Sunday, September 10, 2017

slow recovery of Texas ports, refineries; US oil & gasoline prices remain distorted

most of news out of the oil and gas patch this week related to the gradual recovery of Texas and Louisiana oil port operations, Gulf of Mexico and Eagle Ford oil and gas production, Gulf refinery operations and the related product distribution Monday, the Colonial Pipeline from Houston to the New York area, which supplies about 60% of the incoming oil products to the Atlantic Coast, resumed pumping distillates and jet fuel; by Tuesday, they also resumed pumping Wednesday, almost half of the refinery capacity that had been shut down at the height of the flooding was coming back, with just 4 refineries still remaining totally shut down, and 13 refineries in the process of restarting, which we've learned is a fraught and dangerous the beginning of the week, at least 54 tankers with capacity to carry more than 33 million barrels remained in a queue off the Gulf Coast, and although the ports around Houston were open, draft restrictions due to silting of the ship channels remained in place, and as a result Texas oil imports were only proceeding at one fifth of their normal pace...

oil prices remained volatile; US contract prices for October fell to as low as $45.96 a barrel on Wednesday of last week as export ports and refineries closed, then moved back up to as high as $49.16 a barrel this Wednesday, as Harvey damage concerns eased, only to fall back to $47.48 a barrel on Friday as the refinery recovery seemed to be going slower than expected...note that these price quotes are only for US oil and also only for the near term; for instance, the front month price quote for North Sea Brent oil, the international benchmark price, only fell to as low as $50.73 a barrel on Wednesday of last week, and then recovered to close this week at $53.78 a barrel, more than 13% higher than the US price for the same time, US oil prices for December delivery only fell to close as low as 46.94 at last week's nadir, and then recovered to $48.56 a barrel on Friday, whereas the October 2018 contract price for oil only fell to as low as $48.26 a barrel on Wednesday of last week, and then recovered to close this week at $49.94 a barrel, more than 5% higher than the current oil price...meanwhile, contract prices for October gasoline had risen by as much as 28 cents a gallon to $1.7792 a gallon last week; those prices fell every day this week and ended Friday at $1.6476 a gallon as supply threats were gradually ameliorated...meanwhile, gasoline prices at the pump averaged 30 cents a gallon higher nationally and 50 cents a gallon higher in Texas, as orders to evacuate all 5.6 million people living in Florida put new pressure on gasoline supplies in the Southeast...

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 September 1st, largely reflects the effect of Hurricane Harvey on oil supplies and consumption as it stalled over Texas and the adjacent Gulf of Mexico for most of the week; thus it indicates a drop in oil imports, as ships avoided the affected ports, a drop in oil exports, as the primary US oil export facilities were shut down, a drop in oil production, as output from the Eagle Ford shale was shut in as the hurricane transversed the area, a drop in oil refining, as up to 25% of refining capacity was shut down by the end of the week, and an increase in US crude oil supplies, because without refineries, crude oil is pretty useless...

our imports of crude oil fell by an average of 822,000 barrels per day to an average of 7,083,000 barrels per day during the week, while at the same time our exports of crude oil fell by 749,000 barrels per day to an average of 153,000 barrels per day, which meant that our effective imports netted out to an average of 6,930,000 barrels per day during the week, 73,000 barrels per day less than during the prior the same time, our field production of crude oil fell by 749,000 barrels per day to an average of 8,781,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 15,711,000 barrels per day during the cited week... 

during the same period, US oil refineries were using 14,472,000 barrels of crude per day, 3,253,000 barrels per day less than they used during the prior week, while at the same time 614,000 barrels of oil per day were being added to 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 and from oilfield production was 625,000 more barrels per day than what refineries reported they used during the week plus what was added to account for that discrepancy, the EIA needed to insert a (-625,000) 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"...note that last week's unaccounted for crude was +421,000, so this week's unaccounted oil represents a swing of 1,046,000 barrels per day, and thus we can surmise that the week over week oil data is accordingly suspect...

US oil refineries were operating at 79.7% of their capacity in using those 14,472,000 barrels of crude per day, down from the 12 year high of 96.6% of capacity the prior week, and the lowest capacity utilization rate since the first week of February 2010....the 14,472,000 barrels of oil refined this week was the least oil refined in the US since April 19, 2013, 14.5% less than the 16,615,000 barrels of crude per day.that were being processed during week ending September 2nd, 2016, when refineries were operating at 93.7% of capacity, and roughly 7.5% below the 10 year average of 15.7 million barrels of crude being refined per day at this time of year...for a visual on how bad US refinery throughput was hit by Harvey, we'll include a graph of that below...

Sept 8 2017 refinery throughput for Sept 2 (Harvey)

the above graph comes from a weekly emailed package of oil graphs from John Kemp, senior energy analyst and columnist with Reuters...the graph shows US refinery throughput in thousands of barrels per day by "day of the year" for the past ten years, with the past ten year range of our refinery throughput for any given date shown in the light blue shaded area, and the median of our refinery throughput, or the middle of the 10 year daily range, traced by the blue dashes over each day of the year....the graph also shows the number of barrels of oil refined for each week in 2016 traced weekly by a yellow line, with our year to date oil refining for 2017 represented in red...thus we can see that for most all of 2016, US oil refining was either at seasonal record highs or near the top of the average range, and that since April of this year, US oil refining had consistently beat the previous records by a large margin...however, oil refining for the week ending September 1st represents a drop of 18.3% from last week's record, a shortfall we might expect to see continue for a least another week as flooded refineries gradually recover...

now, i know no one can look at that chart without asking what caused that obvious plunge to 11,500 gallons per day in the 10 year i can determine that was the result of Hurricane Ike of 2008, which made landfall on Galveston Island on September 13 as a strong Category 2 hurricane, with a storm surge of over 15 feet from Galveston into southern Louisiana...Ike also knocked out power to most of the Houston area at the same time, so while it didn't cause flooding, it certainly could have been responsible for a similar reduction of refining capacity in the week that it hit, which coincidentally marked the onset of the Global Financial Crisis and Great Recession...

with this week's big hit to US oil refining, gasoline production from our refineries fell by 1,085,000 barrels per day from last week's record to 9,517,000 barrels per day during the week ending September 1st, the lowest gasoline output since March....that left this week's gasoline output at a level 6.4% lower than the 10,173,000 barrels of gasoline that were being produced daily during the comparable week a year addition, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 563,000 barrels per day to 4,492,000 barrels per day at the same time, which was 10.7% less than the 5,031,000 barrels per day of distillates that were being produced during the week ending September 2nd last year.... 

with this week's reduced gasoline production, our end of the week gasoline inventories fell by 3,199,000 barrels to 226,738,000 barrels by September 1st, the 9th decrease in gasoline inventories in 12 weeks...that was even as our domestic consumption of gasoline fell by 683,000 barrels per day to 9,163,000 barrels per day, the least since April, and as our imports of gasoline fell by 364,000 barrels per day to 475,000 barrels per day, and as our exports of gasoline fell by 418,000 barrels per day to 319,000 barrels per day...with significant gasoline supply withdrawals in 9 out of the last 12 weeks, our gasoline inventories are now half a percent below last September 2nd's level of 227,793,000 barrels, while they are still 5.7% higher than the 214,547,000 barrels of gasoline we had stored on September 4th of 2015, and roughly 8% above the 10 year average of gasoline supplies for this time of the year...

meanwhile, with the big decrease in our distillates production, our supplies of distillate fuels fell by 1,396,000 barrels to 147,767,000 barrels over the week ending September 1st, the first distillates inventory decrease in 4 weeks…that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 153,000 barrels per day to 4,063,000 barrels per day, while our exports of distillates fell by 384,000 barrels per day to 738,000 barrels per day and our imports of distillates rose by 26,000 barrels per day to 110,000 barrels per day...after this week’s decrease, our distillate inventories were 6.6% lower than the 158,135,000 barrels that we had stored on September 2nd, 2016, and 2.1% lower than the distillate inventories of 150,903,000 barrels of distillates that we had stored on September 4th of 2015, even as they remain more than 4% above the 10 year average for distillates stocks for this time of the year

finally, with the big drop in use of crude by our refineries, our commercial crude oil inventories rose for only the 3rd time in the past 22 weeks, increasing by 4,580,000 barrels to 457,773,000 barrels as of September 1st, an increase not even as large as the prior week's decrease...however, while our oil inventories as of September 1st were 3.8% below the 480,725,000 barrels of oil we had stored on September 2nd of 2016, they were 8.5% higher than the 426,062,000 barrels in of oil that were in storage on September 4th of 2015, and up considerably from the normal level for our oil supplies in the years before the oil glut started building up, ie., 41.2% higher than the 327,428,000 barrels of oil we had in storage on September 5th of 2014...  

This Week's Rig Count

US drilling activity increased for the 4th time in the past 11 weeks during the week ending September 8th, after a string of 23 consecutive weekly increases earlier this year, but the count still remains lower than during July and August....Baker Hughes reported that the total count of active rotary rigs running in the US rose by 1 rig to 944 rigs in the week ending Friday, which was 436 more rigs than the 508 rigs that were deployed as of the September 9th 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 was down by 3 rigs to 756 rigs this week, which still left oil rigs up by 342 over the past year, while their count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, the same time, the count of drilling rigs targeting natural gas formations increased by 4 rigs to 187 rigs this week, which was 95 more rigs than the 92 natural gas rigs that were drilling a year ago, but still way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 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 was unchanged at 16 rigs this week, as was the total offshore both cases, that was down from 18 offshore in the Gulf and in total a year ago...however, a platform was set up and began drilling operations on an inland lake in southern Louisiana this week, for an 'inland waters' count of 5 rigs, the same as a year ago... 

working horizontal drilling rigs fell by 1 rig to 793 rigs this week, which left the horizontal rig count still up by 397 rigs from the 396 horizontal rigs that were in use in the US on September 9th of last year, while their count was also still down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, the directional rig count was down by 5 rigs to 76 rigs this week, which was still up from the 48 directional rigs that were deployed on September 9th of 2016.... on the other hand, the vertical rig count was up by 7 rigs to 75 vertical rigs this week, which was also up from the 64 vertical rigs that were deployed during the same week 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 both tables, the first column shows the active rig count as of September 8th, the second column shows the change in the number of working rigs between last week's count (September 1st) and this week's (September 8th) count, the third column shows last week's September 1st 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 9th of September, 2016...      

September 8th 2017 rig count summary

other than the major producing states listed above, Alabama saw its rig count fall by a rig to 1 rig, which was also down from the 2 rigs active in Alabama in the same week last year, while Mississippi saw its rig count increase by 1 rig to 3 rigs, which was still down from the 4 rigs deployed in Mississippi on September 9th 2016..


Mahoning County Board again votes down fracking issues on ballot (WYTV) – The group that’s been trying to ban fracking in Youngstown is expected to file a lawsuit Thursday morning with the Ohio Supreme Court. This after the Mahoning County Board of Elections voted on Wednesday to keep its proposals off the November ballot. The Mahoning County Board of Elections and Youngstown’s anti-fracking group debated the merits of the new state law, which allows Election Boards to keep issues off the ballot which they find to be illegal or unconstitutional in Ohio. “I took an oath to follow the law and the constitution of the state of Ohio,” David Betras of Mahoning County BOE said. “It’s the law,” said Kathleen Berry, an anti-fracking protester. “It’s the law.” Berry dramatized the situation that the anti-fracking group was facing. Despite being defeated six times, it wants another ballot issue to ban fracking in Youngstown. But it also wants a second issue to limit campaign contributions in Youngstown to $100 and allow those contributions to be made only by city residents. “Because we have seen nothing but big business money thrown at the drinking water protection community bill of rights to defeat it — over and over again,” Lynn Anderson, an anti-fracking protester said. Attorney Joe Gurarino — representing Western Reserve Building Trades — asked the board to not allow the issues onto the ballot, saying that fracking is regulated by the state. And on the ballot issues… “Organizations such as labor unions have first amendment rights of their own,” Gurarino said. Election Board Chairman Mark Munroe said both proposals to amend Youngstown’s Charter. “Deal with matters that are governed by existing law and are clearly beyond the city’s authority modify,” he said. And with that, they voted 4-0 not to allow either issue on the Nov. 7 ballot.

Anti-fracking charter group files brief with high court  -- Athens News - A group proposing a charter form of government for Athens County has filed a merit brief with the Ohio Supreme Court arguing that the local elections board erred in rejecting the charter for the ballot, and asking the state high court to put the charter question to voters. In July, the Athens County Board of Elections rejected the Athens County Bill of Rights Committee’s (ACBORC) 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. As with initiatives in the previous two years, this charter proposal doubles as an effort to keep oil and gas horizontal hydraulic fracturing (fracking) out of Athens County, through prohibiting the use of local water for fracking operations. It also would outlaw future fracking waste-injection wells, of which Athens County already has several in operation. Last week, the Athens County Bill of Rights Committee (ACBORC) proposing the charter filed a merit brief with the Fourth District Court of Appeals, contending that the county Board of Elections unconstitutionally rejected the proposal and that the county Common Pleas Court improperly upheld that objection. This summer, Athens County Common Pleas Judge George McCarthy sided with the county Board of Elections and upheld its latest rejection of the charter. The group filed an appeal of McCarthy’s decision with the Fourth District Court of Appeals on July 28. The ACBORC also filed a protest of the elections board decision with Ohio Secretary of State Jon Husted. Earlier this month, Husted dismissed the protest without considering its merits, instead saying it was improperly filed.

Trump now has the votes to feed US fracking frenzy with new gas pipelines - Norwalk Reflector - Since February, the Federal Energy Regulatory Commission has lacked a quorum to decide on new projects, frustrating the oil and gas industry, which lobbied Trump and the Senate to fill vacant seats. Just before its August recess, the Senate delivered, approving the nominations of Republicans Neil Chatterjee and Robert Powelson to serve on the commission, commonly known as FERC. Energy lobbyists were giddy following the vote, optimistic the commission will quickly act on a backlog of multibillion-dollar gas pipelines proposed in states such as Ohio, Pennsylvania, the Virginias and North Carolina. Property rights advocates and some environmental organizations were less gleeful, fearful that Chatterjee and Powelson will rubber-stamp new pipelines with little regard to safety or landowner concerns. Chatterjee has served as an energy aide to Senate Majority Leader Mitch McConnell of Kentucky, and Powerson is a member of the Pennsylvania Public Utilities Commission, a panel known to be friendly to the oil and gas industry. These are boom times for pipeline developers, partly because of the enormous volumes of natural gas being fracked from the Marcellus Shale formation of West Virginia, Ohio and Pennsylvania. Supporters say this fracking could boost production of gas-fired electricity, bringing down prices and allowing utilities to switch from coal to a cleaner-burning fuel. Yet from New York to the Carolinas, landowners are resisting proposed pipelines. As McClatchy reported in May, many are stunned that private companies have been granted state authority to use eminent domain to secure right of way for the projects. Several have filed lawsuits, saying these projects violate antitrust laws or have polluted the environment. In Ohio, state regulators have accused developers of the $4.2 billion Rover Pipeline of multiple violations of state water quality laws. In Pennsylvania, homeowners have had their wells tainted by Sunoco’s construction of the Mariner East 2 pipeline, which would carry hazardous natural gas liquids to a Pennsylvania port for export to Europe. Last week, two ranking Democrats on Senate and House energy committees — Sen. Maria Cantwell of Washington and Rep. Frank Pallone Jr. of New Jersey — wrote FERC requesting an investigation into the Rover and Mariner East 2 pipelines. Some analysts have also raised concerns on whether there is a market for all the gas transmission lines that utilities are proposing. If utilities build too many pipelines, their customers could end up paying for that excess, unused capacity.

