Sunday, March 11, 2018

natural gas & oil output both at record highs, but gas supplies now 29.5% below those of a year ago

oil ended the week higher, with political developments driving prices more than any fundamental changes in oil supply or demand...that's actually been the case for a few weeks now, starting when oil & natural gas prices crashed 10% during the 2nd week of February on a broad selloff in global equity markets; since that time, oil prices have tended to move in tandem with stock prices, almost regardless of the news from the oil sector...thus we saw the widely traded contract for April oil rise $1.32 to $62.57 a barrel on Monday "on forecasts of higher demand" when the stock market indices were much higher, and then we saw that same contract fall $1.45 to $61.15 a barrel on Wednesday and another $1.03 to $60.12 a barrel on Thursday, during the same hours that the markets were falling after the resignation of Trump's chief economic advisor Gary Cohn and in response to his imposition of tariffs on imported aluminium and steel, which sparked fears of a global trade war...stocks and oil prices then rallied on Friday after Trump accepted an invitation to meet with North Korea’s Kim Jong Un, with oil closing the day $1.92 higher at $62.04 a barrel, with the first drop in oil rig activity in 7 weeks contributing to oil’s price rise...thus US oil prices ended the week with a gain of 79 cents, or 1.3%, despite a bearish US oil supply report on Wednesday...

natural gas prices, on the other hand, moved obliviously to the news and other markets, rising early in the week on an outlook for colder weather and the expected increase in demand, and then falling Thursday and Friday after the weekly storage report indicated a smaller than expected withdrawal of supplies from storage, with natural gas prices for April delivery ending the week 3.7 cents higher at 2.732 per mmBTU...the week's natural gas storage report indicated that our natural gas in storage fell by 57 billion cubic feet to 1,625 billion cubic feet over the week ending Friday, March 2nd, which turned out to be the same as the drawdown during the same week last year, and hence our gas supplies remained 680 billion cubic feet, or 29.5% lower than the 2,305 billion cubic feet that were in storage on March 3rd of last year...the average withdrawal of natural gas during the ninth week of the year has been 129 billion cubic feet over the past 5 years, so this constitutes the third week in a row where our natural gas withdrawals have been much below normal...despite that, however, the 1625 billion cubic feet we had in storage on March 2nd was 300 billion cubic feet, or 15.6% below the five-year average of 1925 billion cubic feet in storage at the end of the ninth week of the year...

before we move on, i want to take a quick look at our natural gas production, because i was quite surprised by the spike in natural gas output in a December that took us to a new production high...we'll start with a graph of our dry natural gas output over the last dozen years...

March 4 2018 natural gas output thru December

up until the recent couple of months, there's not much of a surprise in what we see above...natural gas production rose steadily as the number of rigs drilling into natural formations topped a thousand early in the aught's decade and rose to 1600 rigs by the summer of 2008, with natural gas prices spiking to over $12 per mmBTU...but when prices for natural gas fell to below $5 per mmBTU the next year, natural gas drilling began a slow decline that culminated with as few as 81 rigs working during the summer of 2016, and production likewise fell as new well completions could not keep up with the depleting output from existing wells...with gas drilling rigs once again increasing to over 180 rigs this past summer, production began to gradually rise, but since the drilling activity remained at less than a sixth of previous levels, i did not expect the increase in output that you see above for the most recent we can see exactly what happened, we'll include a table of natural gas output that roughly matches the period that the above graph shows....

March 10 2018 natural gas output spreadsheet thru December

the table above is from the EIA table of US dry natural gas production monthly, which I've lopped off at 2005 because the prior years saw little we can see that US natural gas production rose each year between 2010 and 2015 as fracking of shale brought on new supplies...but then, after March of 2016, the year over year comparisons turned negative, and stayed negative for 15 months, until June and July of this summer saw small increases in output over the prior year...there was another increase in output in October, but when November output failed to follow through, i thought it had reached a plateau...but as you can see above, natural gas output jumped by more than a 100 billion barrels in December to set a new record by a long shot....

now, here's the problem...if our natural gas production from wells was at such an elevated level going into this winter, then why did our supplies of natural gas fall so rapidly during the first few cold snaps? as you'll recall from the graph we showed last week, by the 4th weekend of February, natural gas stocks were down to their second lowest on record, even after a warm spell knocked our seasonal demand for heating to 191 population-weighted heating degree days below consideration of what we now know was a record level of natural gas output, our natural gas supplies should have stayed above average this winter, in keeping with that lower demand for heating...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering the week ending March 2nd, showed there was a large increase in our oil imports and in oil production from the prior week, while at the same time increases in refining and oil exports were relatively modest, which meant that we had oil left over to add to storage for the fifth time in six weeks...our imports of crude oil rose by an average of 721,000 barrels per day to an average of 8,003,000 barrels per day during the week, while our exports of crude oil rose by an average of 53,000 barrels per day to an average of 1,498,000 barrels per day, which meant that our effective trade in oil worked out to a net import average of 6,505,000 barrels of per day during the week, 668,000 barrels per day more than the prior the same time, field production of crude oil from US wells rose by 86,000 barrels per day to a record high of 10,369,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 16,874,000 barrels per day during the reporting week..

during the same week, US oil refineries were using 15,935,000 barrels of crude per day, 53,000 barrels per day more than they used during the prior week, while at the same time 369,000 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 570,000 barrels per day more than what refineries reported they used plus what was added to storage during the account for that disparity, the EIA needed to insert a (-570,000) 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 oil data is gathered, and the possible reasons for that "unaccounted" oil, is explained here)...since there was a 821,000 barrel per day change in that 'unaccounted for oil' figure, from +252,000 barrels per day last week to -570,000 barrels per day this week, the week over week changes reported here are correspondingly unreliable...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 7,549,000 barrels per day, still 4.2% less than the 7,879,000 barrel per day average we imported over the same four-week period last year....the 369,000 barrel per day increase in our total crude inventories included a 344,000 barrel per day addition of oil to our commercial stocks of crude oil and a 25,000 barrel per day addition to our Strategic Petroleum Reserve...this week's 86,000 barrel per day increase in our crude oil production included a 80,000 barrel per day increase in output from wells in the lower 48 states and a 6,000 barrel per day increase in output from Alaska...the 10,369,000 barrels of crude per day that were produced by US wells during the week ending March 2nd was the highest on record, 14.1% more than the 9,088,000 barrels per day that US wells were producing during the week ending March 3rd of last year, and 23.0% above the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June, 2016...

US oil refineries were operating at 88.0% of their capacity in using those 15,935,000 barrels of crude per day, up from 87.8% of capacity the prior week, but way down from the wintertime record 96.7% of capacity set nine weeks earlier, as some US refineries are still down due to pre-spring blend changeover and scheduled maintenance...the 15,935,000 barrels of oil that were refined this week were 9.5% 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 2.9% more than the 15,492,000 barrels of crude per day that were being processed during the week ending March 3rd, 2017, when refineries, also undergoing seasonal maintenance at the time, were operating at 85.9% of capacity....

even with the small increase in the amount of oil being refined, gasoline output from our refineries saw a big jump, increasing by 532,000 barrels per day to 9,923,000 barrels per day during the week ending March 2nd, after gasoline output had decreased by 717,000 barrels per day the prior week....that increase meant our gasoline production was 0.8% greater during the week than the 9,844,000 barrels of gasoline that were being produced daily during the week ending March 3rd of last the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 127,000 barrels per day to 4,596,000 barrels per day, after falling by 660,000 barrels per day over the prior 3 weeks...thus that increase still left the week's distillates production 3.7% lower than the 4,773,000 barrels of distillates per day than were being produced during the equivalent week of 2017....   

the big jump in our gasoline production notwithstanding, our supply of gasoline in storage at the end of the week still fell by 788,000 barrels to 251,029,000 barrels by March 2nd, in just the second decrease in 17 weeks....our supplies were down because our domestic consumption of gasoline rose by 416,000 barrels per day to 9,276,000 barrels per day, and because our exports of gasoline rose by 224,000 barrels per day to 760,000 barrels per day, while our imports of gasoline rose by 162,000 barrels per day to 608,000 barrels per day...but since our gasoline supplies have increased 15 of the last seventeen weeks, our gasoline inventories are fractionally higher than last March 3rd's level of 249,334,000 barrels, and roughly 5.9% above the 10 year average of gasoline supplies for this time of the year...        

likewise, even with the week's increase in distillates production, our supplies of distillate fuels still fell by 559,000 barrels to 137,426,000 barrels over the week ending March 2nd, after falling by 3,382,000 barrels the prior two weeks...that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, inched up by 5,000 barrels per day to 3,926,000 barrels per day, while our exports of distillates rose by 123,000 barrels per day to 1,015,000 barrels per day and while our imports of distillates rose by 58,000 barrels per day to 265,000 barrels per day...after this week’s inventory decrease, our distillate supplies were 14.9% lower at the end of the week than the 161,532,000 barrels that we had stored on March 3rd, 2017, and 3.5% lower than the 10 year average of distillates stocks at this time of the year…  

finally, with our oil imports up and oil demand metrics little changed, we were able to add to our commercial supplies of crude oil for the 6th time in 16 weeks and for the 15th time in the past 51 weeks, as our commercial crude supplies increased by 2,408,000 barrels, from 423,498,000 barrels on February 23rd to 425,906,000 barrels on March 2nd....but even with increases in five out of the last six weeks, our oil inventories as of that date were 19.4% below the 528,393,000 barrels of oil we had stored on March 3rd of 2017, and 13.2% lower than the 490,843,000 barrels of oil that we had in storage on March 5th of 2016, even as they were still 2.5% greater than the 415,425,000 barrels of oil we had in storage on March 6th of 2015, at a time when the US glut of oil had barely begun to build...  

This Week's Rig Count

US drilling activity increased for 7th time in the past 10 weeks during the week ending March 9th, a period which has seen the increases far exceed the few decreases...Baker Hughes reported that the total count of active rotary rigs running in the US rose by 3 rigs to 984 rigs in the week ending on Friday, which was also 216 more rigs than the 768 rigs that were deployed as of the March 10th 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 fell by 4 rigs to 796 rigs this week, in the first drop in oil drilling in 7 weeks...but those 796 rigs were still 179 more oil rigs than were running a year ago, even as 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 increased by 7 rigs to 188 rigs this week, which was also 37 more gas rigs than the 151 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

drilling was stopped from another platform in the Gulf of Mexico this week, leaving just 13 rigs active in the Gulf or anywhere in the offshore US, which was down by 7 rigs from the 20 rigs that were deployed in the Gulf of Mexico a year ago, and the least rigs working in the Gulf in Baker Hughes records going back to January 7, 2000, a time when there were 123 rigs drilling in the Gulf....meanwhile, the week's count of active horizontal drilling rigs was up by a single rig to 848 horizontal rigs this week, which was still up by 209 rigs from the 639 horizontal rigs that were in use in the US on March 10th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, the vertical rig count was up by 2 rigs to 61 vertical rigs this week, which was still down from the 68 vertical rigs that were in use during the same week of last year...meanwhile, the directional rig count was unchanged at 75 directional rigs this week, which was still up from the 61 directional rigs that were deployed on March 3rd 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 March 9th, the second column shows the change in the number of working rigs between last week's count (March 2nd) and this week's (March 9th) count, the third column shows last week's March 2nd 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 10th of March, 2017...    

March 9 2018 rig count summary

despite the 7 rig increase of drilling rigs targeting natural gas, neither the Utica or the Haynesville was affected, with a single rig addition in the Marcellus in Pennsylvania the only major gas basin to see a rig addition...natural gas rigs were also added in the Arkoma Woodford and the Cana Woodford of Oklahoma, which simultaneously saw seven oil rigs shut down, and in 4 other locations not specified in Baker Hughes summaries...drilling in the Utica was unchanged, with 16 rigs targeting wet gas formations and 7 rigs drilling for oil....however, even as Ohio only saw a single rig added over the past year, production of natural gas from the state's wells increased by 38.4% over a year ago in the 4th quarter, which you'll see in the link from the ODNR below...


Ohio’s Utica Shale Fourth Quarter Production Totals Released - ODNR – During the fourth quarter of 2017, Ohio’s horizontal shale wells produced 4,193,562 barrels of oil and 503,066,907 Mcf (503 billion cubic feet) of natural gas, according to the figures released today by the Ohio Department of Natural Resources (ODNR).  Total production for the last two years, with the percent change in production for 2016 to 2017, can be found below:  The ODNR quarterly report lists 1,897 horizontal shale wells, 1,869 of which reported oil and natural gas production during the quarter. Of the 1,869 reporting oil and natural gas results:

  • The average amount of oil produced was 2,244 barrels.
  • The average amount of natural gas produced was 269,164 Mcf.
  • The average number of fourth quarter days in production was 88.

