oil prices again tracked higher this week, as saber rattling about Syria had traders weighing geopolitical risks in the Middle East in addition to the usual oil supply issues of OPEC's production cuts and increasing US oil production...after closing last week at a one-month high of $52.24 a barrel, US oil prices for May delivery moved up steadily all day Monday to finish the day at $53.08 a barrel, as hedge funds turned bullish on crude after 5 weeks of liquidating their positions...oil prices rose again on Tuesday morning on headlines of a possible OPEC production cut extension, and then extended their gains after the American Petroleum Institute reported an across the board drawdown of crude and refined products supplies, ending the day at $53.40 a barrel...prices moved higher again Wednesday morning, trading as high as $53.71 a barrel, before pulling back after the weekly EIA showed increasing stockpiles at the U.S. crude hub at Cushing, Oklahoma, and a 20 month high for US crude production, and ended the day down 29 cents at $53.11 a barrel, the first daily price decrease in 8 sessions...prices then inched back up on Thursday, closing 7 cents higher at $53.18 a barrel, despite news of a still rising rig count, as the IEA (International Energy Agency) reported that the global oil market was probably already balanced, as oil inventories were falling in many parts of the world and have started to decline in the OECD as well...
OPEC's April report
since the OPEC April Oil Market Report (covering March OPEC & global data) was out this week, and since their production cuts are ultimately underpinning higher roil prices and hence increased US drilling, we'll take a look at that report first....the first table from that report that we'll include here is from page 62 of that OPEC pdf, and it shows oil production in thousands of barrels per day for each of the OPEC members over the recent years, quarters and months as the column headings are labeled...for all their official production measurements, OPEC uses data from these "secondary sources", such as analyst's reports from satellites and shipping data, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to resolve any potential disputes that could arise if each member reported their own figures...
here we can see that this official data shows that OPEC production was down by 152,700 barrels per day to 31,928,000 barrels per day in March, from a February oil production total of 32,081,000 barrels per day that was revised 123,000 barrels per day higher than what was reported last month...(for your reference, here is the table of the official February figures before these revisions)...recall that OPEC committed to reducing their production by 1.2 million barrels per day from their October levels (shown here, with Indonesia, who is no longer a member), so these figures show that the total production of the remaining 13 members is pretty close to the level they agreed to cut back to....but note that over 90 thousand barrels of this month's reduction came from Nigeria and Libya, the two OPEC nations that were exempt from the cuts, because their production was reduced by domestic unrest...both counties had renewed disruptions in March, but should their problems be overcome, their potential production would be enough to reverse the rest of OPEC's cuts...
next, we'll include a graph of the total OPEC oil output for all 13 members included in this report, so we can see how this month's production stacks up compared to historical figures...
the above graph, taken from the 'OPEC March Crude Oil Date" post at the Peak Oil Barrel blog, shows total oil production, in thousands of barrels per day, for the 13 members of OPEC, for the period from January 2005 to March 2017, using the same official data from secondary sources as in the table above...obviously, we can see that March OPEC production of 31,928,000 barrels per day is down quite a bit from their record production of 33,374,000 million barrels per day in November, a level achieved during their production run-up before the agreement was reached…but note that their current production is still somewhat more than what they were producing between February and May of 2016, and every other month before that, including last January...indeed, when we check the March 2016 production data in last April's OPEC Oil Market Report, we find that OPEC production for that month minus the output of Indonesia comes in at 31,526,000 barrels per day....that means that their March production of 31,928,000 barrels per day this year is actually 1.3% higher than in March a year ago, despite the well orchestrated 'cuts' from the elevated levels of October..
this next graphic we'll include shows us both OPEC and world oil production monthly on the same graph, from April 2015 to March 2017, and it comes from page 63 of the April OPEC Monthly Oil Market Report...the light blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for that shown on the right scale...global oil production slipped to 95.82 million barrels per day in March, down by 0.23 million barrels per day from February but up by 0.22 million barrels per day from March a year ago...OPEC's production of 31,928,000 barrels per day thus represented 33.3% of what was produced globally, a statistically insignificant decrease from the 33.3% OPEC share in February and down from a 33.5% global share in January...but even with the three months of production cuts we can obviously see on this graph, there is still a surplus of oil supply globally, as the next table that we'll include will show us..
the table below comes from page 37 of the April OPEC Monthly Oil Market Report, and it shows oil demand in millions of barrels per day for 2016 in the first column, and OPEC's forecast for oil demand by region and globally over 2017 over the rest of the table...on the "Total world" line of the second column, we've circled in blue the figure we're interested in, which is the estimate for global oil demand over the first quarter of 2017...
OPEC's estimate is that during the first three months of this year, all oil consuming areas of the globe used 95.39 million barrels of oil per day, up from the 95.05 millions of barrels of oil per day they were using in 2016...but as OPEC showed us in the oil supply section of this report and the summary supply graph above, even with their production cuts, the world's oil producers were still producing 95.82 million barrels per day during March...that means that even after all the production cuts have taken place, there continued to be a surplus of around 430,000 barrels per day in global oil production in March...in addition, global production for February was revised higher, to 96.05 million barrels per day, so the global oil surplus during February was therefore around 660,000 barrels per day...and as we showed two months ago, using figures from the February report, there was also an excess of nearly a million barrels per day in global oil production in January...clearly, from these figures, oil supply is not yet balanced with demand, and those who say it is are just talking their book and not looking at the data...
The Latest Oil Data from the EIA
the oil data for the week ending April 7th from the US Energy Information Administration showed that an increase in our exports of crude oil coupled with another large increase in our oil refining meant that we had to take oil out of storage to meet those needs for only the 2nd time in the past 14 weeks...our imports of crude oil increased by an average of 28,000 barrels per day to an average of 7,878,000 barrels per day during the week, while at the same time our exports of crude oil rose by 114,000 barrels per day to an average of 689,000 barrels per day, which meant that our effective imports netted out to 7,189,000 barrels per day during the week, 86,000 barrels per day less than the prior week...at the same time, our crude oil production rose by 36,000 barrels per day to an average of 9,235,000 barrels per day, which means that our daily supply of oil, from net imports and from wells, totaled an average of 16,424,000 barrels per day during the cited week...
meanwhile, refineries reportedly used 16,697,000 barrels of crude per day, 268,000 barrels per day more than they used during the prior week, while at the same time, 399,000 barrels of oil per day were being pulled out of oil storage facilities in the US....thus, this week's EIA oil figures would seem to indicate that refineries used 126,000 less barrels of oil per day than were supplied by what we took out of storage plus our net oil imports and oil well production…therefore, in order to make the weekly U.S. Petroleum Balance Sheet balance out, the EIA inserted a phantom -126,000 barrel per day figure onto line 13 of the petroleum balance sheet, which the footnote tells us represents "unaccounted for crude oil"...that "unaccounted for crude oil" 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", which means they got that balance sheet number by backing into it, using the same arithmetic we just used in explaining it...
the weekly Petroleum Status Report also indicates that the 4 week average of our oil imports rose to an average of 8,065,000 barrels per day, now 3.0% above the imports of the same four-week period last year, and that the 4 week average of our oil exports slipped to 706,000 barrels per day, 94.5% higher than the same 4 weeks a year earlier, since we had barely started overseas exports of surplus light crude oil in early 2016...the 399,000 barrel per day decrease in our crude inventories came about on a 309,000 barrel per day withdrawal from our commercially available crude oil stores and a 89,000 barrel per day sale of oil from our Strategic Petroleum Reserve, part of an ongoing sale of 5 million barrels annually that was planned 18 months ago...
meanwhile, this week's 36,000 barrel per day oil production increase resulted from a 35,000 barrel per day increase in oil output from the lower 48 states and a 1,000 barrels per day increase in oil output from Alaska...the 9,235,000 barrels of crude per day that we produced during the week ending April 7th was up by 5.3% from the 8,770,000 barrels per day were producing at the end of 2016, and the most we've produced since the 2nd week of January 2016...while the week's production was up by 2.9% from the 8,977,000 barrel per day output during the during week ending April 8th a year ago, it was still 3.9% below the June 5th 2015 record oil production of 9,610,000 barrels per day...
US oil refineries were operating at 91.0% of their capacity in using those 16,697,000 barrels of crude per day, up from 90.8% of capacity the prior week, but still down from the year high of 93.6% of capacity in the first week of January, when they were processing 17,107,000 barrels of crude per day...however the quantity of crude oil processed by US refineries was a Spring-time record, just topping the 16,695,000 barrels of crude per day that were being refined during the week ending June 24th last year...since we've had quite a ramp in the amount of crude that US refineries have been processing over recent weeks, which directly led to the first drawdown of crude supplies in 6 weeks, we'll take a look at a graph of that to see how it compares to the historical norm...
the above graph comes from a weekly emailed package of oil graphs from John Kemp, senior energy analyst and columnist with Reuters...this graph shows US refinery throughput in thousands of barrels by "day of the year" for the past ten years, with the past ten year range of our refinery throughput on any given date shown in the light blue shaded area, and the median of our refinery throughput, or the middle of the 10 year daily range, traced by the blue dashes over each day of the year...the graph also shows the number of barrels of oil refined for each week in 2016 traced weekly by a yellow line, and our year to date oil refining during 2017 represented in red...from this we can there is an obvious seasonal swing for oil refining, with demand for their products highest in the summer and again around the holidays, but we can still see that for most all of 2016 and through most of 2017, oil refining was either at seasonal record highs or near the top of the average range...we can also see that although refining slipped below last year's pace earlier this year, we've had quite a increase in oil refining over the past four weeks, as US refinery throughput surged 7.9%, from 15,472,000 barrels per day March 10th to this week's seasonal record of 16,697,000 barrels of crude per day...that was 4.7% more than the 15,941,000 barrels per day that were being refined during the week ending April 8th last year, when refineries were running at 89.2% of capacity...
with the week's refining increase, gasoline production from our refineries increased by 412,000 barrels per day to 9,927,000 barrels per day during the week ending April 7th, which was 3.9% more than the 9,568,000 barrels per day of gasoline that were being produced during the comparable week a year ago....in addition, refineries' production of distillate fuels (diesel fuel and heat oil) also increased by 93,000 barrels per day to 5,060,000 barrels per day, which was 5.8% more than the 4,784,000 barrels per day of distillates that were being produced during the week ending April 8th last year...
however, even with the big jump in our gasoline production, the EIA reported that our gasoline inventories still shrunk by 2,973,000 barrels to 236,130,000 barrels as of April 7th, after they had already dropped by almost 16.8 million barrels over the prior 5 weeks....that was because our gasoline exports rose by 121,000 barrels per day to 710,000 barrels per day and because our imports of gasoline fell by 119,000 barrels per day to 488,000 barrels per day, while our domestic consumption of gasoline inched up by 30,000 barrels per day to 9,275,000 barrels per day...while our gasoline supplies are now down by nearly 23 million barrels from the record high set 8 weeks ago, they're still just 1.5% lower than last April 8th's inventories of 243,998,000 barrels, and are still 3.6% above the 227,873,000 barrels of gasoline we had stored on April 10th of 2015...
in like manner, even with the increase in distillate's production, our supplies of distillate fuels also fell during the week, decreasing by 2,153,000 barrels to 150,221,000 barrels by April 7th, as the amount of distillates supplied to US markets, a proxy for our consumption, increased by 537,000 barrels per day to 4,635,000 barrels per day, even as our exports of distillates fell by 226,000 barrels per day to 851,000 barrels per day and as our imports of distillates fell by 11,000 barrels per day to 118,000 barrels per day at the same time....while our distillate inventories are now 8.1% below the record distillate inventories of 163,489,000 barrels that we had stored on April 8th 2016, following last year's warm El Nino winter, they are still 16.5% higher than the distillate inventories of 128,941,000 barrels that we had stored on April 10th of 2015, following a more normal winter…
finally, our commercial inventories of crude oil fell for only the 2nd time in the past 14 weeks, decreasing by 2,166,000 barrels to 533,377,000 barrels as of April 7th....at the same time, 625,000 barrels of oil from our Strategic Petroleum Reserve was sold, which left inventories in the SPR at 691,510,000 barrels, oil that's not considered available for commercial use....thus, for commercial purposes, we still finished the week ending April 7th with 11.3% more crude oil in storage than the 479,012,000 barrels we had stored at the end of 2016, 5.6% more crude oil in storage than what was then a record 505,232,000 barrels of oil in storage on April 8th of 2016, 18.3% more crude than what was also then a record 450,956,000 barrels in storage on April 10th of 2015, and 47.2% more crude than the 362,354,000 barrels of oil we had in storage on April 11th of 2014...
This Week's Rig Count
Baker Hughes released this week's rig count data on Thursday because of the Friday holiday...nonetheless, drilling activity still increased for the 23rd time in the past 24 weeks during this shortened week, although the 5 week string of double digit rig count increases did come to an end...Baker Hughes reported that the total count of active rotary rigs running in the US increased by 8 rigs to 847 rigs in the 6 day week ending on Thursday April 13th, which was 407 more rigs than the 440 rigs that were deployed as of the April 15th report in 2016, and the most drilling rigs we've had running since September 11th, 2015, but still far from the recent high of 1929 drilling rigs that were in use on November 21st of 2014....
the number of rigs drilling for oil increased by 11 rigs to 683 rigs this week, which was up by 332 from the 351 oil directed rigs that were in use a year ago, and the most oil rigs that were in use since April 24th 2016, while it was still way down from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations fell by 3 rigs to 162 rigs this week, which was still up from the 89 natural gas rigs that were drilling a year ago, but down from the recent natural gas rig high of 1,606 rigs that were deployed on August 29th, 2008...in addition, there were also 2 rigs in use that were classified as miscellaneous, compared to a year ago, when there were no such miscellaneous rigs at work...
one drilling platform that had been working offshore from Louisiana in the Gulf of Mexico was shut down this week, which left 21 offshore rigs still drilling in the Gulf, down from 27 in the Gulf of Mexico a year earlier....that was also down from the total of 28 offshore rigs that were deployed a year ago, as there was also an drilling platform working in the Cook Inlet offshore from Alaska last year at this time...in addition, one of the rigs that had been drilling in an inland lake in Louisiana was also idled this week, which still left 3 rigs working on inland waters, all in Louisiana, the same as the number as were deployed on inland waters on April 15th of 2016...
active horizontal drilling rigs increased by 11 rigs to 706 rigs this week, which was well more than double the 335 horizontal rigs that were in use in the US on April 15th of last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, a net of 4 vertical rigs were added this week, bringing the vertical rig count up to 77, up from the 54 vertical rigs that were deployed during the same week last year....however, 7 directional rigs were pulled out this week, reducing the directional rig count down to 64 rigs, which was still up from the 51 directional rigs that were deployed during the same week a year ago...
the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of April 13th, the second column shows the change in the number of working rigs between last week's count (April 7th) and this week's (April 13th) count, the third column shows last week's April 7th active rig count, the 4th column shows the change between the number of rigs running on Thursday 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 15th of April, 2016...
although increased drilling in the Permian by itself accounted for the week's 8 rig increase, it wasn't Texas that saw the added burden this week, as apparently 7 of the new Permian rigs were set up across the state line in southeast New Mexico...Texas only saw a 2 rig increase, which necessarily included the 3 rig increase in the south Texas Eagle Ford, while rigs were pulled out of the portions of the Granite Wash and the Haynesville that lie in the state...also note that another natural gas rig was added in the Utica shale of Ohio, which brings the Utica count up to 23 rigs, up from 12 rigs a year ago...other than the 3 rig increase in Oklahoma, 2 of which were set up in the Cana Woodford, the big change we don't see in the table above was in Mississippi, where 3 of the 5 rigs that had been operating in the state were pulled out....the two rigs remaining in Mississippi were the same number that were working in the state on April 15th of last year...
Ohio nuclear bill could clash with federal law, conceals info from public | Midwest Energy News: A bill to subsidize FirstEnergy’s Davis-Besse and Perry nuclear plants presents potential conflicts under Ohio and federal law. Senate Bill 128 would implement FirstEnergy’s zero-emission nuclear, or ZEN, program to have its Ohio utilities’ two million distribution customers pay above-market prices for as much as $57 per year for up to 16 years. That charge of about $5 per month would be in addition to a rider the company started collecting this year of nearly $4 per residential customer per month in order to prop up FirstEnergy’s credit rating. Critics say the nuclear ZEN bill would conflict with federal law by improperly interfering with electricity markets. Questions have also been raised about the fact that one of the bill’s two sponsors, state Sen. John Eklund, is also an antitrust and trade attorney with the firm of Calfee, Halter & Griswold, whose list of government relations clients includes FirstEnergy. The Legislative Inspector General’s database of lobbyists confirms that two attorneys in the firm’s Columbus office are identified as registered on behalf of the energy company. “The coziness that there is between the legislature and this public utility…doesn’t smell good,” said Dick Munson of the Environmental Defense Fund. When asked if there was an ethical problem in his sponsorship of the bill or whether he might need to abstain from voting on it, Eklund said, “the short answer is no.” As he understands it, an earlier opinion from Ohio’s Joint Legislative Ethics Committee would apply to the situation. “I’m not doing this for FirstEnergy,” Eklund continued. “I’m elected to represent my district, which as you know includes the Perry Nuclear Power plant, and I have deep, deep concerns about what the possible closure, shuttering of that facility, would do to the communities that it’s in and that surround it, and the entire northeast Ohio area.”
Amid Fracking And Trump Pennsylvania Faces Water Protection Questions - A Pennsylvania state law requiring that public water systems were informed of nearby gas drilling spills saw its downfall late last month.The state’s Supreme Court had given the legislature six months to implement a notification requirement for private wells in September 2016. If the legislature did not comply, it would “see that portion of Act 13, the law governing Pennsylvania's shale industry, disappear,” according to Pennlive.com. The Republican leadership existing in both chambers thought over the choice given to them by the court. However, the state Department of Environmental Protection (DEP) “plans to continue its notifications of public water systems, despite losing the statutory mandate.” “We need to have a formal statutory obligation," Sen. John Yudichak, Democrat of Luzerne County, told Pennlive. "Administrations change. Department secretaries change. We want to make sure that provision is in there."Senate Minority Leader Jay Costa, Democrat from Allegheny County, said that discussions focused on how to restore the water notification requirement were presently happening."I need to go back and take the temperature of our caucus again," he said.According to Philly.com, “President Trump's proposal to slash 31 percent of the U.S. EPA’s budget could eventually be magnified in a sort of double whammy to clean air and water safeguards in Pennsylvania and New Jersey.”
Shell’s Appalachian ethylene complex construction set for late 2017 - Oil & Gas Journal: Royal Dutch Shell PLC subsidiary Shell Chemical Appalachia LLC is nearing completion of the early works program in preparation for a targeted late-2017 start of construction on its long-planned grassroots petrochemical complex along the Ohio River in Potter Township, Beaver County, Pa., about 30 miles northwest of Pittsburgh ((OGJ Online, June 6, 2011). The early works program, including site preparation and detailed design and engineering work, has been progressing safely, efficiently, and to the highest standards of engineering, with main site construction on track to begin later this year, Shell said. To date, completed works include installation of 4,200 steel pilings for the foundations of several permanent structures, relocation of an existing state highway, and improvements to interchanges intended to benefit area motorists as well as accommodate trucks working on the main construction phase, the company said. To further reduce road traffic during construction, Shell also finished building two large river docks for the delivery of large equipment via barge. Alongside ongoing removal of preexisting foundations and associated environmental remediation work at the site, the company also recently began laying concrete to complete foundations for permanent structures. Designed to produce ethylene and polyethylene (PE) from nearby supplies of low-cost Marcellus and Utica shale ethane, Shell’s Appalachian petrochemical complex will include an ethane cracker with an average ethylene production capacity of about 1.5 million tonnes/year, three PE units with a combined production of 1.6 million tpy, as well as associated installations for power and steam generation, storage, logistics, cooling water and water treatment, emergency flare, and offices (OGJ Online, June 7, 2016).
