oil prices fell on Monday and never recovered to the levels of last week, as potential impacts from the hurricane hitting the Texas coast weighed on crude prices, while simultaneously boosting those of gasoline...after closing last Friday with a 3% gain to $48.51 a barrel in a week that saw prices a bit lower, US light sweet crude for September delivery fell $1.14 to $47.37 a barrel on Monday, in a selloff that was widely described as "profit-taking'...oil prices then headed higher Tuesday, with the expiring September oil contract closing 27 cents higher at $47.64 a barrel, while the October contract, which had started the week at $48.89, rose 30 cents to $47.83 a barrel, on expectations that the week's data would show that U.S. supplies of crude oil had fallen for an eighth-consecutive week...with Wednesday's oil price quotes now referencing crude for October delivery, oil prices rose 58 cents, or 1.2%, to settle at $48.41 a barrel at the close on Wednesday after the EIA report showed the expected decreases in supplies of crude oil and gasoline...with Hurricane Harvey strengthening and heading towards the Texas coast where one third of US refining capacity was in the path of the storm, oil prices tumbled 98 cents, or 2%, to $47.43 a barrel on Thursday, on fears that the Harvey would force refinery closures and thus reduce demand; hence, at the same time, September gasoline rose 4.52 cents, or almost 3%, to $1.6641 a gallon...oil prices then recovered and edged up 44 cents to $47.87 a barrel on Friday, as the the oil industry shut down production and evacuated offshore wells as the storm approached...that left the October oil contract price down 89 cents, or 1.8% for the week, its third consecutive weekly drop, while at the same time US gasoline spot prices had risen almost 10 percent to a high of $1.74 a gallon, their highest since April....the result was that U.S. gasoline crack spreads, or the difference between the price refineries pay for oil and their price of gasoline, rose throughout the week and ended at their widest in five years for this time of year...
The Latest US Oil Data from the EIA
this week's US oil data from the US Energy Information Administration, covering details for the week ending August 18th, showed a big increase in our imports of crude oil, still near-record amounts of crude oil being used by US refineries, and yet another withdrawal of oil from our commercial stocks....our imports of crude oil rose by an average of 664,000 barrels per day to an average of 8,790,000 barrels per day during the week, while at the same time our exports of crude oil rose by 59,000 barrels per day to an average of 936,000 barrels per day, which meant that our effective imports netted out to an average of 7,854,000 barrels per day during the week, 605,000 barrels per day more than during the prior week...at the same time, our field production of crude oil rose by 26,000 barrels per day to an average of 9,528,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 17,382,000 barrels per day during the cited week...
during the same week, refineries used 17,461,000 barrels of crude per day, 104,000 barrels per day less than they used during the prior week, while at the same time 475,000 barrels of oil per day were being pulled out of oil storage facilities in the US...hence, 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 396,000 more barrels per day than what refineries reported they used during the week...to account for that discrepancy, the EIA needed to insert a (-396,000) 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"...
further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 8,233,000 barrels per day, which was still 3.1% below the imports of the same four-week period last year....this week's 26,000 barrel per day increase in our crude oil production resulted from a 14,000 barrel per day increase in oil output from Alaska and a 12,000 barrels per day increase in oil output from wells in the lower 48 states...the 9,528,000 barrels of crude per day that were produced by US wells during the week ending August 18th was the most oil US wells have produced since July 17, 2015, 8.6% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 11.5% more than the 8,548,000 barrels per day of oil we produced during the during the week ending August 19th a year ago, while oil output was still 0.9% below the record US oil production of 9,610,000 barrels per day set during the week ending June 5th 2015...
US oil refineries were operating at 95.4% of their capacity in using those 17,461,000 barrels of crude per day, which was down from 96.1% of capacity the prior week, but still above normal for this or for any time of year...the amount of oil refined this week was 4.7% more than the 16,679,000 barrels of crude per day.that were being processed during week ending August 19th, 2016, when refineries were operating at 92.5% of capacity, and roughly 11.2% above the 10 year average of 15.7 million barrels of crude refined per day at this time of year...
even with oil refining down a bit this week, gasoline production from our refineries increased by 518,000 barrels per day to a new record high of 10,566,000 barrels per day during the week ending August 18th, topping the previous record set during the week ending last December 23rd, 2016....that put this week's gasoline output at a level 5.3% higher than the 10,035,000 barrels of gasoline that were being produced daily during the comparable week a year ago....however, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 196,000 barrels per day to 5,091,000 barrels per day at the same time, which was still 5.0% more than the 4,849,000 barrels per day of distillates that were being produced during the week ending August 19th last year....
however, even with this week's record gasoline production, our end of the week gasoline inventories decreased by 1,223,000 barrels to 229,902,000 barrels by August 18th, the 8th decrease in gasoline inventories in 10 weeks...that was as our domestic consumption of gasoline rose by 107,000 barrels per day to 9,629,000 barrels per day, and as our imports of gasoline fell by 122,000 barrels per day to 555,000 barrels per day, and as our exports of gasoline rose by 23,000 barrels per day to 693,000 barrels per day...with significant gasoline supply withdrawals in 8 out of the last 10 weeks, our gasoline inventories are now 1.2% below last August 19th's level of 232,695,000 barrels, even as they are still 7.2% higher than the 214,434,000 barrels of gasoline we had stored on August 21st of 2015, and almost 9% above the 10 year average for gasoline supplies for this time of the year...
meanwhile, with the decrease in our distillates production, our supplies of distillate fuels were little changed, rising by just 28,000 barrels to 148,387,000 barrels over the week ending August 18th, after rising by 702,000 barrels the previous week…that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 145,000 barrels per day to 4,077,000 barrels per day, while our imports of distillates fell by 35,000 barrels per day to 132,000 barrels per day and as our exports of distillates rose by 10,000 barrels per day to 1,142,000 barrels per day....after this week’s small increase, our distillate inventories were still 3.2% lower than the 153,257,000 barrels that we had stored on August 19th, 2016, and fractionally lower than the distillate inventories of 149,836,000 barrels of distillates that we had stored on August 21st of 2015, even as they remain roughly 5.7% above the 10 year average for distillates stocks for this time of the year…
finally, even with the large increase in oil imports, our commercial crude oil inventories fell for the 18th time in the past 20 weeks, decreasing by another 3,327,000 barrels to 463,165,000 barrels as of August 18th, leaving us with the least oil we've had in storage since January 15th, 2016...since that's been a matter of concern in some corners, we'll include a graph of what that looks like below...
the above graph was taken from the Zero Hedge coverage of this week's EIA release and it shows our commercial inventories of crude in billions of barrels from September 2012 through this week's report....while we can clearly see that our oil supplies are down substantially over the last 4 months from their March peak, to a level roughly matching that of mid-January 2016, they're still up considerably from the normal level for our oil supplies in the years before the oil glut started building up.. thus, though our oil inventories as of August 18th were 6.0% below the 492,962,000 barrels of oil we had stored on August 19th of 2016, they were still 10.5% more than the 418,990,000 barrels in of oil that were in storage on August 21st of 2015, and 40.8% higher than the 329,024,000 barrels of oil we had in storage on August 22nd of 2014...
This Week's Rig Count
US drilling activity decreased for the 6th time in the past 9 weeks during the week ending August 25th, following a string of 23 consecutive weekly increases earlier this year, as both drilling for oil and for natural gas slowed....Baker Hughes reported that the total count of active rotary rigs running in the US fell by 6 rigs to 940 rigs in the week ending Friday, which was still 451 more rigs than the 489 rigs that were deployed as of the August 26th report in 2016, while it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....
the number of rigs drilling for oil decreased by four rigs to 759 rigs this week, which still left oil rigs up by 353 oil rigs over the past year, while their count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations decreased by 2 rigs to 180 rigs this week, which was still 99 more rigs than the 81 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...in addition, one rig that was classified as miscellaneous was still drilling this week, compared to the 2 miscellaneous rigs that were working a year ago..
the Gulf of Mexico rig count rose by one rig to 17 Gulf rigs this week, the same number that were working in the Gulf during the same week last year...that's also the same as the total US offshore rig count for this week, since there was no other US offshore drilling except in the Gulf...
active horizontal drilling rigs fell by 3 rigs to 796 rigs this week, which left the horizontal rig count still up by 417 rigs from the 379 horizontal rigs that were in use in the US on August 26th of last year, while their count was also still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the vertical rig count was down by 2 rigs to 64 vertical rigs this week, which was still up from the 62 vertical rigs that were deployed during the same week last year...at the same time, the directional rig count was down by 1 rig to 80 rigs this week, which was still up from the 48 directional rigs that were deployed on August 26th of last year....
the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of August 25th, the second column shows the change in the number of working rigs between last week's count (August 18th) and this week's (August 25th) count, the third column shows last week's August 18th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 26th of August, 2016...
noteworthy this week is that the Marcellus saw the greatest loss of any basin, down 3 rigs to 43 rigs...hence, Pennsylvania joined Texas as the states with the greatest decrease, as drillers in both states shut down three rigs...we would also note that the number of rigs active in Pennsylvania fallen to 31, while at the same time the Ohio rig count was up by 1 rig to 29 rigs with the addition of another rig in the Utica...the drop of 2 rigs in natural gas activity was a bit more involved than Pennsylvania shutting down 3 rigs while Ohio added one, however, since natural gas rigs were also added in the Haynesville of Louisiana and the Eagle Ford of south Texas, where there were two oil-directed rigs pulled out at the same time...that was as two natural gas rigs were concurrently pulled out of 'other' basins, which are not named by Baker Hughes in their summaries....going forward, we can probably expect to see a reduction in Eagle Ford drilling next week, because widespread rain totals of up to 40 inches are expected in the area, and some analysts believe those shale fields could be out of commission for up to two months in the subsequent flooding...meanwhile, that new rig in the Gulf of Mexico was supposedly offshore from Texas, and we can almost guarantee that there was no drilling going on there as the Category 4 Hurricane passed overhead...
Secretary of State blocks anti-fracking charter... again - Athens NEWS - In a blow against local efforts to ban fracking-waste injection wells in Athens County, Ohio Secretary of State Jon Husted declined last week to consider the argument of a group protesting the local election board’s decision to keep a proposed county charter off of the ballot.In a decision last Monday, Husted dismissed a protest by the Athens County Bill of Rights Committee against the Athens County Board of Elections’ rejection of the charter, saying the protest was improperly filed.Husted determined that Ohio law barred the petitioners from filing the protest with his office after they had already appealed the elections board’s decision to the local Athens County Common Pleas Court. His decision addressed charters proposed in both Athens and Medina counties, and he dismissed both on the same grounds.The Athens County Board of Elections last month rejected the charter as invalid by saying 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. Athens County Common Pleas Judge George McCarthy sided with the Board of Elections and upheld the rejection of the charter. The group filed an appeal of McCarthy’s decision with the Fourth District Court of Appeals on July 28. The Athens County Bill of Rights Committee proposing the charter (which also seeks to ban fracking-waste injection wells in the county, as well as the use of local water resources for deep-shale oil and gas development) also filed a protest of the elections board decision with Husted. Toledo attorney Terry Lodge, who represents the ACBORC, explained the thinking behind filing both the protest and the appeal. He pointed to a charter proposed in Medina County in 2016. After that was rejected by the Medina County Board of Elections, he said, charter supporters filed an objection with Husted, which was denied, and then filed a mandamus lawsuit in the Ohio Supreme Court for an order for Husted to place the proposal on the ballot.
High court once again may decide county charter - Athens NEWS - The issue of whether Athens County voters will be allowed to vote on a proposed charter form of government will go to the Ohio Supreme Court for the third year in a row.The attorney for the Athens County Bill of Rights Committee (ACBORC) proposing the charter confirmed Monday that the group has filed a complaint in mandamus in the Ohio Supreme Court in opposition to Ohio Secretary of State Jon Husted’s rejection of the issue. Earlier this month, Husted dismissed a protest by the ACBORC against the Athens County Board of Elections’ rejection of the charter, saying the protest was improperly filed. Husted determined that Ohio law barred the petitioners from filing the protest with his office after they had already appealed the elections board’s decision to the local Athens County Common Pleas Court. His decision addressed charters proposed in both Athens and Medina counties, and he dismissed both on the same grounds. Terry Lodge, an attorney from the Pennsylvania-based Community Environmental Legal Defense Fund who’s representing ACBORC as well as Medina clients, said Monday he expects briefings to go to the state Supreme Court this weekend. “I would expect the lightning round of briefing for (the complaint in mandamus) to commence about Saturday and will use up another week or so before the matter goes to the Supreme Court for a decision,” he wrote. Lodge said that the group’s brief in the direct appeal of the case, to the Fourth District Court of Appeals, is due Monday, Aug 28. The Athens County elections board will then have 20 days for a response, after which the ACBORC will have 10 days to reply, he said. The Athens County Prosecutor’s Office, representing the Board of Elections, has indicated it likely will file for a stay in the Fourth District court case while the same matter is pending before the state high court.
Yale Faculty Receive Two Million Dollar Grant to Study Health Effects of Fracking -- With a new two million dollar grant from the Environmental Protection Agency (EPA), researchers from the Yale School of Public Health (Yale), forestry & environmental studies (FES), and engineering & applied science (engineering) will investigate the health effects of unconventional oil and gas production. Assistant professor Dr. Nicole Deziel (Yale) and professor Dr. James Saiers (FES) will direct an interdisciplinary team of scientists who will investigate the impact of hydraulic fracturing, more commonly known as 'fracking,' and related activities on drinking water quality and neonatal health outcomes within the Appalachian Basin. Thousands of wells have been hydraulically fractured within the Appalachian Basin-an area stretching from Alabama to New York-during the past decade and the practice is expected to continue for years to come. 'This research brings together physical scientists, engineers and population scientists from across the Yale campus to evaluate the likelihood of drinking-water contamination and adverse birth outcomes resulting from these new industrial activities,' said Dr. Deziel. 'Research from these disciplines has generally been occurring separately, and integration of hydrogeology, chemistry and epidemiology will provide critical scientific evidence for policymakers, health officials and other researchers.' The Appalachian Basin has contributed significantly to the nation's oil and gas boom. Advances in drilling and hydraulic fracturing have unlocked these reserves, which has increased domestic supplies and made oil and gas cheaper, but widespread deployment of these extraction technologies have been accompanied by concerns about environmental contamination, social stressors and health problems that may be felt acutely by lower-income communities. Through the grant, the EPA is seeking multidisciplinary research that illuminates the impacts of unconventional oil and gas production, with the ultimate goal of using this research to inform policy decisions and best practices for oil and gas drilling within the Appalachian Basin and elsewhere.