All horizontal production reports can be accessed at

Appeal of charter election rejection now in court's hands - Athens NEWS - The 4th District Court of Appeals heard brief arguments Thursday morning in a local group’s appeal of the Athens County Board of Elections decision last July rejecting an anti-fracking county charter ballot proposal submitted by the group. While supporters of the group, the Athens County Bill of Rights Committee (ACBORC), rallied in protest in the rain outside the Athens County Courthouse, chanting “Let Us Vote,” the three-judge appellate panel heard brief arguments inside the courthouse from each side in the case. A decision in the appeal case is expected no sooner than 30 days and could take several months.Athens County Prosecutor Keller Blackburn, whose office is representing the county Board of Elections in the appeal case, said attorneys for both sides Thursday morning mainly touched on points already included in their legal filings in the appeal.The party appealing the case, described as “a committee of petitioners for the county charter proposal,” on July 28, 2017, appealed Athens County Common Pleas Judge George McCarthy’s decision to uphold the Board of Elections’ July 10 decision to not place on the November 2017 ballot the Athens County Bill of Rights Committee’s proposed county charter. Last July, the local Board of Elections rejected the charter as invalid by stating, among other things, that a proposed executive council (comprised of county elected officials who aren’t county commissioners) does not meet Ohio Revised Code requirements for a county executive under an alternative form of government.Judge McCarthy sided with the Board of Elections and upheld the rejection of the charter.  As with initiatives in the previous two years, this county charter proposal doubles as an effort to keep oil and gas horizontal hydraulic fracturing (fracking) out of Athens County, through prohibiting the use of local water for fracking operations. It also would outlaw future fracking waste-injection wells, of which Athens County already has several in operation.

The Wayne National Forest to update Land Management Plan -  The Wayne National Forest will update its Land Management Plan following a lawsuit by the Center for Biological Diversity.  The lawsuit, filed last year against the U.S. Forest Service and Bureau of Land Management, said the sale of gas and oil leases under the current Land Management Plan violated the National Environmental Policy Act and the Endangered Species Act.  The Wayne National Forest, Ohio’s only national forest, created its first Land Management Plan in 2006, before Ohio’s fracking boom.  “The current land plan is completely outdated,” said Taylor McKinnon, a representative from the Center for Biological Diversity. “It could not and does not anticipate the effects of fracking in Ohio.” The Bureau of Land Management began leasing parcels of land in the Wayne in the 11 years since the Land Management Plan was created. Those oil and gas leases are awarded to companies who may use the land for natural gas extraction.  Acquiring the land does not, however, give permission for companies to drill for natural gas. Instead, companies have 10 years to apply to drill on the land, Greg Fuhs, acting deputy state director of external affairs for the Bureau of Land Management Eastern States, said in a previous Post report. Gary Chancey, public affairs officer for the Wayne National Forest, said the land plan needed to be updated to reflect how the uses of the forest have changed in the 11 years since the plan's creation.   "This presents an opportunity for the Wayne National Forest to revise its Land Management Plan, creating compatible plans that allow the agencies to work together more efficiently.” McKinnon said the most effective way to update the land plan is to ban fracking completely in the Wayne.

Ohio Gas Well Was Spewing Methane Pollution Three Weeks After Blowout -- An oil and gas drilling pad where a fiery explosion led to the evacuation of about 100 people in Ohio's Belmont County last month was still spewing raw methane into the atmosphere nearly three weeks after the initial well blowout, according to an infrared video released by environmental watchdog group Earthworks on Tuesday. Workers reportedly brought the well under control Wednesday morning.   While much of the national media has yet to take notice, Earthworks is comparing the accident in Belmont County to the 2015 natural gas disaster in California's Aliso Canyon, where a storage well blowout allowed more than 100,000 tons of methane pollution to spew into the atmosphere near Los Angeles over a four-month period. The disaster brought national attention to the climate impacts of methane, a natural gas that can cause 86 times more climate damage than carbon dioxide over a 20-year period, according to the Intergovernmental Panel on Climate Change. On February 15, well operators with XTO Energy, a subsidiary of ExxonMobil, lost control of the Belmont County natural gas well while servicing a fracked well at the same site, according to the Environmental Protection Agency (EPA) and local reports. Fires broke out and explosions occurred, spewing thousands of gallons of drilling fluids containing toxic chemicals such as hydrochloric acid and 2-butoxyethanol into the air and a tributary of a nearby stream. XTO workers were able to gain control of the well and stop the leak on Wednesday morning, according to a spokesman for the Ohio Department of Natural Resources (ODNR). In all, the wellhead leaked for about 21 days after the initial blowout. XTO estimated that the damaged wellhead was leaking methane gas at a rate of 100 million cubic feet per day, according to the EPA's initial emergency response report. The Aliso Canyon leak emitted an average of 49 million cubic feet of gas per day, or about half as much for a longer period of time, according to Earthworks. This infrared video taken by optical gas photographer Peter Dronkers on Saturday shows that raw methane was still billowing from the XTO Energy well in Belmont Country at an alarming rate weeks after the accident:

WATCH: Kucinich tells you why he wants to be governor - Sandusky Register (half hour video interview) — Dennis Kucinich took his campaign for governor to Sandusky Thursday and emphasized his support for an assault weapons ban and inexpensive healthcare coverage for all. Kucinich appeared on “Between the Lines Live,” the Register’s public affairs program, and said Ohio has reached a moment “when government has to be returned to the people.” Kucinich, 71, a former Congressman and Cleveland mayor, is a Democrat seeking his party’s nomination in the May primary.   Kucinich told Register managing editor Matt Westerhold health care costs “are just killing family budgets.”He said he and his running mate, Akron City Council member Tara Samples, are putting together a plan to offer inexpensive health coverage to all Ohioans. He said he could put the plan on the ballot if lawmakers won’t adopt it. Kucinich said he’s the only candidate in the race from either party who favors a ban on the sale and ownership of assault weapons. He said the step is necessary to deal with a “public health emergency.” He noted he opposes fracking and said as governor, he’ll order the Ohio Department of Natural Resources not to issue any more licenses allowing new drilling for fracking.“I believe we have to protect clean water from fracking,” Kucinich said. “You can’t drink oil. Water is essential for human health.” Kucinich said he likes Cordray personally but described his rival as a “Republican light” who opposes bans on assault rifles and fracking.

PUC orders Sunoco pipeline shutdown after sinkholes expose bare pipe near Exton - Philly The Pennsylvania Public Utility Commission on Wednesday ordered the immediate shutdown of Sunoco Pipeline’s Mariner East 1 system after sinkholes exposed the bare pipeline in Chester County, which PUC investigators said “could have catastrophic results” if not repaired.  Gladys M. Brown, the PUC’s chair, granted an emergency order to halt operations on the 8-inch-diameter pipeline, which went into service in 1931 originally to carry motor fuel. It now carries up to 70,000 barrels a day of high-pressure volatile natural gas liquids such as propane from the Marcellus Shale gas region to a Sunoco terminal in Marcus Hook.  The emergency order will require Sunoco to run an inspection tool through the pipeline to ensure it is undamaged, and to conduct geophysical testing to determine the extent of underground instability. Operations will not be allowed to resume until corrective actions are taken that satisfy the PUC’s investigators.

PUC shuts down Mariner East 1 pipeline, citing public safety concerns raised by sinkholes - Pennsylvania’s Public Utility Commission on Wednesday ordered a temporary shutdown of the Mariner East 1 natural gas liquids pipeline, saying it could have a “catastrophic” effect on public safety if it leaks. PUC Chairman Gladys Brown approved a request by the commission’s Bureau of Investigation and Enforcement for an emergency order that would halt operation of the line until inspectors are satisfied that it meets safety standards. The panel, in a petition issued earlier Wednesday, argued that the pipeline had been exposed by the appearance of sinkholes near the construction of two other pipelines – Mariner East 2 and 2X – at several places in Chester County’s West Whiteland Township in recent days. The panel said that the construction of the two new pipelines and the sinkholes that resulted from drilling for the pipelines – all of it near ME1 – “compromise the safety of the public.” In a four-page order, Brown agreed with the panel, saying that risks to the public outweigh risks to the shippers of natural gas liquids. “I agree with BIE that permitting the continued flow of hazardous liquids through the ME1 pipeline without the proper steps to ensure the integrity of the pipeline could have catastrophic results impacting the public,” Brown wrote.

MVP asks West Virginia judge to order protesters out of trees along pipeline route - Lawyers for the Mountain Valley Pipeline are asking a West Virginia judge to order the removal of protesters sitting in trees along the pipeline’s route.The protesters’ attempt to block tree cutting for the natural gas pipeline has no legal justification and could delay construction, the attorneys wrote in a motion for a temporary restraining order filed in Monroe County Circuit Court.Since Feb. 26, two self-described pipeline resisters have been sitting on wooden platforms in trees near the spot where the pipeline would cross the Appalachian Trail in the Jefferson National Forest, just across the state line from Giles County.  Unless stopped, the “tree-sit” protest “will prevent MVP from engaging in lawful construction activities,” the motion stated.Mountain Valley contends the protesters are violating forest service rules while it has received approval from the Federal Energy Regulatory Commission, the U.S. Forest Service and the federal Bureau of Land Management for its 303-mile buried pipeline.A Circuit Court judge has yet to enter an order or schedule a hearing since the request for a restraining order was filed Friday.Named in the motion is Appalachians Against Pipelines, a group that has posted information about the protests on its Facebook page, and Ashley Brown, who said during a cellphone interview with The Roanoke Times last week that she was one of two protesters about 60 feet above the ground sitting in trees. Five other protesters involved in the tree-sit are not known to Mountain Valley and are identified in court papers as John Does.

Environment Committee Advances Fracking Waste Ban - — The Environment Committee voted 29-1Wednesday to forward a bill banning fracking waste to the Senate.  There is currently a moratorium on fracking waste that was approved back in 2014, but environmentalists say they can’t predict what the future holds.  The moratorium will stay in place until the Department of Energy and Environmental Protection submits legislation to address hazardous waste from fracking. Fracking waste includes wastewater, sludge and other substances generated in the process of hydraulic fracturing of shale to get to natural gas buried underground. There is currently no fracking happening in Connecticut, but it happens in states like Pennsylvania. In 2014, the Connecticut legislature passed a three year moratorium that temporarily prohibited fracking waste. The measure was prompted after the New York legislature considered lifting its ban on fracking. At the time many environmentalists in Connecticut called the moratorium a “watered down” version of an actual ban on fracking waste.Legislation that featured a permanent ban easily passed in the House last year, but it sat on the Senate calendar for about a month before the session ended.Rep. John Piscopo, R-Thomaston, called the legislation largely symbolic and argued that it was no way to write state law.“There’s no reason for this,” Piscopo said. Rep. Michael Demicco, D-Farmington, who co-chairs the committee, pushed back saying that just because fracking does not occur now, does not mean it will not occur in the future.

A year after fracking ban, Maryland Gov. Hogan’s support for natural gas sparks new battle - Capital Gazette: year after Maryland banned the controversial natural gas harvesting technique known as fracking, Gov. Larry Hogan is pushing to connect more homes in the state to gas lines, sparking a new battle over the fuel. Hogan, who signed last year’s law, wants to require a Canadian energy company to invest more than $100 million in Maryland, including money to establish a program to make natural gas the primary energy source for more homes in the state.The move has drawn fire from environmentalists. They say it’s hypocritical for Hogan, who has backed programs to fight global warming, to expand the use of natural gas. Proponents counter that using more natural gas would reduce the state’s reliance on fuels that produce more pollution. The conflict, along with ongoing friction over a proposed gas pipeline beneath the Potomac River and the soon-to-open Cove Point natural gas terminal in Southern Maryland, is part of a larger debate about how the state should cut fossil fuel emissions and combat climate change. Article continues belowMaryland has decided not to join in the nation’s fracking boom, but natural gas is poised to grow in the state nevertheless. Maryland Environment Secretary Ben Grumbles rejected suggestions that the Hogan administration is being inconsistent in its support for gas infrastructure. He called natural gas “a bridge fuel to a clean-energy future,” reducing dependence on dirtier fuels such as coal and heating oil while the use of wind, solar and other sources grows and costs fall. 

Dominion Maryland Cove Point LNG facility exports first cargo (Reuters) - Dominion Energy Inc said on Friday the first vessel carrying liquefied natural gas from its newly constructed Cove Point LNG export terminal in Maryland left the facility, another sign of growing U.S. prowess as an oil and gas producer. The LNG tanker Gemmata left fully loaded, according to energy data provider Genscape, which said it observed the loading of the vessel through its cameras set up to watch the facility. Dominion said it spent about $4 billion to add export facilities at Cove Point, long an LNG import terminal on Chesapeake Bay. The facility is still undergoing final commissioning, the company said. Cove Point is the second big LNG export terminal in the Lower 48 U.S. states after Cheniere Energy Inc’s Sabine Pass terminal in Louisiana, which exported its first cargo in February 2016. After decades of importing massive amounts of gas, the United States became an exporter of the fuel in 2017 for the first time in 60 years due to record U.S. gas production from shale fields. The United States is expected to become the world’s third- biggest LNG exporter by capacity in 2018, furthering President Donald Trump’s goal of American energy dominance by exporting U.S. oil and gas to help create jobs at home and provide more security to the nation’s allies around the world. U.S. LNG export capacity is expected to rise to 10.1 billion cubic feet per day (bcfd) by the end of 2020 from 3.8 bcfd today. Cove Point is designed to liquefy about 0.75 bcfd of gas. One bcfd can power about 5 million homes. 

