Sunday, February 5, 2017

three more natural gas pipelines approved, gasoline supplies at a seasonal high, gasoline demand near a 16 year low

US oil contracts continued to trade in a narrow price range this week, as OPEC production cuts seemed to be holding but market participants continued to worry about the ongoing U.S. drilling recovery...after closing last week at $53.16 a barrel, the contract for March delivery slid 54 cents, or 1%, to settle at $52.63 a barrel on Monday as traders focused on last week's increased US oil production and Friday's jump in the rig count...but then, despite large increases oil and product inventories reported by the American Petroleum Institute on Tuesday and by the EIA on Wednesday, oil prices climbed to close at $52.81 on Tuesday and then to close at $53.88 a barrel on Wednesday, after Trump's saber rattling at Iran spooked oil traders...US prices were then down 34 cents, or 0.6 percent, to $53.54 a barrel on Thursday as the implications of record gasoline supplies became apparent, but they went on to post a modest increase for the week, closing Friday at $53.83 a barrel after Reuters and Bloomberg agreed that OPEC had achieved a roughly 80 percent compliance rate with its promised cuts...US oil prices have now been stuck between $52 and $55 a barrel for over two months, with the price range narrowing to $52 a barrel to $54 a barrel over the past month...typically, when such a tight trading range breaks down, it precipitates a large change, whether positive or negative...

natural gas prices, on the other hand, continued their 6 week slide, ending the week at $3.063 per mmBTU (million British thermal units), their lowest settle since November 23rd...the 2 week and longer range forecasts are now indicating above normal temperatures for almost the entire country, and if that warmth holds there wont be much heating season left to pressure it looks like we're out of the woods for the time being, at least until such time as the half dozen LNG export trains now under construction are completed, and gas from our area starts being piped south for shipment to Europe and Asia...

you may recall last week we speculated that despite Trump's order to expedite the Dakota Access Pipeline, there would be little movement on it until his appointees took up their positions at the head of the specific relevant Army units....this week, .however, despite the fact that Vincent Viola, Trump's billionaire nominee for Secretary of the Army, withdrew his name under a cloud of ethics and financial disclosure problems, two congresscritters from North Dakota both issued statements alleging that the acting secretary of the Army, Robert Speer, had ordered the Army Corps of Engineers to grant an easement for the pipeline to run under Lake Oahe...apparently, they're the only ones who knew about it, because a representative of Energy Transfer Partners said that the company did not know anything beyond what they read on the Congressmen's website...still, that pipeline still seems to be moving forward faster than we expected it to....

on the other hand, there was no additional news about the Keystone XL this week, although TransCanada was in the news regarding pipelines in our area...word is that the Federal Energy Regulatory Commission (FERC) ignored the EPA's concerns and approved two of TransCanada's planned natural gas pipelines intended to moved gas from the Marcellus and Utica areas to Midwest and Gulf Coast Markets...the $1.4 billion Leach XPress will transport 1.5 billion cubic feet per day of natural gas across the northern panhandle of West Virginia to Fairfield country southeast of Columbus and then south through Ohio on existing natural gas pipelines, while the Rayne XPress will move 1.0 billion cubic feet a day from Waynesburg PA along the Ohio river and then south to Rayne Louisiana, from where we would not be surprised to see it exported through Cheniere Energy's Sabine Pass natural gas terminal or other Gulf coast LNG export facilities now under construction...

in addition to those two pipelines, on Friday FERC approved the Williams Cos. $3 billion Atlantic Sunrise 200 mile natural gas pipeline expansion from the northeastern Marcellus producing region in Pennsylvania to the Transco mainline in southeastern Pennsylvania, from where it will move south through Maryland, Virginia, North Carolina, and South on the two Transcanada pipelines is expected to start later this month, and be completed by November, while construction will start on the Atlantic Sunrise in mid-2017, with the portion along the Eastern Seaboard to be completed in time for the 2017-2018 winter heating season, while the Pennsylvania leg will follow in the spring of 2018..

The Latest Oil Stats from the EIA

this week's oil data for the week ending January 27th from the US Energy Information Administration showed that our imports of crude oil rose substantially, while our refining of that oil fell for the 3rd week in a row, and hence the week's surplus of crude that was added to our stored supplies was the largest since October...our imports of crude oil rose by an average of 480,000 barrels per day to an average of 8,290,000 barrels per day during the week, while at the same time our exports of crude oil fell by 50,000 barrels per day to an average of 509,000 barrels per day, which meant that our effective imports netted out to 7,741,000 barrels per day for the week, 530,000 barrels per day more than last the same time, our crude oil production fell by 46,000 barrels per day to an average of 8,915,000 barrels per day, which means which means that our daily supply of oil, from net imports and from wells, totaled an average of 16,656,000 barrels per day during the week...

meanwhile, refineries reportedly used 15,947,000 barrels of crude per day during the week, 100,000 barrels per day less than the prior week, while at the same time, 923,000 barrels of oil per day were being added to oil storage facilities in the US...thus, this week's EIA oil figures seem to indicate that we consumed or stored 214,000 more barrels of oil per day than were accounted for by our oil imports and oil well production…therefore, in order to make the weekly U.S. Petroleum Balance Sheet balance out, the EIA inserted that phantom 214,000 barrel per day number onto line 13 of the balanc sheet, which the footnote tells us represents "unaccounted for crude oil"...that is further described in the glossary of the EIA's weekly Petroleum Status Report as "the arithmetic difference between the calculated supply and the calculated disposition of crude oil.", and hence we've been calling that number the EIA's weekly oil fudge factor...

the weekly Petroleum Status Report also tells us that the 4 week average of our oil imports rose to an average of 8.256 million barrels per day, now 5.3% higher than the same four-week period last year...from that same source, we also find that this week's 46,000 barrel per day oil production decrease included a 45,000 barrel per day drop in production in the lower 48 states, and a thousand barrel per day decrease in output from Alaska..our crude oil production for the week ending January 27th turned out to be 3.2% lower than the 9,214,000 barrels of crude that we produced during the week ending January 29th of last year, and 7.2% below our June 5th 2015 record oil production of 9,610,000 barrels per day...

US refineries were operating at 88.2% of their capacity in using those 15,947,000 barrels of crude per day, down from 88.3% of capacity the prior week and down from the year high of 93.6% just three weeks earlier, but up from the 86.6% capacity utilization during the same week a year ago, as refineries are now in a typical seasonal slowdown...thus, even though the week's refining was down by almost 1.2 million barrels per day from the first week of this year, it was 2.1% more than the 15,615,000 barrels of crude refined during the week ending January 29th, 2016....and even though they took in less crude, gasoline production from those refineries rose by 276,000 barrels per day to 9,101,000 barrels per day during the week ending January 27th, which was 5.3% more than the 8,642,000 barrels per day of gasoline that were produced during the week ending January 29th a year addition, refineries' production of distillate fuels (diesel fuel and heat oil) also rose, increasing by 102,000 barrels per day to 4,677,000 barrels per day...thus the week's distillates production was up by 5.5% from the 4,435,000 barrels per day that were being produced during the week ending January 29th last year, while it was just fractionally higher than the 4,666,000 barrels per day of distillates produced during the same week of 2015, which was during a colder winter than the last two...     

with the increase in our gasoline production, the EIA reported that our gasoline supplies rose again, by 3,866,000 barrels to 257,086,000 barrels as of January 27th, for what is now a five week jump of nearly 30 million barrels in our gasoline inventories since Christmas...& we might have stored even more, but our gasoline exports were up by 28,000 barrels per day to 902,000 barrels per day, while our gasoline imports were down by 105,000 barrels per day to 488,000 barrels per day...coincidental to that, our domestic consumption of gasoline rose by 261,000 barrels per day from last week's 35 month low to 8,310,000 barrels per day, which left the 4 week average of gasoline demand at 8.222 million barrels per day, down from 8.715 million barrels a day during the same four weeks last year...since something unusual has happened to gasoline demand in this new year, we'll repeat the graph we showed two weeks ago, now including these latest updates:

February 4 2017 gasoline demand as of January 27

the above graph was taken from the bottom of the gasoline section of the EIA's "This Week in Petroleum" and it shows the weekly four week moving average of US gasoline consumption over the past two years, with February 2015 to February 2016 charted in brown, and February 2016 to the most recent week in charted we pointed out two weeks ago, gasoline consumption was running well ahead of the prior year's pace for most of 2016, until it slipped slightly below the 2015 levels in November and, following 5 consecutive weeks of low demand, that 4 week average of gasoline demand has dropped to well below last year's pace, and except for a virtually equivalent period in January 2012, is at the lowest it's been since the winter of 2001...two weeks ago i thought the drop to below last year's totals might have been due the ice storms that moved through the middle of the country during that reference week, but now, after a relatively long period of good January driving weather over most of the country, this now unexplained collapse in gasoline demand still persists...Americans certainly aren't  buying smaller cars; sales of vehicles built on truck frames outpaced conventional passenger car sales throughout 2016...yet as you can see, demand for gasoline has almost dropped to a 16 year low...

meanwhile, with the increase in distillates production, we also added 1,568,000 barrels to our supplies of distillate fuels, which reached 170,717,000 barrels by January 27th, for a 5 week increase of over 19 million barrels, at a time of year when distillates are usually being drawn down and consumed as heat oil...the amount of distillates supplied to US markets, a proxy for our consumption, rose by 146,000 barrels per day to 3,809,000 barrels per day, and was thus above the average of the past 5 years...but still, our distillate inventories are 6.9% higher than the distillate inventories of 159,695,000 barrels of January 29th last year, and 27.0% above the distillate inventories of 134,475,000 barrels of January 30th, 2015…  

finally, with big jump in our oil imports, our inventories of crude oil rose by 6,466,000 barrels to 494,762,000 barrels by January 27th, a level which is now only 3.4% below the April 29th record of 512,095,000 barrels...moreover, we ended the week with 5.0% more crude oil in storage than the then record 471,344,000 barrels we had stored on January 29th of 2016, and 30.4% more crude than the 379,473,000 barrels of oil we had in storage on January 30th of 2015...  

This Week's Rig Count

US drilling activity increased for the 13th time in 14 weeks during the week ending February 3rd, with the three week increase in drilling rigs now the largest 3 week increase since January 2010...Baker Hughes reported that the total count of active rotary rigs running in the US increased by 17 rigs to 729 rigs in the week ending on this Friday, which was an increase of 158 rigs from the 571 rigs that were deployed as of the February 5th report a year earlier, but still down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...

the entire increase was in rigs drilling for oil, which were up by 17 rigs to 583 rigs during the week, and as a result active oil directed rigs are now at their highest since October 23rd, 2015...oil drilling was thus also up from the 467 oil directed rigs that were working in the US on February 5th last year, while down from the recent high of 1609 oil rigs that were drilling on October 10, 2014....drilling rigs targeting natural gas formations remained unchanged at 145 rigs, which was still up from the 104 natural gas directed rigs that were in use a year ago, while it was still way down from the recent natural gas rig high of 1,606 natural rigs that were deployed on August 29th, 2008... 

one drilling platform offshore from Louisiana in the Gulf of Mexico started drilling this week, which brought the Gulf of Mexico rig count up to 21, which was still down from the 26 rigs working in the Gulf a  year ago…our total offshore count for the week was thus up to 22 rigs, with an ongoing drilling operation in the offshore waters off Alaska...the number of horizontal drilling rigs working in the US increased by 17 rigs  to 579 rigs this week, which is now up by 138 from the 458 horizontal rigs that were in use in the US on February 5th last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of addition, the directional rig count was up by 5 rigs to 66 rigs as of January 27th, which was up by 13 rigs from last February 5th's count of 53 directional rigs....meanwhile, a net of 5 vertical rigs were shut down during the week, reducing the vertical rig count to 67, which was still up from the 60 vertical rigs that were deployed during the same week 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 from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas both tables, the first column shows the active rig count as of February 3rd, the second column shows the change in the number of working rigs between last week's count (January 27th) and this week's (February 3rd) count, the third column shows last week's January 27th active rig count, the 4th column shows the change between the number of rigs running this 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 5th of February, 2016...      

February 3 2017 rig count summary

in something of a change from recent weeks, drilling in the Permian with an increase of just 4 rigs was not the driver of this week's increase, as drillers in the Cana Woodford of Oklahoma added 7 rigs to now match the Eagle Ford as the second most active basin in the US...the Cana Woodford is home to the SCOOP and the STACK, two of most discussed plays in the US over the past year...that's the South Central Oklahoma Oil Province (SCOOP) and Sooner Trend Anadarko basin Canadian and Kingfisher (STACK), in case anyone else had been wondering what those acronyms stood for...other than the aforementioned variances, there aren't many other major changes above, with no change in either the Utica or the Marcellus, as the natural gas rig added in the Fayetteville offset the gas rig pulled from the might note that the totals of new drilling in the basins above don't add up to the 17 rig increase in horizontal rigs...that's because 4 oil directed rigs began operations in basins other than those listed, the names of which Baker Hughes does not include in their summary data sets...


Ohio electric deregulation on the chopping block? | -- The big power plants that FirstEnergy and Columbus-based American Electric Power have operated for decades just cannot make electricity as cheaply -- or as profitably -- as the new gas turbines, and at times, wind farms. The companies have been looking for a way to escape the perils of market prices that come with deregulation or at the very least craft "surgical" amendments to state laws that since 2000 have been gradually moving the industry into market-based pricing. In other words, they want to "re-structure" the state's utility laws. And you can bet that their opponents -- independent power producers which own coal plants or are building gas turbine plants --along with consumer groups are gearing up for a fight. This past week Nicholas Akins, CEO of AEP, gave a glimpse of what the utilities have been talking about privately and efforts to resolve their differences before they formally involve lawmakers. "We've got to make sure that an industry restructuring package is transparent enough and people will understand it well enough to accommodate some of these varied interests," he told financial analysts during the company's public teleconference discussing 2016 sales and profits. "There are already drafts of legislation that are circulating around and we just need to make sure all the parties are comfortable with that,"he added. AEP, which is doing well financially, wants to build wind and solar farms, and maybe new gas plants, he told them. And FirstEnergy is interested in finding a way to subsidize its nuclear power plants Davis-Besse and Perry.

Ohio Gov. Kasich again pushes for oil and gas severance tax increase | Midwest Energy News: The latest state budget from Ohio Gov. John Kasich renews his effort to increase the severance tax for oil and natural gas. And once again, that proposal is meeting with opposition from some state lawmakers and leaders in the state’s oil and gas industry. The proposal would impose a fixed rate of 6.5 percent for crude oil and natural gas when sold at the wellhead, and a lower rate of 4.5 percent at later stages of distribution for natural gas and natural gas liquids. Two years ago, Kasich sought the same rates in the 2015 budget. “These rates are lower than those levied by other major state producers, such as Texas, Oklahoma and North Dakota, and will place Ohio squarely in the middle of the pack of all state rates,” according to a fact sheet provided when the 2017 budget package was released. Ohio’s current rate of 20 cents per barrel of oil and 3 cents per thousand cubic feet (Mcf) of natural gas is “already at the ground floor with regard to how much they tax this industry,” noted Ted Auch of FracTracker Alliance. “They’re giving this stuff away.” Nonetheless, Ohio House Finance Committee chairman Rep. Ryan Smith (R-Bidwell) called the proposal “ironic” and compared it to the 1993 movie Groundhog Day. “Because the same thing is coming back budget after budget after budget,” Smith said. He spoke about the proposal at a conference hosted by Vorys Advisors and the law firm of Vorys, Sater, Seymour and Pease in Columbus on January 31.

Baseline results in for injection well water study - Athens NEWS Baseline water-quality testing conducted by Ohio University employees on behalf of Athens County near fracking waste injection wells showed some chemicals at several sites exceeding secondary maximum contamination levels, as well as Ohio Department of Health advisory levels. The levels did not rise to the level of being actionable, however. The Regional Groundwater Quality Report was funded by the Athens County Commissioners for $15,637 and was produced by the OU Voinovich School of Leadership and Public Affairs by Senior Project Manager Jennifer Bowman, Environmental Studies associate professor Natalie Kruse and Geospatial Software Development Engineer Steve Porter.  Waste-injection wells have become extremely controversial in Athens County, with environmental activists claiming they threaten vital water resources, among other problems. The oil and gas industry insists they’re safe, and argue that waste injection is safer than other forms of disposal.  Bowman, the Athens County Fracking Action Network and Torch CAN-DO were meeting with local residents to obtain permission to conduct further monitoring of water wells throughout that area, which includes four fracking waste injection wells.  The study area included the eight active Class II injection wells in Athens County. The researchers collected samples during two separate time periods, which were analyzed by the Summit Environmental Technologies, Inc. laboratory in Cuyahoga Falls, Ohio. The study’s conclusions reported that iron, manganese and total dissolved solids exceeded the secondary maximum contamination levels at various sites. . “In addition, one parameter that exceeded health advisories includes methane.”

TransCanada receives approval for two Marcellus area pipelines -- The executive order that gave TransCanada the go ahead to pursue completion of the Keystone XL Pipeline stole the spotlight from two smaller, but still substantial pipeline projects received approval from the Federal Energy Regulatory Commission (FERC). A TransCanada press release announced the approval for the construction of the Leach XPress and Rayne XPress projects. Both will provide natural gas from the Marcellus and Utica production areas to Midwest and Gulf Coast Markets.  The $1.4 billion Leach XPress will transport 1.5 billion cubic feet per day (Bcf/d) of natural gas across the northern panhandle of West Virginia and then through southeastern Ohio. The Rayne XPress will provide natural gas to the Gulf Coast region and includes two new compressor stations to increase the Rayne Pipeline’s capacity by 1.0 Bcf/d. Marcellus Drilling News reported that the two pipelines have not been without controversy, despite limited publicity. Last June the Obama EPA tried to derail the projects (see Federal EPA Throws Cold Water on Leach XPress, Rayne Xpress Pipes). However, FERC ignored the EPA and moved forward (a latter day miracle). Last June, Natural Gas Intelligence laid out the EPA’s concerns, citing mostly insufficient information in regards to its environmental impact and the alternative options for pipelines in the area that would eliminate the necessity of the Leach, including the Mountaineer XPress Pipeline, which would require far fewer miles of pipeline in order to expand capacity. The article also noted that most of the possible impacts of the Leach could likely be minimized with mitigation plans. TransCanada has a November 1, 2017 in-service date for the projects, beginning right-of-way preparation and construction on both of the pipeline projects in February.