Local Gas and Oil Drilling Numbers On Rise This Year  - Wheeling Intelligencer - This increase in business coincides with the number of active drilling rigs for both Ohio and West Virginia being double that of this time last year. Oilfield services giant Baker Hughes counts 28 active rigs for Ohio, compared to 14 a year ago, while there are now 14 working in West Virginia, up from just seven this time in 2016. Also, Ohio Oil and Gas Association Executive Vice President Shawn Bennett said companies working in the Buckeye State have spent about $50 billion to drill, frack, install pipelines, build processing and fractionation plants, and conduct other work since 2011. Bennett said part of the reason for the industry’s optimism is the continued progress with several large pipeline projects to transport natural gas from the region. The Federal Energy Regulatory Commission recently approved the $2 billion Nexus Pipeline, while the $4.3 billion Rover Pipeline is also progressing. Other major pipeline projects in some form of permitting or construction are the $5.1 billion Atlantic Coast Pipeline, the $3 billion Atlantic Sunrise, the $1.4 billion Leach XPress, the $3.5 billion Mountain Valley Pipeline and the $2 billion Mountaineer XPress. Bennett said much of the conference this year will focus on the Royal Dutch Shell ethane cracker, which is now progressing in Beaver County, Pa. He said industry leaders remain optimistic about the potential PTT Global Chemical ethane cracker for Belmont County. In the oil and natural gas industry, “upstream” refers to drilling and fracking; “midstream” involves pipelines, processing plants and compressor stations; and “downstream” refers to an end-user, such as an ethane cracker. “We’re really going to be focusing on downstream opportunities, with a lot of emphasis on the Shell ethane cracker,” Bennett said. “The idea is to create a manufacturing renaissance in this region.”

In 'gasland' community, new tests revive old drilling debate -— The well water at Ken Morcom and Kim Grosso's house is laced with so much explosive methane that a Pennsylvania environmental regulator who went there to collect samples this summer decided it would be safer to coast her SUV down the driveway. Morcom and Grosso want to leave but doubt they could sell a house with tainted water. So, a few weeks ago, they asked the gas driller they blame for polluting their well to buy them out. "I was hoping they'd fix it. But I've given up hope," said Morcom, 49, who supports drilling but has become disillusioned with Houston-based Cabot Oil & Gas Corp. "Just let us out of the box." "The box" is the couple's 8-acre spread in rural Dimock Township. But Morcom could have been talking about Dimock itself. A patchwork of homes and farms about 150 miles north of Philadelphia, the community became a battleground for pro- and anti-drilling forces after state regulators found that Cabot — one of the biggest drillers in the vast Marcellus Shale gas field — had contaminated 18 residential wells with methane. Homeowners sued, accusing the company of polluting their water with toxic chemicals and methane. Activists and celebrities descended. It's a much quieter place these days. But the questions surrounding Dimock's groundwater have yet to be resolved — and the federal government is back for the first time in more than five years to investigate ongoing claims of contamination. Public health experts visited 25 homes last month to test for bacteria, gases and chemicals. The testing has resurrected an old debate about the groundwater in Dimock, whose plight was the focus of the Emmy Award-winning documentary "Gasland." State regulators say Cabot still hasn't fixed the water. Cabot says the methane was there long before it began drilling. It's an argument that's been going on for eight years. 

Environmentalists oppose Illinois' approval of fracking permit -  Environmental activists on Friday said the state of Illinois' approval of its first permit to allow a specific kind of oil and gas fracking would increase the risk of harm to the environment and residents' health. An Illinois Department of Natural Resources office determined on Thursday that Woolsey Operating Co's application to perform high volume horizontal hydraulic fracturing operations in White County in southern Illinois met all fracking rules and requirements.   Critics say the practice has polluted water supplies, while backers say it supplies needed energy resources.The permit was the first one approved under 2014 state rules and regulations for high volume horizontal hydraulic fracturing. That process is a riskier technique that became widespread in the early 2000s, said Anthony Ingraffea, a retired Cornell University engineering professor who has conducted research in the oil and gas industry as well as for environmental groups, including in Illinois. The process uses 100 times more fluid and produces more waste that is pumped underground and has caused earthquakes, Ingraffea said. It also causes noise and air pollution."White County is not only particularly vulnerable to the impacts of fracking due to high levels of naturally occurring radioactivity and seismic activity, but also already faces periodic oil and brine spills," Food & Water Watch, a group advocating for healthy food and clean water, said in a statement.

Fracking Has an Enormous Radioactive Waste Problem—Just Ask Kentucky  -- Fracking is used to extract oil and natural gas from shale, but without question, water is the star resource. A Duke University study found that fracking consumed roughly 250 billion gallons of water between 2005 and 2014 to unlock the hydrocarbons but also generated about 210 billion gallons of briny, chemically laden flowback water during those same years.  This produced water contains a cocktail of industry-secret chemicals, heavy metals and naturally occurring toxic or radioactive elements like selenium and radium. To deal with the fluids, energy companies either reuse it, store it in surface ponds, send it to wastewater treatment facilities, or truck it to deep injection wells.  But these disposal methods aren’t always foolproof. A leaky pond or an ill-equipped wastewater treatment plant can inadvertently leach contaminants into groundwater or drinking water supplies, meaning public health and the environment could be at risk of exposure.  Kentucky is still legally wrangling over its handling of more than 1,000 cubic yards of out-of-state radioactive fracking waste that ended up at the Blue Ridge Landfill in Estill County two years ago. According to the Richmond Register, the waste came from drilling operations in Pennsylvania, West Virginia and Ohio and was further concentrated by a wastewater treatment plant in Fairmont, West Virginia. The facility’s treatment process apparently increased the waste’s radionuclides and radioactivity, with an intensity nearly 400 times higher than EPA standards.The Bluegrass State does not allow the transport and disposal of radioactive waste from other states, so how did it end up in this hot mess? In short, West Virginia regulators realized the toxicity of the sludge and refused to dump it in the state’s own landfills, so the Kentucky dump decided to accept it.  Kentucky’s fracking waste problem is not an isolated case. The CPI report explains, “the four states in the Marcellus are taking different approaches to the problem; none has it under control. Pennsylvania has increasingly restricted disposal of drilling waste, while West Virginia allows some landfills to take unlimited amounts. Ohio has yet to formalize waste rules, despite starting the process in 2013. New York, which banned fracking, accepts drilling waste with little oversight.”

Colonial delays restart as fuel prices keep rising after Harvey - Colonial Pipeline, the biggest U.S. fuel system, delayed reopening a segment of its system in Texas that was shut due to Hurricane Harvey, increasing worries about rising retail prices and the domestic distribution of gasoline and distillates. The company, which had originally scheduled a Sunday restart for the segment going from Houston to Hebert, Texas, said it planned to reopen the distillates line on Monday. The line would be ready to move gasoline on Tuesday, it added. Colonial's 5,500-mile system begins in Houston and ends in Linden, New Jersey, serving seven airports and other facilities. The pipeline hauls more than 3 million barrels per day (bpd) of refined products including gasoline, diesel and jet fuel from the Gulf Coast refining hub to the populous U.S. Northeast. The firm also planned to allow shippers to pump transitionary-grade Gulf Coast CBOB gasoline, as refiners ran short of the summer grade product due to Hurricane Harvey. U.S. gasoline prices continued to rise through the weekend amid fears of shortages, despite the restart of several key refineries on the U.S. Gulf Coast that had been crippled by Hurricane Harvey. The storm took down a quarter of U.S. oil refining capacity, hit oil and gas platforms along the Gulf and lifted average gasoline prices by more than 20 cents since Aug. 23.  Refiner Phillips 66 said on Sunday that it requested a Jones Act waiver to its Alliance refinery in Louisiana, but the petition was still pending.  The Jones Act mandates the use of U.S.-flagged vessels to transport goods between U.S. ports. The CBP has occasionally allowed exemptions for oil and gas operators to use often cheaper, tax-free, or more readily available foreign flagged vessels.

US Gulf Coast energy infrastructure shut due to Harvey - Already, gasoline prices in the US have hit $2 per gallon for the first time since 2015, according to Reuters, as flooding from Harvey knocked out nearly a quarter of USA refineries, while the storm moves inland over Louisiana.The U.S. Customs and Border Patrol said it received a request to waive the Jones Act, which mandates the use of U.S. -flagged vessels to transport merchandise between the nation's ports.US gasoline futures jumped 4 percent to settle at 1.7833, the highest in more than two years.Exxon may begin shutting units as early as Tuesday at its 362,300-barrel-per-day (bpd) Beaumont refinery in east Texas due to high water in the plant, said sources familiar with the company's plans.In the first tapping of the reserve for an emergency since Hurricane Isaac in 2012, two emergency exchanges of oil of 500,000 barrels will be delivered to the Phillips 66 (NYSE: PSX) refinery in Lake Charles, La., the department said. Still, Delaware gas price average, as of August 30, was up to $2.30 per gallon, up five cents overnight and nine cents on the week (since August 23).The shutdowns led the USA government to tap its strategic oil reserves for the first time in five years on Thursday, releasing 500,000 barrels of crude to a working refinery in Louisiana.Nationwide, pump prices have surged - the average for a gallon of regular gasoline rose from about $2.35 a week ago to $2.45 now, AAA reported. The biggest US refiner, Motiva's Port Arthur facility, which can handle 600,000 barrels of crude daily, will be shut for at least two weeks, however, according to sources familiar with plant operations. USA gasoline futures on Tuesday rose 0.9 percent to $1.73 a gallon, and have jumped about 6 percent since last Wednesday's prestorm close. That is up 28 cents per gallon in one week, the GasBuddy figures indicate.Suppliers in the Chicago area were taking steps to prevent shortages, and banking on hope as wholesale prices continued to increase. The expected United States crude build-up today widened the WTI discount to Brent to US$5.64 per barrel, its widest in over two years.

Oil Tanker Logjam Grows To 54 Ships As Gulf Ports Remain Closed - On Tuesday, just as Hurricane Harvey was peaking, we reported that according to ship-tracking data compiled by Bloomberg, as well as MarineTraffic real-time tracking, at least 25 tankers carrying almost 17 million barrels of imported crude oil were drifting near Texas and Louisiana ports, unable to offload because of closures from Tropical Storm Harvey. Since then the situation has deteriorated by more than double, and as of Friday evening, Bloomberg reports that 54 tankers with capacity more than 33 million barrels either to deliver imported crude from Latin America, Europe, Caribbean, Africa and Middle East or receive U.S. supplies are drifting off U.S. Gulf Coast as several key ports remain closed while others are open with restrictions. The historic "tanker traffic jam", last observed nearly two years ago as traders scrambled to store crude tankers in the same region in hopes of contango, can be seen on the Marine Traffic map below, only this time it has little to do with the shape of the oil strip, and everything to do with the logistical complications following Harvey :  According to Bloomberg, as of Sept. 1, 37 Aframaxes, 3 VLCCs, 8 Suezmaxes, 6 Panamax tankers are currently waiting off ports of Corpus Christi, Houston, Galveston, Freeport, Texas City, Beaumont, Nederland, Port Arthur, Port Neches, Sabine and Lake Charles, La. This is 8 more then the 29 tankers carrying 18.6mm bbl as of Aug. 31. That said, the situation is slowly but surely getting resolved as more ports are starting to let traffic sneak through. On Friday, the port of Corpus Christi reopened to ship traffic, making way for seven refineries in the area to go back online. The Texas Gulf Coast supplies one-fourth of the nation’s oil and gas. Hurricane Harvey caused a severe hiccup in the gasoline supply chain over the last week, creating consumer panic and long lines at gas stations.

Petrochemicals factbox: Ports begin to re-open; additional FMs announced -- Port Houston, the second-largest petrochemical port in the world, allowed ships to access one of its two container ports and Norwegian chemical shipper Odfjell's terminal on Friday as energy infrastructure walloped by Harvey continued showing signs of recovery. Multiple chemical producers still had force majeures in place, telling customers they would not be able to fulfill their contracts because of Harvey, often because logistics were stalled by the storm. Harvey dumped more than 51 inches of rain in the Houston area after coming ashore at the middle of the Texas coast a week ago as a Category 4 hurricane, forcing more than 50% of US ethylene capacity to shut down. Port Houston said no ships could yet move north of the Bayport container terminal, which is just north of Odfjell's terminal near the mouth of the Houston Ship Channel. However, barges and tug boats could traverse the channel and nearby ports in Galveston, Texas City and Freeport. However, ports in Beaumont, Port Arthur and Orange in southeast Texas remained closed and may not open to vessel traffic until Tuesday or Wednesday next week, according to the Sabine Pilots, the organization that oversees vessel movements and safety for those ports. Currents from Harvey's floodwaters were too strong to allow vessel traffic. * Arkema CEO Rich Rowe said the company has little choice but to wait for warming organic peroxides in eight containers at the company's Crosby, Texas, site to ignite and burn in the coming days. A ninth such container suffered two explosions early Thursday. The peroxides produced at the plant are used to make PE, PP and PVC, and must be refrigerated to remain stable. Harvey left six feet of water at the site, which rendered multiple refrigeration systems inoperable. Rowe said it was not safe to approach the remaining containers.

Colonial aims to restart ex-Houston distillates line Monday, gasoline line Tuesday  - Colonial Pipeline, the largest US refined product pipeline, now aims to restore its diesel and jet fuel shipments from Houston on Monday and gasoline shipments on Tuesday, the company said Sunday. The pipeline was previously targeting a Sunday restart of the section of its system between Houston and Hebert, Texas, which it shut because of flooding from Hurricane Harvey. The system continues to operate from Louisiana to the Northeast.  "Colonial continues to ship as much gasoline and other refined products as available from Louisiana-based refineries and other refineries on the Colonial system east of Lake Charles, and will continue to do so as markets return to normal," the company said in a statement.  Half of the 26 refineries that connect to the Colonial system are located between Houston and Lake Charles, which suffered catastrophic flooding during Harvey. The Colonial system runs from Houston to Linden, New Jersey, and supplies about 60% of the incoming supply of gasoline into the Atlantic Coast. Colonial has the ability to ship 1.37 million b/d of gasoline on its Line 1 and 1.16 million b/d of middle distillates on Line 2.  Colonial said Wednesday a lack of supply east of Lake Charles was forcing it to suspend service. On Thursday, it said deliveries would be "intermittent and dependent on terminal and refinery supply."   The reopening of the Calcasieu Ship Channel early Thursday meant that Lake Charles' three refineries were no longer cut off from crude tanker deliveries and could resume production. The area has 789,000 b/d of refining capacity: Citgo's 425,000 b/d plant, Phillips 66's 260,000 b/d Westlake plant and Calcasieu Refining's 104,000 b/d plant.

