Sunday, January 7, 2018

oil prices hit 3 year high, natgas prices fall despite the cold, US refining and distillates production tops last week's records

oil prices pushed to a 3 year high over the first three days of trading this week, but then fell back almost 1% on profit taking on Friday....after closing out 2017 at a two and a half year high of $60.42 a barrel, US crude for February delivery pushed 32 cents higher to a new high early Tuesday before settling 5 cents lower at $60.37 a barrel, as the damaged pipelines in Libya and the UK restarted and the EIA reported that U.S oil production increased to the highest level in more than four decades in October...oil prices then surged nearly $2 on Wednesday after the Iranian's regime's response to domestic economic protests left 21 dead, but then pulled back to end the session with a increase of $1.26, or 2.1 percent, at $61.63 a barrel, its highest closing price since December 2014...oil prices then added to that interim record on Thursday, closing above $62 a barrel for the first time in more than three years, after the EIA reported that U.S. crude supplies shrank by the most since August, with oil prices ending up 38 cents at $62.01 a barrel after trading as high as $62.21...oil prices then retreated on Friday, giving up 57 cents to close at $61.44, as tensions in Iran subsided, oil traders cashed in their profits, and rising U.S. production and weaker refined products demand weighed on the market...for the week, prices ended $1.02, or 1.7% higher, their 4th higher weekly close in a row...

natural gas prices also took an interesting ride this week, especially in light of the record cold outbreak over the Midwest and densely populated eastern US... after hitting a 16 month low at 2.592 per mmBTU on the Thursday before Christmas, natural gas prices rose as expected during the record cold outbreak of Christmas week, finishing at $2.953 on December 29th...however, the nationally quoted futures price for February delivery stalled after rising 10.3 cents to $3.056 on Tuesday and then fell every other day this week, and ended down 15.8 cents at $2.795 per mmBTU, 5.4% lower than it started the week...meanwhile, at the same time that February natural gas futures were falling on the NYMEX, spot prices for power generation reached a record $175.00 per million British thermal units in New York, with other trading hubs in New York and New England seeing prices exceeding $100 per mmBTU...however, since the futures prices did not rise on those local shortages, there would be no way to write contracts for natural gas at those higher prices, and hence no opportunity for the drillers to participate in those prices....since we haven't been doing a very consistent job of tracking natural gas prices, we'll include a graph of their recent trajectory so you can see how their decline has transpired..

January 6 2018 natural gas prices

the above graph shows the daily closing contract price over the last year for a million British thermal units (mmBTU) of natural gas at or contracted to be delivered in February at the Louisiana interstate natural gas pipeline interconnection known as the Henry Hub, which is the benchmark location for setting natural gas prices across the you can see, the contract for February natural gas prices had been sliding since mid-November after holding in the $3.20 to $3.40 per mmBTU range over most of the summer, and crashed to below $2.60 before the cold weather set in...generally, there are only two factors that move domestic gas prices, the amount of gas in storage and the weather...according to the Weekly Natural Gas Storage Report from the EIA, natural gas in storage was at 3,126 billion cubic feet as of Friday, December 29th, a net decrease of 206 billion cubic feet from the previous week...that left natural gas supplies 5.8% below where they were at the end of last year, and also 5.8% below their average level for this time of year...some are anticipating another draw of as much as 300 billion cubic feet when the report for the week just ended is released....if gas in storage being that much below normal with this kind of weather doesn't raise natural gas prices, it's hard to imagine what can...

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 December 29th, showed that because of an increase in our oil exports, and because US refineries were running at a record pace for this time of year, the amount of oil left in storage in the US fell by the most in 5 months...our imports of crude oil fell by an average of 27,000 barrels per day to an average of 7,966,000 barrels per day during the week, while our exports of crude oil rose by an average of 265,000 barrels per day to an average of 1,475,000 barrels per day, which meant that our effective trade in oil worked out to a net import average of 6,491,000 barrels of per day during the week, 292,000 barrels per day less than the net imports of the prior the same time, field production of crude oil from US wells rose by 28,000 barrels per day to 9,782,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 16,273,000 barrels per day during the reporting week...

during the same week, US oil refineries were using 17,608,000 barrels of crude per day, 210,000 barrels per day more than they used during the prior week, while at the same time 1,009,000 barrels of oil per day were being pulled out of oil storage facilities in the US....hence, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was still 326,000 fewer barrels per day than what refineries reported they used during the account for that disparity, the EIA needed to insert a (+326,000) 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 fudge factor 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 rose to an average of 7,789,000 barrels per day, just 0.1% less than the 7,795,000 barrels per day average imported over the same four-week period last year....the 1,009,000 barrel per day decrease in our total crude inventories came about on a 1,060,000 barrel per day withdrawal from our commercial stocks of crude oil, which was partially offset by a 51,000 barrel per day addition of oil to our Strategic Petroleum Reserve, likely a return of oil that was borrowed from the Reserve during the post Hurricane Harvey emergency... this week's 28,000 barrel per day increase in our crude oil production included a 25,000 barrel per day increase in output from wells in the lower 48 states, and a 3,000 barrels per day increase in output from Alaska....the 9,754,000 barrels of crude per day that were produced by US wells during the week ending December 29th was 11.5% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 16.1% above the interim low of 8,428,000 barrels per day that our oil production fell to during the last week of June, 2016...

US oil refineries were operating at 96.7% of their capacity in using those 17,608,000 barrels of crude per day, up from 95.7% of capacity the prior week, and the highest capacity utilization on record for any week outside of the summer driving season....the 17,608,000 barrels of oil that were refined this week were only 0.7% less than the record 17,725,000 barrels per day that were being refined at the end of August of this year, and were 5.5% more than the 16,689,000 barrels of crude per day that were being processed during week ending December 30th, 2016, when refineries were operating at 92.0% of capacity, and roughly 14.3% above the 10-year seasonal average of oil refined at this time of the year... 

despite the increase in the amount of oil being refined, gasoline output from our refineries was much lower, decreasing by 562,000 barrels per day to 9,682,000 barrels per day during the week ending December 29th, after increasing by 181,000 barrels per day during the prior week...part of this week's decrease was due to a 280,000 barrel per day swing in the weekly adjustment to correct for the imbalance created by the blending of fuel ethanol and motor gasoline blending components, while the record also shows there is typically a large drop in gasoline production at the end of each year....thus, even with this week's large decrease, our gasoline production was still 2.3% higher than the 9,467,000 barrels of gasoline that were being produced daily during the week ending December 30th of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 116,000 barrels per day at the same time to a new record high of 5,592,000 barrels per day, after rising 270,000 barrels per day to a record the prior week...that meant the week's distillates production was 4.9% higher than the prior record 5,329,000 barrels of distillates per day that were being produced during the the last week of 2016....   

in spite of the big drop in our gasoline production, our gasoline inventories at the end of the week rose by 4,813,000 barrels to 233,187,000 barrels by December 29th, their eighth increase in a row...that was because our domestic consumption of gasoline also dropped, by 835,000 barrels per day to 8,650,000 barrels per day, a decrease in demand for gasoline that's consistent with previous holiday week lulls at the end of the the same time, our exports of gasoline rose by 91,000 barrels per day to 953,000 barrels per day, while our imports of gasoline fell by 39,000 barrels per day to 349,000 barrels per day....however, with significant gasoline supply withdrawals throughout the summer months, our gasoline inventories are still down by 3.8% from their pre-summer high of 242,444,000 barrels, and down nearly 1% from last December 30th's level of 235,450,000 barrels, even as they are roughly 5.4% above the 10 year average of gasoline supplies for this time of the year...      

meanwhile, with our distillates production at a record level, our supplies of distillate fuels rose by 8,899,000 barrels to 129,935,000 barrels over the week ending December 29th, the largest increase in distillates supply in a year but just the seventh increase in eighteen weeks...that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 738,000 barrels per day to 3,588,000 barrels per day, and as our exports of distillates fell by 371,000 barrels per day to a 16 week low of 862,000 barrels per day, while our imports of distillates fell by 110,000 barrels per day 129,000 barrels per day... even after this week’s inventory increase, however, our distillate supplies were still 14.1% lower at the end of the week than the 161,685,000 barrels that we had stored at the end of 2016, but now were less than 1% lower than the 10 year average of distillates stocks at this time of the year… 

finally, with higher oil exports and US oil refining at a near record pace, our commercial crude oil inventories fell for the 32nd time in the past 39 weeks, decreasing by 7,419,000 barrels, from 431,882,000 barrels on December 22nd to a 27 month low of 424,463,000 barrels on December 29th......since that's now the least amount of oil we've had in commercial storage since the week ending September 18th, 2015, we'll include a graph that will show how our once excessive glut of oil in storage has evaporated... 

January 6 2018 crude oil supplies as of December 29

on the above graph, taken from the EIA's This Week in Petroleum Crude Oil Section, the blue line shows the recent track of US oil inventories over the period from June 3rd, 2016 to December 29th 2017, while the grey shaded area represents the range of US oil inventories millions of barrels as reported weekly by the EIA over the prior 5 years for any given time of the 2 years from June 2016 to June 2018…thus the grey area also shows us the normal range of US oil inventories as they fluctuate from season to season, typically with a high in the springtime, before the summer driving season, and a low in the fall...and as you can see by the blue line, that oil supply pattern continued into early this year, where we seeing a record supply of oil almost weekly up until the week ending March 31st, 2017, when our oil supplies topped out at 535,543,000, an increase of almost 68% from the early 2014 low of 319,079,000 barrels...however, as you can also see by following the blue line, our oil supplies have been falling since, and at 424,463,000 barrels are now 20.7% below their March 31st high...there are two reasons that our oil supplies have been dropping so fast; first, that we've been refining more of that oil than ever before, and second, that we've been exporting more of our domestic production than ever before (we continued to import 7.9 million barrels per day in 2017, essentially unchanged from the 7.9 million barrels per day we imported during 2016) to illustrate those reasons for our drop in oil supplies, we'll include graphs of that refinery usage and oil exports over the period in question....

January 4 2018 refinery throughput for December 29

this graph of refinery throughput came from the package of oil graphs that John Kemp, senior energy analyst and columnist with Reuters, emailed out on Thursday; it shows US refinery throughput in thousands of barrels per day by "day of the year" for the past ten years, with the past ten year range of our refinery throughput for any given date shown in the light blue shaded area, and the median of our refinery throughput, or the middle of the 10 year daily range, traced by the blue dashes over each day of the year....the graph also shows the number of barrels of oil refined for each week in 2016 traced weekly by a yellow line, with our year to date oil refining for 2017 represented by the red can clearly see that this year's oil refining (red) has been beating what were the record or near record levels of last year (yellow) by a large margin since the beginning of April, except for during the disruptions to refining resulting from this year's hurricanes, setting several records for US refining on the way... 

January 6th 2017 crude exports as of December 29

the above graph of US crude oil exports was also from a weekly package of oil graphs that John Kemp of Reuters emailed two weeks ago; i've just added the data points for the two most recent weeks to bring it up to it now stands, this graph now shows weekly US crude oil exports in thousands of barrels per day over the past 16 months, and also gives us the exact amount of our crude exports in thousands of barrels per day over several of the past 17 weeks...recall that US oil exports had been illegal for 40 years, after the OPEC oil embargo had left us short of fuel...that oil export ban was lifted in December of 2015, and as you see through most of 2016 our oil exports stayed under 700,000 barrels per day...from then, until September of 2017, our oil exports had only topped a million barrels per day five times...however, since the hurricane disruption to shipping, there's been a premium for international oil of 10% to 12% over the price of equivalent grades of US crude, encouraging US crude suppliers to sell as much oil overseas as they could, and as a result our oil exports have stayed above a million barrels per day since...

as a result of these record oil exports and record refining, then, our oil inventories as of December 29th were 11.4% below the 479,012 ,000 barrels of oil we had stored at the end of 2016, and 5.9% lower than the 450,956,000 barrels of oil that we had in storage on January 1st of 2016...however, our crude supplies at year end were still 21.7% greater than the 348,806,000 barrels of oil we had in storage on January 2nd of 2015, before the oil glut in the US had really built our crude supplies up to above normal levels..

This Week's Rig Count

US drilling activity decreased for the third time in 9 weeks during the week ending January 5th, and by the most for any week in that period....Baker Hughes reported that the total count of active rotary rigs running in the US fell by 5 rigs to 925 rigs in the week ending on Friday, which was still 259 more rigs than the 665 rigs that were deployed as of the January 6th report of 2017, while it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil fell by 5 rigs to 742 rigs this week, which was still 213 more oil rigs than were running a year ago, while the week's oil rig count remained far below the recent high of 1609 rigs that were drilling for oil on October 10, the same time, the number of drilling rigs targeting natural gas formations remained unchanged at 182 rigs this week, which was only 47 more gas rigs than the 135 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 activity in the Gulf of Mexico was was down by 1 rig to 17 rigs this week, which was also down from the 23 rigs that were drilling from platforms in the Gulf of Mexico a year ago...the total national offshore count was also down 1 rig at 17 rigs this week, but a year ago there was also a rig drilling offshore from Alaska, which means this week's national offshore total is down 7 rigs from the 24 offshore rigs that were working last January addition, a drilling platform which had been drilling through an inland lake in Louisiana was also shut down this week, leaving the inland waters rig count at just 1 rig, the same as a year ago...

this week's count of active horizontal drilling rigs was up by 2 rigs to 798 horizontal rigs this week, and also up by 264 rigs from the 534 horizontal rigs that were in use in the US on January 6th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...meanwhile, the vertical rig count was down by 3 rigs to 62 vertical rigs this week, and that was also down from the 74 vertical rigs that were working during the same week last year....meanwhile, the directional rig count was down by 4 rigs to 64 rigs this week, which was still up from the 57 directional rigs that were deployed on January 6th of 2017...

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 January 5th, the second column shows the change in the number of working rigs between last week's count (December 29th) and this week's (January 5th) count, the third column shows last week's December 29th 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 6th of January, 2017...               

January 5th 2018 rig count summary

notice that the basin variances table doesn't show us much this week; part of the reason for that is that there were few changes in horizontal drilling work, while at the same time Baker Hughes has neglected to add other basins to their coverage for several years, leaving us blind to the changes in those basins, unless we were to dig through the records for individual wells included in Baker Hughes' North America Rotary Rig Count Pivot Table (xls)...we do know, though, that Louisiana accounted for 6 rig shutdowns, and the summary does break out Louisiana drilling into 4 categories; offshore, which was down 1 rig to 16 rigs, inland waters, which was also down 1 to 1 rig, northern Louisiana land rigs, which are mostly in the Haynesville shale, also down 1 rig to 38 rigs, and southern Louisiana land rigs, which are mostly drilling conventional wells, down 3 rigs to 1 rig this week...


Trump Administration Abandons Tighter Regulations on Fracking in Wayne Forest and Other Public Lands - WKSU News - The Trump administration decided quietly over the holidays to abandon proposed federal regulations governing fracking on public lands. For Ohio environmentalists, the decision is big and bad news. For Ohio’s oil and gas industry, it’s a practical approach to regulation.  The Interior Department has rescinded a proposed Obama administration rule that would have set limits on hydraulic fracturing in places like Ohio’s Wayne National Forest. The rules would have tightened standards for well construction and required disclosure of toxic chemicals contained in fracking fluids. But Mike Chadsey of Ohio’s Oil and Gas Association says Ohio already has adequate disclosure and other requirements and states are better positioned to set standards.  “We’ve got folks that live in the areas they regulate. The county regulator lives in that county. That is far superior than someone in D.C. saying hey do XYZ and they’ve never even been to Monroe County.”   But Nathan Johnson  of the Ohio Environmental Council says disclosure rules regarding chemical spills aren’t enough. “We have some limited propriety chemical requirements in Ohio, under state law, but we’re really missing out on the stronger first-responder type of disclosure we could have seen.” He cites an explosion in 2014 just outside the Wayne forest in which operator Halliburton took several days to disclose the chemicals.  Johnson has another concern about the loss of the proposed federal requirement that companies store their drilling waste in special tanks. He says under Ohio law, such tanks aren’t required, and operators often opt for open pits.  “This stuff is highly toxic. When it’s just out in an open pit there’s a much greater risk of leaks and spills. And wildlife are often also negatively impacted. Birds and bats, it’s known that these pits often attract them and are sort of death traps for these species.”

City Council to 'fix' laws arising from TACO, BORC votes -   Since 2014, Athens city voters have overwhelmingly approved two citizen-submitted ballot issues that ended up becoming city law because of those votes. They are the Athens Cannabis Ordinance (TACO), which de-penalizes marijuana misdemeanor crimes in areas where the city has jurisdiction, and a ban on oil-and-gas drilling and other activities in the city of Athens put forward by the Athens Bill of Rights Committee in 2014.  However, until recently, Athens City Council had never taken a vote to officially codify either law to place them in the city’s code of ordinances. Voters approved the TACO ordinance this past November, while voters approved the BORC “water supply protection” ordinance in November 2014. Realizing this, Athens City Council on Nov. 20 voted unanimously with an emergency clause to approve adding the language from both ballot issues to the city’s books.  However, even after that vote, Caleb Brown, a local activist who pushed the TACO ordinance, said he noticed something strange. The ordinances as codified had dropped significant portions of the language that was included with both the TACO and the BORC anti-fracking ballot issues. In particular, the BORC ordinance did not include a “bill of rights” section that was included with the ballot issue that, among other things, calls for a change to Ohio’s Constitution to “recognize and enforce the right to local community self-government that shall not be preempted when the municipality enacts laws that protect the health, safety and welfare of the community or… asserts and expands the rights of human and natural communities,” according to the original text of the BORC water-supply protection bill. “I obtained copies of the ordinances that were codified and compared them with the ordinances as they appeared in the petitions that were circulated and approved by voters,” Brown said in a Dec. 3 email to The NEWS. “I discovered that the entire Bill of Rights section of the Athens Community Bill of Rights and Water Supply Protection Ordinance was removed, as was any mention of its origin as a citizen initiative petition. I also noticed that any other mention of rights of citizens or of nature was removed from both petitions, as were all statements of intent.”

Pennsylvania Suspends Mariner East 2 Pipeline Construction - Pennsylvania suspended permits for Sunoco Pipeline on Wednesday, LP 's $2.5 billion Mariner East 2 pipeline project, after finding that the company committed "egregious and willful violations" of state laws. The order directs Sunoco, a subsidiary of Dakota Access Pipeline builder Energy Transfer Partners , to stop Mariner East II construction activities across Pennsylvania. The 306-mile pipeline project would carry 275,000 barrels a day of butane, propane and other liquid fossil fuels from Ohio and West Virginia to the Atlantic coast for export. "Suspension of the permits described," the order states, "is necessary to correct the egregious and willful violations described herein."  Construction has been plagued by numerous spills and contaminated drinking water supplies for homes in Silver Lake Township, Pennsylvania. State regulators had discovered that Sunoco was drilling under streams without permits when a spill contaminated a high-quality creek in Berks County, Pennsylvania, the order notes—and then found unpermitted construction at over a half-dozen other locations along the pipeline's route.  The 24-page order requires the company to provide a report that "fully explains the failures that led to the violations," to outline the steps it will take to prevent recurrences, to address the private water wells contaminated in Silver Lake Township "to the satisfaction of the private well owners," and to "properly abandon" illegally drilled pilot holes within 10 days, as well as a long list of other terms and conditions. The only activities allowed will be those associated with ensuring the shutdown is done safely and without further environmental damage.

Pa. halts Mariner East 2 work amid 'egregious' violations -- A pipeline project designed to move natural gas products across Pennsylvania hit a major roadblock yesterday as state regulators halted construction indefinitely. The Pennsylvania Department of Environmental Protection suspended permits for the Mariner East 2 project, citing "egregious and willful" violations. The 24-page order enumerates dozens of infractions, including instances in which project backer Sunoco Pipeline LP allegedly did not obtain a permit at all for certain installation activities. "Until Sunoco can demonstrate that the permit conditions can and will be followed, DEP has no alternative but to suspend the permits," DEP Secretary Patrick McDonnell said in a statement. "We are living up to our promise to hold this project accountable to the strong protections in the permits." Mariner East 2 would deliver natural gas liquids including propane, butane and ethane 350 miles across the southern portion of the Keystone State, sending products to eastern Pennsylvania and the Marcus Hook terminal near Philadelphia.  Sunoco has touted the pipeline as a critical link between the Utica and Marcellus Shale formations and markets in Pennsylvania and beyond. The Marcus Hook facility serves as a budding hub for exports of gas products. For now, Pennsylvania's order will block all construction on the $2.5 billion project until Sunoco corrects violations, addresses complaints about fouled private water wells and submits a plan for avoiding future problems. According to the order, the dozens of permit infractions represent violations of Pennsylvania's Clean Streams Law and Dam Safety and Encroachments Act. "Suspension of the permits ... is necessary to correct the egregious and willful violations herein," the order says. "Other enforcement procedures, penalties and remedies available to the Department under the Clean Streams Law and the Dam Safety and Encroachments Act would not be adequate to effect prompt or effective correction of the conditions or violations demonstrated by Sunoco's lack of ability or intention to comply."

