity, OPEC’s second largest producer may feel more than justified in its position, but among members those claims have a hollow ring. With millions of internally displaced people within its borders and the cost of being still at war with IS on its home soil, Baghdad has more reasons than most to expect tolerance as it needs funds to rebuild its nation. However, the country has tried to present a semblance of compliance by cutting crude oil exports rather than production. Adding up Iraqi production barrels isn’t as straightforward as it seems. For instance, since the start of 2016, Iraq’s Ministry of Oil has included production from the Kurdish region of Iraq as being ‘Iraqi oil’. Given its lack of control over this roughly 580,000 b/d output, Baghdad could legitimately claim that, at the very least, KRG oil should be treated separately. Moreover, Iraq carries a unique burden in that nearly a third of its exported oil is allocated as payment in kind to international oil company contractors involved in the development and operation of its producing fields. 

OPEC expects laggards to comply more fully with oil cut pact (Reuters) - OPEC expects greater adherence to its pact with non-OPEC producers to cut oil output after two days of meetings in Abu Dhabi aimed at boosting compliance with the accord. The Organization of the Petroleum Exporting Countries, Russia and other producers are cutting output by about 1.8 million barrels per day (bpd) until March 2018 to get rid of a glut and support prices. OPEC producers Iraq and the UAE have shown relatively low compliance with the deal based on figures from secondary sources OPEC uses to monitor its supply. Meanwhile, non-OPEC Kazakhstan and Malaysia have been boosting output in the last few months, according to the International Energy Agency. In Abu Dhabi, a panel comprising Russia, Kuwait and Saudi Arabia, plus officials from OPEC's Vienna headquarters, met individually with officials from Iraq, the United Arab Emirates, Kazakhstan and Malaysia. "Discussions were conducted in a constructive atmosphere and proved fruitful," OPEC said in a statement. "The conclusions reached with the countries at the meeting will help facilitate full conformity," it added, although it did not give details on how compliance would be increased. The meeting was a special session of the JTC, or Joint Technical Committee, which is monitoring adherence to the deal. A ministerial panel, known as the JMMC, met last month and instructed that the Abu Dhabi meeting be held.

Hedge funds get bullish again on oil (third time lucky?): Kemp  (Reuters) - Hedge funds and other money managers are becoming bullish again about oil prices, for the third time this year, as investors conclude the market is showing clear signs of rebalancing. Hedge funds raised their combined net long position across the five major futures and options contracts linked to petroleum prices by 135 million barrels in the week to Aug. 1 (http://tmsnrt.rs/2fmeXOd). The combined weekly increase in net long positions across Brent, WTI, U.S. gasoline and U.S. heating oil was the largest since Dec. 6, immediately after OPEC announced it was cutting production. For the first time in months, the increase in the net long position was driven primarily by the creation of new long positions rather than covering of old short ones. Hedge funds raised their combined long position across the five major contracts by 95 million barrels to 951 million barrels, the highest level since April 18. Fund managers cut their combined short position across the five contracts by 40 million barrels to 239 million barrels, which was the lowest level mid-April. The same pattern of new long building and continued short covering was apparent across all the individual crude and fuel contracts. Hedge funds raised their combined net long position in ICE Brent and NYMEX and ICE WTI by 99 million barrels to 649 million barrels. Long positions were raised by 70 million barrels while short positions were trimmed by 30 million, according to regulatory and exchange data. Fund managers have boosted their net long position by more than 290 million barrels since the end of June to the highest level for more than three months. Funds now hold almost 4.5 long futures and options positions in Brent and WTI for every short position, up from a recent low of 1.95 at the end of June. Fund managers have also built up a large net long position in U.S. gasoline, a smaller one in U.S. heating oil, and a record net long position in European gasoil. 

Oil Stuck At $50 As OPEC Output Jumps - Oil prices faltered on Monday on concerns about slipping OPEC compliance, as well as news that a disruption in Libya had ended. "The petroleum markets are tipping toward the lower end of their recent trading range as oil producers meeting in Abu Dhabi have been slow to assure the market that compliance with this years production cuts will be improved,” Tim Evans, Citi Futures’ energy futures specialist, wrote in a research note. News that Saudi Arabia would cut oil exports (see below) helped steady crude benchmarks on Tuesday.  In a new report, investment bank Morgan Stanley pointed to tightening signs for certain crude oil blends, including the Urals blend and oil from Angola. The market is showing some optimism, and narrowing differentials for other benchmarks against Brent offer some evidence about tightening conditions. At the same time, Morgan Stanley noted that U.S. shale companies tend to hedge their production at $50 per barrel, which could provide resistance for further price gains.  In addition to Morgan Stanley, other analysts agree that $50 is a key threshold that starts to trigger new output from U.S. shale. More fields are profitable, drillers are more likely to move ahead with new projects, and crucially, they can hedge at that level. “I do think $50 is the line of demarcation,” Rob Thummel, managing director for Tortoise Capital Advisors, told the WSJ. “With oil below $50, producers in general are indicating that if we stay here at this price, we’re going to have to reassess capital and not spend as much, so production won’t be as high.”

