oil prices rose every day this past week, in what ended up with the biggest weekly price increase so far this year...the rally started with news on Monday that OPEC had reached an agreement that Saudi Arabia, the Emirates and Kuwait would further cut oil exports, and that previously exempt Nigeria would agree to cap their oil production at 1.8 million barrels a day, with US crude for September delivery increasing 57 cents to $48.60 a barrel on the day....WTI September futures then rose $1.55 or 3.3 percent on Tuesday, to finish at $47.89 a barrel, the highest close for that benchmark since early June, after the Saudis further committed to a million barrel per day export reduction and Anadarko Petroleum said it would cut its 2017 outlays by $300 million because of depressed oil prices, in the first sign that U.S. oil producers might be cutting back on new well drilling...oil prices then approached eight-week highs on Wednesday, rising 86 cents or 1.8 percent to $48.75 a barrel, after the EIA reported that U.S. crude, gasoline, and distillate inventories all fell in the prior week, with our oil supplies dropping below their year earlier level for the first time since 2014...the buying momentum spurred by the inventory declines carried into Thursday, as US light, sweet crude prices rose another 29 cents, or 0.6%, to $49.04 a barrel, the first close over $49 a barrel since May 30th...with a relatively small increase in oil rigs reported on Friday, traders remained focused on the OPEC crude oil export cuts and the larger than expected inventory draws and pushed oil prices up another 67 cents, or 1.4 percent, to $49.71 on Friday, capping an 8.6% increase for the week, the largest weekly gain this year...
with the headlines all noting that "largest price gain this year" for this week, we'll include a chart of oil prices over the past 6 months for some perspective...
the above graph is a screenshot of the live interactive oil price graph at Daily FX, an online platform that provides trading news, charts, indicators and analysis of the markets...each bar on the above graph represents oil prices for one day of oil trading between February 1st and July 28th, wherein green bars represent the days when the price of oil went up, and red bars represent the days when the price of oil went down...for green bars, the starting oil price at the beginning of the day is at the bottom of the bar and the price at the end of the day is at the top of the bar, while on red or down days, the starting price is at the top of the bar and the price at the end of the day is at the bottom of the bar...at the far right, we can see the five green bars that represent this week's price rally; but note that this week's rally started from last Friday's 8 day low, so more than a third of this week's increase was just recovering what was lost last week...also note that this week's close is still nearly $2 a barrel below the May high, which itself was $2 a barrel below the April high...furthermore, we had an extended 4 month period ending in March where oil rarely saw prices below $52 a barrel...so we're still a way from reaching those levels, or anything that looks like a permanent change to the downward trend that we've been in since then...
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 21st, showed a small increase in US oil imports, a big increase in our oil exports, and a substantial increase the amount of oil used by US refineries, which thus meant that more oil was again withdrawn from our commercial stocks of crude oil to meet those needs...our imports of crude oil rose by an average of 48,000 barrels per day to an average of 8,044,000 barrels per day during the week, while at the same time our exports of crude oil rose by 302,000 barrels per day to an average of 1,030,000 barrels per day, which meant that our effective imports netted out to 7,014,000 barrels per day during the week, 254,000 barrels per day less than during the prior week...at the same time, our field production of crude oil fell by 19,000 barrels per day to an average of 9,410,000 barrels per day, which means that our daily supply of oil from net imports and from wells totaled an average of 16,424,000 barrels per day during the cited week...
during the same week, refineries used 17,285,000 barrels of crude per day, 166,000 barrels per day more than they used during the prior week, while at the same time 1,030,000 barrels of oil per day were being pulled out of oil storage facilities in the US (coincidentally the same amount of oil as we exported)....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 169,000 more barrels per day than what refineries reported they used during the week...to account for that discrepancy, the EIA needed to insert a (-169,000) 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 inched up to an average of 7,848,000 barrels per day, which was still 4.2% below the imports of the same four-week period last year...the 1,030,000 barrel per day decrease in our total crude inventories was all withdrawn from our commercial stocks of crude oil, as oil stored in our Strategic Petroleum Reserve was unchanged....this week's 19,000 barrel per day decrease in our crude oil production resulted from a 54,000 barrels per day drop in oil output from Alaska, which was only partially offset by a 35,000 barrel per day increase in oil output from wells in the lower 48 states...the 9,410,000 barrels of crude per day that were produced by US wells during the week ending July 21st was 7.5% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 10.5% more than the 8,515000 barrel per day of oil output during the during the same week a year ago, while it was still 2.1% below the June 5th 2015 record US oil production of 9,610,000 barrels per day...
US oil refineries were operating at 94.3% of their capacity in using those 17,285,000 barrels of crude per day, which was up from 94.0% of capacity the prior week, and above normal for this or any time of year...the amount of oil refined this week was also above the seasonal norm, as it was 4.2% more than the 16,586,000 barrels of crude per day.that were being processed during week ending July 22nd, 2016, when refineries were operating at 92.4% of capacity, and roughly 9% above the 10 year average of 15.8 million barrels of crude refined per day for the third week of July....
with the increase in refining, gasoline production from our refineries increased by 297,000 barrels per day to 10,393,000 barrels per day during the week ending July 21st, which was the third highest weekly gasoline production on record; it was also 3.2% higher than the 10,068,000 barrels of gasoline that were being produced daily during the comparable week a year ago....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) also rose by 186,000 barrels per day to 5,131,000 barrels per day, which was 4.3% more than the 4,918,000 barrels per day of distillates that were being produced during the week ending July 22nd last year....
even with the increase in our gasoline production, our end of the week supply of gasoline decreased by 1,015,000 barrels to 230,196,000 barrels by July 21st, the 6th drop in gasoline inventories in a row....a 229,000 barrels per day increase to 9,821,000 barrels per day in our domestic consumption of gasoline was responsible for the drop in supplies, which occurred despite a 132,000 barrel per day increase to 723,000 barrels per day in our imports of gasoline... meanwhile, our gasoline exports increased by 22,000 barrels per day to 595,000 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 4.7% below last year's seasonal high of 241,452,000 barrels for this week of the year, but are still 6.6% higher than the 215,922,000 barrels of gasoline we had stored on July 24th of 2015, and roughly 6.5% above the 10 year average of gasoline supplies for this week of the year…
likewise, even with the increase in our distillates production, our supplies of distillate fuels fell by 1,852,000 barrels to 149,564,000 barrels over the week ending July 21st, the 4th drop in five weeks....a factor in this week's decrease in distillates supplies was a 108,000 barrel per day increase to 1,150,000 barrels per day in our exports of distillates...in addition, the amount of distillates supplied to US markets, a proxy for our consumption. rose by 42,000 barrels per day to 4,376,000 barrels per day, while our imports of distillates rose by 4,000 barrels per day to 130,000 barrels per day....with this week's decrease, our distillate inventories are nearly 1.6% lower than the 152,003,000 barrels that we had stored on July 22nd, 2016, but they remain 38% higher than the distillate inventories of 144,103,000 barrels that we had stored on July 24th of 2015, and roughly 10.7% above the 10 year average for distillates stocks for this time of July...
finally, with the increase in oil exports and the pickup in oil refining, our stored supplies of oil decreased for the 14th time in the past 16 weeks, as our commercial crude oil inventories fell by 7,208,000 barrels to 483,415,000 barrels as of July 21st, leaving us with the least oil we've had in storage anytime this year.. furthermore, our oil supplies dropped below their year ago level for the first time since 2014, as July 21st's oil inventories were 1.4% below the 490,501,000 barrels of oil we had stored on July 22nd of 2016...with that, we have another graph that will attempt to put this into perspective...
the above graph comes from a weekly emailed package of oil graphs from John Kemp, senior energy analyst and columnist with Reuters, which i've attempted to embellish with a bit of additional information...John's graph shows US commercial oil inventories in thousands of barrels by "day of the year" for the past ten years, with the past ten year range of our gasoline supplies on any given day of the year shown in the light blue shaded area, and the median level of our oil supplies, or the middle of the 10 year daily range, traced by the blue dashes over each day of the year...the original graph also shows the number of barrels of oil we had stored for each week in 2016 traced weekly by a yellow line, with our 2017 oil supplies represented in red for the year to date ..to that i've added a green line which very approximately represents our 2015 oil inventories in thousands of barrels for each day of that year, a violet line which similarly represents our 2014 oil inventories in thousands of barrels for each day of that year, and a brown line which represents our 2013 oil inventories in thousands of barrels for each day of that year...note that the lines that i've included were drawn by hand by dragging a mouse over the graph using the Microsoft Paint utility, and thus are far less than exact; they're only meant to show the trend in our oil supplies over that period...
and the trend that they show is that oil inventories stayed in a narrow range fairly close to the 10 year mean throughout 2013 and 2014, typically falling to below 330 million barrels by the end of each summer and then rising to nearly 370 million barrels by early spring...however, at the beginning of 2015, represented by the green colored graph, our inventories of oil started rising each week till they topped 450 million barrels at the end of April 2015, and then stayed elevated in a range roughly 80 to 100 million barrels above the previous norms over the rest of that year...that large year over year difference continued into early 2016, represented by Mr Kemp's yellow colored graph, and although the rate of increase tailed off from the previous year, our 2016 oil supplies still generally averaged about 15% above 2015's elevated levels, and more than 40% above historical levels...now note that the red graph representing 2017 has been above the 2016 level, which previously had represented a record for each "day of the year" throughout the year, up until this week..so although our oil supplies as of July 21st may have just slipped below those of the same week in 2016, they are still 13.0% higher than the 427,633,000 barrels in of oil that we had in storage on July 24th of 2015, 44.0% higher than the 335,631,000 barrels of oil we had in storage on July 25th of 2014, and 43.7% higher than the 10 year average of oil supplies for this time of year ...
N.B. take a good look at those graphs for 2013, 2014, and 2015 while you're here; they're probably the last you'll ever see me try to draw by hand...
This Week's Rig Count
US drilling activity increased for only the 2nd time in 5 weeks during the week ending July 28th, following 23 consecutive weeks of increases earlier this year....Baker Hughes reported that the total count of active rotary rigs running in the US rose by 8 rigs to 958 rigs in the week ending Friday, which was 495 more rigs than the 463 rigs that were deployed as of the July 29th report in 2016, and the most drilling rigs we've had running since April 10th, 2015, even though it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....
the number of rigs drilling for oil increased by 2 rigs to 766 rigs this week, which was up by 392 oil rigs over the past year, and the most oil rigs that were in use since April 2nd 2015, while it was still far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations increased by 6 rigs to 192 rigs this week, which was 108 more rigs than the 86 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...
there was no change in the Gulf of Mexico rig count this week, where drilling continues from 23 platforms, up from the 19 rigs working in the Gulf a year ago...however, a new platform started drilling offshore from Alaska this week, so the total US offshore rig count increased to 24 rigs, up from a total of 19 offshore a year ago, because it was this week a year ago that the rig deployed in the Cook Inlet offshore from Alaska was shut down..
active horizontal drilling rigs increased by 7 to 810 rigs this week, up by 392 from the 374 horizontal rigs that were in use in the US on July 29th of last year and the most horizontal rigs in use since March 27th of 2015, while the horizontal count is still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the directional rig count was up by 2 rigs to 77 directional rigs this week, which was also up from the 48 directional rigs that were deployed during the same week last year...meanwhile, the vertical rig count was down by 1 rig to 71 rigs this week, which was still up from the 61 vertical rigs that were deployed during the same week last year....
as usual, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of July 28th, the second column shows the change in the number of working rigs between last week's count (July 21st) and this week's (July 28th) count, the third column shows last week's July 21st 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 29th of July, 2016...
notice that although the Permian basin saw the largest increase with 5 new drilling rigs, the rig count in Texas was still down by one...that's because 4 of the new Permian rigs were set up on the New Mexico side of the border, which is why New Mexico saw the most rigs added of any state this week...the other large increase was in the Cana Woodford of central Oklahoma, where 4 rigs were added, and since the Mississippian shale increase was also in Oklahoma, at least two rigs were pulled out of the state in areas not targeting the major shale deposits...the reason for the Texas drilling decrease was a 6 rig reduction in Texas Oil District 2, a small wedge in the southeast part of the state that includes part of the Eagle Ford trend...otherwise, Texas rig increases were seen in District 1 in the south central part of the state, District 3, centered around Houston, District 8, in the heart of the Permian, and in District 9, which would be in the Barnett shale underlying Dallas-Ft Worth...since there was no change in Texas District 10, that means the rig that was added in the Granite Wash was on the Oklahoma side of the panhandle border...meanwhile, rigs targeting natural gas were added in Ohio's Utica shale, in the Marcellus in West Virginia, the Barnett in Texas and 3 rigs in 'other' basins that are not named in Baker Hughes summary data...also note that of the states not included in the major producing states table above, Mississippi saw two rigs pulled out this week, and now have just one rig remaining; that's also a decrease from the same week a year ago, when 3 rigs were working in the state..
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Local judge sides with elections board, rejects charter from ballot - Athens NEWS - Athens County Common Pleas Court Judge George McCarthy on Wednesday upheld the local elections board’s rejection of a county charter initiative for the November ballot.He ruled first that the charter did not have the required number of signatures to be placed on the ballot, and then also sided with the Athens County Board of Elections that a proposed executive council (comprised of county elected officials who aren’t county commissioners) does not meet Ohio Revised Code requirements for a county executive under an alternative form of government.The committee proposing the charter has said they will challenge McCarthy’s decision.The county Board of Elections rejected a proposed county charter for the third year in a row on July 10, 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.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. Both of those cases (2015 and 2016) also ended up in the Ohio Supreme Court, the first time after a local citizen challenged Judge McCarthy’s ruling in favor of the charter, and the second time after the charter group appealed the elections board’s decision directly to Ohio Secretary of State Jon Husted, who rejected the appeal, prompting the group to take it to the high court.
Judge rules charter petition had enough signatures after all - Athens NEWS - Athens Common Pleas Court Judge George McCarthy reversed part of his decision regarding a proposed county charter initiative, ruling that the proposal did in fact have enough valid signatures.Last week, McCarthy upheld the local election board’s rejection of the charter for the November ballot. He did so for two reasons. First, he said that it didn’t have enough valid signatures. Second, he sided with the elections board in ruling that a proposed executive council (comprised of county elected officials who aren’t county commissioners) does not meet Ohio Revised Code requirements for a county executive under an alternative form of government.On Tuesday, McCarthy reversed the portion of his decision regarding the signatures. He said that the elections board agreed that sufficient elector signatures were submitted to comply with the requirement that a number equal to 10 percent of votes in Athens County in the race for governor in 2014 were submitted.Aside from that modification, M cCarthy noted, the rest of his judgment remains in full force and effect, meaning that the proposal still remains rejected from the ballot. The next move for the committee proposing the charter will be to appeal that decision, though they did not want to go forward with the appeal until the signature issue was resolved.
Small Ohio Town Spent More Than $185k Trying To Ban Fracking - The Daily Caller -- An Ohio city spent more than $185,000 on a series of anti-hydraulic fracturing ballot measures that would violate state law, according to public records obtained by a local CBS affiliate. Records on the city of Youngstown were given to WKBN news by the pro-fracking group Energy In Depth and suggest the seventh ballot measure will cost the town another $36,000.“Unfortunately for the City of Youngstown, it has had no choice but to pick up the tab for these six failed ballot measures, which include costs from required advertising, printing the ballots and employing poll workers,” Jackie Stewart, Ohio director for Energy In Depth, told The Daily Caller News Foundation. Even if the measure is enacted, it would have no force of law. The Ohio Supreme Court ruled in 2015 the state government has sole authority over oil and gas drilling. Any ban would be “preempted by state law and therefore, is invalid and unenforceable,” according to the ruling. But that didn’t stop environmental activists. The Community Environmental Legal Defense Fund (CELDF) helped get a measure to ban fracking on the ballot in Youngstown and Waterville. City lawyers, however, determined any ban would “not be enforceable.”Environmental groups have increasingly turned to local fracking bans to stop drilling operations. Campaign finance reports show national environmental groups have pumped time and money into local fracking ban initiatives.“What’s happened in Youngstown is a group called the Community Environmental Legal Defense Fund — an extreme Pennsylvania-based environmental activist group that has worked in concert with a handful of anti-fracking locals — have continued to abuse this city with frivolous ballot measures,” Stewart said. “The ballot measure is not supported by the voters of Youngstown, as it has been rejected six consecutive times,” Stewart said. “The Ohio Supreme Court and a myriad of other courts have also ruled against local control matters repeatedly and have made it abundantly clear that fracking is regulated at the state level.”
Statoil to lay cable for seismic monitoring of fracking well - Martins Ferry Times Leader — An oil and gas subcontractor asked the Monroe County Board of Commissioners on Monday to permit the temporary installation of a network of cables to monitor seismic activity as a result of a new fracking operation in Salem Township.Statoil, an international energy company with operations in 37 countries, is set to begin fracking, or hydraulic fracturing, of its Pirl South Well for production, but the company wants to lay 24 linear miles of surface-based seismic monitoring equipment, starting from the well pad and reaching out in all directions. The company hired Cougar Land Services to help with the permitting process and to install the system. “Statoil hired us to go out to landowners and county commissioners to obtain permits to do seismic (monitoring),” Joe Brown of Cougar Land Services said. “Seismic cables pick up seismic vibrations, and they make an image of those vibrations. … We are not asking anything more than to lay these cables.”The equipment is designed to be laid out and retrieved quickly, with “minimal intrusion on property,” according to MicroSeismic, the manufacturer of the equipment. The equipment will provide Statoil non-invasive, real-time monitoring and mapping of well stimulation and, “unlike other monitoring techniques, passive monitoring does not require the drilling of additional wells or the use of heavy recording equipment.” Brown said the cables are much like extension cords and likely will be in place for six weeks. There are about 100 different landowners in the affected area, and Brown is in the process of informing each one and obtaining permission from them. Most of those landowners already have leases with Statoil and are set to earn royalties from the well’s production. Landowners will be paid $400 per linear mile of cable placed on their property. The cable will cross several county and township roads in Salem and Adams townships, and a few county-owned properties. There will be a total of 11 lines, each averaging 2 miles in length. Brown said he expects surveyors to begin mapping and placing flags and ribbons where the cable will be laid within the next two weeks, after all permits are obtained.
Driller wants wastewater well near Murrysville border - A Delmont-based company hopes to convert a plugged gas well in Plum into a wastewater injection well, pending federal and state approval. Penneco Environmental Solutions is seeking permits to dispose of fracking water and other fluids from oil and gas drilling operations at a site off of Old Leechburg Road near the border of Murrysville and Upper Burrell. A notice published this month stated the U.S. Environmental Protection Agency plans to issue a permit pending a public comment period. If EPA approves the proposal, the state Department of Environmental Protection will start its permitting process. Several studies have connected earthquakes to underground injection wells in Ohio and Oklahoma. In February, a DEP study linked low-magnitude earthquakes in April 2016 in Lawrence County to fracking. Matt Kelso, a Plum resident and manager of data and technology for FracTracker Alliance, said he is concerned about the proposed injection well. FracTracker Alliance is a nonprofit organization that tracks oil and gas development across the world. “Almost the entire borough of Plum has been undermined with coal mines. Mine subsidence is already a risk, and even a small earthquake could put a lot of stress on underground coal columns,” Kelso wrote in an email. He also mentioned coal mine fires, which have been burning in Pennsylvania for decades. One is in Plum, he said: the Renton Mine. DEP officials believe the fire has been burning for four or five decades. “These fires have further eroded the columns of coal that were left as the mines were abandoned,” Kelso said, adding that other concerns include increased truck traffic, noise, traffic delays and the possibility of spilling or venting toxic wastewater in populated areas.