Mammoth W.Va. storage project moves closer to DOE loan - West Virginia officials are applauding the progress of a natural gas storage facility that could be built beneath their state, after the proposal got the first of two necessary approvals for a $1.9 billion Department of Energy loan. The Appalachia Development Group project, which would also include another $1.4 billion in financing, is being hailed as a possible economic hub for the state. Its exact location hasn't been decided, but the American Chemistry Council estimates it would create some 100,000 jobs locally. In addition to the storage facility, the project would include pipelines running into nearby valleys, as well as a cracker facility where ethylene would be produced. On Wednesday, West Virginia Sen. Shelley Moore Capito (R) called the project a "game-changing idea" for the state, adding that the first approval was "a clear indication of the strength of their application" (Jonathan Mattise, AP/Houston Chronicle, Jan. 3).

US FERC approves two major TransCanada gas pipeline expansions - The US Federal Energy Regulatory Commission has granted certificate approval to the second-largest natural gas expansion project in the US Northeast, the 170-mile, 2.7 Bcf/d Mountaineer XPress project in West Virginia. The project, sponsored by TransCanada's Columbia Gas Transmission, was approved late Friday and is roughly 500 MMcf/d shy of Rover Pipeline's 3.25 Bcf/d capacity. Like Rover, it is producer-backed and expected to boost production in the Marcellus shale and also increase deliveries from the Northeast to neighboring regions, particularly the US Gulf area. In addition to the Mountaineer XPress, the commission late Friday granted certificate approval to Columbia Gulf Transmission's 860 MMcf/d Gulf XPress project, adding seven new compressor stations in Kentucky, Tennessee and Mississippi to allow for bidirectional flows on Columbia Gulf's Lines 200 and 300, as well as changes to an existing compressor station and one existing meter station. Mountaineer XPress is the third major expansion of Columbia Gas' pipeline system to receive approval in 2017, following the January approval of the 1.5 Bcf/d Leach XPress project and the November approval of the 1.3 Bcf/d WB XPress project.It is also the fourth project targeting West Virginia production takeaway capacity to receive FERC approval in fourth-quarter 2017 alone, following WB XPress, the 2 Bcf/d Mountain Valley Pipeline and the 1.5 Bcf/d Atlantic Coast Pipeline, bringing total capacity approvals targeting West Virginia production to 7.5 Bcf/d in the last three months of the year.

Sens. Warren, Markey query feds about Tennessee Gas pipeline wastewater spill in Agawam -  U.S. Sens. Edward J. Markey and Elizabeth Warren are seeking answers from top federal regulators after a Tennessee Gas Pipeline contractor improperly spilled 16,500 gallons of tainted wastewater near the company's Agawam compressor station in November.Warren and Markey on Jan. 2 wrote to Environmental Protection Agency administrator Scott Pruitt and Federal Energy Regulatory Commission chairman Kevin McIntyre with a list of questions about the incident and its aftermath.The hazardous spill "may pose a significant danger to surrounding communities and the environment, especially as the discharge may have reached nearby water bodies," Warren and Markey wrote.The wastewater, stored in an above-ground tank, had been used for "hydrostatic testing" of a pipeline segment associated with the Connecticut Expansion, a recently-completed project in three states that serves natural gas utilities in Connecticut.The Nov. 20 discharge contained copper, iron, lead, and two chemicals, according to an independent lab report. PERC, an industrial solvent, and DEHP, used to produce polyvinyl chloride, are classified by the EPA as likely carcinogens.The company submitted the lab report to FERC and the the EPA Region I New England office in response to a Dec. 12 demand letter from the Boston regulators.While the company told FERC and the EPA the spill did not contaminate a nearby stream, Warren and Markey said that claim "does not appear to be backed up by any additional testing, only a visual observation performed almost 10 days later."  The company told the regulators in December that it "did not observe any environmental damage resulting from the discharge."

Study: Pregnant Women Face Risks Living Near Fracking Sites -- Pregnant women living next to fracked gas wells are more likely to have a low birth-weight baby - that's the finding in a new study from Princeton University.   The researchers compared standard birth-weight records collected by Pennsylvania hospitals with the locations of the parents' homes. Princeton economics professor and study co-author Janet Currie said they found a strong correlation - that the low birth weights were highly localized, much more likely to be found right next to the well sites.  "What is surprising is we found a fairly large effect for people living very close” Currie said; "but by the time you got to two miles away, we did not detect any effect." The industry argues that air pollution from gas wells and equipment such as compressor stations disperses quickly after it's released. It also says the issue is well understood and regulated.  Low birth weight has long been considered an important indicator of later health problems.

Hydraulic Fracturing Decreases Infant Health, Study Finds - From North Dakota to Texas to Pennsylvania, hydraulic fracturing has transformed many places in America into energy powerhouses. But while some see the new energy boom as benefiting the local economy, others fear the potential health and environmental consequences. As U.S. and international policymakers grapple with whether the benefits of allowing hydraulic fracturing outweigh the costs, new evidence sheds light on a clear cost: an increase in the probability of poorer health for babies born near these sites. The study, released today in the journal Science Advances, finds infants born to mothers living up to about 2 miles (3 kilometers) from a hydraulic fracturing site suffer from poorer health. The largest impacts were to babies born within about a half mile (1 kilometer) of a site, with those babies being 25 percent more likely to be born at a low birth weight—leaving them with a greater risk of infant mortality, ADHD, asthma, lower test scores, lower schooling attainment and lower earnings. “Broadly, hydraulic fracturing has reduced energy prices and caused natural gas to greatly decrease the use of coal for power generation in the United States, leading to reductions in air pollution that have very likely improved health throughout the country,” said study co-author Michael Greenstone, the Milton Friedman Professor in Economics and director of the Energy Policy Institute at the University of Chicago. “But these national benefits depend on local communities allowing hydraulic fracturing and governments around the world have taken very different approaches with some banning it and others embracing. This study provides the first large-scale peer-reviewed evidence of a link between hydraulic fracturing activities and our health, specifically the health of babies.”

Fracking Boom Further Spurs Plastics Crisis -  Jerri-lynn Scofield -  As I’ve written before, every time I return to the US, I’m struck by just how ubiquitous over-packaging is– and how difficult it is to avoid. This problem infects just about everything, down to the simple purchase of food.  I’ve been disturbed by the sheer volume of metal, cardboard, and plastic, plastic, plastic that enshrouds even the most basic foodstuffs.  So, although one can in theory commit to reducing one’s consumption of plastics, there’s a limit to how much an individual can do– no matter how diligent one is. So, around the world, countries, states, and cities have undertaken limited measures to reduce plastics use. In 2016, France became the first country to ban plastic cups and cutlery, extending an earlier ban on plastic bags. Delhi in 2017 banned use of disposable plastic. Hawaii was the first US state to ban the use of single use shopping bags at checkout in 2016, followed by California. These initiatives are all no doubt well-intentioned, but they fail to grapple with the full scope of the problem. And that’s to ban not just the use of plastics– single use or otherwise– but to drastically curtail the production of them, at source.  That seems to me to be where the focus should be. And that’s a much larger and more difficult problem that looks destined to get much worse, due to investments being made by some of the very same companies that have brought us climate change. As The Guardian reports: The new facilities – being built by corporations like Exxon Mobile Chemical and Shell Chemical – will help fuel a 40% rise in plastic production in the next decade, according to experts, exacerbating the plastic pollution crisis that scientist warn already risks “near permanent pollution of the earth.” Now, it’s apparent that Trump has yet to see a fossil fuel friendly policy that he doesn’t like.  So I’m not holding out for the United States to take any leadership role in reducing the production of plastics. But I should point out that it was under his predecessor that fracking boomed, as reported in this cheerleading CNN piece, The Obama Oil Boom. And that expansion, according to The Guardian, lies behind the plastics investment surge.

U.S. Just Burned the Most Natural Gas Ever - The U.S. burned the most natural gas ever on Monday, breaking a record set during the so-called polar vortex that blanketed the nation’s eastern half with arctic air in 2014. America consumed 143 billion cubic feet of gas as temperatures dipped to all-time lows on New Year’s Day, topping the previous high of 142 billion from four years ago, data from PointLogic Energy show. Prices for the heating fuel rose to the highest in a month.

US winter storms spark record natural gas demand - Frigid temperatures across much of North America have sparked record natural gas demand — but in a sign of the overpowering supply coming from shale rock, the surge did little to ignite futures prices. New Year’s Day was the coldest day of the 21st century in the 48 contiguous US states, according to a measure tracked by Commodity Weather Group, which uses temperatures from across the country and gives more weight to areas of high gas demand. Monday also smashed gas consumption records, with total demand surpassing 140bn cubic feet, said S&P Global Platts. Yet benchmark gas prices have moved mildly, despite forecasts for continuing brutally cold conditions across large parts of the US and winter storm warnings issued as far south as Florida. Nymex February gas futures dropped 1.6 per cent Wednesday to settle at $3.008 per million British thermal units. Some spot markets responded more dramatically. Gas for immediate delivery to Louisiana’s Henry hub had more than doubled from mid-December to $6.625 per mBtu Wednesday, according to S&P Global Platts. Prices at Dominion South, a hub in the producing region of Pennsylvania, respectively, rose a similar amount to $5.345. The subdued response in the futures market stands in contrast to the winter of 2013-14, when arctic air spilled south into big cities and Henry hub gas futures soared above $6 per mBtu.

U.S. power prices soar, gas use peaks in frigid start to year - (Reuters) - Power and natural gas prices in several U.S. regions jumped to their highest in years on Tuesday as gas use hit an all-time high due to arctic weather blanketing much of the country. Gas demand in the lower 48 U.S. states is expected to reach an all-time high of 144.0 billion cubic feet per day (bcfd) on Tuesday, according to Reuters data going back to 2008. That would top the 142.0 bcfd record set on Monday, New Year’s Day, and the previous record of 133.8 bcfd set on Jan. 7, 2017, data showed. One bcfd represents enough gas to fuel about five million U.S. homes. In New England, next-day electricity prices jumped to their highest since March 2014 as temperatures across the six-state region were expected to remain below freezing all week. Temperatures in Boston, New England’s biggest city, were expected to peak at 20 Fahrenheit (minus 11 Celsius) on Tuesday, and after a pair of slightly warmer days, slip further to 17F on Friday and 10F on Saturday, according to AccuWeather. On Monday, the high was 13F. Last week, next-day gas prices in New England rose to their highest since the winter of 2015. Gas and electricity prices in New England usually spike on the coldest winter days as homes and businesses use most of the region’s gas supplies for heating, leaving little for utilities to burn in power plants. To produce electricity during the freeze, New England’s electric grid, ISO New England, expects utilities to increase their use of oil for power generation instead of gas. With the retirement of several coal, oil and nuclear plants over the past decade, gas has become the biggest fuel for electric production in New England. Gas generated about 49 percent of the region’s power in 2016, while oil accounted for just 1 percent. Generators in New England usually only burn oil on the coldest winter days. 

U.S. Cold Snap Lifts Natural Gas Prices as Deep Freeze Ices East Coast - Natural gas prices rose to the highest levels in nearly a month Tuesday as Americans braced for another record-breaking day of low temperatures amid one of the worst cold snaps in decades. The U.S. National Weather Service has warned of "dangerously cold wind chills" in certain parts of the east coast and mid-west this week as a front continues to ice cities from Maine to Texas, bringing record-low temperatures and a surge in heating fuel demand. "Bitter cold wind chills continue across the Northern Plains, Great Lakes, Northeast, New England and Mid-Atlantic," the NWS said in an update on its website. "Freezing temperatures reach all the way to southern Texas and central Florida. The cold air will begin to moderate early this week. Heavy Lake Effect snow continues downwind of the Great Lakes."  Natural gas future for February delivery traded more than 4% higher than their Friday closing price in early European hours, taking benchmark prices to $3.09 per million British Thermal Unit (BTUs), the highest since Dec. 4, before paring gains to around $3.012 per million BTUs by 7:45 am eastern.   Reuters is forecasting a 14.5% increase, to 136.3 billion cubic feet per day, this week as Americans hunker down for an arctic blast that has brought temperatures to as low as -20 degrees Fahrenheit in Omaha, Nebraska, the coldest in more than 130 years. The city of Chicago, Illinois, also recorded its coldest-even New Year's Day, with temperatures only hitting a high of -1 degrees while the Baltimore Ravens of the National Football League played the coldest game in franchise history, with a kick-off wind-chill of -10 degrees Fahrenheit. The New England Patriots also played their coldest regular season game in history Sunday, topping the New York Jets 26-6 in a 2017-ending finale that kicked off with an on-field temperature of -13 degrees.

Arctic Plunge Pushes Natural Gas Prices Higher - A bona fide Arctic invasion is underway for much of the country.Temperatures have been tumbling since the start of the new year. Below is a map of forecast highs across the U.S. for Tuesday, Jan. 2. Along with this cold snap comes the increase in demand for heating across the Midwest, Northeast and even into the Deep South. This has resulted in an uptick in the price of natural gas. Coming up from lows around $2.50 in 2017, the commodity is now back to the $3 mark. With a below-normal temperature forecast for the next two weeks, the price may edge higher as we venture into the first few weeks of 2018.   While it's uncertain to what extent this cold snap will have on heating costs, it certainly bears watching. Analysts acknowledge other factors (other than the weather) that also drive the price of natural gas, such as inventory and imports/exports. One analyst pointed out that all of these factors could culminate into a buying opportunity in 2018.

Cold Weather Shocks Natural Gas Prices -- Natural gas markets are receiving a jolt from the wave of icy weather that has swept over the Eastern half of the United States.The effect is twofold: extreme cold is actually cutting production, while demand is surging because everyone is turning up the thermostat to stay warm.First the supply side. There are reports that in North Dakota’s Bakken, for instance, cold weather is cutting into production. Reuters reports that gas output in the Bakken is down more than 20 percent since last month. Citing Genscape data, Reuters said that gas flowing through interstate pipelines from North Dakota dropped from 1.3 billion cubic feet per day (bcf/d) in the week ending on December 25 to just 1 bcf/d as of Tuesday. Some of that decline could be consumed within North Dakota, but the drop-off is probably too significant not to be related to production problems. “That drop is due to the freeze off we’re seeing,” said Andrew Bradford of BTU Analytics, according to Reuters.Texas (-20 percent) Oklahoma (-22 percent) and Pennsylvania (-5 percent) are also reporting weather-related production problems, Genscape data says.Gas output can be affected by water and water vapor freezing. With temperatures in North Dakota recently dipping to -45F (-43C), it is no surprise there have been issues.In Canada, cold weather is also curtailing output. The Financial Post reports that some natural gas wells in Alberta were “frozen shut,” a situation called a “freeze-off” in industry jargon. Benchmark natural gas prices in Alberta surged 72 percent from $2.50 per thousand cubic feet to $4.30/mcf because of the cold temperatures.  On the demand side of the ledger, the U.S. is now burning through much more gas because of the cold snap. There is a structural issue and a seasonal one. The U.S. has built a long line of new gas-fired power plants in recent years to burn cheap natural gas, which has catapulted natural gas into the top spot for electricity generation. So while gas consumption fluctuates seasonally, the spring and autumn lows are getting higher and the winter spikes are also getting higher. This is a structural increase that will continue to grow over time.However, the recent jump in consumption is also the result of the extreme cold that has swept over the country. Bloomberg noted that on New Year’s Day, the U.S. burned the most natural gas ever recorded. The U.S. consumed 143 bcf of natural gas on January 1, breaking the previous record of 142 bcf during the polar vortex in 2014.

NYMEX February natural gas futures fall 4.8 cents as weather warms-- With US demand falling to its lowest levels in four days, the NYMEX February natural gas futures contract fell 4.8 cents/MMBtu to $3.008/MMBtu Wednesday. The February contract had risen to a four-week high of $3.056/MMBtu Tuesday, largely on the back of a cold snap that enveloped the eastern half of the US . Although the cold weather persisted Wednesday, it was warmer than earlier in the week, driving down demand. US demand Wednesday checked in at 123.7 Bcf/d, down 9 Bcf/d from Tuesday and the lowest since Saturday's consumption of 118.4 Bcf/d, according to data from Platts AnalyticsBentek Energy.  Although demand was down across all sectors, the largest decline came from residential and commercial consumption, which fell 5.1 Bcf/d to 66.3 Bcf/d. Meanwhile, consumption of gas for power burn fell to 28.6 Bcf/d, down 2.9 Bcf/d, and industrial demand slipped 700 MMcf/d to 25.5 Bcf/d. With demand down, withdrawals from storage also slowed. Wednesday's pull came in at 50.5 Bcf, down 5.2 Bcf from Tuesday's draw of 55.7 Bcf. Heavy withdrawals have been the norm of late and are expected to be reflected in the weekly storage report from the US Energy Information Administration, which will be released Thursday. A consensus of analysts surveyed by S&P Global Platts expected to see a draw of 219 Bcf for the week ended December 29. The predicted draw dwarfed recent withdrawals. The EIA reported storage withdrawals of 112 Bcf for the week ended December 22 and a pull of 182 Bcf for the period ended December 15. The last time a draw from storage topped the 200 Bcf mark was the week ended January 13, when 243 Bcf was taken out of stocks.

'Bomb cyclone' is driving demand, yet prices are falling -- Not even nasty winter weather and the frigid "bomb cyclone" could lift natural gas markets out of their doldrums. The weather anomaly dumping snow on the Northeast and chilling residents from Georgia to Maine has left gas traders unimpressed, even after a federal government report showed a strong draw on gas in storage. Prices for the now dominant fuel source have actually fallen during this latest spell of rough weather. Gas demand even spiked in Texas as the Lone Star State experienced an unusually protracted period of chilly conditions. Yesterday the Electric Reliability Council of Texas (ERCOT), which oversees most of the state's grid, said the state set a new winter peak electricity demand record. Demand hit 62,855 MW, which exceeded the previous winter record by more than 3,200 MW, according to ERCOT. Still, the Henry Hub natural gas price index fell in trading, losing more than 4.6 percent of its value. Yesterday the federal Energy Information Administration (EIA) released its latest Weekly Natural Gas Storage Report. The data confirms that the cold winter weather is having an impact on supplies. Gas in storage fell by 206 billion cubic feet. Volumes are nearly 200 billion cubic feet lower than this time last year and 200 billion cubic feet below the five-year average. Brian LaRose, a commodities market analyst at ICAP Technical Analysis, said traders didn't care as the markets still don't see a fundamental case for breaking natural gas prices much higher than a $3 per million British thermal unit (Btu) level.

Blizzard Triggers a 60-Fold Surge in Prices for U.S. Natural Gas - Natural gas surged to 60 times the going rate as howling blizzard conditions stoked demand for the furnace fuel across the U.S. Northeast. Spot prices for the fuel used to heat homes and generate power reached a record $175 per million British thermal units in New York, according to Consolidated Edison Inc. That’s a far cry from the $2.93 that U.S. gas futures have been averaging on the New York Mercantile Exchange this winter. Other major trading hubs in New York and New England saw prices exceed $100, according to a person familiar with those markets. Even if the rally cools later Thursday as the storm lambasting New York and Boston moves off to the north, prices in the region probably will close in the triple digits, the person said. “This string of cold has stressed the market just as much as the polar vortex” of 2014. “You are seeing pipeline restrictions and flow restrictions pop up.”The cold-weather cyclone swirling off Nantucket island grounded thousands of flights, disrupted rail service, shut schools and prompted emergency declarations up and down the Eastern Seaboard. Even as slashing winds cut off power to more than 70,000 homes and businesses, electricity prices climbed 126 percent to $273.23 a megawatt-hour on Thursday morning, the highest for that time of day in almost four years. The gas squeeze underscores the lack of adequate pipeline capacity to haul enough gas from Appalachia and points farther afield to Northeast metropolises where households have been scrapping heating-oil tanks for gas-fired furnaces. As a result, gas in the region is the world’s priciest, commanding 14 times more than U.K. futures price and about nine times more than Asian imports of the liquefied version of the fuel.

Oil to the rescue in New England's blizzard -- At 2:09 p.m. yesterday, as New England's grid operators strained to cope with a blizzard and wind blasts resulting from the "bomb cyclone," one of the region's major power plants, the Pilgrim Nuclear Power Station in Plymouth, Mass., suddenly shut down. One of two power lines connecting it to the electric grid was lost in the storm, plant owner Entergy Corp. said. In Massachusetts, power outages had hit 15,879 customers, concentrated on the coast, and the region's hourly demand still topped 18,000 megawatts. Pilgrim's loss took out 680 megawatts in an instant. But the region rode through the loss, according to ISO New England, the grid operator. The key to its escape — 3.9 million barrels of fuel oil held in reserve by dual-fuel gas and oil generators, emergency stocks that state grid planners were counting on if polar weather pushed the grid to the edge. After the bitter polar vortex in 2014, ISO New England created a winter reliability program offering incentives for natural gas plants able to also burn oil to stock up on oil supplies before the winter and keep them replenished until March. "Oil is taking the place of gas," said Paul Peterson, principal with Synapse Energy Economics, in Cambridge, Mass. "That's the good news element to this. The concern about unavailability or scarcity of natural gas that would lead to giant price spikes and reliability problems hasn't materialized," he said. 