Cuomo Denies Permit for Northern Access Pipeline - New York State blocked the Northern Access Project on March 7, a pipeline that would have carried fracked gas from Pennsylvania to Canada via New York. This is a huge victory not just for New Yorkers but for the entire planet. The New York State Department of Environmental Conservation (DEC), after a careful and exhaustive study, exercised its right under Section 401 of the federal Clean Water Act to deny certification to the proposed 24-inch diameter, 99-mile pipeline. Without 401 certification, the natural gas pipeline cannot go forward within the state. Gov. Cuomo and DEC Commissioner Basil Seggos have shown exceptional leadership in denying the permit. This project was a serious threat to water quality, wildlife, trout streams and other habitats, as well as to air quality in the North Country and Western New York. The pipeline would have directly harmed 192 streams, 600 acres of forests and more than 17 acres of wetlands in the state and would have crossed one sole source aquifer—the Cattaraugus Creek Basin Aquifer System—the sole source of drinking water for 20,000 residents in Cattaraugus, Erie and Wyoming counties in New York. DEC's decision to deny 401 certification for the pipeline is not the first time that Gov. Cuomo has taken bold action to protect the environment. In 2015, New York State was the first state with natural gas resources to ban fracking in the U.S. and in 2016, the State denied a 401 certification to Constitution pipeline, another natural gas pipeline that could have significantly harmed state water quality. This decision may not have happened but for widespread opposition from the environmental community across the state. On March 27, hundreds of people from across New York State rallied in Albany to express their outrage over the proposed pipeline, demonstrating statewide opposition to this dangerous project. That same day, 143 organizations, businesses and faith communities representing thousands of New Yorkers signed on to a letter asking DEC to deny 401 certification to Northern Access.
Will an oil pipeline proposed for tribal lands destroy the Ramapough Lenape Nation, or will it be the catalyst that once again unites the tribe? - For the Ramapoughs, a group of indigenous people native to the highlands around Mahwah, N.J., life has often been a series of excruciating struggles over rights and resources. The tribe has an embattled history marked by colonial occupation, environmental degradation, discrimination, and clashes with politicians and real estate developers. Over the years, they have been left greatly diminished, a proud tribe working to stave off eradication and invisibility. But the Ramapoughs have experienced something of an awakening in recent months. After a developer proposed an oil pipeline that would run through their native land — and potentially threaten the region’s water supply — the tribe began a wave of protests that has drawn together its dwindling members. They were galvanized further by the election of President Trump, whom they see as an enemy to the environment and indigenous life at large — and an old foe of the tribe in particular. Now this small and beleaguered community is preparing for battle with forces both local and national. For Mr. Perry, the stakes are nothing short of the existence of the Ramapoughs. “We’ll either last another thousand years,” Mr. Perry said, “or get wiped out entirely.” Since he became chief in 2006, Mr. Perry has often found it challenging to mobilize the tribe in times of need. But recently he has fastened on to an issue that has alarmed his people. In 2014, Pilgrim Pipeline Holdings released plans to construct a pair of oil pipelines that would pass through Ramapough territory. According to the proposal, the pipelines would each stretch 178 miles underground, running from Albany to Linden, N.J. Heading south, the channel would carry 200,000 barrels each day of crude Bakken shale, a volatile variety of oil from Montana and North Dakota. Gasoline and aviation fuel would flow north.
Enviro groups appeal NJ gas pipeline approval- Two environmental groups are appealing the approval of a hotly contested natural gas pipeline through the ecologically sensitive New Jersey Pinelands region by the state agency created to protect the area. The Sierra Club and Environment New Jersey filed the appeal Monday of a Feb. 24 decision by the New Jersey Pinelands Commission to approve a pipeline through the federally protected reserve. The pipeline is designed to help a power plant in southern New Jersey switch from coal to gas. But Jeff Tittel, director of the New Jersey Sierra Club, says the commission failed to follow its own guidelines that require any project in the Pinelands to primarily benefit people living there. The gas plant, he says, is largely outside the Pinelands preserve. "We are going to court to do the job the Pinelands Commission is supposed to do, which is to protect the Pinelands," Tittel said. "The Pinelands Commission have sold out the Pinelands and the environment by approving the South Jersey Gas pipeline." The commission declined to comment. It was the most emotionally charged jobs-versus-environment clash in recent New Jersey history and was closely watched by environmental and energy groups around the nation, particularly with a new presidential administration seen as more supportive of the energy industry. South Jersey Gas plans to run the pipeline mostly under or alongside existing roads. The company says it already operates over 1,400 miles of gas mains and 133 miles of elevated pressure lines within the Pinelands without harming the environment.
Maryland Bans Fracking, As Activists Fight 9000 Miles of New Pipelines - Maryland is the third state to ban fracking, after New York and Vermont did a couple of years ago. In a rare case of bipartisanship, Maryland’s Republican Governor, Larry Hogan, signed a bill passed overwhelmingly by the Democratically controlled legislature. He says, “The possible environmental risks of fracking simply outweigh any potential benefits. Protecting our clean water supply and our natural resources is critically important to Marylanders and we simply cannot allow the door to be open for fracking in our state.” Activists have been pushing for a ban since 2012. Food & Water Watch talks about how it came to fruition. After lots of rallies and knocking on doors, they say: “In March of 2013, we helped pass a ban on fracking wastewater in the Baltimore City Council, and in 2014, we worked with Montgomery County to ban fracking there. When the state legislature passed a fracking moratorium in 2015, things really started to pick up steam. Working with partners, we passed fracking bans in Prince George’s County, Anne Arundel County, Baltimore City and Friendsville in Garrett County. We also passed fracking resolutions in Frederick County and about a dozen other jurisdictions across the state. These local actions brought thousands of people into the anti-fracking movement, and set us up to win big at the state level.”138 communities in the US have banned fracking, including Los Angeles, Mendocino, San Benito, Santa Cruz and Butte counties in California and Cincinnatiand Athens in Ohio. Colorado has been at outlier, suing towns that have passed bans.In the past, Hogan called fracking an economic goldmine, so we’re not sure what changed his mine – especially since he vetoed a bill to expand renewable energy in Maryland. Democrats overrode the veto, raising the state’s Renewable Portfolio Standard to 25% renewables by 2020, up from 20% by 2022. A bill to expand energy efficiency – utilities must cut electricity demand 2% a year by 2020 – became law without the Governor’s signature.
Virginia pipelines will be subject to Department of Environment Quality water-quality review - richmond.com: The Atlantic Coast and Mountain Valley natural gas pipeline projects, proposed to cross hundreds of streams and wetland areas across Virginia, will be required to submit detailed information to state regulators on how they will comply with state erosion control and sediment runoff regulations to protect water quality. The Virginia Department of Environmental Quality announced Thursday that it would require water quality certifications under Section 401 of the federal Clean Water Act for each segment of both projects that crosses or potentially affects water bodies. The decision will require extensive review of hundreds of affected waterways, potentially delaying the construction of the two proposed multibillion-dollar projects. “These certifications will ensure that Virginia water quality standards are maintained in all areas affected by the projects,” the DEQ said in a statement. “The public will have an opportunity to review and comment on these certifications and the conditions required to protect water quality.” The department had been weighing whether to permit the crossings solely under the “blanket” rules in the U.S. Army Corps of Engineers Nationwide Permit 12 process, which pipeline opponents have criticized as too limited and general to protect Virginia waterways. “We could have done that but that would have been less involved on each piece of the pipeline,” DEQ spokesman Bill Hayden said. “It really came about partially from the public interest that’s been expressed and partly from DEQ’s own concerns that the pipeline construction be done properly to protect water quality. They’re big projects, both of them, and we wanted to make sure they can be done right.”
Trump to seek offshore drilling expansion | TheHill: President Trump is preparing an executive order to start undoing former President Obama’s restrictions on offshore drilling. Interior Secretary Ryan Zinke, who oversees offshore drilling, told an industry conference about the upcoming order Thursday, Bloomberg News reported, citing sources in attendance. The order would direct the Interior Department to rewrite Obama’s five-year schedule for lease sales between 2017 and 2022, which left out any drilling in the Arctic or Atlantic oceans, and to add some sales in those areas. It would also begin the process of undoing Obama’s actions to indefinitely block drilling in certain areas of the Arctic and Atlantic, Bloomberg reported. The former president used a little-known provision in law to do that last year, and his administration argued that the action could not be undone by Trump. The actions would fit within Trump’s pledges on the campaign trail and since taking office to increase domestic energy production, particularly of fossil fuels. He signed a wide-ranging executive order last week to undo nearly all of Obama’s climate policies. That order also directed Interior and other agencies to find policies that inhibit domestic energy production and use and to work to undo them. Rewriting the five-year plan would require an extensive Interior Department process with multiple steps that could take years. It took the Obama administration about two years to write its five-year plan, which included 10 leases in the Gulf of Mexico but left other areas out completely.
Trump moves to open Atlantic coast to oil drilling for first time in more than 30 years - The White House is taking steps that could open up new areas of the Atlantic and Arctic oceans to offshore oil and gas drilling, according to multiple individuals briefed on the proposal. The White House is considering an executive order instructing the Interior Department to reverse President Barack Obama’s withdrawal of hundreds of millions of offshore acres from future drilling in December. The executive order — which could come out in the next few weeks — represents President Trump’s latest attempt to promote domestic energy exploration by rolling back restrictions put in place by previous administrations, though it would take considerable time for Interior to carry out aspects of the proposed directive. Interior Secretary Ryan Zinke on Thursday, in an address to the annual meeting of the National Ocean Industries Association, confirmed that there was an executive order addressing offshore, “on the way … likely next week,” according to Nicolette Nye, a spokeswoman for the group. However, Interior spokeswoman Heather Swift said that Zinke was alluding to the executive order Trump signed last week and that the department was “reviewing our offshore policies and regulations.”Other oil industry officials, participants at the NOIA meeting, and a GOP lawmaker from an affected state said that they had not been briefed and that the order might not be issued any earlier than May. People familiar with the planned order spoke on the condition of anonymity because it has not been formally announced yet. Zinke’s comments highlighted the extent to which Trump’s March 28 executive order is already reverberating throughout the federal government. That directive instructed the heads of all agencies to “review all existing regulations, orders, guidance documents, policies, and any other similar agency actions (collectively, agency actions) that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.” Legal experts and others are just beginning to understand how the order could affect “almost every environmental regulation that affects energy in any way” as well as many non-environmental rules.
Gulf of Mexico crude oil production, already at annual high, expected to keep increasing -- U.S. crude oil production in the Federal Gulf of Mexico (GOM) set an annual high of 1.6 million barrels per day (b/d) in 2016, surpassing the previous high set in 2009 by 44,000 b/d. In January 2017, GOM crude oil production increased for the fourth consecutive month, reaching 1.7 million b/d. On an annual basis, oil production in the GOM is expected to continue increasing through 2018, based on forecasts in EIA’s latest Short-Term Energy Outlook (STEO). In 2016, eight projects came online in the GOM, contributing to the high production levels. Another seven projects are anticipated to come online by the end of 2018. Based on anticipated production levels at these new fields and existing fields, annual crude oil production in the GOM is expected to increase to an average of 1.7 million b/d in 2017 and 1.9 million b/d in 2018. Because of the length of time needed to complete large offshore projects, oil production in the GOM is less sensitive to short-term oil price movements than onshore production in the Lower 48 states. Recent crude oil price increases have not had a significant impact on operations in the GOM. Rotary rig counts in the GOM—including both gas- and oil-directed rigs—have actually declined since crude oil prices increased following the November 2016 Organization for the Petroleum Exporting Countries (OPEC) announcement to cut production. However, long-term trends also affect GOM oil production. The number of rotary rigs operating in the GOM decreased from an average of 55 in 2014, when the Brent crude oil spot price began dropping, to 22 in 2016. The number of development and exploratory wells has fallen in each year since 2012. Although the number of operating rotary rigs in the GOM increased from 2012 to 2014, falling crude oil prices in 2014, along with drilling delays caused by the 2013 discovery of faulty rig safety equipment, led to decreasing drilling activity in that period.
Three US-based LNG terminal projects report delays to operational start dates - Three US-based LNG export projects have delayed the planned start of their commercial operations, according to company updates on the US Department of Energy's website. LNG terminal developers must provide semi-annual progress reports for their facilities in April and October, as required by the department. Some projects have not yet posted April reports. April updates published on the department's website report later start dates for three projects: the Lake Charles Exports terminal in Louisiana, with a capacity of 16.2 million mt/year; Commonwealth LNG's Cameron Parish, Louisiana, facility, with planned exports of 169 MMcf/d and 190 MMcf/d to free trade and non-free trade nations, respectively; and Strom's Crystal River, Florida, facility, with export capacity of 80 MMcf/d. Lake Charles now anticipates that the first of its three trains will be operational in 2022.Trains 2 and 3 are scheduled for completion in six-month increments after the first train, the April report stated. Last October, the company said only that the first train was expected to be operational in 2021. Commonwealth LNG expects to start commercial operations by the second quarter of 2022, the company said. In October 2016, it set a start date of the fourth quarter of 2021. Strom said it was proposing to start operations in the second quarter of 2019, providing market conditions remain stable. Previously, it reported a start date in the fourth quarter of 2018. Earlier this week, six other projects reported delayed operational start dates: SCT&E LNG's export terminal in Cameron Parish, Louisiana; SeaOne Gulfport's CGL terminal at Gulfport, Mississippi; Texas LNG Brownsville's terminal in Brownsville, Texas; Gulf LNG Liquefaction's terminal at Pascagoula, Mississippi; Freeport-McMoRan's Main Pass Energy Hub Deepwater facility off the Louisiana coast; and the Venture Global Calcasieu Pass export project in Cameron Parish, Louisiana.
Trump administration moving ahead with ending Jones Act exemptions - The Trump administration appears to be moving ahead with an Obama administration proposal aimed at reversing long-standing Jones Act exemptions and is not considering weakening its criteria for waivers from the maritime law, a US Customs and Border Protection spokeswoman said. Those waivers "may only be granted if necessary in the interest of national defense," as they traditionally have been, Katrina Skinner, the CBP spokeswoman, said in a statement to S&P Global Platts on Monday. The issue centers on a change CBP proposed on January 18, just two days before the Obama administration ended, that would revoke decades of rulings allowing foreign-built vessels to transport certain equipment, such as repair pipe, between US ports and oil and gas operations in US waters. The change, which is backed by the US maritime industry and a bipartisan swath of Congress, would represent a significant strengthening of the federal government's enforcement of the Jones Act. The 100-year-old Jones Act requires vessels transporting goods between US ports to be US-flagged, US-built and majority US-owned.The proposed change is opposed by drilling and marine contractors and the American Petroleum Institute, which last week released a study claiming the change could reduce oil and natural gas production in the US Gulf of Mexico by about 500,000 b/d over the next 13 years. In her statement, CBP's Skinner said the agency was accepting comments on the proposed change through April 18 and is expected to issue a decision on the potential change by mid-May. While Skinner declined to comment further, sources said the Trump administration has indicated that it plans to go forward with the proposed change and will likely oppose any efforts seen as weakening the Jones Act.
Crude storage and docks near, but not in, the Houston Ship Channel - The build-out of Houston-area crude oil storage and marine terminal capacity continues, and as it does, ship congestion in the Houston Ship Channel worsens. Which raises the question, why not develop more crude storage and marine docks outside the Ship Channel that still offers strong pipeline connectivity to crude production areas, the Cushing hub and Houston-area refineries—plus easier access to the open waters of the Gulf of Mexico? That’s a key premise behind Oiltanking’s first major Gulf Coast expansion since the February 2015 sale of most of Oiltanking’s assets in the region to Enterprise Products Partners. Today we discuss Oiltanking’s plan to add crude storage and a marine terminal in Texas City, TX. The greater Houston area is a magnet for crude oil. Houston remains the capital of North American refining. It has 10 refineries with a combined distillation capacity of about 2.5 MMb/d; more than 50 MMbbl of storage capacity; and port facilities capable of both receiving large volumes of oil (imported and domestic) and sending out large volumes of crude (to other U.S. ports, to Canada and—since the ban on oil exports was lifted in December 2015—to the rest of the world). Houston also is the hub of an extraordinary pipeline and storage network, much of it developed or repurposed over the past four or five years, that can receive light crude and condensate from the Permian Basin and the Eagle Ford, light crude from the Bakken and other U.S. shale regions, and heavy crude from western Canada. Parts of this same pipeline/storage network can receive imported crude from Houston-area docks, or shuttle oil east to refineries in Port Arthur, TX, Lake Charles, LA and farther up the East Coast.
EPP to build NGL pipeline linking Permian to Mont Belvieu - Enterprise Products Partners LP (EPP) plans to build a 571-mile pipeline to transport natural gas liquids from the Permian basin to the firm’s NGL fractionation and storage complex in Mont Belvieu, Tex. The Shin Oak NGL pipeline will originate at EPP’s Hobbs NGL fractionation and storage facility in Gaines County, Tex. The 24-in. OD pipeline will have an initial design capacity of 250,000 b/d, expandable to 600,000 b/d. The project is supported by long-term customer commitments and is expected to be in service in second-quarter 2019. In addition to mixed NGL supplies aggregated at the Hobbs facility, the Shin Oak pipeline will provide takeaway capacity for mixed NGLs extracted at gas processing plants in the Permian region, including two EPP facilities that began service in 2016 and the Orla I plant that is scheduled to begin operations in second-quarter 2018. In tandem with EPP’s existing NGL pipelines, the pipeline will also increase the company’s capacity to transport purity NGL products from Hobbs to Mont Belvieu. EPP’s Mont Belvieu NGL complex has 130 million bbl of underground storage capacity and 670,000 b/d of NGL fractionation capability. The firm is building a ninth fractionator at Mont Belvieu that will increase NGL fractionation capacity by 85,000 b/d following its expected completion in second-quarter 2018. Mont Belvieu is pipeline-connected to the US petrochemical industry on the Gulf Coast and EPP’s LPG and ethane deepwater marine export terminals on the Houston Ship Channel. “The Shin Oak pipeline project is part of [EPP’s] larger plans in the Permian to leverage our integrated midstream assets to link supplies of cost-advantaged US hydrocarbons to the largest domestic and global NGL markets,” said AJ Teague, chief executive officer of EPP’s general partner.
Shale Hotspot Draws In Another Big Oil Player -- The oil price crash that destroyed a lot of smaller oil producers has not spared the finances of even the oldest and largest oil companies. Trying to keep the precious dividends intact and growing, Big Oil is focusing on cost control and cash preservation, and has effectively deferred investments in new ultra-expensive drilling ventures.One of the biggest companies, U.S. Chevron, is now planning to capitalize on its vast acreage holdings in the Permian. Investments in new mega projects, at least over the next few years, are not currently on the table, chief executive John Watson told Reuters in an interview published this week.Chevron is now betting big on the Permian; the star shale play straddling West Texas and New Mexico that has seen most of the resurgence since oil prices started steadily recovering in the fourth quarter last year.Unlike some other (and smaller) producers who have just recently rushed to secure holdings in the shale play, Chevron is not a newcomer to the Permian – the group and its legacy companies have held acreage in the area since the early 1920s.Now the new oil order is causing the company to shift strategies away from mega drilling projects to secure steady returns in more conservative projects in order to protect dividends and keep them growing.Chevron reported earnings of $0.22 per share for the fourth quarter of 2016, compared with a loss of $0.31 per share for the fourth quarter of 2015, in line with analyst expectations that it would return to profit, but still missing the EPS estimates by a wide margin. Full-year 2016 results showed a loss of $497 million compared with earnings of $4.6 billion in 2015, which was the first annual loss Chevron has booked since 1980. Despite the first annual loss in a generation, Chevron increased the 2016 annual dividend payout for the 29th consecutive year.This year, Chevron plans to spend around $2.5 billion on shale and tight investments, the majority of which is slated for the Permian Basin, a 67-percent increase over last year. In the upstream investments for 2017, the funds for the Permian are second only to the $3-billion investment in the expansion of the Tengiz field in Kazakhstan. Chevron’s production in the Permian was 90,000 net barrels of crude oil per day in 2016.