Oil prices extend losses as investors await OPEC news -  Oil prices fell for a second straight session in volatile trade Tuesday as investor sought details from an OPEC meeting to discuss a deal to further cap crude oil production. The cautious mood overshadowed reports that Saudi Arabia is planning to scale back exports to Asia next month. On the New York Mercantile Exchange, West Texas Intermediate futures slid 22 cents, or 0.5% to settle at $49.17 a barrel. Brent crude, the global benchmark, reversed gains to finish 0.4% lower at $52.14 a barrel. Saudi Arabia, the world’s largest crude oil producer, is expected to cut sales of oil supplies to Asia by up to 10% in September to tackle the global crude glut, according to multiple reports Tuesday. The Saudis “continue to do their best to support the market by cutting exports,” said Ole Hansen, head of commodity strategy at Saxo Bank. But investors remained skeptical over how effectively the Organization of the Petroleum Exporting Countries can enforce compliance, said Lukman Otunuga, a research analyst at FXTM, in a note. Saudi Arabia first announced late last month plans to limit oil exports to 6.6 million barrels a day in August. That declaration came as the OPEC — of which Saudi Arabia is the most important member — has struggled to reduce an oversupply of oil in the global market that has weighed on prices for three years. “The kingdom’s oil minister made it clear a few months ago that the OPEC heavyweight will do ‘whatever it takes’ to bring global stock levels lower,” experts at oil broker PVM Group said. “Words are now being followed by actions.”

Saudi Arabia to cut crude allocations in Sept by at least 520,000 bpd --  State oil company Saudi Aramco will cut crude oil allocations to its customers worldwide in September by at least 520,000 barrels per day (bpd), an industry source familiar with the matter told Reuters on Tuesday. The cuts in allocations are in line with Saudi Arabia's commitments with the OPEC-led supply reduction pact, under which the top oil exporter is required to cut 486,000 bpd. Saudi Arabia will cut supplies to most buyers in Asia by up to 10 percent in September, multiple sources with knowledge of the matter have said."The Saudi decision to take an ax to its Asian crude allocations shows it means business (and) gives credence to its pledge to do 'whatever it takes' to normalize bulging global oil inventories," PVM oil analyst, Stephen Brennock, told CNBC on Tuesday. Brennock argued Asian buyers would soon be forced to become increasingly reliant on producers in the Atlantic Basin in order to meet their crude oil requirements. He also suggested that Russia would most likely gain further market share from Saudi Arabia as a result of the Middle Eastern country's self-imposed cut to crude oil allocations. "(While) it helps to lift sentiment in the short term, there's no guarantee of long-term price support as other oil exporters including Russia, the U.S. and Iran rush to fill the shortfall," Brennock said.

WTI Algos Confused On Crude Draw And Surprise Gasoline Inventory Build - WTI had coiled up today, closing lower, ahead of tonight's API data. After last week's API build and small DOE draw, hope was high that the trend of larger draws would continue and it did with API reporting a larger than expected crude draw (-7.839mm vs -2.2mm exp). However, a susprise build in gasoline inventories took the shine off and the machines could not decide whether to buy or sell. API:

  • Crude -7.839mm (-2.2mm exp)
  • Cushing +319k
  • Gasoline +1.529mm (-1.5mm exp)
  • Distillates -157k

Last week's much smaller than expected draws across the board was followed by an algo-confusing big draw in crude and surpriose build in gasoline this wekl... WTI tumbled at the NYMEX close, testing stops below $49 but hovered there into the API print...then kneejerked higher but then gasoline saw a surprise build and the gains disappeared... “There just isn’t enough confidence in OPEC yet to get us above $50. That’s the big problem," James Williams, economist at WTRG Economics in London, Arkansas, says. "We’re in the last big month of the driving season and the question is, can OPEC balance the lower fall and winter demand?"

Another Huge Draw: US Commercial Crude Oil Inventories Decreased By 6.5 Million Bbls -- -- From the EIA's weekly petroleum report:U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 6.5 million barrels from the previous week. At 475.4 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories increased by 3.4 million barrels last week, and are in the upper half of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased by 1.7 million barrels last week but are in the upper half of the average range for this time of year. Propane/propylene inventories remained unchanged last week and are in the lower half of the average range. Total commercial petroleum inventories decreased by 4.6 million barrels last week. My calculations (parameters previously described) suggest that at the average rate of decline over the past 15 weeks, it will take 35 weeks to "re-balance":

WTI/RBOB Sink After Biggest Gasoline Build In 7 Months, Production Hits New Cycle High -- Last night's mixed bag from API has been dominated by 'war premium' in oil prices as WTI bounced off $49 ahead of the DOE report which confirmed that gasoline inventories surprisingly built (+3.42mm vs -1.5mm exp) - the biggest build since January - and Crude inventories drew (though less than API). Crude production in the Lower 48 rose to 9.048mm b/d - a new cycle high. DOE:

  • Crude -6.45mm (-2.2mm exp)
  • Cushing +569k
  • Gasoline +3.42mm (-1.5mm exp)
  • Distillates -1.73mm (-500k exp)

The surprise build in gasoline inventories reported by API (and large draw in crude) were confirmed by DOE but the gasoline build was dramatic... Total stockpiles of crude and product inventory continue to trend down to the lowest levels since Jan 2016...but still remains extreme...