Williams Gets U.S. Approval for $3 Billion Shale Gas Pipeline - Williams Cos. won U.S. approval to build its $3 billion Atlantic Sunrise natural gas pipeline expansion in the Northeast, ending a review that ran almost two years and forced delays in the project. The 200-mile (322-kilometer) pipeline will expand shipments from shale formations by enough to serve 7 million homes, according to Williams. The Federal Energy Regulatory Commission approved it on Friday just hours before the scheduled resignation of commissioner Norman Bay, whose departure will leave the agency without the quorum needed for major decisions. The decision spares Williams further delays after already waiting for more than 670 days for clearance. Last year, the stocks of both Williams and a would-be shipper on the project, Cabot Oil & Gas Corp., plunged on speculation that the expansion would face more regulatory setbacks. The time it takes to approve such pipelines has jumped to 429 days from 359 days just in the past three years as environmental opposition grows, according to Bloomberg Intelligence. Williams said in a statement Friday that it was pleased the agency had approved “this much-needed energy infrastructure project.” The company said it plans to start construction on the main portion of the project in mid-2017, establishing a path for more gas to flow to markets along the Eastern Seaboard in time for the 2017-2018 winter heating season. Construction on another part of the project known as the Central Penn Line is scheduled to begin in the third quarter, allowing Williams to bring the entire capacity of the expansion into service in mid-2018.

Uncovered DEP data reveals effects of fracking in PA - The publicly funded and independent watchdog press Public Herald recently published the results of a three-year investigation in Pennsylvania that it says reveals “widespread and systemic impacts related to ‘fracking’.” The Herald first filed a request for records of complaints to the Pennsylvania Department of Environmental Protection (DEP) in 2011. The DEP declined to release the complaints, telling the Herald they were “confidential” and that they “didn’t want to cause alarm.” However, after persistent inquiry, the Herald reviewed 6,819 complaint cases and more than 50 file reviews, resulting in public availability of these cases via the Pennsylvania Oil & Gas Complaint Map. The Public Herald notes that citizen complaints are dispersed across counties where shale gas drilling occurred. The Public Herald saw complaints about drinking water, water supplies, gas migration, spill response, pollution, and leaking wells. In conjunction with Dr. Anthony Ingraffea, a published oil and gas engineering expert from Cornell University, the team analyzed the data. Ingraffea states: It’s not like all the bad stuff is happening up in the northeast. Pennsylvania is pretty widespread, and what the data shows, quite clearly, is that impact has been systemic. It’s not as if complaints about fracking are new. There have been many controversies surrounding the practice, even some that have led to bans and moratoriums. But what surprised the Public Herald team most was the total number of complaints–thousands more than they anticipated–and that they showed a strong relationship to unconventional shale gas development. As unconventional well numbers rose, complaints also went up during the same time period in correlation to the complaints. When compared to conventional gas drilling, the number of wells drilled was high, but complaints were low. While there could be other factors that affect these numbers, such DEP reporting records or other record-keeping issues, it is hard to ignore the Herald’s data. …when Governor Tom Wolf took office in 2015, after campaigning on the promise to make fracking “safe,” the number of complaints exceeded the number of new shale gas wells for the first time since 2009.

Exxon's Fracking Linked to 176 Drinking Water Complaints in Rural Pennsylvania – Steve Horn - The investigative journalism outlet Public Herald documented that ExxonMobil subsidiary XTO Energy has been the subject of 176 citizen complaints in Pennsylvania, many of them drinking water-related. The state is home to the Marcellus Shale basin, the most prolific field for obtaining natural gas via hydraulic fracturing ('fracking”) in the U.S. and an early hotbed of debate on fracking's potential threats.  In its investigation, the Pennsylvania-based publication spent three years digging up complaints submitted by the state's citizens to the Pennsylvania Department of Environmental Protection (DEP). With documents spanning from 2004–2016, the complaints previously have been concealed from the public, and Public Herald says they show “evidence of widespread and systemic impacts” of fracking on water in the state. A DeSmog review of files housed on the investigation's document-hosting website,, shows dozens upon dozens of these wells were owned by XTO. Exxon bought XTO as a wholly owned subsidiary in 2009 and said that the purchase would “enhance Exxon Mobil's position in the development of unconventional natural gas and oil resources.” Indeed, Exxon quickly became and still is the top producer of shale gas in the U.S.One of Exxon's liquefied natural gas export projects, Golden Pass LNG, which is co-owned with Qatar Petroleum, reported in March 2016 that it will receive gas from the Transco Pipeline system. Transco, as DeSmog reported in 2014, will feed Marcellus Shale gas to Gulf of Mexico-based export facilities like Golden Pass.  As a company, Exxon lobbied on behalf of liquefied natural gas (LNG) exports in quarter two and quarter four of 2016. Golden Pass got a key permit from the Obama administration in December. But what kind of impacts are these projects leaving behind in Pennsylvania and other fracking sites?

9,942 Citizen-Reported Fracking Complaints Reveal 14-Years of Suppressed Data - Guess what was found in Pennsylvania's Department of Environmental Protection's (DEP) filing cabinets after gas operators drilled 10,027 fracking wells over the last 14 years? Only 9,942 citizen-reported fracking complaints. And 44 percent of those are drinking water-related. Pennsylvania's DEP finally released the complaints to Public Herald , an investigative journalism nonprofit. There's much to learn from Pennsylvania's now-public 9,942 fracking complaints as legislators decide to frack or not to frack in Western Maryland.  As fracking took off in 2008, so did the number of citizens lodging water, air and land fracking complaints with the DEP.   A year ago, we reported that Pennsylvania's drinking water contamination due to fracking appeared to be much higher than previously reported. To date, Pennsylvania's Department of Environmental Protection (DEP) reports only 284 positive water contaminations for the 10,027 fracking wells drilled. That three percent figure seems pretty low.  What hasn't set right with many is that Pennsylvania's official water contamination rate is starkly different than what citizens report on-the-ground. Thousands of news stories, YouTube videos and social media posts report an entirely different story of serious fracking water issues, rampant air pollution , land destruction and negative health issues.

Managing fluids used in shale wells - The largest shale play in the United States spans across Farm and Dairy’s readership area, producing one-fourth of the nation’s natural gas. This area is also known as the Utica and Marcellus basins. “Shale gas continues to grow, right now harvesting 37.4 billion cubic feet per day,” said David Yoxtheimer, hydrogeologist and Extension associate with Penn State University’s Marcellus Center for Outreach and Research.  But millions of gallons of fluids are being used to drill and fracture those wells.“Water management costs are significant — $2-$15 per barrel to dispose of the fluids,” he said. “When you think of millions of barrels being produced each day, those numbers add up quickly.”Penn State’s Marcellus center reports between 5 and 25 percent of the cost to drill and develop a shale well is in managing the fluids.Drillers use 50,000 to 100,000 gallons of water in the drilling process and 3- to 10-plus million gallons of water to hydraulically fracture a single well, according to 2016 reports from Penn State. The fluid has to be managed before and after the well is drilled and/or fractured.  The flowback fluids, meaning the fluid that comes back to the surface immediately after fracking, can be anywhere from 5-50 percent. Flowback fluids have a low concentration of metal and salts. Produced fluids that come out of the well over time and during production have a higher concentration of dissolved solids because they have had a longer time in contact with the shale. Experts estimate a half a barrel of produced fluid for every barrel of oil. In fracturing fluid, there is a wide range of additives used. The additives are used to inhibit corrosion to protect the steel, biocides to disinfect, etc. To find out what exactly is added to the water in a specific area or project, visit, a website operated by the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission.  There are five options for the fluids once they are used:

  • • Direct reuse, blending with new fluids;
    • On-site treatment with reuse;
    • Off-site treatment with reuse;
    • Treatment, with discharge into ground water;
    • Class II Underground Inspection Control well disposal;

GOP lines up resolutions to undo coal, methane rules - House Republicans are preparing to vote next week on two resolutions undoing pollution rules issued in the closing months of the Obama administration. Two Interior Department rules — one protecting streams from coal mining waste and another to cut methane emissions at oil and natural gas drilling sites — are the targets of Congressional Review Act resolutions due up in the House next week. Rep. Rob Bishop(R-Utah), the chairman of the House Natural Resources Committee, called the rules “abusive, last minute regulations.”“Congress has an obligation to ensure executive actions are consistent with congressional intent, and that agencies operate in accordance with their statutory mandate,” he said on Friday. “When they don’t, and in this case they haven’t, it is our responsibility to act.” Both rules have been targets for House Republicans and affected industries for a long time. The Stream Protection Rule is an Office of Surface Mining regulation that was reviewed over the course of the entire Obama administration. Environmental groups supported the rule as a measure to protect waterways from adverse impacts of mountaintop removal mining, but the coal industry said the regulation would kill mining jobs. Methane was a target for Obama later on in his presidency, when regulators warned about its impact on climate change. But the drilling industry said the Bureau of Land Management's venting and flaring rule is too costly, and it quickly moved to oppose new federal regulations on oil and natural gas wells.

Here's What's at Stake If Congress Kills the Methane Rule --Now, the oil and gas industry and its allies in Washington, DC, are echoing the miners of old as they try to do away with the Interior Department's Methane and Waste Prevention Rule, which was finalized in November of last year. The industry's arguments today are just as flawed as the miners' were a century ago. Just as it was standard practice for mills to dump tailings directly into streams, so is it common for oil drillers to dump natural gas, a mix of methane and other hydrocarbons, into the atmosphere. The practice is known as venting or, when the methane is burnt off, flaring, and it's done when a well lacks a "gathering system" to pipe the natural gas that accompanies oil from the well to the market. Meanwhile, methane can leak from nearly every step of oil and natural gas production, from drilling, to fracking, to piping, to processing. In 2015, the oil and gas industry reported that its facilities in the U.S. collectively emitted 3.3 million metric tons of methane, with a little less than half that coming from facilities on federally managed lands. Methane is a potent greenhouse gas, with at least 86 times the warming potential of carbon dioxide over the short term. If methane is leaking, then so are harmful hydrocarbons, such as benzene, a known carcinogen. Those reasons are enough to get a handle on leaks and venting. But even for those who don't believe in human-induced climate change—i.e. members of the new administration in Washington and many Republican congressmen—there is another compelling case for reducing methane leaks. The stuff leaking from the pipes and being vented and flared is natural gas, a marketable commodity. That's money oozing into the air. More than $300 million worth of gas is lost annually from federal and tribal lands alone, according to a 2015 Environmental Defense Fund analysis. That adds up to millions in lost royalties for the feds and local communities, too. 

New bill would prohibit DEP from enacting tougher methane standards than EPA -  A bill in the state Senate could handcuff the Pennsylvania Department of Environmental Protection in enacting tough regulations on methane emissions, but it is receiving opposition from environmentalists and Gov. Tom Wolf. At its core, the bill would prohibit the DEP from enacting any methane regulation that is stricter than any regulation on the books with the federal Environmental Protection Agency. State Sen. Guy Reschenthaler, R-37, Jefferson Hills, sponsored the bill and said Monday it would help get rid of “duplicative regulations” between the DEP and the EPA. However, some environmentalists see it as an attempt to take enforcement powers away from the DEP at a time when President Donald Trump is stripping oversight abilities of the EPA. Joseph Otis Minott, executive director of the Philadelphia-based Clean Air Council, said Monday the bill is a “terrible” idea that would “hurt the health and welfare of Pennsylvania residents living in shale country. “It deprives Pennsylvania from doing what it believes it should do to protect public health and welfare of its residents,” he said. “Pennsylvania is the nation’s second-largest producer of natural gas and the state with the oldest infrastructure. Why would the Legislature cede its responsibility to protect its residents to the federal government?” Reschenthaler said his bill would streamline regulations and help in job creation by reducing “a duplicative, confusing and costly patchwork of standards” between the DEP and EPA.

Virginia House Votes to Keep Fracking Chemical Cocktails a Secret -  Virginia's House of Delegates voted 59-37 on Monday in favor of a bill that would allow fracking companies to keep their chemical cocktails a secret.  HB 1678 states that "chemical ingredient names, the chemical abstracts number for a chemical ingredient, or the amount or concentration of chemicals or ingredients used to stimulate a well" are exempt from the Virginia Freedom of Information Act.  As the Richmond Times-Dispatch reported, while fracking is not heavily used in Virginia, some energy companies have shown interest. Texas energy company Shore Exploration and Production Corp. has acquired about 86,000 acres of gas and oil leases for Virginia's Taylorsville basin.  The bill was sponsored by Republican delegate Roxann L. Robinson, who argued that "by protecting that actual recipe, it will foster more efficient and more advancements in the fracking industry."   She claimed that HB1678 has since evolved into a "transparency bill" after it was amended to only cover information about chemical concentrations, not the chemicals themselves, according to the Times-Dispatch. Robinson has also sponsored HB 1679 , a separate bill that "authorizes the Director of the Department of Mines, Minerals and Energy (Director) to disclose [chemical names and concentrations] to additional Department staff or state or local officials to assist the Department in responding to an emergency."

Atlantic Coast Pipeline collaborators 'encouraged' by Trump's energy infrastructure push -   Players behind an effort to stretch a 550-mile natural gas pipeline from West Virginia to North Carolina say they’re “encouraged” by President Donald Trump’s apparent push for energy infrastructure projects. The Atlantic Coast Pipeline is a collaboration of subsidiaries of Dominion Resources, Duke Energy, Piedmont Natural Gas and Virginia Natural Gas parent AGL Resources. And it was one of more than 50 infrastructure projects from across the nation prioritized in a new report attributed to Trump’s administration, apparently uncovered by McClatchy Newspapers’ Washington bureau. The Trump report says the project would mean 10,000 total direct jobs and cost between $4.5 billion and $5 billion. It errantly says the project has been permitted. The earliest the project could even receive its final federal permissions would be this fall. Aaron Ruby, spokesman for the ACP, said his group couldn’t comment on lists reported in the media “as we cannot independently verify their source.” Nor would he answer questions about whether the Trump administration had consulted ACP before apparently constructing its list. “However, we are very encouraged by the Trump administration’s recognition of the urgent national need to build critically important energy infrastructure projects,” he said, pointing to the president’s recent moves to push other pipeline projects forward, such as Dakota Access. “The administration has taken several important first steps in recent days to clear the path for these projects, and we are eager to work with the president to ensure that projects like the Atlantic Coast Pipeline are approved and built in a timely manner.”

Colonial Pipeline refiles tariff to change minimum batches, rounding increments - Colonial Pipeline told shippers Monday that it is again filing changes to the minimum tender and rounding process, two parts of a tariff that was rejected last summer by the US Federal Energy Regulatory Commission. The pipeline operator refiled with FERC a tariff to implement changes that will reduce the minimum batch size on the line and reduce the rounding increment for allocating capacity on the line. The changes would be implemented on Colonial's 19th cycle, the first cycles in April. The proposed change would reduce the minimum size from 25,000 barrels to 15,000 barrels on its main lines Lines 1 and 2, and change allocation rounding to the nearest 5,000-barrel increment, down from 25,000-barrel increments.The pipeline operator first proposed the changes in August of 2015 as part of a package that would also halt the transfer of shipper history and change the rules to how shippers could attain regular shipper status. FERC eventually rejected the tariff in July because the proposed changes to how new shippers would attain regular shippers status and the elimination of shipper history trade were found to be insurmountable hurdles for companies wanting to ship on the line.

Florida Fracking Ban Bill Draws Bipartisan Support - A bipartisan group of lawmakers in Florida have proposed legislation to ban fracking in the state.Republicans across the United States have largely embraced fracking, a popular method for stimulating a well to extract hard-to-access oil and gas reserves. With this new bill, filed to the Senate last week byRepublican Sen. Dana Young, Florida is bucking the trend. Another Republican legislator has filed a companion bill in the state House of Representatives. Fracking is technically legal under current laws in Florida, but isn't yet happening. This is largely because there are no specific rules for how it should be done. Officials in recent years have repeatedly attempted to establish such regulations. At the same time, public opposition to fracking has grown. More than 70 counties and cities across the state have passed local ordinances prohibiting the process or supporting a state ban. Environmentalists, communities and local officials are primarily concerned that future fracking activities could threaten the state's precious freshwater sources. "Our aquifer, which is a main source of fresh water for us, runs across the state and knows no county line," Young said in a statement. "I believe we must act quickly and decisively to protect our fragile environment from incompatible well stimulation practices in our state. The wellbeing of our environment is something that all Floridians care about which is why you'll find my bill to ban fracking in Florida has bipartisan support in both chambers." Young represents a west Florida district that includes the city of Tampa, one of the biggest cities in the state to endorse a statewide fracking ban.

Moving natural gas down the Texas gulf coast. - As natural gas exports to Mexico continue to rise and as construction proceeds on liquefaction/LNG export terminals in Freeport and Corpus Christi, TX, the need to transport increasing volumes of gas down the Texas Gulf Coast becomes ever more urgent. And moving gas down the coast is no easy task; the Lone Star State’s convoluted mix of interstate and intrastate pipelines were designed primarily to flow gas up the coast from South Texas and Gulf Coast production areas to the greater Houston Ship Channel area—and from there on interstate pipes to Louisiana and beyond. Today we use RBN’s Fretboard Model to discuss whether existing and planned southbound pipeline capacity will be sufficient to meet export demand.  For several months now, RBN has been making the case that 1) the natural gas export market—more specifically, pipeline exports to Mexico and waterborne exports of LNG—will be the biggest demand drivers for U.S. natural gas production, 2) Texas producers will need a major assist from Marcellus/Utica and other producers in supplying all the gas that will be required to keep pace, and 3) Texas’s existing networks of interstate and intrastate pipes will need major re-plumbing and expansion. We’ve tackled this Texas-size topic not only in blogs, but also in Part 1, Part 2, and Part 3 of our Drill Down series, “I Saw Miles and Miles of Texas.” The fourth and final part of that series will be published next week. As we said in Part 3 of the Drill Down series, one of the biggest challenges in moving increasing volumes of gas south along the Texas Gulf Coast is that the interstate pipelines there are “telescoped the wrong way” —that is, because the pipes were originally designed to add supplies as they moved gas north toward Louisiana (and from there to the Northeast and Midwest), their diameters and capacities increased along the way. Also, while some of the interstate pipelines along the coast begin at the Mexican border (or at least extend deep into South Texas), others start further up the coast and therefore aren’t as helpful in moving gas to the Agua Dulce hub in Nueces County (near Corpus Christi), which has emerged as a key pricing point for the South Texas gas market, including Eagle Ford production as well as gas flows bound for Mexico.