Sunoco Ordered to Temporarily Suspend Drilling on Pipeline Project - The Pennsylvania's Environmental Hearing Board ordered Sunoco Pipeline LP Tuesday to temporarily halt some types of work on a $2.5 billion pipeline project designed to carry 275,000 barrels a day of butane, propane and other liquid fossil fuels from Ohio and West Virginia, across Pennsylvania, to the Atlantic coast. On July 19, three environmental groups presented Judge Bernard Labuskes, Jr. with documentation showing that the project had caused dozens of drilling fluid spills and other accidents between April and mid-June. "Across the state, Sunoco has unleashed drilling fluid into exceptional value wetlands, high-quality trout streams, reservoirs, and groundwater endangering both drinking water supplies and our natural environment," Clean Air Council said in a statement . The nonprofit, along with the Mountain Watershed Association, Inc. and the Delaware Riverkeeper Network, submitted the evidence to the judge one week ago. The judge ordered all horizontal directional drilling—expected to be used in 168 locations where the pipeline crosses waterways or other obstacles—halted until Aug. 7, except in places where Sunoco can show that stopping mid-bore would cause safety problems, equipment damage or "more environmental harm than good." The order immediately affects 55 sites where drilling is currently underway. State environmental regulators are also investigating potential violations during the pipeline's construction, including one case where regulators found that 14 homeowners "experienced adverse impacts to their private water supplies, which are drawn from groundwater."
West Virginia issues cease, desist order to some Rover construction -West Virginia environmental regulators have ordered the Rover Pipeline project to cease and desist certain land development activities in the state after inspectors found what they called violations of state rules and a water pollution control permit. Among other concerns, the DEP in its July 17 order cited "conditions not allowable in the waters of the state by creating sediment deposits" at eight locations. The order was entered into the US Federal Energy Regulatory Commission docket Monday. The DEP also flagged a failure to maintain erosion control devices, citing silt fencing and other devices in need of maintenance, and locations where it said water bars were not installed as designed in the permit. In a number of spots, it said Rover failed to prevent sediment-laden water from leaving sites "without going through an appropriate device." The DEP told Rover to "immediately cease and desist further land development activity until such time when compliance with the terms and conditions of its permit and all pertinent laws and rules is achieved." It told Rover that it must file a proposed plan of corrective action and schedule within 20 days of the effective date of the order. Rover spokeswoman Alexis Daniel Monday said in an email: "We continue to work with the West Virginia DEP to resolve these issues in a manner that is satisfactory to all parties." Construction continues in the state's Hancock and Marshall counties in West Virginia, she added. "We are complying with the DEP, and have stopped construction at the areas noted in the order." The timing of construction of the 3.25 Bcf/d, 500-mile-long Rover Pipeline is closely watched because it is expected to have significant effects on market fundamentals, in particular in the US Northeast where its added takeaway capacity is likely to result in a widespread easing of pipeline capacity constraints and support production growth. Ohio regulators July 7 issued unilateral orders they said were needed to enforce state environmental laws in the wake of the drilling mud spills and other impacts such as sediment-laden stormwater runoff. Lending some backing to Ohio, FERC staff July 12 also gave Rover a list of environmental restoration work and water quality monitoring plans it would require before signing off on placing Mainline A of the project into service.
Republicans brewing Russian scandal to target greens (Politico) Republicans are trying to conjure up a Russian scandal they can get behind. GOP House members and at least one Trump Cabinet member are pushing years-old allegations from conservative activists that Russia has funneled money to U.S. environmental groups to oppose fracking. The story has reappeared in conservative circles in recent weeks — a respite, perhaps, from the steady drip-drip of news reports about dealings between Russians and President Donald Trump’s inner circle. Allegations have circulated for years that Moscow has sought to discourage European countries from developing their own natural gas supplies as an alternative to Russian fuel. And conservatives have sought to extend those concerns to the U.S. — though there’s little but innuendo to base them on. But the rumors gained new life in late June, when House Science Committee Chairman Lamar Smith and fellow Texas Republican Rep. Randy Weber asked Treasury Secretary Steven Mnuchin to investigate whether the Kremlin is bankrolling green campaigns against the fracking technology that helped the U.S. overtake Russia in gas production.Among other material, Smith and Weber cited articles in conservative news publications and an alleged Hillary Clinton speech published by WikiLeaks — part of a trove of stolen Clinton campaign documents that U.S. intelligence agencies have linked to Russia’s election-meddling efforts.The reports, the Republican lawmakers wrote in the letter to Mnuchin, suggest “that Russia is also behind the radical statements and vitriol directed at the U.S. fossil fuel sector.” Green groups dismissed Smith’s allegations as an attempt to divert attention from all the news surrounding Trump and Russia.
Russia's Alleged Meddling in US Shale Production Nothing But Persecution Mania - The US "is brewing another Russian scandal," this time suspecting Moscow of bankrolling US anti-fracking activists to oppose fracking and halt shale oil production. Russian experts call the allegations absurd, saying that it resembles "persecution mania." A recent report published by US-based Politico magazine says that the US has revived its "yearsold allegations from conservative activists that Russia has funneled money to US environmental groups to oppose fracking." "Allegations have circulated for years that Moscow has sought to discourage European countries from developing their own natural gas supplies as an alternative to Russian fuel. And conservatives have sought to extend those concerns to the US – though there’s little but innuendo to base them on," the outlet says. In late June, House Science Chairman Lamar Smith and fellow Texas Republican Representative Randy Weber asked Treasury Secretary Steve Mnuchin to investigate whether "the Kremlin is bankrolling green campaigns against the fracking technology that helped the US overtake Russia in gas production."Green groups however dismissed Smith’s allegations as an attempt to divert attention from all the news surrounding Trump and Russia, the magazine says. The League of Conservation Voters, another group named in Smith’s letter, also blasted the Science Committee’s allegations. "Anti-fracking sentiment in the US started bubbling up among US environmental groups as soon as the oil and gas production method started surging in the late 2000s, with the documentary 'Gasland' appearing in theaters in 2010 after a year and a half in production. Much of that opposition was driven by local activists in new gas hot spots like Pennsylvania who complained about threats to their drinking water, while major national environmental groups like the Sierra Club were slower to take up the cry," Politico says. "Still, there is no evidence that Russian money has gone to US green groups, at least on the national level,"
Bernie Sanders makes first move against a bill with bipartisan support that could increase fracking - With the Senate focused on health care reform, a little-noticed bill that could increase America’s production of fossil fuels may see a vote on the Senate floor as soon as next week. Sen. Bernie Sanders (I-Vt.) does not plan to let that legislation pass quietly. In an emailed statement provided to Mic on Thursday night, Sanders said he opposes the current form of the Energy and Natural Resources Act, a bipartisan bill introduced in late June by Sens. Lisa Murkowski (R-Alaska) and Maria Cantwell (D-Wash.).“Our job is to move away from fossil fuels toward sustainable energy and energy efficiency,” the senator said in the statement. “This bill does the opposite.”Murkowski and Cantwell say the bill would modernize America’s energy infrastructure by finding “common ground” on energy issues. The bill would also continue funding for the Land and Water Conservation Fund, a fund that taxes oil and natural gas earnings to preserve U.S. land and water resources.But Sanders sees it differently: “[This bill] would make us more reliant on fracking for natural gas for decades to come by expediting the review process for natural gas pipelines and liquefied natural gas,” Sanders said in his statement. “It would also provide millions of taxpayer dollars to research new offshore natural gas extraction techniques.” Sanders opposition is not surprising. But it is strategic. Senate Majority Leader Mitch McConnell (R-Ky.) fast-tracked the bill for consideration by the full Senate. If Republicans fail to pass a health care bill on Tuesday, Democratic aides and outside groups said McConnell may bring up the energy bill before the Senate next week to show the Senate can move quickly and approve bipartisan legislation. In announcing his opposition to the bill, Sanders said he will offer amendments to the legislation. Those changes would have to be voted on by the Senate, slowing any quick passage of the legislation.
While Oil Patch Bleeds, Gas Drillers Race to Unleash Wells - Oil prices have been lousy for so long that U.S. producers are hoarding unfinished wells rather than pumping crude out of them. In the natural gas patch, just the opposite is happening.While the energy slump has idled lots of wells for both commodities, their economics have diverged. Oil remains at half its price in 2014, leading to a record backlog of drilled-but-uncompleted wells spread across shale formations where fracking brought on a surge in crude production. Meanwhile, gas futures are almost double last year’s low, and the so-called fracklog of wells in the Marcellus gas fields of Pennsylvania and West Virginia is shrinking as drillers there unleash supplies to take advantage of higher prices.By the end of June, the fracklog in the Marcellus was the smallest in the three and a half years since government data has been collected. The drop portends a production boom that could imperil bullish gas bets, which jumped to a three-year high in May on speculation that a hot summer, new pipeline capacity and rising exports of the fuel would boost demand. Gas explorers are “putting a down payment on a bull market that companies hope is coming,” said John Kilduff, a partner at the commodities hedge fund Again Capital LLC. They’re “taking the view that prices are going to rebound.”
Why U.S. Shale Drillers Can’t Sell Their Gas - Natural gas output from the U.S. shale formations is at a record high. So are recoverable gas reserves, according to the Potential Gas Committee. This sounds like good news for everyone except producers: there just are not enough pipelines to transport the gas, which is already uncomfortably cheap because of the abundant supply. As natural gas prices recovered from the lows they hit last year on oversupply, shale producers became bolder and started ramping up, just like oil drillers did. As a result, according to Bloomberg data from June, output in the Marcellus shale and the Permian has hit a record. In the Marcellus shale, daily output is close to 20 billion cu ft, while associated gas in the Permian is creeping closer to 10 billion cu ft daily. As of last week, the Energy Information Administration calculated gas output in Marcellus at 19.55 billion cu ft daily. Output in the Permian was 8.49 billion cu ft. Utica produced 4.45 billion cu ft of natural gas. Haynesville and Eagle Ford both yielded more than 6 billion cu ft of gas. Next month, the EIA projects shale gas production to continue rising across the board, reaching a total 52.858 billion cu ft daily, from this month’s estimated 52.021 billion cu ft. Meanwhile, West Virginia’s Department of Environmental Protection has ordered Energy Transfer Partners to stop work on the construction of Rover – set to be the biggest natural gas pipeline project under construction in the country. The order is yet another stumbling block for the US$4.2-billion, 713-mile pipeline that was supposed to transport gas from Utica and Marcellus to other parts of the United States. Earlier this year, a drilling fluid spill along the construction route in Ohio prompted the Federal Energy Regulatory Commission—the body in charge of gas pipelines—to ban horizontal drilling during construction. The delay of the Rover completion—until this fall, probably—is bad news for ETP, certainly, though the company behind the Dakota Access pipeline should by now be used to such hurdles. It’s also bad news for producers because, as the Wall Street Journal’s Spencer Jakab writes in a recent story, Utica and Marcellus gas is selling at a substantial discount to the Henry Hub benchmark.
Dominion's Atlantic Coast gas pipeline clears key environmental hurdle -- Dominion Energy's Atlantic Coast natural gas pipeline Friday received a broadly favorable environmental impact statement from Federal Energy Regulatory Commission staff, marking a major milestone for the 600-mile, 1.5 Bcf/d line, among several high-capacity projects designed to bring gas to the Eastern Seaboard. The greenfield project (CP15-554) would move gas to points along its mainline in West Virginia, Virginia and North Carolina, and in concert with other projects aimed at the downstream market, would likely put downward pressure on Transco Zone 5 pricing, despite the demand growth expected there. FERC staff concluded that the project would have some adverse impacts on the environment but that most would be reduced to "less-than-significant levels" through a host of proposed plans, mitigation measures and steps laid out by the commission. Staff included 71 environmental conditions. FERC highlighted adverse impacts on steep slopes and adjacent water bodies, aquatic resources, forests, endangered species, as well as karst, cave and subterranean habitat and their associated species. The EIS also encompassed Dominion's related Supply Header Project (CP15-555), entailing 37.5 miles of 30-inch-diameter pipeline and compressor station upgrades in Pennsylvania and West Virginia, as well as evaluating a related capacity lease proposal on Piedmont Natural Gas' system (CP15-556). The Atlantic Coast route passes through heavily forested and steep terrain at the border of Virginia and West Virginia, raising the bar for environmental review and drawing opposition from environmental groups and some communities in its path. At the same time it has garnered support from some business leaders, building trade unions, and local officials, including those seeking to develop the Hampton Roads, Virginia, area.
Environmental report on pipeline favorable for developers — The Atlantic Coast Pipeline intended to carry natural gas across West Virginia, Virginia and North Carolina would have some adverse environmental effects, including impacts on water resources, forest and other habitats, but most could be reduced to insignificant levels, an assessment by federal regulators found. The Federal Energy Regulatory Commission, which oversees interstate natural gas pipelines, released its final environmental impact statement Friday for the proposed 600-mile (965-kilometer) pipeline, which has broad support from political and business leaders but is staunchly opposed by environmentalists and many affected landowners. The assessment is a major milestone in the approval process for the project that will cross hundreds of bodies of water, mountainous terrain, national forest, and the Appalachian Trail. Its findings were largely favorable for developers. The impact statement did find that construction in steep terrain could increase the potential for landslides and that the project was likely to adversely affect seven species protected under the Endangered Species Act. It found that the greatest impact on vegetation would be on forested areas, with more than 3,400 acres having long-term or permanent effects. But overall, the assessment said that if developers use proper construction and mitigation techniques, most of environmental impacts could be reduced to "less-than-significant" levels.
Atlantic Coast Pipeline opponents criticize federal government’s ‘woefully inadequate analysis’ - Federal regulators on Friday issued a final environmental review of the controversial Atlantic Coast Pipeline, concluding that the 600-mile pipeline’s impact on the environment would be reduced to “less-than-significant” levels if the developers follow certain mitigation measures.With the Federal Energy Regulatory Commission’s favorable review, the pipeline’s developers moved a big step closer to starting construction. The project’s primary developer, Dominion Energy of Richmond, Virginia, still must receive state water permits and then wait for FERC to issue its final decision.“The favorable environmental report released today provides a clear path for final approval of the Atlantic Coast Pipeline this fall,” Leslie Hartz, Dominion Energy’s vice president of engineering and construction, said in a statement Friday. “This report is the culmination of one of the most thorough and exhaustive environmental reviews that has ever been performed for a project of this scope.” The pipeline would transport natural gas from West Virginia through Virginia to southern North Carolina. Other partners in the $5.2 billion project are Duke Energy and its subsidiary Piedmont Natural Gas and Southern Company.While not surprised by the favorable report, environmental groups still criticized FERC’s conclusion that the project would have “less-than-significant” impacts on the environment.The commission’s environmental impact statement reveals “significant gaps in information and woefully inadequate analysis, which is no surprise based on the agency’s historic rubber-stamp approach to virtually all natural gas interstate pipelines,” Lew Freeman, executive director of the Allegheny-Blue Ridge Alliance, said Friday in a statement. FERC issued the final environmental analysis for the Atlantic Coast Pipeline one month after releasing its final review of the Mountain Valley Pipeline, which would also transport natural gas produced in West Virginia into Virginia. The commission similarly concluded that Mountain Valley “would result in limited adverse environmental impacts.”
This massive natural gas pipeline will run right through Native American communities - Protests against the Dakota Access oil pipeline in North Dakota escalated more than a year ago when Native Americans realized the pipeline’s developers and government officials intended to ignore their request to reroute the pipeline around the Standing Rock reservation. Now, a similar scenario is playing out in Virginia and North Carolina, where Native Americans are urging federal, state, and local officials to listen to their concerns about the 600-mile Atlantic Coast Pipeline, a pipeline system that would transport fracked gas from West Virginia into Virginia and North Carolina. Native Americans “didn’t have opportunities to learn how the route was chosen or to provide input on bodies of water or specific landscapes that their tribes consider sacred and that they might have problems with a pipeline passing through,” Ryan Emanuel, a member of the Lumbee Tribe of North Carolina who serves on the environmental justice committee of the North Carolina Commission of Indian Affairs, told ThinkProgress.About 30,000, or 13 percent, of the people who live within one mile of the proposed route of the pipeline in North Carolina are Native American, even though Native Americans represent only 1.2 percent of the state’s total population.The pipeline originates in northern West Virginia, a region that is seeing heavy natural gas production, and ends in Robeson County, North Carolina, a county with one of the highest percentages of Native Americans east of the Mississippi River. The Atlantic Coast Pipeline’s proposed route crosses territories of four Native American tribes in North Carolina: the Lumbee Tribe of North Carolina, the Tuscarora, the Haliwa-Saponi, the Coharie, and the Meherrin Nation. Of the eight counties in the state through which the pipeline would travel, four have large Native American communities. Members of tribal groups worry the pipeline could damage sacred Native American sites and the surrounding environment. Last Friday, the Federal Energy Regulatory Commission (FERC) issued a final environmental review of the pipeline, concluding that the impact on the environment would be reduced to “less-than-significant” levels if the developers follow certain mitigation measures.
Environmentalists provoke pipeline workers to speak up - The people who build oil and gas pipelines in the U.S. have worked in relative obscurity for decades. But a growing number of protests against pipelines are turning some of those workers into activists themselves. The U.S. produces more oil and gas than any other country, according to the Energy Information Administration. That's led to a pipeline construction boom and a growing protest movement that's had some success delaying projects, notably the Keystone XL and Dakota Access pipelines. Environmentalists concerned about climate change have a strategy – dubbed "keep it in the ground" – to stop new pipelines and other infrastructure from being built. The goal is to make it difficult for companies to develop new fossil fuel sources.This has prompted Pipeliners Local Union 798 to get involved in the public conversation about pipelines."We're having to do a lot of lobbying for ourselves just to stay employed," says Ed Coker, a Local 798 job steward. The union created a website and encourages members to contact lawmakers, sign petitions and attend town hall meetings."Pipeliners," as members of the union call themselves, are a tight-knit group of journeymen, welders and welder helpers. They travel around the country from job to job. If no pipelines are under construction they don't work. But Coker says now is a busy time.This has been a good year, politically, for the union. Coker says most Pipeliners supported Donald Trump and were energized by his focus on two topics that keep them employed: building infrastructure and supporting the domestic oil business. Still, it's clear that Coker and other Pipeliners feel misunderstood. They view their work as an important contribution to the economic life of the country. When protesters say they shouldn't be building pipelines, it offends them. Part of their new-found activism includes talking more publicly about their work. "We're certainly not trying to destroy the environment. You know, I'm as worried about the environment as anybody else," says Coker. Currently he is overseeing his union's work on a section of the Mariner East 2 pipeline, which has been the focus of protests and legal challenges.
An Update of the Southeast Power Market Pipeline Projects - For the first time in more than a decade, Florida — the second-largest natural gas demand market for electric generation in the U.S. (after Texas) — now has a new gas supply route into the state. Last month, Enbridge’s Sabal Trail Transmission pipeline began partial service, increasing Florida’s inbound gas transportation capacity by 1.1 Bcf/d (26%) — just in time to help meet air conditioning demand during the hottest months of the summer. The pipeline ultimately will for the first time connect Marcellus/Utica shale gas to the Sunshine State’s voracious power market. In the month or so since it began service, the pipe has already ramped up to 0.4 Bcf/d and, in conjunction with additional upstream expansions, could ultimately change not only how Florida gets its gas but where that gas gets sourced. Today, we provide an update on Sabal Trail and its effect thus far on gas flows.
Squeeze Coming to NGL Takeaway Capacity Out of the Permian? -- A big question mark hanging over the Permian like a dark cloud is whether there will be sufficient pipeline takeaway capacity to deal with continued production growth in the U.S.’s hottest shale play. Mostly, takeaway-adequacy questions are asked about either crude oil or natural gas, but ensuring sufficient NGL pipeline capacity out of the Permian may ultimately be the biggest challenge of all. Why? Because just about everything involving NGLs seems to be more complicated — how they are produced, transported, stored and even priced. Today we begin a series on Permian natural gas processing, natural gas liquids production growth and existing plus planned NGL pipelines out of West Texas and southeastern New Mexico. It is primarily the pursuit of crude oil, not natural gas or natural gas liquids (NGLs), that is driving the frenzy of drilling activity and investment in the multistacked, hydrocarbon-packed Permian’s Midland and Delaware basins. But while crude may be driving the Permian bus, oil-focused wells in the 70,000-square-mile region also are producing large volumes of associated gas, most of it liquids-rich, wet gas loaded with NGLs that — once processed, delivered and fractionated into purity products like ethane, propane, butanes and pentanes+ — add considerable monetary value of their own. Permian production numbers (both current and projected) are noteworthy. The region already is producing 2.3 million barrels a day (MMb/d) of crude oil and 6.3 billion cubic feet per day (Bcf/d) of dry natural gas, and under RBN’s Growth Scenario, those numbers are expected to rise to 3.7 MMb/d and 12 Bcf/d, respectively, by 2022. The growth outlook for Permian NGLs is similar. Nearly 800 Mb/d are being produced now, and five years from now the region’s NGL output could top 1.4 MMb/d, a prospective increase of nearly 80%.
