Sunday, February 18, 2018

natural gas supplies falling faster than winter weather accounts for; Utica drillers shifting to oil bearing rock

oil prices rebounded more than 4% this week, after dropping by nearly 10% in a global market panic the prior week, as the financial markets recovered and carried other prices higher as well...after falling a total of $6.60 a barrel over the prior six trading sessions, oil prices for March delivery steadied on Monday, rising 9 cents to $59.29 a barrel, as global markets stabilized and the US dollar fell in value...not much changed on Tuesday either, as a continually weaker dollar sparked a rebound from an early slide down after the International Energy Agency forecast that oil supplies would outstrip demand, with oil ending the day down 10 cents at $59.19 a barrel...oil prices also started lower on Wednesday morning, but then rebounded sharply after the weekly EIA data showed that crude inventories rose less than expected the prior week, with oil prices finishing $1.41 higher at $60.60 a barrel...the Wednesday rally carried into Thursday, as higher US oil prices forced those who has sold oil they didn't own to buy it back to cover their bets, with oil prices ending the session 74 cents higher at $61.34 a barrel...oil prices continued higher for a third session on Friday, carried by a strong rebound in global stock markets and a much weaker dollar, as oil ended up another 34 cents at $61.68 a barrel, a closing price that represented a 4.2% increase on the week, in the first weekly gain in three weeks...

meanwhile, natural gas prices were slightly lower this week, after running up to a 12 month high three weeks ago, and then crashing to an 18 month low last week, with this week seeing the smallest price change and least price volatility in the past 7 weeks...after opening lower, natural gas prices for March delivery were down every day this week except Tuesday, when they rose 4.2 cents to $2.594 per mmBTU on what was called 'technical buying' in response to oversold conditions...other than that, ongoing forecasts of warmer weather pushed prices lower on Wednesday and Thursday, in spite of the weekly gas report on Thursday that indicated a larger than expected withdrawal of natural gas supplies from underground storage...natural gas prices then fell 2.2 more cents on Friday to end the week at $2.558 per mmBTU, for a net loss of 2.6 cents, or 1.0% on the week...

this week's natural gas storage report indicated that our natural gas in storage fell by 194 billion cubic feet to 1,884 billion cubic feet in the week ending Friday, February 9, 2018, which left our gas supplies 577 billion cubic feet, or 23.4% lower than the 2,461 billion cubic feet that was in storage on February 10th of last year, and 433 billion cubic feet, or 18.7% below the five-year average of 2,317 billion cubic feet for the sixth week of the year...the typical natural gas withdrawal for the sixth week of the year has averaged 154 billion cubic feet, so the withdrawal during the cited week exceed the norm by 40 billion cubic feet...

now, one would think that a week during the middle of winter that saw a much larger than normal withdrawal of natural gas from storage would have been colder than normal, but that was not the case this week, as we'll see in the graph below...

February 16 2018 heating demand for week ending February 9th

the above graph, of population weighted heating degree days (PWHDD) nationally, came from a package of natural gas graphs that John Kemp, senior energy analyst and columnist with Reuters, emailed out on days are a measure of daily heating requirements used by utilities and suppliers of heating fuels to determine what the daily demand for heating will be, so they can adjust their production or delivery schedules accordingly...they are computed by taking the average daily temperature and subtracting that figure from 65F, which is considered to be the temperature when most buildings will start to need heating....hence, the colder it gets, the greater the the number of heating degree days are required for a given location...John's graph is an average of heating degree day readings from around the country, weighted by population, to give us an average daily heating requirement for the entire country...

in this graphic, then, the yellow graph shows the historical average number of heating degree days needed per capita over the typical US heating season (starting with zero in July) and the red dots show the actual population-weighted heating degree days for each day this heating season of 2017-2018....while those dots are difficult to read and line up, you can orient what the graph shows by noting that the highest number of degree days was on January 1st, when the all time record for natural gas consumption was set...the 7 red dots farthest to the right are for the current heating week, and as John's headline says, population weighted heating degree days for that period totaled 192, slightly less than the historical 196 average for the same period in February (as we can see the majority of the right-most red dots are a bit below the yellow line) we see that despite the fact that our national heating requirements were slightly below normal for the week, we still had to withdraw more than 25% more natural gas than normal over the same period...

next we have a graphic which compares this year's heating requirements to the previous two years and to the historical also came from the same emailed package of natural gas graphs from John Kemp as the graph above..

February 16 2018 seasonal heating demand as of February 9th

in this graph, the difference between normal heating demand and the cumulative heating demand for each of the past three heating seasons is shown daily over the span of a year,  with the divergence in the current year shown as a solid yellow line, last year's divergence shown as a dashed yellow line, and with the divergence from normal of the 2015/2016 heating season shown as a dashed red line....note that all three graphs trend downward, or negative from zero, because all three years experienced warmer than normal temperatures, hence less degree days than normal, over their heating seasons...i know that here in the Midwest it's been colder than normal most of this winter, but at the same time the Pacific Coast states, the Rockies, and much of the south has been warmer than normal, resulting in that downward trending solid yellow line for the entire US that we see for this year...note that had it been colder than normal nationally, the graph would be moving upwards, into a range above zero on the graph...for this year's solid yellow line, the pattern the graph traces describes a cool September, and a generally warmer than normal October, November and early December, a colder than normal January except for one week, and a gradual moderation the heading on the graph says, this year's cumulative heating demand has actually been 130 population-weighted heating degree days (PWHDD) below normal, compared to the much warmer prior two years that had heating requirements 497 PWHDD and 449 PWHDD below normal respectively...but while our heating requirements were modestly below normal so far this year, we still have had to pull more natural gas out of storage than any other year on record, except for the "polar vortex" dominated winter of 2014, which we'll see in the next graph....

February 16 2018 gas in storage as of February 9th

the above graph also came from that emailed package of natural gas graphs from John Kemp of Reuters, and it shows the quantity of natural gas in storage, in billions of cubic feet, in the lower 48 states over the period from January 2016 up until the week ending February 9th 2018 as a red line, the quantity of natural gas in storage in the lower 48 states over the period from January 2015 up until the end of 2017 as a yellow line, and the average of natural gas in storage over the 5 years preceding those same dates shown as a dashed blue line...also shown by the light blue shaded background is the range of the amount of natural gas in storage for any given time of year for the 5 years prior to the years shown by the graph…thus the light shaded area also shows us the normal range of natural gas in storage as it fluctuates from season to season, with natural gas in storage underground normally building to an annual maximum by the middle of October, falling through the winter, and usually bottoming out at the end of March, depending of course on the weather related heating requirements during any given season...

as John Kemp notes on the top of this graph, our supplies of natural gas are well below the average range and near the bottom of that average line; in fact, if we look at the Historical Record of Natural Gas in Working Underground Storage for the Lower 48 States, we see that 2014 was the only year on record to have less natural gas in storage as of the 2nd week of February than the 1,884 billion cubic feet that we had as of this week's report....yet as we saw in the 2nd graph above, our heating requirements so far this year have been modestly below normal, so the reason that our supplies of natural gas are now well below average hasn't been the weather...rather it has been our increasing use of natural gas to generate electricity, and increasing liquefaction of natural gas (LNG) for export, (which had reached as much as 3.2 billion cubic feet per day at the Sabine Pass export terminal alone) that have been responsible for drawing down our supplies of natural gas faster than our stagnant gas production can replace tracing the dashed blue line on the graph above, we can see that over a normal heating season, our natural gas supplies are drawn down from an average of around 3,750 billion cubic feet in mid-October to an average of around 1,600 billion cubic feet by the end of March...hence, over a 167 day heating season, the Sabine Pass export terminal alone would be converting 534.4 billion cubic feet, or nearly one-quarter of our normal winter usage, into LNG to be shipped to Europe and Asia...seeing that, just imagine what will happen when we hit a cold winter after all the LNG export facilities now under construction are brought online and also draw from that supply...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering the week ending February 9th, indicated that our oil refineries slowed considerably while our oil imports and oil production were little changed, and as a result we added crude oil to storage for the third week in a row...our imports of crude oil fell by an average of 4,000 barrels per day to an average of 7,888,000 barrels per day during the week, while our exports of crude oil rose by an average of 35,000 barrels per day to an average of 1,322,000 barrels per day, which meant that our effective trade in oil worked out to a net import average of 6,566,000 barrels of per day during the week, 39,000 barrels per day less than the net imports of the prior the same time, field production of crude oil from US wells rose by 20,000 barrels per day to another record high of 10,271,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 16,837,000 barrels per day during the reporting week..

during the same week, US oil refineries were using 16,162,000 barrels of crude per day, 635,000 barrels per day less than they used during the prior week, while at the same time 323,000 barrels of oil per day were being added to oil storage facilities in the US....hence, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports and from oilfield production was 352,000 barrels per day more than what refineries reported they used during the week plus what was added to account for that disparity, the EIA needed to insert a (-352,000) 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, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"...(how this weekly data is gathered, and the reason for that "unaccounted" oil, is explained here)...since there was a 630 barrel per day change in that 'unaccounted for oil', from +278,000 barrels per day last week to -352,000 barrels per day this week, our week over week changes are correspondingly unreliable...

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 8,063,000 barrels per day, 5.0% less than the 8,491,000 barrel per day average we imported over the same four-week period last year....the 323,000 barrel per day increase in our total crude inventories came about on a 263,000 barrel per day addition to our commercial stocks of crude oil and a 60,000 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, since the Reserve is not authorized to buy oil at this time....this week's 20,000 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, which was partially offset by a 5,000 barrels per day decrease in output from Alaska...the 10,271,000 barrels of crude per day that were produced by US wells during the week ending February 9th was the highest week on records going back to 1983, 14.4% more than the 8,977,000 barrels per day that US wells were producing on February 10th of last year, and 21.9% 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 89.8% of their capacity in using 16,162,000 barrels of crude per day, down from 92.5% of capacity the prior week, and down from the wintertime record 96.7% of capacity set just six weeks earlier, as US refineries are now into the pre-spring blend changeover and maintenance season...the 16,162,000 barrels of oil that were refined this week were 8.2% less than the off-season record 17,608,000 barrels per day that were being refined during the last week of December 2017, but were 4.6% more than the 15,458,000 barrels of crude per day that were being processed during the week ending February 10th, 2017, when refineries were operating at 85.4% of capacity....

with the big drop in the amount of oil being refined, gasoline production by our refineries was also much lower, decreasing by 493,000 barrels per day to 9,592,000 barrels per day during the week ending February 9th, after increasing by 518,000 barrels per day the prior week....nonetheless, our gasoline production was still 7.2% higher than the 8,950,000 barrels of gasoline that were being produced daily during the week ending February 10th of last the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 317,000 barrels per day to 5,129,000 barrels per day, after rising by 516,000 barrels per day the prior week...but even after that decrease, the week's distillates production was still 6.2% higher than the 4,531,000 barrels of distillates per day than were being produced during the equivalent week of 2017....    

however, even with the big decrease in our gasoline production, our gasoline inventories at the end of the week still rose by 3,599,000 barrels to 249,073,000 barrels by February 9th, their thirteenth increase in 14 weeks...that was as our domestic consumption of gasoline fell by 51,000 barrels per day to 9,059,000 barrels per day, and as our exports of gasoline fell by 190,000 barrels per day to 639,000 barrels per day, while our imports of gasoline fell by 108,000 barrels per day to 638,000 barrels per day....but even after thirteen increases in fourteen weeks, our gasoline inventories are still 3.9% lower than last February 10th's level of 259,063,000 barrels, even as they are now roughly 6.9% above the 10 year average of gasoline supplies for this time of the year...      

with the week's drop in distillates production, our supplies of distillate fuels fell by 459,000 barrels to 141,367,000 barrels over the week ending February 9th, the third decrease in distillates supplies in the past nine weeks...that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 305,000 barrels per day to 4,082,000 barrels per day, and as our imports of distillates fell by 77,000 barrels per day to 236,000 barrels per day while our exports of distillates fell by 72,000 barrels per day to 1,031,000 barrels per day...after this week’s inventory decrease, our distillate supplies were 16.9% lower at the end of the week than the 170,057,000 barrels that we had stored on February 10th, 2017, and fractionally lower than the 10 year average of distillates stocks at this time of the year… 

finally, the big decrease in the amount of oil used by our refineries while our oil supply metrics changed little meant that we had surplus oil to add to our commercial supplies of crude oil for the third time in 13 weeks and for the 13th time in the past 48 weeks, as our crude supplies increased by 1,841,000 barrels, from 420,254,000 barrels on February 2nd to 422,095,000 barrels on February 9th....but even with three increases in a row, our oil inventories as of that date were still 18.5% below the 518,119,000 barrels of oil we had stored on February 10th of 2017, and 10.7% lower than the 472,823,000 barrels of oil that we had in storage on February 12th of 2016, even they were still 7.8% greater than the 391,516,000 barrels of oil we had in storage on February 13th of 2015, at a time when US supplies of oil had just begun to increase...   

This Week's Rig Count

net US drilling activity was unchanged during the week ending February 16th, with oil drilling increasing and drilling for natural gas decreasing....Baker Hughes reported that the total count of active rotary rigs running in the US was stable at 975 rigs in the week ending on Friday, which was still 224 more rigs than the 751 rigs that were deployed as of the February 17th report of 2017, while it was still down by nearly half from the recent high of 1929 drilling rigs that  were in use on November 21st of 2014...

the number of rigs drilling for oil rose by 7 rigs to 798 rigs this week, which was also 201 more oil rigs than were running a year ago, while the week's oil rig count still remained well 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 fell by 7 rigs to 177 rigs this week, which was only 24 more gas rigs than the 153 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 from platforms in the Gulf of Mexico was increased by 2 rigs to 18 rigs for the week, which was also up from the 17 rigs deployed in the Gulf of Mexico a year ago...however, last year at this time there was also a rig deployed offshore from Alaska, so the total offshore rig count last year was also 18 rigs, same as today's...meanwhile, a rig which had been drilling from a platform on an inland lake in Louisiana was shut down this week, leaving just one such "inland waters" rig remaining active, which was down from 3 rigs on inland waters as of February 17th of last year...

the week's count of active horizontal drilling rigs was up by 7 rigs to 839 horizontal rigs this week, which was also up by 225 rigs from the 614 horizontal rigs that were in use in the US on February 17th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...on the other hand, the vertical rig was down by 5 rigs to 65 vertical rigs this week, which was the same count as the 65 vertical rigs that were in use during the same week of last addition, the directional rig count was down by 2 rigs to 71 directional rigs this week, which was also down from the 72 directional rigs that were deployed on February 17th 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 the 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 February 16th, the second column shows the change in the number of working rigs between last week's count (February 9th) and this week's (February 16th) count, the third column shows last week's February 9th 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 17th of February, 2017...              

February 16th 2018 rig count summary

as you can see from the above tables, this week's 'unchanged' rig count masked a lot of changes in activity nonetheless...probably the most surprising in light of an increase of 7 oil rigs was the 4 oil directed rigs that were shut down in the Permian of western Texas and southeast New Mexico, the basin which had been leading this most recent wave of drilling; but even after those shutdowns, the 433 oil directed rigs that remain active in the Permian are still more than half of the 798 oil directed rigs working nationwide, and the Permian also still accounts for 130 of the 224 rigs that have been added over the past year....

there was also a much larger change than is evident from the table in Ohio's Utica shale this week, as the net loss of 2 rigs masks the fact that 7 natural gas rigs were shut down in the state, while at the same time 5 rigs started drilling targeting oil rich formations...that leaves the total Utica deployment at 15 natural gas directed rigs, and 7 rigs seeking oil, confirming the movement of Ohio's drilling activity to the north and west that we suspected two weeks ago, when we noted new drilling plans in the Mansfield area... the Utica shale had gone all of 2016 and most of 2017 with just spotty oil drilling, so this now appears to be a significant change likely driven by the higher oil prices we've seen over recent months...


America Dumps Its Fracking Waste in My Ohio Town – Alison Stine - My southeastern Ohio town in the Appalachian foothills is a small, rural place where the demolition derby is a hot ticket, Walmart is the biggest store, and people in the surrounding villages must often drive for 30 minutes to grocery shop.  We hold the unfortunate distinction of being the poorest county in the state: an area that is both stunning — with rolling hills, rocky cliffs, pastures, and ravines — and inaccessible, far from industry.  It’s here, at the Hazel Ginsburg well, that fracking companies dump their waste. Trucks ship that sludge of toxic chemicals and undrinkable water across the country and inject it into my county’s forgotten ground. My step-grandmother, the daughter of a Kentucky miner, used to tell me stories of washing her clothes in polluted red water, downstream from mines. Coal companies exploited employees like her father, paying him in company scrip and keeping him poor and exploiting the land.That kind of abuse continues. It’s just changed shape. The Ginsburg well has a long history of violations, so many that the Ohio Department of Natural Resources ordered it shut.  It was not. It’s a pit well, which looks like an old swimming pool, covered by a tarp. No sign indicates the presence of chemicals, just a “no trespassing” sign. Allegedly, a guard will snap your picture if you stop or turn your car around. The well is located in a residential area, with houses — some with swing sets — just down the road. Our local economy now depends on tourism and farming. By contaminating the environment, fracking wastewater wells threaten all these businesses. In 2015, tank trucks injected 4 million barrels of waste into my small county alone.

Democrats seek FERC briefing on Ohio pipeline worries - House and Senate Democrats on Thursday asked the Federal Energy Regulatory Commission to provide them with a special joint briefing on the environmental practices of a company that's trying to build a major pipeline in Ohio. “Our committees have a longstanding interest in ensuring that drilling activities minimize environmental risk and that regulated entities are operating in full compliance with all applicable statutes, regulations, and permits,” top Democrats from both chambers said in a rare request to the commission. "In order to more fully understand these issues, we request a briefing from FERC staff on any environmental risks associated with this project as referenced in FERC’s January 24 memorandum.” The letter was sent by Sen. Maria Cantwell of Washington, the top Democrat on the Senate Energy and Natural Resources Committee, and Rep. Frank Pallone of New Jersey, the top Democrat on the House Energy and Commerce Committee, to FERC chairman Kevin McIntyre. Both committees directly oversee the commission. The company in question, Energy Transfer Partners, is trying to expand its 713-mile Rover Pipeline. But the Democrats' letter explained that the FERC recently ordered the company to cease its drilling activities near the Tuscarawas River in Ohio because of environmental concerns. FERC is the primary regulator and licenser of major interstate natural gas pipelines like Rover. Democrats on the letter seem to suspect that Energy Transfer Partners' water quality management is reason for concern when it comes to building the Rover Pipeline, which traverses Ohio and multiple states to move natural gas from fracking wells. The Democrats cited a Jan. 24 FERC order instructing the Rover Pipeline and its parent company "to cease the use of horizontal directional drilling techniques in pipeline construction near the Tuscarawas River in Ohio," according to the letter. The senators point out that it was the second time that FERC had raised "major issues" over the pipeline’s construction. In a FERC memorandum to the company, the commission cited concerns about the loss of drilling fluid in tunneling to build the pipeline, the Democrats stated. The FERC memo said there has been “no approach to date" that has been "completely successful" in resolving the fluid loss.

Fracking in shale plays could trigger earthquakes in deeper faults: study - Ohio oil and gas drillers could trigger noticeable earthquakes even if fracking activity doesn’t miss targets or directly contact deeper faults in the basement rock.That’s the conclusion of new research from Miami University that looked at how pumping fluids underground can affect faults much deeper underground. “With the results from our study, we can better advise environmental regulators and natural gas companies about what to expect when attempting hydraulic fracturing,” said geologist Michael Brudzinski at Miami University in Oxford, Ohio, a co-author of the report published Monday in the Proceedings of the National Academy of Sciences (PNAS).  The study could lead to more regulatory scrutiny of shale gas drilling in Ohio and elsewhere, but it doesn’t give a quick yes-or-no answer on where drilling should or shouldn’t take place. As one Facebook status option says, it’s complicated.   The study team found fracking can lead to two types of earthquakes, based on an analysis of the largest seismic events in Harrison County, Ohio, from 2013 to 2015. What happens depends on the local tectonics — geologic conditions linked to movements of parts of the earth’s crust over very long periods of time.  Larger earthquakes of magnitude 3 or more generally involve older faults in deeper layers, reported geologist Maria Kozlowska, who worked on the project as a post-doctoral researcher at Miami University. Fracking fluids don’t necessarily have to enter those faults or deeper layers in order to trigger earthquakes, Brudzinski said. Those older faults are in deep layers that date back to hundreds of millions of years ago when plates collided into eastern North America and built up the Appalachian Mountains. When things settled down, the fault movements slowed to nearly a stop. “We think that the injection has woken them up by allowing stored energy from long ago to finally be released,” Brudzinski said.. “Our results provide some new evidence that the stresses from fracturing the shale rocks may be enough to trigger the deeper older faults to move without having a direct connection,”

Researchers find fracking spurs bigger quakes at different depths -  Five small earthquake sequences triggered by fracking in eastern Ohio between 2013 and 2015 were more complex than researchers previously understood, revealing that fracking-linked seismic disturbances originate at different geological depths and that deeper events pose greater risks.The new study — led by researchers at Miami University in Ohio and published in the Proceedings of the National Academy of Sciences — uncovered interesting dynamics about the rare, but concerning, earthquakes associated with deep natural gas wells targeting the Utica and Point Pleasant shale formations that sit about two miles underground.The findings offer clues that might eventually allow drilling companies to adapt their operations to avoid setting off earthquakes. For now, the study suggests, stopping fracking temporarily may help head off more intense quakes once they have started.  But the fact that a bigger quake hasn’t struck the region so far has been partly luck.  More than a dozen cases of man-made, or induced, seismic events have been associated with Utica Shale fracking or gas wastewater disposal wells in recent years in eastern Ohio — a region that had “essentially no documented seismicity before 2010,” the researchers wrote. All of the five quake sequences studied by the researchers in Harrison County, Ohio, started in previously unknown faults in rock layers beneath the horizontal paths of the Utica gas wells underground. Some of the faults were restricted to shallower layers of relatively weaker rocks, while others began in the deep, crystalline basement rock — below the layers of sedimentary rock that built up on top of it over hundreds of millions of years. The deeper earthquakes were more powerful, apparently reflecting slippage along more mature stressed faults, and the shaking there continued in some cases over a month after the fracking that triggered it stopped. Smaller, shallower earthquakes tended to stop more quickly. The researchers also saw two dynamics at play in causing the rocks to slip. Fluid used to crack the gas-rich shale sometimes apparently escaped its target and followed pathways to deeper geologic layers, where the pressure from the fluid activated stressed faults.They saw evidence of this in wells where more liquid returned to the surface than would be expected for the amount of gas produced, indicating the fractures had tapped into deep water networks. In other cases, the fluid apparently stayed within its Utica Shale target but built up so much pressure there that the rocks bowed out, sending a cascading force through lower rock layers until the faults were triggered.

