Sunday, November 26, 2017

oil prices at a 2½-year high, oil drilling picking up...

oil prices rose nearly 4% this past week and finished at a 2½-year high, as traders focused on a supply disruption to the Cushing hub in Oklahoma, while anticipating extended supply cuts from the OPEC meeting in this coming week...after closing at $56.55 a barrel, down 0.4%, last week for the first time in six weeks, US oil contracts for December crude continued sliding lower on Monday on a stronger dollar and edginess about the upcoming OPEC meeting, closing down 46 cents at $56.09 a barrel as the December contract the same time, the contract for January crude slid 29 cents to close at $56.42 a barrel...with the media now quoting January crude as 'the price of oil', that contract rose 41 cents to $56.83 on Tuesday, on restrained expectations that OPEC would extend their output cuts when they meet in Vienna next week...oil prices then jumped $1.19 or 2.1% to $58.02 on Wednesday after TransCanada reported Keystone pipeline crude deliveries to Oklahoma would be curtailed by 85 percent through November, following last week's spill of more than 210,000 gallons of tar sands oil under a farm field in northeast South Dakota, which is still unrepaired...that pipeline shutdown would reduce the glut of oil at the Cushing depot, on which these WTI oil contracts are based...momentum from that pipeline shutdown carried through the holiday as oil rose again on Friday, bolstered by reports that OPEC and Russia agreed to a framework to extend their oil production cuts to the end of next year, with oil prices ending up another 93 cents at $58.95 a barrel at the close, a gain of 1.6% on the day and more than 3.9% for the week...

since oil prices are now much higher than they've been for a good two years, we'll include a graph of the recent rally to help you envision how they got here...

November 25 20117 oil prices

the above graph is a screenshot of the live interactive oil price graph at Daily FX, an online platform that provides trading news, charts, indicators and analysis of the markets...each bar on the above graph represents oil prices for one day of oil trading between June 15th and November 24th, wherein green bars represent the days when the price of oil went up, and red bars represent the days when the price of oil went down...for green bars, the starting oil price at the beginning of the day is at the bottom of the bar and the price at the end of the day is at the top of the bar, while on red or down days, the starting price is at the top of the bar and the price at the end of the day is at the bottom of the bar...there are also feint grey "wicks" above and below each bar to indicate trading prices for each day that were above or below the opening to closing price range...note at the far right that there are four green bars that would represent this week's price rally, rather than the three day rally we have described; that's because this graph also includes online and international trading, which continued through the Thanksgiving holiday, while the New York markets that we reported on were closed...

on that graph, we can almost see that oil prices dipped to a ten month low of $42.05 a barrel on June 21st, which we saw at that time was below the average breakeven price for all US oil basins...from there, oil prices stayed below $50 a barrel until mid-September, which thus led to an extended pullback in oil drilling that lasted through October...however, with oil prices over $50 a barrel since that time, the rig crews have been returning to the field, and drilling for oil has been picking, with oil prices near $60 a barrel, the disincentive of the past two years has reversed, because it will now be profitable to drill for oil in every shale basin in the US, with the possible exception of the thinnest trends of the SCOOP/STACK...if oil prices should continue rising from here, we would not be surprised to even see oil drilling return to the Utica shale, at least to the same degree as we saw before mid 2014, when more than half of the Utica rigs were targeting oil...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending November 17th, showed a big jump in our oil exports while our oil imports were little changed, which meant that oil needed to be pulled out of storage to meet the needs of our refineries, who also saw another increase in throughput...our imports of crude oil slipped by an average of 25,000 barrels per day to an average of 7,873,000 barrels per day during the week, while our exports of crude oil rose by an average of 462,000 barrels per day to 1,591,000 barrels per day, which meant that our effective trade in oil worked out to a net import average of 6,282,000 barrels of per day during the week, 487,000 barrels per day less than the net imports of the prior the same time, field production of crude oil from US wells rose by 13,000 barrels per day to another record high of 9,658,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 15,940,000 barrels per day during the reported week... 

during the same week, US oil refineries were using 16,838,000 barrels of crude per day, 199,000 barrels per day more than they used during the prior week, while over the same period 511,000 barrels of oil per day were being withdrawn storage facilities in the US....hence, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was 387,000 fewer barrels per day than what refineries reported they used during the account for that discrepancy, the EIA needed to insert a (+387,000) 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, a metric that is labeled in their footnotes as "unaccounted for crude oil"...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports slipped to an average of 7,680,000 barrels per day, now 5.3% less than the 8,110,000 barrels per day average imported over the same four-week period last year....the 511,000 barrel per day decrease in our total crude inventories included a 265,000 barrel per day withdrawal from our commercial stocks of crude oil and a 246,000 barrel per day sale of oil from our Strategic Petroleum Reserve, part of an ongoing sale of 5 million barrels annually that was included in a Federal budget deal 25 months ago...this week's 13,000 barrel per day increase in our crude oil production was due to a 20,000 barrel per day increase in output from wells in the lower 48 states, which was partially offset by a 7,000 barrels per day decrease in output from Alaska....the 9,658,000 barrels of crude per day that were produced by US wells during the week ending November 17th was another new record high for US output, 10.1% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 11.1% more than the 8,690,000 barrels per day of oil we produced during the during the equivalent week a year ago...

US oil refineries were operating at 91.3% of their capacity in using those 16,838,000 barrels of crude per day, up from 91.0% of capacity the prior week, and above normal for November...while the 16,838,000 barrels of oil that were refined this week were still 5.0% less than the 17,725,000 barrels per day that were being refined the week before Hurricane Harvey struck at the end of August, they were 2.7% more than the 16,397,000 barrels of crude per day that were being processed during week ending November 18th, 2016, when refineries were operating at 90.8% of capacity, and more than 12.7% above the 10-year seasonal average for this time of year...

with increase in the amount of oil refined, gasoline output from our refineries was 5.9% higher, increasing by 580,000 barrels per day to 10,432,000 barrels per day during the week ending November 17th, which was also 7.5% higher than the 9,700,000 barrels of gasoline that were being produced daily during the comparable November week a year addition, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 104,000 barrels per day to 5,335,000 barrels per day, which was a record distillates output for any week in any November, and 5.0% more than the 5,080,000 barrels per day of distillates that were being produced during the week ending November 18th last year....    

even with the big jump in our gasoline production, our gasoline inventories at the end of the week just rose by 44,000 barrels to 210,475,000 barrels by November 17th, because our domestic consumption of gasoline rose by 423,000 barrels per day to 9,595,000 barrels per day at the same time, even as our exports of gasoline fell by 62,000 barrels per day to 782,000 barrels per day, while our imports of gasoline rose by 165,000 barrels per day to 514,000 barrels per day...however, with significant gasoline supply withdrawals in 15 out of the last 23 weeks, our gasoline inventories are still down by 13.2% from their pre-summer high of 242,444,000 barrels, and by over 6.0% below last November 18th's level of 224,026,000 barrels, even as they are still roughly 0.8% above the 10 year average of gasoline supplies for this time of the year...   

with the increase in our distillates production, our supplies of distillate fuels rose by 269,000 barrels to 125,032,000 barrels over the week ending November 17th, in just the second small supply increase in twelve weeks, after falling by 9,724,000 barrels over the prior three weeks...that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 28,000 barrels per day to 4,057,000 barrels per day, while our exports of distillates fell by 47,000 barrels per day to 1,430,000 barrels per day, and while our imports of distillates rose by 29,000 barrels per day to 190,000 barrels per day...even after this week’s increase, our distillate inventories were still 16.2% lower at the end of the week than the 149,239,000 barrels that we had stored on November 18th, 2016, and 5.3% lower than the 10 year average of distillates stocks at this time of the year

finally, the big increase in our crude oil exports, combined with the increase in domestic refining, meant that our commercial crude oil inventories fell for the 26th time in the past 33 weeks, decreasing by 1,855,000 barrels, from 458,997,000 barrels on November 10th to 457,142,000 barrels on November 17th....while our oil inventories as of November 17th were 6.5% below the 489,029,000 barrels of oil we had stored on November 18th of 2016, they were still fractionally higher than the 456,035,000 barrels of oil that we had in storage on November 20th of 2015, and 30.3% greater than the 350,704,000 barrels of oil we had in storage on November 21st of 2014, at a time when the buildup of our oil glut in the US was just getting started...     

This Week's Rig Count

because of the holiday, the weekly Baker Hughes rig count report was released on Wednesday, November 22nd, and thus covers changes in drilling activity for just the five days from November 17th to the 22nd...nonetheless, they reported that drilling rig activity increased during that period for the 3rd week in a row, but just the 6th time out of the last 17 weeks, as the active rig count rose by 8 rigs, from 915 rigs on November 17th to 923 rigs on November 22nd...that was also 330 more rigs than the 593 rigs that were deployed as of the November 23rd report last year, but still way down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014... 

the number of rigs drilling for oil rose by 9 rigs to 747 rigs this week, which was also up by 273 oil rigs over the past year, while this week's 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 fell by 1 rig to 176 rigs this week, which was still only 58 more gas rigs than the 118 natural gas rigs that were drilling a year ago, and way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

drilling began from one platform in the Gulf of Mexico offshore from Louisiana this week, which increased the Gulf of Mexico rig count to 22 rigs, which was still down from the 23 rigs active in the Gulf of Mexico a year ago...since there were no other offshore rigs active other than those deployed in the Gulf either this week or a year ago, those Gulf of Mexico rig counts are also the same count as the total US offshore count...

the count of active horizontal drilling rigs increased by 10 rigs to 786 rigs this week, which put them up by 311 rigs from the 475 horizontal rigs that were in use in the US on November 23rd of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, the vertical rig count was up by 3 rigs to 66 vertical rigs this week, which happened to be the same number as the 66 vertical rigs that were deployed on November 23rd of 2016...on the other hand, the directional rig count was down by 5 rigs to 71 rigs this week, which was still up from the 52 directional rigs that were working 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 November 22nd, the second column shows the change in the number of working rigs between last week's count (November 17th) and this week's (November 22nd) count, the third column shows last week's November 17th 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 23rd of November, 2016...           

November 22 2017 rig count summary

as you can see from the above, we have another week where the major basin variances table doesn't tell us much; despite the net addition of 10 horizontal rigs during the period, the major basins tracked here only account for 3 rig additions, and one rig shutdown...part of the problem is that Baker Hughes has not changed the basins they track as activity has shifted over the years; for instance, the Fayetteville in Arkansas has gone almost two years with no more than one rig active, as compared to 2011, when that basin averaged over 30 active rigs a week...yet basins that are now seeing more activity, such as the Unita in Utah and the Powder River Basin in Wyoming, have not yet even been listed here...with a 4 rig increase in Wyoming, it's entirely possible that half of the week's new rigs were set up in the Powder River Basin, but without digging through the individual well logs in the North America Rotary Rig Count Pivot Table (XLS), there's no easy way of determining exactly where they were...note that in addition to the activity changes in the major producing states shown above, Montana also saw another rig added this week, and they thus have two rigs working, up from none a year ago, and the first time more than one rig was active in the state since March 2015..


Frack-waste truck overturns near Coolville - A truck hauling brine waste resulting from the hydraulic fracturing process tipped over Sunday morning on U.S. Rt. 50/Ohio Rt. 7 between Coolville and Belpre, spilling roughly 1,200-1,500 gallons of brine, the Ohio Environmental Protection Agency confirmed on Tuesday.  According to Ohio EPA spokesperson Dina Pierce, the Ohio EPA and Department of Natural Resources were continuing to conduct clean-up of the spill as of Tuesday morning, which occurred in Little Hocking, Washington County, a mile or two east of the K&H fracking-waste injection well located in Torch. The driver suffered minor injuries, according to an Ohio State Highway Patrol report, after the truck (in the westbound lane, heading toward K&H) drove off the right side of the roadway, struck an embankment and a tree, and overturned onto its side. Alcohol is not suspected in the crash.   “Brine leaked from a top hatch into a roadside culvert. The Little Hocking fire department had plugged the culvert and installed a temporary dam in the ditch to limit migration of the brine.”  Pierce said that the Ohio EPA inspected the discharge from the truck that flowed into the culvert and ditch, and also checked the nearest waterway that that culvert empties into, a creek that Pierce identified as White’s Run Creek. Pierce said that the company took samples of the brine from the crash site, and sent it to a “independent” lab to analyze the materials within the brine. “Ohio EPA inspected the discharge to the culvert, ditch, and also checked White’s Run Creek,” Pierce said. “No odors, sheen or wildlife impacts were observed. The trucking company, Contractor Transport, hired a contractor to vacuum the liquid from the culvert and ditch. The next steps are removing soil impacted by the spill.” Brine in this context is a byproduct of hydraulic fracturing for oil and gas, and may contain a cocktail of hazardous and toxic substances. Lorraine McCosker, an Athens-based environmental activist, was present on the scene Sunday, which she said is about a mile away from the K&H well. She said she and others took a sample of the brine, and will be conducting their own testing. She said that dozens of trucks carrying brine traverse that roadway each day, many of them heading toward the K&H waste-injection well.

Fracking Chemicals Remain Secret Despite EPA Knowledge of Health Hazards - The U.S. Environmental Protection Agency (EPA) knows that dozens of the chemicals used in fracking pose health hazards. The agency not only allows their use, but also lets the oil and gas industry keep the chemicals secret, according to a new report. Between 2003 and 2014 the EPA identified health hazards for 41 chemicals used in fracking, according to a report from the Partnership for Policy Integrity and Earthworks , based on documents obtained through a Freedom of Information Act request. Fracking is the injection of a chemical slurry into drilling sites to free up underground oil and gas deposits. Hazards from the chemicals used included irritation to eyes and skin; harm to the liver, kidney and nervous system; and damage to the developing fetus. Nonetheless, in most cases, the EPA allowed the chemicals to be manufactured and used without further testing. What's more, the identities of the chemicals are hidden from the public, even though federal law authorizes the EPA to require disclosure of so-called trade secrets if there is unreasonable risk of injury to health or the environment. In response to the report, more than 100 scientists, health professionals and first responders wrote the EPA , asking that it make public the identities of the chemicals known to pose health hazards.  "Citizens have a right to know what health hazards we are being exposed to, especially when these hazards have been identified by government health assessments ... It is an unreasonable risk for people to be unknowingly exposed to chemicals that EPA, itself, has identified as potentially harmful," said the letter. Signers included Sandra Steingraber, author of Living Downstream and other acclaimed books on environmental health, and Wilma Subra, winner of a MacArthur "genius" award for her work to help vulnerable communities document the health risks of industrial pollution.

How the Government Hid Fracking’s Risk to Drinking Water -- The federal government hid evidence that chemicals used in hydraulic fracking can damage groundwater and drinking water, according to a report from Inside Climate News. The implications are especially important for rural families that rely on wells for drinking water. The findings go all the way back to 2004, when the George W. Bush administration’s Environmental Protection Agency commissioned a study on the chemicals used in fracking. The study, which minimized the risk from the chemicals, was not scientifically sound, a whistleblower said then.  New information says the report’s conclusion was not supported by the scientists who wrote it:  InsideClimate News has learned that the scientists who wrote the report disagreed with the conclusion imposed by the Bush EPA, saying there was not enough evidence to support it. The authors, who worked for a government contractor, went so far as to have their company’s name and their own removed from the final document.  Congress subsequently exempted fracking chemicals from regulation under the Clean Water Act. So property owners and neighbors don’t know what chemicals have been used in what quantities.  The "Halliburton loophole" exempts oil and gas companies from having to answer to the Clean Water Act for the chemicals they use for fracking.

Five more pipeline protesters arrested | - Five more members of the Lancaster Against Pipelines organization were arrested on Saturday, bringing the total number of arrests to 45. The organization said on Sunday these five protesters, who include one minor, are the latest to oppose the construction of the Williams Partners Atlantic Sunrise Pipeline, which is being constructed through Lancaster County. The five were arrested in Martic Township by stopping construction on Martic Heights as they sat in front of a working backhoe, according to the group. This follows the arrest of three on Tuesday, as well as previous protests that resulted in arrests in October. A court order filed by protestors had temporarily halted work, but the stay was removed by the court Nov. 8. The pipeline will ship natural gas across 183 miles of Pennsylvania, connecting gas-producing regions in the northeast to customers in the mid-Atlantic and the South.  

Columbia gets FERC sign-off for 1.3 Bcf/d WB XPress pipeline project -- Columbia Gas Transmission won certificate approval Friday from the US Federal Energy Regulatory Commission for the 29-mile, 1.3 Bcf/d WB XPress natural gas pipeline project. The project will increase capacity along Columbia's existing WB Line, which runs bi-directionally through West Virginia and the northern part of Virginia. The project will pick up gas around Braxton County, West Virginia, and deliver 500 MMcf/d eastbound into interconnects with Cove Point Pipeline and Transcontinental Gas Pipe Line as well as sending 800 MMcf/d westbound into interconnects with Tennessee Gas at Broad Run and existing Columbia infrastructure including Columbia Gas Appalachia Pool. The FERC action came after Columbia parent TransCanada recently warned FERC of pressure on its schedules for WB XPress and its 171-mile, 2.7 Bcf/d Mountaineer XPress project without prompt approval, particularly as an environmental window controlling timing of tree clearing had already opened. A TransCanada executive said in a recent earnings call the company expected to have FERC certificates for the WB XPress, Mountaineer XPress and Gulf XPress projects in the fourth quarter of this year, and place all three projects in service in 2018.

WV abdicates responsibility in pipeline question (Charleston Gazette-Mail editorial) - Several firms, including EQT Midstream Partners LP; NextEra US Gas Assets, LLC; Con Edison Transmission, Inc.; WGL Midstream; and RGC Midstream, propose building the $3.7 billion Mountain Valley Pipeline, among several to move natural gas out of the region. This pipeline would run 300 miles from Wetzel County to Pittsylvania County, Virginia. The 42-inch pipe would have a 125-foot-wide construction corridor and a permanent right of way of 50 feet. It would require more than 600 stream crossings and 400 wetlands crossings. Construction would disturb nearly 4,300 acres of land in its path across Harrison, Doddridge, Lewis, Braxton, Webster, Nicholas, Greenbrier, Fayette, Summers and Monroe counties.

  • Potential effects on water and wildlife, to say nothing of people, are obvious. Naturally, pipeline builders must submit to various evaluations and permit processes at both the state and federal levels. One, called a 401 Water Quality Certification after its section of the Federal Clean Water Act, is required for projects permitted by a federal agency. The 401 certification process is West Virginia’s opportunity to make sure a federally permitted project will not violate the state’s water quality or stream standards.
  • West Virginia’s Department of Environmental Protection quickly granted this certification, despite much testimony from West Virginians that the project as proposed would harm water and streams.
  • In August, the Sierra Club, West Virginia Rivers Coalition, Indian Creek Watershed Association, Appalachian Voices and Chesapeake Climate Action Network filed a suit in federal court asking the court to vacate DEP’s hasty certification and send the matter back to the agency for a thorough evaluation.
  • In September, West Virginia’s DEP responded to the suit, acknowledging that the application did indeed require further review. DEP also asked the judge to send it back.
  • In October, the 4th U.S. Circuit Court of Appeals sent the issue back to the state DEP for further review, as requested.
  • By November, DEP just declared that the pipeline project could be built without harm. Furthermore, West Virginia wouldwaive its right to even conduct the 401 Certification.