US oil output growth hit by lack of operators and equipment -- US oil production growth this year is on course to be significantly lower than government forecasts, as companies struggle to find the operators and equipment they need to complete the wells they have drilled, according to a new energy research firm. The steady rise in shale oil output from the US has weighed on global crude prices but the projections Kayrros, a Paris-based research firm backed by former Schlumberger chief executive Andrew Gould, suggest there may be less oil coming than expected coming on to world markets over the next few months. This would help support oil prices that have already risen about 10 per cent since the Brent benchmark dipped below $45 per barrel last month. Once a shale well has been drilled it needs hydraulic fracturing or fracking and other procedures to start production. The number of drilled but uncompleted wells, often known as DUCs, in the US main shale oil and gas regions has been rising sharply this year, going from 4,944 last December to 6,031 in June, according to the US government’s Energy Information Administration. Kayross argues that the number will continue to rise, slowing the growth of US oil output. By October, the firm sees onshore US production in the lower 48 states growing by 560,000 barrels per day from the end of last year to 7.09m, compared to the 900,000 b/d increase forecast by the EIA.
A timeline map of the massive increase in human-caused earthquakes in Oklahoma - In just the past 10 years, the number of earthquakes in the central US (and particularly Oklahoma) has risen dramatically. In the 7-year period ending in 2016, there were more than three times the number of magnitude 3.0+ earthquakes than in the previous 36 years. Above is a video timeline of Oklahoma earthquakes from 2004-2016. At around the midpoint of the video, you’ll probably say, “wow, that’s crazy”. Keep watching. These earthquakes are induced earthquakes, i.e. they are caused by humans. Fracking can cause induced earthquakes but the primary cause is pumping wastewater back into the ground. From the United States Geological Survey’s page on induced earthquake myths & misconceptions (a summarized version of this paper):Wastewater disposal wells typically operate for longer durations and inject much more fluid than hydraulic fracturing, making them more likely to induce earthquakes. Enhanced oil recovery injects fluid into rock layers where oil and gas have already been extracted, while wastewater injection often occurs in never-before-touched rocks. Therefore, wastewater injection can raise pressure levels more than enhanced oil recovery, and thus increases the likelihood of induced earthquakes. Of course, this wastewater is a byproduct of any oil & gas production, including fracking. But specifically in Oklahoma’s case, the induced earthquakes have relatively little to do with fracking: In contrast, in Oklahoma spent hydraulic fracturing fluid represents 10% or less of the fluids disposed of in salt-water disposal wells in Oklahoma (Murray, 2013). The vast majority of the fluid that is disposed of in disposal wells in Oklahoma is produced water. Produced water is the salty brine from ancient oceans that was entrapped in the rocks when the sediments were deposited. This water is trapped in the same pore space as oil and gas, and as oil and gas is extracted, the produced water is extracted with it. Produced water often must be disposed in injection wells because it is frequently laden with dissolved salts, minerals, and occasionally other materials that make it unsuitable for other uses.
In Colorado Fracking Fight, Emails Show Constituents ‘Begging’ Lawmakers For Help - A battle over oil and gas drilling in residential areas was fought in the Colorado legislature this spring, with Democrats and environmental groups seeking to impose rules that would push fracking activity further away from schools and public facilities. This effort, which was punctuated by an April gas well explosion that killed two men in Firestone, was opposed by the state’s influential oil lobby and allied Republican legislators.A trove of emails to and from leading Republican state senators, examined by International Business Times, shows how the debate over local drilling played out behind the scenes. While constituents, worried about health and safety risks, sent emails urging lawmakers to support HB1256, a “setback” bill that would require new wells to be at least 1,000 feet from the edge of school properties (the current rule requires wells to be just 1,000 feet from school buildings), oil and gas industry representatives obtained meetings with state lawmakers and invited them to a variety of “energy forums,” “legislative receptions” and “seminars,” and even a clay shooting event, throughout the legislative session. The oil and gas industry spent more than $100,000 on state senate and house races in 2016, with $71,000 of that money going to Republicans, according to the National Institute on Money and State Politics. The industry spent another $686,301 on lobbying last year. While the emails, which were obtained through Freedom of Information Act requests filed by IBT, show no sign of illegal activity or quid pro quo dealings between lobbyists and lawmakers, they do reveal the asymmetrical war fought between the fossil fuel lobby and ordinary citizens who work and live near their facilities, many of whom wrote their representatives to assert that they weren’t anti-fracking, but simply worried about their own or their children’s health. Some pleaded with their representatives for help, only to receive a form letter, or nothing at all, in reply.
Trump proposes scrapping Obama-era fracking rule on water pollution -- The Trump administration has proposed scrapping an Obama-era rule that aimed to ensure fracking for oil and gas does not pollute water supplies. The Bureau of Land Management (BLM), which is part of the Department of Interior, said on Tuesday that it is moving to scrap the 2015 regulation because it duplicates state rules and “imposes burdensome reporting requirements and other unjustified costs” on the oil and gas industry. The rule requires that fracking operations on public land are properly constructed so that pollutants do not leak into water supplies. Companies are also obliged to publicly disclose the chemicals in fluids used in fracking, which is a drilling process used to release oil and gas deposits within rock formations. Despite being finalised two years ago, the fracking rule has never come into force due to a series of court challenges from the fossil fuel industry and several states. The BLM had initially defended the rule but following Donald Trump’s entrance to the White House the agency is now proposing to scrap it. The Natural Resources Defense Council, an environmental group, said the move showed that the Trump administration’s loyalty lies with “industry and polluters”. “This administration is sacrificing our public lands and neighboring communities to the oil and gas industry,” said Amy Mall, a senior policy analyst at NRDC. “While these rules still fall far short of what’s needed to reduce impacts from fracking, they would have provided some much-needed steps to better safeguard drinking water supplies, public health, and the environment.” According to the BLM, the rule would cost the oil and gas industry at least $32m a year and would be unnecessary as companies are already doing what the regulation requires “either to comply with state law or voluntarily”.
Trump Administration Proposes Repeal of Fracking Protections --Three days before oral arguments are scheduled in the 10th Circuit Court of Appeals on Bureau of Land Management safety measures to regulate fracking operations on public lands , the U.S. Department of Interior is moving ahead with its plan to rescind the 2015 rule. The rule, which was the product of nearly five years of agency work, expert input, public comments and hearings, never went into effect after it was challenged immediately by oil and gas industry trade associations. After a district court judge set aside the rule in 2016, BLM and citizen groups appealed to the 10th Circuit in late 2016. The Trump administration , however, reversed course in March 2017 and announced that it would propose repealing the rule. Today, the administration formalized that reversal with a proposal to be published Tuesday for public notice and comment. "This is another cynical move by the Trump administration that sacrifices our public lands and public safety as a favor to the oil and gas industry," said Michael Freeman, the attorney for Earthjustice who is representing environmental groups who support the safety rules in the legal action. Despite a request by the administration to stay the appeal, the 10th Circuit scheduled oral argument for July 27. "The timing of this proposal is obviously linked to this week's oral argument. It is part of the administration's effort to circumvent the law by asking to stay this appeal while leaving the lower court ruling in effect. We oppose that request, and we'll see the agency in court Thursday morning," Freeman said.
Trump's Interior Department plans to chop months off wait-times for oil-drilling permits -- The Department of Interior plans on cutting wait times for oil and natural gas drilling permits on public lands to just 30 days, according to a senior agency official. “We do want to shrink it down to 30 days and to make all the processes as short as possible, but at the same time, making sure our environmental stewardship is not breached, all of which is completely doable,” Vincent DeVito, energy policy adviser to Interior Sec. Ryan Zinke, told Politico on Monday. “We intend to be a better business partner,” DeVito said, “by harmonizing the environmental review process across the board, the one-stop-shopping type of model.” Republicans and drilling proponents have for years criticized the Obama administration for stymieing energy production on federal lands at a time when output boomed on state and private lands. If what DeVito says were to happen processing times for oil and gas drilling permits on federal lands would be cut by more than 71 percent. On average it took the federal government 220 days to approve drilling permits in 2015, but 116 of those days came from time spent by oil companies addressing “deficiencies” in their permit application — though the Trump administration could streamline this process as well. The Interior Department itself took 104 days on average to process drilling permits in 2015, according to government data. Cutting the wait for permits would put the federal government on par with states, like North Dakota and Texas, which have experienced an energy boom. President Donald Trump has made “energy dominance” a key part of his economic platform. “We have so much more than we ever thought possible,” Trump told energy CEOs in late June “Under the previous administration, so much of our land was off limits to development.” Trump signed an executive order in April to boost offshore energy production. The Trump administration has leased 990,157 acres of offshore areas, generating nearly $278 million in high bids revenues, mostly raised from leases in the Gulf of Mexico.
Make America Wait Again: Trump Tries to Delay Regulations out of Existence - Oil and gas wells let loose a lot of methane, a potent greenhouse gas. In April, when the U.S. Environmental Protection Agency suspended for three months an Obama administration rule to restrict such emissions, it did not defend wells or deny climate change. Instead the agency said the rule had not been studied enough. For instance, the EPA said the costs to get new well-venting systems approved had not been analyzed, so oil and gas companies had been unable to provide input as required by law. Earlier this month an Appeals Court disagreed and overturned the delay as an illegal and “capricious” maneuver. “Even a brief scan of the record demonstrates the inaccuracy of EPA’s statements,” a panel of judges from the U.S. Court of Appeals for the District of Columbia Circuit found. “The administrative record thus makes clear that industry groups had ample opportunity to comment…and indeed, that in several instances the agency incorporated those comments directly into the final rule,” the judges wrote. EPA Administrator Scott Pruitt was free to revise the methane rule, the court said, but it was already in place with the force of law, so he could not simply put it on ice.The delay tactic has become a hallmark of Pres. Donald Trump’s approach to environmental rules and other regulations, but the court decision pokes a hole in it. According to an analysis by Scientific American and legal scholars, federal agencies have suspended enforcement of at least 39 rules from the administration of Pres. Barack Obama affecting issues ranging from air pollution to airlines’ handling of wheelchairs. Other major environmental rules have been placed under review with an eye toward weakening them. Some of the delays are indefinite, pending the outcome of the reviews or court cases. Most last from a few months to a few years. The suspensions have often come at the request of affected industries. Although a new presidency always revisits its predecessor’s regulations, “what’s unique about the Trump administration is that we’re seeing so much sloppy work, in the sense of these stays that have absolutely no justification,”. “We’re seeing stays that aren’t sufficient to withstand judicial review.”
Trump’s U.S.-Steel Pipeline Plan To Backfire On Energy Projects -- One of the first memorandums that President Trump signed after taking office was ordering the Secretary of Commerce to “develop a plan under which all new pipelines, as well as retrofitted, repaired, or expanded pipelines, inside the borders of the United States, including portions of pipelines, use materials and equipment produced in the United States, to the maximum extent possible and to the extent permitted by law.” In April, President Trump ordered the Secretary of Commerce to report if “steel is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.” The Commerce Department is expected to release the report any day now, but over the past six months, the all-American steel pipeline project has raised doubts and criticism from energy companies, pipeline makers, and trade bodies, although many steel makers and steel manufacturing associations have expressed support for the plan. The Steel Manufacturers Association (SMA)—whose members represent 75 percent of U.S. steelmaking capacity – strongly supports the intent of the American-steel-first policy, arguing that it would boost the economy, increase capital investments, and create American jobs. However, the oil and gas industry—which had hailed President Trump’s approval of the Dakota Access and Keystone XL pipelines—begs to differ regarding possible protectionist policies on steel. Earlier in May, the associations published a report commissioned to ICF, which found that in recent years around 77 percent of the steel used in line pipe was imported. Due to the reliance of imported goods, lack of immediate substitutes, and the fact that some materials and equipments are not currently manufactured in the U.S. “an immediate implementation of stringent domestic content requirement for line pipe, fittings, and valves would mean that most oil and gas pipeline construction projects would be delayed or stalled,” according to the report.
Dakota Access protesters claim responsibility for pipeline sabotage -- Two Iowa activists with a history of arrests for political dissent are claiming responsibility for repeatedly damaging the Dakota Access Pipeline while the four-state, $3.8 billion project was under construction in Iowa. Jessica Reznicek, 35, and Ruby Montoya, 27, both of Des Moines, held a news conference Monday outside the Iowa Utilities Board’s offices where they provided a detailed description of their deliberate efforts to stop the pipeline's completion. They were taken into custody by state troopers immediately afterward when they abruptly began using a crowbar and a hammer to damage a sign on state property. Both women are involved in Iowa’s Catholic Worker social justice movement and they described their pipeline sabotage as a "direct action" campaign that began on Election Day 2016. They said their first incident of destruction involved burning at least five pieces of heavy equipment on the pipeline route in northwest Iowa's Buena Vista County. The two women said they researched how to pierce the steel pipe used for the pipeline and in March they began using oxyacetylene cutting torches to damage exposed, empty pipeline valves. They said they started deliberately vandalizing the pipeline in southeast Iowa's Mahaska County, delaying completion for weeks. Reznicek and Montoya said they subsequently used torches to cause damage up and down the pipeline throughout Iowa and into part of South Dakota, moving from valve to valve until running out of supplies. They said their actions were rarely reported in the media. They also contended the federal government and Dallas-based Energy Transfer Partners, the pipeline developer, withheld vital information from the public.
Tribes fight trade groups' intervention in Dakota Access pipeline dispute (AP) — American Indian tribes trying to shut down the Dakota Access oil pipeline are objecting to the possible intervention of national energy and manufacturing trade groups in the legal dispute. Attorneys for the Standing Rock and Cheyenne River Sioux tribes say in court documents filed Tuesday that the arguments of the trade groups are too lengthy and duplicate those already made by Texas-based pipeline developer Energy Transfer Partners and the Army Corps of Engineers, the federal agency that permitted the $3.8 billion pipeline which began moving North Dakota oil to Illinois about two months ago. U.S. District Judge James Boasberg, in Washington, D.C., in June ordered the Corps to further review the pipeline's impact on the Standing Rock Sioux tribe, which has sued along with three other tribes over fears of environmental harm — a claim ETP rejects. Boasberg is deciding whether to shut down the pipeline while the work is completed. The national trade groups seeking a say are the American Petroleum Institute, American Fuel and Petrochemical Manufacturers, Association of Oil Pipe Lines, national Chamber of Commerce and National Association of Manufacturers. They maintain in court documents that ceasing pipeline operations "would have serious adverse economic impacts throughout the oil industry and local and regional economies." Tribal attorneys Jan Hasselman and Nicole Ducheneaux say the groups' 18-page argument is too long and "reiterates many of the arguments and legal principles raised by the Corps and Dakota Access (ETP)." The trade groups on Wednesday submitted a revised argument that is only 10 pages. They again contended that their input can help Boasberg with his decision.
Regulators consider first major ND pipeline since Dakota Access | The Dickinson Press— The North Dakota Public Service Commission will hold public hearings starting Monday, July 24, on the largest pipeline proposed in the state since the Dakota Access Pipeline protests. Commissioner Julie Fedorchak said she hasn't heard of opposition to the project proposed by Cenex Pipeline LLC, but the commission has notified local law enforcement about the hearings. "We want to make sure we're prepared for any type of protest," Fedorchak said. Cenex, a subsidiary of CHS, proposes to build a 180-mile pipeline from Sidney, Mont., to Minot to transport refined fuels such as gasoline and diesel fuel. The project would replace a portion of an existing pipeline and add additional capacity, which the company said is needed to meet increased demand for refined fuels in the region. The $160 million project would transport about 38,000 barrels per day. Cenex says in its application that the company is proposing to reroute the existing pipeline to minimize construction in sensitive areas. The proposed route travels 150 miles in North Dakota, crossing Williams, Mountrail and Ward counties. The pipeline route crosses the Missouri River in Montana. Water crossings in North Dakota include the Little Muddy, White Earth and Little Knife rivers. Public hearings are scheduled for 10 a.m. Monday at the Sleep Inn in Minot and at 9 a.m. Tuesday at Tioga City Hall. Commissioner Brian Kroshus said the Dakota Access protests "really changed the game."
North Dakota natgas backs out Canadian (Argus) — Rising natural gas production this year from North Dakota has curbed western Canadian flows on Northern Border and limited price gains on that pipeline. Associated gas production from the Williston basin, which includes the Bakken and Three Forks formations in North Dakota, has exceeded year-earlier levels since February. Overall gas production in the state reached a record 1.85 Bcf/d (53mn m³/d) in May, up by 13pc from a year earlier, according to the North Dakota Department of Mineral Resources. Final production numbers from June may show a new high as producers there are focusing in areas with a high gas-to-oil ratio, the agency said.Spot gas prices from February to May on Northern Border at Ventura, Iowa, averaged $2.80/mmBtu, up by 55pc from a year earlier. But the price increase lagged that of the NIT/AECO hub in Alberta, where prices almost doubled year over year to $2.06/mmBtu. Northern Border delivers Canadian gas and supplies from North Dakota, to major midcontinent markets such as Chicago. The pipeline receives production from the Western Canadian Sedimentary Basin through TransCanada's Mainline system near Port of Morgan, Montana.Gas flow from Canada at Port of Morgan in the first half of 2017 averaged 1.5 Bcf/d, down by 3.3pc from the year-earlier period, according to pipeline flow data. Meanwhile, gas flow on Northern Border past the Glen Ullin compressor station, which indicates Bakken receipts, has been near its full capacity of 2.4 Bcf/d for the past year.The decrease in flows from Canada does not necessarily mean production from North Dakota has displaced Canadian imports, according to BTU Analytics senior energy analyst Erika Coombs. Production from western Canada could reach the US using various other pipelines. Alliance pipeline, which can transport liquids-rich gas from North Dakota and the WCSB to Chicago, had high utilization amid growing production.
Emails Show Iraq War PR Alums Led Attempt to Discredit Dakota Access Protesters -- Behind the scenes, as law enforcement officials tried to stem protests against the Dakota Access pipeline, alumni from the George W. Bush White House were leading a crisis communications effort to discredit pipeline protesters. Emails show that the firms Delve and Off the Record Strategies, apparently working on contract with the National Sheriffs’ Association, worked in secret on talking points, media outreach, and communications training for law enforcement dealing with Dakota Access opponents mobilized at the Standing Rock Sioux Reservation in Cannon Ball, North Dakota. This revelation comes from documents obtained via an open records request from the Laramie County Sheriff’s Department in Wyoming. As previously reported by DeSmog, the GOP-connected firm DCI Group led the forward-facing public relations efforts for Dakota Access via a front group called Midwest Alliance for Infrastructure Now (MAIN). Today MAIN has morphed into a national effort known as Grow America’s Infrastructure Now (GAIN). Delve is an opposition research firm run by Jeff Berkowitz, former Republican National Committee research director and official in the George W. Bush White House. His company led research efforts on behalf of the National Sheriffs’ Association. Off the Record Strategies, meanwhile, guided the sheriffs’ behind-the-scenes communications strategy. Mark Pfeifle runs the secretive firm, Off the Record Strategies, and served as communications advisor in the George W. Bush administration, leading PR efforts for the wars in Iraq and Afghanistan. The National Sheriffs’ Association, a trade group for sheriffs, has been lobbying the federal government for additional surplus military gear from the Department of Defense under the auspices of its 1033 program. The association was also the central organizing vehicle which brought hundreds of out-of-state cops to Standing Rock via the Emergency Management Assistance Compact (EMAC).
Santa Barbara Becomes First California City to Pass Resolution Against Offshore Oil and Gas Drilling - The Santa Barbara City Council approved a resolution Tuesday opposing new drilling off the California coast and fracking in existing offshore oil and gas wells. The resolution is the first in a new statewide campaign to rally local governments against proposals to expand offshore fossil fuel extraction in federal waters. The vote—which makes Santa Barbara the first California city to oppose both fracking and new offshore drilling—follows President Trump's April 28 executive order urging federal agencies to expand oil and gas leasing in federal waters. The order could expose the Pacific Ocean to new oil leasing for the first time in more than 30 years. "I'm thrilled to be part of this community effort to protect natural resources, the water supply and community health," said Santa Barbara City Council member Jason Dominguez, who sponsored the resolution. "At the same time, we can improve our economy, develop green markets, and bring quality jobs and living wages to the area." Today's resolution, cosponsored by Dominguez and Santa Barbara City Council member Harwood "Bendy" White, is supported by more than 20 local businesses, the Pacific Coast Federation of Fishermen's Associations, Wishtoyo Chumash Foundation and several environmental organizations, including the Center for Biological Diversity and Food & Water Watch . The groups are working with other California cities to pass similar resolutions. "The last thing Californians want is more drilling and fracking off our coast," said Blake Kopcho, an organizer with the Center for Biological Diversity's oceans program. "Santa Barbara took a stand because the city has seen the horrific damage offshore drilling can cause. Trump is delusional if he thinks we'll stand idly by and let him recklessly endanger wildlife and our communities with oil spills and toxic fracking chemicals."