Millennials Interrupt Fracking Lobbyist Meeting at Trump Hotel in D.C. (Video)  — A dozen young people interrupted the opening reception to an oil and gas lobbying event Monday at the International Trump Hotel in Washington, D.C. The annual 2018 “Congressional Call-Up” event, which focused on influencing federal officials in Congress and at the Environmental Protection Agency, was held by the Independent Petroleum Association of America, a lobby group representing oil and gas companies.  Before the opening reception, over a dozen young people—part of the Sunrise Movement, a millennial-led group looking to make climate change an urgent political priority in the 2018 midterm elections—stood in the reception entrance inside the Trump International Hotel. During the interruption, attendees displayed a banner that read "Oil Lobby Money Buys Climate Wrecking Politics," sang a song to the tune of "God Bless the USA," and spoke about the impacts of climate change and oil drilling on their families. Fracking firms, many represented by the IPAA, fought hard in 2017 to ensure the Trump administration and Republicans in Congress moved swiftly to approve pipeline projects like the Dakota Access Pipeline, gut environmental protections, and expand drilling on public lands. “Fossil fuel executives and their lobbyists are only able to get away with pay-to-play politics because they corrupt our democracy in the shadows of places like the Trump Hotel,” said Stephanie Tulowetzke, a DC-based organizer with Sunrise Movement. “We’re here today to bring their dangerous, corrupt actions into the light. We won’t stop showing up at events like these until our politicians reject campaign contributions from the very CEOs threatening our lives and the lives of millions in this country.”

As Atlantic Coast Pipeline moves to construction, groups urge Northam to act -- More than a year ago, as he was attempting to fend off a primary challenge from an opponent dead set against the Atlantic Coast and Mountain Valley pipelines, then-Lt. Gov. Ralph Northam called for the contentious projects to “be held to the highest environmental standards” in a letter to the state’s environmental agency.Last week, armed with a new report warning of the hazards the pipelines’ construction poses to drinking water, trout streams and wetlands, a trio of environmental groups sought to hold Northam to that pledge.The report, commissioned by the Natural Resources Defense Council, says sediment loads in the streams and wetlands crossed by the pipelines would increase during and after construction, continuing at levels “above baseline on a permanent basis,” among other findings.“We strongly agree with you,” says the letter Northam got last week from the Virginia League of Conservation Voters, the Natural Resources Defense Council and NextGen America. “An individualized evaluation of these pipelines’ pollution impacts, guided by your call to use the best available scientific evidence, in a transparent, public process, is the best way to ensure protection of Virginia’s waters.” Specifically, the groups want Northam to push the state Department of Environmental Quality, which has been excoriated for how it has handled the water quality review of the pipelines, to conduct an individual review of the hundreds of spots where the pipelines will cross waterways. But that ship may have already sailed. The DEQ ceded the review of water crossings to the Army Corps of Engineers. The corps has now issued what critics call “blanket” permits for both pipeline projects, an approval that opponents argue allows some degradation of waterways that impairs existing uses, which state regulations do not permit.

How 'North Carolina' got erased from Atlantic Coast Pipeline fund — Over six weeks of negotiation, a deal to bring $57.8 million to North Carolina as part of the Atlantic Coast Pipeline project morphed from an agreement between the pipeline partnership and the state to a deal between the partnership and Gov. Roy Cooper. Draft versions of the memorandum of understanding laying out terms for the mitigation fund show changes handwritten in the margins by William McKinney, Cooper's in-house attorney, as the deal was worked up in December and January. Instead of the money flowing to the state, it would go into an escrow fund designated by the governor. Repeated references to "the state of North Carolina" were edited to "the governor of the state of North Carolina." The reason? Cooper and his administration don't trust the Republican-controlled General Assembly. The feeling is mutual. After the fund was announced, the Republican majority moved quickly to pass legislation rerouting the promised money to schools along the pipeline route instead of leaving it to Cooper and a still-unwritten executive order contemplated in the memorandum to lay out rules for doling out the money. Republican leaders called the administration's agreement "a slush fund" created outside the treasury to circumvent their power of the purse. "I think that their subsequent actions bore out why we didn't want to involve the legislature," said Ken Eudy, Cooper's senior adviser and the administration's point man for talks with Duke Energy and other companies partnering on the pipeline.

Documents reveal immense outreach on Atlantic Coast Pipeline — Dominion Energy says it’s being a good neighbor by handing out $2 million in grants of around $5,000 to $10,000 in communities affected by its joint venture with fellow energy giants Duke Energy and Southern Co. But critics say Dominion is buying support on the cheap to outflank opponents of the project, which would carry fracked natural gas from West Virginia into Virginia, North Carolina, and potentially further south at a cost that’s swelling to as much as $6.5 billion. ”It continues to astonish me how tiny these grants are and how ready people are to sell their souls,” said Hope Taylor, executive director of Clean Water for North Carolina, a nonprofit fighting the pipeline. Documents obtained by The Associated Press as well as interviews with company officials, supporters and opponents, show the considerable lengths Dominion has gone to as it builds support for its largest capital project. The company says its grant program is charity, and not part of what it calls its largest outreach program in Dominion history. “We wanted to make sure our side is adequately told,” said Bruce McKay, who as senior energy policy director for Richmond-based Dominion oversees the project’s public affairs. He calls the outreach necessary in part because of the pipeline’s complex, multijurisdictional nature and growing opposition to fossil fuel infrastructure. Dominion is the leading percentage owner of the Atlantic Coast Pipeline, responsible for its construction and operation. So far, only some trees have been cleared, but the project aims to go online as early as late 2019, according a recent Securities and Exchange Commission filing. Supporters say the pipeline will meet a critical need for natural gas — primarily for power generation — in a region with constrained supplies. They say it will create jobs, boost economic development and support a shift from coal. Opponents say it will harm the environment, and contend developers are overstating the need to build a project for which regulators will allow them to recoup a handsome return on their investments.  

US Colonial Pipeline restarts Lines 1 and 3 - Colonial Pipeline said Friday morning it had restarted its gasoline-only Line 1 and multi-product Line 3 after a respective integrity issue and leak forced the lines to close. The company said Line 1 was shut Thursday afternoon to investigate an undisclosed issue. The 1.37 million b/d line ships gasoline from Pasadena, Texas, to Greensboro, North Carolina. Line 3 was shut Wednesday morning after a small release was found in Bel Air, Maryland. The line carries 885,000 b/d of gasoline, diesel and other products from Greensboro to Linden, New Jersey. Colonial did not provide details of the leak in Bel Air, nor did it specify if the Line 1 and Line 3 issues were related. A company spokeswoman did not immediately return a request for comment.

Report: Russians targeted Sabal Trail pipeline on social media -- Russian agents exploited social media to attempt to disrupt U.S. domestic energy markets and stir up protests against the Sabal Trail pipeline and other pipelines, fossil fuels, climate change and other divisive issues, a Congressional report released this month found. Juno Beach-based FPL, which uses natural gas to generate 70 percent of its power, is the Sabal Trail pipeline’s primary customer. The U.S. House of Representatives Committee on Science, Space and Technology says the same Russian entity indicted by a federal grand jury last month, the Internet Research Agency, is behind the social medial campaigns seeking to undermine U.S. energy markets. The Congressional report on the energy issues found that between 2015 and 2017, there were an estimated 9,097 Russian posts or tweets regarding U.S energy policy or an energy event on Twitter, Facebook and Instagram. For example, a tweet on Dec. 11, 2016 from RT, the Russian-sponsored news agency stated: “Critics call $3 billion #SabalTrail Pipeline #Florida’s Dakota Access Pipeline.” Another Tweet from RT that same day was “Pipeline Protests are Happening in Florida. #NOSabalTrailPipeline.” The Russian agents efforts included attempting to incite Americans to take action against pipeline efforts by promoting links and references to online petitions aimed at stopping Sabal Trail, the Dakota Access and Enbridge Line 5 pipelines, the report states. 

Trump drilling plan faces backlash | TheHill: The oil industry has been put on the defensive in the fight over the Trump administration’s plan to expand offshore drilling. The backlash against Interior Secretary Ryan Zinke’s decision to consider oil and natural gas drilling nearly everywhere along the nation’s coasts has been fierce and bipartisan. Drilling opponents have dominated the public conversation since the plan was released in January. Meanwhile, almost all of the Atlantic and Pacific coast governors have come out in opposition to the plan, spurring Zinke to remove Florida’s waters from the proposal just days after it was released.With energy prices, including for gasoline, remaining fairly low, the industry is facing numerous headwinds as it pushes to open up significant new areas for drilling. “We recognize the fact that this is a bit more of an uphill fight because the pressure is off,” said Tim Charters, a lobbyist at the National Ocean Industries Association, which represents oil companies and others involved in offshore oil, gas and wind development. “When Florida’s tourism is getting crushed because gasoline is $4 a gallon, folks want to look at new drilling. When oil has been stable for several years and gasoline is around $2.50, the pressure is off,” he said. “We’re working to remind everyone that these resources belong to the American people and should be used for the benefit of all of America.” One person who works in energy industry advocacy said that the Trump administration is likely to come out with a final drilling plan that oil and gas interests can be proud of. But that person also warned the industry risks losing the narrative unless it steadily makes the case to the public for offshore drilling. 

Interior Secretary gets strong GOP resistance to drilling plan, starts backing off -- Facing mounting pressure from fellow Republicans who see little consistuent support for drilling off the Atlantic coast, Interior Secretary Ryan Zinke could be backpedaling on the Trump administration’s initial plans to expand the program, GOP lawmakers told McClatchy. In a meeting with affected coastal GOP representatives last week, Zinke reaffirmed an exemption from the drilling for Florida, hinted to New Jersey officials their state was likely to be spared and left a Virginia congressman optimistic the policy would be overturned for his state, too. And Zinke said he’d travel to South Carolina to get a better sense of their concerns as well. If Zinke carves out exceptions for all these states, the idea of cross-Atlantic oil drilling basis could be dead. The new policy had seemed clear in early January, when Zinke, at the White House’s behest, said he would expand drilling all along the Atlantic. Then he gave an exemption to Florida, and other states — many of which have Republican-dominated congressional delegations — began demanding similar treatment. Seeking to clean up a bureaucratic mess, Zinke has since been visiting Capitol Hill and speaking with governors who want carve-outs. Following a Feb. 27 meeting Zinke convened on Capitol Hill with East Coast Republican representatives, Interior spokeswoman Heather Swift said her boss was “happy to meet with coastal representatives to discuss the offshore plan.” But Zinke is leaving confusion in his wake. Lawmakers from Florida emerged from that recent meeting convinced they were still going to get their exemption, citing a united delegation and a longstanding federal moratorium on drilling in the eastern Gulf of Mexico. New Jersey Republicans said Zinke, a former Montana congressman, strongly implied their coast would be spared, too, because some studies suggested drilling there would not yield much oil. Rep. Scott Taylor, R-Va., said he was confident his state would get an exemption because of tourism and the Navy’s concerns about drilling near a military base. And Rep. Tom Rice, R-S.C., said he was encouraged both by Zinke’s promise to visit the South Carolina coast and his indication “to me that strong resistance (inside the state) will certainly be taken into account.” 

Zinke says Interior should be a partner with oil companies - — Interior Secretary Ryan Zinke says his agency should be a partner with oil and gas companies that seek to drill on public land and that long regulatory reviews with an uncertain outcome are “un-American.” Speaking Tuesday to a major energy-industry conference, Zinke described the Trump administration’s efforts to increase offshore drilling, reduce regulations, and streamline inspections of oil and gas operators. “Interior should not be in the business of being an adversary. We should be in the business of being a partner,” Zinke said to a receptive audience that included leaders of energy companies and oil-producing countries. Zinke said the government should shorten the permitting process for energy infrastructure — it shouldn’t take longer than two years. “If you ask an investor to continuously put money on a project that is uncertain because the permit process has too much uncertainty, ambiguity, (it) is quite frankly un-American,” he said. The Interior Department manages 500,000 million acres — one-fifth of the U.S. land mass — as well as the lease of offshore areas for oil drilling. One-fifth of U.S. oil production takes place on land or water that the Interior Department leases to private energy companies. Environmentalists accuse Zinke and the administration of undercutting environmental rules to help oil, gas and coal companies. Alex Taurel, a legislative official with the League of Conservation Voters, said Tuesday that Zinke “thinks our public lands are nothing more than an ATM for his industry friends. If anything is un-American, it’s this administration’s persistent attacks on America’s public lands.” In January, the Trump administration proposed to open up nearly all coastal areas to oil drilling, although Florida was dropped after the Republican governor and lawmakers objected, citing risk to the state’s tourism business. 