DOE Pumps $30 Million Into Fracking Projects As Natural Gas Takes Center Stage  The Energy Department plowed tens of millions of dollars into projects designed to explore new fracking technology as the U.S. leans heavily on natural gas amid harsh winter weather.  DOE’s decision will help the agency master oil and gas development in untapped, energy-rich areas, according to a press statement Wednesday from the agency. The funding targets the Tuscaloosa Marine Shale in Texas and the Huron Shale, which spans four states in the Appalachian.The effort will help “strengthen America’s energy dominance, protect air and water quality, position the nation as a global leader in unconventional oil and natural gas (UOG) resource development technologies, and ensure the maximum value of the nation’s resource endowment is realized,” the statement notes. DOE’s funding effort comes shortly after Americans consumed a record-breaking amount of gas during the most-recent cold snap, according to data from PointLogic Energy, an oil and gas firm that monitor gas usage. The country used more gas throughout the holidays last year than in 2014, a year that saw a so-called polar vortex cover the U.S.’ east coast with arctic air. Snowstorms and frigid temperatures pounded parts of the Northeast and the Midwest during Christmas and New Year’s Day.  The country consumed more than 143 billion cubic feet of gas as temperatures dipped to all-time lows on New Year’s Day, the data show. Prices for natural gas skyrocketed to the highest level in a month — gas is not the only fossil fuel states are turning to for warmth this winter. DOE’s move to pump money into the industry also comes President Donald Trump moved late last year to nix Obama-era regulations leveled against the fracking industry.

Court Rejects Sierra Club Lawsuits Challenging Natural Gas Exports -- A U.S. Court of Appeals has thrown out three lawsuits filed by the Sierra Club that sought to block the export of liquefied natural gas from terminals on the East Coast and the and the Gulf of Mexico. The U.S. Court of Appeals for the District of Columbia Circuit has thrown out three lawsuits filed by the environmental activist group the Sierra Club that sought to block the export of liquefied natural gas (LNG) from terminals on the East Coast and the Gulf of Mexico.The November 1 ruling by a three-judge panel rejected Sierra Club’s argument the U.S. Department of Energy (DOE) failed to give adequate consideration to the potential climate impacts of the export of LNG from the Cove Point plant in Maryland and the Sabine Pass facility in Louisiana and Corpus Christi in Texas. The Sierra Club had raised three objections to DOE’s decision to approve natural gas exports from the terminals, arguing the department should have conducted an in-depth environmental impact assessment for all three terminals instead of the more narrowly focused environmental assessments for Cove Point and Sabine Pass; DOE’s assessment ignored information about the environmental effects of natural gas production that would feed into Cove Point; and DOE failed to properly weigh the public interest in approving the three projects. In rejecting the Sierra Club’s arguments, the judicial panel’s four-page decision cited a ruling handed down by a separate panel of the D.C. Circuit in August in which judges rejected similar arguments raised by environmental groups against DOE’s approval of LNG exports from a terminal in Freeport, Texas.

Haynesville natural gas production is surging -- again -- but will it last? -- After being left for dead for more than five years, natural gas production in the greater Haynesville region has been surging upward — from about 5.7 Bcf/d this time last year to more than 7 Bcf/d today, an increase of 25% during 2017. Much of this growth has been coming from a new cast of characters, employing different technologies and different strategies than the first wave of Haynesville pioneers that established the play back in 2008, then abandoned it in 2012. But a couple of big challenges face the Haynesville. Today, we begin an examination of the Haynesville that will take us from production trends through producer strategies and finally into detailed calculations of production economics for the play.  We first highlighted the resurrection of the Haynesville in Don’t Call It a Comeback, pointing out that new drilling technology and burgeoning Gulf Coast gas markets had changed the dynamics for a production province that today is “not your father’s Haynesville.” The rags-to-riches-to-rags saga of this play began back in 2008-09, when horizontal drilling and hydraulic fracturing techniques honed first in North Texas’s Barnett Shale were deployed in the “Greater Haynesville” — a region we define as the Haynesville, Bossier and Cotton Valley formations in northwestern Louisiana and East Texas. Production there surged from less than 4 Bcf/d in 2008 to more than 6 Bcf/d in 2010 — almost all of it dry gas containing no economically recoverable natural gas liquids (NGLs). Dry gas meant that new processing plants were not needed, and that expedited infrastructure development to get new production to market. But the lack of NGLs was not so good for the play’s production economics.

Trump administration aims to trim rules on offshore drilling -— The Trump administration on Friday proposed to rewrite or kill rules on offshore oil and gas drilling that were imposed after the deadly 2010 rig explosion and oil spill in the Gulf of Mexico. The administration said the rules are an unnecessary burden on industry and rolling them back will encourage more energy production. An offshore-drilling group welcomed the rollback, while environmentalists said President Donald Trump was raising the risk of more deadly oil spills. A division of the Interior Department published the proposed change Friday in the Federal Register. The public will have until Jan. 29 to comment. The Obama administration imposed tougher rules last year in response to the 2010 explosion on a drilling rig called the Deepwater Horizon and used by BP. The accident killed 11 workers and triggered a massive oil spill. The Obama rules targeted blowout preventers, massive valve-like devices designed to prevent spills from wells on the ocean floor. The preventer used by BP failed. The rules required more frequent inspections of those and other devices and dictated that experts onshore monitor drilling of highly complex wells in real time. In its notice Friday, the Bureau of Safety and Environmental Enforcement, an office of the Interior Department that regulates offshore oil and gas drilling, said some provisions in the rules created “potentially unduly burdensome requirements” on oil and gas operators “without significantly increasing safety of the workers or protection of the environment.” The agency estimated that revising some rules and removing others would save the energy industry at least $228 million over 10 years.

Trump admin proposes vastly expanded leasing - In a huge win for the oil and gas industry, the Trump administration today unveiled a new five-year plan that would allow more drilling in the Atlantic, Pacific and Arctic oceans. Ending months of speculation and igniting an outcry from critics, Interior Secretary Ryan Zinke announced the decision in a 1 p.m. press call. "This is a start on looking at American energy dominance," Zinke said, adding that the plan would make the U.S. "the strongest energy superpower." He said the new plan would make more than 90 percent of the outer continental shelf (OCS) open for leasing, including off California. The plan would schedule 47 lease sales from 2019 to 2024, which Zinke called the largest number of lease sales ever proposed for the National OCS Program’s five-year lease schedule. It would include 19 sales off the coast of Alaska, seven in the Pacific region, 12 in the Gulf of Mexico and nine in the Atlantic region. Zinke's move came less than a week after the Trump team proposed weakening the rules on offshore drilling safety equipment, saying they create an unnecessary burden for the industry. The combination marked a double punch for environmental groups and other opponents of the proposal, which will replace the current five-year plan finalized last January under the Obama administration and scheduled to run through 2022. "More drilling and less safeguards is a recipe for disaster," .

Trump Moves to Open 90 Percent of Our Coastal Waters to Oil Drilling - President Trump has launched the most sweeping industrial assault in history on our oceans , marine life , coasts and all they support, proposing to expose nearly all U.S. waters to the risk of another BP oil spill–style disaster. In a move that would put every American coastal community at risk, Trump proposed Thursday to hand over vast reaches of waters currently protected from drilling —in the eastern Gulf of Mexico and the Atlantic, Pacific and Arctic oceans—to the oil and gas industry.  If Trump gets his way, iconic fishing grounds like George's Bank, treasured recreational waters like the Florida Straits, and critical marine-breeding areas like those off the California coast would be exposed to the dangers of blowouts, explosions, catastrophic spills, seismic blasting and other perils that come with these inherently hazardous industrial operations at sea. We could see drill rigs going up in federal waters off our coasts from Maine to Florida, from California to Alaska, and everywhere in between.  Trump's proposal comes on the heels of two moves that needlessly increase those dangers. Over the holidays, the Trump administration proposed weakening offshore drilling and production safeguards that grew directly from lessons learned from the BP disaster. And earlier in December, the administration killed an independent study needed to help modernize and strengthen responsible public oversight of oil and gas operations at sea. This three-front assault on our oceans and coasts is madness—and it's maddening.

Trump administration plan would widely expand drilling in U.S. continental waters - The Trump administration unveiled a controversial proposal Thursday to permit drilling in most U.S. continental-shelf waters, including protected areas of the Arctic and the Atlantic, where oil and gas exploration is opposed by governors from New Jersey to Florida, nearly a dozen attorneys general, more than 100 U.S. lawmakers and the Defense Department.Under the proposal, only one of 26 planning areas in the Arctic Ocean, Pacific Ocean, Gulf of Mexico and the Atlantic Ocean would be off limits to oil and gas exploration, according to Interior Secretary Ryan Zinke. He said the Bureau of Ocean and Energy Management has identified 47 potential areas where industry companies can buy leases between 2019 and 2024, when the proposed period would begin and end. The Draft Five Year Outer Continental Shelf Oil and Gas Leasing Program was embraced by oil and gas industry groups but is expected to face withering opposition from a wide range of state officials and conservationists. “Nothing is final,” Zinke said in remarks at a news conference. “This is a draft program. The states, local communities and congressional delegations will all have a say” before the proposal becomes final in the coming months. Zinke said the proposal is consistent with President Trump’s executive order in April to widen energy exploration. He said it was a clear departure from the Obama administration’s effort to protect areas rather than exploit them. “This is a clear difference between energy weakness and energy dominance,” the secretary said. He vowed that the Trump administration would heed environmental safeguards. But potential environmental disasters are on the minds of numerous Atlantic-coast governors who oppose drilling in four planning areas from Maine to the Florida Keys. In a resounding bipartisan call, Republicans and Democrats have said in no uncertain terms that oil and gas drilling should not be allowed.

Trump plan to drill for oil off Atlantic coast stirs opposition - The Trump administration’s proposal to allow offshore oil and natural-gas drilling in federal waters off the Atlantic Coast could make 2018 an even tougher election year for Republicans in coastal states.The long-awaited plan would reverse an Obama-era prohibition on offshore energy exploration and make good on a campaign promise by President Donald Trump to boost U.S. energy production. That much Republicans can cheer.But the plan will also force a number of anxious, regional Republican candidates — already unsettled by predictions of a Democratic wave in the midterm elections — to either side with an unpopular president’s industry-friendly proposal, or join coastal residents, businesses and environmental groups in opposing it."For members that have districts that are impacted, it will definitely be an issue," Rep. Mark Sanford, R-S.C., who represents a coastal district and opposes offshore drilling. "Geography will drive the politics here."That political dynamic was in full effect on Thursday.After Florida’s Democratic Sen. Bill Nelson delivered a speech on the Senate floor opposing offshore drilling on Wednesday, Florida’s Republican Gov. Rick Scott, who is widely expected to seek Nelson’s seat, broke months of silence on the issue, saying he too opposes drilling off Florida’s coast. “I have already asked to immediately meet with Secretary Zinke to discuss the concerns I have with this plan and the crucial need to remove Florida from consideration,” Scott said in a statement. “My top priority is to ensure that Florida’s natural resources are protected.”

Zinke open to tweaks as plan draws strong reactions -  While critics estimated the Obama administration put 94 percent of the outer continental shelf off-limits to oil and gas development, Interior Secretary Ryan Zinke said today he wants to make more than 90 percent of the OCS open for leasing. But Zinke said his proposal for 47 lease sales from 2019 to 2024 — the most ever for a five-year planning period — is just a start, and he made it clear he's open to tweaking the proposal."Today's announcement lays out the options that are on the table and starts a lengthy and robust public comment period," Zinke said. "Just like with mining, not all areas are appropriate for offshore drilling, and we will take that into consideration in the coming weeks."The Interior Department said it will hold public meetings around the country beginning Jan. 16 to receive comments on Zinke's plan, which calls for potential lease sales in 25 of the 26 OCS planning areas, including off California. According to the Interior Department, the 47 lease sales would include 19 off the coast of Alaska, seven in the Pacific region, 12 in the Gulf of Mexico and nine in the Atlantic region (Greenwire, Jan. 4).Zinke said gas and oil drilling had "taken a backseat" during the Obama years but that would no longer be the case. "Today we're embarking on a new path for energy dominance in America," Zinke said.

New Report Exposes Inconsistencies In Obama Oil & Gas Testing Approvals - A new investigation by the Government Accountability Office (GAO) says the Obama administration took an inconsistent amount of time to approve applications for seismic testing for offshore oil and gas drilling, a report by The Hill says.  Depending on the regional office, some applications were approved within a day and others would take almost a year to go through the process. The National Marine Fisheries Service (NMFS) and the Fish and Wildlife Service (FWS) did not record application turnaround times consistently either.“Until NMFS and FWS develop guidance that clarifies how and when staff should record the date the agency determines the ‘adequacy and completeness’ of an application, the agencies and applicants will continue to have uncertainty around review time frames for incidental take authorizations,” GAO said.“Moreover, NMFS and FWS officials we interviewed said that they do not analyze their review time frames, a practice that is inconsistent with federal standards for internal control.”  Seismic analysis, which allows oil and gas companies to determine potential reserves in the underwater areas they would bid on to lease, is a controversial practice for environmentalists. They claim it unduly disturbs the wildlife. An unpredictable bureaucracy generally makes it difficult for high cost, high risk businesses, like the oil and gas industry, to run on a set schedule. The report makes Obama’s executive branch seem unfriendly to the industry, though the previous White House did reverse forty years of restrictions on American fossil fuel exports. “Seismic research is vital to unlocking energy potential off our coasts, and federal red tape is standing in the way,” Utah Rep. Rob Bishop, who requested the report, said. “GAO’s report highlights the bureaucratic dysfunction, lack of transparency and blatant abuses of discretion that has stalled greater exploration and development.”

Feds should improve permitting for seismic surveys — GAO - Federal guidance for issuing seismic research permits to companies interested in offshore oil and gas exploration is confusing, possibly resulting in unnecessary delays in some instances, according to a new watchdog report. Three agencies within the Commerce and Interior departments have responsibilities related to reviewing and approving seismic survey applications from companies seeking to tap the potential for oil and gas drilling in waters within the outer continental shelf (OCS), because of risks posed to the marine ecosystem.But those agencies — the Bureau of Ocean Energy Management, the Fish and Wildlife Service, and NOAA Fisheries — don't always use the same process or time frames, which can lead to frustration for applicants."In reviewing applications for seismic survey permits, BOEM records the date on which an application for a seismic survey permit is 'accepted,' or complete, which may be weeks or months after an application is received," concluded the Government Accountability Office in a new report, released today. "NMFS [NOAA Fisheries] and FWS, however, were unable to provide accurate data on the dates that they determined applications for incidental take authorizations were adequate and complete because the agencies' guidance does not specify how or when staff should record this date," the report says.

Strong margins keep US LNG exports growing - Business is booming this winter for the US LNG-export industry. With global gas prices at their highest in over three years, export margins from the US are at their strongest yet. In December, those margins propelled cargo shipments to the highest monthly volume on record, nearly 85 Bcf. Thanks to a natural gas shortage in China, bitterly cold temperatures in Japan and a supply shortfall in Australia, benchmark global prices, currently around $11/MMBtu, appear likely to linger through mid-February. Combined with the looming startup of exports from Dominion Energy's Cove Point facility in Maryland, elevated global gas prices are poised to keep US exports in record-setting territory again this month. But with swaps markets betting on weaker shoulder-season demand setting in by April, US exporters could be facing prices below $8/MMBtu by early March and ultimately the upper $6s/MMBtu before the summer months. As US export volumes continue to build in 2018, a return to lower prices later this year will pose new challenges both for exports and for a domestic US gas market that's growing increasingly dependent on the whims of global demand. On Monday the Platts JKM, the benchmark price for spot LNG delivered to northeast Asia, was assessed unchanged at $11.20/MMBtu. By late December, that price level boosted the profit margin on US export cargoes delivered to the region to a record-high $4.57/MMBtu, according to Platts Analytics. The calculation includes gas transport, shipping costs and product losses along the value change, but excludes sunk-cost liquefaction fees currently estimated at between $2.25-$3/MMBtu.

Momentous Change in US Natural Gas, with Global Impact - Wolf Richter - In 2017, the US became a net exporter of natural gas for the first time. It started small in February, when the US exported 1 billion cubic feet more than it imported. By October, the last month for which data from the Energy Department’s EIA is available, net exports surged to 45 billion cubic feet. For the first 10 months of 2017, the US exported 86 billion cubic feet more than it imported. And this is just the beginning.  Exports to Mexico via pipeline have been rising for years as more pipelines have entered service and as Mexican power generators are switching from burning oil that could be sold in the global markets to burning cheap US natural gas. The US imports no natural gas from Mexico.Imports from and exports to Canada have both declined since 2007, with the US continuing to import more natural gas from Canada than it exports to Canada.What is new is the surging export of liquefied natural gas (LNG) by sea to other parts of the world. This chart shows net imports (imports minus exports) of US natural gas. Negative “net imports” (red) mean that the US exports more than it imports:The first major LNG export terminal in the Lower 48 – Cheniere Energy’s Sabine Pass terminal in Cameron Parish, Louisiana – began commercial deliveries in early 2016 when the liquefaction unit “Train 1” entered service. Trains 2 and 3 followed. The three trains have a capacity of just over 2 billion cubic feet per day (Bcf/d). In October 2017, the company announced that Train 4, with a capacity of 0.7 Bcf/d, was substantially completed and is likely to begin commercial deliveries in March 2018. Train 5 is under construction and is expected to be completed in August 2019. The company is now lining up contracts and financing for Train 6. All six trains combined will have a capacity of 4.2 Bcf/d.This is just the Sabine Pass export terminal. In addition, there are five other LNG export terminals under construction, according to the Federal Energy Regulatory Commission (FERC), with a combined capacity of 7.5 Bcf/d. This brings total LNG export capacity to over 11 Bcf/d over the next few years and will make the US the third largest LNG exporter globally, behind Australia and Qatar. In addition, there are several other export terminals that FERC has approved but construction has not yet started. And other projects are in the works but have not yet been approved.

US Gulf Coast distillate flows to Europe around 700,000 mt for Jan - Distillates products heading to Northwest Europe and the Mediterranean from the US Gulf Coast for January currently total some 700,000 mt, according to data from S&P Global Platts trade flow software cFlow, with some additional volume being exported towards the end of December likely as a result of year-end destocking. While destocking may also be adding some pressure to sell cargoes out of the region, nearly all of the volume currently on the water -- especially on medium-range vessels -- is term or contract barrels, with the HOGO spread -- the difference between NYMEX heating oil futures and the ICE low sulfur gasoil contract -- continues to keep the arbitrage to Europe closed.\ Such is the strength of the heating oil contract, driven by cold weather in the US, that a possible reverse arbitrage to the US Atlantic Coast could be on the cards. In the meantime, six vessels have left the USGC region over the last seven days, including one LR 1, according to cFlow. The majority of these cargoes are heading to Northwest Europe, as a weak Mediterranean is struggling for demand to absorb the native volumes being produced.

U.S. arctic cold draws rare tankers of heating oil (Reuters) - Freezing weather across the U.S East Coast has drawn a number of tankers carrying diesel and heating oil from Europe, reversing a traditional trade route. The Pacific Anna set sale this week from the Gibraltar straits to the storage hub of St Croix in the Caribbean with a 90,000 tonne cargo of diesel it had loaded in Saudi Arabia in December, according to Reuters AIS ship tracking. Similarly, trading house Vitol chartered the 60,000 ton Amalia to deliver diesel from the Baltic port of Primorsk to St Croix, where it is expected to discharge on Jan. 15, according to shipping data and tracking. “The cold weather is drawing barrels,” a European diesel trader said. Oil products stored at St Croix are typically sold into the United States, traders said. The cargo might be blended with other components to meet the U.S. winter specifications for heating oil, they added. A third cargo, STI Donald C Traus has also been booked by Gazprom from Primorsk with options to go on the transatlantic route. The United States has in recent years become a major exporter of refined oil products, supplying large volumes of diesel to Europe, where regional refineries can not meet local demand. But an Arctic front that hit eastern United States has led to a sharp rise in demand for diesel, used in many states for heating, offering traders what is known as a reverse arbitrage. Another major winter storm is set to hit the region on Wednesday with freezing rain, snow and strong winds, demand was expected. Several other traders are seeking to deliver cargoes on the west-bound transatlantic route, traders said. 

NWE gasoline flows to North America at around 222,000 mt for January -- Gasoline flows to the US and East Coast of Canada from Northwest Europe in January so far amount to around 222,000 mt, according to data Wednesday from cFlow, S&P Global Platts trade flow software. In December, around 557,000 mt of gasoline loading in Northwest Europe and the Baltics arrived in the US and the East Coast of Canada, up slightly from 518,000 mt in November. Only three vessels likely carrying gasoline have left NWE over the past seven days to go to North America. All of them are Medium Range tankers heading to the US Atlantic Coast. According to data from PJK International, gasoline inventories in the Amsterdam-Rotterdam-Antwerp hub edged higher for the first time in six weeks, rising 21,000 mt, or 2.5%, to 854,000 mt for the week ended December 27. While the spot gasoline arbitrage from Europe to the US has now been closed for at least a couple of months, the NWE gasoline cargo market had been supported by ample volumes leaving the region in December for West Africa, and some smaller volumes having left Europe the same month to go the Persian Gulf or even Asia.