With FERC Back in Business, What Does It Mean for Gas Projects? -- On August 4, the U.S. Senate confirmed two new commissioners for the Federal Energy Regulatory Commission (FERC), restoring the three-member quorum legally required for FERC to vote. The Senate action ended a six-month dry spell during which FERC could not issue any orders, and thus could not approve any of the many pipeline projects pending there. What does it mean that FERC can act again to approve new projects? And does that mean the industry can move forward at the pace it needs? Today we explore these questions and assess what it will take to get some key gas infrastructure projects back on track. This is the second part of our “You Never Can Tell” series on the challenges that midstream companies face when they run their projects through the regulatory gauntlet. In Part 1, we explored the implications of the loss of its quorum for FERC, which is chartered to have five members; discussed the “midnight orders” issued just before the commission lost its quorum to approve three major projects (Energy Transfer Partners’ Rover Pipeline, Williams’ Atlantic Sunrise Pipeline and National Fuel’s Northern Access Pipeline); and noted that other permitting issues can be just as troublesome as getting a certificate of public convenience and necessity from FERC. At the time of that post, we did not expect the inability of FERC to vote to last for six months. By taking so long to repopulate the five-member commission, the administration and the Senate have delayed project development for at least a half-year and probably longer. The “probably longer” refers to delays in authorization that can cause a project to miss key dates for tree clearing and other seasonally sensitive activities the developers can’t start without a certificate. This can force developers to wait for the target season to roll around again next year. So it’s very easy for a FERC delay of a couple of months to delay a project for a year or more.
Photos: Pennsylvania Residents in Path of Atlantic Sunrise Pipeline brace for fight over construction -- If you know where to look, you can spot them along the roadsides as you drive through the hilly farmland of Lancaster County, Pennsylvania. Short wooden stakes stand exactly 50 feet apart, topped with orange tape. The markers seem benign, but for many Lancaster residents, the threat they represent is anything but: These poles mark the proposed path of the Atlantic Sunrise natural gas pipeline. The Atlantic Sunrise project is a $3 billion expansion of natural gas giant Williams’s Transco pipeline network. Building it will require burying a 42-inch pipe under miles of Amish country, below farms and rivers, in the face of opposition from many Lancaster residents. Many of the pipeline’s opponents are already in open rebellion. A group of nuns who own land on the proposed pipeline’s path refused to grant Williams an easement on their property. Williams threatened to use eminent domain, and now the nuns from the Adorers of the Blood of Christ have sued the Federal Energy Regulatory Commission in U.S. District Court. They argue the pipeline’s construction contradicts their deeply held religious beliefs and that using eminent domain to take their land is a violation of their First Amendment rights to freedom of religion. The Adorers, a small order of Catholic sisters with a commitment to social and environmental justice, first established themselves in the small farming community of Columbia, Pennsylvania, in 1925. There they founded St. Anne’s, a home for the elderly. More recently, they purchased a small forest preserve near their original ministry in Illinois. Beyond the immediate disruption to their land that the pipeline would inflict, the sisters argue that it also promotes fracking, which they consider harmful to the environment.
US appeals court deals setback to Constitution Pipeline project -- Efforts to serve New England with more US shale gas that would make supply costs cheaper on days of high demand for the home heating and power plant fuel suffered a blow Friday when a federal appeals court effectively stalled the 650 MMcf/d Constitution Pipeline at the New York border. Operator Williams and shippers Cabot Oil & Gas and Southwestern Energy have viewed Constitution as an important cog in the natural gas wheel that would alleviate bottlenecks in the pipeline-constrained Northeast, a region that needs new infrastructure to move output from the Marcellus and Utica shale plays. New England, in particular, heavily relies on pipeline imports from Canada and LNG imports from overseas to meet winter peak consumption, factors that can increase prices during shortages. Constitution's sponsors had repeatedly expressed optimism in recent months that the assistance the five-year-old project was seeking from the Trump administration and a successful challenge of the New York State Department of Environmental Conservation's denial last year of a key water permit would allow the pipeline to move forward and be completed. That goal has been put in limbo now that the US 2nd Circuit Court of Appeals has ruled to uphold the permit denial. "A state's consideration of a possible alternative route that would result in less substantial impact on its waterbodies is plainly within the state's authority," the court said.
Cove Point LNG ready for commissioning (Argus) — Dominion today asked the US Federal Energy Regulatory Commission (FERC) for authorization to test its Cove Point LNG export terminal in Maryland by introducing gas into the pre-treatment and liquefaction areas. Cove Point is on track to become the second major operating LNG export terminal in the contiguous US. "These activities will support production of LNG in the fourth quarter of 2017," Dominion said. "This request is part of the commissioning process for the export project that is scheduled for completion in the fourth quarter of this year." Dominion previously said that Cove Point likely would achieve sustained production in the fourth quarter before starting long-term commercial operations late this year. Dominion has said that a third party has contracted to provide feed gas for the testing process and to export test cargoes, but it has declined to identify that entity. The $3.8bn Cove Point export project would have peak capacity of 5.75mn t/yr, equivalent to 770mn cf/d (21.8mn m³/d) of gas, from one liquefaction train. Cove Point has received an average of about 30mn cf/d of gas since 1 May to test other parts of the facility. Intake would increase significantly after FERC approves introducing gas into the liquefaction unit. When Cove Point comes on line, the contiguous US will have peak LNG export capacity of 25.75mn t/yr, as the fourth liquefaction train at Louisiana's Sabine Pass LNG export terminal started operating in late July. Six LNG export projects are being built or completed in the contiguous US with combined peak capacity of 75mn t/yr, which would almost equal Qatar's capacity of 77mn t/yr. Dominion has signed two 20-year take-or-pay liquefaction capacity deals totaling 4.6mn t/yr. Japanese trading house Sumitomo and Indian state-owned gas utility Gail each signed a deal for 2.3mn t/yr. Sumitomo has signed 20-year deals to sell most of its Cove Point offtake to Japanese utilities, with 1.4mn t/yr going to Tokyo Gas and 0.8mn t/yr to Kansai Electric. The customers at Cove Point are responsible for procuring their own gas and pipeline transportation. Most of the gas is expected to come from the relatively close Marcellus and Utica shale fields.
New York state's final chance to stop fracking is slipping away | TheHill: New York banned fracking in 2014, Maryland recently followed suit, and local ordinances to limit it have been passed in 22 states. But a fracking expansion juggernaut is subverting state and local attempts to keep fracking’s negative impacts out. The federal fix is in, with the Trump administration ramming through project approvals and reversing Obama’s initiatives to regulate fracking’s air and water impacts and methane leakage. There has been some push-back from the courts, including important decisions over the last few days rejecting Federal Energy Regulatory Commission (FERC) approval of Florida's Southeast Market pipelines because it ignored their climate impacts, and upholding New York state's refusal to issue a water permit for the Constitution Pipeline. Still, some of the damage to state power to say “no” to fracking has been self-inflicted. Even in states like New York and California, which proclaim themselves sustainability leaders, fracked gas power plants and infrastructure are getting built over local objections, to serve as markets for fracked gas producer states like Pennsylvania and Wyoming. Increasingly, fracking’s environmental and health impacts are coming home to residents who fought to keep fracking out and believed they had prevailed. Sadly, they haven’t. New York is a cautionary case in point. Already the fourth-largest consumer of fracked gas in the U.S. despite its famous fracking ban, New York is surely on track to become the largest. It took a giant step down that path by allowing Competitive Power Ventures (CPV) to build an unneeded 680 MW fracked gas plant in the Hudson Valley’s Orange County. CPV opponents call it “the head of the snake,” because the plant necessitates a vast network of pipelines, compressor stations and fracking wells. Despite CPV’s spectacularly inappropriate siting, its efforts to preempt state laws and regulations, and an egregious corruption scandal, construction of the plant continues. If it becomes operational, it will signal a public health and climate catastrophe, and carte blanche for fracking expansion elsewhere.
Governor opposition complicates Trump administration's Atlantic drilling plans -- The Trump administration is facing increasing pressure from governors of East Coast states to keep federal Atlantic waters out of the five-year oil and natural gas leasing plan it hopes to finalize late next year. Several East Coast governors, including Republicans and supporters of President Donald Trump, have ramped up pressure on the administration to keep the Atlantic out of the 2019-2024 federal offshore lease plan. This is significant since the administration is required by federal law to consider local and state opposition to offshore drilling before it approves a lease sale. Much of this opposition was made public this week as governors weighed in comments to the Interior Department's Bureau of Ocean Energy Management, which is developing the five-year plan. Comments were due Thursday and the agency received nearly 74,000 as of Friday afternoon. It's murky waters when considering expanded US offshore oil and gas drilling In an August 11 letter to BOEM, Virginia Governor Terry McAuliffe, a Democrat who previously supported offshore oil and gas development, wrote he could not support oil and gas drilling off his state's coast, largely because of a lack of a revenue sharing agreement between Atlantic coastal states and the federal government. New Jersey Governor Chris Christie, a Republican and Trump supporter, is "strongly" opposed to any federal waters off his state's coast being considered for oil and gas drilling, according to Bob Martin, commissioner of the state's Department of Environmental Protection. In a letter sent to BOEM Thursday, North Carolina Governor Roy Cooper, a Democrat, wrote offshore drilling "threatens our coastal economy and environment, yet offers little economic benefit" to the state.
Feature: Gasoline demand from Mexican deregulation may pressure Colonial Pipeline - A recent output disruption at Mexico's largest refinery may have contributed to Colonial Pipeline's June decision to cancel some shipping on its gasoline-only Line 1, USGC gasoline market sources have said. While this was an isolated event, growing Mexican import demand driven by deregulation could continue to put pressure on Colonial's Texas-to-North Carolina Line, sources said. Colonial in June decided not allocate the 37th cycle on its Line 1, the first such decision since the line's 42nd cycle in 2011. The disruption over June and July at Mexico's 330,000 b/d Salina Cruz may have also compounded the overall economic challenges of the USGC-USAC arbitrage over the summer, the sources said, as Latin America became a bigger draw for USGC product. "Why lose money shipping on Colonial when there's an entire other market for USGC gasoline? A lot of gasoline has been going out by ship this summer," a gasoline source said. Another USGC source agreed with that, saying that USGC gasoline has not been competitive with European sellers in the New York Harbor market in recent months and so has been bound for export.
Court Rules FERC Failed to Adequately Review Environmental Impacts of Sabal Trail Pipeline - The U.S. District Court of Appeals ruled 2-1 Tuesday saying that the Federal Environmental Energy Regulatory Commission (FERC) failed to adequately review the environmental impacts of the greenhouse gas (GHG) emissions of the fracked gas Sabal Trail pipeline , which runs more than 500 miles through Alabama, Georgia and Florida. "Today, the D.C. Circuit rejected FERC's excuses for refusing to fully consider the effects of this dirty and dangerous pipeline," said Sierra Club staff attorney Elly Benson. "Even though this pipeline is intended to deliver fracked gas to Florida power plants, FERC maintained that it could ignore the greenhouse gas pollution from burning the gas. For too long, FERC has abandoned its responsibility to consider the public health and environmental impacts of its actions, including climate change . Today's decision requires FERC to fulfill its duties to the public, rather than merely serve as a rubber stamp for corporate polluters' attempts to construct dangerous and unnecessary fracked gas pipelines ." The judges declared that the environmental impact statement for the Southeast Market Pipelines Project was required to either quantify the impact of GHG resulting from burning the fracked gas transported by the pipeline or explain why it failed to do so. "That fear was manifested when this project began leaking into our communities the other week, and it's why a thorough review of this pipeline will show that it must be—and should have been—rejected." Since FERC did neither, the commission must go back and conduct a new review of the project.
Court rejects pipeline project on climate concerns | TheHill: An appeals court on Tuesday rejected the federal government’s approval of a natural gas pipeline project in the southeastern U.S., citing concerns about its impact on climate change. In a 2-1 ruling, the Court of Appeals for the District of Columbia Circuit found that the Federal Energy Regulatory Commission (FERC) did not properly analyze the climate impact from burning the natural gas that the project would deliver to power plants. The ruling is significant because it adds to environmentalists’ arguments that analyses under the National Environmental Policy Act — the law governing all environmental reviews of federal decisions — must consider climate change and greenhouse gas emissions.The case concerns the Southeast Market Pipelines Project, which is meant to bring gas to Florida to fuel existing and planned power plants. The Sierra Club sued FERC following its 2016 approval of the project. The environmental group brought a series of objections to the project and its environmental review, but the court denied all of the objections except the one focused on greenhouse gas. The environmental impact statement for the project “should have either given a quantitative estimate of the downstream greenhouse emissions that will result from burning the natural gas that the pipelines will transport or explained more specifically why it could not have done so,” Judge Thomas Griffith, who was nominated to the court by President George W. Bush, wrote in the opinion. He was joined by Judge Judith Ann Wilson Rogers, one of President Bill Clinton's nominees. “As we have noted, greenhouse-gas emissions are an indirect effect of authorizing this project, which FERC could reasonably foresee, and which the agency has legal authority to mitigate,” Griffith said. “Quantification would permit the agency to compare the emissions from this project to emissions from other projects, to total emissions from the state or the region, or to regional or national emissions-control goals. Without such comparisons, it is difficult to see how FERC could engage in ‘informed decision making’ with respect to the greenhouse-gas effects of this project, or how ‘informed public comment’ could be possible,” the court wrote, quoting previous cases regarding environmental reviews.