House Votes To Bar Future US President From Creating Another Keystone XL Pipeline Debacle - The House voted Wednesday to prevent future presidents from scuttling oil and gas pipelines, like the Keystone XL project, that run across international borders. Lawmakers voted to give the Federal Energy Regulatory Commission (FERC) authority over the approval of interstate natural gas pipelines, and passed a measure granting the agency sole responsibility for permitting all pipelines that cross the U.S. border with Canada or Mexico. The vote was a shot across the bow of the Obama administration. Former President Barack Obama used his executive powers to deny a permit to TransCanada’s Keystone pipeline in 2015, a 1,700-mile project that is expected to carry 830,000 barrels of oil a day from Canada to Gulf Coast refineries. President Donald Trump overturned his predecessor’s decree in January, a move that roiled environmentalists and some Democrats that believed the project was bad for the environment. Activist groups sued the Trump administration over Keystone’s approval, arguing that the pipeline needed to go through another environmental review before going forward. They filed suit in a federal court in Montana — one of the states through which the project will run. The changes could get put on the back burner, however, because the Senate has not voted to approve any of the president’s FERC nominees, which could give the agency back its quorum after a handful of members retired. The commission has been shut down since February because it does not have enough members to overcome a gridlocked decision.
A Worldwide Gas Glut Claims $27 Billion Victim in Canada | Rigzone-- A $27 billion energy project in Canada just became the latest casualtyof a worldwide glut of natural gas.Malaysia’s Petroliam Nasional Bhd abandoned on Tuesday its plans for the Pacific Northwest LNG terminal, a plant that would have liquefied Canada’s gas and sent the fuel by tanker from the western shores of British Columbia to buyers in Asia. Petronas cited market conditions in its decision.Pacific Northwest LNG joins a growing list of projects that have been killed in recent months by plummeting LNG prices, throwing the economics of export terminals from Australia to Russia to Mozambique into question. Prices have crashed as increasing volumes of gas from Australia and America’s shale formations hit the water, inundating the market with so much supply that analysts say demand may not catch up until the next decade.“Developers have been trying to jump on a rather full and over-hyped bandwagon,” Muhammed Ghulam, an equity research associate at Raymond James in Houston, said by email. “There is simply too much LNG export capacity planned in North America, and cancellations, especially of Canadian projects, are likely to continue.”Last year, Woodside Petroleum Ltd. shelved its $40 billion plan to build a floating LNG terminal off Australia’s western coast and a project in Oregon was canceled. More than two-thirds of the LNG terminals proposed to come online in the mid-2020s probably won’t get built, Sanford C. Bernstein & Co. said in May.Petronas said the decision to drop the Pacific Northwest project was driven by “prolonged depressed prices and shifts in the energy industry.” The company and its partners -- China Petrochemical Corp., Japan Petroleum Exploration Co., Indian Oil Corp. -- remain committed to developing natural gas assets they’ve bought in Canada and “will continue to explore all options” for long-term investments, according to a statement.
Petronas deals fresh blow as world exits Canada’s energy patch - Petroliam Nasional Bhd.’s decision to back out of a giant gas-export project on Canada’s Pacific Coast is the latest hit to the country’s energy sector -- and to Prime Minister Justin Trudeau’s plan of balancing energy exports and climate action. The Malaysian state-run oil and natural gas producer cited an "extremely challenging environment" of low prices and other changes in declining to proceed with the liquefied natural gas project, which Trudeau approved last year after sweeping to power on pro-environment pledges. Petronas’s cancellation follows a string of exits from Canada’s oil patch as global producers focus on lower-cost areas. So far this year, ConocoPhillips and Royal Dutch Shell Plc have sold more than $20 billion in oil-sands assets to local producers Cenovus Energy Inc. and Canadian Natural Resources Ltd. “It’s another negative data point for doing business in Canada,". “The biggest concern is the perception that investors are not seeking Canada as an investment opportunity, and what does that do to other investment opportunities?" Canadian energy projects face tightening regulations, years-long approval processes, environmental opposition and legal uncertainty, particularly around the rights of indigenous people. Trudeau is trying to balance expanding energy exports while cutting Canada’s greenhouse-gas emissions. LNG is generally less controversial than crude oil, but still faced similar hurdles. The $27 billion Petronas proposal was already weighing a different site to quell opposition. That wasn’t the only challenge, though. "More specifically on this project, the challenge was the bloated cost,"
Qatar's LNG brownfield trumps Petronas' greenfield hopes: Russell (Reuters) - The shifting dynamics of the liquefied natural gas (LNG) industry have been neatly encapsulated by two recent decisions: the scrapping of a major new development and the expansion of an existing large-scale project. Malaysia's state-owned Petronas announced this week it was cancelling its $29 billion Pacific Northwest LNG venture in Canada's western British Columbia province, citing low global prices for the super-chilled fuel. The decision not to proceed came after Qatar said on July 4 it planned to raise its LNG capacity by 30 percent, which would allow it to defend its title as the world's largest producer against Australia, which is due to claim the crown once the last of its eight new projects is completed. The Petronas announcement was not unexpected, given the 12 million-tonne-a-year project has suffered delays, engineering challenges and an LNG price only a quarter of what it was three years ago. What Petronas' decision does confirm is that it's going to be extremely difficult to develop any greenfield LNG projects in the next few years, and not just in western Canada. It appears the Canadians have missed the LNG boat, with their massive projects being proposed and planned after Australia embarked on building eight new liquid gas plants and the United States chipped in with five more. The Australian and U.S. projects, and others in East Africa and Russia, are expected to boost the amount of annual LNG available globally to around 454 million tonnes by 2020, up from around 340 million tonnes at the end of last year. All this additional capacity is expected to push the LNG market into oversupply, which is likely to weigh on already weak prices. Wood Mackenzie analyst Saul Kavonic forecasts the surplus will be around 17.8 million tonnes of LNG a year by 2019.
Fracking Has Devastated Canada's Industry | The Daily Caller -- Booming energy production from U.S. hydraulic fracturing operations has hurt Canadian oil and gas projects, according to a report by Bloomberg. Canadian energy projects have become less competitive than their U.S. equivalents for a variety of reasons, including tightening regulations, long approval processes and environmentalist opposition. Canadian Prime Minister Justin Trudeau’s attempts to expand energy exports while reducing the country’s greenhouse gas emissions has further complicated the issue. Petroliam Nasional cancelled a $27 billion liquefied natural gas (LNG) export project Wednesday due to an “extremely challenging environment” for business. This followed a slew of sell-offs by major oil companies, including ConocoPhillips and Royal Dutch Shell, liquidating more than $20 billion in Canadian oil assets. “It’s another negative data point for doing business in Canada,” Swanzy Quarshie, a Canadian investor who manages $80 million in energy assets, told Bloomberg. “The biggest concern is the perception that investors are not seeking Canada as an investment opportunity, and what does that do to other investment opportunities?”U.S. fracking is out-competing Canadian oil and gas, so export terminals will increasingly be built in America. The U.S. is producing natural gas so efficiently it’s almost counterproductive to the industry.. Additionally, American politics are far more friendly to energy exports than their Canadian equivalent. “The disturbing part of this is that it’s not the first project and the first international major company to leave Canada,” Murray Mullen, CEO of a Canadian oilfield services company, told Bloomberg. “When you combine all of those together and you can’t get consensus, then nothing happens.”
One-Third of British Columbia’s Oil and Gas Wells Are Leaking Significant Levels of Methane -- About 35 per cent of British Columbia's 11,000 active oil wells, abandoned wells and water injection wells in the northeastern part of the province are leaking significant amounts of methane, according to a forthcoming new study. The report will be released later in the summer and submitted to the industry-funded British Columbia Oil and Gas Commission. According to John Werring, senior science and policy advisor to the Foundation, the study found that the average rate of flow of methane gas from surface casing vents from oil wells was conservatively estimated to be between nine and 11 cubic metres per day. That amounts to 14.2 million cubic metres, or 10,617 metric tonnes of methane a year from roughly 11,079 active oil wells, alongside abandoned, suspended and water disposal wells in B.C., said Werring. Surface casing vent flow, or leaks at the wellhead, often signal failed well integrity. Cement seals erode and crumble as they age, creating pathways for methane to migrate to the surface. "Methane leaks from abandoned wells are a huge problem and issue in this province," said Werring. "As Alberta goes, so too does B.C." That peer-reviewed study found that methane emissions from B.C.'s shale gas basins are now at least 2.5 times higher than provincial government estimates. That makes the oil and gas sector the largest source of climate pollution in B.C., a greater source of pollution than commercial transportation. Last August, Werring used a Flir infrared camera to identify the source of methane leaks at well sites. Where possible he put a balloon over the leak, and then measured the length and width of the balloon to calculate the volume of methane being leaked over time. With a Flir camera, "The vapour coming off the sites looks like smoke," Werring said. Of 178 wells that Werring examined, 62 were abandoned or suspended wells. Twenty-nine per cent of these wells were leaking methane. Werring also took images and methane samples from 25 producing oil wells and found that seven were leakers, or 28 per cent. In addition, more than half of all water injection wells were leaking methane, too.
After false dawn, Big Oil to double down on cost cuts (Reuters) - After a brief respite at the start of the year, the world's top oil and gas companies are set to double down on cost cutting as a recovery in crude prices after a three-year slump falters. Corporate hopes were raised by a deal between members of the Organization of Petroleum Exporting Countries and other non-OPEC producers to cut production, which lifted oil prices above $58 a barrel in January, after they had slid to as low as $27 in 2016. But Brent crude prices have since slipped back below $50 and banks have lowered price forecasts, amid surging output from the United States and other nations not bound by the global oil pact. Investors are again focusing on the ability of top oil firms such as Exxon Mobil, Royal Dutch Shell and Total to live within their means and eke out profits when oil has failed to recover, as hoped, to $60. The majors, often dubbed Big Oil, have already been through tough spending cuts since a collapse in crude prices since mid-2014 from above $100. They have shed thousands of jobs, scrapped projects, sold assets and squeezed service costs. The painstaking effort has paid off. Net income for Exxon, Chevron, Shell, BP, Total, Eni, and Statoil is set to double on average in the quarter ending June 30 from a year earlier, even though oil prices are back as similar levels, according to analyst estimates compiled by Reuters. But earlier savings may not now be enough, with Brent crude averaging below $50 in the second quarter and forecasts that the 2017 average will be $54. While net income for Q2 may climb year-on-year, the quarter-on-quarter picture is different. Compared to the first three months of the year, the second quarter will see net income fall by about 20 percent, according to analyst estimates.
U.S. oilfield service firms eye pricing gains despite rangebound crude (Reuters) - Oilfield service companies do not expect their businesses will get a major activity boost from oil prices in the second half of this year, but demand is robust enough that they will be able to raise fees, executives said. "We are well structured for the $45 to $55 a barrel range," Andy Hendricks, chief executive of drilling and fracking services provider Patterson-UTI Energy (PTEN.O), said in a phone interview on Thursday. "We expect the rig count for us to go up slightly throughout the year." Patterson is upgrading seven rigs at a cost of $8 million, an expense justified by contracted rates of slightly above $20,000 per day. One rig already has been delivered, and the remaining six will be delivered by December. Rival Helmerich & Payne Inc (HP.N) expects oil CLc1 to remain below $50 a barrel through year-end, but still sees opportunities to increase its rig lease rates, CEO John Lindsay said on its third-quarter earnings call Thursday. It forecasts average rig margins per day for fiscal 2018 and 2019 of $13,000 and $14,500, respectively. The optimism among service companies comes despite a cautious view among shale producers. Oil prices earlier this year climbed above $50 a barrel, and many producers set budgets expecting further gains.
US crude oil production forecast expected to reach record high in 2018 - EIA --In EIA’s latest Short-Term Energy Outlook (STEO), total U.S. crude oil production is forecast to average 9.3 million barrels per day (b/d) in 2017, up 0.5 million b/d from 2016. In 2018, EIA expects crude oil production 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. EIA forecasts that most of the growth in U.S. crude oil production through the end of 2018 will come from tight rock formations within the Permian region in Texas and from the Federal Gulf of Mexico. In the July STEO, 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 more than the estimated June 2017 production level, representing nearly 30% of total U.S. crude oil production in 2018. The Permian region covers 53 million acres in the Permian Basin of western Texas and southeastern New Mexico. Within the Permian Basin are smaller sub-basins such as the Midland Basin and the Delaware Basin, 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) crude oil prices below $50 per barrel (b). Based on data from Baker Hughes, 366 of the 915 onshore rigs in the Lower 48 states in June were operating in the Permian region. EIA forecasts that the Permian’s rig count will fall slightly to 345 at the end of 2017 and then grow to 370 by the end of 2018. In addition to responding to changes in WTI price, increases in rig counts are also related to cash flow. In the Permian, operators have been able to maintain positive cash flow because of lower costs, higher productivity, and increased hedging activity by producers, many of whom have sold future production at prices higher than $50/b. Available cash flows could potentially contribute to the growth of rigs in this region despite relatively flat crude oil prices since December 2016.
REPORT: US Oil Production To Shatter Historic Milestone In Trump’s First Term -- U.S. oil production could reach never-before-seen heights by the end of President Donald Trump’s second year in office, according to the Department of Energy’s statistical arm.The Energy Information Administration (EIA) “expects crude oil production 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 increase in production would come from Texas hydraulic fracturing operations and offshore rigs in the Gulf of Mexico, according to EIA.EIA forecasts that most of the growth in U.S. crude oil production through the end of 2018 will come from tight rock formations within the Permian region in Texas and from the Federal Gulf of Mexico. In fact, Texas’s Permian Basin alone is expected to churn out nearly one-third of U.S. oil production by 2018. Permian production is expected to increase even if oil prices remain below $50 a barrel.Permian production is expected to average 2.9 million barrels per day of crude oil by the end of 2018, EIA reported Tuesday. Gulf of Mexico oil production could average 1.9 million barrels per day in 2018 after several major operations come online. EIA’s projection is somewhat conservative compared to one put forward by analysts at Rystad Energy in June. Rystad predicts U.S. crude oil output could top an old record set in November 1970 by the end of 2017. EIA’s projection is good news for Trump’s “energy dominance” agenda. The administration has put forward policies to boost oil production on federal lands, while also rolling back regulations on oil and gas drilling.
EIA Drilling Productivity Report Misleading the Market? - Recent headlines from journalists and industry veterans alike have pointed to the latest EIA Drilling Productivity Report (DPR) as a sign that US oil production growth rates are slowing and that the growth in Permian productivity has stalled out. (See chart below). BTU Analytics would contend that those hoping that Permian productivity has hit a peak and thus US oil production forecasts are overblown are deceiving themselves. Each month, the EIA estimates the productivity of the US shale rig fleet for seven major shale producing areas including the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica. Let’s begin by briefly reviewing the EIA Drilling Productivity Report model methodology using a numerical example in parenthesis. […] There are several potential flaws with modeling rig productivity utilizing [EIA's] approach. The first flaw is that it assumes all new production in period 2 originated from rigs active just two months prior. It’s no secret at this point that the industry has a tremendous ability to add rigs quickly to a region, but completion crews often fail to keep pace with producers in the basin. From 2009-2015, operators in the Marcellus and Utica outstripped the ability of infrastructure and completion crews to keep pace with drilling activity, leading to a peak of nearly 1,600 wells in excess backlog, and oil plays have been no different. The price crash in 2015 led operators to defer completions across all of the major oil producing areas, leading to an excess backlog that peaked in 2016 at over 2,000 wells in the Eagle Ford, Permian, Bakken, and Niobrara.
Is India's appetite for US crude oil sustainable? -- Platts Snapshot video - India, one of the fastest growing oil demand centers in Asia, has added the US to its long list of crude suppliers. Early this month, Indian Oil Corp sealed its first deal to import US crude. This was followed shortly by BPCL's purchase of Mars and Poseidon grades. Sambit Mohanty, S&P Global Platts senior editor for oil news and analysis, explains why India's diversification is crucial and what it could mean to Middle Eastern suppliers.
Venezuela says US refiners face 'difficult situation' if Trump imposes sanctions -- US refiners stand to lose the most if the Trump administration imposes sanctions that restrict or ban imports of Venezuelan crude, Venezuela's oil minister Nelson Martinez said Monday. He noted that many refineries in the US Gulf Coast have made significant investments in the past few decades to optimize runs of heavy oil, which is primarily what Venezuela produces. "We sell a lot of our crude oil to these companies in the Gulf," Martinez said, naming Valero, Philips 66 and Marathon. "Some of these refineries are designed and built based on the consumption of heavy and extra-heavy oil from Venezuela," he continued. "These [sanctions] can create a real difficult situation for these refineries, and that is what has to be taken into account before taking these decisions." The Trump administration is considering the sanctions in response to Venezuelan President Nicolas Maduro's pledge to rewrite his country's constitution amid an economic, political and humanitarian crisis that has seen citizens protest daily. US officials have said they are "mindful" of the impact potential sanctions on crude imports would have on US businesses and consumers and said all economic effects were being studied. "The United States will not stand by as Venezuela crumbles," President Donald Trump said in a July 17 statement, warning of "strong and swift economic actions" if Maduro proceeds with a special vote on July 30 to elect a Constituent Assembly with powers to rewrite the country's constitution and further entrench him in power. US refiners, in a July 6 letter through their trade group American Fuel & Petrochemical Manufacturers, have warned the Trump administration about the "significant negative impact" that sanctions on Venezuelan crude imports could have. "Sanctions limiting US imports of Venezuelan crude would disadvantage many US refineries, particularly those in the Gulf Coast and East Coast regions, that have optimized to utilize sour crudes produced in Venezuela," AFPM President Chet Thompson wrote, adding that due to the nature of the global oil market, crude bound for the US could be diverted to Asian trading competitors if sanctions take root.
Big Oil warns new Russia sanctions could deal out US companies -- The oil industry has warned US lawmakers that proposed new economic sanctions on Russia approved by the US Senate could take their toll on US jobs and oil and gas projects around the world, the FT reported. American oil and natural gas companies are pushing for changes to avoid unintended consequences. The legislation, which passed with a 97-2 vote in the Senate in June and is now with the House of Representatives, would prohibit US individuals and companies from providing goods, services or technology for deepwater, Arctic offshore or shale projects where Russian companies are involved, according to the newspaper. Alexei Kokin, a senior oil and gas analyst at UralSib Financial Corp in Moscow, told New Europe by phone on July 20, “It’s still unclear at this point what happens and how this bill is going to be changed perhaps in Congress”. “The problem here is if you only prevent Americans from getting these contracts, especially construction contracts, it means giving preference, essentially handing an advantage mostly to Europeans,” Kokin said, adding that Washington-based policymakers should also find a way to put pressure on European companies to stay apart from these projects as well. “Otherwise you are hurting American competitiveness so I would presume that if the sanctions actually are imposed on the pipeline projects, there should be a way for Americans to also prevent Europeans from any involvement,” he said. “So everybody will suffer and that’s it,” he added, laughing.