U.S. Gulf Coast Refiners Begin Recovery -- As much of the U.S. shut down for Monday’s Labor Day holiday, Gulf Coast refiners continued their recovery from the devastation of Hurricane Harvey. Valero Energy Corp. returned two Texas refineries to pre-storm fuel-making rates while three other plants were in various stages of resuming operations, said Lillian Riojas, a spokeswoman for the San Antonio-based company. Exxon Mobil Corp. began shipping gasoline and diesel in Houston-area pipelines, although its Beaumont, Texas, refinery was too flooded to turn back on. Flint Hills Resources LLC and Citgo Petroleum Corp. also were in the process of resuming production, according to Genscape Inc. Gasoline futures surged to a 26-month high last week as Harvey’s churn across southeast Texas and Louisiana knocked out refineries, pipelines and ports responsible for producing and dispatching much of the continent’s gasoline, diesel and jet fuel. The rally began to fizzle as domestic refiners bailed out swamped plants and resumed operations, while European and Asian traders swooped in with cargoes to capture profits. The roller-coaster may continue, with another major hurricane moving across the Atlantic Ocean toward the Caribbean. “We have seen a fair amount of refinery capacity return online but there still is a significant amount that is still offline between the Houston-Beaumont-Port Arthur region,” “The market is pricing in a rather quick recovery in the Houston area but it might still be several weeks for the Houston area refiners to return to full production.”

Colonial Pipeline restarts pumping on distillates line from Houston --Colonial Pipeline, the largest US refined product pipeline, has resumed pumping of diesel and jet fuel shipments on its Line 2 from Houston, the company said Monday. "Line 2 has resumed operation from Pasadena and Houston," the company said in a notice to shippers.Colonial shut down pumping from all Texas locations on its system in the wake of Hurricane Harvey. Smaller volumes of products on Line 2 and the gasoline-carrying Line 1 were flowing last week from Lake Charles, Louisiana, and points further east.Colonial is hoping to restart gasoline flows from Houston on Line 1 Tuesday.The pipeline has previously been targeting a Sunday restart of the Texas potion of Lines 1 and 2.Half of the 26 refineries that connect to the Colonial system are located between Houston and Lake Charles, which suffered catastrophic flooding during Harvey. The Colonial system runs from Houston to Linden, New Jersey, and supplies about 60% of the incoming supply of gasoline into the Atlantic Coast. Colonial has the ability to ship 1.37 million b/d of gasoline on its Line 1 and 1.16 million b/d of middle distillates on Line 2.

Motiva plans Port Arthur restart (Argus) — Motiva plans to restore 40pc of rates at its 600,000 b/d refinery in Port Arthur, Texas, this weekend, the company said today. The facility, which shut amid heavy flooding in the Port Arthur area on 30 August, could reach that limited throughput 10 September if workers can clear equipment checked for storm damage, the company said. Motiva is the US refining subsidiary of Saudi Aramco. The Port Arthur refinery is the single largest in the US. Hurricane Harvey's remnants dropped 47 inches (120cm) of rain in the Beaumont and Port Arthur area last week, including 12.5 inches of rainfall in less than 12 hours.

Since Harvey, gas prices at the pump are up 50 cents a gallon - Harvey’s strike at the Gulf Coast has caused gas shortages and raised prices across Texas and the United States, industry experts said on Tuesday. Prices started to ease during the weekend, but Hurricane Irma, while still well off shore, started to send people in Florida scrambling to fill up their tanks and Gov. Rick Scott suspended highway tolls so people could more easily leave the area.The oil refineries on the Texas Gulf Coast account for half of U.S. refining capacity and produce a quarter of the nation’s gasoline.Nearly 10 percent of the nation’s refineries remained shut on Tuesday including Saudi Aramco’s 603,000 barrel-a-day Motiva plant and ExxonMobil’s 362,300 barrel-a-day Beaumont plant.Other refineries remain at 50 percent capacity, including ExxonMobil’s Baytown refinery, with 560,500 barrels a day, the nation’s second biggest after Motiva.The wholesale price of a gallon of regular unleaded gasoline in San Antonio jumped 49.85 cents during the past two weeks. Prices jumped 41.25 cents a gallon in Austin and 42.97 cents in Houston, according to Matthew Kohlman, senior managing editor of S&P Global Platts, an industry news group. Once retailers added in a few pennies, costs shot up more than 50 cents a gallon at the pump to a Texas statewide average of $2.53, according to the Automobile Association of America. The national average price is up 30 cents a gallon.

Harvey may pinch some Gulf Coast refining, chemical projects - Oil and petrochemical plants along the U.S. Gulf Coast intend to go ahead with plans for near record spending on expansions next year, despite Hurricane Harvey driving up labor costs and slowing work, experts said. Harvey largely spared oil and petrochemical plants along the U.S. Gulf Coast from significant damage but thousands of homes and businesses were not as fortunate. Refiners and recovery projects will compete for the same labor, driving up costs or causing labor shortages. Industrial investment in the Gulf Coast is expected to hit $51.9 billion next year, near the 2015 peak, requiring an army of pipefitters, ironworkers and other craftsman, said Industrial Information Resources (IIR), which tracks labor supply for refiners and other industrial companies. "We had a labor shortage before Harvey, but now it's significantly worse," said IIR's Anthony Salemme. "It's going to spread to soft crafts like painters and insulators." Investments have soared in recent years because the shale revolution fed off an existing infrastructure. The region's deep water ports and expanding pipeline and storage networks offer an easy outlet to global markets. It also boasts a welcoming regulatory climate and skilled workforce. Since 2010, $85 billion worth of petrochemical projects have started or been completed across the United States, nearly all of them in the Gulf Coast region, according to the American Chemistry Council. But the concentration along the Gulf of Mexico leaves these facilities and supporting networks exposed to the brutal force of tropical storms and hurricanes, as Harvey laid bare last month.The storm shut roughly a quarter of the nation's refinery capacity and more than a dozen petrochemical plants halted operations. Ports were closed and key fuel pipelines serving the Midwest and U.S. Northeast were partially or completely shut, driving up pump prices as fears of fuel shortages took hold. Preliminary assessments suggest that storm's hit to the region is not deterring companies from going ahead with existing projects. But global commodities buyers such as Ineos Group and Reliance Industries Ltd that relied on existing facilities shut by the storm may now consider putting some warehouses and stock elsewhere.

Oil Factbox: Colonial Pipeline restarts gasoline Line 1 - Colonial Pipeline, the largest US refined products pipeline, resumed gasoline shipments on its Line 1 from Houston and Pasadena, Texas, the company said Tuesday. That returned the full system to service after Hurricane Harvey knocked out pumping from all Texas locations. Colonial resumed pumping of diesel and jet fuel shipments on its Line 2 from Houston on Monday.Valero Energy, the largest independent US refiner, has told federal regulators the ramp-up of its Houston-area refineries after Harvey could be stalled by a snag over gasoline specifications allowed on Colonial.The refiner said it wants to move winter-grade gasoline on the pipeline, in line with the US Environmental Protection Agency's waiver lifting summer-grade gasoline requirements in 38 states and the District of Columbia two weeks early.Colonial filed its own emergency request to the Federal Energy Regulatory Commission asking for the same action.  Enterprise Products Partners has restarted "substantially all of its major assets impacted by Hurricane Harvey," the company said. Among the units back online are its eight NGL fractionators, six propylene splitters, isomerization facility and octane enhancement unit at the Mont Belvieu, Texas, hub, as well as ethane and LPG loading terminals on the Houston Ship Channel. * Motiva aims to return its 603,000 b/d Port Arthur, Texas, refinery -- the nation's largest -- to service by Sunday, at initial rates of about 40% of capacity, the company said Tuesday. "Motiva's Port Arthur Refinery is in the final phases of equipment assessments and initial phases of refinery start up. We expect the refinery to initially return to approximately 40% production by the end of this weekend, provided that the final assessments meet our operational standards," the emailed statement said. (see refinery list)

Oil Factbox: Industry prepares for Hurricane Irma as Texas refineries recover --Texas refiners and pipelines Wednesday were still in the process of returning operations from the impact of Hurricane Harvey and the US oil industry further east was preparing for Hurricane Irma.  Most of the Texas refineries brought down ahead of Harvey were on their way back Wednesday, with Phillips 66 the latest to announce it had begun a restart Tuesday of its 247,000 b/d Sweeny plant.  Roughly 977,800 b/d of refining capacity remains down, while another 2.75 million b/d of capacity is in the process of returning. Assuming the returning refineries are operating at 50% of capacity, the total downed capacity comes to roughly 2.35 million b/d, or 12.7% of US capacity.The market is now watching Irma, which is moving across the Caribbean and heading to Florida by the weekend.Fuel retailers across Florida reported sporadic shortages Wednesday but expect more outages as residents from across the state, especially those in the southern parts, evacuate ahead of the Category 5 hurricane.  The state depends on barge shipments rather than pipelines for 97% of its refined products. Refined products are shipped regularly into Port Everglades, on the southeast coast. Petroleum throughput at Port Everglades was 121.07 million barrels in 2016, according to the port's website. South Florida ports were open Wednesday.At least one offshore oil producer, BP, is already evacuating nonessential personnel in the US Gulf of Mexico ahead of Irma. * Roughly 977,800 b/d of Texas refinery capacity remained down. Assuming the plants that are returning are at 50% of capacity, that would put the figure closer to 2.35 million b/d, or 12.7% of US capacity. Full shutdown: (Company: Location -- Capacity (b/d)):

  • ExxonMobil: Beaumont, TX -- 362,300
  • Buckeye: Corpus Christi, TX -- 50,000
  • Shell: Deer Park, TX -- 340,000
  • Total: Port Arthur, TX -- 225,500
The Galveston Bay Entrance Channel, Outer Bar Channel, Inner Bar Channel and Bolivar Roads Channel are open, as are the ports of Galveston and Texas City. Freeport is open, albeit with a maximum draft restriction of 38 feet. As draft restrictions remain in place, there has been significant lightering activity. Texas waterborne imports of crude remain sluggish nearly two weeks after Hurricane Harvey made landfall, according to Platts Analytics Bentek Energy and US Customs data. The state's ports imported just 3 million barrels of crude in the past 10 days, roughly one-fifth their typical intake, as port authorities along the coast work to resume normal traffic flows.

Oil surges as refineries restart after Harvey; Irma is trouble for gas -- Oil and gasoline prices snapped back to levels seen before Hurricane Harvey disrupted about a quarter of U.S. refining capacity, but another incoming storm could cut fuel demand and weigh on prices, analysts said on Tuesday. U.S. West Texas Intermediate crude jumped 2.9 percent, or $1.37, to close at a three-week high of $48.66 as refineries sidelined by Harvey started processing oil into fuels. WTI touched a seven-week closing low of $45.96 last Wednesday. U.S. gasoline futures for October delivery were down 2.8 percent to $1.6989 per gallon shortly before WTI's settlement. The September contract rose as high as $2.17 a gallon last week. "What we're seeing here today is really a reversal of the activity we saw in the previous week as oil pipelines were shut down and refineries were shut down," said Andy Lipow, president of Lipow Oil Associates. About 3 million barrels a day, or 16 percent of U.S. refining capacity, remained offline or in preliminary restart mode on Monday evening, according to Lipow. That cut about 1.2 million gallons per day of gasoline supply, roughly equal to consumption in California, Oregon and Washington combined. Refineries were mostly up and running in Corpus Christi, Texas, where Harvey made landfall as a Category 4 hurricane. Plants in Lake Charles, Louisiana, near Harvey's second landfall last week, were also churning out fuel after briefly reducing activity. Major pipelines that move fuel from Houston to Dallas, St. Louis, Tulsa and Chicago were back in operation. The critical Colonial Pipeline that runs from Houston through the Southeast and up to New Jersey fixed a partial outage on its diesel line and expected its gasoline line to be running on Tuesday.

Gas factbox: About 8.1% of Gulf of Mexico output remains offline -- Houston and the Gulf Coast region of Texas continued to dry out Monday following the days of historic flooding that Harvey delivered. The storm made landfall as a hurricane, but did most of its damage to energy infrastructure after it was downgraded to a tropical storm. About 8.1% of daily Gulf of Mexico natural gas output remained offline Monday, 10 days after Harvey began to wreak havoc to the center of US energy infrastructure. It was a slight improvement from 8.4% offline Sunday. The Bureau of Safety and Environmental Enforcement reported that, based on data from operator reports submitted as of 11:30 am local time, about 259.2 MMcf/d of Gulf gas production of 3.2 Bcf/d was shut in. Personnel remained evacuated from 14 production platforms, or 2% of the 737 manned platforms in the Gulf of Mexico, down from the 30 production platforms that saw evacuations as of Sunday. At Cheniere Energy's Sabine Pass LNG export terminal in Cameron Parish, Louisiana, tankers still were unable to access the site Monday because inbound and outbound traffic along the Intracoastal Waterway feeding the terminal remained suspended. A dispatcher for Sabine Pilots, which navigates vessels along the waterway, said the suspension would be in effect until further notice. Another dispatcher said Sunday the suspension could be lifted Tuesday or Wednesday. The last cargo to leave Sabine Pass was August 24, the day before Harvey came ashore along the Gulf Coast.

Potential Natural Gas Storage Scenarios for the Balance of Injection Season --Hurricane Harvey has dissipated, but the affected areas, including energy infrastructure and operations, are still in recovery mode and will be for some time to come. In the natural gas market, production fell as low as 71.3 Bcf/d this past week, and has now rebounded to pre-storm levels near 72 Bcf/d. But exports to Mexico, which were averaging near 4.4 Bcf/d in the 30 days prior to Harvey, were at 3.6 Bcf/d last Friday, still lagging 0.8 Bcf/d (18%) behind their pre-storm level, after dropping to as low as 2.85 Bcf/d last week. Deliveries for LNG export are also down nearly 1.0 Bcf/d (47%) from the 30-day average to just under 1.0 Bcf/d last Friday and dropped to about 475 MMcf/d over the weekend. Meanwhile, U.S. consumption — in the power, industrial and residential and commercial sectors — this past week averaged 62.8 Bcf/d, down 6.0 Bcf/d (9%) versus last year and also 1.6 Bcf/d (3%) lower than the five-year average for this time. In another important market development, Energy Transfer Partners’ new Rover Pipeline began partial service on Friday and deliveries rose to more than 500 MMcf/d over the weekend. What will these shifts mean for the gas market balance and storage inventory? Today, we continue our analysis of the gas market balance, this time with a forward look at potential storage scenarios for the balance of injection season.  We first considered potential supply and demand scenarios for the 2017 injection season in our late-March/early-April blog series You Keep Me Hangin’ On. At the time, the U.S. gas storage inventory was at 2,051 Bcf, 429 Bcf lower than at the same time in 2016. Based on that year-on-year deficit in storage, and given sluggish production growth and prospects for rising exports, we concluded that it would take exceptionally low gas consumption — from the power, residential and commercial and industrial sectors —to come in at three-year lows (2014 levels) in order for the national storage inventory to peak near record highs above 4,000 Bcf for the third consecutive year. What’s more, we found that it would take demand falling to well below 2016 levels for the U.S. storage inventory to even exceed 3,600 Bcf.