Controversial natural gas pipeline project back on the table in Hamilton County   -- One of the region's most controversial pipeline proposals in recent years is moving forward once again.For two years, Duke Energy has expressed the need to construct a new underground natural gas pipeline through central Hamilton County. It says the reliability of natural gas service depends on the project.  But opposition has been fierce. Safety is the number one concern for most community members along the proposed routes. Namely, they fear a gas explosion, which does happen with some frequency. Reading Mayor Bo Bemmes said Duke officials met with him and other city leaders in late January to let them know they would soon refile the pipeline application to state authorities, from whom the company must get permission.The pipeline runs the length of Reading, and also touches Amberley Village, Blue Ash, Bond Hill, Evendale, Golf Manor, Pleasant Ridge, Reading, Sharonville and Norwood. Duke had tweaked a few sections of the route – moving it a bit further from economic development sites that had worried city officials – and evaluated potential problems near a highly-polluted site called Pristine Inc.

XTO Looks to Stop Methane Leak at Well Pad in Powhatan Point - --Emergency officials set up a command post along Ohio 148 next to the Clair Mar Golf Course in Powhatan Point Thursday while responding to a gas leak at XTO Energy’s Schnegg well pad.Flames did not seem to shoot from the XTO Energy Schnegg well near Captina Creek on Friday as they had after the Thursday explosion, but about 100 nearby residents remained displaced as methane continued leaking into the atmosphere.  “Right now, it seems the well is still releasing gas into the air that is not burning,” Ohio Department of Natural Resources spokesman Steve Irwin said. “That is mostly methane.” After the early Thursday blast rocked the area in southern Belmont County, emergency responders and XTO officials, along with regulators from both the ODNR and Ohio Environmental Protection Agency, remained at the site on Friday. XTO spokeswoman Karen Matusic said the mandatory evacuation for those within a 1-mile radius remained in effect as of Friday evening, but said some residents had been allowed to return home to feed livestock animals.“Some of the farmers have been escorted to their acreage to feed their livestock,” she said.“They have gone back in under supervision with law enforcement and someone with a gas monitor and paramedics,” Irwin said of the residents.  Matusic and Irwin said it is still too early to say when residents will be allowed to return to their homes. In December 2014, residents of about 30 homes near Sardis were displaced for 10 days when the wellhead blew at a Magnum Hunter Resources operation. At that time, an unknown amount of unburned methane gushed into the atmosphere in a geyser-like manner.

‘Out of order’: West Virginia lawmakers drag woman off House floor for reading list of oil and gas donations - In a video spotted by Common Cause, lawmakers in West Virginia had a woman dragged away from the lectern as she read off a list of members of the House and how much they collected in contributions from the oil and gas industry.According to the report, fracking activist and House of Delegates candidate Lissa Lucas appeared in the Charleston state house on Friday to address lawmakers considering a bill that would allow oil and gas companies to drill on minority mineral owners’ land without their consent. Stepping to the microphone Lucas can be seen saying, “I have to keep this short, because the public only gets a minute and 45 seconds while lobbyists can throw a gala at the Marriott with whiskey and wine and talk for hours to the delegates.” She then proceeded to list off members of the legislative body and the amounts of contributions they have taken from the industry they are regulating until she is stopped by Chairman John Shott (R-Mercer).“Miss Lucas, we ask that no personal comments be made,” Shott said.“This is not a personal comment,” Lucas replied.“It is a personal comment and I am going to call you out of order if you are talking about individuals on the committee,” Shott declared. “If you would, just address the bill. If not, I would ask you to just step down.” Proceeding ahead with her list of lawmakers, despite the warning, Lucas then found herself between two security officials ordered by Shott to remove her.Told she had to leave, Lucas told  the lawmakers, “I want to finish,”  however the guards did not relent.“Drag me off then,” she said as she was hustled out of the chambers. Watch the video below posted by Common Cause:

Caught On Tape: Security Drags Woman From Hearing For Exposing Big Oil Funding Politicians - A West Virginia resident and House of Delegates candidate was physically removed from a public hearing at the West Virginia House of Delegates shortly after she began reading a list of donations made to delegates by the energy industry, during discussion of a bill aimed at easing restrictions on gas and oil-related drilling on private land. Lissa Lucas, Democratic candidate for District 7 of the West Virginia House of Delegates, appeared at the state capitol to testify regardingHouse Bill 4268, “which would allow a majority of 75 percent of owners or heirs of a single piece of property to determine whether the property could be developed for oil or gas production” according to WVNews. Lucas claimed that those speaking in favor of the bill and some voting on the bill were being paid by “the industry.” “I have to keep this short because the public only gets a minute and 45 seconds while lobbyists can throw a gala at the Marriott with whiskey and wine and talk for hours to the delegates,” Lucas said. She went on to list oil and gas donations that have been made to members of the House Judiciary Committee— which included Committee chairman John Shott, who quickly opposed Lucas’ listing of names.“John Shott. First Energy $2,000. Appalachian Power $2,000. Steptoe & Johnson—that’s a gas and oil law firm—$2,000. Consol Energy $1,000. EQT $1,000. And I could go on,” Lucas said. Shott then said, “Miss Lucas, we ask that no personal comments be made?” “This is not a personal comment,” Lucas responded.“It is a personal comment and I am going to call you out of order if you are talking about individuals on the committee,” Shott told Lucas. “If you would, just address the bill. If not, I would ask you to just step down.”She went on to name Delegate Jason Harshbarger, who is employed by Dominion Energy Transmission, and claimed that 40 percent of his contributions “comes from the oil and natural gas industry” as the microphone she was using was cut off. As she continued to press to continue speaking, she could be seen on video being physically led out by two men.

She was naming lawmakers who took oil-and-gas money — so they barred her from the public hearingVideo of a little-known candidate for a statehouse seat in West Virginia went viral over the weekend after she was forcibly removed from a hearing for reciting a list of oil-and-gas donations to lawmakers’ campaigns. Here is her story.

Fracking tied to reduced songbird nesting success - The central Appalachian region is experiencing the country's most rapid growth in shale gas development, or "fracking," but we've known almost nothing about how this is affecting the region's songbird populations—until now. A new study from The Condor: Ornithological Applications demonstrates that the nesting success of the Louisiana Waterthrush—a habitat specialist that nests along forested streams, where the potential for habitat degradation is high—is declining at sites impacted by shale gas development in northwestern West Virginia.  West Virginia University's Mack Frantz and his colleagues mapped waterthrush territories and monitored nests along 14 streams from 2009 to 2011 and again from 2013 to 2015. They also mapped and measured disturbances to streams and to the forest canopy, using aerial photographs and satellite imagery as well as extensive ground-truthing, and classifying them according to whether they were related to shale gas development. Their results show that as shale gas development has expanded in the area, nest survival and productivity and riparian habitat quality have declined. At the same time, the size of individual waterthrush territories has increased, suggesting birds need to range farther to find sufficient resources. This study is one of the first to demonstrate that shale gas development can affect songbird reproductive success and productivity, both directly through the presence of fracking infrastructure and indirectly through effects on habitat quality. "I hope our findings lead to robust protections of our forested headwater stream ecosystems, which are currently overlooked for regulation despite their critical role in providing nutrients and organic matter downstream, not to mention as an important source for drinking water," says Frantz. "Waterthrushes are a modern-day 'canary in the coal mine,' and there are many more opportunities to study how anthropogenic disturbance affects and entangles food webs at the aquatic-terrestrial interface."

Fracking Waste Disposal: Still A Hot Mess - The slogan for Estill County is “where the bluegrass kisses the mountains.” But since 2015 the county, population 15,000, is widely known as the place where radioactive material generated by the oil and gas industry in a process known as fracking was dumped near some schools. As theOhio Valley ReSource reported in 2016, tons of waste from the drilling practice known as fracking was hauled from state to state before being improperly disposed of in a county landfill not designed to hold radioactive material. This week the Concerned Citizens of Estill County and state officials squared off over how to best deal with the tons of radioactive waste. The landfill owners have been fined and are required to create a mitigation plan. Officials with the Kentucky Energy and Environmental Cabinet want to keep the waste in place. But local residents have a different idea. In the two years since the waste was discovered the community has come to a consensus on what should happen with the illegally dumped waste: Dig it up and move it out. Concerned Citizens member Tom Bonny said he first thought keeping the waste in place was the better solution. But when he considered the long-half life of the radioactive material coupled with its location near Estill County’s schools, he thought of the long-term consequences to the community. He is also concerned about the proximity of the landfill to the Kentucky River and potential danger to the water supply not only in Irvine but downstream. So, he changed his mind.He said most folks he’s talked to feel the same way. “The majority of the people I have spoken with indicate they will not have full peace of mind if it is left in place,” he said.The disagreement over how to deal with the mess is just a small part of a larger problem with a lack of regulation, oversight and monitoring of this difficult waste. And years after Estill County’s crisis brought attention to the matter, experts say little has changed to prevent similar incidents.

46% Say 'Yes' to Fracking, But Want Oil to Stay Here - Rasmussen Reports®: A rise in U.S. shale production over the last several years has created a surplus of oil that is now in high demand from countries overseas. Though support for fracking has dropped slightly, nearly half still favor the idea, but most say if we’re going to do it, we should keep the surplus oil here at home. A new Rasmussen Reports national telephone and online survey finds that 46% of Likely U.S. Voters favor a process known as hydraulic fracturing used to drill for oil and natural gas in shale oil reserves. Thirty-nine percent (39%) are opposed to fracking. Fifteen percent (15%) are not sure. (To see survey question wording, click here.)   The survey of 1,000 Likely U.S. Voters was conducted on February 7-8, 2018 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence.  See methodology.

The Boston Globe editorial board unloads on the ‘pipeline absolutism’ of environmentalists - In a CD post last week, I posed the question “Why is LNG coming 4,500 miles to Boston from the Russian Arctic when the US is the world’s No. 1 natural gas producer? (see map above of the route). The simple answer to the question is a lack of natural gas pipelines in New England due to the “pipeline absolutism” of anti-fossil environmentalists who have blocked all new pipeline expansions, as I explained in a recent Boston Herald op-ed “Epic U.S. energy boom cruises by region,” here’s an excerpt:Although the U.S. has been the world’s top producer of natural gas since 2009, New England relies on imported LNG from faraway countries for about 20% of its natural gas. This is what happens when you don’t build your own natural gas pipelines, which are the safest and most economical way to transport energy. The trouble is there isn’t enough pipeline capacity to bring in natural gas from the Marcellus shale in Pennsylvania to New England in times of high demand. Even as America’s natural gas production has soared, the pipeline capacity to get it to where it’s needed hasn’t kept up. The problem: political obstacles driven by environmental groups.  Now the editorial board of the Boston Globe is weighing in on “pipeline absolutism” with a lengthy, 2,000-word editorial yesterday “Our Russian ‘pipeline,’ and its ugly toll, here’s part of the opening (emphasis added): To build the new $27 billion gas export plant on the Arctic Ocean that now keeps the lights on in Massachusetts, Russian firms bored wells into fragile permafrost; blasted a new international airport into a pristine landscape of reindeer, polar bears, and walrus; dredged the spawning grounds of the endangered Siberian sturgeon in the Gulf of Ob to accommodate large ships; and commissioned a fleet of 1,000-foot ice-breaking tankers likely to kill seals and disrupt whale habitat as they shuttle cargoes of super-cooled gas bound for Asia, Europe, and Everett. Massachusetts’ officials have leaned heavily on righteous-sounding stands against local fossil fuel projects, with scant consideration of the global impacts of their actions and a tacit expectation that some other country will build the infrastructure that we’re too good for.

Federal agency OKs start of pipeline construction in Giles County -  On Monday, the Federal Energy Regulatory Commission granted a request from the project’s developer to begin construction on parts of the 303-mile natural gas pipeline that will pass through the county. Although tree-cutting has already started in West Virginia, where the pipeline will originate, FERC’s approval allows the work to cross the state line into Virginia. A letter from Paul Friedman, the agency’s environmental project manager, informed Mountain Valley officials that construction could begin on a 12-mile segment of the pipeline. FERC also gave its go-ahead for work at 44 temporary workspaces and 14 staging areas or access roads in Giles County. Natalie Cox, a spokeswoman for Mountain Valley, said it would be difficult to say exactly when the work might begin, given the uncertainties of winter weather and the availability of needed equipment. “That said, we hope to begin tree felling activity in permitted areas in Giles County by the end of the month,” Cox wrote in an email. For anything beyond tree-cutting, Mountain Valley still needs approval from the Virginia Department of Environmental Quality, which is reviewing erosion and sediment control plans for the project. “They cannot start construction without these plan approvals,” DEQ spokeswoman Ann Regn said. “They can do limited, hand tree-felling as long as there is no land disturbance.” In other words, the trees would have to remain where they fall until Mountain Valley gets state approval for more wholesale clearing of 125-foot rights of way where the buried pipeline would be laid. FERC’s approval on Monday does not include a 3.5-mile route the pipeline would take through the Jefferson National Forest, crossing under the Appalachian Trail. Nor does it allow work in the Greater Newport Rural Historic District or the Big Stoney Creek Historic District, where preservation plans must be reviewed by the Virginia Department of Historic Resources. 

Civitas files complaint against Cooper over pipeline fund — Civitas filed an ethics complaint Wednesday against Gov. Roy Cooper, questioning his role in a $57.8 million fund tied to the Atlantic Coast Pipeline that the governor plans to control.  The complaint, from a right-leaning group that has been a frequent critic of Cooper, does not directly accuse the governor of trading a key state permit on the project for access to the fund. But it quotes relevant state law prohibiting officials from accepting gifts in exchange for official action, and it describes the fund as "open-ended, unconstrained and rife with potential for abuse." "In our opinion, these matters rise to the level of a full ethics investigation," the complaint states. "At the very least, we request the Commission issue an opinion on the ethics of the governor leveraging his official title and official position to exchange state approval of a major project for private funds that only the Governor can spend, even if the funds trickle into the accounts of his political supporters or indirectly aid in his re-election."The complaint went to the State Board of Elections and Ethics Enforcement, which currently has no appointed members, but does have staff.The governor's office called the complaint "absurd," even for a partisan political attack. Cooper's office announced the fund Jan. 26, the same day the state announced the Atlantic Coast Pipeline planned by Duke Energy, Dominion Energy and other utilities had won a key state water permit called a 401 certification. The fund, according to the memorandum, would accept $57.8 million from the utilities, which would go into an account designated by the governor.

Trump's idea for 'Buy American' mandate on US pipeline projects has 'vanished' - A much-ballyhooed White House proposal to boost domestic manufacturing might be stuck in the pipeline.More than a year after President Donald Trump demanded that oil and gas pipelines built in the U.S. be constructed with U.S.-made steel — roiling the energy industry in Texas and beyond — there is little evidence that the Trump administration is close to making that idea a reality.A July deadline for the U.S. Commerce Department to produce such a plan went by without the release of any details. Trump has dropped the idea from his speeches, where it was once a prominent fixture. And groups tracking the proposal say it has just fallen off the radar. “With little explanation, it has vanished,” said Scott Paul, president of the Alliance for American Manufacturing, which supported Trump’s “Buy American” effort.  That inaction could reflect concerns that the mandate would be unfeasible and potentially in violation of international trade law. Or it could result from resistance by companies like Dallas’ Energy Transfer Partners, which called the idea “well-intentioned” but “unworkable.”   The Commerce Department, which didn’t respond to requests for comment, could always press ahead. The White House’s plan for a $1.5 trillion infrastructure package could be a new vehicle. And some trade cases involving steel imports could offer an indirect way to address the issue.

Trump administration proposes selling off US gasoline reserve - The Trump administration Monday again proposed selling off the 1 million barrel Northeast Gasoline Supply Reserve, calling it unnecessary and costly to operate. In a proposed fiscal 2019 budget President Donald Trump sent to Congress Monday, the administration proposes to "disestablish" the gasoline reserve."The [gasoline reserve] has not been utilized and has issues surrounding cost efficiency and operational functionality," the budget states. The Obama Administration set up the reserve following gasoline shortages caused by Hurricane Sandy in 2012. It currently holds 700,000 barrels in New York Harbor, 200,000 barrels in Boston and 100,000 barrels in South Portland, Maine. Congress is unlikely to enact the budget, as it crafts federal spending on its own, but the proposal serves as a guide for the administration's policy priorities in the coming year.The budget requests $11.3 billion for the Interior Department, the agency which manages oil and gas drilling on federal land and waters, a $2.2 billion, or 16%, decrease from the 2017 enacted level. It also requests $29 billion for the Department of Energy, a roughly 3% decrease, and $5.4 billion for the Environmental Protection Agency, a $2.8 billion, or 34%, decrease from fiscal 2017.

Environmental groups sue Trump administration for allowing oil and gas companies to dump waste in Gulf of Mexico --  Environmental groups are suing the Trump administration for allowing oil and gas companies to dump fracking and drilling waste into the Gulf of Mexico, saying that the permits do not take into account potential dangers to water quality. The three groups — the Centre for Biological Diversity, the Gulf Restoration Network, and the Louisiana Bucket Brigade — filed their suit Tuesday against the Environmental Protection Agency (EPA), saying that the federal agency’s decision could have devastating effects on marine wildlife and habitats. “The Trump administration is letting oil companies dump toxic fracking chemicals into the Gulf with no regard for the risks or the law,” Kristen Monsell, the senior attorney at the Centre for Biological Diversity, said in a statement. “That’s just unacceptable,” she continued. “The EPA is supposed to protect water quality, not give oil companies free rein to use our oceans as their garbage disposal.” The lawsuit is the second time those groups have sued the EPA for the permit, which was finalised in September for new and existing offshore oil and gas platforms operating in federal waters off the coasts of Mississippi, Louisiana, and Texas. The permits allow oil companies to dump unlimited amounts of waste fluid, which includes chemicals involved in fracking. Those fracking chemicals include benzene, arsenic, lead, mercury, phenol formaldehyde resins, and hexavalent chromium.  

Offshore drilling foes, denied microphone, hold rallies — With giant inflatable whales, signs that read “Drilling Is Killing” and chants of “Where’s our meeting?” opponents of President Donald Trump’s plan to open most of the nation’s coastline to oil and natural gas drilling have staged boisterous rallies before public meetings held by the federal government on the topic. That’s because the public cannot speak to the assembled attendees at the meetings. The U.S. Bureau of Ocean Energy Management is meeting one on one with interested parties and allows people to comment online, including typing comments on laptops it provides. People also can hand bureau officials written comments to be included in the record. What they can’t do is get up at a microphone and address the room. That has led drilling opponents on both coasts to hold their own meetings before the official ones begin. The latest took place Wednesday in Hamilton, where one attendee wore a furry red lobster hat with claws protruding from both sides. “They’re dodging democracy,” said Cindy Zipf, executive director of New Jersey’s Clean Ocean Action environmental group, which held a citizens’ hearing before the bureau meeting. “The government works for the people. I understand it’s uncomfortable to have a bad idea and be held accountable for it, but that’s what they’re proposing.” The Republican president’s decision last month to open most of the nation’s coast to oil and gas drilling horrified environmentalists, and many elected officials from both major political parties oppose it. But energy groups and some business organizations support it as a way to become less dependent on foreign energy. The Bureau of Ocean Energy Management’s chief environmental officer, William Brown, said Congress has mandated five-year energy plans since the Arab oil crisis of the 1970s sent prices rising. 

Does fracking adversely impact on drinking water? - New research suggests a negative impact of hydraulic fracturing, intended to extract gas and oil, upon streams, plus downstream recreation water and drinking water. The research has been led by the University of Central Arkansas. The research adds to other environmental issue relating to hydraulic fracturing. The fracking process involves the injection of millions of gallons of freshwater and chemicals into shale. While most research has been into the direct effect on water quality, the new study looks at how fracking processes impact water loss. The fracking operation withdraws these large quantities of water from nearby waterways.  The effect of withdrawing large quantities of water from nearby waterways, like streams, for fracking can potentially affect aquatic ecosystems and there is also an impact upon people who use such water for drinking and recreation, according to the research. The fracking process involves the use of high-pressure injection of 'fracking fluid' (water, which may contain sand or other proppants) into a wellbore.  The researchers have assessed that, typically, over 5 million gallons of freshwater are used to fracture one gas well in the U.S. This is a water quantity can could fill seven Olympic-size swimming pools. The source water is typically streams located close to the fracking site. The researchers are concerned that many of these streams are a source of drinking water for communities and also the ecological niche for various species, some of which are in decline. The researchers are calling for greater study into the sustainably of water loss from such sources.

