Sunday, July 23, 2017

oil prices down on rising OPEC output; another drop in US oil, gasoline supplies; backlog of unfracked wells at record high

oil prices were mixed but modestly higher over the first four days of last week, hitting a 6 week high on Thursday, but then fell nearly two and a half percent on Friday to close below $46 a barrel for the first time in a week and a half, on indications of rising OPEC oil output....after rising every day the prior week and closing at $46.54 a barrel, US oil for August delivery fell 52 cents to $46.02 on Monday, after the Drilling Productivity Report from the EIA forecast an August increase of 113,000 barrels in US shale oil production....prices bounced back on Tuesday after Bloomberg reported that Saudi Arabia was mulling output cuts on the order of 1 million barrels per day, twice what the OPEC pact required, with oil closing up 38 cents on the day at $46.40 a barrel...prices then jumped over $47 a barrel for the first time in two weeks on Wednesday, closing at $47.12, after the EIA reported a big drop in US crude, gasoline and distillate stockpiles....US oil for August delivery then rose to a six week high of $47.55 a barrel Thursday morning before falling on profit taking to close Thursday at $46.79 a barrel, as trading in the August contract expired...concurrently, oil for September delivery, the new front month contract, fell 40 cents to close Thursday at $46.92 a trading September oil on Friday, prices fell more than 2 percent for the day, wiping out the week's gains, after Reuters reported that an oil tanker-tracking firm reported July supply from OPEC would rise by 145,000 barrels per day, with September oil closing down $1.15 at $45.77 a barrel, a drop of 98 cents or almost 2% from where that contract started the week, and 77 cents lower than last week's close for August oil...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending July 14th, showed an increase in US oil imports, a decrease in our oil exports, and a decrease the amount of oil used by US refineries, which nonetheless still left us short of oil for the week, which thus meant another withdrawal from our commercial stocks of crude oil...our imports of crude oil rose by an average of 386,000 barrels per day to an average of 7,996,000 barrels per day during the week, while at the same time our exports of crude oil fell by 190,000 barrels per day to an average of 728,000 barrels per day, which meant that our effective imports netted out to 7,268,000 barrels per day during the week, 576,000 barrels per day more than during the prior the same time, our field production of crude oil rose by 32,000 barrels per day to an average of 9,429,000 barrels per day, which means that our daily supply of oil from net imports and from wells totaled an average of 16,797,000 barrels per day during the cited week... 

during the same week, refineries reportedly used 17,119,000 barrels of crude per day, 125,000 barrels per day less than they used during the prior week, while at the same time 676,000 barrels of oil per day were being pulled out of oil storage facilities in the US....thus, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was 254,000 more barrels per day than what refineries reported they used during the account for that discrepancy, the EIA needed to insert a (-254,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as "unaccounted for crude oil"...

details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 7,841,000 barrels per day, which was 1.7% below the imports of the same four-week period last year...the 676,000 barrel per day decrease in our total crude inventories shows up as a 675,000 barrel per day withdrawal from our commercial stocks of crude oil while oil stored in our Strategic Petroleum Reserve was unchanged, so there's some weird rounding in one or both of those metrics....this week's 32,000 barrel per day increase in our crude oil production resulted from a 30,000 barrel per day increase in oil output from wells in the lower 48 states and a 2,000 barrels per day increase in oil output from Alaska...the 9,429,000 barrels of crude per day that were produced by US wells during the week ending July 14th was 7.5% more than the 8,770,000 barrels per day we were producing at the end of 2016, and up by 11.0% from our 8,494,000 barrel per day of oil output during the during the same week a year ago, while it was still 1.9% below the June 5th 2015 record US oil production of 9,610,000 barrels per day... 

US oil refineries were operating at 94.0% of their capacity in using those 17,119,000 barrels of crude per day, which was down from 94.5% of capacity the prior week, but still above normal for this time of year...the amount of oil refined this week was also above the seasonal norm, as it was 1.5% more than the 16,863,000 barrels of crude per day.that were being processed during week ending July 15th, 2016, when refineries were operating at 93.2% of capacity, and roughly 10% above the 10 year average of 15.6 million barrels of crude refined per day for the second week of July....

with the slowdown in refining, gasoline production from our refineries decreased by 373,000 barrels per day to 10,096,000 barrels per day during the week ending June 14th, which was still fractionally higher than the 10,050,000 barrels of gasoline that were being produced daily during the comparable week a year the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 404,000 barrels per day from last week's all time high to 4,945,000 barrels per day, which was also down by 1.2% from the 5,004,000 barrels per day of distillates that were being produced during the week ending July 15th last year.....   

with the drop in our gasoline production, our end of the week supply of gasoline decreased by 4,445,000 barrels to 231,211,000 barrels by July 14th, the 5th drop in gasoline inventories in a row....that was despite a 194,000 barrels per day drop to 9,592,000 barrels per day in our domestic consumption of gasoline, and in spite of a 68,000 barrel per day increase to 591,000 barrels per day in our imports of gasoline... meanwhile, our gasoline exports increased by 26,000 barrels per day to 573,000 barrels per day at the same time, partially offsetting the increase in gasoline imports....with the week’s decrease in our gasoline supplies, our gasoline inventories are now 4.1% below last year's seasonal high of  241,000,000 barrels for this week of the year, but are still 6.9% higher than the 216,285,000 barrels of gasoline we had stored on July 17th of 2015, and roughly 7.4% above the 10 year average of gasoline supplies for this time of year…  

with a similar sizable drop in our distillates production, our supplies of distillate fuels fell by 2,137,000 barrels to 151,416,000 barrels during the week ending July 14th, after increasing by 3,131,000 barrels the prior week....other than the drop in production, the major factor in this week's decrease in distillates supplies was a 467,000 barrel per day increase to 4,334,000 barrels per day in the amount of distillates supplied to US markets, a proxy for our consumption...meanwhile our exports of distillates fell by 127,000 barrels per day to 1,042,000 barrels per day, while our imports of distillates rose by 1,000 barrels per day to 126,000 barrels per day....with this week's increase, our distillate inventories are nearly 1% lower than the 152,783,000 barrels that we had stored on July 15th, 2016, but they remain 7.0% higher than the distillate inventories of 141,515,000 barrels that we had stored on July 17th of 2015, and roughly 12.6% above the 10 year average for distillates stocks for this time of July...

finally, with the increase in oil imports, and the relatively slower refining, our commercial supplies of crude oil decreased for the 13th time in the past 15 weeks, as our commercial oil inventories fell by 4,727,000 barrels to 490,623,000 barrels as of July 14th, leaving us with the least oil in storage since the end of January.. however, we still finished the week with 2.4% more crude oil in storage than the 479,012,000 barrels we had stored at the end of last year, and a small fraction more crude oil in storage than the 488,830,000 barrels of oil in storage on July 15th of 2016....compared to historical figures, when the oil glut was still building, this week still saw 13.6% more crude than the 431,836,000 barrels in of oil that were in storage on July 17th of 2015, 44.6% more crude than the 339,328,000 barrels of oil we had in storage on July 18th of 2014, and 45.7% more than the 10 year average of oil supplies for this time of year ...       

This Week's Rig Count

US drilling activity stalled for the 3rd time in 4 weeks during the week ending July 21st, following 23 consecutive weeks of increases....Baker Hughes reported that the total count of active rotary rigs running in the US fell by 2 rigs to 950 rigs in the week ending Friday, which was still 488 more rigs than the 462 rigs that were deployed as of the July 22nd report in 2016, even though it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil decreased by 1 rig to 764 rigs this week, which was still up by 393 oil rigs over the past year, while it was still far from the recent high of 1609 rigs that were drilling for oil on October 10, the same time, the count of drilling rigs targeting natural gas formations also decreased by 1 rig to 186 rigs this week, which was still 98 more rigs than the 88 natural gas rigs that were drilling a year ago, but way down from the recent natural gas rig high of 1,606 rigs that were deployed on August 29th, 2008...

however, new drilling started from 2 platforms in the Gulf of Mexico offshore of Louisiana this week, which brought the Gulf of Mexico activity count up to 23 rigs, up from 18 rigs in the Gulf and a total of 19 offshore a year ago, when there was also a rig deployed offshore of Alaska, in the Cook Inlet...

the count of active horizontal drilling rigs decreased by one rig to 803 rigs this week, the first drop in horizontal drilling since November 11th of 2016...however, active horizontal rigs were still up by 446 rigs from the 357 horizontal rigs that were in use in the US on July 22nd of last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....meanwhile, the vertical rig count was down by 4 rigs to 72 vertical rigs this week, which was still up from the 61 vertical rigs that were deployed during the same week last year....on the other hand, the directional rig count was up by 3 rigs to 75 directional rigs this week, which was also up from the 44 directional rigs that were deployed during the same week last year...

as usual, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary 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 both tables, the first column shows the active rig count as of July  21st, the second column shows the change in the number of working rigs between last week's count (July 14th) and this week's (July 21st) count, the third column shows last week's July 14th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 22nd of July, 2016... 

July 21st 2017 rig count summary

clearly, there's a lot of minus signs on this week's table, something we haven't seen much of this past year...the two most active states, Texas and Oklahoma, were down 3 rigs each, with decreases in the Barnett near Dallas-Ft Worth and the Eagle Ford of south Texas contributing to the Texas drop, while Oklahoma dropped rigs in the Arkoma Woodford and the Mississippian...meanwhile, Louisiana added 4 rigs, with additions in the Gulf of Mexico and the Haynesville...once again, the number of drilling rigs working in the Utica and the Marcellus were unchanged, and hence there was also no change in drilling activity in Ohio, Pennsylvania, or West Virginia...natural gas rigs ended up down one despite the addition of two in the Haynesville, however, as one natural gas rig was pulled from the Arkoma Woodford and two were removed from other basins not individually itemized by Baker Hughes...of the states not included on the above list of major producers, Alabama got rid of one rig and Illinois got rid of two; that left Alabama with two rigs, still up from just 1 rig throughout last July, and left Illinois with one rig, down from the 3 that were running in the state last July 22nd...meanwhile, Kentucky saw two rigs start up in the the state's first drilling since June 2nd, also an increase from a year ago, when there were no rigs active in the state...

DUC well report for June

this past week also saw the release of the EIA's Drilling Productivity Report for July, which includes the EIA's June data for drilled but uncompleted oil and gas wells in the 7 most productive US shale basins...once again, this report showed a large increase in uncompleted wells nationally, entirely because of dozens of newly drilled but uncompleted wells (DUCs) in the two Texas oil basins, the Permian basin of west Texas and the Eagle Ford in the south.... for all 7 sedimentary basins covered by this report, the total count of DUC wells rose from 5,877 wells in May to 6031 wells in June, the eighth consecutive monthly increase in uncompleted wells, and the highest number of such unfracked wells in the short history of this we know from the weekly rig counts,  horizontal drilling has rapidly expanded over the past year, more than doubling over that period, and as a result a shortage of competent fracking crews has developed, such that existing fracking crews are unable to keep up with the number of newly drilled wells...yet another article this week tells us that skilled worker shortages are hampering fracking operations, noting 200 frack crew job openings listed for North Dakota alone...over the 2 and a half year oil field slump and associated layoffs that began in early 2015, most frackers had gone nearly two years with just skeleton fracking crews still working in most basins around of the country, and as a result many of those who had had been working in the oil fields before the bust had since found work elsewhere, and have no interest in returning to boom/bust oil work...furthermore, fracking crew retirements were up 33 percent last year, & intelligent young people dont want to work in an oilfield any more than they want any kind of dirty, manual labor job... fracking has also become more complex and technically demanding over that period, with 50 stage fracks explosively driving several hundred pounds of proppant per foot of lateral not uncommon, so putting together a fracking crew capable of correctly & accurately executing the current fracking techniques has become that much more difficult...

a total of 1,026 new wells were drilled in the 7 basins covered by this report during June, but only 872 drilled wells were completed, thus accounting for the 154 DUC well increase for the has been the case all year, the June DUC increases were oil wells, with most of those in the Permian basin...the Permian saw its total count of uncompleted wells rise by 130, from 2,114 DUC wells in May to 2,244 DUCs in June, as 475 new wells were drilled into the Permian but only 345 wells in the region were the same time, DUC wells in the Eagle Ford of south Texas rose by 42, from 1,364 DUC wells in May to 1,406 DUCs in June, as 187 wells were drilled in the Eagle Ford in June but only 145 drilled wells were addition, DUC wells in the Bakken of North Dakota increased by 8 to 819, as 92 wells were drilled but just 84 Bakken wells were fracked, while the Niobrara chalk of the Rockies front range saw their uncompleted well inventory increase by 2 wells to 663, as 142 wells were drilled into the Niobrara, while 140 wells were fracked during the same period....on the other hand, the Marcellus DUC count fell by 20 wells, from 663 DUCs in May to 643 DUCs in June, as 60 Marcellus wells were drilled while 80 were fracked...likewise, Ohio's Utica shale showed a decrease of 11 uncompleted wells and thus had only 62 uncompleted wells remaining at the end of June, as 23 new wells were drilled into the Utica during the month while 34 Utica wells were completed...meanwhile, the Haynesville shale of Louisiana was the only natural gas basin to see a DUC well decrease, as their uncompleted well inventory rose by 3 wells to 194, as 47 wells were drilled into the Haynesville, while 44 wells were fracked in the same region...for the month, DUCs in the 4 oil basins tracked by in this report (ie the Bakken, Niobrara, Permian, and Eagle Ford) increased by 182 wells to 5,132 wells, while the DUC count in the natural gas regions (the Marcellus, Utica, and the Haynesville) decreased by 28 wells to 899 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and gas... 


Drilling in Ohio parks? Legislators' constitutionally suspect budget amendment: Thomas Suddes - - In Ohio, lobbies for public utilities, insurance companies and banks sit pretty at the Statehouse, with Ohio's nursing home and oil-and-gas lobbies also at the head table. No surprise, then, that Ohio's Republican-run House overrode some Medicaid-related budget items that Republican Gov. John Kasich vetoed. If the Senate, also GOP-run, also overrides those item-vetoes, the net effect would be to limit Kasich's options for managing the Ohio Medicaid program's nursing home costs. Then there's the Kasich item-veto about a hot-button environmental issue: gas and oil exploration.  The fracking boom in heavily Republican Appalachia seems to have made oil and gas lobbyists nothing but good guys in the eyes of Republican legislators. So, they've spurned Kasich's bids to raise Ohio's puny severance taxes. In 2011, Kasich signed a bill passed by the legislature's Republicans that opened state parks to oil and gas exploration. (Got a hard hat, Bambi?) The bill also created the Oil and Gas Leasing Commission. The commission's job is to select the "highest and best" bidders for oil and gas leases of state-owned land.   But Kasich hasn't appointed anyone to the commission. No commissioners, no leases; no leases, no drilling. That evidently has ticked off some Republicans in the General Assembly. They folded an amendment into House Bill 49, Ohio's new budget. The amendment would strip Kasich of the power to appoint the members of the Oil and Gas Leasing Commission. Instead, the budget amendment would give Ohio House Speaker Clifford Rosenberger, of southwest Ohio's Clinton County, and state Senate President Larry Obhof, of Medina, both Republicans, the power to appoint the Leasing Commission's members. Kasich (as he should have) item-vetoed the Oil and Gas Leasing Commission budget amendment, saying that what the legislature was trying to do "would transfer appointment authority ... from the governor to the General Assembly." The House, in a 68-29 tally, overrode Kasich's line-item veto. If the Senate does, too, someone just might consider asking a court what separation of powers means in Ohio. At the moment, the answer seems to be, "Not much."

Common Pleas Court will now consider county charter issue –   The Athens County Common Pleas Court is expected to hear a protest today (Monday) of a county Board of Elections’ decision to deny as invalid a proposed county charter for the November ballot. Judge George P. McCarthy is scheduled to hear arguments in the protest at 2:30 p.m. The Board of Elections rejected a proposed county charter for the third year in a row last Monday, not due to a lack of valid signatures but because board members said it didn’t include a county executive position required under Ohio Revised Code statute for alternative forms of government. The Athens County Bill of Rights Committee, which submitted the petitions, charged that the elections board erred in its decision and filed a protest of it. The committee has argued that the charter proposal falls under Ohio constitutional guidelines and not the Ohio Revised Code statute that covers alternative forms of government. The Bill of Rights Committee argued that charters formed under the state constitution are distinct and separate from alternative governments established under Ohio Revised Code. Members of the county Board of Elections said, on the other hand, that charters formed under the state constitution must still conform to the laws for alternative government set fourth in the ORC. As with initiatives in the previous two years, this charter proposal doubles as an effort to keep oil and gas horizontal hydraulic fracturing (fracking) out of Athens County, through prohibiting the use of local water for fracking operations. It also would outlaw future fracking waste-injection wells, of which Athens County already has several in operation. If the charter is determined by Judge McCarthy to be valid after Monday’s hearing, the next step will be for the court to notify the Board of Elections and the Athens County Board of Commissioners. At that point, the commissioners would have to certify the resolution no later than July 19 to the elections board.

Feds investigating Ohio pipeline over ‘misstatements’ | TheHill: Federal officials are investigating the developer building a controversial natural gas pipeline over alleged “misstatements” regarding its construction in Ohio. Federal Energy Regulatory Commission (FERC) staff said in a Thursday notice that they preliminarily determined that Energy Transfer Partners, developer of the Rover pipeline, “did not fully and forthrightly disclose all relevant information to the commission” in paperwork filed for a federal permit. The disclosure of the FERC investigation and preliminary finding are the latest problem for Rover, whose developer also built and operates the controversial Dakota Access pipeline.Ohio officials have accused Energy Transfer of spilling drilling waste that includes diesel fuel at a pipeline construction site, where it allegedly entered wetlands near a river. That spurred FERC to order Energy Transfer to stop horizontal drilling for the pipeline temporarily. The Thursday finding regards a historic house that Energy Transfer purchased and demolished in Ohio for the construction. State historic preservation officials say that the house was a protected historic landmark and its demolition was illegal. “In the application and other docketed filings, Rover falsely promised it would avoid adverse effects to a historic resource that it was simultaneously working to purchase and destroy,” FERC wrote in its notice. “Rover subsequently made several misstatements in its docketed response to the commission’s questions about why it had purchased and demolished the resource.” 

Spills, Fines and Route Disputes Plague Rover Pipeline -- The Rover Pipeline project in Ohio faces continuing problems, with more spills of drilling mud , ongoing questions about diesel fuel contamination, and orders issued last week by both the Ohio Environmental Protection Agency (EPA) and the Federal Energy Regulatory Commission (FERC).  "The significant thing that is very new here is that Ohio EPA has said that they are working very closely with the Federal Energy Regulatory Commission," observed Cheryl Johncox of the Sierra Club . FERC issued a July 12 order that echoes multiple directives from the Ohio EPA's July 7 order to Energy Transfer Partners.   FERC also issued another notice of violation on July 13 , claiming that Energy Transfer Partners "did not fully and forthrightly disclose all relevant information" before demolishing a historic home . Meanwhile, more problems with the project have also emerged in Michigan and West Virginia.  On July 2, drilling for the Rover Pipeline project released 5,000 more gallons of drill slurry into a Stark County area where the company was working on a five-foot borehole that would go under the Tuscarawas River. Work was already underway to deal with a previous spill in that area.  On July 3, another "inadvertent release" of 1,500 to 2,500 gallons of drilling mud took place at a nearby area ten feet from the river. This month's leaks are a tiny fraction of the millions of gallons already released by the Rover Pipeline's drilling work in Ohio. The Ohio EPA issued a proposed administrative order against Energy Transfer Partners in May. On July 7, Ohio EPA Director Craig Butler issued final findings and orders to Energy Transfer Partners, adding the new releases to its initial list of charges. The order also notes that some previously-leaked material had subsequently been found to contain diesel fuel . The fluids are defined as "industrial waste" under Ohio law and must go to a licensed landfill or other authorized location, the July 7 order noted. The total fines sought from the company so far exceed $900,000 , and the matter has been referred to the Ohio Attorney General's office for possible further action. Announcing the referral on July 10, Butler described the company's response leading up to the action as "basically a stiff arm to the state of Ohio."

Rover gas pipeline builder faces investigation by federal regulators - Federal regulators will investigate Energy Transfer Partners, the company behind the controversial Dakota Access pipeline in North Dakota, for alleged violations associated with its $4.2 billion Rover natural gas pipeline in Ohio.The investigation comes as the number of violations and fines against the company over the Rover project continue to grow. "Rover falsely promised it would avoid adverse effects to a historic resource that it was simultaneously working to purchase and destroy,"FERC wrote in its Notice of Alleged Violations. "Rover subsequently made several misstatements in its docketed response to the Commission's questions about why it had purchased and demolished the resource." The historic resource in question was the Stoneman House, a historic home built in 1843 in Dennison, Ohio.  A Dec. 5, 2016, letter from FERC to the federal Advisory Council on Historic Preservation stated that the house, which was eligible for inclusion in the National Register of Historic Places, was located across the street from a proposed compressor station for the pipeline. FERC officials expressed concern to pipeline company representatives about the visual impact of the compressor station on the historic house in February 2014,according to the letter. Rover purchased the Stoneman House on May 11, 2015, and a year later, without notifying FERC, demolished the building in late May of 2016. Unaware that the building had just been destroyed, FERC recommended on July 29, 2016, that Rover develop a revised visual screening plan for the proposed compressor station to shield views from the historic property. "I think it's somewhat consistent with this company and what they are doing in Ohio," said Craig Wilson, an attorney who represents approximately 140 clients, mostly farmers concerned about damage to their farmland from the pipeline. "They just go do things and ask for forgiveness after the fact." Heavy rains in Ohio this spring have caused trenches dug by the pipeline company to flood, Wilson said. The company then pumped the water onto surrounding agricultural fields, flooding crops, according to Wilson, who has petitioned FERC to investigate the damage. In addition, he said, the trench work has mixed topsoil that is good for growing crops with underlying, nutrient-poor layers that will permanently reduce crop yields once the work is completed. "We've never experienced anything like this company in Ohio before," he said. "They had that culture since day one when they came into Ohio. They were running a pipeline through here, and they were basically telling the landowners to get out of the way."

Dakota Access developer’s new pipeline rankling regulators  — The company that developed the Dakota Access oil pipeline is entangled in another fight, this time in Ohio where work on its multi-state natural gas pipeline has wrecked wetlands, flooded farm fields and flattened a 170-year-old farmhouse. The federal commission that oversees gas pipelines told Dallas-based Energy Transfer Partners last week to clean up its mess before it will allow the Rover Pipeline to flow. New drilling on unfinished sections also remains halted after 2 million gallons (7.6 million liters) of drilling mud seeped into a wetland in the spring.While the $4.2 billion pipeline that will carry gas from Appalachian shale fields to Canada, and states in the Midwest and Gulf Coast, hasn't been besieged by protests that erupted in North Dakota, opponents say the spills and snags highlight the risks that come with building huge pipelines needed for growing the natural gas and oil industries. Much of the 700-mile (1,126-kilometer) Rover Pipeline is being built across Ohio and will extend into Michigan, Pennsylvania and West Virginia. Ohio's environmental regulators and landowners say construction crews have been laying pipe at warp speed since March to meet the company's ambitious plan of finishing the first phase this month and the entire project by November. "As soon as they started, they began having problems," said Craig Butler, director of Ohio's Environmental Protection Agency. "It's just a function of them moving too quickly, trying to meet a deadline and cutting corners."