Are the Latest Russia Sanctions Really About Forcing US LNG on Europe? -- Yves Smith - One of the dangers of being limited to the English-language press is that important aspects of major news stories can readily be reported in an awfully one-sided manner. The object lesson today is the latest US sanctions against Russia, which passed the House today by a 419-3 margin. The hot button for Europeans that the bill targets the NordStream2 pipeline that would deliver gas from Russia to Germany. They also single out a large range of players, including Russian banks, energy exporters and projects, and arms merchants. Moreover, unlike past sanctions, they cannot be reversed by the President but require Congressional approval for any rollbacks. Unlike past sanctions against Russia, which European governments have backed, albeit with some grumbling, since some countries, particularly Germany and the Netherlands, have commercial ties with Russia, the EU is opposed to the latest US campaign. From the Financial Times: EU officials are concerned that the sanctions could damage multibillion-euro pipeline and infrastructure projects straddling Russian territory and beyond in areas as far apart as the Baltic and Black seas. A list prepared for EU commissioners shows that projects at risk include the proposed Baltic liquefied natural gas plant on the Gulf of Finland of the Baltic Sea, in which the Anglo-Dutch group Shell has a stake alongside Russia’s Gazprom. The list also includes Blue Stream, the gas export pipeline linking Russia with Turkey in which Eni of Italy has a 50 per cent. The threat to this pipeline centres on penalties against the maintenance and repair of pipelines on Russian land or waters. Documents seen by the Financial Times also state that BP “would not be able to engage” in its activities with Rosneft if the US penalties hit operations by European companies to maintain, repair or expand pipelines in Russia. The list also includes the CPC pipeline in which European groups such as BG Overseas Holdings, Shell and Eni work with Russia to carry Kazakh oil to the Black Sea via Russia. Both the existing pipeline and its proposed expansion could be hit by the sanctions. As a result, European officials believe the impact of the new sanctions would go far beyond the contentious Nord Stream 2 project that Gazprom is building between Russia and Germany and the existing Nord Stream 1 pipeline. New Europe states that Brussels plans to retaliate against the US if the sanctions are imposed, although it may not be able to deliver on its threat: It is unclear whether EU member states such as the UK, the Baltic States, Poland, or Hungary are willing to sign off retaliatory measures towards Washington. I hope German language readers can help flesh out the input from a regular reader of the German press. He said that the German businessmen and politicians see the latest round of sanctions have as a major objective foisting US gas on Europe and that they don’t like being stuffees. SPD party leader and foreign minister Sigmar Gabriel apparently made a speech on this topic in the last few days. This would be consistent with his earlier statements, as reported by WSWS last week:
Analysis: China's record US crude imports to give OPEC more sleepless nights - China's import of US crude oil crossed 1 million mt for the first time in June, an eight-fold rise year on year, as elevated Dubai prices prompted both state and independent refiners to use it as an opportunity to diversify supplies, a trend that could add to the headache of OPEC suppliers. While shipments from the US to China hit 1.09 million mt, or 268,000 barrels/d, in June, imports from Saudi Arabia fell to a six-month low of 940,00 b/d in the same month, a sign that China is more than willing to shed its dependence on OPEC supplies and widen its feedstock sources as much as it can. "China's imports from the US in H2 is likely to go up because of expectations that the supplying country will lift production, thereby boosting availability," said S&P Global Platts senior analyst Song Yen Ling. China's imports from the US have multiplied from just about 34,034 b/d a year ago. June 2017 import volumes were also 49.1% higher than May imports of 179,442 b/d, data released by the General Administration of Customs showed. A closer look at the cumulative import numbers shows that OPEC's share in the world's second-biggest oil consuming market fell to around 55% in H1, from 58% in the same period a year earlier. Market participants said that OPEC's share is unlikely to rebound in H2, as Saudi Arabia's crude exports are expected to be more or less capped at the current level because of OPEC-led efforts to clear the global oil supply glut.
Why record U.S. oil exports are poised for even more growth (Reuters) - U.S. refineries are producing more fuel than ever as they seek to meet rising demand - from overseas, rather than the drivers on nearby roadways. Last year, the U.S. became the world's top net exporter of fuel, an outgrowth of booming domestic production since the shale oil revolution started in 2010. That's a fundamental shift from the traditional U.S. role in global markets as a top importer and consumer. Net exports are on track to hit another record in 2017, making foreign fuel markets increasingly important for the future growth prospects and profit margins of U.S. refiners. Shale oil producers have provided refiners with abundant and cheap domestic crude supplies, giving them the raw material they need to produce internationally competitive fuel. The nation set a record in 2016 by sending a net 2.5 million barrels per day (bpd) of petroleum products to foreign markets. That compares to net fuel imports of 2.3 million just a decade ago, according to U.S. government data. Booming exports have bolstered margins at the biggest U.S. refiners - including Marathon Petroleum and Valero - and compensated for lack of strong growth this year in U.S. fuel demand. Now, the government of U.S. President Donald Trump is seeking to deregulate oil and gas production to further leverage rising U.S. exports for international political gain - a policy Trump calls "energy dominance". Surging U.S. crude production has already complicated the ongoing effort by the Organization of the Petroleum Exporting Countries (OPEC) to tame a global glut that has halved oil prices since 2014. The United States remains a massive importer of crude oil - regularly trading the top spot with China - but American refineries now re-export much of that oil as jet fuel, diesel and gasoline. The U.S. has a growing role in satisfying demand for motor fuel in countries such as Mexico and Brazil, where the thirst for U.S. fuel is likely to accelerate amid refinery outages and high production costs. Refined U.S. exports are also going further afield to Asia, and diesel exports to Europe increased in June to levels not seen in nearly two years, traders have said.
Saudi Arabia Turns Off the U.S. Oil Tap - At last, Saudi Arabia seems to be doing what it takes to reduce the world's most visible oil glut: the one in the U.S. Unfortunately, its renewed vigor comes as OPEC's deal to reduce excess crude stockpiles starts to show signs of unraveling elsewhere, a subject that will be wrestled with by the group's oil ministers as they and other producer nations meet in St Petersburg on Monday. Data published last week by the U.S. Energy Information Administration show that imports from Saudi Arabia in the week to July 14 fell to their lowest for seven years: just 524,000 barrels a day. For sure, one week's number doesn't mean much on its own, particularly when a single very large crude tanker could raise or lower that figure by half.But this isn't an isolated figure. The EIA data show a clear drop in deliveries from Saudi Arabia since the start of June. The average rate of U.S. imports from the desert kingdom over the past six weeks has dropped by 450,000 barrels a day, or 34 percent, compared with the first six weeks of the year.Given that it averages six weeks for a tanker full of crude to travel from the Persian Gulf to the U.S., this drop in imports reflects a slowdown in Saudi shipments that began in mid-April, which shows up in Bloomberg tanker tracking data for the Kingdom. So Saudi Arabia is finally slashing exports to the U.S., even as shipments to other destinations -- with less visible inventories -- have been maintained, or even risen. This is crucial, because the failure to drain U.S. storage tanks has been a major factor in driving down oil prices. "Exports to the U.S. will drop measurably," Saudi oil minister Khalid Al-Falih said in May. The kingdom is now making good on that promise.Preliminary tanker data must be treated carefully, though. Several ships show no final destination and could still end up in the U.S. Saudi crude usually moves across oceans in 1 million or 2 million barrel shipments, which means a pickup in flows to the U.S. at the end of July could change the picture dramatically. Anyway, one has to ask whether Riyadh's new resolve is too late as the OPEC-brokered deal to remove about 1.8 million barrels a day from the world's supply is looking a little shakier. In June, OPEC members' compliance with their agreed cuts fell to its lowest level since the deal came into effect (although 95 percent is still pretty good).
Anadarko becomes first U.S. oil producer to slash 2017 capex (Reuters) - U.S. oil producer Anadarko Petroleum Corp (APC.N) posted a larger-than-expected quarterly loss on Monday and said it would cut its 2017 capital budget by $300 million because of depressed oil prices CLc1, the first major U.S. oil producer to do so. Anadarko and the rest of the U.S. shale oil industry have been grappling with how to conserve cash and maintain growth opportunities even as crude prices have slumped since January. Many Wall Street analysts had asked U.S. producers to consider cutting budgets, and it was unclear which company would do so first. Anadarko, the first major U.S. producer to report quarterly results, ended that guessing game. Several U.S. shale producer executives had said last month that they had flexibility in spending, and would not invest cash blindly. Shares of Houston-based Anadarko fell 3.8 percent to $42.55 in after-hours trading on Monday. Anadarko in March had forecast 2017 spending of $4.5 billion to $4.7 billion. Anadarko, which operates in the U.S. Gulf of Mexico as well as Colorado and other U.S. shale regions, South America and Africa, posted a third-quarter loss of $415 million, or 76 cents per share, compared to $692 million, or $1.36 per share, in the year-ago period. Average daily sales volumes, the physical amount of crude and natural gas sold, fell 20 percent to 631,000 barrels of oil equivalent per day (boe/d). Anadarko in May closed more than 3,000 wells in Colorado after a fatal home explosion was linked by local authorities to a well owned by the company. Given those closings, Anadarko said it was trimming its 2017 production forecast to 644,000 boe/d, a 2 percent cut.
Anadarko plans to boost well completions in second half of 2017 - Anadarko Petroleum plans to bring more oil wells into production over the next few months after leaving scores of them untapped in West Texas and Colorado. In Colorado's DJ Basin, the Woodlands-based oil company will boost well completions by 50 percent in the second half of the year. And in the Delaware Basin in West Texas, Anadarko has recently contracted six hydraulic fracturing crews to work off much more of its backlog of uncompleted wells. "We did build some drilled-but-uncompleted wells on the front end (of 2017), but we expect to work those off in the back half of the year," said Brad Holley, an executive vice president of U.S. onshore exploration and production at Anadarko. In the Permian Basin, the number of untapped wells has climbed to 2,244 last month, up from 1,467 in November. The company on Monday said it would pare back capital spending by $300 million, a small portion of its overall investment budget. But increasing the number of wells it brings into production will boost its oil production. It's a sign the oil industry, which has drilled faster than it completed wells, is getting closer to the payoff of this year's oil boom
First Anadarko, Now Whiting: Second Shale Company Slashes CapEx Budget On Monday we reported that Anadarko, which previously had been lamenting the egregious amount of liquidity in the energy sector, became the first company to slash its full year capex budget by $300 million from a previous range of $4.5-$4.7 billion. As noted in our discussion, this was a material event not only for APC but the entire sector as "the Anadarko news is clearly negative for its shale peers, most of whom are set to announce similar capex declines." Moments ago, this was confirmed when Whiting Petroleum, the largest oil producer in North Dakota's Bakken region, became the second shale driller in the current cycle to slash its full year capital spending budget by 14% to $950 million from a prior estimate of $1.1 billion. .Whiting CEO James J. Volker explained it as follows: “One of our priorities is to maintain a strong balance sheet while delivering high returns and sustainable growth to investors. We plan to reduce capital spending to $950 million while achieving 14% production growth from first quarter to fourth quarter 2017. This is a testament to the high quality of our asset base, which is also evident in the strong 23% growth in proved reserves from year-end 2016 levels. A large component of this growth was driven by the effect of enhanced completions in the Williston Basin.” The recent collapse in WLL's capex as a result of the drop in oil prices is shown below, and at the current budget it appears that there will be little if any incremental capex growth from here.
Some oil services could get a boost from DUC calls - E&P firms have cut costs and got a bit of a tailwind from the rally in oil prices earlier this year, leading to a sharp increase in the number of rigs in operation. But it’s hard to maintain that sort of enthusiasm when oil futures don’t rise above $50 a barrel until early 2020. So the number of oil rigs being added has slowed markedly: That, along with signs of a slowdown in drilling permits being issued, is bad news for companies that provide land-drilling equipment and services, such as Precision Drilling Corp That stock has fallen 42 per cent this year. A jump on Wednesday, in response to bullish US oil inventory numbers, shows it would stand to gain from a sustained move by crude futures above $50. I wrote some time agoa about the rapid build-up in drilled but uncompleted wells, or DUCs, in US shale basins this year. The DUCs represent potential oil supply of perhaps several hundred thousand barrels a day (for their first year of production) once they’ve been fracked. With the E&P sector as a whole having set ambitious production growth targets for 2017 earlier in the year — when futures prices were higher — the most important aspect of the second-quarter earnings calls about to begin will be any sign companies are dialling back their plans. It’s a tricky balancing act because prudence demands they protect balance sheets, but investors in the sector have traditionally rewarded growth. One likely outcome, though, is that the emphasis in investment swings away from the first half’s drilling frenzy toward completing wells, which can then add to production. Even at an oil price of around $50, a new well producing 350 barrels a day — about average for Permian wells last year, according to Wood Mackenzie — would still pay back a completion cost of $4.5 million in less than a year.
Schlumberger eyes midterm supply crunch from global overworked assets: CEO -- As US shale operators and OPEC Gulf countries and Russia continue battling out low oil prices versus global supplies, the bulk of the world's producers are keeping output flat by working assets harder -- which could result in a midterm supply crunch, a key oilfield executive said Friday. The "harvesting approach" now pursued by many national and international oil companies that represent over half the world's production at a time of persistently low crude prices below $50/b may not be the best course for oil markets long term, Paal Kibsgaard, CEO of oil services provider Schlumberger, said in a quarterly earnings conference call. "The longer the current underinvestment carries on, the more severe the cliff-like decline trend will likely be when producers run out of short-term options to maintain production," Kibsgaard said. "Given the size of this production base, it will be difficult for the rest of the global producers to compensate for this pending supply challenge." Meanwhile, two things are "very clear," he said: "Come 2019 or 2020 we will have significant supply challenges," and global investments will rise in that period, as this have already begun. Until then, "what happens to oil markets comes down to the interplay between Russia/OPEC on one hand, and US producers on the other," the CEO said. US land producers, which account for 8% of global oil supply, have taken a "fast barrels" track as they ramp up production this year after a two-year industry downturn, he said. The breakneck rampup in US production -- about 450,000 b/d since the start of this year -- has "spooked" oil investors into believing that oil will flood the markets and keep global inventory levels relatively high into the foreseeable future, he said. As a result, pursuit of short-term equity returns in US land E&P stocks prevents recovery of oil markets, sends oil prices tumbling further and tamps down any equity appreciation the investments had aimed at creating, he added.
Halliburton, Schlumberger take hit on Venezuela bills in second quarter (Reuters) - Venezuela was unable to pay its biggest oilfield suppliers in cash in the second quarter, and top service companies Halliburton and Schlumberger accepted promissory notes that they immediately wrote down by hundreds of millions of dollars, their second-quarter reports showed. Schlumberger, the world's largest oilfield service firm by revenue, took a $510 million impairment charge, the vast majority of which was on promissory notes received from Petroleos de Venezuela in lieu of $700 million in outstanding fees. Halliburton similarly recorded a pre-tax charge of $262 million on promissory notes from its main customer in Venezuela in exchange for $375 million in fees, according to its financial filing. Neither company identified PDVSA by name, and both described the oil company as their "primary customer" in Venezuela. A PDVSA source confirmed it issued the notes. Foreign oil companies operating in Venezuela have become increasingly exposed to that country's economic woes, which have worsened under socialist President Nicolas Maduro. A brutal recession and persistent low oil prices have the cash-strapped nation delaying payments or using government-issued notes to pay suppliers. Last month, Weatherford International plc said it would amend its financial statements to reclassify $31 million that was previously booked as revenue as interest payment and a reduction in accounts receivable because of PDVSA's lengthy delay in payment. Representatives from Halliburton and Weatherford did not immediately respond to requests for comments. Schlumberger referred questions on the impairment charge to its coming financial filings.
Welsh officers 'will not facilitate Cuadrilla's business', Police and Crime Commissioner says - Lancashire Evening Post: Lancashire Constabulary had announced a 'number of other forces' were helping police Cuadrilla's fracking site in Preston New Road this month and next after protesters stepped up their presence there. But Mr Jones, an environmental campaigner who fought to halt fracking plans in Wales prior to being elected, tweeted: "No more @NWPolice officers will be going to facilitate Cuadrilla's business in Lancs. Let them pay for their own security. #capacity" When asked if he helped to 'bring this change about', he replied: "The decision was an operational one over which I have no say but I did make feelings known and may have influenced." He later said in a statement: "I was told last week there would be no further deployments after I made representations around capacity issues in North Wales and questioned how could we justify sending officers to Lancashire in those circumstances. “Why should officers from North Wales be sent to police and facilitate an activity where the activity is more or less unlawful in their own country?
Farmers and growers stand up to fracking in protester 'month of action -- The demonstration expected to shut down the Preston New Road development for a day last week (July 21) as part of a ‘rolling resistance’ month of action to disrupt work at the Cuadrilla site every day in July. It came as a new YouGov survey found about 66 per cent of Lancashire residents opposed fracking near their homes. Pilling organic grower Alan Schofield said: “As a Lancashire vegetable farmer whose livelihood depends on the health and wellbeing of our soils, I am shocked this development has been allowed. “The good people of Lancashire said no to this development, only to be overturned by central government. “We are not just fighting an unwanted and highly polluting industry, the whole of our demographic process is at stake.” A social media event advertising the demonstration slammed the fracking industry for ‘threatening widespread pollution whilst billing itself the farmer’s friend’. Little Plumpton farmer Allan Wensley was criticised for his decision to host the first Lancashire shale gas site but said he did not regret his decision. Liz Humphrey of the Landworkers Alliance added: “The fracking industry’s international legacy in the US and Australia to date is the permanent contamination of fertile land and critical water supplies. “Livestock are often the first to suffer the impacts of air and water pollution and the standard response to the devastation of herds is denial rather than compensation.”
Fracking drilling rig snuck on site overnight 'to avoid protests -- A company preparing to be the first to start large-scale UK fracking has breached its planning permission by delivering a drilling rig overnight, prompting the local authority to warn it is considering action against it.Cuadrilla said that around 30 trucks had made deliveries to its Preston New Road site near Blackpool at 4.45am on Thursday. It has permission to frack at the site later this year.Campaigners accused the company of bringing in the rig “under the cover of darkness” to avoid protests, and said the move would only strengthen opposition.The rig will be used to drill a 3,500m pilot well, taking samples to find the best spot to drill two vertical exploratory wells, from which the UK’s first horizontal shale wells will be drilled.But Lancashire county council said Cuadrilla had breached the terms of its planning permission by delivering equipment on heavy vehicles outside of the permitted hours of 7.30am-6.30pm. A council spokesman said: “We are writing to the operator requiring them to put measures in place to prevent a recurrence, as well as considering what further action to take.” The council could not say what form that action might take. Cuadrilla defended its decision to deliver outside of its permitted hours, saying it had done so in consultation with the police, with the aim of minimising disruption on the road outside the site. The company said the road has been closed or reduced to a single lane several times in recent weeks during protests. Ellie Groves of Reclaim the Power, a group which has been protesting outside the site for months, said: “While they congratulate themselves, we won’t be distracted by today’s news, and it will only strengthen everybody’s resolve to keep fighting.”
Mexico Delays Next Oil Auction to Let Huge New Find Sink - Mexico will delay its next offshore oilfield auctions by a month, giving international bidders more time to evaluate recent major crude discoveries that highlight the potential value of the assets. A new billion-barrel find announced last week "confirms that the Mexican side of the Gulf of Mexico is very prolific," said Juan Carlos Zepeda, Mexico’s chief oil regulator in an interview Friday. "International and national interest is awakening." July 12 marked perhaps the single most successful day for the Mexico oil industry since the government ended Petroleos Mexicanos’s government-owned production monopoly in 2014. Premier Oil Plc, Sierra Oil & Gas and Talos Energy LLC reported a reservoir with an estimated 1.4 billion to 2 billion barrels of oil in the southern Gulf of Mexico. On the same day, Italian producer Eni Spa said its March find in Mexico’s offshore waters also contains the equivalent of as much as 1 billion barrels, and Mexico successfully auctioned 21 of 24 onshore fields to private companies. "There was already interest to come, explore and work in the Gulf of Mexico before these finds, but now to have discoveries in such a short time, interest of international entrants to have activity in Mexico has renewed," Zepeda, head of the National Hydrocarbons Commission that oversees the industry, said in an interview in Bloomberg’s Mexico City office. The Talos-led discovery is expected to produce crude in three to four years, Zepeda said. Eni, which won rights to develop three more shallow water areas in the Gulf of Mexico last month, will accelerate development plans as it expects production by as soon as 2019, he said. Mexico wants to give potential international entrants plenty of time to digest all the new data before they bid for new leases in the region. The Mexican government will keep as much as 90 percent of the profits earned by the Eni project and around 83 of those generated from the Talos consortium, according to a July 16 emailed statement from the Energy Ministry.