Bans and Regulations: Two Sides of the Same Coin - The Heartland Institute - Officially, Vermont, New York, and Maryland, in that order, are the only states to have passed legislation banning hydraulic fracturing, also known as “fracking.” Illinois’ 2013 Hydraulic Fracturing Regulatory Act (HFRA), which grants permits allowing for high-volume hydraulic fracturing in the state, has ironically acted as a de facto ban – so much so that the first permit to be granted was two months ago, in September, four years after HFRA went into effect.Wichita, Kansas-based Woolsey Operating Co. was slated to be the first oil and natural gas company to begin its fracking operations in the New Albany Shale formation, located in southeastern Illinois. But alas, not even two months later, Woolsey requested the state’s Office of Oil and Gas Resource Management withdraw its injection well permit, explaining the company would consider reapplying for a permit in the future once “it is economical to pursue the projects contemplated …” Mark Sooter, Woolsey’s vice president for business development, revealed to Natural Gas Intel’s Shale Daily the primary reason for his company’s quick suspension of fracking production. “The process we have gone through to receive a permit was burdensome, time consuming and costly due to the current rules and regulations of the State of Illinois … Also, the drilling and completion requirements under the HFRA are stringent, which will make future development costs of the New Albany Shale excessive and the obligations for compliance on our staff demanding.”

Four Questions About the New Line 5 Pipeline Report - In June, the state of Michigan released a draft report on alternatives to Enbridge's Line 5 pipeline , which pumps up to 23 million gallons of oil and natural gas liquids (NGLs) per day along the bottom of the Straits of Mackinac. The draft report, written by Dynamic Risk, was met with heavy criticism from all sides, and the National Wildlife Federation joined with many others to suggest numerous and substantive changes. On Nov. 20, the final alternatives report was released to the public . As per an agreement with the state to obtain funding for the report, Enbridge has had five days to review this report before it is released publicly. Mike Shriberg, executive director for the National Wildlife Federation's Great Lakes Regional Center and a member of the Michigan Pipeline Safety Advisory Board, issued the following statement Monday about how we're evaluating the final alternatives analysis: "We're looking for this report to address four issues, at minimum, lacking in the first draft. It must assess what's best for Michigan—not Enbridge; it must analyze Michigan's share of product transported through Line 5; it must accurately assess the risk of Line 5 and treat that risk with the seriousness it deserves; and it must fully analyze all alternatives to Line 5."   Here's a little more detail about what we're looking for in the report.

Pipeline opponents claim Enbridge skirted permit rules for storage yard - Enbridge has stockpiled thousands of pieces of pipe at several storage sites in northern Minnesota, in preparation for the company’s proposed new Line 3 oil pipeline. But pipeline opponents contend Enbridge skirted Minnesota law in its permit applications for the pipe storage yards. Missives from the Minnesota Pollution Control Agency (MPCA) — which granted the permits — buttress that notion. Enbridge in a statement said the “permits were issued in compliance with applicable regulations at the time.” Enbridge wants to build a new 340-mile pipeline to replace its existing Line 3, one of six Enbridge pipelines running from Canada across Minnesota to Superior, Wis. The new Line 3 would follow the current route to Clearbrook, but then jog south to Park Rapids before heading east. Enbridge has stacks of pipe at several staging areas, including Cloquet, Minn., ready to go if the Public Utilities Commission (PUC) approves the project. The PUC is expected to decide on Line 3 in April. Enbridge had to get “construction stormwater permits” for the pipe storage yards. In 2015, the MPCA issued the permits, which deal with controls for stormwater runoff. In May 2016, the MPCA conducted inspections of eight pipe yards and found Enbridge to be compliant with the stormwater permits. But the MPCA found a problem on another front. Under law and MPCA regulations, permits such as those for Enbridge’s pipe yards aren’t supposed to be issued before the completion of an environmental review for an entire project. The MPCA wrote to Enbridge in March that the pipe-yard permits were approved “prior to completion of the required environmental review” of Line 3. In the case of Line 3, a state-conducted environmental impact statement wasn’t completed until August. The PUC has not yet approved the EIS.

Tellurian awards EPC agreements for Driftwood LNG project totaling $15 billion (video) Houston-based Tellurian Inc. has awarded Bechtel Oil, Gas and Chemicals Inc. — the Houston-based subsidiary of California-based Bechtel Corp. — a collection of four engineering, procurement and construction agreements for its flagship liquefied natural gas terminal near Lake Charles, Louisiana.The agreements for the Driftwood LNG facility come to a total of $15.24 billion across four phases of construction, according to a filing with the U.S. Securities and Exchange Commission. The phases are to be completed along four deadlines. Tellurian has not yet filed the specific dates of those deadlines, though the Driftwood facility is supposed to start producing LNG from the first phase some time in 2022, with full production from all four phases in 2025, according to a company spokeswoman.In total, Driftwood will have capacity to produce up to 27.6 million tons per year of LNG, which means the facility will cost about $554 per ton of capacity. That makes it one of the lowest-cost LNG facility construction projects in the world, Tellurian's president and CEO, Meg Gentle, said in a press release."Today, production on Bechtel-built facilities accounts for 30 percent of global LNG capacity," Gentle said in the release. "We are proud to work together on the next generation of U.S. LNG exports."The contract price is to be paid out in a mixture of U.S. dollars and euros, according to the filing.Tellurian recently hired Bechtel to handle some additional engineering for the project. By the end of the year, the company is set to start participating in LNG markets as it sets up its marketing arm. Tellurian completed a merger with Magellan Petroleum Corp. earlier this year in a deal that took it into public markets. Tellurian plans to offer equity interest in Driftwood Holdings, which will include the LNG terminal, a pipeline and Tellurian's upstream natural gas production.

Kinder Morgan gets US FERC go-ahead for project to supply Sabine Pass - The US Federal Energy Regulatory Commission late Monday approved a Kinder Morgan pipeline expansion that will deliver feedgas to a fifth liquefaction train at Cheniere Energy's Sabine Pass LNG export terminal in Louisiana. The $151 million Sabine Pass Expansion Project will add 600,000 Dt/d of north-to-south firm service. It will replace a meter station in Acadia Parish, add a tap and lateral to connect to the export terminal in Cameron Parish, make changes to three delivery interconnects to allow receipts of gas as well as delivery, and add 15,900 hp of compression in Acadia Parish. It also entails addition of less than 1.5 miles of header pipeline to connect the compressor station to three existing pipeline interconnects. Kinder Morgan Louisiana Pipeline and Sabine Pass Liquefaction have signed a precedent agreement for the full capacity of the project under a 20-year term, according to the FERC order (CP17-22). FERC's order notes there is some overlap of facilities with Kinder Morgan's previously approved Lake Charles Expansion Project, intended to serve the Magnolia LNG project in Lake Charles, Louisiana. However, Kinder Morgan now expects to build the Sabine Pass Expansion Project first. The Magnolia project has received regulatory approval but is still seeking long-term contracts and awaiting a final investment decision, amid a well-supplied global market. 

West Texas Producers Face A Growing Glut Of Natural Gas - West Texas oil producers are running out of places to send the growing glut of natural gas that is a byproduct of the recent oil boom in the region.  As Fox Business reports, all of the natural gas pipelines that stretch from West Texas to the gulf are basically full. And the gas can’t be sent north, because northern natural gas markets are already supplied by producers in Canada and the Rockies.  The market saturation has already sent natural gas prices tumbling even lower. And the oversupply could mean that some West Texas producers will be forced to cap wells or slow down on oil drilling. Many producers have resorted to simply burning the gas, a process that is harmful to the atmosphere but is often allowed in loosely-regulated Texas. Meanwhile, producers are hoping to pipe some of the gas to a waiting Mexican market—once new pipelines are built.

Growing Gas Glut Threatens West Texas Oil Boom - Natural gas is gushing out of West Texas, a byproduct of frenzied drilling for oil. That is a problem for energy producers, who are running out of places to send it all. Pipelines running from the region's Permian Basin to the Gulf Coast's chemical plants, cities and export terminals are essentially full. Drillers in the Rockies and Canada already supply markets in the north and west. There is plenty of room on pipelines running south to Mexico, which has emerged as a major market for U.S. producers, but there is a catch: much of the gas distribution infrastructure and power plants there that would buy the fuel haven't been built yet. The growing gas glut is already weighing on regional prices. Natural gas prices at the WaHa trading hub in West Texas have fallen to much as 57 cents per million British thermal units -- or about 20% -- below spot prices at Louisiana's Henry Hub, the national benchmark, according to S&P Global Platts. Analysts forecast the gap exceeding $1 next year, or about a third of the $3 that U.S. natural gas futures have hovered around this year. That is good news to regional gas consumers, such as power producers, who can profit from the lower price. Electricity provider Vistra Energy Corp. said it paid $350 million in August for a power plant in Odessa, Texas, to take advantage of the cheap fuel. But for oil and gas producers, the excess supply could potentially force them to take drastic measures -- such as capping wells and curtailing oil drilling -- until new pipelines to the Gulf Coast are built and planned power plants come online in Mexico. "We're headed into a situation that's never happened before," said Rusty Braziel, a former trader who heads consultant RBN Energy LLC. "They're making money on crude. They need to make sure the lack of gas takeaway capacity doesn't affect their crude production."

Natural gas inventories end October just below the previous five-year average - Working natural gas in storage in the Lower 48 states as of October 31, 2017, totaled 3,784 billion cubic feet (Bcf), as interpolated from EIA’s Weekly Natural Gas Storage Report data. Natural gas storage levels typically increase from April through October, although net injections sometimes occur in November. Inventories at the end of October 2017 were 2% lower than the previous five-year end-of-October average and 5% lower than the record-setting end-of-October level of 3,977 Bcf last year.  Injection levels during refill season level can vary considerably, depending in part on inventory levels at the start of the refill season. This year, relatively high inventory levels at the beginning of the injection season (April) would naturally have resulted in a slower-than-average pace of injections. Nevertheless, injections were insufficient to return inventories to their recent historical average. From May 2015 through mid-September 2017, working gas levels were higher than the five-year average for 118 out of 122 weeks. However, since late September 2017, working natural gas levels have been lower than the previous five-year average for seven consecutive weeks, based on data through November 10.  Natural gas storage is used to balance out seasonal fluctuations in demand. Natural gas demand is highest in the winter months, when residential and commercial demand for natural gas for space heating increases. Natural gas consumption in the power sector is highest in summer months, when overall electricity demand is relatively high for cooling.  Based on data through August, year-over-year declines in electric power sector consumption have been partially offset by changes in natural gas trade, as exports have increased and imports have remained relatively flat. EIA’s latest Short-Term Energy Outlook expects the United States to be a net exporter of natural gas on an annual basis in 2017.

Pace of E&P bankruptcy filings slowed in 2017: attorney - Although bankruptcy filings among oil and natural companies have continued throughout the current year, the pace among exploration and production companies has slowed considerably since the start of the oil price collapse in mid-2014, according to a partner with the Haynes and Boone law firm. However, the same cannot be said for companies in the oilfield service sector, which has seen bankruptcy filings continue apace throughout 2017, attorney Eli Columbus said in a phone interview from Dallas. In a recent report, Haynes and Boone, which reports on oil and gas industry bankruptcy trends, said that it tracked 134 North American oil and gas producers that have filed for bankruptcy since the beginning of 2015. These bankruptcies, involved almost $80 billion in cumulative secured and unsecured debt. However, as of October 31, only 20 producers had filed bankruptcy in 2017, representing approximately $5.6 billion in cumulative secured and unsecured debt, the law firm said in the report. "On the producer side bankruptcies were steady and a there were lot of them through 2016, but in 2017 there hasn't been nearly as much activity in bankruptcy filings," Columbus said. At the same time, Haynes & Boone recorded 155 service company bankruptcies filed since the beginning of 2015, including a total aggregated debt of about $43.6 billion, with the average debt of these cases exceeding $281 million. Among the largest reported bankruptcy cases in the sector were Seadrill Limited, involving total debt of about $8 billion; Ocean Rig, $3.7 billion, and CGG Holding, $3.4 billion.

Saudi Arabia’s Risky Market Share Sacrifice - The 600,000 barrels per day Port Arthur refinery has exclusively processed Saudi Arabian crude since 1988, when Saudi Aramco first bought a stake in the facility—the largest of its kind in the United States.  But Riyadh’s new strategy of constricting exports to the United States, along with several Asian countries, has reduced supplies to Motiva and several other refineries across the country."The drop is huge," said Amrita Sen of Energy Aspects in London. "It’s not just that Saudi exports are low, but they have been low for several months.” For months, the KSA has schemed to reduce the size of global inventories, which would spur the world’s major oil consumers to purchase more fuel, thus ending three years of a stubborn oil glut. The latest Brent barrel prices have hovered in the $62 range, which is a less than $10 jump from the January 2017 rate. At the time, the Organization of Petroleum Countries (OPEC) had not begun implementing its 1.2 million-barrel production deal. Eleven months in, the results are lackluster. Back in 2016, Saudi Arabia touted that the success of its Aramco initial public offering, due to take place in 2018, rested on a $60 per barrel price. That price would give investors confidence that the oil industry could be depended upon to produce profits for the next 10-20 years. Beyond that timeframe, the days of the dominance of fossil fuels in the global energy mix are numbered. Solar, wind and nuclear energies have seen unprecedented growth in recent years as nations gear up to meet their obligations under the 2015 Paris climate change agreement. Considering the KSA’s ultimate goal of ending its addiction to oil revenues, the fact that the nation dropped from being the U.S.’s second-largest oil provider to the fourth-largest in recent months, fails to ring major alarms. Iraq has picked up the slack so far. In July, the Motiva refinery increased its crude purchases from Iraq to make up for the lower supplies from Saudi Arabia. Other heavy crude producers have stepped up to fill supply gaps in American markets. As Libya, Iraq and Nigeria recover lost capacity, Saudi Arabia is due to be squeezed out of its North American market share.

Officials caught forcing state scientist to cover up earthquake/fracking link -- Due to an increased prevalence of seismic activity in the vicinity of fracking areas, many activists have pointed that this process may cause earthquakes as well. While environmentalists have been hoping to raise awareness about this problem for years, new testimony from one of the country’s top seismologists gives us a glimpse into why the scientific community has been largely silent about this issue. According to Austin Holland, the former lead seismologist for the state of Oklahoma, officials at the University of Oklahoma worked to actively cover up scientific findings that linked fracking to earthquakes. Oklahoma is one of the most drastic examples of how fracking can cause an upsurge in seismic activity, with the state seeing 639 earthquakes in the year of 2016 alone.  In a deposition last month, Holland stated that Larry Grillot, former dean of OU’s Mewbourne College of Earth and Energy, and Randy Keller, the former director of the Oklahoma Geological Survey pressured him to alter his findings to be more favorable to fracking companies. After the incident, Holland left his position at OU and the Oklahoma Geologic Survey. “I don’t know if ‘angry’ is the right word, but just disappointed … that I’d spent my time working towards something, and I thought I was in my dream job, and then I couldn’t be a scientist and do what scientists do, and that’s publish with colleagues. Well, that’s the point at which I realized that for my scientific credibility, I had to leave the position I was in,” Holland said.

Nebraska Regulators Approve Alternative Route for Keystone XL Pipeline - — Nebraska regulators on Monday allowed the Keystone XL oil pipeline to clear its final major hurdle, granting a victory to President Trump and Republicans who have for years pressed for the project. But the pipeline company will not be allowed to build along its preferred route, the regulators announced, opening up new questions about how the project will proceed. The pipeline’s future was complicated by the commission’s 3-2 vote to approve the alternate route. The decision drew tempered reactions both from opponents of the project and TransCanada, the pipeline company, which was noncommittal about its path forward. “As a result of today’s decision, we will conduct a careful review of the Public Service Commission’s ruling while assessing how the decision would impact the cost and schedule of the project,” Russ Girling, TransCanada’s president and chief executive officer, said in a statement. The approved route enters Nebraska at the same spot and leads to the same end point as the company’s preferred option. But in between, the alternate route veers east to follow the path of the existing Keystone pipeline. The three commissioners who voted to approve the permit, all Republicans, said in a written opinion that they were very cognizant of the “impacts to the natural resources of the state,” but that there was “no utopian option” and that building the pipeline would bring economic benefits to counties along the route. Two commissioners, one Republican and one Democrat, dissented. Opponents of the pipeline, including many farmers and ranchers, packed the hearing room for the announcement. Some landowners in attendance found out that their land would no longer be on the pipeline route, while others learned that a path through their property had been approved. “They’re going to rape and pillage our soil,” “We will do everything in our power to make sure it doesn’t happen.”

Nebraska Regulators Approve Keystone Pipeline Route Days After South Dakota Leak, Shutdown - TransCanada received its final required pipeline route approval, winning Nebraska’s permission to build its long-delayed Keystone XL crude oil pipeline across the state... just days after a 5,000 barrel spill in South Dakota shut the pipeline. The decision will almost certainly be challenged in court. Just a few short days after 210,000 gallons of crude oil spilled in South Dakota, Bloomberg reports that Nebraska's Public Service Commission voted three to two Monday, removing one of the last hurdles to the Calgary-based company’s construction of the $8 billion, 1,179-mile conduit (1,897-kilometer), which has been on its drawing boards since 2008. For those who aren't familiar with the project, the pipeline links Canada’s Alberta oil sands to U.S. refineries.  While a portion of the pipeline has been operating, part of it had still not been approved by state regulators... until today's decision by Nebraska.  Notably, with Nebraska’s go-ahead in hand, TransCanada still must formally decide whether to proceed with construction on the line, which would send crude from Hardisty, Alberta, through Montana and South Dakota to Nebraska, where it will connect to pipelines leading to U.S. Gulf Coast refineries. The company’s open season for gauging producers’ interest closed late last month, and TransCanada executives have indicated that they’ve secured enough shipping commitments to make the project commercially worthwhile.

The Keystone XL Pipeline Wins a Battle, But Faces a New War -- After a nearly decade-long fight over its construction—which grew to include three states, two provinces, several indigenous tribes, tens of thousands of activists, and two U.S. presidents—the Keystone XL pipeline seemed set to clear its final major hurdle on Monday morning.By a vote of 3-2, the Nebraska Public Service Commission voted to allow the pipeline to pass through the state. The commission’s vote was the last significant regulatory approval that Keystone XL required before construction could begin. Montana, South Dakota, and the U.S. federal government already okayed the 1,100-mile-long project this year.But—in a twist—the Nebraska commission’s vote might have merely opened a new chapter in the saga. While the commissioners approved Keystone XL, they also ordered that the pipeline take an alternate route through the state. The new route—which adds a 63-mile detour and parallels a preexisting pipeline—increases the cost and legal difficulties of an already expensive and delayed project.The commissioners said they were forcing the new route because Keystone XL must “take advantage of any opportunity” to run along the preexisting pipeline corridor.TransCanada, the pipeline’s developer, did not seem to celebrate the approval. Russ Girling, its president and chief executive officer, said in a statement that the company was “assessing how the decision would impact the cost and schedule of the project.” He also assured investors that the company was pursuing other improvements. And as the day went on, environmentalists and indigenous groups opposed to Keystone XL sounded upbeat about the possibility of postponing its construction further. “By pushing Keystone XL onto a new route, the commission all but guaranteed more delays and hurdles for TransCanada to work through. We’ll be there with our allies pushing back on them every step of the way,” said May Boeve, the director of, a climate-activism organization. She also said that activists should prepare to peacefully assemble in the pipeline’s path.