Kentucky accused of secrecy in radioactive fracking waste dumping case - The Courier-Journal An Estill County citizens group has accused state environmental regulators of illegal secrecy during its enforcement case against a dump that accepted radioactive drilling waste from out-of-state fracking operations.Both sides squared off Wednesday in Franklin Circuit Court, arguing before Judge Phillip Shepherd.The group Citizens of Estill County wants to read 89 email chains between lawyers for the Kentucky Energy and Environment Cabinet and lawyers representing the Blue Ridge Landfill. It wants to make sure a pending corrective action plan required by an agreement between the state and landfill operation protects the public and the environment, and the emails will help determine that, said Mary Cromer, a lawyer who presents the citizen group. The state incorrectly argues that it doesn't have to release the emails because it shares a common interest with the landfill, among other exemptions Kentucky claimed, Cromer said. In fact, she argued, that state's role as a regulator is different from an entity it is regulating. For their part, cabinet officials said both sides shared an interest in reaching an agreement without more costly litigation, and that state officials have gone beyond their normal practices to seek public comments and meet with the Estill group before making its enforcement decisions.

Fracking: report warns of risks associated with shale gas extraction - Residents, environmentalists and pastoralists have welcomed a “balanced” report on fracking in the Northern Territory, which identified a number of risks associated with the industry and a loss of community trust. The NT government enacted a moratorium on hydraulic fracturing in the NT when it took office in August, establishing an inquiry to examine if it could be done safely, following concerted campaigning by Indigenous land owners, pastoralists and environmentalists. The NT is estimated to have more than one-third of Australia’s shale gas resources, 70% of which are found in the Beetaloo sub-basin. The site has received about half of the $505m of exploration investment since 2010 and is the main target for future development. The interim report from the inquiry, run by a panel of experts, said its “preliminary view” was that the use of surface water for shale gas operations should be prohibited in arid and semi arid areas. Groundwater should not be permitted for use in fracking without proof there would be no adverse impacts, it said, and fracking during the Top End’s wet season should not be allowed at all because of the potential for storage ponds to overflow. The report noted most national parks, reserves and areas of high conservation were not currently “no go zones” and could be subject to petroleum exploration permits applications. The panel said it would consider the risks a shale gas industry may have on those areas, as well as residential areas, agricultural land, sacred sites and tourism icons should be excluded from potential fracking wells. The report also identified several land-related risks, including detracting from iconic landscapes, damage to biodiversity and habitat loss, spreading weeds and changing fire regimes, as well as potential risks to public health including contamination of aquifers and airborne chemicals. 

Wastewater from Hydraulic Fracturing May Cause Pollution with Radioactive Material: Hydraulic fracturing has led to a domestic gas and oil boom in the U.S.; however, its fast growth has raised questions about the billions of gallons of wastewater that result from this process.  Researchers now state that treating the wastewater and releasing it into surface waters in Pennsylvania has contaminated water with radioactive material and endocrine-disrupting chemicals. The study is published in ACS' journal Environmental Science & Technology.A report in Pennsylvania estimates that 10,000 unconventional gas and oil wells in Marcellus Shale generated 1.7 billion gallons of wastewater in 2015. The facilities that collect the water offer only limited treatment before releasing it to surface waters. Bill Burgos and Collaborators at Penn State, Colorado State and Dartmouth wanted to examine the impact these water facilities may have in treating and releasing fracking wastewater.  The Researchers sampled porewaters and sediments from a lake located downstream from two facilities that treat fracking wastewater in Pennsylvania. The analysis detected the presence of peak concentrations of salts, radium, alkaline earth metals and organic chemicals in the same sediment layer. The two major classes of organic contaminants detected were polycyclic aromatic hydrocarbons, which are carcinogens and nonylphenol ethoxylates, which are endocrine-disrupting chemicals.The highest concentrations detected in sediment layers were deposited 5 to 10 years ago during a peak phase of fracking wastewater disposal. High levels of radium were also found in water as far as 12 miles downstream of the treatment plants. According to Researchers, the potential threats associated with this contamination are unknown; however, they express that modified regulations of wastewater disposal could help protect human health and the environment.

Fracking waste contaminates Penn. watershed with radioactive material -Stream sediments in Pennsylvania downstream from two fracking wastewater treatment facilities were found to contain radioactive material and carcinogens, according to study scientists from Penn State, Colorado State and Dartmouth universities.  The study’s findings, published Thursday, came after Penn State’s Bill Burgos and his fellow scientists sought to discover what had been the effect of the strategy of treating and releasing fracking wastewater, according to the Independent. They sampled sediments and groundwater from the Conemaugh River water, downstream from two facilities that were created to make the water used in the fracking process fit for release into the environment. “Isotopic ratios of 226Ra/228Ra and 87Sr/86Sr identified that peak concentrations of Ra and Sr were likely sourced from wastewaters that originated from the Marcellus Shale formation,” according to the study Watershed-Scale Impacts for Surface Water Disposal of Oil and Gas Wastewater in Western Pennsylvania. Their analysis detected peak concentrations of radium, chloride, barium, strontium, radium and organic compounds in Conemaugh River watershed. The two major classes of organic contaminants included nonylphenol ethoxylates, endocrine-disrupting chemicals, and polycyclic aromatic hydrocarbons, known carcinogens.  The highest concentration of radium was just 14 percent below the level at which it would have to be treated as radioactive waste in some US states.

Treated hydraulic fracturing wastewater may pollute area water sources for years --- Although studies show that hydraulic fracturing does produce less greenhouse emissions than older technologies like coal, it does come with other environmental concerns. At the top of that list is the wastewater it produces, which contains a multitude of potentially hazardous contaminants. In 2015 alone, Pennsylvania's unconventional gas wells produced nearly 1.7 billion gallons of wastewater. While there are facilities dedicated to treating the wastewater before its release, they provide only limited treatment, leaving many of the pollutants intact. To gain a better understanding of the impact of these contaminants on the environment, Penn State environmental engineering professor Bill Burgos and his colleagues studied sediment samples collected from a reservoir in western Pennsylvania. The study was published in the most recent issue of Environmental Science & Technology. " The objective of the study was to use the sediments that had built up to reconstruct the industrial oil and gas activity that was happening during the boom of the Marcellus Shale development in Pennsylvania, from roughly 2008 to 2015, in order to gain a better understanding of the historical impact of oil and gas wastewater disposal. "You need a lake or a reservoir that allows sediments to lay down undisturbed in those layers," said Burgos. "The words we use are a 'coherent temporal record.' You only get a coherent temporal record if it's a lake that continuously accumulates sediments and isn't subject to a flood or scour." The researchers chose the Conemaugh River Lake in western Pennsylvania. This site offered high wastewater concentration and low wastewater dilution, as well as a dam-controlled reservoir. The results determined that the discharge of oil and gas wastewater did impact water quality and sediment quality on a larger scale than previously thought. Large quantities of oil and gas wastewater with high loads of chloride, barium, strontium, radium and organic compounds left high concentrations in the sediments and pore water. Specifically, two important types of organic contaminants were found: endocrine disrupting chemicals (nonylphenol ethoxylates) and carcinogens (polycyclic aromatic hydrocarbons). The highest concentrations coincided with sediment layers deposited five to 10 years ago, during the peak of Marcellus Shale activity. "The isotopes confirm these are unconventional oil and gas wastes," said Burgos. Some isotope ratios, such as strontium and radium, are rather unique to the Marcellus formation. This current study demonstrates that elevated levels were found as far away as 12 miles downstream from the treatment plants.

Thousands of Miles of Pipelines Enrage Landowners, Threaten the Future of Our Planet --They landed, one after another, in 2015: plans for nearly a dozen interstate pipelines to move natural gas beneath rivers, mountains and people's yards. Like spokes on a wheel, they'd spread from Appalachia to markets in every direction. Together these new and expanded pipelines—comprising 2,500 miles of steel in all—would double the amount of gas that could flow out of Pennsylvania, Ohio and West Virginia. The cheap fuel will benefit consumers and manufacturers, the developers promise. But some scientists warn that the rush to more fully tap the rich Marcellus and Utica shales is bad for a dangerously warming planet , extending the country's fossil-fuel habit by half a century. Industry consultants say there isn't even enough demand in the U.S. for all the gas that would come from this boost in production.   And yet, five of the 11 pipelines already have been approved. The rest await a decision from a federal regulator that almost never says no. The Federal Energy Regulatory Commission (FERC) is charged with making sure new gas pipelines are in the public interest and have minimal impact. This is no small matter. Companies given certificates to build by FERC gain a powerful tool: eminent domain, enabling them to proceed whether affected landowners cooperate or not.  Only twice in the past 30 years has FERC rejected a pipeline out of hundreds proposed, according to an investigation by the Center for Public Integrity and StateImpact Pennsylvania , a public media partnership between WITF in Harrisburg and WHYY in Philadelphia. At best, FERC officials superficially probe projects' ramifications for the changing climate , despite persistent calls by the U.S. Environmental Protection Agency ( EPA ) for deeper analyses. FERC's assessments of need are based largely on company filings. That's not likely to change with a pro-infrastructure president who can now fill four open seats on the five-member commission.

Catholic nuns in Pa. build a chapel to block the path of a gas pipeline planned for their property -- Linda Fischer has always known this land as sacred. Now the 74-year-old nun and her sisters in their Catholic order suddenly find themselves fighting to protect the land from an energy company that wants to put a natural gas pipeline on it. “This just goes totally against everything we believe in — we believe in sustenance of all creation,” she said. The pipeline company first sought without success to negotiate with the nuns. Now as Williams Cos. tries to seize the land by eminent domain, the order is gearing up for a fight in the courtroom — and a possible fight in the field, as well. There, smack in the path of the planned pipeline, the nuns have dedicated a new outdoor chapel. “We just wanted to symbolize, really, what is already there: This is holy ground,” said Sister Janet McCann, a member of the national leadership team of the Adorers of the Blood of Christ, whose 2,000 nuns around the world have made environmental protection and activism a key part of their mission. The sisters’ chapel is a rudimentary symbol, but a powerful one: eight long benches, a wooden arbor and a pulpit, all on a straw-coated patch of land carved out of the cornfield. More than 300 people came to the chapel’s consecration service July 9. Since then, neighbors of many faiths have been stopping by to pray, leaving ribbons to mark their solidarity. The Adorers and their supporters’ nascent faith-based resistance, which has been compared to the anti-pipeline activism led by Native Americans at Standing Rock, N.D., could eventually set a precedent in a murky area of religious freedom law.  U.S. appeals court judges have ruled inconsistently on whether federal law protects religious groups from eminent domain in such cases. The U.S. Court of Appeals for the 3rd Circuit, which covers Delaware, New Jersey and the part of Pennsylvania where the nuns reside, has yet to issue a ruling on the matter. Legal observers say a case could make its way to the U.S. Supreme Court.

Nuns Head to Court to Defend Chapel Blocking Pipeline Route - A group of about 30 Catholic nuns in Lancaster County, Pennsylvania, who constructed an open-air chapel on the proposed path of natural gas pipeline, are in court on Monday fighting efforts by the fossil fuel company trying to seize their land.  The sisters appeared at a U.S. District courthouse in Reading for an 11:00 a.m. hearing, following two prayer vigils earlier Monday morning.  About six months ago, they came up with the idea to build the chapel on their farmland as "a visible symbol of their commitment to the land," Mark Clatterbuck, of Lancaster Against Pipelines —which helped build the chapel— told the York Daily Record, a local paper.  "We have to pay reverence to the land God has given us," said Sister George Ann Biscan. "We honor God by protecting and preserving His creation."   Friday, seeking a federal injunction, the Adorers filed a complaint in the U.S. District Court for the Eastern District of Pennsylvania, claiming the Federal Energy Regulatory Commission (FERC), which regulates interstate natural gas pipelines, and its commissioner have violated the Religious Freedom Restoration Act, "by forcing the Adorers to use their land to accommodate a fossil fuel pipeline," the order said in a statement .  The nuns, the statement continued, "allege that FERC's action places a substantial burden on their exercise of religion by taking their land, which they want to protect and preserve as part of their faith, and forces the Adorers to use their land in a manner and for a purpose they believe is harmful to the Earth."  The complaint followed an emergency motion filed by the pipeline's developer, Tulsa-based Williams Companies, "in an attempt to take immediate possession of the property and get permission to deploy U.S. Marshals on the nuns and 'any third parties authorized by the sisters to be on the property,'" Sojourners reported .  The pipeline, called "Atlantic Sunrise," is slated to stretch across more than 180 miles of central Pennsylvania and link to the company's Transco pipeline, which carries gas from the Gulf of Mexico to the East Coast. FERC approved the project in February, and Williams began construction in early spring.

Is Putin funding anti-fracking groups? Republicans think so — and so did Hillary Clinton – Salon -- Does Russian President Vladimir Putin want to stop hydraulic fracturing, or “fracking,” in Western nations the same way he allegedly wanted to harm the electoral chances of 2016 Democratic nominee Hillary Clinton? According to two Texas Republican congressmen, the answer is yes. It’s entirely likely that the open letter on this subject sent by Reps. Lamar Smith and Randy Weber on June 29 to Treasury Secretary Steve Mnuchin was partly motivated by a desire to shift public attention from President Donald Trump’s burgeoning Russian-influence scandal. But the allegations have some support from non-Republicans. One person who appears to believe that the Russians are interested in stopping oil and gas extraction via fracking, in fact, is Hillary Clinton herself. In a private, paid speech delivered in Canada on June 18, 2014, the former secretary of state denounced “phony environmental groups” she claimed had been created by Russia to oppose fracking.“We were even up against phony environmental groups, and I’m a big environmentalist, but these were funded by the Russians to stand against any effort, oh that pipeline, that fracking, that whatever will be a problem for you, and a lot of the money supporting that message was coming from Russia,” Clinton said, according to an excerpt from the speech created by her presidential campaign staffers. It is unclear what region of the world Clinton was discussing, since the full text of her speech has never been made available by Clinton or by tinePublic, the Canadian marketing firm that paid her to deliver it. Ironically, the excerpt that is publicly available was among the tens of thousands of emails released by WikiLeaks, allegedly thanks to the efforts of Russian hackers who copied them from the email account of John Podesta, Clinton’s former campaign manager.Clinton’s speech was delivered to an audience in Edmonton, the capital of Alberta, the Canadian province that produces more petroleum than any other within the country.

A pipeline cutting through the iconic Appalachian Trail sparks a fight over natural gas expansion - - The stretch of Appalachian Trail through the Blue Ridge Mountains here is prized by hikers from around the world for its open ridgelines, spectacular geologic formations and challenging slopes.But one of the country’s most iconic viewsheds could soon be changed forever to make room for an energy project favored not just by fossil fuel industry boosters like President Trump, but also Virginia’s Democratic governor.A natural gas developer with some powerful political allies is nearing final approval to plow a pipeline corridor as wide as 150 feet, tracking the trail for dozens of miles and burrowing through it at one point.Amid the nation’s ongoing boom in natural gas production, federal rules have made pipeline construction an extremely lucrative enterprise, even in markets where the need is hotly debated.To many, the Mountain Valley Pipeline has become a symbol of the building frenzy. Concern stretches all the way to California, where climate activists worry that such projects are undermining their efforts. Leaders of the Pacific Crest Trail Assn. fear that gas companies feel increasingly emboldened to impose an ever bigger footprint on protected lands.“Everybody, not only in the East, but around every national scenic trail, should be concerned about this,” said Andrew Downs, regional director with the Appalachian Trail Conservancy, the 90-year-old nonprofit organization entrusted by the National Park Service decades ago with the task of managing the trail. The conservancy has never found it necessary to get involved in a pipeline fight in this way, but times have changed. “We’ve never seen pipelines of this size and magnitude,” Downs said.The conservancy is joined by preservationists deeply concerned that the pipeline route would cut through seven historic districts. Those include the picture-postcard village of Newport, a place where generations of families have picnicked by the 100-year-old covered bridge and gathered at the 164-year-old church in the center of town. The pipeline has pushed Newport onto the list of “most endangered historic places” compiled by the group Preservation Virginia.

MPLX's Expanded Plan for Piping Marcellus/Utica NGLs and Field Condensate -- MPLX is wrapping up a three-part, $500 million plan to facilitate the pipeline transport of large volumes of field condensate and natural gasoline from the Marcellus and Utica plays to Midwest refineries, western Canadian heavy-crude shippers and other end users. But “wrapping up” may be the wrong phrase. In fact, MPLX sees its Cornerstone Pipeline, Utica Build-Out Projects and other elements of the company’s Midwest pipeline push as part of a larger and continuing effort to deal with remaining inefficiencies in the delivery of Marcellus/Utica liquids to market. Today we review what has been accomplished so far, and what expansions and enhancements to MPLX’s pipeline plan may be in the offing.  It would be difficult (if not impossible) to find anyone who has done more than MPLX (a master limited partnership formed by Marathon Petroleum Corp. (MPC) and its MarkWest Energy Partners unit) to address the challenges of increasing volumes of natural gas liquids (NGLs) and field condensate produced in eastern Ohio’s Utica play and the liquids-rich portion of the Marcellus play in western Pennsylvania and northern West Virginia. As we discussed in our Join Together With Demand Drill Down Report, MarkWest not only developed an extensive portfolio of natural gas processing plants (to separate mixed NGLs from the raw gas stream that emerges at the wellhead) and fractionators (to split mixed NGLs into purity products like ethane, propane, butane and natural gasoline), but also a network of intraregional pipelines to help manage the efficient flow of NGLs — especially ethane, the lightest and most challenging NGL to store and transport. More recently, in Part 1 and Part 2 of our “1-2-3” blog series, we considered MPLX’s plan to more efficiently transport the heavier end of the NGL barrel (namely, natural gasoline; a.k.a. plant condensate or pentane-plus) and field condensate (a superlight crude oil also known as lease condensate) to end users.

President Trump announces plan to nominate McIntyre for US FERC - President Donald Trump announced late Thursday his intent to nominate Jones Day attorney Kevin McIntyre to the US Federal Energy Regulatory Commission and designate him chairman, a move that has been expected since March but has dragged out longer than other nominations. Once the White House sends over his formal paperwork, McIntyre would be the third Republican pick Trump has made for the commission, which currently lacks a quorum needed to approve key energy projects including natural gas pipelines. Related: Find more content about Trump's administration in our news and analysis feature. Trump has also announced plans to nominate Richard Glick, a Senate energy panel staffer backed by Democrats. Sending paperwork over for that nomination has been seen as pivotal to lifting the logjam for the two Republican nominees currently awaiting Senate floor action. A White House statement said McIntyre would fill a term expiring June 30, 2018, and additional five-year term expiring June 30, 2023. That would effectively mean the White House was nominating him for two terms at once. McIntyre is co-leader of the global energy practice at Jones Day, and the White House noted his expansive FERC practice "representing clients in all industry sectors -- natural gas, conventional electricity, oil, hydropower, wind power and other renewable resources, and energy marketing and trading." 

FERC Paves Way for Atlantic Coast Pipeline -- The Federal Energy Regulatory Commission (FERC) paved the way Friday for the 600-mile, 42-inch fracked gas Atlantic Coast Pipeline to proceed when it issued the final environmental impact statement (FEIS) . A joint project of utility giants Duke Energy and Dominion Energy, the Atlantic Coast Pipeline would move fracked gas from West Virginia into Virginia and North Carolina.  In April, the Sierra Club submitted more than 500 pages of legal and technical comments on FERC's draft EIS, which were joined by more than 18,000 individual comments detailing opposition to the project. The pipeline has been met with widespread opposition , with more than 1,000 people participating in public hearings across the three affected states. The Sierra Club recently requested that FERC issue a new environmental review document analyzing information that came in after or late in, the public comment process.  "Despite all its rhetoric, FERC continues to prove it's nothing more than a rubber stamp for fracked gas pipelines that threaten our communities and our climate," Deb Self, a Sierra Club Beyond Dirty Fuels campaign representative, said. "FERC has failed to account for the dangers the Atlantic Coast Pipeline, which would lock communities into the dirty and dangerous fuels of the past when clean, renewable energy options are readily available."  Obstacles remain for the Atlantic Coast Pipeline, as it still must secure water quality permits in West Virginia, Virginia and North Carolina, where the project is widely opposed. Recently, state agencies have denied certification for three gas pipelines because pipeline companies failed to prove they could protect state waters. The Forest Service and Bureau of Land Management must consider impacts to species, habitats and landscapes on public lands crossed by the pipeline.  "Along the 600 miles of this proposed pipeline and across the affected states, people are organizing and standing up for their water, protection of public and private lands, and their way of life," Kate Addleson, director of the Virginia Chapter of the Sierra Club, said. "Our streams, forests, and endangered species need protection, and so do our communities. Landowners shouldn't have their land taken for private companies' profit, and residents shouldn't be saddled with higher utility bills to pay for an unneeded, destructive pipeline that threatens communities and the climate."

Residents concerned over possible fracking in Barry County | Fox17: -- Some Barry County residents are worried about the possibility of hydraulic fracturing, also known as fracking, coming to their town. It comes after a group from Texas submitted a permit to the Michigan DEQ to construct an oil well in Carlton Township. The group Interstate Explorations out of Texas submitted a permit a few weeks ago to the Michigan Department of Environmental Quality. They now have 30 days to send it back with revisions. In the meantime, residents are rushing to learn more about it and what they can do to stop the permit from getting approved. Concerned residents gathered for an informational session at the Hastings Public Library Saturday afternoon. “I’m very concerned about the possibility of a frack well happening in Barry County, said Craig Brainard. "In fact the proposed location I saw is only about six miles from my home” Brainard is from the Sierra Club and presented information about how the Boulter 1-17 permit could impact the community. Residents at the meeting  said their biggest concern is the water and what fracking might do to it. “My biggest concern is that water remains usable," said Doris Hale of Hastings.  "My biggest concern is the chemicals in the water and then by extension what would happen to property values.”