Lawmakers divided over a ban on Venezuelan oil amid fears of a Russian takeover -- In advance of a July 30 vote that could strip Venezuelan lawmakers of their constitutional power, Cuban-American politicians are going after Venezuela’s jugular: the largest proven oil reserves in the world. Over the past few weeks, as the tough talk on Venezuela reaches a fever pitch, South Florida lawmakers are uniformly behind a ban on Venezuelan oil imports to the United States, a drastic step that could deal a critical blow to Venezuela’s slumping oil industry. The lawmakers seem convinced that the White House will do something drastic, going beyond the long-used tactic of issuing sanctions on individual Venezuelan government officials suspected of money laundering and drug trafficking. “We will have a swift and firm response from this administration,” Miami Rep. Ileana Ros-Lehtinen said this week. “If this happens on July 30, I am convinced without any doubt that the President of the United States will act swiftly and decisively to ensure that there will be measures taken against individuals and potentially sectors for the unconstitutional overthrow of democracy and the replacement with a Cuban-style regime,” Sen. Marco Rubio said on Wednesday. For now, Congress is united in its disgust toward Venezuelan President Nicolás Maduro, but some lawmakers — even among Republicans — disagree over how far the U.S. should go if Maduro’s constituent assembly comes up for its scheduled vote. The Cuban Americans favor a ban on Venezuelan oil imports, a far-reaching action that could further cripple an economy already mired in hyperinflation. But some leading foreign-policy voices in Congress, including Senate Foreign Relations Chairman Bob Corker, a Tennessee Republican, have doubts. “I believe there’s a crisis coming in Venezuela, and I think we need to be careful about not making ourselves the focus of that crisis,” Corker said. “Sometimes what we do unifies the chavistas.”
Prelude: a new era for LNG? -- Prelude, the world’s largest floating LNG vessel, has arrived in Australia. Shell, the developer and operator, has sounded the trumpets and declared it “a new era for the LNG industry.” Indeed, it may be, but this is a very expensive way to produce LNG and one that is operationally unproven. The world’s first FLNG vessel, developed and operated by Malaysia’s Petronas, the PFLNG Satu facility on the Kanowit gas field, only loaded its first cargo in April. It has yet to ramp up to full production. Moreover, it is a much smaller beast than Prelude. PFLNG Satu will operate in 70-200 meters of water and has a processing capacity of 1.2 million mt/year of LNG. Prelude, by contrast, will displace more water than six of the world’s largest aircraft carriers, and is the world’s largest ever offshore facility. It will produce 5.3 million mt/year of liquids, of which 3.6 million mt/year will be LNG, 1.3 million mt/year condensate and 0.4 million mt/year LPG. It will operate in 250 meters of water and experience category 5 cyclones over its 20-25 year forecast life, when it is expected to “shelter in place”. No one is throwing around precise numbers for the final cost, which is never a good sign. A “brought in under budget” announcement would surely have been made, if it could have been. First-of-a-kind technologies, particularly on this scale, are rarely cheap. Prelude’s cost has been estimated by external observers at between $10.8 billion and $12.6 billion. Shell said way back in 2011 that it would be competitive with other new LNG projects at between $3.0 billion and $3.5 billion per million tons of LNG production capacity.
China, India oil imports show Saudi Arabia is already carrying the burden of cuts: Russell (Reuters) - Saudi Arabia wants to do more to boost crude oil prices by taking a razor to its exports, but the kingdom is already doing much of the heavy lifting in Asia, where it is surrendering market share in the world's top importing region. Saudi Energy Minister Khalid al-Falih said after a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies on Monday that his country would limit crude oil exports to 6.6 million barrels per day (bpd) in August, almost 1 million bpd below levels a year ago. This commitment is belated recognition that OPEC and its non-OPEC allies, including Russia, have to do more than just comply with their November agreement to cut output by a combined 1.8 million bpd. For the output restrictions to work by draining global oil inventories, the producers will also have to curb exports. Vessel-tracking data from Thomson Reuters and other service providers suggest that cuts to exports in the first half of 2017 by OPEC and its non-OPEC allies haven't matched the reductions in stated output. However, data from Asia's top two oil importers, China and India, show that Saudi Arabia is already taking much of the pain by cutting the amount of crude it supplies. China imported the equivalent of 8.56 million bpd of crude in the first half of 2017, up 13.8 percent on the same period a year earlier, according to calculations based on customs data released on Monday. Of this Saudi Arabia supplied 1.07 million bpd, a gain of just 0.5 percent over the first half of 2016.This meant that Saudi Arabia, which was China's top supplier in 2015 and was only just pipped by Russia last year, has now slipped to third.
Fearing Global Sanctions, Russia Speeds Up Turkish Stream Gas Pipeline - Russian natural gas giant Gazprom is speeding up laying pipe for its Turkish Stream pipeline out of fear that extra-territorial sanctions being proposed by the U.S. Senate will eventually shut that project down. Russian business daily Vedomosti reported on Tuesday that Gazprom contractor Swiss Allseas has already laid about 15 miles of the pipeline under the Black Sea. Marine traffic coordinates on Swiss Allseas deep sea unit Audacia shows its vessels are in place and moving with Turkish Stream ahead of schedule. Gazprom's pipe laying is a slightly risky endeavor because there has yet to be any agreement with the Turks as to the points of entry and inland infrastructure for the pipeline. Still, these are early miles out of Russia, just south of the Crimea peninsula. There is a long way to go before they get to Turkey. The Turkish Stream pipeline was created as an alternative to South Stream, a pipeline deal between Gazprom and south European companies like Italy's Eni SpA to create another Russian gas route into Europe rather than through Ukraine. The Europeans killed that line as Ukraine-related sanctions took off in 2014. Ironically, the same government authorities have not killed a second Gazprom line, called Nord Stream II, which is scheduled to be built in the Baltic Sea and has counted on financing from Germany's Wintershall and Austria's OMV. Both of their government's slammed the U.S. Senate for singling out Nord Stream in its latest sanctions upgrade bill. Turkish Stream was not mentioned in the bill.
Libyan crude oil production at 1.069 million b/d: source -- Libya's oil production is 1.069 million b/d, and the country hopes to grow its output to as much as 1.25 million b/d this year, a source close to production said Monday. This would be the first time since 2013 that Libyan output would break above 1 million b/d, but state-owned National Oil Corp., or NOC, has been strangely silent, and has not officially confirmed current production. In its last statement on production in June, Libyan oil officials told OPEC its produced 852,000 b/d. The silence has led some industry observers to doubt whether production was stable at this level, and it remains unclear which fields have contributed to the increased rates. "They might have indeed hit that 1 million b/d mark. But my feeling here is that this number is capacity, not average production, and output is probably fluctuating between 900,000 b/d and 1 million b/d," North African analyst with Medley Global Advisors Mohammed Darwazeh said. Rising production has thrown the spotlight on NOC Chairman Mustafa Sanalla, who was invited to explain Libya's production outlook at the OPEC/non-OPEC technical committee meeting in St Petersburg, Russia on Saturday. OPEC has been in a quandary in the last few months, as the effectiveness of its cuts is being blunted by the sharp rise in production from Nigeria and Libya, two members of the organization that were exempted from the original output deal in November. Omani oil minister Mohammed Rumhy told S&P Global Platts in an interview in St Petersburg, that Libya and Nigeria should have their exemptions from the cuts rescinded and they should stop talking about their plans to increase production, which he said was contributing to bearish sentiment in the market.
Libya’s Oil King Won’t Be Stopped By OPEC - Conflict-torn Libya, divided between rival factions in the east and the west, recently reached 1 million bpd of crude oil output—for the first time since 2013. The oil production recovery has put in the spotlight the chairman of Libya’s National Oil Corporation (NOC), Mustafa Sanalla, whom analysts see as a central figure in the oil sector, wearing the hats of both a diplomat and an oil minister. It will be Sanalla who will lead Libya’s delegation at the upcoming meeting of the Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) in Russia, at which he will argue his country’s position and share production plans for the immediate future. . Libya’s production averaged 390,000 bpd throughout 2016 and 404,000 bpd in 2015, according to OPEC’s secondary sources. In the fourth quarter last year, output increased slightly to an average of 574,000 bpd. Since then, the lifting of port seizures and blockades and the June interim deal with Germany’s Wintershall to immediately resume production in concession areas and related fields, which unblocked 160,000 bpd worth of output—has helped Libya to nearly double production.The recovery of Libya and Nigeria’s crude oil production in the past two months has rekindled fears that rising supply from those two exempt African producers is offsetting a large part of the reductions and is depressing crude oil prices, alongside rising U.S. shale output. Libya’s oil production recovery is the primary goal of NOC’s chairman Sanalla, who said in an opinion piece in the New York Times in June, referring to the country’s internal power struggles: “Between 2013 and last September, these blockaded nearly all of Libya’s main oil ports and tried to leverage that chokehold into ransom money and political power. That cost the country over $120 billion in lost revenues and most of its financial reserves.”Arguing that the country’s oil and gas resources should not be held hostage to power struggles and fractious politics, Sanalla noted: “Caught between those rivals, we at the N.O.C. intend to remain neutral until there is a single legitimate government we can submit to.”
OPEC grapples with growing threats to oil deal. OPEC is worried that its plan to drain a global oil glut—and thereby raise crude prices—isn’t working. A long-planned meeting in St. Petersburg, Russia, on Monday to discuss the oil market with big producers outside the cartel has turned into a critical gathering. Over the weekend, the Organization of the Petroleum Exporting Countries said, its ministers have held a series of “intensive consultations” about the challenges for an output-cutting deal the 14-nation cartel struck last year with Russia and other big producers. The agreement was supposed to take almost 1.8 million barrels of crude oil off the global market and drain an oversupply that has weighed prices down for three years and sent a shock through the economies of oil-producing economies. But prices have remained stubbornly low as the glut persists. Brent, the international benchmark, fell 2.5%, to $48.06 on Friday because of doubts about OPEC’s ability to turn around the market. Libyan and Nigerian officials have signaled a willingness to limit their production once it stabilizes, but the details are being negotiated. An OPEC official said Iraqi production would also be discussed, as the cartel member’s output has remained much higher than its agreed upon levels.
Hedge funds close bearish positions in crude and gasoline- Kemp (Reuters) - Hedge fund managers have continued to cover short positions in crude oil and gasoline, helping lift prices across the petroleum complex against a backdrop of improving fundamentals.Hedge funds and other money managers reduced short positions in the five major petroleum futures and options contracts by a further 44 million barrels in the week to July 18 (http://tmsnrt.rs/2gWa6Ui).Total short positions in ICE Brent, ICE and NYMEX WTI, NYMEX gasoline, and NYMEX heating oil were cut to 350 million barrels, from a record 510 million barrels three weeks earlier.The extreme short positioning seen in most contracts at the end of June has gradually dissipated amid signs of a slowdown in shale drilling and a sharp draw in stocks of crude and gasoline in the United States.Hedge funds raised their combined net long position in Brent and WTI by 66 million barrels to 500 million barrels in the week to July 18 (http://tmsnrt.rs/2eHF4ii).Portfolio managers also boosted their net long position in gasoline by nearly 9 million barrels to 15 million barrels, according to regulatory and exchange data (http://tmsnrt.rs/2eHF9m6).Short positions in NYMEX WTI are almost back to the same level as at the start of June, when the current short-selling cycle started (http://tmsnrt.rs/2gWqGnb).Brent and WTI prices too are almost back to the level when the wave of short-selling began, indicating the current short-selling cycle may be drawing to a close (http://tmsnrt.rs/2gWtS23).Some managers have begun to build long positions in anticipation of a further rise in prices, especially in crude, where hedge funds added 29 million barrels of bullish long positions across Brent and WTI.But with so many short positions now covered, the balance of short-term price risks appears more even than at any time since early June.
Traders Think Hedge Funds Are Missing a Trick With Oil -- Hedge funds are still holding large bearish bets against oil and OPEC, yet out in the real world traders and refiners buying and selling actual barrels say it’s starting to look somewhat more bullish. "Physical differentials are improving across the world.” Differentials are an important indicator of the state of the market. They reflect the price of each type of crude compared with a benchmark, often Brent or West Texas Intermediate. The narrower the discount -- or larger the premium -- the stronger the market for that particular grade. While financial investors largely look at just those two big crude contracts, physical traders have broader view because they regularly deal in dozens of varieties from Venezuela’s Tia Juana Light to Vietnam’s Bunga Kekwa. Price differentials for some important varieties of crude, including Russia’s top export Urals, are at the strongest levels in three years, according to data compiled by Bloomberg. That would be encouraging for Saudi Arabia and its allies, if the hedge funds were paying attention. "The improvement in physical markets is being ignored in the financial space," "In other words, even though physical differentials are strengthening, headline price is range-bound at best.” The emerging tightness in the physical market helped Brent to move briefly above $50 a barrel last week, but prices were back around $49 on Tuesday. Even as Saudi Arabia promised deep cuts in shipments at a meeting of producers in St. Petersburg, Russia on Monday, signs of growing production from Libya and Nigeria -- exempt from the output curbs -- kept a lid on prices.
Hedge funds' active positioning in crude oil: Kemp (Reuters) - Hedge funds are some of the most important and dynamic participants in the oil market but public information on their positions and behaviour is severely limited. The only comprehensive information on hedge fund positions that is regularly available is contained within the commitments of traders reports published by regulators and exchanges. Hedge fund positions are co-mingled with pension funds, commodity trading advisers and other firms that manage or conduct trading on behalf of clients in the “money managers” category.The managed money category embraces a wide range of trading styles, some very active and likely to play an important role in short-term price discovery, and others which are essentially more passive and long-term. Money managers held long positions across the three major futures and options contracts linked to Brent and WTI totalling 771 million barrels on July 18, according to exchange and regulatory data. They also held 271 million barrels of short positions, giving them an overall net long position of 500 million barrels (http://tmsnrt.rs/2h5ayzx). Because of the way the data is published, there is no way to identify how many of these positions were active positions held by hedge funds and how many were more passive long-term positions held by a range of players. But it may be possible to make a rough division between active/dynamic positions and more structural/permanent positions by a careful inspection of the data. Since March 2013, the number of managed money long positions has peaked at 1,054 million barrels, but never dropped below 452 million, even in the depths of the oil price slump.Similarly, the number of short positions has ranged as high as 392 million barrels, but never fallen below 70 million, even when the sector was at its most bullish in May 2014.These minimum long and short positions in the money manager category appear to be semi-permanent or structural in nature (http://tmsnrt.rs/2eQhq35). Because these positions appear invariant to prices, and everything else, they probably play a limited or no role in the price formation process.Excluding these structural long and short positions from the total provides a clearer insight into the remaining, more dynamic positions.
Oil markets need regulator in face of speculators: Eni CEO - Energy markets might need to be regulated to put a brake on widespread financial speculation that is distorting crude prices, the head of Italian oil major Eni told Il Sole 24 Ore newspaper. Eni CEO Claudio Descalzi said OPEC and Saudi Arabia were not in a position to push prices higher by cutting output, adding that geopolitical tensions, growing U.S. shale oil production and heavy speculation in crude futures were hurting the sector. "The financial speculation is so strong that it has transformed even those with long term strategies into short term investors," Descalzi was quoted as saying. "Perhaps we should adopt in the oil sector the sort of regulations and market controls that were imposed on banks. Banks have a central watchdog, while in the past, our regulator was OPEC, which is no longer playing the role it once had." He said hedge fund speculators no longer believed that the Organization of the Petroleum Exporting Countries (OPEC) was in a position to introduce radical output cuts. Six OPEC and non-OPEC ministers are due to meet on Monday in St Petersburg to discuss the market outlook and review a global pact on reducing crude supplies that was agreed this year. Asked if he thought further cuts might be decided, Descalzi said: "I am not optimistic."
OPEC moves to cap Nigerian oil output, boost compliance | Reuters (Reuters) - OPEC moved on Monday to cap Nigerian oil output and called on several members to boost compliance with production cuts to help clear excessive global stocks and support flagging prices. OPEC has agreed with several non-OPEC producers led by Russia to cut oil output by a combined 1.8 million barrels per day (bpd) from January 2017 until the end of March 2018. OPEC states Libya and Nigeria were exempted from the limits to help their oil industries recover from years of unrest. The deal to curb output propelled crude prices above $58 a barrel in January but they have since slipped back to a $45 to $50 range as the effort to drain global inventories has taken longer than expected. Rising output from U.S. shale producers has offset the impact of the output curbs, as has climbing production from Libya and Nigeria. A ministerial committee of OPEC and non-OPEC states that monitors the global oil pact said it had agreed Nigeria would join the deal by capping or even cutting its output from 1.8 million bpd, once it stabilizes at that level from 1.7 million bpd recently. The monitoring committee, known as JMMC and which met in the Russian city of St Petersburg, did not give the timeframe for when this would happen, saying it would track Nigerian production patterns in the next weeks. The committee did not back capping Libyan output as it said its production was unlikely to exceed 1 million bpd in the near future compared to its capacity of 1.4 million-1.6 million bpd before unrest erupted in 2011 and plunged the nation into chaos. Brent oil prices rose about 1 percent at about $48.50, helped by news of a cap on Nigeria and by comments from Saudi Energy Minister Khalid al-Falih that the kingdom's exports would fall to 6.6 million bpd in August as demand at home was rising, effectively representing a cut of 1 million bpd year-on-year. He said global stocks had fallen by 90 million barrels, but were still about 250 million barrels above the five-year average for industrialized nations, which is the level OPEC and non-OPEC states are targeting with their output curbs.
Oil rises 1 percent after Saudi vows to cap crude exports next month (Reuters) - Oil rose more than 1 percent on Monday, after leading OPEC producer Saudi Arabia pledged to cut exports in August to help reduce the global crude glut, and Halliburton Co's executive chairman said the U.S. shale drilling boom would probably ease next year. Saudi Energy Minister Khalid al-Falih said his country would limit crude oil exports at 6.6 million barrels per day in August, almost 1 million bpd below levels a year ago. Russian Energy Minister Alexander Novak also told reporters that an additional 200,000 bpd could be removed from the market if compliance with a global deal to cut output was 100 percent. Brent crude futures LCOc1 settled up 54 cents or 1.1 percent to $48.60 a barrel. U.S. West Texas Intermediate (WTI) crude futures CLc1 settled up 57 cents or about 1.3 percent to $46.34 a barrel. The Saudi and Russian energy ministers were in St. Petersburg for a gathering of the Organization of the Petroleum Exporting Countries and other producers. Ministers discussed their previous agreement to cut production 1.8 million bpd from January 2017 through March 2018. Falih said OPEC and non-OPEC partners were committed to cut output longer if necessary but would demand that non-compliant nations stick to the agreement. OPEC members Nigeria and Libya have been exempt from the output cuts, and market watchers remain concerned that production from the two countries is offsetting the impact of the global reduction. There was no discussion of deeper output cuts, and OPEC Secretary-General Mohammad Barkindo said Nigeria had no intention of going beyond its production target of 1.8 million bpd.
Oil ends higher as Saudis pledge export cut, Nigerians agree to output cap - Oil ended higher Monday, as news that Saudi Arabia has pledged to lower crude exports and Nigeria plans to limit its production sent prices higher for the first time in three sessions. September West Texas Intermediate crude CLU7, +0.24% rose by 57 cents, or 1.3%, to settle at $46.34 a barrel on the New York Mercantile Exchange. September Brent crude LCOU7, +1.35% on London’s ICE Futures exchange tacked on 54 cents, or 1.1%, to $48.60 a barrel. Oil prices posted declines in each of the last two sessions. Energy ministers from major crude-producing nations gathered in St. Petersburg, Russia Monday, as part of a monthly meeting held to monitor compliance with crude production limits set by an agreement led by the Organization of the Petroleum Exporting Countries that began at the start of the year. Saudi Arabia, which is the world’s largest oil exporter, agreed to limit its exports at 6.6 million barrels a day, while Nigeria also committed to taking part in production cuts if it reaches a production level of 1.8 million barrels a day, according to a report from The Wall Street Journal. “Saudi Arabia announced its plan to cut exports and this is their way of gluing things back together,” said Bill Baruch, chief market strategist at iiTRADER. Nigeria’s current production is below that level—at about 1.6 million barrels a day in June. News reports, meanwhile, indicate that the Saudi export cut would amount to roughly one million barrels a day, compared with a year ago. Nigeria and Libya have seen their own output rebound faster than expected. The two OPEC members have been exempt from the production-cut deal as their output recovers from years of civil unrest. OPEC members had agreed to reduce their output by about 1.2 million barrels a day from Jan. 1 of this year through the end of March next year. But tanker tracker Petro-Logistics on Friday reported that OPEC output is expected to top 33 million barrels a day this month, up 145,000 barrels a day from June, according to Reuters.