Five things to watch in the new Keystone fight | TheHill: Nebraska's decision Monday to approve the pipeline route was a landmark moment in the Keystone saga, but it’s not the final time regulators will decide the pipeline's fate. The Bureau of Land Management needs to issue a permit allowing pipeline construction on a small swatch of federal land along its path, said Sierra Club senior attorney Doug Hayes. The Army Corps of Engineers also has to authorize its construction over waterways along the route.Opponents have tried to raise legal barriers to Keystone on both the state and federal level. Tribes and landowners that oppose the pipeline are still suing over South Dakota’s decision to grant construction permits to developers. Their lawsuit is pending before that state's Supreme Court. On the federal level, a coalition of environmental groups want the courts to reconsider Trump’s permitting decision, arguing the State Department relied on an outdated environmental review when issuing the cross-border permit. A federal judge on Wednesday rejected a request from TransCanada and the Trump administration to dismiss that lawsuit, meaning the court is likely to review the State Department’s environmental assessment. Nebraska’s decision is also subject to legal challenges, something opponents have promised to pursue. A key question is how the route selected by the Nebraska Public Service Commission affects existing permits for the pipeline. Opponents of the pipeline say that decision raises a host of questions about previous permitting decisions. “It creates certain challenges on the state and federal level in terms of further environmental review, changes to the easements, and everything else,” Hayes said. 

Keystone Pipeline oil spill could be worse than we thought - An oil spill in South Dakota that leaked thousands of gallons of highly polluting oil could damage the environment more than the company has let on.  TransCanada shut down a portion of its highly contested Keystone Pipeline,which transports oil from the Canadian tar sands to refineries in the U.S., at 6 a.m. on Thursday after 210,000 gallons, or around 5,000 barrels, of oil spilled across South Dakota farmland. The type of oil in the pipeline, however, makes pinpointing the size of the spill more difficult than usual, worrying local environmental groups and landowners about its environmental effects. A viscous type of oil called diluted bitumen, or tar sands oil, flows through the Keystone Pipeline. Because it’s so thick, leaks can be difficult to detect. If the oil does spill, it’s often far more detrimental to sensitive water resources. Bitumen is also one of the dirtiest fuels in the world. Unlike conventional crude which can be pumped directly from the ground, water is required to separate the heavy, tar-like substance from the sand it’s found in — a process that depletes and pollutes freshwater resources.  Thursday’s spill happened on a section of pipe along a small road approximately 35 miles south of the Ludden pump station in Marshall County, South Dakota,three miles southeast of the town of Amherst.  Kent Moeckly, a nearby land owner and member of the Dakota Rural Action Group, told VICE News he’s concerned that the spill could be much larger though, in large part because the computers used to detect oil pressure drops don’t always detect small leaks. “TransCanada thought it was 200,000 gallons. What we found out working with TransCanada, it could very well be 600,000 gallons,” Moeckly said. His concerns aren’t unfounded. After the last major Keystone oil spill in South Dakota, in April 2016, TransCanada revised its initial estimate of the spill from 187 gallons to 16,800 gallons after the company started digging up the field where the spill occurred. Because diluted bitumen is so dense, it seeps into the soil and river beds rather than rising like conventional, lighter crude, potentially masking the full spill.

Drone footage captures extent of US oil leak - BBC News - (video) Drone footage has captured the scale of a 5,000 barrel oil leak in South Dakota. The leak was discovered by Keystone pipeline operators TransCanada on Thursday.

TransCanada sends more crews to Keystone pipeline leak - ABC News: TransCanada Corp. says the company has sent additional crews and equipment to the site of a 210,000-gallon oil spill in South Dakota from its Keystone pipeline. TransCanada said Saturday it is making progress in its investigation into the spill cause on farmland in Marshall County, near the North Dakota border, about 250 miles (402 kilometers) west of Minneapolis. But the company did not elaborate on the cause. The company says additional equipment and workers continue to be dispatched to the site. Company spokesman Terry Cunha said Sunday that about 150 people are now at the site. Cunha said a gravel road has been completed to handle heavy equipment. Cunha said a drainage ditch near the leak was protected by a berm and not polluted by the spill. State officials earlier said they did not believe the spill has polluted any surface water bodies or drinking water systems. A drainage ditch is clearly visible in aerial footage taken by DroneBase on Friday. Crews shut down the pipeline Thursday after discovering the leak. TransCanada says the leak is under control and there is no significant environmental impact or threat to the public.

Keystone Pipeline Permit Could Be Revoked After Last Week's 210,000-Gallon Spill - TransCanada's permit to operate its Keystone tar sands pipeline in South Dakota could be revoked if an investigation into last week's 210,000-gallon leak determines that the pipeline operator violated its license, Reuters reported. State regulators expressed concern that the Nov. 16 spill in Marshall County was not the first from the controversial pipeline. "This is a relatively new pipeline. It is supposed to have an operating life of more than 100 years and it was supposed to be a state-of-the-art pipeline construction. It appears that it is not," South Dakota Public Utilities Commission (PUC) member Gary Hanson told Aberdeen News . "We've had three fairly major leaks just on the border with North Dakota and two in South Dakota in a very short period of time," Hanson added. "One might expect this to take place on a pipeline over a period of 30 or 40 years at the maximum, yet it's been fewer than 10 years." In April 2016, the Keystone pipeline gushed 16,800 gallons of oil near Freeman, South Dakota.  According to Reuters, the permit that the PUC issued for the Keystone in 2007 had 57 conditions that include construction standards and environmental requirements. The PUC can revoke or suspend the permit if TransCanada is found to have made misstatements in its application or does not comply with the conditions. The PUC is expecting a preliminary report about the spill from federal and state technical experts in the next 10 days.  “We are waiting to see what the forensic analysis comes back with to see if any of our conditions were violated," PUC chair Kristie Fiegen told the news service.

Canadian heavy crude prices fall after TransCanada shuts Keystone pipeline - Canadian heavy crude benchmark Western Canadian Select at Hardisty fell sharply Friday after TransCanada shut its 600,000 b/d Keystone pipeline Thursday following a leak. Sources said WCS traded Friday at the January NYMEX light sweet crude futures contract calendar month average (WTI CMA) minus $15.90/b and at minus $16/b. Those levels represent a drop of as much as 50 cents/b from where the grade traded against the January WTI CMA on Thursday, which was the last day of December crude as the prompt month prior to pipeline nominations being due, sources said. On Thursday, TransCanada said it had shut the pipeline after detecting a leak of about 5,000 barrels of crude in South Dakota following a drop in pipeline pressure. The leak occurred in a section of the pipeline about 35 miles south of the Ludden pump station in Marshall County, South Dakota. "The section ... was completely isolated and within 15 minutes emergency response procedures were activated," the company said in a statement. "We have been keeping our shippers and customers up to date and have communicated that the pipeline from Hardisty, Alberta, to Cushing, Oklahoma, and to Wood River/Patoka, Illinois, is expected to remain shut as we respond to this information," it said, adding the shutdown does not impact crude flows on the Marketlink pipeline system.

WCS Hardisty-Cushing crude spread widens to two-year high on Keystone shutdown - The ongoing shutdown of TransCanada's Keystone crude pipeline in South Dakota helped push the spread between the price differentials for Western Canadian Select in Hardisty, Alberta, and in Cushing, Oklahoma, to its widest level in more than two years Tuesday, sources said. While WCS at Hardisty was heard talked at the NYMEX light sweet crude futures contract calendar month average (WTI CMA) minus $16.85/b Tuesday, a decline of 85 cents/b from Monday's assessment, the same grade at Cushing was talked at WTI CMA minus $6.80/b, an increase of $4.25/b day on day. Those price movements boosted the spread between the WCS grades to $10.05/b from $4.95/b on Monday, its widest level since reaching $10.50/b on August 12, 2015. TransCanada shut the pipeline November 16 after it detected a leak of 5,000 barrels at a site 3 miles southeast of Amherst, North Dakota. A company spokesman on Tuesday said while progress is being made at the site, it will be "some time" before a cause for the leak is determined and that the company does not yet have a timeframe for when operations will resume. Sources said another factor moving prices for WCS Tuesday was pipeline operator Enbridge's apportionment Monday. Enbridge set the apportionment for December crude shipments on Line 4/67 on its Canadian Mainline System at 21%, which one source described as "large," and compares with 5% apportionment in November. The Line 67 pipeline typically carries heavy western Canadian barrels from Alberta. The widening of the spread between differentials at Hardisty and at Cushing is probably about 60% due to the Keystone shutdown and 40% due to the apportionment, the source said.

Legal protest launched against massive Nevada fracking plan - —Three conservation groups filed an administrative protest against an enormous Bureau of Land Management oil and gas lease auction, scheduled for Dec. 12, that would allow fracking on more than 600 square miles of Nevada public lands. The 388,000 acres in eastern Nevada includes important regional springs and groundwater and critical habitat for imperiled species. The protest filed by the Center for Biological Diversity, Wildlands Defense and Basin and Range Watch says the BLM has violated the National Environmental Policy Act and the Endangered Species Act by failing to analyze the risks of drilling for oil and fracking with dangerous chemicals on such a massive scale. Development of these parcels, one of the largest fracking plans in the country, could contaminate ground and surface water, threaten endangered species and cause irreparable harm to the global climate. “The Trump administration is putting some of Nevada’s most critical water supplies at risk of fracking pollution by auctioning off this public land to oil companies,” said Patrick Donnelly, the Center’s Nevada state director. “This plan reeks of callous disregard for our state’s water and wildlife. Trump’s BLM is flagrantly violating our nation’s environmental laws to line the pockets of the fossil-fuel industry. ” Regulations require the BLM to fully analyze and disclose harm from any federal actions, including developing public land for oil and gas extraction. Instead, BLM dismisses as “speculative” the possibility that drilling and fracking would damage Nevada’s precious water resources. Nevada hydrologist Tom Myers analyzed the effects of drilling and fracking in the sensitive groundwater basins of eastern Nevada. Myers concludes that “fracking development in the proposed lease area threatens the hydrogeology of the area, including regional springs and intermittent and perennial streams; potential impacts include both contamination and depletion of flow.” 

Erie requests that Crestone relocate wells farther from community - Erie is the latest stakeholder in a mega oil and gas development to request that Crestone Peak Resources relocate 36 wells farther from the town, north onto Colo. 52. The Denver-based energy company has remained mum on whether it is seriously considering shifting around 180 wells proposed in Boulder County as part of its Comprehensive Drilling Plan, a new state process."We are reviewing all the letters from all the stakeholder groups regarding the CDP," said Crestone spokesman Jason Oates. "I don't have specific feedback to share about their proposals at this time." Oates had a similar response when asked about whether Crestone would consider other proposals by the Colorado Department of Health and Environment and a homeowner group calling for the relocation and consolidation of well pads. Martin Ostholthoff, Erie's community development director, asked state regulators that Crestone consider numerous requests regarding traffic impacts, pipelines, noise mitigation, leaks and fracking fluids. In a letter posted to the state's website on Nov. 16, Ostholthoff requested that Crestone:

  • • Relocate proposed pipelines through Kenosha Farm and Erie Village subdivisions to North 119th Street and Kenosha Road
  • • Provide pipeline/flowline mapping data to Erie
  • • Reduce noise levels from operations below the maximum level permitted
  • • Conduct monthly audio, visual and olfactory testing of well pads
  • • Inspect operations with infra-red camera twice a year
  • • Report inspection results to Erie on an annual basis
  • • Use nearby water sources for the drilling and hydraulic fracturing
  • • Ban diesel, 2-Butoxyethanol and benzene as fracking chemicals
  • • Explore alternative methods of delivering materials
  • • Hire an outside consultant to perform a road impact study, and pay for any damage caused by additional traffic

Climate activist goes on trial for Montana pipeline shutdown (AP) — An Oregon man goes on trial in Montana on Tuesday in the latest criminal prosecution against activists who sought to call attention to climate change by shutting down pipelines carrying crude from Canada's oil sands region to the United States. Leonard Higgins, 65, of Portland is charged with trespassing and felony criminal mischief for breaking into a fenced site near Big Sandy, Montana, to turn off a valve on a Spectra Energy pipeline in October 2016. Activists simultaneously targeted other lines in Washington state, North Dakota and Minnesota.Higgins, a retired technology worker for the state of Oregon, wants to tell jurors that his act of civil disobedience was necessary because climate change is an emergency that can't be ignored, he told The Associated Press.But District Judge Daniel Boucher (boo-SHAY) has indicated that he won't allow the trial to be used as a vehicle for political protest. Boucher said in an April order that testimony on climate change would be irrelevant to the charges faced by Higgins. "The energy policy of the United States is not on trial, nor will this court allow Higgins to attempt to put it on trial," Boucher wrote in the order. "Mr. Higgins is on trial for his voluntary acts."In a parallel case in Minnesota, two activists last month convinced a state judge to let them present evidence in their upcoming trial that the imminence of climate change justifies extreme action. That's a legal tactic known as a "necessity defense.""The important thing about a jury trial is a chance to argue about the climate emergency," said Higgins, a former information technology worker for the Oregon state government. "We chose tar sands oil and consider it along with coal to be the dirtiest carbon emitters. They're the ones we should reduce.

Blocked From Discussing Climate Change, Valve-Turner Faces 10 Years in Prison After Felony Conviction - After a judge refused to allow him to share his reasons for shutting off a tar sands pipeline valve in a protest of fossil fuel mining, 65-year-old climate activist Leonard Higgins was found guilty of criminal mischief—a felony—and misdemeanor criminal trespass. Higgins faces up to 10 years in jail and as much as $50,000 in fines.  "I'm happy for the opportunity to share why I had to shut down this pipeline, and I really appreciate the time and dedication of the jury and the judge," Higgins said. "I was disappointed and surprised by the verdict, but even more disappointed that I was not allowed a 'necessity defense,' and that I wasn't allowed to talk about climate change as it related to my state of mind. When I tried to talk about why I did what I did I was silenced. I'm looking forward to an appeal." Supporters spoke out on social media after the verdict was handed down in a Montana court room, following a trial that lasted less than two days. Higgins , along with four other activists, shut off an emergency valve of the Enbridge tar sands pipeline in rural Montana on Oct. 11, 2016, in protest of the flow of the highly damaging carbon-carrying oil into the U.S.  The former government employee admitted to his actions and expressed gratitude for his day in court. Higgins was hoping to be able to offer a "necessity defense," demonstrating that his protest was necessary to fight the destruction of climate change that's accelerated by fossil fuel mining and transportation of tar sands—but he was not permitted to testify regarding climate change.

Bakken Learning Curve Said Driving Well Productivity Gains -- Drilling productivity in the Bakken Shale, which is producing more than 1 million b/d of light sweet crude oil, is a byproduct of geology and the fact that North Dakota operators are further along the learning curve than in other U.S. onshore plays. Compared to a six-year-old well on average, wells now produce about 70,000 bbl more in the seventh month of their life. Operators also are having fewer issues with hydraulic fracturing (fracking) and well interference, he said. Water and sand volumes are higher this year than they were a year ago too, which indicates more fracking and longer laterals.  Helms believes the Bakken has remained at the cutting edge in technology applications, such as fracking techniques, lateral length and the drilling speed. "Equally important is the fact that the Bakken, with the exception of the far northwestern corner of the state, is very overpressured, much more than many of the other major U.S. plays," he said. "This makes Bakken well productivity quite a bit higher due to the rock being so over-pressured."

Culver City Could Add 30 New Oil Wells and Allow Fracking Under New Proposal | L.A. Weekly: Environmentalists and local activists are protesting a proposal by Culver City to allow up to 30 new oil wells to be drilled in the next 15 years. Even more controversially, the city's proposed regulations would allow for fracking and other forms of well stimulation."I know that some of the city council members have been vocal about wanting to protect their residents from oil and gas production," says Maya Golden-Krasner, a senior attorney with the Climate Law Institute at the Center for Biological Diversity. "I don’t know why this is what they came up with."She adds: "They shouldn’t be drilling new wells. Really, we’re at the point where we really need to be looking at ways to phase out oil drilling." Roughly 10 percent of the 1,000-acre Inglewood Oil Field lies within Culver City's boundaries. After a raucous public meeting on Monday night, Culver City Council voted to extend the public comment period for the drilling proposal's Environmental Impact Report (or EIR). The extension is a small victory for opponents of new drilling. The city's mayor, Jeff Cooper, told L.A. Weekly after the meeting that he does not support the current proposal. "Personally, I don’t believe 30 new oil wells are good for Culver City," Cooper says. "I don’t think any new oil wells are good for Culver City. We’re surrounding the largest urban oil field in the world. I get concerned for a lot of the reasons our residents are concerned — potential seismic activity, chemicals used for extraction, other environmental consequences that could occur. 

Victory: Concerned Citizens and Environmental Groups Stop Oil Train in Its Tracks -- A coalition of concerned citizens, environmental groups, and health and safety advocates successfully challenged the approval of a massive refinery and rail project that will further harm air quality in the San Joaquin Valley and subject residents in several states to the catastrophic risks of a derailment involving scores of tanker cars filled with explosive Bakken crude oil. The Alon Bakersfield Refinery Crude Flexibility Project, approved by the Kern County Board of Supervisors, would have enabled the refinery to unload crude from more than 200 tanker train cars per day, allowing it to import up to 63.1 million barrels of crude oil per year. A lawsuit filed by Earthjustice on behalf of the Association of Irritated Residents, Center for Biological Diversity and Sierra Club claimed that Kern County's certification of an environmental impact report (EIR) failed to meet its legal duty to fully assess the project's risks and disclose them to the public. The court agreed. Bakken crude emits high levels of volatile organic compound emissions that lead to ozone pollution, which in turn causes respiratory illnesses such as asthma. Already one in six children in the Valley will be diagnosed with asthma before age 18. The crude oil being transported to the Alon Bakersfield Refinery from the Bakken formation in North Dakota poses a higher risk of explosion in the event of a rail accident than heavier crudes. Kern County's EIR underestimated the likelihood of release of hazardous materials by rail accident by fivefold. It also wrongly ignored the air pollution from rail transportation. The county's EIR was set aside requiring a new one to be drafted and certified.