Senate's Dirty Energy Bill Would Lock U.S. Into Fossil-Fuel Dependency for Decades -- In the wake of Senate Republicans' ever-deepening debacle over their flailing attempts to strip health insurance from 22 million people, Majority Leader Mitch McConnell is desperate to do something—anything—to show that he can get legislation passed. To this end, he's bypassing the standard committee review process to push a complex 850+ page energy bill straight to the full Senate floor. Perhaps not surprisingly, this legislation, the Energy and Natural Resources Act of 2017, would be a disaster for public health and our climate . Despite its benign-sounding name, the bill would be a catastrophe, effectively locking the U.S. into fossil-fuel dependency for decades. This dirty energy legislation would allocate millions of dollars for the discovery and extraction of fossil fuels off U.S. coastal waters, speed up the review period required for fracked gas terminals and instruct the Bureau of Land Management to create a program to expedite drilling and fracking permits. These are shameful giveaways to the oil and gas industry—directly in line with Trump's pro-fossil fuel agenda. Even worse, the bill gives no mention of clean wind and solar power—precisely at a moment in our history when we need to transition to 100 percent renewable energy now. The science is clear: If we're going to have a chance of avoiding the worst of climate catastrophes and public health crises in coming years, we need to get off fossil fuels immediately. NC governor on Trump drilling plan: ‘Not off our coast’ | The Seattle Times: (AP) — Under pressure from President Donald Trump, North Carolina’s governor announced his opposition on Thursday to drilling for natural gas and oil off the Atlantic coast, saying it poses too much of a threat to the state’s beaches and tourism economy. Up against a Friday deadline for comment from elected officials on the Trump administration’s request for companies to perform seismic testing under Atlantic waters, Democratic Gov. Roy Cooper held a news conference at a coastal state park to announce he’ll be registering the state’s opposition. “There is a threat looming over this coastline that we love and the prosperity it brings, and that’s the threat of offshore drilling,” Cooper said at the Fort Macon State Park in Carteret County, where he said he visited as a child and as a parent. “As governor, I’m here to speak out and take action against it. I can sum it up in four words: ‘not off our coast.'” In April, Trump signed an executive order to expand oil drilling in the Arctic and Atlantic oceans, reversing restrictions imposed by President Barack Obama, and the Interior Department is rewriting a five-year drilling plan. A federal agency is now seeking permits for five businesses to use seismic air guns to find oil and gas formations deep under the Atlantic, despite the harm environmentalists say this technology does to marine mammals. Maryland GOP Gov. Larry Hogan also announced his opposition this month. \ 

Louisiana producers face up to $50 billion in litigation: state oil, gas group --Lawsuits alleging the hydrocarbons industry is largely responsible for the erosion of Louisiana's southern coast could cost participants upwards of $50 billion in damages and irreparably harm the state's business reputation, an industry association executive said Monday. "If you carry it all the way out and at the end of the day and the industry loses, which we don't believe we will, the numbers get thrown around are $30, $40, $50 billion," said Gifford Briggs, vice president of the Louisiana Oil and Gas Association. "You start put numbers like that it, it likely signals the end of the industry in Louisiana," Briggs said in an interview Monday. Briggs' comments came in response to a resolution filed last week by New Orleans City Councilman Jason Williams urging the city to join in the effort to sue the oil and gas producers to raise funds for coastal protection. Six coastal Louisiana parishes are now suing about 300 industry players, seeking damages. The New Orleans City Council tabled action on the resolution, which called on the city to join the lawsuits filed by the coastal parishes. The resolution alleged that the oil industry had refused to negotiate with the city over the alleged part it played in the loss of 2,000 square miles of wetlands over the years. Although the city council deferred action on Williams' resolution last week, Briggs said the threat to the state's exploration and production industry remains. 

It's murky waters when considering expanded US offshore oil and gas drilling -- Favorable price differentials are leading to growing US crude exports from the Gulf Coast, which in turn is helping to fuel an infrastructure buildout that will encourage even more exports and new entrants into the US market. Crude oil exports have increased recently amid widening discounts for both WTI Midland and WTS (West Texas Sour) Midland. So far in July, the average discount of WTI Midland was WTI cash minus $1.05/b, down 21 cents from June. WTS Midland discounts over the same time have fallen to WTI cash minus $1.18/b, down 9 cents, according to Platts data. A wider discount makes grades like WTI and WTS more attractive to export. Arbitrage economics have been reinforced by a widening WTI/Dubai spread. Month on month, the swap spread between WTI and Dubai widened 20 cents/b to $1.22/b last week. As this spread widens, WTI-based crudes like Bakken become more economic choices in countries like China, providing stiff competition to pricier Dubai-based imports. The discounts are driven not only from increased production from the Permian, there have been increased flows south from the Bakken via the southern leg of the Dakota Access Pipeline—called the Energy Transfer Crude Oil Pipeline (ETCOP). These barrels have flooded the region with supply. With a 38-40 API, 0.2% sulfur Bakken is similar to WTI Midland. As a result, US crude exports averaged 9.338 million b/d ago, up 568,000 b/d since the end of 2016, according to the latest US Energy Information Administration report on exports.

Will the Gulf of Mexico Remain a Dumping Ground for Offshore Fracking Waste? -- As the Trump administration moves to gut Obama-era clean water protections nationwide, an environmental group is warning the U.S. Environmental Protection Agency (EPA) that its draft pollution discharge permit for offshore drilling platforms in the Gulf of Mexico violates clean water laws because it allows operators to dump fracking chemicals and large volumes of drilling wastewater directly into the Gulf . In a recent letter to the agency, the Center for Biological Diversity told the EPA that the dumping of drilling wastewater—which can contain fracking chemicals, drilling fluids and pollutants, such as heavy metals—directly into Gulf waters is unacceptable and prohibited under the Clean Water Act. Under current rules established by the Obama administration, offshore oil and gas platforms can discharge well-treatment chemicals and unlimited amounts of "produced waters" from undersea wells directly into the Gulf as long as operators perform toxicity tests a few times a year and monitor for "sheens" on the water's surface. About 75 billion gallons of produced water were dumped in the Gulf in 2014 alone, according to EPA records. Offshore fracking, which typically involves injecting water and chemicals at high pressure into undersea wells to improve the flow of oil and gas, has rapidly expanded in the Gulf of Mexico over the past decade. The latest draft of the pollution discharge permit, which was largely prepared under the Obama administration, would require drillers to collect information on the fracking chemicals they dump overboard. Regulators want to know what these chemicals are; their catalogue of offshore fracking chemicals has not been updated since 2001, despite advancements in technology. "It's absolutely appalling that EPA is letting oil companies dump fracking wastewater into the Gulf without any idea of the types of chemicals being discharged, or their effects on sea turtles, sturgeon or the other marine life that call Gulf waters home," said Kristen Monsell, an attorney for the Center for Biological Diversity, in an email to Truthout.

As Pruitt Guts Water Rules, EPA Will Allow Fracking Waste Dumping in the Gulf of Mexico: As the Trump administration moves to gut Obama-era clean water protections nationwide, an environmental group is warning the Environmental Protection Agency (EPA) that its draft pollution discharge permit for offshore drilling platforms in the Gulf of Mexico violates clean water laws because it allows operators to dump fracking chemicals and large volumes of drilling wastewater directly into the Gulf. In a recent letter to the agency, the Center for Biological Diversity told the EPA that the dumping of drilling wastewater -- which can contain fracking chemicals, drilling fluids and pollutants, such as heavy metals -- directly into Gulf waters is unacceptable and prohibited under the Clean Water Act. Under current rules established by the Obama administration, offshore oil and gas platforms can discharge well-treatment chemicals and unlimited amounts of "produced waters" from undersea wells directly into the Gulf as long as operators perform toxicity tests a few times a year and monitor for "sheens" on the water's surface. About 75 billion gallons of produced water were dumped in the Gulf in 2014 alone, according to EPA records.

The fossil fuels project that pits Trump’s base against itself --  For a landmark fossil-fuel program deep in Trump country, it’s not environmentalists who are the biggest threat. It may be Donald Trump himself. The $3.8 billion project in Lake Charles, Louisiana, would take waste from oil refining and turn it into synthetic natural gas while capturing emissions. Those products would be turned into high-value chemicals like methanol and hydrogen. Carbon dioxide, the greenhouse gas blamed for global warming, would be injected into the Earth to stimulate oil production. For the promoters, the project could spur 1,000 jobs, use General Electric Co.-licensed equipment and showcase cutting-edge machinery to help decarbonize oil. The catch: the technology isn’t broadly proven, so banks won’t yet finance it. That means there are few sources of project debt. The most obvious lender would be a U.S. Energy Department program that some Republicans are intent on neutering. The debate about whether the government should lend a hand in Lake Charles could divide Republicans as TransCanada Corp.’s Keystone XL pipeline did for President Barack Obama’s administration. It pits supporting companies, Republicans in Congress and Breitbart News Network LLC against the Tea Party and the Heritage Foundation, which oppose corporate handouts. “This will be their Keystone: Do you support job creation, or ideology?’’ said Brendan Bell, the former director of strategic initiatives at the Energy Department’s loan programs office. “There’s going to be a reckoning here.’’ 

Recent LOOP Sour rally evidence of persistent, global sour shortage -- The Louisiana Offshore Oil Port received no imports of Saudi Arabian or Iraqi crudes by the halfway point of July, evidence of the global sour crude shortage and competition for those barrels that has led to rising prices for regional grades such as LOOP Sour, which has increased in value by 60 cents/b over the past month alone, an analysis of Platts Analytics and S&P Global Platts data shows. Serving the Louisiana refining industry, LOOP is the only US deepwater port capable of receiving VLCC or larger tankers and typically ranks No. 3 for US ports that receive the most crude by water, behind Houston and Port Arthur, Texas. It is a bellwether for the regional crude supply-demand picture. By the halfway point of July though, LOOP had received no waterborne imports of crude from Iraq and Saudi Arabia. Compare that to January-June, when LOOP received an average of 5.9 million barrels per month of Iraqi crude and 6.5 million barrels of Saudi crude, according to a Platts analysis of US Customs data through July 13, the most-recent available. The global fight for medium sour barrels has picked up as OPEC and non-OPEC countries look for a way to bring up crude prices by limiting production. That global sour shortage has naturally resulted in higher prices in the US Gulf Coast region. On Monday, LOOP Sour, a blend of two domestic grades and three imported Middle East grades, was heard bid-ask at minus 35 cents/b by minus 30 cents/b to one of its five component crudes, Mars. It was assessed on the low end of that range, or cash West Texas Intermediate at Cushing, Oklahoma, minus $1.15/b. Platts LOOP Sour has risen 60 cents/b from mid-June compared with a 45 cents/b increase in Mars differentials and a 60 cents/b increase in Poseidon, according to Platts data..

Don't Call It a Comeback - It's Not Your Father's Haynesville Natural Gas Shale Play -- For the first time in six years, pipeline flow data show that natural gas production from Louisiana’s Haynesville Shale is rising. Additionally, rig counts and producers’ plans suggest more growth is on the way. Is the play poised to create a whole new crop of Bayou Billionaires?  Or is this a head fake that will only make us long for days of Haynesville past.  Well, it depends.  Because even though the Haynesville basin is looking up, it still faces some formidable challenges, from its geology to competition from other supply regions. Today, we continue our look at Haynesville’s prospects.We last wrote about the Haynesville Shale a couple of months ago in Part 1 of Don’t Call It a Comeback. At the time, we noted the bright neon signs indicating that the pure-gas play along the Texas-Louisiana border was attractive again — the ramping up of rig counts, the entrance of new Haynesville-dedicated operators in the region, and the increased drilling efficiencies being achieved. The only thing that was missing was, well, an actual increase in production volume from the region. By several accounts, it looked like a comeback. But production data was not reflecting that, at least not then. In the three months since, the evidence of a comeback has continued to pile up. Rig counts, which in mid-April 2017 were already up 200% to 37 total, from just 12 a year earlier, have climbed by another six rigs to 43 total, as of the July 14 Baker Hughes weekly rig count report. That means the rig count is nearly back to where it was in 2014, when Haynesville production was nearly 1.0 Bcf/d higher than it is now. Additionally, key operators like Goodrich Petroleum Corp., Chesapeake Energy and others in their first-quarter earnings calls affirmed plans to continue ramping up drilling in the region.

The Near-Term Potential for Permian Gas Takeaway Constraints -  Permian natural gas production is up nearly 40% over the past three years to 6.3 billion cubic feet/day (Bcf/d), and production could almost double to 12 Bcf/d by 2022. While there is 10.8 Bcf/d of existing gas takeaway capacity out of the Permian — suggesting that takeaway constraints are not imminent — much of the capacity to Mexico is not currently usable because of delays in related power-generation and pipeline projects south of the border. There also are limits to how much of the gas pipeline capacity from the Permian to California can be used for Permian takeaway, particularly during the off-season, when California can serve much of its incremental power load from hydro, solar and wind. The Midcontinent (Midcon) and Upper Midwest can only take so much Permian natural gas too; they’re taking gas from almost every direction. Put simply, takeaway constraints out of the Permian may be much closer than they appear. Today we consider existing natural gas takeaway capacity out of the Permian, how it compares with current and projected gas production in the region, and the potential for — and timing of — constraints that could reduce the prices that Permian producers receive for their gas.  In Part 1 of our series, we said that the pace of Permian hydrocarbon production growth will be influenced by many factors, including the degree to which the market price for crude oil exceeds the play’s breakeven prices and the ability of midstream companies to add incremental oil pipeline takeaway capacity as that capacity is needed. While the pursuit of crude oil is driving drilling and production activity in the Permian’s Midland, Central and Delaware basins, rapid growth in crude output is being accompanied by large volumes of associated gas and natural gas liquids (NGLs) that also must be dealt with. Fortunately, the Permian has been a major production area for decades — thus, a number of pipelines to transport crude, natural gas and NGLs are already in place. But the existing pipelines we discussed in Part 1 and Part 2 will not be enough, particularly if one of the more optimistic production-growth scenarios for the Permian were to play out.

Three sand producers building sand plants in West Texas --  Unimin Corp. announces plans to open a frac sand processing plant in West Texas with the hopes of supplying oil/gas drilling companies with frac sand from a local source, Chron reports. The sand plant is expected to be ready in early 2018 and will produce 5 million tons of sand per year. Unimin is the third company to begin construction of a major sand plant in the Permian Basin, as U.S. Silica and Hi-Crush Partners are also expected to open sand plants in early 2018. According to the news source, analysts expect half of next year’s sand demand to come from West Texas, where high demand and limited local supply has caused sand costs to rise for drillers. Having a local frac sand source will be cheaper than having to ship it by train from Wisconsin, or truck it in from 200 miles away.”There aren’t any sand mines in the Permian Basin, so, obviously, transportation costs will be much lower,” said Michael Lawson, a spokesman for U.S. Silica, which is investing $225 million in a sand plant that will produce 4 million tons of sand per year.

Pipelines in place for Niobrara / DJ Basin growth, but will it come? -- The rig count in the Niobrara Shale’s Denver-Julesburg (DJ) Basin has doubled in the past year, and crude oil production has been rebounding modestly in recent months. Most of the activity in the play is concentrated in super-hot Weld County, CO, where 23 of the DJ Basin’s 29 active rigs are set up. But with crude prices below $50/barrel, will the DJ make a real comeback, or will production sag again, just like it did after the big price declines of 2014-15? And what about Niobrara-related midstream infrastructure? Even some of the more optimistic forecasts leave the region with far more pipeline takeaway capacity than it needs. Today we consider recent developments in the Rocky Mountain region’s most important shale play and what they mean for exploration and production companies and midstreamers. The Niobrara Shale and its two subregions — the Denver-Julesburg Basin, centered in northeastern Colorado, and the Powder River Basin in eastern Wyoming — never attracted the national spotlight like the Bakken, the Eagle Ford and the Permian shale plays have in recent years. But the Rockies’ leading production area experienced noteworthy growth through the first half of the 2010s, especially in the DJ Basin. We tracked that growth in a number of blogs, beginning with Bananarama in the Rockies, in which we discussed the Niobrara’s decades-long history as conventional producer (using vertical wells), the region’s complex geology (which posed significant challenges for horizontal-drilling pioneers in the play) and the early successes that suggested the DJ may become a superstar. Then, in Hey Mr. DJ, Keep Playing That Song, Part 1 and Part 2, we looked at the challenges that rapid growth initially posed regarding takeaway capacity, in part because DJ (and Powder River Basin) output has historically had to compete for pipeline space with production traveling through the Rockies region from western Canada and North Dakota.

Letter said Colorado woman ‘could be held liable for drilling accidents if she didn’t sign,’ but…Under the headline “Facts vs. Fear,” The Greeley Tribune’s Tyler Silvy reports about a Weld County woman named Linda Warner who won’t lease her land to oil-and-gas companies, and the letters she gets from those companies. “Warner, a former environmental studies teacher at University Schools, is against fracking, but she did more research when the letters first started arriving in her mailbox,” the Tribune reports. “She met with companies, then returned to the same conclusion: She wouldn’t sell or lease, no matter what. ‘It’s an ethics issue for me,’ Warner said. ‘I just don’t want to do it.’ Then, in April, came a unique letter from Aztec Exploration, one offering her a ‘last chance’ to sell those rights — one that said she could be held liable for drilling accidents if she didn’t sign. The letter was technically true. ‘To me, it just seems crazy,’ Warner said. ‘You’re being held liable for something you’re personally opposed to.'”

'The Fight Is Not Over': Activist Building Solar Arrays to Block Keystone XL Route - When President Donald Trump signed off on a presidential permit okaying the Keystone XL crude oil pipeline in March, it was a real blow to an environmental movement that had tasted victory over the dirty tar sands clunker back in 2015 when President Obama withdrew the permit for the project.  With Trump and Canadian Prime Minister Justin Trudeau united in their support of the pipeline , it seemed little could stand in the way of some 830,000 barrels of dirty tar sands fuel barreling down a 36-inch crude oil pipe from Hardisty, Alberta through Montana, South Dakota and Nebraska to export terminals in the Gulf of Mexico. The pipeline seemed destined to pass over, under, and through environmentally sensitive areas such as Nebraska's Sandhills, and put at risk the Ogallala Aquifer, one of the world's largest underground freshwater sources. But not so fast.  Anti-pipeline activists are holding strong. They announced Solar XL, the latest move in a battle waged against the pipeline. Launched July 6 by a coalition of groups including Bold Nebraska,, Indigenous Environment Network and Oil Change International, the campaign features a series of solar panel arrays installed directly on the KXL pipeline route as it passes through Nebraska.   "TransCanada will have to literally dig up these solar arrays in order to build a polluting pipeline of the past that will pollute land and water, increase carbon emissions, and make climate change worse. The first project will be completed by the time the hearing in Lincoln starts in August." Each installation will cost $15,500 for a nine-panel frame, net-metering connection to the Nebraska power grid and labor. The groups aim to raise $50,000 via crowdfunding at the Action Network to help finance the installation in locations where landowners have refused to sell to TransCanada.

Big Victory in Fight to Protect California’s Coast From Offshore Fracking - A federal court on Friday rejected the Trump administration's effort to dismiss a lawsuit challenging the approval of fracking in federal waters off California. The suit—filed by the Center for Biological Diversity and Wishtoyo Foundation—notes that the government violated the National Environmental Policy Act and Endangered Species Act by failing to carefully study offshore fracking's risks before allowing this dangerous oil-extraction practice. The suit points to offshore fracking pollution's threats to the marine environment, public health, imperiled wildlife and sacred Chumash cultural resources and places. "This is a big victory in the fight to protect California's coast from offshore fracking's toxic chemicals," said Kristen Monsell, a Center for Biological Diversity attorney. "We're glad the court rejected the Trump administration's baseless attempt to dismiss efforts to force a hard look at offshore fracking's risks. The law clearly requires the feds to carefully study and reduce threats from offshore fracking, not blow them off so oil companies can keep using this hazardous process in fragile coastal environments." The Trump administration argued that the approval of offshore fracking and acidizing at all active oil and gas leases in the Pacific Ocean was not a final agency action reviewable by the court. In rejecting these arguments, the court noted that federal defendants' challenged decision allowed the use of offshore fracking and acidizing "without restriction" at all active leases in the Pacific Ocean.  Oil platforms in the Santa Barbara Channel have federal permission to annually dump up to nine billion gallons of produced water—including fracking chemicals—into the ocean. At least 10 fracking chemicals used in offshore fracking in California could kill or harm a broad variety of marine species, including sea otters and fish, Center for Biological Diversity scientists have found . The California Council on Science and Technology has identified some common fracking chemicals to be among the most toxic in the world to marine animals.

Federal judge tosses suit by Raging Grannies seeking to ban coal and oil trains through Spokane | The Spokesman-Review: The Raging Grannies’ attempts to stop coal and oil trains through Spokane has been derailed again. A federal judge on Monday issued his written opinion dismissing a federal lawsuit that was attempting to overturn a federal law, which the group of citizens has argued gets in the way of local governments that want to institute laws to address concerns over global warming and ensuring the rights of citizens to have a livable climate. The lawsuit brought by the Raging Grannies and others was filed after the group attempted through the initiative process to ban the trains. But U.S. District Court Judge Tom Rice found a laundry list of reasons to dismiss the suit that challenged the primacy of the Interstate Commerce Commission Termination Act of 1995. “First, of special import here, the federal law does not prohibit the passing of local laws” Rice wrote. “Rather, it may only pre-empt certain laws’ application.” Since the issue had no basis in law, it would have required Rice to issue an advisory opinion. “Accordingly, deciding the case now is not necessary and would not cause any significant hardship on” the Raging Grannies, Rice wrote. “Further, Plaintiffs could have attempted to circumvent the City Council by garnering support from five percent of the electorate, which would have placed the measure on the ballot regardless of any legal opinion.After failed attempts to get the issue before voters, the controversy culminated with the arrests of three women, all grandmothers, on Aug. 31, 2016. They were among about 20 protesters who blocked rail lines between Trent Avenue and Napa Street. “We were willing to be arrested to stop climate change,” Nancy Nelson, who dressed in a blue floral dress with a matching hat, told The Spokesman-Review at the time. “With the oil and coal trains coming right through our city, this is a very serious issue, which we have to address.” 

House budget could lead to Alaska refuge drilling | TheHill: The House GOP budget proposal released Tuesday could lead to oil and natural gas drilling being permitted in the Arctic National Wildlife Refuge (ANWR). The blueprint from the House Budget Committee for fiscal year 2018 asks the Natural Resources Committee to pass legislation to reduce the government’s deficit by $5 billion over 10 years. Democrats and environmentalists harshly criticized the blueprint, calling it a veiled attempt to clear the way for ANWR drilling since revenues from associated fees and royalties would help the government’s coffers. Rep. John Yarmuth (Ky.), the top Democrat on the Budget Committee, said that Democrats might propose an amendment to remove the ANWR provision. “We haven't talked about an amendment on that specific provision yet — we just found out about that earlier today — but that's something that we might consider,” he told reporters Tuesday. Greens also promised to put up a fight. “This is a shameless attempt to push an extremely unpopular action through the back door of Congress on behalf of President Trump and the oil lobby,” “We’re confident that Americans will see through this scam and once again demand that the Arctic Refuge remain protected. This refuge is a national treasure, and we have a moral obligation to protect it for future generations of Americans. It is simply too special to drill.” “Our homelands are under attack,” said Bernadette Demientieff, executive director of the steering committee for the Gwich’in people, native to Alaska and northwestern Canada. “The very existence and identity of the Gwich'in is under threat. The Arctic National Wildlife Refuge is a sacred place. We want to continue to live our cultural and traditional life with the Porcupine Caribou herd.” 