'Like thunder in the ground': Texans fear link between quakes and fracking waste - Significant new research led by a seismologist at Southern Methodist University in Dallas and published in November indicates that the spate of tremors in north Texas is occurring on faults that were inactive for at least 300m years. Using a different analytical technique from earlier studies, it backs up previous conclusions that the only plausible explanation for the earthquakes is human activity.In Fort Worth there are 2,127 pending and approved gas well drilling permits within the limits of the city, which has a population of more than 850,000.Since 2008, the Fort Worth Basin has changed from experiencing no confirmed recorded earthquakes to hundreds, mostly minor. The likely primary culprit is not hydraulic fracturing (fracking) in itself, but the process of wastewater injection. A common way to get rid of the vast amounts of water that are a byproduct of fracking and other extraction methods is to use disposal wells to push it underground, where it is thought to put pressure on faults.In the fall an earthquake-tracking website was launched by the Bureau of Economic Geology at the University of Texas.It shows that in 2017 there were clusters of seismic activity around prominent oil-and-gas producing regions in west and south Texas, as well as the Dallas-Fort Worth area, home to more than 7 million people and a number of huge dams of debatable resilience.

To round out a year of rollbacks, the Trump administration just repealed key regulations on fracking -- On the last business day of the year, the Interior Department rescinded a 2015 Obama administration rule that would have set new environmental limitations on hydraulic fracturing, or fracking, on public lands. The regulation from the Bureau of Land Management, which had been opposed by the oil and gas industry and tied up in court, would have tightened standards for well construction and wastewater management, required the disclosure of the chemicals contained in fracking fluids, and probably driven up the cost for many fracking activities. It had been held up in litigation and had not taken effect; a Wyoming district court said it exceeded the agency’s authority. Reversing the regulation, the Interior Department says, clears up that legal question and also lifts a costly regulation for the industry, in line with President Trump’s agenda to slash regulations and advance the United States’ “energy dominance.” The agency said rescinding the rule would save “up to $9,690 per well or approximately $14 million to $34 million per year” in industry compliance costs. It also noted that because of state, tribal and existing federal regulations, the move “would not leave hydraulic fracturing operations unregulated.” But Mike Freeman, an attorney with EarthJustice who defended the now-repealed regulation in court, countered that it “was a reasonable and long overdue update of the agency’s old regulations, adopted in the early 1980s, about 35 years ago, and they were developed long before modern fracking became common.” “The move today represents just another example of the Trump administration sacrificing our public lands, air and water in order to pad the bottom line of oil and gas companies,” Freeman said. 

Trump administration kills Obama-era fracking rule before it can be enacted -- The Obama administration’s 2015 fracking rule was never actually implemented, thanks to an ongoing court battle, and it apparently never will be. The Interior Department published a final rule Friday in the Federal Register repealing immediately the hydraulic-fracturing regulation on federal lands, saying that “we believe it imposes administrative burdens and compliance costs that are not justified.” The previous fracking rule was already moribund after a federal judge in Wyoming struck it down in June 2016 in response to a four-state lawsuit, holding that the Bureau of Land Management had overstepped its authority by acting without congressional approval. The U.S. Court of Appeals for the 10th Circuit had given the BLM until Jan. 12 to move ahead with its appeal, but the repeal renders the case moot. The decision met with cheers from Western lawmakers and oil-and-gas advocates, who had argued that the federal rule duplicated existing state regulations on hydraulic fracturing and energy production.

The Home Front: Trump’s BLM revokes chemical disclosure rules for fracking | The Colorado Independent: -- “The Trump administration is proceeding with revoking a 2015 rule requiring chemical disclosures and otherwise regulating hydraulic fracturing on federal and tribal lands,” reports The Grand Junction Daily Sentinel. “According to a Bureau of Land Management document released Thursday and scheduled to be published today in the Federal Register, the BLM is issuing a final rule repealing the measure, which never has taken effect due to a court challenge of it. The repeal is effective immediately. ‘This final rule is needed to prevent the unnecessarily burdensome and unjustified administrative requirements and compliance costs of the 2015 rule from encumbering oil and gas development on Federal and Indian lands,’ the document says. The action is likely to be challenged by supporters of the 2015 rule. “This decision is illegal and completely arbitrary and we expect we’ll take the Trump administration to court,” said Michael Freeman, an attorney with the group Earthjustice who up to now had been working to defend the rule from a court challenge aimed at overturning it.”

Colo. regulators ready to weigh in on Firestone explosion - Colorado oil and gas regulators could vote as early as next week to finalize Gov. John Hickenlooper's (D) proposal for tighter safety regulations on the type of pipelines linked a deadly home explosion last year. The Colorado Oil and Gas Conservation Commission will hold a two-day hearing beginning Monday in Denver on the rules. The proposal applies to flow lines, which are typically low-pressure lines that connect oil and gas wells to tanks and other equipment. A flow line at a gas well in Firestone, about 35 miles north of Denver, apparently caused an explosion in April that killed two people and destroyed a home. The line was connected to a 24-year-old gas well, and had been cut off and left unplugged near the basement of a newly built home, possibly when some of the surrounding gas field's equipment was moved to make way for a subdivision (Energywire, May 3, 2017).Industry groups and the state's largest oil driller have pushed the commission to make the rules more flexible, while neighborhood groups and at least one local government are asking for broader restrictions on energy producers."A rulemaking solely about the issue of flowlines, while important, is not sufficient to address the issues raised by the tragic events of this past summer," Sara Loflin, executive director of the League of Oil and Gas Impacted Coloradans (LOGIC), which represents a coalition of neighborhood groups, said in a written comment about the rules. Colorado is one of the few oil- and gas-producing states that regulate flow lines, but the explosion highlighted a weakness — state regulators don't have reliable information on the pipes' locations. That became a key concern for homeowners and local governments, since many of the suburbs north of Denver are built over aging oil fields and are interlaced with pipelines and well sites.

Anadarko exec in Colorado says she's 'never stopped learning' in oil & gas - Denver Business Journal - Since May 2017, Horton has been Anadarko Petroleum Corp.’s vice president for development in Colorado's Denver-Julesburg Basin.She grew up in Kentucky, better known for its coal mines than oil and gas production. She got her bachelor’s degree in geology from Miami University in Ohio, and a master's in geology from Duke University in North Carolina. Neither school is well known in the industry for churning out graduates with typical oil and gas degrees, such as petroleum engineering. But, she said, “I got a great, classic, geology education.” Anadarko, based in suburban Houston, recruited her to an internship as part of an effort that focused on non-traditional oil and gas schools.“I accepted an internship with Anadarko not knowing anything about the industry, not having ever been to Texas,” Horton said with a laugh.  “I got in my car, drove to Texas and loved it from day one. It’s such a dynamic, challenging industry," she said. "To this day, I’ve never stopped learning.”

Fracking rule fracas: The next round - Obama-era safeguards for hydraulic fracturing on public lands suffered their final blow last week as the Trump administration formally rescinded them.The Bureau of Land Management's fracking rule is really dead this time, but the conflict is not over.Finalized Friday, the rescission caps off a yearlong deregulatory campaign by President Trump and his team as they attempt to dissolve any measures seen as hurdles to domestic fossil fuel production (see related story).It also sparks the next round in a bitter battle over fracking on public and tribal lands, as environmental groups prepare to sue BLM and the Interior Department for rolling back the only federal regulation that specifically addressed the practice."Yesterday's move represents another example of the Trump administration sacrificing our public lands, air and water in order to pad the profit margins of oil and gas companies," said Earthjustice attorney Mike Freeman, who has led environmental defense of the Obama rule."We'll see them in court," he added. The fracking rule would have set new standards for well construction, wastewater management and chemical disclosure, and would have required operators to get BLM approval for fracking operations. The Trump administration's rescission took effect immediately, skipping the 30-day waiting period often incorporated into rollbacks.  Freeman and a coalition of groups supporting the tighter safeguards for fracking on public lands are expected to file suit in the coming weeks, taking aim at the government's rationale for reversing the regulation.

Group calls for review of online leasing -- The Center for American Progress today called for federal officials to review Interior's online oil and gas leasing program, arguing that the process lacks transparency and is vulnerable to fraud and abuse. The liberal think tank released an 11-page report criticizing Interior's shift to online lease auctions from in-person auctions."The BLM's move toward privatized, online lease sales further shrouds an already-abused and opaque system in secrecy; obstructs public oversight; and likely costs taxpayers millions of dollars in lost revenues each year," the report says.CAP argues that the process could allow oil and gas companies to exceed federal limits on leasing land reserved for future drilling, via the use of "subsidiaries, affiliates and lease brokers — referred to as landmen."The organization urged a review of the program by both the Government Accountability Office and Interior's Office of Inspector General."While the in-person bidding system was not specifically designed to be an open and transparent process, this increased level of secrecy is concerning. As noted above, for several industry and government watchdog groups, the move to privatized, online lease sales appears intended to silence public opposition and protests at the behest of the industry," the report says.The Bureau of Land Management shifted to online leasing under the Obama administration, as part of an effort to save money, streamline transactions and increase transparency (E&E News PM, July 25, 2016).

Tribes ask PUC to reconsider review of new Enbridge pipeline route, saying cultural study wasn't done - Minnesota’s Ojibwe Indian tribes say state regulators failed to do a complete cultural study and thus botched their environmental review of Enbridge’s proposed new oil pipeline across northern Minnesota. In a regulatory filing this week, five bands asked the Minnesota Public Utilities Commission (PUC) to reconsider its recent decision on the environmental review and order that a “full historic properties review” be done. The tribes and environmental groups have harshly criticized the Environmental Impact Statement (EIS) done by the Minnesota Department of Commerce on Enbridge’s proposed new Line 3, which would replace an aging and corroding pipeline. In December, the PUC rejected the EIS, but on narrow environmental concerns. The EIS must be approved before the PUC’s final decision on Line 3, which had been expected in April but now may not occur until June. Representatives of the Fond du Lac Band of Chippewa and the Mille Lacs Band of Ojibwe told the PUC last month that the EIS should have been rejected out of hand because it failed to include a formal tribal cultural resource study. Environmental reviews often account for such cultural resources as burial grounds and historic villages. “The state’s historic properties work on the Line 3 Replacement project to date has been so inadequate that it could be used as a ‘what not to do’ example in future guidance,” said the filing by the Mille Lacs, Fond du Lac, White Earth, Leech Lake and Red Lake Indian bands. The approach “violates a host of state laws.” 

Trucking company pays fines over wastewater dumping in N.D. -- A Wyoming-based trucking company has paid over $950,000 in fines for dumping oil production wastewater on a North Dakota road in 2014.The $951,526 shelled out by Black Hills Trucking to the North Dakota Industrial Commission last week came after the company lost its appeal of the fine in the state Supreme Court.It stems from incidents in February and March of 2014, when a truck driver with the company disposed of the byproduct on a gravel road in Williams County. Alison Ritter, spokeswoman for the state's Department of Mineral Resources, called it the largest fine ever collected by the commission, which has been unable to collect in some past cases involving bigger fines. Nearly all of the money will go to a fund for restoring abandoned oil wells (Amy Dalrymple, Bismarck Tribune/Inforum, Jan. 3).

ONEOK Inc. Plans to Build $1.4 Billion Natural Gas Pipeline (AP) — An Oklahoma natural gas liquids company has announced plans to create a $1.4 billion pipeline system from eastern Montana to the company's existing facilities in central Kansas. The Oklahoman reports that ONEOK Inc. has proposed building a 900-mile (1,448-kilometer) pipeline to transport up to 240,000 barrels of unfractionated natural gas liquids each day. The Elk Creek Pipeline will be designed to allow for expansion to 400,000 barrels a day with the creation of additional pumping facilities. The pipeline is expected to cost $1.2 billion with an additional $200 million in related infrastructure costs. Company officials say they'll offer up to 19 million shares of common stock in a public office to help pay for the project.   The pipeline is expected to be operational by the end of 2019.

Monterey County Judge: Measure Z fracking ban remains; two other bans preempted, invalid by existing laws: With the passage of Measure Z in November 2016, Monterey County stood to be the first oil-producing county in California to ban hydraulic fracturing, also known as fracking, and the expansion of oil production procedures, but the oil-industry quickly filed suit and on Thursday a decision was finally handed down. Monterey County Superior Court Judge Thomas Wills issued an “intended decision” on Measure Z, the voter-approved initiative that banned fracking, new oil wells and would phase out wastewater injection wells. The decision said that Measure Z’s bans on drilling new wells and wastewater injection are preempted and invalid by existing state and federal regulations. The decision leaves the fracking ban in place because it said the oil industry plaintiffs lack standing to challenge it in light of the fact they do not currently conduct hydraulic fracturing in Monterey County. But if and when Monterey County were to attempt to enforce the fracking ban, it could be challenged at that point. “No fracking in Monterey County takes place because it’s not needed to produce oil here,” said Kathy Miller, an Aera Energy spokeswoman. “The geology is different in Monterey County.” Aera Energy filed the lawsuit in December 2016 in response to the passage of Measure Z. “It didn’t uphold the fracking ban,” said Miller. “We continue to believe that the fracking ban is preempted just as the two other bans are.”

Judge backs Texas company over workers’ claims of toxic gas exposure in Alaska -- An Anchorage Superior Court judge has ruled against a group of men seeking a punitive-damage award from Baker Hughes for neurological illnesses they say arose after they were exposed to toxic gases during a construction project.Judge Eric Aarseth on Tuesday issued a single-page "final judgment" favoring "prevailing party" Baker Hughes, one of the world's largest oil-field services companies, with headquarters in Houston, Texas.The decision came on the heels of a Dec. 22 order in which Aarseth granted a motion for summary judgment that had been filed by Baker Hughes. In that decision, Aarseth said there were "no further matters to litigate." He vacated a trial that had been set for early January.The "alleged toxic gas exposure," Aarseth wrote in the December order, took place near a chemical transfer facility outside Kenai, where drilling chemicals are packaged for shipment to oil fields.Baker Hughes owned and operated the facility, and in 2013 began building a modern transfer facility next to the old one.The plaintiffs suing Baker Hughes were Christopher Lovely, Steven Adams, Robert Defoe, Chuck Van Curren and Dustin Leavitt.The men worked on the project for UIC Construction, the contractor carrying out the construction for Baker Hughes. The men could not be reached for comment.TV station KTVA in November interviewed Lovely and Adams. The men said they had suffered brain damage and other severe health problems that left them disabled. They said a horizontal exhaust pipe from the old building, where chemicals were transferred to containers, repeatedly blew toxic gas on them as they helped build the new facility next door.  The workers also suffered dizziness, hair loss, nausea, confusion, headaches, inexplicable rashes and other problems, according to the KTVA story and complaints filed in court.

USGS, BOEM hike Alaska resource estimates - US Interior Sec. Ryan Zinke issued an updated resource assessment showing that the National Petroleum Reserve-Alaska, Western Beaufort Sea, adjacent Alaska state and Native lands, and state waters might contain 17.6 billion bbl of crude oil and more than 50 tcf of natural gas. Zinke listed recent discoveries among reasons the Bureau of Ocean Energy Management and US Geological Survey sharply increased their estimates of mean undiscovered, technically recoverable resources onshore and offshore.  USGS led onshore assessment, and BOEM led offshore efforts with data contributed by the US Bureau of Land Management. State and industry partners provided additional information.​Onshore, USGS estimated mean undiscovered, technically recoverable resources at 8.7 billion bbl of oil (up from 1.5 billion bbl in a 2010 resource estimate) and 25 tcf of gas. Offshore, BOEM’s revised estimates of mean undiscovered, technically recoverable resources in the Beaufort Sea Outer Continental Shelf Planning Area are 8.9 billion bbl of oil and 27.7 tcf of gas.​ The updated assessment resulted in a net increase of nearly 700 million boe over BOEM’s 2016 Beaufort Sea Planning Area assessment.

Without fanfare, oil companies just received a tax break on New Year’s Day -  Congressional Republicans allowed a tax on oil companies that generated hundreds of millions of dollars annually for federal oil-spill response efforts to expire this week — a move that amounts to another corporate break in the wake of lawmakers’ sweeping tax overhaul late last month. The tax on companies selling oil in the United States generated an average of $500 million in federal revenue per year, according to the Government Accountability Office. The money, collected through a 9 cents-per-barrel tax on domestic crude oil and imported crude oil and petroleum products, constituted the main source of revenue for the Oil Spill Liability Trust Fund. The fund has roughly $5.7 billion in reserve. Intended to help the government respond quickly to accidents on land or offshore, it was established in 1986 but only got a stable source of funding in the wake of the 1989 Exxon Valdez spill. The tax, which expired Sunday, had lapsed before but was renewed under the bipartisan 2005 Energy Policy Act. Federal officials recently had debated whether it should be expanded to apply to oil sands products. Although GOP leaders opted not to renew the tax in December, they are considering reinstating it retroactively in an “extenders” bill that would revive several recently expired taxes. Industry officials noted that the U.S. Coast Guard or the National Oceanic and Atmospheric Administration could always ask Congress to reimpose it if either felt it was needed. A White House official did not respond to a request for comment Thursday. Environmentalists called the tax lapse another industry victory under President Trump at the expense of people and wildlife located near sites susceptible to spills. 

America could dethrone Russia and Saudi Arabia as oil king in 2018 - The United States is poised to ramp up crude oil production by 10% in 2018 to about 11 million barrels per day, according to research firm Rystad Energy. Surging shale oil output should allow the United States to dethrone Russia and Saudi Arabia as the planet's leading crude oil producer, Rystad predicted in a recent report. The U.S. hasn't been the global leader, nor ahead of both Russia and Saudi Arabia, since 1975. "The market has completely changed due to the U.S. shale machine," said Nadia Martin Wiggen, Rystad's vice president of markets. The prediction shows how the fracking revolution has turned America into an energy powerhouse -- a transformation that President Trump has vowed to accelerate by cutting regulation. This long-term shift has allowed the U.S. to be less reliant on foreign oil, including from the turbulent Middle East. U.S. oil production slipped -- but didn't completely collapse -- after Saudi-led OPEC launched a price war in late 2015 aimed at reclaiming market share lost to shale and other players. A massive supply glut caused crude to crash from around $100 a barrel to a low of $26. Cheap prices forced shale companies in Texas, North Dakota and elsewhere to dial back. Domestic output bottomed at 8.55 million barrels per day in September 2016, down 11% from the recent peak in April 2015, according to the U.S. Energy Information Administration.

U.S. Shale Can’t Offset Record-Low Oil Discoveries  -- The U.S. shale resurgence has been one of the main themes in oil markets this year, while OPEC’s production cut deal to deplete the oil overhang and boost oil prices has been the other key development in 2017.U.S. shale production is expected to grow over the next few years as the companies that survived the worst of the downturn showed resilience in the face of the lower-for-longer oil prices. But three years of low oil prices also led to the global oil industry slashing investments in conventional oil exploration, and deferring or revisiting development plans.This has led to the lowest ever volumes of oil discoveries in 2017, Rystad Energy said last week. While the low level of discoveries is not an immediate threat to global oil supply, it could become such ten years down the road, according to Rystad Energy.In ten years’ time, U.S. shale production may have peaked, at least according to OPEC that sees shale peaking after 2025, although the cartel has conceded that U.S. tight oil has defied previous forecasts and has increased production more than initially expected and will continue to do so in the short term. This year has seen less than 7 billion barrels of oil equivalent discovered globally, a volume as low as last seen in the 1940s, Rystad Energy has estimated. What worries analysts the most is the fact that this year the reserve replacement ratio—the amount of discovered resources relative to the amount of production—was a mere 11 percent, compared to 50 percent in 2012, Sonia Mladá Passos, Senior Analyst at Rystad Energy, said. Another point of concern is that the resources discovered per field also dropped, and this could affect the commercial viability of new discoveries. “Under our current base case price scenario, we estimate that over 1 billion boe discovered during 2017 might never be developed”,

Schlumberger acquires US hydraulic fracturing business of Weatherford - Energy Business Review: A subsidiary of oilfield services company Schlumberger has completed acquisition of the US pressure pumping and pump-down perforating assets of rival Weatherford International for $430m in an all-cash deal. In late March 2017, the oilfield services companies agreed to create a joint venture called OneStim, with Schlumberger holding 70% stake and Weatherford owning the remaining stake. The aim of the joint venture was to deliver completions products and services for the development of unconventional resource plays in the US and Canada land markets. As per the original agreement, both companies were to contribute all their respective North America land hydraulic fracturing pressure pumping assets, multistage completions, and pump-down perforating businesses to the joint venture. Additionally, Schlumberger was to make a one-time payment of $535m to Weatherford. However, the companies had agreed to revise the terms of the agreement to include the sale of the hydraulic fracturing business of Weatherford in the US. With the closing of the deal, Schlumberger has also become the owner of the supplier and customer contracts related to the former US hydraulic fracturing business of Weatherford. The Texas-based Weatherford will retain 100% of its multistage completions portfolio, manufacturing capability and supply chain, which is expected to enable significant upside potential for the company. Weatherford will also continue to take part in the emerging completions markets in Canada and the US and in other parts of the world. 