Has California built its last natural gas plant? -- Two pending decisions from California utility regulators will show whether the state is committed to its renewable energy goals or bound to natural gas for years to come.  The most notable decision is the future of NRG Energy’s proposed 262 MW Puente natural gas project. Earlier this year, a committee of the California Energy Commission came out against building the plant, resulting in NRG suspending its application while reviewing the facility’s future  prospects.   On another front, Pacific Gas and Electric’s (PG&E) decision to shutter its 2,200 MW Diablo Canyon nuclear facility by 2024 or 2025 leaves a gaping hole in capacity that needs to be filled. The utility proposed a $1.3 billion energy efficiency investment as part of a 2016 agreement with renewable energy advocates over shuttering the plant.   But an administrative law judge with the California Public Utilities Commission (CPUC) deferred approval of that investment, saying it should be addressed in the state’s new comprehensive planning. Natural gas appears to be the easy answer to fill the state’s capacity goals, but a recent investigation by the Los Angeles Times left many questioning whether the state is overbuilding that resource. California ISO agreed earlier this year to examine alternatives to Puente after pressure from lawmakers. Clean energy and green groups are also urging regulators and lawmakers to pivot to solar, efficiency and storage as a more cost-effective way to meet power needs and reduce emissions. As these debates play out, California is reaching an inflection point over the future of its energy landscape and how these decisions play out will decide how the state will move forward to cut emissions and invest in more renewable energy.

Port to protesters: No scheduled plans to ship fracking sand by rail - The Port of Olympia currently is unaffected by a group of protesters who have occupied a section of railroad tracks in downtown Olympia because the port has no scheduled plans to ship fracking sand to North Dakota, a spokeswoman for the port said Tuesday. The Port of Olympia commission met Tuesday for a special meeting on the port’s 2018 budget. The commission made no mention of the protest. “It’s not affecting us,” spokeswoman Jennie Foglia-Jones said during Tuesday’s meeting, but she added the port supports whatever action is taken by local law enforcement. “No movement is scheduled,” she said about the cargo. Meanwhile, city of Olympia officials don’t want to get the Olympia Police Department involved. City Manager Steve Hall says he hopes the port and railroad officials will resolve the issue. “This feels like a repeat of last year, and nobody wants to go through what happened last year,” Hall said. “Their beef is really with the port, not with the city.” 

Senate May Approve Drilling In Alaskan Wilderness With Tax Bill  - The Senate could soon approve oil drilling in Alaska's Arctic National Wildlife Refuge with its bill to overhaul the nation's tax code. ANWR has long held an outsized symbolic role in the tug-of-war between environmental protection and the desire to increase domestic oil and gas drilling. In that regard, you could argue, it was the original Keystone XL Pipeline — an issue activists on both sides could rally, fundraise and organize around.  Legislation opening up a portion of ANWR for leasing cleared a key Senate hurdle this week, when the Senate Energy and Natural Resources Committee approved it on a 13-10 vote. The measure is tied to the budget process that Republican leaders are using to advance the tax overhaul, which means the bill would only need 51 votes – not the usual 60 – to advance in the full Senate. That means they can conceivably pass their legislation with just Republican votes.  The measure would generate $1.1 billion over the coming decade, according to the nonpartisan Congressional Budget Office. That figure would help Senate Republicans offset the cost of their proposed tax cuts. Under reconciliation rules, the tax changes can't add more than $1.5 trillion to the deficit over 10 years, or they'd need 60 votes to advance. Democrats are seizing on that cost disparity as they blast the bill. "The Energy and Natural Resources Committee has been instructed to raise a billion dollars, and at the same time the Finance Committee is trying to increase the deficit by $1.5 trillion with tax cuts for corporations and millionaires," Sen. Maria Cantwell, D-Wash., said at this week's committee hearing. "The fact our committee's contribution to that deal is about 7/100th of one percent of the Republicans' increased deficit spending shows that this is not a serious budget proposal. It's a cynical effort to open up the heart of the Artic Wildlife Refuge for oil."

Aiming for ANWR: Will the Alaskan area be opened to oil development? - This week’s Capitol Crude looks at efforts by congressional Republicans to open up the Arctic National Wildlife Refuge to oil and gas development. After decades of debate, drilling in ANWR appears closer than ever, but there are a lot of open questions and moving parts. Senior oil editor Brian Scheid looks closely at a Senate committee hearing last week where a bill opening ANWR was approved. Additionally, Chris Guith, a senior vice president for policy at the US Chamber of Commerce’s Global Energy Institute, talks about whether oil and gas producers are even interested in the Alaskan frontier.

Alaska governor touts pipeline project that faces hurdles (AP) — Gov. Bill Walker on Tuesday touted the benefits a major liquefied natural gas project would bring to Alaska, though the project, which the state is pursuing with Chinese partners, is far from assured. Walker, speaking in Anchorage, told reporters the project could provide affordable natural gas to communities, create thousands of jobs and generate up to $2 billion a year in revenue for the state. Walker's office released the agreement that Walker and Keith Meyer, president of the state-sponsored Alaska Gasline Development Corp., signed this month with leaders of Sinopec, China Investment Corp. and the Bank of China. Sinopec is a major oil and gas company. The agreement doesn't obligate any party, and it doesn't require that they pursue this project exclusively. Instead, it calls on them to explore by May 31 the feasibility of investing in the Alaska project, which would move gas from the prodigious North Slope to Asian markets, and pursue terms to advance the project, including the potential for Sinopec to be involved in engineering, construction and other aspects. But Walker said the agreement is significant, a result of work that has included building relationships with Chinese officials, including the country's president, and getting the project on the White House's radar and promoting it with the Trump administration. Larry Persily, a former federal coordinator for Alaska natural gas projects, said it's good to have interest in the project. But "people are getting prematurely euphoric," he said. 

Alliance of the Bear: Native groups stymie Trump, tar sands pipelines - – Summary:

  • When Big Oil and Gas invaded rural North America to frack, drill and dig the Alberta tar sands, the firms were met by a scattered opposition from Native peoples who developed a novel strategy: oppose new pipelines to keep fossil fuels from getting to market.
  • Gradually, First Nations resistance groups in Canada’s East and West joined up with Western U.S. Native groups. Last July, many of their leaders met at a Rapid City, South Dakota Holiday Inn to sign a treaty of alliance against the fossil fuel companies and their ongoing projects.
  • In recent months, oil and gas projects that indigenous organizers had risen against began to fold, including the Petronas liquid natural gas refinery project in British Columbia, and TransCanada’s Energy East pipeline.
  • In June, the Trump administration removed Endangered protection status for the Greater Yellowstone River Valley grizzly population. The powerful Treaty Alliance Against Tar Sands Expansion vowed resistance, viewing delisting as both an attack on the sacred bear and as a means of exposing the land over which the bear roams to mining and drilling.

Foreign majors leaving Canada’s oil and gas sector Low oil and gas prices have spurred an exodus on foreign oil companies from Canada’s energy sector over the last year. On Thursday South Africa’s Sasol Ltd became the latest international energy firm to say it plans to divest Canadian assets. The departures have raised doubts over future development prospects of the world’s third largest crude reserves and stoked criticism of federal and provincial environmental policies that are stricter than those of the United States.(table of divestitures)

Eastern Canadian producers to offer as many as 10 January crude cargoes: source - Producers operating off the coast of the eastern Canadian province of Newfoundland and Labrador will offer as many as 10 crude cargoes for January loading, a source with knowledge of the program said. Five cargoes of Hibernia crude plus one potential direct-to-market cargo are scheduled to load in January, compared with seven in December, the source said. The Hibernia project is co-owned by ExxonMobil (33.125%), Chevron (26.875%), Suncor (20%), Canada Hibernia Holding (8.5%), Murphy Oil (6.5%) and Statoil (5%). There will be two cargoes of Terra Nova available in January, compared with one in December, the source said. Suncor, the operator of Terra Nova, has a 37.675% stake. The other partners in the field are ExxonMobil (19%), Statoil (15%), Husky Energy (13%), Murphy Oil (10.475%), Mosbacher Operating (3.85%) and Chevron (1%). There will be two cargoes of White Rose available in January, the same as in December, the source added. Husky operates the White Rose field with a 72.5% stake, while Suncor holds the remaining 27.5%.

The topsy-turvy world of Mexican natural gas supply - Mexico’s natural gas supply situation is in a state of flux, to say the least. Gas production within Mexico continues to decline, but there’s hope it can rebound in the country’s Burgos Shale region. Gas demand is rising fast, and new gas pipelines are being built to deliver Permian and other U.S. gas to new Mexican power plants. At the same time, though, delays in completing some of these new pipes have forced Mexico’s electricity authority to turn to LNG imports to keep gas supply and demand in balance. And yet, plans are afoot to export LNG to Asia from Mexico’s west coast by the early 2020s — gas that, by the way, would initially originate in Texas. Today, we explore recent developments in the Mexican gas arena. Exports of natural gas from the U.S. to Mexico have increased sharply over the past few years, driven by a combination of rising Mexican demand for gas (mostly to fuel a fast-growing fleet of new gas-fired combined-cycle power plants) and declining Mexican gas production. In 2016, exports of U.S. natural gas to Mexico via pipeline averaged 3.8 billion cubic feet/day (Bcf/d), more than four times higher than they were in 2010, and in the first eight months of 2017 pipeline-gas deliveries from the U.S. to Mexico averaged 4.2 Bcf/d, according to the Energy Information Administration (EIA). As we said in Part 4 of our “It Was Good Living With You (W)aha” blog series on the Waha gas hub in West Texas, the pace of pipeline-export growth to Mexico in late 2017 and in 2018 will be tied in large part to how quickly new gas pipeline capacity can be completed within Mexico, but a number of pipeline projects south of the border have experienced delays.

Fracking firm wins extension to 'draconian' protest injunction - A multinational firm has secured a long-term, sweeping injunction against anti-fracking protesters despite critics calling it “draconian and anti-democratic”.On Thursday, a high court judge extended the wide-ranging injunction sought by petrochemicals giant Ineos, which covers all anti-fracking campaigners.The injunction prohibits campaigners from interfering unlawfully with Ineos’s fracking operations. Anyone who obstructs the firm’s fracking activities faces being jailed, fined, or having their assets seized. Mr Justice Morgan dismissed a legal challenge brought by two anti-fracking campaigners, Joe Corré, the son of fashion designer Vivienne Westwood, and Joe Boyd, who had argued that the injunction was oppressive and should be discarded. Boyd said he will seeking to appeal the ruling which he called “profoundly troubling” and “an unprecedented restriction on our fundamental rights”.  The legal case could have important implications for campaigners protesting against the activities of corporations as other firms could be encouraged to take out similar injunctions.

Natural gas emissions will blow Europe's carbon budget at current levels - Governments have drastically underestimated methane emissions from natural gas and will miss the Paris agreement’s goal of limiting global warming to 2C unless they urgently scale down its use, a major new study has found. Continuing natural gas emissions at present levels will add 0.6C to global warming and, with other fossil fuel use, exhaust Europe’s carbon budget – the amount it can safely and fairly emit – in less than a decade, says the report by the Tyndall Centre for Climate Change Research. It concludes that Europe must phase out all fossil fuels including gas by 2035 and decrease emissions by 12% per year – far beyond its current ambitions – to keep to the Paris 2C pledge. EU countries, including the UK, have committed to burn more natural gas as a “bridging fuel”, because it offers a baseline alternative to wind and solar on cloudy and windless days, and because it emits less carbon dioxide than coal. But the report’s authors find that there is “categorically no role” for new gas, oil or coal production, because of their high CO2 and methane emissions. “Considering both carbon dioxide and methane emissions, an urgent programme to phase out existing natural gas and other fossil fuel use across the EU is an imperative of any scientifically informed and equity-based policies designed to deliver on the Paris agreement,” says the study, which was co-written by Tyndall’s Prof Kevin Anderson and Dr John Broderick. Their report, which is based on original modelling and a meta-analysis of 250 gas supply chain studies, logs a “sustained rise” since 2006 in atmospheric methane concentrations. These are now “at the top end of IPCC (Intergovernmental Panel on Climate Change) scenarios” and running at unsustainable levels, according to the study. Far from phasing out natural gas ventures though, the EU appears to be accelerating them in a new “projects of common interest” (PCI) list for gas infrastructure.  After 77 gas projects were approved in the last PCI round, the latest slate (pdf) could potentially approve more than 100 gas ventures for public funding and fast-tracked planning approval, according to analysis by Friends of the Earth Europe (FoEE).

Statoil plants flag in Big Oil’s race for ‘cleaner’ crude (Reuters) - There’s oil and then there’s oil, says Norway’s Statoil, which is pitched in a race to develop the cleanest crude as countries wean themselves off fossil fuels. While the world will need oil and gas for decades to come, Statoil’s Chief Executive Eldar Saetre expects that many oil deposits will never be tapped as increasingly discerning consumers will demand only the lowest-polluting crude. “A lot of fossil fuels will have to stay in the ground, coal obviously ... but you will also see oil and gas being left in the ground, that is natural,” Saetre told Reuters in an interview in London. “At Statoil we are not pursuing certain types of resources, we are not exploring for heavy oil or investing in oil sands. It is really about accessing the most carbon-efficient barrels.” Around 70 percent of the world’s discovered oil resources is heavy oil and bitumen, both highly viscous crudes that are more complex and energy-intensive to extract and process than lighter crude, according to the U.S. Geological Survey. The comments from a senior oil executive may raise alarm bells for oil-rich countries such as Venezuela and Canada that mostly produce heavy oil. The retreat from energy-intensive oil production in Canada and elsewhere is already taking place. Statoil sold its entire Canadian oil sands business late last year to Athabasca Oil Corp, and Royal Dutch Shell, ConocoPhillips and Marathon Oil have all scaled back their operations in the country. Statoil is now exploring for new resources offshore Norway and Brazil where oil is lighter and abundant. “The world needs to develop more efficient barrels... Competitiveness to me is carbon competitiveness and cost competitiveness,” Saetre said. Shell, Exxon Mobil and France’s Total have also invested billions in recent years in Brazil’s oil wealth, and companies are vying to discover and develop resources in other light-oil provinces such as the North Sea as well as shale basins in the United States. 

Groundwater maps could help South Africa prepare for safer fracking - The South African government has made a firm commitment to proceed with unconventional gas exploration using fracking.   Speculative estimates of the potential gas resource in the country’s Karoo basin range from 13 to 390 trillion cubic feet of gas, with the lowest estimate being the most realistic.The extraction of shale gas is an attractive option. It could reduce South Africa’s huge reliance on coal for energy. But there are also uncertainties around the impact of shale gas extraction. That’s why the Academy of Science investigated South Africa’s technical readiness for shale gas development. It assessed the status of available information and technologies that can support the development of the shale gas industry. The government also commissioned the strategic environmental assessment for shale gas development. One major concern from fracking is that groundwater will be affected in the shale gas extraction process. But a groundwater vulnerability map could help assess these risks. It also has the potential to help government decide which regions can be more safely fracked to limit damage to groundwater resources. Unconventional oil and gas extraction often has an impact on groundwater. Some of these include aquifer damage. An aquifer is an underground layer of water-bearing rock from which groundwater can be extracted using a borehole. During oil and gas extraction, an aquifer canexperience dewatering, deformation, and contamination. In some cases, the damage from contamination can be irreversible, such as when aquifer contamination can’t be physically cleaned or rehabilitation is too expensive. Physical cleanup may be impossible, for instance, when certain organic contaminants cannot be effectively removed. In the US, hazardous waste cleanup sites present a technical and institutional challenge at more than 126 000 contaminated locations. Various organic compounds are also used in fracking fluids and therefore represent similar risks to groundwater resources.

As Venezuela pumps below OPEC target, oil rivals begin filling gap (Reuters) - As Venezuela’s dilapidated energy sector struggles to pump enough crude oil to meet the country’s OPEC output target, rival producers have started to plug the gap, according to OPEC and industry sources and U.S. government data. The South American country’s oil output hit a 28-year low in October as state-owned oil giant PDVSA [PDVSA.UL] struggled to find the funds to drill wells, maintain oilfields and keep pipelines and ports working. Venezuela's oil production, which has been falling by about 20,000 barrels per day (bpd) per month since last year, is on track to fall by at least 250,000 bpd in 2017, according to numbers reported to the Organization of the Petroleum Exporting Countries (OPEC), as U.S. sanctions and a lack of capital hobble operations. [For a graphic on Venezuelan and Iraqi oil shipments to the United States and India, click] Some OPEC members expect the fall to accelerate in 2018, reaching at least 300,000 bpd, OPEC sources said. At a recent internal OPEC meeting, Venezuelan officials were asked to give a clearer picture of the country’s declining output. The topic could come up later this month at the group’s next meeting. Saudi Arabia will not raise its output to compensate for this decline as OPEC’s defector leader is focused on reducing global oil stocks, one OPEC source familiar with Saudi oil policy told Reuters this month. But heavy oil from OPEC member Iraq and non-OPEC producers Canada and Brazil are already replacing Venezuelan barrels to key customers the United States and India, according to the sources and Thomson Reuters data. The Iraq shipments remain within OPEC targets. Iraq has increased shipments of crude and condensate to India by 80,000 bpd this year as Venezuelan deliveries fell by 84,000 bpd. The second largest OPEC producer also has exported 201,000 bpd more oil to the United States this year through October as Venezuelan shipments dropped about 90,000 bpd, according to the Reuters data. Venezuela’s weaker output “could be good for market rebalance and we could see price stay at $60 for a slightly longer time,” one OPEC source said. “That doesn’t mean there will be no free riders,” the source added. 

China’s Russian buying spree to continue, says leading Moscow investment bank | South China Morning Post: The recent acquisition spree by Chinese firms in Russian energy and commodities companies is set to continue into next year as relations between the two nations grow closer, and both continue to show strong support for projects involved in the “Belt and Road Initiative”, according to a senior banker at the Moscow-based, Russian state-backed investment firm VTB Capital. The fact commodity prices have rebounded from industry cycle lows is also helping further cement the nations’ ties, said Alex Metherell, co-head of global banking at VTB, the investment banking unit of Russian government-controlled VTB Bank. Levels, however, are still trading significantly below the lofty heights of a few years ago, making it easier for buyers and sellers to agree on a price for complex assets and projects, “We have definitely seen increased cross-border investments by Chinese firms in Russia in the past 18 to 24 months,” he told the South China Morning Post in an exclusive phone interview. “Strategic asset owners in Russia, Eastern Europe and Central Asia are increasingly coming to China, too, as their first port of call before going elsewhere in search of potential long-term strategic investors.”There have been six major stake purchases by Chinese corporates in Russian firms so far this year, involving total investment of US$9.1 billion, up from US$1.1 billion last year and US$2.7 billion in 2015, according to data compiled by Dealogic. The largest deals over the past decade between the nations have predominantly been in the oil and gas sector, made by state-owned Chinese buyers. 

Russia warns over Urals crude oil quality - The quality of Russia's key Urals crude exports towards Europe will continue to fall next year as more of the country's low-sulfur oil flows are diverted eastward to China, Russian national oil pipeline operator Transneft warned Monday. Predicting a 2% rise in crude exports by Russian companies next year, Transneft said the sulfur content in its westbound export flows will reach "a critical level" this year, as the company has no further technological tools to improve the quality of crude flows headed west towards mostly European customers. "Due to a [planned] rise in low-sulfur crude supplies to China, there will be no more low-sulfur volumes available for improving crude quality via other directions," Transneft's vice-president Sergei Andronov said Monday. The increase in sulfur levels in Urals as Russia exports more premium crude through outlets in the far east of the country has long been predicted, and may support prices for rival crude grades such as neighboring Kazakhstan's high-value CPC crude. The latter is exported through the Russian port of Novorossiisk via the CPC pipeline, which, unusually, is not owned by Transneft, but by an international consortium. The rise of alternative crudes around the eastern Mediterranean, including CPC, Azeri and Kurdish crudes, has already depressed demand for Urals in recent years, pushing it to further flung destinations. At the request of the energy ministry, Transneft maintains the quality of crude delivered to domestic refineries stable, at around 1.63% sulfur since 2014, Andronov said. Increasing sulfur content poses a high risk to domestic refining because Russian refineries are only equipped to process crude with less than 1.8% sulfur.