'Biggest Oil Find' of 2016 Puts Crown Jewel Texas Oasis in Crosshairs for Fracking - DeSmog (blog) — Travelers crossing the long stretch of arid desert spanning West Texas might stumble across an extraordinarily improbable sight — a tiny teeming wetlands, a sliver of marsh that seems like it should sit by the ocean but actually lays over 450 miles from the nearest coast. This cienega, or desert-wetlands (an ecosystem so unusual that its name sounds like a contradiction), lies instead near a massive swimming pool and lake, all fed by clusters of freshwater springs that include the deepest underwater cave ever discovered in the U.S., stretching far under the desert's dry sands. Famous as “the oasis of West Texas,” Balmorhea State Park now hosts over 150,000 visitors a year, drawn by the chance to swim in the cool waters of the park's crystal-blue pool, which is fed by up to 28 million gallons of water a day flowing from the San Solomon springs. The pool's steady 72 to 76 degree Fahrenheit temperatures make the waters temptingly cool in the hot Texas summer and surprisingly warm in the winter, locals say — part of the reason it's been called “the crown jewel of the desert.” The wild desert surrounding the springs here looks virtually nothing like it does further east, in the Permian Basin, where the oil industry has been in the midst of the nation's biggest shale drilling frenzy. Drivers on the interstate can smell oil in the air before they even see the oilfields outside Midland, Texas. From the mesquite and cactus-dotted plains atop the Permian Basin, over 2 million barrels of oil a day are pumped out of the ground. Dense fields of thousands of oil pump-jacks line roadsides, extracting fossil fuel from wells that are sometimes less than a football field apart. In September, Apache Corp. announced a major new oil and gas find in Reeves County, a claimed $80 billion discovery that could turn the region's fate on its head. This has locals, who have seen what happens to people's air, water, and communities when deserts are transformed into oil fields, worried. The prospect of allowing thousands of wells to be fracked where water is so scarce raises fundamental questions about what natural resources Americans are willing to sacrifice in the pursuit of fracked oil and gas, Matta and other Balmorhea locals say. Though the drilling industry long denied that fracking puts water wells at risk of contamination, a major EPAstudy released in December concluded that drilling and fracking can pose serious risks to people's drinking water, and has already left some of the country's water supplies “unusable.”

Activists threaten to block Oklahoma pipeline construction - Native American and environmental activists have vowed to block a planned crude oil pipeline, hinting at a standoff in Oklahoma reminiscent to the monthslong Dakota Access Pipeline protest. Once built, the $900 million Diamond Pipeline will carry sweet crude oil from a national transport hub in Cushing eastward toward Tennessee. Opponents said the project was crafted without input by tribes and might disturb unidentified graves of ancestors who were marched to Oklahoma along the Trail of Tears. Organizer Mekasi Camp Horinek declined to say where the protesters would set up along the pipeline's route but warned that actions could begin soon. “There definitely will be an encampment that's going to come here to Oklahoma in the near future where we can call on our allies, our brothers and sisters, the connections we made during that fight at Standing Rock,” said Horinek, state director for Bold Oklahoma. Minor construction has already begun on the Diamond Pipeline and the first pipe could be laid within weeks. The project is a joint venture between Plains All American Pipeline and Valero. Plains All American Pipeline spokesman Brad Leone said the company reached out to almost two dozen tribes before permits were issued by the U.S. Army Corps of Engineers. He said the Corps offered tribes an opportunity to review and comment about the route, which takes the pipeline through seven Oklahoma counties. “Where concerns were raised about the route, every effort was made to reroute the pipeline, use less invasive installation technologies, or provide access to the right of way during construction activities for trained cultural monitors, some of whom are recommended by or directly provided by certain tribes,” Leone wrote in an email to The Oklahoman. Ashley McCray, founder of NoPlainsPipeline, has visited the Standing Rock protest site in North Dakota, spending a few weeks to help weatherize the camp. “The encampment at Standing Rock was really good for a lot of people in Oklahoma because it has enabled them to realize that the front line is in their own backyard,” McCray said. “We just need to bring the fight here.”

BP Plays Long Game with Rockies Assets - The main rationale of BP plc’s decision to move its U.S. Lower 48 headquarters from Houston to Denver is to be closer to two-thirds of its operated oil and natural gas production and proved reserves in the Rocky Mountain region.Could BP’s decision signal a revival for the Rockies exploration and production (E&P) investment and activity, particularly for natural gas? After a surge of activity from 2005 to 2008, Rockies investment and production started to decline, partly due to competition from Marcellus shale gas production. The long-term bullish outlook for U.S. natural gas at home and abroad could lift gas prices and natural gas E&P in the United States, including the Rockies.With natural gas comprising about 80 percent of BP’s Lower 48 portfolio, the company has not only been very focused on improving efficiency and its cost structure, but using emerging technologies such as multi-lateral drilling and data analytics to maintain a competitive, sustainable, safe business, even at lower commodity prices, BP spokesperson Brett Clanton told Rigzone.At the same time, the company is participating in the transition to a low-carbon economy. By the end of the decade, BP expects its 60 percent of its portfolio to be natural gas assets, up from the current 50 percent, as new projects come on stream, BP CEO Bob Dudley said in an October 2016 speech. This includes projects in Trinidad & Tobago, Oman, Egypt and the Shah Deniz 2 project in Azerbaijan. “The scale of energy demand means that the world will continue to need energy from all sources, but the balance of the energy mix needs to change,” Dudley stated.

This lawmaker wants to ease rules on drilling in national parks, and conservationists aren’t happy - It’s safe to say that Rep. Paul A. Gosar (R-Ariz.) is no friend of environmentalists. He boycotted Pope Francis’s speech to Congress in 2015 because the pontiff addressed climate change. He received a score of 3 percent that year from the League of Conservation Voters, significantly below the House average of 41 percent.But his latest move came as a surprise to many. Gosar submitted a resolution Monday that threatens to repeal the National Park Service’s authority to manage private drilling for oil, gas and minerals at 40 national parks, according to the National Parks Conservation Association. Under what are known as the 9B rules, the Park Service, which controls the surface of natural parks, can decline drilling rights to parties that own resources beneath the surface if it determines that the operation would be an environmental threat.“The resolution is just the latest in a series of moves by federal lawmakers to weaken environmental protections for national parks under the Congressional Review Act,” said the association, a nonprofit watchdog for parks. “If these repeals are signed into law … it will not only stop these protections, it will also prohibit agencies from issuing similar rules and protections in the future, unless directed by Congress The parks that have “split-estate ownership” of surface and underground resources include Everglades National Park, Mammoth Cave National Park and Theodore Roosevelt National Park, the association said.

How Come “Old Faithful” Is Spewing Out Crude? Drilling In Our National Parks Is A Hot Issue -- I am now, 40-plus years in the oil and gas industry, primarily on the marketing and PR side, where I spent most of my career trying to explain to naysayers that drilling (and more recently, fracking) is a good thing for our energy independence, the economy, and our national security. Let me start with the downside of this, then I’ll explain the upside. First off, why do we actually need to drill in the parks? Recent humongous finds in the Permian, the Gulf of Mexico, Alaska and elsewhere have proven reserves that will keep us slathered in oil for at least, according to industry experts, the next 100 years. And there are still millions of acres of undrilled land in the same regions that hold just as much promise, if not more. Secondly, the national parks (in my opinion) are sacred ground. Not from a religious sense, but from the perspective I mentioned earlier. It’s a place where you can go and commune with nature in her most primitive state. Taking a kayak around the bend of a pristine river only to see a line of oil rigs is not my idea of a fun trip. And trying to enjoy the solitude of the Grand Tetons while listening to fracking pumps in the background hardly seems peaceful. Make no mistake, I love this industry. I am all for the energy renaissance we are in the midst of right now, and I believe we should still go full speed ahead with exploration and production. But on private lands, and non-national park public lands. Not national parks. Strangely enough, I’ve done a non-scientific poll among my many friends in the industry, and I have yet to find anyone in our industry who thinks this is a good idea. We have good laws in place right now, and our new President has indicated that we will introduce more, that are friendly to our industry. But I don’t think looking for oil in our national parks should be one of them. Oh, I mentioned earlier that I would address the upside of this subject. I’ll do it as soon as I can think of one.

House repeals Obama rule on methane emissions on federal lands | Reuters: The U.S. House of Representatives on Friday repealed a rule put forth in the final days of the Obama administration that limited emissions of the potent greenhouse gas methane from oil and gas drilling on federal lands, in the latest move by Republican lawmakers to overturn regulation on the energy industry. The Senate is expected to vote next on repealing the rule, which was part of former President Barack Obama's efforts to curb climate change. Congress this week repealed pollution and anti-corruption rules on energy companies.

Trial Begins: This Man Faces 30 Years in Prison for Shutting Down a Pipeline -- The trial began on Monday for Ken Ward, a climate activist and co-founder of the Climate Disobedience Center , who risks spending 30 years in prison for shutting down a pipeline carrying tar sands crude last October.  At the time, 59 year old Ward, who shut down the Kinder Morgan Trans-Mountain Pipeline in Anacortes, Washington, said his actions were "to avert climate catastrophe and stand with the Standing Rock water protectors. We must stop the fossil fuel industry in its tracks." Ward participated in the #Shutitdown action which targeted tar sands pipelines in different states, including Washington, Oregon, North Dakota, Montana and Minnesota. It has led to a dozen criminal cases against activists and journalists, of which Ward's is the first to go to full trial. As yesterday unfolded the prosecution dropped one of the three charges—trespassing— against Ken leaving only charges of burglary and sabotage for him to face.

A ray of light in dark times: Jury refuses to convict Ken Ward for pipeline shutdown!  - In a resounding recognition of the threat of climate change, a Skagit County jury has refused to convict Ken Ward of two felony counts stemming from an act of civil disobedience in October of last year. After more than five hours of deliberation, Ward’s three-day trial ended in a hung jury, with at least one juror refusing to convict.“In five hours, the jury was unable to decide that with all of the evidence against me, including the video of me closing the valve, that this was a crime. I didn’t contest a single piece of the evidence, only presented my story and evidence of catastrophic climate change. This is a tremendous outcome.,” said Ken Ward after the decision.The trial was closely watched as the first in a series stemming from pipeline protests last October. The outcome of Ward’s trial is a powerful victory for the group who call themselves the “ValveTurners.” On October 11th 2016, Ward closed an emergency block valve on Kinder Morgan’s TransMountain Pipeline, which transports tar sands from Canada to Washington refineries. The action, coordinated with four others across the country, was described by Reuters as“the biggest coordinated move on U.S. energy infrastructure ever undertaken by environmental protesters.”The Valve Turners’ action stopped the equivalent of 15% of the amount of oil burned in the United States in a single day. Ward was charged with two felonies, sabotage and burglary, and faced up to 20 years imprisonment and $40,000 in fines had he been convicted. Wardbroadcas this action, which included cutting two chains to enter a TransMountain block valve site and closing the valve. Ward did not contest the facts of his actions.  Ward’s defense consisted exclusively of his motivation to confront the threat of climate change, and the defense did not contest a single piece of evidence brought by the prosecution. Several exhibits demonstrating climate science and impacts and the role of civil disobedience in societal change were permitted as evidence. Ward himself was the only witness called by the defense. “This trial was about climate change. The prosecution presented only information about what Ken did on October 11, and Ken and the defense presented only information about climate change, so the only decision that the jury was making was which story mattered more. And the story of the climate crisis won.”

After Trump, Black Lives Matter And Pipeline Protests, New Bills Would Raise Penalties For Protest : NPR: From the Black Lives Matter movement to environmentalists trying to stop new oil pipelines to the recent Women's March against President Trump, the past year has been filled with large, often spontaneous protests.Now the reaction to those protests is appearing in a number of Republican-controlled statehouses across the country, where lawmakers are introducing proposals to increase penalties for those who block roadways while protesting.A bill in Iowa was inspired by a protest against Donald Trump shortly after the November election. More than 100 demonstrators blocked traffic on Interstate 80, just outside Iowa City, Iowa, stopping traffic on the busy trucking route for almost a half-hour. "You're not just stopping traffic," said Republican state Sen. Jake Chapman about his bill, which would apply to people blocking highways with speeds posted above 55 mph. Violators could get a felony and spend five years in prison, plus a fine of up to $7,500 "You're impeding law enforcement ability to get to call where there could be serious life-threatening situations," said Chapman, who also works for an ambulance service. Opponents of the bill call it an attack on free speech. "Republicans have taken over state legislatures across the country and they appear interested in punishing people with different views than theirs," said Democratic state Sen. Joe Bolckom of Iowa City.

North Dakota House passes new rule for reporting oil spills - On Wednesday January 25, the North Dakota House legislators voted in an overwhelming majority of 82-11 in favor of House Bill 1151 that eliminates the need to report oil spills under ten barrels. No one wants oil spills, but as Meg Morley wrote in a letter to the Grand Forks Herald urging the legislature to pass the new law, “Spills WILL happen; they’re inevitable when you’re working with oil.” No one questioned whether or not they happen. The argument centered around how big the spill has to be before it’s necessary to report it. North Dakota HB 1151 states companies no longer need to report spills of crude oil, produced water or natural gas that are contained to a well site or production location and are less than 10 barrels, or 420 gallons. Supporters of the bill say it will eliminate inspection of spills that are contained to a well site and can easily be cleaned up by companies. Other supporters of the bill also said it would clean up the administrative burden the reporting standard places on public employees. According to the Bismarck Tribune, Kathleen Spilman, a consultant with Keitu Engineering who develops emergency response plans for the oil and gas industry, said she estimates 80 county and state employees get email notices about every spill, regardless of the size. However, Department of Mineral Resources spokesperson Alison Ritter said the law probably wouldn’t save the department much money, since oil and gas field inspectors do not immediately respond to a spill of 10 barrels or less that is contained on site. Instead, such incidents are inspected during routine inspections to ensure they’ve been properly cleaned up. Yet landowners say the new law directly contradicts a commitment to protecting North Dakota’s environment. Troy Coons, North Dakota Landowners Association Chairman, said the organization would continue to oppose the law, even if it’s passed, reports the Dickinson Press. The organization supports reporting every spill over one gallon, regardless of the location. Kayla Pulvermacher, member advocacy director for the Farmers Union, noted that producers would likely want to know if spills, regardless of size, happen on their land.

Malia Obama joins Dakota Access Pipeline protests - Malia Obama, the oldest daughter of former President Barack Obama, was spotted Friday at a Dakota Access pipeline protest at the Sundance Film Festival. Malia Obama joins Dakota Access pipeline protest at Sundance— (@mercnews) Obama was praised by fellow protester, actress Shailene Woodley, who also attended the event at the Sundance Film Festival in Park City, Utah.“It was amazing to see Malia,” the actress told Democracy Now. “To witness a human being and a woman coming in to her own outside of her family and outside of the attachments that this country has on her, but someone who’s willing to participate in democracy because she chooses to,” Woodley said. “Because she recognizes, regardless of her last name, that if she doesn’t participate in democracy, there will be no world for her future children.” Malia reportedly left her family’s Caribbean vacation to attend the Sundance festival. The Dakota Access Pipeline was in headlines late last year as massive protests nationwide fought to stop the pipeline. Many were concerned with possible oil spills, the pipeline's affect on nearby water supplies and the tribal rights of the Standing Rock Sioux tribe, who discovered the construction of the pipeline was planned through a sacred site. Feds stopped construction of the pipeline under Obama, however President Trump took executive action this week to move forward with its construction.

Military veterans throw support behind Standing Rock protesters after Trump signs Dakota Access pipeline memo -  A U.S. military veterans group announced new efforts to support the Standing Rock Native American tribe and protesters who oppose completion of the Dakota Access pipeline, just days after President Donald Trump took action to move the project forward.  Those efforts include developing the capability to deploy thousands of veteran volunteers to Standing Rock, potentially putting the White House in a politically difficult position. They come as tensions have escalated between protesters and law officers in recent weeks.  Veterans Stand launched a fundraising drive on GoFundMe last week to support a network of protesters camped out near Cannon Ball, North Dakota. It seeks to raise $500,000 to buy supplies for campers, provide car rides for volunteers and create a rapid response ability. It has raised about $19,000 in two days."The 4,000 could have easily turned into 20,000, because that's how we're trained to operate." -Anthony Diggs, communications director, Veterans Stand"We stand in unity with our brothers and sisters in Standing Rock (and beyond) and our community is ready to mobilize," the group said on the GoFundMe page.  About 4,000 veterans traveled to the reservation in North Dakota last month to support the protest by the Standing Rock Sioux tribe, environmentalists and other activists, according to figures provided by Veterans Stand.  The Standing Rock Sioux oppose completion of Energy Transfer Partners' Dakota Access pipeline because it would pass beneath a source for the tribe's drinking water and construction would disrupt sacred land, they say.

Lawyer: No timetable for allowing Dakota Access construction | TheHill: A government lawyer said Monday that he didn’t know when the Army Corps of Engineers will issue a construction easement for the Dakota Access pipeline, a move mandated by an order from President Trump. Trump ordered the Army Corps last week to issue an easement allowing construction on the most controversial stretch of the 1,170-mile $3.8 billion Dakota Access Pipeline. But it's not clear when that easement will be issued. “The Corps and the Army are continuing to make decisions under the order,” attorney Matthew Marinelli told a federal judge on Monday. “I can’t give you a timetable for the completion of that decision-making process.”The Obama administration declined to issue the easement after the Standing Rock Sioux tribe warned that the pipeline threatens its drinking water supply in North Dakota. The tribe sued over the pipeline, with their concerns sparking national protests against the project. Obama officials said they would conduct an environmental impact assessment of the pipeline, something that could delay the mostly complete project for years. Trump issued orders Tuesday calling for the completion of both the Dakota Access and the Keystone XL pipelines, expediting both. Marinelli said senior Army Corps officials were meeting on Monday to discuss how to follow that order. “My clients are actively working toward responding to that presidential memorandum,” he said. Jan Hasselman, an Earthjustice lawyer representing the Standing Rock Sioux, said Monday that the tribe is worried it might not have enough time to ask a court to block the project’s operation once the Army Corps issues the easement.