Sand mining industry grows in Texas amid drilling needs | The Herald: In a deepening pit in this small town southeast of Waco, workers aim a high-pressure water cannon that reduces small hills of clay-like sand into a watery slurry that is filtered, processed, dried into fine particles, and loaded onto trucks bound for hydraulic fracturing operations across Texas. It will take up to 1,000 trucks to haul enough of this sand to frac a single large well. The Houston Chronicle (http://bit.ly/2o3mAc3 ) reports as drilling has recovered in recent months, particularly in West Texas' Permian Basin, the sand mining industry has exploded. It is producing more than ever to meet the demand of an oil and gas sector that is using up to 20 times more sand per well than it did during peak of the last energy boom. Across the state, already home to nearly 10 frac sand mines, operators are moving to expand quickly, setting the stage for Texas to become a bigger player — and competitor — in an industry long dominated by purer Wisconsin and Minnesota sands. At the same time, the growth of sand mining is opening a new front in the battle between the energy industry and environmentalists, who argue the mines despoil pristine land and create health hazards by kicking up silica dust, which has been linked to lung cancer, tuberculosis and other lung diseases when inhaled. In Atascosa County, south of San Antonio, residents are fighting a 300-acre sand mine proposed by Preferred Sands of Radnor, Pennsylvania, citing health risks, potential well water contamination, truck traffic and potential damage to the site of the 1813 Battle of Medina, a bloody fight in the early years of Mexico's long war for independence. "What's more important? Breathing or having water to drink?"
Oklahoma Drinking Water Poisoned By Fracking, Claims New Report - A new report from the Clean Water Fund claims that drinking water supplies in Oklahoma are at risk from several oil and gas wastewater wells. Many private wells could also be affected by wastewater disposal wells permitted by the Oklahoma Corporation Commission (OCC). “It’s disturbing that the OCC may have permitted oil and gas wells to inject directly into potential drinking water sources and that the agency can’t accurately point to where the drinking water is located,” said John Noël, lead author of the report. He is also the national oil and gas campaign coordinator for Clean Water Action. “That’s fundamental to the OCC’s job. It is the agency that is supposed to protect Oklahomans’ drinking water from the impacts of oil and gas activities. Without proper information, the OCC cannot assure that the state’s many thousands of injection wells have all been permitted safely.” Speaking with ThinkProgress, Noël would not say whether there are specific drinking water reserves that have been contaminated. Instead he pointed out that OCC’s publicly available data is “wildly flawed,” outdated, and unreliable. “They are admitting there is flawed data publicly available and that’s what we are basing our analysis on,” Noël said. “How are they able to safely permit oil and gas wells?” Oklahoma is home to Scott Pruitt, the man taking a hatchet to the EPA under Trump. As attorney general of Oklahoma, he was famous for suing the EPA. Trump’s primary environmental policy initiatives are based on the premise that states have all the money and manpower they need to protect their own environments. An OCC spokesperson denied there are any wastewater injection wells that are going into drinking water sources. “The study is based on faulty data that we warned the group about in February when they presented their draft findings and we saw what data they were using,” Matt Skinner told ThinkProgress via email.
Nebraska law enforcement, Keystone XL pipeline foes prepare for possible protests | Nebraska | omaha.com: What began as a couple of small protest camps on the Standing Rock Indian Reservation eventually swelled into an international incident. Now the sheriff thinks Nebraska will be next for a similar mega demonstration. With the recent resurrection of the Keystone XL pipeline project by President Donald Trump, the group that led the opposition to the pipeline, Bold Nebraska, has pledged to renew its fight. On its website, the grass-roots group is not only asking pipeline opponents to write letters and attend rallies and court hearings, but also to risk arrest. “I pledge to participate in peaceful direct action that may result in my arrest, should construction begin on the Keystone XL pipeline,” it states. Jane Kleeb, who launched Bold Nebraska, said she doesn’t envision Nebraska having the massive and violent protests that erupted over the now-finished Dakota Access pipeline. Thousands of Native Americans and environmentalists poured in to protest there. Nearly 700 people have been arrested, and about $40 million has been spent, to date, on law enforcement costs. But Kleeb said her group wants to be ready if the pipeline is eventually approved in the state. “We’re certainly not setting up a big protest camp like at Standing Rock — we’ve made that clear to partners. But we do have supporters, including land owners, who want that option to participate in civil disobedience,” Kleeb said.
Six Teenagers Win Court Appeal In Colorado Fracking Case - The Colorado Court of Appeals has recently ruled 2-1 in favor of six teenage activists who had petitioned the Colorado Oil and Gas Conservation Commission to consider a rule that places public health and environment before oil and gas development instead of seeking a ‘balance’ between resources development and people’s health. Although the appeals court ruling can be further challenged at Colorado’s Supreme Court, it gives environmentalists and green activists a reason to rejoice in this victory and potentially a new tool in seeking to oppose fracking in Colorado, which has been a battleground state for activists and counties opposing oil and gas drilling. On the other hand, the recent appeals court decision just remands the case of the proposed rule to the Colorado Oil and Gas Conservation Commission, which now has to consider it again in light of the appeals court ruling.The court saga began in November 2013, when the teen activists petitioned the Commission to consider a rule that it “not issue any permits for the drilling of a well for oil and gas unless the best available science demonstrates—and an independent, third party organization confirms, that drilling can occur in a manner that does not cumulatively, with other actions, impair Colorado’s atmosphere, water, wildlife, and land resources, does not adversely impact human health and does not contribute to climate change.”In April 2014, the Commission denied the petition, saying that “the Proposed Rule, if adopted, would have required the Commission to readjust the balance crafted by the General Assembly under the Act, and is therefore beyond the Commission’s limited grant of statutory authority.”The district court later upheld the Commission’s denial of the petition, saying that the Commission lacked authority to consider such a proposal. Now the appeals court agrees with the petitioners and says that the district court and the Commission erroneously interpreted the Oil and Gas Conservation Act. It has reversed the district court ruling and returned the petition to the Commission for further examination. The appeals court found that a section in the Act “supports the conclusion that the Commission has authority to promulgate rules regulating oil and gas development in the interest of protecting public health, safety, and welfare.”
Lawsuit claims new oil and gas wells will be too close to Colorado school - Denver Business Journal: Environmental advocacy groups and the NAACP’s Colorado chapter have filed a suit over an oil and gas site they say is too close to a school near Greeley that has a large population of poor and minority students. The suite was filed Tuesday in Denver District Court against the Colorado Oil and Gas Conservation Commission (COGCC) by Weld Air and Water, the Sierra Club, the NAACP’s Colorado chapter and Wall of Women, a group that described itself in the lawsuit as a grassroots environmental advocacy group advocating to protect the earth for future generations.The suit claims the COGCC erred in granting approval to Denver’s Extraction Oil & Gas Inc. (NASDAQ: XOG) to put a 24-well site, called the Vetting 15-H Well Pad and Vetting Facility, 1,350 feet from the walls of Bella Romero Middle School in Weld County, just outside the Greeley city boundary. The groups said they believe the site is too close to the school itself as well as the playgrounds and athletic fields — which are between the school and the wellsite. But Extraction, in a statement, defended the location, saying it was chosen in part because it allows the company to use pipelines — rather than trucks — to remove oil and natural gas from the site, and also allows access to electricity to drive a quiet drilling rig and other production facilities. The company also said the Vetting site is about 1,343 from the nearest school and “well outside 1,200 feet from the playground.”
TransCanada shuts down Keystone after oil seeps to surface - Alberta-based TransCanada Corp has shut down its Keystone pipeline after crews spotted oil near a pump station in South Dakota, the company said in a statement on Monday. The company, Canada's second largest pipeline operator, said the "potential incident" was first reported on Saturday afternoon. "TransCanada immediately began the process to shut down the pipeline, activate its emergency response procedures and dispatch ground crews to assess the situation," said the company in a statement. "Crews initially found visible signs of oil on a small surface area." News of the oil seeping to the surface could be inconvenient for TransCanada, which is now trying to convince communities across Canada to accept its proposal for a gigantic new pipeline infrastructure project — the 4,600-kilometre Energy East pipeline. Leak discovered by passerby The chairman of the South Dakota watchdog, Chris Nelson, confirmed that there was a spill from Keystone, and that state environmental officials were overseeing the cleanup. In a brief phone interview, he told National Observer that a member of the public may have been the one that discovered the spill. "My understanding is that it was a passerby that observed it and called the company," said Nelson, chairman of the South Dakota Public Utilities Commission. If confirmed, this would mean that the company's leak detection system failed to identify the incident.
Dakota Access Pipeline to start interstate service May 14 | Reuters: The controversial Dakota Access Pipeline will begin interstate crude oil delivery on May 14, according to a filing with the U.S. Federal Energy Regulatory Commission. Energy Transfer Partners LP on Thursday filed what is known as a tariff, which lays out details about the line and the oil to be delivered. The 1,172-mile (1,885-km) Dakota Access line runs from western North Dakota to Patoka, Illinois. The $3.8 billion project became a focus of international attention, drawing protesters from around the world, after a Native American tribe sued to block completion of the final link of the pipeline through a remote part of North Dakota. The Standing Rock Sioux tribe said the pipeline would desecrate a sacred burial ground and that any oil leak would poison the tribe's water supply. Thousands of protesters demonstrated in North Dakota and Washington, D.C., many staying to support the tribe in a makeshift camp near the pipeline's construction site last fall. Many opponents also said reliance on the pipeline and the petroleum it was intended to carry would exacerbate climate change. The outgoing administration of Democratic President Barack Obama said it would reconsider the permits issued for the pipeline's route near tribal lands, delaying the project by several months. But that move was quickly reversed after the inauguration of Republican President Donald Trump in January.
Company Behind Dakota Access Pipeline Wins Legal Right To Keep Spill Risks From the Public | Colorlines: Last month, unknown offenders allegedly damaged the Dakota Access Pipeline, using a torch to burn holes into both fenced and unfenced segments of the line. A federal judge cited this act of protest as the reason why the company that owns the pipeline can legally withhold certain information from the public in order to protect the infrastructure from further damage, The Associated Press reported yesterday (April 12). Pipeline developer Energy Transfer Partners can keep secret what points along the 1,172-mile route are more likely to spill. However, information on how the company would handle such spills should be public knowledge, U.S. District Judge James Boasberg ruled on April 7. The company is currently in a legal dispute with the Standing Rock Sioux and Cheyenne River Sioux tribes. The tribes were hoping that information on where the pipeline faces spill risks would help make their case that the project needs further environmental study. Other details the judge ruled Energy Transfer can withhold from the public include pipeline maps at certain crossings, more maps of spill scenarios, graphs that measure spill risks along the pipeline, predictions on spill oil volume and how to detect and shut down spills. “The asserted interest in limiting intentionally inflicted harm outweighs the tribes' generalized interests in public disclosure and scrutiny,” said Boasberg.
Snipers and Infiltrators at Standing Rock: Quashing Protests at Taxpayer Expense -- The inner-workings and cost of the government’s militant and violent crackdown on peaceful Standing Rock protesters have been trickling in these past few months, yet it hasn’t received the headlines it all deserves. In March, MUCKROCK was provided with an unredacted look at Indiana’s Department of Homeland Security’s EMAC (Emergency Management Assistance Compact) operation at Standing Rock, and just this week files and photos obtained by journalist Mike Best from Ohio’s State Highway Patrol confirm that at least one sniper was deployed on a nearby hill, overlooking the protests. First, here’s a look at Indiana’s EMAC, which was asked to join North Dakota’s efforts to silence Standing Rock protests at taxpayer expense. For 18 days, from October to November of last year, 37 officers from Indianapolis PD were sent to North Dakota’s Morton County. Estimates of the cost of sending these cops, including their equipment, transport and commodities, exceeded $725,000. Wisconsin’s Dane County Sheriff’s Office also sent 13 deputies, with a total cost of $91,166 per day for an eight day stint. Here’s a list and cost breakdown provided by MUCKROCK of the weapons and materials Indiana sent along with their forces to Standing Rock.
42 “sidearms” (judging from the individual officer’s paperwork, these are various Glock models): $16,464
37 (one for each officer!) Bushmaster AR-15’s: $14,504
16 outfits of riot gear: $9,408
23 shotguns: $9,016
21 pairs of Gen III night vision goggles: $8,232
37 seemingly department issued cell phones: $6,160
21 pairs of binoculars: $1,029
10 spotting scopes (possibly used as part of a sniper team): $490
2 tear gas launchers of different sizes: $784
1 TAC 700 pepper ball launcher: $392
1 thermal imaging camera: $784
The official police photos below come from Mike Best’s request from the Ohio State Highway Patrol. While it is widely known that pepper spray and dogs were used to intimidate and terrorize Standing Rock activists, these new photos give us an inside look at government efforts to quash the uprising against the Dakota Access Pipeline. The photos show that at least one sniper had his sights set on #NoDAPL activists below, they also indicate that the protest itself was likely infiltrated by law enforcement personnel. No doubt all of this is just the tip of the iceberg.
Montana lawmakers seek to change fracking disclosure rules | The Fresno Bee: Energy companies would have to justify claims that the chemicals they use in the hydraulic fracturing process to drill for oil and gas are trade secrets that must be kept from the public, under a bill that advanced Monday in the Montana Legislature. The companies would submit their requests for confidentiality and a $25 fee to the Montana Oil and Gas Conservation Board, which would make the determination. The board would not be allowed to release chemical information considered confidential unless a court orders it to do so, according to the bill. The measure, which is a vote away from passing the Montana Legislature, comes after an environmental organization and landowners filed a lawsuit in January over the current Montana rule that allows companies to conceal the ingredients of the chemicals they use during hydraulic fracturing, or fracking. Under the current rule, companies don't have to offer any proof that the chemicals are protected trade secrets or disclose them to the oil and gas board. Republican state Sen. Tom Richmond, of Billings, a former administrator of the board, said he is sponsoring the bill in response to the public interest in disclosing the chemicals, though he disagrees with concerns that the chemicals could harm groundwater beneath adjacent properties. "The public right to know is a strong right in our constitution," Richmond told a House committee late last month. "This lets the board keep trade secrets confidential unless ordered by the court to release them." The measure is based on disclosure rules in Wyoming. It is supported by the Montana Petroleum Association, whose executive director, Alan Olson, told lawmakers it will allow the board to make a determination over a trade secret claim while protecting companies' proprietary information.
Huge risk, no gain: Fracking is a lose-lose for Nevada … Hydraulic fracturing — more commonly known as fracking — is a significant threat to our state’s scarce water supplies. Under current federal law, certain methods of fracking are exempt from a number of environmental protection laws, most importantly the Clean Water Act and the Safe Drinking Water Act. Due to these federal regulation exemptions, fracking is largely regulated at the state level, with states varying widely in their ability and commitment to govern this practice. The potential threat that fracking poses to our water supplies is grounded in reality. The longstanding drought that occurred throughout much of the West and Southwest saw fracking wastewater in California rerouted to farmlands for the purposes of livestock drinking water and the irrigation of crops in 2014. According to a report by Physicians for Social Responsibility, “[i]nvestigative reports in 2015 revealed that Chevron Corporation piped 21 million gallons of recycled oil and gas wastewater per day to farmers for crop irrigation. Tests showed the presence of several volatile organic compounds, including acetone, which is linked, in lab studies, to kidney, liver and nerve damage.”The investigative report is an eye-opening look into the fracking practice, but in fact, further investigations and testing revealed that “more than one-third of the 173 chemicals used in the hydraulic fracturing process are classified as trade secrets and their identities are therefore unknown to the public. Of the remainder, 10 are classified as either carcinogenic or possibly carcinogenic in humans, 22 are classified by the state of California as toxic air contaminants, and 14 had no ecotoxicity or mammalian toxicity data available.” Nevada must learn from the issues uncovered in California. Nevada is the most arid state in the nation, with a codified public policy for protecting water resources above all others. Nevada is frequently susceptible to droughts, making our water supplies a very precious resource. Once a groundwater basin is contaminated, it is nearly impossible to remediate.
Fracking is ruining one of the last truly dark places in the US, and astronomers are on edge – Quartz - On a near-cloudless night in mid-March, atop a mountain in the Davis range of the Chihuahuan desert in West Texas, hundreds of families sat on blankets in the pitch-dark, looking up at the starry sky while an astronomer pointed with a laser beam at the constellations of Taurus and Orion, Cassiopeia, and Ursa Minor. Then he pointed to a hazy cloud of light emanating up from one segment of the horizon. Not a star could be seen. Farther above it, where the sky darkened again, a few brighter stars peeked out. But in the bright glow around the horizon, the night sky was completely washed out. That’s hydraulic fracturing, the astronomer explained. Astronomy is in the business of darkness. The darker the night sky, the more there is to observe. For most of its existence, since it opened in 1933, the University of Texas’ McDonald Observatory in Fort Davis sat beneath some of the darkest skies in the continental US. But over the last 10 years that’s changed, thanks to the West Texas oil and gas drilling boom. The night sky has its own natural “background” brightness, even in places absent of human light pollution. But since the drilling boom began, “we’re up 10 to 15% above background,” says Bill Wren, a veteran astronomer and the Observatory’s authority on dark skies, says. “It’s [still] as dark as any other major observatory in the world. It used to be extremely dark, the darkest, but it’s not anymore.” Over the last decade, the number of gas flares and brightly-lit drilling facilities near the Observatory have increased, particularly in the Permian Basin, the largest oil field in the state, that sits northeast of the Observatory. Wren told The Daily Texan he has data showing the sky beginning to brighten—even before it was visually brighter—around 2009, right around the start of the boom. Last year, fracking company Apache Corp announced what may be the biggest oil and gas find yet in the Permian Basin—located in the Alpine High region, just 25 miles from the Observatory. “We’re concerned,” Wren says. He’s currently working with oil and gas companies to make adjustments to their operations, like shielding and aiming their light fixtures so the light is kept pointed towards the ground and out of the sky. So far, Wren says the drilling companies have been open to his suggestions.
Report: Fracking lights causing major headaches for UT 'McDonald -- It's a no-brainer that studying the night sky works best when the lights are out.That's why scientists at The University of Texas' McDonald Observatory in Fort Davis are concerned by encroaching and well-lit oil and gas facilities, according to Quartz. Thanks to an oil boom in West Texas, since 2009, more and more brightly-lit fracking operations have popped up around the observatory, causing what astronomers call "background brightness" to be more intrusive on their work."We're up 10 to 15 percent above background," Bill Wren, an astronomer at the observatory told Quartz. "It's [still] as dark as any other major observatory in the world. It used to be extremely dark, the darkest, but it's not anymore." To help combat brighter skies, the McDonald Observatory recently teamed up with Permian Basin Petroleum Association to deliver dimmer lighting recommendations for seven counties that surround the observatory. The recommendations include suggestions on the direction and color of lights, as well as the minimization of unnecessary and permanent lighting.