Cheniere's Sabine Pass receives first LNG tanker since Harvey - Cheniere Energy was preparing Wednesday to ship its first LNG export cargo from its Sabine Pass terminal in Louisiana since Harvey came ashore along the Gulf Coast as a powerful hurricane almost two weeks ago. The Rioja Knutsen tanker was allowed to dock at the terminal in Cameron Parish after being held in a holding pattern with numerous other vessels in the Gulf of Mexico due to strong currents and high water levels in the Intracoastal Waterway that feeds the facility."We managed to sneak her in today, barely," said Daniel Dubois, chief dispatcher for Sabine Pilots, which navigates vessels along the channel. "We're probably not going to do another one until she sails. The conditions aren't exactly favorable." Extra tugboats were required to guide the Rioja Knutsen to the Cheniere dock safely, Dubois said. If loaded immediately, it could depart as early as Thursday, he said. A Cheniere spokesman, Eben Burnham-Snyder, confirmed the arrival of the tanker but said he had no update on timing. "It is gradually easing," Dubois said of the vessel restrictions. "We've had some diversions when they found out it was going to be a while." The tanker would be the first to depart Sabine Pass since August 24, the day before Harvey came ashore and delivered five days of strong wind and punishing rain to the Houston area, before moving on to East Texas and southwest Louisiana. The Neches River, which feeds the Intracoastal Waterway, rose to record levels, making it dangerous for tankers with a deep draft to pass under bridges.

Meth, coke and oil: A drug boom in the Texas shale patch - (Reuters) - When Joe Forsythe returned to the West Texas oilfields last year after a stint in a drug rehab facility, he figured he had beaten his addiction to methamphetamine.  The 32-year-old rig worker and equipment handler lasted about a year before relapsing.  Forsythe’s experience and others like it reflect a painful flipside of the nation’s shale oil boom - a parallel increase in substance abuse, drug crime and related social ills. While drug use is a problem among industrial workers nationwide, it raises particular concern in the oil patch as U.S. production surges to record levels in what is already one of the nation’s most dangerous sectors - with a fatality rate about three times the average for other industries, according to 2015 federal statistics. Drug use is a significant factor in workplace injuries and crimes involving oilfield workers, according to drug counselors, hospital and police officials and court records in West Texas, the epicenter of the U.S. shale sector. As the shale revolution has spawned waves of hiring here since 2010, law enforcement authorities have tracked a boom in drug trafficking and related crime. In Midland and Ector counties, home to many Permian Basin oil workers, state and local police in 2016 seized more than 95 pounds of methamphetamine - up from less than four pounds in 2010. Meth and cocaine are stimulants of choice in the oil patch to get though long oilfield shifts, but alcohol and pain killers such as opioids are also widely abused - often to soften the crash after taking stimulants, drug addicts and counselors said. Drug charges in the industry town of Midland more than doubled between 2012 and 2016, to 942 from 491, according to police data. In neighboring Odessa, total drug arrests doubled between 2010 and 2016, to 1291 from 756, according to Odessa Police Department data.  The increase in drug crime stretched through two boom periods in the West Texas oil patch, before and after a crude price crash that hit in 2014.

Greenpeace v. Energy Transfer Partners: The Facts -- Greenpeace USA , Greenpeace International , and others are facing another meritless attack from Trump's go-to lawyers in an attempt to silence advocacy work and attack free speech . The latest corporation to sign on to the Kasowitz Benson Torres firm's bullying tactics is Energy Transfer Partners —the company behind the Dakota Access Pipeline . In response to the powerful protests led by Indigenous communities and climate activists, the firm has filed a lawsuit claiming billions of dollars in damages on behalf of Energy Transfer. Here's what you need to know.  In response to the powerful alliance of Indigenous communities and climate activists who protested Energy Transfer Partner's Dakota Access pipeline at Standing Rock, the Kasowitz firm has filed a Strategic Lawsuit Against Public Participation (SLAPP). The goal of this suit is to silence opposition by misrepresenting what happened on the ground at Standing Rock—making outrageous and racist claims that big green organizations like Greenpeace orchestrated the Indigenous-led movement at Standing Rock. This lawsuit is about silencing opposition in Donald Trump's America. While Greenpeace is named as a defendant in the lawsuit, its impacts aren't limited to us. This suit could have far-reaching consequences for journalists, advocacy organizations and anyone who values free speech. The Kasowitz firm is trying to challenge all of our abilities to speak out against corporate power and destruction. This is the second year in a row that the Kasowitz firm has filed a meritless lawsuit against Greenpeace and other public interest advocates on behalf of a corporation. In 2016, the plaintiff was Resolute Forest Products , Canada's largest logging company. That lawsuit made similarly baseless legal claims in an attempt to mislabel legal advocacy as criminal conduct through the use of U.S. racketeering laws (RICO), and presented constitutionally-protected free speech as defamatory. A hearing to dismiss the Resolute lawsuit is scheduled for Oct. 10, 2017 in the U.S. District Court in San Francisco.  These suits are part of a pattern of legal bullying, as desperate corporations and political hacks try to silence activists, journalists and anyone speaking out against injustice. Energy Transfer must know that the end of the fossil fuel era is upon us, and these attacks are a last gasp effort to retain relevance and an illusion of power. What they haven't seemed to realize is that none of us will quit until these pipelines are stopped for good.

TransCanada May Abandon Energy East Tar Sands Pipeline - TransCanada wants to suspend and may even cancel its proposed $15.7-billion Energy East pipeline, which would carry tar sands oil across most of the Canadian continent.  The pipeline giant—the same company behind the controversial Keystone XL —is seeking a 30-day pause on the project in order to do a "careful review" of the National Energy Board's (NEB) tough, new climate standards.  The NEB, Canada's pipeline regulator, announced last month it was widening the scope of its Energy East and Eastern Mainline Project assessment to consider upstream and downstream, or indirect, greenhouse gas emissions.  As the National Observer explained, the NEB's new rules are a departure from its previous practice of only reviewing the impact of pollution caused during pipeline construction and operations—it also considers the impact of pollution caused by the production and consumption of the oil to be shipped by an operator.  NEB also said it will provide "more visibility" to the evaluation of risks associated with accidents such as oil spills. TransCanada said the NEB's expanded pipeline standards could affect the "costs, schedules and viability" of its Energy East project. NEB said it will make a decision on the company's request "in a timely manner." TransCanada's announcement is a win for environmentalists who have long protested the project.  According to the Natural Resources Defense Council , the proposed Energy East pipeline would transport 1.1 million barrels per day of mostly tar sands oil from Alberta to St. John and would bring a significant increase in carbon pollution—the equivalent to the annual emissions of as many as 54 million passenger vehicles—and lock in high-carbon infrastructure expected to operate for at least 50 years.

TransCanada extends Keystone XL open season (Argus) — TransCanada is extending an open season for its long-delayed 830,000 b/d Keystone XL crude pipeline project, citing "the historic flooding and catastrophic impacts" to Houston and parts of the US Gulf coast in the aftermath of Hurricane Harvey. The open season will be extended by about a month to 26 October. TransCanada is seeking binding commitments for Keystone XL and for its existing 590,000 b/d Keystone pipeline, to move crude from Hardisty, Alberta, to markets in Cushing, Oklahoma, and the US Gulf coast. TransCanada said on 28 July that it is working on refreshing legacy shipper contracts for Keystone XL. "Our goal remains to achieve a significant level of long-term 20-year contracts on Keystone in this open season," said liquids pipeline president Paul Miller, while discussing second quarter earnings. The delay in firming up shipper support for Keystone XL is mostly a matter of "refreshing the legacy contracts and getting the documentation in place," he said. Keystone XL would transport crude from Alberta's oil sands to Steele City, Nebraska. Miller also said that the results of the open season along with the end of a regulatory process in Nebraska will determine the next steps for the project. TransCanada first proposed the line in 2008 but it was delayed repeatedly. The administration of previous US president Barack Obama in 2015 blocked Keystone XL after years of review, citing environmental concerns. But the project was revived this year, receiving a cross-border permit from the administration of President Donald Trump on 24 March. Opposition against Keystone XL flared most strongly in Nebraska, where the company still did not have a route approved when it pulled its state application after Obama denied the border-crossing permit. The Nebraska Public Service Commission held formal hearings on the project on 7-10 August. A decision on the state permit is expected later this year. 

Interview: Canadian crude oil exports to Asia could rise - Kinder Morgan's Trans Mountain Expansion project in Canada is expected to start up as planned and will likely open a window of opportunity to export Western Canadian crude oil into Asian markets, Alberta energy minister Margaret McCuaig-Boyd said in an interview Thursday. Canada's crude exports from the west coast to Asia have been negligible for many years because of Vancouver's inability to load on tankers larger than Aframax, as well as a limited surplus for exports to markets other than the US, according to industry sources. But Kinder Morgan's expanded Trans Mountain pipeline, which will boost its capacity nearly threefold, will offer scope to boost Canadian crude exports to Asia, as it would make it relatively easier for Asian buyers to access Canadian crude.  “We are very pleased that Kinder Morgan's line allows access to Asian markets," McCuaig-Boyd said in the interview with S&P Global Platts in Tokyo, adding that while the pipeline would open up a lot of possibilities, actual increases in oil exports to Asia would depend on "market forces." Kinder Morgan's Trans Mountain Expansion project, which received regulatory approval from the Canadian government for expansion in November, will break ground this autumn. It will increase throughput on the Alberta-to-British Columbia pipeline to 890,000 b/d from the current 300,000 b/d. The project is due to be completed by December 2019.

Oil Factbox: Hurricane Irma closes Caribbean storage; Katia heads to Mexico - Hurricane Irma was moving through the Caribbean Thursday, closing petroleum storage facilities as it heads towards southern Florida.A number of storage tanks and other equipment at NuStar Energy's crude and refined products storage terminal on the Caribbean island of St. Eustatius were damaged by Irma. The company had shut down the 14 million-barrel terminal Monday in preparation. Buckeye Partners shut down its Yabucoa, Puerto Rico, facility Tuesday ahead of Irma. That terminal has around 4.6 million barrels of storage capacity for crude, fuel oil and refined products, according to Buckeye's website. Buckeye also said it was "implementing hurricane preparedness plans" at its Grand Bahamas, Bahamas and Florida terminal facilities. Buckeye's 26.2 million barrel terminal in Freeport, Grand Bahama Island, stores crude, fuel oil, and refined products. A report from Galbraith's shipbrokers said the Freeport facility was closed. Statoil said its South Riding Point terminal, also on Grand Bahama Island, was open Thursday, and that the company is monitoring the storm and will "take necessary precautions."Irma is expected to make landfall in southern Florida Sunday morning, according to the National Hurricane Center.  Florida depends on barge shipments rather than pipelines for 97% of its refined products. Refined products are shipped regularly into Port Everglades, on the eastern Florida coast. Petroleum throughput at Port Everglades was 121.07 million barrels in 2016, according to the port's website.  The US Coast Guard is closing south Florida ports, including Port Everglades, starting at 8:00 pm EDT Friday.

Can NAFTA Protect Big Oil From Mexico’s Populist Movement - The second round of NAFTA negotiations that concluded yesterday in Mexico City sought ways to enshrine the 2014 energy sector reforms that the Enrique Pena-Nieto government had launched to overhaul an oil and gas industry monopolized by state-major, Pemex.  This monopoly had all the consequences that were to be expected, including underinvestment in new oil and gas discoveries, falling output, and ultimately, a threat to the country’s energy security with increased reliance on imports, especially of fuels and natural gas, from the U.S.  The reforms that Pena-Nieto’s government effected involved opening up the Mexican energy market to private participants, with a series of oil and gas auctions conducted in relatively quick succession in a bid to address a situation where energy demand at home is growing but production of energy sources is falling.  Yet, this is Pena-Nieto’s last term as president, and the frontrunner for the 2018 election is a leftist candidate, Andres Manuel Lopez Obrador. Obrador, founder and leader of the Morena political party, recently said he will review the current oil contracts that Mexico awards its foreign partners if he wins the vote next year.  Against the background of the United States’ US$64-billion trade deficit with Mexico, the energy reforms from 2014 are an important tool in the NAFTA negotiations. Besides direct participation in oil and gas tenders for U.S. companies and besides fuel and natural gas exports to the south, the U.S. would benefit from exporting oil- and gas-field development equipment to its neighbor.  Enshrining the reforms in the free trade agreement would benefit both sides, protecting foreign participants in the Mexican oil and gas industry from a radical change in the government’s approach to their activities, and stimulating further investments in said sector.Of course, the danger of such a radical change in approach may well be overblown, and Obrador’s comments regarding the reform may just be an example of what politicians usually say on the campaign trail. Reviewing the oil contracts does not necessarily mean canceling them, after all, and a focus on expanding local refining capacity makes perfect sense. Besides, the Morena candidate is certainly aware that Mexico can’t handle its growing energy demand on its own. In short, foreign oil companies operating or planning to start operating Mexican oil and gas fields have little to be concerned about at the moment. Those worried about the fate of the reforms under a leftist Mexican government, however, are probably keeping their fingers crossed for the NAFTA negotiations to end with an agreement – a prospect still distant after the second round of talks ended with no major breakthrough.

ExxonMobil To Invest $200 Million In Argentina's Vaca Muerta (Reuters) - U.S. oil major Exxon Mobil Corp plans to invest $200 million to boost natural gas output in Argentina's Vaca Muerta shale play, a spokeswoman told Reuters on Friday. The company has asked the government of Neuquen province for a 35-year unconventional production concession in the Los Toldos I Sur block, the spokeswoman said. Exxon Chief Executive Officer Darren Woods informed President Mauricio Macri of the plans during a Thursday meeting at the presidential Pink House. Attracting investment to the Belgium-sized Vaca Muerta play, one of the world's largest unconventional gas reserves, is a key priority for Macri's business-friendly administration as it seeks to boost local energy production in order to reduce costly imports. Last year, Exxon said it could invest more than $10 billion in shale projects over 20 to 30 years in the region. In January, Macri reached a deal with unions and companies to lower very high labor costs and attract investment, though executives note that logistics costs remain high. Exxon's Argentine subsidiary owns 80 percent of the Los Toldos I Sur block and is the operator, while Argentine oil company Tecpetrol SA and province-owned Gas y Petroleo de Neuquen each control 10 percent. 