Midland crude production, takeaway capacity and price differentials. -  Permian crude oil production continues to march steadily upward, headed toward 3.0 MMb/d sometime in the next few months. Most of the recent growth responsible for pushing total U.S. output past 10 MMb/d has come from increases in Permian volumes. Pipeline capacity out of the super-hot play is on the ragged edge of maxing out, and a myriad of new projects to relieve capacity constraints are in the works. Why then has the price differential between Midland, TX, and the Gulf Coast dropped over the past few weeks? Why did the Brent vs. WTI/Cushing spread crater? And what does this all mean for Midland-to-Gulf Coast transport deals getting struck for $2.00/bbl or less? Today, we look at these developments, try to make sense out of the Permian/Midland crude oil market, and consider what the future might hold for West Texas barrels moving to the Gulf Coast.

Fracking Earthquakes Pop Up in Unexpected Corner of Oklahoma's Shale Patch - Insurance Journal - The oil prospectors of Oklahoma, it appeared, finally had a solution to their earthquake problem. Ordered by regulators to curb the wastewater they were dumping deep into the ground, they watched with satisfaction as tremors plunged to fewer than two a day from more than five. This seemed to be important confirmation of what had long been suspected in the petroleum-dependent state: The act of drilling for crude wasn’t the big problem, it was just the way the main byproduct was being discarded. But now quakes are popping up in a relatively new corner of Oklahoma’s shale patch and sparking jitters once again. It’s not the volume (so few that officials are just starting to record them) or force (very low on the Richter Scale) that’s worrisome. It’s the circumstances — because in the Scoop and Stack, the fields where the earth is suddenly moving, almost no wastewater is jettisoned underground. That, in turn, has brought critical attention back to fracking, the essential technology that has made the oil business viable in countless low-margin fields, helping push output so high the U.S. recently hit 10 million barrels a day for the first time in four decades. Oklahoma lawmakers and regulators aren’t inclined to put heavy brakes on the use of a tool that has helped triple output in the past decade to 497,000 barrels a day and create thousands of jobs. After all, the state, the fifth-largest producer in the U.S., was among the first to forbid cities and counties from banning fracking activities.  To some industry defenders in Oklahoma, in fact, low-level tremors now and again are a fair price to pay. In any event, the ones out in the Scoop and Stack are so minor experts are still puzzling over their significance.  But “all earthquakes start out small,” said Austin Holland, a supervisory geophysicist with the U.S. Geological Survey in New Mexico who worked for the Oklahoma Geological Survey until 2015. “You can’t rule out the possibility that you could have a significant earthquake triggered by hydraulic fracturing.”

Chesapeake Energy Exits Mississippi Lime -- Richard Zeits -- February 12, 2018 -- Link here to SeekingAlpha.  Summary:

  • Chesapeake received an estimated $1,000 per acre for its Miss Lime acreage, excluding production
  • the price received is reasonable and the transaction as a positive, albeit hardly material, development for the stock
  • given the improvement in oil prices, Chesapeake is likely to put additional asset packages in the Mid-Continent on the auction block
  • Chesapeake Energy announced last week its exit from the Mississippian Lime, the play that the company helped to pioneer several years ago. 
  • we interpret the $0.5 billion price received for the properties as a success for Chesapeake
From the article: Why are the buyers willing to pay half a billion dollars for properties that are producing less than 5,000 barrels of oil per day, have been extensively drilled and have a high operating cost?  Several factors could be the reason:
  • A large portion of production is obviously quite mature and is characterized by a relatively low decline rate - which makes it more valuable.
  • The buyer may find some promise in other zones on this stacked-pay acreage, which is held by production and represents a long-term exploration option in the event oil prices move significantly higher.
  • The acquirer may be betting on achieving a meaningful increase in production volumes via workovers (which, arguably, were not the top capital allocation priority for Chesapeake).
  • The sale includes production infrastructure that was originally configured for larger volumes and may have some value.

Chesapeake Update -- Zeits -- February 13, 2018 -- Summary, link over at SeekingAlpha:  Chesapeake guided to sequentially lower production volumes in Q1 2018, following a very strong Q4 2017. Spending within cash flow in 2018 means activity levels will be reduced as compared to the second half of 2017.  However, even with this consideration in mind, the full-year production outlook is underwhelming. With total debt again approaching $10 billion, Chesapeake cannot "drill its way out" of the leverage problem - significant asset sales is the only path to stability. Then this: For Q4 2017, Chesapeake Energy (CHK) achieved its production goal of 100,000 barrels of crude oil per day, in-line with previous guidance. Natural gas and NGL production for the quarter were 2.6 Bcf/d and 59,500 b/d, respectively, above previous guidance.These volumes represent a 10% sequential increase on a BOE basis, after adjusting for asset sales.As a reminder, in the last six months Chesapeake significantly accelerated the pace of completions to monetize the company’s significant inventory of drilled but uncompleted wells.During Q3 2017, Chesapeake emphasized completions in the Marcellus, Utica and Haynesville to position itself for winter demand for natural gas.In Q4 2017, the company nearly tripled the pace of completions in the Eagle Ford, as compared to the preceding two quarters.The “surge” in the number of new wells being brought online yielded an impressive ramp-up in production volumes during the second half of 2017.The advantage of DUCs -- take note: In retrospect, Chesapeake's decision to accelerate DUC conversions was well timed. Cash flows have benefitted from greater crude volumes sold into an attractive price environment that prevailed during the last several months. On the natural gas side, Chesapeake took advantage of the strong heating demand this winter for natural gas and NGLs.

Pipeline-backed 'sabotage' bill will lead to abuse of eminent domain - The "critical infrastructure sabotage" legislation before the Iowa Legislature is not what it seems. It’s backed by Energy Transfer Partners (ETP), the corporation behind the Dakota Access Pipeline, and is offered in response to arson and vandalism against the pipeline in 2016 and 2017.This legislation has nothing to do with sabotage. It’s about silencing nonviolent dissent and influencing a historic Iowa court case. Consider these points:First, under Iowa law, arson and vandalism are already serious crimes. This bill would do nothing to improve the safety of public infrastructure.Second, the legislation could apply a 25-year sentence plus a fine of $100,000 to peaceful protesters who "cause a substantial interruption or impairment of service." ETP originally said oil would flow through its pipeline in 2016. Yet because of numerous delays, some caused by protesters, oil didn't flow until June of 2017.It’s impossible to say how this legislation would be interpreted in a court of law, but ETP could argue that, given the delay, protesters caused an "interruption" of service and deserve the maximum fine and penalty.Third, and of greatest concern, this legislation legitimizes the pipeline as "critical infrastructure.” It lumps a privately owned oil pipeline in with public lines that transport electricity, gas, broadband service, water and wastewater.Of all the compelling arguments against the Dakota Access Pipeline, one of the strongest is that ETP is a private company merely transporting its product through Iowa. True public infrastructure is used by the people whose land it passes through.The pipeline’s highly questionable status as critical public infrastructure is ETP's Achilles' heel. ETP knows this, and it hopes Iowans either haven't noticed or have stopped caring. If ETP can ram this legislation through quickly, it will effectively codify a private oil pipeline as a public necessity. And that’s a big deal because of the landowner/Sierra Club lawsuit currently before the Iowa Supreme Court. If Iowa codifies that an oil pipeline is “critical infrastructure,” it could affect the outcome of that lawsuit.

State completes amended environmental review of proposed Enbridge oil pipeline - The Minnesota Department of Commerce Monday released an amended environmental review of Enbridge’s controversial new Line 3 oil pipeline, though it includes no major changes. In December, the Minnesota Public Utilities Commission rejected the commerce department’s Environmental Impact Statement (EIS) on a handful of narrow concerns. The PUC gave the department 60 days to make clarifications. Calgary-based Enbridge wants to build a new pipeline across northern Minnesota to transport Canadian oil to its terminal in Superior, Wis. The new pipeline would replace Enbridge’s aging and corroding Line 3, which is running at just over half of its capacity due to safety concerns. The new Line 3 would follow the path of the current pipeline to Clearbrook, Minn., but it would then jog south to Park Rapids before heading east to Superior. Environmental groups and Indian tribes oppose new Line 3, saying it would open a new region of lakes and rivers to possible degradation from oil spills. They have asked the PUC to reconsider its December decision on the EIS, claiming the document should be rejected because it’s fundamentally flawed, lacking among other things an assessment of large oil spills. The PUC is expected to hear their reconsideration arguments next week. 

'I'm just more afraid of climate change than I am of prison’ - On Oct. 11, 2016, Michael Foster and two companions rose before dawn, left their budget hotel in Grand Forks, N.D., and drove a white rental sedan toward the Canadian border, diligently minding the speed limit. As the driver, Sam Jessup, followed a succession of laser-straight farm roads through the sugar-beet fields, and a documentary filmmaker, Deia Schlosberg, recorded events from the back seat, Foster sat hunched in the passenger seat, mentally rehearsing his plan. When Jessup pulled over next to a windbreak of cottonwood trees, Foster felt the seconds stretch and slow. For months, he’d imagined his next actions: He would get out of the car, put on a hard hat and safety vest, retrieve a pair of bolt cutters from the trunk and walk to the fenced enclosure about 100 feet away. He would snip the padlock that secured the gate and approach the blunt length of vertical pipe in the center of the enclosure — the stem of a shut-off valve for the 2,700-mile-long Keystone Pipeline, which carries crude oil from the tar sands of Alberta to refineries on the Texas coast. He would cut the chain on the steel wheel attached to the stem, and turn the wheel clockwise until it stopped. What Foster didn’t expect was that once he’d broken through the chain-link fence, he would be briefly overwhelmed by the magnitude of what he was about to do. He faced away from the biting wind, and allowed himself to cry. He then put a gloved hand on the steel wheel, which was almost three feet across and mounted vertically as if on the helm of a ship, and began to turn it. For long minutes it spun easily, but then both the wheel and the ground below his feet began to shake. Foster had been told to expect this, but still he hesitated. When he resumed turning, he had to throw his body into the task, at times dangling from the wheel to coax it downward. Finally, he could wrestle it no farther, and the shaking stopped.  About half an hour after Foster walked away from the valve station, an officer arrived and arrested Foster, Jessup and Schlosberg.

North Dakota oil output fell to 1.18 million b/d in December: state -- North Dakota oil output fell to 1.18 million b/d in December, down nearly 15,700 b/d from December and the first production decrease from the previous month since June, according to the state's Department of Mineral Resources. December's output was nearly 46,200 b/d below the all-time North Dakota output high of 1.23 million b/d, set in December 2014. North Dakota's daily natural gas output averaged over 2.08 Bcf/d in December, down from nearly 2.10 Bcf/d in November, which was an all-time record, according to the state agency. There were 14,293 producing wells in North Dakota in December, down 45 wells from November, which was also an all-time high. The state issued 86 drilling permits in December, down from 119 in November. But statistics appear to point to higher production in 2018. The state issued 106 drilling permits in January when the rig count averaged 56 rigs, up from 52 in January. The rig count Thursday was 57, the agency said. "Operators have shifted from running the minimum number of rigs to incremental increases and decreases as WTI oil price moves between $45 and $60/barrel," Lynn Helms, North Dakota's top oil and gas regulator, said in a statement. Bakken operators plan to add between five to 10 rigs in Q3 and Q4 of this year, "depending on workforce and infrastructure constraints," Helms said. The state estimates that were 877 wells waiting on completion at the end of December, down 6 from the end of November while the estimated inactive well count fell by 23 to 1,469 wells over that one-month time frame. 

Trump Team to Rescind Methane Rule --Jerri-lynn Scofield -  The Trump team continues to dismantle slowly and methodically the limited environmental protection legacy of its predecessor– particularly with respect to climate change. Most immediately. it’s the turn of the methane rule, which was enacted during the waning days of the previous administration by the Interior Department to limit the flaring of methane and other problematic practices on public (federal) lands. Yes, I know: that regulators couldn’t get their act together to promulgate a new rule until Trump was nearly installed in the White House was no doubt a feature– not a bug. Most of those responsible for that and similarly misguided delays, no doubt expected Hillary Clinton to be elected President, and that meant the exiting charade of pretending to protect the environment– and addressing the imperative of climate change—while never quite getting around to enacting final binding rules– could continue to be played. Waiting ‘til end days to act ensured that enacted regulations were vulnerable– and ensured that some apparent Democratic governance victories were short-lived. Significant rules that had been properly promulgated were subsequently  cuppered under the procedures set out in the Congressional Review Act (CRA)– although I concede that Democrats perhaps didn’t anticipate just how aggressively these measures could be deployed. The Trump administration and its allies among the deregulation uber allies congressional Republican set have used CRA procedures to target rules enacted within 60 session days of Congress passing a CRA resolution to overturn the rule. That means the agency that had promulgated the deep-sixed rule was thenceforth barred from reviving the rule in “substantially the same form”, unless and until Congress passes new authorizing legislation (for my further discussion of CRA, see Republicans Deploy CRA Authority to Roll Back Regulations, Trump and Congress Use Congressional Review Act to Roll Back 14 ‘Midnight’ Rules; More to Follow? and Republicans to Use CRA to Roll Back ‘Midnight’ Rules and Benefit Oil Companies).

How to Reduce Methane Emissions From the Oil and Gas Industry Across North America - U.S. natural gas production has boomed in the past decade, driving gas prices sharply downward. Natural gas has become a competitive choice for electricity generation, edging out coal . Because gas contains less carbon than coal , greenhouse gas emissions from power plants have dropped, and the U.S. grid has become cleaner, more efficient and more flexible. More natural gas is also entering the power sectors in Mexico andCanada .But the low-carbon profile of natural gas doesn't tell the whole story. Methane , its primary component, is a powerful greenhouse gas. It leaks to the atmosphere from wells and pipelines , contributing to climate changeand reducing the climate benefit of using natural gas.In 2016 U.S., Canadian and Mexican leaders pledged to reduce methane emissions from the oil and natural gas sector 40 to 45 percent below 2012 levels by 2025. Today, however, Canada is just beginning to contemplate more comprehensive regulatory limits on methane. Mexico has made only nonbinding pledges so far, and the Trump administration is rolling back federal methane regulation . Scientists are still working to quantify methane emissions from oil and gas production, and to improve tools for detecting and reducing methane leaks. But even though much of the science is still uncertain, and the Trump administration is retreating from regulating methane leaks, we believe it is still possible and necessary to make progress on reducing methane emissions. Many actors—including state and provincial governments, industry, and nongovernmental organizations—are working to advance methane measurement and mitigation efforts. To be effective, they need to work in concert. In a newly published synthesis article , we propose a North American Methane Reduction Framework to coordinate regulations, voluntary industry actions and scientific developments in methane estimation and mitigation. This approach can bridge the divide between science and policy, and drive new research that in turn can support better policies when governments are ready to act.

US spending bill expands carbon tax credit, boosting oil producers (Reuters) - A little-noticed addition to the U.S. budget deal approved last week will help Occidental Petroleum Corp and other oil producers by more than tripling a tax credit for injecting carbon dioxide back into the earth to increase crude output. The tax-credit expansion, although supported by environmentalists and energy producers, had failed to move out of Congress during the 2016 presidential election. Its passage now likely will further boost already surging U.S. oil output in a year that production is forecast to hit 11 million barrels per day. The injection process, used for more than 40 years to prolong output from traditional oil wells, also is being tested by Oxy and others as a way to speed more oil production from shale wells. President Donald Trump last week signed the spending plan into law. It boosts for 12 years an existing tax credit to $35 per metric ton of carbon dioxide injected underground, up from $10 per ton. “This will be an economic driver for our nation,” said North Dakota Senator Heidi Heitkamp, a Democrat who had pushed for the credit’s expansion with a bipartisan group of senators. “It will hopefully push a lot of innovative technologies across a range of industries, not just in coal or oil.” Oxy, Denbury Resources Inc and others inject more than 2 billion cubic feet of carbon dioxide each day into traditional oil wells, many of which came online more than 75 years ago. The method harnesses the carbon dioxide produced during the extraction of oil or from electric-power plants, and forces it back into the fields. That helps drive more oil to the surface. The technique, one of several enhanced oil recovery (EOR) strategies that can prolong the productive life of oilfields, underpins more than five percent of U.S. oil output, or about 450,000 barrels per day, according to energy consultancy Advanced Resources International. EOR can help firms extract between 30 percent and 60 percent of all the oil held in a reservoir. That’s far more than the 10 percent usually recovered from initial traditional drilling, according to the U.S. Department of Energy.

Shipping first as commercial tanker crosses Arctic sea route in winter - An LNG tanker designed for icy conditions has become the first commercial ship to travel the Arctic’s northern sea route in winter. It marks a milestone in the opening up of Russia’s northern coastline, as thawing polar ice makes industrial development and maritime trade increasingly viable. The Teekay vessel Eduard Toll set out from South Korea in December for Sabetta terminal in northern Russia, cutting through ice 1.8m thick. Last month, it completed the route, delivering a load of liquefied natural gas (LNG) to Montoir, France. Its voyage was captured by the crew in a timelapse video. Bermuda-based firm Teekay is investing in six ships to serve the Yamal LNG project in northern Russia. A similarly designed vessel owned by Sovcomflot made the same passage last August. This small and growing Arctic-ready fleet can operate independently of icebreaker escorts, which are also in high demand. Arctic sea ice is steadily thinning and receding, with seasonal fluctuation, as global temperatures rise due to human activity. In January 2018, ice extent hit another record low for the month, according to the US National Snow and Ice Data Center. While polar conditions remain tough, the trend creates market opportunities. The northern sea route is shorter than alternatives through the Suez Canal for many trade links between Europe and Asia. 

Watch how easily this gas tanker just crossed the melting Arctic  - timelapse video - The first liquefied natural gas tanker to cross through the Russian Arctic this time of year without the help of a separate icebreaker finished its journey Friday. Eduard Toll, a tanker that belongs to regional energy shipping company Teekay, landed in northern Russia after setting route from Korea at the end of January. Teekay can thank climate change for this easy passage: Arctic sea ice extent was at record-breaking low levels in January. These are the kinds of conditions that made this trip possible at all. Arctic sea ice is melting, and now ships carrying the very substance that contributes to its melting can nonchalantly roll through. This saves money for companies trading between Europe and Asia (like Teekay), as the route is shorter than going through Egypt’s Suez Canal.  This time of Arctic “exploration,” as Teekay describes it, is set to expand as more and more ice melts, giving way to new shipping routes. This tanker is the first of six that’ll carry natural gas for a major Russian natural gas project. These waters also pose a security risk to the U.S. as they see more use, per the Pentagon. While Russia has been focused on investing in building its military to make use of this new region, the U.S. has been lagging behind.

U.S. proved reserves of natural gas up in 2016, oil reserves remained unchanged – EIA - The United States had 341.1 trillion cubic feet (Tcf) of natural gas proved reserves as of the end of 2016, an increase of 5% from 2015, according to EIA’s recently released U.S. Crude Oil and Natural Gas Proved Reserves report. U.S. crude oil and lease condensate proved reserves remained virtually unchanged from their 2015 level, at 35.2 billion barrels.   Proved reserves are those volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Changes in proved reserves from year to year reflect new discoveries, either in new fields, new reservoirs in old fields, or extensions of existing reservoirs; net revisions and other adjustments to previous reserve estimates; and reductions from annual production of each fuel.  Pennsylvania had the largest net increase in natural gas proved reserves of all states between 2015 and 2016, adding 6.1 Tcf of natural gas proved reserves in the Marcellus Shale play in the Appalachian Basin. Following a record high set in 2015, U.S. production of natural gas decreased 1% between 2015 and 2016—the first annual decline in U.S. natural gas production in 10 years.   The share of natural gas proved reserves from shale compared with total natural gas increased from 54% to 62% in 2016 because gas reserves were added in several shales, including the Wolfcamp, Marcellus, Eagle Ford, Utica, Woodford, and Haynesville shales. Texas had the largest net increase in proved reserves of crude oil and lease condensate of all states between 2015 and 2016, adding 941 million barrels of proved crude oil and lease condensate reserves, mostly from development in the Permian Basin. Operators drilled and completed long horizontal wells into the stacked oil-bearing formations of the Spraberry Trend and the Wolfcamp Shale. Between 2015 and 2016, U.S. production of crude oil and lease condensate decreased by 6%.

The United States is projected to become a net energy exporter in most AEO2018 cases -  EIA projects that the United States will become a net energy exporter in 2022 in the newly released Annual Energy Outlook 2018 (AEO2018) Reference case, primarily driven by changes in petroleum and natural gas markets. The transition from net energy importer to net energy exporter occurs even earlier in some sensitivity cases that modify assumptions about oil prices or resource extraction. Sensitivity cases with less energy production project that the United States will remain a net energy importer through 2050.  The transition of the United States to a net energy exporter is fastest in the High Oil Price case, where higher crude oil prices lead to more oil and natural gas production and transition the United States into a net exporter by 2020. In that case, higher crude oil prices also result in higher petroleum product prices and lower consumption of petroleum products, driving decreases in net petroleum imports.  In the High Oil and Gas Resource and Technology case, with more favorable assumptions for geology and technological developments, the United States becomes a net exporter in 2020, and net exports increase through the end of the projection period. In cases with relatively low oil prices or less favorable assumptions for geology and technological developments, U.S. net energy trade still decreases, but the United States remains a net energy importer through 2050.  In energy equivalent terms, the United States imported about 27 quadrillion British thermal units (quads) of energy in 2017 and exported 18 quads, which resulted in 9 quads of net imports. In 2017, the United States imported about 11 quads of petroleum and other liquids and exported 2 quads of coal and coal coke. U.S. natural gas trade in 2017 was nearly balanced between imports and exports, and net electricity trade with Canada and Mexico was relatively small. Petroleum and natural gas account for most of the changes EIA projects in U.S. energy trade.