Contract volatility reins in US land rig day rate growth: Fuel for Thought -- “Tapping the brakes” is as good a description of what’s happening in US land drilling activity today as any, and it applies to drilling costs as well.Since the recovery in drilling activity began to really gather steam last December, the US active land rig count, as monitored by Platts RigData’s RADAR report, had added at least 40 rigs to each successive month’s average tally through May.Correspondingly, there was a comparable run-up in rig day rates (the daily cost to hire a rig with a full crew). The turnaround in day rates began somewhat modestly, if unexpectedly, in December. Even with this monthly improvement, however, it wasn’t enough to lift the average day rate for 4Q 2016 out of negative territory, where it had languished for two years.But Q1 of this year provided the jaw-dropper: a whopping 3.5% increase in the average day rate—the biggest quarter-to-quarter increase in this metric since 4Q 2010.The driver for much of this surge was a shift in operator-driller negotiations on rig day rates: As operators scrambled to lock in day rates on the spot market before they could escalate further, drillers shifted from offering discounts for longer-term contracts to asking for premiums for same—especially for the preferred Class D (1,500–1,999 hp) rigs that now account for 70% of all US onshore drilling activity.However, the rapidly accelerating rig count growth raised concerns that operators were adding more rigs than oil and gas prices warranted and that a correction of sorts was in order. And indeed there was a significant retrenchment, as the rate of additions to the active rig fleet was roughly halved in June and again in July. Now, with the plateauing of rig demand over the past two months, there is a similar pattern of weakening for day rate gains.
The Latest Red Flag For U.S. Shale - The U.S. shale industry has had a rough few weeks, with a growing number of reports suggesting that the industry is facing much more financial trouble than many analysts had expected. Now, a new report adds further evidence to the notion that shale is losing its luster in a $50 per barrel market, with producers forgoing shale in favor of older wells.U.S. shale was thought to be the most competitive source of oil out there, and indeed the industry appears to be ramping up production at today’s prices. Shale had adapted to a $50 per barrel market, producers had streamlined operations to make them almost resemble an assembly line, and in a volatile and unpredictable market, the short-cycle nature of shale drilling made it one of the least risky options for drillers.But in just a few weeks’ time, investors are starting to ask major questions about the viability of shale drilling at such a large scale.A couple of notable things have occurred in the past month or so. Pioneer Natural Resources, a top Permian producer, raised concerns when it told investors that its Permian shale wells were coming up with a higher natural gas-to-oil ratio than expected, a potentially worrying sign. The company also reported that it had trouble with some of its wells, forcing it to delay some completions.Separately, Goldman Sachs reported that top investors are souring on U.S. shale E&Ps, with poor performances leading investors to search for ways to “reallocate capital” elsewhere in the energy space. That is big red flag for the shale industry, which is still struggling to consistently post profits despite the highly-touted cost reductions over the past few years. But the newest sign of trouble comes from the Wall Street Journal, which just reported that more oil producers are shunning shale drilling and using their scarce dollars to reinvest in older conventional wells. “As crude prices languish under $50 a barrel, and with increasing costs for land, labor and infrastructure, some shale fracking operations are starting to look expensive,” the WSJ reported.
Hurricane Harvey Set To Wreak Havoc On Texas Crude Production And Refining Capacity --According to the latest warning from the National Hurricane Service (NHS), Harvey looks to be the first hurricane to strike the Texas coast since 2008. According to NHS models, the storm is expected to gain hurricane-force winds by tomorrow afternoon and make landfall in Texas at 1AM on Saturday. Of course, heavy flooding and storm surge warnings have been issued for most of the Texas coast. Per Bloomberg, Harvey is expected to make landfall as a Category 1 or 2 hurricane. “It could intensify right up to landfall on Friday,” said Jeff Masters, co-founder of Weather Underground in Ann Arbor, Michigan. “I expect a Category 1 hurricane at landfall, but I cannot rule out a Category 2.Nearly the entire Texas coastline from Corpus Christi to Galveston are projected to be hit by hurricane force winds. Meanwhile the rainfall forecast is calling for up to 20 inches of rain for those cities at the center of the storm. In terms of economic impacts, nearly one-third of America's refining capacity currently sits in the path of the storm and large E&P companies have already started to evacuate staff from offshore rigs which will reduce oil imports to the Texas coast. The Gulf Coast from Corpus Christi, Texas, to Lake Charles, Louisiana, is home to nearly 30 refineries -- making up about 7 million barrels a day of refining capacity, or one-third of the U.S. total. It’s in the path of expected heavy rainfall. Flooding poses risks to operations and may cause power failures."Biggest impact of this storm will be a significant reduction of crude oil imports into the Texas Gulf Coast, resulting in refineries cutting crude rates,” Andy Lipow, president of Lipow Oil Associates in Houston, said by email.“There will also be a significant impact on petroleum product exports impacting supplies into Mexico.” Exxon Mobil Corp. had said it’s cutting output at its Hoover production platform in the Gulf of Mexico ahead of the storm. The company’s also working on plans to evacuate staff in stages from offshore facilities that will be in the path of the storm, Anadarko Petroleum Corp. said earlier this week it’s removing nonessential staff from some production platforms in the Gulf of Mexico in response to weather conditions. Meanwhile, cotton prices have also rallied on speculation the storm will threaten U.S. crops.
BHP Billiton Seeking Buyers For U.S. Shale Oil Assets - BHP Billiton is seeking buyers for its U.S. shale oil and gas operations after deciding that this business is non-core. The company will retain its offshore oil operations in the Gulf of Mexico, it said in the release of its FY 2016/2017 financial results, and will also look for ways to make the assets for sale more attractive to prospective buyers. The Australian miner reported a strong year, with underlying net profits coming in at US$6.7 billion, from US$1.2 billion a year earlier, thanks to higher iron ore and coal prices—its core business—on the back from improved demand from China.In its commodities outlook section, the miner said it expected U.S. supply and low production prices to continue undermining OPEC’s and its partners’ efforts to prop up international prices, but the long-term outlook, BHP said, remained positive, thanks to demand from emerging economies.BHP acquired its shale oil assets in 2011, as part of a US$20-billion shopping spree that led to criticism from some shareholders. One of these, Elliot Management Corp., argued that managerial missteps, including the shale asset acquisition, have cost the company US$40 billion in lost value, Bloomberg reports, noting that Elliott Management earlier this year initiated a public call for reforms at the miner. BHP’s chairman, Jac Nasser, admitted a couple of months later that “In terms of shale, if you had to turn the clock back, and if you knew what we knew today, you wouldn’t do it. The timing was way off.”
E&Ps maintain accelerated spending despite oil price decline - Despite a 12% decline in crude oil prices from their December 2016 highs, the 43 top U.S. exploration and production companies (E&Ps) we’ve been tracking are largely maintaining their aggressive 2017 drilling and completion capital spending plans, announcing a mere $1.0 billion — or 1.5% — decline in total investment since the plans were unveiled. The industry’s apparent confidence in the long-term profitability of its aggressive development of the major U.S. resource plays is in sharp contrast with eroding investor sentiment that has driven Standard & Poor’s (S&P) E&P Index 29% lower than its late-2016 peak. The companies that announced modest investment reductions — about one-third of our universe of 43 E&Ps — cited cost savings from increased drilling efficiency and divestments as well as the lower short-term price outlook as reasons for the cuts. Today we review the changes in the overall outlook for 2017 upstream capital spending and oil and natural gas production, and take a quick peek into our three peer groups: those that focus on oil, those that focus on gas, and diversified E&Ps. We analyzed in depth the ongoing transformation of the U.S. E&P sector in Piranha!, our market study of 43 top U.S.-based E&Ps that includes an examination of the strategies that E&Ps are adopting to thrive in a $50/bbl world. Of that universe of companies, 21 focus on oil (60%+ liquids reserves), nine are gas-weighted producers (60%+ natural gas reserves) and 13 are diversified producers. All major U.S. shale/unconventional plays are represented in the combined portfolios of these firms. Also, in several blogs over the past few months we examined details for each of these groups of companies and tallied the increases in capex the firms had planned for 2017. Today, we update these capital spending plans and oil and gas production expectations.
New Pipeline Capacity to Keep Pace with Permian Production Growth - The widely held expectation that Permian NGL production will rise sharply through the early 2020s has set off fierce competition among midstream companies to develop new pipeline capacity out of the play — mostly to the NGL storage and fractionation hub in Mont Belvieu, TX, but also to Corpus Christi. Only some of the incremental pipeline takeaway capacity being planned is likely to be needed, though, raising the stakes among midstreamers to line up the long-term commitments they need to finance and build their projects. Today we continue our series on NGL-related infrastructure in the U.S.’s hottest shale play with a look at efforts to add new takeaway capacity as NGL production in the Permian ramps up. As we’ve seen time and again during the Shale Era, one of the biggest challenges posed by rapid production growth is developing the pipeline infrastructure needed to transport crude oil, natural gas and natural gas liquids (NGLs) to downstream markets. Exploration and production companies (E&Ps) in the Permian perhaps have been luckier than their counterparts in other shale plays because unlike, say, the Marcellus in northeastern Pennsylvania or the Bakken in western North Dakota, the Permian already had been a major production area for decades when shale production started ramping up in 2015-16 and therefore had substantial takeaway infrastructure already in place. But with Permian NGL production already at 800 Mb/d and expected to rise to 1.4 MMb/d by 2022 (under RBN’s Growth Scenario), the day is fast approaching when new pipeline capacity out of the play will be required.
Apache cribs activist tactic and protests wastewater well at Alpine High - Apache Corp., pulling a tactic from the playbook of environmental activists, is protesting another company’s application to inject oil and gas wastewater deep underground, hoping to prevent that company from contaminating aquifers or even causing earthquakes. Houston-based Apache has fastidiously managed its own use of water — and image — while developing its new West Texas play, Alpine High, over the past year. The company announced the field last September, estimating it held 15 billion barrels of oil and gas on about 350,000 acres in southern Reeves County. Apache has since worked to prove it is a responsible corporate citizen. It has promised not to drill within city or park boundaries. It is developing its own wastewater treatment and recycling program. And now it’s trying to prevent others from soiling the region’s aquifers — and Apache’s project. The issue: As oil flows up and out of the ground, it brings with it millions of gallons of salty, dirty water. When companies pump water underground for hydraulic fracturing operations, even more water comes up. And all of that water, usually laden with chemicals, has to go somewhere. The most common practice in Texas is to re-inject it deep underground, into formations that are not likely to produce oil.But environmentalists fear wastewater injection can pollute drinking water sources. And scientists have tied such injections to small earthquakes, becoming increasingly common in Texas.Several companies have filed applications over the year to inject wastewater near or in Alpine High. In response, Apache lawyers have filed a number of protest letters with the state, said spokesman Joe Brettell.One of the most recent, sent Aug. 15, protests an application submitted by Dallas oil and gas company Primexx Operating Corp. Apache says Primexx plans could threaten water resources.“Apache reserves the right to provide evidence and examples of more issues, violations and deficiencies with Primexx’s application at the hearing,” wrote Bill Hayenga, an Austin attorney working for Apache.
Texas oil industry boasts of near-infinite supply — but what if the world stops buying? - With all the talk from Trump administration officials about achieving "energy dominance," Texas' own oil and gas industry has set out to prove that it's the most dominant of all. In a chest-puffing report issued Thursday, the Texas Oil and Gas Association detailed the billions of dollars of investment that are going into drilling, pipelines, and refining capacity in and around the bountiful Permian Basin. Texas accounts for 45 percent of onshore oil production and 25 percent of natural gas, and IHS expects investment in the Permian to quadruple by 2021, to $40 billion. "What this report reflects is that Texas is the global energy leader, and we are very proud of that fact," said Todd Staples, TXOGA's president. Impressive numbers, to be sure, especially when business investment in the rest of the American economy has been lagging. But even with a president in the White House and a governor in Austin willing to do seemingly whatever the extractive industries want, there may be another challenge stalking Texas' fossil fuel producers.That challenge is laid out in another report issued recently by BP, in the 66th edition of its annual statistical review and world energy outlook. It found that global energy demand increased by only one percent in 2016 for the third year in a row, a marked decrease from the longer-run average of nearly two percent.That decline was led by a dramatic slowdown in energy demand growth in China, which is shifting to less energy-intensive industries to power its economy, as well as appliances and cars that need less electricity and fuel.Even as fast-growing nations like India move towards a higher standard of living and all the power-using amenities that requires, they may be able to leapfrog the most polluting stages of that transition, if electric cars and solar power become cheap enough. That would depress energy demand growth even further.
Colorado: No online oil, gas pipeline map after fatal blast - AP — Colorado will not offer an online map of oil and gas pipelines in the wake of a fatal house explosion blamed on a gas leak, Gov. John Hickenlooper said Tuesday, citing concerns about security and theft.The state will instead require energy companies to provide location information to the existing Call 811 program, which marks the location of underground utilities at a property owner's request, Hickenlooper said.The expanded location program was among seven steps the governor announced in response to an April explosion in the town of Firestone that killed two people and injured a third. Investigators blamed the explosion on odorless, unrefined natural gas leaking from a pipeline that was thought to be out of service but was still connected to a well with a valve open.Hickenlooper said in May that the explosion showed the need for a comprehensive state map of "flow lines," which carry oil or gas from wells to tanks or other gathering equipment. But he said Tuesday "there are a lot of concerns about having a database like that available, of people stealing gas or, you know, tapping into these lines, that causes some level of security risk," he said. "I recognize that, and I think that's a valid argument."
Wyoming gets $1.6M to address leaking oil storage tanks (AP) — The Wyoming Department of Environmental Quality has received a $1.6 million grant from the U.S. Environmental Protection Agency to help clean up contamination from leaking underground petroleum storage tanks. KTWO reports (http://bit.ly/2g4QFIM ) the funding will support staff that oversees cleanup projects around Wyoming. The money comes from a Trust Fund created by Congress in 1986 to address petroleum leaks from federally-regulated underground storage tanks. In 2005, the Energy Policy Act expanded eligible uses of the Trust Fund to include certain leak-prevention activities.Financing for the fund comes from a .1-cent tax on gasoline sold nationwide. The EPA says Wyoming reported last year six new confirmed discharges, 96 completed cleanups and 707 that are under investigation or active remediation.