Oil prices will be stuck below $60 through 2020, Credit Suisse forecasts: Analysts once believed an agreement by oil producers to pump less would send crude prices to $60 a barrel in relatively short order. Now, Credit Suisse believes prices won't even approach that level until 2020. The investment bank on Monday lowered its long-term price forecast for U.S. West Texas Intermediate crude by $5 a barrel, to $57.50 in 2020. Brent crude, the international benchmark contract, also got a $5 cut, to $60 a barrel in 2020. The oil market won't reach a lasting turning point until the third quarter of 2018, according to Credit Suisse. The bank pushed out its expectation for the long-awaited rebalancing of supply and demand until 2019. A group of oil producers led by Saudi Arabia has cut output by 1.8 million barrels a day through March in a bid to shrink global crude stockpiles to the five-year average. Credit Suisse believes inventories will still be 120 million barrels above that level by the time the deal is scheduled to wind down. The bank pointed to the usual suspects: Oil production from Libya and Nigeria, the two OPEC member countries exempt from the deal, rose more than expected, offsetting the output cuts. And despite throttling back production, OPEC members kept on exporting barrels at a brisk pace, which kept storage tanks full. Meanwhile, weak growth in demand for oil in many parts of the world in the first quarter made it tougher to draw down U.S. stockpiles, according to Credit Suisse analysts. Credit Suisse projects that OPEC, led by Saudi Arabia, will extend the production cuts for a second time, keeping them in place until U.S. stockpiles fall at least to the upper range of the five-year average.
Saudi tries to strengthen OPEC/non-OPEC hand with oil export gambit - Platts video -- Saudi Arabia's oil minister Khalid al-Falih did his best to restore the confidence of the oil market at the recent Joint OPEC-Non-OPEC Ministerial Monitoring Committee meeting in St. Petersburg, by promising that it will cut its exports to a six-year low next month. S&P Global Platts senior editor Eklavya Gupte reads into some of the key statements made at this meeting, including Falih's remarks that it will look to use export data as a key metric for compliance.
Saudi Arabia Regains Influence Over Oil Markets --The oil price gains continued this week after Saudi Arabia said that it would cut its oil exports deeper than before. The announcement suggests that the largest OPEC producer is keen to see the rebalancing accelerate.. OPEC met in St. Petersburg on Monday for a routine meeting to monitor compliance, but the summit took on greater importance with oil prices faltering and data for the prior two months showing that members have boosted production. The cartel’s compliance rate has slipped in recent weeks, and Saudi energy minister Khalid al-Falih said on Monday that the members needed to step up their efforts.Saudi energy minister Khalid al-Falih indicated that Saudi Arabia would cuts it crude exports to just 6.6 million barrels per day (mb/d) in August. The WSJ notes that because Saudi Arabia averaged exports of 7.2 mb/d between January and June, the export target would equate to a reduction of an additional 600,000 bpd. There is some discrepancy over the significance of this move. Taking 600,000 bpd off of the market appears very aggressive, but Saudi Arabia also typically sees exports fall in the summer because domestic demand spikes. Nevertheless, the focus on exports as opposed to production is a shift in thinking, a recognition that in prior months production might have fallen but exports declined only modestly. Related: Goldman Sachs Warns Of Global Oil Demand Peak The oil majors have pulled off remarkable cost reductions over the past few years, a campaign to bring spending down to sustainable levels. That has led to an improvement in the financials this year compared to last, but the gains ran out of steam in the second quarter. Analysts estimate that net income for the oil majors fell by 20 percent in the second quarter compared to the first. That means that deeper cost reductions are likely in the offing. "The sector needs to continue doing more of the same," Jason Kenney, head of pan-European oil and gas equity research at Banco Santander, told Reuters.
WTI Jumps Above $48 After API Inventory Report Shows Huge Crude Draw -- The recent trend of inventory draws (in crude and products) has supported higher Brent and WTI prices (the latter testing $48 today) despite surging production. API reported more of the same with a much larger than expected draw (-10.2mm vs -3mm exp), sending WTI above $48. All was not perfect in the report however as gasoline saw an unexpected build. API:
- Crude -10.2mm (-3mm exp) - biggest draw since Sept 2016
- Cushing -2.568mm (-1mm exp)
- Gasoline +1.9mm (-1.8mm exp)
- Distillates -111k
Gasoline surprised with an unexpected build in inventories but the massive crude draw (largest since Sept 2016) and a reduction in stocks at Cushing helped send crude proices higher...WTI traded around $48 into the API print - having ripped higher the last two days after Saudi 'whatever it takes' comments - and blew through $48 on the API print...
Oil rallies 3 percent as U.S. shale shows signs of slowdown (Reuters) - Oil rose 3.3 percent on Tuesday to the highest close in more than a month, a day after U.S. oil producer Anadarko said it would cut capital spending plans and Saudi Arabia vowed to reduce crude exports to help curb global oversupply. Brent crude futures rose $1.60 or 3.3 percent to settle at $50.20 a barrel, the first time the benchmark closed above $50 since June 6. U.S. West Texas Intermediate futures rose $1.55 or 3.3 percent to settle at $47.89 a barrel, the highest close for that benchmark since early June. The lower oil prices in June and July may have been affecting U.S. shale production, said Mark Watkins, regional investment manager at U.S. Bank. "Companies are not drilling as fast as they had been in the beginning of 2017," he said, "They’re not producing as much because it’s much less profitable with prices in the low $40s." On Monday, Anadarko Petroleum Corp posted a larger-than-expected quarterly loss and said it would cut its 2017 capital budget by $300 million because of depressed oil prices, the first major U.S. oil producer to do so. Earlier, Halliburton's executive chairman said growth in North America's rig count was "showing signs of plateauing." "In the U.S. investors have been waiting to see where that top is in oil production," Watkins said, "We’ve hit a tension point."
Here’s why oil just scored its biggest one-day rally of 2017 - News of cuts to oil-and-gas exploration spending and signs of a potential slowdown in U.S. output also played roles in the bullish shift in sentiment.On Tuesday, September West Texas Intermediate crude rallied by $1.55, or 3.3%, to settle at $47.89 a barrel on the New York Mercantile Exchange, marking the strongest single-day climb since late last year, according to FactSet data. Prices continued to climb in electronic trading late Tuesday, topping $48 a barrel, after data from an industry group reportedly showed a hefty drop in weekly supplies for U.S. crude. Early Wednesday, oil prices were extending those gains.On Monday, Saudi Arabia said at a meeting in Russia that it would cut August exports to 6.6 million barrels a day—a million barrels less than a year earlier. Separately, Nigeria, which isn’t part of the production-cut agreement led by the Organization of the Petroleum Exporting Countries, also promised to limit its daily production to 1.8 million barrels.Traders have taken these developments as bullish for prices, though many do point out that the Saudis normally lower exports at this time of year because of stronger domestic demand for oil, and Nigeria’s output would still have to rise from its current level of just over 1.6 million barrels a day before the West African nation would cap its output.Still, at the meeting Monday, which include some major non-OPEC nations such as Russia, oil producers were upbeat. “OPEC and non-OPEC members displayed optimism over the current production cut deal and seemed confident that the path they were treading would eventually rebalance the markets,” said Lukman Otunuga, research analyst at FXTM, in an note Tuesday.
OPEC’s No.2 Goes Rogue, Plans To Pump 5 Million Bpd - Iraq’s crude oil output could hit 5 million barrels daily by the end of the year, the country’s Oil Minister Jabar al-Luaibi told Iraqi media, adding that these projections “will not be affected by any fluctuations”. According to OPEC’s latest Monthly Oil Market Report, in June Iraq pumped 4.5 million barrels of crude daily, up from 4.44 million bpd in May, according to secondary source data. Exports in June averaged 3.2 million bpd, according to cargo loading data cited by Reuters. That’s up substantially from the 2.69 million bpd average for May and follows a decision by Baghdad to split the crude oil it exports into two grades, Basra Light and Basra Heavy, which prompted some field operators to boost output. Al-Luaibi’s announcement of production growth plans comes ahead of a meeting of oil ministers today in St. Petersburg, to discuss how the oil production deal is progressing and what further steps the partners need to take to accelerate this progress. It also comes a week after Ecuador announced it would no longer comply with its obligations under the deal as it needs oil revenues to patch up its budget. Iraq was perhaps the least willing OPEC member to take part in the deal. To the last day, Baghdad insisted it should be exempted from any cuts along with Nigeria and Libya due to its ongoing battle with IS that requires oil-export money. That Al-Luaibi’s announcement comes now that the deal was extended by another nine months, to March 2018, strongly suggests Iraq may follow Ecuador out the door. Iraq is the second-largest oil exporter in OPEC, after Saudi Arabia. Under the November 2016 deal terms, it agreed to cut 210,000 bpd from its daily crude oil output, but to date has fallen short of hitting this target.
Oil jumps to near eight-week high after big draw in U.S. crude stocks - - Oil prices rose to near eight-week highs on Wednesday, with Brent crude futures above $50 a barrel, as a much steeper than expected decline in U.S. inventories encouraged hopes the global crude glut would recede. Brent crude futures settled up 77 cents or 1.5 percent to $50.97 a barrel. U.S. West Texas Intermediate futures rose 86 cents or 1.8 percent to $48.75 a barrel. U.S. crude stocks fell last week as refineries hiked output and imports dropped, while gasoline stocks decreased and distillate inventories fell, the Energy Information Administration said. Crude inventories fell 7.2 million barrels in the week ending July 21, far exceeding the 2.6 million barrel forecast. It was the fourth straight weekly decline, bolstering hopes that the long-oversupplied market was moving toward balance. On Monday, Saudi Arabia said it would limit oil exports to 6.6 million barrels per day (bpd) in August, down nearly 1 million bpd from a year earlier. "Today’s report has strengthened the bullish sentiment already prevailing in the market, although the longevity of the move remains in doubt," said Abhishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics in London. "Nevertheless, the country’s crude and gasoline stockpiles remain above their five-year averages, which will cap price gains." The drawdown was a combination of higher exports from the United States, a marginal decline in oil output and a rise in the refinery utilization rate, he said. "The market has been tightening and the refinery margins are strong," "You add geopolitical risk premium for Venezuela, and you've got a strong market."
WTI Pops As Inventory Draws Trump Production Surge To 2 Year Highs --WTI prices kneejerked higher after last night's yuge crude inventory draw reported by API but prices have leaked lower into the DOE print. Expectations were for a 4th straight weekly draw in crude (thanks to robust refining activity) were confirmed with a 7.2mm inventory drop (less than API's 10.2mm), and Gasoline also saw a major draw (as opposed to API's build). However, exuberance ion WTI is not evident as Lower 48 production surge above 9mm barrels for the first time since July 2015. DOE:
- Crude -7.2mm (-3mm exp)
- Cushing -1.699mm (-1mm exp)
- Gasoline -4.445mm (-1.8mm exp)
- Distillates -1.185mm
While everyone was exuberant about API's crude draw the gasoline was notable, but DOE data dismissed that with draws across the entire complex....
Physical oil market tightens as refiners scramble for crude: Kemp (Reuters) - Physical crude markets are at last showing signs of tightening as record refinery consumption in the United States coincides with a slowdown in oil exports from the Middle East Gulf.U.S. refineries processed an average of almost 17.3 million barrels of crude per day last week, an increase of 620,000 barrels per day (bpd) compared with the same week in 2016 (http://tmsnrt.rs/2h8Wkh9).Fuelconsumption by U.S. motorists remains largely flat but U.S. refineries are seeing higher demand for gasoline and diesel from Latin America where supplies have been hit by local refinery problems.Refinery crude consumption remains high in most other geographical markets in an indication fuel demand is growing strongly, especially in emerging economies.OPEC exports have been rising as a result of increasing output from Libya and Nigeria, which are not capped under the organisation’s production deal, and poor compliance from some members.But Saudi Arabia has been restricting exports in recent weeks and has stated exports will be below 6.6 million bpd in August, compared with 7.3 million bpd in August 2016, and the lowest for the month since 2010.Saudi Arabia and Iraq both tend to export less during the summer because they use more crude domestically to burn in power plants to meet airconditioning demand.So some of the slowdown in Saudi exports may be seasonal, but officials are keen to frame it as a deliberate policy to accelerate the reduction of global oil stocks. Saudi sources have said export allocations to the United States, Europe and Asia will all be cut sharply in August (“Saudis to cut Aug oil exports to lowest level this year”, Reuters, July 12).The prospective reductions have left refiners scrambling to find replacement crude which is tightening the physical market for all grades.Demand for medium and heavy crudes, with a high yield of middle distillates, has been strong since the start of the year, helping narrow the light-heavy differential (http://tmsnrt.rs/2eTo4WB).But intensive refinery runs during the second and third quarters have seen strong demand for light crudes as well, tightening the market for light oils, even as supplies from North America and Africa have increased. One consequence is that commercial crude stocks in the United States have fallen more rapidly than normal at this time of year and are now below year-ago levels (http://tmsnrt.rs/2h97HFO).
OilPrice Intelligence Report: $50 Oil Is Back: Oil prices are on track for the biggest weekly gain so far this year, with Brent solidly above $50 per barrel and WTI not far behind. Royal Dutch Shell’s CEO Ben van Beurden said this week that oil prices will likely remain “lower forever,” not just because of too much supply, but also because the coming wave of EV adoption will lead to peak demand, possibly as soon as the late-2020s. His company now produces more natural gas than oil and will continue to diversify. Meanwhile, the company posted better-than-expected profits for the second quarter at $3.6 billion, or more than three times larger than the year before. Unless OPEC makes deeper production cuts, oil prices are in danger of falling below $40 per barrel in the first quarter of next year, according to JBC Energy GmbH. The consultancy sees oil prices trading between $45 and $47 later this year, but then it gets “very tricky,” as demand slows. “If OPEC stays the same and we have the same output restrictions even in the first quarter, we’re looking at a lot of surplus in the market,” Richard Gorry, managing director at JBC Asia, told Bloomberg. “To really tighten the market, OPEC will have to cut more, and I don’t know if they want to do that.” Financial advisors for Saudi Aramco have recommended the company list its shares on the London Stock Exchange, rather than Yew York, citing tougher disclosure rules in the U.S. The final decision for the estimated $100 billion IPO is not expected until later this year.
Pace Of US Oil Rig Count Growth Slows As Prices Climb -- The number of active oil rigs in the United States rose this week by 2 rigs showing a growth—albeit a slower one—in oil drilling as US players proceed more cautiously than before. Combined, the total oil and gas rig count in the US now stands at 958 rigs, up 495 rigs from last year, with oil rigs in the United States increasing by 2 and gas rigs increasing by 6 this week. Canada, which added 15 oil and gas rigs the week prior, added another 14 rigs for week this week. Of the 14 new active rigs this week in Canada, 11 were oil rigs. Oil rigs in Canada now stand at 129, up 60 on the year. Prices had risen to an eight-week high on Thursday, a continued to climb on Friday, with WTI trading up 1.08% at $49.57 at 12:01pm and Brent crude trading up 1.67% at $52.35. Oil prices are on track for the largest weekly gain in 2017 as the momentum from reports that Saudi Arabia, Kuwait, and UAE would cut crude oil exports and a larger than expected inventory draw for crude oil and gasoline. But while the rise in the number of active rigs in the US slows, US crude oil production is not, with average production averaging 9.41 million barrels per day for the week ending July 21—more than 1 million barrels higher than in in January 3, 2014, when 1,378 US oil rigs were active. By basin, the Permian added 5 rigs, and Cana Woodford added 4. Eagle Ford lost two rigs, and DJ-Niobrara lost one. At 10 minutes after the hour, WTI was trading at $49.70 with Brent crude trading at $52.47 and up almost 2% on the day.
US oil rig count up just 2 as firms ponder second-half activity - The US drilling rig count is seesawing between gains and losses.Baker Hughes’ overall tally of active US drilling rigs for the week ended July 31 increased by 8 to 958. It’s just the second rise of the past 5 weeks for the overall count, which has rebounded resoundingly since the bottom of the drilling downturn on May 20-27, 2016 (OGJ Online, July 21, 2017). Since then, the count has added 554 units. US oil-directed rigs, the catalyst for overall rig count growth over the past 14 months, added just 2 units this week and now total 766. Over the past 5 weeks, the oil-directed tally has gained just 8 units total compared with 38 during the 5 weeks prior.Gas-directed rigs, growth of which has also been slow over the past 2 months, jumped 6 units this week to 192, up 111 units since Aug. 26, 2016.Seven of the 8 units to begin work this week were land-based, with the tally of rigs drilling horizontally adding 7 units to reach 810, up 496 units since May 27, 2016. Rigs drilling horizontally last week posted their first decline in 36 weeks. Rigs drilling directionally rose 2 more units this week to 77.The US offshore count added 1 unit near Alaska and now totals 24, its highest level since Jan. 20.A steep drop in Alaska crude oil production, meanwhile, sank overall US production during the week ended July 21, according to data from the US Energy Information Administration. Alaska’s output dropped 54,000 b/d, offsetting a 35,000-b/d gain by the Lower 48. As a result, overall US production fell 19,000 b/d to 9.41 million b/d. While rig count growth has slowed in recent weeks, the drilling outlook remains far more positive compared with late 2014-early 2016 levels. In addition to relatively steadier crude oil prices compared with the volatility of early 2016, EIA this week attributed the extended drilling rebound to better cash flow among US firms. Operators in the Permian, the source of much of the recent drilling and production increases, have maintained positive cash flow through lower costs, higher productivity, and increased hedging, which might explain the elevated rig count in the region this year despite relatively flat crude prices, EIA said (OGJ Online, July 26, 2017).Productivity in the Permian, as measured by new-well oil production per rig in barrels per day, fell for the 10th consecutive month in June, EIA said, explaining that output per rig is likely dropping because operators are drilling more wells than they are completing.
A Coup In The House Of Saud? -- What has been an open secret across the Arab world is not a secret anymore even in the US: What happened last month in the deep recesses of the House of Saud with the ascension of Crown Prince Mohammad bin Salman, aka MBS, was in fact a white coup.Nearly a month ago, as I’ve written elsewhere, a top Middle East source close to the House of Saud told me:“The CIA is very displeased with the firing of [former Crown Prince] Mohammad bin Nayef. Mohammad bin Salman is regarded as sponsoring terrorism. In April 2014 the entire royal families of the UAE and Saudi Arabia were to be ousted by the US over terrorism. A compromise was worked out that Nayef would take over running the kingdom to stop it.”The source also referred to an insistent narrative then pervading selected Middle East geopolitical circles, according to which US intel, “indirectly”, had stopped another coup against the young Emir of Qatar, Sheikh Tamim al-Thani, orchestrated by Mohammed bin Zayed, Crown Prince of Abu Dhabi, with help from Blackwater/Academi’s Eric Prince’s army of mercenaries in the United Arab Emirates. Zayed, crucially, happens to be MBS’s mentor.But instead of a coup in Doha, what happened was actually a coup in Riyadh.According to the source, “the CIA blocked the coup in Qatar and the Saudis reacted by dumping the CIA-selected Mohammed bin Nayef, who was to be the next king. The Saudis are scared. The monarchy is in trouble, as the CIA can move the army in Saudi Arabia against the king. This was a defensive move by MBS.” Now, almost a month later, confirmation of the white coup/regime change in Riyadh has been splashed on the front page of The New York Times, attributed mainly to the proverbial “current and former United States officials”.
Saudi Arabia to execute 14 men on protest-related charges -- The Supreme Court of Saudi Arabia has upheld the death sentences of 14 men who were found guilty of various charges in proceedings which “brazenly flouted international fair trial standards,” Amnesty International has said. The 14 individuals were convicted of a range of offences, including “armed rebellion against the ruler” by “participating in shooting at security personnel, security vehicles”, “preparing and using Molotov Cocktail bombs”, “theft and armed robbery” and “inciting chaos, organising and participating in riots”, court documents showed. The men - who were tried en masse, and told the court they had been subjected to lengthy pre-trial detention in which they were tortured into confession - were originally sentenced on 1 June. The news of the Supreme Court’s decision to uphold the lower Specialised Criminal Court’s decision became public this week. “By confirming these sentences, Saudi Arabia’s authorities have displayed their ruthless commitment to the use of the death penalty as a weapon to crush dissent and neutralise political opponents,” said Samah Hadid, the organisation’s director of campaigns for the Middle East.