Alaska senators push bill to allow Arctic drilling | TheHill: Alaska’s two Republican senators have introduced a bill that would repeal Obama administration restrictions on off-shore drilling and allow for oil production in the Arctic Ocean. The bill, from Sens. Lisa Murkowski and Dan Sullivan, would undo Obama’s December decision to withdraw sections of the Outer Continental Shelf from the U.S.’s offshore drilling program. It would also require, as part of federal five-year drilling plans, a minimum of three drilling lease sales in each of the Beaufort, Chukchi and Cook Inlet planning areas off the northern coast of Alaska.SEMENT“After years of regulatory restrictions and burdens imposed by the Obama administration, this bill charts a much better course for responsible energy production in our Beaufort and Chukchi seas that actually reflects the views of the vast majority of Alaskans,” Murkowski, the chair of the Energy and Natural Resources Committee, said in a statement. “These areas contain prolific resources that can be safely developed to create jobs, reduce our deficits, keep energy affordable and strengthen national security.” Obama in December formally removed waters in the Chukchi Sea and most of its Beaufort Sea from the federal drilling program, one month after he finalized a five-year drilling plan that didn’t include Arctic lease sales. Environmentalists praised the decision has a major victory in their fight against Arctic drilling. But the fossil fuel industry and its congressional supporters vowed to fight the decision. The White House is crafting an executive action to kick off the process of rewriting that leasing plan, officials said this week. That process could take years to finalize.
Leak Raises Concerns About Aging Alaska Seafloor Pipelines (AP) — Alaska's picturesque Cook Inlet is home to endangered beluga whales and wild salmon — and a spider web of oil and natural gas pipelines on the sea floor, many of them placed there five decades ago. Cook Inlet's petroleum production is often overshadowed by Alaska's giant North Slope oil fields, but the inlet is in the spotlight as millions of cubic feet of natural gas spew from an underwater pipeline owned by the inlet's largest petroleum producer, Hilcorp Alaska LLC. The federal agency that oversees pipeline safety has "strongly recommended" that Hilcorp develop a safety management system for its pipelines. Environmental advocates are demanding immediate pipeline inspections by federal authorities, not Hilcorp, in the area with earthquakes and some of the world's strongest tides. "The age of the pipelines significantly increased the risk of failure, especially when coupled with the harsh offshore Cook Inlet environment," Kristen Monsell, an attorney for the Center for Biological Diversity, wrote in a letter to the federal Pipeline and Hazardous Material Safety Administration. Hilcorp has not said whether it will craft the safety management system but insists the age of its pipeline system does not pose a threat and would not affect maintenance and inspection requirements already enforced by state and federal regulators.Besides earthquakes that periodically rattle Cook Inlet, tides fluctuate more than 25 feet (7.6 meters) and are so strong that they move car-size boulders along the sea floor, said Lynda Giguere, spokeswoman for the Cook Inlet Regional Citizens Advisory Council, set up after the Exxon Valdez oil spill to promote environmentally safe marine transportation. Hilcorp entered the Alaska market in 2012 and owns 15 of the 17 Cook Inlet petroleum platforms. The gas leak is in a pipeline carrying processed natural gas from shore to four platforms, where it's burned to provide electricity.
Fracking Comes To Alaska, Triggering New Oil Boom -- Hydraulic fracturing is coming to Alaska, and one professor thinks it could change global politics in favor of U.S. interests. Companies have discovered in the last year at least 5 billion barrels of recoverable oil on Alaska’s North Slope — a 14 percent increase in U.S. proven reserves. These finds could significantly increase U.S. oil production, changing the global energy game in the U.S.’s favor. “If these new discoveries become producing fields, the Alaskan Arctic will write a new chapter in the U.S. oil industry’s dramatic ascent,” Dr. Scott L. Montgomery, a professor of international relations at the University of Washington, wrote in an op-ed for The Conversation. “It will increase our leverage over [Organization of Petroleum Exporting Countries] OPEC and may help to counter Russia’s geopolitical influence.” “This prospect raises a new question: How will we will use our clout as the world’s most important new oil power?” Montgomery wrote. Montgomery argued fracking for Alaskan oil will make the U.S. a major oil exporter. Montgomery says Alaskan oil will be sold to Asia and undercut OPEC’s share of that market. “Oil remains our one unreplaceable energy source,” Montgomery wrote. “Global mobility and a modern military are, as yet, inconceivable without it. Growth in global demand, centered in developing Asia, will continue for some time, as it did even from 2010 through 2014 when prices were above $90 per barrel.” The U.S. is the world’s largest and fastest-growing producer of oil and natural gas, surpassing both Russia and Saudi Arabia. U.S. oil production grew 80 percent higher than it was in 2008. Companies recently found massive untapped oil deposits in Alaska that could be access through fracking. Major oil companies like Conoco are purchasing Alaskan land and developing cost effective methods of fracking in remote regions. Fracking in Alaska could accelerate as oil prices rise. Fracked Alaskan oil could be profitable to drill at $50 a barrel, which is just under current crude prices.
Fracking Comes to the Alaskan Arctic - Despite opposition from environmental groups and President Obama's 2016 ban on drilling in federal Arctic waters , exploration in Alaska has revealed massive new volumes of oil. This comes at a time of low oil prices, when many observers felt the Arctic would remain off limits. Alaska has proved precisely the opposite. Although it has gone largely unnoticed outside the industry, foreign firms are partnering with American companies to pursue these new possibilities. I expect this new wave of Arctic development will help increase U.S. oil production and influence in world oil markets for at least the next several decades. This is a global story, spurred by continued growth in world oil demand, especially in Asia; the dynamism of the oil industry; and the fact that the U.S. has become a major new petroleum exporter, something that would have seemed impossible only a few years ago. Such realities imply that decisions made in Washington, DC are far from the only forces shaping U.S. energy and climate change policy. Over the past year, oil companies have discovered volumes on Alaska's North Slope totaling as much as five billion barrels or more of recoverable oil. This is a 14 percent increase in U.S. proven reserves, based on recent estimates , which is no small thing. One discovery, "Horseshoe," made this year by the Spanish company Repsol in partnership with Denver-based Armstrong Oil and Gas, is the largest new U.S. find in more than 30 years . It is estimated at 1.2 billion barrels and comes just after a find by ConocoPhillips in January, called "Willow," evaluated at 300 million barrels. Both of these are dwarfed by "Tulimaniq," a spectacular discovery drilled by Dallas-based Caelus Energy in the shallow state waters of Smith Bay, about 120 miles northwest of Prudhoe Bay, in October 2016. Caelus has confirmed a total accumulation of as much as 10 billion barrels of light, mobile oil, with 3-4 billion barrels possibly recoverable at current prices of about US$50 per barrel.
Dem warns Russia may gain control of US oil company | TheHill: Sen. Bob Menendez (D-N.J.) is sounding an alarm over the possibility that Russia’s government could gain control of a major United States oil company. Menendez formally asked Treasury Secretary Steve Mnuchin to “proactively monitor” a loan that Rosneft, an oil company majority-owned by the Russian government, has provided to Citgo Petroleum Corp.’s parent company. “Given Russia’s interference in the U.S. election and ongoing meddling in European elections, not to mention its habit of invading and bullying its neighbors, the last thing the United States should be doing is handing the Kremlin a significant ownership share in a major U.S. energy supplier,” Menendez said in a statement. Petróleos de Venezuela, Venezuela’s state-owned oil company, used 49.9 percent of Citgo’s shares as collateral for a loan. If Venezuela’s economic crisis continues and the company defaults, Menendez said Rosneft may take control of the shares, which would combine with the Russian company’s other interests in the company to give it majority control. “This could leave Rosneft, a Russian company controlled by oligarchs with close ties to [Russian President] Vladimir Putin, in control of critical energy infrastructure in the United States,” Menendez told Mnuchin in a letter. Mnuchin serves as chairman of the Committee on Foreign Investment in the United States, which has the power to review certain foreign investment actions and recommend that President Trump block them. “We ask that you proactively monitor the situation and that your staff keep our offices briefed on your efforts and any informal review process of Rosneft’s potential acquisition of Citgo,” the Democrat said. Mnuchin could only initiate a formal investigation if Rosneft took formal action to take control of the company.
Energy Employment Surges With U.S. Shale Production - A major bright spot in the March 2017 American jobs report was the apparent recovery of the mining sector, the employment area associated with oil and gas. The report indicated that 11,000 new jobs were added in the month of March, a further sign that the years-long hemorrhaging of jobs in the energy sector has come to an end. This report comes after February jobs’ numbers indicating oil and gas employment increased by about 1 percent. The Bureau of Labor Statistics reported that 178,700 people were employed in oil and gas in February 2017. This is the largest number recorded since May 2016, though it is still far off from the industry peak in October 2014, when over 200,000 people were employed in oil and gas. Since October, thirty-five thousand new mining sector jobs have been added to the U.S. economy. This time last year, the sector was shedding jobs at a rate of eighteen-thousand per month. The turn-around comes as prices slowly edge above $50 a barrel. There are hopes that federal changes to environmental regulations, the opening up of federal land and improving price forecasts will all support a new boom in oil and gas production within the United States.This news may help to mitigate negative reactions to reports that some industry CEOs took big pay-days during the energy downturn that hit the U.S. oil and gas industry hard between 2014 and 2016. As their companies filed for bankruptcy, the chief executives of Ultra Petroleum, Seventy Seven Energy and other firms have taken large stock packages and significant pay-offs. Still, the jobs report is good news for the domestic energy sector. Hiring in oil field services is ticking up, as Houston-based Halliburton announced plans to hire two-thousand workers for pressure pumping and cementing in the U.S. The Houston Chronicle has reported an increase in job postings tied to energy and manufacturing. The increase is tied to the growing activity in the Permian Basin and the rising U.S. rig count, now at 943 according to Baker Hughes. The Bakken shale field, which has suffered from a drop in investment and some concerns about long-term viability, has recovered as hiring increases and employers search to fill openings. A
Oil-weighted E&Ps anticipating surge in capital spending in 2017. -- The 21 oil-focused U.S. exploration and production companies examined in our Piranha! market study are planning an average 47% increase in their 2017 capital expenditures and expecting a 7% increase in production. The 47% boost in capex is huge, but due to draconian cuts in 2015 and 2016 this year’s total is still off 58% from 2014’s—an indication of the big hole the sector is still climbing out of. The Permian Basin continues to attract more capital—no surprise there—but capex in the Bakken is also on the rise after a few lean years. Today we continue our Piranha! series on upstream spending in the oil and natural gas sector, this time zeroing in on E&Ps that focus on crude. We examine this ongoing transformation in Piranha!, our new market study of 43 representative U.S. E&Ps; of that total universe of companies, 21 focus on oil (60%+ liquids reserves), nine are gas-weighted producers (60%+ natural gas reserves) and 13 are diversified producers. All of the major U.S. shale/unconventional plays are represented in the combined portfolios of these firms. In Very Particular Places to Go, we discussed Piranha!’s purpose and organization. The first part of the four-part market study examines the strategies that companies are adopting to thrive in a $50/bbl world, breaking down merger and acquisition (M&A) activity by basin to show where these firms are selling and where they are buying. The second part considers the E&P sector’s 2017 capital spending plans and production expectations as a whole, while the third delves into what these company’s have been doing to maintain and improve their financial health. The fourth and final section of Piranha!, which accounts for more than 120 of the report’s 150-plus pages, examines each company in our universe of 43 firms at a granular level, looking at their financial condition, capex plans, geographic focus, M&A strategies and a general assessment of the company’s position in today’s U.S. E&P industry.
Did The Banks Just Give U.S. Shale A Carte Blanche? -- Twice a year, in April and in October, banks review the creditworthiness of oil and gas companies in what is known as a borrowing base redetermination. Ahead of this year’s spring review, both banks and U.S. oil companies are showing improved outlook for the industry, with cautious optimism seeping in through more oil and gas producers, oilfield services companies, lenders, and private equity firms. According to Haynes and Boone’s ‘Borrowing Base Redeterminations Survey’: Spring 2017, the majority of polled banks and oil and gas companies expect borrowing bases to increase, and nearly all survey respondents see U.S. exploration and production companies raising their capital expenditure budgets this year compared to 2016.Haynes and Boone’s spring 2017 survey shows a brighter picture compared to last year’s spring survey and to the fall 2016 survey.Judging from the results of this spring’s poll, lenders and U.S. companies alike are dispelling fears that last month’s slide in oil prices – when WTI traded below $50 for the better part of two weeks – could make banks revise downwards their borrowing base redeterminations, and potentially stall the resurgence of the U.S. oil patch. The timing of last month’s slide in oil prices could not have been worse, just weeks before banks and oil firms sit down to review how much explorers and producers could borrow. But with leaner, fitter, and highly selective producers focusing on cheaper and profitable plays, optimism has grown ahead of this season’s credit reviews. In addition, U.S. onshore producers have been increasingly hedging production to mitigate risks from possible significant oil price drops. In a sign that companies are growing optimistic as the worst of the downturn is now over, U.S. firms started increasing their investments in the fourth quarter last year. Respondents in Haynes and Boone’s spring 2017 survey believe that 76 percent of U.S. producers will have their borrowing bases raised slightly or remain unchanged compared to the borrowing bases in the fall of 2016. To compare, in the fall 2016 survey respondents expected 59 percent of companies to see their borrowing bases increase or remain unchanged. Furthermore, a total of 89 percent of the latest survey respondents reckon that the capex budgets of the drillers will rise this year compared to 2016, with 45 percent expecting a 20-percent increase in capex, another 12 percent of respondents projecting a 30-percent increase, and 6 percent expecting capex rises of more than 30 percent. Just 3 percent of respondents think capex budgets would decrease by 10 percent this year.
Oil Surplus Or Scarcity? Shale Makes It Even Harder To Predict (Reuters) - The shale oil boom has transformed the U.S. and global energy sector to such an extent that it has upended traditional supply dynamics and made forecasts far more polarised.Investment banks, many of which finance new projects, along with oil majors such as Total and Eni, have warned that huge spending cuts caused by a plunge in oil prices since 2014 would lead to a supply crunch in the next two years.Yet Goldman Sachs, the only bank to make more than $1 billion a year from commodities trading, believes a looming recovery in U.S. output on the back of higher oil prices combined with an avalanche of new conventional projects will create a substantial surplus by 2019.Prior to the shale revolution, conventional oil was the only game in town. Estimating future supply essentially involved calculating the project pipeline and factoring in the "unknown knowns" such as political risk in oil-producing nations.The ability of the shale sector to adapt quickly and nimbly to a lower-price environment means production cycles have shortened as fields can be switched on and off in a matter of weeks.Most forecasters including OPEC and the International Energy Agency underestimated shale's decline during the oil price collapse and its production increases as prices recovered.Goldman predicts the coming two years will see a huge burst of development, complicating OPEC's efforts to rebalance the market and ease a global glut with the help of output cuts."This long lead-time wave of projects and a short-cycle revival, led by U.S. shales, could create a material oversupply in 2018-19," Goldman's equity research team said last month."As OPEC prepares for its May 25 meeting, it is likely to weigh the relative benefit of stability (extend cut) versus the risk of long-term share loss."Goldman estimates that new projects and rising shale output could add 1 million barrels per day (bpd) to global supply by 2018-2019.The forecast contrasts with those of consultancy Wood Mackenzie, which foresees a supply gap of 20 million bpd by 2025, and Goldman's rival Morgan Stanley, which believes a surge in U.S. production this year will not derail the rebalancing."OPEC has successfully constrained output, and although drilling activity in U.S. shale is picking up rapidly, this will probably not come quick enough to prevent a period of sizeable inventory draws late this year," Morgan Stanley said.
U.S. crude oil imports increased in 2016 - Gross U.S. crude oil imports in 2016 rose to an average of 7.9 million barrels per day (b/d), 514,000 b/d more than the 2015 average. Net crude oil imports increased by a smaller amount (460,000 b/d), as U.S. crude oil exports rose despite a decline in U.S. crude oil production. From a longer term perspective, gross crude oil imports in 2016 were still 22% lower than their 2005 high of 10.1 million b/d. Crude oil imports have also been affected by other major changes since 2005, when the United States was the world’s largest net importer of refined products and crude oil. In 2016, the United States was the world’s largest net exporter of refined products, with a significant portion of crude oil input to U.S. refiners supporting those exports. Canada continued to be the largest source of U.S. crude oil imports in 2016, providing a record 3.3 million b/d, or 41% of total U.S. imports—more than all Organization of the Petroleum Exporting Countries (OPEC) combined. Among non-OPEC suppliers, 2016 marked the seventh consecutive year of increasing crude oil imports from Canada and the sixth consecutive year of decreasing crude oil imports from Mexico. Imports from Mexico have declined as Mexico’s crude oil production, its total crude export sales, and the share of its exports sold in the United States have all fallen. Increased U.S. imports of heavy Canadian crude oils are replacing some imported Mexican crude oils of similar quality. Canada’s share of U.S. crude oil imports declined slightly from 2015, as both imports and import shares from countries such as Iraq and Nigeria grew, according to annual trade data from EIA's Petroleum Supply Monthly. OPEC supplied 40% of the crude oil imported to the United States in 2016, up slightly from 36% in 2015. Nevertheless, OPEC’s share in 2016 was lower than in any year between 1973, the earliest year for which EIA has country-specific crude oil import data, and 2014. Imported crude oil from Iraq and Nigeria were the largest contributors to the increase in U.S. crude oil imports in 2016. Imports from Iraq increased from 229,000 b/d in 2015 to 418,000 b/d in 2016, and imports from Nigeria increased from 54,000 b/d to 210,000 b/d. Nigerian crude oil is of similar quality to that produced in the Bakken region in parts of North Dakota and Montana. As production in the Bakken region (and the United States as a whole) declined, refiners may have increased imports from Nigeria to replace these barrels.
EIA: Expect Record U.S. Oil Production in 2018, Exceeding 1970 Peak --- “U.S. crude oil production is expected to be higher during the next two years than previously forecast, with annual output in 2018 now forecast to reach 9.9 million barrels per day, exceeding the previous record level of 9.6 million barrels per day reached in 1970.” The EIA released the Short-Term Energy Outlook today. From the STEO:
- • U.S. crude oil production averaged an estimated 8.9 million barrels per day (b/d) in 2016. U.S crude oil production is forecast to average 9.2 million b/d in 2017 and 9.9 million b/d in 2018.
- • For the 2017 April-through-September summer driving season, U.S. regular gasoline retail prices are forecast to average $2.46/gallon (gal), compared with $2.23/gal last summer. The higher forecast gasoline price is primarily the result of higher forecast crude oil prices. For all of 2017, the forecast average price for regular gasoline is $2.39/gal, which, if realized, would result in the average U.S. household spending about $200 more on motor fuel in 2017 compared with 2016.
- • North Sea Brent crude oil spot prices averaged $52 per barrel (b) in March, $3/b lower than the February average. EIA forecasts Brent prices to average $54/b in 2017 and $57/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $2/b less than Brent prices in both 2017 and 2018.
Methane Leaks from Energy Wells Affects Groundwater, Travels Great Distances, Study Confirms – A new University of Guelph study proves what many western Canadian landowners have long documented — that methane gas leaking from energy industry wells can travel great distances in groundwater and pose safety risks, contaminate water and contribute to climate change. The study, published in Nature Geoscience this month, also concluded that current monitoring for gas leakage, usually at ground level and adjacent to wells, is inadequate to detect contamination. “Current surface and subsurface monitoring efforts of shale gas development are thus insufficient to meaningfully detect or assess methane impacts to atmosphere and groundwater,” the study found. British Columbia’s floundering shale gas industry has drilled and fracked nearly 10,000 wells in northeastern B.C. over the last decade, causing more than 1,000 earthquakes in the region. Impacts on groundwater are not being systematically monitored.Cahill and other scientists at Guelph’s Institute for Groundwater Research injected methane over a 72-day period into a shallow sand aquifer at Canadian Forces Base Borden in Ontario at a rate of about a cubic metre a day — a volume much less than actually recorded at many leaking oil and gas wells in Alberta and B.C. Guelph researchers tracked the injected methane for more than eight months via monitoring wells as the explosive gas travelled through the ground, entered the atmosphere or dissolved into groundwater, causing subtle but important changes to water chemistry. In an aquifer, bacteria can metabolize methane and generate undesirable byproducts such as hydrogen sulfide. Bacterial reactions can also bring about the release of trace elements, changing water quality and potentially rendering it undrinkable. “We didn’t see a lot of methane reacting. It degraded at low rates. In other words, if a leak were to occur the methane wouldn’t go away too rapidly from the aquifer,” Cahill said. Cahill also noted that the study covered only a short time period and used only small amounts of methane. “For larger leaks over longer times and greater areas, these findings would indicate that the groundwater would likely become unusable,” he said.