Coast Guard Makes Dire Warning About Drilling in the Arctic - Back in April, Trump signed an executive order to extend offshore oil and gas drilling to large parts of the Atlantic, Pacific and Arctic oceans .  "We're opening it up ... Today we're unleashing American energy and clearing the way for thousands and thousands of high-paying American energy jobs," Trump said as he signed the America-First Offshore Energy Strategy.  Then earlier this month, the Trump administration granted Italian oil company Eni the right to drill exploratory wells off the coast of Alaska. As InsideClimate News reported, "Eni's leases were exempt from Obama's ban because the leases are not new."  In response, Kristen Monsell, an attorney with the Center for Biological Diversity , said, "An oil spill here would do incredible damage, and it'd be impossible to clean up."  And now in a devastating, uncompromising rebuke to Trump and Zinke, the head of the U.S. Coast Guard has agreed with the Center for Biological Diversity: The U.S. cannot successfully clean up an oil spill in the Arctic. Admiral Paul Zukunft, who was the federal on-scene coordinator for the Deepwater Horizon oil spill, told a Washington symposium hosted by the U.S. Arctic Research Commission and NOAA that they would not recover all the oil if there was a spill in the Arctic.  7th Symposium on the Impacts of an Ice-Diminishing Arctic on Naval and Maritime Operations - YouTubeZukunft (his speech begins at 1:52) spoke to the Symposium on the Impacts of an Ice-Diminishing Arctic on Naval and Maritime Operations, warning about how climate change was changing the Arctic, with glaciers retreating and ice disappearing due to "polar acceleration." "You have got to understand what is happening to high latitudes," he said, before adding you have to see what is happening "first hand" and "how it is affecting the whole globe around us."  He then went on to talk about oil spills:  "I can assure you that if there is an oil spill, we're not going to recover all that oil. On the best of days, during the Deepwater Horizon cleanup, we maybe recovered 15 percent of that oil. And when I say recovered we burnt it, we dispersed it and it was flat calm and we had a fleet of over 6,000 ships out there doing recovery operations, and we had the infrastructure to support all of that."

U.S. Owns 700 Million Barrels of Oil. Trump Wants to Sell It - It started small. Just 412,000 barrels of Saudi Arabian light crude stashed in a Southeast Texas salt cavern. In the wake of the Arab oil embargo, which sent prices through the roof and forced Americans to ration gasoline, creating a national reserve seemed like an obvious way to protect U.S. consumers from global supply shocks. “It’s hard to imagine if you weren’t there,’’ said John Herrington, the Energy secretary under President Ronald Reagan, who pushed to expand the reserve in the 1980s. “We were lining up at gas stations. We were turning down our thermostats.’’ Forty years later, the world has changed, and Washington is torn on whether the Strategic Petroleum Reserve has outlived its usefulness. The U.S. is awash in crude, imports are declining, yet the stockpile remains the largest in world, ballooning to nearly 700 million barrels of crude, enough to offset U.S. production for more than two months, stored in some 60 caverns in Texas and Louisiana. In light of these changes, Herrington’s position has shifted. “I don’t see the need for a petroleum reserve now,’’ he said. Shrinking Reserves The government is far from united on the matter. The Energy Department this year kicked off a $2 billion, multiyear effort to upgrade the reserve and improve its ability to distribute oil during an emergency. President Donald Trump, on the other hand, wants to sell part of the reserve, a plan that lawmakers for now have ignored. So the hoard, and the salt caves, remain. The caverns themselves are a marvel. For all the disputation in Washington, the place is eerily quiet. At Bryan Mound, about 60 miles south of Houston, the salty breeze from the Gulf of Mexico rustles through knee-high sea grass. 

Schlumberger beats on N American drilling; sees global recovery - Times of India  - Schlumberger Ltd's quarterly profit and revenue beat analysts' estimates on Friday, driven by strong demand in North America, and the company said it was seeing recovery in its international markets. The Houston-based company's shares were up 1.5 percent at $68 in premarket trading. North American shale producers have been actively drilling in recent quarters, encouraged by a recovery in oil prices. Crude in the second quarter averaged $48.15 per barrel, a 5 percent gain over a year earlier, and companies added 506 onshore rigs in the past year, according to a closely watched Baker Hughes report. Schlumberger, the world's top oilfield services provider, said North America revenue surged nearly 27 percent to $2.20 billion in the second quarter ended June 30. Revenue from the region rose 18 percent from the preceding quarter. The company said U.S. onshore revenue soared 42 percent in the latest quarter from the preceding, as higher completion activity and improving pricing boosted hydraulic fracturing revenue. Schlumberger said it was also seeing more positive signs in the international markets with increases in activity and new project plans. The company is the first oilfield services provider to report results and sets the tone for the industry. Total revenue for the company rose 4.2 percent to $7.46 billion in the second quarter, beating the average analysts' estimate of $7.23 billion, according to Thomson Reuters I/B/E/S. Excluding items, the company earned 35 cents per share, above expectations of 30 cents. 

U.S. shale makes 'rapid' return, global oil market on the mend: Schlumberger | Fox Business: Schlumberger (SLB) said Friday it rapidly revived its idle oil-drilling equipment in North America during the second quarter, capitalizing on an oil recovery that carried the oilfield services provider to an earnings beat. Schlumberger’s revenue tied to U.S. hydraulic fracturing—or “fracking”—soared 68% over the first quarter. Overall, North American quarterly revenue was up 18%, or 27% versus last year, on strength in U.S. shale production. The company saw weakness in offshore drilling in the Gulf of Mexico, but U.S. land revenue grew 42% sequentially as the industry’s rig count improved 23%. Oil and natural gas producers flooded back to U.S. shale plays after oil prices returned to healthier levels. Energy firms have also managed to cut costs associated with the expensive process of hydraulic fracturing. Schlumberger noted that all of its U.S. land businesses were profitable in the second quarter, citing improved efficiency and higher pricing. Crude oil averaged $48.15 per barrel during the quarter, up 5% percent year-over-year. Schlumberger, the world’s largest provider of drilling equipment and software, expects international oil markets to follow North America’s lead. “While the activity outlook in North America for the second half of the year remains robust, we are now also seeing more positive signs in the international markets with increases in activity and new project plans starting to emerge in several GeoMarkets,” said Schlumberger Chairman and CEO Paal Kibsgaard. 

Meet The Only Private Equity Fund In History To Raise $2 Billion From Investors And Return $0 - Sir Richard Branson once said that the quickest way to become a millionaire was to take a billion dollars and buy an airline. But, as EnerVest Ltd, a Houston-based private equity firm that focuses on energy investments, recently found out, there's more than one way to go broke investing in extremely volatile sectors.  As the Wall Street Journal points out today, EnerVest is a $2 billion private-equity fund that borrowed heavily at the height of the oil boom to scoop up oil and gas wells.  Unfortunately, shortly after those purchases were made, energy prices plunged leaving the fund's equity, supplied primarily by pensions, endowments and charitable foundations, worth essentially nothing. The outcome will leave investors in the 2013 fund with, at most, pennies for every dollar they invested, the people said. At least one investor, the Orange County Employees Retirement System, already has marked its investment down to zero, according to a pension document.Though private-equity investments regularly flop, industry consultants and fund investors say this situation could mark the first time that a fund larger than $1 billion has lost essentially all of its value. EnerVest’s collapse shows how debt taken on during the drilling boom continues to haunt energy investors three years after a glut of fuel sent prices spiraling down.

Rising US rig counts slow as oil prices remain below $50/b -- There are many contributing factors that are causing US oil prices to remain suppressed. Part of the reason is that petroleum inventories are not declining as quickly as some market participants had expected. Also, there are concerns that persistent production growth in the US will delay the market’s ability to balance. Additionally, production has rebounded in Libya and Nigeria, which has offset some of the efficacy of the OPEC-led production cut. As a result, WTI oil prices have been hovering around $47/b the past three months, reaching as low as $42.53/b on June 21, and we are starting to see some hesitation on the part of the US producer. Through the first five months of 2017 the US rig count grew by 45% (or 300 rigs), which equates to adding 60 rigs per month. Over the last month, however, the pace of growth has slowed dramatically — increasing only 4% (or 36 rigs), bringing the US total to 1,050 rigs for early July. If prices remain below $45/b, producers will most likely decrease drilling efforts because of internal rates of return below 20% (light blue bars below) for all plays except the Permian, according to the Platts Well Economic Analyzer. If a typical well within a play averages over a 20% return, it usually leads to a steady increase in new drilling activity within that play. To that point, if prices climb back over $50/b we could expect rig activity to grow since returns would rise above that 20% threshold (dark blue bars below) in the top oil-rich plays: the Permian, STACK, Denver-Julesburg, Eagle Ford and the Bakken.

US Shale Production Just Hit A New All Time High --One month ago, we reported that based on recent data, June oil output from shale producers would post the first double-digit production growth since July of 2015, when oil prices tumbled and a substantial portion of US production was briefly taken offline. While the final data has yet to be tabulated, it is safe to say that this is now the case. Indicatively, while over the past year total U.S. production was up roughly 525kb/d, virtually all of it, or 98.5%, was the result of horizontal rig production in the Permian Basin, where output rose by just over half a million barrels per day. Also of note is that while US rig shows not signs of slowing yet, in its latest Weekly Oil Rig Monitor, Goldman predicted that $45/bbl is the price below which shale output would finally slow, although that price may also prove a substantial hurdle for many gulf budgets, whose all in cost of production - including mandatory and discretionary government outlays - is roughly the same if not higher. But what is more notable, is that according to the June EIA Drilling Prodctivity Report forecast, in July total shale (note: not total) basin output would rise by 127kb/d from May's 5.348mmb/d, and hit 5.475 mmb/d, surpassing the previous record of 5.46 mmb/d reached in March 2015. Today the EIA released its latest Drilling Productivity Report, and while the number is not official just yet, it is safe to say that as of July, the total US shale basin is producing a record amount of crude oil, which the EIA pegged at 5.472mmb/d, up almost exactly as predicted, and is expected to rise by a further 113kb/d in August to a new all time high of 5.585mmb/d.

US shale oil output to rise by 100,000 barrels a day in August: Oil production from several U.S. shale regions is expected to keep on rising in August, the U.S. Energy Information Administration forecast on Monday. The EIA's latest drilling productivity report projects that drillers operating the nation's shale oil fields will increase production by 113,000 barrels a day next month. Total output from these areas is expected to reach 5.59 million barrels a day in August. show chapters US shale rebound baked in for the rest of the year, could drag in 2018:  July's report marks the fifth straight month the agency's growth forecast came in above 100,000 barrels a day. The forecast is the latest sign that U.S. drillers continue to pump more even as benchmark U.S. West Texas Intermediate crude futures remain stuck in a range below $50 barrel. The Permian basin in Texas and New Mexico is once again projected to see the largest growth in August. EIA forecast drillers there will hike output by 64,000 barrels a day.  The Eagle Ford shale in eastern Texas has consistently come in second place. In August, EIA sees the region's production growing by 27,000 barrels a day.  Rocky Mountain drillers are expected to raise production by 15,000 barrels a day in the Niobrara region, contributing to a slow but steady recovery in Colorado's oil patch. North Dakota's Bakken will also see a bump of 4,000 barrels a day in August, EIA forecast.

EIA: Major US onshore regions to add 113,000 b/d in August - Crude oil production from the seven major US onshore regions is projected to rise 113,000 b/d month-over-month in August to 5.585 million b/d, the US Energy Information Administration says in its Drilling Productivity Report. About 94% of the monthly increase is expected to come from the Permian, Eagle Ford, and Niobrara. The DPR also forecasts oil and gas output from the Bakken, Haynesville, Marcellus, and Utica, taking into consideration the regions’ total number of active drilling rigs, drilling productivity, and estimated changes in production from existing oil and gas wells.The Permian is forecast to gain 64,000 b/d month-over-month in August to 2.535 million b/d. In its July Short-Term Energy Outlook published last week, EIA projects the basin in 2018 to account for 30% of total US oil production, producing 2.9 million b/d by the end of that year. As of the week ended July 14, Baker Hughes’ count of active Permian rigs was 373, up 239 units since the basin’s modern low on May 13, 2016 (OGJ Online, July 14, 2017). EIA separately estimates the Permian’s tally of drilled but uncompleted (DUC) wells in June climbed by 130 month-over-month to 2,244.The Eagle Ford is expected to increase 27,000 b/d month-over-month in August to 1.387 million b/d. EIA’s July STEO expects the South Texas shale region in both 2017 and 2018 to average 1.3 million b/d as projected lower crude oil prices limit output growth.The Eagle Ford as of July 14 had 80 active rigs, an increase of 49 units since Oct. 14, 2016, according to Baker Hughes data. EIA’s DPR indicates the region’s DUC well count rose by 42 month-over-month in June to 1,406.The Niobrara is estimated to gain 15,000 b/d month-over-month in August to 480,000 b/d. Its DUC count in June edged up by 2 month-over-month to 663.Modest growth is forecast in August for the Bakken, up 4,000 b/d month-over-month to 1.043 million b/d. EIA expects Bakken output in 2017-18 to average 1.1 million b/d, according to the STEO. The region’s DUC tally in June rose by 8 month-over-month to 819. EIA projects August gas production from the seven regions to climb 837 MMcfd month-over-month to 52.858 bcfd. The Marcellus is expected to lead the way with a 201-MMcfd increase to 19.752 bcfd, followed by the Permian, up 160 MMcfd to 8.653 bcfd; Haynesville, up 142 MMcfd to 6.726 bcfd; Eagle Ford, up 112 MMcfd to 6.404 bcfd; Utica, up 104 MMcfd to 4.554 bcfd; and Bakken, up 20 MMcfd to 1.934 bcfd.

U.S. crude oil production forecast to average 9.9 million barrels per day in 2018 - EIA forecasts that total U.S. crude oil production will average 9.3 million barrels per day (b/d) in 2017, up 0.5 million b/d from 2016. In 2018, crude oil production is expected to reach an average of 9.9 million b/d, which would surpass the previous record of 9.6 million b/d set in 1970. Most of the growth in U.S. crude oil production from June 2017 through the end of next year is expected to come from tight rock formations within the Permian region in Texas and from the Federal Offshore Gulf of Mexico (GOM) (Figure 1). The Permian region is expected to produce 2.9 million b/d of crude oil by the end of 2018, about 0.5 million b/d above the estimated June 2017 production level, representing nearly 30% of total U.S. crude oil production in 2018. The Permian region predominately spans the Permian Basin of western Texas and southeastern New Mexico, covering 53 million acres. Within the Permian Basin are smaller sub-basins, including the Midland Basin and the Delaware Basin, all of which contain historically prolific non-tight formations as well as multiple prolific tight formations such as the Wolfcamp, Spraberry, and Bone Spring. With the large geographic area of the Permian region and stacked plays, operators can continue to drill through several tight oil layers and increase production even with sustained West Texas Intermediate (WTI) prices below $50 per barrel (b).  Based on EIA’s Drilling Productivity Report, productivity in the Permian, as measured by new-well oil production per rig in barrels per day, is forecast to decrease month-over-month for the 10th consecutive month in June (Figure 2). Output per rig is likely decreasing because operators are drilling more wells than they are completing. Completing a well is the process of casing, cementing, perforating, and hydraulically fracturing a well to make it ready for producing. When operators drill a well but do not complete it, the inventory of drilled but uncompleted wells (DUCs) increases, which tends to lower output per drilling rig. Oil flows only after a well is completed. The trend of operators drilling more wells than they are completing does not have a clear cause, but a widening of the WTI-Midland crude oil price discount to WTI-Cushing since the beginning of 2017 suggests the possibility of some minor transportation constraints. Lags in well completion may also reflect implementation of strategies that drill more wells from a single pad, with completion equipment not deployed until all wells are drilled.

Chart of the day: US oil production could hit a new all-time record high by September - According to new data released yesterday by the Energy Information Administration, US crude oil production last week increased to 9.43 million barrels per day, the highest output in two years going back to July 2015. There have only been ten previous weeks, all during the May to July 2015 period, that US crude oil production was higher than last week (based on EIA’s weekly oil output data that starts in 1983). At the current rate of production increases, US oil output could surpass the most recent post-shale revolution weekly peak of 9.61 million barrels per day set in June 2015 by mid-September of this year. Further increases could bring US oil production above 10 million barrels per day by February of next year for the first time since late 1970 (on a monthly basis, record US crude oil production was slightly above 10 million barrels per day in both October and November of 1970).  Peak what?

U.S. uncompleted well backlog hangs over oil market: Kemp (Reuters) - U.S. oil and gas exploration and production companies are drilling new wells faster than they can be fractured and hooked up to gathering systems, creating a growing backlog of drilled but uncompleted oil and gas wells.By June, the number of drilled but uncompleted oil and gas wells across the seven largest shale plays had topped 6,000, according to estimates from the U.S. Energy Information Administration.The estimated number of uncompleted wells across the seven plays has risen by more 1,000 since December 2016, the agency reported on Monday ("Drilling productivity report", EIA, July 2017).The problem is concentrated in the Permian Basin of Texas and New Mexico, where the number of uncompleted wells has risen by more than 800 since December and more than 1,000 since June 2016.In most other shale plays, the estimated number of drilled but uncompleted wells has been broadly stable over the last year ( are now almost 2,250 uncompleted wells in the Permian, up from an estimated 1,200 a year ago, and compared with 3,800 across all the other plays combined.Since the Permian has accounted for more than 40 percent of the extra drilling rigs deployed countrywide over the last year, the concentration of uncompleted wells in the region is not surprising.But the growing number of uncompleted wells represents an obvious imbalance and is ultimately unsustainable, so either the number of new wells drilled must slow or the completion rate must increase ( lengthening backlog mostly reflects the shortage of fracking and completion crews, though in a few cases it may reflect a strategic decision to delay bringing wells onstream to wait for higher prices. However, drilling is expensive, using up corporate cash, and wells do not start earning a return until they start flowing, so in most cases there is an incentive to flow them as soon as practical.

U.S. gasoline surplus eliminated by trade flows: Kemp (Reuters) - The U.S. gasoline surplus has disappeared thanks to a sharp drop in prices which has caused imports from Europe to slow and exports to Latin America and other markets to accelerate since the start of June. U.S. refineries are processing record volumes of crude while domestic gasoline consumption appears to be holding steady at the same level as 2016, threatening to flood the market with excess fuel. But low domestic gasoline prices at the start of the summer driving season have encouraged the diversion of tanker shipments from Europe and incentivised U.S. refiners to boost their own exports. The United States was a small net exporter of gasoline in the four weeks to July 14, compared with net imports of 450,000 barrels per day (bpd) at the same point in 2016 and 411,000 bpd in 2015. U.S. gasoline imports are running around 240,000 bpd below year-ago levels, while exports are up by almost 230,000 bpd, according to data from the U.S. Energy Information Administration ( The shift in the net trade position helped clear excess inventories that built up earlier in the year and had been weighing on gasoline prices. On June 9, U.S. refiners, importers and fuel blenders reported gasoline stocks of 242 million barrels, almost 5 million barrels higher than in 2016 and 28 million barrels over the 10-year average. Stocks were equivalent to around 26 days of implied domestic consumption compared with 25 days at the same point in 2016. By July 14, five weeks later, stocks had fallen to 231 million barrels, almost 10 million barrels below 2016 levels and only 15 million barrels above the 10-year average. Gasoline stocks had been reduced to just 24 days of implied domestic consumption compared with almost 25 in 2016. Aided by lower prices, the United States has traded its way out of an impending gasoline glut with increased exports to markets in Latin America and European shipments diverted to West Africa and Latin America.

Oil Giants Make a Play For Millennial Hires - Oil, in short, is cool, the industry’s branding braintrust has declared. The 30-second spot rolled out this year is part of a broader American Petroleum Institute campaign  to “raise awareness about the role natural gas and oil has in economic growth, job creation, environmental stewardship, and national security.” Dubbed Power Past Impossible, the ads by the lobbying arm of America’s oil giants are all about millennials, the generation of roughly 21 to 35 year olds which out-sizes any other and makes up the largest chunk of the American workforce.  “It’s a shift in our messaging and our target that’s been in the works for several years,” says Marty Durbin, the institute’s chief strategy officer. “There isn’t a company out there that isn’t chasing the elusive millennials.” That may be true, but there are few with the kind of uphill battle the oil industry faces in catching them. Millennials often frown on companies whose main products play a key role in global warming. A 2016 poll by the University of Texas found that 91 percent of those under the age of 35 said climate change is occurring and just over half supported a carbon tax. About two thirds of millennial-aged voters said energy issues influenced how they vote and that they plan to by an alternative fuel vehicle.  “What exactly were you guys thinking making a commercial aimed at young people,” tweeted one viewer. “Every time I see it I’m reminded of how [expletive] of a resource petroleum is ecologically and how dumb it was to advertise ... that way.”

"Dirty, Difficult, And Dangerous": Why Millennials Won't Work In Oil  -- Like many industries today, the oil industry is trying to sell its many job opportunities to the fastest growing portion of the global workforce: Millennials. But unlike any other industry, oil and gas is facing more challenges in persuading the environmentally-conscious Millennials that oil is “cool”.  During the Super Bowl earlier this year, the American Petroleum Institute (API) launched an ad geared toward Millennials, who now make up the largest generation in the U.S. labor force.  Despite its pitch to speak the Millennials’ language and reach out to the elusive generation, the ad sparked anger with many consumers and viewers. Millennials continue to have the most negative opinion toward the oil industry compared to all other industries, and they don’t see a career in oil and gas as their top choice of a workplace. The oil industry’s talent scouting and recruiting methods of the past are failing to reach Millennials, who want their work to have a positive impact on society, various studies and polls have found—a rather big ask for the oil industry. This failure to reach the group that makes up the largest portion of today’s workforce—which now surpasses Generation X—points to a huge problem for the oil sector, as Baby Boomers move into retirement in droves. Not only are Millennials snubbing oil and gas because of its negative image, they also seek different job perks than previous generations sought, and in this regard, the oil industry will need to do more as it becomes increasingly obvious that Millennials want different things than what oil executives think they want. A total of 14 percent of Millennials say they would not want to work in the oil and gas industry because of its negative image—the highest percentage of any industry, McKinsey said in September 2016.

US crude exports are the gift that keeps on giving -- The Trump administration is looking to expand drilling in federal waters in the Gulf of Mexico, Atlantic, Arctic and even the Pacific oceans. To learn more about the prospects of expanded offshore oil and gas production, senior oil editor Brian Scheid and Gary Gentile, chief editor of Platts Oilgram News, talk with Randall Luthi, president of the National Ocean Industries Association and head of the US Minerals Management Service during the George W. Bush Administration. Luthi talks about why the industry may be most focused on drilling in the mid- and south Atlantic than anywhere, why the five-year leasing plan should be ditched for a long-term, “generational” offshore plan and why royalty rates for oil and gas production need reform.

Could US sour crude oil be exported to Europe at the expense of other grades? (video) Calculations point toward a chance for US sour crude oil grades like Mars and Southern Green Canyon to find a market in Northwest Europe, where they could potentially displace OPEC or Russian barrels. James Bambino, who has been tracking crude and refined oil product flows, crunches the numbers and considers Europe's Urals market, freight rates, refinery runs along the US Gulf Coast, demand and capacity. How long could the opportunity last, and will the market take advantage of it?