Massive Fracking Plan Near Yellowstone National Park Threatens Wildlife, Air Quality, Climate - The Center for Biological Diversity and the Sierra Club lodged formal comments with the federal government Monday opposing a massive gas fracking project that spans 220 square miles of public land in Wyoming south of Yellowstone National Park. The Normally Pressured Lance gas field would destroy wildlife habitat and worsen ozone pollution, a major cause of childhood asthma, in areas already suffering from extreme air pollution. "This enormous project will be a disaster for wildlife, people and the planet," said Diana Dascalu-Joffe, a senior attorney with the Center for Biological Diversity. "It will decimate habitat for animals that are already struggling and further foul the air in communities already suffering with pollution from drilling and fracking . And it locks us into decades more fossil fuel dependence, which will only worsen the climate crisis." In their comments to the federal Bureau of Land Management (BLM) Monday, the groups said the project would destroy key wildlife habitat for greater sage grouse, pronghorn and mule deer by allowing 3,500 new gas wells, roads and other infrastructure. If approved by BLM, drilling in the 140,000-acre gas field could begin next year. Fracking in sagebrush habitats will reduce already dwindling mule deer populations in the region. Mule deer avoid gas wells and infrastructure, which fragments and shrinks their habitat. Research shows that development of the Pinedale fracking field decimated migration routes and winter habitat, reducing mule deer populations by more than a third. Drilling would worsen ozone pollution in the upper Green River basin, where winter ozone levels already exceed federal health standards. The project would produce up to 440 million tons of equivalent carbon dioxide pollution. This would account for more than 1 percent of the entire remaining U.S. carbon budget needed to have a 50 percent chance of returning global average temperature rise to 1.5°C by 2100.
Fracking sites expose 17.6 million Americans to toxins - An estimated 17.6million Americans live within one mile of an active oil or gas well, a study has revealed. That means more than five percent of the US population is exposed to harmful toxins on a daily basis.Experts say the report should be a red flag to public health officials that protective regulations and policies need to be improved to help prevent exposure.The wells contaminate the quality of the air, water and soil and increase harmful toxins such as benzene and formaldehyde.People living within a mile of these toxic fumes have an increased risk for getting cancer, heart disease, dementia or a neurological problem.Birth defects such as pre-term birth, low weight and congenital heart defects have also increased around the areas with active oil and gas production. Researchers looked at the nationwide measurement for the number of people living near active oil and gas wells. 'Our study was specifically designed to determine how many Americans have increased health risks from potential exposure to pollutants emitted from oil and gas development,' said Eliza Czolowski, a research associate at PSE and lead author on the study. When people live within a mile of these operations, they have a higher risk of being hospitalized for numerous medical issues, including heart and neurological problems, cancers and asthma. Residential proximity to these operations has also increased adverse birth outcomes, including pre-term birth, lower birth weight, neural tube defects and congenital heart defects. So pregnant women living near these wells could be putting their fetuses at an increased risk to have one of these defects.
Minneapolis Fed president: Fracking better than Twitter — Fracking has been better for the American economy than cellphones and social media, said the president of the Federal Reserve Bank of Minneapolis. While talking about what spurs economic growth, Neel Kashkari said advances in technology this century so far pale compared to the last one. “Compared to the integrated circuit, Twitter is not very impressive. Let’s just say that,” he told members of Rotary Club from Minneapolis and the west metro at the Edina Country Club on Thursday, Aug. 17. The comments came in response to a question about long-term stagnation predicted to affect the global economy. “So our productivity is growing at about half the rate as it had in prior decades, and we don’t have answer for why,” Kashkari said. He noted some basic economic rules, that two major features cause the economy to grow: 1. a skilled workforce that can do more with the same resources, which comes as a result of education and research into new technologies. 2. population growth, which is more people needing more services and goods. He said the advances of 50 to 100 years ago were transformative. Think of the airplane, the electrical grid and microchips. Social media, cellphones and all their applications, he said, have provided instant communication and speedy information, but they also waste time, cause needless interruptions and slow down worker productivity. “Are these things really moving the needle?” he asked. Fracking, on the other hand, was technology developed by roughnecks in North Dakota, Oklahoma and Texas, not techies in California, he said, and it has had a profound effect on the global economy.
Impacts of Pipeline Toxins, Water Pollution Exposed During Bakken Oil ‘Toxic Tour’– This weekend, the Indigenous Environmental Network (IEN), Protectors of Water and Earth Rights (P.O.W.E.R.), grassroots activists and clergy from the Gulf Coast led a “toxic tour,” the Third Annual Healing Walk, and an educational seminar for community members in the heart of the Bakken Oil Formation. The two-day series of events aimed to increase awareness about the environmental impacts of pipeline toxins and pollution in local water resources. Participants say this information is critical for communities along the pipeline routes because the Bakken oil and gas field resources the Dakota Access and Bayou Bridge Pipelines and also leaks 275,000 tons of methane per year. “We have been dealing with oil and gas extraction around us for nearly 10 years,” said Lisa DeVille, President of POWER. “We cannot survive without healthy water so we gather annually to pray for the health of our water as our grandmothers and grandfathers used to. We know that with extraction, it’s only a matter of time before our only drinking source will be unsafe to drink.” “We can individually deal with the symptoms of the problems created by the oil and gas industry or we can work in solidarity and go straight to the source; for all of us that’s the extraction zone of the bakken shale oil fields,” says Kandi Mossett – Mandan, Hidatsa, Arikara from New Town, ND. The toxic tour and the healing walk also follows several pipeline developments this week with Dakota Access Pipeline (DAPL), the Bayou Bridge and the Keystone XL Pipeline. In Nebraska, hearings began to determine whether TransCanada should receive permits to build the pipeline across the state. In Louisiana, where the Bayou Bridge is the last leg of DAPL, votes were delayed on alternative community evacuation routes currently blocked by the Energy Transfer Partners, the company that built DAPL. Finally, the North Dakota Public Service Commission (NDPSC) announced that it will take legal action against DAPL for probable company violations during the pipeline’s construction.
Feds Urge Judge to Keep Oil Flowing in Dakota Access Pipeline During Environmental Review - Federal lawyers have urged a federal judge not to shut down the Dakota Access Pipeline while the Army Corps of Engineers conduct a fresh environmental review mandated by the court. The lawyers said there was a "serious possibility" that the new review by Army Corps will also find there is little risk of oil from the pipeline spilling into North Dakota's Lake Oahe, that the local Native American tribes consider sacred and environmentally important. In June, a federal judge ruled that the Army Corps had failed to adequately study the environmental impact of the pipeline. The Army Corps lawyers also argued shutdown of the pipeline could increase the risk of oil spill because the oil would instead have to be transported by rail, which they consider riskier. The Indian tribes have asked for the pipeline be closed until the review is completed.
Dakota Access Pipeline owner sues Greenpeace, arguing it broke organized crime law - The company behind the Dakota Access Pipeline, which drew international attention for potentially endangering the water supply of Native American tribes in the Dakotas, accused Greenpeace and other environmental activists who helped organize protests of eco-terrorism, racketeering and other crimes. By filing a lawsuit against the activists in U.S. District Court in North Dakota on Tuesday, the Dallas-based oil and gas company Energy Transfer Partners became the second firm to accuse Greenpeace of breaking a federal organized crime law used to try members of the mafia, the Racketeer Influenced and Corrupt Organizations Act, or RICO Act. Last year, a Canadian logging company, Resolute Forest Products, filed a RICO lawsuit against Greenpeace after the environmental group mounted a multimedia campaign against the company for harvesting trees in Canada’s sensitive boreal forests. As part of that campaign, Greenpeace branded Resolute a “forest destroyer.” In their respective lawsuits, Energy Transfer Partners and Resolute are being represented by Kasowitz, Benson & Torres LLP, a law firm founded by Marc Kasowitz, President Trump’s longtime attorney who was sidelined recently in the Russia investigations. Greenpeace defended its activism, accusing the firm’s lawyers of being “corporate mercenaries willing to abuse the legal system to silence legitimate advocacy work,” according Tom Wetterer, general counsel for Greenpeace USA. The protest of an oil pipeline that is being constructed close to the Standing Rock Indian reservation has become a rallying point for Native Americans across the United States. Here's what you need to know. (Daron Taylor/The Washington Post)
Dakota Access Pipeline Company Sues Greenpeace, Claims the Group Engaged in 'Acts of Terrorism' - On Tuesday, Dallas-based oil company and Dakota Access Pipeline operators (or profiteers, depending on your understanding of what stolen land is), Energy Transfer Partners, filed a lawsuit against Greenpeace International, Earth First!, and other environment advocacy groups accusing them, ironically, of racketeering.ETP is the second company to accuse Greenpeace of violating the Racketeer Influenced and Corrupt Organizations Act (the RICO Act), typically used to try members of organized crime networks. Last May, preternaturally self-assured logging company Resolute Forest Products filed its own racketeering suit against Greenpeace over the environmental group’s anti-decimating-Canadian-forests campaign “Resolute: Forest Destroyer.” The oil and gas company is also charging these various groups, who helped organize peaceful protests against the construction of their beloved pipeline, of eco-terrorism and other crimes, the Washington Post reports. What was so specifically terrifying about these alleged acts, is that they caused damage to the company’s “critical business and financial relationships.” The lawsuit also accuses the environmental groups of “manufacturing a media spectacle,” that, again, impacted the company’s bottom line. Of course ETP is being represented by the law firm founded by Trump’s longtime (until recently, due the Russia inquiry) attorney, Marc Kasowitz. The same firm represented Resolute last year. Greenpeace’s lawyer, Tom Wetterer, commented on the connection in a statement, saying, “This is the second year Donald Trump’s go-to-attorneys at the Kasowitz law firm have filed a meritless lawsuit against Greenpeace….[The complaint] repackages spurious allegations and legal claims made against Greenpeace by the Kasowitz firm on behalf of Resolute.” And let’s not forget either, beneath the pile of other reprehensible shit that Trump has done since taking office, that our fractious frack-zealot of a president brought back the Dakota Access Pipelines project from the dead, after Barack Obama in his final days as commander-in-chief had come to his senses and halted construction, and after many months of brave, dogged organizing against the pipeline by the Standing Rock Sioux Tribe and its allies.
Trump Attorney Sues Greenpeace Over Dakota Access in $300 Million Racketeering Case – Steve Horn - Energy Transfer Partners, owner of the Dakota Access pipeline, has filed a $300 million Racketeer Influenced and Corrupt Organizations (RICO) lawsuit against Greenpeace and other environmental groups for their activism against the long-contested North Dakota-to-Illinois project. In its 187-page complaint, Energy Transfer alleges that “putative not-for-profits and rogue eco-terrorist groups who employ patterns of criminal activity and campaigns of misinformation to target legitimate companies and industries with fabricated environmental claims and other purported misconduct” caused the company to lose “billions of dollars.” In the case, Energy Transfer is represented by lawyers from the firm Kasowitz Benson Torres LLP, one of the namesakes of which is Marc Kasowitz. Kasowitz is a member of the legal team representing President Donald Trump in the ongoing congressional and special counsel investigation of his 2016 presidential campaign's alleged ties and potential collusion with Russian state actors. The press release announcing the filing of the lawsuit details that Kasowitz attorney Michael J. Bowe is leading what the firm describes as an ongoing probe into the environmental groups' “campaign and practices.” Bowe, according to multiple press accounts, is serving as Kasowitz's deputy in the ongoing Russia investigation. He also represents Resolute Forest Products and co-plaintiffs in its ongoing RICO lawsuit against Greenpeace, Stand.Earth, and other defendants involved in a corporate social responsibility campaign revolving around Resolute's forest-originated products. Bowe, furthermore, is an attorney-of-record in a $50 million defamation lawsuit filed against freelance journalist Yashar Ali by suspended Fox News anchor Eric Bolling. Ali published a freelance article commissioned by the HuffPost on August 4 in which multiple sources told Ali that Bolling had sent a litany of unsolicited lewd text messages to Fox News' female employees. Another attorney of record for the latest Greenpeace lawsuit, Jennifer Recine, formerly represented Trump “against the owners of one of the last large scale real estate development sites in Manhattan” and helped him win “the largest ever attachment in New York City history,”
After fracking test launched on North Slope, company presses ahead to drill two new wells - A unique effort to test the benefits of hydraulic fracturing on the North Slope is still underway, but the focus is shifting away from a well that's already been drilled to new sites 25 miles to the west.Accumulate Energy Alaska drilled a production test well this summer from an existing gravel pad along the Dalton Highway. Oil-flow tests are still underway at that well, known as Icewine No. 2.But early information helped determine "the size and extent of the oil bearing formations, and the best means for producing from them," says Accumulate, in a proposed update to its oil spill contingency plans filed with Alaska regulators July 31. The proposed changes, announced by the Alaska Department of Environmental Conservation on Thursday, are under agency review. The oil company plans to drill the additional wells next spring, after contractors build about 25 miles of ice roads — frozen routes made with layers of water and ice chips to protect tundra — to reach drill sites from the highway. The two wells would explore oil deposits about 40 miles south of Slope oil fields. The company says it plans to hydraulically fracture the wells, testing the Seabee formation about 2 miles below the surface. The formation contributes oil to the Meltwater pool, part of ConocoPhillips' giant Kuparuk River unit. Accumulate Energy is working with Burgundy Xploration of Houston. That company is headed by Paul Basinski, who helped discover the large Eagle Ford shale site in Texas. During the Alaska lease sale in December, the companies' more than doubled their lease holdings to about 700,000 acres. This summer, Accumulate has conducted hydraulic fracturing to stimulate the Icewine No. 2 well drilled off the Dalton, and to test the potential for oil to flow. That well is targeting the HRZ shale formation, a bit deeper than the Seabee formation. Accumulate is targeting residual oil and gas that never migrated out of rocks in geologic history. That oil and gas is considered one of the sources for the crude oil at the giant Prudhoe Bay oil field.