Western Australia halts hydraulic fracturing, to probe risks (Reuters) - Western Australia state (WA) will ban onshore hydraulic fracturing while it looks into the risks associated with the drilling technique, its environment minister said on Tuesday, making it the fifth Australian state to restrict the process.The state of Victoria has banned hydraulic fracturing, or "fracking", as well as shale and coal-seam gas exploration, while the Northern Territory, New South Wales and Tasmania have moratoriums.The blocks come despite a growing gas supply crisis in Australia, where a large portion of supply in the continent's east is drawn from coal seam developments.However, farmers and environmental groups are worried that groundwater reserves could be depleted or contaminated by both conventional and unconventional onshore gas drilling.The Western Australian moratorium was promised to voters by the state's centre-left Labor Party, which won office at an election in March."We appreciate there is a level of community concern around fracking in WA, which is why we are commissioning an independent scientific inquiry," said Environment Minister Stephen Dawson in a statement posted on his website.The inquiry will be run by Tom Hatton, chair of the WA Environmental Protection Authority and examine the effect of fracking on the environment, water, agricultural productivity and the community, according to its website. The pause on fracking freezes more than A$380 million in investment in new onshore projects, said chief operating officer of Australian Petroleum Production and Exploration Association WA, Stedman Ellis, in a statement. 

The next oil major? Service firm Schlumberger's big bet on production (Reuters) - The world’s largest oilfield services company, Schlumberger NV, is spending billions of dollars buying stakes in its customers’ oil and gas projects - investing in the same ventures it supplies with equipment and expertise. The new business model gives Schlumberger a say in drilling decisions, oilfield management and even on hiring other Schlumberger units for service contracts, the company has told investors. The expanded operational authority saves Schlumberger from bidding for each of the many jobs that typically require separate contracts on a large drilling project - effectively locking out the firm’s competitors. Schlumberger’s gamble could upend the service business model throughout the industry, as rivals including General Electric Co’s (GE.N) unit Baker Hughes (BHGE.N) say they are considering whether to adopt similar strategies. The model can supercharge profits on a given job but also ramps up risk, giving the firm more exposure to global oil price swings and potentially big losses if individual projects fail. The downsides have some analysts questioning whether the traditionally conservative firm is taking on too many speculative projects too quickly. Schlumberger already has taken hundreds of millions in write-downs or impairments on some of these joint ventures, according to its financial filings.Traditionally, oil producers manage the risk and make the financial and operational decisions on projects; they pay service providers a fee to carry out individual jobs. Firms such as Schlumberger typically supply a wide variety of services, such as well design, along with technology and staff to run rigs.

Big Oil to be "usurped" by gas in less than a decade, experts warn --  THE dominance of Big Oil will be usurped in less than two decades by the dawn of a golden age for natural gas lasting at least until the middle of the century. One of the world’s biggest risk assurance experts in the global energy ­industry has predicted that gas will emerge as the world’s most important source of energy by the mid 2030s ­after a slow descent for oil which will peak within ten years and the ongoing decline of coal. Royal Dutch Shell has already begun to shift its portfolio towards gas exploration and production in the wake of the global oil price crash Credit: Johnny Greig/Alamy MoreRemi Eriksen, the boss of Norway’s DNV GL, said the group’s first conservative prediction for the future of the global energy industry has revealed a boom in renewable energy which will meet around half the world’s needs – but gas will be the largest single source of energy for decades to come. “Gas will overtake oil as the world’s biggest source of energy by 2034. By 2050 it will be the single biggest source at 27pc of demand,” he said. He added that the demand for gas will tower over the use of individual renewable energy sources such as wind, hydro and solar power, although when totalled ­together renewable energy will make up 50pc of energy use. The fresh findings are reassuring for investors in oil supermajors BP and Royal Dutch Shell which have both ­begun to shift their portfolios towards gas exploration and production in the wake of the global oil price crash. Mr Eriksen said Big Oil will continue to move towards gas on economic grounds due to its low cost compared to oil, and high demand for gas from electricity generators looking for a fuel which is less polluting than burning oil and coal. . 

Is Big Oil Prepared For The Natural Gas Era? -- By 2034, natural gas will overtake oil as the main source of energy, and by 2050 it will be the single largest such source globally, satisfying 27 percent of demand. That’s according to the first Energy Transition Outlook by DNV GL, a global quality assurance and risk management services provider for the oil and gas, maritime, and power industries. Gas supply, however, will peak in 2035.In crude oil, DNV’s report forecasts, supply will plateau between 2020 and 2028, after which it will begin declining steadily. That’s bad news for pure-play oil producers, especially given that the company’s report is conservative, but it would be welcomed by gas suppliers and those like BP and Shell, which are already moving away from oil, investing much more in gas and renewables.Renewables will be the culprit behind fossil fuels’ decline: by 2050, fossil fuels and renewables will have an even share in global energy supply. This will happen thanks to the quickly falling costs of renewable energy installations, especially solar and wind, which means that the transition from fossil fuels to renewables will take place without any significant hikes in annual energy expenditure.As solar PV and wind capacity doubles, the costs for each of the two energy sources will fall by 18 percent and 16 percent respectively. DNV says this will bring down the overall cost for global energy from the current 5 percent of the world’s GDP to less than 3 percent. Related: How Long Can U.S. Refineries Remain Offline?Oil’s biggest enemy is the electric vehicle. Increased adoption of electric cars will be the driver of oil’s demise after 2028. By 2022, DNV estimates, EVs will “achieve cost parity” with internal combustion engines as their cost performance will improve at a much faster pace than the cost performance of ICE vehicles. By 2033, 50 percent of new car sales globally will be EVs.

Platts JKM Weekly: October LNG up 27.5 cents on strong early winter sentiment - S&P Global Platts assessed the October JKM for LNG cargoes at $6.425/MMBtu Friday, up 27.5 cents/MMBtu week on week, on South Korean demand for deliveries in H2 October, ahead of a relatively strong contango into early winter H1 November. October demand has been underpinned by buying interest from end-users in South Korea and China for late October cargoes. South Korean buyer SK was heard to be seeking a late-October cargo with a narrow delivery window. Korea Midland Power and Posco were also seeking a cargo to be delivered between October 23 and October 25 via a tender for delivery into Gwangyang. Pricing uncertainty for winter cargoes and the volatility in UK NBP hub prices has led to spot trade negotiations for November cargoes largely being sluggish. However, bullish sentiment has been building for November trading with current oil-slope equivalent levels around the 13% mark on the back of stronger offer levels. Russia's Sakhalin facility awarded its October 26 and November 3 loading cargoes late last week, with sources indicating cargoes were awarded at around $6.50-$6.70/MMBtu. Sakhalin further issued a tender on Friday offering two November loading cargoes. The tender closes September 14, with bids valid until September 16. Taiwan's CPC closed a tender on Wednesday seeking an unspecified quantity of January cargoes and was thought to have awarded the tender, which will be an early benchmark indication for January. Indian Oil Corp has a tender seeking November 16 delivery closing on September 19 with validity until September 22. Petronas was heard to be marketing one Bintulu cargo for end of September loading, according to two end-users.

France Will Ban All Oil Exploration By 2040 - Road to Paris: France plans to end oil output by 2040 with exploration ban. Link at Bloomberg. Data points and comments:

  • will stop granting new permits next year
  • the move will turn down 40 exploration requests already made
  • this actually includes where France has oil, like French Guiana where Total has a stake
  • big deal? Not. France pumped 6 million bbls of oil in 2015, covering just 1% of its demand
  • this is France's Macaroni simply confirming the obvious: France is unable to meet its own crude oil needs when oil trades at $45
  • this was predicted back on May 18, 2013, at "Europe at a Tipping Point" over at "Big Stories": on that date, first line at that original post: Europe may be the only continent in the world to depend on imported energy -- EU Council President.
  • it looks like France is leading the way

When is Russia going to run out of oil and natural gas? – Pravda - Russia's Minister for Natural Resources and Environment, Sergey Donskoi, said that Russia's reserves of natural gas and oil will be enough for many decades. According to him, gas reserves in Russia will last for 80 years, while oil reserves - for 29 years, if the country works with ready-to-develop deposits and reserves. "We are still one of the leaders in terms of traditional reserves of natural gas, and we continue opening new ones. The State Reserves Commission has recently received materials on the Tambeyskoye field in Yamal, from which one can extract up to four trillion cubic meters, so we expect a good increase in traditional reserves," the official said.  The minister noted that if one takes into account unconventional and hard-to-extract oil reserves in Russia, they may last not for 29 years, but for several centuries. Sergey Donskoi also said that the introduction of new technologies that will allow to extract raw materials with least spending possible is the main task of the Ministry of Natural Resources. Pravda.Ru discussed the subject of reserves of Russian natural resources in an interview with Rustam Tankayev, member of the Energy Strategy Committee of the Chamber of Industry and Commerce of Russia, general director of InfoTEK-Terminal, leading expert of the Union of Oil and Gas Producers of Russia. (interview transcript)

Novak does not rule out term changes to OPEC/non-OPEC oil output cut deal, if extended - Russia's energy minister Alexander Novak does not rule out that the OPEC/non-OPEC group may consider changes to the existing terms of the production cut agreement if there is a decision on its new extension, he said Wednesday. Novak confirmed that Russia and Saudi Arabia have discussed potential extension of the deal for a further three months beyond March 2018 but said it was too early to speak about concrete details now, with a final decision likely to be taken closer to the date when the current agreement expires. "During the ministerial monitoring committee which meets every two months, we have discussed those issues. The discussion is [focused on the conception that] if there is a need, we'll take such a decision [to expand the agreement and expect] that all countries [participating in the deal] will comply with it," he told reporters on the sidelines of the Eastern Economic Forum in Vladivostok. The decision to expand the deal could be taken if inventories are not reduced to average five-year levels and the market will require additional measures to re-balance it, he said. When asked if Russia and Saudi Arabia consider potential extension of the deal on the current terms or some changes -- including in respect of Libya and Nigeria participation or the size of production cut quotas in general -- are possible, Novak said: "I'll answers with a general phrase: 'Everything is possible.' It is possible to change the terms. If needed, we'll discuss such issues." At the same time, Novak reiterated that it is too early to speak about the details of potential extension of the deal, which expires in more than six months. "If you remember, we decided on the [initial] extension of the deal a month before its expiration date, so I think that we'll discuss these issues next year," he said.

China invests $9.1 billion in Rosneft as Glencore, Qatar cut stakes (Reuters) - Chinese conglomerate CEFC will buy a 14.16 percent stake in Russian oil major Rosneft for $9.1 billion from a consortium of Glencore and the Qatar Investment Authority, strengthening the energy partnership between Moscow and Beijing. CEFC China Energy has grown in recent years from a niche oil trader into a sprawling energy conglomerate and the transaction will allow China, the world’s second largest energy consumer, to boost cooperation with the world’s top oil producer. The deal comes as the United States imposes a new round of economic sanctions on Russia, making it difficult for large Western firms such as Glencore to develop partnerships and increase ties with state-owned firms such as Rosneft. Glencore said in a statement that CEFC will buy shares at a premium of around 16 percent to the 30-day volume weighted average price of Rosneft shares without naming the price. A CEFC spokesman said the company would pay $9.1 billion. Rosneft’s market capitalization stands at $57 billion and the deal makes it one of the largest investments ever made by China into Russia. Glencore and QIA will retain stakes of 0.5 percent and 4.7 percent in Rosneft respectively. The Kremlin has been seeking to expand its ties with China, especially since the West imposed wide-ranging sanctions on Moscow to punish it for the annexation of Crimea and an incursion into east Ukraine in 2014. Russia tops the list of Chinese crude suppliers where it competes with its arch-rival Saudi Arabia, the world’s largest oil exporter.

China's teapot plants form new club to beat rivals, but will it work? (Reuters) - A group of independent Chinese oil refiners is clubbing together to survive an onslaught by state-owned giants and the rise of private chemical giants, but industry analysts said the new alliance may find it hard to stick. Less than two years after becoming some of China’s newest crude oil importers, around 20 independent plants in the eastern industrial heartland of Shandong province plan to form a joint venture to coordinate their production, marketing, crude oil imports and investments. The new alliance, to be called the Shandong Refining & Chemical Group, is to be headquartered in the provincial capital Jinan, and as envisioned will be an upgrade on a crude-buying federation set up in early 2016 by some of the same members. The new group of “teapot” refiners aims to pool funds and resources to produce fuels and chemicals more efficiently as they battle stiff competition in an increasingly saturated market and under tightened environmental and tax scrutiny. “We see the need to advance to the next stage as we face competition from both the national team and the provincial team. We can’t afford operating like a plate of scattered sand,” said Zhang Liucheng, a vice president of Shandong Dongming Petrochemical Group [SDHLYD.UL], one of the initiators of the stronger alliance. The earlier crude-purchasing club was too loose an organization and did not have much success, Zhang said. But while Shandong Dongming and fellow founding member Qingyuan Group are trying to build a more formal structure, including registering the new company as early as next week with a capitalisation of 50 billion yuan ($7.7 billion), there are few details such as a list of members and when they will start to commit funding.  Analysts said pooling the assets and coordinating the investments of 20 plants that have multiple private and local government owners will be a huge challenge.  “The new group shall have bigger political bargaining power ... but it will be hugely difficult to align all the various interests,” said Harry Liu, of consultancy IHS Markit.

Oman’s petroleum and other liquids production reached record levels in 2016 -- Oman set a new record with annual total oil production in 2016 exceeding 1 million barrels per day (b/d). Oman’s petroleum and other liquids production ranks seventh among the Middle Eastern countries. Oman is the largest oil producer in the Middle East that is not a member of the Organization of the Petroleum Exporting Countries (OPEC). Like many countries in the Middle East, Oman is highly reliant on its hydrocarbons sector. The Oman Ministry of Finance stated that finances have been severely affected by the decline in oil prices since mid-2014. In 2016, Oman's oil and natural gas revenues were 67% lower than in 2014, despite achieving record production. Oil revenue accounted for 27% of Oman’s gross domestic product (GDP) in 2016, a decrease from 34% of GDP in 2015 and 46% in 2014. Before setting the country's oil production record in 2016, Oman’s annual petroleum and other liquids production had peaked at 972,000 b/d in 2000 and dropped to 715,000 b/d in 2007. Since then, Oman’s total oil production has risen because of increased adoption of enhanced oil recovery (EOR) techniques and recent discoveries of oil. Oman was on track to maintain this production level in 2017, but as part of an agreement with OPEC member countries, Oman reduced production to approximately 970,000 b/d in early 2017.  Almost all of Oman’s oil production is exported, mainly to Asian markets. In 2016, Oman exported 912,500 b/d of crude oil and condensate, its highest level since 1999. Virtually all of the country’s crude oil exports in 2016 went to countries in Asia, with 78% going to China.

Saudi Aramco Uses New Technology To Re-Explore Vast Empty Quarter (Reuters) - Oil giant Saudi Aramco is using new technology to re-explore areas of the vast Arabian desert known as the Empty Quarter, which could help to bolster its proven reserves of oil and gas before the company offers its shares to the public. A team of about 900 people is using advanced seismic technology developed over the last few years to explore 15,400 square kilometres (5,950 square miles) around Turayqa in Saudi Arabia, Aramco said in a statement. Turayqa, discovered in 2013, is an onshore conventional gas field that contains no oil. Part of the area was previously explored by joint ventures involving Aramco and foreign companies, Aramco said. The JVs failed to find recoverable quantities of oil and gas. "Data processing is ongoing. The area partially covers areas relinquished by some of the joint ventures," the company told Reuters. Aramco set up four consortia in 2003 and 2004 to explore the Empty Quarter, but they ended their search after failing to find commercial volumes of gas. The new seismic technology may improve the chances of successful exploration, though it cannot by itself prove the existence of oil and gas reserves; drilling is needed for that. Seismic technology uses artificially induced shockwaves in the earth.  It not only provides a three-dimensional picture of the structure of rock going down several kilometres (miles), but also tells the user physical characteristics of the rock, such as its density and fluid saturation, he said.