Anticipating hazards from fracking-induced earthquakes in Canada and US - As hydraulic fracturing operations expand in Canada and in some parts of the United States, researchers at the 2017 Seismological Society of America's (SSA) Annual Meeting are taking a closer look at ways to minimize hazards from the earthquakes triggered by those operations. Hydraulic fracturing, or fracking, is a method of hydrocarbon recovery that uses high-pressure injections of fluid to break apart rock and release trapped oil and natural gas. Most induced earthquakes in Canada have been linked to hydraulic fracturing, in contrast to induced earthquakes studied in the central and eastern United States. In the U.S., these earthquakes have been linked primarily to massive amounts of wastewater injected back into the ground after oil and gas recovery. However, some presentations at the SSA meeting will take a closer look at the possibilities for fracking earthquakes in the United States. Michael Brudzinski of Miami University and his colleagues will discuss their work to identify swarms of small magnitude earthquakes in Ohio that appear to be correlated in time and space with hydraulic fracturing or wastewater disposal. Their work suggest that there are roughly three times more earthquake sequences of magnitude 2 or larger induced by hydraulic fracturing compared to wastewater disposal in the area—even though there are about 10 times more hydraulic fracturing wells than wastewater disposal wells. Their technique, they say, provides evidence of induced seismicity from hydraulic fracturing in Oklahoma, Arkansas, Pennsylvania, West Virginia and Texas as well. Zenming Wang and colleagues are preparing for the onset of oil and gas exploration in the Rome Trough of eastern Kentucky, conducting a study of the natural background seismicity in the area to be able to better identify induced earthquakes if they occur. In their SSA presentation, they will also discuss how an area like eastern Kentucky might assess and prepare for ground shaking hazards from induced earthquakes, since the ruptures may occur on unmapped or "quiet" faults. In western Alberta and eastern British Columbia in Canada, a significant increase in the rate of felt earthquakes from hydraulic fracturing has researchers looking at ways to mitigate potential damage to infrastructure in the region. In her SSA presentation, Gail Atkinson of Western University will discuss the factors that affect the likelihood of damaging ground motion from fracking-induced earthquakes. Based on these factors, Atkinson proposes targeted "exclusion zones" with a radius of about five kilometers around critical infrastructure such as major dams.
A Houston company is set to massively expand its Canadian pipeline - The Trans-Pecos and North Dakota Access pipelines have garnered a lot of headlines over the past year or so, but with both of those projects now pretty much complete, the next big pipeline battle may be over the proposed expansion of the Trans Mountain pipeline in Canada. And again, a Texas-based company is behind that project. In November, Canadian Prime Minister Justin Trudeau approved an expansion project by Houston energy company Kinder Morgan that would nearly triple the capacity on its Trans Mountain pipeline, which stretches from Edmonton, Alberta to Burnaby, British Columbia (here’s a map if you’re not up on Canadian geography). It’s a truly massive endeavor. The plan would add more than 600 miles of new pipeline, allowing Trans Mountain to carry 890,000 barrels of oil per day. To put that in perspective, that’s more barrels than both the Keystone XL and Dakota Access pipelines carry, and it’s enough oil to meet 4 percent of our daily gas consumption here in the United States, according to Seattle’s NPR affiliate KUOW. The project is expected to cost a whopping $7.4 billion. The expansion would be a huge boon for Canada’s oil industry—it is expected that it would dramatically expand the nation’s oil exports and open up access to key Asian markets. In late March, Kinder Morgan said it had already contracted all available long-term capacity on its expanded pipeline to about thirteen customers, according to Reuters, and if all goes well, the expanded pipeline could be up and running by 2019. But the project has already run into problems. Kinder Morgan is facing over eighteen legal challenges aimed at halting the expansion, according to the Toronto Star. Along with the usual anti-pipeline arguments focused on climate change and oil spills, environmentalists also say that the pipeline would have a detrimental effect on endangered killer whales in the Pacific waters off the coast of Vancouver, since it is expected to increase oil tanker traffic in the port at Burnaby by about 29 ships a month, according to CBC. The cities of Burnaby and Vancouver have each filed lawsuits against the federal government, and a handful of Canada’s First Nation tribes have also sued the Canadian government on the grounds that they were not properly consulted before the project was approved. In early March, 122 First Nation tribes signed a treaty urging TD Bank, an adviser hired by Kinder Morgan in February, to divest from the expansion project. Protestors took to the streets outside the bank’s headquarters in Toronto last week.
Carbon emissions factor into major oil sands shakeup - As global companies abandon the Canadian oil sands at a time of low oil prices and huge losses, some of them are also concerned that producing one of the world’s most carbon-laden fossil fuels may be bad business in a warming world. A wave of sell-offs began last year when Murphy Oil and Norway’s Statoil decided to pull out of the oil sands. Royal Dutch Shell followed last month, selling most of its operations to Canadian Natural Resources as part of a $7.25 billion divestment. Shell will maintain a small stake in the oil sands, however. Shell’s announcement was followed by Marathon Oil, which said it would sell its oil sands subsidiary to Shell and Canadian Natural for $2.5 billion. Finally, at the end of March, ConocoPhillips struck a $13 billion deal to offload its oil sands business to Calgary-based Cenovus Energy after losing about $1 billion in the oil sands each year since 2014. “As a high-carbon intensity, high-cost producer, the oil sands are in trouble,” said David Keith, a physics and public policy professor at Harvard University.
US EIA raises Q2 Henry Hub spot gas price forecast 15 cents - The US Energy Information Administration raised its forecast for second-quarter spot natural gas prices and said prices for 2017 and 2018 would likely be further buoyed by added exports and rising consumption. While gas production levels are expected to be higher, on average, this year for the first time since 2005 after declining last year, the EIA in its April Short-Term Energy Outlook nonetheless scaled back its production estimates from the prior-month's report. The outlook released Tuesday raised the Q2 Henry Hub natural gas spot price forecast to $3.04/MMBtu, 15 cents above the agency's estimate a month earlier. Prices picked up in March, averaging $2.88/MMBtu, the agency said, as temperatures returned closer to seasonal norms after significantly warmer-than-normal eather in February. EIA's Q3 estimate in the April report slid 3 cents to $3.06/MMBtu.The agency said new gas-export capabilities and growing domestic consumption would contribute to the expected rise in prices for full years 2017 and 2018, compared with 2016, when the average was estimated at $2.51/MMBtu. For 2017, Henry Hub prices are projected to average $3.10/MMBtu, 7 cents above what was indicated in March. The forecast for 2018 stayed steady at $3.45/MMBtu. On the supply side, EIA lowered its Q2 gas marketed production estimate 910 MMcf/d to 77.48 Bcf/d, and trimmed its Q3 projections 250 MMcf/d to 79.47 Bcf/d. EIA also scaled back its full-year production estimates compared with the prior month's forecast, with 2017 average estimates down 610 MMcf/d to 78.32 Bcf/d and 2018 estimates 740 MMcf/d lower at 82.82 Bcf/d.
Hedge funds build big bullish position in U.S. natural gas: Kemp - (Reuters) - Hedge funds are more bullish about U.S. natural gas prices than at any time for almost three years, according to position records published by regulators and exchanges.By April 4, hedge funds and other money managers had amassed a net long position in the two main futures and options contracts linked to U.S. gas prices equivalent to 3,280 billion cubic feet (http://tmsnrt.rs/2nxfzE0).Fund managers had boosted their net long position for five consecutive weeks by a total of 1,082 billion cubic feet, taking it to the highest level since May 2014 (http://tmsnrt.rs/2nZFHU1).Hedge fund long positions outnumbered short positions by a ratio of nearly 3.6:1 on April 4, up from just 2.2 on Feb. 28, and nearing the recent high of 4.2 on Jan. 17 (http://tmsnrt.rs/2ohYJYv). Fund managers have responded to signs the gas market is tightening, despite one of the warmest winters in the last 50 years.Strong exports and the continued weakness of gas output have offset warm weather and reduced consumption from electric power producers.The United States exported a record 270 billion cubic feet of gas in January, up from 169 billion cubic feet in the same month a year earlier (http://tmsnrt.rs/2nZp5Mw).Gas stocks finished winter at just 2,051 billion cubic feet, which was 426 billion cubic feet, or 17 percent, lower than a year earlier (http://tmsnrt.rs/2nxikoZ).As a result, gas prices have risen to limit power producers’ consumption especially during the coming summer airconditioning season.Futures prices for gas delivered at Henry Hub in June 2017 have risen to $3.31 per million British thermal units (BTUs), up 16 percent since Feb. 22. Futures prices for deliveries in June 2017 are now trading at a premium of 48 cents per million BTUs over June 2018 in an effort to limit short term power burn (http://tmsnrt.rs/2nZNRfn).There may be fundamental reasons for hedge funds’ bullishness towards gas but the concentration of long positions has become a source of downside price risk in the short term.Large concentrations of hedge fund positions on one side of the market often presage a sharp retracement in prices when managers attempt to unwind them and lock in profits.Gas prices could be vulnerable to a correction if temperatures across the main U.S. population centres remain mild over the next 5-6 weeks, cutting gas consumption more than usual.
NYMEX May natural gas settles at $3.187/MMBtu, up 3.7 cents - The NYMEX front-month natural gas contract edged 3.7 cents higher Wednesday to settle at $3.187/MMBtu, chipping into Tuesday's near 9-cent decline ahead of the weekly US Energy Information Administration natural gas storage report. According to Platts Analytics' Bentek Energy, US demand is expected to surge 2 Bcf day on day Thursday, reaching about 65 Bcf/d, with a large portion of coming from an increase in residential/commercial demand in the Northeast. Looking ahead, prospects for weaker US demand in the coming weeks and restrictions on NET Mexico, impacting exports into the Mexican market, may prove difficult for the prompt month to continue to trudge higher over the next two weeks. Forecasts through April 26 maintain that US demand will hover near 64 Bcf/d, below the current April month to date of 65.5 Bcf/d, and a stark 8.2 Bcf/d below year-ago levels. The National Weather Service projects the eight- to 14-day temperature outlook to mirror more immediate weather outlooks, with "near to below normal temperatures [being] favored over the northern [continental US]," with a high degree of confidence of above average temperatures over the southern half of US. In addition, CENEGAS announced that from April 10 through 21, NET Mexico flows through the Agua Dulce compressor station will be restricted in a range of 570 MMcf/d to 1.22 Bcf/d. In the more immediate, preliminary projections formulated by Platts expects an injection between 9 Bcf-13 Bcf into storage stocks, bringing total inventory to nearly 2.064 Tcf, about 416 Bcf below year-ago levels.
How U.S. LNG Transformed The Market - The global market for LNG is changing quickly, spurred on by new sources of supply from U.S. shale.U.S. natural gas production surged over the past decade, as fracking opened up a wave of new gas supply. That wave led to a glut and a crash in prices long before shale drillers did the same for oil. The U.S. was sitting on massive volumes of gas that routinely traded as low as $2 or $3 per million BTU (MMMBtu). At the same time, Asian consumers – mainly Japan, South Korea and increasingly China – paid a hefty premium to import gas, with prices spiking close to $20/MMBtu following the Fukushima meltdown in 2011 that left Japan painfully short of functioning electricity capacity.That presented U.S. gas companies with a straightforward arbitrage opportunity – export cheap American gas to Asia, selling it for a much higher price. The race to build LNG export terminals was on.But by the time the first LNG export terminal in the U.S. came online in 2016, the gas market was radically changed. On the demand side, Japan – the largest LNG importer in the world – was no longer desperate for gas imports in the same way that it was back in 2011 and 2012. New renewable energy, a monumental efficiency campaign, and a greater reliance on coal cut into gas demand. China’s gas demand has also grown slower than expected.The effects on the supply side of the equation are arguably much more significant. LNG export capacity around the world has surged in recent years, hitting 340 million tonnes per annum (mtpa) in 2016, up from 278.7 mtpa at the end of 2011, an increase of 20 percent. New megaprojects have come online, including Chevron’s Gorgon LNG project in Australia. A whopping 879 mtpa of new export capacity has been proposed for the future, although much of that probably won’t be constructed now that the market is oversupplied. Surging supply and disappointing demand caused prices to come down from their peaks. Spot prices in East Asia – the Platts JKM marker – hit $19.42/MMBtu in March 2014. By 2016, Japan only paid an average of $7/MMBtu for imported LNG, or around one-third of the prices from three years ago. Spot prices for May 2017 delivery are now trading below $6/MMBtu. The glut of LNG today is upending long-standing trade practices. LNG has historically been traded on long-term contracts at prices linked to the price of crude oil. The volume of LNG traded had once been limited, so there wasn’t much of a true market price for the product. Fixing cargoes to the price of crude oil became a common practice.
Old Guard Calls Foul on Sweeter LNG Deals Luring New Buyers -- Buyers in the world’s largest liquefied natural gas markets are concerned upstarts are winning better deals than traditional customers who helped underwrite the industry. New importers in the Middle East and South Asia could be getting cheaper LNG than established users in North Asia, according to Hiroki Sato, a senior executive vice president with Jera Co., one of the world’s biggest buyers of the super-chilled gas. Sellers may be sweetening deals to lock up fresh customers as new projects, made possible partly by long-term commitments from buyers in countries including Japan and South Korea, flood the market, he said. To raise the tens of billions of dollars needed to build an LNG project, developers have traditionally needed to find both large natural gas resources as well buyers willing to commit to purchase contracts that can last more than 20 years. Jera’s wariness over how new importers are being courted highlights the growing pressure on sellers trying to manage old relationships while winning new customers amid the oversupply of capacity that’s tilted the seaborne gas market in favor of buyers. “Japan and some other Asian countries are traditional foundation buyers for many LNG projects, but substantial demand is now coming from emerging markets” Sato said in an email Friday. “We traditional buyers have a right to the cheapest price.” Many Japanese customers and other big buyers signed supply deals between 2012 and 2014 when prices were at their peak, according to Kerry Anne Shanks, an analyst at Wood Mackenzie Ltd. in Singapore. Those contracts require them to buy gas at a higher percentage of the price of crude -- known as oil indexation -- than newer agreements, she said. Last year, Pakistan State Oil Co. agreed to import LNG from Qatar at 13.4 percent of the price of oil, while Japan’s Chubu Electric Power Co., Kansai Electric Power Co. and Tokyo Electric Power Co. Holdings Inc. all reached deals in 2012 with the country at a price 14.9 percent of oil, according to Bloomberg New Energy Finance. Chubu has another contract from 2007 at 17 percent. “Clearly these foundation buyers are annoyed that low-credit buyers in emerging markets are getting better deals than them,” said Shanks. “But it is a function of when the deals were signed.”
Brazil's oil exports set to jump this year, weakening OPEC curbs | Reuters: Brazil is poised to sharply increase oil exports this year as heavy investments spur new output and demand for its lighter crudes win more buyers, especially in China and India. Production is projected to rise 210,000 barrels per day (bpd) in 2017, second only in the size of additional supply to the United States among non-OPEC producers. Higher output from the U.S. and Brazil are among the factors impeding an OPEC-led effort to lift crude prices through production cuts. Growth in exports should continue in future years as companies such as Royal Dutch Shell Plc prepare to tap some of the largest discoveries made since the end of the last decade off the nation's Atlantic coast. Already just in the first two months of the year, Brazil's oil exports have soared 65 percent over the same period a year earlier to record highs of more than 1.46 million bpd, according to government data obtained by Reuters. Consultancy Wood Mackenzie estimates 2017 exports will hit nearly 1 million bpd, up from 798,000 bpd last year. Years of heavy investment that left state-controlled Petróleo Brasileiro SA (Petrobras) as the world's most indebted oil company are beginning to pay off. The nation hopes to use higher oil sales to help drag its economy out of a two-year recession.
A country off the border of South America may become the next oil hot spot -- ExxonMobil last week announced its third successful oil find offshore Guyana – the tiny Latin American country squeezed between Venezuela and Suriname. The Snoek discovery follows hitting oil-bearing rock in the Liza-1 well and the Payara-1 well, where Exxon struck oil at the beginning of this year. The three finds together have led analysts to estimate the total reserves held in Exxon’s Starbroek block at between 1.4 and 2 billion barrels of oil equivalent, which Exxon is developing in partnership with Hess and China’s Nexen. First commercial oil will probably start flowing in 2020, from a floating production storage and offloading vessel, to be later joined by a second one and later by a third one, if all goes well. According to Wood Mackenzie, by the mid-2020s daily output from the Starbroek block could reach 450,000 barrels—a pretty respectable figure that is bound to attract the attention of other oil players. Exxon is not the only one in Guyana: Tullow Oil and Eco Atlantic are exploring the potential of a neighboring block, Orinduik, which was initially estimated to hold some 700 million barrels of oil equivalent when exploration started last year but the companies later revised reserves to as much as 900 million barrels. Eco Atlantic’s chief executive said that the company has been approached several times by companies offering to buy its stake in the Orinduik block. Noting they were "big names", Gil Holzman added that Eco had declined the offers. Instead, the company plans to push the launch of drilling at Orinduik forward to 2018, three years ahead of schedule, in case international oil prices stay where they are now.
Japan says methane hydrate output test crucial for commercial production -- Japan is set to conduct what will be a "crucial" offshore output test of gas from methane hydrate as its results will decide the future of commercial production, a senior official at the Ministry of Economy, Trade and Industry said Monday. The Chikyu drilling ship arrived at the Daini-Atsumi Knoll in Nankai trough, 80 kilometers (49.6 miles) south of the Atsumi Peninsula in Aichi prefecture and will start finishing the two production wells already drilled at the site, Yuki Sadamitsu, METI's director of oil and gas division, said at a press briefing. The test would mark a crucial step in the path to commercialization of methane hydrate production, Sadamitsu said. Once the production wells are drilled another 50-60 meters to reach methane hydrate layers about 300 meters below the seabed at a water depth of around 1,000 meters, the Chikyu will start extracting gas from methane hydrate using the decreased pressure system for a flare test in late April or early May, he added. This will be the second offshore methane hydrate production test globally after Japan produced 120,000 cubic meters, or 20,000 cu m/day, of gas from methane hydrate in a six-day offshore production test at the Daini-Atsumi Knoll in March 2013. This followed more than a decade of field research as well as testing of various technologies. Although there are a number of technical barriers to methane hydrate production, such as achieving sufficient flow rates to reduce output costs, known resources could be large enough to meet Japan's demand for about 10 years, based on its confirmation of 40 Tcf of methane hydrate resources in place in the southern Sea of Kumano in 2007. Commercialization of methane hydrates would involve deposits of water and methane gas from solid, ice-like hydrates, located deep underwater where cold temperatures and extreme pressure causes the gas to condense and solidify.