Army Corps ordered to issue final Dakota Access pipeline permit, two lawmakers say -- The acting secretary of the Army has instructed the Army Corps of Engineers to provide the final permit needed to complete the Dakota Access pipeline, according to two Republican North Dakota lawmakers who support the project. Sen. John Hoeven and Rep. Kevin Cramer both issued statements Tuesday night saying the acting secretary of the Army, Robert Speer, had ordered the Corps to grant an easement for the pipeline to run under Lake Oahe. “This will enable the company to complete the project,” Hoeven said, “which can and will be built with the necessary safety features to protect the Standing Rock Sioux Tribe and others downstream.” On Wednesday, however, the Army said the process still had a ways to go. Malcolm Frost, chief of public affairs for the Army, said the Army “has initiated the steps” outlined in the Jan. 24 presidential directive which directs the acting secretary of the Army to “expeditiously review” the Dakota Access Pipeline permits. “These initial steps do not mean the easement has been approved,” Frost said. “The assistant secretary for the Army Civil Works will make a decision on the pipeline once a full review and analysis is completed in accordance with the directive.” A representative of the pipeline company, Energy Transfer Partners, said Tuesday night that the company did not know anything beyond what it saw on Cramer’s and Hoeven’s websites.

US Army Corps of Engineers directed to approve Dakota Access easement. - The acting Secretary of the Army has directed the Army Corps of Engineers to issue the final remaining easement for the Dakota Access pipeline for a disputed crossing at Lake Oahe.   Robert Speer, who was designated as the acting Secretary of the U.S. Army on January 20, 2017, notified Congress Tuesday that the agency will be granting the easement.   The move follows a memo from President Donald Trump on Jan. 24 directing that the agency expedite reviews and approvals for the project, which was proposed to carry Bakken crude 1,172 miles across four states to Illinois, where it can more readily access refineries that handle light sweet crude.   Proponents of the pipeline have said it will take thousands of trucks off the road and represents the safest way of transporting crude, while opponents have questioned whether safety measures at Lake Oahe will be adequate to protect the water, which provides drinking water to the tribe and many others downstream.  Delegates for North Dakota have generally supported completion of the project, seen by industry leaders as critical infrastructure for the Bakken’s future. Members of the tribe did not have an immediate statement Tuesday night, but have repeatedly called on President Trump to respect their treaty rights and stick with the Environmental Impact Statement the U.S. Army Corps of Engineers had said it would grant in the waning days of the Obama administration.

US army to allow Dakota oil pipeline --The US Army has been ordered to allow the construction of the final section of a controversial oil pipeline. North Dakota Senator John Hoeven said the Army Corps of Engineers had been directed to allow work under Lake Oahe, a reservoir on the Missouri River. Native Americans, who have protested against the Dakota Access Pipeline for months, vowed legal action to stop it. President Donald Trump recently signed an executive order signalling his support for the pipeline. The US Army Corps of Engineers, which has approval authority, decided last year to explore other routes for the pipeline amid huge protests by the Standing Rock Sioux Tribe. In an announcement on Tuesday, Mr Hoeven said that the acting Secretary of the Army, Robert Speer, had ordered the corps to allow the work necessary to complete the pipeline.But the Standing Rock Sioux Tribe argues that the Army has to wait for the results of a scheduled environmental impact study (EIS) that was ordered in January. "The Army Corps lacks statutory authority to simply stop the EIS," they said in a statement. The $3.7bn (£2.8bn) pipeline is designed to transport about 470,000 barrels of crude oil a day across four states, from North Dakota to a terminal in Illinois, where it can be shipped to refineries.

76 Arrested at Standing Rock as Trump Tries to Move DAPL Forward - Seventy-six Water Protectors were arrested following a clash with law enforcement at Standing Rock on Wednesday afternoon. The arrests came a day after federal officials claimed that the final controversial easement for the Dakota Access Pipeline (DAPL) had been granted. Morton County Sheriff's Office spokesman Rob Keller told BBC News that the arrests were made after demonstrators moved from their flood-prone main camp, Oceti Sakowin, to private land owned by the pipeline operator, Energy Transfer Partners. According to the Huffington Post , deputies said "rogue protesters" were seized without injury after twice refusing warnings to leave the property,. "Law enforcement showed great restraint, enduring verbal abuse and taunts and protesters resisting arrest but did not make use of any less-than-lethal munitions. The camp was cleared by around 4:00 pm," the office said in a statement .  Demonstrators noted in a Facebook post that the short-lived "Last Child" camp was a "peaceful assembly."

Thousands of Veterans: Dakota Access Pipeline 'Will Not Get Completed' - "Thousands" of U.S. military veterans and volunteers are readying their return to Standing Rock as President Donald Trump tries to move the Dakota Access Pipeline (DAPL) forward and clashes between law enforcement and Water Protectors continue to break out. "We are committed to the people of Standing Rock, we are committed to nonviolence and we will do everything within our power to ensure that the environment and human life are respected. That pipeline will not get completed. Not on our watch," Anthony Diggs, a spokesman for Veterans Stand , told CNBC . In early December, Veterans Stand mobilized more than 2,000 veteran to descend upon Standing Rock, North Dakota. The vets volunteered to act as peaceful human shields for Water Protectors who were facing increasingly violent confrontations and mass arrests from heavily militarized police. As it happened, their arrival coincided with the U.S. Army Corps of Engineers denying a key easement for the pipeline to travel under Lake Oahe. The corps' decision temporarily halted pipeline construction to allow time for an Environmental Impact Study. However, with Trump now in office, the $3.7 billion project has found new legs. Last week, the president issued executive orders to "review and approve" the DAPL as well as the long-contested Keystone XL in "an expedited manner." He also asked the corps to reconsider the environmental review.  To make matters worse for pipeline opponents, Sen. John Hoeven (R-ND) and Rep. Kevin Cramer (R-ND) separately claimed that the final easement for the DAPL has already been granted even though the Standing Rock Sioux said they had not received notice that the easement was granted, calling the lawmakers' claims "premature."

Dozens Arrested at Standing Rock as Veterans Vow to Block Completion of Dakota Access Pipeline - Real News Network video and transcript

Tribal chairman decries Dakota Access protesters' new camp | National News |— Dakota Access oil pipeline protesters who tried to set up a new camp on private land undermined the Standing Rock Sioux tribe's efforts to stop the $3.8 billion project, tribal Chairman Dave Archambault says. Archambault in recent weeks has been pushing protesters to leave their flood-prone main encampment on federal land between the reservation and the pipeline route and asking that activism be spread around the U.S. He said efforts by some to establish a camp Wednesday on nearby higher ground "do not represent the tribe." Authorities arrested 74 protesters, including American Indian activist Chase Iron Eyes, after they set up teepees Wednesday on land owned by Texas-based pipeline developer Energy Transfer Partners. Protesters said they were peacefully assembling on land they believe rightfully belongs to American Indians. The Morton County Sheriff's Office initially reported 76 arrests but later said two were protesters accused of unrelated drug offenses. The new camp site was west of the main encampment that for months has housed hundreds and sometimes thousands of people who support the tribe's position that the pipeline threatens their drinking water and Native American cultural sites. The pipeline would carry oil from North Dakota through the Dakotas and Iowa to a shipping point in Illinois. The route would go under Lake Oahe, a large reservoir along the Missouri River. Energy Transfer Partners disputes the tribe's arguments and says the pipeline will be safe. A few hundred people still remain in the main camp, which is being cleaned up this week in advance of spring flooding that could carry any remaining refuse into the Missouri River. Archambault in recent weeks has called for the camp to disband, and late Wednesday he urged people who have left to stay away. "In these past few weeks at camp, I see no reflection of our earlier unity, and without unity we lose," he said.

Dakota Access company wants some court information sealed | TheHill: The company developing the controversial Dakota Access oil pipeline wants some records regarding the project to be hidden from the public. Dakota Access LLC, a subsidiary of Energy Transfer Partners, outlined its objections to certain disclosures in a brief late Wednesday in the federal District Court for the District of Columbia. The company cited the ongoing protests against the pipeline as evidence to argue that “terrorists or others intending to cause harm” could misuse the information. “Given the intense amount of public attention this pipeline has received, and the unlawful activity already experienced, there is a greater than typical risk that this information would be misused to harm the public,” it wrote. Information regarding the pipeline from the Army Corps of Engineers has been submitted to the court as part of a complex case in which an American Indian tribe is trying to get the pipeline blocked and the company is trying to force its approval. The project’s main remaining hurdle is an Army Corps easement it needs in order to build under Lake Oahe in North Dakota. Former President Obama delayed the easement before leaving office. But last week, President Trump instructed the Army Corps to approve it as soon as possible. Dakota Access said all of the parties to the case have agreed to seal some of the information.

Is The Kremlin Funding A Campaign That Undermines U.S. Fracking? - The recent National Intelligence Council report assessing the involvement of Russia in last year’s U.S. presidential elections spurred a flurry of media reports suggesting that Russia is heavily involved in anti-fracking campaigning. Some authors interpreted this involvement as a “propaganda effort”, while others claimed the Kremlin was financially backing anti-fracking groups in the U.S., without, however, providing any evidence for this claim. The basis for all these reports is part of the report, in which the authors discuss the agenda of RT, a state-funded TV channel and website that is widely seen as the Kremlin’s chief megaphone abroad. Anti-fracking rhetoric was identified in the report as a major element of RT’s agenda and interpreted by the report’s authors as reflecting Russia’s concern about the growing influence of shale oil and gas on international markets and “the potential challenges to Gazprom’s profitability.” One media report author, Drew Johnson, went further, seeing this rhetoric as indicative of Putin’s direct financial involvement in anti-fracking campaigns in an effort to undermine America’s energy independence. It only takes a bit of common sense to see why Russia would not be too happy with the shale revolution – it brought prices down, shaving billions off Russia’s state revenues from oil. So, the suggestion that the Kremlin has a material interest in undermining the popularity of fracking in the U.S. by fueling opposition to it is a logical one. Yet, besides this logical suggestion, there are several questions that might raise some doubts as to the actual “Russian threat” to fracking. First of all, Russia does not export its own fossil fuels to America, so that can’t be a reason for the campaigns. Second, Russia’s energy industry has proved to be very resilient—more than a lot of small U.S. shale players—simply because of size and government support. One could argue that the U.S. energy industry actually suffered a bigger blow from the price crash than the Russian industry. Third, the threat that American gas could pose to Gazprom’s profitability is a very remote one: gas is exported either via pipelines or as LNG. Gazprom’s pipeline network around Russia and in Europe ensures its stable position on regional markets – a position that it will take U.S. exporters a lot of time and investment to challenge.

Pipeline backers make big promises about jobs, growth | Fox Business: Former President Barack Obama rejected the Keystone XL in 2015. The Army Corps of Engineers put a halt to construction of the Dakota Access pipeline last month. The move by Trump fulfills a campaign promise to revive the projects, which he says will create thousands of jobs and generate taxes for states and communities. However, the number of jobs created and the economic benefits have been hotly debated. Many experts believe any impact on the U.S. economy will be small. Despite Trump's executive orders, both projects face likely court fights by environmental groups, and the Keystone XL pipeline faces uncertain demand from oil shippers. According to a 2014 report by the U.S. State Department, Keystone XL would support about 42,100 jobs including about 3,900 workers directly involved in construction. Workers, including those indirectly supported by the pipeline, would earn about $2 billion.Once construction ends and oil starts flowing, the pipeline would support just 35 permanent jobs, according to the report. The Dakota Access project has created about 12,000 construction jobs, according to project leader Energy Transfer Partners LP. But most sections of the pipeline are finished and most of the jobs are too. The State Department said that construction of Keystone XL would contribute around $3.4 billion to the nation's output. The companies building the Dakota Access pipeline say they have spent more than $3.5 billion and would spend "hundreds of millions a month" to finish the work. Those sums, however, are insignificant in the $18 trillion U.S. economy. The XL pipeline would contribute about 0.02 percent to the nation's gross domestic product.

Trump Doubles Down On Dubious Pledge To Build Pipelines With U.S. Steel | The Huffington Post: President Donald Trump doubled down Thursday on his pledge to require that the Keystone XL and Dakota Access pipelines be built from steel manufactured in the United States.Speaking at the annual Republican Party retreat in Philadelphia, Trump said he added a last-minute clause that ordered the use of American-made steel to a flurry of presidential memoranda he signed this week in hopes of restarting talks with developer TransCanada to build Keystone XL and ending a delay on construction of the hotly protested Dakota Access Pipeline in North Dakota.“I was sitting at my desk, and I’m getting ready to sign Keystone and Dakota, and I say, where is the pipe coming from? And I won’t tell you where, but you wouldn’t be happy,” Trump said. “If people want to build pipelines in our land we want the pipe to be manufactured here.”But such a stipulation may not be legal. The requirements may run afoul of regulations set by the World Trade Organization. The rules laid the groundwork for the post-war boom and created a bulwark against the kind of global economic collapse last seen in the 1930s. The fourth paragraph of the General Agreement on Tariffs and Trade, a 1947 trade deal that helped establish the WTO, barred its member countries from giving favor to domestic products.The issue was last tested nearly four decades ago, when the U.S. successfully challenged Canada’s 1973 Foreign Investment Review Act, which required regulators to give favor to domestically produced product before approving an investment.

Trump’s first days fuel optimism among drillers, angst for environmentalists - In less than two weeks in office, President Donald Trump is working to usher in a new era for American energy companies. He’s begun rolling back efforts to combat climate change and is pushing for federal approval of controversial, new infrastructure projects — such as the Keystone XL and Dakota Access oil pipelines. There is guarded optimism among fossil fuel companies as they wait and see, along with everyone else, how Trump will deliver on his promises to boost American energy production. But his win has also been a major blow to many environmental groups, climate scientists, and others who worry about the administration’s disregard for science and policies aimed at protecting public health and the natural world. They’re now steeling themselves for a long, hard fight. Not surprisingly, President Trump sounds a lot like candidate Trump. “The shale energy revolution will unleash massive wealth for American workers and their families,” he told oil and gas executives in Pittsburgh last fall. With that in mind, on his first day in office, the Trump administration deleted information on climate change from the White House’s official website and posted a new America First Energy Plan—which calls for rolling back environmental regulations, and promoting the further development of fossil fuels, particularly the nation’s shale oil and gas. This is good news to people like David Spigelmyer, who heads of the Marcellus Shale Coalition, a trade group representing natural gas producers. “We’re optimistic because we believe that free market enterprise will work, and that energy options won’t be taken off the table,” says Spigelmyer. “All sources of energy will be given an opportunity to compete.”

TOP OIL TRADER: Trump’s border tax would make gasoline more expensive -- A top oil trader is counting on President Donald Trump's border tax to increase oil prices - helping American producers while hurting American car drivers."If the tax is adopted, WTI could move to a $10 [per barrel] premium to Brent providing a substantial economic advantage to US producers," according to an investment outlook from Andurand Capital Management, a $1.6 billion hedge fund firm. "Such a tax would also increase domestic gasoline prices in the US."A copy of the January 16 note was reviewed by Business Insider. Trump said January 23 that he would impose a significant "border tax" on companies that move production outside of the US to other countries. America’s oil giants have production facilities around the world, and could be impacted by such a tax.London-based Andurand Capital Management is run by Pierre Andurand, and was up 22.2% last year compared to the 16.9% return of the S&P GSCI Crude index, according to the note. In December, Andurand's fund gained 6.8% net of fees, owing largely to a long position in crude oil (long Brent, WTI future and call options), the note said.Here's the relevant excerpt from Andurand's outlook (emphasis added): "We believe that OPEC would like to achieve higher oil prices quickly to counteract the potential cross border tax adjustment supported by President elect Donald Trump. The issue of the Trump border tax policy is a real wild card and could have a significant impact on US and foreign oil prices. If the tax is adopted, WTI could move to a $10/bbl premium to Brent providing a substantial economic advantage to US producers. However, such a tax would also increase domestic gasoline prices in the US. At current relatively low oil prices, we believe that there is still room for the tax to be implemented. However, if OPEC succeeds in propping oil prices up towards $70/bbl, President Trump might face resistance from US gasoline consumers and drop the tax adjustment (at least for the energy sector). While we believe there is a 30% chance for the tax adjustment to go through, it also reinforces our belief that OPEC will do anything that is necessary to push oil prices higher as soon as possible.

Oil and Gas Production in N America -- This post provides an overview of N American oil and gas production utilising the growing mountain of charts to be found in Global Energy Graphed. These charts show the parlous state of the Mexican oil and gas industry that will be the focus of this post. Oil production is down nearly to the point where Mexico will cease oil exports. Gas production is down and Mexico has already become a serial gas importer. Drilling has virtually come to a halt. I want to kick off with a quick update on Global Energy Graphed that has expanded enormously in recent weeks but is still very much a work in progress with a lot more to come. Note that the easiest way to navigate this resource is through the menu bar up top. Hover the cursor over charts to read the data that lies behind.

  • Monthly oil production from the IEA where we have now graphed the whole Oil Market Report from January 2002. There is a total of 54 graphs that were updated to December 2016 on 2nd February.
  • Annual gas production and consumption as reported by the BP statistical review. There are summary charts for 7 regions plus individual country charts for all major producers and consumers. There are 51 graphs in all.
  • Annual coal production and consumption as reported by the BP statistical review. There are summary charts for 5 regions plus individual country charts for all major producers and consumers. There are 26 graphs in all (not yet completed).