OPEC invites Libya, Nigeria to committee meeting Sep 22 -- Libya and Nigeria, the two OPEC members exempt from the current oil production cut deal, have been invited to participate in the producer group's latest ministerial committee meeting September 22. The two countries have been asked to attend the meeting in Vienna to identify the latest developments in their oil sectors, Kuwait's OPEC governor, Haitham al-Ghais told Al-Rai newspaper Sunday. Nigeria's oil production, including crude oil and condensates, is currently at around 2.2 million to 2.3 million b/d, including about 300,000 to 400,000 b/d of condensates, oil minister Emmanuel Kachikwu said Thursday. Libyan output had also recovered to reach an average of 990,000 b/d in July, its highest level in three years, up 180,000 b/d in June, according to the latest S&P Global Platts OPEC survey. This was before the closure of three fields -- the 300,000 b/d Sharara, 90,000 b/d El-Fil and 10,000 b/d Hamada field, shutting-in around 360,000 b/d of output since the middle of August. OPEC will consult with them to identify their plans, Ghas said. The production cut agreement, which began January 1, calls on OPEC's 14 members along with 10 non-OPEC countries, led by Russia, to cut a combined 1.8 million b/d in output through March. The group will hold a technical committee meeting on September 20, looking at the continued effects of US shale oil on the global market, and the impact of Hurricane Harvey. "The amount of production affected by the hurricane is estimated at 700,000 b/d, which may strengthen the status of the market", Ghais said. US production had increased by 500,000 b/d so far in 2017, compared with 2016, he added. This will be followed September 22 by a committee overseeing the deal, composed of ministers from Kuwait, Russia, Venezuela, Algeria, Oman and Saudi Arabia. 

Hedge funds anticipated hurricane disruption to U.S. refineries: Kemp (Reuters) - Hedge funds turned bearish towards U.S. crude while boosting bullish positions in gasoline and heating oil in the final week of August, anticipating major disruption to U.S. refineries as a result of Hurricane Harvey.Hedge fund operators responded in the classic textbook manner for a supply interruption expected to hit refineries rather than crude production by selling crude while buying fuels ( funds and other money managers cut their net long position in futures and options contracts linked to Brent and WTI by 107 million barrels to 582 million barrels in the week to Aug. 29.Almost all the reduction in positions came from WTI (which fell by 105 million barrels) rather than Brent (which were declined by just 1 million barrels) reflecting the specific disruption in the United States. The one-week decline in net long positions in WTI was the largest on record, as fund managers prepared for a big drop in crude consumption due to the refinery closures in Texas. But fund managers boosted their net long position in U.S. gasoline by 12 million barrels to 49 million barrels, anticipating an acute shortage of refined fuels.  U.S. crude, which had been edging towards backwardation, swung to a large contango, anticipating a temporary oversupply of crude and inadequate refining capacity.Price discounts for U.S. crude delivered in October compared with December widened to $1.33 per barrel on Aug. 31 from 26 cents on Aug. 21 ( contrast, the gasoline market tightened sharply, with the October-December backwardation surging to 24 cents per gallon on Aug. 31 from 5 cents on Aug. 21 (

U.S. Crude Edges Higher, Gasoline Tumbles After Harvey - U.S. crude oil prices edged higher on Monday while gasoline prices slumped to pre-Hurricane Harvey levels, as oil refineries and pipelines in the U.S. Gulf Coast slowly resumed activity, easing supply concerns. U.S. West Texas Intermediate (WTI) Clc1 crude futures were 8 cents higher at $47.37 per barrel at 1351 EDT (1751 GMT) as U.S. demand recovered after being hit by reduced refinery activity since Harvey made landfall on Aug. 25. Brent crude futures settled 41 cents lower at $52.34, due in part to a shift away from crude markets to assets perceived to be safer, such as gold, after a powerful North Korean nuclear test. NYMEX gasoline futures RBc1 were down 3.28 percent at $1.6906 a gallon, a level last seen on Aug. 25. Damage by Harvey to the oil infrastructure in the Gulf Coast appeared less extensive than some had feared. A number of major refineries, which convert crude oil to refined products such as gasoline and jet fuel, were gradually resuming operations on Monday. Colonial Pipeline, the largest American fuel system, was restarting the distillates segment of its pipeline from Texas to New Jersey. Its gasoline pipeline was due to resume operations on Tuesday, the company said. At the same time, about 5.5 percent of the U.S. Gulf of Mexico’s oil production, or 96,000 barrels of daily output, remained shut on Sunday, down from a peak of more than 400,000 bpd last week. “The disruptions from Hurricane Harvey in the U.S. Gulf Coast are gradually clearing. In the broader scheme of things, it appears that so far the energy industry was spared major damages to assets and infrastructure,” . “However, some Houston-area refineries will likely remain offline for some time longer.” Traders booked dozens of gasoline tankers over the past week from Asia and Europe to the United States and Latin America in order to plug supply shortages in the wake of the shutdowns. 

Oil Markets Rebound After Hurricane Harvey - U.S. Gulf Coast refineries have started to come back online, easing fears of a major fuel shortage, although bottlenecks and localized scarcities will persist for some time. The Gulf Coast is still drying out while another major hurricane looms towards the end of the week. . A handful of refineries have come back online as the flood waters have receded, allowing operations to resume. ExxonMobil is bringing its Baytown facility back online, the second largest in the nation. Valero Energy (NYSE: VLO) said its Corpus Christi refinery (293,000 bpd) and its Texas City refinery (225,000 bpd) have returned to full production, while its Port Arthur refinery (293,000 bpd) was in the “final stages” of returning to operation. However, the Motiva complex (600,000 bpd) remains offline. Still, enough refineries have come back online to allow the restart of the Colonial Pipeline system, a crucial conduit to supplying the East Coast. Gasoline prices fell back from their peaks last week.   The return of a large chunk of the Gulf’s refining capacity has smoothed out the price spike in the gasoline futures market. But that does not mean that the disruptions will be over soon, or that the gasoline market will see minimal effects. Some refineries could be offline for weeks, perhaps months. “We have seen a fair amount of refinery capacity return online but there still is a significant amount that is still offline between the Houston-Beaumont-Port Arthur region,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, told Bloomberg. “The market is pricing in a rather quick recovery in the Houston area but it might still be several weeks for the Houston area refiners to return to full production.”

Asian traders look to snap up US crude in wake of Hurricane Harvey (Reuters) - Some oil traders in Asia are looking to snap up crude cargoes from the United States after Hurricane Harvey closed U.S. refineries, denting local demand and pushing out the price spread between U.S and Atlantic Basin crude benchmarks. Hurricane Harvey barreled into the U.S. Gulf of Mexico coast around 10 days ago, closing nearly a quarter of the nation’s refining capacity, although some of that is now coming back online. The closures pushed the prompt-month spread between West Texas Intermediate crude and Brent crude to the widest in two years at nearly $6 a barrel last week, pushing Asian traders to hunt for competitively priced U.S crude. However, some said spot prices would need to ease further before traders fixed cargoes for the journey east. “One good piece of news is that the WTI-Brent spread has blown out so much that means excess U.S. crude is going to be exported,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo. “It looks like there wasn’t much damage to export facilities and they should come back up quicker (than expected).” Prices for WTI light grades were the weakest and they could head to Asia first, said a Singapore-based trader, declining to be identified as he was not authorised to speak with media. Still, the market is evolving daily with spot levels for WTI Midland WTC-WTM rebounding on Tuesday after several refineries restarted post-Harvey. Taiwanese refiner Formosa Petrochemical Corp could consider buying from the United States. “We’re watching the situation,” spokesman KY Lin told Reuters. “U.S. crude’s length may worsen and put more downward pressure on prices in the next two weeks.”

Market Movers Europe, Sep 4-8: Harvey pushes European crack spreads to two year highs (Platts video) In the European gasoline market, prices soared by more than 50% last week as traders rushed cargoes across the Atlantic in response to supply problems caused by Tropical Storm Harvey.Deliveries of petrochemical products from the US into Europe this month are also under a question mark, with at least 13 major petrochemical sites shut down in the US Gulf Coast region and supplies of many products under force majeure.Meanwhile, in metals, the European steel coil market is bullish as producers return from their summer holidays. Mills are likely to seek an extra Eur20-40/metric ton after other markets -- primarily China -- spiked. Finally, in UK electricity, forward prices for September have been rising ahead of reduced gas and coal plant availability and, as this graph shows, September traded above October.  hile September is braced for reduced availability, October is the start of a new era under the new UK Capacity Mechanism.

Oil traders expect a tighter market in 2018: Kemp (Reuters) - While the headlines have been dominated by the devastation wrought by Hurricane Harvey, oil traders have quietly become more bullish, or at least less bearish, about 2018.Brent calendar spreads have resumed their steady march from contango towards backwardation as Texas refineries resume operations after shutting down during the storm.Brent spreads from November to December and December to January are now trading in small backwardations while inter-month spreads for the rest of 2018 are close to flat ( calendar spread for the whole of the first six months has moved into backwardation for the first time since oil prices started to slide in July 2014 ( are closely related to traders’ perceptions about the future supply-demand balance and changes in inventories.Contango is associated with high and/or rising inventories while backwardation is linked to low and/or falling stocks.Like spot prices, spreads can be distorted by short-term noise as traders accumulate and liquidate positions in a herd.But spreads are arguably less noisy than spot prices, and provide analysts and traders with an improved signal to noise ratio ( For the first time since oil prices slumped in 2014, the emergence of a small sustained backwardation indicates traders anticipate a balanced market or even a sustained drawdown in global oil inventories. Brent spreads are not the only sign of renewed bullishness among oil traders. Futures prices for U.S. crude to be delivered in 2018 have been rising in recent sessions and are now at the highest level since May.The WTI calendar strip for 2018, which is the benchmark for U.S. shale firms’ hedging programmes for next year, has climbed to around $50.70 per barrel from a recent low of $45 in June ( If most oil traders are not exactly bullish yet, they are no longer bearish.

WTI Pops, RBOB Drops As Refiners/Pipelines Restart, Irma Looms -- WTI crude prices are testing above $48 this morning (and RBOB prices tumbling) as refiners and pipelines come back on line faster than expected and fears of Hurricane Irma's path impacting Gulf production edge higher.As Goldman notes, the recovery from Hurricane Harvey has accelerated over the weekend, with prolonged dry weather helping the decline in flood levels. We estimate that half of shut-in refinery capacity will likely be back online by Thursday, September 7.  Yet the corresponding level of outages of 2.0 mb/d remains elevated relative to the limited damages reported by both producers (0.3 mb/d currently offline) and midstream operators. With nearly all ports reopening, the key to a normalization in crude and petroleum product supply will therefore hinge on how long some refineries may be forced to stay offline, with guidance that at least 1.4 mb/d of capacity could still be offline past mid-September. In addition, curtailed NGL fractionation capacity could over time prevent and in fact reverse the recovery in shale production. Additionally, concerns over the path of now Cat-5 Hurricane Irma are spooking energy markets as Goldman warns that RBOB prices could spike once again if Irma makes a violent landing on the Southern U.S. East Coast and Florida because the region is sparse on oil infrastructure and the effect of the storm would be mostly felt on demand instead, and other forecasters are fearful of Irma's path progressing into the Gulf and affecting offshore production significantly.

First Glimpse Of Harvey Impact Shows Biggest Crude Build In 5 Months, Smaller Gasoline Draw Than Expected -- Amid all the chaos of Harvey's outages and Irma's expectations, tonight's API inventory seems relatively irrelevant but we are sure the machines will be all over it - no matter that it will be guesstimated more than normal. WTI was at one-month highs above $49 as API printed and kneejerked lower despite a smaller than expected crude build (still the biggest build since March) and a smaller than expected draw in gasoline. API:

  • Crude +2.79mm (+4mm exp) - biggest build in 5 months
  • Cushing +669k (+1mm exp)
  • Gasoline -2.544mm (-5.2mm exp) - biggest draw in 6 weeks
  • Distillates -610k

Last week's modest builds in products and big draw in crude occurred before Harvey hit. This week's data shows the initial effects with a major build in crude (though less than expected) and major draw in gasoline stocks (though also less than expected).

Oil markets dip storm Harvey fallout; Hurricane Irma heads into Caribbean (Reuters) - Oil prices slipped on Wednesday as crude demand remained subdued on the back of refinery closures following Hurricane Harvey which hit the U.S. Gulf coast 10 days ago. Market focus was also being drawn to Hurricane Irma, a record Category 5 storm, which is barrelling towards important shipping lanes in the Caribbean. Although many refineries and pipelines which were knocked out by Harvey are now in the process of restarting, analysts say it will take some time before the U.S. petroleum industry is back to full crude processing capacity. As of Tuesday, about 3.8 million barrels of daily refining capacity, or about 20 percent, was shut, though a number of the refineries in that group were in the process of restarting. Several others, including Marathon’s Galveston Bay and Citgo’s Corpus Christi refineries, were running at reduced rates, according to company reports and Reuters estimates. U.S. West Texas Intermediate (WTI) crude futures Clc1 were at $48.57 barrel at 0333 GMT, 9 cents, or 0.2 percent, below their last settlement. In international oil markets, Brent crude futures LCOc1 dipped 19 cents, or 0.4 percent, to $53.19 a barrel. Meanwhile, Hurricane Irma is heading for the Caribbean islands of Antigua, Barbuda, Anguilla, Montserrat, St. Kitts and Nevis, the Virgin Islands, Puerto Rico, the Dominican Republic, and parts of Cuba. “With another hurricane threatening to hit the U.S. coast, traders still remain cautious,”

Hurricane Irma Could Destroy Oil Demand - About half of the shuttered refining capacity along the Gulf Coast could be back up and running by Thursday, assuaging concerns about the possibility of acute gasoline shortages in much of the U.S. The disruptions of more than 4 million barrels per day of refining capacity have been cut in half, with major refineries restarting operations in Corpus Christi and Houston. ExxonMobil is ramping up operations at its Baytown facility, the second largest in the country. Valero Energy brought two refineries in Corpus Christi and Texas City back online, with another large one in Port Arthur scheduled to resume operations soon. The massive Motiva refinery – the largest in the country with 600,000 bpd of capacity – is still offline, but is getting closer to resuming operations. The large volume of restarts led to a spike in crude oil prices on Tuesday, with WTI up more than 3 percent. Gasoline futures fell back as the Colonial Pipeline restarted shipments. Goldman Sachs predicts that as of Thursday, half of the shuttered refining capacity will have resumed. But what about the rest? An estimated 1.4 mb/d could remain offline through mid-September at least, the investment bank predicts. Goldman says the lingering effects will be “modestly bearish,” projecting a 40-million-barrel increase in crude oil inventories. But the quick comeback of some larger refineries led Goldman to lower its projected demand impact from -750,000 bpd in the first month after the storm to just -600,000 bpd. However, the effects could actually become slightly bullish over time as the recovery efforts pick up, and intriguingly, there is “potential for some sustained US onshore production curtailments.” Eagle Ford shale drillers were forced to shut in some shale output as both the takeaway capacity (i.e., pipelines) and Gulf Coast refineries went offline, backing up crude at the wellhead. Some estimates put Eagle Ford output down by half at first, although data is hard to come by at this point. Goldman Sachs estimates that 200,000 bpd of Eagle Ford production “remains shut-in,” which offsets some of the bearish impact on WTI from the refinery outages. Adding in some lingering outages offshore in the Gulf of Mexico, total upstream supply outages still stand at about 300,000 bpd.Goldman raises the possibility that the comeback in shale production could be curtailed by the sustained outages at Gulf Coast refineries, a scenario that it says is underappreciated by market analysts.