BP Takes $1.5B Hit Over US Tax Changes, Joining Shell (Reuters) - Oil giant BP will take a one-off $1.5 billion charge to adjust to new U.S. tax rules, joining rival Royal Dutch Shell and other companies, but expects a long-term boost from the corporate-friendly tax rates, it said on Tuesday.The massive $1.5 trillion tax overhaul that U.S. President Donald Trump signed into law last month cuts the corporate rate from 35 percent to 21 percent and temporarily reduces the tax burden for most individuals as well.BP, like many other international companies, said it expected a positive impact to its U.S. earnings in the long run.But in the short term, lower tax rates will affect its deferred tax assets and liabilities, resulting in a one-off, non-cash charge of $1.5 billion to its 2017 fourth quarter results which are due to be announced on Feb. 8, it said."The ultimate impact of the change in the U.S. corporate income tax rate is subject to a number of complex provisions in the legislation which BP is reviewing," BP said in a statement.The British company's shares were down 1.15 percent by 1534 GMT.The adjustment will not impact BP's cash flow in the fourth quarter.Deferred tax assets refer in some cases to a company overpaying taxes in advance and then getting them back in the form of tax relief.BP has large operations in oil and gas production in the Gulf of Mexico and onshore shale operations as well as refineries that can process up to 746,000 barrels per day of crude oil, according to its website.Shell said last week it would incur a one-off charge of $2-$2.5 billion, although the new legislation would have a "favourable" impact on earnings.On Dec. 22,

Alberta issues alert, natural gas outages in north during extreme cold snap - Alberta's Emergency Management Agency has issued an alert about natural gas outages affecting people who live in the north as the region deals with frigid temperatures. The agency says the extreme cold weather has disrupted the supply of gas to the Mackenzie County area. People who can't heat their homes are being encouraged to stay with friends and family who have alternative heat sources. The agency says natural gas supply trucks are being brought in to try and maintain gas line pressure, but the problem is expected to continue until temperatures rise. A reception centre is open at the Mennonite Heritage Centre in La Crete, a hamlet about 700 kilometres north of Edmonton. Environment Canada is reporting temperatures at the High Level airport of -38 C, -48 C with the wind chill, and there is more extreme cold weather in the forecast. "At this point we are requesting that all natural gas users within the region limit their usage as much as possible," the county said in a post on Facebook Friday. "This will help gas reach the end of the line and prevent additional houses from freezing." The Mackenzie County website says about 12,000 people live in the remote area that includes the communities of La Crete, Fort Vermilion and High Level. Len Racher, the county's chief administrative officer, said as a precaution the hospital in Fort Vermilion has switched over to diesel for heat and a long-term care home in La Crete has switched to propane. He said officials have warming centres and buses ready if needed. Racher said officials are focusing on maintaining service to the communities where most people live. 

Mexico’s Standing Rock? Sempra, TransCanada Face Indigenous Pipeline Resistance South of Border - Steve Horn - Since Mexico privatized its oil and gas resources in 2013, border-crossing pipelines including those owned by Sempra Energy and TransCanada have come under intense scrutiny and legal challenges, particularly from Indigenous peoples. Opening up the spigot for U.S. companies to sell oil and gas into Mexico was a top priority for the Obama State Department under Hillary Clinton. Mexico is now facing its own Standing Rock-like moment as the Yaqui Tribe challenges Sempra Energy’s Agua Prieta pipeline between Arizona and the Mexican state of Senora. The Yaquis in the village of Loma de Bacum claim that the Mexican government has failed to consult with them adequately, as required by Mexican law. Under Mexico’s new legal approach to energy, pipeline project permits require consultations with Indigenous peoples living along pipeline routes. (In addition, Mexico supported the adoption of the United Nations Declaration on the Rights of Indigenous Peoples, which includes the principle of “free, prior and informed consent” from Indigenous peoples on projects affecting them — something Canada currently is grappling with as well.) It was a similar lack of indigenous consultation which the Standing Rock Sioux Tribe said was the impetus for lawsuits and the months-long uprising against the Dakota Access pipeline near the tribe’s reservation in Cannon Ball, North Dakota, in late 2016. Now, according to Bloomberg and Mexican reporter Gema Villela Valenzuela for the Spanish language publication Cimacnoticias, history is repeating itself in the village of Loma de Bacum in northwest Mexico. Agua Prieta, slated to cross the Yaqui River, was given the OK by seven of eight Yaqui tribal communities. But the Yaquis based in Loma de Bacum have come out against the pipeline passing through their land, even going as far as chopping out a 25 foot section of pipe built across it. “The Yaquis of Loma de Bacum say they were asked by community authorities in 2015 if they wanted a 9-mile tract of the pipeline running through their farmland — and said no. Construction went ahead anyway,” Bloomberg reported in a December 2017 story. “The project is now in a legal limbo. Ienova, the Sempra unit that operates the pipeline, is awaiting a judicial ruling that could allow them to go in and repair it — or require a costlier re-route.” As the legal case plays out in the Supreme Court of Justice in Mexico, disagreements over the pipeline and its construction in Loma de Bacum have torn the community apart and even led to violence, according to Cimacnoticias.

Peak México -- In Bottleneck: Humanity’s Impending Impasse, William R. Catton called our modern humans Homo colossus — those among our kind living in industrial countries and consuming massive amounts of fossil fuels to motivate and control machines that do orders of magnitude more work than humans or animals could do otherwise. Homo colossus is gradually replacing Homo sapiens as industrial development spreads like a cancer across the Earth. Fossil fuels artificially boosted carrying capacity for human occupancy, at least to outward appearances. It could never last. While Homo sapiens, with a stable population under one billion, might have stood a reasonable chance of being around for another two or three million years, Homo colossus hasn’t a prayer. México is a poster child for the present schizophrenia. On November 3rd the national oil company, Petróleos Mexicanos (Pemex), made headlines across the world: “Pemex makes México’s biggest onshore oil find in 15 years. ” México’s President, Enrique Peña Nieto personally made that announcement, standing shoulder-to-shoulder with his energy minister, Pemex’ chief executive, and a range of other government and union officials at the Tula refinery in Veracruz. He proudly announced that Pemex made its historic discovery by drilling its onshore Ixachi well near the municipality of Cosamaloapan, and that the overall field is believed to hold some 350 million barrels of proven, probable and possible reserves. Pause for a second and consider that number. True, it is the biggest find in 15 years. Equally true it represents less than one year of the oil México produced at its peak, in 2003, and perhaps 18 months worth at present rates of production. In the United States, its largest trading partner, it would keep the lights on and the filling stations operating for all of 17 days, 18 hours and 20 minutes, unless it arrived at a holiday travel time. But even the number 350 million is suspect. First, that number is “proven, probable and possible;” three very different categories. If it was all proven reserves, bankers would be lining up to lend capital to develop the find. Instead, México has had to go to Big Oil looking for venture partners, and dropped its expectations from a majority holding, to 49% and now 40% and still no takers.

Belize Ends Oil Operations in Its Ocean Waters - Belize, home of the largest barrier reef in the western hemisphere, has permanently suspended oil operations in its ocean waters. The legislation marks the first time that a developing country has taken such a major step to protect its oceans —and all the life within —from oil exploration and extraction. The new suspension of oil activity marks an enormous win for the Belize Barrier Reef Reserve System World Heritage site, the wildlife that live there, and the hundreds of thousands of Belizeans who rely on the reef for survival. "Today is a great day for Belize," said Nadia Bood, Mesoamerican reef scientist at World Wildlife Fund (WWF). "Not only has its government listened to calls to protect the Belize Barrier Reef, which only last year was under threat from seismic oil exploration , it has stepped up to become a world leader in ocean protection by ending all oil activity in its waters." Ecosystems in the reef have already been damaged by coastal construction, and potential oil drilling posed a major threat. Harmful industrial activities would impact Belize's economy, natural resources and the 1,400 species found in the reef system.  More than 450,000 people from around the world joined WWF's campaign to end oil exploration and other harmful activities in the reef.

Oil-Rich Venezuela Is Out Of Gasoline - According to the Organization of the Petroleum Exporting Countries, the highest proven oil reserves in the world, including non-conventional oil deposits, are in Venezuela.“Gentlemen: There is no more gasoline in Venezuela. In Venezuela, we are out of gas. In Venezuela, there is no gas oil. In Venezuela, there are no lube oils,” said Iván Freites in a televised press conference. Freites is the secretary of the professional and technician division of the United Federation of Venezuelan Petroleum Workers.In his address, Freites said that poor management led to the stoppage of 80 per cent of the country’s refineries. “Only Amuay and Cardón refineries are operative and that is nothing. They produce 40,000 barrels per day and the national demand is over 200,000 barrels of gas per day,” he said.Venezuela’s oil production has fallen to levels not seeing since the late-1980s. According to the latest OPEC report, which is based on information provided by the Nicolás Maduro government, the country is producing about 2.3 million barrels of oil per day. In October, it experienced the steepest fall in production of 2017, as only 1.9 million barrels were extracted, 130,000 barrels less than the previous month. The oil industry, however, is still the major source of income as it generates about 96 per cent of the foreign exchange. He also expressed concern about the fact that Maduro’s administration pulled out of a partnership with Cuba in its Cienfuegos oil refinery, taking into account that all of Venezuela’s oil products have been unloaded on the island for the past 15 years before making their way to other markets.

Fracking and earthquakes: weighing up the dangers in SA -- The South African government is looking into fracking to reduce the country’s huge reliance on coal for energy. Fracking involves pumping high pressured fluids into rock formations to release reserves of oil and gas.  Estimates for gas deposits in the main Karoo region of South Africa range widely. A few studies have been done for government on the potential for shale gas in the country. These include a report on the technical readiness for a shale gas industry, a strategic environmental assessment on shale gas and a multi-authored academic book on hydraulic fracturing in the Karoo. Government must now integrate this information into policy and develop regulations for the fracking industry.Environmental groups and landowners are concerned about the negative environmental and the social impact of fracking. They say that it could have an impact on water quality and quantity, and could also cause habitat fragmentation and loss. They are also worried about possible increased seismicity associated with deep well waste water injection and fracking operations.Our research set out to look at the link between earthquakes and fracking. It formed part of the vulnerability mapping for fracking in South Africa. We found that the areas with the highest vulnerability for seismicity linked to fracking were in the parts of Western Cape, Gauteng, North West Province, Mpumalanga, KwaZulu-Natal and one of South Africa’s neighbours, Swaziland. Even though no gas is expected to be found in many of these areas, they would still be prone to the seismic effects of fracking in the Karoo basin, the site of what is assumed to be the country’s biggest gas deposits.  Seismic hazards in South Africa are not high by international norms. But there could be significant damage to infrastructure if seismicity increases.

Europe’s Largest Oil And Gas Producer Is Back On Its Feet - Europe’s largest oil and gas producer, Norway, suffered its fair share of problems when oil prices tanked three years ago. Yet, helped by the cushion of its massive sovereign wealth fund, the Norwegian economy is back on track, and this year’s unemployment fell to 2.4 percent, according to the country’s central bank—the lowest since 2012. The central bank now believes that job creation will continue, and that unemployment will continue to shrink, with the rate of the shrinking gradually slowing down, as befits the cyclical nature of the labor market. That’s a pretty good development, especially in light of the fact that between 2013 and 2016, employment in the oil industry in the country shrank by about a fifth, from more than 232,000 people to 183,800, as the industry struggled with the global oil price crisis. The petroleum sector—which accounts for 12 percent of Norway’s GDP and for 36 percent of the nation’s total exports—generated 40 percent lower revenues for the government in 2016 compared to 2015. These revenues should have improved this year thanks to higher oil prices, even though oil and gas investments in the Norwegian Continental Shelf are expected to drop for a fourth consecutive year in 2018. One might think that this means Norway is moving away from oil after the crisis, but that would only be partially true. Norway’s oil fields are maturing, that’s true. New exploration has had mixed results, but after a decline between 2001 and 2013, oil production is now on the rise and has been for the last three years despite the oil price collapse. Two huge fields discovered in 2010 and 2011, Johan Sverdrup in the North Sea, and Johan Castberg in the Barents Sea, are expected to start operations in 2019 and 2022 respectively, and will lift Norway’s oil production in the early 2020s compared to expected declines in 2018 and 2019. But after 2025, production and activity are expected to significantly drop off unless there are new discoveries, according to oil major Statoil.

Norway court clears ways for controversial Arctic drilling (AP) — A court in Norway said Thursday that the government can hand out oil drilling licenses in the Arctic, dealing a blow to two environmental groups that had filed a lawsuit against further drilling in the Barents Sea. The Oslo District Court acquitted the government against charges from Nature and Youth and Greenpeace Nordic that drilling for oil and gas in Arctic waters would violate with the Paris Agreement on climate change and the Norwegian constitution. The court cited the constitution, saying "natural resources shall be managed on the basis of long-term considerations, which will safeguard this right for future generations as well." Activists decried the decision. "Climate change is global. And climate scientists are freaking out. The Norwegian oil policy is letting down my generation and threatens my future," said Ingrid Skjoldvaer, head of Nature and Youth. The groups had sued Norway's Ministry of Petroleum and Energy in an attempt to invalidate the latest round of 10 production licenses in the Barents Sea on the edge of the Arctic Ocean. The oil ministry had said the licensing round was in compliance with the constitution and noted that it was backed by a large majority in Norway's parliament. The government said following the court ruling that it now "had a sound basis for its decision to award the production licenses." The court also said the groups should pay legal expenses worth 580,000 kroner ($71,435). 

Russia Posts Highest-Ever Natural Gas Output - Russia registered its highest-ever natural gas production last year amid plans to expand into China and boost sales of liquefied natural gas. The nation’s output of the fuel jumped 7.9 percent to 690.5 billion cubic meters, according to data emailed Tuesday by the Russian Energy Ministry’s CDU-TEK unit. That beat the previous record, set in 2011, by 2.9 percent. Russia, the world’s largest gas exporter, is working to boost output with plans to increase production of LNG with new plants in an area that stretches from the Baltic region to its Pacific coast.  That will put the country up against the biggest producers of the super-chilled fuel, including Qatar, Australia and the U.S. Russia has resources to increase its LNG production almost 10 times by 2035, led by the privately-owned Novatek PJSC in the Arctic, according to the nation’s Energy Ministry.

Russian natural gas exports to Europe hit all-time high in 2017 --Russia’s gas exports to Europe and Turkey rose by 8.1 percent to a record high 193.9 billion cubic metres (bcm) in 2017, Alexei Miller, head of Gazprom, said in a statement on Wednesday, despite EU efforts to cut its reliance on Russian energy.  Gazprom, run by Miller, a close ally of Russian President Vladimir Putin, supplies more than a third of the European Union's gas.However, the European Commission has called on EU member states to curb their reliance on Russian energy following Moscow's 2014 annexation of Crimea from Ukraine and a clash over gas deliveries between Kiev and Moscow that saw Gazprom cut off supply."The rising trend of the record-high data for the second year in a row shows, on one hand, a rising demand for the Russian gas in Europe, and on the other hand, its secure supply in necessary volumes," Miller said. Gazprom said its gas deliveries to its largest customer, Germany, jumped by 7.1 percent to 53.4 bcm last year, a new record high. Its 2017 gas production, the world's largest, rose by 12.4 percent to 471 bcm, Miller said.

Russia's Gazprom sets annual Europe, Turkey gas export record of 193.9 Bcm - Russia's Gazprom supplied a total of 193.9 Bcm of gas to Europe and Turkey in 2017, its CEO Alexei Miller said Wednesday, easily breaking the record set in the previous year. Miller, cited by Russian news agency Tass, said deliveries to the "Far Abroad," which includes Europe and Turkey but not the countries of the former Soviet Union, were 8.1% higher than 2016's 179.3 Bcm."The trend of record yearly records demonstrates the growing demand of European countries for Russian gas on the one hand and the reliability of our supplies in the required volumes on the other," Miller said.Russian supplies to Germany and northwest Europe are likely to remain at elevated levels through the winter as the oil-indexed contract price range remains well below the TTF month-ahead price until April.Supplies to Germany hit a record of 53.4 Bcm last year, Miller said, a 7.1% year-on-year increase.Gazprom's supplies to Austria, the Netherlands and Denmark also hit new record highs in 2017, he said.Austria bought 8.5 Bcm last year, a 40% year on year increase, while the Netherlands was supplied with 4.6 Bcm, up 9.7% year on year.Gazprom delivered 1.75 Bcm of gas to Denmark, up 1.9% year on year.The previous records to Austria, the Netherlands and Denmark were set in 2005, 2007 and 2016, respectively.Russian gas supplies also rose to France by 6.8% to 12.3 Bcm, to the Czech Republic by 28% to 5.8 Bcm and to Slovakia by 24.5% to 4.6 Bcm. Demand for Russian gas was strong across Europe in early 2017 due to cold weather and remained robust through the summer and autumn given the need to refill storage stocks -- especially in Germany and the Netherlands -- which fell to historically low levels last winter.

Russia to Keep Its Grip on Europe’s Gas Market After Record 2017 - Russia is working to keep natural gas exports to Europe near record levels in 2018 after the continent’s biggest supplier, Gazprom PJSC, said its deliveries this year signal it is achieving on its ambitions to expand. The state-controlled gas giant plans to ship a minimum of 180 billion cubic meters next year, Deputy Chief Executive Officer Alexander Medvedev said in an interview in St. Petersburg. That volume would be the second highest ever after at least 190 billion cubic meters expected this year, which is a record. “Of course, it’s business, not sports,” Medvedev said. Yet, this is “a new stage” in the company’s history. Gazprom meets more than a third of Europe’s demand for natural gas, Russia’s biggest and most lucrative market worth some $37 billion in revenue this year. Tighter trade links with the Kremlin-backed company contrast with increasing tensions on the military and political front. Officials across Europe accuse Russia of everything from meddling in elections to menacing coastlines and airspace with warships and planes. Earlier this month, the U.K.’s armed forces warned of a growing threat for the Atlantic undersea communications cables, the internet and international trade from Russia’s submarines. European Union lawmakers have had their hearts set on diversifying energy supplies away from Russia and are urging expansion of ports to handle liquefied natural gas tankers from the U.S.   Production there has skyrocketed, making the U.S. a potential top producer of LNG in the mid-2020s, according to International Energy Agency estimates. Gazprom accuses the U.S. of politicizing its economic interests in the EU through a sanctions law earlier this year that targeted pipeline projects. Executives in Russia have so far shrugged off the threat of serious competition in Europe. While EU gas demand depends on weather and economic growth, it’s likely to increase next year as domestic production falls and coal prices recover, making imports from Gazprom more competitive, Medvedev said. Russia has the biggest potential to meet the additional demand, he said. 

Russian daily oil output edges up in 2017 to 30-year high (Reuters) - Russian oil production has continued to grow in 2017, with average daily output at a 30-year high of 10.98 million barrels per day, though the pace of growth slowed from 2016 because of the country’s participation in an OPEC-led global supply pact. The Middle East-dominated Organization of the Petroleum Exporting Countries and other leading oil producers agreed to cut their combined oil production by almost 1.8 million barrels per day (bpd) from the start of 2017 to prop up prices. Russia said it would cut its output by 300,000 bpd from the 30-year monthly high of 11.247 million bpd hit in October 2016 and achieved the targeted cut by the second quarter. OPEC and Russia have subsequently agreed to extend the cuts for the whole of 2018. Russian energy ministry data showed that oil and gas condensate production stood at 10.95 million bpd in December, up from 10.94 million bpd in November. In tonnes, oil output rose to 46.322 million last month from 44.782 million in November, lifted by a 0.2 percent rise in output at leading oil company Rosneft For the whole of 2017, the average output of 10.98 million bpd compared with 10.96 million bpd in 2016 and 10.72 million bpd in 2015. In tonnes, Russian oil output reached 546.8 million last year, against 547.5 million tonnes in 2016, which was one day longer. Reuters uses the barrel to tonnes ratio of 7.33 to 1. Russian Energy Minister Alexander Novak has said that 2018 oil production is expected to stay at 547 million tonnes if the cuts last until the end of the year, as agreed. “Output is likely to hold around current levels following the recent decision by OPEC and non-OPEC producers to extend the cuts to the end of 2018,” the International Energy Agency (IEA) said in its December review 

New Pipeline Doubles Russian Crude Oil Supply To China -  Russia quietly doubled its crude oil export capacity to China in the new year when it launched a new pipeline, cementing its position as the number one supplier of crude to its Asian neighbor. The extension of the East Siberia-Pacific Ocean, or ESPO, oil pipeline between Russia and China started operating on January 1, doubling the export volumes from 15 to 30 million tons annually, or almost 220 million barrels, Xinhua reported. The agency noted that the extension, which was agreed in 2013, would serve China’s Belt and Road initiative for expanding China’s regional influence in Asia. The new section of the Eastern Siberia–Pacific Ocean pipeline began operations Monday, Xinhua added. The venture is expected to "deepen energy co-operation between Moscow and Beijing" and serve the Belt and Road Initiative, a major Chinese-led development project across Asia. Rosneft is the supplier of the crude via the ESPO pipeline, while PetroChina is the buyer. The oil will be processed at three refineries in the Northeast of China. Back in September, Reuters reported, citing refinery sources, that one of these was undergoing a capacity expansion upgrade that cost US$880 million. The upgrade should increase its capacity to 400,000 bpd by the end of this year. Originating in Skovorodino, Russia, the pipeline stretches to Mohe, the northernmost province of China, before passing through the Inner Mongolia Autonomous Region all the way to Daqing in the northeastern Heilongjiang province. As a result of the second line, Russia’s crude export capacity to China has now doubled from 15 million to 30 million tons, or about 600,000 barrels a day. This significantly boosts Russia’s lead over Angola and Saudi Arabia as Beijing's’s biggest supplier of crude oil. China is currently considered the number one importer of raw petroleum in the world. Construction on the second line began in August 2016. According to RT, the first pipeline from Mohe to Daqing began operating on January 1, 2011. Some 110 million tons of oil have passed through the first line so far. Another section of the pipeline snakes around China to Russia's Far East, serving the specialized oil seaport of Kozmino. Almost exactly one year ago, we reported that Russia overtook Saudi Arabia  to become China’s biggest oil supplier for 2016.  Since then Russia has held the crown of China's biggest supplier for nine consecutive months based on the latest data, released in the last week of December.In November, Russian crude exports to China totaled 5.12 million tons, or about 1.25 million barrels daily. That was 11% more than in November 2016. At the same time, Saudi imports fell by 7.8% in November, to 1.056 million bpd.