Appeals court to review halt in Louisiana pipeline work — A federal appeals court has scheduled a hearing next week to review a judge’s order that halted construction of a crude oil pipeline in a Louisiana swamp. Bayou Bridge Pipeline LLC asked the 5th U.S. Circuit Court of Appeals for an “emergency stay” that would lift the suspension of construction work while it appeals the judge’s ruling. A three-judge panel from the court is scheduled to hear to arguments on that request next Tuesday. On Feb. 23, U.S. District Judge Shelly Dick sided with environmental groups and issued a preliminary injunction stopping all Bayou Bridge pipeline construction work in the Atchafalaya Basin until the groups’ lawsuit is resolved. In a court filing last Friday, company attorneys claimed Dick’s ruling “fails the basic requirements” for issuing such an order. Dick concluded the project’s irreversible environmental damage outweighs the economic harm that a delay brings to the company. Her order only applies to the basin and doesn’t prevent the company from working elsewhere along the pipeline’s 162-mile-long (261-kilometer) path from Lake Charles to St. James Parish. Sierra Club and other environmental groups sued the U.S. Army Corps of Engineers in January, saying it violated the Clean Water Act and other environmental laws when it approved a permit for the project. The groups and Bayou Bridge disagree on whether the company could immediately resume construction in the basin if the 5th Circuit lifts the preliminary injunction. The groups’ attorneys claim Bayou Bridge couldn’t, because the Corps’ permit prohibits the work when water levels reach a certain height. “That height has already been reached, and river levels will likely remain high for months,” they wrote in a court filing Monday. But the company’s lawyers say they would have at least a few weeks to make “significant uninterrupted construction progress” before rising water levels disrupt work in the basin 

The growing role of VLCC's in US crude oil exports. -- U.S. crude oil exports from the Gulf Coast remain at a high level, as does interest in transporting crude to Asia and Europe in Very Large Crude Carriers (VLCCs) capable of carrying as much as 2 million barrels (MMbbl) each. The catch is that only one Gulf port — the Louisiana Offshore Oil Port (LOOP) — can send out fully loaded VLCCs, and so far LOOP has loaded only one; other Gulf ports need to fill or top off the gargantuan tankers in open waters using reverse lightering. Plans are afoot to allow greater use of VLCCs, but how long will they take to implement? Today, we discuss the economic benefits of exporting crude on supertankers, the growing use of VLCCs for Gulf Coast exports and the challenges exporters face in utilizing them even more this year and next. VLCCs are giants. The supertankers have an average length of about 1,100 feet — longer than Houston’s 75-story JPMorgan Chase Tower is tall — with an average beam (or width) of nearly 200 feet and an average fully loaded draft of 72 feet. There are about 800 VLCCs operating in the world today and, as we’ll get to, an increasing number of these behemoths are being filled with U.S. crude along the Gulf Coast and sent to faraway ports in Europe and Asia.

Global oil players flock to Houston as OPEC, US shale tensions ease (Reuters) - The oil industry’s biggest names gather this week at CERAWeek, the largest energy industry get-together in the Americas, at a time when U.S. shale production is booming, global demand is rising and crude prices are at a sweet spot for both big U.S. producers and OPEC. FILE PHOTO: An offshore oil platform is seen in Huntington Beach, California September 28, 2014. REUTERS/Lucy Nicholso/File PhotoLast year’s decision by the Organization of the Petroleum Exporting Countries to restrain output has drained the global glut that occupied much of the conversation at 2017’s gathering. With oil prices LCOc1 up about 15 percent since oil ministers and top executives convened here last year, fears have receded for a slugfest of OPEC vs. U.S. shale. Rising prices have U.S. shale producers pumping more, sending total U.S. output to an all-time record above 10 million barrels per day. This year, the United States could surpass Russia as the world’s largest oil producer. OPEC, meanwhile, has shown no signs of moving to produce more, with output from members at a 10-month low. The cartel’s leaders have even expressed interest in keeping some production curbs in place through 2019. Oil ministers and their advisers will use the conference to put shale under a microscope, said Dan Yergin, vice chairman of conference organizer IHS Markit (INFO.O) and a Pulitzer Prize-winning oil historian. “OPEC is still really struggling to understand: ‘What is this new oil business called shale?’” said Yergin. “This conference is a field trip for OPEC to a different reality in oil.” They have scheduled dinners with shale executives and financiers for the second time in two years, underscoring the maturation of a relationship between big petrostates and a once-upstart industry that weathered OPEC’s best efforts to bury it under a supply glut from 2014 to 2016. Shale has emerged stronger from that period with the Permian Basin, the largest U.S. oilfield, now producing nearly 3 million barrels of oil per day, triple that of 2009. Presentations will look at shale’s rising role in global markets and the potential for future North American production and export growth. 

U.S. shale and OPEC share steak in uneasy truce at Houston dinner (Reuters) - Around the room at Houston’s The Grove restaurant on Monday, at several tables, sat a group of shale executives, interspersed with energy ministers and officials representing OPEC members, where they dined on fish and steak. They should have had a lot to discuss amid the fervor of CERAWeek, the most notable U.S. energy event of the year. But what could have been two of the biggest topics of conversation - oil prices and OPEC output levels - were not in the cards, as such a broad conversation would run afoul of U.S. antitrust rules against price-fixing. “It was quite a congenial group of people. We had a really wonderful conversation,” said Tim Dove, CEO of Pioneer Natural Resources Co (PXD.N). He noted that Mohammed Barkindo, OPEC secretary general, gave a speech, and “his main message was that they believe very strongly that demand is going to be significant moving forward in terms of growth.” Just a year-and-a-half ago, such a gathering would have been difficult. The two sides were involved in a price war that left many shale firms bankrupt. The Organization of the Petroleum Exporting Countries pumped all-out from 2014, pushing down the oil price in a campaign for market share aimed at pushing the shale industry out of business. The price war sparked an industry recession, and oil prices CLc1 LCOc1 plunged to a low of $27 a barrel. But shale cut costs and survived, and eventually the low price was too much for OPEC members to bear. OPEC cut output in 2017, effectively making way for shale. Since then, there has been an uneasy truce between OPEC and the shale industry. Even as OPEC ministers sit down with shale executives, it still grates for them that they have had to cut production and cede market share to U.S. oil firms that pump as much as they can. 

Fossil Fuel Execs Very Annoyed #KeepItIntheGround Movement Crimping Their Ability to Pillage Planet -- Pipeline executives are extremely upset that protests by environmentalists and Indigenous groups are disrupting their ability to plunder the planet at will, and they aired their discontent publicly on Thursday at the CERAWeek energy conference in Texas.  Singling out the " Keep It in the Ground " movement—which calls for an "immediate halt" to all new fossil fuel development—as a particularly strong obstacle to their ambitious construction projects, pipeline CEOs complained that opposition to dirty energy has grown in "intensity" over the past several years, posing a serious threat to their companies' bottomlines. "There's more opponents, and it's more organized," lamented Kinder Morgan CEO Steven Kean, according tothe Houston Chronicle. Kinder Morgan's Trans Mountain pipeline—which would carry tar sands 700 miles from Alberta to Burnaby, British Columbia—is currently facing fierce resistance from Indigenous groups and local governments. At least 7,000 people are expected to participate in a march and rally against the pipeline in Vancouver on Saturday, the Seattle Times reports . Other pipeline CEOs appearing at the CERAWeek conference echoed Kean's concerns, highlighting the success of efforts by environmental activists to delay, disrupt and cancel projects through non-violent civil disobedience, litigation and other tactics. Bitterly recounting how activists tried to drill a holes in his company's pipelines, Energy Transfer Partners CEO Kelcy Warren reportedly said: "Talk about someone that needs to be removed from the gene pool."

Record crude and gas production leads to record NGL production at just the right time. - In recent weeks, both crude oil and natural gas production have breached all-time records. So it should come as no surprise the same thing happened to NGLs — production blasted to over 4.0 MMb/d in the fourth quarter of 2017, and by our estimates will move considerably higher this year. This is a particularly big deal for the ethane market, which has spent the last eight years waiting patiently for a wave of new Gulf Coast ethane-only petrochemical plants — a.k.a. “steam crackers” — to come online in 2018. Well, here we are in 2018 and new demand from the crackers is finally kicking in. The good news for petchems is that all of the incremental NGL production means the supply of ethane available to the market is growing too, right on cue. What do these developments mean for future NGL production, demand and prices? Today, we begin a new blog series discussing our updated NGL market forecasts, starting with that NGL product whose market is going through the most changes: ethane.   NGLs are a frequent topic here in the RBN blogosphere, and in recent months, we’ve discussed the pace of NGL production growth and the need for more infrastructure to handle the incremental barrels. We covered the Permian in Different for NGLs, where we projected that Permian NGLs production is expected to increase nearly 80% over the next five years. From 2016 to 2017, average annual production in the Permian grew by about 160 Mb/d, and the growth rate over the next five years will be even steeper. It was a similar story for the Marcellus/Utica in Unleashed in the (North)East, where we were looking at a 63% increase in NGL production over five years. Now we are talking more like 75%. And in Thank You, we examined the need for ONEOK’s Elk Creek Pipeline being built to move another 240 Mb/d of NGLs out of the Bakken. And in Can't Get There from Here, we looked at ethane in particular, considering the possibility that producers will need to move ethane from more distant sources to meet all the new cracker demand — a development that would likely drive prices higher.  

US oil pipelines pivot south as shale surges -- The plumbing of the US oil market is pivoting. Old pipelines have been reversed to deliver crude to Gulf of Mexico terminals. New ones also point at the coast.  The changes are cementing the stature of the US in world oil markets, feeding exports of crude from shale fields and fuel made by coastal refineries. More pipelines and expanded ports have enabled American oil producers to reach 10m barrels a day in output, in league with Saudi Arabia and Russia.  It is a far cry from the past, when US midstream assets reflected a much greater dependence on foreign oil. For example, in 1967 the Capline pipeline began shuttling imported and Gulf coast crude northwards from Louisiana to Illinois, where it was dispensed to Midwestern refineries.  Now, its volumes drying up, Capline’s owners have proposed flipping the 1.2m b/d conduit to flow south instead of north, permitting inland crude to reach the coast.  The new BridgeTex, Permian Express and Cactus pipelines now stretch from west Texas oilfields to ports and refineries in coastal Corpus Christi and Houston. Additional pipeline systems able to handle more than 2.1m b/d are planned or under construction, according to RBN Energy, a research company.

U.S. to Unleash 'Major Second Wave' of Fracked Oil - Despite governments around the world enacting measures to reduce carbon emissions to help fight climate change , the latest oil market forecast from the International Energy Agency (IEA) makes it clear that the world is yet to turn its back on fossil fuels .According to IEA's Oil 2018 , global oil production capacity is forecast to hit 107 million barrels a day (mb/d) by 2023. As TIME noted from the report, much of that growth is led by the U.S. due to oil produced from fracking the Permian Basin in western Texas, where output is expected to double by 2023."Non-OPEC supply growth is very, very strong, which will change a lot of parameters of the oil market in the next years to come," Fatih Birol, the head of the International Energy Agency, told reporters at the CERAWeek energy conference hosted by IHS Markit. "We are going to see a major second wave of U.S. shale production coming."The IEA predicts that growth in U.S. oil production will meet 80 percent of the growing global demand over the next three years, with Canada, Brazil and Norway able to supply the rest."Thanks to the shale revolution, the United States leads the picture, with total liquids production reaching nearly 17 mb/d in 2023, up from 13.2 mb/d in 2017," the analysis states.Republican Sen. Dan Sullivan of Alaska said at the CERAWeek energy conference "there has never been a more exciting time for the American energy sector.""It is clear to me the American energy renaissance is now in full swing and is being supported by federal government policies," he added.But environmental activist Josh Fox , the director of Oscar-nominated 2010 documentary Gasland , lamented the resurgent shale boom."A major second wave of fracking is coming," he tweeted. "Ok fractivists, time for a major second wave of organizing, because we don't have a major second planet to live on."

Fracking Will Make US World's Largest Fossil Fuel Supplier By 2023, Says IEA - Fracking will make the United States the largest supplier of oil and gas in the world by 2023, Fatih Birol, head of the International Energy Agency said at the CERAWeek energy conference hosted by IHS Markit in Houston last week.“What is happening in the US between now and 2025 [is] a huge expansion of oil production, about 80% of the global oil production growth comes from the US. It exceeds the huge expansion of Saudi Arabia which we witnessed in the 1960s and 70s,” he told The Guardian before the conference began. “Non-OPEC supply growth is very, very strong, which will change a lot of parameters of the oil market in the next years to come,” Birol told the press in Houston. “We are going to see a major second wave of U.S. shale production coming.” The oil patch kids congregating in Houston are over the moon with joy at the news that the US will now be the tail that wags the fossil fuel dog, at least in the short term. China reportedly has many times the reserves the US has, but has declined to exploit them as of yet because of the unmitigated damage to the environment extracting and burning them would cause. The US, on the other hand, doesn’t care a flying fig about the environment. There are profits to be made and nothing can be allowed to interfere with that. In fact, US fossil fuel companies have been euphoric at the support for their nefarious plans they have received from the Trump maladministration. Interior Secretary Ryan Zinke has been instrumental in formulating plans to remove the protected status of many federal lands, including the Bears Ears and Grand Staircase-Escalante national monuments. Think Progress reports the New York Times has uncovered several e-mails between Zinke and fossil fuel companies promising to strip protection of those lands so the oil, gas, and coal reserves buried beneath them can be exploited. The braying jackass in the White House is ecstatic, making himself out to be the savior of the American oil and gas industry. The IEA puts the kibosh on those claims by pointing out rising demand and higher prices for oil and gas are largely responsible for the current state of affairs. But facts have never been an impediment to the megalomaniac in chief before and won’t be this time either.