Exclusive: UAE's ADNOC to venture into privatization, oil trading - CEO (Reuters) - Abu Dhabi National Oil Company (ADNOC) has embarked on a major shake-up plan to privatize its services businesses, venture into oil trading and expand partnerships with strategic investors, its chief executive said on Monday.  The partial privatization plan marks a major shift by the state energy company that was founded in 1971. It aims to make ADNOC more competitive and commercially focused, operating in way that is more akin to other state-owned controlled peers. The state firm plans to sell at least 10 percent of its fuel retail unit, ADNOC Distribution, in an initial public offering (IPO) this year and could float up to 30 percent in the unit in future, CEO Sultan al-Jaber told Reuters in an interview. Other Gulf states, such as Saudi Arabia and Oman, have also embarked on selling energy assets with the slide in oil prices. Saudi Arabia’s state-run oil giant Saudi Aramco plans to list about 5 percent next year. Although ADNOC has no plans to list the holding company, it might look at selling stakes in other service companies and would explore new ways to manage its assets, al-Jaber said. “ADNOC as the holding company will continue to be wholly owned by one shareholder that is Abu Dhabi government,” he said. “But anything that is currently owned by ADNOC especially companies in the service sector are actually candidates for us to explore where we can unlock and maximize value.” He said

Iran pushes to retain Asia oil buyers as possible U.S. sanctions loom (Reuters) - Iran is pushing to retain customers for its oil in Asia, hoping that price reductions will boost the appeal of its crude compared with other Middle Eastern supply even as the potential threat of further U.S. sanctions on the country looms. The National Iranian Oil Company has in the last few weeks offered spot cargoes, ranging from light to heavy grades, to its term buyers in Asia, after setting December prices at the lowest in years against comparable Saudi grades, three sources with knowledge of the matter said. The sources declined to be identified as they were not authorized to speak with media, while NIOC was not immediately available for comment. That comes as U.S. Congress has until mid-December to decide whether to reimpose sanctions on Iran that were lifted in exchange for it limiting its nuclear activity, with President Donald Trump disavowing Tehran’s compliance with the terms of that deal. “The threat of U.S. Congress sanctions has put pressure on Iran to ‘firm up’ markets via discounts and freight adjustments for its crude,” said Tilak Doshi, consultant at Muse & Stancil in Singapore. NIOC first cut the official selling price (OSP) of Iran Heavy crude against Saudi’s Arab Medium grade for October, before lowering it again for December. That puts the Iran Heavy price for December at the widest discount against Arab Medium in over a decade, data on Thomson Reuters Eikon showed. Meanwhile, price cuts for Iranian Light placed the oil at its lowest premium in two years against Saudi Arabia’s Arab Light. The discounts were made to retain existing buyers of Iranian oil, which already have government-backed arrangements in place from when the original western sanctions hit Iran’s oil exports in 2012-2014, the sources said. 

Oil prices stall as record bullish position makes funds wary: Kemp (Reuters) - Hedge funds increased their bullish position in petroleum futures and options to a new record last week, but the first signs of caution started to emerge. Fund managers raised the number of long positions in the five major futures and options contracts covering Brent, WTI, U.S. gasoline and U.S. heating oil to a record 1.31 billion barrels on Nov. 14. Minus short positions, portfolio managers held a net long position of 1.12 billion barrels in the five main contracts, which was also a new record, according to regulatory and exchange data. Fund managers held record net long positions in both gasoline (100 million barrels) and heating oil (72 million barrels), and the position in Brent (538 million barrels) was just 6 million below the record set the week before. Even in WTI, where portfolio managers have been least bullish, the net position (410 million barrels) was only 34 million below the record set in February.Benchmark Brent prices have risen almost $20 per barrel since late June, while hedge fund positions in petroleum have increased by 815 million barrels.  But fund managers’ positioning has become very lopsided over the last four months raising the prospect of a sharp price correction ( funds now hold 6.9 long positions in petroleum for every short position, up from 1.6 at the end of June, and one of the most stretched positions in recent years.Over the last three years, similar concentrations of long or short positions have generally been followed by a sharp reversal of the previous price trend.In the current context, fund managers already hold a record number of long positions, which raises questions about their ability and willingness to continue adding to their positions, at least in the short term.On the short side, there are few  bearish positions left to squeeze, with the total number of shorts across the five major contracts already down to just 190 million barrels, from 510 million in June.

Oil eases as traders; investors grow edgy ahead of OPEC (Reuters) - Oil prices slipped on Monday, extending recent weakness ahead of an OPEC meeting next week, while a rally in the dollar negatively affected commodities across the board.  Brent crude futures were down 84 cents at $61.86, or 1.4 percent, by 11:37 a.m. EST (1637 GMT), while U.S. West Texas Intermediate (WTI) crude futures fell 70 cents, or 1.2 percent, to $55.85 a barrel. Oil has been under pressure for the last two weeks since peaking in early November; U.S. crude has lost 2.6 percent. The Organization of the Petroleum Exporting Countries, together with a group of non-OPEC producers led by Russia, has been restraining output since the start of this year to try to lower global inventories and support prices. The deal is due to expire in March 2018, and OPEC meets on Nov. 30 to discuss the policy. The expectation is for the agreement to be extended to cover the whole of next year. “It is widely believed that OPEC together with 10 non-OPEC countries will roll over their production for the whole of 2018, although Russia is holding its cards close to its chest,” P OPEC last week forecast demand for its own crude to rise by 460,000 barrels per day (bpd) to 33.42 million bpd next year, in contrast with a forecast from the International Energy Agency (IEA) for a drop of 320,000 bpd to 32.38 million bpd. The dollar’s move higher overnight hit commodities, including oil. Oil often moves inversely to the dollar, because oil is transacted in the dollar, and a stronger dollar theoretically makes oil more expensive for global buyers. The relationship is not consistent, but sharp reactions in the dollar can affect commodities, and vice versa. 

Crude Oil Prices Start the Week on The Backfoot - - Crude prices were a bit lower to start the week on Monday, as reduced expectations for an extension of OPEC-led output curbs combined with fears over rising U.S. output weighed on sentiment.Brent crude futures, the benchmark for oil prices outside the U.S., shed 17 cents, or around 0.3%, to $62.55 a barrel by 3:25AM ET (0825GMT).Meanwhile, U.S. West Texas Intermediate (WTI) crude futures slipped 4 cents, or about 0.1%, to $56.66 a barrel.Oil prices jumped more than 2% on Friday, but failed to offset their first weekly loss in six weeks, amid ongoing investor fears that rising U.S. output would dampen OPEC’s efforts to rid the market of excess supplies.Domestic U.S. output has rebounded by almost 15% since the most recent low in mid-2016, casting doubts over the past few months' narrative of tightening energy markets.Meanwhile, growing concern that Russia was reluctant to support an extension of an existing OPEC-led production cut agreement further weighed.Under the original terms of the deal, OPEC and 10 other non-OPEC countries led by Russia agreed to cut production by 1.8 million barrels a day (bpd) for six months. The agreement was extended in May of this year for a period of nine more months until March 2018 in a bid to reduce global oil inventories and support oil prices.Discussions are continuing in the run-up to the Nov. 30 meeting, which oil ministers from OPEC and the participating non-OPEC countries will attend.In the week ahead, trade volumes are expected to remain light around Thursday's Thanksgiving holiday and Friday's shortened trading session.Market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.In other energy trading, gasoline futures declined 0.6 cents, or 0.4%, to $1.739 a gallon, while heating oil lost half a cent to $1.942 a gallon. Natural gas futures dropped 5.6 cents, or 1.8%, to $3.040 per million British thermal units.

Oil Prices Stuck Ahead Of OPEC Meeting --Oil prices are in a holding pattern ahead of the OPEC meeting at the end of next week. The consensus expectation is for an extension, although there are some rumblings about unease with the Russian delegation. “There seems to be some equivocation by the Russians about extending the OPEC deal,” said John Kilduff, founding partner at Again Capital. “With the door being left open, you’re seeing the market take a hit on a potential unraveling.” Data from OPEC suggests Venezuela could continue to see its oil production erode, with losses expected at 250,000 bpd in 2017. The losses could accelerate next year, jumping to 300,000 bpd. Some think it could be even worse. An OPEC source told Reuters that Saudi Arabia would not increase production in order to compensate for falling Venezuelan output. Still, Reuters points out that rising heavy oil production from Iraq, Canada and Brazil are offsetting the losses.  Nebraska regulators gave the greenlight to the Keystone XL pipeline, removing one of the last barriers for the decade-old proposal. However, Nebraskan officials approved an alternative route, not TransCanada’s preferred route. That means that there could be new litigation that stands in the way of construction. Environmental groups argue that the alternative route has not yet been vetted. As some automakers shift aggressively towards electric vehicles, the oil majors are spending heavily to keep the internal combustion engine alive. The WSJ reports that ExxonMobil, Royal Dutch Shell and BP (NYSE: BP) are seeking to develop the next generation of engine lubricants, which could help boost fuel efficiency, allowing gasoline-fueled vehicles to compete.  U.S. gasoline consumption hit a record high for the month of October, according to the American Petroleum Institute. Total deliveries of petroleum products hit 19.9 mb/d in October, 1.1 percent higher than a year ago. Gasoline demand averaged 9.3 mb/d.

Oil rises ahead of OPEC meeting as further output cuts expected -- (Reuters) - Oil rose on Tuesday, supported by expectations of an extension next week to OPEC output cuts, but prices remained under pressure from signs of higher output in the United States. Brent crude oil LCOc1 was up 17 cents at $62.39 a barrel at 1452 GMT. U.S. light crude CLc1 was at $56.72, up 30 cents. Analysts said Brent was expected to fluctuate in a narrow range, from $61 to $63, as the market awaited the outcome of the Organization of the Petroleum Exporting Countries’ meeting on Nov. 30. OPEC, together with a number of non-OPEC producers led by Russia, has been restraining output this year in an effort to end a global supply overhang and prop up prices. At its meeting next week, the group is widely expected to extend the deal beyond its March 2018 expiry date. “The market is just waiting for confirmation that OPEC wants to move on with the extension,” said Ole Hansen, senior manager at Saxo Bank. But doubts about the willingness of some participants including Russia to keep restricting production have led traders to take a more cautious approach and weighed on prices. “Against the positive news we have some comments from Russia which could indicate that they at this stage prefer to wait and see,” Hansen said. Russian news agency TASS reported on Tuesday that the country’s oil producers had met with the energy ministry to discuss a six-month extension, as opposed to the nine months originally floated by President Vladimir Putin. But the biggest headache for OPEC has been a rise in U.S. drilling activity, led by shale oil producers.

WTI Tops $57 After Biggest Crude Draw In 3 Months WTI/RBOB bounced today in anticipation of a reversal of the last two week's builds in crude inventories, and bulls were not disappointed by the API print.  Jan '18 WTI pushed above $57 but RBOB fell after a big crude draw (though gasoline build).“It looks like we are going to get a draw in crude oil inventories. That’s somewhat supportive,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by phone.Investors are also “looking ahead to the OPEC meeting, and despite some of that dithering by Russia, the consensus is they are going to come together and extend the output cuts.”Additionally, Oil Vol dropped to 8 month lows...“When you get into a solid, one-way trend, the volatility tends to come down because there’s not really a sense of an impending doom to the downside or even a real explosive upside breakout," API:

  • Crude -6.356mm (-2.2mm exp) - biggest draw since August
  • Cushing -1.8mm
  • Gasoline +869k
  • Distillates-1.67mm

Crude inventories up the last 2 weeks and a surprise gasoline build spooked markets but if API data holds this week's crude draw is the largest since August and the Cushing destocking is the largest since July. However, Gasoline saw another modest (surprise) build.

Oil Price Drop Imminent If Moscow Says "No" To Extension -- As the November 30 meeting in Vienna of OPEC and its partners in the oil production cut deal nears, worry has returned among traders: one of the brokers of the deal might decide to walk out on the deal instead of participating in another extension.We’re talking about Russia, the world’s top producer and exporter, who many believe played OPEC and specifically its leader, Saudi Arabia, by agreeing to a relatively minor production cut from its nearly record-high rate of production. Reports emerged last week that Russia is considering a delay on the decision to extend the cut. That’s after Energy Minister Alexander Novak hinted more than once that from Moscow’s perspective, this decision is far from urgent. With a budget based on Brent at US$40, Russia is indeed in a sweet spot compared with its partners in the deal: it can remain in the black at any price above US$40. But there may be another reason for Moscow deciding to opt out of the extension.Lower oil prices could actually be more beneficial for the Russian economy.Macro-Advisory analyst Chris Weafer lists six ways in which lower oil prices would be better for Russia, and all of these make sense, counterintuitive as this line of argument might seem at first glance.For starters, the higher the price of oil, the greater the risk of another collapse down the road. The more oil costs, the more producers will invest in new production, possibly leading to a repeat of the 2014 collapse. Or prices could simply take a dive once the OPEC deal ends, which it must at some point.A higher oil price would also likely compromise a budget reform currently in the works, which aims to rein in spending. More importantly, Russia’s economic diversification efforts may well be compromised if oil prices remain higher—a point we’ve made repeatedly on Oilprice, not just with respect to Russia but to all oil-dependent economies.According to Weafer, however, renewable energy does not play a large part in this diversification. He says that stifling investments in renewable energy is one more reason for Moscow to want oil prices to fall: the higher oil prices are, the more attractive renewable energy becomes.Yet another reason is that Moscow prefers to keep the ruble cheaper as this stimulates exports, curbs imports, and boosts competitiveness. Traditionally, the Russian currency has followed Brent’s moves closely, but this link has now been severed thanks to a fiscal rule mechanism employed by the Russian Finance Ministry that involves converting more rubles into forex as tax on the oil industry rises, pressuring the local currency. If, however, Brent goes high enough, there may be a spike in speculative interest in rubles, which will cause the currency to rise, too.

Oil Jumps in New York as U.S. Supply Drop Adds to OPEC Optimism - Oil settled at a two-year high as a drop in U.S. crude stockpiles added optimism to a rally underpinned by hopes for an OPEC deal extension.Futures in New York surged 2.1 percent to close above $58 a barrel for the first time since mid-2015. Crude inventories fell by 1.86 million barrels last week, the Energy Information Administration said Wednesday. Prices briefly dipped after the report as the draw came in smaller than the 6.36 million decline posted by the American Petroleum Institute. Meanwhile, an outage on TransCanada Corp.’s Keystone pipeline has led inventories to contract in the Cushing, Oklahoma distribution hub.“There is a fundamental under-supply right now in the global oil market, which is by definition bullish,”  There’s a “growing recognition in the market-place, that global inventories are coming down and by a substantial amount.”  The U.S. benchmark has jumped more than 6 percent this month amid signals that the Organization of Petroleum Exporting Countries and its allies may agree to prolong supply curbs beyond March when producers meet in Vienna next week. OPEC will extend its deal through the end of 2018 when the group meets on Nov. 30, according to a Bloomberg survey of analysts and traders. The cartel is said to have invited another 20 non-members to its meeting in an effort to rebalance world oil markets, according to a person familiar with the matter.  “If they confirm that the cuts will be extended for a considerable length of time, let’s say nine more months, and everybody will continue to be covered who has been covered before, that may spur some additional uplift in oil.” West Texas Intermediate for January delivery advanced $1.19 to settle at $58.02 a barrel on the New York Mercantile Exchange, the highest level since June 30. Total volume traded was about 52 percent above the 100-day average.

WTI/RBOB Slide After Smaller Than Expected Crude Draw, New Record High Production -- With WTI at its highest since July 2015, vol at 8mo lows, and the front-end flipped into backwardation for the first time since Nov 2014, it appears a lot of hope is priced into continued equilibration (and OPEC). Last night's API (crude draw) provided some more confirmation but this morning's DOE data disappointed with a smaller than expected crude draw, and production rose once again to a new record high.“Domestic production is going to be the big nugget that everybody will be racing to see, in terms of whether those levels continue to rise or not,” John Kilduff, a partner at Again Capital, says.“They likely will, so that can be a counter-balance to the drawdown” DOE:

  • Crude -1.86mm (-2.2mm exp)
  • Cushing -1.827mm
  • Gasoline +44k (+1mm exp)
  • Distillates +269k

DOE disappointed expectations with a considerably smaller than expected crude draw (and well below API) and modest product builds...

Oil Prices Unmoved By Bullish EIA Report - A day after the American Petroleum Institute helped prop WTI up by reporting a 6.356-million-barrel inventory draw, the Energy Information Administration chimed in, reporting a much smaller decline of 1.9 million barrels in crude oil inventories for the week to November 17. At 457.1 million barrels, the EIA said, crude oil inventories are within the upper half of the seasonal average. Analysts polled by Platts expected a draw of 2.1 million barrels in crude oil inventories and a build of 1 million barrels in gasoline stockpiles.According to the EIA, gasoline stockpiles remained unchanged last week, after a 900,000-barrel build in the previous reporting period. That build followed a hefty build of 3.3 million barrels a week earlier and is more normal for this time of year when there is less driving and less demand for the most popular passenger vehicle fuel.Gasoline production last week averaged 10.4 million barrels daily, the EIA also said, up from 9.9 million bpd in the week before. Refineries operated at 91.3 percent of capacity, processing 16.8 million barrels of crude daily, versus 16.6 million bpd a week earlier.In addition to doubts about the OPEC oil deal extension, this week WTI received support from Canada: the closure of TransCanada’s 600,000-bpd Keystone pipeline due to a leak offered fresh support to prices, suggesting next week’s EIA report could include another inventory draw as a result of this suspension.As for OPEC’s meeting, most analysts are still certain it will result in an extension, despite reports that Russia may not be all-in. In fact, according to some, these reports are only a tool to get prices even higher prior to the extension announcement, which won’t be a great surprise, so it will not have that much of a boosting effect on prices. In the meantime, traders remain wary of making any big bets on oil in case something unforeseen happens in the run-up to the OPEC meeting, due next Thursday. WTI traded at US$57.73 a barrel at the time of writing, and Brent crude was changing hands at US$62.69 a barrel.

US Rig Count Up by 8 This Week to 923; Wyoming Up 4 - The number of rigs exploring for oil and natural gas in the U.S. increased by eight this week to 923. That's up from the 593 rigs that were active a year ago. Houston oilfield services company Baker Hughes said Wednesday that 747 rigs sought oil and 176 explored for natural gas this week. The weekly tabulation, normally released on Friday, was distributed early this week because of the Thanksgiving holiday.Among major oil- and gas-producing states, Wyoming gained four rigs while Colorado, Louisiana, New Mexico and Texas were up one apiece. Utah declined by one. Alaska, Arkansas, California, North Dakota, Ohio, Oklahoma, Pennsylvania and West Virginia were unchanged.The U.S. rig count peaked at 4,530 in 1981. It bottomed out in May of 2016 at 404.