China overtakes S Korea to become second-largest LNG importer in 2017: cFlow - China overtook South Korea to become the world's second-largest LNG importing country in 2017, according to completed voyage data compiled by S&P Global Platts trade flow software cFlow. Northeast Asia's four largest buyers imported a total of 172.28 million mt in 2017, up 12.65% year on year. Related video: US and China: Partners in global LNG growth? Chinese imports of LNG in 2017 totaled 37.89 million mt, up 48.4% year on year, while imports by South Korea totaled 36.51 million mt, up 10.81% year on year. Japan retained its position as the world's top importer, receiving 81.61 million mt in 2017, up 2.28% year on year. Northeast Asia's fourth-largest importer, Taiwan, imported 11% more in 2017 at 16.27 million mt. In December, China imported 5.05 million mt of LNG, up 38.25% year on year, registering its single highest ever monthly import volume since it started importing LNG in 2006. Japan imported 7.6 million mt of LNG in December, up 0.82% year on year. 

China set to top Japan as world’s biggest natural gas importer -- Beijing's crackdown on pollution has put China on track to overtake Japan this year as the world's biggest importer of natural gas, used to replace dirtier coal. China — already the biggest importer of oil and coal — is the world's third biggest user of natural gas behind the United States and Russia, but has to import around 40 percent of its total needs as domestic production can't keep up with demand. Data compiled from the Thomson Reuters Eikon terminal indicates China's 2017 imports of pipeline gas and liquefied natural gas (LNG) will top 67 million tonnes, up by more than a quarter from a year earlier. LNG imports alone surged more than 50 percent. The data, which includes LNG tanker arrivals to China and pipeline monthly import flow estimates, is preliminary as December figures are not yet available. China still lags Japan, with gas annual imports of around 83.5 million tonnes, all as LNG, but its overall gas imports topped Japan's in September and again in November, government data and shipping flows show. Analysts say the trend is set and China should top Japan for the full year in 2018. "Both LNG and pipeline imports will continue to increase in the next few years. We expect China to overtake Japan as the world's largest gas importer in 2018," said Miaoru Huang, Asia gas and LNG senior manager at energy consultancy Wood Mackenzie. "But Japan will remain as the No.1 LNG importer till around 2028," she added.

Pakistan restricts fuel oil imports as consumption falls - Pakistan has imposed restrictions on fuel oil imports with immediate effect, as domestic consumption declines amid rising LNG imports and the shutdown of several fuel oil power plants. A new energy committee, headed by the minister for power, has also been constituted to approve future fuel oil imports and monitor output from domestic refineries, demand from the power sector, and stocks at oil marketing companies, an official with the ministry of energy said. The decision was taken December 28 at a meeting in Islamabad attended by Prime Minister Shahid Khaqan Abbasi, minister for power Sardar Awais Ahmed Khan Leghari and officials from oil refineries, oil marketing companies and the ministry of energy. "During the meeting, a decision was made to restrict imports of fuel oil with immediate effect. Only four cargoes, which were booked by Pakistan State Oil, would be received," the official said. Pakistan State Oil deferred four cargoes in November, one of which is due to arrive in the first days of 2018, and another three by the end of January, the same official added. 

Israeli pipeline, once a link to Iran, will remain a mystery (Reuters) - An oil pipeline company established decades ago by Israel and Iran, and a new Israeli company that is meant to replace it, can continue to operate secretly, an Israeli parliamentary committee ruled on Sunday. The Eilat-Ashkelon Pipeline Co (EAPC) was a joint venture set up in 1968, when the two nations were friendly, to transport Iranian oil via Israel to the Mediterranean. Ties were cut after Iran’s 1979 Islamic revolution, and the enemies are now locked in arbitration that could be worth billions of dollars. Although Iranian oil no longer flows through the pipeline, EAPC has become a major distributor of oil in Israel, with ambitions to become a leading trade hub. It also added a reverse-flow system so oil from the Black or Caspian Seas can be shipped from Eilat, Israel’s southernmost city and port, to southern Asia and the Far East, and increased its storage capacity for traders in the region. Israel, worried about national security, maintains tight control over EAPC, to the extent that articles about its business dealings must pass through the military censor. Instead of renewing EAPC’s concession, which came up this year, Israel formed a new company with the same initials, the Europe Asia Pipeline Co, owned by the government. It will take over the original EAPC’s responsibilities by September, with an option to extend the handover period an additional six months. . Calls to end the secrecy surrounding EAPC emerged after its pipe burst in 2014, spilling millions of liters of oil into a desert nature reserve in Israel’s worst spill. After an Israeli environmental group petitioned the Supreme Court, the gag order was narrowed slightly to exclude issues like environmental impact and safety measures. The company’s primary dealings, including the sources of oil and how it is used, are still under censorship. 

Libya burns dirty oil for electricity as Islamic State disrupts gas plans - Libya is turning to crude oil to solve electricity shortages, as the threat from Islamic State holds back gas infrastructure development. Two new plants at Ubari in the southwest and Tobruk in the northeast are primarily designed to run on gas. But in the absence of pipelines to deliver the fuel, both will instead burn oil, emitting roughly double the greenhouse gases. In the instability since former leader Muammar Gaddafi was toppled in 2011, the imperative to address frequent power blackouts is taking priority over environmental protection. “It’s more a strategy of necessity than a deliberate approach to burn oil for power,” Richard Mallinson, analyst at London-based Energy Aspects told Climate Home News. “In a more stable environment they’d aim to have everything connected up when it came on stream. But they have an urgent need for power.” The 640MW power plant at Ubari is expected to be commissioned in the coming weeks. Gas fields in the southwest are connected by pipeline to an export terminal in Mellitah, but the pipeline stops about 300km short of Ubari. The 650MW Tobruk plant has a similar problem. Libya’s main gas pipeline runs along the Mediterranean coast between the capital Tripoli and Libya’s second city, Benghazi, but it stops about 400km short of Tobruk. Libya bucks the global trend away from oil-fired power generation, which in most parts of the world is used as a last resort. Even oil-rich nations see more value in exporting the product than squandering it in inefficient power plants. 

Oil resurrection sets stage for another Opec-shale clash - Oil continued its revival from the biggest crash in a generation, with prices set for a second annual gain after a year marked by hurricanes, Middle East conflict and the tussle between Opec and US shale. Futures are up more than 12 per cent in 2017, having entered a bull market in September. In 2018, investors will watch whether rising prices trigger a new flood of US output. "The current highs are unsustainable in the short-to-medium term, with prices likely to head back below $60 once we get past January, but for now the season of goodwill appears to be in full swing," said analysts led by Michael dei-Michei at consultants JBC Energy in Vienna. West Texas Intermediate, the US benchmark, is now trading at the highest level since mid-2015, pushed above $60 a barrel by a severe cold snap in the northeastern US that spiked demand for heating fuel. Oil topped natural gas as the biggest source of electricity in New England on Thursday morning, after temperatures plunged well below freezing. US output has surged overall this year, hitting a 46-year high in October when producers pumped 9.6 million barrels a day, according to federal data. The US expects production to top 10 million barrels a day in the coming year. For now, shale drillers are showing restraint, with the number of working rigs unchanged for the second week in a row, according to Baker Hughes data released on Friday. The rig count, now at 747, stayed relatively stable during the last quarter, even as oil strengthened. At the same time, speculation is rising that American drillers will put more rigs to work next year as oil strengthens. That could undermine plans by the Organization of Petroleum Exporting Countries and and other producers, including Russia, who have pledged to extend production curbs through the end of 2018 to wipe out a global glut.

The Oil and Gas Sector Is Changing — and So Is Geopolitics - The decline in crude oil prices from $100 per barrel to around $60 and below over the past two years, along with the widespread ability to extract shale gas through hydraulic fracturing of rock, or fracking, has moved the United States from being “the world’s thirstiest consumer of overseas oil to a position of greater self-sufficiency,” O’Sullivan writes. Falling energy prices have also stabilized Europe’s economy, helped Japan manage the aftermath of the Fukushima nuclear disaster, allowed China to more aggressively pursue its new Silk Road strategy across Eurasia (while reducing the pain of a decelerating economy), kept Russia from becoming an energy superpower and weakened the prospects for energy-rich sub-Saharan African countries. “On the whole,” the author says, “the new energy abundance is a boon to American power — and a bane to Russian brawn.” In fact, it was new extraction techniques in tight oil and shale gas that helped ease America out of the recession. But triumphalists beware. Though the United States is now the world’s largest energy producer, it can never be the swing producer of hydrocarbons that Saudi Arabia once was, able to determine world prices by simply deciding how much to pump. That is because the United States is not an autocracy with a national oil company, but a vast network of hundreds of small producers making their own decisions and taking their own risks.At the same time, the energy revolution has laid the basis for a more politically and economically unified North American continent. For this reason, O’Sullivan criticizes Barack Obama for alienating Canada with his delays of the Keystone XL pipeline and Donald Trump for alienating Mexico with his insults and talk of a “wall” between the two countries. O’Sullivan’s book lays out Trump’s ignorance of the whole United States-Mexico relationship. In 2015, the two countries traded “more than $1 million of goods and services every minute.” Rather than “simply trading in final products, the United States and Mexico build goods together, utilizing complex supply chains that crisscross the border,” a grid-work that includes 20 natural gas pipelines.

The Oil Chart is Setting Up Very Bullishly To Start the Year -- Oil is looking very bullish right now. On the daily chart (top chart), prices are in a multi-month uptrend.  They recently consolidated gains in a triangle pattern and are now at a 1-year high.  The moving averages are setting up in a bullish manner: they're all increasing, the shorter EMAs are above the longer EMAs and prices are above the EMAs.  The MACD has plenty up upside potential at current levels. The weekly chart (bottom chart) is also very bullish.  Prices consolidated around the 200-week EMA and have since moved higher.  The MACD is also rising and has plenty of upside room.   When a security sets up in bullishly in several time frames, the odds of a bullish advance increase.    This is one of the charts I recently said was key to 2018

Hedge funds gamble OPEC will tighten oil market too much: Kemp (Reuters) - Hedge funds are the most bullish about oil prices in years, expecting further gains even as prices touch multi-year highs and ignoring the risk linked to such a large concentration of positions.A record net long position has been accumulated by hedge funds and other money managers, amounting to 1,183 million barrels in the five biggest futures and options contracts covering crude, gasoline and heating oil.Portfolio managers held a record 1,328 million barrels of long positions in Brent, WTI, U.S. gasoline and U.S. heating oil on Dec. 26, according to data published by regulators and exchanges.By contrast, hedge funds held only 145 million barrels of short positions, the lowest level for 10 months and among the lowest at any point since the start of 2013.Fund managers now hold more than nine long positions for every short position, the most bullish picture for at least five years ( are record net long positions in Brent crude (561 million barrels), WTI (461 million barrels) and U.S. heating oil (82 million barrels).There are also large, if not quite record, net long positions in U.S. gasoline (79 million barrels) and European gasoil (131 million barrels). In many of these contracts hedge fund positioning appears extremely stretched, with the ratio of long to short positions at multi-year highs. The concentration of so many bullish positions poses a significant downside risk to prices if and when portfolio managers decide to close them out and realise some of their paper profits. For the time being, however, most fund managers are ignoring the liquidation risk and focusing on the prospect of further price increases first.

Oil Markets Start 2018 With A Bang | - Despite pipelines in the North Sea and Libya coming back online in 2018, oil has remained above $60 in the new year. Oil prices started out the year with some bullish sentiment related to geopolitical flashpoints, while the market fundamentals looked less favorable with the restoration of some key pipelines. Oil prices remained at more than two-year highs as protests swept across multiple cities in Iran. Crowds of protestors, mainly young people, criticized the government for poor economic conditions. The demonstrations pushed crude prices up a bit, and both WTI and Brent opened above $60 per barrel for the first time in years. "Growing unrest in Iran set the table for a bullish start to 2018," the Schork Report said in a note to clients on Tuesday.  The saga over North Korea’s nuclear program continues to take new twists and turns. The latest disturbance comes after news that Russian oil tankers helped send oil to North Korea, which would be a violation of UN sanctions. The U.S. has also accused China of violating UN sanctions by shipping crude oil to the isolated North Korea regime.  The return of the Forties pipeline to operation and the restoration of output from North Sea oilfields removed one of the recent bullish catalysts from the oil price equation. Libya’s pipeline outage also came to an end after the damaged pipeline was repaired. So far, the bearish news of resumed oil flows in the North Sea and Libya has been outweighed by the protests in Iran.

Oil Hits Highest Since Mid-2015 But Settles Down As Outages Abate - (Reuters) - Oil prices hit mid-2015 highs in early trading on Tuesday but dipped to settle slightly lower as major pipelines in Libya and the UK restarted and U.S production soared to the highest level in more than four decades.It was the first time since January 2014 that the two crude oil benchmarks opened a year above $60 per barrel. Prices were buoyed by large anti-government rallies in Iran and supply cuts led by OPEC and Russia.U.S. West Texas Intermediate (WTI) crude futures settled 5 cents lower at $60.37 a barrel. In early trading WTI hit $60.74, the highest level since June 2015.Brent crude futures, the international benchmark, settled 30 cents, or 0.5 percent lower at $66.57 a barrel. The session high of $67.29 was the highest since May 2015.The spread between U.S. crude and Brent hit the narrowest in nearly two weeks.The 450,000 barrel per day (bpd) capacity Forties pipeline system in the North Sea returned to full operations on Dec. 30 after an unplanned shutdown.Repairs have been completed on a Libyan oil pipeline damaged in a suspected attack last week and production is restarting gradually, engineers said."The resolution of the North Sea pipeline issue is having the expected result that the Brent-WTI spread is narrowing today," David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington.Thompson added that traders have been returning to work from the holidays, boosting volumes."Despite the day's price weakness, both Brent and WTI remain in solid, long-term bullish trends - $58.95 is nearby support on WTI front-month futures and $65.60 is the corresponding support on front-month Brent futures."

OPEC's focus on stocks risks prices overshooting – Kemp - (Reuters) - The Organization of the Petroleum Exporting Countries (OPEC) is sticking doggedly to its plan to cut commercial oil inventories down to the five-year average to rebalance the oil market.But in doing so, the organisation risks tightening the market too much, sending prices sharply higher and encouraging a faster-than-expected acceleration in production from U.S. shale producers.Saudi Arabia’s oil minister, who is the organisation’s de facto leader, has reiterated that stocks are still around 150 million barrels too high and it would be premature to discuss an exit strategy or change of course.“Almost the single metric we look at is global inventories and of course the most transparent and trustworthy is the OECD,” he said in an interview before Christmas (“Saudi energy minister Q&A with Reuters”, Dec. 20). OPEC, the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) all have slightly different figures for OECD commercial crude and products stocks, but they show a similar trend.OPEC estimates that total stocks were around 137 million barrels higher than the five-year average in October, down by around half since May (“Monthly Oil Market Report”, OPEC, December 2017).IEA puts commercial stocks about 111 million barrels above the prior five-year average at the end of October (“Oil Market Report”, IEA, December 2017).EIA data shows commercial stocks 167 million barrels above the five-year seasonal average at the end of October, down from a surplus of 380 million barrels in July 2016 ( the specific numbers differ, mostly for definitional and methodological reasons, the data from each of the agencies shows the stock overhang compared with the five-year average has narrowed significantly.Most of the remaining overhang is concentrated in crude oil rather than refined products such as gasoline and heating oil.Product inventories are already tight in some cases, notably for middle distillates such as gasoil, diesel fuel and heating oil.OPEC seems determined to drive total stocks down to the five-year average, or very close to it, before starting to increase its own output. But that would almost certainly leave stockpiles uncomfortably low, send benchmark Brent prices well above $70 per barrel and push the market into a big backwardation.

WTI/RBOB Extend Gains After 7th Straight Week Of Crude Draws - WTI/RBOB rallied into the inventory data as expectations were for a seventh straight week of crude draws and gasoline builds. API confirmed the streak is alive and saw a 4.27mm build in distillates - the biggest weekly build since June 2017. API:

  • Crude -4.992mm (-5mm exp)
  • Cushing -2.11mm
  • Gasoline +1.87mm (+2mm exp)
  • Distillates +4.272mm (+500k exp) - biggest build since Jun 2017

The trend of crude draws and gasoline builds continues for the 7th straight week...  WTI/RBOB ramped higher today ahead of the API data and extended gains after...

Oil prices reach highest since June 2015 as US stockpiles dwindle - Oil climbed to the highest level in two and a half years on expectations a US government report will register the longest decline in crude stockpiles since the summer driving season. Futures rose as much as 1.6% in New York, topping $61 a barrel. Oil stored in US tanks and terminals probably dropped for a seventh straight week, according to a survey of analysts. Prices also have been buoyed by almost a week of violent protests in Iran that the nation’s Revolutionary Guard Corps on Wednesday said had been brought to heel. “The fundamental backdrop right now is stronger than we’ve seen in recent memory,” said Michael Tran, commodities strategist with RBC Capital Markets in New York. “Prices will likely be able to hang in there this year, due to tightening stockpiles.” Oil has risen for two years running as the Organization of Petroleum Exporting Countries (Opec) and allied producers including Russia trimmed supplies to reduce a global glut. Oil prices will probably trade between $40 and $60 a barrel this year, penned in by rising US shale production, declining but still ample spare supplies and slipping discipline among Opec members, according to Moody’s Investors Service. “The US shale-Opec tug of war will simultaneously cap upside price potential and downside risks,” West Texas Intermediate for February delivery rose 78 cents to $61.15 a barrel at 10:12am on the New York Mercantile Exchange. In earlier trading, the contract touched $61.35, the highest intraday price since June 2015. Brent for March settlement rose 64 cents to $67.21 on the London-based ICE Futures Europe exchange after losing 30 cents on Tuesday. The global benchmark crude traded at a premium of $6.02 to March WTI. 

Oil rallies to 3-year high as Iranian unrest persists - Oil rallied Wednesday to a close at a nearly three-year high as antigovernment protests rattled Iran, raising concerns over the potential for disruptions to crude output from OPEC's third-largest producer. February West Texas Intermediate crude on the New York Mercantile Exchange added $1.26, or 2.1%, to settle at $61.63 a barrel. March Brent gained $1.27, or 1.9%, to end at $67.84 a barrel on ICE Futures Europe. Both WTI and Brent scored their highest settlements since December 2014, according to data from Dow Jones. Antigovernment demonstrators have taken to the streets in cities across Iran over the past week to voice anger over the country's economic woes. The protests, which have left more than 20 people dead, have reignited a geopolitical risk premium in global oil markets amid concerns the civil unrest could result in crude supply disruptions out of the Islamic Republic. "Political uncertainty in Iran has moved in to support the market this week as protests are expected to continue in the days ahead,"   "While there is currently no tangible threat to oil supply, it is not yet clear how extensive and widespread the current protest movement could become." "Ultimately, any sign of instability in OPEC’s third largest producer will tend to provide at least a near-term lift until the situation appears to be trending towards resolution," he said in a daily note.Analysts at Commerzbank said that protests in Iran, so far, "have had no impact on the country's oil production or oil shipments." But they cautioned the situation could change if the U.S. were to impose fresh sanctions on the Iranian regime or dismantle the 2015 international agreement to curb Iran's nuclear program. "This justifies a certain risk premium on the oil price, though this should already be more than sufficiently reflected in the current price level," the Commerzbank analysts wrote in a note Wednesday. 

WTI/RBOB Rise After Biggest Crude Draw Since August - WTI/RBOB were sinking into the DOE data, despite API's solid crude draw data, after tagging $62/$1.81 overnight. Official data confirmed API's with the seventh straight week of crude builds (biggest crude build since Aug) and gasoline draws but it was distillates' massive build (most since Dec 2016) that stood out.A pull-back in prices might be seen if builds in gasoline and distillate inventories are larger than a crude oil decline, according to Bob Yawger, director of the futures division at Mizuho Securities USA. Yet, a second weekly drop in U.S. crude production would be “a bullish indicator.”Bloomberg's Intelligence Energy Analysts Fernando Valle and Vince Piazza note the potential weather effects...Although winter usually ushers in a slowdown in demand, refiners are being encouraged to use domestic crude instead of imports tied to the Brent benchmark, whose price remains elevated because of Middle East tensions.Cold weather in the Northern Hemisphere is having diverging effects on distillates and gasoline. It's making distillate refining margins larger, putting downward pressure on supplies, while gasoline cracks are likely to narrow as frigid temperatures discourage domestic demand and exports. DOE:

  • Crude -7.419mm (-4.7mm exp) - biggest draw since Aug 2017
  • Cushing -2.441mm
  • Gasoline +4.813m(+2mm exp)
  • Distillates +8.899mm (+500k exp) - biggest build since Dec 2016

This is the seventh straight week of crude draws and gasoline builds but it is distillates' massive 8.9mm builds (the most since Dec 2016) that stands out... As Bloomberg notes, Distillate shipments were the lowest since ports were shut post-Hurricane Harvey in September. That accounts for at least 2.5 million of the distillate stock build.