Oil market marches on toward backwardation: Kemp (Reuters) - Oil traders are increasingly convinced the market will rebalance over the next year with a major drawdown in crude and products stocks. Conviction about market rebalancing is showing in a big rise in the calendar spreads for West Texas Intermediate (WTI) and especially Brent crude in the last two months (http://tmsnrt.rs/2fviNVk).Calendar spreads, which measure price differences between any pair of contracts with different delivery dates, are closely tied to changes in the supply-demand balance.Calendar spreads are conventionally expressed as the price of a near-dated futures contract (such as October 2017) minus the price for a contract maturing later (such as March 2018).When the oil market is oversupplied, and crude stocks are high and rising, calendar spreads tend to be negative, a state known as contango (near-dated contracts trade at a discount).When the market is undersupplied, and stocks are low and falling, calendar spreads tend to be positive, a state known as backwardation (near-dated contracts trade at a premium). (Full Story) As the oil market has cycled between periods of undersupply and oversupply, the calendar spreads have cycled between backwardation and contango (http://tmsnrt.rs/2hNC4SN).Brentspreads slumped into contango in the second half of 2014 as the oil market became oversupplied, and have stayed there for the last three years as the market struggled to digest excess stocks.But as the market transitions from oversupply in 2014/15 towards a period of undersupply in 2017/18, spreads have tightened.The contango in WTI and Brent futures has been narrowing progressively since early 2016, which is consistent with a market starting to draw down stocks as a result of lower supply and faster demand growth.In the later stages of rebalancing, spreads are likely to move into backwardation to increase supply, moderate demand and stabilise inventories.Something like this appears to be happening with an unusually large seasonal reduction in crude stocks in the United States. Saudi Arabia has pledged to reduce its exports in August and September, and is curbing shipments to the United States, to accelerate the rebalancing.

OPEC Oil Output Jumps To Highest In 2017 As Production Cut Compliance Slides -- A surge in Libyan oil production in July sent total OPEC output higher by 172.6kbpd last month to 32.87mmbpd, the highest monthly production this year, as Saudi production also hit a 2017 high of 10.067mmbpd, up 31.8kbpd on the month the latest OPEC monthly market report revealed. Nigeria - which like Libya is exempt from the supply cuts agreed upon in last year's Vienna meeting - saw another month of rising crude production, with its total supply rising by 34.3kbpd to 1.748mmbpd. Meanwhile, oil production declined in Angola and Venezuela, while Iraq’s production fell by 33.1k b/d to 4.468m b/d, still above its agreed upon reduction target.   Surprisingly, while secondary sources estimated Saudi production at just under 10.1mmbpd, in the OPEC table listing production based on direct communication, the Saudi output number was missing for reasons unknown. To offset the growing historical output, OPEC raised its forecasts for how much oil it will need to supply in 2017 and 2018 by ~200kbpd each, amid stronger-than-expected fuel consumption and weaker outlook for rival production.  The oil cartel also lowered its estimate for rival supply by 50k b/d in 2017, 90k b/d in 2018, although it remains to be seen if shale has any intention of complying with this optimistic - for OPEC - prediction. Preliminary data indicates that global oil supply increased by 0.17 mb/d m-o-m to average 97.30 mb/d in July 2017, compared with the previous month. The increase of non-OPEC supply (including OPEC NGLs) by 0.52 mb/d to average 64.49 mb/d was mainly driven by Canada, Norway, US, OPEC NGLs, Ghana, Colombia, Brunei, Africa other and Congo, which partially offset m-o-m declines in the UK, China, Mexico and Azerbaijan. OPEC crude oil production also increased by 0.17 mb/d in July, leading to an increase in global oil output. The share of OPEC crude oil in total global production slightly decreased by 0.1 pp to total 33.8% in July compared with 33.9% in June.

Another Red Flag For Oil? China’s Crude Imports Slump To 7-Month Low -- Chinese crude oil imports in July dropped to their lowest level in seven months, although they rose 12 percent on an annual basis, according to calculations made by Reuters on the basis of China’s customs data.Last month China imported some 34.66 million tons of crude oil, or around 8.16 million bpd, which—according to Reuters calculations based on China’s General Administration of Customs data—was the lowest level since January.Crude oil imports in the first seven months of this year increased by 13.6 percent at 247 million tons.In the first half of the year, Chinese crude oil imports averaged 8.55 million bpd, or 212 million tons in total – a 13.8-percent annual increase.The total trade data for July had analysts worried that China’s economy may have started to show signs of slowdown. Both exports and imports increased less than expected, making analysts wonder if global demand growth has started to slow down, or if China’s July trade figures should be attributed solely to one-off or seasonal factors.In total imports, China’s imports increased by 11 percent last month, missing forecasts for a 16.6-percent rise, and slowing down from June’s 17.2-percent jump, to the slowest growth since December last year.Last month, a senior manager at Sinopec said that lower domestic production and continued low oil prices will lead to China’s demand for c rude oil imports rising by around 400,000 bpd in 2017. Chinese crude oil imports are expected to exceed 400 million tons this year, and to further rise next year, Zhang Haichao, vice president of Sinopec Group, told Reuters. The estimate provided by Zhang means that Chinese demand for foreign crude would rise by 400,000 bpd, and for the first time ever, rising imports could make China the world’s top crude oil importer on an annual basis, according to Reuters.