US set to become swing oil supplier --US runaway crude oil production and total oil export growth is having dramatic impacts on global oil markets, positioning the US to be the major oil export hub in the world.  It is already the world’s largest total producer of liquids, now marketing close to 15.5m barrels a day including crude oil, bio fuels and natural gas liquids. By year-end, total US oil liquids output should be well over 50 per cent higher than either Russia or Saudi Arabia. Also by this time next year, the US should add over 1m b/d not only to production, but also to exports, with total liquids exports at over 8.3m b/d, larger than either Russia or Saudi Arabia.October 2017 data were already remarkable, indicating a year-on-year increase of 2.2m b/d of which crude oil was close to 1m b/d, the remainder being oil products and liquid petroleum gas.We expect US crude production to grow about 1.4m b/d this year (vs the EIA’s projection of 1.26m b/d) while US natural gas liquids should grow another 550,000 b/d. This means that total US exports could rise by anywhere from 1.1m to 1.6m b/d this year.While the US still imports around 2.5m b/d more of crude oil and petroleum products, we expect US production to rise by at least 3m b/d by 2020, making it an oil surplus country. Far more important than that number is that fact that the US is already the largest oil trading hub in the world, with recent trade totalling around 16.5m b/d.

Capacity, demand constraints throttle Canadian gas imports to Chicago area.  Canada’s natural gas exports — which have been pushed out of the supply-rich U.S. Northeast in recent years — are also facing challenges in Western U.S. markets. Growing supply from North Dakota’s Bakken Shale is increasingly competing for capacity on the same transportation routes as imports and is targeting the same downstream markets. Meanwhile, the rise of renewable energy in the West region from wind and solar farms is limiting gas demand in those target markets. What does that mean for imports from Canada? Today, we look at how these factors are affecting Canada’s exports to the Western U.S. This is Part 3 of a series updating our analysis of changing gas flows along the U.S.-Canada border. As we noted inPart 1, Canadian gas production has been climbing in recent years and hit 10-year highs by late 2017. Historically, about a third of that gas has found a market across the border in the U.S. But Canadian producers are facing ever-increasing competition from soaring U.S. gas supply, led by the Marcellus/Utica shales in the Northeast. On the whole, Canadian exports to the U.S. in recent years have managed to remain relatively stable in the 5.5-6.0 Bcf/d range on an annual basis. But regional dynamics tell a much different story. In Part 2, we zeroed in on border flows in the Northeast, which flipped from being strictly a net importer of gas from Canada to being a net exporter on most days. Over the past decade, Marcellus production has not only displaced the more than 2.0 Bcf/d of Canadian gas supply that once flowed to the Northeast market, but also has made the Northeast region a net exporter of gas supply to Canada for most months out of the year.

The Shale 'Miracle' & The Reality-Optional World Of Bizarro Finance - Kunstler -- As of this week, the shale oil miracle launched US oil production above the 1970 previous-all-time record at just over ten million barrels a day.  Techno-rapturists are celebrating what seems to be a blindingly bright new golden age of energy greatness. Independent oil analyst Art Berman, who made the podcast rounds the last two weeks, put it in more reality-accessible terms: “Shale is a retirement party for the oil industry.” It was an impressive stunt and it had everything to do with the reality-optional world of bizarro finance that emerged from the wreckage of the 2008 Great Financial Crisis. . If you can’t afford to run your society, then try borrowing from the future to keep your mojo working. The shale oil industry was a prime beneficiary of this new hyper-debt regime. The orgy of borrowing was primed by Federal Reserve “creation” of trillions of dollars of “capital” out of thin air (QE: Quantitative Easing), along with supernaturally low interest rates on the borrowed money (ZIRP: Zero Interest Rate Policy). The oil companies were desperate in 2008. The discovery of new oil had been heading down remorselessly for decades, to the point that the world was fatally short of replacing the oil it used every year with new supply. Technology - that El Dorado of the Mind - rode to the rescue with horizontal drilling and fracturing of ”tight” oil-bearing shale rock. The only problem was you couldn’t make any money doing it. The shale oil companies could get plenty of cash-flow going, but it all went to servicing their bonds or other “innovative” financing schemes, and for many of the companies the cash flow wasn’t even covering those costs. It cost at least six million dollars for each shale well, and it was in the nature of shale oil that the wells depleted so quickly that after Year Three they were pretty much done.The two original big shale plays, the Bakken in North Dakota and the Eagle Ford in south Texas, have now apparently peaked and the baton has passed to the Permian Basin in west Texas. If the first two bonanzas were characteristic of shale, we can look forward not very far into the future when the Permian also craps out. There are only so many “sweet spots” in these plays. The unfortunate part of the story is that the shale oil miracle only made this country more delusional at a moment in history when we really can’t afford to believe in fairy tales.

Oil spill tax on oil companies reinstated as part of budget deal | TheHill: Oil companies will once again have to pay a tax to fund oil spill cleanups thanks to Congress's new budget signed into law early Friday morning. Senators voted to reinstate the 9 cents per barrel tax on both domestic crude oil and imported crude and petroleum products as part of an "extenders" tax bill package. The package was included in the Senate's budget deal passed Thursday and would put the oil tax back into effect starting March 1, according to Politico. The tax on companies selling oil within the U.S. generated an average annual revenue of $500 million, according to the Congressional Research Service. But Republican leaders decided against renewing the tax in December, causing it to lapse at the end of the year. The lapse was met with heavy criticism from the public and environmentalists. "The Oil Spill Liability Trust Fund ensures that when there is a spill, American taxpayers are not left holding the bag to clean up Big Oil's mess," Sen. Ed Markey (D-Mass.) said in a statement at the time. "We should have a robust trust fund — not just trust that oil companies will do nothing wrong — in case a disaster like the BP spill happens again." The oil tax is the primary contributor to the Oil Spill Liability Trust Fund, which is used to pay for oil spill cleanups similar to the BP Deepwater Horizon oil spill. The fund contained $5.8 billion at the time of the lapse, a senior financial analyst with the Coast Guard's National Pollution Fund Center, which oversees the trust fund, told The Times-Picayune at the time.

TransCanada Expands Gas Pipelines With Keystone XL in Limbo - While TransCanada Corp. continues to weigh whether to build its long-delayed Keystone XL oil pipeline, the company announced another major expansion of its natural gas system in Alberta. TransCanada will spend C$2.4 billion ($1.9 billion) to expand its NGTL System, adding 1 billion cubic feet of daily shipping capacity, according to a statement Thursday. The company struck binding agreements with shippers that start in November 2020 and April 2021, with an average contract term of almost 29 years. The expansion shows TransCanada isn’t sitting still while it considers whether to move ahead with Keystone XL. The company has been proceeding with preliminary work on the $8 billion, 1,200-mile (1,930-kilometer) project, but hasn’t officially announced a decision to build it. Activists haven’t given up trying to block it, with opposition groups filing a motion to invalidate a key permit last week. TransCanada made no significant new announcements about Keystone XL in its fourth-quarter earnings report on Thursday. Even without Keystone XL, the company’s oil transport business posted strong results. The unit’s comparable earnings before interest, taxes, depreciation and amortization rose 33 percent to C$401 million, helped by higher volumes on the existing Keystone system and the start of operations on its Grand Rapids and Northern Courier lines. The expansion on the NGTL system may bring some relief to Canadian natural gas drillers who have suffered through wild swings in pricing as rising production from the prolific Montney formation tries to move through a crowded pipeline network. Maintenance on the system last summer sent AECO gas’s discount to Henry Hub to the widest in more than a decade.

Enbridge to double 2018 asset sales, targets about C$8 billion: sources   (Reuters) - Enbridge Inc, Canada’s biggest pipeline operator, plans to accelerate its divestment program by selling assets valued at about C$8 billion ($6.4 billion) in 2018, more than twice its initial sale target, according to people familiar with the situation. Under pressure from both investors and rating agencies, the Calgary, Alberta-based firm wants to ramp up the sale of non-core assets from the previous C$3 billion it forecast in November, the people said on condition of anonymity because the process is private. Enbridge is trying to take advantage of favorable selling conditions to rid itself of unwanted units and pay down its C$61.4 billion long-term debt, the people said. Enbridge last year completed a $28 billion merger with Spectra Energy Corp. The company, which reports fourth-quarter earnings on Friday, declined to comment. Shares in Enbridge have lost 23 percent in the last 52 weeks, underperforming the broader market. Earlier this month, the stock hit its lowest in nearly two years. The shares rose about 1.6 percent on the news and closed up 0.9 percent, at C$43.23. As part of a strategic review announced in November, Enbridge said it has identified C$10 billion in non-core assets that it could sell over time. Enbridge is working with an investment bank to sell Canadian and U.S. renewable energy assets worth more than C$2 billion, the sources said. It is also looking to offload Canadian midstream assets, largely the result of the Spectra merger, that could fetch as much as C$4 billion, the sources said. Renewable energy assets have drawn interest from investor groups, including infrastructure and private equity funds, in recent years due to a steady return in a low interest rate environment and their increasing prevalence in North America’s energy make-up. Also, Enbridge has hired an investment bank to sell its Midcoast Gas Gathering and Processing business in the United States, the sources said. Enbridge hopes that selling non-core assets will help speed up debt reduction, enabling it to strengthen its balance sheet and raise its dividend.

Mexico's increasingly open natural gas market, and CFEnergia's role in it. - Mexico’s natural gas market continues to evolve rapidly. New pipelines are being built to move increasing volumes of U.S.-sourced gas to Mexican power plants, industrial customers and other end users. Gas exports from the U.S. to Mexico already average 4.5 Bcf/d and those volumes are sure to rise as more pipelines and power plants come online. Just as important, the government of Mexico has been taking aggressive steps to undo what had been state-owned Petróleos Mexicanos’s (Pemex) near-monopoly on gas pipeline capacity and to encourage a large and diverse group of gas marketers to enter the fray. Today, we examine ongoing efforts to increase transparency, pipeline access and competition in the gas market south of the border, and look at how Comisión Federal de Electricidad’s (CFE) marketing affiliate, CFEnergía, is growing its gas marketing business within Mexico. We last looked at Mexico’s gas infrastructure in Rio, where we took a deep dive into the Nueces header being built for CFE at the Agua Dulce Hub in South Texas. We also wrote about the status of gas pipelines in Mexico as well as the header system that was built by Energy Transfer Partners for CFE at West Texas’s Waha Hub in Part 4 of our Waha blog series, “It Was Good Living With You, (W)aha.” Both of those blogs were mostly focused on the pipeline infrastructure being built on both sides of the border to facilitate increased exports of gas from the U.S. at the Texas/Mexico border. However, structural changes have also been taking place within Mexico that are impacting how gas is bought and sold within the country. There are currently about 10 large capacity holders and almost two dozen smaller players actively marketing gas within Mexico. Although activity remains in a nascent phase compared to the U.S. market, the market in Mexico is developing along a path similar to its northern neighbor. In this blog, we detail the efforts of one of the largest current players in the Mexico natural gas market, CFE’s marketing affiliate, CFEnergía.

We Are Drowning In Plastic, and Fracking Companies Are Profiting -   We are choking the planet in plastic. Everything from wasteful water bottles to grocery shopping bags are polluting our waterways, and endangering marine life and the natural environment. It’s fair to say that even the most casual news consumer has probably encountered a Facebook post, TV report, or radio segment about the garbage patches in the Pacific Ocean.  But what’s less well-known is what is fueling this plastics binge: fracking. As the Guardian recently reported, in less than a decade, tens of billions of dollars have been invested in creating new manufacturing sites around the world to turn fossil fuels into resin pellets used to manufacture plastic products. The companies profiting off this surge in plastics are contributing to a growing climate crisis while generating mountains of plastic garbage.One company behind this plastics surge is the U.K.-based chemical company Ineos. While not a household name like Shell or Exxon, Ineos is at the center of this growing plastics industry—but the damage caused by the company extends beyond the mounds of discarded waste littering beaches and waterways. The company’s 75 manufacturing facilities across 22 countries are responsible for chemical leaks, fires, explosions, and air and climate pollution. This record includes a 2008 chemical fire in Germany and air pollution in Scotland, where the company’s Grangemouth facilities were the country’s single largest emitter of carbon dioxide in 2016. And the Ineos business model also relies on polluting communities thousands of miles away in Pennsylvania and Ohio, where the fracking industry is scarring the landscape, polluting water, and threatening public health. The company uses the liquid gas found in the shale formations there to feed its chemical plants. To meet this demand, the company recently built a fleet of so-called “dragon ships” to carry volatile gas liquids across the Atlantic.  And Ineos wants to continue ramping up. After the first crossing of one of these liquid gas transport ships from the U.S. to the U.K., the chairman of Ineos called the event a “gamechanger” that could “spark a shale gas revolution,” according to a company news release.

Unreleased government report suggests industry and ministers exaggerated fracking boom -Both politicians and industry leaders have been exaggerating the potential of future fracking operations in the UK, an unreleased 2016 government report has suggested. It estimated that 155 fracking wells will be constructed by 2025, a fraction of the number predicted by a prominent industry report that has stated 4,000 horizontal wells could be drilled by 2032, with 400 wells per year at the peak phase of construction.  The projected boom for employment and investment in the UK these would bring have been cited by ministers to justify the controversial practice. The Implementation Unit Report on Shale Gas predicted the much lower number.It was released after a Freedom of Information request revealed by Unearthed, Greenpeace’s investigative platform.Though it was made in 2016 for the Cabinet Office, the report was never released despite its discrepancies with other projections. Another industry report supported by the Government predicted fracking could create over 64,000 jobs and bring £33bn of investment to the UK, but this was based on the estimate of 4,000 wells.The new figures, therefore, raise questions over the economic benefits of fracking used by ministers and industry representatives to drum up support for it.Hydraulic fracturing, or “fracking”, to extract shale gas involves injecting water mixtures into wells to release underground fuel reserves. The technique has been opposed by many environmental campaigners and local residents in designated fracking areas due to environmental concerns.  Previous research has called into question the sustainability of fracking, and currently the US is the only nation carrying it out on a large scale.

Carillion links put fracking firm’s scheme in doubt - A controversial plan to start fracking for shale gas in rural North Yorkshire has been thrown into doubt amid mounting concerns over the finances and management of the company behind the scheme. In a move that has encouraged anti-fracking protestors, energy secretary Greg Clark has ordered the start of drilling at Kirby Misperton to be put on hold pending an investigation into the “financial resilience” of Third Energy. The Department for Business, Energy and Industrial Strategy has offered no guarantee that the project would get a final go-ahead. Clark’s move, taken after the collapse of outsourcing firm Carillion, came as protest groups and Labour politicians drew attention to the fact that Carillion’s former chief executive, Keith Cochrane, is now the non-executive chairman of Third Energy.  Friends of the Earth has piled on further pressure by writing to Clark raising further objections, including a claim that the firm’s ultimate parent company is Third Energy Holdings, based in the Cayman Islands. No fracking operations have taken place in the UK since 2011, when it was found to be the probable cause of minor earthquakes around a test site on the Fylde coastal plain in western Lancashire.

Norway defends its tax regime supporting oil exploration (Reuters) - Norway’s tax rules for the oil industry do not constitute state aid, its finance ministry told a European competition watchdog on Friday. The competition watchdog of the European Free Trade Association (EFTA) is investigating the tax regime following a complaint by Norwegian environmental group Bellona. Environmental groups, including Greenpeace, have also mounted a legal battle in Norway to try to stop the government from expanding exploration areas in the Arctic. “The Ministry maintains that the Norwegian rules on reimbursement of exploration costs and interest on carry forward of losses ... do not constitute state aid under Article 61 of the EEA Agreement, and are therefore in compliance with the EEA (European Economic Area) law,” the ministry said in a letter. Norway allows companies to deduct 78 percent of their exploration costs from taxable income. Since 2005, companies without taxable income have been reimbursed for the value of this benefit directly in cash. Bellona’s complaint focuses on those provisions for the up-front cash flow reimbursement of exploration costs, which the organization argues are in breach of state aid rules of the EEA. This has so far amounted to over 100 billion Norwegian crowns ($12.54 billion). In 2014 alone, the government paid 14.2 billion Norwegian crowns in reimbursements to the petroleum sector. “This means that if income is derived from petroleum activity taxed at a rate of 78 percent, the state, through the tax system, should cover a corresponding share of the cost incurred to earn this income,” the ministry said. The government argues that the scheme can generate trillions of crowns in future tax payments for the state. Bellona says that the state, as tax collector, should not trade such benefits for future gain. Norway, western Europe’s largest oil and gas producer, is seeking to attract more oil firms to explore in the Arctic Barents Sea. Environmentalists oppose the move and says reserves found in the Arctic might be never extracted because of measures to counter climate change, while the state will be left to reimburse exploration costs. 

EU tells Turkey to avoid damaging actions after Cyprus ship incident - (Reuters) - The European Union on Monday called on Turkey to avoid threats and “refrain from any actions that might damage good neighborly” ties after Cyprus, a member of the bloc, accused the Turkish military of obstructing a ship exploring for gas. Cyprus is one of several states, also including Israel and Lebanon, racing to tap gas deposits in the eastern Mediterranean. Greek Cypriots run Cyprus’s internationally recognized government, while Turkish Cypriots have a breakaway state in the north - recognized only by Ankara - and say resources around the island belong to them too. Cyprus said on Sunday the Turkish military had obstructed a vessel contracted by Italian oil company Eni which was approaching an area to explore for natural gas. After speaking to the Cyprus President Nicos Anastasiades, the chairman of EU leaders, Donald Tusk, said: “I call on Turkey to avoid threats or actions against any EU member and instead commit to good neighborly relations, peaceful dispute settlement and respect for territorial sovereignty.” Turkey’s foreign ministry, in a statement on Sunday, did not make any mention of obstructing the Eni ship but said the case was a unilateral move by Greek Cypriots that violated the sovereign rights of Turkish Cypriots.

Australia’s secret Timor Sea deal could pave oil and gas revenue future for East Timor - East Timor could receive up to 80 per cent of revenue from the $50 billion Greater Sunrise oil and gas field in the Timor Sea under a still-secret agreement with Australia, according to a report from the country’s capital of Dili.The Portuguese news agency Lusa quotes a source familiar with sensitive and high-level negotiations between the countries as saying East Timor would receive 80 per cent of the revenue if gas from the field is piped to an existing processing plant in Darwin, and 70 percent if it goes to a yet-to-be built industrial complex on East Timor’s remote south coast.The split, if the field is developed, would deliver billions of dollars to East Timor and likely secure its economic future for decades as existing oil and gas fields run dry in the next few years. The report written by Antonio Sampaio, the only foreign correspondent based in Dili, said a landmark agreement due to be signed at the United Nations in early March also puts the maritime boundary halfway between the countries, a huge concession by Australia for Asia’s newest nation.   East Timor and Australia announced in September they had agreed on central elements of a landmark treaty establishing maritime boundaries as well as sharing revenue arrangements for Greater Sunrise, ending years of bitter disagreement. Officials from the two countries, in meetings under the watch of the United Nations, have set a March 1 deadline to agree on the final details.

Fracking pipe ‘deformation’ row: The sequel - A spokesman for Origin Energy says the anti-fracking Lock the Gate Alliance was misleading the public when it claimed that a pipe “deformation” amounted to a failure of the well in the NT’s Beetaloo field. Christopher Zipf says there was no risk to the safety of the public nor the environment. The claims and counter claims featured in the fracking enquiry last week: Lock the Gate spokeswoman Naomi Hogan described the deformation as a “casing failure”. She said in a media release on February 6: “Lock the Gate can reveal today that Origin Energy erased all evidence of a frack well casing deformation in a submission to the NT Fracking Inquiry, making the draft Final Report a false account. “Lock the Gate is calling for a full investigation of Origin’s conduct, including how the NT Government and the NT Fracking Inquiry came to be implicated in the cover up.” However, it was revealed that Origin had provided diagrams both showing (pictured) and not showing the deformation, to the NT Government as well as the inquiry. The government released a statement that it had not misled the inquiry. 

A nearly invisible oil spill threatens some of Asia’s richest fisheries — A fiery collision that sank an Iranian tanker in the East China Sea a month ago has resulted in an environmental threat that experts say is unlike any before: An almost invisible type of petroleum has begun to contaminate some of the most important fishing grounds in Asia, from China to Japan and beyond.It is the largest oil spill in decades, but the disaster has unfolded outside the glare of international attention that big spills have previously attracted. That is because of its remote location on the high seas and also the type of petroleum involved: condensate, a toxic, liquid byproduct of natural gas production. Unlike the crude oil in better-known disasters like the Exxon Valdez and the Deepwater Horizon, condensate does not clump into black globules that can be easily spotted or produce heart-wrenching images of animals mired in muck. There’s no visible slick that can be pumped out. Experts said the only real solution is to let it evaporate or dissolve. Absorbed into the water, it will remain toxic for a time, though it will also disperse more quickly into the ocean than crude oil. Experts say there has never been so large a spill of condensate; up to 111,000 metric tons has poured into the ocean. It has almost certainly already invaded an ecosystem that includes some of the world’s most bountiful fisheries off Zhoushan, the archipelago that rises where the Yangtze River flows into the East China Sea. The area produced five million tons of seafood of up to four dozen species for China alone last year, according to Greenpeace, including crab, squid, yellow croaker, mackerel and a local favorite, hairtail. If projections are correct, the toxins could soon make their way into equally abundant Japanese fisheries. Exposure to condensate is extremely unhealthy to humans and potentially fatal. The effects of eating fish contaminated with it remain essentially untested, but experts strongly advise against doing so. “This is an oil spill of a type we haven’t seen before,”  “Working out the impact is actually a huge task — probably next to impossible.”

Iraq says $4 billion needed for new downstream oil investments (Reuters) - Iraq needs $4 billion for new investments in its downstream oil industry, Oil Minister Jabar al-Luaibi said on Tuesday, outlining plans to expand refining capacity over the next several years. Speaking at a conference on reconstruction of the war-torn country, he also said Iraq planned to boost its crude oil production capacity to 7 million barrels per day by 2022, from 5 million bpd at present. Luaibi said the downstream investment would lift refining capacity to 1.5 million bpd by 2021, with 500,000 bpd of that earmarked for export. The increase in refining capacity would come from seven projects, some of them new and some involving expansion of existing refineries. Some would be turnkey projects, in which contractors would hand over facilities to Iraq, while others would be build-operate-transfer deals in which private firms would receive concessions to operate facilities.