Crude Oil Price Steady as Gas, Diesel Stockpiles Soar - The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Thursday morning, showing that U.S. commercial crude inventories decreased by 7.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 424.5 million barrels. The commercial crude inventory remained in the middle of the average range for this time of year. Wednesday evening the American Petroleum Institute (API) reported that crude inventories fell by about 5.0 million barrels in the week ending December 29. Gasoline inventories rose by 1.8 million barrels and distillate stockpiles rose by 4.3 million barrels. For the same period, analysts polled by S&P Global Platts had consensus estimates for a decrease of 5.7 million barrels in crude inventories, a rise of about 1.3 million barrels in gasoline and an increase of 2.0 million barrels in distillate stockpiles.  Total gasoline inventories increased by 4.8 million barrels last week, according to the EIA, and remain above the upper limit of the five-year average range. U.S. refineries produced about 9.7 million barrels of gasoline a day last week, down by about 500,000 barrels a day compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged about 9.2 million barrels a day for the past four weeks, up about 2.1% compared with the same period a year ago. Before the EIA report, benchmark West Texas Intermediate (WTI) crude for February delivery traded up about 0.3% at around $61.77 a barrel, and it moved down to around $61.68 after the report’s release before returning to $91.78 minutes later. WTI settled at $61.63 on Wednesday and opened at $61.93 Thursday morning. The 52-week range on February futures is $43.76 to $62.21, and the high was posted this morning. Since mid-December WTI crude oil has added about $5 a barrel and settled on Wednesday at its highest price in three years at $61.63, and it posted a 52-week high at $62.21 early this morning. How long can the party go on?   The higher pricing is almost entirely due to the withdrawal of about 1.8 million barrels a day in global crude oil supplies resulting from the OPEC-initiated production cuts. The cartel expects that the crude market to balance this summer and run at a small deficit in the second half of 2018.

Oil closes above $62 as stockpiles shrink - Houston Chronicle: Oil closed above $62 a barrel for the first time in more than three years after U.S. crude stockpiles shrank by the most since the summer driving season. Futures jumped 0.6 percent in New York to the highest level since December 2014. American crude inventories slipped by 7.42 million barrels last week as refiners boosted operating rates to the highest level in more than a decade, signaling strong demand, the Energy Information Administration said on Thursday. Stored crude supplies have been dwindling for seven straight weeks and the scope of last week's withdrawal surprised analysts. "The crude oil inventory number was pretty healthy relative to consensus," Brian Kessens, who helps manage $16 billion in energy assets at Tortoise Capital Advisors LLC, said by telephone. "People are optimistic that there are some tailwinds behind the underlying crude oil price." Oil broke above $62 in New York as the U.S. supply picture appeared tighter, with crude inventories at Cushing, Oklahoma sliding below their five-year average. Prices have risen as the Organization of Petroleum Exporting Countries and Russia work to reduce global inventories through output reductions and amid concerns over the stability of the group's third-biggest producer, Iran. Tensions in Iran have also sparked fear that there could be an impact on oil production in the region. West Texas Intermediate for February delivery rose 38 cents to settle at $62.01 a barrel on the New York Mercantile Exchange. The front-month futures' premium over second-month WTI is at the widest in more than three years. Brent for March settlement advanced 23 cents to end the session $68.07 a barrel on the London-based ICE Futures Europe exchange, the highest since December 2014. The global benchmark crude traded at a premium of $6.17 to March WTI. U.S. crude inventories fell to 424.5 million barrels last week, while distillate supplies climbed by about 8.9 million barrels, the most since December 2016, the EIA said. U.S. refiners boosted operating rates for a third straight week, contributing to the decline in stored oil supplies. Stockpiles at the nation's key pipeline hub in Cushing dropped to about 49 million barrels. 

US shale returns to growth, posing problem for OPEC: Kemp - (Reuters) - U.S. crude oil prices have risen above $60 per barrel which should accelerate shale drilling and production in the next few months, provided the price increase is sustained.U.S. crude futures are trading over $60 for all delivery months between February and August 2018, an increase of about 40 percent since the middle of 2017 ( the futures strip for 2019, the benchmark against which U.S. shale producers can execute hedges for next year's output, is trading over $56, up almost 20 percent on the last six months.  Breakeven prices for shale vary tremendously between different companies, different basins and even different wells within the same play.But with futures prices above $60, a much wider range of wells and shale plays should now be profitable.Futures prices are sending a clear signal to shale firms that they should step up drilling programmes and boost output.  Experience shows changes in drilling rates generally follow changes in futures prices with a lag of about 16 to 20 weeks.  Futures prices have been rising fairly consistently for 27 weeks since hitting a trough around $43 in late June 2017. Drilling rates, as measured by the Baker Hughes rig count, started turning up 19 weeks later, consistent with normal behaviour. The rig count unexpectedly stalled in the second half of December, but the continued increase in futures prices strongly suggests the rig count will start increasing again and should rise at least through March and April.Shale production is already increasing strongly as a result of the growing number of wells drilled earlier in 2017 and completed in the second half of last year. Monthly completion rates across the seven major shale plays climbed from 700 in January 2017 to 921 in June and 1,086 in November, according to the U.S. Energy Information Administration.Production from the Lower 48 states excluding the Gulf of Mexico, much of it from shale formations, has surged from 6.6 million barrels per day (bpd) in January 2017 to 7.0 million bpd in June and 7.7 million bpd in October.

OilPrice Intelligence Report: Oil Prices Stumble As Traders Take Gains: Oil prices fell back on Friday during early trading after posting strong gains for much of the week. The tension in Iran has helped push prices up, and a strong U.S. crude inventory drawdown added some momentum on Thursday, although that bullish data was slightly offset by the large build in gasoline stocks. Overall, by Friday, it appeared that oil traders had sold off some positions to pocket some of the recent gains. The breather raises questions about the durability of the current rally.   The Trump administration has proposed to open up vast new territory for offshore oil and gas drilling, going so far as to push drilling in areas currently off limits, including the Atlantic, Arctic and Pacific Oceans, as well as parts of the Gulf of Mexico that haven’t seen drilling. The five-year plan for 2019-2024 would replace the Obama-era plan for 2017-2022, and it would include 47 possible auctions that encompass more than 90 percent of the U.S. outer continental shelf. The proposal will take time to finalize and would be vulnerable to legal challenges. . Energy stocks have significantly lagged behind the broader stock market, underperforming even in a period in which oil prices rebounded. But 2018 could be different. With oil prices at their highest level since mid-2015, the outlook looks better for energy stocks than it has in some time. On top of that, a long list of companies have trimmed costs and the oil majors have returned to positive cash flow. This has more investors gaining confidence in the investment case of oil and gas stocks. “2017 was a challenging year for investors but there are now real opportunities in the energy sector,” Olivia Markham, portfolio manager at BlackRock Commodities Income Investment Trust, told Reuters. According to Reuters, investment banks UBS, RBC and JP Morgan issued strongly positive outlooks for the oil and gas sector in recent weeks, while Barclays predicted European integrated oil companies could rise 20 percent from the third quarter. Others agree.

US Rig Count Dips As Oil Prices Hold Steady - The number of active oil and gas rigs dipped again this week, according to Baker Hughes data, decreasing by 5 rigs, bringing the total rigs to 924 rigs, which is an addition of 259 rigs for the 2017 calendar year.The number of oil rigs in the U.S. decreased by 5, while the number of gas rigs stayed the same. The number of oil rigs stands at 742 versus 529 a year ago. The number of gas rigs in the U.S. now stands at 182, up from 135 a year ago.At 9:52am EST, the price of a WTI barrel was down $.60 (-0.97%) to $61.41, while the Brent barrel was trading down $0.35 (-0.51%) to $67.72. Both benchmarks are up week on week.U.S. crude oil production has been on a steady upward trajectory during Q4 2017—a thorn in OPEC’s side which has managed to cap price spikes courtesy of various supply disruptions and unrest in Iran. The last week of the 2017 calendar year, crude oil production came in at 9.782 million bpd—the second highest level in 2017.Last week, Baker Hughes data showed an alarming drop off in Canada’s rig count—the oilfield services provider reported that Canada lost 58 oil rigs and 16 gas rigs, marking a 21-rig loss year over year. This week, Canada regained 38 rigs (36 oil, 2 gas), but this still leaves Canada 31 rigs in the whole year over year.The Permian basin rig count increased by 2 this week, standing at 400 rigs, or 133 above this same week last year. The Haynesville and Williston basins each lost a rig. At 1:07pm EST, WTI was trading at $61.39 (-$0.62) with Brent trading at $67.62 (-$0.45).

Baker Hughes: US rig count falls 5 units to 924 - - The US drilling rig count fell 5 units to 924 rigs working during the week ended Jan. 5, data from Baker Hughes indicate. This total is up 259 units from a year ago.Offshore this week dropped 1 unit to 17 rigs working. In the Gulf of Mexico, 17 rigs were drilling, 1 fewer than a week ago. The 906 total rigs drilling on land and the 1 rig drilling in inland waters were down 3 units and 1 unit, respectively, from last week.Rigs targeting oil fell 5 units to reach 742. A year ago this week, 529 rigs were drilling for oil. There were 182 units targeting gas this week, unchanged from last week. This time a year ago, 135 rigs were drilling for gas.Among the major oil and gas-producing states, Louisiana, with 56 total units running, saw the largest drop in rigs, down 6 units from last week. Oklahoma was down 2 units to 118 rigs working, and North Dakota was down 1 unit to 45. Eight states’ rig counts were unchanged this week, namely Pennsylvania, 36; Colorado, 34; Ohio, 27; California, 14; West Virginia, 13; Utah, 11; Alaska, 5; and Arkansas, 0.Wyoming gained 2 units from last week to 26 rigs working. Texas and New Mexico each gained 1 unit to 454 units and 76 units, respectively. Canada gained 38 units to 174 rigs from a week ago. There are 31 less rigs running than a year ago this week. Oil-directed rigs rose 36 units this week to 98, while those targeting gas increased 2 units to 76.

U.S. oil rig count ends 2017 40 percent above year-ago levels (Reuters) - The U.S. oil rig count rose by about 42 percent by end-2017 compared to the corresponding period last year, as energy companies boosted spending amid a recovery in crude prices. Drillers held the number of oil rigs steady for a second straight week at 747 in the week to Dec. 29. That was 222 more than the 525 rigs at the end of 2016, General Electric Co’s Baker Hughes Inc energy services firm said on Friday. The oil rig count, an early indicator of future output, remained unchanged in December after rising by 10 in November. It declined by 3 in the fourth quarter after falling by 6 in the third quarter. U.S. oil prices closed above $60 a barrel for the first time since mid-2015 on the final trading day of the year, ending 2017 with a 12 percent gain spurred by strong demand and declining global inventories. [O/R] Oil prices had been boosted by signs the global crude glut that has dogged the market since 2014 is shrinking, as a year of production cuts led by Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and Russia helped tighten the market.  In 2017, U.S. crude futures have averaged about $51 a barrel, easily topping last year’s $43.47 average. Looking ahead, futures were trading at about $59 for the balance of 2018 and $56 for calendar 2019. In anticipation of higher prices in coming years, U.S. financial services firm Cowen & Co said 21 of the roughly 65 E&Ps they track have already provided capital expenditure guidance for 2018 indicating a 13 percent increase in planned spending over 2017. Cowen, which has its own U.S. rig count, said it expects a gradual decline in the count in 2018. There were 929 oil and natural gas rigs active on Dec. 29, up 41 percent from the 658 at the end of 2016. The average number of rigs in service in 2017 was 876. That compares with 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas. U.S. crude oil production in October hit the highest in more than 46 years, rising by 167,000 barrels per day (bpd) to 9.64 million bpd, U.S. Energy Information Administration’s monthly production report on Friday.  Oil retreats on US output after hitting near 2-yr high (Reuters) - Oil prices fell on Friday, dropping from highs last seen in 2015, as soaring U.S. production undermined a 10 percent rally from December lows that was driven by tightening supply and political tensions in OPEC member Iran. Rising U.S. output and weaker refined products demand weighed on the market, traders said. “The holiday demand surge that we get is in the rearview mirror,” said John Kilduff at Again Capital. “That, coupled with the rebound in U.S. production, is helping to undercut some of the recent price strength.” While product demand is up from a year earlier, robust stockpiles and a cold snap in the U.S. could put a damper on demand for transportation fuels. Traders said political tensions in Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), had pushed prices higher. “The protests in Iran add more fuel to the already bullish oil market mood,” said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer. On Friday there was no new major outbreak of violence in the country, relieving some of the tension from the market. West Texas Intermediate crude CLc1 futures fell 57 cents to settle at $61.44 a barrel. WTI hit $62.21 the previous day, which was its strongest price since May 2015. Brent crude LCOc1 futures for March delivery fell 45 cents, or 0.7 percent, to $67.62 a barrel. The previous day it touched $68.27, also the highest price since May 2015. “Crude oil traders are probably getting some demand concerns at the $60 threshold for WTI and especially the risk that Brent – the biggie globally – could hang out above $65 for too long,”

Bromance to Break-Up: 4 Ways the OPEC Deal Could End Early - OPEC and Russia have surprised the industry with the success of their grand alliance as oil surges to a three-year high. As the unlikely bond enters a second year, there are challenges ahead.Here are four scenarios that could end their deal earlier than planned.

  • Street Fighting. Tension is flaring in OPEC members Iran and Venezuela, the two countries that RBC Capital Markets LLC says pose the biggest risk of supply disruption. If either nation shuts oil output as a result, fellow producers could just decide the restraints are no longer appropriate, and instead boost supplies to prevent a damaging price shock.Discontent with economic stagnation has sparked the biggest street protests since 2009 in Iran, rekindling memories of the 1979 revolution that paralyzed crude production. In Venezuela, food shortages and rampant inflation have threatened to trigger a massive social collapse. Even if the country can avoid that, the industry has already been hit so hard that production could slump anyway.
  • Mission Accomplished.  Russian President Vladimir Putin could heed pressure from his country’s biggest oil companies for a swift exit. Though he gave his blessings to extending the deal, Rosneft PJSC and Lukoil PJSC have warned that if the measures drag on too long they could lose market share to rivals. With oil prices rising and stockpiles draining, Russia could persuade other countries to end the deal before its time.
  • Temptation to Cheat. Last year, Iraq -- which initially resisted output curbs as it recovered from years of war -- was so slow to deliver on promised cuts that its petroleum minister was summoned to Riyadh. The country’s very public ambitions to expand capacity as soon as possible only add to doubt about its commitment.
  • Too Much of a Good Thing.  The OPEC-Russia strategy has always contained a contradiction: by boosting oil prices, they risk triggering a fresh surge of output from the original source of the glut -- U.S. shale. If the U.S. opens up more shale taps, Commerzbank AG says OPEC and Russia’s logical response will be to abandon their strategy and return to the days of pump-all-you-can. The unlikely bromance could turn out to be a victim of its own success.

Will new tax spur economic reform in UAE and Saudi? --  Saudi Arabia and the United Arab Emirates are ringing in the new year with the introduction of a five percent value-added tax (VAT) on most goods and services, in an effort to boost revenue and revive their oil-dependent economies.The tax, which goes into effect on Monday, will be imposed on a wide range of commodities, including food, clothes, fuel, entertainment, electronics, and telephone, water and electricity bills.Rent, real estate sales, airline tickets and school fees are excluded from the scheme.The move is part of a region-wide measure agreed upon by the six Gulf Cooperation Council (GCC) member states in Riyadh in 2016."The imposition of VAT will help to raise tax revenues of the Saudi government to be utilised for infrastructure and developmental works," Mohammed Al-Khunaizi, a member of Saudi's Shoura Council, said on Sunday. The other GCC members - Qatar, Bahrain, Oman and Kuwait - have until January 1, 2019, to impose the tax.

Saudis Get Extra Pay After Price Surge Sparked Public Complaints - King Salman ordered extra pay for Saudi government workers and soldiers this year after the implementation of value-added taxation and a surge in fuel prices stirred grumbling among citizens, highlighting the kingdom’s struggle to overhaul its economy without risking a public backlash.Royal orders issued early Saturday restored an annual pay raise for Saudi civil servants, suspended as part of attempts to rein in a hefty public-sector wage bill. The monarch also ordered a 5,000-riyal ($1,333) bonus for soldiers fighting in the kingdom’s war in Yemen and granted Saudis working for the state an extra 1,000 riyals a month as a “cost of living” allowance for a year. Saudi citizens, including some prominent writers, took to social media and television to complain about rising prices after the introduction of a 5 percent VAT as well as a substantial increase in electricity tariffs and gasoline prices as of Jan. 1. The measures were part of Crown Prince Mohammed bin Salman’s plan to raise non-oil revenue and repair public finances strained by low oil prices. The handouts show how hard it is for Saudi rulers to overhaul a decades-old social contract based on government largesse for political loyalty, even after Prince Mohammed, 32, tightened his grip on power to emerge as the kingdom’s predominant leader. Last year, King Salman also reversed cuts to public sector salaries. Finance Minister Mohammed Al-Jadaan, appearing on state television to explain the reasons behind the price increases, struggled to keep up with repeated questions over the impact on citizens. Calls for the return of annual pay raises for public sector workers were persistently trending on social media. King Salman said he issued the orders after Prince Mohammed, his son and heir, explained that the recent measures “would increase the burden on some citizens,” according to the royal decree published by the official Saudi Press Agency.The handouts will cost the state more than 50 billion riyals, Saud Al-Qahtani, an adviser to the royal court, said on his Twitter account.

Iran blocks social media access as protests turn deadly | South China Morning Post: Iran on Sunday blocked access to Instagram and a popular messaging app used by activists to organise and publicise the protests now roiling the Islamic Republic, as authorities said two demonstrators had been killed overnight in the first deaths attributed to the rallies. The demonstrations, which began on Thursday over the economic woes plaguing Iran and continued on Sunday, appear to be the largest since protests following the country’s 2009 presidential election. They were fanned in part by messages sent on the Telegram messaging app, which authorities blocked on Sunday along with the photo-sharing app Instagram, which is owned by Facebook.Many in Iran are learning about the protests and sharing images of them through Telegram, a mobile phone messaging app popular among the country’s 80 million people. On Saturday, Telegram shut down one channel on the service over Iranian allegations it encouraged violence, something its moderator denied. On Sunday, Telegram CEO Pavel Durov wrote on Twitter that authorities had blocked access to the app. “Iranian authorities are blocking access to Telegram for the majority of Iranians after our public refusal to shut down … peacefully protesting channels,” he wrote Iran’s state television news website,, quoted an anonymous source saying that social media in Iran would be temporarily limited as a safety measure.“With a decision by the Supreme National Security Council, activities of Telegram and Instagram are temporarily limited,” the report said, without elaborating.

Iran protests: 'Iron fist' threatened if unrest continues - BBC News: Iran's Revolutionary Guards have warned anti-government protesters they will face the nation's "iron fist" if political unrest continues. Three days of demonstrations over falling living standards have become the biggest show of dissent since huge pro-reform rallies in 2009. A Revolutionary Guards commander said the protests had degenerated into people chanting political slogans and burning public property. Two protesters died of gunshot wounds. The authorities in Dorud in western Iran said security forces did not open fire on demonstrators, and blamed the deaths instead on Sunni Muslim extremists and foreign powers. Correspondents say the reference to foreign intelligence agencies was intended to mean Saudi Arabia. Iran has imposed "temporary" restrictions on social networks Telegram and Instagram. The decision was taken "to maintain tranquillity and security of society", a source told state news agency IRIB. Telegram CEO Pavel Durov tweeted that the action was taken after his company refused to shut down channels on the messaging app used to organise peaceful protests.

Jihadist Group Blows Up Oil Pipeline In Iran, In Midst Of Protests - Overnight Friday a well-known Sunni jihadist group which operates in Iran posted a video to its media accounts purporting to show an attack on an oil pipeline in Iran's southern Khuzestan province, which has historically been a restive area in which Sunni Arab separatists have been active. Though Iran has yet to confirm the attack, the terror group Ansar al-Furqan Ahwaz Martyrs Brigade claimed responsibility in an official statement, which noted "This operation was conducted to inflict losses on the economy of the criminal Iranian regime." Ansar al-Furqan is a relatively new group, having been founded in 2013, and has ties to Syria’s Al-Qaeda-linked Al-Nusra Front (currently called Ha’yat Tahrir al-Sham). It is comprised primarily of Baluchi Salafist militants which are hostile to the Iranian government - the Baluch people, an entho-linguistic group, are spread primarily throughout southern Iran, Afghanistan, and western Pakistan. Both the video and written statement identify the location of the attack as near near Omidiyeh, a city in Khuzestan Province - an area of the country which has witnessed periodic uprisings and sporadic bombings going back to 1979 and into the mid-2000's. Meanwhile, late in the day Friday the US State Department issued a formal condemnation of the Iranian government, calling the regime "a rogue state whose chief exports are violence, bloodshed, and chaos" while announcing support for protesters. As we noted, statements now coming from US officials fit a familiar script which seem to roll out when anyone protests in a country considered an enemy of the United States - no matter the motivations and grievances of the demonstrators, whether economic and local or otherwise.