Are Oil Bulls About To Be Burned Again? - Oil investors have grown more optimistic as of late, as oil prices have moved back to $50 per barrel. The market appears to be on sounder footing, suggesting that things will gradually tighten for the rest of the year. But it is unclear how far oil prices can really move above today’s position. Hedge funds and other money managers have begun buying up long positions on oil futures, a sign of growing bullishness. Reuters analyst John Kemp argues that the positioning of hedge funds has entered the third bullish phase of 2017, after two previous cycles ran their course earlier this year. In fact, the most recent data saw the largest weekly increase in net-long positions so far this year, and interestingly, Kemp points out that the net-long build is due to new long positions, rather than simply just a reduction of shorts. In other words, investors are betting that crude oil prices will rise.And for good reason. U.S. shale production growth has slowed, as has the rig count.Inventories have finally posted significant declines, which appear to be ongoing. Some high-profile shale drillers have announced spending cuts. And Saudi Arabia is moving to cut oil exports to Asia, a sign that OPEC’s most powerful member intends to do its best to accelerate market tightening. Plus, although OPEC compliance has slipped in the past two months, the cartel met this week to figure out a way to hold the laggards to their word. Nothing particularly concrete came from the meeting, but the group seems determined not to let things fall apart. "Discussions were conducted in a constructive atmosphere and proved fruitful," OPEC said in a statement. "The conclusions reached with the countries at the meeting will help facilitate full conformity.” Few details were provided.  But can things continue on this upward trend? “The biggest question now is, was that July rally just a lot of short covering, or does it have staying power?” “The market’s just content to go sideways and figure that out.”

Oil prices fall 2%, but natural-gas futures rally to a 3-week high - Oil futures pulled back on Thursday, marking the lowest finish in more than two weeks, with U.S. prices failing to hold above $50 a barrel as a report from OPEC showed that crude production among the group’s members rose in July. Natural-gas futures, meanwhile, finished at a three-week high after U.S. government data revealed a smaller-than-expected weekly climb in domestic supplies of the fuel. September West Texas Intermediate crude shed 97 cents, or 2%, to settle at $48.59 a barrel on the New York Mercantile Exchange. The settlement was the lowest since July 25, according to FactSet data. October Brent crude declined by 80 cents, or 1.5%, to $51.90 a barrel. The $50 level “remains a huge psychological barrier for U.S. oil,” “As crude stocks continue to draw down each week, it’s easy at first to justify a bullish trading path,” he said. “But as we start to hit price levels that we know are capable of boosting production, the market makes a quick turn from greed back to fear.”   Prices for WTI climbed to as high as $50.22 before it retreated Thursday. They rose 0.8% Wednesday after data showed a sharp 6.5 million-barrel decline in last week’s U.S. oil inventories. “Yes, the inventory data was favorable [for prices], but the [WTI] oil price failed to break the resistance of $50, which was a clear confirmation that traders are not convinced that demand is strong enough to satisfy the supply,” . In a monthly report Thursday, the Organization of the Petroleum Exporting Countries lifted its forecast for global oil demand growth this year by 100,000 barrels a day, saying it now expects growth of 1.37 million barrels a day in 2017. The cartel also said, however, that production from the group rose further in July, driven by higher production in Libya, Nigeria and Saudi Arabia.

Oil prices drop as IEA sees slow market rebalancing (Reuters) - Oil prices fell on Friday after the International Energy Agency said weak OPEC compliance with production cuts was prolonging a rebalancing of the market despite strong demand growth. Brent crude, the global benchmark, was at $51.83 a barrel at 1220 GMT, down 7 cents, having earlier fallen 50 cents or around 1 percent to its lowest since Aug. 1. U.S. West Texas Intermediate crude was down 10 cents at $48.49 per barrel, having earlier dropped 1 percent to its lowest since July 26. Oil touched 2-1/2-month highs on Thursday but closed down around 1.5 percent, with U.S. prices slipping back below $50 amid oversupply concerns. "There would be more confidence that rebalancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve," the IEA said in its monthly report. The IEA said OPEC's compliance with the cuts in July had fallen to 75 percent, the lowest since those curbs began in January. It cited weak compliance by Algeria, Iraq and the United Arab Emirates. In addition, OPEC member Libya, which is exempt from the cuts, steeply increased output. "Crude oil prices failed to hold recent gains, with a nervous market starting to doubt recent falls in inventories," ANZ bank said in a note. "Supply-side issues also weighed on prices."