Can ‘Fire Ice’ Solve Japan’s Energy Problem? - Resource-challenged Japan, the world’s top LNG importer, the third-largest oil consumer and net importer, and the third biggest coal importer, is estimated to have spent an additional annual average of around $30 billion for fossil fuel imports in the three years following the Fukushima disaster, after which the country suspended all of its nuclear power generation.Japan has been studying for years the potential recovery of one resource lying in its seabed – methane hydrate – also known as ‘fire ice’ or ‘flammable ice’. Methane hydrate is a cage-like structure of crystallized ice, inside of which are trapped molecules of methane, the chief constituent of natural gas. If methane hydrate is either warmed or depressurized, it reverts back to water and natural gas.In March 2013, two years after the Fukushima disaster, Japan Oil, Gas and Metals National Corporation (JOGMEC) carried out the first methane hydrate offshore production test in the Japan Eastern Nankai Trough, successfully extracting 20,000 cubic meters (706,300 cubic feet) per day on average for six days.Now, Japan’s trade ministry said on Monday that it had started preparing to carry out a second production test to extract methane gas from gas hydrates with two wells. The test is expected to continue for a combined four to five weeks, according to officials at the Japanese Ministry of Economy, Trade and Industry (METI). In February, a ministry official told Platts that the test would begin sometime around late April, with the goal to have the tests run non-stop for up to one month. The trial will test the decreasing pressure system at the Daini-Atsumi Knoll in the eastern Nankai Trough, and would aim to evaluate the feasibility of stably producing gas from methane hydrate with the decreasing pressure system for a certain period. The ultimate goal is to ascertain whether the output could go commercial-scale in the future, according to the trade ministry’s official. Japan hopes that it can start commercial production of gas from methane hydrates by 2023, the EIA says in its country profile of Japan.
Analysis: S Korea looks towards US, Russian crudes amid Middle East squeeze - South Korean oil refiners are stepping up purchases of US and Russian crudes, in the wake of a squeeze in supplies of Middle Eastern grades after output curbs by the Organization of the Petroleum Exporting Countries. The country's fourth-biggest refiner Hyundai Oilbank said Monday that it had purchased 2 million barrels of US Southern Green Canyon crude oil, the country's first import of the grade. "We have purchased 2 million barrels of US Southern Green Canyon from Shell, and they will arrive in South Korea from next month," a company official told S&P Global Platts. The first and second cargoes will arrive in May and June, respectively, he said. The company official said there would be no problems using Southern Green Canyon at its crude distillation units, which are equipped to run sour and heavy crudes. Hyundai Oilbank, the only South Korean refiner that can run very heavy, sour crudes without the need for blending, is focused on procuring heavy grades and is not interested in light, sweet crudes. The refiner currently runs two crude distillation units with a combined capacity of 390,000 b/d at its Daesan complex on the west coast. In addition, Hyundai Oilbank began commercial operations at its 130,000 b/d condensate splitter in November last year, which had raised its overall refining capacity to 520,000 b/d. "We purchased the US crude due to weaker prices and low freight rates. We have no immediate plans to import more crude from the United States, but we will seek to import from sources other than the Middle East as part of diversifying supply sources," the official said.
ANALYSIS: Iranian oil exports dip in March, floating storage almost cleared -- Iran's crude oil and condensate exports in March fell slightly from the previous month as refinery runs picked up but the OPEC producer has managed to clear almost all of its oil in floating storage.
- Exports fall to 2.35 million b/d
- Flows to India jump but relations could sour over Farzad B row
- Floating storage barrels dwindle
- Fall in European spot demand from stiffer competition
Iran, which is allowed special status to increase output slightly under the recent OPEC deal, could be switching its focus to improving returns for its oil from maximizing its market share over a year after coming out of the sanctions doldrums, as its output begins to plateau.Total estimated export volume on Aframaxes, Suezmaxes and VLCCs from Iranian ports in March dropped to 2.35 million b/d from 2.41 million b/d in February, data from cFlow, S&P Global Platts trade flow software, showed.This contrasts with the small output rise according to an S&P Global Platts survey, which estimated crude oil production at 3.77 million b/d in March compared with 3.75 million b/d in February thanks to a steady production boost due to the startup of the Azar and South Pars fields.But with Iran's allocation under the OPEC/non-OPEC output agreement at 3.797 million b/d and its key competitors -- Russia, Saudi Arabia and Iraq -- having to clip their wings in recent months, OPEC's third largest producer is hoping to strengthen its relations among various global refiners. Barrels held in floating storage again accounted for a proportion of Iran's exports in March and the country has now reduced the volume held on the water from over 40 million barrels early last year to around 5 million barrels, according to Platts estimates. Exports to Asia jumped sharply to 1.685 million b/d in March from 1.442 million b/d in February, led by a sharp increase in shipments to India.
May a big month for Iran amid rising crude oil output (podcast) Iran's crude oil production is close to pre-sanctions levels, according to the S&P Global Platts OPEC survey, but can the country push on further? Associate director Paul Hickin and senior editor Eklavya Gupte shed light on the diversification of Iranian crude export destinations, as it faces the uncertainty of Iranian elections on May 19 and bids to lure in global expertise through a new contract model. OPEC also meets next month to discuss extending the current output cuts and Iran's rising production profile is likely to be in focus.
Iran To Reduce Exports To Below Pre-Sanctions Levels -- Iran will be decreasing oil exports to 2.4 million barrels per day in the current fiscal year, according to a recent report by the Azeri news agency Trend. The last month of the last fiscal year, which ended on March 21st, saw export levels touch 3.05 million barrels per day. The new goal will bring those heights to just below pre-sanctions levels. Since the international community lifted sanctions against Iran’s oil sector in January 2016, the country has been rebuilding international market share. Fellow OPEC-member and regional rival Saudi Arabia took most of Tehran’s lost business, which caused a production war until November of last year. It was then that OPEC agreed to 1.2 million barrels from production. A portion of Iran’s export growth over the past few months came not from production, but from the sale of oil and gas stored in floating tankers. On April 2nd, the Oil Ministry announced that all stored resources had been sold. New data from OPEC suggests that Iran has been slow to make promised cuts in production. Iran’s production was up over 36,000 bpd in February to 3,814,000 bpd. The last time Iran produced this much oil was in October of 2008. But on March 14th, Oil Minister Bijan Zanganeh announced that Iran would cap production at 3.8 million bpd in the second half of 2017, as long as the OPEC production deal held. Iran has been seeking more investment for its undeveloped gas and oil fields, some of the richest in the world. Last month, the country said production from the Azar oil field, which it shares with neighboring Iraq, had begun. Output is set at 15,000 bpd and is expected to double in the spring before reaching 65,000 bpd in March 2018.
Indonesia's Pertamina plans to import up to 7.5 mil barrels of gasoline in May - Oil | Platts News Article & Story: Indonesia's Pertamina plans to import 6.8-7.5 million barrels of gasoline in May, down 11%-19% from the 8.4 million barrels estimated as April imports, according to market sources. This was another noticeable decrease month on month from an average of around 10.55 million b/month in the first quarter. May imports will comprise 4.7-5 million barrels of 88 RON gasoline and 2.1-2.5 million barrels of finished 92 RON gasoline. The estimate for April's imports comprised 5.3-5.5 million barrels of 88 RON gasoline and about 3 million barrels of finished 92 RON gasoline, according to market sources.Traders said that Pertamina's gasoline imports were higher than expected in January and February, but buying interest is limited in March and April. A trader summed it up by saying: "Talk is they over-bought in quarter one."
Asian refiners diversify crude oil supplies to reduce impact of OPEC-related output cuts (video) Since the start of 2017, Asian refineries have been looking at a wider range of crudes to run as they seek to diversify their supplies and reduce the impact of OPEC related production cuts. In this video, Calvin Lee, editorial director for Asia & Middle East oil markets, examines the spread between medium-heavy sour Dubai crude and light sweet Brent crude, and the surge in Atlantic basin crudes heading to Asia.
China data: Independent refiners' Mar crude imports hit new record high, up 21% on month - Independent refineries in China's eastern Shandong province, Hebei province and Ningxia province had imported in March a total of 10 million mt, or 2.36 million b/d, of crude oil, up 21% from a revised 8.03 million mt in February, a monthly survey by S&P Global Platts showed Friday. The February imports were revised up as several cargoes imported in late February which also finished offloading discharges were also included. The higher import level for the month, was in line with the increasing feedstock demand at refineries, which had raised runs in March. Operating rates at the 42 independent refineries surveyed by Beijing-based energy information provider JLC rose to 61% of capacity in March from 56% in February, suggesting that consumption of feedstock also have increased. The cargo count for March comprises parcels that arrived into ports in Shandong and Tianjin and completed discharge operations through the month, as well as a few cargoes that arrived in late-February but only completed offloading in early-March. Crude cargoes counted for the month include imports by refineries that have import quotas, as well as those that have no quotas but are buying from those with quotas. The volumes imported by trading companies like PetroChina, Sinochem, Mercuria, Trafigura, Kunyang and Yijia that are dedicated for independent refineries are also included.
Saudi Aramco to supply full crude contract volumes to Asia, offers more light oil | Reuters: The world's top oil exporter Saudi Arabia has stepped up sales of light oil to Asia by offering buyers more cargoes on top of the full contract volumes it will provide for May, industry sources with knowledge of the matter said on Wednesday. The offers will add to a glut of light oil supplies in Asia, increasing competition with fellow Gulf producer Abu Dhabi National Oil Co and Russia, said multiple sources, who declined to be identified due to the sensitivity of the matter. "There will be less demand for light grades such as Das, Murban, ESPO and Sokol," said a Singapore-based trader, referring to crude grades from Abu Dhabi and Russia. State-owned oil company Saudi Aramco has also priced its Arab Extra Light crude at a competitive level, another trader said, after lowering the grade's May official selling price to the lowest in eight months. Saudi Aramco plans to supply full volumes of crude to least six buyers in Asia in May, the sources said, despite cutting production to comply with a deal between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers. OPEC and some non-OPEC producers pledged to cut output in the first half of 2017 to support oil prices. To comply with the deal, Saudi Arabia has cut production of medium-heavy oil to keep its overall output lower. But it has kept supplies to Asia steady so far this year as it defends its market share in the world's fastest oil-demand growth region against other producers. In line with its strategy, Saudi Aramco reduced Arab Medium crude supplies and replaced it with Arab Light for some customers, the sources said. Still, a buyer who has previously received cuts to his Arab Heavy term supplies said he will be getting the full contract volume of the heavy oil in May.
Russian crude Urals at its highest so far this year on strong month-end demand - Russian crude Urals for loading out of the Black Sea port of Novorossiisk has spiked over 90 cents/barrel last week, to stand at its highest of the year so far, due to strong month-end demand for Urals. CIF Augusta-delivered Urals crude was assessed at Dated Brent minus $0.98/b Friday, up 21.5 cents/b day on day, to stand at its highest since December 5. All through last week, Urals loading from the Black Sea port of Novorossiisk gained 92 cents/b, as Litasco repeatedly appeared in the Platts Market on Close assessment process as a bidder, looking for cargoes loading between April 25-29, and while the company was sold a cargo Tuesday and Wednesday by Vitol, which increased prices day on day. Litasco and Tenergy -- who appeared offering the cargo Litasco was looking for in the MOC process Thursday and Friday -- did not cross each other, which was one of the reasons of the price increase over the past week. On Friday, Litasco's bid was outstanding at Dated Brent minus $0.80/b, while Tenergy's offer was outstanding at the end of the MOC process at Dated Brent minus $0.60/b for the April 26-27 loading Aframax Urals cargo.Sources said that the increase has come from a largely unexpected Asian demand for Urals as four out of the eight April-loading Suezmaxes have been said to be going to India.
OPEC sees 2017 call on its crude at 32.2 mil b/d, market in deficit Q3 - Despite revising sharply upward its projection for 2017 non-OPEC oil supply, largely due to US shale, OPEC on Wednesday sounded an optimistic note, saying that the onset of the summer driving season, along with strong discipline within the producer group with its production cut agreement, will provide a bullish environment for prices in the coming months. "The return of refineries from seasonal maintenance and healthy demand, together with the high conformity observed in OPEC and non-OPEC production adjustments, should enhance market stability and reduce the volatility seen in recent weeks," OPEC said in its monthly oil market report. In particular, US oil demand trends "continue to provide grounds for optimism," OPEC said, while oil demand growth in China was "very solid" in February. OECD commercial oil stocks fell 28.3 million b/d in February, reversing January's build, OPEC said, and stand at 2.987 billion barrels, about 268 million barrels above the five-year average.The call on OPEC crude for 2017 will average 32.2 million b/d, a downward revision of 100,000 b/d from February's report but above the group's March output level of 31.93 million b/d, according to secondary sources. OPEC kept its overall 2017 world oil demand forecast largely unchanged at 96.32 million b/d.
Is a 'decade of disorder' ahead for global oil markets? (podcast) Low oil prices and a lack of upstream spending are fueling a looming, worldwide supply crisis for the 2020s, some oil industry experts say. Adam Sieminski, former head of the US Energy Information Administration, and Michael Cohen, head of energy markets research at Barclays, speak with Brian Scheid about how the current decade of shale may be setting the stage for a supply shock. Global populism, trade wars and geopolitical issues could all further complicate market fundamentals.
OPEC's war on oil overhang starts to bear fruit | Reuters: OPEC appears to be slowly winning the battle against a global overhang of crude and oil products as inventories in onshore and floating storage decline. The price of oil may not reflect this just yet, as Brent crude futures are struggling to recover its losses for the year to date and break above $55 a barrel. But there is no doubt that stocks are falling around the world, from Saldanha Bay in South Africa, to the Caribbean. A persistent glut of Nigerian oil is easing and even Iran has liquidated the amount of crude held in floating storage. The Organization of the Petroleum Exporting Countries explicitly said a joint deal with non-OPEC producers to cut some 1.8 million bpd in the first half of 2017 was aimed at slashing an excess of around 300 million barrels of crude and petroleum products in OECD stocks. "Across the first quarter of the year, crude stocks built by much less than they did in the first quarter of last year even though refinery maintenance globally was much heavier," Energy Aspects analyst Richard Mallinson said. Iran has sold all the oil it had stored for years at sea and Tehran is now struggling to keep exports growing as it grapples with production constraints. Trading giant Vitol has sold millions of barrels of Nigerian crude oil from storage in South Africa's Saldanha Bay, according to oil traders, with cargoes sailing for Taiwan, India, the United States and Europe. France's Total has offered a further 2 million barrels of Nigerian Escravos oil from its own Saldanha Bay storage tanks, while sources said trader Mercuria had also been offering oil from storage.
Hedge funds regain some of their faith in oil: Kemp (Reuters) - Hedge funds have turned bullish towards crude oil again as international marker prices have steadied above the psychologically important $50 threshold.Hedge funds and other money managers increased their net long position in the three main Brent and WTI futures and options contracts by 54 million barrels in the week to April 4.The boost in the net long position comes after five consecutive weeks of drawdowns between Feb. 21 and March 28 totalling 309 million barrels (http://tmsnrt.rs/2oi5fi3).By April 4, fund managers held an overall long position equivalent to 696 million barrels, according to an analysis of position data published by regulators and exchanges (http://tmsnrt.rs/2oi1YPy).The position is well below the recent peak of 951 million barrels reported on Feb. 21 but far above the recent low of 422 million recorded in mid-November before OPEC’s production deal.Hedge fund managers remain overwhelming bullish about the outlook for oil prices. Fund managers’ long positions outnumber shorts by a ratio of more than 4:1 (http://tmsnrt.rs/2nZYkHq). Hedge fund managers' faith in the outlook for oil prices was badly shaken by the sharp sell-off that started on March 8 and lasted through subsequent sessions. But managers seem to have recaptured some of that confidence after front-month Brent prices found a floor just above $50 per barrel on March 27 (http://tmsnrt.rs/2nxixIt). Funds added the equivalent of 30 million barrels of extra long positions in Brent and WTI between March 28 and April 4.The stabilisation and subsequent rise in prices also prompted a wave of short-covering, with funds cutting short positions by a total of 24 million barrels.Short positions had previously more than doubled to 241 million barrels on March 28 from 102 million on Feb. 21 in the sixth cycle of short-selling since the start of 2015.But with prices no longer falling, and new buyers emerging, many short position owners decided to take profits, accelerating the upward move in prices. If hedge funds have shifted to closing out short positions after just five weeks, which seems likely, this will be the briefest and shallowest short-selling cycle since the start of 2015 (http://tmsnrt.rs/2nZRlOX).
WTI/RBOB Extend Gains After Biggest Crude Inventory Draw Of 2017 WTI/RBOB prices jumped intraday on the heels of anonymous and ambiguous headlines about Saudi and OPEC production cut extensions and extended gains on API inventory data. After last week's surprise builds in crude (and at Cushing), API showed a 1.3mm draw in crude inventories - the biggest since Dec 2016. Gasoline and Distillates continued their season drawdowns also. API
- Crude -1.3mm (-1.5mm exp)
- Cushing (+800k exp)
- Gasoline -3.7mm (-1mm exp)
- Distillates -1.6mm (-1mm exp)
Biggest crude draw of the year as the seasonal draws in gasoline and distillates continues... And the reaction - after WTI has risen for 6 straight days - was further gains for both oil and gasoline futures...
Oil Prices Pull Higher After API Reports Draws Across The Board -- The American Petroleum Institute (API) reported a draw of 1.3 million barrels in United States crude oil inventories, compared to analyst expectations for a crude oil build of 125,000 barrels.API also reported a significant gasoline inventory draw of 3.7 million barrels, compared to predictions of a 1.8-million-barrel draw.Distillates saw a 1.6-million-barrel draw compared to an expected 1.3-million-barrel draw for the fuel.Inventories at the Cushing, Oklahoma, site fell by 358,000 barrels, following last week’s 1.34-million-barrel build.Oil prices rose to five-week highs after Friday’s reports of U.S.-ordered airstrikes against Syrian infrastructure, followed by production outages from Libya’s largest oilfield, and late-breaking news on Tuesday that suggested Saudi Arabia would support OPEC production cuts. Despite the overarching sentiment that the American Petroleum Institute would report a build late Tuesday afternoon, WTI was trading up 0.36% at $53.27 at 1:20pm EST, while Brent Crude traded at $56.03, up .09% on the day. These per-barrel prices are more than $2.00 higher than this time last week.This week’s draw in crude oil inventories is only the sixth draw in the last 15 weeks, using API data, with the API still reporting an overall hefty b uild over the previous 15 weeks of roughly 37.9 million barrels.
Is The Oil Price Rally Running Out Of Steam? | OilPrice.com: Oil prices started the week at a one-month high, with geopolitical tensions and growing confidence over an OPEC deal extension driving a rally. But as oil prices settle in the mid-50s the rally is slowing and traders appear happy to lock in gains. Also, after sharp gains in recent weeks, the rally for crude prices could be slowing. . One of the world’s largest oil traders, Gunvor, has approached at least two of its competitors to gauge interest in a sale of the company. The discussions are being held close to the vest – Gunvor’s CEO says it has no plans to sell – but if it occurred it would consolidate an already consolidated industry. The WSJ reports that Gunvor’s trading volumes have held steady in recent years while its competitors, including Vitol Group, Glencore and Trafigura Group have increased their volumes. The market turmoil since 2014 has been a boon due to the fact that traders profit on storage and volatility. The market stability so far in 2017 has led to softer business for the traders. The oil majors, including ExxonMobil, Statoil, Royal Dutch Shell and Total are all suffering from a falling reserve base as they fail to replace the reserves that are being produced, according to a Reuters analysis. Exxon, for example, saw its reserves fall to an equivalent of just 13 years’ worth of oil, given its current rate of production. That is the lowest lifespan since 1997. Shell has the lowest reserve life since 2008, even after incorporating the large oil and gas reserves from its purchase of BG Group. Historically, the volume of reserves was one of the most important metrics for Wall Street. But in an age of low oil prices, that is no longer the case. Shareholders are increasingly willing to overlook a declining reserve base as long as the majors keep debt and spending in check. Of course, that raises questions about a supply shortage years from now because of a failure to find and discover new reserves.According to TASS news agency, Russian officials will start consultations with Russian oil companies about the extension of the OPEC deal, a sign that Russia is on board with a six-month extension.