Rouhani defends right to protest but rejects violence -- Iran's President Hassan Rouhani says people in the country have the right to protest but warned that violence is unacceptable. His comments on Sunday were the first since widespread anti-government protests, the biggest show of dissent since huge rallies in 2009, broke out in the Islamic Republic earlier this week. "It should be clear to everyone that we are people of freedom. According to the constitution and citizens' rights, people are free to express their criticism and to protest," Rouhani said in televised comments from Iran's capital, Tehran. "However, we need to pay attention to the manner of that criticism and protest. It should be in such a way that it will lead to the improvement of the people and state," he added. "People have the right to protest, but those demonstrations should not make the public feel concerned about their lives and security."Iranians began protesting on Thursday in the second-largest city of Mashhad, rallying against the clerical elite, which they blame for economic hardships and alleged corruption. The rallies have since gained momentum and spread to other cities, including Tehran, where clashes between students and police were reported on Saturday. On Sunday, Mehr, the semi-official Iranian news agency, reported that at least two protesters died on Saturday night in Dorud, a city in western Iran, although there is confusion over who is responsible for the deaths. Habibollah Khojastepour, security deputy of the governor of Lorestan province, said the presence of "agitators" prevented a peaceful end to the protest, according to Mehr. Khojastepour said neither police nor security forces fired at the protesters. He did not provide a reason for their deaths.  

Death toll jumps as Iran protests continue -- At least 12 people have been killed in Iran, according to local news media reports, as anti-government demonstrations continued across the country for a fourth night.Thousands have engaged in protests since the first rallies against the high cost of living on December 28, marking the biggest show of dissent in Iran since huge rallies took place in 2009.State TV reported on Monday that 10 people were killed in several cities on Sunday, and showed footage of damage allegedly caused by protesters.The report did not provide further details about the deaths.Local media reports said that of those who died, six were killed in Twiserkan, in Hamedan province, and three others in Shahin Shahr, in Esfahan province.Another person was killed in Izeh, while two others died in Dorud, in western Iran, late on Saturday. Some 400 people have been arrested across Iran in the protests, state news agencies have reported.

Iran – Early U.S. Support For Rioters Hints At A Larger Plan -- In Iran - Regime Change Agents Hijack Economic Protests we looked at the developing U.S.-Israeli operation to instigate a revolt in Iran. What follows are a few more background points and a view on the developments since. A color revolution or revolt in Iran have only little chances of success. But even as the fail they can be used as pretext for additional sanctions and other anti-Iranian measures. The current incidents are thus only one part of a much larger plan. The "western" democracies are used to distinguish political parties as left or right with fixed combinations of economic and cultural policies. The "left" is seen as preferring a social economy that benefits the larger population and as cultural liberal or progressive. The right is seen as cultural conservative with a preference for a free market economy that favors the richer segments of a nation. The political camps in Iran are different. The conservatives, or "principalists", are cultural conservative but favor economic programs that benefit the poor. Their support base are the rural people as well as the poorer segments of the city dwellers. The last Iranian president near to them was Mahmoud Ahmedinejad.  The current Iranian president Hassan Rouhani is a member of the "reformist" camp. His support base are the merchants and the richer parts of the society. He is culturally (relative) progressive but his economic polices are neoliberal. The protests on December 28 and 29 were about these and other economic issues. Such protests have regularly occurred in Iran throughout the decades. But the current ones were soon hijacked by small groups which chanted slogans against the Iranian system and against the strong Iranian engagement in Syria and Palestine. These are not majority positions of the 80 million inhabitants of Iran:  The small groups that hijacked the protests against Rouhani's economic polices were heavily promoted by the usual suspects of U.S. influence operations. Avaaz, the RAND cooperation, Human Rights Watch and others immediately jumped onto the bandwagon. (True to form HRW's Ken Roth used a picture of a pro-government rally to illustrate the much smaller anti-government protests.) The smaller groups that hijacked and publicized the demonstration seem well coordinated. But they are far from a genuine movement or even a majority. On the morning of December 30 large demonstrations in support of the Iranian republic were taking place in several cities. In Tehran several thousand people took part.

Iran protests have violent night; at least 13 dead overall (AP) — Protests across Iran saw their most violent night as "armed protesters" tried to overrun military bases and police stations before security forces repelled them, killing 10 people, Iranian state television said Monday. The demonstrations, the largest to strike Iran since its disputed 2009 presidential election, have seen five days of unrest across the country and a death toll of at least 13 with the slaying of a police officer announced late Monday. The protests began Thursday in Mashhad over Iran's weak economy and a jump in food prices and have expanded to several cities, with some protesters chanting against the government and the supreme leader, Ayatollah Ali Khamenei. Hundreds of people have been arrested. Iranian state television aired footage of a ransacked private bank, broken windows, overturned cars and a firetruck that appeared to have been set ablaze. It said 10 people were killed by security forces during clashes Sunday night. "Some armed protesters tried to take over some police stations and military bases but faced serious resistance from security forces," state TV said. In a later report, state TV said killed six people were killed in the western town of Tuyserkan, 295 kilometers (185 miles) southwest of Tehran, and three in the town of Shahinshahr, 315 kilometers (195 miles) south of Tehran. It did not say where the 10th person was killed.

China Orders Media To Stop Reporting Iran Unrest, Desires Stability For Massive Investments As widespread protests in Iran have now reached a full week, a new censorship directive from the Chinese government has ordered newsrooms across the nation to cease reporting on Iran demonstrations. The leaked directive, which has been translated and published by the China Digital Times, notifies journalists to "not report any more on the demonstrations in Iran" and that "follow-up reports require further notice from superiors." The China Digital Times reports the government instructions as follows:The following censorship instructions, issued to the media by g  overnment authorities, have been leaked and distributed online. The name of the issuing body has been omitted to protect the source.Do not report any more on the demonstrations in Iran. Follow-up reports require further notice from superiors. Relevant information that has already been transmitted and is from an authoritative source and is compliant should no longer be hyped but do not delete it. [Chinese] News of the Iran protests have been trending on Chinese social media and have received intensive coverage in state and independent media. New York Times Hong Kong correspondent Austin Ramzy observed, "Chinese activist Twittersphere has been very focused on the Iran protests, cheering the expanding demonstrations, with the hope that something like this could happen at home." However, authorities in Beijing have as their chief driving concern that Iran maintain stability as China has already positioned itself to be the chief international investor in Iranian infrastructural projects, to the tune of tens of billions of dollars. When asked about the Iran protests at a regularly scheduled press conference on Tuesday, China’s foreign ministry spokesperson Geng Shuang simply gave a one-sentence answer and moved on, saying, “China hopes that Iran can maintain stability and achieve development.” This decidedly conservative and reserved pro-Tehran response has much more to do with protecting Chinese investment and trade growth in an emerging market, than it does over questions that Iran protests could inspire similar movements domestically.

Iran deploys Revolutionary Guards to quell 'sedition' in protest hotbeds (Reuters) - Iran’s elite Revolutionary Guards have deployed forces to three provinces to put down anti-government unrest after six days of protests that have rattled the clerical leadership and left 21 people dead. The protests, which began last week over economic hardships suffered by the young and working class, have evolved into a rising against the powers and privileges of a remote elite, especially supreme leader Ayatollah Ali Khamenei. The unrest continued to draw sharply varied responses internationally, with Europeans expressing unease at the delighted reaction by U.S. and Israeli leaders to the display of opposition to Iran’s clerical establishment. Defying threats from the judiciary of execution if convicted of rioting, protests resumed after nightfall with hundreds hitting the streets of Malayer in Hamadan province chanting: “People are begging, the supreme leader is acting like God!” Videos carried by social media showed protesters in the northern town of Nowshahr shouting “death to the dictator”. In a sign of official concern about the resilience of the protests, the Revolutionary Guards commander, Major General Mohammad Ali Jafari, said he had dispatched forces to Hamadan, Isfahan and Lorestan provinces to tackle “the new sedition”. Most of the casualties among protesters have occurred in those regions of the sprawling Islamic Republic. The Revolutionary Guards, the sword and shield of Iran’s Shi‘ite theocracy, were instrumental in suppressing an uprising over alleged election fraud in 2009 in which dozens of mainly middle-class protesters were killed. Khamenei condemned that unrest as “sedition”. 

Iran protests could hurt clerics but Rouhani has most to lose, say insiders (Reuters) - Iranian authorities are concerned that nationwide unrest will undermine the clerical establishment and want to stamp out the protests quickly, senior government officials say. But the person with the most to lose is President Hassan Rouhani. While several senior officials said there was concern that prolonged unrest would damage the legitimacy and influence of the country’s religious leaders, few insiders see the unrest as an existential threat to that leadership, which has ruled since the 1979 revolution and is now controlled by Supreme Leader Ayatollah Ali Khamenei, the ultimate authority in Iran’s system of dual clerical and republican rule. The biggest loser, they say, is likely to be Rouhani, who is much more closely tied to the country’s economic policies. “Of course Rouhani and his government will have less power afterwards, especially because his economic policy was criticized during the unrest,” said political analyst Hamid Farahvashian. “He will be a lame-duck president and Khamenei will have more power.” Much of the protesters’ anger has focused on what Rouhani and his government have failed to deliver: an economic boom promised as the payoff for the 2015 deal that curbed Iran’s disputed nuclear program in return for world powers lifting sanctions. Protesters are angry that Iran’s youth unemployment rate is edging towards 30 percent, want higher wages and an end to alleged graft. They have chanted slogans against all of Iran’s leaders, including the clerical elite, and attacked police vehicles, banks and mosques as the unrest widened. “The continuation of the protests will lead to a legitimacy crisis,” said one senior official close to Rouhani, asking not to be named due to the sensitivity of the issue.

US Intelligence Reportedly Gives Israel Green Light To Assassinate Iran's Top General -  According to reports circulating widely in Israeli media today, the United States has quietly given Israel the green light to assassinate Iran's top military officer, Iranian Revolutionary Guards al-Quds Force commander Maj. Gen. Qassem Soleimani. The leader of Iran's most elite force also coordinates military activity between the Islamic Republic and Syria, Iraq, Hezbollah, and Hamas - a position he's filled since 1998 - and as Quds Force commander reports directly to the Supreme Leader of Iran, Ali Khamenei, and oversees Iran's covert operations in foreign countries. Iran's Revolutionary Guards have vowed to crack harshly down on protests currently gripping multiple major cities across the country, now in their fifth day, and after a particularly bloody night which saw 12 demonstrators killed - some of them reportedly shot by security forces. The report, though unconfirmed, originated in a Kuwaiti newspaper and is now going viral through a Times of Israel story. The Times of Israel summarizes the context as follows: Thursday’s report by al-Jarida, which has been known to publish improbable-sounding stories about Israel, was widely picked up by Israeli media. There was no immediate reaction to the report from Jerusalem or Washington. Three years ago, Israel came close to assassinating Soleimani near Damascus, al-Jarida quoted unnamed source as saying, but the Americans tipped off the Iranians against the background of intense disagreement between Washington and Jerusalem.  And concerning the current go-ahead for new assassination plans reportedly given by US intelligence to the Israelis: The source was quoted by the paper as saying that Soleimani’s assassination would serve both countries’ interests and that US authorities have given Israel the go-ahead to carry it out.

As guns fall silent, Russia to shape Syria's political endgame | Asia Times: Many analysts predict that the upcoming year will witness a phased end to the Syrian conflict — at least, militarily. According to the Russian Ministry of Defense, 85% of Syrian territory has been liberated from ISIS and other groups that had controlled entire cities and towns since 2012. Aleppo was re-taken by the Russian and Syrian armies in December 2016, followed more recently by Albukamal and al-Mayadeen in the Syrian northeast. In early December 2017, President Vladimir Putin landed in Syria and, from Russia’s military base in Hmeimeem, on the Syrian coast – he announced a thundering “mission accomplished,” promising to bring Russian troops back home in the weeks and months ahead. Excess troops that had been shipped to Syria in 2017 will be returning to Russia in the first weeks of 2018.This will not apply to the 1,200 Russian military police deployed in the countryside of Aleppo and Damascus, or to the 1,000 troops monitoring the ceasefire in southern Syria. The Hmeimeem base will remain intact – it was leased to the Russians in January 2017 for 49 years, extendable for another 25. Putin hopes that other stakeholders in the Syrian conflict – like Iran, Hezbollah, Turkey, and the United States – will take their cue from him and start evacuating soon. Politically, Putin hopes to jumpstart peace talks at the Red Sea resort of Sochi some time in January or February. Over 1,000 Syrians will be invited to attend a “national dialogue conference” hosted by the Russian Foreign Ministry, ahead of Russia’s presidential elections in March. They will be tasked with signing off an endgame to the Syrian conflict, in accordance Putin’s terms and conditions. 

Likud party calls for de-facto annexation of Israeli settlements (Reuters) - Prime Minister Benjamin Netanyahu’s Likud party unanimously urged legislators in a non-binding resolution on Sunday to effectively annex Israeli settlements in the occupied West Bank, land that Palestinians want for a future state. By enacting civilian law over settlements, the move could streamline procedures for their construction and expansion. That land is currently under military jurisdiction and Israel’s defense minister has a final say on building there. The settlers are subject to Israeli civilian law. “We will now promote the recognition of our sovereignty of the Jewish settlements in Judea and Samaria (the West Bank). ... We must begin to enact this sovereignty, we have the moral right and obligation towards our settler brothers,” Public Security Minister Gilad Erdan told a meeting of Likud’s Central Committee. Netanyahu is not bound to follow the resolution. He did not attend the meeting, which attracted several hundred delegates including ministers, legislators and party officials. The Likud Central Committee is the party’s governing body. At least two previous Likud Central Committee decisions have been ignored by party leaders:  In 2002, it voted against the creation of a Palestinian state, but then-Prime Minister Ariel Sharon said he would act as he saw fit and Netanyahu in 2009 voiced conditional support for the establishment of a Palestinian state in a landmark speech. Political commentators said the decision might bolster right-wing support for Netanyahu, who could seek a public mandate in an early election as he awaits possible criminal indictments against him on corruption suspicions. He denies wrongdoing.

Why Is the State of Israel So Afraid of 16-Year-Old Ahed Tamimi? -- Sixteen-year-old Ahed Tamimi was back in court Thursday, with the judge ruling for the third time that her detention is extended, this time for another five days. Over the past week and a half, Ahed has been shuffled between numerous Israeli prisons and police stations. She has been held in cold isolation cells with cameras pointed at her 24 hours a day. Repeatedly, without a parent or lawyer present, they have attempted to interrogate her. The reasoning for the judge’s rulings to extend her detention is that she “poses a risk” to the military and the Israeli government's case against her. Israel is right that Ahed Tamimi poses a risk. But it isn’t a risk to one of the most heavily armed and advanced militaries in the world or to the legal case being built against her. The risk she poses is in her refusal to submit to the Israeli demand that Palestinians acquiesce to their own occupation. Israeli logic is that Palestinians should cooperate with their own oppression. They should move quietly through the checkpoints, open their bags, not look their occupiers in the eye and not challenge or protest the theft of their lands, resources and freedoms. Israeli logic is that if they don’t like it, they can leave. Actually, they would strongly prefer that Palestinians leave. The strategy is to make life so unbearable for Palestinians, that they leave willingly. This even has a name: “voluntary transfer.” On Friday, December 15, during a protest of President Trump’s announcement of Jerusalem as the capital of Israel, Ahed’s 14-year-old cousin Mohammed Tamimi was shot in the face with a rubber bullet. He was taken to the hospital where he required surgery and a was placed in a medically induced coma. A few hours later, when armed soldiers came to Ahed’s home demanding to enter, she pushed back. She slapped and kicked them, and screamed that they could not come in.

Israel indicts Palestinian teen activist Ahed Tamimi - Israeli authorities are seeking 12 charges against Ahed Tamimi, a prominent 16-year-old Palestinian activist filmed slapping and kicking two Israeli soldiers in the occupied West Bank.The teenager was detained on December 19, four days after the video showing her confronting the soldiers outside her family's home in the village of Nabi Saleh went viral.  The incident occurred moments after Israeli forces had shot Ahed's 15-year-old cousin point-blank in the face with a rubber bullet.The wounded minor experienced severe internal bleeding and was put in a medically-induced coma for 72 hours.Ahed's 20-year-old cousin Nour, who also appeared in the video, as well as her mother Nariman, were arrested soon afterwards.  During a hearing on Monday at Israel's Ofer military court near Ramallah, Ahed faced 12 charges, including assaulting an Israeli soldier, interfering with a soldier's duties and two past instances of stone-throwing, according to her lawyer Gaby Lasky.  Lasky told Al Jazeera that Nariman was charged with "incitement" for uploading the video on social media, as well as another charge of assault. Ahed's father, Bassem, told Al Jazeera that it was very likely his daughter would be sentenced and imprisoned over the charges. "They built the case around her specifically to try to keep her in prison as long as they can," he said.

Nabi Saleh Is Where I Lost My Zionism -- A short video of 16-year-old Ahed Tamimi slapping an Israeli soldier has dominated the Israeli media for the past week, and received prominent coverage internationally as well. Ahed, a Palestinian girl from the West Bank village of Nabi Saleh, makes a big impression with her eye-catching mane of blonde hair, the fierce, intelligent expression in her blue eyes — and her fearlessness. One of the most striking aspects of the immense discussion generated by the video is the near-binary contrast between what Israelis and their advocates see, and what everyone else sees. For Israelis, one of their soldiers was provoked, almost unbearably, but still managed to rise above the situation. For almost everyone else, the video shows an unarmed adolescent — who could easily, based on her appearance, be an Israeli teenager shopping at the mall — bravely confronting an armed soldier in her own village. Even without knowing the circumstances, a fully-grown man in combat gear and carrying a powerful weapon refraining from hitting a much smaller, unarmed adolescent girl, seems not remarkably praiseworthy but rather a response predicated on basic humanity and ethics. The Israeli media has, for the most part, promoted the army’s narrative about the incident — of a restrained and mature soldier who dealt admirably with a difficult and stressful situation involving enemy actors. In the segment below, Yaron London, the host of an eponymously named primetime news magazine program on Channel 10, mirrors the perspective of the army. London’s guests are Or Heller, the station’s military affairs correspondent, and Jonathan (Yonatan) Pollak, a veteran anti-occupation activist:

Palestinians are watching Saudi Arabia closely - Palestinians have been carefully watching Saudi Arabia drawing closer to Israel.The past few months have seen not only a flood of Saudi statements on social media supporting normalisation with Israel (some saying that Saudi is "more important" than Palestine and others apparently dreaming of Israel becoming Saudi's top vacationing spot), but also a flurry of diplomatic activity between Riyadh and Tel Aviv.Saudi and Israeli political leadership agree on a number of issues, the most important of which is the need to curb Iran's growing influence and to keep the US engaged in the Middle East. Pursuing these common interests, the Saudis and the Israelis have intensified their efforts for a formal normalisation of relations.In June 2017, Anwar Eshki, former Saudi general and current head of the Middle East Center for Strategic and Legal Studies, said that Saudi Arabia would accept normalisation with Israel if it, in turn, accepted the Arab peace initiative. He also said that if Saudi Arabia did so, the rest of the Islamic world would follow suit.In October, former head of Saudi intelligence Prince Turki al-Faisal took part in a forum in New York with the former head of Mossad, Efraim Halevy. In November, Israeli Chief of Staff General Gadi Eizenkot had an interview with Saudi website Elaph. The same month, the Israeli minister of communications, Ayoub Kara, invited Saudi Mufti Abdulaziz Al Sheikh to visit Tel Aviv.

South Korea Seizes 2nd Ship Suspected Of Violating UN Sanctions On Oil Sales - After we reported yesterday that South Korean authorities had seized a ship suspected of illegally delivering oil to North Korea via clandestine ship-to-ship transfers, Reuters  reported Sunday that the South also seized a Panama-flagged vessel suspected of violating UN sanctions restricting oil sales to North Korea. The seizure was the second to be revealed by South Korea within a few days, as the United Nations steps up efforts to squeeze essential oil supplies to the reclusive North following its nuclear or ballistic missile tests. The ship, the KOTI, was seized at Pyeongtaek-Dangjin port, the official told Reuters, without elaborating, due to the sensitivity of the issue. The port is on South Korea’s west coast, south of Incheon. A marine official also confirmed the seizure, which he said was done “recently”. The KOTI’s estimated time of arrival at the port was Dec. 19, according to VesselFinder Ltd., a tracking service provider. The ship can carry 5,100 tonnes of oil and has a crew mostly from China and Myanmar, Yonhap News Agency reported, adding that South Korea’s intelligence and customs officials are conducting a joint probe into the vessel. A Foreign Ministry spokesman confirmed the probe, declining to provide details.

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