US Crude Oil Inventories INCREASED SIGNIFICANTLY -- September 7, 2017 -- This will extend the time to re-balancing for a few more months.  US commercial crude oil inventories (excluding the SPR) increased by 4.6 million bbls. I believe this is the greatest increase since we started tracking this metric about 20 weeks ago.  At 462.4 million bbls, US crude oil inventories are in the upper half of the average range for this time of year (the report did not say over how many years the "average" was determined). The average was pulled up significantly by the Saudi surge between 2014 and 2016, so saying US inventories are in the upper half is not good news for oil bulls.   Interestingly, total motor gasoline inventories decreased 3.2 million bbls last week despite the fact that Texans were not driving because they had run out of gasoline, post-Harvey. Regardless, gasoline inventories remain  near the upper limit of the average range, so if you think you are over-paying for gasoline ... guess what, you probably are.

Crude Oil Price Barely Blinks Following EIA Inventory Report - The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Thursday morning, showing that U.S. commercial crude inventories increased by 4.6 million barrels last week, maintaining a total U.S. commercial crude inventory of 462.4 million barrels. The commercial crude inventory has moved into the upper half of the average range for this time of year. This week’s report was delayed by one day due to the Labor Day holiday. Last week’s results also reflect the impact of tropical storm Harvey on the region of the country where nearly half of its oil production is refined. Tuesday evening the American Petroleum Institute (API) reported that crude inventories rose by 2.8 million barrels in the week ending September 1. API also reported gasoline supplies fell by 2.5 million barrels and distillate inventories fell by 600,000 barrels. For the same period, an S&P Platts Global survey of analysts had consensus estimates for a decrease of 2.7 million barrels in crude inventories, a decrease of 4.2 million barrels in gasoline inventories and a drop of 1.9 million barrels in distillate stockpiles. Total gasoline inventories fell by 3.2 million barrels last week, according to the EIA, and remain near the upper limit of the five-year average range. U.S. refineries produced about 9.5 million barrels of gasoline a day last week, down about 1.1 million barrels compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged over 9.5 million barrels a day for the past four weeks, down by 1% compared with the same period a year ago. Refinery closures due to tropical storm Harvey are virtually entirely responsible for last’s build in the crude oil inventory and the drop in gasoline stockpiles. With refineries closed and export terminals shut down, there was nowhere for oil to go last week. Had wells in the Eagle Ford shale play not been shut in for several days the stockpile situation could have been even more lopsided.

WTI/RBOB Drop After Harvey Prompts US Crude Production Collapse, Biggest Inventory Build In 6 Months  --Last night's first glimpse of Harvey's impact on energy confirmed a sizable crude build but only modest gasoline draw. WTI/RBOB prices slid into the DOE print and extended losses (after a quick kneejerk higher) following a bigger than expected crude build (+4.58mm vs +4mm exp). Gasoline and Distilates saw bigger draws than API reported but it was the collapse in Lower 48 crude production that stood out with most of Texas offline. DOE:

  • Crude +4.58mm (+4mm exp) - biggest build in 5 months
  • Cushing +797k (+1mm exp)- biggest build in 5 months
  • Gasoline -3.20mm (-5.2mm exp)- biggest draw in 2 months
  • Distillates -1.396mm

The inventory changes reported by the API were much smaller than those forecast by analysts. As a reminder, Saxo Bank's Ole Hanson notes that "inventory data later is a lot of moving parts which could be quite skewed away from what we’ve seen in recent weeks." Additionally, investors “are going to be skeptical of the data,” James Williams, an economist at energy researcher WTRG Economics, told Bloomberg. “It might be pretty flaky data this week and next, so I don’t expect to see a big market-mover”Bloomberg's Fernando Valle notes energy's past week was all about Hurricane Harvey as refineries shuttered, choking output and hauling down inventories of gasoline and distillates. Bigger than expected crude build and bigger gasoline and distillate draws than API reported...

OilPrice Intelligence Report: Bearish Backlash Drives Oil Prices Down - Oil prices collapsed again on Friday as China aims to reduce the capacity of its teapot refineries and Hurricane Irma zeros in on Florida. This dramatic drop in oil prices has ended several days of strong gains and created the largest spread between WTI and Brent in two years. More refineries are trickling online. Crude is getting loaded on tankers in the ports of Corpus Christi for export. According to IHS Markit, Galveston Bay is operational, and the Houston shipping channel is mostly open. Three refineries in Lake Charles are finally receiving crude oil. Railroads are mostly back up and running. IHS Markit says that 8 of the 20 refineries impacted by Harvey are running at “normal” rates, while all but one of the other 12 are moving towards, or are in the process of, restarting. There is nothing surprising about the EIA data release, but it is still eye-opening to see the hard numbers. On Thursday, the first government data since Harvey hit showed a plunge in U.S. crude oil production by about 750,000 bpd for the week ending on September 1. IHS Markit says the Eagle Ford is quickly restoring lost production and the offshore sector is also getting back to normal. Refining runs were obviously down sharply, while imports also fell. Gasoline prices jumped to a national average of $2.679 per gallon, up from just $2.399 a week earlier. The quick restart to so many Gulf Coast refineries has led to a quick fallback of gasoline futures. WTI swiftly rebounded as well, with fears of major disruptions subsiding as the Texas’ energy industry gets back on its feet. The spread between Brent and WTI jumped to its largest disparity in two years at over $6 per barrel. But that will likely ease as Gulf Coast refineries ramp up and U.S. crude is exported. There is a line of tankers sitting in the Gulf waiting to receive crude, so U.S. oil exports should rebound quickly. 

Crude Is Getting Slammed After China Headlines - WTI crude is suddenly tumbling. While it's unclear of the specific catalyst (storms outweighing most other events), desk chatter suggests it is due to a story in The FT thatChina is striving to reduce capacity of its 'teapot' oil refineries - thus cutting demand notably.Beijing’s push to use crude import quotas and licences as a tool to spur consolidation within China’s independent refining sector is working to correct an industry that has grown “out of control”. A new report from Columbia University’s Center on Global Energy Policy argues the number of privately owned “teapot” refineries will shrink over the next decade as larger, sophisticated plants thrive at the expense of smaller rivals.Consolidation comes as the industry faces pressures from overcapacity, a battle for market share between independent and state-owned companies and slower demand for refined products. Large plants with higher utilisation rates and greater access to imported crude had already begun acquiring smaller plants that had not been granted the same rights by Beijing.“The government does not want dozens of refineries running at 40-50 per cent capacity,” said Erica Downs, the author of the report.“Beijing is correcting a course for an industry that has gotten out of control.” The reaction to this potential plunge in demand hit WTI immediately

Baker Hughes: US rig count gains 1 unit to 944 - The overall US rig count has made another slight gain again this week. Baker Hughes’ calculation of active US rigs increased 1 unit during the week ended Sept. 8 to 944. Rigs drilling for oil were down 3 units to 756 rigs compared with last week, while those rigs targeting natural gas gained 4 units to 187 rigs. Rigs unclassified were unchanged again this week at 1 unit.The US rig count is up 436 rigs from last year’s count of 508, with oil rigs up 342, gas rigs up 95, and unclassified rigs down 1.The US offshore rig count was unchanged from last week to 16. This count is down 2 year-over-year. On land, the count also was unchanged at 923 units this week.Among the major oil and gas-producing states, New Mexico gained 3 rigs this week to 68. North Dakota, Pennsylvania, and West Virginia each gained 1 unit to respective counts of 53, 33, and 15.Six states were unchanged this week: Texas, 455; Oklahoma, 130; Ohio, 29; Wyoming, 25; California, 16; and Utah, 8.Louisiana, Colorado, and Arkansas each lost 1 unit to respective counts of 65, 36, and 0. Alaska was down 2 units to 2 rigs working.In Canada, the overall rig count increased 1 unit this week to 202. Rigs drilling for oil were unchanged at 102 and those targeting gas rose 1 unit to 100. The total count is up 68 units from this time a year ago when 134 rigs were working.

Oil Prices Slip Amid Falling U.S. Rig Count - The number of active oil and gas rigs in the United States rose this week by 1 rig. Baker Hughes Rig Count last week was largely unchanged as well, with data for 47 counties South Texas largely unavailable last week due to the Hurricane, according to BH. The total oil and gas rig count in the United States, two weeks post-Harvey, now stands at 944 rigs, up 436 rigs from the year prior, with the number of oil rigs in the United States decreasing by 3 this week and the number of gas rigs increasing by 4.  Oil rigs in the United States now number 756—342 rigs above this time last year.  The number of rigs fell in Arkoma Woodford (1), DJ-Niobrara (1), Fayetteville (1), and Granite Wash (1). Permian, Haynesville, and Cana Woodford, and Marcellus all gained two rigs.  Prices fell on Friday despite promises of decreased exports from Saudi Arabia for the month of October, with promises of a 350,000 bpd decline for the month, with exports to the United States to be below 600,000 bpd.  At 10:53pm EDT Friday, WTI was trading down 1.63 percent at US$48.29, with Brent trading down 0.48 percent at US$54.23—both benchmarks up from last week.    Despite the small rise in the number of active rigs in the United States, US crude oil production slipped the week ending September 1 to 8,781 bpd—the first under-9,000 bpd week since February. Hurricane Irma is currently headed for Florida, and expected to weaken demand further in the coming week, as ports have closed ahead of the storm. Hurricane Katia is following closely behind, and expected to hit the Mexican coast by early tomorrow. At 8 minutes after the hour, WTI was trading at $48.06 with Brent crude trading at $54.10.

OPEC Aug crude oil output 32.65 mil b/d, down from July on Libya outages: Platts Survey - OPEC's crude oil output fell in August for the first time in five months, as outages in Libya interrupted the country's recent dramatic recovery, more than offsetting gains in Nigeria, according to the latest S&P Global Platts OPEC survey released September 7.  Saudi Arabia, Iraq and Gabon also produced fewer barrels in August, while Angola raised its output in the month. In all, the 14-country bloc produced 32.65 million b/d in August, a 170,000 b/d drop from July, the survey found.Libyan output, which had risen to 990,000 b/d in July, tumbled to 830,000 b/d in August as militants blockaded key fields Sharara, Elephant and Hamada.Libya's National Oil Corp. said in the week ended September 1 more than 360,000 b/d of production from the three fields had been shut in, although sources told Platts late September 6 that flows from the 300,000 b/d Sharara and 10,000 b/d Hamada fields had resumed.Production also restarted at the 90,000 b/d Elephant field on September 2, sources said. Nigerian production, meanwhile, rose 50,000 b/d to 1.86 million b/d in the month, as the country's output continues to rebound from civil unrest.In a podcast last week, Nigerian oil minister Emmanuel Kachikwu suggested that the country's production was close to full capacity, linking the rise in output to increased investment by foreign companies on relative calm in the Niger Delta oil province.Nigeria lifted force majeure on loadings of key export grade Bonny Light in August.Libya and Nigeria are exempt from OPEC's landmark production cut agreement, and their recovery over the past few months had led to talks among the coalition on whether the two should be asked to join in on the cuts, although Libya's setback in August may quell some of that discussion.Representatives from Libya and Nigeria have been invited to the September 24 meeting of the OPEC/non-OPEC monitoring committee overseeing the deal to explain their production outlooks. The two members' combined August average output was 480,000 b/d above their level in October, the benchmark month from which OPEC based its production cuts and quotas.

Potential impact of Harvey fallout on OPEC output deal; outlook for Libya's oil sector - OPEC Outlook Podcast - With Hurricane Harvey battering the heart of the US oil industry in Texas, S&P Global Platts senior writer Herman Wang takes a look at how the fallout from the storm might impact OPEC and its production cut agreement in the weeks to come. Will the hurricane deal a blow to OPEC’s attempt to rebalance the market, just as fundamentals seemed to be turning in the producer group’s favor this summer?Also on the S&P Global Platts OPEC Outlook podcast, we preview the September 24 meeting of the OPEC/non-OPEC monitoring committee overseeing the production cut agreement, as Saudi Arabia and Russia line up support behind a three-month extension of the deal.  And in our Get to Know an OPEC Member series, this month the podcast focuses on war-torn Libya, which is rebuilding its oil industry after years of civil strife that still simmers today.  Neil Quilliam, a senior research fellow at the Chatham House’s Middle East and North Africa program and also a director at energy consultancy Rapidan Group, joins the podcast to discuss Libya’s oil outlook.

Syria may be in ruins, but it looks like Assad ‘has won the war militarily’ -- In southern Syria’s chilly late winter of 2011, a scrap of schoolboy graffiti that read “Your turn, Doctor” — a mocking call for the ouster of President Bashar Assad — helped spark a ferocious civil war that has left hundreds of thousands dead and millions displaced. Now, there is a growing diplomatic consensus that Assad, the 51-year-old ophthalmologist who inherited Syria’s leadership 17 years ago from his dictator father, has almost certainly prevailed against efforts to dislodge him militarily — and that his opponents need to come to terms with his political survival as they plot a new course.The multi-sided war, midway through a seventh brutal year, is far from over. But Assad’s consolidation of control in key parts of the country, and continued crucial aid from allies Russia and Iran, have contrived to make it virtually impossible for the rebels who once enjoyed U.S. support to drive him from power, longtime observers of the conflict say.“Bashar Assad’s government has won the war militarily,” said Robert Ford, a former U.S. ambassador to Damascus who witnessed the uprising’s earliest days. “And I can’t see any prospect of the Syrian opposition being able to compel him to make dramatic concessions in a peace negotiation.” The government has yet to fully secure areas around the capital, and fighting continues in various pockets of Syria’s east as well as the northwestern province of Idlib. Yet even Assad’s staunchest international adversaries see the continuation of his rule as a fait accompli and have urged the rebels arrayed against him to do the same. “The nations who supported us the most … they’re all shifting their position,” said Osama Abu Zaid, an opposition spokesman contacted by phone. “We’re being pressured from all sides to draw up a more realistic vision, to accept Assad staying.”