A Second Wind for the North Slope? - Rigzone -Following an executive order from U.S. Secretary of the Interior Ryan Zinke, the U.S. Geological Survey (USGS) is in the process of generating updated assessments of the oil and gas resources on Alaska’s North Slope in what could be the precursor to an exploration and development boom on federal lands that have mostly been off-limits to the industry.The May 31 executive order has renewed a sense of hope for opening currently off-limit areas of the National Petroleum Reserve – Alaska (NPRA), and opening the 1002 Area of the Arctic National Wildlife Refuge (ANWR), which has been tightly closed to the industry since the 1980s, to exploration. As older oilfields such as Prudhoe Bay, the Kuparuk River and the Alpine have long since reached their production peaks, the state of Alaska has been anxiously watching the steady decline of oil through the Trans-Alaska Pipeline System (TAPS) over the last three decades – peaking in 1988 at 2.1 million barrels of oil per day to today’s roughly 500,000 barrels.While it has long been speculated that off-limit areas in NPRA and the 1002 Area in ANWR have the potential for major discoveries of hundreds of millions or billions of barrels of oil, decades of legislation and land management policies have kept them closed to the industry to varying degrees, said David Houseknecht, USGS senior research geologist who is overseeing the North Slope assessments, to Rigzone. Yet recent, headline-making discoveries on the North Slope by Armstrong Oil & Gas, Inc., ConocoPhillips Alaska and Caelus Energy Alaska have sparked excitement in the Last Frontier State. All lie within a major fairway stretching from the Colville River Delta to the western coast of Smith Bay. If areas that are currently off-limits to leasing near Teshekpuk Lake in NPRA open up, that could be the catalyst to the next energy boom in Alaska, Houseknecht said. With a Republican-controlled House and Senate and a president whose no-holds-barred approach to the industry has unleashed a wave of optimism among operators, many believe that Alaska can brightly shine on the industry’s maps once again. “After the last administration spent eight years systematically closing off access to the Arctic, this executive order puts us back on track to explore and ultimately produce prolific resources in that region,” said U.S. Sen. Lisa Murkowski of Alaska in a press release.
Can Oil Sands Pay Off at Just $50 a Barrel? - The future is arriving—a few tons at a time—at Suncor Energy Inc.’s North Steepbank oil sands mine in Alberta, Canada. Human-operated excavators scrape away the top layers of soil to get to the hydrocarbon-rich tar sand beneath in much the same way they always have. But now they’re dumping that dirt into driverless trucks that use GPS systems and lasers to find their way through the massive mine. The trucks, part of a multiyear test, are just one way that Suncor and other oil sands producers are trying to bring down the cost of what traditionally has been one of the most expensive ways to extract crude. Canada’s tar sands, which contain the planet’s third-largest oil reserves, were a prized possession for global energy companies when crude was trading above $100 a barrel. But since prices fell to $50 in 2015, where they have lingered, Royal Dutch Shell, ConocoPhillips, and Marathon Oil have unloaded their holdings amid concerns that these capital-intensive projects would struggle to turn a profit. The Canadian companies that have snapped up those assets are chipping away at those fears, using automation and other new technologies to drive down operating expenses. “They are making great progress and showing that they can be healthy and make money at $50 oil,” says Justin Bouchard, an analyst at Desjardins Securities in Calgary. In recent earnings announcements, Suncor and rival Cenovus Energy Inc. said they can now sustain production with oil at $40 a barrel without jeopardizing the dividend they pay shareholders. While that’s not yet near the economics of shale producers in Texas’ Permian Basin, where the break-even price can be as low as $25, additional advances on the horizon could make oil sands production even more efficient, Bouchard says. For instance, companies are experimenting with injecting solvents such as propane into reservoirs to recover more of the sticky crude. They’re also running tests that use radio waves, instead of steam, to heat the sand so oil can flow to the surface.
Fracking: Shale rock professor says UK gas reserves 'hyped' - BBC News: The gas reserves in shale rocks in the UK have been "hyped", an academic said. Professor John Underhill from Heriot-Watt University said the UK's potential shale deposits were likely to have been disrupted by shifts in the earth 55 million years ago. He said the government would be wise to formulate a Plan B to fracking for future gas supplies. But the fracking firm Cuadrilla said it would determine how much gas was present from its test drilling. Hydraulic fracturing, or fracking, is a technique designed to recover gas and oil from shale, a sedimentary rock found worldwide. The amount of shale gas available in the UK is acknowledged to be a great unknown. Cuadrilla said estimates from the British Geological Survey (BGS) indicated a large potential gas reserve. But Prof Underhill said his research on the influence of tectonic plates on the UK suggested that the shale formations have been lifted, warped and cooled by tectonic action. These factors make shale gas production much less likely. "The complexity of the shale gas basins hasn't been fully appreciated so the opportunity has been hyped," he told the BBC. This is very different from the US, where big deposits of shale gas were created in the continental heart of America, far from the movement of tectonic plates. Prof Underhill's comments are based on an unpublished paper on tectonics. He said he deduced the impact on shale formations by chance.
Norway Removes Greenpeace Ship From Statoil Arctic Drill Site -- Norway’s coast guard has removed Greenpeace protestors from a safety zone near Statoil drilling operations in the Korpfjell field of the Barents Sea, according to a new report in the Maritime Executive. The protestors used kayaks to infiltrate a 500-meter exclusion zone around theSonga Enabler on Thursday in order to attach a large globe to the rig. On it was a statement from environmentalists calling on Norway to end its drilling in the Arctic. Statoil called the stunt “illegal and irresponsible” before summoning the authorities to remove the protestors’ vessel, Arctic Sunrise. On the other hand, Greenpeace Norway argues the coast guard’s actions were unlawful.“The Norwegian coast guard doesn’t have the right to board or remove our ship,” said Truls Gulowsen, head of the local branch of the environmental group.“Protest at sea is an internationally recognized lawful use of the sea, related to the freedom of navigation. We are taking action against Arctic drilling in an area where our rights to protest are protected under international law. The Norwegian government cannot unjustifiably interfere with that right.” So far, the government maintains that it acted within its rights when it removed the ship due to the clear establishment of the exclusion zone. To this claim, the group retorts: “While Greenpeace recognizes that Norway has the right to establish a safety zone around a fixed offshore installation, there should also be room to exercise the right to protest in a safe and peaceful manner.” Environmentalists continue to protest drilling in the Arctic and the potential opening of the Lofoten islands to exploration. Greenpeace is suing Norway in a trial set to begin in November, arguing that “granting licenses to open a new oil frontier breaches the Norwegian Constitutional right to a healthy and safe environment for current and future generations and contravenes the Paris Agreement.”
First tanker crosses northern sea route without ice breaker - BBC News: A commercial LNG tanker has sailed across the colder, northern route from Europe to Asia without the protection of an ice-breaker for the first time. The specially-built ship completed the crossing in just six-and-a-half days setting a new record, according to the tanker's Russian owners. The 300-metre-long Sovcomflot ship, the Christophe de Margerie, was carrying gas from Norway to South Korea. Rising Arctic temperatures are boosting commercial shipping across this route. The Christophe de Margerie is the world's first and, at present, only ice-breaking LNG carrier. The ship, which features a lightweight steel reinforced hull, is the largest commercial ship to receive Arc7 certification, which means it is capable of travelling through ice up to 2.1m thick. On this trip it was able to keep up an average speed of 14 knots despite sailing through ice that was over one metre thick in places. The Russian owners, Sovcomflot, will use this ice-breaking tanker to export gas from the Yamal peninsula to Asian markets later this year. It will be the first of a planned fleet of 15 that will transport gas from these ice bound fields all year round. "Previously there was only a window of navigation from our summer to autumn, but this ship will be able to sail westwards from Sabetta which is the Yamal energy port, all year round and eastwards from July to December," said Sovcomflot spokesman Bill Spears. "Before the northern sea route was only open for four months and you had to have ice-breakers - so it's a significant development."
Lithuania challenges Russia with a shipment of U.S. natural gas - Lithuania, among the bravest of the former Soviet states surrounding prickly Russia, has poked a finger directly in the Kremlin's eye by buying a shipment of American liquefied natural gas, defying Moscow's energy stranglehold on the region. The shipment Monday could not have been economically advantageous, given that Russian gas supplies are right next door, but Lithuania calculated that the political dividends made it a shrewd deal. Why it matters: The move suggests that, three years after the Russian invasion of Ukraine, the Baltic states remain resolved to putting up a strong front against Moscow.
- A geopolitical move: In an interview with Reuters, Lithuanian Foreign Minister Linas Linkevicius explicitly described the LNG shipment as part of his country's political calculus. "We want to cement our relationship with the United States in many aspects in addition to defense and security, [and the] energy trade is one of the strategic areas for cooperation," he said.
- The shipment comes almost exactly a month after NATO military exercises were held just east of the capital of Vilnius, also intended to convey as a message of resolve against Russia.
- Savoring the moment: On Monday night, a map on marinetraffic.com showed the LNG tanker Clean Ocean still moored at the Lithuanian LNG port, just southwest of Banginis, suggesting no rush to stop aggravating Moscow.
US LNG Exports to Lithuania A Chink in Russia's Eastern European Energy Dominance – - On Monday, a shipment of liquefied natural gas (LNG) arrived in the Lithuanian port of Klaipeda. That in and of itself was not overly remarkable, but where the shipment came from was. The shipment was the first purchase and importation of American natural gas by a former Soviet state. While the quantity of gas sold was minor, the shipment symbolized dramatic shifts in the worldwide energy market with the potential to influence geopolitics by reducing Russia’s ability to manipulate energy access to exert influence over its neighbors.Although the initial shipment was primarily of symbolic impact, officials in Lithuania were clear about the message they were trying to send.“We want to cement our relationship with the United States in many aspects in addition to defense and security– energy trade is one of the strategic areas for cooperation,” Lithuanian Minister of Foreign Affairs Linas Linkevicius told Reuters.Cheniere, the company behind the shipment, said it was looking forward to continuing the relationship with Lithuania.Lithuania has been working to reduce its dependence on Russian energy for several years. In 2014, it opened a terminal for LNG imports and began bringing in gas from Norway. However, the country would like to show Russia, and the state-backed energy company Gazprom, that multiple alternate energy suppliers exist. “That’s just smart business sense not to have all your eggs in one basket,” says Brigham McCown, an American infrastructure expert and a Program Council Member for the Warsaw Security Forum. “From my perspective, a lot of Eastern European countries would like to have U.S. natural gas in particular.” However, he stressed that the viability of American natural gas sales to central Europe depends on its price. Shipping LNG across the Atlantic requires a very low production price at home. To the extent that American producers are able to hit this mark, it is thanks to fracking. Fracking has paid off dramatically in terms of cheap energy in the U.S. Abundant natural gas has lowered electricity prices and helped spur the development of major chemical plants in places like Ohio and Louisiana. The next stage for the industry has been the export market, which so far has focused on Canada and Mexico. As the industry continues to expand, shipment companies are looking further afield, to Latin America and beyond.
Natural gas is key to German Energiewende -The head of one of Germany’s main natural gas associations told EURACTIV’s partner Der Tagesspiegel that the German government should back the fuel source as part of its energy transition, as well as advocating the use of power-to-gas technology. The chief executive of the German Association of Energy and Water Industries wants “a clear commitment to gas” from the country’s lawmakers. Stefan Kapferer wants the energy source to play a more important role in the drive to meet the 2050 climate protection plan. Kapferer laid down four specific areas in which gas should be used. Firstly, in securing Germany’s heat supply, a factor in which gas still remains indispensable. Secondly, using the fuel source in natural gas-powered cars. Thirdly, gas power should be used as a back-up for renewable energies, which can be intermittent. Lastly, surplus electricity produced by Germany’s wind farms should be converted into gas fuel using power-to-gas technology. The latter option is still relatively unknown to Germany’s politicians, as well as other important opinion-forming groups. “We have work to do there,” Kapferer told reporters at the beginning of the month during a presentation of a BDEW survey on natural gas’s role in the German Energiewende.
Shell Plans To Double Gas Stations In Russia - Royal Dutch Shell plans to double the number of its retail gas stations in Russia from the current 227, Sergey Starodubtsev, the chief executive of Shell’s Russian unit, said on Wednesday.Shell views Russia as one of its priority regions, Russian media quoted Starodubtsev as saying at a press conference. The company does have plans to expand its retail network and plans to double the number of its gas stations in Russia in the near future, according to Starodubtsev.Apart from the downstream business, Shell is active in Russia with natural gas projects.The Anglo-Dutch oil and gas supermajor holds a 27.5-percent stake minus one share in the Sakhalin-2 liquefied natural (LNG) project, in which Russia’s gas giant Gazprom holds the majority stake of 50 percent plus one share. Mitsui (12.5 percent) and Mitsubishi (10 percent) hold the remaining stakes.In June this year, Shell signed a joint venture deal with Gazprom to study the construction and development of another LNG project in Russia—Baltic LNG. The Baltic LNG project entails the construction of an LNG plant with an annual capacity of 10 million tons in the Baltic Sea port of Ust-Luga, which is some 110 kilometres (68 miles) west of St. Petersburg.Under the agreement, the Shell-Gazprom joint venture will secure the funding and carry out the design, construction, and operation of the LNG plant, Gazprom said in a June 3, 2017, press release. Last year, Shell and Gazprom expressed their intent to explore the Baltic LNG project possibilities by signing a Memorandum of Understanding (MoU) for potential cooperation in that project. This year Shell marks 125 years since it started doing business in Russia.
Russia claims to have invented an alternative to fracking - Russian scientists and local oil field services companies claim to have created a technology for thermochemical gas fracturing that could be an alternative to hydraulic fracturing and could increase oil production by between 1.7 and 6 times, Russia’s news agency RIA Novosti reports, citing the University of Tyumen’s press service. In hydraulic fracturing, rocks are fractured with high-pressure injection of fluids, while the new breakthrough technology, as claimed by Russian scientists and media, is creating chemical reactions in the strata that contain oil. The chemicals react and emit heat and gas, which makes extraction easier and lifts well productivity, according to the scientists and researchers. The other upside in the technology, the Russians claim, is that the main component in the chemical reactions is ammonium nitrate, which is often used as fertilizer. According to Professor Konstantin Fedorov, Director of the Institute of Physics and Technology at the University of Tyumen and the scientific consultant on the project, the improved well productivity effect lasts between 300 and 1,000 days. Production increases by between 1.7 times and 6 times compared to the initial output level, although the scientists have seen tests with production increases of 10 to 20 times. The success rate is close to 100 percent, Fedorov claims, as reported by Russian media. According to the University of Tyumen, the project —partially supported by government funding—had the goal to create an innovative and, more importantly, Russian method of oil and gas production. The project partners plan to begin the first tests at operational wells of one of Rosneft’s subsidiaries in September, according to the University of Tyumen.