US on course to become world’s largest exporter of natural gas - The United States is challenging Australia and Qatar as the world's largest exporter of natural gas, according to a new report by the International Energy Agency.  Global gas demand is expected to grow by 1.6 percent a year for the next five years, with consumption on track to hit almost 4,000 billion cubic meters by 2022. China is projected to account for almost 40 percent of growth. "The U.S. shale revolution shows no sign of running out of steam and its effects are now amplified by a second revolution of rising LNG supplies," IEA Executive Director Fatih Birol said in a statement Thursday. The Asia Vision LNG carrier ship at the Cheniere Energy terminal in this aerial photograph taken over Sabine Pass, Texas, Feb. 24, 2016"Also, the rising number of LNG consuming countries, from 15 in 2005 to 39 this year, shows that LNG attracts many new customers, especially in the emerging world," Birol added.The U.S. is already the world's largest producer of natural gas. The IEA estimated that by 2022 the country's production will be 890 bcm, more than a fifth of global gas output.The IEA said the United States will challenge Qatar and Australia as the highest exporter by 2022 with more than half of the natural gas produced to be converted to liquefied natural gas for export. In a bid to increase export demand, three major LNG terminals under construction on the Texan coast will double the number of U.S. ports currently in use. Future demand will be driven by the industrial sector, according to the IEA, as its traditional use in power generation is trimmed by a growing mix of renewables and coal.  The report added that increased liquefaction capacity is coming into a market already well supplied, and the glut is driving down prices to interest new countries such as Pakistan, Thailand and Jordan

Natural Gas Prices Up Slighting After Lower Than Expected Storage Build -- Working gas in underground storage in the Lower 48 states increased by 28 billion cubic feet (Bcf) in the week to July 14, the EIA said on Thursday, but the build was less than analysts had expected, sending natural gas prices higher.At 12:54pm on Thursday, natural gas futures for delivery in August were up 0.59 percent at US$3.084/MMBtu.  Analysts had expected a build of 32 billion Bcf.As of July 14, working gas in storage was 2,973 Bcf, the EIA has estimated. At the end of last week, stocks were 299 Bcf less than this time last year and 141 Bcf above the five-year average of 2,832 Bcf. At 2,973 Bcf, total working gas is within the five-year historical range, the EIA noted.    In the week to July 7, working gas in underground storage had increased from 2,888 Bcf to 2,945 Bcf. U.S. demand for natural gas is expected to be high to very high for the week ahead, with the weather forecasts pointing to hot weather in most parts of the United States.   Natural gas inventories reached a record high of 4,047 Bcf on November 11, 2016, and inventories ended the winter heating season at 2,072 Bcf in March 2017, the EIA said in its latest Short-Term Energy Outlook. Inventory builds have been slightly below average thus far during the injection season, and EIA expects inventories to be 3,940 Bcf at the end of October 2017, which would be 2 percent higher than the five-year average level for the end of October, but 2 percent lower than the 2016 end-of-October level.

Paradoxes blur path forward for plentiful, cheap US natural gas -- Global natural gas supplies are abundant enough to keep the fuel in use for the next two centuries, but how the gas industry handles the paradoxes confronting the sector will determine the resource's path forward in the US, an executive with Anadarko Petroleum said Monday. Scott Moore, chairman of the Natural Gas Supply Association, said being a 32-year veteran of the industry has taught him that the more he knows, the less he understands about what is really going on. "I find that we live in a world of paradox and that we lead through paradox,"   Among the paradoxes of natural gas leadership is that "change is constant," he said. The industry underwent a radical change brought on by disruptive technology, primarily hydraulic fracturing and horizontal directional drilling, that had an economic and political impact on the world, allowing the US to re-establish itself as a global leader in the space and reshape geopolitical influence, Moore said. Aided by fracking, there is believed to be 27,000 Tcf of gas that can be economically recovered, a figure that could easily increase with new technological developments and if areas like the Middle East or Russia were to pursue unconventional gas sources, something they have not bothered to do given their abundance of conventional gas, Paul Greenwood, vice president of Americas and new markets for ExxonMobil Gas and Power Marketing, said during the panel. By comparison, the US consumed just under 30 Tcf of gas in 2015, and the world's total gas production on an average basis that year was 350 Bcf/d. With such a small percentage of available resources actually produced, the world can expect to enjoy about 215 years of gas supplies at current consumption levels, Greenwood said.

The Rapidly Expanding Global Liquefied Natural Gas Market - The global LNG (liquefied natural gas) market is expanding by 4-6% per year, compared to around 1-2% for overall gas consumption. LNG accounts for a rising 12% of all gas demand, increasingly vital because LNG is the fastest growing way to trade gas. And gas is the only fossil fuel that increases in use even under the most stringent environmental policies, where the world’s nations incorporate policies to keep the global temperature increase below 2 degrees Celsius (3.6 degrees Fahrenheit) by 2050. In short, the more we try to reduce greenhouse gas emissions, the more gas we will consume. Gas emits just 50% the CO2 that coal does and 30% of the CO2 emitted by petroleum. Global LNG demand is now around 265 million tonnes per annum (Mtpa), or 35 Bcf/d. And there is a current global glut that is widely expected to dissipate early in the next decade. It’s LNG that is evolving natural gas into a global commodity like petroleum. The U.S. hub-priced gas system is preferable because it’s based on the transparent fundamentals of supply and demand. Others need to use the same market forces to find a price level for natural gas versus its competitors.

Platts JKM LNG Weekly: September JKM at $5.60/MMBtu on stronger summer demand -- S&P Global Platts assessed the September Platts JKMTM, the new front month, at $5.60/MMBtu Friday, as stronger seasonal demand from Northeast Asia end-users injected some price support. Higher-than-average summer temperatures over July to August were seen as the main reason for the sudden spot buying interest from Japan and South Korea, sources said. Earlier in the week, sell tenders from PNG LNG for mid-September delivery and ExxonMobil for late-July-to-early-August delivery were heard to be done at $5.50-$5.60/MMBtu. The latest sell tender issued Thursday is by Angola LNG for a cargo loading between August 31 and September 2, market sources said. Japan's Tohoku Electric issued a single cargo buy tender for H2 September delivery, according to several market sources. The deadline for bid submissions was heard to be July 25. Kansai Electric also issued a buy tender for H2 August-H1 September delivery cargo, which closes Tuesday and will be valid till Thursday. According to market sources, the tender was not awarded Friday. Despite the hotter weather, there were no South Korean end-users active in the market during the week as LNG stock levels remained sufficient in the country. The heavy restocking conducted last month has built up more than enough storage to last till the end of summer, according to sources. Meanwhile, Taiwan's CPC was also heard issuing a two-cargo tender for August and September deliveries, which closed Monday this week. On the other hand, India's LNG demand was subdued due to weaker domestic power production.

What If Big Oil’s Bet on Gas Is Wrong? -  Talk to a Big Oil executive these days, and the chances are they’ll steer the conversation toward gas. “In 20 years, we will not be known as oil and gas companies, but as gas and oil companies,” Patrick Pouyanne, chief executive officer of French giant Total SA, told a conference in St. Petersburg last month. Pouyanne and his peers have pitched the fuel as a bridge between a fossil-fuel past and a carbon-free future. Gas emits less pollution than oil and can be burned to produce the power that grids will need for electric cars. But with the cost of renewable technologies falling sharply, some are warning that the outlook may not be so rosy. Forecasters are beginning to talk about peak gas demand, spurred by the growth of alternative power supplies, in the same breath as peak oil consumption, caused by the gradual demise of the internal combustion engine. In a long-term outlook published last month, Bloomberg New Energy Finance predicted that gas’s market share in global power generation will drop from 23 percent last year to 16 percent by 2040, and that gas-fired power generation capacity will start to decline after 2031. BP Plc has highlighted “risks to gas demand” as a key uncertainty, including the possibility that consumption plateaus by 2035, “squeezed out by non-fossil fuels.” If those forecasts play out, it has huge implications for Total, BP and other oil majors already grappling with a possible surge in electric car use. Gas-exporting nations most notably Russia, Qatar and Australia will also be exposed. The global gas industry, based on multi-billion dollar pipelines and export plants, has decades long investment cycles and decisions being made today rely on rising demand until the middle of the century. 

Fracking could begin in London after ‘multi-million’ pound natural gas find -- An energy company today claimed to have identified natural gas “worth millions” under an industrial estate in London, raising the prospect of the capital’s first fracking operation.   London Local Energy believes there are oil and gas deposits below Artesian Close Industrial Estate in Willesden. It now wants a Petroleum Exploration and Development Licence from regulator the Oil and Gas Authority to drill underground. LLE chief executive Nick Grealy and four geologists came up with the theory that oil and gas are at the location after researching the discovery of oil at Stonebridge Park in 1912. The company believes this deposit, 1,700ft down, could be more effectively explored and extracted with modern equipment — and could potentially meet 12 per cent of London’s energy needs and save 1.7 million tonnes in carbon dioxide emissions. Mr Grealy, 63, today urged the OGA to open up another round of PEDL bids. More than 100 licences have been issued but at present there is no date for a new round of bids.

United anti-fracking protest shuts Lancashire site - About 200 anti-fracking activists and trade unionists blocked the entrance to the Preston New Road Cuadrilla site in Lancashire last Friday. It was part of a day of action for trade unionists against fracking. Convoys of cars from Lancaster and a coach of protesters from Manchester joined with the local people who protest on a daily basis. Three Lancashire trades councils were represented from Preston, Blackpool and Lancaster. Speakers from the NUT, Unite, Unison, PCS and UCU unions addressed the protest that shut the site for the day. Ricardo, a student at Lancaster university, said, “Bit by bit they make our lives worse, taking away our rights and worsening our conditions. You have to fight it from the start.” Margaret Jones from Lancaster and Morecambe TUC told Socialist Worker, “I am absolutely opposed to fracking. Direct action is the only way to stop it.” Sally Laver from Lancaster and Morecambe Pensioners Action Group said, “This is important for everyone as we hope more people live to become pensioners. “This is less likely with climate change, fracking and continued burning of fossil fuels. It is important we keep the protest going with mass demonstrations every week.”

Tensions rise at fracking site in UK after police and activists clashes -- Tensions at Britain’s most high-profile fracking site have risen after an increase in violent clashes between protesters, security guards and police. One demonstrator said she had been left unconscious after a “pretty brutal” scuffle with security officers on Wednesday, and another activist fell from his wheelchair, the same day, when police officers pulled him out of the way of a 40-tonne lorry.   Both protesters said they planned to report the incidents that had occurred at energy firm Cuadrilla’s Preston New Road site, near Blackpool, to Lancashire police. The skirmishes came as anti-fracking activists and Cuadrilla accused each other of “increased aggressive” acts in the years-long battle over the 1.5-hectare (3.8-acre) plot near Little Plumpton, one of the firm’s sites for shale gas exploration.Hundreds of protesters have demonstrated outside the site since last October, when the government overruled Lancashire county council and gave Cuadrilla the green light to begin drilling.  Scuffles between protesters and security guards increased from the start of July as activists marked what they call a month of “rolling resistance”. Katrine Lawrie, 39, said she was knocked unconscious and taken to hospital on Wednesday after allegedly being pushed by a security guard as she tried to protect other protesters carrying out a “lock-on” with objects constructed from plastic, bitumen and concrete. “They’ve been getting increasingly more violent and aggressive over the last few weeks and every day it seems the aggression and violence seems to ramp up. It’s outright assault,” she said. Hours later footage circulated online showed another activist, Nick Sheldrick, a former naval officer, being tipped backwards from his wheelchair as police tried to move him away from an approaching haulage truck.

IEA, DOE leaders see Mexico’s global energy role growing quickly -- Mexico is poised to become an increasingly important global oil and gas supplier as reforms take hold and foreign participation grows, International Energy Agency and US Department of Energy leaders agreed during a joint press conference on July 18.“Mexico’s change in its constitution helped its oil investments double in 2016 when an expected rebound did not occur and global oil investment declined for the first time in years,” IEA Executive Director Fatih Birol said, citing a recent IEA report (OGJ Online, July 11, 2017). “That’s good news for North America’s energy future.”US Energy Sec. Rick Perry observed, “History teaches us that the world is not stagnant. Mexico had one of its biggest natural gas discoveries in history last week. I’ve just returned from talks with government leaders there, and I believe Mexico will become an even bigger oil and gas supplier as we go about building this new North American energy partnership.”Birol said IEA expects the US shale revolution to get a second wind and increase its gas production to 40% of the world’s total by 2022 (OGJ Online, July 14, 2017). IEA also projects that the US will become one of the world’s three largest LNG exporters—alongside Australia and Qatar—and give LNG a majority share of the global gas market for the first time by 2040, he said.“North America is entering a golden age of energy prosperity,” said Birol, adding that Mexico looks as if could be more than a junior partner. The country is on track to become a full IEA member by yearend, he said. Perry said one of DOE’s priorities will be to streamline its gas export approval process. Sales to customers in countries having a free-trade agreement with the US are presumed to be in the US national interest. DOE determines whether that is the case in proposed sales to customers in non-FTA countries.

U.S. May Halt Oil Imports From Venezuela --The Trump administration is mulling over sanctions against senior Venezuelan government officials, and additional measures could include sanctions against the country’s oil industry, such as halting imports into the U.S., according to senior Washington officials who spoke to media.  The goal of the sanctions is to prevent the Nicolas Maduro government from having things its way at a July 30 election for a Constituent Assembly that, the U.S. administration believes, would serve to cement Maduro’s power and turn Venezuela into a “full dictatorship.”The Constitutional Assembly vote was proposed by the government as a means of tackling the political crisis that Venezuela slid into last year, after the election of a new parliament where the opposition had a majority that put it at odds with the government. A Constituent Assembly can rewrite the country’s constitution, and many observers see the move as an attempt to strengthen the current regime’s hold on power. Russian Sputnik quoted Venezuela’s Foreign Minister Samuel Moncada as saying Venezuela will reconsider its relations with the U.S. should Washington go ahead with the sanctions, which, for the time being, seem to target two senior government officials: Defense Minister Vladimir Padrino Lopez and the second most senior figure in the ruling Socialist Party, Diosdado Cabello. The allegations against them are for rights violations.Venezuela is the third-largest oil exporter to the US, with the daily rate of imports for the week to July 7 at 823,000 barrels, according to the EIA, about 30,000 bpd less than Saudi Arabia’s daily exports to the U.S.

Factbox: Impacts of US sanctions on Venezuelan oil - The Trump administration is considering major sanctions on Venezuelan oil exports into the US, a policy move which could exacerbate the current heavy crude supply tightness, and cause a months-long dip in US refining margins. A senior administration official said this week that a ban on Venezuelan imports was one of the options being considered, but views on the practicality and effectiveness of such a ban remain divided with the administration.While specifics remain largely unclear, here's a look at the issues at play, the possible sanctions routes the White House is considering and the expected impacts: A senior administration official said these actions may be imposed before July 30 and that "all options are on the table." Analysts expect that the Trump administration will likely focus on sanctions targeting individuals, at least initially, but said the most effective sanctions would likely target petroleum exports considering that energy accounts for roughly 95% of Venezuela's export economy. The impact on US refiners will depend on how quickly the potential sanctions are put into place and how broadly they are imposed, according to Rick Joswick, managing director for oil with the PIRA Energy Group, a unit of S&P Global Platts. If, for example, the administration announces it will impose a $2 to $3/b duty of Venezuelan imports within three to six months, "then people will adapt," Joswick said. If the administration imposes a full ban on Venezuelan crude on August 1, the impact will be much more severe, he said. If Venezuelan oil sanctions were imposed US refiners, particularly along the Gulf of Mexico, would need to find new sources of heavy crude. While the US now imports about half of the amount of Venezuelan crude than it did 20 years ago, Venezuela remains a key supplier of the US Gulf refining market. At 795,000 b/d, Venezuela was the single largest supplier of imported crude into the USGC in April, according to the US Energy Information Administration, followed by Saudi Arabia at 714,000 b/d.The Phillips 66 Sweeny Refinery in Old Ocean, Texas, imported nearly 46.2 million barrels of Venezuelan crude in 2016, the most of any US refinery last year, according to the EIA. Citgo's Lake Charles, Louisiana, refinery took in the second-most with nearly 44.7 million barrels of Venezuelan crude in 2016, according to the EIA. Citgo is owned by PDVSA. In total, 13 US refineries imported Venezuelan crude in 2016, according to the EIA.

Exclusive: Russia, Venezuela discuss Citgo collateral deal to avoid U.S. sanctions - sources | Reuters: (Reuters) - Russia's top oil producer Rosneft is negotiating to swap its collateral in Venezuelan-owned, U.S.-based refiner Citgo for oilfield stakes and a fuel supply deal - a move to avoid complications from U.S. sanctions, two sources with knowledge of the negotiations told Reuters. State-owned Rosneft holds a 49.9 percent stake in Citgo as collateral for a loan last year of about $1.5 billion to the OPEC nation, which is reeling from low oil prices and a severe recession. The arrangement with Venezuela's state-owned oil firm, PDVSA, has drawn fire from U.S. senators who do not want Russia in a position to own a substantial stake of U.S.-based energy assets in potential violation of existing economic sanctions. The negotiations took on more urgency this week, one of the sources told Reuters, when U.S. President Donald Trump threatened to impose "strong economic actions" on Venezuela unless embattled leftist President Nicolas Maduro aborts plans to establish a new legislature with powers to rewrite the nation's constitution. Such sanctions, which could include a ban on U.S. oil imports from Venezuela, could undermine Citgo's business model and threaten Venezuelan or Russian ownership of the U.S-based firm in the long term. Under a new proposal being discussed this week in Moscow by top executives from Rosneft and PDVSA, the collateral stake in Citgo would be exchanged for a package of eight key deals, one of the sources with knowledge of the talks said.

US Said to Stymie Japan's Plan to Explore for Russian Oil | Rigzone A Japanese group’s plans to explore for Russian oil with state-run Rosneft have been stymied by U.S. intervention over sanctions, according to people familiar with the matter. Washington’s objection to the Japanese project to explore for oil in the ocean off Russia’s Far East shows the U.S. Treasury is maintaining a firm line on sanctions, even as some international companies press on with Russian energy deals. In April, the U.S. turned down a request from Exxon Mobil Corp. for a waiver to allow it to drill with Rosneft in the Black Sea. Rosneft signed a preliminary deal with a Japanese consortium of Japan Oil, Gas & Metals National Corp., known as Jogmec, Inpex Corp., and Marubeni Corp. for offshore exploration at a license to the south west of Sakhalin Island in December, one of more than 60 agreements and memorandums signed during Russian President Vladimir Putin’s visit to Japan. However, since then the U.S. government has objected to the project, according to two people familiar with the discussions who asked not to be identified discussing a sensitive matter.

Libya and Nigeria exempt from OPEC cuts, but not from speculation over their futures - OPEC Outlook Podcast - Speculation has begun to swirl about how OPEC and its 10 non-OPEC partners in their production cut agreement will handle the resurgence of Libya and Nigeria, whom they had exempted from the deal due to civil strife. The combined output of Libya and Nigeria in June was nearly 400,000 b/d above where it was in October, the benchmark month from which OPEC determined its cuts, and the prospects of further recovery in July seem likely. Senior writer and OPEC specialist Herman Wang previews the upcoming July 24 meeting of the OPEC/non-OPEC monitoring committee overseeing the deal, which is sure to discuss the two exempt countries, even as their oil ministers appear likely to decline invitations to attend. The episode also examines OPEC’s engagement with US shale companies, with Secretary General Mohammed Barkindo saying at the World Petroleum Congress in Istanbul last week that he planned to have further meetings with them to gain a better understanding of how they are responding to market signals. And the podcast’s Get to Know an OPEC Member segment features founding member Venezuela, which has seen its output steadily decline and is now facing an economic, political and humanitarian crisis. Francisco Monaldi, a fellow in Latin American Energy Policy at the Baker Institute for Public Policy at Rice University, joins the podcast to discuss Venezuela’s oil outlook.

Kazakhstan Bows Out Of OPEC Deal --Kazakhstan is, as expected, bracing to drift away from its role in the OPEC oil production cap in the coming two months. Energy Minister Kanat Bozumbayev said at an industry conference in Istanbul over the weekend that Kazakhstan’s withdrawal from its pledge to the cap will take place gradually, Russian news agency TASS reported.Last November, members of OPEC and other oil-producing nations thrashed out an agreement to collectively reduce their daily output by 1.8 million barrels as compared to production in late 2016. The same countries later agreed to extend the deadline for that cap to March 2018 in a desperate bid to prop up prices.Asked if Kazakhstan would be prepared to consider a further extension during OPEC talks in November, Bozumbayev was evasive, answering only that “this is a question for November.”But the data on Kazakhstan so far shows Astana never really had its heart in it, and Bozumbayev even admitted the country’s oil output for 2017 will outshoot the previous projected volume of 81 million tons (around 578 million barrels). Quite how strictly Kazakhstan has abided by its OPEC obligations depends what and how one is counting. In March, an International Energy Agency report suggested that far from cutting output by 20,000 barrels daily, as pledged, Kazakhstan had actually jacked up output.

Ecuador Breaks Ranks With OPEC and Increases Oil Output - Ecuador has dealt a blow to OPEC unity by announcing it will start raising oil production this month, arguing it needs the money. OPEC has for years cheated on its own agreements, particularly when oil prices fail to recover after an output cut. But Ecuador has taken the rare step of saying publicly it will increase production, making it impossible for the group to conceal the desertion. The Latin American country won’t be able to meet its commitment to lower output by 26,000 barrels a day to 522,000 a day, as agreed with OPEC last year, Oil Minister Carlos Perez said in an interview with Teleamazonas late Monday. “There’s a need for funds for the fiscal treasury, hence we’ve taken the decision to gradually increase output,” Perez said. “What Ecuador does or doesn’t do has no major impact on OPEC output.” Indeed, Ecuador’s exit is largely immaterial when considering the size of the global oil market, as the amount it agreed to cut accounts for less than 25 seconds of daily consumption. Still, it does create a dangerous precedent in the Organization of Petroleum Exporting Countries, opening the door for other, perhaps bigger producers to follow suit. “Ecuador’s latest statement will not matter for global balances but it shows the challenges for OPEC members given the cuts failed to raise prices,” 

OPEC Deal Splinters: Ecuador Will No Longer Comply With Production Quota Due To "Difficult Economic Situation" -- Ever since the OPEC production cut deal was announced last year in Vienna, there have been two key wildcards fascinating the oil trader and analyst community: what would be the deal compliance (in other words, how pervasive would cheating be), and which country would break away from the deal first. When it comes to the former, after an impressive run in which compliance hit and in some months surpassed 100%, mostly due to Saudi Arabia shouldering the extra production cut burden, in June it finally slid back to 92%, the lowest in months, and the first indication that the recent Saudi rising production is starting to weigh on the cartel members who are growing concerned that the Saudi commitment to production cuts may be waning. As for the first country to defect, the odds were always highest on Venezuela, however as of today that has turned out to be a losing wager because as Argus reported, Ecuador's oil minister said the cash-strapped country faces a "difficult economic situation" and is no longer able to comply with its pledge to Opec to cut 26,000 b/d of oil production. Today's announcement comes after the small Latin American nation had strictly followed the quota set by the Vienna deal, and from January to May Ecuador reduced its output by some 16,000 b/d. However, that ended today, when oil minister Carlos Perez said today the country is no longer complying with the quota because of its fiscal challenges.  These include a public debt close to 50% of gross domestic product and an expected 7.5% fiscal deficit for the year.