Nigeria preparing to comply with OPEC output cap: Kachikwu - Nigeria will refocus on oil projects that deliver higher returns to keep production within the limits set by OPEC, oil minister Emmanuel Kachikwu said late Tuesday. The country has been struggling to make good on its pledge not to produce above 1.8 million b/d under the OPEC/non-OPEC output agreement, with output hitting its highest level in more than two years in January at 1.93 million b/d, according to the S&P Global Platts survey. "Oil prices are currently depressed at $60-$70/b and, coupled with the production quota imposed by the Organization of Petroleum Exporting Countries, Nigeria will begin to look at its priorities differently," Kachikwu said in an oil ministry statement. Africa's biggest oil producer "will only consider projects that are of higher net value for the country," he added. Nigeria is working hard to keep its crude oil output within the OPEC quota, and would therefore need to focus on getting more revenue from existing projects by reviewing the production sharing contract (PSC) terms, he said. Kachikwu made clear this means prioritizing the approval of oil projects with international oil companies and reviewing the fiscal terms in the agreements with foreign partners to develop deepwater oil fields. Nigeria has not seen the start-up of new big oil fields in almost half a decade. But later this year it will get first oil from the 200,000 b/d offshore Egina oil field. 

Venezuela To Accept More Crude Oil From Russia As Production Falters -- Russian crude oil exports to Venezuela are rising as Caracas struggles to produce enough crude to supply refineries in its contracted network, according to a new report by S&P Global Platts.Russian Urals crude is now entering Venezuela at a rate of 335,000 barrels per day to supply PDVSA’s refinery in Curacao.So far this year, Caracas has purchased 3 million barrels of Urals crude from Swiss trader GlencoreFour tankers are scheduled to reach Curacao from Russian ports just this month, trading sources said.PDVSA has been the contractual operator of Curacao for many years, but the contract is set to expire in 2019. Shell, the facility’s owner, has said PDVSA will not be the facility’s operator beyond the existing contract due to its failure to meet contractual obligations to perform upgrades.According to OPEC’s Monthly Oil Market Report published this week, secondary sources - the ones the cartel uses to monitor compliance and official stats - pegged Venezuela’s crude oil production in January 2018 at 1.6 million bpd, down by 47,300 bpd compared to December 2017. This was the largest monthly decline in oil production among OPEC’s 14 member states. Venezuela, allowed to pump as much as 1.972 million bpd under the deal, surely did not make that cut voluntarily - its economy is collapsing and oil production has been in freefall for months now.  Venezuela, for its part, self-reported to OPEC that its oil production last month increased by 148,300 bpd over December to 1.769 million bpd.

Interview: Russia's Novak spells out vision for close long-term OPEC relationship --Russia wants to build a long-term relationship with Saudi Arabia and the broad OPEC alliance once their pact to restrict oil supplies expires, energy minister Alexander Novak said in an interview with S&P Global Platts. The world's largest producer of crude is reining in its output as part of a deal first agreed in 2016 with OPEC and a Russia-led group of smaller producers to withdraw 1.8 million b/d from global supply. Novak consented to extend the pact through 2018 last December, from the previous deadline of the end of March, and co-chairs, alongside Saudi energy minister Khalid al-Falih, the coalition's influential market monitoring committee. The coalition members are increasingly talking about future cooperation after the deal expires, and Russia and Saudi Arabia are already working closer in a number of areas.Last year, the two countries established a $1 billion fund to invest in joint energy projects, including in oil services and petrochemicals. They are also discussing gas projects, after Russia's Yamal LNG project was launched in the Arctic.While some analysts question the stability of the relationship between the world's two biggest oil producers, which are likely to start competing for the markets again sooner or later, Novak said he did not see the grounds for such concerns.

Russia, Saudi Arabia to ink LNG deal Wed, finalize 3 joint energy projects soon: Russian official - Russia and Saudi Arabia plan to ink an agreement in the LNG sector during Wednesday talks in Riyadh, and also aim to finalize three major energy projects worth more than $2 billion in joint investments within the next three months, as the two countries aim to accelerate work to build a strong bilateral relationship, the head of Russia's Fund of Direct Investments, Kirill Dmitriyev, said Wednesday. Saudi Aramco is expected to "partner with a major LNG project in Russia," Dmitriyev said, speaking during an energy forum in Riyadh."I think today you will also see a big announcement between Saudi Aramco and a major LNG project in Russia, but let's wait for the announcement," he said, adding that Russia enjoyed seeing Saudi Arabia's energy minister Khalid al-Falih visiting the Arctic Yamal LNG project launched in late 2017. Falih twice visited the Novatek-led Yamal LNG project last year as Saudi Arabia is interested in LNG purchases to free more oil that it currently uses as feedstock for its power stations. The Yamal LNG's initial capacity of 5.5 million mt of LNG is set to grow to 16.5 million mt/year when all three trains are launched and operational, with two more trains to be launched in the third quarter of 2018 and the first quarter of 2019, respectively. Novatek is already working on its second LNG project, the Arctic LNG 2, to be located on the neighboring Gydan peninsula, also in the Arctic.Earlier this month, Novatek's representatives said the company has increased the planned capacity of the plant to 19.8 million mt/year, up from initially considered 16.5 million mt/year. Other joint projects that the two countries have been discussing recently involve a $1 billion petrochemical project that Russian Sibur plans to build in Saudi Aramco, as well as Saudi's involvement into Russia's biggest oil service provider, Eurasia Drilling Company, and Novomet oil equipment producer, to supply services and parts to Saudi Aramco, Dmitriyev said.

Gazprom warns Europe of gas shortage without increased Russian imports - Europe will soon experience a gas shortage and price spike if it tries to rely on U.S. gas imports to cover rising demand instead of increasing purchases from Russia, Kremlin energy giant Gazprom told Reuters. The warning about a possible supply crunch comes as Gazprom prepares to start large-scale deliveries to China in a move reminiscent of Russia’s oil strategy, under which Moscow became a major supplier to Beijing at the expense of Europe. Gazprom’s deputy head Alexander Medvedev said the company would have enough supplies for both Europe and Asia but that it was time for Europe to decide from where it should source gas. “Europe completely miscalculated when they assumed that they won’t need much additional gas and if they need some it can be supplied from outside Russia,” Medvedev said.

Saudi Arabia Plans To Double Natural Gas Output In 10 Years - Saudi Arabia plans to double its natural gas production over the next ten years, the country’s energy minister told reporters on Wednesday.“When it comes to natural gas, over the next decade we are going to be roughly doubling our production to 23 billion cubic feet per day and substantially increasing the percentage of natural gas in the Kingdom’s fuel mix, displacing liquids and therefore reducing carbon (emissions),” Khalid Al-Falih said at the eighth annual IEA-IEF-OPEC Symposium on Energy Outlooks occurring in Riyadh.Natural gas is considered a “green” fuel because burning it releases less carbon dioxide into the atmosphere than coal or oil.Al-Falih also addressed industry-wide concerns regarding the future of an OPEC-led pact to reduce global oil output by 1.8 million barrels per day through the end of the year.“Market volatility is a common concern for producers and consumers, and the Kingdom is committed to mitigating this volatility and moderating its negative impacts by responsibly meeting its pledges” under the deal. “I am confident that our high degree of cooperation and coordination will continue and bring the desired results,” Falih told the industry conference, with an audience of Russian Energy Minister Alexander Novak and OPEC Secretary General Mohammad Barkindo.According to OPEC’s latest production figures released earlier this week, Saudi Arabia lifted its January production by 23,300 bpd to 9.977 million bpd—but still below its 10.058-million-bpd quota, over complying once again. The market volatility and the plunge in oil prices—from over $70 to $62 a barrel Brent—in just two weeks has raised concerns that oil is on another downturn, and Saudi Arabia returns to reiterate its pledge that it will do “whatever it takes” to bring global inventories back to balance.

NYMEX March natural gas down 2.3 cents seeking direction -- After settling 11.3 cents lower at $2.584/MMBtu Friday, NYMEX March natural gas futures were near unchanged overnight ahead of Monday's open with changing fundamentals. At 7:15 am ET (1215 GMT) the contract was 2.3 cents lower at $2.561/MMBtu, while trading a range from $2.545/MMBtu to $2.607/MMBtu. Colder weather helped drive up natural gas demand to start February, with the EIA's latest "Natural Gas Weekly Update" showing a 13% rise in total US gas consumption during the week to Feb. 7 from a week earlier, led by a 20% gain in ResComm demand.Rising demand in the report feeds expectations of a rise in the rate of weekly inventory withdrawals for the next storage data for the week ended Feb. 9, for which preliminary estimates call for drawdowns in the upper 170s Bcf against the 120 Bcf year-ago pull and the 154 Bcf five-year-average. The week's data would follow a 119 Bcf draw from stocks reported by the EIA for the week to Feb. 2 that bested the average anticipated 115 Bcf pull, but trailed both the 142 Bcf prior-year withdrawal and the 151-Bcf five-year average drawdown.

March NYMEX natural gas retraces some steps to $2.606/MMBtu in 'technical buying'- NYMEX March natural gas futures climbed in technical buying overnight in the US ahead of Tuesday's open. At 6:50 am ET (1150 GMT) the contract was 5.4 cents higher at $2.606/MMBtu. March gas shed 3.2 cents in the previous session falling through the key support level at $2.57/MMBtu in its fourth consecutive day on the downtrend but sentiment of oversold conditions is inspiring a fresh round of buying, as traders consider changing fundamentals. Recent cold weather is seen to have bolstered demand and encouraged a step higher in the rate of weekly storage draws when the US Energy Information Administration releases its next inventory report on Thursday that will cover the week ended February 9, with preliminary estimates spanning withdrawals in the mid- to upper 170s Bcf. That would compare to a 120 Bcf year-ago pull and the 154 Bcf five-year-average drawdown. It would also come on the heels of a draw of just 119 Bcf the previous week. Cooler weather during the review week to February 7, much of which will be included in the upcoming storage report, is seen to have driven a 20% week-on-week boost in consumption in the residential and commercial sectors that contributed to a 13% increase in total US natural gas consumption, the EIA's latest Natural Gas Weekly Update showed. Warming in store for the major heat-consuming regions in the midrange, however, spell renewed demand weakness in the weeks ahead likely to slow anew the rate of inventory withdrawals.

March NYMEX gas sheds a cent to $2.582/MMBtu in cautious trade - Wednesday's open, in cautious trade amid the expectation of supportive near-term storage data. Following a 4.2 cent advance in yesterday's session, the contract was down 1.2 cents at $2.582/MMBt at 7:15 am ET (1215 GMT).Cold weather that ramped up demand to start February is seen to have driven a step higher in the rate of weekly storage withdrawals when the US Energy Information Administration releases its next storage data on Thursday. Preliminary estimates call for a drawdown in the mid-170s Bcf to the low 180s Bcf for the review week ended February 9, which would exceed both the 120 Bcf year-ago pull and the 154 Bcf five-year-average withdrawal.The week's data would come on the heels of well below-average storage draws for the past couple of weeks at 99 Bcf and 119 Bcf. Warmer weather in store for the major heat-consuming regions in the eastern US spell diminished heating demand and a reduction in the amount of natural gas drawn from underground storage facilities in the coming weeks, but changing weather further out feeds upside support for demand.

NYMEX March gas holds steady, settles at $2.587/MMBtu -- The NYMEX March natural gas futures contract was relatively unchanged Wednesday, settling 0.7 cent lower at $2.587/MMBtu, as the market took a break from what has been a volatile month so far. Despite record US demand and gas storage numbers that are well below the five-year average during February, the NYMEX front-month contract has experienced sharp declines since March took over as the front-month contract, as forecasts of warmer-than-average weather and strong production have driven prices down. Wednesday's small price movement takes a step back from drops experienced lately in the front-month contract, as the contract has fallen $1.04, or 28.6%, over the prior 12 trading days. JJ Woods Associates President John Woods said the market dip throughout February "has been an overreaction to the downside" as concerns of strong output and warmer weather pressured the front-month contract from the $3.60/MMBtu level seen just a few weeks ago. "Just like prices were too overdone" at $3.60/MMBtu, the market is likely to correct the overreaction as "prices will reach $3[/MMBtu] shortly" awaiting "some news," Woods added. But that news did not arrive Wednesday, as US demand is projected to slide in the coming weeks, averaging 81.8 Bcf/d over the next seven days, down 9.6 Bcf/d from the 91.4 Bcf/d average over the previous seven days, according to S&P Global Platts Analytics. The projected demand drop could be partly attributed to the most recent six- to 10-day weather outlook from the National Weather Service, which calls for a high probability of warmer-than-average weather along the East Coast, Southeast and demand centers in the Midwest. 

NYMEX Mar gas slides 3.2 cents to $2.555/MMBtu ahead of storage report -- NYMEX March natural gas futures initially rose in the US overnight only to fall back despite the release later Thursday of US storage data poised to show higher weekly withdrawals. At 7:30 am ET (1230 GMT) the contract was 3.2 cents lower at $2.555/MMBtu. Cold weather is expected to have driven a large drawdown in the Energy Information Administration's storage report for the week ending February 9 to be released at 10:30 am ET. According to a consensus of analysts S&P Global Platts surveyed, the data is expected to show a 183 Bcf withdrawal. Responses to the survey were in a 174-191 Bcf range. A 183 Bcf draw would be above both the 120 Bcf a year earlier and the five-year-average of 154 Bcf. It would also take stocks down to 1.895 Tcf, 422 Bcf below the five-year average and 566 Bcf lower on the year. 

Wow, Natural Gas Drawdown Exceeds Forecast Significantly; Almost Doubles Last Year's Draw Down -- February 15, 2018 -- Note the forecast, and prior history for this time of year, and then the actual draw down in bold red: Natural gas: Thursday, February 15: AEI natural gas storage report:

  • previous: -119 bcf
  • forecast: -179 bcf (private forecast)
  • actual: -194
  • compare: -120 Bcf last year and -154 Bcf for the five-year average (same link)
Don did the math: at the rate of draw down the natural gas storage facility will be empty in 9.7 weeks. That is only 5.7 weeks later than Punxsutawney Phil said winter "might" be over for the year.

NYMEX March gas down 3 cents at $2.550/MMBtu on warmer weather - NYMEX March natural gas futures fell in overnight US trading on forecasts of warmer weather. At 7:35 a.m. ET (1235 GMT), the contract was 3.0 cents lower at $2.550/MMBtu. The market attempted to rise Thursday after the US storage report from the Energy Information Administration for the week to February 9 showed a higher-than-expected 194 Bcf withdrawal. The consensus of an S&P Global Platts analysts' survey was for a 183 Bcf withdrawal. Inventories were 1.884 Tcf, down 577 Bcf on the year and 433 Bcf below the five-year average. The six-to-10-day weather forecast from the National Weather Service shows above-average temperatures across nearly the entire eastern US, with normal temperatures in the central and Southwest and below-average readings in the western half. This is calming concerns about end-of-season supply, even though storage levels are on track to end March at their lowest since 2014, according to Barclays analysts. 

NYMEX March gas down 3 cents at $2.550/MMBtu on warmer weather - NYMEX March natural gas futures fell in overnight US trading on forecasts of warmer weather. At 7:35 a.m. ET (1235 GMT), the contract was 3.0 cents lower at $2.550/MMBtu. The market attempted to rise Thursday after the US storage report from the Energy Information Administration for the week to February 9 showed a higher-than-expected 194 Bcf withdrawal. The consensus of an S&P Global Platts analysts' survey was for a 183 Bcf withdrawal.Inventories were 1.884 Tcf, down 577 Bcf on the year and 433 Bcf below the five-year average. The six-to-10-day weather forecast from the National Weather Service shows above-average temperatures across nearly the entire eastern US, with normal temperatures in the central and Southwest and below-average readings in the western half. This is calming concerns about end-of-season supply, even though storage levels are on track to end March at their lowest since 2014, according to Barclays analysts.

Choke points could emerge to inhibit global LNG trade expansion in 2018 - Platts Snapshot Video - As the market embarks on a second year of record level LNG supply from the Atlantic Basin and strong competition from Asia for those volumes, a potential choke point is emerging: the Panama Canal. The canal can transit just one LNG vessel a day, laden or ballast, and only during daylight hours. The vessel transit restriction will be in place until October 2018 when capacity is expected to double to two vessels a day. In this video, S&P Global Platts Senior Director for Global Gas and LNG Madeline Jowdy examines how concerns about the Panama Canal can affect trade flows and investment decisions.

The Power Of Siberia And China's Next Natural Gas Moves - Gazprom’s Power of Siberia pipeline is more than two-thirds complete. It will be delivering gas to China by the end of this year. A second pipeline is still under discussion. A report yesterday from Alex Mercouris at The Duran noted some frustration from China over the irregular liquefied natural gas (LNG) supplies coming from its contract partners in Uzbekistan and Turkmenistan. It seems the Turkemi and Uzbek governments are shaking down China for better prices because gas demand in Western China’s autonomous regions is growing rapidly. Complicating matters is the tough winter in Europe which spiked LNG demand there as well. Remember, Gazprom recently announced that delivered volumes to Europe rose by 8% in 2017 over 2016. And that number is likely to rise again this year. Even the U.K. is begrudgingly buying Russian LNG from the Yamal LNG project on the Eastern Baltic coast. China National Petroleum Corp., CNPC, just signed a deal with Cheniere Energy to supply 1.2 million tons of LNG annually. China’s demand for natural gas has to rise as its leadership deals with the increasing costs of air pollution from running a major portion of its economy on coal. This is part of the reason why Russia and China hooked up for the original Power of Siberia pipeline in the first place. And it’s why I have little doubt that a second pipeline is a slam dunk. This would be the expanded Altai Pipeline or Power of Siberia 2 that was postponed in 2015 but is now back on the table. Last year China and Russia signed an MOU on Power of Siberia 2. Though no formal agreement has been reached, it’s obvious both parties want this done. The question for China is likely price. And they are not above holding out for better terms and cheaper gas prices. So, they’ll string Gazprom along on price by talking engineering, etc. for a few more months while they wait to see if the projected glut of gas materializes.

China hits new record with January oil imports - China established itself as the world’s largest importer of crude in January with shipments increasing by 19.4% year on year to a record high of 40.64 million tonnes (9.61 million bpd), according to the General Administration of Customs (GAC). Last month’s figure exceeded the March 2017 record high of 9.21 million bpd. China’s crude imports during the whole of 2017 displaced the US as the world’s largest importer, the US Energy Information Administration (EIA) confirmed last week. According to EIA data, China imported an average of 8.4 million bpd compared with US imports of 7.9 million bpd. GAC data put Chinese imports for the year at 8.49 million bpd.

Oil prices tumble as hedge funds liquidate record bullish position - Kemp (Reuters) - Hedge funds have started to liquidate some of their record bullish positions in crude oil and refined fuels as the rally has gone into reverse and amid signs that U.S. shale production is surging. Hedge funds and other money managers cut their combined net long position in the six most important futures and options contracts linked to petroleum by the equivalent of 41 million barrels in the week to Feb. 6. The combined net long position has been cut by a total of 63 million barrels over the two most recent weeks after being raised by 258 million barrels over the previous five weeks. Even after the recent reduction, however, the net long position across all six contracts is still a massive 1,112 million barrels higher than at the end of June 2017 ( The change has come from a reduction in long positions rather than an increase in short ones, which indicates that it has been driven by profit-taking after the rally. Portfolio managers have cut bullish long positions in Brent, NYMEX and ICE WTI, U.S. gasoline, U.S. heating oil and European gasoil by a combined 71 million barrels since Jan. 23. Bearish short positions have actually fallen by 8 million barrels over the same period, and are at the lowest level since oil prices started to slide in June 2014, according to records published by regulators and exchanges. The liquidation of some of the record long positions hedge fund managers accumulated in the weeks and months before Jan. 23 has coincided with a softening in benchmark Brent prices since Jan. 25. The accumulation of such an enormous number of long positions by fund managers had left the market looking very stretched, with long positions outnumbering short ones by a ratio of more than 11:1. The recent downward correction in prices therefore came as no surprise since lopsided positioning has normally preceded a sharp reversal in the previous price trend since at least the start of 2015. Commentators have identified several possible triggers for the correction in oil prices, including the sharp drop in U.S. equities, recent dollar strengthening and the unexpectedly rapid increase in U.S. shale production. In reality, positioning in the oil market had become so stretched almost anything (or nothing at all) could have sparked a sell off. 

Money managers reduce net length in NYMEX crude futures -  Money managers reduced their net length in NYMEX crude futures the week ending February 6, primarily by shedding longs during the middle of a sell-off, US Commodity Futures Trading Commission data showed Friday. Money managers cut their net length by 14,997 contracts to 467,783 contracts, having reduced their longs by 19,404 contracts. NYMEX front-month crude prices fell $2.41 during the last three days of the reporting period, settling at $63.39/b February 6. Since then, NYMEX crude has fallen another $4.19/b to settle at $59.20/b Friday (see story 2053 GMT). Analysts have blamed the price decline at least partially on higher US crude production and rising rig counts. Also, it is likely speculative longs are exiting the market. "Speculative financial investors, who had been betting further on rising prices in anticipation of continued market tightening, are now likely to get cold feet and jettison the net long positions they had previously built up," Commerzbank analysts said. Producer/merchants took the dip in prices as an opportunity to add a combined 8,935 long and short crude futures contracts to 872,628 contracts. In the process, producer/merchants reduced their net short position by 3,575 contracts to 80,658 contracts, the CFTC data showed.