The growing rig count maintains its November momentum - Houston Chronicle: U.S. oil and gas drilling activity increased for the third straight week, demonstrating new momentum for the energy sector heading into the holiday season. Nine more rigs drills for oil were added throughout the country, although the natural gas rig count dipped by one, creating a net gain of eight rigs for the week. This follows a week that saw a big surge in gas rigs and a week before that which had another large jump in oil rigs. U.S. oil prices are currently hovering near two-year highs, and the drilling activity has picked back up after lagging in the late summer and early fall.Only Wyoming saw a big jump with four active drilling rigs added last week, while the other gains were spread out. Texas, Louisiana, Colorado and New Mexico each added one net rig, according to weekly data collected by Baker Hughes. The U.S. rig count is now up to 923 rigs, down from a July peak of 958. Oil rigs account for 747 of the total. The total U.S. rig count is up from an all-time low of 404 rigs in May 2016. U.S. oil was selling above $57 a barrel in early afternoon trading in New York. West Texas' Permian Basin now accounts for 393 rigs, which is more than half of all the nation's oil rigs. The next most active area is Oklahoma's Cana-Woodford shale with 73 rigs, recently surpassing Texas' Eagle Ford shale with 67 rigs. Texas is home to 450 rigs overall, while Oklahoma is second with 122 rigs. New Mexico is next with 69 rigs, having passed Louisiana for third. 

US Oil Rig Count Rises Amid Record Breaking Production -- The number of oil and gas rigs in the United States rose again this week. The boost in the number of active oil rigs this week brings the total gained in November to 10—the first monthly gain since July. Oil and gas rigs combined were up by 14 in November—also the biggest increase seen since July, in a sign that drillers are once again eager to add rigs after scaling back in August. This week, the number of active oil rigs increased by 9, with gas rigs falling by 1. The Permian basin, after gaining two rigs this week, now boasts 165 more rigs than this time last year, a staggering 72-percent increase. The WTI and Brent benchmarks rose earlier today on a small crude oil inventory decline as reported by the EIA, further supported by the Keystone pipeline shutdown that took 600,000 bpd offline. WTI and Brent are both trading at levels not seen since mid-2015. The total oil and gas rig count in the United States now stands at 923 rigs, up 330 rigs from a year ago—a 55 percent increase. The number of oil rigs stands at 747 versus 474 a year ago (+57 percent). The number of gas rigs in the US now stands at 176, up from 118 a year ago (+49 percent). WTI was trading up on Wednesday at 1.76 percent at $57.83 at 1:38pm EST. Brent crude was trading up 0.69 percent at $62.75 at that time. Along with an increase to the number of active oil rigs, US crude oil production was up for the week ending November 17 at 9.648 million barrels per day—another new high for 2017 as new highs are seemingly reached each week.

Oil price rises to 2-year high above $58 US on supply slowdown - The benchmark North American oil price hit its highest price in 2½ years on Wednesday as lower production from Canadian oilsands coupled with reduced inventories in the U.S. to push down supply.The price of  West Texas Intermediate touched $58.05 US a barrel a little before 6 a.m. ET, up more than a dollar from Tuesday's close. The U.S. crude price is now up by about 35 per cent since a low in June. Two factors in the recent gain were warnings from two major oilsands companies that they would pump less oil this month and next. Royal Dutch Shell told its customers that output at its 255,000-barrel-per-day upgrader in Scotford, Alta., would be reduced next month, and Syncrude said it would cut volumes from the 350,000-barrel-per-day plant in northern Alberta by about five per cent, Reuters reported.Last week, the Keystone pipeline that carries 590,000 barrels per day of crude from Alberta's oilsands to markets in the United States, was shut down after 5,000 barrels of oil spilled in South Dakota. That prompted a shutdown of the pipeline while the mess could be cleaned up, and that's also pushing up the oil price. On Tuesday, the American Petroleum Institute reported that oil inventories dropped by 6.4 million barrels last week, far more than what analysts were expecting.Oil inventories tend to decline through the summer months — the busiest driving season — but this year's decline is stretching even later than usual.

WTI flips into big backwardation after pipeline spill: Kemp- (Reuters) - U.S. crude futures prices have swung into substantial backwardation after a spillage on the Keystone pipeline severely reduced crude deliveries from Canada into the U.S. Midwest. U.S. crude futures, also known as West Texas Intermediate (WTI), are based on crude delivered into the tank and pipeline system around Cushing, Oklahoma. Futures prices are therefore very sensitive to anything that affects the regional supply-demand balance in the Midwest. After the spill on Nov. 16, the calendar spread between WTI futures for delivery in January and July 2018 has surged from a contango of 2 cents a barrel to a backwardation of $1.17. The six-month WTI spread is trading at the highest level since October 2014, a sure sign traders expect stocks around Cushing to tighten significantly after the pipeline outage ( ). U.S. crude prices have risen much more sharply than Brent in recent sessions, narrowing the big gap between the two that started to open this summer and reached a peak in early November. U.S. crude futures for delivery in January are now trading only $5 a barrel below Brent, down from a discount of $6.70 earlier in the month. In reality, the Keystone spill has accelerated an adjustment of Midwest stocks and prices that had already begun as traders responded to the huge price differential by routing more crude to the coast. Cushing crude stocks rose steadily between the middle of August and the start of November, even as stocks declined in the rest of the country, especially on the U.S. Gulf Coast. ( ) Stocks at Cushing increased in 10 of the 11 weeks between Aug. 18 and Nov. 3 by a total of more than 8 million barrels, U.S. Energy Information Administration (EIA) data shows. By contrast, stocks in the rest of the country declined in seven of 10 weeks by a total of 14 million barrels.  The contrast with the main refining centre on the Gulf Coast is even more stark, where stocks fell by 16 million barrels over the same period. Even before the Keystone spill, WTI futures had moved from a broad contango in early October to nearly flat in November, reflecting the shifting supply-demand-stocks dynamic at Cushing. Local oversupply was starting to clear and the pipeline outage will accelerate the process significantly.

U.S. oil hits 2-year high on pipeline outage, lower inventories -  (Reuters) - U.S. crude hit a two-year high in thin trade on Thursday as the shutdown of a major crude pipeline from Canada and a draw on fuel inventories pointed to a tightening market, despite rising output from U.S. producers. West Texas Intermediate crude was up 54 cents at $58.56 per barrel by 2:00 p.m. EST (1900 GMT), close to a two-year peak of $58.58 touched earlier in the session. Brent crude settled at $63.55 per barrel, 23 cents above its previous close. Trading volumes were thin because of the Thanksgiving holiday in the United States. The shutdown on TransCanada Corp's 590,000-barrel-per-day Keystone pipeline following a spill last week has helped drive oil prices higher because of expectations it will reduce crude stocks in the U.S. storage hub of Cushing, Oklahoma. "Inventories should drain sharply in the next few weeks given the uncertain timeline for a restart of the Keystone pipeline, a major artery for Canadian heavy oil barrels into the heart of the Cushing hub," Prices also found support from a drawdown in commercial fuel inventories in the United States. U.S. stocks fell 1.9 million barrels in the week to Nov. 17, and have dropped 15 percent from record highs in March to below 2016 levels. The market shrugged off data showing U.S. output has risen by 15 percent since mid-2016 to a record 9.66 million bpd, helping turn the United States from the world's biggest importer to a major exporter.

Oil dips after US crude hits near 2-year high on pipeline shutdown  - Oil prices eased on Thursday, with U.S. crude falling away from two-year highs reached the day before, but the shutdown of the Keystone pipeline and a drawdown in fuel inventories continued to bolster markets despite worries over rising output. U.S. West Texas Intermediate (WTI) crude futures were at $57.89 a barrel at 0749 GMT, down 13 cents, or 0.2 percent, from their last settlement, but still close to 2015-highs of $58.15 a barrel reached on Wednesday. Brent crude futures were at $63.14 per barrel, 18 cents, or 0.3 percent, below their last close. WTI has been buoyed by the shutdown of the 590,000 barrel-per-day (bpd) Keystone pipeline, one of the largest crude pipelines from Canada to the United States, as well as by another drawdown in commercial fuel inventories that came despite record U.S. oil production. "Lower supplies into the U.S. from the north and robust exports from the south are likely to support a further reduction in U.S. inventories," said Ole Hansen, head of commodity strategy at Saxo Bank. U.S. crude inventories fell 1.9 million barrels in the week to Nov. 17, to 457.14 million barrels. Stocks have dropped by 15 percent from their records in March, to below 2016 levels. The inventory drop came as the Keystone pipeline connecting Canada's oilfields to the United States was shut last week after an oil spill in South Dakota. Operator TransCanada is cutting deliveries at least until the end of November. In a sign of a tightening market, the WTI forward curve has moved from contango, when prices for future delivery are more expensive than those for immediate dispatch, into backwardation, where spot prices are higher than those for later delivery. Markets are also tightening globally due to an effort led by the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC producers, including Russia, to withhold output.

US oil prices hit fresh two-year highs on Keystone pipeline outage (Reuters) - U.S. crude oil hit fresh two-year highs on Friday, as the shutdown of a major crude pipeline from Canada to the United States tightened North American markets. A fuel dispenser is seen at a petrol station in Riyadh, Saudi Arabia October 8, 2017. REUTERS/Faisal Al NasserTrading activity is expected to be very low on Friday due to the U.S. Thanksgiving holiday. U.S. West Texas Intermediate (WTI) crude futures were at $58.37 a barrel at 0206 GMT, up 35 cents, or 0.6 percent from their last settlement. They reached a high of $58.58 a barrel early on Friday, the highest level since July 1, 2015. In a sign of a tightening market, both crude benchmarks are in backwardation, where spot prices are higher than those for future delivery, which makes it unattractive for traders to store oil for later sale. The closure of the 590,000 barrels per day (bpd) Keystone pipeline following a spill last week has helped drive up U.S. crude as it reduces stocks in the storage hub of Cushing, Oklahoma, traders said. Markets have also been tightening globally due to an effort by the Organization of the Petroleum Exporting Countries (OPEC) and a group of other producers, including Russia, to withhold 1.8 million bpd of production. The deal to restrict output expires in March 2018, but OPEC will meet on Nov. 30 to discuss its policy, and it is expected to extend the cuts. “The Agenda for the OPEC meeting is out and it’s only a 3-hour meeting. That suggests that a broad consensus has been built and the meeting is really just a rubber stamp to agree the extension of the Saudis’ favored 9-month extension period,” 

OilPrice Intelligence Report: A Big Week For Oil Bulls: Oil prices rose sharply in early trading on Friday on renewed optimism around an OPEC cut, which came a few days after news that the Keystone pipeline would remain mostly offline for a few weeks. Also, the EIA data from mid-week showed an unexpected inventory decline. Taken together, the news meant that oil bulls were on the march at the close of the week. TransCanada said that its Keystone pipeline would be offline for weeks, cutting crude deliveries through the 590,000-bpd pipeline by 85 percent. Last week the pipeline spilled an estimated 5,000 barrels of oil in South Dakota, knocking the pipeline offline. After the announcement, oil prices shot up on Wednesday on expectations of tighter supply in the United States. Meanwhile, WTI futures flipped into a state of backwardation, the first time the futures curve has been downward sloping in years. Backwardation could help accelerate inventory drawdowns. No surprise here, but Reuters reports that top OPEC officials are pushing for an extension through the end of 2018 ahead of the upcoming meeting on November 30. “The Saudis are lobbying to have a decision in November for nine months,” a senior oil industry source told Reuters. Russia remains the wildcard, as Moscow indicated in recent weeks that it had reservations about an extension. However, by early Friday, there were reports that Russia was getting close to coming on board. Bloomberg reportedthat Russia and OPEC agreed to a framework that included an extension through the end of 2018, although crucial details remained unanswered. One idea includes linking the amount of production cuts to the overall supply/demand balance in the market. Another idea would be to make explicit the fact that the deal could be renegotiated early next year in case market conditions change. OPEC officially meets on November 30 in Vienna, where they hope to announce the finalization of some agreement. . After several consecutive months of sharp declines in the rig count, the U.S. oil industry added more rigs back into operation for the third week in a row. The oil rig count jumped by nine, while the natural gas rig count fell by one. With several weeks of data in the books, there is growing evidence that the rig count bottomed out again, and is now on the rise, moving in tandem with the resurgence in oil prices. The price rally since September seems to have sparked a drilling revival.

U.S. oil prices climb as traders focus on disruptions, OPEC meeting - U.S. oil prices finished at a 2½-year high in an abbreviated session on Friday, as investors focused on a disruption to a major crude-oil hub in Oklahoma and looked ahead to a key OPEC meeting next week. West Texas Intermediate crude futures for January delivery, the U.S. benchmark rose 93 cents, or 1.6%, to $58.95 a barrel, settling at levels not seen since the summer of 2015. The contract has been inching closer in recent sessions, to attempt to eliminate the gap with Brent oil, which added 31 cents, or 0.5%, to $63.86 a barrel. For the week, WTI gained 4% and Brent futures, the international benchmark, marked a 1.8% climb. WTI has posted three weekly gains in a row, while Brent has logged four consecutive weekly gains. Crude prices have been on the rise as inventory data from the U.S. Energy Information Administration showed crude stockpiles fell by 1.9 million barrels last week, a sign that the rebalancing in the oil market is having an impact on U.S. storage, even though the decline was less than some expected. Trading in crude futures settled an hour earlier on Friday, at 1:30 p.m. Eastern, following the observance of Thanksgiving in the U.S. on Thursday. Adding to that bullish momentum on the session, Keystone pipeline operator TransCanada said Tuesday that flow from its pipeline to the U.S. would be reduced by 85% through the end of November, after roughly 5,000 barrels of oil leaked in South Dakota last week. The topic of rising U.S. output is expected to be on the table at the meeting of Organization of the Petroleum Exporting Countries Nov. 30, which will be attended by non-OPEC members. Some expect the meeting will yield an extension to a production-cut deal that was hammered out in January, but analysts warned that the market could be setting itself up for disappointment. Early reports suggest that one of the biggest non-OPEC crude producers, Russia, is in support of extending a current pact to limit crude output, set to end March 2018, to the end of next year.

Is $40 WTI Now More Realistic Than $60? - The current rise in oil prices is more of a fear trade right now, driven by fear of what is going on in the Middle East, rather than a result of growing OPEC chatter or inventory reports, Todd Horwitz, chief strategist at, told Bloomberg on Wednesday.“The oil premiums are very narrow going out to the future, which means that this is more of a fear trade in the front month,” Horwitz said on ‘Bloomberg Markets’.“To me, this is more of just another farce of what OPEC is trying to do, and trying to push these prices higher,” the strategist noted.OPEC and its non-OPEC partners in the production cut deal are scheduled to meet in Vienna on November 30 to discuss the extension of their pact.While just a month ago a nine-month extension to the end of 2018 was the base case of all analysts, now there are growing voices that OPEC may delay the decision to early next year. The constant OPEC chatter and the return of some geopolitical risk premium in oil prices - with Saudi Arabia’s purge, heightened Saudi-Iran tensions, and the Iraq-Kurdistan standoff - have pushed oil prices to their highest in two years over the past few weeks. According to Horwitz, however, the WTI price has little room to rise from its current price of around $58 per barrel, because U.S. shale will return stronger.

Saudis push for nine-month extension of OPEC-led oil cut: sources (Reuters) - Top crude exporter Saudi Arabia is lobbying oil ministers to agree next week on a nine-month extension to OPEC-led supply cuts, sources familiar with the matter said, as Riyadh seeks to ensure a price-sapping glut is eradicated.  The Organization of the Petroleum Exporting Countries, non-member Russia and nine other producers are cutting oil output by about 1.8 million barrels per day until March 2018, and will discuss extending the deal at a Nov. 30 meeting in Vienna.  Oil prices have risen to almost $65 a barrel, the highest since 2015, supported by lower inventories. However, OPEC is wary prices could fall again since excess supply persists, while a flare-up in Middle Eastern political tensions has also played a part in the rally. “The Saudis are lobbying to have a decision in November for nine months,” said a senior oil industry source with knowledge of the matter who declined to be identified. Indications of support for a nine-month extension have come from the very top in Saudi Arabia, OPEC’s de facto leader, and Russia, the largest non-OPEC producer involved in the agreement.  Saudi Crown Prince Mohammad bin Salman signaled he was supportive of extending the agreement further into 2018, following remarks by Russian President Vladimir Putin on Oct. 4 that the deal could be stretched to the end of next year.

Russia and OPEC Agree on Framework to Extend Oil Cuts - OPEC and Russia have crafted the outline of a deal to extend their oil production cuts to the end of next year, although both sides are still hammering out crucial details, according to people involved in the conversations. The Organisation of Petroleum Exporting Countries and several non-OPEC nations led by Russia will meet next week in Vienna to discuss prolonging their output curbs. Moscow had been hesitating over the need for an extension now because the current deal doesn’t expire until the end of March. After days of talks, Moscow and Riyadh now agree they should announce an additional period of cuts at the Nov. 30 meeting, the people said, asking not to be named because the conversations are private. Russia wants the extension deal to include new language that would link the size of the curbs to the health of the oil market, they said. “The goal to re-balance the market hasn’t been met in full yet, so everyone is in favor of extensions to reach final goals, Russia also supports these proposals,” Energy Minister Alexander Novak said in an interview with RBC television on Friday. “Different options are considered now, we will discuss details at the Nov. 30 meeting.” Russian President Vladimir Putin talked on the phone with Saudi King Salman bin Abdulaziz on Nov. 21, during which they “emphasized importance of further coordination between Russia and Saudi Arabia in the global hydrocarbon markets,” according to a Kremlin statement. The deal isn’t finalized as Russia and Saudi Arabia haven’t yet agreed on the new language, the people said. Oil ministers are due to start arriving in Vienna for the talks early next week. West Texas Intermediate crude, the U.S. benchmark, extended gains to the highest level since July 2015. Futures for January delivery rose as much as 1.6 percent to $58.92 a barrel in New York.

OPEC chatroom dead as Qatar crisis hurts Gulf oil cooperation (Reuters) - OPEC’s most powerful internal alliance, bringing together the oil producer group’s Gulf members, is disintegrating fast. As a six-month-old spat between Saudi Arabia and Qatar deepens, the organization’s Gulf ministers will have to scrap their tradition of meeting behind closed doors to agree policy before OPEC holds its twice-yearly talks, OPEC sources say. “We used to have a WhatsApp group for all ministers and delegates from the Gulf. It used to be a very busy chatroom. Now it’s dead,” said a senior source in the Organization of the Petroleum Exporting Countries. Four other sources said there had been no official contact on oil policy between the Gulf Arab nations, in a grouping known as the Gulf Cooperation Council (GCC). The GCC includes OPEC members Saudi Arabia, the United Arab Emirates, Kuwait and Qatar and non-OPEC Oman and Bahrain. OPEC meets on Nov. 30 in Vienna to decide whether to extend global output cuts beyond March. OPEC kingpin Saudi Arabia and the UAE cut ties with Doha in June, saying Qatar backed terrorism and was cozying up to rival Iran. Qatar rejected the accusation. “The ministers can’t meet,” another OPEC source said. “They may relay the message through the Kuwaiti or the Omani oil ministers, but Saudi and the UAE cannot meet publicly with the Qataris.” Kuwait and Oman have refrained from taking sides in the dispute, over which Kuwait’s Emir Sheikh Sabah has led regional mediation. 