Oil rebalancing: delayed rather than derailed? Kemp (Reuters) - Oil market rebalancing has been pushed back by a few months rather than pushed off course, if recent movements in crude futures prices are to be believed.Brent futures prices for June delivery have risen in 10 of the last 11 trading sessions by a total of more than $5 per barrel.Brent has now recovered all its previous losses after the sell that began on March 8 and continued through March 23 (http://tmsnrt.rs/2p5snBy).In contrast to the recovery in flat prices, Brent calendar spreads have remained weak and showed no signs of strengthening.The calendar spread between Brent for delivery in June and December 2017 has remained in an overall contango of 82 cents per barrel (http://tmsnrt.rs/2p5hMGF).Brent spreads for the second half of 2017 have not tightened significantly and remain well below the peak set in February.However, the overall spread weakness conceals very different performance for different months within the second half. Spreads for June and July have continued to weaken while spreads later in the year have been strengthening in recent sessions (http://tmsnrt.rs/2p5gGuC). Calendar spreads have become the major battleground among traders about the timing of any draw down in crude stocks.Hedge funds built record long positions in both flat prices and calendar spreads between December and February anticipating an early rebalancing and move into backwardation.In the event, the positions proved premature, contributing to a sharp correction in spreads (from late February) and flat prices (from early March).But believers in rebalancing mostly think that the movement to backwardation has been postponed rather than aborted.
EIA: U.S. crude oil inventories decreased by 2.2 million barrels from the previous week --Key highlights from the Summary of Weekly Petroleum Data for the Week Ending April 7, 2017, published by the U.S. Energy Information Administration:
- U.S. crude oil refinery inputs averaged 16.7 million barrels per day during the week ending April 7, 2017, 268,000 barrels per day more than the previous week’s average. Refineries operated at 91.0% of their operable capacity last week
- U.S. crude oil imports averaged 7.9 million barrels per day last week, up by 28,000 barrels per day from the previous week.
- U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.2 million barrels from the previous week. At 533.4 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year.
EIA: US crude stockpiles drop 2.2 million bbl - US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, declined 2.2 million bbl during the week ended Apr. 7 compared with the previous week’s total, according to the US Energy Information Administration’s Weekly Petroleum Status Report.It marks just the second drop of the past 14 weeks. At 533.4 million bbl, US crude inventories are near the upper limit of the average range for this time of year.Separate data from the American Petroleum Institute indicated crude inventories lost 1.3 million bbl last week.EIA reported that total motor gasoline inventories decreased 3 million bbl last week but are in the upper half of the average range. Both finished gasoline inventories and blending components inventories fell.Distillate fuel inventories dropped 2.2 million bbl but are in the upper half of the average range for this time of year. Propane-propylene inventories fell 1.2 million bbl and are in the lower half of the average range. Total commercial petroleum inventories decreased 4.7 million bbl.US crude refinery inputs during the week ended Apr. 7 averaged 16.7 million b/d, up 268,000 b/d from the previous week’s average. Refineries operated at 91% of their operable capacity.Both gasoline production and distillate fuel production increased to 9.9 million b/d and 5.1 million b/d, respectively.US crude imports averaged 7.9 million b/d, up 28,000 b/d from the previous week’s average. Over the last 4 weeks, crude imports averaged 8.1 million b/d, up 3.0% from the same 4-week period last year.Total motor gasoline imports, including both finished gasoline and gasoline blending components, averaged 488,000 b/d. Distillate fuel imports averaged 118,000 b/d last week.
US oil settles at $53.11 a barrel, down 29 cents as traders eye Cushing build, US supply: Oil futures turned lower on Wednesday, pulling back after eight straight sessions of gains after U.S. crude inventory data suggested that the market was still heavily supplied. Traders focused on preliminary U.S. production estimates in the weekly EIA report that suggested domestic output is still climbing. The report also showed stockpiles at the U.S. crude hub at Cushing, Oklahoma, rose 276,000 barrels in the week. Brent crude futures were last down 37 cents at $55.86 a barrel, after hitting a one-month high of $56.65. U.S. West Texas Intermediate (WTI) crude futures were down 29 cents at $53.11 a barrel, after touching the highest since March 7 at $53.76. Both contracts had initially jumped to the highest in more than a month, the eighth straight session of gains, after Saudi Arabia was reported to be pushing fellow OPEC members and some rivals to prolong supply cuts beyond June. Analysts and traders said long-term fundamentals remained strong and more stockpile draw-downs are likely as refiners exit maintenance season. "Crude inventories at Cushing rose 0.28 million barrels (mb) to 69.42 mb; however, this leaves just over 10mb of available storage before operational efficiency starts to be compromised," Standard Chartered said in a note. "We do not expect inventories to reach this point, particularly with the added downward pressure on Midwest inventories from the reduction in Canadian flows."
WTI/RBOB Slide As Crude Production Hits 20-Month High, Cushing Glut Hits Record High --WTI/RBOB prices slipped ahead of DOE data as Canada's growth outlook cut trumped Saudi Arabia's wishy-washy chatter on production cuts. DOE data confirmed the biggest crude draw of 2017 (-2.16mm) and gasopline and distilates saw the 8th week in a row of drawdowns but Cushing's 276k build pushed it to a new record high as US crude production rose once again to its highest sine August 2015. DOE:
- Crude -2.16mm (-1.5mm exp)
- Cushing +276k (+800k exp)
- Gasoline -2.97mm (-1mm exp)
- Distillates -2.15mm (-1mm exp)
The biggest crude draw since 2016 and 8th weekly draw in gasoline and distillates inventories...
Oil Retreats as U.S. Production Gain Offsets Stockpile Decline Crude retreated for the first time in seven sessions after a government report showed U.S. production climbed to the highest level in more than a year, offsetting data on declining stockpiles. Futures ended the longest stretch of gains this year in New York. Crude output climbed for an eighth week, the longest stretch since 2012, according to the U.S. Energy Information Administration. Inventories fell 2.17 million barrels, compared with a 1.5 million barrel drop forecast by analysts surveyed by Bloomberg. Prices rose earlier on reports that Saudi Arabia will support an extension to OPEC-led production curbs. While speculation that the Organization of Petroleum Exporting Countries and its allies will extend their six-month pact aimed at eroding a global glut is helping boost prices, there’s also concern that rising U.S. output will counter the reductions. In its monthly report on Wednesday, OPEC boosted estimates for rival supplies as shale drillers emerge from the industry’s two-year slump. “Overall supply and demand are coming into balance,” Brian Kessens, a managing director and portfolio manager at Tortoise Capital Advisors LLC in Leawood, Kansas, who helps manage $17.1 billion in energy assets, said by telephone. “There’s a little less focus on the weekly inventory numbers and more on OPEC rhetoric.”West Texas Intermediate for May delivery slipped 29 cents, or 0.5 percent, to close at $53.11 a barrel on the New York Mercantile Exchange. Prices touched $53.76 earlier, the highest intraday price since March 7. Total volume traded was about 16 percent above the 100-day average. Brent for June settlement slipped 37 cents, or 0.7 percent, to $55.86 a barrel on the London-based ICE Futures Europe exchange. The global benchmark oil climbed the previous seven sessions, the longest stretch of gains since July 2012. Brent closed at a $2.34 premium to June WTI.
The numbers behind US crude oil balances and inventories -- Crude oil prices are up more than $5/bbl over the past couple of weeks, mostly due to Middle East tensions and the latest readings of OPEC tea leaves. U.S. markets have contributed little to the bullish trend, with crude oil inventories hanging in there at 533.4 million barrels, just under the all-time record hit last week. U.S. production is up almost 800 Mb/d since the low last summer and a whopping 550 Mb/d since the OPEC/NOPEC deal. That’s some decidedly bearish statistics. If these trends hold, the U.S. could completely offset the 1.2 MMb/d in OPEC production cuts in another six months. But that begs the questions, where exactly do these statistics come from, and how should they be interpreted? The first answer is simple: it is the U.S. Energy Information Administration. But where do they get the numbers? And what can we learn about the crude oil market through a better understanding of the sources and assumptions behind these numbers? That is our topic in today’s blog. This is Part 3 of a blog series in which we are examining the growing significance of the U.S. supply/demand balance in the Shale Era, as well as the data that are available to assess the balance on a regular basis. In Part 1, we discussed the relationship between crude oil prices and the U.S. supply/demand balance equation, focusing on what throws the equation out of balance, and what imbalances mean for crude oil prices. Part 2 took us into the math of EIA’s Weekly Petroleum Status Report (WPSR), the numbers released each Wednesday at 10:30 a.m. Eastern Time that include the latest on U.S. crude production; imports and exports; inputs and production at refineries and blending terminals; and inventories at refineries, terminals and pipelines, among other things. Using these data, the folks at EIA give us data to better understand the crude oil supply/demand balance.
Oil: Solid increase for Oil Rig Count - A few comments from Steven Kopits of Princeton Energy Advisors LLC on Apr 13, 2017:
• Total US oil rigs were up 11 to 673
• US horizontal oil rigs added 11 to 572
• The US horizontal oil rig count is now within three weeks of the entire number necessary to cover the US contribution to incremental global oil supply.
• US supply is blowing right through earlier production gain forecasts, up by 600 kbpd over the last half year
U.S. Oil Rig Count Hits 2 Year Hi -- This week’s Baker Hughes rig count has oil rigs up by 11, with a majority of the growth occurring in the Permian Basin in Texas and New Mexico.The number of active oil rigs in the United States now stands at 683 – 332 rigs higher than the figure one year ago. The last time oil rigs were this high in number was in April 2015.Gas rigs declined this week by 3—after five consecutive weeks of growth—bringing the total oil and gas rig count to 847, or 407 more than a year ago today. This week marks the thirteenth straight week of increases to the oil and gas rig count.Both benchmarks were trading down on the day an hour after data release, with WTI trading down 14 cents at $52.97, and Brent trading down 23 cents at $55.63. State-wise, New Mexican drilling activity grew by seven rigs, Oklahoma by three rigs and Texas, by two rigs. Alaska and Louisiana lost two sites each. The Permian Basin saw eight rigs come online, right after a 12-site jump last week. The Permian, the most prolific basin by far, now boasts 339 total rigs, which is 198 more than the 141 rigs in that basin a year ago, dwarfing runner up Eagle Ford’s 75 rigs, which holds 33 more active rigs than a year ago. Eagle Ford and Cana Woodford gained three and two rigs, respectively. DJ-Niobrara, Utica and Williston all gained a single rig, each, while Haynesville and Granite Wash lost the same number. Canada’s oil rig count was down by two, while gas rigs in Canada fell 12. Canada’s total oil and gas rig count now stands at 118, which is 78 more rigs than a year ago.
US Oil Rig Count Surges To 2-Year High - Will Shake Kill The Oil Rally Again? --For the 14th straight week, US oil rig counts rose (by 11 to 683). This is the highest since April 2015... and leads US crude production to its highest level since Aug 2015… The question is, as OilPrice.com's Nick Cunningham asks, will Shale kill off the recent oil price rally again?WTI has rallied more than 11 percent over the past month, raising hopes from oil bulls that maybe, just maybe, the price gains are here to stay. Oil had dipped in February and March on record high levels of oil sitting in U.S. storage, but by April, the market is starting to look tighter.The oil market bust is closing in on the three-year mark, and there are growing signs that things could finally be moving in the right direction.Despite the record high levels of crude oil storage in the U.S., inventories are falling pretty much everywhere else. South Africa, the Caribbean, Nigeria, and Iran are all reporting lower inventory figures, although the reasons vary. Iran cleared out its fleet of floating storage, which had built up during years of sanctions that prevented the Islamic Republic from exporting to its full potential. That backlog of oil has now been worked through and Iran could have trouble lifting exports. In fact, Iran’s exports have been flat since last summer.Europe also has high levels of oil and refined products sitting in storage, but total levels are down from 2016. And like the U.S., the past few months have been quiet ones for refiners. That suggests that inventories should start seeing some more meaningful declines in the months ahead as refineries ramp up. According to FGE, and reported on by Reuters, total product stocks across the U.S., the Amsterdam-Rotterdam-Antwerp region, plus Singapore and Japan, declined by a combined 6.5 million barrels – a sign of market tightening. Storage is still exceptionally high, but converging down towards long-run averages. Outside the U.S., accurate data is hard to come by, so these snippets offer some clues into broader market trends."Across the first quarter of the year, crude stocks built by much less than they did in the first quarter of last year even though refinery maintenance globally was much heavier," Energy Aspects analyst Richard Mallinson told Reuters.
US oil settles at $53.18 a barrel, up 7 cents in overall strong week for crude: Oil prices were little changed on modest volume on Thursday, in a week where crude benchmarks recouped more of March's losses on increased hopes world supply and demand were nearing balance. Benchmark Brent crude futures were up 1 cent at $55.87 a barrel as of 2:30 p.m. ET, after touching a one-month high on Wednesday. U.S. West Texas Intermediate crude futures settled at 7 cents at $53.18 a barrel. The Paris-based International Energy Agency (IEA) said on Thursday that supply and demand in the global oil market were close to matching after a fall in stockpiles in developed countries in March. The market has been oversupplied for three years, prompting members of the Organization of the Petroleum Exporting Countries and some non-OPEC producers to agree to cut output in the first six months of 2017 to rein in the glut. OPEC meets on May 25 to consider extending the cuts beyond June. Saudi Arabia, Kuwait and most other OPEC members are leaning towards this if agreement is reached with other producers, OPEC sources told Reuters last month. OPEC data showed members of the group had cut March output beyond the level they had promised. At the same time, however, U.S. production has continued to increase, with overall production rising to 9.24 million barrels a day out of the United States, according to U.S. Energy Department figures.
Oil Prices Rally Amid Rising Rig Count | OilPrice.com: Oil posted some solid gains this week on outages in Libya, further confidence in an OPEC extension, and the first sizable drawdown in U.S. crude stocks this year. The IEA added its voice to the growing chorus of analysts seeing light at the end of the tunnel. The IEA said in its latest report that the oil market is probably already balanced, although more data is needed. Oil inventories are falling in many parts of the world and have started to decline in the OECD as well. In the coming months, the agency says, more substantial inventory declines will arrive and demonstrate that the oil market is no longer oversupplied. At the same time, the IEA downgraded its oil demand growth estimate for this year from 1.4 mb/d to 1.3 mb/d.Goldman Sachs maintains its projection that oil prices will remain stable for years to come due to improvements in drilling technology that can add marginal barrels whenever they are needed, keeping a lid on prices. The investment bank says that shale will also limit volatility, with crude likely to trade within a 10 to 20 percent band. Goldman has a five-year estimate on WTI at $54 per barrel. "We believe we are going back to an environment similar to pre-2003, a period characterized by stable long-term oil prices and low oil-dollar correlation," the bank’s research note said. JPMorgan Chase, Wells Fargo and Citigroup saidthis week that their portfolio of energy loans has turned out much better than expected, allowing them to put to work a combined $370 million that they had set aside to cover for losses on those loans. The result will likely be more lending, which will allow more shale companies to drill more wells. Ultimately, this could boost production. Early evidence suggests banks are already stepping up their lending. So-called leveraged loans, which are loans to already indebted companies, shot up by 86 percent in the first quarter compared to a year earlier. The U.S. rig count jumped again this week, the 13th consecutive week of increases. Standing at 683, the rig count is now at its highest level since April 2015.
Exclusive - Saudis, oil majors discuss gas investments ahead of giant IPO | Reuters: Saudi Arabia and international oil companies have discussed gas venture opportunities inside the kingdom and abroad as part of the top crude-exporting country's drive to diversify investments before the listing of national energy giant Saudi Aramco. Saudi officials explored investment opportunities with firms including BP and Chevron to help develop its gas reserves, the world's sixth largest, at a time of booming energy demand at home, four industry sources told Reuters. Aramco has also looked into investing in gas ventures abroad, including with Italy's Eni, the sources said. The development revives memories of talks between Aramco and global majors at the end of the 1990s and early 2000s, known as the Saudi gas initiative. Most of those talks collapsed as the parties disagreed over returns on investment. This time, Aramco is gearing up for a share listing next year, aiming to get a valuation of up to $2 trillion in what could be the world's biggest initial public offering (IPO). Chevron, BP, Aramco and Eni declined to comment on talks. "We have a long-standing relationship with Saudi Arabia, so it is not uncommon for us to talk to them. We're always having discussions about business development. I don't have anything particular to say about Saudi Arabia," Chevron CEO John Watson told Reuters last week. BP Chief Executive Bob Dudley, who traveled to Saudi Arabia at the end of last year, said this year he wouldn't rule out "creative partnerships" with Aramco but that an outright investment by BP in the IPO was unlikely.
Secondary OPEC Sources Show Saudi Oil Production Rose For Second Month --For the second month in a row, Saudi oil production both declined or rose, depending on which sources one believes, OPEC's latest market report showed. Saudi's self-reported production declined by 111Kbbl/d from 10,011 to 9,900kbpd the lowest since January... ... even as secondary sources showed a second consecutive increase in production, from 9,809 in January to just why of 10mmpd in March. And while Saudi production may be rising according to secondary sources, overall OPEC production declined driven by a steep drop in Libyan output where geopolitical developments have prevented the nation's oil fields from producing at capacity. Total OPEC output was said to have declined by -153k b/d (-0.5%) m/m in March to 31.928m b/d, as 9 out of 13 members reduced output. In addition to Libya, Venezuela crude production also extended its decline in March.Curiously, OPEC said that while oil inventories shrank in developed nations as its production cuts took effect, it forecast that rivals in the U.S. shale industry are growing stronger. The cartel boosted estimates for U.S. production growth by 200,000 barrels a day, to 540,000 a day as a recovery in investment helps the nation’s shale-oil explorers resume drilling. The number of rigs in operation has more than doubled since May, according to Baker Hughes Inc., while government data shows U.S. production has recovered to its highest in more than a year Bloomberg reported. Overall non-OPEC production is now expected to grow by 580tb/d. From the report:For 2017, non-OPEC oil supply is now projected to grow by 0.58 mb/d, up by 176 tb/d from the previous MOMR, to average 57.89 mb/d. This is due to higher expectations for US growth – revised up by 200 tb/d – along with lower declines in Colombia and China following revisions of 23 tb/d and 26 tb/d, respectively. Offsetting some of this increase are downward revisions to expected growth in Canada and Brazil has been adjusted down by 53 tb/d and 56 tb/d, respectively.From the supply point of view, it is evident that there are many projects waiting to come on stream in the coming years. The period 2017-2019 is likely to see the largest production increase from mega projects in the industry’s history. Large projects in Brazil, Russia, Canada and the Gulf of Mexico are expected to reach completion and add to global supply between 2017 and 2019. Combined with new shale output, these projects could add another 1 mb/d in the coming years. Many of these projects, costing billions of dollars and taking many years to bring online, were initiated back when oil prices traded at $100/b.In total, OPEC raised estimates for growth in non-OPEC supply for a third month, increasing its forecast by 176,000 barrels a day. The group sees rival production expanding by 580,000 barrels a day, more than four times the growth rate projected in January and almost half the amount its members pledged to cut.
U.S. Insurers Sue Saudis For $4.2 Billion Over 9/11 -- Last year’s Justice Against Sponsors of Terrorism Act (JASTA), a bill which allowed Americans to sue Saudi Arabia in US court over their involvement in 9/11, has yielded another major lawsuit yesterday, a $4.2 billion suit filed by over two dozen US insurers related to losses sustained because of the 2001 attack. The lawsuit is targeting a pair of Saudi banks, and a number of Saudi companies with ties to the bin Laden family, accusing them of various activities in support of al-Qaeda in the years ahead of 9/11, and subsequently having “aided and abetted” the attack."But for the assistance provided by defendants," the lawsuit said, "al Qaeda could not have successfully planned, coordinated, and carried out the September 11th attacks, which were a foreseeable and intended result of their material support and sponsorship of al Qaeda."The 10 defendants in the lawsuit include Al Rajhi Bank, aviation contractor Dallah Avco, the Mohamed Binladin Co, the Muslim World League, and other charities, but the biggest target is the Saudi National Commercial Bank, which is majority state-owned. The Saudi government heavily pressured the Obama Administration to block the JASTA last year, threatening to crash the US treasury market if it led to lawsuits, but overwhelming Congressional support still got it passed into law.While there were more than a few lawsuits already filed in the past several weeks related to JASTA, this is by far the biggest, and most previous lawsuits are still in limbo as the court and lawyers try to combine them into various class action groups.Historically, US sovereign immunity laws have prevented suits against the Saudi government related to overseas terrorism. With the release of the Saudi-related portions of the 9/11 Report last year, however, such suits were inevitable, and the federal government could no longer protect the Saudis from litigation.