Michigan Faculty And Lawmakers Urge Reprieve Of Student In "Imminent" Saudi Execution --Amnesty International is warning that 14 young men are facing "imminent execution" for protest-related crimes in Saudi Arabia, including Mujtaba al-Sweikat, who was arrested in 2012 at the age of 17 while boarding a plane to attend an American university, as a well as a partially blind and deaf man who was reportedly tortured into giving a false confession. The men have already been moved to Riyadh, the site the Islamic kingdom's Deera Square (commonly called "Chop Chop Square"). Saudi Arabia typically gives no notice regarding precisely when executions are carried out - typically in the form beheading - though they are open to the public. The king's signature is all that's required before execution of the 14 men takes place after what Amnesty described as a "grossly unfair mass trial". July has been a particularly bloody month with over 26 executions in a 3 week period. International monitoring groups have estimated that over 60 executions have been carried out so far in 2017. In 2015 the kingdom reached a two decade high with over 157, and the following year executed 47 on a single day, including a prominent Shia cleric for leading anti-government protests. Various rights groups, as well as Michigan state lawmakers and teachers organizations, appealed to the White House to intervene, especially considering that one of the youngest facing execution, al-Sweikat, had been accepted as a student at Western Michigan University (WMU). Sweikat was arrested, along with other juveniles, for taking part in pro-Shia protests - all 14 are of part of Saudi Arabia's Shia minority.
Saudi-led coalition says Yemeni rebel missile shot down near Mecca - A ballistic missile fired by Yemeni rebels was shot down late Thursday close to Mecca in Saudi Arabia, a month before the annual Hajj pilgrimage to Islam's holiest site, the Arab military coalition fighting in Yemen said. The missile was intercepted 69 kilometres (43 miles) south of the city in western Saudi Arabia, the coalition said in a statement, calling it "a desperate attempt by Shiite Huthi rebels to disrupt Hajj", which begins at the end of August. Occasional ballistic missile attacks, as well as more frequent short-range rocket fire over the southern border, have in the past been conducted after coalition air strikes against the rebels in Yemen and is not the first time rebels have fired in the direction of Mecca. In October they launched one of their longest-range strikes against Saudi Arabia, firing a ballistic missile that was brought down near the holy city, an attack condemned by Riyadh's Gulf allies. But the new attack is thought to pose a threat ahead of Hajj, when some two million faithful from across the world will visit the site. The Huthi rebels and their allies, former members of Yemen's security forces linked to ex-president Ali Abdullah Saleh, began retaliatory attacks against the kingdom two years ago. The Saudi-lead coalition intervened in the country in March 2015 to support President Abedrabbo Mansour Hadi, who says the rebels are supported by its regional arch-rival Iran. The war has killed more than 8,000 people and wounded 44,500 since Saudi Arabia and its allies joined the conflict. Nearly two million Yemeni children are "acutely malnourished" and a "vicious combination" of war, hunger and cholera have left the country in desperate need of aid, the United Nations warned this week.
Yemen: What does Houthis’ new military capability mean? - In the two years since the Saudi-led coalition intervened in Yemen's civil war, fighting has often spilled over the country's borders.Until now, that meant shelling of Saudi cities and villages close to the frontier. But the Houthi rebels who control the capital Sanaa, and much of the north of the country, have long threatened to take the war directly to Saudi Arabia. The group says it is now able to target major cities in Saudi Arabia and claims to have successfully hit a Saudi oil facility in the Red Sea port of Yanbu last week. US officials have confirmed the missile attack but the Saudi government denied it.The development is significant because Yanbu is more than 900km from the northern Yemeni province of Saada, from which the missile was launched. If Yanbu is within range of Houthi weaponry, then so is much of the rest of Saudi Arabia.While the Saudis deny reports of the Yanbu attack they say, they did intercept a missile 69km south of Mecca this week. The Saudi-led coalition called that launch a "desperate attempt" to disrupt the upcoming pilgrimage season. So if the Houthis really are capable of attacking cities and oil facilities deep inside the kingdom, what does that mean for the ongoing war in Yemen?
UN, aid group: Cholera in Yemen to worsen in rainy season - ABC News: The U.N. health agency and an international aid organization warned on Friday that Yemen's cholera epidemic, the world's worst since Haiti's 2010 outbreak, is likely to worsen in the rainy season. The World Health Organization stressed that Yemen's cholera outbreak is "far from being under control, with the rainy season having begun, and possibly increasing the pace of transmission," U.N. deputy spokesman Farhan Haq said. The United Kingdom-based OXFAM group said in a statement that cholera in Yemen is now "the largest ever recorded in any country in a single year." The warnings came a day after the World Health Organization reported nearly 370,000 suspected cases of cholera and over 1,800 deaths since April 27. "Cholera has spread unchecked in a country already on its knees after two years of war and which is teetering on the brink of famine," WHO reported a decline in suspected cases over the past two weeks in some of the worst hit areas, including the capital Sanaa, but warned it's too early to tell if this is becoming a trend. OXFAM warned that Yemen's rainy season from July to September will accelerate the outbreak. The conflict in Yemen worsened in 2015 when a Saudi-led coalition backing the internationally-recognized government waged an extensive air campaign aimed at dislodging Houthis, whom the coalition accuse of acting as an Iranian proxy, from northern Yemen. The war has left more than 10,000 civilians dead, displaced 3 million people, and pushed the Arab world's poorest nation to the verge of famine.
Exclusive: UAE oil giant in talks to obtain loan of up to $5 billion: sources (Reuters) - Abu Dhabi oil giant Adnoc is in talks to obtain a syndicated loan worth up to $5 billion, the latest sign that the region's giant oil companies are increasingly turning to the debt markets to fund expansion. Two banking sources said on Monday that company's talks with regional and international banks are focusing on a loan that may total several billion U.S. dollars. A third said it was expected to be in a range of $4 billion to $5 billion. The loan facility, which would have various maturities of up to five years, is one of a number of fund-raising options being considered by the company, formally called the Abu Dhabi National Oil Co. It is also discussing the possibility of issuing a project bond that could be as large as $3 billion, bankers said, declining to be named because of commercial sensitivities. An Adnoc spokesman told Reuters: "As announced on July 10, Adnoc is expanding its partnership model and creating new partnership and co-investment opportunities across all areas of its value chain. "Alongside this new partnership model, Adnoc is also taking a more active approach to managing its portfolio of assets and balance sheet to both unlock value and drive growth. "Furthermore, as per the normal course of its financial planning, Adnoc is also looking at the most effective capital structure for the efficient management of its business." Before oil prices crashed in 2014, state energy firms in the Gulf largely financed themselves with money from their governments. But low oil and gas prices mean governments' finances are under pressure, so companies are increasingly turning to the markets.
The Qatar Blockade Is Threatening The OPEC Deal -- The blockade of Qatar could persist for quite a long time, according to the foreign minister of the UAE, who insisted that the Gulf States that have imposed the punitive barricade are not looking for a “quick fix.”The UAE Minister of State for Foreign Affairs Anwar Gargash told Bloomberg earlier this week that the blockade would be in place for “weeks, months…as long as it takes them to realize that this is not a crisis that we are looking for a quick fix. This is a crisis that we want to get to the bottom of, and we want to take away Qatar’s huge, huge support for this extremism and terrorism that we are seeing everywhere.”Despite the bluster, the blockade for the past month and a half has not gone according to plan. Qatar has still been able to import food and other necessities, while its exports of oil and gas have gone on uninterrupted. Moreover, the blockade by Saudi Arabia, the UAE, Bahrain and Egypt has not succeeded in isolating Qatar. In fact, Qatar has grown closer to Turkey and Iran, a development the Gulf States were hoping to avoid."As with their disastrous war in Yemen, Saudi Arabia and the UAE radically overstated their prospects for success and failed to have a plausible plan B in case things did not go to plan," wrote Marc Lynch, of George Washington University, according to the Washington Post. "The anti-Qatar quartet seems to have overestimated Qatari fears of isolation from the GCC and their own ability to inflict harm on their neighbor." The U.S. government has been trying to lower the temperature in the region and help resolve the crisis diplomatically, U.S. President Donald Trump’s vocal attacks on Qatar notwithstanding. Secretary of State Rex Tillerson shuffled between Kuwait, Qatar and Saudi Arabia last week to mediate, and while it wasn’t initially clear that he had come away with anything concrete, the U.S. and Qatar did sign an agreement to combat terrorism financing, a move that would seem to offer the Gulf States some consolation while also simultaneously taking away a bit of their leverage.
U.K. Joins U.S. in Calling for an End to Boycott of Qatar --Britain has joined the U.S. in calling for an end to the boycott of Qatar after the country pledged to fight terrorism. “I welcome the Emir of Qatar’s commitment to combat terrorism in all its manifestations, including terrorist financing,” U.K. Foreign Secretary Boris Johnson said in a statement on Sunday. “We hope in turn Saudi Arabia, U.A.E., Egypt and Bahrain respond by taking steps toward lifting the embargo. This will allow substantive discussions on remaining differences to begin.” The four nations cut off diplomatic relations with Qatar in June, accusing its government of funding terrorism. Qatari ruler Sheikh Tamim bin Hamad Al Thani has condemned their campaign to isolate his nation, saying it violates international law. He says his country is open to dialog, if sovereignty is respected, to resolve the dispute. American Secretary of State Rex Tillerson said last week that the U.S. is “satisfied with the effort” Qatar is making to counter terrorism and urged its neighbors “to consider, as a sign of good faith, lifting this land blockade.” But U.A.E. Minister of State for Foreign Affairs Anwar Gargash said Qatari officials must revise their policies before discussions could begin, making the possibility of imminent talks more remote. Maintaining the embargo may be harder than the Saudi-led bloc thought. The U.A.E.’s two government-controlled telecom providers, Etisalat and Du, said they will restore Qatar’s beIN Sports channels with “immediate effect,” according to local media.
A Shameful Silence: Where is the Outrage Over the Slaughter of Civilians in Mosul? - The catastrophic number of civilian casualties in Mosul is receiving little attention internationally from politicians and journalists. This is in sharp contrast to the outrage expressed worldwide over the bombardment of east Aleppo by Syrian government and Russian forces at the end of 2016. Hoshyar Zebari, the Kurdish leader and former Iraqi finance and foreign minister, told me in an interview last week: “Kurdish intelligence believes that over 40,000 civilians have been killed as a result of massive firepower used against them, especially by the Federal Police, air strikes and Isis itself.” The real number of dead who are buried under the mounds of rubble in west Mosul is unknown, but their numbers are likely to be in the tens of thousands, rather than the much lower estimates previously given. People have difficulty understanding why the loss of life in Mosul was so huge. A good neutral explanation of this appears in a meticulous but horrifying report by Amnesty International (AI) called “At Any Cost: The Civilian Catastrophe in West Mosul”. It does not give an exact figure for the number of dead, but otherwise it confirms many of the points made by Mr Zebari, notably the appalling damage inflicted by continuing artillery and rocket fire aimed over a five-month period at a confined area jam-packed with civilians who were unable to escape. However, even this does not quite explain the mass slaughter that took place. Terrible civilian casualties have occurred in many sieges over the centuries, but in one important respect the siege of Mosul is different from the others. Isis, the cruellest and most violent movement in the world, was determined not to give up its human shields. Even before the attack by Iraqi government forces, aided by the US-led coalition, started on 17 October last year, Isis was herding civilians back into the city and not allowing them to escape to safety. Survivors who made their way to camps for displaced people outside Mosul said they had to run the gauntlet of Isis snipers, booby traps and mines.
Moscow, Baghdad Sign Huge Arms Deal -- It was reported on July 20 that Russia and Iraq have struck a deal on supplying a large batch of T-90 tanks. Vladimir Kozhin, the Russian president’s aide for military technical cooperation, confirmed the agreement but declined to provide details, saying only «the number of tanks is substantial». Russian military analyst Ruslan Pukhov told Russian newspaper Izvestia that the deal might cover deliveries of several hundred T-90 tanks, and thatthe contract may exceed $1 billion.The T-90 is among the best-selling tanks in the world. Hundreds of vehicles have been sold to India, Algeria, Azerbaijan and other countries. A small number of tanks has been delivered to Syria to reinforce the military’s capabilities of combatting Islamic State (IS). Kuwait, Vietnam and Egypt are considering the option of purchasing T-90s.Known for its firepower, enhanced protection and mobility, the T-90 features a smoothbore 2A46M 125mm main gun that can fire both armor-piercing shells and anti-tank missiles and the 1A45T fire-control system. Standard protective measures include sophisticated armor, ensuring all-round protection of the crew and critical systems, including Kontakt-5 explosive reactive armor and active infrared jammers to defend the T-90 from inbound rocket-propelled grenades, anti-tank missiles and other projectiles.
Iran unveils new missile production line -- Iran has announced the launch of a new missile production line, according to its state media, against a backdrop of tension between the United States and Tehran. The Sayyad 3 missile can reach an altitude of 27km and travel up to 120km, Iran's Defence Minister Hossein Dehghan said at an undisclosed location of an inauguration ceremony on Saturday. The missile can target radar evasive fighter planes, unmanned aerial vehicles, cruise missiles and helicopters, he said. Dehghan also said that the recent $110bn military deal between the US and Saudi Arabia was intended as a threat to Iran. "We recently witnessed an immense purchase that some countries in the region paid as a ransom to America and they intend to bring weapons into the region, and this purchase was done with the goal of threatening Islamic Iran," Dehghan said according to the website for state TV. Last week, the US imposed new economic sanctions on Iran over its ballistic missile programme, and said Tehran's "malign activities" in the Middle East undercut any "positive contributions" coming from a 2015 Iran nuclear accord. The measures signalled that the administration of US President Donald Trump was seeking to put more pressure on Iran while keeping in place the agreement between Tehran and six world powers to curb its nuclear programme in return for lifting international oil and financial sanctions.
Iran says it has launched a satellite-carrying rocket into space - LA Times: Iran successfully launched its most advanced satellite-carrying rocket into space, the country's state media reported on Thursday, in what is likely the most significant step yet for the launch vehicle. A confirmed launch of the Simorgh rocket would mark another step forward for the Islamic Republic's young space program, but is likely to raise alarm among its adversaries, who fear the same technology could be used to produce long-range missiles.The Trump administration considers the launch a violation of the "spirit" of the landmark nuclear accord because it reflects "provocative" action by Tehran, State Department spokeswoman Heather Nauert said. She said the launch appeared to be related to Iran's attempts to develop ballistic missiles, which is not covered under the nuclear deal but is a subject of protest and sanctioning by the U.S. Iranian state television said the rocket, whose name means "phoenix" in Persian, is capable of carrying a satellite weighing 550 pounds. The report did not elaborate on the rocket's payload. Other state-linked agencies including the semi-official Fars news agency also described the launch as successful. Media reports did not say when the launch took place at the Imam Khomeini National Space Station in Semnan, about 138 miles east of Tehran.
For China’s Global Ambitions, ‘Iran Is at the Center of Everything’ -- For millenniums, Iran has prospered as a trading hub linking East and West. Now, that role is set to expand in coming years as China unspools its “One Belt, One Road” project, which promises more than $1 trillion in infrastructure investment — bridges, rails, ports and energy — in over 60 countries across Europe, Asia and Africa. Iran, historically a crossroads, is strategically at the center of those plans.Like pieces of a sprawling geopolitical puzzle, components of China’s infrastructure network are being put in place. In eastern Iran, Chinese workers are busily modernizing one of the country’s major rail routes, standardizing gauge sizes, improving the track bed and rebuilding bridges, with the ultimate goal of connecting Tehran to Turkmenistan and Afghanistan. Much the same is happening in western Iran, where railroad crews are working to link the capital to Turkey and, eventually, to Europe. Other rail projects will connect Tehran and Mashhad with deepwater ports in the country’s south.Once dependent on Beijing during the years of international isolation imposed by the West for its nuclear program, Iran is now critical to China’s ability to realize its grandiose ambitions. Other routes to Western markets are longer and lead through Russia, potentially a competitor of China. “It is not as if their project is canceled if we don’t participate,” said Asghar Fakhrieh-Kashan, the Iranian deputy minister of roads and urban development. “But if they want to save time and money, they will choose the shortest route.” He added with a smile: “There are also political advantages to Iran, compared to Russia. They are highly interested in working with us.”
South China Sea: Vietnam halts drilling after 'China threats' - BBC News: Vietnam has reportedly terminated a gas-drilling expedition in a disputed area of the South China Sea, following strong threats from China. A source in the south-east Asian oil industry has told the BBC that the company behind the drilling, Repsol of Spain, was ordered to leave the area. It comes only days after it had confirmed the existence of a major gas field. Those reports have been corroborated by a Vietnamese diplomatic source. According to the industry source, Repsol executives were told last week by the government in Hanoi that China had threatened to attack Vietnamese bases in the Spratly Islands if the drilling did not stop. China claims almost all of the South China Sea, including reefs and islands also contested by other nations.The drilling expedition began last month in an area of sea about 400km (250 miles) off Vietnam's south-east coast. The Vietnamese call the region Block 136-03 and have leased it to a company called Talisman-Vietnam, a subsidiary of Repsol. China calls it Wanan Bei-21 and has leased the same piece of seabed to a different company. Exactly which company is not clear. In 2015, the Chinese rights were sold to a Hong Kong-listed company called Brightoil, but it has recently denied owning them. Two of the directors of Brightoil are senior members of the Chinese Communist Party.
Vietnam Vietnam pushes back after threats from Beijing over drilling in the South China Sea : (Reuters) - Vietnam on Friday said other countries should respect its legitimate right to drill for oil in its waters amid growing tension with China over energy development in the South China Sea. The drilling began in mid-June in Vietnam's Block 136/3, which is licensed to Vietnam's state oil firm, Spain's Repsol and Mubadala Development Co of the United Arab Emirates. The block lies inside the U-shaped "nine-dash line" that marks the vast area that China claims in the sea and overlaps what it says are its own oil concessions. China on Tuesday urged a halt to the drilling. "Vietnam's petroleum-related activities take place in the sea entirely under the sovereignty and jurisdiction of Vietnam established in accordance with international law," Vietnamese Foreign Ministry spokeswoman Le Thi Thu Hang said in a statement sent to Reuters. "Vietnam proposes all concerned parties to respect the legitimate rights and interests of Vietnam." This week, the BBC reported that Vietnam had halted drilling there after Chinese threats, but there was no independent confirmation and neither Vietnamese officials nor Repsol made any comment on the report. Thomson Reuters data showed the drilling ship Deepsea Metro I was in the same position on Friday as it had been since drilling began on the block in the middle of June. China claims most of the energy-rich South China Sea through which about $5 trillion in ship-borne trade passes every year. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.
The surprising influence of China's independent refineries. Their nickname — teapot refineries — may make them seem small and nonthreatening, but China’s privately owned, independent refining sector is anything but. Teapots have been growing in size and processing sophistication, and they now account for about one-quarter of total Chinese refining capacity. Their rise has raised the ire of China’s big national oil companies, who are pressing the government to rein in teapot refiners’ aggressive tactics and alleged circumvention of tax and environmental laws. Today we look at the growing role of China’s teapot refineries, the challenge they pose to much larger competitors and the Chinese government’s recent efforts to put a lid on the teapots’ ambitions. Teapots are privately owned, independent Chinese refineries that have developed — and, to a large extent, thrived — in the shadows of China’s large national oil companies (NOCs): China Petroleum & Chemical Corp. (Sinopec), China National Petroleum Corp. (CNPC) and China National Offshore Oil Corp. (CNOOC). Generally speaking, the 150-plus teapot refineries now operating in China (many of them located in coastal Shandong Province in East China) started out small and simple; most initially did little more than refine straight-run fuel oil into middle distillates (diesel). Even today the capacity of most individual teapots is 100 Mb/d or less (though a few are considerably larger). As small, independent operators in markets dominated by big, state-owned giants, teapot owners are scrappy and resourceful. Time and again, they have responded to market opportunities by adding refining equipment and capabilities and, when it became possible, by importing crude (rather than buying fuel oil as their primary feedstock) and exporting refined products.
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