Ecuador Abandons The OPEC Deal: Who’s Next? -- Ecuador announced its withdrawal from the OPEC agreement this week, a move that could shake the foundation of a deal that was already starting to show some cracks."We need funds for the fiscal treasury and for that reason we've taken the decision to gradually increase production,” Ecuadorian oil minister Carlos Perez said, according to Reuters. Ecuador is running a fiscal deficit equivalent to 7.5 percent of GDP. Low oil prices are really hurting government finances, and production restrictions only add to the pain. With oil prices having posted few gains from the deal since it was implemented at the start of the year, Ecuador decided enough was enough. It needs to produce as much as possible. Ecuador, by any measure, is not a massive oil producer. The Andean nation produced just 527,000 bpd in June, making it the third smallest OPEC producer after Equatorial Guinea and Gabon. As a small producer, its contribution to the original OPEC deal agreed to last November was also relatively minor. Ecuador pledged to cut a rather miniscule 26,000 bpd as part of the deal, an afterthought in a 97 million barrel-per-day oil market. After all, the EIA’s data on shale production bounces up or down by more than that on a weekly basis In any case, Ecuador was not even fully complying with its cuts – it had only actually throttled back on output by about 16,000 bpd. As such, the return to full production (or near full production) probably won’t even be noticeable. Ecuador’s oil minister acknowledged as much. "What Ecuador does or does not do has no great impact on OPEC's total output,” he said, according to Reuters. However, it isn’t Ecuador’s production levels that should be concerning. It is the psychological and political impact that a withdrawal from the deal could have on the commitments from other members. Oil analysts have long argued that compliance with the cuts will weaken over time, as has historically been the case. We now have the first OPEC member that has succumbed to persistently low oil prices, deciding that the collective output reductions are not worth the trouble. How long before other members come to the same conclusion?

Deeper OPEC Cuts Would Help Shale – OPEC would hurt itself and help U.S. shale producers if it adopted deeper cuts, the former oil minister of Qatar warned. “It’s not beneficial for OPEC to deepen their cuts because prices will go up and shale oil producers and others will take OPEC’s market share,” Abdullah al-Attiyah said in interview in Istanbul. The Organization of Petroleum Exporting Countries and Russia’s quest to rebalance the oil market through a deal to curb production have failed to sustainably boost prices. Resilient U.S. shale output and rising production from Libya and Nigeria — OPEC members exempt from cutting — have diluted the group’s efforts and global inventories remain well above the five-year average. “This is a new situation for the oil market,” al-Attiyah said. “Traditionally, it was always oil competing with other sources like coal or renewable, but today it is a fierce war” between conventional and unconventional oil resources.

Twice burned, funds wait for clear sign of oil rebalancing: Kemp (Reuters) - Hedge funds have continued to cover their short positions in crude and refined products, but the impact on oil prices has been surprisingly muted so far, with a much smaller rally in prices than expected.Hedge funds and other money managers reduced short positions in the five main futures and options contracts linked to petroleum prices by a combined 69 million barrels in the week to July 11.Fund managers have cut the total number of short positions over two weeks by 116 million barrels, falling from a record 510 million barrels on June 27 to just 394 million barrels on July 11 ( the same period, total long positions increased by just 10 million barrels, rising from 815 million barrels to 825 million barrels, according to regulatory and exchange data.Short covering was widely expected after hedge funds established record or near-record short positions in most contracts by the end of June (“Hedge funds walk into a bear trap in oil”, Reuters, July 3). The concentration of short positions and relatively small number of long positions left the market looking stretched on the downside. Crowded trades such as this have often preceded a sharp price reversal in the past. But instead of rallying, crude prices generally declined over the week between July 3 and July 11, and have only risen modestly since, indicating hedge funds found plenty of willing sellers as they closed their short positions. Hedge funds built large bullish positions twice earlier this year, in February and April, anticipating a tightening oil market and higher prices, only to be disappointed and incur significant losses both times. With investors’ patience wearing thin, few managers can afford to be wrong a third time, so many seem to be waiting on the sidelines until signs of market rebalancing are unambiguous.

Saudi Arabia empties domestic crude tanks: Kemp (Reuters) - Saudi Arabia has been progressively reducing its bloated domestic stocks of crude in a sign the global oil market is rebalancing, albeit more slowly than OPEC anticipated. Saudi Arabia’s domestic crude stocks declined in 16 of the 19 months between November 2015 and May 2017 according to government data reported to the Joint Organisations Data Initiative ( stocks fell to just 259 million barrels at the end of May 2017, which was the lowest level since January 2012, according to updated figures published on Tuesday.Stocks were down by 30 million barrels compared with the same month a year earlier and are now down by 71 million barrels from their peak in October 2015 ( Like other producers, Saudi Arabia holds stocks for a range of reasons, including the need to cover field maintenance and manage seasonal changes in consumption and exports. Operational stocks are held to satisfy demand for exports as well as from domestic oil refineries and power plants burning crude to produce electricity. The best way to track stocks over time is to compare them with the total daily requirement from exports, refinery intake and direct crude burn.   By October 2015, with prices well on the way to their nadir in January 2016, stocks had risen to 329 million barrels, equivalent to 32.7 days worth of combined requirements. Since then, stocks have been progressively reduced and were down to just 259 million barrels and 25.7 days worth of combined requirements in May 2017 ( ). Saudi crude stocks display a strong element of seasonality owing to refinery maintenance schedules and increased crude consumption for electricity generation during the hot summer months. Nonetheless, there has been a clear downward trend in both absolute stocks and days of cover since late 2015 as production has fallen short of combined requirements. The rise and subsequent fall in Saudi crude stocks illustrates how heavily oversupplied the crude market was during 2014/15 as well as the gradual rebalancing under way during 2016/17.

Are Deeper Cuts OPEC’s Only Option? - Despite the November, 2016 Vienna crude oil agreement among OPEC and certain non-OPEC (NOPEC) producers and its subsequent May 2017 extension, the global crude oil market is still burdened with excess supply and may be far from re-balancing.“Re-balancing” largely refers to an economic mechanism where a sustainable and stable equilibrium price for a commodity is realized. In the case of crude oil, this rebalancing has historically been achieved by artificially intervening in supply.While observers may note that the market should be left to re-balance itself, a look at fundamentals suggest that approach may not be feasible or sufficient. Therefore, according to Rex Preston Stoner, an energy consultant with U.S.-based HUB International, “joint action by the OPEC/NOPEC producers may remain necessary for the medium term, if not the long term, if crude is to avoid another price crash. Whether such collective action may hold is the ‘million dollar question’”Some observers argue that Saudi Arabia made a grave error when in 2014 it chose not to play its traditional role of global “swing producer” and refused to “turn off its taps” just as global demand declined. Market share was at stake and the Saudi action was based on an apparently misinformed calculation that high-cost producers, particularly the U.S. Shale companies, would be forced from the market leaving OPEC producers with their market share restored and the global crude oil price stabilized at a level that could sustain the Saudi and other OPEC producers’ economies. In the light of rising U.S. production, gains from Libya and Nigeria, and doubts over the effectiveness of the OPEC-led pact oil prices fell clearly indicating that markets require more OPEC intervention.

OPEC can’t save oil market alone – the US has to step in, says Morgan Stanley U.S. shale production needs to slow down for the oil market to balance, according to Wall Street bank. OPEC and other major oil producers have taken on an ambitious battle to rebalance the oversupplied oil market, but despite the best intentions their efforts aren’t enough, Morgan Stanley warns. In a Thursday research report, the Wall Street bank called on U.S. shale-oil producers to join in efforts to tackle the global supply glut that has pummeled prices since the summer of 2014. “If OPEC doesn’t balance the market, the oil price will have to force it somewhere else, most likely in U.S. shale. For a chance of a balanced market in 2018, the U.S. rig count can no longer grow and possibly needs to contract ~150 rigs. Given current break-evens, this requires WTI between $46-50,” the Morgan Stanley analysts said in the report.Cementing their downbeat assessment of the oil market, they significantly downgraded their 2017 forecasts for both West Texas Intermediate and Brent. They now see WTI trading at $48 a barrel at the end of the year, down from $55 expected previously. For Brent, they cut their forecast to $50.5 from $57.5. 

Oil Producers Don’t Have a Plan to End the Glut - OPEC and Russia’s plan to clear the global oil glut hasn’t worked as they hoped, but there’s little expectation the world’s largest producers will act more aggressively when they meet this weekend.Oil has slumped into a bear market and inventories remain stubbornly high despite a deal between OPEC and 10 countries outside the group to cut output. The implementation of supply curbs is faltering as Libya and Nigeria restore lost production. The trouble for ministers meeting in St. Petersburg to review the progress of the deal is the alternatives look little better than the status quo. If the Organization of Petroleum Exporting Countries abandons the deal and increases oil output, a further plunge in prices would inflict more pain on their economies. And while deepening the production cuts would spark a rally, that might encourage even bigger flows from U.S. shale drillers. “The bottom line is, it hasn’t worked” and “if they cut more, the more they support prices, the more they support U.S. production.” Oil prices have given up all their gains since OPEC and Russia assembled a coalition of producers in December to try and end the market’s two-and-a-half-year slump. Despite forecasts that the measures would reduce the world’s bloated oil inventories, that doesn’t seem to be happening, the International Energy Agency said on July 13. The agreement between OPEC and its allies was undermined before it even started, as key producers such as Saudi Arabia, Russia and Iraq ramped up exports just before the deadline to cut output took effect. The pact faces a further challenge as Nigeria and Libya, which were exempt from cuts while they tackled political crises, recover output.

The Only Way OPEC Can Kill U.S. Shale -- Commerzbank’s head of commodity analysis wrote in early December that the OPEC production cut would only serve to strengthen the rise in U.S. production, and he kept his outlook on oil prices unchanged: Weinberg forecast that crude would slide below US$50 this year, which is exactly what is happening right now. Meanwhile, these same banks that were quick to revise their price outlook upwards are now just as quick to downgrade their earlier outlooks as the bleak reality firmly settles in.Weinberg advised OPEC to change tack and go back to what it set out to do initially: stifle U.S. shale by pumping at maximum. “They should let prices crash to kill shale and then aim for steady price increases in the long term,” Weinstein told Bloomberg. The question remains, however, whether OPEC, with oil-reliant budgets already strained, could afford this tactic reversal now that they’ve suffered price lows for an extended period of time. And while it would hurt to do just that, OPEC may not have too much of a choice. The options right now are 1) to keep going with the cuts as-is, 2) to deepen the cuts, and 3) to give up the cuts and follow Weinberg’s advice. The first option would result in no great change in prices, most likely, and it might add fuel to diversification efforts. These efforts, however, require a lot of investment, which would be hard to come by if OPEC chooses option three.Option two is perhaps even worse than the others: an OPEC insider, Qatar’s ex-Oil Minister Abdullah al-Attiyah, told Bloomberg that deeper cuts will only benefit U.S. shale boomers, and would not benefit OPEC. “The problem is that there is someone waiting in the dark corner for OPEC -- it’s shale oil producers and whenever prices rise, they raise production,” he said.In the price context, Weinberg’s suggestion to return to maximum production may at some point make the most sense. Prices may indeed take a nosedive if OPEC turns the taps on full max. Yet, the decline may not be as severe as OPEC fears—a possibility that would further poke gaping holes into precarious oil-dependent budgets. And given the political diversity of OPEC, would the group realistically be able to rally its troops behind such a painful move, even if it wanted to?

Oil settles lower as report renews U.S. shale-output worries - Oil prices finished with a loss on Monday, their first in six sessions, as expectations for a monthly rise in U.S. shale-oil production helped to push prices back in the wake of a more than 5% climb last week. August West Texas Intermediate crude CLQ7, +0.13%  shed 52 cents, or 1.1%, to settle at $46.02 a barrel on the New York Mercantile Exchange, after trading as high as $46.88 during the session. It had scored a gain of 5.2% last week. September Brent crude LCOU7, +0.14% on London’s ICE Futures exchange lost 49 cents, or 1%, to $48.42 a barrel. In a monthly report released Monday, shortly before WTI prices settled, the U.S. Energy Information Administration said it sees a rise of 113,000 barrels a day to 5.585 million barrels a day in August oil production from seven major domestic shale plays, compared with July, with the Permian Basin expected to see the largest output climb.The data followed a separate monthly short-term outlook report from the EIA, which forecast a growth slowdown in U.S. output next year because of lower oil prices.  “Inventory levels and any headlines that provide some supply or demand guidance will be the main drivers in the near term,” Brian Youngberg, senior energy analyst at Edward Jones, told MarketWatch, ahead of Monday’s EIA report. “We still see oil higher at the end of the year, with shale output growth offset by rising global demand and output levels elsewhere remaining challenging as a whole,” he said. Phil Flynn, senior market analyst at Price Futures Group, meanwhile, pointed out “U.S. crude supply is falling at a record pace and the drawdowns in supply do not look like it will stop anytime soon.”The EIA has reported hefty declines in domestic crude supplies in each of the last two weeks and last week, Baker Hughes reported a modest increase in the number of active U.S. oil-drilling rigs.

Oil Up As Saudis Consider Deeper Output Cuts --Oil prices continued to ratchet upwards, with WTI above $46 per barrel during midday trading on Tuesday. The latest gains come on rumors that Saudi Arabia could be considering deeper cuts to its supply. Bloomberg reported that Saudi Arabia is mulling cuts on the order of 1 million barrels per day (mb/d), or nearly twice its required commitment under the OPEC deal. More aggressive action might be needed as the most recent data shows OPEC compliance slipping, while at the same time the first member decided to pull out of the deal this week (see below).   Ecuador said that it could no longer adhere to the OPEC cuts because it has financial pressure and needs to export more. The government said that it would gradually raise output. Ecuador is a small producer and was already not complying fully with its promised cuts so the additional barrels that the South American nation will put onto the market won’t be a game-changer. But the real concern is that overall compliance within the cartel starts to slip.  UAE’s foreign minister told Bloomberg that his country is not interested in a quick fix to the standoff between several gulf nations and Qatar. He said that the blockade could last “weeks, months” to come to a resolution. “We want to take away Qatar’s huge, huge support for this extremism and terrorism that we are seeing everywhere,” the minister said.  The U.S. government recertified the 2015 nuclear deal with Iran, although some within the White House were reportedly pushing against the move. President Trump called it a “terrible deal” during his campaign of for the presidency, raising fears that the administration would scrap the agreement. The White House recertified the deal this week, although at the same time it plans on slapping new sanctions on Iran for the latter’s ballistic missile program. “Iran is unquestionably in default of the spirit of the JCPOA,” a senior administration official said Monday, referring to the nuclear deal.

Oil edges up on talk of potential cuts to Saudi exports -  Oil prices got a boost Tuesday, settling higher following a report that Saudi Arabia is considering cutting crude exports, even as the latest data show U.S. production trending higher this year. A sharply weaker U.S. dollar Tuesday also contributed to gains for oil, which is traded in the greenback. August West Texas Intermediate crude rose 38 cents, or 0.8%, to settle at $46.40 a barrel on the New York Mercantile Exchange, but ended off the session’s high of $46.92. September Brent crude on London’s ICE Futures exchange gained 42 cents, or 0.9%, to $48.84 a barrel. Saudi Arabia is considering a 1 million barrel-a-day cut to its crude exports, according to a report Tuesday from the Financial Times, which cites a recent note to clients from Bill Farren-Price, a consultant at Petroleum Policy Intelligence. Farren-Price said the move would offset the rise in Libyan and Nigerian supplies. “This is what OPEC has resorted to, export cuts in order to jawbone the market higher,” said Bill Baruch, chief market strategist at iiTRADER. “We believe that OPEC members are getting restless and instead of this news showing how stable a deal they have, its shows the holes.”

WTI Sinks After Surprise Crude Inventory Build --WTI has roller-coastered higher since last week's 'bullish' API report and rose today for the 6th of the last 7 days (on Saudi cut hype). While many eyes are on record high shale production, the recent trend in inventory draws remains key but API upset that dream briefly as Crude saw an unexpected build (+1.628mm vs -3.5mm exp). Gasoline and Distillates saw major draws (much bigger than expected) and Cushing saw its first build in 8 weeks.API

  • Crude +1.628mm (-3.5mm exp)
  • Cushing +608k
  • Gasoline -5.448mm (-1.3mm exp)
  • Distillates -2.888mm

Big draws in crude, and Gasoline (and at Cushing) in the last few weeks have set the scene for some normalization but tonight's API data shows an awkward build in crude stockpiles (and at Cushing) even though Gasoline and Distillates saw big draws... It's been quite a ride since last week's API data sparked buying (DOE production sparked selling, and OPEC jawboning did the rest)...(NOTE - for the second day in a ro WTI tagged $47 and fell). When the API data hit, the initial reaction was selling pressure... “The market is waiting for the proof in the pudding,” Michael Loewen, a strategist at Scotiabank in Toronto, says by phone, “There’s a lot of chatter these days. If Saudi Arabia is actually going to reduce exports” investors will need to see it in tanker-tracking data before they believe it, he says

WTI Jumps Back Above $47 After Crude Draw; Production At Highest Since July 2015 - After API's surprise crude build, DOE dashed bears' hopes with a bigger than expected crude draw (-4.727mm vs -3.5mm exp) as the entire energy complex was inventories decline. WTI prices kneejerked back above $47 on the proint but stalled a little as once again production jumped (to its highest since July 2015). DOE:

  • Crude -4.727mm (-3.5mm exp)
  • Cushing -23k
  • Gasoline -4.445mm (-1.3mm exp)
  • Distillates -21.37mm (+1.2mm exp)

Amid peak demand season, the large gasoline draws are unsurprising but the bid crude draw (especially compared to API's build) was a bullish surprise... Overall, much is being made of the notable decline in US stockpiles since its peak in late March, however, as the chart below shows, US Crude stockpiles remain 37% above historical average... Of course, last week it was the resurgence in US crude production that stymied bullish exuberance at inventory draws. After rebounding last week, it looks like the Alaskan component of US oil production slowed this week as maintenance work continues in the Alaskan North Slope, but the Lower 48 saw production hit 2 year highs...

Oil rises 1.6% to 6-week high, closing at $47.12, after big drop in US crude, gas stockpiles - Oil prices jumped more than 1 percent on Wednesday after a U.S. report showed a bigger weekly draw than forecast in crude and gasoline stocks along with a surprise drop in distillate inventories.The Energy Information Administration (EIA) said U.S. crude stocks fell 4.7 million barrels during the week ended July 14. , exceeding estimates for a 3.2 million draw in a Reuters poll.U.S. West Texas Intermediate (WTI) crude futures ended the session 72 cents, or 1.6 percent, higher at $47.12 per barrel, the best closing price since June 6. Brent crude futures, the international benchmark for oil prices, were up 84 cents, or 1.7 percent, at $49.68 per barrel by 2:35 p.m. ET (1835 GMT). "The report was more good news for the oil industry as inventories declined across the board for crude and products by over 10 million barrels," Andrew Lipow, president of Lipow Oil Associates in Houston said.EIA said distillate stocks decreased 2.1 million barrels and gasoline stocks declined 4.4 million barrels. Analysts polled by Reuters had forecast a 1.2 million barrel build in distillates and a 0.7 million barrel draw in gasoline.U.S. distillates were up 2.8 percent and gasoline futures rose 2.5 percent, briefly boosting the products crack spread, a measure of refinery margins, to its highest since November 2016. The drawdown occurred even as EIA said U.S. production climbed to 9.43 million barrels per day (bpd), its highest since July 2015. Analysts said rising U.S. production has made it harder for OPEC and other producing nations to support prices with their own output cuts.

Oil retreats from 6-week high as traders await producer meeting -  Oil pulled back Thursday, a day after a third consecutive weekly declines in U.S. crude supplies lifted prices to a six-week high. Traders weighed outcome scenarios for a crucial meeting of some of the world’s biggest producers next week. The August contract for West Texas Intermediate crude CLQ7, -0.83% which expired at the day’s settlement, fell 33 cents, or 0.7%, to finish at $46.79 a barrel on the New York Mercantile Exchange. The new front-month contract, September WTI ended at $46.92, down 40 cents, or 0.9%. September Brent lost 40 cents, or 0.8%, to $49.30 a barrel on ICE Futures Europe, after tapping a high of $50.19. Futures prices for WTI and Brent finished Wednesday at the highest levels since June 6, according to FactSet data, after the Energy Information Administration showed that U.S. crude inventories declined by a larger-than-expected 4.7 million barrels for the week ended July 14. But WTI oil prices are “still not moving anywhere close to the $50 level regardless of what the crude inventory data will show us,” said Naeem Aslam, chief market analyst at ThinkMarkets UK. “The supply glut is still very much the focus,” he said. “As long as we do not see the glut fading in a meaningful way, we think the odds are stacked against the upward move for the oil price.”

Oil retreats as traders await rig data, OPEC meeting - Oil pulled back Friday, putting prices on track for a loss on the week, as traders awaited the latest count on U.S. rigs for hints on the outlook for U.S. crude production and an coming meeting of major producers. September West Texas Intermediate crude lost 78 cents, or 1.7%, to $46.14 a barrel on the New York Mercantile Exchange, extending a 0.9% loss from a day earlier. For the week, prices turned lower, with the contract poised for a loss of roughly 1.2%. Based on the front-month contract finish of $46.54 last Friday, prices have lost about 0.8% for the week.  September Brent crude on London’s ICE Futures exchange fell 72 cents, or 1.5%, to $48.58—down about 0.6% from a week ago. The international benchmark had tapped the $50-a-barrel level for the first time in more than a month on Thursday before giving up gains in a move that some attributed to profit taking.“Market focus remains on the global oversupply problem, and the lack of response the market has had to the [Organization of the Petroleum Exporting Countries] and non-OPEC production cap agreement,” said Tyler Richey, co-editor of the Sevens Report. On Monday, OPEC oil ministers as well as some other producers who are not members of the group, including Russia, will meet to review the production-cut deal, which is set to expire at the end of March next year. They are also expected to discuss possible output limits for OPEC members Nigeria and Libya. Sharp rises in output have been seen this year from those countries, which are currently exempt from the agreement.

OilPrice Intelligence Report: Lower OPEC Compliance Keeps Oil Prices Down: Oil prices posted more gains this week, as the EIA reported deeper inventory reductions with Brent briefly traded above $50 per barrel for the first time in nearly two months on Thursday. There is a bit more confidence in the oil market than a few weeks ago, although there are questions about the potential upside from here. U.S. oil production jumped again, putting output above 9.4 mb/d, which, along with fears of rising OPEC production, pushed oil down during early trading on Friday. OPEC members are meeting to monitor the progress of their production cuts, but analysts see little chance that they will take more aggressive action to balance the market. Deeper cuts would require more sacrifice and merely open up more market share for U.S. shale, while abandoning the collective output cuts would surely lead to another slide in prices. “They’re between a rock and a hard place,” Mike Wittner, head of oil market research at Societe Generale SA, told Bloomberg. “The bottom line is, it hasn’t worked.” Nevertheless, a report from Petroleum Policy Intelligence says that Saudi Arabia is considering unilateral cuts. Exports will probably drop by 600,000 bpd this summer as domestic consumption ramps up, but Riyadh is considering cuts on the order of 1 mb/d.  New data from Petro-Logistics estimates OPEC production rising in July, further evidence of a weakening compliance rate for the cartel. The consultancy forecasts production rising by 145,000 bpd this month, pushing combined output above 33 million barrels per day. The production gains come from Saudi Arabia, the UAE and Nigeria. Oil prices appeared to fall on the news on Friday.  