Trump touts report US is set to become world’s top oil producer | TheHill: President Trump on Tuesday celebrated a report from the International Energy Agency which claims the U.S. will become the world's leading oil producer by 2023. In a tweet linking to the report, Trump touted his administration's focus on "jobs and security." The report states that U.S. oil exports are expected to double to 4.9 million barrels a day by 2023, a marked change from just a few years ago when the U.S. was prohibited from exporting crude oil by law.Trump's tweet comes on the heels of his announcement of controversial new tariffs on steel and aluminum imports, a new policy that America's petroleum industry says will have a negative effect on its business. "Today’s announcement by the Department of Commerce to recommend sweeping tariffs around all steel and aluminum imports, in the guise of national security concerns, doesn’t make sense for the U.S. economy,” said American Petroleum Institute President Jack Gerard. “These tariffs would undoubtedly raise costs for U.S. businesses that rely heavily on steel and aluminum for the majority of their products — and ultimately consumers.” Trump has said that the expected tariffs could be imposed as early as this week. 

America's Oil Boom Is Fueled By A Tech Boom – NPR - The U.S. is on track to become the world's biggest oil producer, pumping out more crude than at its peak nearly a half century ago. For decades, few expected such a comeback, and it's all the more remarkable because the price of a barrel of oil is nowhere near what it was during the last, recent boom."This is an incredible statement, but we're probably making more money at fifty dollars a barrel than a hundred," says Kirk Edwards, president of Latigo Petroleum in Midland, the de facto oil capitol of West Texas.Downtown, not far from Edwards' office, a big LED sign flashes the going price of a barrel of oil. A few years ago, when the number was over 100, rigs were going up everywhere across the state's Permian Basin, as drillers made crazy money. Then came a crash, courtesy of the Organization of Petroleum Exporting Countries."OPEC was trying their best just to slam the door on what was going on here by flooding the oil markets," says Edwards. "They did a phenomenal job."Companies went bankrupt and hundreds of thousands of people lost jobs. In Midland, some laid off workers abandoned cars at the airport as they flew back home. People started to wonder if the good times would ever come back.  They have, even though the price of oil is nowhere near its old high.One reason for that is a lower cost of doing business. Oilfield contractors who survived the bust did so by slashing prices. Subcontractors, of which there are many, started charging less. Edwards says that significantly brought down the investment needed to drill a well. The head of ConocoPhillips has even boasted that his company can now break even when the price of oil is below $40 a barrel.  Technological advances in the way oil and gas is sucked from the ground are also helping producers cut costs.Inside an air conditioned control center, called a frack van, men can monitor information coming out of the well. "Look at all the computer screens," Taylor says. "We used to frack jobs on the tailgate of a pickup, and so we've come a long ways."

US Shale Is Booming, But Is It Enough To Fuel The World? -- The U.S. is expected to dominate global energy markets in the coming years, but a major question is emerging that puts a damper on global energy optimism. Experts are questioning whether enough is being invested to adequately meet projected demand for oil and natural gas. “The United States is set to put its stamp on global oil markets for the next five years,” Fatih Birol, executive director of the International Energy Agency (IEA), said in a statement on the release of the latest oil market report. U.S. production will make up 80 percent of oil supply growth over the next five years, IEA projects. Hydraulic fracturing and horizontal drilling unlocked vast oil and gas reserves. “But as we’ve highlighted repeatedly, the weak global investment picture remains a source of concern,” Birol said. Operating costs have fallen, but investment in upstream production operations hasn’t recovered a 2015 and 2016 when oil prices took a nosedive. U.S. companies have increased investments as shale oil and gas production surges, but the Organization of the Petroleum Exporting Countries (OPEC) and other countries have not followed suit. Investments need to increase to meet forecast demand, Birol said. Adding to the confusion is chaos in Venezuela, a major OPEC oil-producing nation. Political instability caused production to plummet, offsetting gains made by other OPEC members. “More investments will be needed to make up for declining oil fields – the world needs to replace 3 mb/d of declines each year, the equivalent of the North Sea – while also meeting robust demand growth,” Birol said. 

Shale oil growth to overwhelm U.S. refiners, fuel exports: study (Reuters) - Rising U.S. shale oil production will overwhelm the nation’s refining capacity, with three-quarters of the additional oil produced in the United States by 2023 shipped to Europe and Asia, according to a new study by consultancy Wood Mackenzie. The research points to the continued impact of U.S. shale on global markets and the mismatch between domestic refining capacity and rising crude output. The oil could bottleneck at U.S. Gulf Coast ports unless new infrastructure is built, researchers said. U.S. refineries will absorb between 900,000 barrels per day (bpd) and 1 million bpd of the expected 4 million bpd of additional production to emerge from U.S. oil fields, Wood Mackenzie said in a study released on Monday. That will leave three-quarters of the additional crude and ultra-light oil known as condensate destined for non-U.S. buyers in the next five years, the researchers said. The oil will vie with Middle East and African crudes in world markets, they said. U.S. refiners prefer to run medium and heavy crudes and will not be able to handle all the additional light crude. The U.S. has been slow to add processing capacity because demand for gasoline is forecast to decline. Since at least 2014, ExxonMobil Corp has considered an expansion of light-crude refining capacity at a Beaumont, Texas, refinery but has yet to approve the project. Most of the crude and condensate exports will head to refineries in Europe through 2022, and new barrels thereafter could land in Asia, according to the study. U.S. crude exports hit 2.1 million bpd late last year. The appetite for U.S. oil may weaken ahead. Worldwide growth in demand for crude is expected to be strong for the next year and level off or possibly decline sometime in the next decade, said Wood Mackenzie Chief Economist Ed Rawle. About half of the new, mostly-light U.S. oil output will come from the Permian Basin in West Texas and New Mexico, according to John Coleman, Wood Mackenzie’s senior analyst for North American crude oil markets. He expects much of the 1.9 million barrels of Permian oil to head to Corpus Christi, a South Texas petroleum export hub. At least two pipelines connecting the area and the Permian are under construction. Researchers said it is unclear whether there will be enough U.S. marine terminal capacity and docks to meet the new flows. 

Halliburton's fracking fleet surges as drillers bring on production --  Halliburton Co., the world's largest fracking company, has grown its fleet of pressure pumping equipment by 700,000 horsepower over the past year, a giant growth spurt that comes as U.S. drillers pump more crude from shale plays.That surge brings the Houston oil field service company's high-pressure pumping equipment to more than 4 million horsepower, about 1.6 million horsepower more than its top competitor Schlumberger has, Norwegian energy research firm Rystad Energy said in a report on Tuesday.Rystad believes U.S. fracking companies expanded their high-pressure pumping fleets by 3.3 million horsepower last year and could add another 3.3 million this year, as demand rises for hydraulic fracturing, the process of blasting water, sand and chemicals underground to open shale rock formations to oil and gas production, in places like West Texas and Oklahoma. The rise in demand for fracking could increase spot prices for pressure pumping between 10 percent and 25 percent in the second quarter, squeezing margins that U.S. drillers make on bringing wells into production.Halliburton rival Schlumberger, the largest oil field service company, has signaled plans to increase its frack fleet by 1 million horsepower by refurbishing equipment it purchased from Weatherford International. Other rivals BJ Services and Pro Frac expect to increase their fleets by a combined 2.7 million horsepower this year. "Equipment manufacturers are at full capacity right now, and some pumpers have had to delay deployment of planned additions," said Alex Yang, an analyst at Rystad, in a statement. "Much of the newly built equipment is earmarked for refurbishment programs rather than totally new spreads."

Two 4.2-Magnitude Earthquakes Rattle Northern Oklahoma in a Single Evening - Two 4.2-magnitude earthquakes struck near Enid in northern Oklahoma Sunday at 5:17 p.m and 9:40 p.m., according to the U.S. Geological Survey (USGS). They are the largest recorded this year so far and even felt in neighboring Kansas. The large quakes were followed by two smaller ones around the same area early Monday. The first was a magnitude 2.7 followed by 12:35 a.m. then magnitude 2.6 at 6:16 a.m. At least one home in Breckinridge was damaged by the first earthquake. According to Enid News , the home had major brick separation from doors and windows and other structural damage. The 4.2-temblors are the largest in the state since August 2017 , when a swarm of earthquakes, including a magnitude 4.2, hit the central part of the state. There were five quakes of 4.0 or greater last year. A tremor at that magnitude feels like a heavy truck striking a building, USGS describes on its website. Oklahoma has seen an alarming uptick in seismic activity that's been linked to the injection of saltwater produced from oil and gas drilling activities into disposal wells. State regulators have directed oil and gas producers in the state to close wells or reduce wastewater injection volumes. The regulations have worked to a certain degree . While the Sooner State has dropped from two earthquakes per day to fewer than one per day, some of the post-regulatory quakes have been large and damaging. Two big ones happened in 2016: the 5.0-magnitude earthquake that struck Cushing, one of the largest oil hubs in the world, and a 5.8 that hit near Pawnee, the largest ever recorded in the state.  Tulsa World reported this week that if oil and natural gas prices begin to soar, wastewater injection could climb 40 percent more under a regulatory cap.

Spooked by Quakes, Oklahoma Toughens Fracking Rules - After recording swarms of earthquakes caused by hydraulic fracturing, Oklahoma has introduced tougher regulations than those used by any Canadian energy regulator.   Last month the Oklahoma Corporation Commission ordered all drillers to deploy seismic arrays to detect ground motion within five kilometres of hydraulic fracturing operations over a 39,000-square-kilometre area in the centre of the state.The commission, which regulates the industry, also lowered the minimum level of earthquakes at which operators must change practices from the current 2.5 magnitude to 2.  In addition, frackers must suspend their operations immediately for up to six hours after causing a 2.5 magnitude earthquake which can be felt at the surface.   The commission created the new earthquake protocol after hydraulic fracturing operations set off more than 70 earthquakes of at least 2.5 magnitude since 2016. Canada’s energy regulators only make companies stop operations if they cause a magnitude 4 earthquake.The Alberta Energy Regulator (AER), for example, doesn’t shut down an operation until it causes a magnitude 4 event. Even then the halt is temporary. British Columbia’s Oil and Gas Commission requires operators “to immediately report” seismic events greater than magnitude 4 or unusual ground motion experienced by people within three kilometres of their operations.  In an attempt to reduce seismic activity, once thought to be solely caused by waste water injection, Oklahoma shut down wells and ordered the reduction of fluid volumes in 700 waste water disposal wells by 800,000 barrels per day between 2014 and 2015.They also stipulated that if a waste water injection site triggered a 3.5 magnitude quake, it had to shut down operations.  In contrast neither B.C. nor Alberta, where the industry holds the record for causing magnitude 4-plus earthquakes by high volume fracking, have limited injection fluid volumes or permanently shut down a well.  

Wastewater injection limit set due to earthquake worries, but Oklahoma could get shakier if oil prices soar again - If oil and natural gas prices begin to soar, wastewater injection linked to Oklahoma earthquakes could climb 40 percent more under a regulatory cap — a disposal level that also happens to be 40 percent shy of the record but would still be a historically large volume. A year ago state regulators implemented volume limits on the deepest disposal wells in a 15,000-square-mile area prone to earthquakes. But the question lingered of how much injection volumes might increase under the overall threshold if production were to ramp up in the event the crude oil market approached $100 a barrel, such as the $105 peak in June 2014 before the bust.After a request by the Tulsa World, the Oklahoma Corporation Commission provided an overall daily cap of 1.9 million barrels, or about 57 million barrels in a 30-day period.Injection was about 37 million barrels in January, or about 1.1 million per day, according to OCC data analyzed by the World. Peak monthly disposal happened in October 2014 at 95.4 million barrels, or about 3 million a day.For reference, a barrel is equal to 42 gallons. The 95.4 million barrels in October 2014 is equivalent to 88 minutes of Niagara Falls’ average water flow. The 57 million barrel 30-day threshold is equal to about 52 minutes, and the 37 million barrels in January is about 34 minutes.Not coincidentally, the monthly rate of magnitude 3.0-and-higher quakes was highest in June 2015 with 104, then again in January 2016 with 103. Research has found a months-long delay between injection and felt seismicity, with disposal rates and cumulative volume playing roles.There were 10 such quakes in January; a number that low hadn’t been seen since October 2013, when nine quakes measuring at least 3.0 were recorded. Oil and gas drilling operations in Oklahoma have migrated to petroleum basins in the SCOOP and STACK plays, a 12,500-square-mile region south, west and northwest of Oklahoma City. This area is separate and distinct from the 15,000-square-mile area in central and northwestern Oklahoma covered by disposal volume limitations where the majority of the state’s quakes occur.