Oil prices settle flat, steady after a week of losses - (Reuters) - Crude markets began to steady Monday, settling little changed on the day as global equities began to recoup some losses from their biggest one-week decline in two years. Brent crude LCOc1 futures slipped 20 cents, or 0.3 percent, to settle at $62.59. U.S. West Texas Intermediate crude CLc1 rose 9 cents to settle at $59.29 a barrel, up 0.2 percent but off the session high of $60.83. “Coming in today, the market tried to pick its head up,” said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut. “It was related to the weakness in the dollar.” A weaker dollar .DXY helped to support oil by making dollar-priced crude cheaper for holders of other currencies.  Crude also got a boost as traders who had unwound long positions last week looked to regain some long footing, said John Macaluso, analyst at Tyche Capital Advisors. Crude prices rose early, then pared gains on concerns that surging U.S. production would outstrip output cuts from the Organization of the Petroleum Exporting Countries (OPEC), McGillian said. U.S. crude production from major shale formations is expected to rise in March by 111,000 barrels per day from the previous month to 6.76 million bpd, the U.S. Energy Information Administration (EIA) said in a monthly report on Monday.[EIA/RIG] The EIA expects that U.S. crude output may rise to 11 million bpd by the end of the year. Early in the week, the market is likely to be driven by technical factors before fundamental inventory data from the U.S. Energy Information Administration kicks in later in the week, Macaluso said. “We’re two days away from EIA numbers, where we’re probably going to see another build,” he said. Analysts noted that oil consumption remains robust. “Demand growth is very strong and, with (output) declines in places like Venezuela, is helping the situation. If demand stays strong, it still looks like OPEC will be in control in 2019,” said SEB chief commodities strategist Bjarne Schieldrop. 

Oil prices firm as global stock markets rebound - Oil prices rose on Tuesday, lifted by a rebound in global stock markets that followed sharp falls last week. U.S. West Texas Intermediate (WTI) crude futures were at $59.44 a barrel at 0103 GMT. That was up 15 cents, or 0.25 percent, from their last settlement. Brent crude futures were at $62.78 per barrel, up 19 cents, or 0.3 percent, from the previous close. “Oil markets attempted a half-hearted recovery overnight on little more than an equity market correlated bounce,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore. Stock markets were roiled last week by some of the sharpest falls on record, shaking confidence across markets. With markets seemingly returning to calmer waters, oil traders said attention was turning to inventory levels to gauge crude supply levels. “The change in inventories this week will be crucial for determining whether further declines in the oil price are on the cards,” said William O‘Loughlin, investment analyst at Australia’s Rivkin Securities. The private American Petroleum Institute (API) is due to publish crude inventory estimates on Tuesday, while the government U.S. Energy Information Administration (EIA) is set to release its fuel storage and crude production data on Wednesday. On the demand side, the Organization of the Petroleum Exporting Countries (OPEC) said on Monday it expected world oil demand to climb by 1.59 million barrels per day (bpd) this year, an increase of 60,000 bpd from the previous forecast, reaching 98.6 million bpd. The rising consumption is being met by increased output from outside OPEC, the Middle East dominated producer club said. OPEC said the United States and other outside producers would boost supply by 1.4 million bpd this year, up 250,000 bpd from last month and the third consecutive rise from 870,000 bpd in November. OPEC said because of non-OPEC production growth, oil markets would only return to a supply and demand balance “towards the end of this year.” 

Oil Prices: Collapse Now, Spike Later - Oil prices closed out the week sharply down, wiping out all the gains posted since the start of the year.  Surging U.S. shale production, along with broader financial turmoil, has clearly put an end to the bullish mood in the oil market. U.S. shale struck several blows against oil prices this week.   First, the EIA dramatically overhauled its forecasts, predicting U.S. oil production would hit 11 million barrels per day (mb/d) this year, rather than late next year. Then, on Wednesday, it revealed estimates that put U.S. oil production at 10.25 mb/d for the week ending on February 2, a staggering 330,000 bpd increase from a week earlier. Those weekly estimates are subject to revision when more data becomes available, but if those figures hold, it would point to a significant ramp up in drilling activity and new supply coming online. As a result, it seems that, in the short run at least, U.S. shale has killed off the oil price rally, which saw WTI move from $50 per barrel in October to the mid-$60s per barrel by January. Brent saw a similar jump from the mid-$50s to $70. But we’re now potentially moving into the next phase of this cycle, an all-too-familiar correction after prices have seemingly climbed too far. This time around the downward swing could be aided by a rebound in the strength of the dollar.    However, the tightening in the oil market has not been a mirage. Inventories are closing in on the five-year average. Goldman Sachs argues that inventories are probably already back at average levels, but it will take time before we know for sure because of data is published on a lag. “The rebalancing of the oil market has likely been achieved, six months sooner than we had expected,” Goldman Sachs said in a recent note, predicting Brent will hit $82 per barrel within six months. It may seem a bit of a contradiction — on the one hand, the oil market seems poised for a price correction amid rising supplies, financial turmoil and overzealous positioning from hedge funds in the futures market. On the other hand, inventories are back close to average levels and some argue that OPEC could overshoot and tighten the market too much. Who to believe?

Oil Holds Steady, But Rebound Seems Unlikely - Oil prices seemed to have stabilized at new, lower levels after a massive decline last week. WTI has some support at about $59-$60 per barrel and Brent at $62. But fears of a shale wave cut seemed to have ended the bullish sentiment and reduced the likelihood of a rebound in prices in the short run.  . The IEA reiterated its position that global oil supply will grow faster than demand this year. The agency noted that global oil and product inventories have declined dramatically, and are very close to the five-year average, but that surging U.S. supply could tip the balance back into surplus. Production is growing so fast that it resembles the original shale wave from years ago. This “second wave of growth [is] so extraordinary” that the supply growth from the U.S. alone could equal total global demand growth in 2018. “[T]he underlying oil market fundamentals in the early part of 2018 look less supportive for prices,” the IEA wrote.Total and Shell are emerging ahead of their peers as darlings of investors, according to Reuters. Total announced plans to hike its dividend by 10 percent and also buyback $5 billion worth of shares by 2020. Bernstein analysts said that Total represents “the new benchmark in shareholder returns,” and the firm upgraded Total’s shares to “outperform.” Shell, for its part, posted earnings and cash flow that exceeded ExxonMobil’s. Shell said it will buy back $25 billion worth of shares by 2020. Meanwhile, Exxon disappointed the market and its share prices has fallen dramatically in the past two weeks.

Oil prices flat, all eyes on US production data (Reuters) - Oil prices were flat on Tuesday, bouncing back from an early slide as the dollar fell to a one-week low, which encouraged buying of dollar-denominated crude at session lows. Global benchmark Brent futures hit a two-month low early, but by 2:02 p.m. EST (1902 GMT), Brent rose 11 cents to $62.70 a barrel. U.S. West Texas Intermediate crude futures were down 9 cents at $59.20 a barrel. The U.S. dollar hit a one-week low, which can attract investors to oil by making crude cheaper for buyers using other currencies. “We have chipped away at crude losses today, and you could easily say it’s a function of a weak dollar,” Since the stock market began falling sharply early this month, oil prices have wiped away the year’s gains amid a volatile stock market. “There are a lot of people who are praying that last week’s collapse in crude...was some anomaly, and that as soon as the stock market recovered, the crude market would recover with it,” said Walter Zimmerman, chief technical analyst at United-ICAP. “So far its looking a little ominous but WTI has not broken down,” Zimmerman said, adding the contract would have to decline more to enter a bear market. Paris-based International Energy Agency said global oil supply would outstrip demand this year, prompting fears that efforts to reduce inventories would fall short of expectations. The IEA revised its global demand forecast upward by 7.7 percent. Still, rising production, particularly from the United States may outweigh demand gains. The United States overtook Saudi Arabia last week to become the second-largest global producer. U.S. oil production is expected to surpass 11 million barrels per day in late 2018, a year earlier than projected last month, the U.S. Energy Information Administration said last week. Seasonality may also be affecting prices, analysts said.  

WTI/RBOB Drop After Bigger Than Expected Crude Build - An ugly week or two for WTI/RBOB continued today ahead of tonight's inventory data and after API reported big builds in crude, gasoline, and distillates; both WTI and RBOB dropped further. API:

  • Crude +3.947mm (+3.05mm exp)
  • Cushing -2.319mm (-1.7mm exp)
  • Gasoline +4.634mm
  • Distillates +1.1mm

3rd weekly crude build in a row and big builds in products too... Not been a pretty week or two for the record spec longs... and it just got a little worse... Of course the big story on traders' minds is surging US production and sudden questions about potential global growth spooked by stocks...

OMR: History repeating itself? - IEA - New and revised data shows a modest tightening of the balance in the early part of 2018, but the main message remains unchanged from last month and it is very clear: in 2018, fast rising production in non-OPEC countries, led by the US, is likely to grow by more than demand. For now, the upward momentum that drove the price of Brent crude oil to $70/bbl has stalled; partly due to investors taking profits, but also as part of the corrections we have seen recently in many markets. Most importantly, the underlying oil market fundamentals in the early part of 2018 look less supportive for prices.  Our demand growth estimate for 2017 remains strong at 1.6 mb/d, reinforced by November data for the US. For 2018, the more positive global economic picture published by the International Monetary Fund is a key factor in raising our growth outlook to 1.4 mb/d. It was thought that the significant increase in the dollar price of crude oil since the middle of 2017 would dampen growth, and this might be the case to some extent, but the impact of higher prices has been partly offset in some countries by currency appreciations.  It is clear that strong demand growth in 2017, alongside a modest increase last year in non-OPEC output, and the cuts made by leading producers, has contributed to the extraordinarily rapid fall in OECD oil stocks. A year ago, they were 264 mb above the five-year average and now they are only 52 mb in excess of it, with stocks of oil products actually below the benchmark. Although the OECD is not the whole world, the leading oil producers who agreed to cut output identified the level of the group’s stocks as an indicator of the progress of their initiative. With the surplus having shrunk so dramatically, the success of the output agreement might be close to hand. This, however, is not necessarily the case: oil price rises have come to a halt and gone into reverse, and, according to our supply/demand balance, so might the decline in oil stocks, at least in the early part of this year.

IEA Warns Of New Oil Glut -- The global oil market could slip into deeper oversupply on the back of non-OPEC production growth led by the United States, the International Energy Agency said in its latest Oil Market Report.“The main factor,” the IEA said, “is US oil production. In just three months to November, crude output increased by a colossal 846 kb/d, and will soon overtake that of Saudi Arabia. By the end of this year, it might also overtake Russia to become the global leader.”  Commenting on the recent reversal in oil prices, the authority attributed it to profit-taking and a market correction spanning all industries, adding that oil’s fundamentals supported a decline in prices. The situation in the United States suggests that history is repeating itself and what we are seeing now is indeed a second shale revolution that could bring petroleum liquids production on par with global demand growth.But that’s not all. The IEA noted the recent shipment of the first U.S. condensate cargo to the UAE, which although unique might prove to be the start of a new era in international oil trading patterns.The news is certainly not good for OPEC and, to a lesser extent, Russia, but there is some light at the end of the tunnel: global economic growth could turn out to be stronger than previously expected and this would help offset the impact of growing U.S. production on prices and keep them where they are now.The authority hinted that the end of the OPEC deal could be in sight given that the overhang in OECD oil inventories has shrunk to just 52 million barrels from 264 million barrels a year ago, but added that the trend in oil prices could convince the cartel to wait.Separately, the IEA maintained its 2017 oil demand growth estimate at 1.6 million bpd and said this year demand will grow by 1.4 million bpd, a 100,000-bpdupward revision on the January OMR estimate thanks to IMF’s expectations of stronger economic growth this year.

Is History Repeating Itself In Oil Markets? -- Back in 2014, U.S. shale production was growing so fast that it ended up crashing the market. Now, history could be repeating itself...That was the warning from the International Energy Agency, which said in its latest Oil Market Report that a “second wave” of shale supply threatens another downturn.Total global oil supply is expected to grow faster than demand this year, which could lead to another downturn. It’s a conclusion that the IEA tried to emphasize in previous reports, but the message finally seems to be sinking in.The extraordinary run up in benchmark prices in December and January came to a startling end two weeks ago. Part of the reason was because of the broader market turmoil in equities, and part of it was because hedge funds and other money managers had overbought oil futures, exposing the market to a price correction.But as the IEA notes, the real worry is rising oil supply, which means that “the underlying oil market fundamentals in the early part of 2018 look less supportive for prices.”It isn’t all bad news for benchmark prices. The IEA noted that due to the OPEC production cuts and strong demand, inventories fell at a remarkable rate last year. The oil inventory surplus currently stands at about 52 million barrels above the five-year average, down sharply from 264 million barrels a year ago. Importantly, while crude oil inventories are closing in on the five-year average, total stocks of gasoline and other refined products have already fallen well below that threshold. “With the surplus having shrunk so dramatically, the success of the output agreement might be close to hand,” the IEA wrote. But even as the elusive “balance” in the oil market is within reach, the IEA says things might quickly reverse. The reason why the oil market might suffer from a renewed glut largely comes down to soaring U.S. shale production. In the three-month period ending in November, the U.S. added “a colossal 846 kb/d,” the IEA noted, with even steeper gains expected this year. The bearish forecast comes a week after the U.S. EIA said much of the same thing: shale output is rising so quickly that the U.S. could reach 11 million barrels per day (mb/d) this year instead of next year. By the end of 2018, the U.S. could surpass Russia and Saudi Arabia in terms of total production. The IEA says that the stars are aligning for U.S. shale, with “rising prices leading, after a few months, to more drilling, more completions, more production, and more hedging.”

Oil glut nearly gone but shale rebound looms - OPEC and its allies have almost achieved their goal of clearing an oil glut, but their efforts could be derailed by rising supplies from the U.S. and other rivals, the International Energy Agency said.Oil stockpiles in developed nations fell the most in more than six years in December as supply cuts by the Organization of Petroleum Exporting Countries and Russia took effect. The surplus is also being cleared by higher consumption, with the agency boosting its forecast for global demand growth in 2018 by about 100,000 barrels a day to 1.4 million a day.Yet OPEC's strategy could be backfiring, as the increase in prices to a three-year high stimulates more supply from America. U.S. output will soon surpass that of the cartel's biggest producer, Saudi Arabia, and may overtake Russia as global leader by the end of the year, according to the IEA.  OPEC and Russia, once fierce market rivals, forged an alliance in late 2016 to offset the oil glut unleashed by the advent of the U.S. shale industry. After a year of output cuts, stockpiles in industrialized nations have shrunk to the lowest since November 2014. They were about 52 million barrels above the five-year average in December, a drop of 80 percent from a year earlier, the IEA said. Last month, OPEC's implementation of pledged cuts was its strongest since the deal came into force, with the group reducing output by 37 percent more than it promised, according to the IEA. Compliance was given a boost by Venezuela, whose oil industry has been crippled by years of under-investment and economic decline. Global inventories may stop falling in the early part of this year with the onset of new supplies, the agency said. It raised estimates for growth in non-OPEC supply in 2018 by about 100,000 barrels a day to 1.8 million a day -- approximately equal to the amount of production OPEC and its partners promised to cut.

WTI/RBOB Spike After Smaller Than Expected Crude Build, New Record High Production - The kneejerk reaction drop in WTI/RBOB overnight on API data was rapidly unwound ahead of today's DOE data and spike further as data showed a smaller than expected crude build (and smaller than API). However, US Crude production surged to new highs once again. DOE:

  • Crude +1.84mm (+3.1mm exp)
  • Cushing -3.62mm (-1.7mm exp)
  • Gasoline +3.59mm (+1.8mm exp)
  • Distillates -459k

3rd weekly Crude build in a row (but lower than expected), but gasoline saw a much bigger than expected build as refinery runs slowed... As Bloomberg notes, last week's refining jump was a blip after all. Gross inputs fell almost 500,000 barrels a day and utilization rates sank back to 89.8%, more in line with what you'd expect this time of year. Cushing Stocks are at their lowest since January 2015... Crude Production rose once again +20k to new record highs...

OPEC: "Houston, We Have A Problem" -- Summary:

  • OPEC's report implies an undersupplied market in 2018
  • however, the report takes an unusually pessimistic view on the trajectory of shale production
  • if one were to use more optimistic projections for U.S. volumes instead, OPEC's report flags the risk of an oversupplied market

OPEC issued its Monthly Oil Market Report for February. The report concludes that the "call" on OPEC production in 2018 will exceed the cartel's January 2018 output by approximately 0.6 million barrels per day. The forecast implies that in the absence of meaningful production increases by OPEC, the market will be undersupplied in 2018, which would lead to further depletion of global petroleum inventories. While the report appears to support the thesis for stronger oil prices throughout 2018, a closer review reveals that the forecast is based on a debatable assumption that U.S. crude production growth will slow down significantly from the recent pace. The assumption raises many questions, putting in doubt OPEC's forecast of a tight market for crude oil in 2018. OPEC revised its U.S. crude production forecast up by 0.15 MMb/d from the previous report. The new forecast calls for U.S. volumes to average 10.22 MMb/d in 2018. To put OPEC's forecast in perspective, the U.S. Energy Information Administration estimates U.S. current crude production at 10.27 MMb/d, which is higher than OPEC's full-year forecast average. The EIA's weekly estimate is based on the agency's STEO model, which predicts U.S. production to average 10.59 MMb/d for the year - or ~370,000 b/d above OPEC's forecast - and reach 11.13 MMb/d in December 2018.

Crude Oil Prices Settle Above $60 as Inventories Rise Less Than Expected - WTI crude oil prices settled higher after data showing US oil supplies rose less than expected offset bearish product inventories data. On the New York Mercantile Exchange crude futures for March delivery rose 2.4% settle at $60.60 a barrel, while on London's Intercontinental Exchange, Brent rose 2.7% to trade at $64.40 a barrel. Inventories of U.S. crude rose by 1.841 million barrels for the week ended Feb. 9, below expectations for for a rise of 2.825 million barrels. Gasoline inventories – one of the products that crude is refined into – rose by 3.599 million barrels, well above the expectations for a build of 1.229 million barrels, while supplies of distillate – the class of fuels that includes diesel and heating oil – fell by 459,000 barrels, less than the 1.130 million barrels forecast. The sharp build in gasoline inventories comes amid a slowdown in refinery activity as refiners enter a period of maintenance. That, however, hasn't led to a faster pace of crude stockpiles in recent weeks. Also supporting crude prices were supportive comments from Saudi oil minister, Khalid al-Falih, who said that OPEC would continue to curb production even if that would result in a supply shortage. "If we have to overbalance the market a little bit, then so be it," Al-Falih said. His comments come a day after the Energy International Agency’s gloomy monthly report stoked investor fears that rising US oil output would derail OPEC’s efforts to rebalance the market. “All the indicators that suggest continued fast growth in the US are in perfect alignment; rising prices leading, after a few months, to more drilling, more completions, more production, and more hedging," the IEA's report stated.

Oil shows resilience as dollar weakness continues - Oil futures proved resilient Thursday, with the U.S. benchmark reversing earlier weakness to end higher as the U.S. dollar continued to weaken, while the global oil benchmark largely erased losses.West Texas Intermediate futures rose 74 cents, or 1.2%, to end at $61.34 a barrel. On Wednesday, the contract rose 2.4% to notch its biggest one-day rise since Dec. 26. Brent crude, the global benchmark, fell 3 cents to close at $64.33.The U.S. dollar was weaker versus major rivals for a fourth straight session Thursday. A weaker buck can be a positive for commodities priced in dollars, making them cheaper to users of other currencies.Oil futures weakened in early action, with analysts saying the Wednesday rebound appeared possibly overdone given economic data and U.S. production statistics, with the bounce driven largely by a smaller-than-expected rise in crude inventories.“The strong upwards movement ran somewhat counter to the more bearish looking signals from inflation and consumer retail sales data,” wrote analysts at JBC Energy in Vienna, in a note. 

Physical oil market sends warning to OPEC: Rout might not be over (Reuters) - As OPEC watches a near 15 percent drop in the oil price in three weeks, important indicators in the physical crude market are flashing signals that the decline might be far from over. The warnings come not from the heavily traded futures market, but from less transparent trading activity in crude oil and products markets, where key U.S., European and Russian crude prices have fallen of late, suggesting less robust demand. Benchmark oil futures have plunged in recent days together with global stock markets due to concerns over inflation as well as renewed fears that rapid output increases from the United States will flood the market with more crude this year. OPEC, including its Secretary-General Mohammad Barkindo, argues the decline is just a blip because demand is exceeding supply and that prices won’t plunge again to $30 per barrel as they did in 2015 and 2016. Traditionally, when oil futures decline, prices in the physical markets tend to rise because crude is becoming cheaper and hence more attractive to refiners. But in recent weeks, differentials in key European and U.S. markets such as North Sea Forties, Russia’s Urals, West Texas Intermediate in Midland, Texas, and the Atlantic diesel market have fallen to multi-month lows. The reasons tend to be different for most physical grades but overall the trend paints a bearish picture. “Physical markets do not lie. If regional areas of oversupply cannot find pockets of demand, prices will decline,” said Michael Tran of RBC Capital Markets. “Atlantic Basin crudes are the barometer for the health of the global oil market since the region is the first to reflect looser fundamentals. Struggling North Sea physical crudes like Brent, Forties and Ekofisk suggest that barrels are having difficulty finding buyers,” he added. This follows a run-up in U.S. production to 10.04 million barrels per day as of November, the highest since 1970.