WTI Tumbles Towards $45 Handle After Tanker-Tracker Signals OPEC Supply At 2017 Highs --Despite the 'bullish' inventory data (and demand), WTI Crude just sank towards a $45 handle - red on the week - as tanker-tracking firm Petro-Logistics signals OPEC crude supply rising again this month will be the highest this year (along with US shale output at record highs). As Bloomberg notes, supply from OPEC members is set to exceed 33 million barrels a day this month, more than 600,000 barrels a day higher than the first-half average,according to Petro-Logistics. The data could reinforce skepticism about the effectiveness of the Organization of Petroleum Exporting Countries’ production cuts as officials from the group gather for meetings in St. Petersburg, Russia.This pushed prices below the pre-DOE data lows...and red for the week. Oil remains in a bear market on concern that growing output in the U.S., Libya and Nigeria is offsetting other producers’ curbs, meaning stockpiles aren’t shrinking fast enough. The report from Petro-Logistics found that Saudi Arabia, the United Arab Emirates and Nigeria are behind the extra barrels. The latter is exempt from making cuts as it tries to recover from disruption due to theft,sabotage and attacks by rebels.The findings of Petro-Logistics further weaken “the foundations under the output deal, which is what the market is also saying by sending prices lower,” said Jens Naervig Pedersen, analyst at Danske Bank A/S. “It puts pressure on OPEC before the meeting this weekend.” Oil bulls hope remains with the rig count later today and more headlines of hope ahead of Monday's meeting of oil leaders.

Oil Rig Count Falls By 1 As Analyst Warns Permian Reserves Are Grossly Exaggerated - For only the second time in the last 27 weeks (and 4th in the last 56 weeks), the number of US oil rigs fell last week (down 1 to 764 rigs). There is a growing concern that the rising rig count has now outpaced the lagged response to pricing and is due to rollover further... WTI tumbled to a $45 handle heading into the data after tanker-tracker data suggested OPEC supply was the highest in 2017...But as's Arthur Berman notes, global energy dominance by the United States is somewhere between aspirational and absurd.  So far in 2017, the U.S. has imported more than 9 million barrels of crude oil per day, and net imports have averaged more than 7.3 million barrels per day. How exactly can the world’s biggest importer of oil become the supplier upon which other countries depend?The recently released BP Statistical Review Of World Energy 2017 places the United States 10th in the global ranking of oil reserve holders between Libya and Nigeria (Figure 1). That’s not bad but it hardly puts the U.S. in the same league as energy-dominant countries like Venezuela, Saudi Arabia, Canada, Iran, Iraq and Russia that have on average 4 times more proved reserves than the U.S.Perhaps the President and Secretary Perry have been reading John Mauldin’s recent work of magical realism Shale Oil: Another Layer of US Power. It features a chart which shows that the U.S. is the largest oil reserve holder in the world (Figure 2)The chart is so wrong that it defies explanation.Its Rystad Energy source data reveals that Mauldin has misrepresented recoverable resources—all oil regardless of commercial value–as reserves—a specific volume that is commercial at today’s oil prices.It also seems that Mauldin didn’t show Rystad’s data correctly. Saudi Arabia—and not the U.S.—is the largest holder of recoverable resources according to Rystad (Figure 3).

U.S. Oil Rig Count Falls By 1 As Canada Adds 15 Rigs -- The number of active oil rigs in the United States fell this week by 1 rig—it’s second loss in four weeks, and its third loss this year—in a sign that the gains we’ve seen week after week are starting to slow. Combined, the total oil and gas rig count in the US now stands at 950 rigs, with oil rigs falling by one and gas rigs falling by one. The market may want to rejoice in this week’s falling US rig count, but things don’t look so good everywhere when it comes to oil prices—Baker Hughes also reported today that Canada’s rig count increased by 15, erasing—and then some—any optimism that may otherwise have come from the falling number of active rigs in the US. Prices had fallen by mid-day on Friday on reports that OPEC’s production would likely increase in July, lowing compliance from the cartel, which had dipped in June as well. Estimates are that OPEC production in July will exceed 33 million bpd, with production increasing from the United Arab Emirates, Nigeria, and even heavyweight Saudi Arabia. At 11:23 am EST, WTI was down 1.56% at $46.19 while Brent crude was up 1.38% at $48.62—both benchmarks below last week’s levels.  Ironically, or perhaps fulfilling earlier suggestions along these lines, OPEC’s noncompliance may yet prove to be the best antidote—albeit a temporary one—to US shale’s aggressive growth, which has seen a near 50-percent increase to the number of active oil and gas rigs in 2017 alone. As the market shows its displeasure with OPEC’s rising production, prices fall, and these lower prices may put pressure on the US shale industry, and may result in fewer rig gains each week. Unfortunately for OPEC—who appears to be in a bit of a pickle—while the lower prices may slow the run on US shale, as long as prices stay low, OPEC’s many oil-dependent economies will continue to suffer budget holes, and Saudi Arabia probably cannot afford an Aramco Valuation with lower oil prices. The reality may be at this point that OPEC’s only remedy is significantly increased demand, without which there may not be enough room for all the oil players to pump at-will.

Baker Hughes: US rig count declines for second time in 4 weeks - Data from Baker Hughes show a 2-unit decline in the overall US rig count for the week ended July 21. The tally has now fallen in 2 of the last 4 weeks after recording 23 consecutive increases (OGJ Online, July 14, 2017).   At 950 rigs working, the count is still up 546 units since the beginning of a drilling rebound that began following a nadir on May 20-27, 2016.  All eyes remain on oil-directed rigs, which edged down 1 unit this week to 764, up 448 units since May 27, 2016. They too have fallen twice in the last 4 weeks, increasing just 6 units during that time. During the 4 weeks prior, the oil count climbed 36 units.Gas-directed rigs also edged down 1 unit and now total 186, up 105 units since Aug. 26, 2016. Onshore rigs fell by 4 as rigs drilling horizontally posted their first drop in 36 weeks, losing 1 unit to 803, up 489 units since May 27, 2016. Directional drilling rigs rose 3 units to 75.  The offshore count increased for the first time in 9 weeks, rising 2 units to 23. The US Energy Information Administration’s preliminary estimate of US crude production for the week ended July 14 shows a 32,000-b/d increase to 9.43 million b/d, up 935,000 b/d year-over-year. The Lower 48 added 30,000 b/d while Alaska rose 2,000 b/d.  EIA this week forecast crude production from the seven major onshore producing regions in August to gain 113,000 b/d month-over-month to 5.585 million b/d (OGJ Online, July 17, 2017). About 94% of the monthly increase is expected to come from the Permian, Eagle Ford, and Niobrara. Among the factors taken into consideration when making the projections, EIA examines the regions’ total number of active rigs and drilling productivity. In June, the seven regions gained 154 drilled but uncompleted (DUC) wells to total 6,031, the agency said. The Permian’s DUC well count climbed by 130 to 2,244, and the Eagle Ford’s count rose by 42 to 1,406. Texas and Oklahoma led the major oil- and gas-producing states with 3-unit losses to 463 and 131, respectively. Drilling growth in Texas has slowed over the last 9 weeks, during which time it has added just 5 units. During the 9 weeks prior, it added 63 units. The Eagle Ford dropped 2 units this week to 78, its lowest level since April. The Barnett dropped 1 unit to 6. The Permian, meanwhile, edged up 1 unit to 374. The basin has added 13 units over the last 9 weeks compared with 53 during the 9 weeks prior. The Arkoma Woodford and Mississippian each dropped 1 unit to 9 and 5, respectively. New Mexico dropped 2 units to 57. Alaska lost 1 unit to 5. North Dakota and Utah each rose 1 unit to respective counts of 54 and 10. California gained 2 units to 13. Partly bolstered by offshore rig deployments, Louisiana climbed 4 units to 71.

Oil prices sink on a report OPEC supply will rise in July -- Oil prices fell more than 2 percent on Friday, wiping out the week's gains after a tanker-tracking firm reported supply from OPEC is rising. OPEC's July oil supply was set to rise by 145,000 barrels per day (bpd) compared to June, Reuters reported citing data from PetroLogistics, a company that tracks OPEC supply forecasts.The increase in oil supply would push production above 33 million barrels per day.Higher supply from Saudi Arabia, the United Arab Emirates (UAE) and Nigeria would drive this month's gains, according to PetroLogistics. U.S. West Texas Intermediate futures erased earlier gains following the PetroLogistics report. They were ended Friday's session down $1.15, or 2.5 percent, at $45.77 per barrel. Brent crude fell $1.30, or 2.6 percent, at $48 a barrel by 2:38 p.m. ET (1838 GMT) .WTI posted a nearly 1.7 percent decline on the week, after earlier being on pace to post a roughly 1.5 percent weekly gain.The day's losses briefly eased after oilfield services firm Baker Hughes reported its weekly count of oil rigs operating in the United States ticked down by one rig to a total of 764. The rig count has fell or barely increased in recent weeks, suggesting early signs of moderating U.S. production growth. Government data showing a larger-than-expected drop in U.S. crude oil and fuel stockpiles had boosted oil prices to six week highs earlier this week.  Friday's decline took place as investors braced for a key meeting between OPEC and non-OPEC members next week. The oil-producing countries will meet to discuss compliance of agreed production cuts and how to bring down inventory levels.

OPED deal at breaking point as compliance falls. - OPEC data was mixed this week reminding us of two important themes - 1, OPEC members are pushing the limits of the current output agreement and 2- recent gains in Libya and Nigeria could be hard to maintain. On the first item, preliminary estimates see July OPEC production +145k bpd m/m which would represent a new YTD high in the cartel’s output and sow additional doubts about their ability to coordinate supply cuts. Meanwhile Iraq is publicly promoting its plan to ramp production up to 5m bpd by year-end (from 4.4m bpd in June) and Ecuador stated that they will no longer participate in cuts in an effort to strengthen their finances. As for the second item, Nigeria’s production and export woes were headline news this week due to pipeline vandalism. All-knowing prompt brent spreads digested the week’s news flow and moved slightly higher. Brent V17/Z17 rallied to -55 cents on Friday forecasting a reasonably strong supply/demand balance in coming month. WTI spreads continued to moderate this week with help from drawing overall stocks and sub 58m bbls in Cushing. On the demand side refiner inputs continue to impress and could be aided in the near term by a rally in US margins to new YTD highs. In front spreads WTI U17/Z17 yielded just 22 cents / mo contango suggesting large inventory draws should persist in the US through the balance of the year. On the downside, however, we saw limitations to potential rallies in the swap market where producers were busy selling WTI Cal ’18 near $49/bbl. CSO markets also saw bearish flows with trade groups building short positions in flat calls in 4q17 and 1h18.

Saudi Arabia curtails crude flow to United States: Kemp (Reuters) - Saudi Arabia is making good on promises to curtail oil shipments to the United States with the likely intention to drain visible inventories and support prices.The United States imported an average of 524,000 barrels per day (bpd) of crude from Saudi Arabia in the week ending July 14, the lowest volume for more than seven years ( from Saudi Arabia averaged just 810,000 bpd over the last four weeks, according to the U.S. Energy Information Administration (EIA), the slowest rate since January 2015.Crude arrives on supertankers carrying an average of around 2 million barrels so the weekly import numbers exhibit a lot of volatility linked to the timing of tanker arrivals.Imports are only reported to the U.S. Energy Information Administration when the crude has cleared U.S. customs so weekly volumes are sensitive to the precise timing of customs clearance.But there is no mistaking the downtrend in imports of Saudi Arabian crude since the start of June which seems set to continue until at least the end of August.On July 20, there were 15 very large crude carriers and 3 Suezmax tankers identified en route from Saudi Arabia to the United States, according to Kpler, a global cargo-tracking firm based in Paris.The number included some partially loaded tankers already off the U.S. coast waiting to complete discharging, according to an analysis by Kpler. There are also a couple of Saudi cargoes with unclear final destinations. But at the same point in 2016, there were 25 very large or ultra large crude carriers and 3 Suezmax tankers voyaging from Saudi Arabia to the United States.Saudi officials have openly discussed reducing shipments to the United States in recent weeks. Saudi crude exports to the United States will be below 800,000 bpd in August, a Saudi industry source familiar with production policy told Reuters ("Saudis to cut Aug oil exports to lowest level this year", Reuters, July 12).Crude and product stocks in the United States are the most transparent and high-profile element of global inventories thanks to the weekly records published by the EIA.Many traders and analysts use weekly stock data from the EIA as a proxy for changes in the global supply-demand balance, even though they may not be representative of the whole market.Saudi Arabia and its OPEC and non-OPEC allies are keen to demonstrate to a sceptical market that output cuts are finally drawing down bloated stocks. So it makes sense to curb shipments to the United States to try to accelerate the reduction in the highly visible stocks held in North America.

Saudis Cut Oil Exports To U.S. To Seven-Year Low -- Saudi Arabia is following through on cuts to its crude oil exports to the United States, weekly EIA crude import data show, after Riyadh stated a couple of months ago that it would purposely reduce exports to the U.S. to force a reduction in the world’s most transparently reported inventory.According to EIA figures, U.S. crude oil imports from Saudi Arabia averaged 524,000 bpd in the week to July 14, the lowest weekly level since June 11, 2010. In the week to July 7, U.S. imports of crude from Saudi Arabia averaged 851,000 bpd.   Weekly import numbers are volatile due to the timing of crude tanker arrivals and customs clearance, Reuters analyst John Kemp recalls.Nevertheless, the latest available weekly import data is the lowest level of weekly Saudi crude imports in more than seven years.The four-week average U.S. imports of crude oil from Saudi Arabia was 810,000 bpd for the four weeks ending the week to July 14 – and this was the lowest 4-week average import figure since January 2015.For the month of July, the Saudis were planning last month to cut exports to the U.S. by around 35 percent.   For August, Saudi Arabia is planning its oil exports to the U.S. to be below 800,000 bpd, as it will be slashing its total crude oil exports by more than 600,000 bpd to the lowest level this year, a Saudi industry source told Reuters last week.

Three Years Into Cheap Oil, Gulf Is Still Depending on a Rebound - Energy-rich Gulf Arab nations have scrambled to adjust to the slump in oil prices since 2014. Three years on, their economies are mired in weak growth and largely just as dependent on crude as they ever were.The six members of the Gulf Cooperation Council have curtailed subsidies and introduced new taxes to bolster non-oil revenue and reduce ballooning budget deficits. Much of the savings, however, have been due to spending cuts and the pace of reforms has slowed across the region, said Monica Malik, chief economist at Abu Dhabi Commercial Bank. Overall progress in economic diversification has been limited, she said.Absent a rebound in oil prices, analysts say it’s unlikely that these nations can repair their finances without deeper spending cuts that could further hurt growth. The standoff between a Saudi-led bloc and Qatar is also undermining investor confidence at a time when the GCC is seeking foreign funds. Five charts illustrate oil’s dominance and the challenges facing the region. First-quarter budget data from Saudi Arabia and Oman showed an improvement in their budget deficits alongside higher oil revenue, after the price of Brent crude rose to as high as $57.10 per barrel in January. It has since retreated under $50, well below what the two nations need to balance their budgets. Saudi Arabia, OPEC’s biggest producer, increased non-oil revenue in 2016 and introduced taxes on tobacco products and soda drinks in June this year. The government, however, reversed a decision to cut the bonuses and some allowances of state employees. A second round of subsidy cuts will also likely be delayed to later in 2017 or early next year, according to people with knowledge of the matter.

Libya to share oil output plans at OPEC/non-OPEC technical meeting next week: NOC -- Libya will present its output plans at the OPEC/non-OPEC technical committee meeting next week, led by the chairman of state-owned National Oil Corporation, Mustafa Sanalla. Sanalla said in a statement Tuesday that he will take "this opportunity to share with the committee the factors enabling and constraining Libya's production recovery." OPEC has been in a quandary in the last few months, as the effectiveness of its cuts are being blunted by the sharp rise in production from Nigeria and Libya, two members of the organization that were excluded from the original output deal in November. The two exempted countries have been invited to explain their production outlook, as the committee meets to review compliance with the deal and assess market conditions. The OPEC/non-OPEC monitoring committee meetings will take place next week in St. Petersburg, with a technical meeting on July 22 followed by a ministerial-level meeting on July 24. "I will consult with significant Libyan decision-makers before I leave and hope to present a unified Libyan position in St. Petersburg that will show we can act together in the national interest," Sanalla said. Last week, Sanalla was quoted as saying that Libya's humanitarian situation should be taken into account when considering whether the country is required to rein in its production. 

UAE arranged for hacking of Qatar government sites, sparking diplomatic row: Washington Post  (Reuters) - The United Arab Emirates arranged for Qatari government social media and news sites to be hacked in late May in order to post fiery but false quotes linked to Qatar's emir, prompting a diplomatic crisis, the Washington Post reported on Sunday, citing U.S. intelligence officials. The emir, Sheikh Tamim bin Hamad al-Thani, had been quoted in May as praising Hamas and saying that Iran was an "Islamic power," the Post reported. In response, Saudi Arabia, the UAE, Egypt and Bahrain cut diplomatic and transport ties with Qatar on June 5, accusing it of supporting terrorism. Qatar said in late May that hackers had posted fake remarks by the emir, an explanation rejected by Gulf states. The Post reported that U.S. intelligence officials learned last week of newly analyzed information that showed that top UAE government officials discussed the planned hacks on May 23, the day before they occurred. The officials said it was unclear if the UAE hacked the websites or paid for them to be carried out, the newspaper reported. The Post did not identify the intelligence officials it spoke to for the report. UAE Ambassador Yousef al-Otaiba denied the report in a statement, saying it was "false," the Post said.

Qatar Opens Its Doors to All, to the Dismay of Some - NYT —  In one western district, near the campuses hosting branches of American universities, Taliban officials and their families can be found window-shopping in the cavernous malls or ordering takeout meals from a popular Afghan eatery.A few miles away at a vast United States military base with 9,000 American personnel, warplanes take off on missions to bomb the Islamic State in Iraq and Syria — and sometimes the Taliban in Afghanistan. Officials from Hamas, a Palestinian militant group, work from a luxury villa near the British Embassy, and recently held a news conference in a ballroom at the pyramid-shape Sheraton hotel. And an elderly Egyptian cleric, a fugitive from Cairo, is a popular fixture on the city’s swank social scene, and was recently spotted at a wedding by an American diplomat who was attending the same celebration. This is the atmosphere of intrigue and opulence for which the capital of Qatar, a dust-blown backwater until a few decades ago, has become famous as the great freewheeling hub of the Middle East. Against a backdrop of purring limousines and dhows moored in the bay, Doha has become home to an exotic array of fighters, financiers and ideologues, a neutral city with echoes of Vienna in the Cold War, or a Persian Gulf version of the fictional pirate bar in the “Star Wars” movies. Yet that welcome-all attitude is precisely what has recently angered Qatar’s much larger neighbors and plunged the Middle East into one of its most dramatic diplomatic showdowns. For more than a month, four Arab countries have imposed a sweeping air, sea and land blockade against Qatar that, in a nutshell, boils down to a demand that Doha abandon its adventurist foreign policy, and that it stop giving shelter to such a broad range of agents in its capital. The blockading nations — Saudi Arabia, Egypt, the United Arab Emirates and Bahrain — insist that Qatar is using an open-door policy to destabilize its neighbors. They say that Doha, rather than the benign meeting ground described by Qataris, is a city where terrorism is bankrolled, not battled against.

Turkey Building Up Army Base in Qatar, Erdogan Adviser Says - Turkey is building up its military presence in Qatar, an adviser to President Recep Tayyip Erdogan said, in defiance of a Saudi-led bloc’s demand that the Turkish military pull out of the emirate. “Turkey’s steady buildup continues there, protecting the border and the security of the Qatari government,” adviser Ilnur Cevik said Monday by phone. Turkey has deployed dozens of commandos and some artillery units in Qatar, the Hurriyet newspaper reported. The growing Turkish military footprint further entrenches positions on either side of the Saudi-Qatar divide that broke open last month. The conflict has resisted Kuwaiti mediation and U.S. Secretary of State Rex Tillerson’s shuttle diplomacy, and on Monday, a senior United Arab Emirates official said the Saudi alliance was ready for this process to take a “very long time.” The allies -- Saudi Arabia, the U.A.E., Bahrain and Egypt -- cut diplomatic and commercial ties with the emirate on June 5. They have vowed to restore them only after the world’s biggest producer of liquefied natural gas complies with a list of 13 demands, including ending Turkey’s military presence, scaling back ties with Iran and severing relations with the Muslim Brotherhood. Qatar has rebuffed the demands and has denied the bloc’s allegation that it funds terrorism. “While the size of the Turkish military presence in Qatar is not big, it serves as a deterrent against moves that could threaten the Qatari government or its land border,” 

Qatar Crisis Set to Continue as Bloc Seeks a Solution ‘That Will Stick’ -  There’s little likelihood of a quick resolution to the Gulf standoff over Qatar as the emirate’s neighbors want a solution “that will stick,” according to a senior United Arab Emirates official. Speaking during a trip to London, Minister of State for Foreign Affairs Anwar Gargash said the four-nation bloc led by Saudi Arabia that’s isolating Qatar needs a clear signal that the emirate is willing to reexamine its position regarding extremism and terrorism. “The situation we want to move to is a neighbor that we can trust, a neighbor that is transparent, that we can do business with,” he said in an interview outside the Houses of Parliament. “This is not a crisis where we are looking for a quick fix,” he said. “We need a solution that will stick.” The allies -- Saudi Arabia, the U.A.E., Bahrain and Egypt -- cut diplomatic and commercial ties with the emirate on June 5. They have vowed to restore them only after the world’s biggest producer of liquefied natural gas complies with their demands, including ending Turkey’s military presence, scaling back ties with Iran and severing relations with the Muslim Brotherhood. Qatar has rebuffed the demands and has denied the bloc’s allegation that it funds terrorism. Gargash refused to give details of any further punitive measures being planned beyond saying that financial institutions and “people being harbored and supported by Qatar” might be targeted. “We’ve said before that we are not going to escalate but we will take, here and there, measures that we need to take within our sovereign rights and within international law,” he said. 

Qatar emir calls for negotiations to ease Gulf boycott - BBC News: The emir of Qatar has called for negotiations to ease a boycott by four powerful Arab neighbours. In his first public address since the crisis erupted, Sheikh Tamim bin Hamad Al Thani said any solution must respect Qatar's sovereignty. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut ties with Qatar in June over its alleged support for terrorism and ties with Iran, and issued a series of demands. Qatar denies aiding terrorists. In his television address, the emir condemned a "malicious smearing campaign" against Qatar and praised the resilience of its people. "As you know, life in Qatar life goes on normally," he said. But he said "the time has come for us to spare the people from the political differences between the governments". "We are open to dialogue to resolve the outstanding problems," so long as Qatar's "sovereignty is respected", the emir said.The restrictions put in place by the four Arab nations have forced the gas-rich emirate to import food by sea and air to meet the basic needs of its population of 2.7 million.Saudi Arabia and its allies have now backed down from a list of 13 specific demands they made last month. They included shutting down the Al Jazeera news network, closing a Turkish military base, cutting ties with the Muslim Brotherhood and downgrading relations with Iran.  Instead they say they want Qatar to accept six broad principles before they lift the restrictions. These include commitments to combat terrorism and extremism, and to end acts of provocation and incitement.