Federal court in Wyoming to revisit methane rule compliance, following California court decision - A federal court in Wyoming will reopen the case into the Bureau of Land Management’s methane rule, a set of requirements cutting emissions from the oil and gas sector that industry and politicians have repeatedly tried to get rid of.Energy states including Wyoming and Texas are asking the court to suspend the rule until the Bureau of Land Management finishes a revision of the requirements in a few months.Compliance on aspects of the Bureau of Land Management Methane Waste Reduction rule began in January of last year, after a failed attempt in the Wyoming courts to stay the rule’s implementation given a dispute over whether the federal agency was allowed to regulate natural gas emissions.The rule has been on and off the books ever since.The U.S. Congress tried to ax the rule in the spring, but the move failed in the Senate. The Trump administration attempted to withdraw the rule, but was sued for cutting corners to undo the regulations in a hurry without following administrative rules. The administration suspended compliance given the rule’s uncertainty and began a rewrite process.A California federal court ruling recently put the methane requirements back in place, with industry calling foul. Firms argued that mandating compliance on the rules, which include the use of both manpower and infrared equipment to catch leaks in pipelines, is unfair given that the rules are about to change.  Supporters of the rule, and the California court, counter that the harm of not having a rule in place to reduce emissions is greater than the burden on industry to comply.

No, Republicans Did Not Expose Extensive Effort By Russia To Fuel Pipeline Opposition - Shadowproof –- A “staff report” from Republicans on the United States House Science, Space, and Technology Committee offers little evidence to prove allegations of Russian efforts to influence U.S. energy markets through “social media propaganda” to incite pipeline protests. Nonetheless, the report, pushed by Republican chairman Representative Lamar Smith, went virtually unquestioned when it was covered by U.S. media. What the report reveals are several Twitter and Instagram posts that Republicans claim were posted by “Russian agents” linked to the Internet Research Agency (IRA), the troll farm which has become a focus of narratives that Russia interfered in the 2016 presidential election.  The report recycles unsubstantiated news reporting that strongly suggested the Russian government was behind anti-fracking activism in the U.S. It contends these posts and tweets demonstrate the “broad nature of Russia’s meddling and to reveal Russia’s attempts to deceive and influence the American public, especially as related to domestic energy issues.”  “Between 2015 and 2017, there were an estimated 9,097 Russian posts or tweets regarding U.S. energy policy or a current energy event on Twitter, Facebook and Instagram,” according to the report. “Between 2015 and 2017, there were an estimated 4,334 IRA accounts across Twitter, Facebook and Instagram.” To understand how these numbers are incredibly minuscule, there are about 95 million posts to Instagram per day and 800 million or more users, as of September 2017. About 500,000 comments, 293,000 status updates, and 136,000 photos are posted to Facebook daily. There are over 2 billion active users on Facebook. On Twitter, about 500 million or more tweets are posted each day. There are 330 million active monthly users. As for reported posts and tweets, because Republicans are pulling from contents that appeared between 2015 and 2017, they are essentially revealing an average of 3,000 or so posts and tweets appeared each year. What is 3,000 out of the 95 million posts to Instagram? What is 3,000 out of the hundreds of thousands of comments and updates to Facebook? What is 3,000 out of 500 million or more tweets?

Plan to open drilling off Pacific Northwest draws opposition  (AP) — The Trump administration's proposal to expand offshore drilling off the Pacific Northwest coast is drawing vocal opposition in a region where multimillion-dollar fossil fuel projects have been blocked in recent years. The governors of Washington and Oregon, many in the state's congressional delegation and other top state officials have criticized Interior Secretary Ryan Zinke's plan to open 90 percent of the nation's offshore reserves to development by private companies. They say it jeopardizes the environment and the health, safety and economic well-being of coastal communities. Opponents spoke out Monday at a hearing that a coalition of groups organized in Olympia, Washington, on the same day as an "open house" hosted by the Bureau of Ocean Energy Management. Attorney General Bob Ferguson told dozens gathered — some wearing yellow hazmat suits and holding "Stop Trump's Big Oil Giveways" signs — that he will sue if the plan is approved. "What this administration has done with this proposal is outrageous," he said. Oil and gas exploration and drilling is not permitted in state waters. In announcing the plan to vastly open federal waters to oil and gas drilling, Zinke has said responsible development of offshore energy resources would boost jobs and economic security while providing billions of dollars to fund conservation along U.S. coastlines. His plan proposes 47 leases off the nation's coastlines from 2019 to 2024, including one off Washington and Oregon. Oil industry groups have praised the plan, while environmental groups say it would harm oceans, coastal economies, public health and marine life. 

Interior Moves to Sell Oil Leases in Arctic National Wildlife Refuge -- The Trump administration is initiating the regulatory process of opening the Arctic National Wildlife Refuge (ANWR ) to oil and natural gas leasing. Top Interior Department officials recently visited the Kaktovik and Utgiagvik communities in northern Alaska to let them know that the agency will publish in the coming weeks a notice in the Federal Register of its intent to move toward an environmental impact statement on planned leasing, the Anchorage Daily News reported.  Interior Deputy Secretary David Bernhardt relayed similar details at an industry gathering in Anchorage later in the week, where he said , "We expect to move pretty quickly on that project." Additionally, Sen. Dan Sullivan (R-Alaska) said at the CERAWeek oil industry conference in Houston that lease sales could start as early as next year, which would beat the 2021 deadline set in last year's Republican tax bill.  "It's my hope, and this is a very aggressive timeline, that we would have the first lease sale ... to be sometime in 2019," Sullivan told the audience.

Alaska senator: Arctic refuge drilling sale could start next year | TheHill: Trump administration officials may be able to hold the first auction for oil and natural gas drilling rights in the Arctic National Wildlife Refuge (ANWR) next year, Sen. Dan Sullivan (R-Alaska) said Monday. Speaking at CERAWeek, a major oil industry conference in Houston, Sullivan said he thinks the Interior Department could beat the 2021 deadline for a lease sale that was set out in last year’s GOP tax bill, though the agency has not committed to a timeline. “It’s my hope, and this is a very aggressive timeline, that we would have the first lease sale ... to be sometime in 2019,” Sullivan told the audience.Sullivan said Interior officials are currently in Alaska laying the groundwork for eventual drilling in the Coastal Plain area of ANWR. He encouraged oil industry officials there to bid in the lease sales. The tax overhaul last year opened ANWR for drilling, settling a 40-year debate over whether to drill in the refuge. It had been a priority of Alaska leaders and some Republicans for decades. Interior must, under the tax law, hold a lease sale by 2021 and another by 2024, with at least 400,000 acres available each time. Environmentalists have fought continuously against ANWR drilling proposals, and they plan to object at every step of the process, including over setting up sales and obtaining permits. 

Regulator wants to hold oil companies accountable for spills  (AP) — An Alaska regulator has asked the Legislature to make sure oil companies clean up old wells, even after the wells are sold to a different company. Cathy Foerster of the Alaska Oil and Gas Conservation Commission testified before the Senate Resources Committee on Monday, Alaska's Energy Desk reported. Foerster said it's becoming more common for smaller oil companies to operate in Alaska — and those companies may be more financially unstable. Forester warned that if a big oil field such as Prudhoe Bay is sold to a smaller company that goes bankrupt and can't pay for cleanup, it could cost the state billions of dollars. She said the state currently has a $200,000 bond to cover the cost of plugging and abandoning all the wells at Prudhoe Bay. "For $200,000 we couldn't even pay for the engineering study that would give us the estimate on what the true cost is to plug all of those wells," Foerster said. "So we're in a bad situation on having adequate bonding for our wells, and we're working it." Forester gave the example of Aurora Gas, which declared bankruptcy last year. Forester said the company is unable to pay to plug and abandon its wells, three of which are on state land, making the state financially responsible for cleaning them up. "Aurora Gas doesn't exist anymore, we cannot go back to Aurora gas and ask them for the money to (plug and abandon) those wells," she said. "It ain't going to happen." 

API: Administration must minimize harm to infrastructure and jobs from steel and aluminum tariffs - – Following the President’s announcement on steel and aluminum tariffs today, API President and CEO Jack Gerard emphasized the need to ensure U.S. oil and natural gas investments in American infrastructure, facilities and jobs can continue. “The actions taken today are inconsistent with the Administration’s goal of continuing the energy renaissance and building world class infrastructure. The U.S. oil and natural gas industry, in particular, relies on specialty steel for many of its projects that most U.S. steelmakers don’t supply,” said Gerard.“Consideration must be given to continue the unprecedented and historic energy renaissance that our industry has driven through important investments that have driven job creation and economic growth.” This afternoon, President Trump announced his intent to impose a 25 percent tariff on imported steel and a 10 percent tariff for imported aluminum, regardless of country of origin, the details of which will be unveiled next week. Implementing this trade policy could create confusion in supply chains, unnecessary costs and impacts to U.S. capital intensive projects, and threaten high-paying industry jobs. The U.S. oil and natural gas industry relies on these global steel imports for the majority of its operations, including steel for drilling, production facilities onshore and offshore, pipelines, LNG terminals, refineries and petrochemical plants.  API is the only national trade association representing all facets of the oil and natural gas industry, which supports 10.3 million U.S. jobs and nearly 8 percent of the U.S. economy.

Rick Perry says Trump steel tariffs must be strategic as energy industry criticizes plan --Energy Secretary Rick Perry wants tariffs on steel and aluminum imports to be "strategic," rather than a blanket policy that targets all countries' imports."I think strategically deploying tariffs, and messaging and regulations, is the key here," Perry told reporters Wednesday at the energy conference CERAWeek in Houston.  His comments came amidongoing criticism by the oil and natural gas industry that tariffs are the wrong direction for the U.S. energy sector, especially for oil and natural gas pipeline development.The president "does know there are countries out there who are in fact impacting the market by their engagement of subsidies [and] what some would refer to as unfair trade practices," Perry told reporters at the five-day energy conference.He added that Trump is aware of the effects the tariffs would have on the energy sector and wants to keep the energy sector economically viable in any decision he makes. “We see the president’s announcement on the steel and aluminum tariffs as inconsistent with his broader energy vision,” Jack Gerard, the president and CEO of the American Petroleum Institute, told the Washington Examiner on the sidelines of the conference. He pointed out that many of the materials used to build oil and natural gas pipelines are imported.

Trump Tariffs Are Gift OPEC Russia Not US Shale Oil Gas Pipelines - President Donald Trump's planned 25 percent import tariff on steel is a gift to OPEC and Russia.  His announcement last week will surely play well in steel towns, as its aim is to protect American producers from "unfair" competition from cheaper foreign suppliers. However, it will inevitably drive up costs for the nation's oil and gas producers. And that could be bad news for the resurgent shale industry, which has set the U.S. on the road to becoming the world's top oil producer.Steel used in oil pipelines has to meet rigorous technical specifications to ensure it doesn't corrode or fracture during a lifetime that may well exceed 30 years -- far longer than that of a domestic appliance or an automobile.But the market is a small one for steel makers, accounting for just 3 percent of the U.S. total, according to the Association of Oil Pipelines, a trade group that represents the interests of owners and operators. That's even with the surge in domestic oil production. U.S. steel makers have largely abandoned this niche market in favor of higher volume products with less rigorous quality specifications. A study conducted by consultants ICT International on behalf of five pipeline industry bodies found that approximately 77 percent of the steel used in line pipe in recent years was imported, either in the form of finished pipe or the raw material used to fabricate it in the U.S. (The report also noted that while the U.S. imports $2.2 billion of steel products related to line pipe from 29 countries, it exports steel and steel products worth five times as much to those same 29 nations). So the higher cost of imported product is unlikely to generate a surge of new domestic supply. Once Trump's tariff becomes law, pipeline companies will see the cost of the steel they need go up -- unless they get an exception. If not, then they'll inevitably pass on higher prices to the oil and gas producers who use their lines.

Bill Nye Confronts Justin Trudeau Over Kinder Morgan Pipeline -- At a recent sit-down at the University of Ottawa, TV personality and science advocate Bill Nye confronted Canadian Prime Minister Justin Trudeau about his approval of the controversial Kinder Morgan Trans Mountain pipeline expansion."I've been to Fort McMurray, Alberta. It really is an amazing place in the most troubling way," the Science Guy said, likely referring to the area's notorious tar sands . "But this pipeline ... tell us about the Kinder Morgan pipeline."   Nye cited a study from The Solutions Project that found Canada could entirely replace fossil fuels by 2050 by switching to renewable energy sources.  "First of all, I agree," Trudeau replied. "There is tremendous potential for renewable energy ... However, we can't get there tomorrow, right? We're not going to get there tomorrow. So, we are going to have a transition phase while we develop alternatives to fossil fuels."Trudeau touted that his government is working on other environmental initiatives such as establishing a national price on carbon and a $1.5 billion ocean protection plan. All those initiatives, he said, are "pieces that go together."However, he ultimately defended his approval of the pipeline expansion, insisting "the environment and the economy need to go together.""We have to make responsible choices that's going to move us in the direction of gettin off our massive dependence on fossil fuels and do more renewables," Trudeau said. “The way to do it is to move forward responsibly in both protecting our environment and protecting the jobs and the economy that still is reliant on fossil fuels and will be for another number of years."