Brent crude settles flat, U.S. oil up on short covering  (Reuters) - Oil markets were mixed on Thursday with Brent flat even though the dollar slid, while U.S. crude rose as investors covered short positions."This is kind of an upside-down Thursday," said Dominick Chirichella, co-president at the Energy Management Institute in New York. He said he was puzzled at why a weaker dollar did not boost Brent futures prices."The rise we've seen in U.S. crude has been more of a short covering rally rather than a return to the uptrend," he added.Global benchmark Brent slipped 3 cents to settle at $64.33 a barrel. U.S. West Texas Intermediate crude gained 74 cents, or 1.2 percent, to settle at $61.34.Those price moves cut the premium of Brent over WTI <WTCLc1-LCOc1> to its lowest in six months."If the Brent-WTI spread narrows, the big incentive to export U.S. crude oil starts to narrow," Chirichella said, noting he did not expect U.S. prices to hold at these higher levels for long since "all of the fundamental snapshots ... over the past couple of weeks have been bearish."The dollar slid to its lowest since it touched a three-year low in late January. A weaker dollar often boosts prices for oil and other dollar-denominated commodities, making them cheaper for holders of other currencies."I´m surprised that (Brent) oil prices are falling today given the weaker U.S. dollar. Currently, the direction of the dollar is having a bigger impact on oil prices than fundamentals," said Rob Thummel, portfolio manager at energy investment manager Tortoise Energy.

Crude Oil Prices Settle Lower as Slowing Refinery Activity To Weigh on Demand– WTI crude oil prices settled lower as traders continued to digest supportive comments from Saudi Arabia while expectations for a further build in product inventories weighed on sentiment. On the New York Mercantile Exchange crude futures for March delivery fell 1.2% settle at $61.34 a barrel, while on London's Intercontinental Exchange, Brent lost 2 cents to trade at $64.34 a barrel. Oil prices reversed some of their gains from Wednesday’s session as traders continued to digest recent data showing US oil producers continued to ramp up production while refinery activity continued to drop, which could add to domestic supply totals in the weeks to come. U.S. refinery utilization dropped to 89.8% last week, the Energy Information Administration said Wednesday. The slowdown in in refinery activity comes as refiners enter a period of maintenance expected to last “almost a month,” said Michael Loewen, a commodities strategist at Scotiabank in Toronto. Subdued refinery comes as U.S. crude output hit a record 10.27 million barrels per day, which keeps the US on track to meet the EIA’s recent estimate for domestic production to top 11 million barrels per day by year-end. Yet, offsetting that somewhat was a slump in the dollar to 2-week lows and recent comments from Saudi Arabia. "If we have to overbalance the market a little bit, then so be it," Al-Falih said Wednesday.

Oil Rig Count Rises As Prices Recover | - Baker Hughes reported a 7-rig increase to the number of oil rigs this week, with a decrease of 7 gas rigs for the reporting period.The result of no increase or decrease to the number of oil and gas rigs this week will likely come as a slight reprieve to battered traders who took it on the chin last week as oil prices plummeted.The total number of oil and gas rigs holds steady at 975, which is an addition of 2224 rigs year over year.The number of oil rigs in the United States stands at 798, or 201 over this time last year. The number of gas rigs, which fell by 7 this week, now stands at 177, or 24 rigs above this week last year.At 12:01 pm EST, the price of a WTI barrel was trading up $0.47 (+0.77%) to $61.64—about a $2 recovery from last week’s dip of $59.80. The Brent barrel trading up $0.73 (+1.13%) to $65.06, also almost $2 per barrel over last week’s prices. Both benchmarks are down from January prices.  Prices have been volatile in recent weeks, but most notably last week, on the back of higher US production, higher crude oil inventories, and an updated IEA forecast that warned that a new glut may be coming on the back of robust US crude oil production. US crude oil production rose again in the week ending February 9, to 10.271 million bpd—a new high—and up from last week’s high of 10.251 million bpd.The Permian basin rig count lost the most rigs this week with a loss of 4. At 1:08pm EST, WTI was trading at $61.67 (+$0.50) with Brent trading at $65.01 (+$0.68).

U.S. drillers add oil rigs for fourth consecutive week -Baker Hughes - (Reuters) - U.S. energy companies added oil rigs for a fourth week in a row even though crude pulled back from three-year highs over the past couple of weeks as more drillers boost their 2018 spending plans. Drillers added seven oil rigs in the week to Feb. 16, bringing the total count up to 798, the highest level since April 2015, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. That was the first time since June that drillers added rigs for four consecutive weeks. The U.S. rig count, an early indicator of future output, is much higher than a year ago when 597 rigs were active as energy companies have continued to boost spending since mid-2016 when crude prices began recovering from a two-year crash. U.S. crude futures traded around $62 a barrel this week, down from late January when prices rose to their highest since December 2014. That compares with averages of $50.85 in 2017 and $43.47 in 2016.  Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week slightly increased their forecast for the total oil and natural gas rig count to an average of 1,014 in 2018 and 1,128 in 2019. Last week, they forecast 1,002 in 2018 and 1,128 in 2019. There were 975 oil and natural gas rigs active on Feb. 16. On average, there were 876 rigs available for service in 2017, 509 in 2016 and 978 in 2015

US oil benchmark aims for 3-day win streak after rig data - Oil futures rose Friday, putting the U.S. benchmark on track for a three-day win streak, as the market took another rise in the number of U.S. drilling rigs in stride. West Texas Intermediate crude for March delivery on the New York Mercantile Exchange was up 43 cents, or 0.7%, at $61.60 a barrel. April Brent crude futures, the global benchmark, rose 62 cents, or 1%, to $64.95 a barrel on the ICE Europe exchange.Crude held on to gains after oilfield-services firm Baker Hughes Inc. said the number of U.S. oil rigs rose by 7 this week to 798 for the fourth consecutive weekly increase.Supply concerns were expected to keep a lid on prices. Traders remain concerned about the amount of U.S. shale that could hit the market. The International Energy Agency earlier this week forecast that crude output from outside the Organization of the Petroleum Exporting Countries—mostly from U.S. shale—could surpass global demand this year.But a rebound by stocks, and recent weakness in the dollar, notwithstanding a Friday bounce by the greenback, were seen playing a role in ending a crude selloff. That drop had driven WTI from a high above $66 a barrel back below $60 last week.“With stock market stability coming back, it’s back to a focus on tightening U.S. oil supply,” said Phil Flynn, senior market analyst at Price Futures Group, in a note. Wednesday data from the Energy Information Administration showed the amount of oil in Cushing, Okla., the delivery hub for Nymex futures, continued to fall. The amount dropped to 32.7 million barrels in the week ended Feb. 9, from 36.3 million the previous week. Private data indicate a further 1.78 million barrel drop in Cushing stocks over the last four days, Flynn said.

Oil gains in weekly recovery on equities rebound, weak dollar : (Reuters) - Oil prices edged up on Friday as a rebound in the global equities market and a weak dollar supported crude's recovery from last week's slide.Global stocks rallied for a sixth straight session to post their best week in more than two years. The dollar rose on the day but remained on track to post its biggest weekly loss in nine months. A weaker dollar can boost oil and other dollar-denominated commodities."I don´t want to underestimate what the dollar is doing. The weaker dollar has been extremely supportive to crude," said Bill Baruch, president and founder of Blue Line Futures.Brent crude futures settled 51 cents, or 0.8 percent, higher at $64.84 per barrel, after touching eight-day highs. The global benchmark ended the week up more than 3 percent, partially recovering from a decline of more than 8 percent last week.U.S. West Texas Intermediate crude rose 34 cents, or 0.6 percent, to $61.68. WTI gained 4 percent this week after losing nearly 10 percent last week.Money managers slashed their bullish wagers on ICE Brent crude oil futures by the most in nearly eight months in the week to Feb. 13, data showed, as prices plunged amid concerns of oversupply.Speculators also cut net long U.S. crude futures and options positions in the week to Feb. 13 by the most since late August, the U.S. Commodity Futures Trading Commission (CFTC) said.

OPEC Future In Doubt As US Production, Rig Count Surge - As US oil production surges to record highs, surpassing Saudi Arabia, rig counts continues to rise (up 7 last week, up 5 of the last 6 weeks) suggesting more production is to come. The rising rig count continues to track lagged WTI prices...  As production soars...  Surpassing Saudi Arabia and nearing Russia...  All of which has prompted OPEC and Russia, along with other countries participating in the oil production cuts aimed at balancing the market, are looking to create a “super group of oil producing countries,” according to a report from The National. As's Nick Cunningham details, the move would institutionalize the framework that has been in place since late 2016, when OPEC, plus a group of non-OPEC oil-producing countries led by Russia, cut output by a combined 1.8 million barrels per day (mb/d). The trick has been keeping everyone on board with the limits for an extended period of time, with multiple extensions, while also trying to figure out what to do when the oil market reaches the long-sought after “balance.”The fear has been that all participants would return to producing flat out, ramping up production in a short period of time, a specter that threatened to crash oil prices all over again. Up until now, OPEC has maintained a shockingly high level of compliance, although that has been aided by the involuntary cuts (i.e. collapse) of output in Venezuela. Still, OPEC and its coalition partners have been cagey about what they plan on doing at the end of this year, offering soothing but vague comments about a “gradual” exit. But, according to The National, the “super group” led by Saudi Arabia and Russia would offer an institutional framework to manage the oil market post-2018. They hope to create a draft proposal before the end of the year. The goal is “together with the secretary general [of Opec, Mohammad Barkindo], to put together a draft agreement for this group [of 24] to stay together for a longer time,” UAE’s oil minster Suhail Al Mazrouei, who currently holds the OPEC presidency, told The National in Abu Dhabi.

OPEC Seeks Capacity Buffer To Counter Dollar-Led Oil Price Jumps -  OPEC is encouraging all its members to build buffers of oil production capacity in order to be able to counter this year a surge in oil prices led by a weaker U.S. dollar, the UAE’s Energy Minister Suhail Al Mazrouei told The National in an interview on Thursday. The weakening of the U.S. dollar in recent months was one of the reasons for the oil price rally. Both WTI and Brent prices hit three-year highs at the end of January as the dollar further slipped, before the oil price rally came to an end two weeks ago with the financial markets turmoil, soaring U.S. oil production, and money managers taking profits from part of the overstretched net long position they had amassed in oil and oil product futures.  “We are incentivising all the group members to have some buffers. That buffer is [to assure] that if you have a surge [in demand] or issue in one of the countries you can replace that in the market and achieve a short and medium-term re-balance of the market,” Al Mazrouei told The National, answering a question about the downsides of a weak dollar on prices. The UAE itself has plans to raise capacity, so do Kuwait and Iraq. Saudi Arabia currently also has spare production capacity, since it is cutting some 500,000 bpd from its production as part of the OPEC/non-OPEC deal. The oil production capacity of Iraq is nearing 5 million bpd, its oil minister Jabbar al-Luiebi said last month, while Baghdad is currently producing around 4.4 million bpd. While OPEC producers are surely happier with the price of oil now than last year or in 2016, the cartel is careful not to overshoot its own strategy to tighten the market too much or see wild upswings in prices that can further motivate U.S. shale drillers to pump more oil.

Exclusive: Plans in the works for super group of oil producing countries -  Plans for a super group of oil producing countries could be in place before the end of this year as Opec works to institutionalise the ongoing collaboration between 24 member and non-member nations that has helped crude prices to recover. Suhail Al Mazrouei, the Minister of Energy and Industry of the UAE, which currently holds the Opec presidency, said that a draft framework for a long-term alliance will be finalised in 2018. The aim is “together with the secretary general [of Opec, Mohammad Barkindo], to put together a draft agreement for this group [of 24] to stay together for a longer time”, he said. The charter for the broader group is currently “a work in progress” but it is a clear aspiration, the minister said in an interview with The National in Abu Dhabi. Mr Al Mazrouei has some hope that the draft framework could even be endorsed and signed by all 24 countries before the end of the year. Optimism is running high that there is now a strong base on which to make the collaboration with non-Opec members a more permanent fixture of energy markets. The Saudi oil minister Khalid Al Falih said last month that the kingdom’s energy alliance with Russia will continue for “decades and generations” and on Wednesday, there was news of plans for joint investments by Saudi and Russia. Opec’s Mr Barkindo said this week that the “building blocks” to institutionalise the partnership between the 24 countries had started to be put in place.  A more permanent partnership between a grouping including the world’s biggest crude producers, Russia and Saudi, would help with efforts to keep energy markets stable in the future as the growth of the US shale sector means the United States could overtake them both in terms of output by next year, according to the IEA. The oil price crash of 2014 was triggered by an over-supply driven by surging shale production in the US.

Turkish warships block drilling rig near Cyprus  - Turkish President Recep Tayyip Erdogan on Tuesday issued a warning to neighboring Greece and Cyprus as well as foreign companies not to encroach on Turkey's sovereignty."Right now, our warships, air force and other security units are following developments in the region closely with the authority to make any kind of intervention if necessary," Erdogan told members of his ruling AK Party in parliament."We advise the foreign companies who are conducting activities off Cyprus, relying on the Greek side, not to be an instrument to businesses that exceed their limit and power." Ankara came under fire this week after its warships began blocking a rig from reaching a location off the coast of Cyprus, where Italian energy company Eni is scheduled to drill for gas. Cyprus government spokesman Nicos Christodoulides told state broadcaster RIK that the rig remained anchored in the eastern Mediterranean, about 50 kilometers (30 miles) from the drilling target off the southeastern coast. He said both the government and Eni were determined to see the drilling go ahead as planned. Italian Foreign Minister Angelino Alfano, meanwhile, said he hoped to find a "shared solution, respecting international law and in the interests of Eni, the countries in the region and of the two Cypriot communities."

Turkey accused of recruiting ex-Isis fighters in their thousands to attack Kurds in Syria - Turkey is recruiting and retraining Isis fighters to lead its invasion of the Kurdish enclave of Afrin in northern Syria, according to an ex-Isis source.“Most of those who are fighting in Afrin against the YPG [People’s Protection Units] are Isis, though Turkey has trained them to change their assault tactics,” said Faraj, a former Isis fighter from north-east Syria who remains in close touch with the jihadi movement.  In a phone interview with The Independent, he added: “Turkey at the beginning of its operation tried to delude people by saying that it is fighting Isis, but actually they are training Isis members and sending them to Afrin.” An estimated 6,000 Turkish troops and 10,000 Free Syrian Army (FSA) militia crossed into Syria on 20 January, pledging to drive the YPG out of Afrin. The attack was led by the FSA, which is a largely defunct umbrella grouping of non-Jihadi Syrian rebels once backed by the West. Now, most of its fighters taking part in Turkey’s “Operation Olive Branch” were, until recently, members of Isis. Some of the FSA troops advancing into Afrin are surprisingly open about their allegiance to al-Qaeda and its offshoots. A video posted online shows three uniformed jihadis singing a song in praise of their past battles and “how we were steadfast in Grozny (Chechnya) and Dagestan (north Caucasus). And now Afrin is calling to us".  Isis fighters are joining the FSA and Turkish-army invasion force because they are put under pressure by the Turkish authorities. From the point of view of Turkey, the recruitment of former Isis combatants means that it can draw on a large pool of professional and experienced soldiers. Another advantage is that they are not Turks, so if they suffer serious casualties this will do no damage to the Turkish government.

Tillerson meets Turkey's Erdogan for 'open' talks after weeks of strain (Reuters) - Top U.S. diplomat Rex Tillerson and Turkey’s Tayyip Erdogan had a “productive and open” talk on Thursday about improving ties strained recently over their policies on Syria, in a meeting following weeks of escalating anti-American rhetoric from Ankara. Tillerson arrived in Turkey on Thursday for two days of what officials have said would likely be uncomfortable discussions between the allies, whose relations have frayed over a number of issues, particularly U.S. support for the Syrian Kurdish YPG militia, seen as terrorists by Turkey. Turkey launched an air and ground assault last month in Syria’s northwest Afrin region to drive the YPG from the area south of its border. Ankara considers the YPG to be an arm of the PKK, a banned group that has waged a decades-long insurgency in Turkey. The militia is the main ground element of the Syrian Democratic Forces (SDF), which the United States has armed, trained and aided with air support and special forces to fight Islamic State. “The two engaged in a productive and open conversation about a mutually beneficial way forward in the U.S.-Turkey relationship,” said a U.S. State Department spokesman traveling with Tillerson. In a photo distributed by the Turkish presidency before the start of the more than three-hour meeting, the two are shown shaking hands, although only Tillerson was smiling. Erdogan conveyed his priorities and expectations on Syria, the fight against terror and other regional issues, a Turkish presidential source said. Ahead of the meeting, Turkey had called for the United States to expel the YPG from the anti-Islamic State SDF forces it is backing in Syria. “We demanded this relationship be ended, I mean we want them to end all the support given to the Syrian arm of PKK, the YPG,” Turkish Defense Minister Nurettin Canikli told reporters in a briefing in Brussels, a day after meeting U.S. Defense Secretary Jim Mattis on the sidelines of a NATO meeting. 

How American Media Spin-Doctored the Iranian Protests -- Barely a month ago, Iranians were amassing in the streets to protest against their government. Their core grievances, according to Western media and politicos, were the economy, foreign policy, expansionism, and human rights. Today, the protests are over. But according to a recent survey by the Center for International and Security Studies at Maryland and IranPoll, only one of those grievances actually provided the spark: the economy.  According to the poll, more than 72 percent of 1,002 Iranian respondents agreed that their government is not doing enough to help the poor, 86 percent said it shouldn’t increase the price of gasoline, 95 percent wanted a halt on the rising prices of food products, and an equal number agreed that their leaders should do more to fight financial and bureaucratic corruption. Asked to select the single most important problem or challenge currently facing Iran, respondents overwhelmingly selected unemployment (40.1 percent), followed by inflation and high costs of living (12.5 percent), youth unemployment (9.4 percent), low incomes (6.9 percent), financial corruption/embezzlement (6 percent), and so forth. Interestingly enough, “lack of civil liberties” was the least selected of the options offered by the pollsters, coming in at a paltry 0.3 percent, while “injustice” garnered just 1.4 percent. President Donald Trump thought otherwise: “The great Iranian people have been repressed for many years. They are hungry for food & for freedom. Along with human rights, the wealth of Iran is being looted,” he tweeted. “Big protests in Iran…The U.S.A is watching very closely for human rights violations!” blared another Trump tweet. In fact, according to poll results, over 66 percent of respondents believed their police forces handled the protests very well (34.5 percent) or somewhat well (31.8 percent), compared to 23.7 percent who said demonstrations were managed somewhat or very badly. Some 63 percent of those polled said the police used an appropriate amount of force, and another 11.4 percent said they used “too little force.”

What Do Iranians Think About the United States? -- With Washington seeming to back Iran into a corner and start yet another Middle East war, a recent public opinion poll by the Center for International and Security Studies at Maryland (CISSM) looks at the United States - Iran relationship from the Iranian viewpoint, a viewpoint that Westerners rarely hear.  Some of the responses may make Western politicians realize that Iranians are humans, just like to rest of us.  The 103 question survey was completed after the short-lived protests that took place in various cities throughout Iran beginning on December 28, 2017 and lasting until January 7, 2018.  The questionnaire was completed by 1002 people and has a margin of error of +/- 3 percentage points.  Let's look at some of the key questions, showing the responses for January 2018 followed by the responses for earlier surveys in brackets for comparison.  We will start with a few questions about how Iranians feel about the quality of their life followed by questions about the recent protests and closing with a more detailed examination of how Iranians feel about the P5+1 nuclear agreement that was implemented in January 2016.

Iran Unveils Two Nuclear-Capable Ballistic Missiles After Israel Attack On Syria -- Following Israel's dramatic airstrikes on Syria on Saturday, seen by many as a "dramatic escalation" in regional tensions, and the most direct threat against Tehran in years, over the weekend Iran unveiled a series of new homemade nuclear-capable ballistic missiles during military parades, in a move that experts said was a bid to bolster the hardline ruling regime while cautioning Israel against any further escalation. Describing the missile, Iran's state-run Fars  news agency described one of the rockets, the Ghadr , as a 2000km-range, liquid-fuel and ballistic missile which can reach territories as far as Israel. The missile can carry different types of ‘Blast’ and ‘MRV’ (Multiple Reentry Vehicle) payloads to destroy a range of targets. Meanwhile, the new version of the Qadr H ballistic missile "can be launched from mobile platforms or silos in different positions and can escape missile defense shields due to their radar-evading capability." As the Washington Free Beacon adds,  Iranian military leaders rolled out the latest ballistic missile technology, which includes a nuclear-capable medium-range missile that appears to share similarities with North Korean technology on the heels of an encounter between what Israel claimed was an Iranian drone and Israeli forces. The missiles are capable of reaching Israel even when fired from Iranian territory, raising concerns about an impending conflict between Tehran and the Jewish state that could further inflame the region. While it was meant to deter further aggression by Israel, the demonstration of nuclear force by Iran could further inflame tensions between the two countries. Concerns that this nuclear-capable technology could be shared by Iran with its terrorist proxies are fueling longstanding concerns among the Israelis that an attack is imminent.

German government plans massive military expansion in Iraq --The new grand coalition in Germany is planning a massive expansion of the German army (Bundeswehr) mission in Iraq. This was announced by Defence Minister Ursula von der Leyen (Christian Democratic Union, CDU) in the course of her trip to the Middle East last weekend.  Von der Leyen praised Germany’s cooperation with the Peshmerga [Kurdish military forces] during her visit to Erbil, the capital of the Kurdistan Autonomous Region in northern Iraq. The Bundeswehr has been arming and militarily supporting the Kurdish force for three and a half years. It was “impressive to see the great success of the Peshmerga training mission,” she said, thanking “Bundeswehr soldiers” on the spot.Von der Leyen then announced that in future the Bundeswehr would be deployed throughout Iraq. There will be “another mandate,” she said, “a mandate with a new balance … between Baghdad and Erbil on equal terms on both sides.” The defense minister made no concrete statements about the planned operation, but left no doubt she envisaged a long-term military engagement throughout Iraq.“Both in Kurdistan, as well as in the central government in Baghdad,” there is “a request above all to help in the implementation of reforms, in the construction of ministry structures,” the minister said. In Erbil, for example, “the construction of an entire sanitary unit is necessary,” but this also involved “of course the entire planning, organisation, recruitment and training.” There is also “considerable demand” for logistics. Germany wanted to “make its contribution” to provide Iraq with “independent, loyal operational forces for the long term.”In Baghdad on Saturday, von der Leyen justified the German offensive by referring to the fight against the Islamic State (ISIS). She “had experienced a country that, on the one hand, is heavily marked by the devastation left by ISIS, but, on the other hand, is full of pride that it has succeeded ... in beating ISIS.” Everybody knew, however, that “ISIS has been hit hard, but is still not completely defeated.”Von der Leyen’s attempt to portray the deployment of the Bundeswehr as an “anti-terrorist operation,” or as part of the fight against the “devastation” of Iraq, is pure propaganda and lies. It is common knowledge that the US invasion under George W. Bush in March 2003 initiated the destruction of Iraq, and that ISIS was the product of the country’s subsequent occupation and Western cooperation with Islamist militias in the regime-change wars launched against Libya and Syria.