Turkey’s Unit International, Russia’s Zarubezhneft and Iran’s Ghadir sign drilling deal (Reuters) - Turkey's Unit International has signed a $7 billion agreement with Russia's state-owned Zarubezhneft and Iran's Ghadir Investment Holding to drill for oil and natural gas in Iran, the company said on Tuesday. In a statement, Unit said the three companies had invested a total of $7 billion for the drilling, which would take place at three oil fields and one large natural gas field in Iran. The total reserves at the three oil fields stand at 10 billion barrels, and the fields will produce 100,000 barrels per day, Unit said. It said the natural gas field had a production capacity of 75 billion cubic metres per year. The consortium will also be able to drill in other parts of Iran, the statement said. The natural gas extracted from the drilling will be equal to 1.5 times the 50 billion cubic metres of gas Turkey imports annually, Unit said, adding that the reserves in this field would help meet Turkey's gas demands for the next 150 years. Unit said all three companies had signed the agreement as equal partners, and added that this marked the first trilateral deal an Iranian company signed with foreign partners.
Oilex unveils favourable fracking analysis for Cambay - Oilex unveiled positive results from the large gas resource at the company's Cambay project on Thursday. The analysis, completed by both tight gas experts at Schlumberger and Baker Hughes, confirmed that siltstones at Cambay could be effectively stimulated as part of the fracking process and that commercial gas flow rates were potentially achievable. Managing director Joe Salomon said that the findings had confirmed the importance of implementing a tailored approach. "We are very pleased that the review and analysis has confirmed the substantive potential of the EP-IV reservoir at Cambay, and that it has provided specific solutions to be employed in the execution of future drilling and well completion programmes. "These findings have confirmed the importance of implementing a tailored approach to unlocking the potential commercial success of the large gas resource at the company's Cambay project". With Schlumberger carrying out the testing, the report from Baker Hughes indicated various important details for the fracking process at Cambay, such as that the reservoir rocks had the essential characteristics for the development of suitable fractures required to increase exposure to the reservoir as well as to enhance gas flow rates under production. Also the report noted that proppant selection will be crucial to the maintenance of the necessary conductivity for sustained production.
Shell Loads Oil in Libya for the First Time in Five Years -- Royal Dutch Shell Plc, the world’s largest oil trader, is said to have loaded its first crude from Libya in five years over the weekend, adding to evidence of the OPEC nation’s comeback. The cargo on Saturday is for 600,000 barrels of crude from the Zueitina port, according to two people familiar with the matter who asked not to be identified because the information is private. A Shell spokesperson declined to comment on the shipment, but said the company’s Shell International Trading & Shipping “has a history marketing Libyan crudes. We welcome new business opportunities with Libya’s National Oil Corp.” Libya this year attracted Germany-based Wintershall AG and Russia’s Rosneft PJSC as investors amid signs of stability in the oil industry after years of civil war and political division. The nation is exempt from the supply cuts agreed to by the Organization of Petroleum Exporting Countries and allied producers. Crude output was 1.02 million barrels a day in July, a four-year high, according to data compiled by Bloomberg. Libya isn’t planning to join any agreement to curb output until it reaches its target of 1.25 million barrels a day by December and can maintain that level, two people familiar said in July. In 2005, Shell signed an exploration deal in Libya and five years later said gas found wasn’t in commercial quantities. Output and exports collapsed after the 2011 revolt against former leader Moammar Al Qaddafi. The country with Africa’s largest crude reserves pumped as much as 1.78 million barrels a day in 2008 and by 2011 it was down to as low as 45,000 barrels a day, Bloomberg data show.
Hundreds of Protesters Occupy Shell Plant in Nigeria, 11 Days and Counting -- The decades-long struggle for social and environmental justice in the Niger Delta continues, largely unseen by the wider world. On Aug. 11, hundreds of people from the Niger Delta stormed the Belema flow station gas plant owned by Shell in the Rivers State region of the Delta. The plant transports crude oil to the Bonny Light export terminal, from where it is shipped overseas. Their list of demands could have been written by their parents and grandparents who fought the company before them. It is the same list of grievances for which the writer Ken Saro-Wiwa campaigned for—and ultimately died for—in the mid-nineties. As Reuters reported earlier this month, "the protesters said they were not benefiting from the region's oil wealth and wanted an end to the oil pollution that has ruined much of the land." Some 11 days on and the protests are continuing with hundreds still occupying the plant, with Shell still not able to access the site. And now Shell is beginning to put pressure on the protesters to leave, saying their safety could be at risk. In response, the local community have vowed to stay until Shell hands over the operation of the plant to a locally-controlled company. However, Shell is unlikely to cede ownership of a key asset. So for the people of the Niger Delta, nothing changes. The vortex of pollution, injustice and poverty continues. Hopefully, Shell will not resort to violence and colluding with the military to clear the site. Otherwise, once again it will have blood on its hands.
Inside the new economic science of capitalism’s slow-burn energy collapse -- A groundbreaking study in Elsevier’s Ecological Economics journal by two French economists, for the first time proves the world has passed a point-of-no-return in its capacity to extract fossil fuel energy: with massive implications for the long-term future of global economic growth.The study, ‘Long-Term Estimates of the Energy-Return-on-Investment (EROI) of Coal, Oil, and Gas Global Productions’, homes in on the concept of EROI, which measures the amount of energy supplied by an energy resource, compared to the quantity of energy consumed to gather that resource. In simple terms, if a single barrel of oil is used up to extract energy equivalent to 50 barrels of oil, that’s pretty good. But the less energy we’re able to extract using that single barrel, then the less efficient, and more expensive (in terms of energy and money), the whole process.Recent studies suggest that the EROI of fossil fuels has steadily declined since the early 20th century, meaning that as we’re depleting our higher quality resources, we’re using more and more energy just to get new energy out. This means that the costs of energy production are increasing while the quality of the energy we’re producing is declining.But unlike previous studies, the authors of the new paper — Victor Court, a macroeconomist at Paris Nanterre University, and Florian Fizaine of the University of Burgundy’s Dijon Laboratory of Economics (LEDi)—have removed any uncertainty that might have remained about the matter. Court and Fizaine find that the EROI values of global oil and gas production reached their maximum peaks in the 1930s and 40s. Global oil production hit peak EROI at 50:1; while global gas production hit peak EROI at 150:1. Since then, the EROI values of oil and gas — the overall energy we’re able to extract from these resources for every unit of energy we put in — is inexorably declining.
US Fracking Keeps Pushing Oil Price Forecasts Down -- A major financial company just lowered its five-year forecast for the oil price ceiling, as the U.S. continues to increases its oil production, Axios reported Friday. Citigroup is projecting that over the next five years, oil prices will not rise above $60 a barrel, down from the previous forecast of $65 a barrel. The Organization of Petroleum Exporting Countries (OPEC) is attempting to raise the price of oil by cutting back production from member countries and others who agreed to the restrictions. The organization has struggled with compliance, however. July marked the fourth straight month oil production from countries in the OPEC agreement has increased. July also marked the highest month of production from OPEC since December, the month before each country agreed to cut its production, CNBC reports. Fracking has consistently grown in the major oil fields of the U.S. in 2017. Shale production is expected to hit over 6 million barrels a day throughout August and September, according to CNBC.
Oil prices fall two percent after end-of-week rally (Reuters) - Oil prices fell nearly 2 percent ahead of monthly contract expiration on Monday, pulling back from last week's rally built on signs the global market is starting to rebalance from chronic oversupply. Brent crude futures settled down 2 percent, or $1.06 at $51.66 a barrel, while U.S. West Texas Intermediate crude futures ended down $1.14 a barrel, or 2.4 percent, at $47.37 a barrel ahead of the September contract's expiration on Tuesday. Both contracts had risen 3 percent on Friday, and traders said the day's action was marked by profit-taking. "Oil prices are experiencing some late summer chop with low trading volume and not much news. I think we are going to be stuck in a neutral for the next two weeks without big moves in either direction," U.S. hedge funds and money managers have reduced bets on rising prices in recent weeks, Commodity Futures Trading Commission data showed on Friday. U.S. oil prices have been on the upswing since bottoming out near $43 a barrel in mid-June, though the market has not been able to sustain a rally above $50. Despite the selloff, the market remains in its recent range, said Phil Flynn, analyst at Price Futures Group in Chicago. The world remains awash with oil despite a deal struck by some of the world's biggest producers to rein in output. Rising U.S. production has been a major factor keeping supply and demand from balancing. U.S. output may soon slow, as energy companies cut rigs drilling for oil for a second week in three, energy services firm Baker Hughes said on Friday.
Strong Inventory Draws Suggest OPEC Deal Is Working - Oil prices dove on Monday after a rally at the end of last week, a dip that analysts attributed to profit-taking. Investors have pulled back recently after building up large bullish bets on crude futures, a sign that the optimistic outlook has tempered. On Tuesday, oil was flat in early trading.. According to PetroLogistics, OPEC production is on track to decline by 419,000 bpd in August, compared to July. The sharp decline comes after a recent monitoring meeting where OPEC officials browbeat laggards within the group, imploring them to step up compliance with the deal. Compliance weakened in June and July, pushing the cartel’s collective output up to a year-to-date high. But fresh data suggests that they are improving the situation, with output dropping so far this month. . At the next official OPEC meeting in November, OPEC will reportedly discuss whether or not the group will extend the cuts beyond the March 2018 expiration date. "At our next meeting at the end of November...the most important items will concern the fate of the agreement to extend or terminate the production cut," Kuwait’s oil minister Essam al-Marzouq told Kuwait TV in an interview. Kuwait’s oil minister Essam al-Marzouq told CNBC on Monday that U.S. crude oil inventories are declining faster than expected, a sign that the OPEC deal is working as planned. “We are now seeing the impact of those cuts (in the first half of the year) as U.S. oil inventories fall by more than expected,” he said. “Week after week we are seeing a much bigger-than-expected fall in inventories.” In what could be a watershed moment, the first U.S. LNG cargo landed in Lithuania, providing the Baltic States with an alternative source of natural gas. The Baltics have been wholly dependent on Russian natural gas, and the landing of a U.S. LNG cargo has already forced Gazprom to lower its prices. Meanwhile, Russia is trying to protect market share in its backyard, lowering prices, seeking an expansion of the Nord Stream pipeline system, and also developing its own LNG. The competition between U.S. LNG and Russian gas in Europe will play out in the years ahead – U.S. LNG supply is set to climb sharply next year and again towards the end of the decade.
NYMEX gas jumps 6.9 cents on eclipse impact, conflicting weather outlooks -- NYMEX September gas futures climbed 6.9 cents to $2.962/MMBtu as Monday's eclipse was projected to boost natural gas demand. The September contract settled at $2.962/MMBtu, up 6.9 cents from Friday's close. The price increase comes after a week where the NYMEX front-month contract dipped 9 cents over five trading sessions. Phil Flynn, senior market analyst at Price Futures Group, said the market could be seeing an "eclipse rally," as more gas was likely used for power generation as solar power was not available during the eclipse. According to US Energy Information Administration data, solar photovoltaic capacity was expected to be affected by an estimated 8.8 GW in California, along with North Carolina seeing nearly 3 GW affected, possibly giving support to prices as gas was used to account for some of that missing power generation. Any rise in gas demand could put increased pressure on national natural gas stocks, which currently sit 1.8% above the five-year-average, according to EIA data. Gene McGillian, manager of market research at Tradition Energy, said there are expectations that the storage build for the week ended August 18 will be below the five-year-average. The jump in price goes against the grain of the most recent six- to 10-day outlook from the National Weather Service calling for a likelihood of cooler-than-average weather for the Northeast and Midcontinent. Flynn said private meteorologist reports are conflicting, as some call for warmer-than-average weather heading into September, whereas others project possible frosts in some regions leading to "possible heating demand in September."
Oil heads higher on bets for an eighth-straight weekly fall in U.S. crude supplies -- Oil prices headed higher Tuesday, buoyed by expectations that data this week will show that U.S. supplies of crude oil fell for an eighth-consecutive week. The September contract for West Texas Intermediate crude oil, which expires at Tuesday’s settlement, rose 17 cents, or 0.4%, to $47.54 a barrel on the New York Mercantile Exchange, after slumping 2.4% on Monday. The October contract advanced 24 cents, or 0.5%, to $47.77 a barrel. October Brent rose 29 cents, or 0.5%, to $51.95 a barrel on the ICE Futures Europe exchange, attempting to recoup part of its 2% slump on Monday. That weakness came amid a lack of major news from a meeting between members of the Organization of the Petroleum Exporting Countries and non-cartel producers about compliance with the output-cut agreement. Media reports said, however, that sources close to OPEC said compliance with the agreed production targets has fallen to 94% in July, compared with 98% in June. “OPEC punted at their technical meeting and put off a decision to extend [the output-cut agreement] until their November meeting,” said Phil Flynn, senior market analyst at Price Futures Group.Kuwait’s oil minister Essam al-Marzouq said on Kuwait TV Monday that OPEC will discuss whether to end or extend the production-cap deal at a meeting in November, according to media reports.“With the expiration of the September WTI futures contracts later Tuesday, prices climbed, but traded below the session’s highs as traders “look to the heart of the shoulder season when gasoline demand dips and refineries go into maintenance,” said Flynn. But the weekly drop in the U.S. oil-rig count reported Friday, as well as news that BHP Billiton is getting out of the U.S. shale business is “raising questions about the level of U.S. oil production going forward,” he said. “The oil market most likely will have to prepare for another big drop in U.S. crude supply that will come after the September contract is history.”