OilPrice Intelligence Report: Have Oil Markets Reached A Tipping Point?: Oil prices were down at the end of the week on fears of lingering oversupply. The U.S. reported a strong drawdown in crude inventories and flat production, although those bullish figures were outweighed slightly by an uptick in gasoline inventories. Investors chose to focus on rising OPEC supply, which led to a selloff in crude on Thursday and Friday. In its latest monthly report, the IEA revised up its forecast for oil demand this year to 1.5 mb/d, up 100,000 bpd from last month. Oil demand growth continues into next year, expanding at an annual rate of 1.4 mb/d. The IEA also said that the rebalancing effort is continuing – the OPEC cuts, combined with demand growth, will erase the supply glut. Still, the agency said that the process is a stubborn one, and the growing signs of tightness in the market are being offset somewhat by the faltering compliance from OPEC. The IEA revised oil demand data from the past few years. The revisions are important because they mean that the “call on OPEC” will be 400,000 bpd lower this year and in 2018, and the revisions also mean that global oil demand is actually 330,000 bpd less for the period between 2015-2018 than previously thought.  Last week, Pioneer Natural Resources reported a worrying increase in the gas-to-oil ratio from some of its Permian wells, a development that has alarmed investors. Pioneer’s stock price plunged on the news, and the sheen on U.S. shale is suddenly looking a little tarnished. Goldman Sachs backed up this sentiment when it wrote in a report that it has fielded calls from investors looking to “reallocate capital” out of shale E&Ps and into other parts of the energy industry. Some analysts think there isn’t much to see here, but judging by the recent stock declines from some top Permian players, the market has suddenly grown worried about the Permian.  In a new report, OPEC boosted its oil demand estimate for the rest of this year and next. The group said that the global market would demand 200,000 bpd more than expected from the cartel this year, as consumption appears stronger than anticipated. At the same time, however, rising Libyan production has pushed the group’s output in July to its highest point so far this year. Libya added more than 150,000 bpd in July, pushing output above 1 mb/d. Saudi Arabia, surprisingly, also added 30,000 bpd, although some of that is surely to meet peak summer demand.

US Crude Production At Cycle Highs As Rig Count Stabilizes; Desperate Saudis Jawbone Deeper Cuts To Come --A tough week for crude oil, which tumbled after algos tagged $50 stops yesterday following the biggest gasoline inventory build in 7 months. While the US oil rig count has stopped rising in the last few weeks, production continues to hit cycle highs stalling prices, but the Saudis are not giving up on their incessant jawboning - hinting that "deeper cuts" are still on the table. US oil rig counts rose by 3 to 768 last week - it has fallen 3 times in the last 7 weeks and is practically unchanged in the last 2 months... Just as we predicted, the lagged response to the shifting oil price has been a stalling of the rising rig count... But even with the US oil rig count declining for 3 of the last 7 weeks, crude production in the Lower 48 rose once again to 9.048mm b/d - the highest since July 2015...WTI prices had a disappointing week - not helped by the biggest gasoline inventory build since January... Once WTI algos tagged $50, it was a one-way street lower…

Oil Rig Count Rises Despite Ballooning Shale Debt - The number of active oil and gas rigs in the United States fell this week by 5 rigs, but the amount of oil rigs increased as drillers in the United States continue to add rigs in defiance of low oil prices, albeit at a slower rate. Combined, the total oil and gas rig count in the US now stands at 949 rigs, up 468 rigs from the year prior, with oil rigs in the United States increasing by 3 and gas rigs declining by 8.  Oil rigs in the United States now number 768—372 rigs above this time last year.  Canada, which lost 3 oil and gas rigs last week, gained three this week—all three oil—for a total of 220 oil and gas rigs—94 above the year ago levels. Prices fell on Thursday and Friday as the weak stock market and word of OPEC’s faltering compliance battered the unstable oil market. Despite Friday’s jawboning from Saudi Arabia on the prospects of OPEC either extending or deepening its production cuts that it agreed to last November—and despite the International Energy Administration’s projections of increased crude oil demand growth for 2018, prices were unable to rally. Barrel prices for WTI is more than $1 lower on the week, and .51% down on the day, trading at $48.34 at 12:06pm EST. Brent was trading down 0.5% at $51.64—down from $52.39 the week prior. The rise in the number of active rigs in the US has slowed in recent weeks, but US crude oil production is not, with average production averaging 9.42 million barrels per day for the week ending August 04, according to the Energy Information Administration (EIA), who now expects US production to reach an average of 9.9 million barrels per day in 2018.The Permian basin lost two rigs this week, and Arkoma Woodford and Eagle Ford also saw declines to the rig count. Despite this week’s loss, the Permian basin still has 188 rigs more than last year. Cana Woodford’s count increased by 3 rigs this week. At 14 minutes after the hour, WTI was trading at $48.47 with Brent crude trading at $51.75.

Baker Hughes: Gas rigs push down overall US rig count by 5 - The overall US drilling rig count declined during the week ended Aug. 11 for the fourth time in the past 7 weeks, and gas-directed rigs led the losses for a second straight week.Baker Hughes’ overall tally of active US drilling rigs decreased 5 units to 949, down up just 8 units over the past 7 weeks (OGJ Online, Aug. 4, 2017). Since a low point in Baker Hughes data touched during the weeks ended May 20-27, 2016, the overall count is up 545 units.Gas-directed rigs dived 8 units to 181 in their biggest drop since early 2016. Since May 19, the gas count has increased by only 1 unit. It’s up 100 units since its recent low in Baker Hughes data, last touched during the week ended Aug. 26, 2016.Oil-directed rigs waffled upward this week with a 3-unit increase to 768, up just 10 units over the past 7 weeks and up 452 units since their recent low in Baker Hughes data on May 27, 2016.Six onshore rigs stopped work, with rigs drilling horizontally down 6 to 801, down 3 units over the past month but up 487 units since May 20-27, 2016. The US offshore count, which dived 7 units last week, added a unit this week to total 18.According to preliminary estimates by the US Energy Information Administration, US crude oil production declined 7,000 b/d during the week ended Aug. 4 to 9.42 million b/d, up 978,000 b/d from a year ago.  Alaska dragged down overall output with a 22,000-b/d drop, which was partially offset by a 15,000-b/d rise from the Lower 48. In its Short-Term Energy Outlook released this week, EIA forecasts that monthly crude production gains from the Lower 48 will slow in the second half to 60,000 b/d, almost half of first-half monthly growth (OGJ Online, Aug. 8, 2017). The agency attributes the forecast to slowing rig count growth as well as operators reducing capital budgets for the year due to ongoing oil market volatility.Texas fell 7 units this week to 459, up only 1 unit since May 19 and up 286 units since May 20-27, 2016.The Eagle Ford, whose count surged to begin the year, fell to its lowest point in 4 months, losing 3 units to 75. The Permian dropped 2 units to 377, up just 9 units over the past 2 months and up 243 units since May 13, 2016.Despite 1 rig starting work off its coast, Louisiana’s overall count edged down a unit to 66.New Mexico and California each rose 1 unit to 61 and 14, respectively. The Cana Woodford gained 3 units to 63, up 39 units since June 24, 2016. The Arkoma Woodford, meanwhile, lost 2 units to 8. Oklahoma’s overall count was flat at 132.