The U.S. Is in Denial About the Civilians It’s Killing in Syria -- Citing an estimated 20,000 civilians who remain trapped in Raqqa, U.N. humanitarian advisor Jan Egeland asked last week for consideration of a humanitarian pause in the city, similar to the respites organized last year in eastern Aleppo, where regime forces were fighting rebels. Despite a number of major investigations into the civilian death toll in Raqqa by multiple human rights organizations in recent months, there is no sign either side is considering any sort of pause.In a report released Aug. 24, the same day Egeland made his appeal, Amnesty International described the hell facing civilians, including thousands of children, at Raqqa. Survivors who fled the city said Islamic State fighters have been “laying landmines and booby traps along exit routes, setting up checkpoints around the city to restrict movement, and shooting at those trying to sneak out.” But the report also described a “constant barrage of artillery strikes and airstrikes” by the coalition that further restricts movement and has injured and killed hundreds of people.Witnesses told of how shells ripped through civilian homes and killed those seeking to escape. “Artillery shells are hitting everywhere, entire streets,” one witness said. “It is indiscriminate shelling and kills a lot of civilians.”  Throughout operations to capture Mosul and Raqqa, the coalition has argued that defeating the terrorist group quickly would ultimately save more lives. After Egeland’s comments, the coalition quickly tamped down expectations that the tempo of fighting might slow in Raqqa or anywhere else. “Any pause in operations will only give ISIS more time to build up their defences and thus put more civilians in harm’s way,” coalition spokesman Col. Joseph Scrocca said. “What is more, it will further reinforce ISIS’s tactic of using civilians as human shields.”

The Stranded ISIS Bus Convoy That No One Knows What To Do With - In a bizarre twist to an already unusual story, a convoy of 17 buses carrying Islamic State terrorists and their families has remained stranded since Thursday in the Syrian desert as the US, Russians, and Syrians discuss their fate: attack the convoy or allow it to pass?Regardless of what happens, emerging photos and video depicting ISIS' retreat from Lebanon as well as their current helpless plight stuck in the middle of Syria constitutes perhaps the most significant blow to ISIS propaganda to date.  Earlier this week we reported on the unusual deal which allowed a large convoy of Islamic State fighters and their families to exit their contested stronghold along the Syrian-Lebanese border under the watch of the Lebanese and Syrian armies and Hezbollah after being defeated. As first announced by Hezbollah's Secretary General Hassan Nasrallah in a speech Monday night, the deal involved the transportation of 26 wounded and 308 ISIS fighters, along with 331 civilian family members via buses and ambulances to Syria's eastern province. The controversial deal was struck in return for the bodies of 9 Lebanese soldiers, kidnapped by ISIS in 2014. That convoy was allowed to enter Syria but was attacked by the US-led anti-ISIL Coalition on Wednesday as it crossed open desert on its way to the Islamic State stronghold of Deir Ezzor. Per coalition statement, the convoy wasn't attacked directly - just outlying ISIS vehicles which were attempting to join and bolster the transport. Part of the highway in front of the convoy, including a key bridge, was further targeted in order to stop its movement.

Israel hits Syrian site said to be linked to chemical weapons (Reuters) - Israel attacked a military site in Syria’s Hama province early on Thursday, the Syrian army said, and a war monitoring group said the target could be linked to chemical weapons production. The air strike killed two soldiers and caused damage near the town of Masyaf, an army statement said. It warned of the “dangerous repercussions of this aggressive action to the security and stability of the region”. The Syrian Observatory for Human Rights, which monitors the war, said the attack was on a facility of the Scientific Studies and Research Centre, an agency which the United States describes as Syria’s chemical weapons manufacturer. It came the morning after U.N. investigators said the Syrian government was responsible for a sarin poison gas attack in April. Syria’s government denies using chemical arms. In 2013 it promised to surrender its chemical weapons, which it says it has done. The Observatory said strikes also hit a military camp next to the center that was used to store ground-to-ground rockets and where personnel of Iran and its ally, the Lebanese Hezbollah group, had been seen more than once. An Israeli army spokeswoman declined to discuss reports of a strike in Syria. Syria’s foreign ministry has sent letters to the U.N. Security Council protesting against Israel’s “aggression” and saying anyone who attacked Syrian military sites was supporting terrorism, Syrian state TV reported.

While defeat of Isis dominates global attention, al-Qaeda strengthens in Syria. --Al-Qaeda is creating its most powerful stronghold ever in north-west Syria at a time when world attention is almost entirely focused on the impending defeat of Isis in the east of the country. It has established full control of Idlib province and of a vital Syrian-Turkish border crossing since July. “Idlib Province is the largest al-Qaeda safe haven since 9/11,” says Brett McGurk, the senior US envoy to the international coalition fighting Isis.  The al-Qaeda-linked movement, Hayat Tahrir al-Sham (HTS), which used to be called Jabhat al-Nusra, has long been the most powerful rebel group in western Syria. After the capture of east Aleppo by the Syrian army last December, it moved to eliminate its rivals in Idlib, including its powerful former Turkish-backed ally Ahrar al-Sham. HTS is estimated to have 30,000 experienced fighters whose numbers will grow as it integrates brigades from other defeated rebel groups and recruits young men from the camps for Internally Displaced Persons (IDPs) who have sought refuge in Idlib from President Bashar al-Assad’s forces.   Al-Qaeda is growing in strength in and around Idlib province just as Isis is suffering defeat after defeat in eastern Syria and Iraq. Its latest setback was its failure on Tuesday to stop the Syrian army linking up with its enclave at Deir Ezzor, where Isis has been besieging the government held part of the city for three years. Divided by the Euphrates, the city is the largest in eastern Syria and its complete recapture opens the way to the al-Omar oilfields that once provided half of Syria’s crude production. 

Why Jihadism Won't Be Allowed To Die - Pepe Escobar - Plan B of Daesh’s masters may have been to indoctrinate repeated waves of misguided youth across the EU and “seduce” them into D.I. Y. jihadi terror, creating fear and insecurity in Europe. I’ve just been to Barcelona — and that’s not happening. No Fear. Daesh can also manipulate its brand name to stake a claim into what we may call the New War Belt in Southwest Asia. That’s also not happening, because the “4+1” – Russia, Syria, Iran, Iraq, plus Hezbollah – with the addition of Turkey, and with China in a “leading from behind” role, are all working together.The unfinished war across “Syraq” coupled with spasms of jihadism in Europe could certainly still metastasize into a massive Eurasian cancer, spreading like a plague from Afghanistan to Germany and vice-versa, and from the South China Sea to Brussels via Pakistan and vice-versa.What would happen under this cataclysmic scenario is the complete derailment of the Chinese-driven New Silk Roads, a.k.a. Belt and Road Initiative (BRI); its integration with the Russia-driven Eurasia Economic Union (EAEC); and a massive security threat to the domestic stability of the Russia-China strategic partnership, with uncontrollable bellicose scenarios developing very close to their borders. It’s no secret which elements and institutions would very much cherish internal political chaos in both Russia and China. Dr. Zbig “Grand Chessboard” Brzezinski may be dead, but geopolitics is still encumbered with his corpse. Brzezinski’s life obsession is that no peer competitor to the US should be allowed to emerge. Imagine as he lay dying contemplating the ongoing, ultimate nightmare; a Russia-China pan-Eurasian alliance. The less disastrous scenario in this case would be to seduce either Moscow or Beijing into becoming a US partner, based on which one would pose a lesser “threat” in the future.  Thus the obsession of the US deep state and the Clinton machine in demonizing all things Russia – like an infantile neo-McCarthyism on steroids. Inevitably, what this geopolitical back hole has precipitated is China’s even more rapid advance on all fronts.

Report: 1,100 Children Killed in Yemen, Majority from U.S.-Backed Saudi Airstrikes -- A new United Nations report says more than 1,100 children have been killed during the war in Yemen—and that the majority of these children were killed by U.S.-backed, Saudi-led airstrikes. The U.N. also described the ongoing humanitarian crisis in Yemen as an "entirely man-made catastrophe." The ongoing war has left more than 7 million people on the brink of famine. The U.S.-backed bombing campaign has also devastated Yemen’s health, water and sanitation systems, sparking the world’s worst cholera epidemic, with 600,000 people affected.

What is fuelling Yemen’s cholera epidemic?  - With Yemen mired in the third year of a war led by Saudi Arabia and its allies, the country's population is facing a humanitarian crisis of unprecedented proportions.More than 20 million Yemenis require humanitarian support, with nearly half of those in acute need of assistance, according to the United Nations. This year, a new wave of cholera cases further devastated the population, infecting hundreds of thousands of people and killing more than 2,000. Aid agencies have warned that without urgent action, the situation will continue to deteriorate.Analysts have described the Saudi-led offensive in Yemen as a strategic failure, but although Saudi's crown prince recently expressed his desire for an exit strategy, there is no immediate end in sight - and the humanitarian consequences will endure long after the bombs stop falling. Al Jazeera spoke with Tarik Jasarevic, a spokesperson for the World Health Organization, about the impacts of the current cholera epidemic on Yemen's vulnerable population.

U.S. Is Said to Seek a Ban on Crude Oil to North Korea - The U.S. is circulating a draft resolution at the United Nations that would bar crude oil shipments to North Korea, ban the nation’s exports of textiles and prohibit employment of its guest workers by other countries, according to a diplomat at the world body.The proposal, which also calls for freezing the assets of North Korean leader Kim Jong Un, has been circulated to the 15 members of the Security Council, according to the diplomat, who asked not to be identified discussing internal deliberations. The U.S. has said it wants the council to take up tougher sanctions at a meeting Sept. 11.The bid for the toughest penalties yet against North Korea comes despite renewed warnings against such moves by the leaders of China and Russia, which have veto power in the Security Council. U.S. President Donald Trump and Chinese President Xi Jinping spoke for 45 minutes Wednesday amid Pyongyang’s stepped-up pace of nuclear and missile tests.“We will not be putting up with what’s happening in North Korea,” Trump told reporters Wednesday after the conversation. The two leaders had a “very, very frank and very strong call,” he added. Asked about possible U.S. military action, the president said “That’s not our first choice, but we’ll see what happens.”There remain questions over how far the Security Council will go in punishing Kim’s regime after North Korea conducted its sixth and most powerful nuclear test on Sunday. Russia and China have opposed doing anything that could lead to the collapse of Kim’s regime. Analysts have said China may only agree to a partial or temporary oil exports ban. Tensions are also set to rise between China and South Korea with Seoul moving Thursday to deploy more launchers for a U.S. defense shield known as Thaad. Four launchers have arrived at Seongju military base despite opposition by residents and activists, Yonhap News reported. China has angrily opposed its neighbor having Thaad, saying it could upset the security balance in the region and be used against Beijing’s own missile systems.

South Korea Proposes Full Oil, Currency Blockade Of North; China Says No -- Unable to make de-escalation progress using conventional diplomatic means at the United Nations, on Monday South Korean President Moon Jae-in proposed that the U.N. Security Council hold serious discussions about imposing an energy and capital blockade on North Korea, by cutting off oil supplies to Kim's regime coupled with a block of North Korean sources of foreign currency, the South Korean president's office said. Moon discussed the idea with his Russian counterpart, Vladimir Putin, during a phone call, according to South Korea's Blue House. "It's time for the U.N. Security Council to seriously consider ways to block North Korea's sources of foreign currency, including a halt to oil supplies to the North and a ban on its exportation of laborers," the office quoted Moon as saying in the wake of the 6th North Korean nuclear test. According to Yonhap, the South Korean leader also said Sunday's nuclear test "was different from past experiments in size and character, and expressed his heightened concern over North Korea's claim that it was an H-bomb that can fit atop an intercontinental ballistic missile." Putin, who is attending a BRICS emerging economies summit in China, sided with his South Korean peer and said that North Korea's nuclear and ballistic missile programs destroy the international nonproliferation regime and pose a "real threat" to regional peace and stability. He also noted that the leaders at the summit adopted a statement condemning the latest test. Moon underscored his commitment to resolving the North Korean nuclear issue diplomatically and peacefully. Putin, in turn, said the leaders at the summit agreed there is only a diplomatic solution to the problem.

Oil supplies to North Korea could be cut as China’s frustration with ally’s failure to communicate grows | South China Morning Post: China is likely to support tougher sanctions against North Korea, including cutting crude oil exports, but Beijing will not completely sever the energy exports to ensure the regime of its ally did not collapse, according to Chinese diplomatic analysts. The assessment came after North Korea conducted its sixth nuclear test and claimed it had detonated a hydrogen bomb on Sunday, overshadowing a summit of emerging market economies summit held in China. The test has increased Beijing’s frustrations with Pyongyang as it has ignored the call to stop nuclear weapon development, and reflected the fact that communications between the two nations seem to have broken down. North Korea used to inform China at least a few hours ahead of its plan to launch nuclear test, but a Beijing-based Asian diplomat said the practice has stopped since Pyongyong’s fourth test in January 2016. China was not notified about the fifth nuclear test last September even though a senior official from Kim Jong-un’s regime visited Beijing shortly before. The Chinese Foreign Ministry did not say whether Beijing was informed by Pyongyang before the latest test, but diplomatic observers said communication between the two sides have been increasingly difficult as Pyongyang continues to defy Beijing with its nuclear programme. “It is a flat-out lie for people to say that North Korea does not hold grudges against China,” Zhang Liangui, a professor of international strategic research at the Central Party School, said. “North Korea has rejected all of China’s initiatives and it has become reluctant to listen to Beijing.” 

A War With North Korea Could Send Oil Prices Skyrocketing -  An open military conflict in Northern Asia would disrupt more than a third of global seaborne crude oil trade, Wood Mackenzie warned last week amid yet another escalation between North Korea, its neighbors, and the U.S.  Such a conflict would cripple North Asia’s production and refining capacity, the consultancy said. Some 65 percent of Asia’s crude oil refining capacity is located in China, Japan, and South Korea, so the effects of an open war would be far-reaching and potentially long-lasting. The most pressing question, then, is how likely such an open conflict is.Pyongyang seems determined to expand its military capabilities with intercontinental ballistic missiles that can carry a nuclear head. State media claim that the nuclear head is a fact, releasing a photo featuring the country’s leader Kim Jong Un inspecting said weapon. After a quick succession of ballistic missile tests over the last couple of months that put South Korea, Japan, and the U.S. on red alert, more nuclear talk from Pyongyang is exactly what the world does not need. Yet it is what we are getting.Talk is not enough to tip the region into a war - possibly even a nuclear war - but it serves to heighten the pressure, and decisions made under pressure are seldom the wisest. Analysts seem to be divided as to the most probable course the events would take.A recent analysis by SBS News’ Kelsey Munro looks into the two basic scenarios: accept a nuclear North Korea, or prevent it from becoming nuclear as soon as possible.Geopolitics experts seem to be split on which scenario is the more sensible one to follow.On the one hand, Munro notes, some researchers believe that accepting North Korea’s nuclear capability would prevent a war that would result in hundreds of thousands of casualties and disrupt the Asian economy. This would be a conventional war, since the chances of success for a tactical nuclear strike seem to be too slim to be comfortable with. On the other hand, acceptance of a nuclear Pyongyang will in all probability lead to other countries in the region going nuclear, ultimately pushing the world closer to a nuclear war as it would be that much harder to exercise any pressure on North Korea after it has solidified its second-strike capability.

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