Why vertically integrated midstream companies hold an edge - Things are definitely looking up in the U.S. midstream sector, but that doesn’t mean that all midstream companies in the horse race will gain equally—in fact, it’s a given that they won’t. To separate the win-place-and-show companies from the middle of the pack and the real laggards, what’s needed is a detailed, muzzle-to-tail inspection of midstreamers’ individual assets, the production areas they serve, the take-or-pay and other contracts that provide their revenue, and how their assets work as a team (or don’t). As we said in Part 1 of this blog series, for racehorse owners and the folks who run midstream companies alike, the aim (as the old song goes) is to “accentuate the positive, eliminate the negative … and don’t mess with mister in-between.” To get the complete picture of a midstream company’s value and prospects, you’ve got to factor in the positive but also ferret out the negative and the in-between, something our good friends at East Daley Capital have done in Dirty Little Secrets—Lifting the Covers on Midstream Energy Company Risk,” which provides company-by-company analyses of 23 midstreamers as well as lessons learn from those detailed reviews. (More information on the report, which runs more than 100 pages, is available here.)

How global economic growth will drown in Trump’s oil glut after 2018  - Oil is here to stay — certainly the Trump administration thinks so, judging by its extraordinary ‘America First Energy Plan’ to ramp up exploitation of America’s last remaining oil, gas and coal resources.The Trump energy plan would appear to be vindicated by BP’s new Energy Outlook, which forecasts a steady growth in demand for oil into the 2040s. The British oil and gas company also forecasts that there is more than enough oil to meet rising global demand.BP is a powerful member of the top US oil industry lobby group, the American Petroleum Institute, whose other members include ExxonMobil, Chevron, Royal Dutch Shell and Saudi Aramco. The group is currently lobbying the Trump administration for more deregulation, offshore drilling and pipeline construction. BP’s Energy Outlook paints a rosy picture of the future of global oil and gas, as a viable and profitable investment opportunity. The BP report appears to stand in stark contrast to a controversial HSBC report released late last year, which INSURGE intelligence exclusively published in full in January. That report agreed that oil demand would continue surging, but offered a very different scenario of what would happen next. HSBC predicted that supply growth would be insufficient to meet demand. So wide would the supply-demand gap be, that by 2040 the world would need to find the equivalent of four Saudi Arabias of oil production to meet demand. This would lead to an oil crunch which in 2018, or shortly after, could trigger a global financial crash of similar scale and nature to what we saw in 2008.BP’s quite different oil production scenario would mean a very different future for oil prices, but not necessarily for the global economy. If BP is right that recoverable global oil supplies are around 2.6 trillion barrels, this could meet rising demand out to 2050 twice over.The world would face a decadal oil glut. The BP report doesn’t explore in detail how this might impact prices, but it would likely o ffset substantial price hikes. Tepid prices, BP warned, would probably be exacerbated by weakening demand for oil driven by a combination of climate change policies and technological advances in renewable energy and electrification.

House Kills Requirement For Energy Companies To Disclose Payments To Foreign Governments -- In a victory for the US oil, gas and mining industry, which for years has appealed to the executive branch and courts to eliminate a rule which Exxon Mobil (whose former CEO was just confirmed as US Secretary of State), Chevron and other producers alleged put them at a disadvantage against foreign competitors, this afternoon the House approved a resolution killing an SEC requirement for US energy companies to disclose their payments to foreign governments, known as the "extraction rule." The industry had claimed that the rule, part of the 2010 Dodd-Frank act, gives global rivals a competitive edge. Backers, on the other hand, said the rule would keep payments to foreign nations in government coffers, not private pockets, and generally avoid bribes and graft. Because Exxon and Chevron aren’t listed on the European exchanges, they don’t have to comply with the EU disclosure rules Bloomberg explains. That may give them an edge over other oil majors who must report project-level payments, critics say. In its 2015 disclosure to the UK, Rosneft reported $29.8 million in payments to the Russian Federation, Vietnam, Brazil and Norway. In the same year, BP reported $15.2 billion in payments to 23 countries, Total disclosed $16.7 billion to 44 countries, and Shell reported $21.8 billion to 24 countries. The idea behind the measure is simple: If foreign oil companies disclose payments of $1 million to the government of Country X, then the lawmakers and citizens of Country X will know that $1 million should show up on the country’s budget. If less shows up, then obviously some of that amount was "diverted for private use" i.e., embezzled.

Another Win For Big Oil: House Removes Transparency Rule - The Republican-dominated House of Representatives yesterday moved to repeal a rule that requires oil companies to report on their payments to foreign governments, including taxes and royalties from their activities in these countries. The rule, part of the Dodd-Frank Act, was devised and approved two years after the 2008 crisis, aiming to make public energy companies more transparent and limit the potential for bribes abroad. The energy companies themselves, however, protested that the rule puts them at a disadvantage to foreign competitors that are not bound by it. On the other hand, backers of the rule note that the main competitors of Exxon and Chevron are based in Europe, and as such, are subject to EU regulations to the same effect. Shell, BP, Total, and the rest of them all report their tax and royalty payments to foreign governments on an annual basis. Rex Tillerson, the new Secretary of State, was one of the most vocal opponents to the rule, arguing that it would make it harder for Exxon to do business in resource-rich countries such as Russia. Yet despite the fact that the rule was stipulated in the Dodd-Frank Act, it never took effect: in the years following the passing of the Dodd-Frank Act, the SEC has working on formulating it more specifically. As Vox reports, the final formulation was only completed in the middle of last year, and the rule was supposed to take effect this year. The Congress is using a little known piece of legislation to quickly remove Obama regulations: the Congressional Review Act. It allows lawmakers to repeal regulation by a simple majority vote. By the end of this week, according to Bloomberg, the House is also expected to kill regulation regarding mountain-top mining and limiting methane emissions.

Saudi Arabia may raise U.S. oil investments: energy minister | Reuters: Saudi Arabia may increase its oil investments in the United States due to a more fossil fuel-oriented energy policy by the U.S. administration of President Donald Trump, the kingdom's energy minister said. Trump had campaigned on a promise that Washington should boost U.S. energy independence from oil cartels such as OPEC, of which Saudi Arabia is its de facto leader and by far the group's biggest producer. But Saudi Arabia's Minister of Energy, Industry and Mineral Resources, Khalid al-Falih, told the BBC that "there are huge areas of alignment" in interests between the two traditional allies. "President Trump has policies which are good for the oil industries and I think we have to acknowledge it ... He has steered away from excessively anti-fossil fuels, unrealistic policies," Falih told the BBC in an interview broadcast on Wednesday. "I think he wants a mixed energy portfolio that includes oil, gas, renewables, and make sure that the American economy is competitive. We want the same in Saudi Arabia." Last year Saudi Arabia unveiled sweeping plans aiming to end the kingdom's "addiction" to oil and transform it into a global investment power through a broad reform plan dubbed Vision 2030. Asked whether there is a worry about Trump's promise to pursue energy independence and block crude imports from Saudi Arabia, Falih said: "We have no problem with the growth of American indigenous oil supply. I have said repeatedly, as long as they grow in line with global energy demand, we welcome them. "We had billions of dollars invested in refining and distribution in the United States and we may be increasing that investment on the back of pro-industry, pro-oil and gas policies of the Trump administration."

Boom and bust returns as oil market loses its swing - Up until 1972, independent US oilmen and oil states like Texas acquiesced to heavy-handed government regulations over oil, imposing monthly quotas on producers. This was all done to vanquish chronic booms and busts that vexed the oil industry, consumers, investors, and officials. A massive price bust in 1931 prompted Texas and Oklahoma governors to send troops into oilfields to shut wells. Afterwards, with the support of both the conservative oil industry and the liberal FDR Administration, oil states like Texas imposed mandatory quotas well-by-well, field-by-field, for 40 years. These super-strict quotas produced a four-decade “Texas Era” of unparalleled price stability which ended in 1972 when slowing US supply and increased nationalisation in the Middle East enabled Opec to become supply manager and price fixer.  Opec achieved some success stabilising prices, but never matched Texas’ achievement. Opec’s reign withered and died about 10 years ago when oil prices began their wild rollercoaster ride, first up to $145 in 2008 and then down to $26 last February. Texas and Opec quotas both aimed to stabilise near-term prices and anchor perceptions of long-term prices so the industry — and everyone who depended on oil — could plan and invest. Oil remains civilisation’s lifeblood and price stability is of paramount importance. Boom-bust oil price cycles reduce planning horizons, deter investment in machinery and equipment, and increase unemployment. Extreme price fluctuation complicates monetary policy, induces global downturns, and can trigger war and terrorism. Some believe recent pledges by Opec and Russia to restrain production mark the return of supply management. Hardly. Since these producers began talking about restraint last February, they added around 1.4m barrels per day to the glut. Their recent pledges to trim production from historically high levels resemble ad hoc, collective supply restraint agreements that sprang up occasionally since oil’s earliest days by producers spooked by price busts. They sometimes enjoyed temporary success but invariably fell apart due to supply growth outside and cheating within members’ ranks. Opec’s own analysts, and those at the US Energy Information Administration, project these pledges will not dent the towering inventory glut.

Exxon Mobil misses on fourth-quarter earnings -  Shares of Exxon Mobil were down less than 1% in premarket trade Tuesday after the company missed fourth-quarter earnings expectations. The company reported net income of $1.68 billion, or 41 cents per share, down from $2.8 billion, or 67 cents per share in the year-earlier period. The FactSet consensus was for earnings per share of 70 cents. Exxon Mobil reported revenue of $61.1 billion, up from $59.8 billion in the year-earlier period, but below the FactSet consensus of $61.4 billion. The company recorded an upstream asset impairment charge of $2 billion, related to dry gas operations in the Rocky Mountain region, which the company said impacted fourth-quarter and full year earnings, as well as a downturn in commodity prices. Shares of Exxon have fallen 6% in the past month, compared to the S&P 500's gain of 2%.

Shell says on track with asset sales as Q4 earnings disappoint - Shell said Thursday it remains on track to cut its debts by selling assets and lowering costs as it benefits from a production boost as a result of the landmark acquisition of the UK's BG Group last year. Reporting its 2016 fourth quarter earnings which missed market expectations, Shell said oil and gas production for the fourth quarter was 3.905 million b/d of oil equivalent, an increase of 28% from the year-ago period. The total included 824,000 boe/d from BG assets which were bought for $54 billion in early 2016. For the full year, Shell said its oil and gas production was 3.67 million boe/d, an increase of 24% compared to 2015, or 2% excluding BG. Shell said it also benefited from higher cash flows which more than covered its cash dividend for a second quarter. Cash flows from operations, a closely watched metric as oil companies recover from the oil price slump, were $9.2 billion during the fourth quarter, up from $8.5 billion in the previous quarter and $5.4 billion for Q4 2015. Following Shell's announcement this week of assets sales in the UK and Thailand worth up to $4.7 billion, Shell said it has agreed or completed some $15 billion worth of asset sales since last year, half the $30 billion divestment program target by 2018 to help cover the cost of the BG acquisition. "Our strategy is starting to pay off..." CEO Ben van Beurden said in a statement. "We are gaining momentum on divestments, with some $15 billion completed in 2016, announced, or in progress, and we are on track to complete our overall $30 billion divestment program as planned."

History repeats as US E&P operators grow by acquisition: Barely three weeks into the New Year, US upstream merger and acquisitions have sizzled as players in a charged-up industry, hungry to get moving after two-plus years of low oil prices and curbed activity, position not just for the up-cycle but the next decade or two. Overwhelmingly, the Permian Basin of West Texas and southeast New Mexico, has been the main site of recent acquisitions, as its vast geography and multistacked shale and unconventional pay zones offer huge potential. Just one zone, the Wolfcamp in the eastern Permian, is said to contain 20 billion barrels of recoverable oil and 16 Tcf of recoverable natural gas. But while shale oil is relatively new, operators’ recent bids to expand their shares of it represents the latest in a long series of reinvention cycles in a 150-plus-year-old industry. As baseball legend Yogi Berra, famous for funny quips, said in another context: “It’s deja vu all over again.” “These things go in waves,” Canaccord Genuity analyst Sam Burwell said. And “the Permian will be the best bet for the foreseeable future.” The biggest recent Permian deals came last week, as ExxonMobil announced a $6.6 billion acquisition to beef up its holdings in the New Mexico Permian. Also, Noble Energy said it will buy small Clayton Williams Energy for $2.7 billion, largely to capture West Texas Permian acreage contiguous with its own inventory. Also, Sanchez Energy sets its cap to become a much bigger Eagle Ford player by inking a $2.3 billion deal for acreage in the south Texas play, which during the downturn lost more than a third of its peak 1.6 million b/d of oil output. The purchase, jointly with Blackstone Energy Partners, is from big independent Anadarko Petroleum.Also, WPX Energy is spending $775 million for acreage in the western Permian, and RSP Permian, Diamondback Energy and Parsley Energy made smaller Permian acquisitions in recent months. All four are mid-sized operators.

Inside FERC Henry Hub February index down 55 cents to $3.39/MMBtu - The February bidweek national average natural gas price dropped 84 cents compared with January's bidweek price to $3.45/MMBtu, according to Inside FERC's Gas Market Report, as the market factored in the likelihood of increasingly bearish weather conditions in key demand centers around the US. The February bidweek price at the benchmark Henry Hub point fell 55 cents to average $3.39/MMBtu, a nearly 14% decrease from the January price. That came as the NYMEX February gas futures contract expired at $3.391/MMBtu, a more than 33 cent decline since ending December trading at $3.724/MMBtu. The February contract also ended nearly 54 cents below the January contract's expiry. The slide in February prices came as the US National Weather Service's outlook for the first two weeks of the month turned increasingly bearish, calling for above-average temperatures across much of the western half of the US, likely dampening incremental gas demand. In California, the bidweek price for Southern California Gas city-gate fell 39 cents, or almost 10% compared with January, to average $3.53/MMBtu. In contrast, spot prices at SoCal Gas city-gate reached as high as $3.75/MMBtu during January as unseasonably cold weather and strong demand pushed the spot market to some of the highest levels of the ongoing winter. Upstream, in the Rockies, bidweek prices at Cheyenne Hub fell just over 55 cents to average $3.14/MMBtu. In the Midwest, bearish expectations for February pushed prices down even more, with Chicago city-gates dropping 77 cents to average $3.40/MMBtu.The biggest declines were reserved for premium Northeast markets, however, as Algonquin city-gate bidweek prices fell almost $4.70 to average $7.39/MMBtu.

NYMEX March gas futures rise 1.9 cents to settle at $3.187/MMBtu -  The NYMEX March natural gas futures contract strengthened after the release of the US Energy Information Administration's weekly gas storage report that showed a larger-than-expected withdrawal of 87 Bcf, helping boost the contract 1.9 cents higher to settle Thursday at $3.187/MMBtu. Despite being slightly larger than the 83-Bcf withdrawal projected by a consensus of analysts surveyed by S&P Global Platts, the withdrawal is a marked departure from historical data, with 2016 showing a withdrawal of 169 Bcf and the five-year average at 166 Bcf, tempering upward movement. Over the next two weeks, Platts Analytics' Bentek Energy projects total US demand to average around 86 Bcf/d, about a 9.7 Bcf/d drop from the corresponding period in 2016. The National Weather Service's eight- to 14-day outlook lends additional credence to Platts Analytics' weak demand outlook, with an increasingly high probability for above-average temperatures expected over more than three-quarters of the continental US.Insulating the market from downward movement resulting from weaker demand has been a year-on-year decrease of 4.1 Bcf/d in US dry gas production, with the current February average hovering around 70.1 Bcf/d, tightening the supply-demand balance. With current storage stocks sitting 266 Bcf below year-ago levels, contracts from June through December experienced the strongest upward movement in a strengthening contango market, increasing an average 4.9 cents, with December reaching the highest of $3.568/MMBtu. Downside risk to the tightening supply-demand market in the coming months has been the "robust growth trend [in rig counts] during the final seven months" of 2016, driven by flatter US natural gas production and a shift in the import-export balance that resulted in an "erosion in the oversupply of dry gas since 2015," analysts at RigData said. RigData is a unit of Platts.

Crude oil, NGL to account for 80% of 2017 drilling in Canada, rigs up: PSAC -  Nearly 80% of the total wells to be drilled in Canada in 2017 will be targeted at crude oil and NGLs and the remaining 20% at natural gas, the president of an oil services industry group said Tuesday. "With WTI prices stabilizing over $50/b for the past month, conventional producers in Alberta and Saskatchewan will be spending more dollars in drilling and are already hiring rigs," Petroleum Services Association of Canada President Mark Salkeld said. The winter drilling season in Western Canada -- which extends from early December to end of March -- has been active and the total number of rigs in operation on January 31 is 355, Salkeld said. This is compared with some 250 rigs deployed in January end last year, he said. On Monday, assuming a WTI price of $52.50/b and an AECO gas price of C$3 ($2.3)/MMBtu, PSAC forecast that a total of 5,150 wells will be drilled in Canada in the current year. In 2016, the total number of wells drilled was 3,950, he said. In 2017, Alberta is forecast to have the most wells drilled at 2,706, followed by Saskatchewan at 1,985, British Columbia at 367 and Manitoba at 73. The remaining 19 wells will be drilled in Eastern Canada, PSAC said. The bulk of the drilling will take place in the Cardium and Duvernay plays in the Western Canadian Sedimentary Basin, with the "dominant" areas include Rocky Mountain House, Wapiti and Sundre, he said.

Canada regulator says Tundra oil spill cleanup almost complete | Reuters: Crews have nearly finished cleaning up 35 barrels of crude oil that leaked from a pipeline at a facility owned by Tundra Energy Marketing Ltd in southeastern Saskatchewan, Canada's energy regulator said on Thursday. There were no injuries or fires as a result of the spill, which occurred Tuesday evening at a Tundra's Ingoldsby facility, 270 kilometers (168 miles) southeast of Regina. It was the second crude oil spill in a matter of weeks for the privately-held company, after more than 1,000 barrels leaked onto aboriginal land in Saskatchewan. The Ingoldsby facility comes under the jurisdiction of Canada's National Energy Board because it is a federally regulated site, and an investigation into the root cause of the leak is underway. "Our inspectors were there on site and they are satisfied the cleanup is moving ahead appropriately," NEB spokesman Tom Neufeld said. The January spill is being investigated by the Saskatchewan government, which said it will provide assistance to the NEB on the latest leak if requested, but could not speculate on the cause of the Ingoldsby incident. "Our investigation continues into the spill on the Ocean Man First Nation and we will release those findings when complete," a Saskatchewan government spokeswoman said. In a statement released on Wednesday, Tundra said it discovered the leak on Tuesday night and shut down operations immediately. All of the crude oil spilled was contained within Tundra's lease site.