OPEC says call on its crude oil to stay stable in 2018 despite record high demand -- Despite a forecast of global oil consumption reaching a record high next year, OPEC expects demand for its crude to stay stable at 32.42 million b/d in 2018, the producer group's statistical arm said Thursday. The latest monthly market report revised down its non-OPEC supply growth forecast for both this year and next, even as it produced a 2017 high of 32.87 million b/d in July. In 2018, it expects non-OPEC oil supply to grow by 1.1 million b/d over the current year to average 58.87 million b/d, "which is slightly less than the expected increase in global demand in 2018." OPEC said world oil demand in 2018 will grow 1.28 million b/d from 2017 levels, meaning that total oil consumption is expected to hit a new record high of 97.8 million b/d in 2018. But despite record-high demand seen next year, OPEC's analysis arm projected global demand for its crude to be lower than its July production. In 2018, demand for OPEC crude is forecast at 32.42 million b/d, the same level as in 2017. OPEC revised down its non-OPEC growth forecast for 2017 following weak output in the US and Canada in Q2, 2017 due to lower production in the Gulf of Mexico "following seasonal maintenance and predominantly lower-than-expected tight crude produced in shale regions." The forecast for non-OPEC supply in 2017 was revised down by 28,000 b/d from the previous month's report to show an annual growth of 780,000 b/d to 57.77 million b/d. However, it still expects non-OPEC supply show a mild growth of 150,000 b/d in H2 2017 compared to the first half of this year.

Saudi Arabia to cut crude allocations in Sept by at least 520,000 bpd –source - - State oil company Saudi Aramco will cut crude oil allocations to its customers worldwide in September by at least 520,000 barrels per day, an industry source familiar with the matter told Reuters on Tuesday.  The cuts in allocations are in line with Saudi Arabia's commitments with the OPEC-led supply reduction pact, under which the top oil exporter is required to cut 486,000 bpd.  Saudi Arabia will cut supplies to most buyers in Asia by up to 10 percent in September, multiple sources with knowledge of the matter have said.

Saudi Arabia Is Trying to Remake the Middle East In Its Image - No country has done more to spread radical Islam than Saudi Arabia. For the better part of four decades, the oil rich nation has—through public and private institutions—funded a multiplicity of organizations dedicated to spreading the most radical and reductionist interpretations of Islam.   In short, the weaponization of Islam is a core part of Saudi foreign policy. It is the primary means by which the country projects power and secures influence in countries across the Middle East and the broader Muslim world. So far, with U.S. complicity, the strategy has enjoyed great success. Saudi Arabia, and to a lesser degree other Gulf nations, are engaged in a kind of cultural terraforming. Centuries of diverse and divergent religious traditions within Islam—in countries like Yemen, Somalia, Egypt, Syria, and Iraq—have been swept away by an influx of Saudi-educated clerics and Saudi-produced religious materials. These Saudi-influenced imams and religious literature teach the radical brand of Islam that predominates in Saudi Arabia: Wahhabism.In 1744, Muhammad ibn Saud made a Faustian bargain with Muhammad Abd al-Wahhab: al-Wahhab would back al-Saud in his battle for supremacy if he pledged allegiance to al-Wahhab’s puritanical vision of Islam. This interpretation of Islam, which differs little from the militant Salafi beliefs that inform the Islamic State’s and al-Qaeda’s understanding of Islam (the Islamic State uses Saudi produced textbooks in its schools), became known as Wahhabism.  The Saudis, who are not descended from the Prophet and have no particular claim to rule even in their territorial heartland of Najd, relied on the clerics of the al-Wahhab family for religious legitimacy. The bargain struck in 1744 held fast. In 1926, Ibn Saud took over the Hejaz and in 1932 the country of Saudi Arabia was created. Ibn Saud’s conquest of most of the Arabian Peninsula would not have happened without the support of the fanatical warriors (the Ikhwan) who, more than anything else, fought to purge the peninsula of what they deemed to be heretical beliefs and practices. 