Israel Gives Official Confirmation Of Covert Ties With Saudi Arabia -- Yet more confirmation emerged today regarding the recently established relationship between Israel and Saudi Arabia, which is being defined by a shared desire to see Iranian influence and expansion rolled back in the Middle East. For the first time a high level Israeli government official has formally acknowledged the increased ties between the two countries which have historically been bitter enemies, and which have never had official diplomatic relations.  The historic news, which is worrisome for the fact that it could bring the region closer to major war as the newfound "allies" eye the Iranian proxy Hezbollah, follows the leak of an Israeli diplomatic cable sent to all Israeli embassies throughout the world which revealed Israeli and Saudi behind the scenes coordination. The cable gave instructions to Israeli diplomats to express support for the Saudi war against Shia forces in Yemen and also urged embassies to aggressively lobby their host governments to take steps toward pushing Hezbollah out of Lebanon. And today the Times of Israel reports the following Reuters story under the bombshell headline, Israel Has Secret Contacts With Saudi Arabia, Senior Minister Reveals:Energy Minister Yuval Steinitz said on Sunday that Israel has had covert contacts with Saudi Arabia amid common concerns over Iran, a first disclosure by a senior Israeli official of such contacts. In an interview on Army Radio,Steinitz was asked why Israel was hiding its ties with Saudi Arabia, which does not have diplomatic ties with Israel.And in response Steinitz replied in the affirmative, explaining that: "We have ties that are indeed partly covert with many Muslim and Arab countries, and usually (we are) the party that is not ashamed. It’s the other side that is interested in keeping the ties quiet. With us, usually, there is no problem, but we respect the other side’s wish, when ties are developing, whether it’s with Saudi Arabia or with other Arab countries or other Muslim countries, and there is much more ... (but) we keep it secret.”

Saudi Arabia’s anti-corruption purge is all about life after oil -- Saudi Crown Prince Mohammed bin Salman’s decision to arrest scores of the country’s most prominent officials and business elites under the banner of an anti-corruption purge last week was a remarkable power play, an unprecedented move designed to concentrate all authority in the Gulf state in one man’s hands.But the radical shake-up was also about something else: preparing for life after oil.MBS, as the 32-year-old heir to the throne is widely known, has not just been detaining people — he’s also been seizing billions of dollars of their money. And he’s using this crackdown to make the case to the world that Saudi Arabia is a reformed nation cleansed of graft, and worthy of a big boost of foreign investment. In other words, the purge is more than just a way of eliminating his rivals and consolidating power. Experts say that MBS sees it as an opportunity to refill his country’s coffers while he works to modernize the stagnating Saudi economy and wean it off its near-total reliance on oil.MBS’s anti-corruption committee, which he formed just hours before the arrests began on November 4, has pledged to take “whatever measures are deemed necessary” to confiscate the assets of corrupt officials and businessmen. Saudi authorities have detained more than 200 people and frozen thousands of bank accounts. A US official briefed on the crackdown told the New York Times that the committee has even tried to get some of the people caught up in the sweep to sign over large amounts of money in order to secure better treatment while detained. (At least 17 people have required medical treatment due to abuse from authorities.) The Riyadh Chamber of Commerce and Industry estimates that if the committee attempted to retrieve all the revenue lost to corruption, it could amount to as much as $800 billion. “A key goal of the arrest campaign seems to be about replenishing state coffers,”

Saudi Purge Claims It's Latest Corporate Victim As Kingdom Holdings Sees $1.3 Billion Bank Deal Collapse --For the past couple of weeks we've written frequently about the sudden political turmoil in Saudi Arabia that resulted in two Saudi princes being killed in a span of just 24 hours and dozens others being detained on charges of corruption while having their bank accounts frozen.  Here are couple of our most recent background posts on the topic:

Now, per an exclusive report from Reuters, it appears as though the latest casualty of the Saudi shakeup is a financing deal sought by the $8 billion dollar Kingdom Holdings which is owned and run by Prince Alwaleed bin least until he was recently arrested that is Kingdom Holding’s plan to borrow money to fund new investments has stalled because owner Prince Alwaleed bin Talal has been detained in Saudi Arabia’s anti-corruption crackdown, according to four banking sources familiar with the matter. Kingdom 4280.SE had approached banks to obtain the loan, but the financing plan has been held up because the lenders are worried about potential repercussions if they lend to the prince’s company, the sources said. One of the sources, who was approached for the loan, said it would have been worth roughly 5 billion riyals ($1.3 billion).  For those who aren't familiar with the company, Kingdom Holdings is a leading Saudi investment firm with stakes in prime real estate including New York’s Plaza Hotel and London’s Savoy Hotel.

Saudi Graft Settlements Could Reap Billions - Saudi authorities estimate they may be able to recover between $50 billion and $100 billion from settlement agreements with suspects detained in an anti-corruption crackdown that has implicated prominent princes, officials and billionaires, a senior official said. Suspects are being offered settlements to avoid trial, the official said, requesting anonymity to discuss the ongoing investigation. If they accept, talks are held with a special committee to work out the details. Payments are based on the amounts authorities believe suspects have amassed illegally, not their entire wealth, the official said. The purge, which saw royals and billionaires such as Prince Alwaleed bin Talal detained, shook the kingdom and reverberated abroad as diplomats, bankers and analysts sought to figure out its impact on wealthy clients as well as the struggle for power in the world’s biggest oil exporter. Prince Miteb bin Abdullah was held in the crackdown and also fired from his post as head of the powerful National Guard, a move that reinforced speculation that King Salman was preparing the ground to hand over power to his son and heir, Crown Prince Mohammed bin Salman. The purge has widened to the military. The senior official said 14 retired officers who worked at the Ministry of Defense and two retired National Guard officers had been detained on suspicion of being involved in financial contracts that were deemed corrupt. No active-duty officers have been arrested, he said. The crackdown comes at a delicate time for Saudi Arabia, an absolute monarchy grappling with the worst economic slowdown since 2009 as well as political unrest in the region, stirred in no small part by Prince Mohammed’s aggressive foreign policy to counter Iran’s influence. In the past two years, the prince has thrust Saudi Arabia into war in Yemen and led a regional boycott of neighboring Qatar. 

U.S. warns citizens against risks of travel to Saudi Arabia (Reuters) - The U.S. State Department on Tuesday warned citizens to “consider the risks” when traveling to Saudi Arabia due to militant threats and the threat of ballistic missile attacks on civilians by rebels in Yemen. The warning comes two weeks after U.S.-allied Saudi Arabia said it had shot down a ballistic missile fired by Iran-aligned Houthis from Yemen towards the Saudi capital Riyadh. The missile, which the Houthis said was in response to Saudi-led air strikes on civilians in Yemen, was shot down near Riyadh airport without causing any casualties.  “Terrorist threats persist throughout Saudi Arabia, including in major cities such as Riyadh, Jeddah, and Dhahran, and attacks can occur without warning anywhere in the country,” the State Department said in the warning, which was also posted on the U.S. embassy’s website. “Terrorist groups, including the Islamic State of Iraq and Syria (ISIS) and its affiliates have targeted both Saudi and Western government interests, mosques and other religious sites (both Sunni and Shia), and places frequented by U.S. citizens and other Westerners,” it added. In October, two Saudi guards were shot dead and three others injured when a gunman drove up to the gate of the royal palace in the Red Sea city of Jeddah and opened fire. 

Saudi Arabia is sideshow compared to our real problems in Middle East | TheHill: It is all too easy to view the Middle East in terms of what has become something approaching the crisis of the day. The odd spectacle of Saad Hariri, the Prime Minister of Lebanon, abruptly resigning while in Saudi Arabia and remaining there for two weeks under what seemed to be house arrest on the grounds that he faced an assassination plot originating in Iran is a case in point. His resignation occurred the same day as a Houthi missile attack on Saudi Arabia from Yemen, and was followed almost immediately by an “anti-corruption” crisis in Saudi Arabia that seems to have been an effort by Crown Prince Muhammad Salman to eliminate key rivals and gain more control over the Kingdom’s private sources of wealth. The practical problem for the United States, however, is not the crisis of the day. The practical problem is the steady erosion in the U.S. position in most of the Middle East and North Africa, that U.S. success in defeating ISIS may actually have made the threat worse, and that the United states does not seem to have a clear strategy for any of the lasting problems that challenge its position in the region. With the possible exception of Morocco, every Arab country in North Africa faces critical economic problems. Libya is torn apart by civil war, and Algeria, Egypt and Tunisia are unable to create jobs and move toward broad development. Egypt has steadily lost regional influence, relied on repression rather than development, and may be tilting back toward Russian arms and security ties. What was once the anchor of the U.S. position in the region is now fragile and uncertain. 

On the Destabilization of the Middle East – One of America’s favorite talking points on Iran is its “destabilizing” role in the Middle East. There’s no question that Iran does things that contribute to regional instability. In particular, it frequently supports armed non-state actors that serve as alternate sources of power inside their countries—Yemen’s rebels, militias in Syria and Iraq, and Hezbollah in Lebanon.But Iran is not the only or even the biggest contributor to Middle Eastern instability. In this area its contribution is at least matched, if not exceeded, by rival Saudi Arabia. Or, to be more specific, by one particular rival in Riyadh: Saudi Crown Prince Mohammad bin Salman (MbS). Since his father King Salman appointed him defense minister in January 2015, no single individual has done more to destabilize the Middle East or put more civilian lives in jeopardy than the future Saudi ruler. Saudi rhetoric about Iran’s “aggression” aside, it’s been Saudi aggression that has most afflicted the region on MbS’s watch. When referring to Iran, the Saudis and their allies have for many years used the term “Arab affairs”—as in, “Iran must stop meddling in Arab affairs.” As a practical matter this is a strange distinction. Leaving North Africa aside, “Arab affairs” are “Middle Eastern affairs,” and Iran, as a large and powerful Middle Eastern nation, will for better or worse continue to play a role in them. But the term isn’t meant to be a reasonable standard for Iranian behavior. Instead, it’s meant to create a reality wherein Iranian meddling in regional affairs must be resisted but the Saudis are free to meddle to their hearts’ content. Worse, the Saudis usually justify their actions as necessary to defend themselves from a supposed Iranian threat. And meddle the Saudis have—in Yemen, Syria, Qatar, and Lebanon. The result has been chaos throughout the Middle East.

In Escalating War Of Words, Saudi Crown Prince Calls Iran's Ayatollah "New Hitler Of The Middle East" -- Godwin's law states that "as an online discussion grows longer, the probability of a comparison involving Hitler approaches 1." Saudi Arabia's powerful, and controversial, 32-year-old Crown Prince Mohammed bin Salman - who in just a few months has made more local (and foreign) enemies than most of his predecessors accumulated over a lifetime, decided he does not need to wait that long, and in a glowing interview with the New York Times' Thomas Friedman, which touched on everything from the accommodations of the Riyadh Ritz-Carlton, to the recent power grab anti-corruption campaign, to Donald Trump, to the Saudi social and religious revolution, called the Supreme Leader of Iran “the new Hitler of the Middle East”, escalating the war of words between the arch-rivals. For his part, Khamenei has referred to the House of Saud as an “accursed tree”, and Iranian officials have accused the kingdom of spreading terrorism.  MbS, as he is also known, and who after the recent purge is also Saudi defense minister, also slapped down the ISIS card and suggested the Islamic Republic’s alleged expansion under Ayatollah Ali Khamenei needed to be confronted.“But we learned from Europe that appeasement doesn’t work. We don’t want the new Hitler in Iran to repeat what happened in Europe in the Middle East,” the paper quoted him as saying.As reported previously, tensions between Iran and the Saudi Kingdom soared once again this month when Lebanon’s Saudi-allied Prime Minister Saad Hariri resigned in a television broadcast from Riyadh, citing the influence of Iran-backed Hezbollah in Lebanon and risks to his life. Hezbollah called the move an act of war engineered by Saudi authorities, an accusation they denied.

Nasrallah Accuses US Of "Daesh Conspiracy" As Feared 'Tehran-To-Beirut Land Bridge' Is Established --  Washington's past decade of Syria policy has been driven by fears of the so-called "Shia crescent" or Iranian land bridge which would conceivably connect Tehran with the Mediterranean in a continuous arch of influence. With events rapidly unfolding in Iraq and Syria, foremost among them the defeat of ISIS and the connection of Syrian and Iraqi national forces at the shared border, that land bridge has now been established for the first time in recent history.  This week Hezbollah's Secretary-General Hassan Nasrallah has once again accused the United States and its allies in Syria of aiding ISIS. In televised remarks on Monday related to the recent fight for Albu Kamal, Nasrallah said, “The US helped Daesh as much as it could in Albu Kamal short of directly engaging forces that fought to liberate the town from Daesh.” He further accused the US of giving air cover to ISIS terrorists in Syria's east, as well as facilitating their escape from advancing Syrian army forces.   But what is the truth behind what Nasrallah calls "the Daesh conspiracy"? The current geopolitics of the Syrian battlefield, and US policy and interests east of the Euphrates, in reality gives the US military every incentive to pressure the Syrian Army while at the same time allowing a Daesh escape - as even a recent bombshell BBC investigation confirmed. But to understand the intricacies of how US policy and strategy is playing out, it is important to chart the significance of the establishment of the historic "Iranian land bridge" which occurred this month.  Below is a dispatch authored and submitted by Elijah Magnier, Middle East based chief international war correspondent for Al Rai Media, who is currently on the ground in the region and has interviewed multiple officials involved in the conflict.

Lebanon Prime Minister Saad Hariri puts resignation on hold  - Lebanese Prime Minister Saad Hariri announced Wednesday he was putting his resignation on hold, more than two weeks after he shocked the country by saying he was stepping down.Speaking hours after he returned to Beirut, Hariri said he had accepted President Michel Aoun's wish for him to suspend his resignation to allow for more consultations on the reasons behind the move.Hariri announced he was standing down on November 4 while in the Saudi capital, Riyadh, saying he feared his life was in danger. Lebanon said it could not accept his resignation until he returned to the country. Aoun said at the time Hariri was being held against his will in Riyadh -- a claim Hariri denied -- and speculation swirled in Lebanon that he was being held hostage.  Hariri finally returned to Beirut late Tuesday, where his first stop was the grave of his slain father, former Prime Minister Rafik Hariri.  On Wednesday he attended an Independence Day military parade in Beirut alongside the President before meeting with Aoun at the presidential palace. Hariri later tweeted: "Our beloved nation requires at this precise moment in its life exceptional effort from everyone, in order to protect it as it faces danger and challenges. These efforts start with an adherence to a policy of neutrality with regards to everything that hurts internal stability and our brotherly relations with the Arabs."

Lebanon's prime minister just un-resigned in the midst of a bizarre political crisis : (Reuters) - Lebanon's Saad al-Hariri on Wednesday suspended his decision to resign as prime minister at the request of President Michel Aoun to allow for dialogue, easing a major political crisis. Hariri made his announcement after returning to Beirut on Tuesday night for the first time since his Nov. 4 shock resignation in a statement broadcast from Saudi Arabia. He said all Lebanese parties must commit to keeping Lebanon out of regional conflicts, a reference to the powerful, Iran-backed group Hezbollah whose regional role is a source of deep concern in Saudi Arabia. He said hoped his decision would open "a new gateway for a responsible dialogue". "I presented today my resignation to President Aoun and he urged me to wait before offering it and to hold onto it for more dialogue about its reasons and political background, and I showed responsiveness," Hariri said in a televised statement. Thomson Reuters Hariri's resignation pitched Lebanon to the forefront of the regional tussle between Sunni Muslim Saudi Arabia and Shi'ite Islamist Iran, which backs the powerful Lebanese group Hezbollah. Lebanese state officials and senior politicians close to Hariri say Riyadh forced him to quit and held him in the kingdom, which Saudi Arabia and Hariri have denied. The resignation took even Hariri's aides by surprise. Hariri's return to Lebanon followed an intervention by France.

Saudi Arabia’s Arab Spring, at Last - Unlike the other Arab Springs — all of which emerged bottom up and failed miserably, except in Tunisia — this one is led from the top down by the country’s 32-year-old crown prince, Mohammed bin Salman, and, if it succeeds, it will not only change the character of Saudi Arabia but the tone and tenor of Islam across the globe. Only a fool would predict its success — but only a fool would not root for it. To better understand it I flew to Riyadh to interview the crown prince, known as “M.B.S.,” who had not spoken about the extraordinary events here of early November, when his government arrested scores of Saudi princes and businessmen on charges of corruption and threw them into a makeshift gilded jail — the Riyadh Ritz-Carlton — until they agreed to surrender their ill-gotten gains. You don’t see that every day. We met at night at his family’s ornate adobe-walled palace in Ouja, north of Riyadh. M.B.S. spoke in English, while his brother, Prince Khalid, the new Saudi ambassador to the U.S., and several senior ministers shared different lamb dishes and spiced the conversation. After nearly four hours together, I surrendered at 1:15 a.m. to M.B.S.’s youth, pointing out that I was exactly twice his age. It’s been a long, long time, though, since any Arab leader wore me out with a fire hose of new ideas about transforming his country. We started with the obvious question: What’s happening at the Ritz? And was this his power play to eliminate his family and private sector rivals before his ailing father, King Salman, turns the keys of the kingdom over to him? It’s “ludicrous,” he said, to suggest that this anticorruption campaign was a power grab. He pointed out that many prominent members of the Ritz crowd had already publicly pledged allegiance to him and his reforms, and that “a majority of the royal family” is already behind him. This is what happened, he said: “Our country has suffered a lot from corruption from the 1980s until today. The calculation of our experts is that roughly 10 percent of all government spending was siphoned off by corruption each year, from the top levels to the bottom. Over the years the government launched more than one ‘war on corruption’ and they all failed. Why?   Because they all started from the bottom up.”

New Footage From Inside Riyadh Ritz-Carlton Reveals Princes Swapping Assets For Freedom (BBC video) A BBC reporter and film crew has gained rare access inside Riyadh's "gilded cage" - the Ritz-Carlton which became a luxury prison after a dozen or more princes were detained during the shocking events which began with Crown Prince Mohammad bin Salman's (MbS) internal purge on November 4th. BBC's tour was "facilitated" under highly controlled and coordinated conditions, as initial photographs and short cell phone videos produced during the first few days of the crackdown revealed harsher and more restricted conditions as princes and/or their staff were forced to sleep on the floor camp-style in the middle of the luxury hotel's lobby. According to the new BBC broadcast from inside the Ritz-Carlton, the princes are desperately scrambling to cut deals through their lawyers in order to secure release, this as new unconfirmed reports of torture have emergedWhen people were brought here around midnight on November 4th they were understandably angry. Some of them thought it would just be a show and it wouldn't last. And then when they realized they were here to stay they were furious. Almost everyone here - 95% I was told - are willing to make a deal, to give back what are said to be substantial sums of money in order to get out of here. The torture allegations began with an explosive Daily Mail report, which said mercenaries purportedly employed by Academi, a successor to infamous US security contractor Blackwater, have been stringing up some of MBS’s “guests” at the Riyadh Ritz Carlton by their feet and savagely beating them during interrogations.  Still, the Daily Mail isn't the most reputable news organization, so these early torture reports should be taken with a grain of salt. But what is certain is that the list of detained princes and businessmen, which has reportedly grown to multiple dozes, and which includes billionaires such as Alwaleed bin Talal and Mohammed Hussein al-Amoudi - the first and second wealthiest men in the country, respectively - constitutes the kingdom's elite and internationally well-connected. As we've consistently reported this is not a "corruption purge" as its being sold to international media, but in reality a massive cash grab and shakedown.