Oil prices climb as traders eye another U.S. crude drawdown | Reuters - Oil inched up on Tuesday, lifted by expectations of another crude stockpile drawdown in the United States but price gains were limited amid the reopening of Libya's largest oil field. Prices, however, pared gains in post settlement trade and Brent crude turned negative as the market was disappointed by industry data from the American Petroleum Institute showing a crude stockpile decline largely in line with expectations and a surprise build in gasoline inventories. [API/S] U.S. crude inventories were expected to have fallen 3.5 million barrels last week, the eighth straight weekly drawdown, and gasoline to have drawn down by over 600,000 barrels, a Reuters poll showed, ahead of weekly data. Official government inventory data for last week will be released on Wednesday at 10:30 a.m. EDT (1430 GMT). Brent crude settled 21 cents, or 0.4 percent, higher at $51.87 a barrel. Book-squaring ahead of the U.S. crude September contract's expiry on Tuesday added to price gains, traders and brokers said. U.S. crude futures for September delivery closed 27 cents, or 0.6 percent, higher at $47.64 while the more active October contract ended the session up 30 cents at $47.83. U.S. gasoline futures RBc1 also led the complex higher for most of the session and settled up 0.4 percent at $1.5908 a gallon as forecasts for heavy rain associated with the remnants of former tropical storm Harvey threatened to cause refinery flooding, traders said. A tropical depression is expected to form over the southwestern Gulf of Mexico on Wednesday or Thursday. "Traders of crude oil and gasoline will also have particular interest in the remnants of Tropical Storm Harvey expected to strengthen to Category 1 hurricane status as it crosses the Gulf of Mexico toward a possible Friday landfall on the Texas Coast," Tim Evans, Citi Futures' energy futures specialist, said in a note. "While not a major storm, this will at least serve as a drill for refiners along the coast, in our view."
WTI Drops After 3rd Weekly Build In Gasoline Inventories -- Amid Libya headlines and contract rollover, WTI prices were wild heading into the inventory data tonight. Following two weeks of surprising builds in Gasoline inventories, API reports a surprise 3rd weekly build in gasoline inventories, and crude drawing only modestly (in line with expectations). The initial reaction was a kneejerk lower, breaking down the day's wedge. API:
- Crude -3.595mm (-3.5mm exp)
- Cushing -462k (+300k exp)
- Gasoline +1.402mm (-1mm exp)
- Distillates +2.048mm
Last week confirmed the concerns about building gasoline (even though crude saw a draw) and API shows a 3rd week of builds (and crude's draw was just in line) and Distillates also saw the biggest build since July. Price action was chaotic today heading into the API data and immediately kneejerked lower (breaking down from the wedge)... “If we are going to get into a new era of instability with Libyan oil production, if it becomes a wild card again, that’s definitely supportive for prices,” Phil Flynn, senior market analyst at Price Futures Group, told Bloomberg, adding, with reference to today's price action, there’s “a little bit of expiration madness. There’s a lot of positioning before the September expiration."
Oil tallies a gain as U.S. crude supplies drop for eighth week - An eighth consecutive weekly decline in U.S. crude supplies lifted oil prices Wednesday, but domestic production continued its climb to levels not seen since July 2015—setting a limit on crude’s price strength. October West Texas Intermediate crude CLV7, -2.00% tacked on 58 cents, or 1.2%, to settle at $48.41 a barrel on the New York Mercantile Exchange. October Brent crude LCOV7, -1.07% rose 70 cents, or 1.4%, to $52.57 a barrel on the ICE Futures Europe exchange.The gains came after the U.S. Energy Information Administration Wednesday reported that domestic crude supplies fell by 3.3 million barrels for the week ended Aug. 18, following declines in each of the last seven weeks. That’s just below the forecast for a decline of 3.7 million barrels by analysts surveyed by S&P Global Platts. The American Petroleum Institute had reported late Tuesday a fall of 3.6 million barrels, according to sources. “Although in line with consensus, oil inventories have fallen for an eighth consecutive week, now down 30 million barrels year on year, and down 70 million barrels from the peak in late March,” said Matt Smith, director of commodity research at ClipperData. “Refinery runs continue to be strong, up nearly 800,000 [barrels a day] year on year, while a larger draw would have been seen had it not been for strong waterborne imports.” The report also showed that total domestic crude production edged up last week by 26,000 barrels a day to 9.528 million barrels a day, holding at levels not seen since the week ended July 17, 2015.
WTI Algos Uncertain After Gasoline Inventories Draw But Crude Production Surges --WTI crude prices managed to scramble back up to pre-API-tumble levels ahead of DOE's data dump this morning with all eyes on gasoline inventories, which did not disappoint showing a small draw (in line with expectations) along with crude's draw which was roughly in line with API and expectations. Production continues to rise to highest since July 2015. DOE:
- Crude -3.33mm (-3.5mm exp)
- Cushing -503k (+300k exp)
- Gasoline -1.22mm (-1.25mm exp)
- Distillates +28k
Builds in products (gasoline and distillates) according to API is weighing on markets (and a big shift from last week's massive crude draw), but DOE data showed a draw for gasoline (in line with expectations) and a draw for crude (in line with expectations) Total Crude Oil Inventories dropped to the lowest since Jan 2016... But as is very clear, remains dramatically over-stocked relative to pre-2015 norms...
US EIA says Midwest ULSD stockpiles dip to lowest point of the year - US Midwest diesel stockpiles fell by 610,000 barrels week on week, hitting their lowest point of the year , Energy Information Administration data showed Wednesday. There were 30.183 million barrels of ULSD stockpiled in the US Midwest in the week that ended August 18, according to the latest EIA data. That is the lowest stockpiles have been since the week ending December 30, when they were 30.06 million. The low stocks have coincided with strong Midwest diesel prices. S&P Global Platts assessed Chicago ULSD at the NYMEX September ULSD futures contract plus 2.75 cents/gal Tuesday, its second-highest point since October 7. Group 3's X grade was assessed at plus 1.80 cents/gal, which did not deviate much from the following week but is well above an average differential of about plus 70 cents/gal in July.Nationally, stockpiles fell 534,000 barrels to 130.85 million barrels. The Midwest saw the biggest drain, the Gulf Coast fell by 365,000 barrels and the Atlantic Coast added 565,000 barrels. Additionally, US ULSD imports fell by 24,000 b/d to 37,000 b/d. That is the fewest ULSD imports the US has taken since 30,000 b/d for the week ending Oct 14.
Natural-gas prices hold on to earlier gains as rise in U.S. supply comes in a bit smaller than expected - Data from the U.S. Energy Information Administration on Thursday showed that domestic supplies of natural gas rose by 43 billion cubic feet for the week ended Aug. 18. On average, analysts were looking for a build of 46 billion cubic feet, according to a survey of analysts conducted by S&P Global Platts. Total stocks now stand at 3.125 trillion cubic feet, down 223 billion cubic feet from a year ago, but 45 billion cubic feet above the five-year average, the government said. Prices for natural gas also got a boost from forecasts that Tropical Storm Harvey in the Gulf of Mexico may become a hurricane by Friday, which could significantly disrupt energy operations in the region. September natural gas rose 4.3 cents, or 1.4%, from Wednesday's settlement to $2.971 per million British thermal units. It traded at $2.967 before the data.
Oil falls as Hurricane Harvey sparks fear that storm damage could sap demand --Oil prices ended sharply lower Thursday as pressure from the risk of weaker energy demand in the wake of a potential Category 3 hurricane in the Gulf of Mexico outweighed the typical price boost associated with the prospect of production disruptions in the region.Prices also declined as investors remained cautious as to whether the glut in oil supplies was finally disappearing, as U.S. production has continued its climb to more than two-year highs. Natural-gas prices, meanwhile, notched only a modest gain as Hurricane Harvey prompted the shut ins of some oil and natural-gas facilities in the Gulf of Mexico. On the New York Mercantile Exchange, October West Texas Intermediate crude CLV7, +0.65% fell 98 cents, or 2%, to settle at $47.43 a barrel—the lowest finish in a week. October Brent crude lost 53 cents, or 1%, to $52.04 a barrel on London’s ICE Futures exchange, within the $4 range traded since late July. “Refineries in the path of the storm will have to be shuttered, reducing crude demand, and reducing gasoline supply.” The risk of tighter inventories lifted gasoline futures prices to their highest finish of this month so far. September gasoline jumped 4.5 cents, or 2.8%, to $1.664 a gallon. September heating oil, however, settled at $1.621 a gallon, down less than half a cent. The hurricane has already hurt energy operations in the region. About 9.6% of Gulf of Mexico production, or 167.231 barrels of oil per day have been shut in, while less than half a percent, or 1.135 million cubic feet a day shut in, as of late Thursday morning central time, according to the Bureau of Safety and Environmental Enforcement.
$20 Oil? Forget OPEC, China Controls Oil Prices -- U.S. shale has taken a lot of headline space recently as the biggest headwind for oil prices and the highest stumbling block for OPEC’s efforts to prop them up by cutting production. Yet, there may be another factor that could bring down oil prices as soon as next year... China has been building a strategic crude oil reserve for the last decade, but the size of that reserve remains undisclosed, with analysts making estimates based on China-bound cargoes and satellite imaging. Last year, a Silicone Valley tech company, Orbital Insight, suggested that China may have stored as much as 600 million barrels of crude by May. This was the highest reserve estimate at the time. Since then, the reserve has in all likelihood grown, possibly exceeding the U.S. SPR, which stood at 678.9 million barrels as of August 18th this year. This year, Chinese crude imports have run at record-breaking rates, with the average daily on par with what the U.S. imports, at about 8 million barrels, the Financial Times notes in an analysis. A lot of these, however, are going into storage tanks, analysts believe, and they warn that soon the tanks may fill up, wreaking havoc on prices and--more notably--on OPEC. What is most alarming is this: If the rate of imports slows down from the current 1-million-bpd, prices are bound to take a hit. The chance of the growth rate falling is quite big – last month imports slumped to the lowest since the start of the year, at 8.16 million bpd. Now let’s remember that OPEC and Russia have agreed to pump less until March 2018. Nobody knows what will happen after that, and while some experts are calling for the cartel and its partners to continue producing less for a longer period of time, it’s doubtful if everyone would be on board with this idea. In fact, we may well see taps being turned on again. It may be time to start considering the possibility of $20 oil again.
Oil industry evacuates, ceases production as Harvey approaches -- Oil companies continued to cease offshore operations and evacuate personnel on Thursday in preparation for Tropical Storm Harvey becoming a full-blown hurricane. The tropical storm is expected to intensify into an category 3 hurricane by Friday morning, as it heads directly for the Texas and Louisiana Gulf Coast. If it reaches hurricane strength, Harvey would be the first hurricane to hit Texas in nearly a decade. Oil firms Exxon Mobil, Shell, and Anadarko had begun shutting down their offshore operations Wednesday evening. An Exxon spokeswoman told the Washington Examinerthat it continued to close its offshore and coastal operations through Thursday afternoon, while refineries on land continued normal operations. "Exxon Mobil is closely monitoring Tropical Storm Harvey, and continues preparation for severe weather at its offshore and coastal operations in the Gulf of Mexico," said spokeswoman Suann Guthrie."We are in the process of evacuating all personnel from our facilities expected to be in the path of the storm, which includes the Hoover platform and Galveston 209 platform," she explained.The Hoover platform was built to be the world's deepest offshore drilling platform at 4,800 feet and is named for the Hoover field that it extracts roughly 100,000 barrels a day of oil, along with equivalent amounts of natural gas.Both the Hoover and Galveston 209 platforms are "shut in" in anticipation of the storm, said Guthrie. "Our Hadrian South subsea production system in the Gulf of Mexico is also shut in. Refineries are currently operating as normal."Shell and Anadarko also shut in their offshore platform facilities. Anadarko said late Thursday afternoon that it has completed evacuation of all its facilities in the western Gulf, and stands ready to do the same in the eastern portion if the storm intensifies.
OilPrice Intelligence Report: Hurricane Harvey Causes Gasoline Price Spike - Energy prices are on their way up as a major hurricane is set to hit the U.S. within hours. Hurricane Harvey, at the time of this writing, is forecast to become a high Category 3 hurricane, the strongest hurricane to hit the U.S. since at least 2008, and perhaps since 2005. The storm is heading directly for the coast of Texas between Houston and Corpus Christi, where many oil refineries are located. “It is becoming pretty clear this morning that Harvey will be mentioned alongside Katrina and Sandy in the history books,” Todd Crawford, chief meteorologist at The Weather Company, told Bloomberg.. The Gulf Coast is home to 45 percent of the U.S.’ refining capacity, and nearly 20 percent of the nation’s oil production. Corpus Christi is also a major port for oil and refined products coming in and out of the country. Gasoline prices spiked more than 4 percent to their highest levels in weeks as roughly 1 million barrels of refining capacity was shut down over the past 24 hours. But crude oil prices did not receive the same attention – only a few offshore platforms were affected, and the expected outage of refineries actually means demand for crude will dip as downstream operations pause. Up to 35 inches of rain are expected, brining life threatening winds, floods and storm surge. Royal Dutch Shell, ExxonMobil and Anadarko Petroleum evacuated their employees from the area. As of now, government data suggests that 10 percent of the Gulf’s oil production – about 167,000 bpd – along with 14 percent of its natural gas production will be curtailed. According to Politico, the U.S. oil and gas industry is growing a little concerned that the Trump administration is giving them too much. The deregulatory push at the EPA and Department of Interior have handed the industry huge wins, but some are concerned that it could set the stage for some sort of accident – and oil spill or methane explosion – from an individual company that would result in serious damage to the entire industry. At worst, the regulatory apparatus could swing back in the other direction, especially under a new administration. Companies like ExxonMobil and BP , for example, see only minor costs to complying with methane emissions rules, which are targeted for rollbacks by the Trump administration. It’s a rare case of an industry cautioning the government not to grant them too many favors.
Baker Hughes data show U.S. oil-rig count down a second week in a row - Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil fell by 4 to 759 rigs this week. The total active U.S. rig count, which includes oil and natural-gas rigs, also declined by 6 to 940, according to Baker Hughes. Oil prices showed little reaction, with October West Texas Intermediate crude up 23 cents, or 0.5%, from Thursday at $47.65 a barrel on the New York Mercantile Exchange. It was nearly flat from levels seen before the data, when prices posted modest gains as traders weighed the potential supply and demand impact of Hurricane Harvey in the Gulf of Mexico.