Macron: "France Will Strike" If Chemical Weapons Used In Syria - French President Emmanuel Macron says he is prepared to "strike" Syria if evidence is found to support claims that President Bashar al-Assad used chemical weapons against civilians, though noted that French intelligence agencies do not have any such proof. “On chemical weapons, I set a red line and I reaffirm that red line,” Macron told reporters in Paris on Tuesday. “Today, our agencies, our armed forces have not established that chemical weapons, as set out in treaties, have been used against the civilian population.” “We have some indications of possible chlorine use [in Syria], but we have no absolute confirmation... So we, alongside the others, are working on trying to confirm this, as we clearly have to get the facts straight.” -French Defense Minister Florence Parly Facilities used to store and "originate" chemical weapons shipments would be the primary targets, said the French President, who also told reporters that he warned Russian President Vladimir Putin of France's plans during a phone call last Friday. “I've reiterated it to President Putin, asking to make it very clear to the Syrian regime, which has reaffirmed that it does not use chemical weapons … but we are watching it,” Macron stated.

ISIS Moves Into Online Casinos To Offset Dwindled Oil Revenue – The Islamic State is running online casinos as the terrorists try to compensate dwindled revenues from oil smuggling after they were driven out of vast areas in Syria and out of Iraq, Vasily Nebenzya, Russia’s Ambassador to the United Nations, said on Thursday.“They are honing their skills with modern technology,” The Moscow Times quoted Nebenzya as telling the United Nations Security Council meeting.“Caliphate fighters are not shying away from seeking revenue from online casinos,” the top Russian diplomat to the UN said, citing a report by the UN Counter-Terrorism Office.As of the end of last year, ISIS revenues from oil smuggling and extortion were down to US$2 million per month, while the overall monthly earnings were at US$3 million, according to Nebenzya.  To compare, the UN has estimated that back in 2015, the annual income generated by ISIS from oil and oil products was between US$400 million and US$500 million.

On The Syria Occupation And The New Face Of Imperialism -- US forces have attacked the Syrian military, reporting over a hundred deaths. The Syrian Ministry of Foreign Affairs is calling the air strike a massacre, a war crime, and a crime against humanity. The US is an invading, occupying force that is in Syria without the permission of its government, yet it is claiming that the air strike was an act of “self-defense” against an “unprovoked attack” upon the US-backed SDF, a mostly Kurdish militia which had occupied an area of Syrian land. No Americans suffered any injuries or deaths in the attack. The SDF suffered a single reported injury. It’s a bit like saying you broke into someone’s house and strangled them from behind with a garotte in self-defense. Believe it or not, it appears very likely that the US military’s latest act of butchery waged upon Middle Easterners on their own land was not about self-defense at all, but about oil. The always insightful Moon of Alabamamakes a compelling case that not only is America’s version of events full of plot holes, but that the whole thing could very well have been “a trap” to sabotage a local deal that had been made for the SDF to turn over an oil and gas field to the Syrian government in the near future. This would fit in perfectly with comments Professor Joshua Landis made about the attack, saying that America’s plan is to keep Syria weak, poor and divided in order to disadvantage US/Israel/Saudi rivals Iran and Russia. It would also clarify US Secretary of State Rex Tillerson’s assertion a few weeks ago that thousands of American troops are being kept in Syria to prevent Assad from regaining control of areas that have been liberated from ISIS.

Russia Is Taking Over Syria’s Oil And Gas  -- In accordance with an energy cooperation framework agreement signed in late January, Russia will have exclusive rights to produce oil and gas in Syria. The agreement goes significantly beyond that, stipulating the modalities of the rehabilitation of damaged rigs and infrastructure, energy advisory support, and training a new generation of Syrian oilmen. Still, the main international aspect and the key piece of this move is the final and unconditional consolidation of Russian interests in the Middle East.Before the onset of the blood-drenched Civil War, Syrian oil production wavered around 380,000 barrels per day. It has declined for some time then, since its all-time peak production rate of 677,000 barrels per day in 2002. Although the Islamic State was allegedly driven underground, the current output still stands at a devastating 14–15,000 barrels per day.As for gas, the production decline proved to be lower (it fell from 8 BCm/year to 3.5 BCm/year) due to its greater significance within the domestic economy. 90 percent of the produced gas in Syria was used for electricity production (as opposed to oil, which was either refined domestically or exported), and in view of this, the government took extra care to retake gas fields first as the prospects of reconquest became viable enough.  It’s an understatement to say that whoever takes over Syria’s energy sector will receive a desolate ruin. The country’s refineries need thorough reconstruction after their throughput capacity has halved from the pre-war level of 250,000 barrels per day. This task will most likely be carried out by Iranian companies, in accordance with agreements signed in September last year, which also involved the reconstruction of Syria’s damaged power grid. However, it remains unclear whether this project will go through, as Tehran counted upon an Iran-Venezuela-Syria consortium, which is all but feasible now against the background of Venezuela disintegrating, a new solution ought to be found. In any case, Tehran already got what it wanted in Syria as Iran’s Revolutionary Guard already secured the telecommunications sector.

US Strikes Kill 100 Russian Fighters In Syria - Following up to last night's bombshell report  that at least two Russian mercenary fighters in Syria had been killed by US-led coalition forces, this morning Bloomberg is out with an exclusive, according to which the body count is far greater than had been disclosed: U.S. forces reportedly killed "scores" of Russian contract soldiers in Syria last week "in what may be the deadliest clash between citizens of the former foes since the Cold War", Bloomberg reported. According to the unnamed US and Russian sources, "more than 200 mercenaries, mostly Russians fighting on behalf of Syrian leader Bashar al-Assad, died in a failed attack on a base and refinery held by U.S. and U.S.-backed forces in the oil-rich Deir Ezzor region" In terms of total body count, the U.S. official put the death toll at about 100, with 200 to 300 injured. A few caveats: the Russian operation was not officially mandated, and the assault "may have been a rogue operation, underscoring the complexity of a conflict that started as a domestic crackdown only to morph into a proxy war involving Islamic extremists, stateless Kurds and regional powers Iran, Turkey and now Israel." In a bizarre deflection of responsibility, Russia’s military not only did not demand an explanation from the US for the deaths, but said it had nothing to do with the attack and the U.S. military accepted the claim. Defense Secretary Jim Mattis has called the whole thing “perplexing,” but provided no further details.

Multiple reports confirm US killed Russians in Syrian oilfield airstrikes -- Reports emerging from Russia indicate that anywhere from dozens to hundreds of Russian military contractors may have been killed in the US air and artillery assault against a column of fighters loyal to the government of Syrian President Bashar al-Assad in eastern Deir Ezzor province on February 7. As yet, a handful of names of Russians killed in the one-sided battle have emerged. The right-wing nationalist “Other Russia” group reported that one of its members, Kirill Ananiev, who had gone to Syria a year ago, was among the dead. A spokesman for the group said there had been “substantial losses” inflicted upon “paramilitary structures with ties to Russia.” A paramilitary organization calling itself the Baltic Cossak Union posted a statement online reporting that one of its members, Vladimir Loginov, had died in the US bombardment in Deir Ezzor. The Conflict Intelligence Team, a Russian opposition group that has monitored developments in Syria, provided three other names: Alexi Ladigin of Ryazan and Stanislav Matviev and Igor Kostorov of Kaliningrad. The Pentagon initially said it had killed 100 fighters in its February 7 attack, which took place on the western bank of the Euphrates River. It claimed it had responded to an advance by as many as 500 fighters, backed by tanks and artillery, on a headquarters of the so-called Syrian Democratic Forces, the US proxy ground force that consists overwhelmingly of the Syrian Kurdish YPG militia. US special forces troops directing the YPG’s operations in the area were reportedly at the site. The US troops called in a withering assault by Apache attack helicopters, an AC-130 Specter gunship and F-15 fighter jets, as well artillery batteries. The Syrian government denounced the US firestorm as a “massacre” and a “war crime,” insisting that its fighters had been targeting remnants of the Islamic State of Iraq and Syria (ISIS).

Syria – Is War With Israel Imminent (Updated)? - Around 6 am GMT the Syrian air defense shot downed an Israeli fighter jet that was attacking the country. There is now the chance that a larger war will ensue. [This is a developing story that will be updated below as new information comes in. - The latest update (below) is a video interview with Elijah Magnier on the implications of today's developments.]This escalation comes after a series of recent provocations against the Russian forces in Syria, yesterday's U.S. attack on Syrian forces, last week's Israeli threats against Lebanon and dozens of Israeli air attacks on alleged Hizbullah or Iranian installations in Syria.Tonight's events developed after Israel shot down what it called an "Iranian drone" allegedly in air space over the Israel occupied Syrian Golan Heights. Syria denies that its drone violated Israeli air space. Israel then attacked ground targets in Syria. One attacking Israeli F-16 fighter jet was taken down by Syrian air defense. The pilot ejected and parachuted into Israeli territory. He is wounded but survived. It is the first downing of an Israeli jet by Syrian air defense since 1982!  Further Israeli "retaliation" followed. This is another paragraph in the long history of Israeli aggression against Syria.  There are some unconfirmed vague reports of a second damaged F-16 and a destroyed Israeli Apache helicopter. Today's development as covered in Eljiah Magnier's timeline (emphasis added):

A Game Changer -- "Additionally to the downed F-16I of the Israeli Air Force, at least one Israeli F-15 warplane wad damaged by a Syrian missile and was forced to make an emergency landing on February 10, the Al Arabiya TV network reported citing own sources. According to unconfirmed report, in total 3 Israeli warplanes were damaged additionally to the F-16 which was downed by the Syrian forces earlier on February 10. If these reports are at least partly confirmed this will be one of the biggest Israeli failures in the recent time."  SF  Israeli collective psychology is based on an assumed military and cultural superiority to the Arab states surrounding them.  For them to lose an F-16 to the Syrian Air Defenses as well as to suffer damage to several F-15s is an unacceptable challenge to their self image and to the intimidating effect that they seek. For the Israelis this defiance of their usual air supremacy requires massive retaliation.  This is ongoing. 

    "Major Escalation": Israel Carries Out "Large Scale Attack" On Syria After Israeli F-16 Shot Down - Open war has now essentially broken out between Israel and Syria. Israel confirms through its IDF spokesperson that it has carried out "a large scale attack" consisting of at least a dozen strikes on Syrian and Iranian military targets inside Syria, in what Reuters dubbed a "major escalation of tension". What we previously described as Assad's strategic "waiting game" and reluctance to respond to repeat Israeli violations of Syrian airspace while launching unprovoked attacks appears to be over as Syrian air defense has shot down an Israeli F-16 fighter jet near the Golan border region in what is a major escalation in the conflict.  According to Al Masdar, the Israeli pilot whose warplane was shot down by Syrian air defense forces on Saturday morning has died from injuries sustained during the engagement.While according to initial reports both crew members ejected – the weapons operator with light injuries and the pilot with ‘severe’ injuries, according to subsequent, still unconfirmed, reports, the Israeli pilot with serious injuries has died in hospital. No further details were given according to Al Masdar. This report however is being denied by the Times of Israel  which reported that the pilot suffered wounds to chest, abdomen while ejecting from jet; co-pilot set to be released home Sunday.   Iran dismissed Tel Aviv’s claims concerning an Iranian drone and a downed Israeli jet as “ridiculous.” An Iranian commander also warned Iran could unleash “hell” on the “Zionist regime” and destroy all US bases in the area.  “The claim about the flight of an Iranian drone and Iran’s involvement in the downing of a Zionist fighter jet is so ridiculous that it does not merit a comment,” Iranian Foreign Ministry spokesman Bahram Qassemi said. He added that Iranian officials are acting in Syria only as advisers and do so “at the request of the… legitimate and lawful government."  According to Reuters, Vladimir Putin and Israeli Prime Minister Benjamin Netanyahu discussed the situation in Syria in a telephone call following the heavy Israeli air strikes in the country, Interfax news agency cited the Kremlin as saying.  “They discussed the situation around the actions of the Israeli air force, which carried our missile strikes on targets in Syria,” Interfax quoted the Kremlin, adding that Putin told Netanyahu there was a need to avoid any steps that would lead to a new confrontation in the region.

    Netanyahu: Air raids dealt serious blow to Iran, Syria -- Benjamin Netanyahu, Israel's prime minister, has described his country's most significant air attacks on Syria in decades as a heavy blow to Syria and Iran.The attacks were in response to Syrian government forces shooting down an Israeli fighter jet on Saturday, and claims that an Iranian drone entered Israeli airspace.The air attacks reportedly hit an airport on the outskirts of al-Suwayda, in southern Syria, and a weapons depot near the capital, Damascus.Israel has sounded several warnings about the perceived, increased Iranian involvement along its borders with Syria and Lebanon.Russia's President Vladimir Putin has urged Netanyahu to avoid any steps that could escalate tension. Netanyahu has held several consultations with Putin, who, for his part, has sent forces to back Syrian President Bashar al-Assad. Following the Israeli attacks, the two spoke again on Saturday, with Netanyahu conveying Israel's intention to counter Iran's actions. Russia's foreign ministry appeared to criticise Israel's actions by calling for restraint and respecting Syria's sovereignty. "It is absolutely unacceptable to create threats to the lives and security of Russian servicemen who are in Syria at the invitation of its legitimate government," it said.

    Israeli attack on Syria heightens danger of wider Mideast war --Casualties from Israeli air strikes on military sites in Syria, carried out Saturday, reportedly included Iranian personnel working in conjunction with the government of Syrian President Bashar al-Assad. Israeli Prime Minister Binyamin Netanyahu made clear that his government deliberately targeted Iranian personnel in the attacks.He gave as justification for the air strikes the destruction of an Iranian unmanned aerial vehicle that had allegedly invaded Israeli airspace from Syria.In response to the Israeli strikes, the Syrian army brought down an Israeli F-16 jet after firing more than 20 antiaircraft missiles. The pilots bailed out.Israel attacked 12 of the country’s main air defence sites, which the Israel Defense Forces (IDF) described as “Iranian targets.” The IDF said it had inflicted huge damage in the “most significant attack” against Syria since the 1982 Lebanon war and the first to claim Iranian lives.IDF sources said the Iranian military has for some time been using the Tiyas (T4) Airbase near Palmyra “for the purpose of transferring weaponry to be used against Israel.”Indicating that this will not to be the last such attack, the Jerusalem Post reported Sunday that the IDF was “preparing for war in the North.” It wrote that witnesses “reported seeing a convoy of missile defense batteries heading north near the Israeli-Arab city of Baqa el-Garbiyeh. Other witnesses posted photos of several trucks carrying the batteries on central highways in northern Israel.” Iran has denied all of the allegations made by Israel. Foreign Ministry spokesman Bahram Qasemi stated, “Reports of downing an Iranian drone flying over Israel and also Iran’s involvement in attacking an Israeli jet are so ridiculous.”

    Israel Preps for Syrian War With Golan’s Oil and Water in Its Sights -  Soon after Saturday's dangerous escalation involving Syria's downing of an Israeli fighter jet in its airspace seemed to fizzle out, the Jerusalem Post reported that Israel was approaching the de-escalation period as a time to prepare for large-scale war with its northern neighbor by boosting its air defenses. According to those cited by the Post, convoys of missile-defense batteries have been relocated to the Israeli-Arab city of Baka al-Gharbiya and numerous other batteries have been sighted on highways throughout northern Israel. While the deployment of air defenses to the country's north seems to forebode an imminent conflict, some experts, like Ofer Zalzberg of the International Crisis Group think tank, have asserted that the recent escalation between Syria and Israel will remain contained, despite Israel's apparent preparations for a large-scale conflict.  Russia, for its part, seemed eager to halt the hostilities, as it urged the need to "avoid any measure that could lead to a dangerous escalation." Indeed, any escalation that would lead to a state of open conflict between Syria and Israel would surely spread, quickly involving Syrian allies including Iran and Lebanon's Hezbollah and, potentially, more powerful nations like the U.S. and Russia. Even if recent events fail to translate into a war between Israel and its northern neighbors, any attempts to prevent such a war—no matter how "successful" they may seem—will only be temporary at best. Israel, even prior to its establishment as a state in 1948, has been ever eager to annex southern Syria in order to gain access to key resources—first, fresh water and now, oil. It is this same desire that continues to motivate Israel's aggression against its neighbors. As Syria will not relinquish what is theirs as long as their sovereignty remains intact, Israel has sought to take such prizes through a variety of tactics ranging from illegal occupation to fomenting covert regime-change efforts. As those efforts have continued to fail, Israel has grown more and more desperate to lay claim to those resources that lie just beyond its reach. Unless Israel relinquishes its desire for its neighbor's resources, the next war is inevitable.

    Syria’s War Is Fueling Three More Conflicts - When an Israeli jet crashed after being shot down over Syria over the weekend, it marked a serious escalation in the Syrian Civil War. But it also reflected an ongoing reality, one that is growing more dangerous: Syria’s war encompasses at least three other international conflicts, each of which are heating up.In the last few weeks alone, Turkey has clashed with Syrian Kurds and threatened a U.S.-controlled town in Syria; an Israeli fighter jet that was part of a response to an incursion into Israeli territory by an Iranian drone launched from Syria took Syrian anti-aircraft fire, forcing its two pilots to eject and parachute into Israeli territory; and U.S. forces repelled an attack by Russian fighters, killing an unknown number of them that reports suggest could be in the hundreds.   Taken individually, each one of the clashes has the potential to turn into something more dangerous. Taken together, they suggest the reasons why even after the defeat of ISIS, Syria cannot hope for stability to return soon—and why the next chapter could be even worse. “The issues have been out there: Kurdish-Turkish-American tensions; Iran-Syria-Israel tensions,” Ryan Crocker, a former U.S. ambassador to Syria, told me. “But … we’ve gotten to a level not reached before, and it’s all coming at once.” The recent flare-ups have come suddenly, but the conditions for them were being set soon after protests against the Assad regime in Syria erupted into a full-blown civil war some seven years ago. The conflict quickly sucked in other countries. Iran entered the conflict in 2011 to help prop up Assad’s regime as it faced growing nationwide protests. Hezbollah, the Lebanese militia that acts as an Iranian proxy, joined in soon afterward, at a point when the regime looked in danger of falling, helping Assad hold off the rebels—some of whom received covert American support. The United States started bombing ISIS and al-Qaeda positions in Syria in 2014. Then in 2015, when Assad’s grip on power appeared to be in peril again, Russian President Vladimir Putin intervened on his behalf.

    War doesn’t have to be nuclear to kill indiscriminately Al Jazeera -- Over the past year, the escalation of tensions between the United States and North Korea has caused much anxiety about the possibility of a nuclear war. Since the creation of the first nuclear bomb and the bombing of Hiroshima and Nagasaki, international diplomacy has focused its non-proliferation efforts on nuclear weapons.In doing so, it has overlooked the proliferation of conventional weapons, which have killed millions since World War II and which continue to kill on a massive scale today.As Amnesty International noted in a report released in late 2015, "reckless arms trading" encouraged atrocities committed by the Islamic State of Iraq and the Levant (ISIL) and other armed groups in Iraq. In 2016, more than 100,000 people were killed in conflicts in which conventional weapons were used. And while the Nuclear Non-Proliferation Treaty has limited the new production of nuclear weapons, the world has experienced an uncurbed proliferation of conventional weapons with no effective international legal tools to control it.Since 1960 - the early days of the Cold War nuclear arms race - international military spending has increased twenty-fold from $82bn to $1.69 trillion; and year on year, it continues to grow. The growing demand for conventional weapons is making many providers very wealthy. The top 100 arms companies have sold over $5 trillion worth of merchandise since 2002. In 2016, some $31bn was generated by the international arms trade, the US earning $9.9bn of it, followed by Russia with $6.4bn and Germany with $2.8bn.

    China plans to launch crude oil futures on March 26: securities regulator (Reuters) - China plans to launch its long-awaited crude oil futures contract on March 26, the country’s securities regulator said on Friday, a move that could potentially shake up pricing of the world’s largest commodity market. Chang Depeng, a spokesman for the China Securities Regulatory Commission (CSRC), gave the launch date at a regular briefing in Beijing, confirming what two sources familiar with the situation told Reuters earlier on Friday. The launch will mark the culmination of a years-long push by China to create Asia’s first oil futures benchmark, and is aimed at giving the world’s biggest oil importer more clout in pricing crude sold to Asia. It will potentially give the Shanghai International Energy Exchange (INE), which will operate the new contract, a share of the trillions of dollars each year in oil futures trading. The Shanghai Futures Exchange (ShFE) and INE, which is part of the ShFE, declined to comment. Asia has become the world’s biggest oil consuming region, and China hopes its own derivative crude contract will better reflect market conditions in the region. The two most active oil futures contracts in the world are the West Texas Intermediate (WTI) CLc1 contract offered by the New York Mercantile Exchange (NYMEX), owned by CME Group (CME.O), and the Brent LCOc1 contract offered by the Intercontinental Exchange (ICE.N) from London. WTI futures are an important component of physical oil prices in the Americas, while Brent plays a vital role for prices for Middle Eastern, European and Asian crude. Most physical oil trades globally are hedged using those two crude derivatives. 

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