Alberta Ready To Turn Off Oil Taps For B.C. - Alberta’s government may be considering a suspension of crude oil shipments to British Columbia in the latest episode of what is turning into a drama series starring Canada’s biggest oil producer and its neighbor who wants to stop the extension of a crude oil pipeline to its coast.In the provincial government’s Speech from the Throne, Alberta’s Lieutenant Governor Lois Mitchell said that all options for retaliation against B.C.’s opposition to the Trans Mountain expansion are on the table. Mitchell recalled a decision by a former Alberta PM in the early 1980s to reduce oil flows to refineries in eastern Canada by 15 percent in reaction to the federal government’s National Energy Program that Alberta saw as a threat to its energy industry.The suggestion is clear enough and it should not be unexpected. First, British Columbia’s new government last year openly stated it did not want the Trans Mountain pipeline to be expanded and would use all available legal tools to fight it. The fact that the project was approved by the federal government was ignored.   Alberta insisted the expansion is crucial because Canada’s pipeline network is already running at capacity; there is even a shortage rearing its head, and oil is having to be transported by train, which is both costlier and riskier.  B.C. was equally insistent that it does not want more oil shipped to its coast and it does not want tankers docking at its ports, since the point of the expansion is to take Alberta crude to foreign markets. In retaliation, Alberta announced a boycott on B.C. wine imports and on electricity imports. B.C. changed its mind about a proposal to change the rules for shipping oil through its territory that would have reduced oil flows for the duration of a study on oil leak response mechanisms. The study would have taken about a couple of years and many saw the proposal as a stalling tactic. The federal government, meanwhile, has so far proved incapable of making the two provinces kiss and make up. At a recent meeting with the public, PM Justin Trudeau reiterated that Ottawa stood behind the Trans Mountain expansion, and that has been about it from the referee.

Don't trust landowners to fight the fracking bosses - New battles against fracking bosses are in the pipeline.Britain’s biggest shale gas company Ineos wants to frack—extract gas—underneath Clumber Park. That’s a national park covering some 3,800 acres in Nottinghamshire.Its plans will pit it against local campaigners, the National Trust—and even sections of landowners.The National Trust has refused access for “seismic testing”, which would identify the best place to drill or frack wells under the grade 1 listed estate and gardens.The Trust has declared it “has no wish for our land to play any part in extracting gas or oil”.James is from nearby Chesterfield Against Fracking and president of Chesterfield trades council. “We’re going to fight this,” he told Socialist Worker. “People are very supportive of the stand the National Trust have taken—it’s a principled rejection of fracking.“We’re planning to keep on campaigning over Clumber Park and make sure Ineos can’t frack.”The government-controlled Oil and Gas Authority last week gave the go-ahead for Ineos to fight the National Trust for access. Once a well is built, a fracking drill can operate horizontally. Fracking companies want licences to test for shale gas underneath land—without necessarily having the owners’ permission.Councils—some of them even led by Tories—are increasingly turning against an industry that is deeply unpopular. But James said the Tories’ opposition “stops at the constituency boundaries”. Ineos is making enemies in even more unexpected places. In a letter published in the Gazette and Herald newspaper in Yorkshire, dozens of major landowners attacked fracking.

NYMEX April natural gas drifts with weather, down 1.2 cents at $2.683/MMBtu - NYMEX April natural gas futures were directionless in overnight US trading due to changing weather and demand expectations. At 7:05 am EST (1205 GMT) the contract was down 1.2 cents at $2.683/MMBtu, after trading a $2.673-$2.726/MMBtu range. Lingering below-average temperature forecasts indicate there could be a demand boost. The National Weather Service projection for the six-to-10-day period shows below-average temperatures holding over the lower tier of the Mid-Atlantic, nearly the entire Southeast, parts of the Gulf Coast, a few areas of the Midwest and Montana, as average to above-average temperatures encompass the Northeast, balance of the Mid-Atlantic, Florida, much of the Midwest, most of the Gulf Coast and almost all of the West. Below-average temperatures expand in scope to overtake the entire Mid-Atlantic, Southeast, most of the Gulf Coast and much of the West Coast in the eight-to-14-day forecast. 

NYMEX April gas settles at $2.749/MMBtu, up 4.5 cents on higher demand -- The NYMEX April natural gas futures contract settled 4.5 cents higher Tuesday at $2.749/MMBtu, as a cold weather outlook and an expected uptick in demand trumped robust production continuing across the US.The below-average temperatures expected in mid- to late-March are very different from "below-average [temperatures] in December, January and February," and while the market currently sits in limbo, a price of $2.65/MMBtu-$2.75/MMBtu in the coming weeks is quite reasonable, said Kyle Cooper, analyst and principal at IAF Advisors.Currently "bears are looking at production" and the "bulls are looking at storage" to drive prices going forward, Cooper said.  But over the next few weeks, neither bulls nor bears will get what they want "to promote their position" and it is anyone's guess as to what will push prices, he said. The most recent six- to 10-day outlook from the National Weather Service calls for lower-than-average temperatures along the West Coast, Northeast, Southeast, Midcontinent and parts of the Midwest and Texas.The colder-than-average weather over the next week raise the possibility of a demand spike, as over the next seven days US demand is expected to average 84.2 Bcf/d, a 3.1 Bcf/d jump from the 81.1 Bcf/d averaged over the previous seven days, according to S&P Global Platts Analytics.The rise in prices experienced so far during the April front-month contract may not continue, as the bump in demand is expected to subside and production is expected to continue at its current strong levels. According to Platts Analytics, US demand is expected to average only 77.5 Bcf/d over the next eight- to 14-day period, a 3.6 Bcf/d drop from the average over the previous seven days and a 3.8 Bcf/d drop from the 81.3 Bcf/d averaged in March 2017.  US dry production is expected to average 77.7 Bcf/d over both the next seven days and the eight- to 14-day periods, a 6.4 Bcf/d increase from the 71.3 Bcf/d averaged in March 2017.

NYMEX April natural gas futures up 2.5 cents overnight at $2.774/MMBtu --NYMEX April natural gas futures ticked higher overnight ahead of Wednesday's open as traders considered mixed fundamentals.At 6:47 a.m. ET (1147 GMT) the contract was 2.5 cents higher at $2.774/MMBtu, trading in a $2.744-$2.778/MMBtu range.Mid-range weather projections continue to reflect lingering cold that should generate residual natural gas demand for heating as winter gives way to spring, but higher low temperatures associated with the calendar looks to keep a lid on weather-related demand support.Total working gas stocks are currently 1,682 Bcf, or 680 Bcf below the year-ago level and 372 Bcf below the five-year average, following a 78 Bcf drawdown reported by the US Energy Information Administration in its latest storage data for the week ended February 23. Early estimates for the upcoming inventory reports show a fluctuation in the rate of storage withdrawals relative to the closely watched five-year average.

EIA reports a 57 billion-cubic-foot weekly decline in U.S. natural-gas supply --The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas fell by 57 billion cubic feet for the week ended March 2. Analysts surveyed by S&P Global Platts had forecast a decrease of 59 billion, but the five-year average withdrawal is 129 billion. Total stocks now stand at 1.625 trillion cubic feet, down 680 billion cubic feet from a year ago, and 300 billion below the five-year average, the government said. April natural gas was down 2.7 cents, or 1%, at $2.75 per million British thermal units, little changed from before the data.

NYMEX Apr natural gas falls 1.1 cents to $2.745/MMBtu as warmer weather seen - NYMEX April natural gas futures moved lower in overnight US trading Friday on a below-average storage draw and forecasts of warmer weather. At 7:30 am EST (1230 GMT) the contract was 1.1 cents lower at $2.745/MMBtu. The contract is under pressure from Thursday's Energy Information Administration report of a net 57-Bcf withdrawal from US gas storage during the week ended March 2 that was on par with the corresponding week in 2017 but well below the five-year average of 129 Bcf. The National Weather Service forecast for the eight-to-14-day period shows the area of below-average temperatures shrinking in the East to include only a portion of the Northeast and mid-Atlantic. Average and above-average temperatures dominate in the eastern half of the country, while below-average temperatures span most of the western half of the country.

Momentous Shift in US Natural Gas, with Global Consequences - Wolf Richter - The year 2017 was when the US became a net exporter of natural gas for the first year in history. The production of natural gas has been surging since 2007, when fracking turned into a boom, whittling away at the need for importing natural gas via pipeline from Canada and via LNG from the global markets. Last year, according to the EIA’s just released data, the US exported 129 billion cubic feet (Bcf) more natural gas than it imported. And this is just the beginning:  Exports to Mexico via pipeline have been rising for years as more pipelines have entered service and as Mexican power generators have switched from burning oil to burning cheap US natural gas (the US imports no natural gas from Mexico). In 2017, natural gas pipeline exports to Mexico surged 12% year-over-year to 1,543 Bcf. But in 2016, a new trend became visible: US natural gas exports via LNG tanker to Mexico (marked in red in the chart below), which rose from negligible in prior years to 28 Bcf in 2016 and to 141 Bcf in 2017. Total exports to Mexico jumped 20% year-over year in 2017, to 1,684 Bcf The US has a bilateral natural-gas trading relationship with Canada, both importing and exporting. Exports to Canada have surged from almost nothing in the late 1990s to a peak of 2,145 Bcf in 2016 but fell 5% in 2017 to 2,043 Bcf. Imports from Canada, while they rose over the past two years, remain in the range established over the past two decades. But due to the surge in exports to Canada, net imports (imports minus exports) have plunged 43% from a peak of 3,600 billion cubic feet in 1999 to 2,042 Bcf:  The LNG export terminals that have gone into service in 2016 and 2017 – they convert natural gas into liquefied natural gas – opened up the rest of the world to US natural gas. So for example, US LNG exports to China have surged from nothing two years ago to 103 Bcf in 2017. This chart shows monthly LNG exports to China:  US natural gas production has been surging since the fracking boom took off in 2007. The chart below shows the monthly (not annual) production in billion cubic feet. Note the impact of the oil-and-gas bust in 2015 and 2016, when some natural gas drillers filed for bankruptcy. But since then, Wall Street opened its wallet again, and new money has flowed into the sector and production has spiked, not only from wells primarily producing natural gas but also from the renewed oil boom as many oil wells also produce natural gas — this used to be flared, but the installation of processing equipment and pipelines allows it to reach the market:

Risk-taking trading firms eye riches in global gas market -- The world’s biggest independent commodity traders have carved out reputations and built their billion-dollar balance sheets on a willingness to take calculated risks in oil and metals markets that more staid and established rivals shunned.Now trading houses, including Trafigura, Vitol, Glencore and Gunvor, are focusing on a new arena they see as rich with potential profit: liquefied natural gas, a once-sleepy corner of the energy industry that is rapidly transforming into the next major commodity for swashbuckling trading houses.For decades this super-cooled fuel market was dominated by state-owned producers, international energy companies such as Royal Dutch Shell and BP and rigid long-term contracts that restricted freewheeling trading activity. However, growing LNG supply from the US and Australia is starting to make the market truly global, handing more power to buyers of the fuel and creating the opportunity for independent trading firms to provide short-term deals. The four commodities houses traded about 27m tonnes in 2017, representing 10 per cent of the market and a jump of two-thirds from 2016, according to estimates from energy consultants Wood Mackenzie.

Royal Dutch Shell to Investors: The World Needs (Lots) More LNG -- In an incredibly rapid yet somewhat overlooked shift, global trade volumes of liquefied natural gas (LNG) have doubled since 2005 -- and they're not done growing yet. Demand will continue to rise, and the countries lucky enough to be flush with natural gas reserves are racing to keep up with it.The United States will boast 9.5 billion cubic feet per day (Bcf/d) of LNG export capacity by the end of 2019. That will make it the third-largest LNG exporter on the planet, right behind Australia and Qatar. While that alone is amazing, the U.S.'s overnight ascension up the global rankings is even more incredible: America had just 0.8 Bcf/d of export capacity at the start of 2016.  Judging by the supply growth in the U.S. and elsewhere, it seems the market will have plenty of LNG to go around. But an astonishing industry outlook published by Royal Dutch Shell sounded the alarm bells, concluding that the world soon won't have enough LNG production to meet demand. That flies in the face of what investors have been told over the years. Countries around the globe have turned to LNG imports for various reasons -- sometimes to displace dirtier coal-fired power generation, sometimes to replace falling domestic production of natural gas, sometimes to lower geopolitical risk, and sometimes for all those reasons. Cheap and abundant natural gas reserves in Australia and the U.S. have made the global LNG boom possible, as have billions in investments planned years ago. Royal Dutch Shell is a majority owner in a floating LNG (FLNG) facility hovering over the massive Prelude field in Australia, which is nearly 300 miles offshore. Meanwhile, Cheniere Energy, America's top LNG exporter, employs more traditional land-based liquefaction facilities along the Gulf Coast. The company actually embodies the national and global trends in the industry quite well.  Cheniere made huge bets a decade ago on the potential opportunity in LNG exports. It will see most of its production capacity (nearly half of America's total) come online between 2017 and 2019, and then it plans to kick back and let cash flows accumulate. According to Shell, that last part is the problem facing the global industry.