Arab Populists Also Blame Foreigners as Gulf Austerity Sets In -- The angst against foreigners that’s sweeping the globe isn’t skipping the oil-rich Middle East.Safa Al-Hashem, the only woman in Kuwait’s 50-seat parliament, is capitalizing on a growing resentment of foreigners to build support for a movement that’s taking shape as the nation’s ruling al-Sabah family withdraws some handouts in an era of cheap oil.“Before asking citizens to pay, the government should reform the population mix by levying taxes on foreigners," said the 52-year-old former investment banker, whose salt-and-pepper pixie-cropped hair and attire of smart business suits make her stand out among exclusively male counterparts in white gowns and headdresses. “The citizen feels that our entitlements lack social justice.” Voices of discontent in Kuwait’s legislature, the most-independent in the Gulf, provide a rare glimpse into how locals are reacting as cash-strapped monarchs from Saudi Arabia to the United Arab Emirates risk their legitimacy by overhauling social contracts that cemented decades of largely autocratic rule. Kuwait’s rulers “have to manage a very delicate transition,” said Graham Griffiths, an analyst at global risk consultancy Control Risks in Dubai. “The issue for them is managing the economic reforms they see as necessary, while placating populist pressures amid broader demand for political reform and accountability.”
Justin Trudeau’s dangerous Syrian Trump gambit -- Trudeau less than twenty four hours prior to the attack said that there needed to be an investigation due to "continuing questions" about who was responsible for the gas strike in Syria and advised caution. Immediately after Trump unleashed the cruise missiles, however, Trudeau was fully on board the war train and asserting now with implied certainty that there was no question of the Syrian regime's guilt. All his pretensions to supporting United Nation's investigations and all his supposed concern about multilateralism were gone. It is amazing what loyal little puppies Canadian Liberals are to American Imperialism and how they love the whiffs of grapeshot the empire likes to unleash. The Trudeau government's utter spinelessness makes perfect sense in this context. It likely makes them feel that they are important players on the world scene as they get the phone call from the Americans advising them in advance of the strike, they can pretend that they matter to the Yanks, and they can stand up in parliament, all serious and statesperson like, and play at being big children one day hoping to grow into adults. The fact that Trump is a megalomaniac whose motives for this attack are anything but humanitarian, that supporting his actions helps to normalize his vile administration, and that these same liberals were denouncing Trump on every front right up until they got to get in on the political boost that seems to come with a certain kind of media endorsed violence, does not factor into their amoral, opportunistic, sad thinking at all. But Canada's Liberal government and other western governments lining up to embrace and endorse this are faced with the immediate conundrum that they are now active apologists for a regime that they know to be headed by a President of uncommon mental instability and surrounded by extremists, bigots, racists and religious lunatics.
Russia-Baiting Pushed Trump To Attack Syria — And Increases The Risk Of Nuclear Annihilation -- Vast efforts to portray Donald Trump as Vladimir Putin’s flunky have given Trump huge incentives to prove otherwise. Last Thursday, he began the process in a big way by ordering a missile attack on Russia’s close ally Syria. In the aftermath of the attack, the cheerleading from U.S. mass media was close to unanimous, and the assault won lots of praise on Capitol Hill. Finally, the protracted and fervent depictions of Trump as a Kremlin tool were getting some tangible results.At this point, the anti-Russia bandwagon has gained so much momentum that a national frenzy is boosting the odds of unfathomable catastrophe. The world’s two nuclear superpowers are in confrontation mode. It’s urgent to tell ourselves and each other: Wake up! The dangers of a direct U.S.-Russian military conflict are spiking upward. After the missile attack, the Russian Foreign Ministry announced that it was suspending a memorandum of understanding with the United States to prevent mid-air collisions over Syria. And Russia’s prime minister, Dmitry Medvedev, issued a statement referring to “our now completely ruined relations” and declaring that the United States was “on the verge of a military clash with Russia.” These ominous developments are a longtime dream come true for ultra-hawks like Republican Senators John McCain and Lindsey Graham, who’ve gained leverage in an alliance with numerous congressional Democrats. The neocons and the “liberal interventionists” really have something going now, after propagating the meme that Trump is a Putin puppet. At this perilous moment in human history, the quality of the Democratic Party leadership was embodied in a tweet last month from the Democratic National Committee’s new chair, Tom Perez, who sent out this message about a weekly address by President Trump: “Translated from the original Russian and everything.” Such tactics aren’t just McCarthyite. They are baiting, goading and pressurizing Trump to prove that he’s willing to clash with Russia after all.
The Risk Of A Major Oil Outage Just Grew Substantially -- The U.S. cruise missiles that were fired on Syria will have severe repercussions for the global oil market. The current price hike could be short-lived, but new confrontations are already on the horizon. Analysts are wrong to expect that Trump’s military action has improved the Middle East’s situation. The political risk premium will be higher for the foreseeable future as instability has increased.Assad’s allies, Russia, Iran and Hezbollah, are openly confronting the U.S. and its allies. In a statement made by the joint command center, which is made up of Russia, Iran and militias supporting Syrian President Bashar al-Assad, the U.S. has been warned that the missile attack crossed “red lines”. The pro-Assad group reiterated that any new aggression will be met by military force.One of the main worries should be the cancellation by Russia of its cooperation with the U.S. (and others) with regards to operational security in the area. The risk of a military confrontation between the different armed players in the conflict has increased. Several NATO countries, such as Belgium, have already postponed further air force operations in Syria. The latter is playing into the hands of the respective armed extremists and Russian backed forces. It seems that this is not what Trump was intending. At the same time, the Arab world also doesn’t seem to be totally supporting the U.S. attack. Iraq, as a perceived ally of Iran, indicated its worries while the region’s leading military and political power, Egypt, has openly criticized the military action. This in stark contrast to most of the GCC Arab countries. Trump’s unilateral military action has increased instability instead of decreasing it. As openly criticizing Washington is still not done, except by Cairo, leaders in Riyadh, Abu Dhabi, Doha and Baghdad, will be assessing the options and the possible negative repercussions of this U.S. action. In the short term, the global oil market might not feel an effect of the actions. Syria’s position as an oil and gas producer is negligible. The future impact, however, could be immense. Especially if there is a spill-over of the civil war to Jordan, Saudi Arabia, or Iraq. Trump’s actions have increased this option substantially.
Intelligence and Military Sources Who Warned About Weapons Lies Before Iraq War Now Say that Assad Did NOT Launch Chemical Weapon Attack -- Former U.N weapons inspector Scott Ritter warned before the start of the Iraq war that claims that Saddam Hussein possessed weapons of mass destruction were false. Sunday, Ritter wrote that current claims that the leader of Syria launched a chemical weapons attack was false: Some sort of chemical event took place in Khan Sheikhoun; what is very much in question is who is responsible for the release of the chemicals that caused the deaths of so many civilians. No one disputes the fact that a Syrian air force SU-22 fighter-bomber conducted a bombing mission against a target in Khan Sheikhoun on the morning of April 4, 2017. The anti-regime activists in Khan Sheikhoun, however, have painted a narrative that has the Syrian air force dropping chemical bombs on a sleeping civilian population. A critical piece of information that has largely escaped the reporting in the mainstream media is that Khan Sheikhoun is ground zero for the Islamic jihadists who have been at the center of the anti-Assad movement in Syria since 2011. Up until February 2017, Khan Sheikhoun was occupied by a pro-ISIS group known as Liwa al-Aqsa that was engaged in an oftentimes-violent struggle with its competitor organization, Al Nusra Front (which later morphed into Tahrir al-Sham, but under any name functioning as Al Qaeda’s arm in Syria) for resources and political influence among the local population. Al Nusra has a long history of manufacturing and employing crude chemical weapons; the 2013 chemical attack on Ghouta made use of low-grade Sarin nerve agent locally synthesized, while attacks in and around Aleppo in 2016 made use of a chlorine/white phosphorous blend. Early on, the anti-Assad opposition media outlets were labeling the Khan Sheikhoun incident as a “Sarin nerve agent” attack; one doctor affiliated with Al Qaeda sent out images and commentary via social media that documented symptoms, such as dilated pupils, that he diagnosed as stemming from exposure to Sarin nerve agent. Sarin, however, is an odorless, colorless material, dispersed as either a liquid or vapor; eyewitnesses speak of a “pungent odor” and “blue-yellow” clouds, more indicative of chlorine gas. The lack of viable protective clothing worn by the “White Helmet” personnel while handling victims is another indication that the chemical in question was not military grade Sarin; if it were, the rescuers would themselves have become victims (some accounts speak of just this phenomena, but this occurred at the site of the attack, where the rescuers were overcome by a “pungent smelling” chemical – again, Sarin is odorless.)
US claims of Syria nerve gas attack: The anatomy of a lie - The claims by the US government that the Syrian government carried out a chemical weapons attack on the town of Khan Sheikhun, in southern Idlib province on April 4, have been backed by a week of nonstop media propaganda, as well as uncritical support, across the official political spectrum, for the missile strike ordered by President Trump against a Syrian base. The charges against the Syrian government are absurd and unbelievable. The campaign mounted by the Trump administration, the intelligence agencies, the Pentagon and the Democratic Party demonstrates complete contempt for the intelligence of the people, and a belief that they can lie with impunity, because nothing they say will be challenged by the servile American media. When a policeman shoots down a working-class youth, it takes months, sometimes years, to complete the investigation. In the case of the Syrian events, it required only minutes for the US government to affix blame and three days to carry out the punishment, firing 59 Tomahawk cruise missiles at a Syrian airbase. In analyzing a crime, there are three factors to investigate: motive, means and opportunity. In relation to the nerve gas attack on Khan Sheikhoun, neither the Russians nor the Syrians had any reason to carry out the attack. The Assad regime had nothing to gain from the use of nerve gas on a town that was not a significant military target. Moreover, carrying out such an attack would inevitably provoke US military retaliation, something that Assad, on the brink of complete victory in the protracted civil war, would hardly want to risk.The Syrian rebels and the US government, on the contrary, had motive, means and opportunity. The rebels would view any loss of life as a small price to pay to bring about US intervention in the civil war which they were losing. They have stockpiles of nerve gas and have shown before, in the staged attack on Ghouta in 2013 which killed many more people, a willingness and ability to carry out such a provocation. Just as importantly, the rebels and their CIA sponsors had opportunity. According to a detailed analysis of the Khan Sheikhoun attack by the respected US physicist and missile expert Theodore Postol, emeritus professor at MIT, the physical evidence strongly suggests that the delivery system for the nerve gas was a mortar shell placed on the ground, not a bomb dropped from a warplane. That means the attack was almost certainly carried out by those who controlled the ground around Khan Sheikhoun, the rebel forces linked to Al Qaeda.
ISIS Attacks US-Led Base In Southern Syria, As Assad Said To Use White Phosphorus -- With the US now engaged in military conflict with, and targeting Syrian army forces, what the Trump administration has (un)wittingly done is provide support to Islamic State, al-Qaeda, and al-Nusra and other terrorist forces, all of which have been engaging with the Assad regime in a fight in which the Syrian president has gradually seen the tide of war turn in his favor. At least until last Friday's US cruise missile attack that is. Which is why it should probably come as no surprise that, emboldened by US actions, moments ago the WSJ reported that Islamic State militants attacked a US-led coalition base (at least we now have official confirmation that there are US military bases in Syria) in southern Syria on Saturday, "triggering a fierce fight that required coalition airstrikes to repel, U.S. military officials said Sunday."The complex attack began on Saturday when Islamic State fighters detonated a vehicle bomb at a base in al-Tanf, a town in southern Syria along the Jordan border used by American special operation forces and Syrian rebels working with the U.S. coalition, the officials said.Between 20 and 30 Islamic State fighters, including some with suicide vests, then attacked the base, which is a staging ground and training facility for the U.S.-backed Syrian rebels.As the WSJ adds, Coalition forces and Syrian rebels engaged in firefights with the attackers and then called in airstrikes to repel the attack, officials said.Luckily, there was no word of any American fatalities in the attack, although next time the US forces on the ground may not be so lucky, and the resulting media storm would prompt a full reappraisal of Trump's action which by weakening Assad implicitly and directly is boosting the relative strength of the Islamic State. The Islamic State attack comes as the U.S. military is deepening its presence in Syria as part of an intensifying campaign to drive the extremist group from its de facto capital in Raqqa. For weeks, the U.S. military has been strengthening its presence along the Jordan-Syria border, according to U.S. and Jordanian officials.
Trump’s Strike has Prolonged the Syrian Tragedy -- The liberals pleasure at the proof of Trump's attack capabilities is felt even more keenly by the U.S. foreign policy establishment, all strands of which are overjoyed that the President has shown first that he is prepared to take the U.S. back onto the attack, and second that he is coming back under their control. In the words of former NATO commander James Stavridis: “With this tactically sound, professionally executed strike in response to significant human rights violations, President Trump shows above all that he is willing and able to take advice from the first-class national security team that he has assembled.” The argument, if that is not too strong a word, most widely used to justify the attack is that it will have a deterrent effect on President Assad and so reduce the likelihood of further atrocities. It therefore apparently represents some kind of limited progress for Syrian people. The chemical attack at Khan Sheikhoun was horrific, and outrage is the only human reaction. But the question is, has Trump's response really helped to limit future killing? Events since have proved the hollowness of this claim. Apart from the fact that the attack will have caused its own horrors – the Syrian government claims nine civilians have been killed – it has demonstrably escalated tensions in Syria. The Russians, for example, have responded by moving to beef up Syria's air defence systems and upgrade their ability to bring down fighter planes. They have also apparently redirected a Black Sea Frigate armed with cruise missiles to the Syrian port of Tartus. Interventionists on all sides have been emboldened. Inside Syria, calls for more Western intervention against Assad are being made with renewed vigour. In the U.S., Hilary Clinton is following up recent calls for a no-fly zone and attacks on all of Assad's airbases with a demand for “a broader strategy to end Syria's civil war.” This atmosphere is almost certain to lead to an intensification of the fighting, leading of course in turn to many many more civilian deaths. Crucially, it also makes an effective political process – the only possible path to peace – ever more remote. Hundreds of thousands of people have been killed in this desperate war. In so far as it has had an impact on the Syrian situation, Trump's attack can only have deepened and prolonged the terrible tragedy of the Syrian people.
Syria Claims US-Led Coalition Strike On ISIS Chemical Weapons Depot Has Killed Hundreds --The Syrian General Staff said that the US-led coalition struck an ISIS depot storing chemical weapons in Deir ez-Zor on Wednesday, poisoning and killing several hundred people, including civilians. As SputnikNews reports, the Syrian military said that this fact proves that terrorists possess chemical weapons."The jets of the so-called US-led coalition launched a strike at about 17:30-17:50 [local time, 14:30-14:50 GMT] on a Daesh warehouse where many foreign fighters were present. First a white cloud and then a yellow one appeared at the site of the strike, which points at the presence of a large number of poisonous substances. A fire at the site continued until 22:30 [19:30 GMT],"The Syrian army yet again denied possessing chemical weapons. According to the Syrian General Staff, the US-led coalition's strike killed several hundred people, including civilians. Hundreds were poisoned as a result of the strike on Daesh's headquarters and depot with chemical weapons."This confirms that Daesh and al-Nusra terrorists possess chemical weapons and are capable of using, obtaining and transporting it," the document said.Furthermore, if true, the US coalition just did exactly what Russia has claimed occurred in the initial chemical attack (that prompted President Trump's "Tomahawk" torrent). The Russian Defense Ministry said the day after the initial chemical weapons release that an airstrike near Khan Shaykhun was carried out by Syrian aircraft, struck a terrorist warehouse that stored chemical weapons slated for delivery to Iraq. Of course, the propaganda battle is not over so what we need now is some YouTube clip to 'prove' what the US coalition did.
For The Third Straight Month, The US Killed More Syrian Civilians Than Russia --March was the deadliest month ever recorded by Airwars during the Coalition’s campaign in Iraq and Syria. This coincided with the greatest number of munitions dropped by the allies so far in the war. The high number of alleged incidents across both countries forced Airwars temporarily to pause its full vetting of Russian airstrikes in order to keep pace with the reported Coalition toll. As of March 31st 2017, 11,554 airstrikes had been carried out in Iraq and 7,831 in Syria since the start of the Coalition campaign against so-called Islamic State. During March, reported strike actions in Syria decreased by 21%, with 434 reported strikes. In Iraq, 268 strikes were declared – a marginal decrease of 1% over February. Yet as the record tolls of civilians killed and bombs dropped show, these strike numbers do not tell the whole tale. The month actually saw the greatest number of munitions dropped during the war so far. The declared active members of the Coalition (the US, UK, France, Belgium, Denmark, Australia – along with possibly Jordan, Saudi Arabia and the UAE) dropped a total of 3,878 munitions on ISIL targets in March, according to figures published by US Air Force Central Command. This was a 13% increase over the previous month. So far this year, 10,918 munitions have been dropped on Iraq and Syria, with January, February and March each setting new records for munitions dropped. This represents a 59% rise on the number of munitions released during January – March 2016, suggesting that President Donald Trump may be following through with his election promise to “bomb the shit out of ISIS”. According to official figures provided to Airwars by CENTCOM, the US carried out 97% of all Coalition strikes in Syria during March. The remaining members of the alliance conducted just 13 strikes in Syria during the month – a drop of 28% on those carried out in February. In effect, the US is carrying out a quasi-unilateral campaign against ISIS in Syria – alongside its completely unilateral campaign against al Qaeda targets.
Migrants from west Africa being ‘sold in Libyan slave markets’ - West African migrants are being bought and sold openly in modern-day slave markets in Libya, survivors have told a UN agency helping them return home. Trafficked people passing through Libya have previously reported violence, extortion and slave labour. But the new testimony from the International Organization for Migration suggests that the trade in human beings has become so normalised that people are being traded in public. “The latest reports of ‘slave markets’ for migrants can be added to a long list of outrages [in Libya],” said Mohammed Abdiker, IOM’s head of operation and emergencies. “The situation is dire. The more IOM engages inside Libya, the more we learn that it is a vale of tears for all too many migrants.” The north African nation is a major exit point for refugees from Africa trying to take boats to Europe. But since the overthrow of autocratic leader Muammar Gaddafi, the vast, sparsely populated country has slid into violent chaos and migrants with little cash and usually no papers are particularly vulnerable. One 34-year-old survivor from Senegal said he was taken to a dusty lot in the south Libyan city of Sabha after crossing the desert from Niger in a bus organised by people smugglers. The group had paid to be taken to the coast, where they planned to risk a boat trip to Europe, but their driver suddenly said middlemen had not passed on his fees and put his passengers up for sale. “The men on the pick-up were brought to a square, or parking lot, where a kind of slave trade was happening. There were locals – he described them as Arabs – buying sub-Saharan migrants,” said Livia Manante, an IOM officer based in Niger who helps people wanting to return home. She interviewed the survivor after he escaped from Libya earlier this month and said accounts of slave markets were confirmed by other migrants she spoke to in Niger and some who had been interviewed by colleagues in Europe.