Qatar emir ready for Gulf crisis dialogue with conditions - - Qatar's ruler said Friday that the Gulf emirate is ready for dialogue to resolve a diplomatic crisis with a Saudi-led bloc so long as his country's sovereignty is respected. "We are open to dialogue to resolve the outstanding problems," so long as Qatar's "sovereignty is respected," Emir Sheikh Tamim bin Hamad Al-Thani said in his first public comments since Saudi Arabia and its allies severed ties with gas-rich Qatar. "Any settlement of the crisis must be based on two principles," he said in a televised speech. Sheikh Tamim insisted that any deal "must not take effect in the form of diktats but rather through mutual commitments undertaken by all the parties". "We are open to dialogue to find solutions to lingering problems within the framework of respect for the sovereignty and will of each state as mutual undertakings and joints commitments binding all," he said. State media said ahead of the speech that the emir would address "the future orientation of Qatar in light of the current Gulf crisis". On June 5, Sunni-ruled Saudi Arabia, Bahrain, the United Arab Emirates and Egypt cut ties with Qatar accusing it of backing extremism and fostering ties with their Shiite rival Iran. Doha denies the claim. The emir said in his speech that Qatar was "fighting terrorism relentlessly and without compromises, and the international community recognises this".

Qatar, Saudi Arabia To Islamize One Of Europe's Greatest Cathedrals-- Muslim supremacists seem to have fantasies -- as well as a long history -- of converting Christian sites to Islamic ones. Take, for example, Saint-Denis, the Gothic cathedral named for the first Christian bishop of Paris who was buried there in 250, and the burial place of Charles Martel, whose victory stopped the Muslim invasion of France in 732. Now, according to the scholar Gilles Kepel, this burial place of most of France's kings and queens is "the Mecca in Islam of France". The French Islamists are dreaming of taking it over and replacing the church bells with the call of the muezzin. In Turkey's greatest cathedral, Hagia Sophia, a muezzin's call recently reverberated inside the sixth-century church for the first time in 85 years. In France, Muslim leaders called for converting abandoned churches into mosques. thereby echoing The late writer Emile Cioran once predicted of Europe: "The French will not wake up until Notre Dame becomes a mosque". Now it is the turn of Spain's greatest Catholic site, the Cathedral of Córdoba. Spanish "leftists" and secularists would now, it seems, like to convert to Islam the cathedral of Córdoba, the symbol of a time when "Islam was on the verge of turning the Mediterranean into a Muslim lake". Now that Islam is again conquering large swaths of the Middle East and Africa, is it not a coincidence that this campaign is gaining ground? In 550 the Cathedral of Córdoba was a Christian basilica, dedicated to a saint; then, in 714, it was occupied by the Muslims, who destroyed it and converted it into the Great Mosque of Córdoba during the reign of Caliph Abd al Rahman I. The site was returned to Catholic worship by King Ferdinand III in 1523 and became the current great Cathedral of Córdoba, one of the most important sites of Western Christianity. Now an alliance of secularists and Islamists are trying to turn the church back to Islamic worship.The Wall Street Journal called it deconquista, playing with the word reconquista, the time when Spain was returned from Islam to Catholicism. "The Great Mosque of Córdoba" is what UNESCO -- also torturing, upending and turning history on its head to rewrite the past of Jerusalem and Hebron -- calls it. In the last six centuries, however, only Catholic mass and confessions have been officiated there. The WSJ charges "left-wing Spanish intellectuals" with trying to "de-Christianize" the site.

Saudi King’s Son Plotted Effort to Oust His Rival — As next in line to be king of Saudi Arabia, Mohammed bin Nayef was unaccustomed to being told what to do. Then, one night in June, he was summoned to a palace in Mecca, held against his will and pressured for hours to give up his claim to the throne. By dawn, he had given in, and Saudi Arabia woke to the news that it had a new crown prince: the king’s 31-year-old son, Mohammed bin Salman. The young prince’s supporters have lauded his elevation as the seamless empowerment of an ambitious leader. But since he was promoted on June 21, indications have emerged that Mohammed bin Salman plotted the ouster and that the transition was rockier than has been publicly portrayed, according to current and former United States officials and associates of the royal family. To strengthen support for the sudden change in the line of succession, some senior princes were told that Mohammed bin Nayef was unfit to be king because of a drug problem, according to an associate of the royal family. The decision to oust Mohammed bin Nayef and some of his closest colleagues has spread concern among counterterrorism officials in the United States who saw their most trusted Saudi contacts disappear and have struggled to build new relationships. And the collection of so much power by one young royal, Prince Mohammed bin Salman, has unsettled a royal family long guided by consensus and deference to elders. 

The Death of Saudi Arabia - Saudi Arabia, Egypt, United Arab Emirates and Bahrain recently cut off diplomatic relations with Qatar and launched an embargo, stating that they wanted the media outlet Al-Jazeera shut down, and support for the Muslim Brotherhood ended.  Or, more colloquially, and good for a belly laugh, “stop supporting terrorists”, which coming from any of those countries and especially Saudi Arabia is so flamingly hypocritical it puts the sun in shadow. Oh my God.Unfortunately for Saudi Arabia and its allies, Qatar has yet to give in, and it has been backed up by Turkey, who sent troops, and Iran, who is sending food.Then we have the war against Yemen. Saudi Arabia invaded Yemen, with a huge coalition, and US support, and, well, what have they accomplished? I suspect the main accomplishment will be crippling Yemen’s next generation by starving them when they were young.And, some time back, Saudi Arabia decided to lower oil prices to push out Western producers and—oh, look, oil prices are too low to support Saudi Arabia.The joke in Saudi Arabia, I understand is, “my grandfather rode a camel, I drive a car, my grandson will ride a camel.”Saudi Arabia is doomed. The current king is an incompetent, thrashing around trying to solve problems and making them worse.  He, as with his forbears, sees foes everywhere, but unlike those who came before him, he isn’t willing to simply sit and let sores fester. He wants to do something about them, and so far, what he’s done has made them worse.This is fairly standard: all dynasties go bad eventually because the kings-to-be grow up in wealth and power and think it’s the natural state of things: that they are brilliant and deserve it all, when it was handed them on a platter. Perhaps they are good at palace intrigue and think that extends beyond the palace.  It doesn’t.

Saudi Arabia Is Under Threat of a Cholera Outbreak as Hajj Nears - Though the Saudi-led coalition may have wanted to keep its war in Yemen at arm's length, the cholera epidemic — a "direct consequence" of two years of conflict — is not bound by borders.In fact, it may invade one of Saudi Arabia's most renowned events, the annual Hajj.The World Health Organization warned Friday that cholera could pose a "serious risk" to the millions of Muslims from all over the world descending on Mecca in September to perform annual the pilgrimage."The current highly spreading outbreak of cholera in Yemen, as well as in some African countries, may represent a serious risk to all pilgrims during the [hajj] days and even after returning to their countries," the WHO bulletin said.Saudi Arabia's Ministry of Health has taken extensive precautionary measures to secure the Hajj from epidemics, establishing a Command and Control Center to monitor suspicious cases, requiring vaccinations, and even suggesting wearing face masks. In the past, it has been known for requiring pilgrims to submit to health screenings, even setting up thermal cameras to monitor body temperature.The cholera epidemic in Yemen is currently the worst in the world. Since April, cholera has swept through Yemen, killing oneperson every hour and infecting over over 300,000, with thousands more confirmed cases every day. Health officials attempting to curb Yemen's ravaging outbreak believe the crisis could have been preventable, but instead was exacerbated by crippled medical facilities, a shortage of supplies, and damaged transport infrastructure. "This deadly cholera outbreak is the direct consequence of two years of heavy conflict," Unicef and the World Health Organization said in a joint statement in June. "Collapsing health, water, and sanitation systems have cut off 14.5 million people from regular access to clean water and sanitation, increasing the ability of the disease to spread."

Qatar Warms Up to Iran on Natural Gas -- The world’s biggest gas field lies between Qatar and Iran, and the half-competitive, half-cooperative race to exploit it has taken a new turn. For both countries, this enormous resource is also a source of political power. Now, with the emirate at odds with Tehran’s foe, Saudi Arabia, its tacit cooperation with Iran is gaining, even as the two are set to compete more intensely in gas markets. In 2005, Qatar imposed a moratorium on further development of the North Field, saying it needed to study the reservoir. That moratorium has only just been lifted -- but a field study does not take 12 years. There were good commercial reasons to halt -- the LNG market was becoming oversupplied and domestic construction capability was overstretched. Saudi pressure blocked new pipelines to Bahrain and Kuwait, which even made difficulties over the route of the Dolphin pipeline. But there has also been suspicion that the Iranians warned Doha to stop new projects that they felt would start draining “their” gas. Since 2014, Iran’s production has been gaining rapidly as long-delayed phases of South Pars, awarded to domestic contractors who were hampered by sanctions and financing problems, have finally been completed. By 2020, Iran’s output from South Pars will exceed Qatar’s from the North Field. The contract that Total and China National Petroleum Corporation signed on July 3 for Phase 11 is a crucial part of Iran’s strategy, as the first deal awarded under the new Iran Petroleum Contract, designed to attract foreign investment following the lifting of nuclear-related sanctions at the start of last year. The production will initially go to the domestic market, but later could support Iran’s first LNG export project. It is a key public relations win for both post-sanctions Iran and for the administration of recently re-elected President Hassan Rouhani. This came only two months after Qatar announced the end of its moratorium, with the beginning of a new gas production project. Just a day after the signature of the South Pars Phase 11 deal, Qatar Petroleum Chief Executive Saad Sherida Al Kaabi said its new project would double in size, raising total LNG export capacity by 30 percent to 100 million metric tons per year by about 2023, maintaining it as the world’s largest, outpacing Australia and the U.S.

Iran Dominates in Iraq After U.S. ‘Handed the Country Over’ - NYT - Walk into almost any market in Iraq and the shelves are filled with goods from Iran — milk, yogurt, chicken. Turn on the television and channel after channel broadcasts programs sympathetic to Iran. A new building goes up? It is likely that the cement and bricks came from Iran. And when bored young Iraqi men take pills to get high, the illicit drugs are likely to have been smuggled across the porous Iranian border. And that’s not even the half of it. Across the country, Iranian-sponsored militias are hard at work establishing a corridor to move men and guns to proxy forces in Syria and Lebanon. And in the halls of power in Baghdad, even the most senior Iraqi cabinet officials have been blessed, or bounced out, by Iran’s leadership. When the United States invaded Iraq 14 years ago to topple Saddam Hussein, it saw Iraq as a potential cornerstone of a democratic and Western-facing Middle East, and vast amounts of blood and treasure — about 4,500 American lives lost, more than $1 trillion spent — were poured into the cause. From Day 1, Iran saw something else: a chance to make a client state of Iraq, a former enemy against which it fought a war in the 1980s so brutal, with chemical weapons and trench warfare, that historians look to World War I for analogies. If it succeeded, Iraq would never again pose a threat, and it could serve as a jumping-off point to spread Iranian influence around the region. In that contest, Iran won, and the United States lost. 

Why Isis Fighters Are Being Thrown Off Buildings in Mosul --  Iraqi security forces kill Isis prisoners because they believe that if the militants are sent to prison camps they will bribe the authorities in Baghdad to release them. “That is why Iraqi soldiers prefer to shoot them or throw them off high buildings,” says one Iraqi source. A former senior Iraqi official said he could name the exact sum that it would take for an Isis member to buy papers enabling him to move freely around Iraq. The belief by Iraqi soldiers and militiamen that their own government is too corrupt to keep captured Isis fighters in detention is one reason why the bodies of Isis suspects, shot in the head or body and with their hands tied behind their backs, are found floating in the Tigris river downstream from Mosul. Revenge and hatred provoked by Isis atrocities are motives for extrajudicial killings by death squads, but so is distrust of an Iraqi judicial system, which is notoriously corrupt and dysfunctional. Paranoia at the end of a very violent war partially explains why so many Iraqis are convinced that dangerous Isis members can always bribe their way to freedom. Dozens of posts on social media from Baghdad allege that suicide bombers who blow themselves up killing many civilians had previously been detained by the security forces and released in return for money. “We die in Baghdad because of corruption,” reads one post, frequently shared with others. One tweet says: “Daesh [Isis] pays the government and kills us in Baghdad.”

New reports indicate ISIS leader still alive | TheHill: The Pentagon could not confirm on Monday new reports that the leader of the Islamic State in Iraq and Syria (ISIS) is still alive, following reports of his death last week. A top Kurdish counterterrorism official told Reuters on Monday that he was 99 percent sure that ISIS leader Abu Bakr al-Baghdadi was alive and south of Raqqa in Syria. “Baghdadi is definitely alive. He is not dead. We have information that he is alive,” Lahur Talabany told Reuters.But Pentagon spokesman Jeff Davis told reporters that it has “no information one way or the other about Baghdadi’s whereabouts or his status.” The monitoring group Syrian Observatory for Human Rights last week claimed to have verified his death. “Obviously we consider him somebody who we would like to see dead as the leader of ISIS, but we don’t have anything one way or the other,” Davis said. 

Photos Of Aleppo Rising: Swimsuits, Concerts And Rebuilding In First Jihadi-Free Summer -- When taxi and bus drivers take journalists into Syria via the Beirut-Damascus Highway these days, there's a common greeting that has become a kind of local tradition as the drivers pull into their Damascus area destinations. They confidently tell their passengers: "welcome to the real Syria." Local Syrians living in government areas are all too aware of how the outside world perceives the government and the cities under its control. After years of often deceptive imagery and footage produced by opposition fighters coordinating with an eager Western press bent on vilifying Assad as "worse than Hitler", many average Syrian citizens increasingly take to social media to post images and scenes of Syria that present a different vision: they see their war-torn land as fundamentally secular, religiously plural, socially tolerant, and slowly returning to normalcy under stabilizing government institutions.

Israel Rejects Cease-fire Deal Between U.S. And Russia In South Syria - One month after the WSJ reported that Israel had been secretly funding the Syrian rebel opposition to Assad's regime for years in hopes of keeping the Syrian political situation unstable and preventing the Syrian - and Iranian - regime's military from becoming a substantial threat, overnight Israel Prime Minister Benjamin Netanyahu told reporters after his meeting with French President Emmanuel Macron on Sunday that Israel opposes the cease-fire agreement in southern Syria that the United States and Russia reached "because it perpetuates the Iranian presence in the country."Quoted by Haaretz, a senior Israeli official said Israel "is aware of Iranian intentions to substantially expand its presence in Syria", and added that Iran is not only interested in sending advisers to Syria but also in dispatching extensive military forces including the establishment of an airbase for Iranian aircraft and a naval base. "This already changes the picture in the region from what it has been up to now," the official said.Which considering that most if not all of Syria's victories in the ongoing parallel proxy wars with both ISIS and the various "moderate" and not so "moderate" rebel groups were courtesy of Iran and specifically the IRGC, is to be expected. Still, by openly voicing his opposition to one of the most significant moves the United States and Russia have made in Syria in recent months, Netanyahu made public a major disagreement between Israel and the two great powers that had until now been kept under wraps and expressed only through quiet diplomatic channels. Netanyahu said he had discussed the cease-fire deal with U.S. Secretary of State Rex Tillerson by phone Sunday night. As a reminder, Donald Trump and Vladimir Putin agreed on the cease-fire on the sidelines of the G20 summit in Hamburg last week. In a tweet published shortly after the truce came into effect last week, Trump tweeted: "We negotiated a ceasefire in parts of Syria which will save lives. Now it is time to move forward in working constructively with Russia!"

Turkey Begins Bombing US-Backed YPG Positions In Syria --It started two weeks ago, when Turkey warned publicly it was preparing for military intervention in Syria, while accusing the US of creating a "terrorist army" (it wasn't referring to ISIS, but US-backed Syrian Kurdish militia YPG). As a reminder, YPG forms a major part of the U.S.-backed campaign to capture Islamic State's stronghold of Raqqa, and whose forces are seen as a terrorist organization by Turkey. The group currently controls a pocket of territory in Afrin, about 200 km (125 miles) west of Raqqa.Tensions between Turkish forces and the YPG have been mounting in the Afrin region in recent weeks: Turkey's military, which launched an incursion last August into part of northern Syria which lies between Afrin and a larger Kurdish-controlled area further east, has said that it has returned fire against members of YPG militia near Afrin several times in the last few weeks.Furthermore, last month the Turkish defence ministry slammed the Pentagon decision to arm theYPF, and mocking Washington's assurances that it would retrieve weapons provided to the YPG after Islamic State fighters were defeated: "There has never been an incident where a group in the Middle East has been armed, and they returned the weapons," Kurtulmus said. The United States "have formed more than a terrorist organisation there, they formed a small-scale army."  Then overnight, Ilnur Cevik, a senior adviser to President Recep Tayyip Erdogan, spoke to Bloomberg and said that while Turkey has no immediate plans for an operation in the Syrian Kurdish-run region of Afrin, its army is preparing for action and the military buildup on the border is “serious."

Pentagon Furious After Turkey Leaks U.S. Base Locations In Syria: "Hard Not To See This As A F-You" - In a move that has angered the U.S. for obvious reason, Turkey’s state-run news agency Anadolu Agency has leaked the precise locations of U.S. bases in northern Syria. The move - which exposes the exact locations of American soldiers on the front lines in the war-torn nation - has sent the ongoing feud between the two NATO allies to new lows. As Bloomberg details, in reports published in both Turkish and English on Tuesday, Anadolu provided detailed information about 10 U.S. bases in northern Syria, including troop counts and a map of the U.S. force presence in the Turkish version.   The reports said that the military outposts are “usually hidden for security reasons, making it hard to be detected.” It said they were located “in the terrorist PKK/PYD-held Syrian territories,” a reference to Kurdish groups that Turkey’s government considers terrorist organizations.   Needless to say, the Pentagon was furious.  According to the Daily Beast, Washington was so incensed that it even tried to prevent US media from reprinting the story, after it had already appeared in the Turkish media.“The discussion of specific troop numbers and locations would provide sensitive tactical information to the enemy which could endanger Coalition and partner forces,” Colonel Joe Scrocca, director of public affairs for Operation Inherent Resolve, reportedly wrote to the New York-based Daily Beast, which was the only major US outlet to pick up the story by Wednesday morning.

NATO Member Turkey Turns To Russia For Air Defense Cooperation -- Turkey has agreed to pay $2.5 billion to acquire S-400 – the Russia-made most advanced long-range missile defense system in the world. Russian President Vladimir Putin has already said that Moscow is ready to sell it. According to Russian Presidential Adviser for Military and Technical Cooperation Vladimir Kozhin, Russia’s contract with Turkey has been agreed in general, with financial details still to be ironed out. The system is capable of intercepting all types of modern air weaponry, including fifth-generation warplanes, as well as ballistic and cruise missiles at a maximum range of nearly 250 miles.According to the preliminary agreement, Ankara is to receive two S-400 missile batteries within the next year, and then produce another two inside Turkey, although the Turkish defense industry has no experience of producing such systems. Not yet.Unlike NATO’s US-made Patriots temporarily deployed in Turkey some time ago, the Russian S-400 deal has no political strings attached, and could, potentially, boost Turkey’s defense industry bringing Russian-Turkish military cooperation to an unprecedented level. The two nations will work together for many years and the process is likely to encompass other areas of interaction. Last year, Russia and Turkey signed a declaration on partnership in defense industry.The parties agreed to form a joint military and intelligence mechanism to coordinate their activities in the Middle East. Ankara also seeks procurement deals with Russia in electronic systems, ammunitions and missile technology.

The New Silk Road Will Go Through Syria – Pepe Escobar - Amid the proverbial doom and gloom pervading all things Syria, the slings and arrows of outrageous fortune sometimes yield, well, good fortune. Take what happened this past Sunday in Beijing. The China-Arab Exchange Association and the Syrian Embassy organized a Syria Day Expo crammed with hundreds of Chinese specialists in infrastructure investment. It was a sort of mini-gathering of the Asia Infrastructure Investment Bank (AIIB), billed as “The First Project Matchmaking Fair for Syria Reconstruction”. And there will be serious follow-ups: a Syria Reconstruction Expo; the 59th Damascus International Fair next month, where around 30 Arab and foreign nations will be represented; and the China-Arab States Expo in Yinchuan, Ningxia Hui province, in September. Qin Yong, deputy chairman of the China-Arab Exchange Association, announced that Beijing plans to invest $2 billion in an industrial park in Syria for 150 Chinese companies. Nothing would make more sense. Before the tragic Syrian proxy war, Syrian merchants were already incredibly active in the small-goods Silk Road between Yiwu and the Levant. The Chinese don’t forget that Syria controlled overland access to both Europe and Africa in ancient Silk Road times when, after the desert crossing via Palmyra, goods reached the Mediterranean on their way to Rome. After the demise of Palmyra, a secondary road followed the Euphrates upstream and then through Aleppo and Antioch.

China June oil refinery throughput close to record  (Reuters) - China's oil refineries ramped up throughput in June to the second highest on record, with some independent plants raising output even as state oil majors prepare to take drastic steps to cut production during the peak summer season. Throughput last month reached 46.08 million tonnes, or 11.21 million barrels per day (bpd), a 2.3-percent rise year-on-year and up from May's 10.98 million bpd, data from the National Bureau of Statistics (NBS) showed on Monday. That was just shy of December's record volume of 11.26 million bpd. The higher throughput came after another month of strong crude oil imports and as top refineries prepared to cut output in the third quarter. "Refinery runs were impressive considering that refinery maintenance was still heavy," said Nevyn Nah, analyst at Energy Aspects. Independent refiners, known as 'teapots', raised their runs after receiving additional crude import quotas, while oil majors kept their throughput roughly flat year on-year, he said. For the first six months, refinery production in the world's second-largest fuel consumer gained 3 percent from a year earlier to 275.21 million tonnes, or about 11.1 million bpd. Upcoming cuts to production by the oil majors will not be as deep as many in the market expect, added Nah, because the planned cuts were from very high levels in the first quarter. The NBS data on Monday also showed domestic crude oil output fell 2.3 percent last month versus a year ago to 16.21 million tonnes, or 3.94 million bpd, but up from May's 3.83 million bpd. Output during the January-June period was down 5.1 percent on-year at about 3.89 million bpd.

North Korea's Fuel Prices Soar After China Suspends Exports -- Diesel and gasoline prices in North Korea have jumped since China National Petroleum Corp (CNPC) halted sales of fuel to Pyongyang, Reutersreported on Monday, citing data on prices collected by North Korean defectors. At the end of last month, reports emerged that CNPC, the main supplier of diesel and gasoline to North Korea, has suspended fuel sales to North Korea because it is worried that it may not receive payments.North Korea imports all the oil and oil products it consumes - mostly from China - and a prolonged suspension by CNPC would choke out supplies at a time when the international community is increasing pressure on North Korea to stop its nuclear and missile ambitions, and is intensifying checks over Chinese business relations with Pyongyang.According to a Reuters analysis of data by the Daily NK website - which is run by North Korean defectors who collect price data via phone calls with fuel traders in North Korea - private dealers in the north were selling gasoline at US$2.18 per kilogram, or US$2.92 per liter, as of July 5, a 50-percent surge compared to US$1.46 per kg on June 21. Gasoline prices fell slightly to US$2.05 per kg by July 12, but still, they were more than double compared to prices at the beginning of the year, Reuters’ analysis of the data shows.   Diesel prices jumped by 20 percent in the three weeks to July 12. After the initial price surges in early July, prices of both diesel and gasoline have stabilized, probably because North Korea has encouraged fuel smuggling across the Chinese border, according to defector Kang Mi-jin who is in communication with traders in North Korea.

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