Two months into Saudi-led boycott, tiny Qatar goes on the offensive — The tiny nation of Qatar is defiantly weathering a boycott by four of its neighbors in a deepening crisis that has roiled the region and threatened U.S. interests.Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severd ties and imposed an economic blockade on Qatar in early June, accusing it of backing terrorism. Qatar has denied the allegations and has since gone on the offensive.Two months into the isolation campaign, the energy-rich Persian Gulf nation has used its billions to strengthen its economy and security. It has announced reforms and bolstered ties with Turkey and Iran that could potentially reshape the region and its alliances for years.Efforts by the United States to mediate between its close allies have not succeeded. Instead, the crisis is acrimoniously playing out in diplomatic and legal venues. “It’s now personal, which in some ways makes it more difficult to find a way for both sides to step down,” said Perry Cammack, a Middle East analyst at the Carnegie Endowment for International Peace. “This is likely to fester for some time.”

The China Wildcard in the Qatar Crisis - In the ongoing crisis pitting the Gulf Cooperation Council (GCC) and its allies against Qatar, China’s position has been relatively clear: remain neutral and encourage the two sides to work out their differences before they do any real damage to Persian Gulf stability – or worse, to Beijing’s interests. Qatar, however, clearly has other ideas. The Gulf state has responded to its neighbors’ demands by coming out swinging. After lodging complaints with the World Trade Organization (WTO) and International Civil Aviation Organization, Qatar has now agreed to a $6 billion purchase of warships from Italy. China’s official engagement in the crisis has remained low-key: the Foreign Ministry’s stance remains that the dispute and its resolution are internal matters for the GCC. Nonetheless, rumors of secret meetings between Qatari and Emirati diplomats in Beijing have raised the prospect of China acting as a decisive mediator in the crisis. While officially remaining “above the fray”, Foreign Minister Wang Yi has indeed been active on the sidelines of regional security forums and bilateral visits, advising his Emirati, Qatari, and Iranian counterparts to discuss an end to intra-GCC disunity. Of course, considering China’s longstanding neutrality towards what it sees as other countries’ “internal matters”, neither Wang nor Chinese president Xi Jinping can be expected to insert themselves into negotiations over a multilateral resolution to the crisis. Not yet, at least. The Gulf is Beijing’s largest supplier of oil and second-largest provider of natural gas, while also accounting for 46 percent of China’s exports to the Middle East. With such high economic stakes, it goes without saying that a long-term deadlock is not a productive outcome for China. Whether or not the Middle Kingdom decides to get more involved may now hinge largely on Qatar’s next moves. The quartet of Arab states – Saudi Arabia, Egypt, Bahrain and the United Arab Emirates (UAE) – blaming Qatar for its support for Islamist groups and regional machinations have moderated and refocused their initial demands; there is now increasing pressure on the Qataris to make concessions in return. With shifting power dynamics and large-scale investment projects on the table, both Doha and the GCC are anxious to see whom Beijing will side with in the ongoing dispute.

‘This is not Aleppo’: Shock at extent of destruction of Saudi Shia town -- Fears are growing of an escalation of the Saudi offensive on Awamiya, as shocking images from local activists and satellite photos reveal the extent of destruction in the Shia town in a months-long siege that has killed at least 12 people. Satellite imagery reveals whole districts of the city, particularly the historic Almosara district, reduced to rubble, as Saudi soldiers clash with Shia militants in the narrow streets. According to an activist with sources in the wider province of Qatif, workers on farms in al-Ramis, to the northeast of Awamiya, received voice messages last week asking them to take their animals out of the area. There have also beenrequisition notices attached to houses in the district of al-Shweikah, about 6km south of Almosara, issued by the Alibrahim private property development company, which is also responsible for the renovation of Almosara. Ameen Nemer, a former resident of the town, told Middle East Eye he feared the Saudi government was preparing to widen its offensive on the Shia-majority region, saying "they don't want a living thing in Awamiya". Tensions have flared up in the city over reported plans to demolish and renovate Almosara, which the government also claims is being used by armed gunmen, and at least a dozen people are so far thought to have been killed in the violence. On Monday, the pro-government al-Sharq al-Awsat news site reported that two men from a list of 23 "terrorists" issued by the Saudi interior ministry, had turned themselves in. The two men, identified as Ramzi M al-Jammal and Ali H al-Zaid, reportedly voluntarily reported themselves to the authorities. The site said that of the 23 listed, eight had already turned themselves in, while most of the rest had been killed. Three remained at large. Local residents told Reuters that three policemen and nine civilians had been killed in the clashes. Though the death toll is hard to verify, this would appear to indicate that as many as 24 people have been killed.  Awamiya has long been a flashpoint for protests by Saudi's Shia minority - the influential cleric Nimr al-Nimr, who was executed by the Saudi government in 2016, came from the town.Confirming precise details about the situation in Qatif has long been difficult due to tight controls over media scrutiny imposed by the Saudi authorities. Reuters reported earlier this year that foreign media could visit the area only if they accompanied by government officials, purportedly for safety reasons. Local activists accuse security forces of driving residents out of Awamiya by firing randomly towards homes and cars as they confront armed men in the area, charges Saudi Arabia denies.