Oil Prices Rise Amid Falling U.S. Rig Count - The number of active oil and gas rigs in the United States fell this week by 6 rigs. Combined, the total oil and gas rig count in the US now stands at 940 rigs, up 451 rigs from the year prior, with the number of oil rigs in the United States decreasing by 4 and the number of gas rigs decreasing by 2.Oil rigs in the United States now number 759—353 rigs above this time last year.Canada lost 6 oil rigs again this week, with the number of gas rigs increasing by 9—bringing Canada’s total to 217 oil and gas rigs—71 above the year ago levels.Prices rose on Friday as Hurricane Harvey draws nearer to the Gulf Coast, with futures hitting a four-month high. At 7:51am EDT Friday, WTI was trading up 0.74 percent at US$47.78 and Brent was trading up 0.81 percent at US$52.46.The rise in price was also thanks to the Energy Information Administration’s Wednesday report that the United States’ crude oil inventory had fallen by 3.3 million barrels. Gasoline inventories fell as well, by 1.2 million barrels, according to the EIA.Barrel prices for WTI were trading about 70 cents over last week’s levels, as prices just can’t seem to sustain any significant increase despite the weekly inventory draws reported by the EIA, reports of Saudi Arabia’s significantly restricted crude oil exports, or OPEC promises that compliance to the production cuts will improve or that further cuts are still on the table. The rise in the number of active rigs in the United States continues to slow, with the 5-week average gain for US oil rig count staying in negative territory for the second week in a row. Despite the falling average weekly gain in active US oil rigs, US crude oil production continues to increase, with average production averaging 9.528 million barrels per day for the week ending August 18, up from 9.502 million bpd the week prior.
Saudi plane for Qatari pilgrims waits on Doha for landing rights: airline (Reuters) - Saudi Arabia's state carrier said on Sunday it had been unable to send planes to transport Qatari pilgrims to the kingdom because it had been unable to get permission to land at Doha airport amid a diplomatic dispute between the two countries. Qatar and Saudi Arabia, along with three other Arab states, have been locked in a political row which severed transport ties to Doha in June, but Riyadh said last week it would facilitate the travel of Qataris for the annual haj pilgrimage. Between 2 million and 3 million Muslims travel to Mecca each year for the pilgrimage - which every able-bodied Muslim has a duty to undertake at least once in their lifetime. Along with reopening its land border with Qatar, Saudi Arabia said on Wednesday that King Salman had ordered the dispatch of a Saudi Arabia Airlines plane to fly Qatari pilgrims to Jeddah at his own expense so that they could go on to Mecca, Islam's holiest city. However, the first flight has not been able to take off from Saudi Arabia because it had not yet received landing permission in Doha, said Saleh al-Jasser, the general director of the airline, according to Saudi state news agency SPA. He said the airline had applied for landing permission several days ago. An official from Qatar's Civil Aviation Authority (CAA) denied claims made by media outlets in the blockading nations that Qatar had refused to allow Saudi Airlines to fly Qatari pilgrims. "The CAA received a request from Saudi Airlines in which they asked to carry Qatari pilgrims, and replied by explaining that they should coordinate with the Ministry of Islamic Affairs through the Qatari Hajj Delegation regarding this issue, in accordance with the procedures followed in the past, so that the CAA can take the necessary measures in this regard,"
Despite Sanctions, Qatar Outpaces Saudi Arabia In Economic Growth - Despite the torrent of reports attesting to the non-impact of the Saudi Arabia-led diplomatic boycott of Doha, new estimates by Bloomberg’s economic survey predict that 2017 will be Qatar’s slowest year of GDP growth since 1995. A previous study in June forecasted 3.1 percent and 3.2 percent growth for this year and next, respectively. New figures reduce those numbers to 2.5 percent for 2017 and 3.2 percent for 2018. The deficit figures jump to 5.1 percent for the current period, compared to previous estimates at 4.6 percent.The current feud between Gulf monarchies began on June 5th, when Saudi Arabia expressed its indignation at an insubordinate Qatar.Energy interests, most notably Doha’s shared custody of the South Pars gas field – the largest of its kind – prevent Qatar from cutting relations with Shiite Iran, the Sunni Saudi government’s main rival in the Middle East.“Even before the diplomatic crisis with regional powers, it looked like Qatar’s non-energy economy would slow,” William Jackson, of Capital Economics told World Oil. “The early signs are that the sanctions dealt a damaging blow to Qatar’s economy in June. The impact appears to be temporary, but it will still result in weaker growth." To be clear, Qatari exports of natural gas have not been affected by the diplomatic row. The biggest casualty has been GCC-funded projects, namely food-processing and port facilities, that now face an uncertain future. “The illegal actions of our neighbors have been the catalyst for us to accelerate our economic plans and renew our commitment to diversification and sustained growth,” said Sheikh Tamim bih Hamid at Thani. “We fully expect to see a strong return of the Qatari economy this year and growth over the years to come.”
Qatar’s Plucky Plan to Outlast the Saudi Embargo - Qatar’s 37-year-old emir, Sheikh Tamim Bin Hamad Al Thani, has survived his frenemies’ initial siege and is riding a surge in domestic nationalism as Qataris dig in for a long standoff. Panic buying in grocery stores, driven by whispered fears of a coup or invasion, made headlines early on. Neither materialized, giving Sheikh Tamim time to cement friendships in the West with big-ticket purchases of U.S. military jets, Italian naval ships, and the contract of Brazilian superstar Neymar, the world’s most expensive soccer player, which was acquired on Aug. 2 by the Qatari-owned club Paris Saint-Germain. Qatar even flirted with buying a stake inAmerican Airlines Inc. Top diplomats from Europe and the U.S. have paraded through Doha to reassure Sheikh Tamim, who controls the world’s third-largest reserves of natural gas. Turkey and Iran have stepped in to replenish Qatari warehouses with construction supplies and restock store shelves with parsley, milk, and other popular goods, foiling the embargo imposed by Saudi Arabia and its partners, Bahrain, Egypt, and the United Arab Emirates. In early July, Qatar signed a new counterterrorism pact with the U.S., belying the Saudi bloc’s accusations of extremism and undermining President Trump’s initial support for the blockaders.
In Historic Move, Qatar Restores Diplomatic Relations With Iran -- Qatar has remained defiant throughout its unprecedented summer diplomatic crisis with Saudi Arabia and other Gulf Cooperation Council (GCC) states which have brought immense pressure to bear on the tiny gas and oil rich monarchy through a complete economic and diplomatic blockade imposed by its neighbors. However, on Thursday it unveiled a stunning geopolitical realignment when it announced the restoration of diplomatic relations with Iran in a move that is arguably its greatest act of defiance yet. The Qatari foreign ministry announced early Thursday that "the state of Qatar expressed its aspiration to strengthen bilateral relations with the Islamic Republic of Iran in all fields" and reportedly informed Iran by phone of plans to return the Qatari ambassador to Tehran for the first time since it broke relations in 2016. The move is significant because the chief accusation leveled against Qatar by its former GCC allies, especially Saudi Arabia, is of growing too close to Iran while sponsoring and funding terrorism. For the Sunni gulf states "funding terrorism" is more often a euphemism meaning links to Iran and Shia movements in the gulf. Ironically, there is ample evidence demonstrating that both sides of the current gulf schism have in truth funded terror groups like al-Qaeda and ISIS, especially in Syria. But Qatar's announcement sends an audacious and daring message essentially signalling that the country remains unbowed by Saudi pressure, and that the severe economic sanctions designed to bring Qatar to its knees may result in a geopolitical backfiring and new regional order as Iran stands to benefit.
The Russian-Saudi rapprochement and Iran - A number of developments in recent months have signalled a possible rapprochement between Russia and Saudi Arabia. The two countries have made a joint effort to push for further cutting of oil production to help bring up prices. Since the beginning of this year, Russian Minister of Energy Alexander Novak and his Saudi counterpart Khalid al-Falih have been seeking to conclude an agreement on reducing output. In late May, then Deputy Crown Prince Mohammad bin Salman went to Russia to discuss with President Vladimir Putin the oil market and the situation in Syria. The visit came just three weeks before Crown Prince Mohammed bin Nayef was removed and bin Salman took his position. While in Moscow, the latter said that "relations between Saudi Arabia and Russia are going through one of their best moments ever". Two months later, Moscow and Riyadh signed a preliminary military cooperation agreement worth $3.5bn. The Saudis have requested transfer of technology to accompany the signing of the deal. In recent months, the two countries have also made significant progress on Syria. Under the patronage of Riyadh, Egypt provided a platform for negotiations between Moscow and the Syrian opposition. The importance of this step for the Kremlin is obvious. Russia is extremely interested in concluding an agreement on de-escalation zones, the implementation of which is not possible exclusively within the framework of the tripartite initiative of Russia, Iran and Turkey, without the involvement of other actors. From this perspective, the role Saudi Arabia played in the signing of the two Cairo agreements between Russia and the Syrian opposition on East Ghouta and Rastan is very important.
Saudi-led airstrikes kill up to 14 civilians, including children – witnesses -- Airstrikes, apparently conducted by the Saudi-led coalition in Yemen, have killed up to 14 civilians, including six children, witnesses on the ground report. The attack targeted the Faj Attan area on the southern outskirts of Sanaa and also reduced two buildings to rubble, Reuters cites local sources as saying. The bodies of several children, who appear to be as young as 10, have been recovered by rescuers, the agency said. According to AP, eyewitnesses say that at least 14 civilians were killed in the early morning airstrikes, and the death toll is expected to rise as rescuers pull more victims from the rubble. The news comes two days after a Saudi bombing killed dozens of people, most of them civilians, in a Sanaa hotel reportedly located next to a rebel checkpoint.The Wednesday attack was condemned by the Office of the UN High Commissioner for Human Rights, w hich said the Saudi-led coalition was responsible for protecting civilians in Yemen.“We remind all parties to the conflict, including the Coalition, of their duty to ensure full respect for international humanitarian law,” spokeswoman Liz Throssell said. “It is not clear at this point what investigations there have been and what they have led to.” The UN reportedly plans to blacklist Saudi Arabia as a nation involved in violation of children’s rights for the high death toll its campaign takes on the minors in Yemen.
‘It’s a Slow Death’: The World’s Worst Humanitarian Crisis - After two and a half years of war, little is functioning in Yemen. Repeated bombings have crippled bridges, hospitals and factories. Many doctors and civil servants have gone unpaid for more than a year. Malnutrition and poor sanitation have made the Middle Eastern country vulnerable to diseases that most of the world has confined to the history books. In just three months, cholera has killed nearly 2,000 people and infected more than a half million, one of the world’s largest outbreaks in the past 50 years. “It’s a slow death,” said Yakoub al-Jayefi, a Yemeni soldier who has not collected a salary in eight months, and whose 6-year-old daughter, Shaima, was being treated for malnutrition at a clinic in the Yemeni capital, Sana. Since the family’s savings ran out, they had lived mostly off milk and yogurt from neighbors. But that was not enough to keep his daughter healthy, and her skin went pale as she grew thin.Like more than half of Yemenis, the family did not have immediate access to a working medical center, so Mr. Jayefi borrowed money from friends and relatives to take his daughter to the capital.“We’re just waiting for doom or for a breakthrough from heaven,” he said. How did a country in a region with such great wealth fall so far and so fast into crisis?
Lebanese Army Finds ISIS Anti-Aircraft Missile Cache: Could Passenger Jets Be Hit? -- The Islamic State has long been rumored as in possession of surface-to-air missiles, and now it appears a US ally is providing ground level confirmation of what might be a worst case nightmare scenario come true. The Lebanese Army has recently been engaged in a fierce campaign to root out ISIS terrorists from the Arsal border pocket - a northeast region of Lebanon bordering Syria which has seen fighting rage since 2014. As we previously reported, the operation is receiving some level of assistance from US special forces advisers as well as coordination from Hezbollah, while at the same time the Syrian Army is attacking from the Syrian side of the border in the Qalaman mountains.On Monday, Reuters issued the following report based on official statements of the Lebanese Army:Lebanon's army found anti-aircraft missiles among with a cache of weapons in an area abandoned by Islamic State militants, it said on Monday. The arms cache also included mortars, medium and heavy machine guns, assault rifles, grenades, anti-tank weapons, anti-personnel mines, improvised explosive devices and ammunition.Not only did Lebanon's army - which is working under the advisement of the Pentagon for the operation - confirm ISIS possession of anti-aircraft missiles, but last week it reported to have uncovered a similarly stocked Nusra (al-Qaeda in Syria) cache as well. According to the same Reuters report:A Hezbollah offensive last month forced militants from the Nusra Front group, formerly al Qaeda's official Syrian branch, to quit an adjacent enclave on the border for a rebel-held part of Syria. On Friday, the Lebanese army said it had discovered surface-to-air missiles in a weapons cache left by the Nusra militants in an area captured by Hezbollah and then taken over by the army.
US imposes new sanctions on North Korean oil, coal trade -- The Trump administration on Tuesday announced new sanctions in response to North Korean nuclear and ballistic missile tests, including penalties aimed at shutting down coal and oil flows into and out of North Korea. The Department of the Treasury's Office of Foreign Assets Control designated 16 companies and individuals accused of supporting North Korea's nuclear and missile programs and participating in North Korean energy trades. "Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programs, and isolating them from the American financial system," Treasury Secretary Steven Mnuchin said in a statement. The sanctions come amid increasing global pressure to isolate North Korea, including a embargo on oil flows into the country. In Seoul Tuesday, a US congressional delegation, including Senators Ed Markey, Massachusetts-Democrat, and Chris Van Hollen, Maryland-Democrat, called for a ban on energy exports from China and Russia to North Korea, according to a report from NK News. "North Korea's trading partners must intensify and enact pressure to bring North Korea to the negotiating table: that starts with getting China to cut off the flow of oil to North Korea," Markey said, according to the report. China, North Korea's top oil supplier, does not report oil shipments to the country, but exports have declined dramatically since the end of the Cold War. North Korea's oil consumption averaged 76,000 b/d in 1991 and had fallen to 15,000 b/d in 2016, according to an Energy Information Administration report.