Saudi Billionaires Look for Ways to Protect Assets From Any Government Purge -- Wealthy Saudis are seeking to restructure their businesses to ring fence assets in case authorities widen their declared crackdown on corruption, according to three people with knowledge of the matter.  Several family groups and businessmen who aren’t implicated in the purge are talking to local banks and international law firms about how to structure their companies to make it harder for the kingdom to confiscate or seize assets, the people said, asking not to be identified because the discussions are private.  The discussions reflect the fear among many wealthy Saudis that the unprecedented purge, seen by many as an attempt by Crown Prince Mohammed bin Salman to tighten his grip on power, is set to widen. Dozens of officials, princes and billionaires, including Prince Alwaleed bin Talal, the global investor whose Kingdom Holding Co. owns stakes in companies such as Citigroup Inc., have already been targeted. Over his meteoric rise to power since his father’s accession to the throne in 2015, Prince Mohammed has emerged as the country’s predominant leader, sidelining other senior royals as he moved to control all levers of government. The crackdown was the latest move to shatter an informal agreement to rule the kingdom by consensus among members of the royal family, a system that ensured political stability but stymied economic reforms.  The purge “is clearly more about the centralization of power,” “You can argue with the merits of whether that is a long-term sustainable equilibrium, but if Saudi is to implement the fast decisions it needs to transform its economy I would argue that centralization is at least necessary if not sufficient step,” he said.

'American mercenaries' are torturing Saudi princes  -- Saudi princes and billionaire businessmen arrested in a power grab earlier this month are being strung up by their feet and beaten by American private security contractors, a source in the country tells group of the country's most powerful figures were arrested in a crackdown ordered by Crown Prince Mohammed Bin Salman three weeks ago as he ordered the detention of at least 11 fellow princes and hundreds of businessmen and government officials over claims of corruption.Just last month, the Crown Prince vowed to restore 'moderate, open Islam' in the kingdom and relaxed a number of its ultra-conservative rules, including lifting a ban on women can disclose that the arrests have been followed by 'interrogations' which a source said were being carried out by 'American mercenaries' brought in to work for the 32-year-old crown prince, who is now the kingdom's most powerful figure.'They are beating them, torturing them, slapping them, insulting them. They want to break them down,' the source told 'Blackwater' has been named by's source as the firm involved, and the claim of its presence in Saudi Arabia has also been made on Arabic social media, and by Lebanon's president. The firm's successor, Academi, strongly denies even being in Saudi Arabia and says it does not engage in torture, which it is illegal for any U.S. citizen to commit anywhere in the world. The Saudi crown prince, according to the source, has also confiscated more than $194 billion from the bank accounts and seized assets of those arrested.

Alwaleed Bin Talal Hung Upside Down And Beaten By US Mercenaries - Crown Prince Mohammed bin Salman must be worried that some of the royals rounded up during his “corruption crackdown” cash grab are holding out on him. Because the Saudi prince has reportedly hired a crew of American mercenaries who haven’t hesitated to employ an array of “enhanced interrogation” techniques.As the Daily Mail reports, mercenaries purportedly employed by Academi, a successor to infamous US security contractor Blackwater, have been stringing up some of MBS’s “guests” at the Riyadh Ritz Carlton by their feet and savagely beating them during interrogations. The claims have spread rapidly on Arabic-language social media, and even Lebanon’s president Michel Aoun has accused MbS of using mercenaries. Still, the Daily Mail isn't the most reputable news organization, so these reports should be taken with a grain of salt.  'They are beating them, torturing them, slapping them, insulting them. They want to break them down,' the source told'Blackwater' has been named by's source as the firm involved, and the claim of its presence in Saudi Arabia has also been made on Arabic social media, and by Lebanon's president. The firm's successor, Academi, strongly denies even being in Saudi Arabia and says it does not engage in torture, which it is illegal for any U.S. citizen to commit anywhere in the world.

Is MBS’s supreme anti-corruption committee torturing Ritz detainees? - The London Daily Mail’s online edition on Thursday published an exclusive report claiming: “American mercenaries are torturing Saudi elite rounded up by new crown prince – and billionaire Prince Alwaleed was hung upside down ‘just to send a message.'” “They are beating them, torturing them, slapping them, insulting them. They want to break them down,” quotes its source as saying.  We have no direct-source verification of the specific claims in the Daily Mail piece. However, reports of beatings and torture of Saudi princes, former ministers, and leading businessmen held in the Riyadh Ritz-Carlton hotel and the nearby Courtyard Riyadh Diplomatic Quarter on allegations of corruption have been coming to light since at least November 10.Cross-checking of such reports and independent verification with diplomatic sources by now provides a high degree of confidence that torture has been taking place to extract admissions of guilt and – more important – to extract funds in the billions of dollars. The Financial Times has reported that Supreme Committee investigators and interrogators are seeking up to 70% of detainees’ wealth in return for their release. Among the individuals beaten and tortured and admitted to a hospital on November 6, according to Asia Times’ sources, was Prince Mutaib bin Abdullah, son of the late King Abdullah and deposed commander of the SANG (Saudi Arabian National Guard). The New York Times reports that as many as 17 detainees have required medical treatment. Were “American mercenaries” involved in the “enhanced interrogations”, beatings and torture? The Daily Mail source named “Blackwater” as the private US security firm involved. That’s nonsense. Blackwater no longer exists. The firm’s assets were sold in 2010 to Forte Capital Advisors and Manhattan Strategic Ventures and renamed Academi.  However, it is a well-documented fact that Blackwater founder Erik Prince, after he sold Blackwater, moved to Abu Dhabi in 2011 and helped develop an 800-man foreign (mainly Colombian and South African) mercenary force for the Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed Al Nahyan (MBZ).

As US Fuels War Crimes in Yemen, House Says US Involvement is Unauthorized - naked capitalism - Jerri-Lynn here: This Real News Network interview with Mike Weisbrot discusses the non-binding resolution the House of Representatives passed last week concerning the unauthorized role of the United States in the war in Yemen. This Saudi war has triggered an unprecedented humanitarian catastrophe, including a cholera epidemic and widespread hunger and starvation. No end to the crisis is in sight. Weisbrot is Co-Director of the Center for Economic and Policy Research in Washington, D.C. and  author of the book Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015), co-author, with Dean Baker, of Social Security: The Phony Crisis (University of Chicago Press, 2000). He writes a column on economic and policy issues that is distributed to over 550 newspapers by the Tribune Content Agency and his opinion pieces have appeared in The Guardian, New York Times, the Washington Post, the Los Angeles Times and Brazil’s largest newspaper, Folha de Sao Paulo. He is also president of Just Foreign Policy. (video with transcript)

U.N. pleads for end of Yemen blockade or 'untold thousands' will die -- The heads of three U.N. agencies urged the Saudi-led military coalition to lift its blockade of Yemen, warning that “untold thousands” would die if it stayed in place. The coalition closed all air, land and sea access to Yemen on Nov. 6 after the interception of a missile fired toward the Saudi capital, saying it had to stem the flow of arms from Iran to its Houthi opponents in the war in Yemen. Yemen has 7 million people on the brink of famine, but without the reopening of all ports, that number could grow by 3.2 million, the heads of the World Food Program, UNICEF and the World Health Organization said in a joint statement. “The cost of this blockade is being measured in the number of lives that are lost,” the statement said. “Together, we issue another urgent appeal for the coalition to permit entry of lifesaving supplies to Yemen in response to what is now the worst humanitarian crisis in the world.” U.N. Secretary General António Guterres wrote to Saudi U.N. Ambassador Abdallah al-Mouallimi to warn him that the blockade was “already reversing the impact of humanitarian efforts,” U.N. spokesman Stéphane Dujarric said Thursday. “The secretary general is very much disappointed we’ve not seen a lifting of the blockade. The secretary general and his humanitarian team are heartbroken at the scenes we’re seeing from Yemen,” Dujarric told reporters. Saudi Arabia has since said that aid can go through “liberated ports” but not Houthi-controlled Hodeidah, the conduit for the vast bulk of imports into Yemen. For months, the United Nations has warned that the closure of Hodeidah would dramatically escalate the crisis. As of Wednesday, 29 vessels, with 300,000 tons of food and 192,000 tons of fuel, had been blocked, while U.N. ships carrying $10 million of health and nutrition supplies and 25,000 tons of wheat were waiting to berth at Hodeidah, according to another U.N. statement.

Drums Along the Euphrates - Earlier today this tweet by Elijiah Magnier caught my eye. “USA protects SDF and ISIS east of the Euphrates and agreed that Russia won't fly over the area occupied by the US Forces in north-east Syria. USA is officially an occupation force in the Levant.”Seems the US and Russia have agreed to using the Euphrates as a de facto border between the SAA and its allies and the US-supported YPG/SDF… at least for a while. This is in line with statements made by Tillerson prior to the G20 summit held on 7 July in Hamburg. “The United States is prepared to explore the possibility of establishing with Russia joint mechanisms for ensuring stability, including no-fly zones, on the ground ceasefire observers, and coordinated delivery of humanitarian assistance” This temporary arrangement makes sense for Damascus. There are still plenty of fires to extinguish on Syrian territory west of the Euphrates. Why spread their forces thin again just when they are now able to concentrate their forces to address those fires. Besides, there is still plenty of time for the negotiation and reconciliation process to achieve victory without further bloodshed. I have no doubt. Syria will be whole once again.  I’m sure CENTCOM sees this differently. I think the grand scheme was to establish an enduring US-controlled enclave encompassing all of Iraqi Kurdistan, Rojava and the Arab lands of eastern Syria. I bet there was a plan for establishing a new CENTCOM forward headquarters in Erbil to oversee this vast enclave. The premature Kurdish bid for independence blew a gaping hole in that plan. Iraqi Kurdistan lost its border with Syria. With that loss went CENTCOM’s secure land route from Kirkuk and Erbil to its growing bases in northeast Syria.

Trump Reportedly Tells Erdogan US Will Cease Arming Syrian Kurds - - Just after Putin hosted trilateral talks on Syria and the Middle East in Sochi involving Russia, Iran, and Turkey, President Trump spent part of his Friday after Thanksgiving on the phone with Turkey's Erdogan. While the two discussed Syria and other regional issues, it appears they broached the delicate and contentious topic of US support to Syrian Kurdish fighters (namely, the Kurdish YPG, which forms the core of the Syrian Democratic Forces). The call came amidst a flurry of diplomatic activity over the Middle East driven by the Kremlin, and follows a lengthy Trump-Putin phone call on Tuesday. Though the details of the call are still unclear, Trump outlined what was to be generally discussed in a tweet, and said this morning, "Will be speaking to President Recep Tayyip Erdogan of Turkey this morning about bringing peace to the mess that I inherited in the Middle East. I will get it all done, but what a mistake, in lives and dollars (6 trillion), to be there in the first place!" Though not verified by the US side, Turkish Foreign Minister Mevlut Cavusoglu said Trump told Erdogan during Friday's call that the US will cease supplying weapons to the Syrian Kurdish fighters, according to the AP. Turkey has long considered Syrian Kurdish militant groups to be terrorists, and Erdogan reportedly insisted at the Sochi summit that Syrian Kurds be excluded from all negotiations over the future of Syria on the grounds that they have links to the PKK. However, it is unlikely that a lasting political settlement for Syria can be negotiated and successfully held without Syrian Kurdish input.

'Facing disaster': children starve in siege of Syria's former breadbasket -- The sight of a woman weeping as she drags her malnourished children into a clinic is not rare in eastern Ghouta, which is under siege by forces loyal to Bashar al-Assad. But when one mother told Abdel Hamid, a doctor, that she had fed her four starving children newspaper cutouts softened with water to stop them from screaming into the night, even he was stunned. “I could try to describe to you how terrible the conditions are in which we are living, but the reality would still be worse,” said Abdel Hamid, who did not give his full name. More than 400,000 people still live in the region bordering Damascus that was once a breadbasket for the capital city, but has endured many of the horrors of Syria’s six-year war. The siege of eastern Ghouta has continued for years with conditions getting steadily worse. Siege Watch, a project that tracks blockades in Syria, has said the area is “on the brink of disaster”. Airstrikes have continued, with rescue workers saying 181 targeted eastern Ghouta this week. The region had long been porous, with smugglers able to maintain supply lines for some foodstuffs and goods. This ended in April after a major government offensive in the area that tightened the blockade. Aid workers and residents report that malnourishment among children is rife and there is an acute shortage of medicine and supplies. Most of the food that can be found is too expensive and airstrikes and shelling continue to devastate towns with limited supplies of electricity and clean drinking water. “Fridges don’t exist as part of our life,” said Abdel Hamid. “Actually, anything that needs electricity is not used. Thank God we don’t have cholera yet.” 

The US Has Quietly Deployed More Than 500 Troops To Somalia --One of the many quiet escalations in countries where US military operations on the ground hadn’t really been well publicized in the first place, officials say that the US has more than doubled the number of ground troops in Somalia this year, and now have over 500 troops there.This is the most troops the US have had in the country since 1993, when the Black Hawk Down incident killed 18 US soldiers and led to a quick withdrawal from the nation.This year was also the first year since 1993 that any US troops died in Somalia.This escalation has involved a soaring number of US airstrikes in Somalia, not to mention a number of joint ground operations with Somali forces, mostly against al-Shabaab fighters, but many of them with very unclear goals. But the goals of the whole US operation in Somalia aren’t exactly clear anyhow, with some vague interest in fighting al-Shabaab, and possibly the ISIS affiliate in Puntland, but little sign that the operation is anything but escalation for escalation’s sake.

US Airstrike In Somalia Kills More Than 100 al-Shabab Militants -- More than 100 al-Shabaab militants were killed Tuesday in the latest US airstrike in Somalia the Pentagon announced, the latest in a series of strikes against the al Qaeda affiliated group and ISIS fighters in the war-torn country meant to support the local government. The strike occurred 125 miles northwest of the capital of Mogadishu, and was the 29th such strike since the start of 2017, and 7th since November 9.The Pentagon released the following statement commemorating the latest airstrike:  U.S. Conducts Airstrike in Support of the Federal Government of Somalia.  In coordination with the Federal Government of Somalia, U.S. forces conducted an airstrike in Somalia against an al-Shabaab camp on Tuesday, Nov. 21 at approximately 10:30 a.m. local Somalia time, killing more than 100 militants. The operation occurred 125 miles northwest of the capital, Mogadishu.  Al-Shabaab has pledged allegiance to al-Qaeda and is dedicated to providing safe haven for terrorist attacks throughout the world. Al-Shabaab has publicly committed to planning and conducting attacks against the U.S. and our partners in the region. U.S. forces will continue to use all authorized and appropriate measures to protect Americans and to disable terrorist threats. This includes partnering with AMISOM and Somali National Security Forces (SNSF); targeting terrorists, their training camps and safe havens throughout Somalia, the region and around the world.

Iran to Send Warships to Gulf of Mexico, Atlantic Ocean — Iran's new naval commander has vowed to send warships to America's backyard. Rear Adm. Hossein Khanzadi said plans were being drawn up for vessels to be deployed to the Gulf of Mexico and Atlantic Ocean "in the near future." They would also visit South American countries, he added. Tehran has long complained about U.S. ships being based in the Persian Gulf. Speaking at his first press conference since being appointed, Khanzadi promised his navy would "wave the flag of our country in the Gulf of Mexico." He pointed out that "the appearance of our vessels in the Mediterranean and Suez Canal shocked the world and the U.S. also made comments on it." It isn't the first time Iran's military has pledged its ships would enter the Gulf of Mexico. Khanzadi’s predecessor Rear Adm. Habibollah Sayyari said in 2014 that Iran planned to send vessels close to American maritime borders as a counter to the U.S. Navy’s presence in the Persian Gulf. Sayyari later said the manoeuvers had been canceled “due to a change in schedule.” Thousands of American troops are in Iraq and Afghanistan, both of which border Iran. #160;

Macron Seeks to Quell Iran Furor, Avoids Taking Sides With Saudis - French President Emmanuel Macron sought to quell a mounting dispute with Iran, vowing not take sides in a regional conflict between the Shiite country and its Sunni rival Saudi Arabia. “We want an Iran that is a less aggressive power and for its ballistic missile program to be curtailed. But Iran is a regional power and we speak to them,” he said at a press conference in Gothenburg, Sweden. “The French line is to work for peace and not choose one side or the other. There are those who would like western countries to take sides between Shia and Sunni. We refuse. The role of France is to speak to everyone.” The 39-year-old president’s remarks come after Iran accused France of being “one-sided” and following French Foreign Minister Jean-Yves Le Drian’s criticism of the country’s regional policy, calling it a show of “hegemonic desire.” Le Drian made the comments at a press conference in Ryiadh, sitting next to his Saudi counterpart. A few hours later, the Iranian Foreign Ministry spokesman Bahram Qassemi fired back. “Unfortunately, it seems like France has a one-sided and biased view towards the ongoing crises and humanitarian catastrophes in the Middle East,” he said according to remarks carried by state-run Press TV late Thursday. “This view fuels regional conflicts, whether intentionally or not,” he added. 

Russia's Arms Sales To Middle East Countries Spike To Record-High Levels -- Dubai Airshow 2017, one of the largest and most successful air shows in the world, ended on Nov.16, having drawn over 79,000 trade visitors, up around 20% over the last version of the event in 2015. The total order tally is $113.8 billion in orders. It nearly tripled from the $37.2 billion signed two years ago.Russia’s exposition at the Dubai Airshow 2017 included the combat helicopter Ka-52, multi-mission fighter MiG-29M, Su-35 supermaneuverable air defense fighter, Be-200 multipurpose amphibious aircraft, combat-transport helicopter Mi-35M, long-range air defense system S-400 Triumph, and short-range air defense missile system Pantsir–S1. The 'Russian Knights' aerobatic demonstration team performed extraordinary stunts riding through the skies to greatly impress spectators.The United Arab Emirates (UAE) is interested in procuring the Sukhoi Su-35 multi-role fighter. The country is considering the purchase of 10 or more of such aircraft. The UAE and Russia signed a letter of intent on the purchase of Su-35 fighter jets in Feb. 2017. The talks are in progress. The Emirates will be the second country after China to buy the plane. The UAE has already purchased Russian ground weapons, such as BMP-3 infantry combat vehicles and Pantsir S1 air-defense systems. In February, the Emirates entered into military contracts with Russia worth $1.9 billion. The deal includes 5,000 anti-armor missiles in addition to training and logistic support. The UAE started talks with Rostec company on the development of light fighter based on the MiG-29 twin-engine aircraft with development set to kick off in 2018.