Chronic diseases spike in Middle East as conflicts rage - Nature - Across the Middle East, deaths resulting from violence grew by 850% between 1990 and 2015, according to a series of reports published on 3 August in the International Journal of Public Health1–15. The increase accelerated after 2010, corresponding with the beginning of the Arab Spring movement and wars in Syria and Iraq. At the same time, the authors found, the incidence of many chronic diseases has also risen dramatically; the death rate from diabetes, for instance, grew 216% over the study period. Taken together, the analyses describe a disturbing deterioration in health across a broadly defined Middle Eastern region, which includes 22 countries — including Afghanistan, Iraq, Syria, Somalia and the United Arab Emirates — that are home to more than 580 million people. “Generations of people are being exposed to a lot of shocks that will impact health throughout their lives,” says Ali Mokdad, an epidemiologist at the University of Washington’s Institute for Health Metrics and Evaluation (IHME) in Seattle, and a co-author of many of the new analyses1. “There is a strong link between mental health and diabetes and cardiovascular disease,” he adds. “If someone faces a shock in their life, it puts pressure on their mental health, and they’ll be less likely to stop smoking if they smoke. They’ll be less likely to seek medical care if it’s dangerous to do so. They’ll be less likely to eat a balanced diet.”

Saudi Arabia still sees no role for Assad in Syrian transition  (Reuters) - Saudi Arabia, a main backer of Syrian rebels, said on Sunday it still supported an international agreement on the future of Syria and President Bashar al-Assad should have no role in any transition to bring the war there to an end. The Saudi Foreign Ministry denied media reports that Saudi Arabia was considering a political transition with a first phase in which Assad will stay in power. Several media, including the state-owned Russia Today, said Saudi Foreign Minister Adel al-Jubeir had informed the Syrian opposition's High Negotiations Committee (HNC) about the decision. A ministry statement, carried by the Saudi state news agency SPA, called the reports attributed to al-Jubeir "inaccurate". "The position of the kingdom on the Syrian crisis is firm, and it is based on the Geneva 1 communique and on U.N. Security Council resolution 2254 that stipulated the formation of a transitional body that will run the country," it said. The agreement also called for drafting a new constitution and holding a new election with no role for Assad in the whole transitional process. Saudi Arabia supports the HNC and its efforts to widen its membership and unify the Syrian opposition, the statement said.The announcement came ahead of the next round of United Nations-led Syria peace talks expected in September. Assad's negotiators have not met directly with the opposition because there is no unified delegation as the HNC and two other groups, known as the Cairo and Moscow platforms, all claim to represent the opposition. 

UN Syria investigator quits over lack of 'political will' -  A member of the U.N. Commission of Inquiry on Syria said on Sunday she was quitting because a lack of political backing from the U.N. Security Council had made the job impossible, Swiss national news agency SDA reported. Carla del Ponte, 70, who prosecuted war crimes in Rwanda and former Yugoslavia, told a panel discussion on the sidelines of the Locarno Film Festival that she had already prepared her letter of resignation. "I am quitting this commission, which is not backed by any political will," she said, adding that her role was just an "alibi". "I have no power as long as the Security Council does nothing," she said. "We are powerless, there is no justice for Syria." Del Ponte, a former Swiss attorney general, joined the three-member Syria inquiry in September 2012, chronicling incidents such as chemical weapons attacks, a genocide against Iraq's Yazidi population, siege tactics, and the bombing of aid convoys. She could not immediately be reached for comment and the United Nations did not immediately confirm her plans to quit. Her departure will leave only two commissioners, Brazilian human rights expert Paulo Sérgio Pinheiro, and Karen Koning AbuZayd from the United States. The commission was set up in August 2011 and has regularly reported on human rights violations, but its pleas to observe international law have largely fallen on deaf ears.Although the United Nations is setting up a new body to prepare prosecutions, there is no sign of any court being established to try war crimes committed in the six-and-a-half year-old war, nor of any intention by the U.N. Security Council to refer the situation to the International Criminal Court in the Hague. 

Making Sense of Turkey’s Syria Strategy: A “Turkish Tragedy” In the Making -- Following Turkish foreign policy has never been more exciting and terrifying. With its ever-increasing footprint in Syria, Turkey is now a full-fledged party to the civil war. The risks associated with the Turkish presence are multi-faceted. Incursions into Syria can trigger not only a direct war between Turkey and whatever is left of the Assad regime, but an indirect one with Iran and possibly Russia.  The more likely scenario involves Turkey in open conflict (not only occasional shelling and air strikes) with the People’s Protection Units (YPG, sometimes referred to as PYD, its political arm)), the Syrian Kurdish militant group with organic ties to Turkey’s arch-nemesis the Kurdish Workers Party (PKK). Such a contingency would not only complicate the already convoluted Syrian conflict, but also spread the Syrian civil war to Turkey, and even Iraq, where the PKK established a strong presence in the strategic Sinjar province. In addition, if Turkey ends up in open conflict with the YPG in Syria, the United States, with its direct support for YPG in its fight against the self-proclaimed Islamic State (ISIL), will find itself stuck between a rock and a hard place. In the best-case scenario, already fragile relations between Turkey and the-United States will deteriorate to a point where Turkey’s NATO membership will be questioned either by Ankara or Washington (most likely both). In the worst-case scenario, the Syrian civil war will witness U.S. and Turkish forces, intentionally or unintentionally, targeting each other’s military assets, including personnel, with casualties mounting on each side.