U.S. transparency reversal stings Canadian, European oil firms | Reuters: A reversal of U.S. transparency requirements for the natural resources industry could give American oil companies an edge over Canadian and European rivals who face some of the toughest rules in the world, according to company executives, legal experts and trade groups. The U.S. Senate passed a resolution early on Friday to overturn the "resource extraction rule," an Obama administration regulation that required companies to disclose taxes and other payments to foreign governments. President Donald Trump is expected to soon sign the resolution killing the rule, which had been aimed at discouraging shady dealing in far-flung nations. The rule was among a handful of regulations ushered in during the final months of Barack Obama's presidency that the Republican-controlled Congress has targeted as overly burdensome for the U.S. economy. Overturning the regulation leaves Canadian and European natural resource companies with far more stringent reporting standards for payments to foreign governments than U.S. behemoths like Exxon Mobil Corp and Chevron Corp. Certain details of contract negotiations and terms of bids to access reserves must be divulged under the Canadian and European rules. That could provide American companies a glimpse of their rivals' negotiating tactics around the globe, without having to tip their hands in return. "It definitely could put Canada at a disadvantage because we are fairly stringent on our rules, both domestically and internationally, on how our companies operate,"

Trump’s Trade War With Mexico Could Crash Natural Gas Prices | The much hyped “trade war” that Donald Trump is apparently preparing for the southern neighbor of the U.S. could be over before its starts, as the full extent of the mutual dependency of the two countries is gradually revealed. One of the major aspects of this mutual dependency is natural gas. The U.S. last year exported some 127.4 billion cu ft of gas to Mexico on a monthly basis, almost twice the amount it used to export two years earlier. This increase has been a boon for shale gas producers who were struggling with falling profits because of a hefty oversupply. Mexico has helped clear up the glut and its need for gas is nowhere near satisfied: there are projections that demand for U.S. gas will reach 6 billion cu ft daily by 2020, from an average 3.5 billion cu ft daily in the first ten months of 2016. Mexico’s power generation industry needs fuel, and cheap fuel at that, and the U.S. shale producers are happy to supply it.The situation at the moment looks like a stalemate: Trump wants to build the wall and he wants Mexico – and U.S. taxpayers– to pay for it. Pena Nieto appears unwilling to accept these terms. Then there’s Trump’s stated intention to do away with NAFTA in a bid to get things back to an every-man-for-himself style of regional trade policies. The combination of these is flammable. It’s difficult to say who needs whom more. Mexico needs natural gas for the bulk of its electricity production: the fuel is responsible for 60 percent of the country’s power output. Last year, imports from the U.S. exceeded domestic production. Although Mexico is working hard towards expanding its own energy industry, this takes time and investments, and U.S. gas is cheap. So, Mexico clearly needs the gas, especially amid rising fuel prices at the pump – part of the government’s energy market liberalization efforts – that sparked huge protests. For the U.S., Mexico was the biggest single export market for its natural gas in the first nine months of 2016. Exports to Mexico stood at 123 billion cu ft monthly for January-September, from a total of 185 billion cu ft exported monthly in the period. The annual increase was 79 percent. Meanwhile, exports to Canada, which is the other big market for U.S. gas, fell by 39 percent due to lower demand and sufficient local supply.

2016 offshore discovered liquids resources were 90% lower than in 2010 - Rystad Energy concludes that the 2016 total offshore discovered liquids resources reached only slightly below 2.3 billion bbl, 90% lower than in 2010. This drop is most significant to the overall decline in discovered volumes; in fact, total global discovered volumes (oil & gas combined) are at an all-time low since the 1940s. In 2016, the average liquid content in the discovered resources was merely ~40%. Even more tellingly, the replacement ratio for liquids in 2016 was below 10%. For comparison, the replacement ratio for liquids in 2013 was as high as ~30%. (country details)

Shell to sell $3 billion of North Sea assets to Chrysaor -- Royal Dutch Shell is nearing the sale of a large part of its North Sea oil and gas assets to private equity-backed Chrysaor for $3 billion, banking sources said, marking a milestone in its drive to reduce debt after buying BG Group. Chrysaor, a North Sea-focused oil company backed by private equity fund EIG Partners, will acquire from Shell a mix of older fields, new developments and infrastructure in a move analysts say could breathe new life into one of the world’s oldest offshore basins where production has been in a steady decline since the late 1990s. The anticipated deal in what is a relatively high-cost region has been seen by the industry as a litmus test for the sector’s appetite for buying and selling oil and gas fields, known as upstream, as it slowly emerges from a brutal two-and-a-half year downturn. It could now unlock other deals in the North Sea and other regions.

UK gas-for-power demand at multi-year high in January -  The amount of natural gas used in the UK to generate electricity set a fresh multi-year high last month after dipping in December due to weaker demand during the Christmas Holiday, data from National Grid showed Wednesday. Gas-for-power demand stood at 2.21 Bcm in January, the highest for a calendar month in at least six years and increases of 6% month on month and 30% year on year. This marked the fourth time in a row that monthly gas-for-power demand stood above the 2 Bcm mark after failing to breach this barrier during any month between February 2011 and September 2016.Cumulative gas-for-power demand so far during the Winter 2016-17 delivery period stood at 8.43 Bcm, an increase of 56% on an annual basis and already 16% higher than total gas-for-power demand during the entire Winter 2014-15 delivery period. A combination of more favorable gas-fired generation economics allied to coal-fired plant closures saw UK gas-for-power demand increase sharply from the beginning of 2016. Last year, gas-for-power demand rose 52% year on year to 20.94 Bcm and reached as high as 94 million cu m/d in early December. Nonetheless, gas-fired profitability has suffered so far this year as NBP pricing has been supported by a combination of colder-than-average temperatures, a weak LNG delivery schedule, and more expensive Continental European hub pricing.

Southern French gas prices reach record highs as cold weather hits -- Platts video & transcript: Lucie Roux talks about prices on the TRS natural gas hub in southern France having reached record highs in January as sustained cold weather exacerbated a tight supply system caused by limited global LNG supplies, low storage levels and internal flow constraints. Southern French LNG terminal Fos near Marseilles is set to receive seven cargoes in February but traders remain concerned as the supply situation could become even tighter if the cold weather persists into February. This would likely cause storage levels to fall below the level needed to ensure secure supplies, in turn triggering gas prices to spike again.

Freezing Central Asia pulls low-density Russian gasoil away from Med -  Black Sea gasoil streams for export to the Mediterranean market have become more dense over the winter as Central Asia gets first pickings of Russian gasoil with better cold properties -- and by its very nature, lower densities. As a consequence, the remaining gasoil streams offered to traders that operate in the Mediterranean basin have increasingly been higher-density material. Sources say the cold weather across Central Asia has resulted in a shift for heating fuel which has driven the recent redistribution of product across end consumer markets. With more higher density streams on offer to the Mediterranean market, blenders have needed to rethink their blending economics, and the streams used to meet certain consumer requirements.Occasional issues have arisen when meeting tailored requirements, market sources reported. The science of blending becomes ever more important as bespoke grades within the Mediterranean basin become increasingly prevalent. In particular there has been an increase in demand from North Africa for 0.1% gasoil, in recent months, including the addition of Tunisia to the 0.1% sulfur-content pool. The premium of Mediterranean 0.1% gasoil cargoes to ICE low-sulfur gasoil futures was assessed 50 cents higher on the day Thursday at $5.00/mt. The Tunisian grade applies a cap on the density, which is lower than standard tenders issued elsewhere in the region. A maximum density of 845 kg/cu m, required by the Tunisian tenders, means blenders need to carefully consider the gasoil streams used for blending.

Gazprom plays ball: the depoliticization of the European gas market -Despite uneasy relations between Europe and Moscow, Gazprom’s gas supplies to European consumers are projected to set a new record in 2016. In 2015, this Russian energy company delivered 158.6 billion cubic meters (bcm) to Europe and Turkey. In 2016 this number is set to hit almost 180 bcm – a 12% increase. This number includes exports to all European countries minus three Baltic States plus Turkey. Gazprom’s exports to the EU28 in 2016 are estimated at around 153 bcm. (Global natural gas exports of Gazprom went up from 195.7 bcm in 2015 to 210 bcm in 2016.) What these figures show is that EU utilities are not afraid of Gazprom and are eager to buy cheap energy from Russia. Gazprom does not disclose the prices it charges its European clients, only an average price charged for its European customers. Gazprom’s average European gas price was $182.50/1,000 cu m in the first half of 2016, Gazprom’s average price for 2016 is estimated at around $165-$170/1,000 cm.

Factbox: Potential impacts of US lifting sanctions on Russian oil sector -  US President Donald Trump said Friday ahead of his first conversation with Russian President Vladimir Putin since taking office that it was too soon to know whether to continue US sanctions against Moscow. Trump has promised to take a softer approach to Russian relations than his predecessor, fueling speculation that he could lift the sanctions. Related: Find more content about Trump's administration in our news and analysis feature.Trump and Putin are scheduled to speak Saturday. "I don't know the gentleman," Trump said. "I hope we have a fantastic relationship, that's possible. And it's also possible that we won't. We will see what happens. I will be representing the American people very, very strongly, very, very forcefully." May took a firmer stance, saying the UK would continue to argue within the EU that it must keep Russian sanctions in place until Moscow fully complies with the 2014 Minsk Protocol. "We have been very clear that we want to see the Minsk agreement fully implemented," she said. The sanctions imposed in 2014 in response to Russia's role in the Ukraine conflict have had a significant impact on the investment climate in Russia. They froze several major upstream oil joint ventures between Russian and Western firms, with ExxonMobil taking an estimated $1 billion hit. Former ExxonMobil CEO Rex Tillerson's nomination to be US secretary of state is on track to be confirmed by the Senate, likely next week, after three key Republican senators previously skeptical of his Russian ties said they would support him. "We'll see what happens," Trump said during a joint press conference with UK Prime Minister Theresa May. "As far as the sanctions, [it's] very early to be talking about that."

India halves LNG import duty to 2.5% to hike gas share in energy basket -  India has decided to cut import duty on LNG to 2.5% from 5% to encourage the use of natural gas in the country, finance minister Arun Jaitley said while presenting the national budget for fiscal 2017-2018 Wednesday. The revised rate will come into force when the new fiscal year starts on April 1, a finance ministry official said. In October, oil minister Dharmendra Pradhan had said that India would aim to raise the share of gas in the energy basket to 15% from 6.5% currently in the next three to four years.India's share of natural gas in the energy basket is low compared with the global average of 24%. New Delhi plans to more than double its LNG imports to 50 million mt by 2020 from 19.2 million mt in 2016, according to data from Platts Analytics. Indian LNG demand is expected to grow 38% year on year in 2017 as infrastructural and regulatory barriers are eased while contractual LNG volumes are raised, Platts Analytics data showed. Market sources said, however, that they had expected a complete removal of duty on LNG imports, bringing it in line with crude oil, on which no import tariffs are imposed.

Differentials for Nigeria’s lightest crudes lowest in over a year | Hellenic Shipping News - Differentials for the lightest end of the Nigerian crude oil complex — light, condensate-like Agbami and Akpo grades — against benchmark Dated Brent have fallen as an abundance of sweet crude in the Atlantic Basin has made it difficult for it to land into Europe and as major buyer India has mostly sated its March-loading demand. On Thursday, Platts assessed Agbami FOB and Akpo FOB cargoes at a discount of $1.10/b to the West African Dated strip. This is the lowest level for the two grades since December 12, 2015, when they were at Dated Brent minus $1.15/b. Both grades have dropped precipitously since the beginning of December, when Agbami briefly went into positive territory at a premium of 5 cents/b to the WAF Dated Strip and Akpo was assessed at flat to the WAF Dated Strip. Large volumes of Mediterranean sweet crudes such as Kazakhstan’s CPC Blend and Algeria’s Saharan Blend, refinery maintenance in Europe, sluggish demand for light naphtha-rich North Sea grades and more of a focus on heavy sours by a number of refineries — and subsequent falling differentials for sweet Mediterranean and North Sea grades — have made it difficult for Agbami and Akpo to find buyers in Europe. Around half of the eight Agbami March-loading cargoes have sold and three of the four Akpo March-loading cargoes also still available, trading sources said. Major buying refineries of Nigerian crude in India have also now finished their March tendering cycle and due to limited interest from Europe, some of the typically attractive grades to India, like Agbami, will have to discount further to find homes, traders said. “Europe has a lot of cheaper options in the North Sea and in the Med — I don’t think Europe [will be] supporting Nigeria,”

Lukoil Eyes Start Of Oilfield Development In Iran This Year - Lukoil hopes it will begin the development of two oil fields in Iran later this year, after the conclusion of negotiations currently held with the National Iranian Oil Company. This is what Lukoil vice president and chief of Middle Eastern operations Gati al-Jebouri told media yesterday.Currently, Lukoil and NIOC are discussing the cost structure of the two projects, and the Russian company hopes that the Iranian side will reach a decision by the end of June, although no firm deadlines have been set, Al-Jebouri also said.Earlier this month, Lukoil was named in a list of 29 foreign companies approved by NIOC for participation in oil and gas field tenders, to take place later this year. The Russian company has not concealed its eagerness to return to Iran: as soon as the Western sanctions on Tehran were lifted, Lukoil President Vagit Alekperov went to Iran to meet with Iranian oil minister Bijan Namdar Zangeneh, who announced to the press that Lukoil was the first foreign oil firm to sign a memorandum of understanding. Before the sanctions, Lukoil operated the Anaran oil field in Iran. According to a recent report by Iran’s Financial Tribune, Russian companies have so far signed preliminary agreements for the development of seven oil and gas deposits in the country. These companies – except Lukoil and Gazprom, who were included in the 29-company list – will be included in a second list of approved foreign oil and gas players. Names include Rosneft, Zarubezhneft, and Tatneft.

Saudi Aramco could raise March crude OSP differentials for Asia: traders - Saudi Aramco is expected to raise the March official selling prices of its Asia-bound crude oil, largely due to the stronger Dubai crude oil market structure, traders said Tuesday. Most traders surveyed by S&P Global Platts said they expected Aramco to raise the March OSP differential of its Asia-bound Arab Light crude by around 10-20 cents/b from a discount of 15 cents/b to the Platts Oman/Dubai average in February. The expected increase reflects the narrowing contango in the Dubai market structure, traders said. S&P Global Platts data showed the spread between frontline cash Dubai versus same-month Dubai swaps at minus 26 cents/b over January to date, up from minus 61 cents/b in December.The spread between the two was last higher in October, when cash Dubai averaged 6 cents/b higher than same-month Dubai swaps. The Dubai market structure is understood to be a key component in the Saudi OSP calculations. Some traders expected the lighter Saudi grades to receive larger increases to their OSP differentials than the medium and heavier grades. "Naphtha crack got stronger compared to last month," said a Singapore-based crude trader. The second-month naphtha to Dubai crude swap crack has averaged at a premium of 55 cents/b in January to date, significantly higher than minus $1.40/b last month, Platts data showed. Meanwhile, fuel oil cracks were relatively steady compared with December, with second-month 180 CST and 380 CST HSFO averaging at minus $2.33/b and minus $3.29/b to Dubai crude swaps, respectively, to date in January.

OPEC May Be Powerless To Stop Lower For Longer - Just a few months after oil prices began to crash from its US$100 level in 2014, BP’s chief executive Bob Dudley warned the industry that it needed “to prepare for lower for longer”.  At the beginning of 2017 - with oil prices relatively stable at over US$50 for a couple of months now - the UK oil supermajor said it in its 2017 Energy Outlook edition that oil resources are abundant, and those that are known today dwarf the expected global consumption of oil out to 2050 and beyond. In BP’s predictions for a future world in the next 20-30 years, the abundance of potential oil reserves and supply may lead to low-cost producers pumping “ever-increasing amounts of that oil and higher-cost producers getting gradually crowded out”, group chief economist Spencer Dale said. This abundance of oil resources contrasts with expectations of slowing growth of oil demand, Dale noted. BP’s supply-demand expectation suggests that oil prices may not only be lower for longer, but that they may be lower for even longer.  Low-cost oil producers may try to use their competitive advantage to increase market share, BP said, and they may be tempted to pump more oil before the demand growth starts to abate. This may lead to “quite significant pressures to dampen long-run prices”, Dale commented in a presentation of BP’s outlook, as quoted by the Financial Times.

OPEC Convinces Investors That Its Oil Output Cuts Are Real… OPEC appears to have persuaded investors that it’s making good on promised production cuts.  Money managers are the most optimistic on West Texas Intermediate oil prices in at least a decade as the Organization of Petroleum Exporting Countries and other producers reduce crude output. Saudi Arabia has said more than 80 percent of the targeted reduction of 1.8 million barrels a day has been implemented. Oil shipments from OPEC are plunging this month, according to tanker-tracker Petro-Logistics SA.   “All the signs are pointing to a pretty significant OPEC cut,” Mike Wittner, head of commodities research at Societe Generale SA in New York, said by telephone. “Until this week we were only getting data from the producers, now the tanker traffic seems to be supporting this view.” OPEC will reduce supply by 900,000 barrels a day in January, the first month of the accord’s implementation, said Geneva-based Petro-Logistics. That’s about 75 percent of the cut that the producer group agreed to make. Eleven non-members led by Russia are to curb their output in support. Hedge funds boosted their net-long position, or the difference between bets on a price increase and wagers on a decline, by 6.1 percent in the week ended Jan. 24, U.S. Commodity Futures Trading Commission data show. WTI rose 1.3 percent to $53.18 a barrel in the report week. The U.S. benchmark slipped 1 percent to close at $52.63 on Monday. OPEC members Saudi Arabia, Kuwait and Algeria have said they’ve cut output this month by even more than was required, while Russia said it’s also curbing production faster than was agreed. Saudi Energy Minister Khalid Al-Falih said Jan. 22 that adherence has been so good that OPEC probably won’t need to extend the accord when it expires in the middle of the year.

Oil slips as U.S. drilling recovery weakens deal to cut output | Reuters: Oil prices fell on Monday as news of another weekly increase in U.S. drilling activity spread concern over rising output just as many of the world's oil producers are trying to comply with a deal to pump less to try to prop up prices. The number of active U.S. oil rigs rose to the highest since November 2015 last week, according to Baker Hughes data, showing drillers are taking advantage of oil prices above $50 a barrel. Global benchmark Brent crude oil prices were down 24 cents at $55.28 a barrel at 1438 GMT, while U.S. crude futures traded down 25 cents at $52.92. "Oil prices are down because of the rise in the U.S. rig count," said Tamas Varga, analyst at PVM Oil Associates in London. The Organization of the Petroleum Exporting Countries and other producers including Russia agreed to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017 to relieve a two-year supply overhang. First indications of compliance to that deal show that members have cut production by 900,000 barrels per day (bpd) in January, according to Petro-Logistics, a company that tracks OPEC supply.

Oil ends at lowest level in over a week with U.S. output set to grow -  Oil futures logged a second straight session decline on Monday to settle at their lowest level in more than a week as traders fretted over signs that U.S. production is set to grow—potentially offsetting efforts by other major crude producers to ease global supplies. On the New York Mercantile Exchange, March West Texas Intermediate crude CLH7, -0.02% fell 54 cents, or 1%, to settle at $52.63 a barrel. That was the lowest finish for a front-month contract since Jan. 20, according to data from Dow Jones. March Brent crude LCOH7, +0.07% which expires at Tuesday’s settlement, lost 29 cents, or 0.5%, to $55.23 a barrel on London’s ICE Futures exchange. “Concerns over rising American production continue to mount, with official rig counts for last week indicating that a further 15 oil rigs had been added in the U.S.,” Baker Hughes reported on Friday a weekly rise of 15 in U.S. oil drilling rigs to total 566 and U.S. government data released last week showed a rise of 17,000 barrels a day in total domestic crude production for the week ended Jan. 20. “This mounting production continued to threaten to undermine the efforts of OPEC to reduce global supply, said Chiorando.   Oil prices also fell “as uncertainty over U.S. policy weighed on markets, following President Trump’s curbs on immigration that have met with fierce opposition world-wide,” he said. U.S. stocks suffered sharp losses in Monday trading.

WTI, RBOB Prices Slide After Biggest Inventory Build Since October -- WTI (and RBOB) prices slid lower into the NYMEX close ahead of API's report tonight that showed further major builds in crude and products. Crude saw inventories rise 5.83mm barrels last week - the most since the end of October and while Cushing saw its 4th weekly draw in a row, Gasoline and Distillates both saw major builds. API:

  • Crude +5.83mm (+3mm exp)
  • Cushing -906k (-700k exp)
  • Gasoline +2.86mm
  • Distillates+2.27mm

The crude build is the biggest since October. This is the 5th weekly build in Gasoline in a row...

Libya: back on the road to supply security? --Global Oil Markets podcast -- Once a North African OPEC powerhouse for light, sweet crude oil, Libya is now riven by civil war and disrupted oil supply. The country is trying to pull itself back into contention as a supplier of crude into the Mediterranean and beyond. S&P Global Platts editors Joel Hanley and Gillian Carr discuss what progress is being made.  Since the fall of Moammar Qadhafi in 2011 and the civil war that has followed, Libya’s crude oil output has dropped by over a million barrels per day. As the country rebuilds its capacity, S&P Global Platts investigates the effort to bring Libya back as an oil force, and examines the pitfalls on its road to recovery.   Download our special report

The Oil War Is Only Just Getting Started Submitted - It’s been a month now that investors and analysts have been closely watching two main drivers for oil prices: how OPEC is doing with the supply-cut deal, and how U.S. shale is responding to fifty-plus-dollar oil with rebounding drilling activity. Those two main factors are largely neutralizing each other, and are putting a floor and a cap to a price range of between $50 and $60. The U.S. rig count has been rising, while OPEC seems unfazed by the resurgence in North American shale activity and is trying to convince the market (and itself) and prove that it would be mostly adhering to the promise to curtail supply in an effort to boost prices and bring markets back to balance. In the next couple of months, official production figures will point to who’s winning this round of the oil wars.This would be the short-term game between low-cost producers and higher-cost producers.In the longer run, the latest energy outlook by supermajor BP points to another looming battle for market share, where low-cost producers may try to boost market shares before oil demand peaks. BP’s Energy Outlook 2017 estimates that there is an abundance of oil resources, and “known resources today dwarf the world’s likely consumption of oil out to 2050 and beyond”.“In a world where there’s an abundance of potential oil reserves and supply, what we may see is low-cost producers producing ever-increasing amounts of that oil and higher-cost producers getting gradually crowded out,” Spencer Dale, BP group chief economist said. In BP’s definition of low-cost producers, the majority of the lowest-cost resources sit in large, conventional onshore oilfields, particularly in the Middle East and Russia.

WTI, RBOB Tumble After Biggest Crude Build Since October, Record Gasoline Inventory -- DOE confirms API's major builds in Crude, Gasoline, and Distillates sending WTI and RBOB prices tumbling. US crude production declined in the last week but remain on an upward trajectory with rig counts as East Coast inventories hit an new all-time record high. DOE

  • Crude +6.46mm (+3mm exp)
  • Cushing -1.25mm (-200k exp)
  • Gasoline +3.866mm (+1.5mm exp)
  • Distillates +1.4568mm (-500k exp)

The 5th weekly build in gasoline and the biggest build in crude since October... OPEC's good work in boosting the price through output restraint is being undone by surging inventories. Crude stockpile up more than twice as much as expected in Bloomberg's survey.

Oil Prices Fall After Another Major Build In Inventories - The Energy Information Administration today reported a 6.5-million-barrel increase in commercial crude oil stocks in the U.S., a day after the American Petroleum Institute reported a smaller build in inventories of 5.8 million barrels.  Prices after the API report remained relatively stable, most likely because of positive news coming from the OPEC camp: according to several estimates, the members of the cartel have cut around 1 million bpd from their combined output, demonstrating the compliance that most investors have been worrying about after the production cut deal struck last November. In light of this, EIA’s report is also not very likely to swing the market, especially since the EIA noted that total crude oil stockpiles stood at 494.8 million barrels at the end of the week to January 27, within seasonal limits.  Gasoline inventories rose by 3.9 million barrels in the period, the authority also said, confirming and, as with crude oil inventories, topping API estimates of a 2.9-million-barrel increase. Distillate stockpiles rose by 1.6 million barrels.Refineries, operating at 88.2 percent of capacity, churned out an daily average of 9.1 million barrels of gasoline and 4.7 million barrels of distillate last week, compared with 8.8 million barrels of gasoline and 4.6 million barrels of distillate in the prior week.  Imports for the seven-day period stood at 8.3 million barrels daily, up from 7.8 million bpd in the previous week.

U.S. oil prices fall after sharp rise in stockpiles | Reuters: Oil prices fell on Thursday after official data showed U.S. crude and gasoline stockpiles rose sharply, although signs that OPEC and other producers are holding the line on output cuts are helping support prices. Brent crude futures fell 24 cents, or 0.4 percent, to $56.56 a barrel as of 0146 GMT (08:46 p.m. ET) after settling up $1.22 in the previous session. Front month futures for West Texas Intermediate were down 28 cents, or 0.5 percent, at $53.60 after climbing $1.07 at the day before. U.S. crude stocks grew last week by an unexpected 6.5 million barrels to 494.76 million barrels, the Energy Information Administration said on Wednesday, as refiners let stocks build further in a seasonally slow season for production. [EIA/] The build in stocks far exceeded analysts' expectations for an increase of 3.3 million barrels. "Obviously we saw some solid gains in prices in the previous session so there might be a little bit of profit taking in the Asian session after the market rallied unexpectedly," said Ben Le Brun, market analyst with optionsXpress in Sydney. "But prices are still very much range-bound," he added. Gasoline stocks climbed by 3.9 million barrels, compared with analyst expectations in a Reuters poll for a 1-million barrel gain. Gasoline demand has been seasonally weak, down 5.7 percent from a year ago over the past four weeks.But prices were underpinned by indications that producers from the Organization of the Petroleum Exporting Countries and others are curbing output and geopolitical tensions between the United States and Tehran after Iran's latest missile test.

US has too much gasoline and that could mean lower oil prices: U.S. gasoline supplies are piling up, and while that might not help drivers much, it could be a negative for the price of oil. The glut is growing as refineries head into spring maintenance season, which means even less demand for crude to make gasoline. As for the consumer, prices typically rise at this time of year but the hike could be slightly less. Crude inventories increased by 6.5 million barrels in the week ended Jan. 27, and gasoline inventories rose by 3.9 million barrels last week and are at above-average levels, according to Energy Information Administration data. Diesel supplies were also up 1.6 million barrels. "You might have the oddity of gasoline prices moving higher while crude oil stays in a range. That's because there's enough refinery maintenance that there's going to be substantially less demand for crude oil from Feb. 15 to April 15," said Tom Kloza, global energy analyst at Oil Price Information Service. The fuel stockpiles are building even as the U.S. has been exporting record amounts of fuel, and refineries have cut back on output as they perform turnaround maintenance before switching to summer fuels. Exports of gasoline totaled 902,000 barrels a day last week, off recent highs but the four-week average of 922,000 barrels is double the amount exported a year ago. Diesel exports were at 880,000 barrels, off from the week earlier's 1.1 million barrels a day.

Oil complex strengthens as US dollar slips following Fed decision - Oil futures rose Wednesday despite data showing weekly builds in US petroleum stocks, with traders focused on OPEC supply cuts as well as the dollar's decline late in the session. NYMEX March crude settled $1.07 higher at $53.88/b. ICE April Brent settled $1.22 higher at $56.80/b. Crude futures settled just a few cents off intraday highs that were reached in the wake of the Federal Open Market Committee's decision to keep interest rates unchanged. That announcement, while expected, caused the US Dollar Index to fall as low as 99.6 within minutes. The dollar index was nearly 100 points just before the Fed's decision was made public. A weaker dollar makes crude and fuel imports less expensive, putting upward pressure on crude futures. "The FOMC statement sounded like it was giving a bit less direction on what the Fed is thinking on rate hikes," said Mike Dragosits, senior commodity strategist at TD Securities. "Maybe the market got a bit hawkish after the election and as expectations get pulled back it's helping drive the dollar lower," he said. Earlier Wednesday, Energy Information Administration data showed US stocks of crude, gasoline and distillates all rose in the week that ended January 27. Oil futures pared increases after the EIA data was released, but quickly recovered, evidence of the market ignoring current fundamentals

US crude settles at $53.54, down 34 cents, as rising US crude supplies offset OPEC output cuts -- U.S. crude futures ended lower after a choppy trading day on Thursday, as rising oil stockpiles in American storage facilities offset evidence that OPEC and other big exporters were cutting production. Prices retraced early gains as traders grew less concerned about mounting tensions between the United States and Iran. "Traders seem to have concluded the dispute between the U.S. and Iran over a recent missile test represents more of a war of words than the start of a military confrontation that would put supplies from the wider Persian Gulf at risk," Tim Evans, Citi Futures' energy futures specialist, said in a note. U.S. President Donald Trump said on Thursday in a tweet that Iran had been "put on notice" after the country tested a ballistic missile. U.S. light crude settled down 34 cents to $53.54, after climbing by $1.07 on Wednesday. Brent crude was down 23 cents at $56.57 a barrel by 2:33 p.m ET (1933 GMT) after settling up $1.22 in the previous session. Earlier, both Brent and WTI traded at their highest levels since early January on indications producers from the Organization of the Petroleum Exporting Countries and other exporters were following through on their agreements to cut output to reduce a global supply glut. The curbs follow an agreement last year by OPEC and other exporters to reduce supplies by a combined 1.8 million barrels per day (bpd) to prop up prices that remain at about half their mid-2014 levels. A Reuters survey this week found that most key oil producers were sticking to the deal, with compliance above 80 percent. Russian oil output contracted in January by 100,000 bpd, Energy Ministry data showed on Thursday.

It’s ambitious to think that oil prices could reach $65: IEA: Despite a recent OPEC agreement to cut oil production and boost prices, it is unrealistic to expect that the commodity will reach $65 a barrel in the near term, an analyst at the Paris-based International Energy Agency told CNBC. OPEC countries reached an agreement last November to cut production by 1.2 million barrels per day to support oil prices and tackle three-consecutive years of falling investment. In early December, some non-OPEC countries, such as Russia, joined their efforts and promised to cut output by 600,000 barrels per day. "I think 63, 65 (dollars a barrel for Brent) I think you might be a little bit ambitious there because the OPEC producers have got this basic issue, they don't want the price to go too low clearly, because their economies wouldn't stand it," Neil Atkinson, head of the oil industry and markets division, at the IEA told CNBC Friday."But if the price goes too high then that's going to attract a lot of investment in other parts of the world, principally the U.S. shale producers," Atkinson added. The six-month agreement had its first test in January. Analysts are watching closely whether OPEC and non-OPEC members stick to their commitments. A large number of oil experts do not expect 100 percent compliance. According to Atkinson, so far, "they're doing quite well." "The signs are quite encouraging that production has been cut back quite significantly in January," he added. A Reuters survey, published this week, showed at the end of January OPEC members cut production by 958,000 barrels per day, equating to an 82 percent compliance of what they initially pledged.

Rig Count Sees Largest 4 Week Gain Since April 2014 - The number of active oil and gas rigs in the United States increased on Friday by 17, nearly erasing earlier gains to both WTI and Brent crude oil benchmarks. Both benchmarks were trading up early on Friday on the back of geopolitical tensions between Iran and the United States over the threat of fresh sanctions. The total number of active oil and gas rigs in the United States is now 729, according to oilfield services provider Baker Hughes, which is 158 rigs above the rig count a year ago.This week marks the largest four-week gain to the number of oil rigs (+54) since April 2014 (+56). All of this week’s gains were oil rig gains, which were up from 566 last week to 583 this week. The number of active oil rigs in the United States is now the highest since October 2015.Oil rigs have increased by 106 since the OPEC agreement was announced on November 30. The number of gas rigs stayed the same this week at 145 ending 12 straight weeks of increases. Cana Woodford saw the largest increase by basin for a total of 7 rigs gained, with the Permian gaining 4 and Eagle Ford 2. The Granite Walsh Basin and Haynesville both lost rigs. After this week’s 4-rig gain, the Permian now has 295 oil and gas rigs—115 rigs more than the same week last year. These figures continue the trend of the redistribution of rigs by basin—while three weeks ago the Permian Basin accounted for 41% of all active oil and gas rigs in the United States, it now accounts for 51%. And while the Eagle Ford Basin accounted for 14% three weeks ago, it now accounts for only 10%.

Rig Count Surges Again To 16-Month Highs (But Where's The Oil Industry Jobs) - For the third week in a row, the US oil rig count rose dramatically (up 15 to 583 - the highest since October 2015). This is the biggest 3-week surge in rig counts since April 2013... (the biggest 3-week percentage gain since Nov 2009) Production continues to trend with rig count... However, as exuberant as this number is, job gains are nowhere to be found as the robotization of the industry (amid more 'real' costs of capital) provide no help to Americans... As Bloomberg notes, the addition of just 100 jobs to industry payrolls lags well behind the pace of the overall U.S. economy, which added 227,000 workers during the month. The growing use of robots and other efficiencies honed over the course of a 2 1/2 year market downturn means more work is getting done with fewer people.

BHI: US rig count up double-digits in third straight week - Oil & Gas ... Rig deployment in the US continued to pick up steam during the week ended Feb. 3 as Baker Hughes Inc.’s tally of active units recorded its third consecutive weekly double-digit increase.The overall count gained 17 units to 729, up 325 since a modern era nadir of 404 touched last May 27 and up 158 units year-over-year (OGJ Online, Jan. 27, 2017). Units targeting crude oil and units drilling horizontally, catalysts of the drilling rebound of the past 8 months, also were up 17 units each during the week. The Permian, however, had a more subdued week, gaining just 4 units to 295, up 161 since its recent bottom on May 13 and up 115 year-over-year.   The Permian remains a stalwart for future drilling and production activity in the US. Exploration and production firms are continue to plan further rig deployments in the region over the coming year, and, accordingly, production is expected to continue rising. The US Energy Information Administration projects Permian output to average 2.3 million b/d in 2017 and 2.5 million b/d in 2018. That compares with 2 million b/d in 2016 and 1.9 million b/d in 2015. Distinguishing itself from the other major oil regions in the US, the Permian features producing zones each more than 1,000 ft thick, EIA notes. “Because of its large geographic size, the Permian offers a lot of potential for testing and drilling, and the multiple stacked plays allow producers to continue to drill both vertical wells and hydraulically fractured horizontal wells,” the agency explains. With its 17-unit jump, the US oil-directed rig count now totals 583, an increase of 267 since May 27 and 116 year-over-year. Gas-directed rigs and those considered unclassified were unmoved at 145 and 1, respectively. US onshore rigs gained 17 units to 705, driven by a 17-unit jump in horizontal rigs to 596, up 282 since May 27 and up 138 year-over-year. Directional drilling rigs rose 5 units to 66, up 30 since July 8. Oklahoma led the major oil- and gas-producing regions during the week, climbing 6 units to 102, nearly double its count on June 24 and above the 100 mark for the first time since Sept. 25, 2015. The Cana Woodford jumped 7 units to 56, up 32 since June 24. Oklahoma and the Cana Woodford are home to two of hottest regions in the US behind the much larger Permian—the South Central Oklahoma Oil Province (SCOOP) and Sooner Trend Anadarko basin Canadian and Kingfisher (STACK) play. Last week, Continental Resources Inc. said it plans to operate an average 16 rigs in Oklahoma during 2017. Of the total, 11 will be in the STACK targeting the Meramec and Woodford formations, and 5 in the SCOOP. The firm is slated to operate an average 20 rigs companywide for the year.

OilPrice Intelligence Report: Is Iran The Next Big Catalyst For Oil Prices? - Oil prices posted some modest gains this week, despite some small up and down movements. OPEC compliance continues to look good, but oil inventories are also rising in the U.S., raising fears of ongoing supply problems. Oil volatility has declined in recent weeks, but it is far from clear which direction it will move in over the next several weeks and months.  Oil markets were buoyed this week by further evidence that OPEC is more or less complying with the production cuts that it promised a few months ago. A Reuters survey put the cuts so far at 1 million barrels per day. Bloomberg mostly agrees, estimating that the cartel cut output by 840,000 bpd so far. In other words, by all accounts, OPEC has achieved a roughly 80 percent compliance rate with its promised cuts. Given the strong skepticism surrounding the deal, the news is bullish for oil. “Compliance is great -- it’s been really fantastic,” Saudi Energy minister Khalid Al-Falih said recently. “Based on everything I know, I think it’s been one of the best agreements we’ve had for a long time.” The Trump administration is moving to impose new sanctions on Iranian entities after Iran tested a ballistic missile. The move comes after the administration said that they were “putting Iran on notice,” a vaguely worded threat that has undone years of improving relations. Iran has said that new sanctions would breach the 2015 nuclear accord; the U.S. insists they do not. The latest flare up in tensions upends a two-year d├ętente between the U.S. and Iran and put the two countries back on a path of confrontation. Iran has succeeded in ramping up oil production after international sanctions were lifted a year ago, but the sudden resurgence in tensions could push up prices if things escalate. The geopolitical battle with Iran had enormous influence a few years ago, and this could be one of the major black swan events of 2017.   Earnings reports from ExxonMobil, Chevron and Royal Dutch Shell ( have been highly disappointing, each company coming in sharply lower than consensus estimates. Shell just reported full-year earnings for 2016 that were the worst in over a decade. At the same time, oil executives struck an optimistic tone, arguing that the worst is over. Shell, for example, was cash flow positive in the past two quarters, allowing it to cover dividends and pay down debt. With oil prices now solidly above $50 per barrel, the oil majors are confident 2017 will be better.

Kuwait cabinet approves budget with huge deficit | The Kuwaiti government on Monday approved the 2017/2018 budget with a projected huge deficit for the third year running due to the sharp fall in oil prices. Finance Minister Anas Al Saleh said the fiscal year’s budget which begins on April 1 is projecting a shortfall of 6.6 billion dinars (Dh79.34 billion; $21.6 billion).The deficit is 25 per cent less than the projected shortfall in the current 2016/2017 fiscal year estimated at $29 billion, due to an improvement in oil prices.Revenues are projected at 13.3 billion dinars and spending is estimated at 19.9 billion dinars, the minister told reporters.The budget becomes official only after the Gulf state’s elected parliament approves it. Oil revenues are projected at $38.4 billion, up 36 per cent on the estimated oil income in this year’s budget, the minister said.Despite the sharp slide in oil prices in the past three years, income from oil is still projected to make up 88 per cent of Kuwait’s total revenues, Saleh said.After posting healthy surpluses for 16 years in a row, Kuwait posted a budget deficit in 2015/2016 which ended March 31 last year.In previous years Kuwait built up a sovereign wealth fund worth around $600 billion that is invested mostly in the United States, Europe and Asia.

Saudi Arabia signals end of tax-free living as oil revenues slump -- Tax-free living will soon be a thing of the past for Saudis after its cabinet on Monday approved an IMF-backed value-added tax to be imposed across the Gulf following an oil slump. A 5% levy will apply to certain goods following an agreement with the six-member Gulf Cooperation Council in June last year. Residents of the energy-rich region had long enjoyed a tax-free and heavily subsidised existence but the collapse in crude prices since 2014 sparked cutbacks and a search for new revenue. Saudi Arabia is the world’s biggest oil exporter and the largest economy in the Arab region. It froze major building projects, cut cabinet ministers’ salaries and imposed a wage freeze on civil servants to cope with last year’s record budget deficit of $97bn. It also made unprecedented cuts to fuel and utilities subsidies. The kingdom is broadening its investment base and boosting other non-oil income as part of economic diversification efforts and aims to balance its budget by 2020. The cabinet “decided to approve the unified agreement for value-added tax” to be implemented throughout the Gulf Cooperation Council (GCC), the official Saudi Press Agency said. “A royal decree has been prepared,” it said. The move is in line with an International Monetary Fund recommendation for Gulf states to impose revenue-raising measures including excise and value-added taxes to help their adjustment to lower crude prices which have slowed regional growth.

EXCLUSIVE: Pentagon believes attack on Saudi frigate meant for US warship | Fox News: The Iranian-backed suicide attack targeting a Saudi frigate off the coast of Yemen on Monday may have been meant for an American warship, two defense officials told Fox News. The incident in question occurred in the southern Red Sea and was carried out by Iranian-backed Houthi rebels. Two Saudi sailors were killed and three were wounded. At first the ship was thought to have been struck by a missile. But based on new analysis of a video showing the attack, American intelligence officials now believe this was, in fact, a suicide bomber whose small boat rammed the side of the Saudi vessel. In the audio heard on the video, a voice narrating the attack shouts in Arabic, "Allahu akbar [God is great], death to America, death to Israel, a curse on the Jews and victory for Islam." U.S. defense analysts believe those behind the attack either thought the bomber was striking an American warship or that this was a “dress rehearsal” similar to the attack on the USS Cole, according to one official.

Trump Continues Obama’s Inane, Immoral, Unconstitutional Drone Policy - We keep dropping bombs and we keep killing more civilians and children than we do alleged terrorists. Instead of lamenting all the lives needlessly destroyed, we praise a US soldier who died in an illegal, immoral, and unconstitutional action. In the following video, Ron Paul discusses US action in Yemen. President Trump ordered a second US attack on Yemen in his still-short presidency. Over the weekend a commando-style raid was said to have killed 14 al-Qaeda operatives. Also killed were at least ten civilians including children. Is this just a continuation of Obama’s disastrous Yemen policy? “Even if they sincerely believed in their hearts, they have to look at the results, …. Don’t they ever look at history? … The seeds have been sewn for them to turn against us,” said Paul. “Obama expanded Bush's inane, unconstitutional, immoral drone policy. Trump followed Obama. Hillary would have too.  No one ever questions why the policy of nation-building never works.

White House: Military won't target US citizens in anti-terror raids | TheHill: President Trump’s top spokesman on Tuesday said the military will never target U.S. citizens in overseas operations, including those suspected of being involved in terrorist groups. “No American citizen will ever be targeted,” White House press secretary Sean Spicer said when asked whether the Trump administration would target American citizens with ties to extremists. The comment put the Trump White House at odds with the Obama administration, which killed U.S.-born alleged al Qaeda leader Anwar al-Awlaki in a 2011 drone strike in Yemen. The Justice Department produced a legal memo justifying the strike, which was made public in 2014. The administration said the killing did not violate the Constitution because al-Awlaki posed an imminent threat to the U.S. Spicer indicated those types of operations would not longer be carried out by the U.S. military.

Obama Killed a 16-Year-Old American in Yemen. Trump Just Killed His 8-Year-Old Sister. - Greenwald - In 2010, President Obama directed the CIA to assassinate an American citizen in Yemen, Anwar al-Awlaki, despite the fact that he had never been charged with (let alone convicted of) any crime, and the agency successfully carried out that order a year later with a September, 2011 drone strike. While that assassination created widespread debate – the once-again-beloved ACLU sued Obama to restrain him from the assassination on the ground of due process and then, when that suit was dismissed, sued Obama again after the killing was carried out – another drone-killing carried out shortly thereafter was perhaps even more significant yet generated relatively little attention. Two weeks after the killing of Awlaki, a separate CIA drone strike in Yemen killed his 16-year-old American-born son, Abdulrahman, along with the boy’s 17-year-old cousin and several other innocent Yemenis. The U.S. eventually claimed that the boy was not their target but merely “collateral damage.” Abdulrahman’s grief-stricken grandfather, Nasser al-Awlaki, urged the Washington Post “to visit a Facebook memorial page for Abdulrahman,” which explained: “Look at his pictures, his friends, and his hobbies His Facebook page shows a typical kid.”  In a hideous symbol of the bipartisan continuity of U.S. barbarism, Nasser al-Awlaki just lost another one of his young grandchildren to U.S. violence. On Sunday, the Navy’s SEAL Team 6, using armed Reaper drones for cover, carried out a commando raid on what it said was a compound harboring officials of Al Qaeda in the Arabian Peninsula. A statement issued by President Trump lamented the death of an American service member and several others who were wounded, but made no mention of any civilian deaths. U.S. military officials initially denied any civilian deaths, and (therefore) the CNN report on the raid said nothing about any civilians being killed. But reports from Yemen quickly surfaced that 30 people were killed, including 10 women and children. Among the dead: the 8-year-old granddaughter of Nasser al-Awlaki, Nawar, who was also the daughter of Anwar Awlaki. (pictures of the children are included here)

Trump Insists That Now, More Than Ever, Americans Must Stand Strong In Face Of Empathy  —Stressing that the very future of the republic was at stake, President Donald Trump called upon all Americans Monday to stand strong and resolute in the face of empathy. “Now, more than ever, we as a nation must remain steadfast in resisting the urge to understand the feelings and perspectives of others,” said Trump, adding that a rising tide of dangerous empathy could, if unchecked, quickly engulf the country in compassion. “Above all else, we must never descend into treating people as separate individuals with their own concerns and desires, deserving of sympathy and respect. That is surely the path to kindness, from which a nation seldom returns.” Trump went on to say that the courage Americans demonstrated today would allow future generations to one day look at the world around them with indifference or, with any luck, pure disdain.

Crazy Ideas About The U.S. Attack In Yemen - The Fake Outrage About Trump piece included a part on a U.S. special force attack in Yemen that had happened just hours before: The rural home of a tribal leader's family, friendly with some Yemeni al-Qaeda members, was raided by a special operations commando. A U.S. tiltrotor military aircraft was shot down during the raid. One soldier was killed and several were wounded. The U.S. commandos responded with their usual panic. They killed anyone in sight and bombed the shit out of any nearby structure. According to Yemeni sources between 30 and 57 Yemenis were killed including eight women and eight children (graphic pics). The U.S. military claimed, as it always does, that no civilians were hurt in the raid. One of the killed kids was the 8 year old daughter of al-Qaeda propagandist Anwar al-Awlaki. That early description holds up well against recent reporting by NBC, the Washington Post and the New York Times. The incident happened as described. But an open question is still why the raid happen. The military and the administration claim it was to get intelligence, laptops, hard-drives and the like. But that is not a good explanation for an elaborate raid that needed lots of resources and backup. We had noted that "Yemeni sources say that at least two men were abducted by the U.S. military." The U.S. Central Command claimsthat no prisoners were taken only intelligence material. But a few days ago it also claimed that no civilians were hurt which it now admits indeed happened. My gut tells me that we will hear more on this issue. There are also some weird conspiracy theories around the raid. Marcy Wheeler aka Emptywheel headlined: Trump Fulfills Another Campaign Promise: Kills 8-Year Old American Girl and asked "Was that the point?"  That is crazy and impossible theory. Trump had been in office for less than ten days.  An organization like the U.S. military can not possibly vet, arrange and coordinated such a collection of different units and assets without several weeks of intense preparations. Another crazy piece was published by Reuters today: U.S. military officials told Reuters that Trump approved his first covert counterterrorism operation without sufficient intelligence, ground support or adequate backup preparations.  As a result, three officials said, the attacking SEAL team found itself dropping onto a reinforced al Qaeda base defended by landmines, snipers, and a larger than expected contingent of heavily armed Islamist extremists. On wonders who these three "U.S. military officials" are who try to back-stab Trump and his advisors. The raiders surely had prior and current intelligence, they surely had enough forces on the ground and in the air. Lots of backup actually did come in when needed.

U.S. military probing more possible civilian deaths in Yemen raid | Reuters: The U.S. military said on Wednesday it was looking into whether more civilians were killed in a raid on al Qaeda in Yemen on the weekend, in the first operation authorized by President Donald Trump as commander in chief. U.S. Navy SEAL William “Ryan” Owens was killed in the raid on a branch of al Qaeda, also known as AQAP, in al Bayda province, which the Pentagon said also killed 14 militants. However, medics at the scene said about 30 people, including 10 women and children, were killed. U.S. Central Command said in a statement that an investigating team had "concluded regrettably that civilian non-combatants were likely killed" during Sunday's raid. It said children may have been among the casualties. Central Command said its assessment "seeks to determine if there were any still-undetected civilian casualties in the ferocious firefight."U.S. military officials told Reuters that Trump approved his first covert counterterrorism operation without sufficient intelligence, ground support or adequate backup preparations. As a result, three officials said, the attacking SEAL team found itself dropping onto a reinforced al Qaeda base defended by landmines, snipers, and a larger than expected contingent of heavily armed Islamist extremists. The Pentagon directed queries about the officials' characterization of the raid to U.S. Central Command, which pointed only to its statement on Wednesday.

US Sends Navy Destroyer Off Yemen Coast As Tensions With Iran Rise --While there were some hopes President Trump would demilitarize US presence in the Middle East, they are quickly getting dashed with every passing day, and following Trump's announcement last week he would implement "safe zones" in Syria which would boost US troop presence in the region, on Friday US officials announced they had moved a Navy destroyer -the USS Cole, which in 2000 was infamously attacked by terrorists while on dock in Yemen's Aden harbor - off the coast of Yemen to protect waterways from Houthi militia aligned with Iran, according to Reuters, citing heightened tension between Washington and Tehran. More details from Reuters: The USS Cole arrived in the vicinity of the Bab al-Mandab Strait off southwestern Yemen where it will carry out patrols including escorting vessels, the officials said.While U.S. military vessels have carried out routine operations in the region in the past, this movement is part of an increased presence there aimed at protecting shipping from the Iran-allied Houthis, they said.The Houthis are allied to Iran, which is at odds with new U.S. President Donald Trump over its recent test launch of a ballistic missiles. Trump said on Thursday that “nothing is off the table” in dealing with Iran, a day after his national security adviser, Michael Flynn said he was putting Iran “on notice.”On Friday, tensions with Iran increased further on Friday when the U.S. Treasury Department announced sanctions on 13 people and 12 entities under U.S. Iran sanctions authority. Earlier this week Houthi insurgents reportedly attacked a Saudi warship off the western coast of Yemen, causing an explosion that killed two crew members. That incident was part of an escalation in combat on Yemen's western coast between the militia and the coalition backing the country's internationally recognized government.

Iran Admits It Test Fired New Missile, Putting Nuclear Deal In Jeopardy -- After yesterday US officials reported that Iran conducted a nuclear ballistic missile test on Sunday, which to some would be another violation of the UN resolution and Obama's nuclear deal, on Wednesday Iran's defense minister admitted that the Islamic Republic had indeed tested a new missile, but added the test did not breach Tehran's nuclear accord with world powers or a U.N. Security Council resolution endorsing the pact. Iran has test-fired several ballistic missiles since the nuclear deal in 2015, but this is the first during U.S. President Donald Trump's administration. Trump said in his election campaign that he would stop Iran's missile program. Furthermore, the confirmed launch comes at a precarious time, with president Trump seemingly looking for excuses to scrap the Iran deal, which could potentially lead to the reestablishment of Iran sanctions and the halt of Iranian oil exports to global markets, taking away as much as 1 million barrels of daily supply.

Putin's Russia in biggest Arctic military push since Soviet fall | Reuters: Russia is again on the march in the Arctic and building new nuclear icebreakers. It is part of a push to firm Moscow's hand in the High North as it vies for dominance with traditional rivals Canada, the United States, and Norway as well as newcomer China. Interviews with officials and military analysts and reviews of government documents show Russia's build-up is the biggest since the 1991 Soviet fall and will, in some areas, give Moscow more military capabilities than the Soviet Union once had. The expansion has far-reaching financial and geopolitical ramifications. The Arctic is estimated to hold more hydrocarbon reserves than Saudi Arabia and Moscow is putting down a serious military marker. "History is repeating itself," Vladimir Blinov, a guide on board the icebreaker Lenin, which is named after communist revolutionary Vladimir Lenin, told a recent tour group. "Back then (in the 1950s) it was the height of the Cold War and the United States was leading in some areas. But we beat the Americans and built the world's first nuclear ship (the Lenin). The situation today is similar." Under President Vladimir Putin, Moscow is rushing to re-open abandoned Soviet military, air and radar bases on remote Arctic islands and to build new ones, as it pushes ahead with a claim to almost half a million square miles of the Arctic.The Arctic, the U.S. Geological Survey estimates, holds oil and gas reserves equivalent to 412 billion barrels of oil, about 22 percent of the world’s undiscovered oil and gas.

Analysis: China's 2016 oil demand in the red as GDP growth hits 26-year low - China's apparent oil demand slipped into the negative territory in 2016, a sharp reversal from the near 7% growth witnessed a year earlier, as the country's slowest GDP growth in 26 years slashed appetite for industrial and transportation fuels in Asia's biggest oil consuming nation. A near 25% growth in LPG demand and close to double-digit growth in naphtha and jet fuel demand failed to offset the impact of sharp falls in gasoil and fuel oil consumption, pulling down overall oil demand in 2016 by 0.8% to 11.11 million b/d, compared with a growth of 6.6% in 2015. The world's second biggest oil consumer saw a sharp slowdown in demand after GDP growth slowed to 6.7% in 2016 from 6.9% in 2015 and 7.3% in 2014. GDP growth was 3.9% in 1990. Although GDP growth was only 0.2 percentage points lower than in 2015, fixed asset investment growth slowed to 8.1% year on year in 2016 from 10% in 2015. Industrial production grew 6% in 2016, also lower than the 6.1% growth seen in 2015, data from the National Bureau of Statistics showed. These factors together pulled down gasoil consumption in the transportation and construction sectors, resulting in a 5.4% year-on-year fall in apparent demand for the fuel, which accounts for around 30% of China's overall oil products consumption.Beijing does not release official data on oil demand and stocks. Platts calculates apparent or implied oil demand by taking into account official data on monthly throughput at Chinese refineries and net product imports. But the official data fails to reflect some of the crude throughput increases from the new crude oil consumers -- the independent refineries. 

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