Shell Outsmarts Competition In The Gulf Of Mexico -- Mexico’s latest deepwater auction in the Gulf of Mexico at the end of January was a success. It was a success for Shell, too: the Anglo-Dutch oil major snapped up 9 out of the 19 awarded blocks and bid aggressively on the deepwater blocks closest to the U.S. maritime border.Shell’s aggressive bidding, especially on the blocks in the Perdido area next to the U.S. border, puzzled some analysts and observers.      But Shell knew something that its competitors did not. Six months earlier, Shell had made a large deepwater oil discovery on the U.S. side of the Perdido area. Since oil firms are not legally obliged to announce discoveries, Shell postponed the announcement of the discovery until the day of the Mexican auction, as it wanted to secure the adjacent blocks in the Mexican waters.While the cat was out of the bag as early as in July 2017, Shell issued the official announcement about the Whale discovery in the U.S. Gulf of Mexico on January 31, 2018—the day on which Mexico held its deepwater auction and all bids had already been submitted. In the six months following the Whale discovery­­—which Shell described in the January release as “one of its largest U.S. Gulf of Mexico exploration finds in the past decade”—the oil major had the time to additionally study the geology of the Whale. It was also such good fortune that Mexico was offering Perdido areas in its deepwater auction. So Shell—hoping that the Mexican blocks would have geological characteristics similar to Whale’s and could hold more oil—moved on to secure most of the adjacent blocks. Commenting on the timing of the Whale announcement, Andy Brown, Upstream Director at Shell, told Reuters: “Post the Whale discovery we had some geological insights. It is not by accident we didn’t announce it until the day of the bid.”  In the Mexican auction, the Shell-led consortia grabbed five of the six awarded blocks in the Perdido area. Shell also won four more blocks in the Cuencas Salinas area. On the same day, announcing the Whale discovery, Shell said that Whale—operated by Shell with a 60-percent interest and co-owned by Chevron with 40 percent—is adjacent to the Shell-operated Silvertip field and lies some 10 miles from the Shell-operated Perdido platform.

Mexico eyes extra-heavy crude for quick win: (Argus) — Mexico's vision of the future of exploration and production in Latin America includes a throwback — developing extra-heavy crude oil reserves to feed US Gulf coast refineries calibrated for that grade. While the country recently launched a tender for unconventional onshore reserves along its northern border, the country's national hydrocarbon agency director Juan Carlos Zepeda said today that the country sees its 3.1bn bl of 3P extra-heavy oil reserves as a "short-term investment opportunity." "The margin between WTI and heavy Canadian crude is at its narrowest in several years," Zepeda said at the CERAWeek conference in Houston today. "The Gulf coast refineries were designed to process heavy oil from Mexico and Venezuela, where its production has been in decline. Heavy oil in the Gulf of Mexico is going to be in high demand." Zepeda said about half of these reserves are in the Ayatzil field, for which state-run Pemex holds the rights. Investment there would depend on additional farm-out agreements. The other half are clustered nearby in what could be offered in another round to auction exploration and production (E&P) rights, Zepeda said. Mexico is in the midst of a series of staggered bidding rounds to offer E&P rights in its upstream sector as part of its sweeping energy reform enacted in 2014. Mexico has already awarded 91 contracts in 12 bidding rounds, with an average take for Mexico's government of 70pc, Zepeda said. Earlier this week Mexico released details of its first ever auction for rights in shale formations in its northern region, seen as extensions of prolific basins across the border in Texas.

ExxonMobil Takes Heat For 7.5 Magnitude Earthquake In Papua New Guinea  - An earthquake in Papua New Guinea rattled ExxonMobil’s gas project on the island nation to the tune of $19 billion, and a backlash against the U.S. company’s activities is becoming more difficult to contain.A group of locals are blaming the activities of Exxon and its local partners for the 7.5-magnitude earthquake that hit the island on February 26. Aftershocks after the initial quake compounded the effects of the natural disaster.The project, known as PNG LNG, is recognized as one of the world’s most successful liquefied natural gas projects, but the foreign presence is becoming more and more unpopular amongst locals. The country’s Vice Minister for Petroleum and Energy, Manasseh Makiba told Reuters that Exxon should open an official inquiry to identify the causes of the aftershocks to address the locals’ concerns.“It could be man-made but that cannot be confirmed until a proper scientific inquiry can be done,” Makiba said. “We need to resolve that.”Finance Minister James Marape also asked the company to take action in a Facebook post: “In a world of science and knowledge, I now demand answer(s) from Exxon and my own government as to the cause of this unusual trend in my Hela.”The islands of Papua New Guinea sit on the Pacific Ring of Fire, known for its regular volcanoes and earthquakes. Chris Mckee, PNG's head of Geohazards Management Division, claims the recent activity was just part of the area’s normal geological climate.“Earthquake activity has been going on much longer than the oil and gas industry presence in the region - there is no connection at all,” he said.

PNG LNG to remain shut for eight weeks of post-earthquake repairs: Santos - The Papua New Guinea LNG facility, which was closed February 26 following an earthquake in the region, is expected to remain closed for approximately eight weeks, project stakeholder Santos said Monday. "Santos has been advised by the PNG LNG operator that following the earthquakes in the Southern Highlands and Hela provinces during the week of February 26, 2018, preliminary assessments of damage to PNG LNG facilities indicate it may take approximately eight weeks to complete repairs and restore production," Santos said. There is recovery work taking place at the Hides gas conditioning plant which is focused on restoring camp and associated facilities. While the plant is safely shut in, there has been some damage to various pieces of equipment and foundation supports that is yet to be fully inspected and repaired, Santos said. It added that initial visual inspections of the major processing equipment indicate they have not been significantly impacted. "In addition, the operator has brought forward scheduled maintenance activity at the LNG plant and has redeployed maintenance and support staff from the Hides gas conditioning plant to assist," Santos said. It said that surveillance of the pipeline has confirmed it has not been damaged. PNG LNG has a nameplate capacity of 6.9 million mt/year, which it consistently operates above. In December, the plant averaged 8.6 million mt/year and compressor upgrades taken last year should enable it to maintain rates at or above 8.5 million mt/year, Oil Search said recently. 

US LPG cancellations could reach 10 cargoes in March as Asia arbitrage narrows -- About seven to 10 LPG cargoes loading in March from the US bound for Asia could be canceled as the arbitrage is crunched by persistently soft Asian prices, traders say. This is more than the three to five cargoes canceled in the February-loading program. Some traders estimated March shipments to total around 1.4 million-1.5 million mt, while others said it could be even lower than 1.4 million mt. This is down from around 1.6 million mt estimated for February loading. In canceling a term cargo, a company opts to pay a cancellation fee rather than lift the product to sell in a weak market. That fee can be as much as 75% of the cost of lifting. Assuming lifting fees are 12 cents/gal, as some sources have estimated, a cancellation fee would be about 8 cents/gal, meaning a company with a similar contract might opt to cancel if spot terminal fees fall below 4 cents/gal. Trading company Vitol was reported to have canceled three or four cargoes for early March loading from Enterprise Products Partners, sources said. A fifth Vitol stem was also said to be canceled for H2 March loading, though other sources said the cargo would be lifted after all. 

Chevron expects LNG supply shortage by 2025  (Reuters) - Chevron Corp said on Tuesday it expected supply shortage in the global liquefied natural gas (LNG) market by around 2025, echoing comments made last month by top LNG trader Royal Dutch Shell. Demand for natural gas, which burns cleaner than coal and oil, has surged as countries such as China look to curb environmental pollution. Chevron, owner of the giant Gorgon and Wheatstone LNG projects in Australia, said it expects global demand to be nearly 600 million metric tonne per annum (mmtpa) by 2035, while supply could be just about half of that. “China’s demand is increasing significantly - they’ve had a very active program to move off of coal in heating industrial applications, and that’s pulled on LNG,” Pierre Breber, EVP -downstream at Chevron, said during the company’s analyst day, when asked about spot LNG prices. China imported record levels of LNG in January, as the world’s second-largest economy shored up supplies ahead of the Lunar New Year celebrations. Shell in February estimated that more than $200 billion of investments in LNG is needed to meet the boom in demand by 2030. The global LNG market is set to continue its rapid expansion into 2020 as facilities approved for construction in the first half of the decade come on line. However, a decline in spending in the sector since 2014 will create a supply gap from the mid-2020s unless new investments emerge, Shell said in its 2018 LNG Outlook. 

Factbox: Russia-Ukraine natural gas war reignites after final arbitration ruling - On February 28, the Stockholm arbitration court issued its final ruling in the long-running dispute between Russia's Gazprom and Ukraine's Naftogaz Ukrayiny over the two companies' 10-year natural gas supply and transit contract signed in 2009. The court ruled in Naftogaz's favor on the transit element of the dispute, forcing Gazprom to pay $4.63 billion for having underused the Ukrainian transit system to deliver gas to Europe. The final net award to Naftogaz was $2.56 billion after taking into account the court's ruling in 2017 on the supply element of the contract, which stated that Naftogaz must pay Gazprom for gas it took but did not pay for in 2014 and 2015. Gazprom has accused the court of "double standards" and vowed to both appeal against the court's rulings and to cancel the contract altogether. CEO Alexei Miller said Gazprom on Monday had officially sent Naftogaz notification of the beginning of the procedure for termination of the supply and transit contracts." Following are the key elements of the dispute. 

Ukraine Closes Schools To Save Natural Gas - Amid freezing temperatures in a Europe-wide cold snap, Ukraine has switched its thermal power plants to fuel oil from natural gas and is closing schools until March 6 in an effort to save gas after Russia’s Gazprom declined to resume shipments to Ukraine.Without the Gazprom gas deliveries that had to begin on March 1, Ukraine currently has a gas deficit of up to 20 million cubic meters per day, Ukrainian Energy Minister Ihor Nasalyk told Parliament on Friday. Switching thermal power plants to fuel oil could save the country some15 million cubic meters of gas a day, Nasalyk said, adding that his ministry had also asked local authorities to close schools and universities until March 6.The current gas shortage in Ukraine is equal to one-tenth of its daily consumption, according to Reuters calculations.Just hours after an arbitration court had ruled in favor of Naftogaz in a long-running payment dispute between the Ukrainian state company and Gazprom, a fresh gas dispute flared up on Thursday after Naftogaz said that Gazprom had not stood by its commitment to resume gas supplies, forcing Ukraine to reduce gas usage amid Arctic temperatures as the ‘Beast from the East’ freezing weather front sweeps across Europe. The new rift comes after years of bitter disputes between the gas companies of Russia and Ukraine, exacerbated by the 2014 Russian annexation of Crimea. On Wednesday, the Stockholm arbitration court ruled in favor of Naftogaz in the payment dispute with Gazprom, ordering the Russian company to pay Naftogaz US$2.56 billion for failing to supply Ukraine with the agreed amount of natural gas over a period of several years and also for failing to pay the full transit fees for the gas it did pump in that direction.

US Army Docs: Plan to ‘Dethrone’ Putin for Oil Pipelines May Provoke WW3 -- A study by the US Army’s Command and General Staff College Press of the Combined Arms Center at Fort Leavenworth reveals that US strategy toward Russia has been heavily motivated by the goal of dominating Central Asian oil and gas resources, and associated pipeline routes. The remarkable document, prepared by the US Army’s Culture, Regional Expertise and Language Management Office (CRELMO), concedes that expansionist NATO policies played a key role in provoking Russian militarism. It also contemplates how current US and Russian antagonisms could spark a global nuclear conflict between the two superpowers. The document remains staunchly critical of Russia and Putin, but finds that Russian belligerence cannot be understood without accounting for the context of ongoing US interference in what Russia perceives to be its legitimate ‘sphere of influence.’  Simultaneously, the document admits that far from the US being some innocently hapless victim of Russian interference, the US has at various times run covert “information, economic and diplomatic” campaigns to either “dethrone Putin”, or at least undermine his rule.An irony of the document is that despite repeatedly recognizing NATO’s own role in provoking Russian militarism, the US Army study refuses to contemplate a fundamental change of course with respect to NATO policies and interests.The document contains the usual caveat included with these sorts of internal US military studies, noting that its findings represent the views “of the author(s) and not necessarily those of the Department of the Army or the Department of Defense.” Yet in its foreword, Major General John S. Kem, Commandant of the US Army War College in Carlisle, notes that the volume’s insights “are important for Army professionals who lead Soldiers in a variety of missions across the globe”, and should be considered “by planners and policymakers alike.” Titled Cultural Perspectives, Geopolitics & Energy Security of Eurasia: Is the Next Global Conflict Imminent?, the study — which was published in March 2017 and has not been reported publicly until now — pinpoints the roles of competing US, European and Russian energy interests in driving growing tensions which could convert regional flashpoints into the next world war.

US Navy Boosts Mediterranean Presence As Exxon Set To Explore Offshore Cyprus - The U.S. Navy has increased its Mediterranean fleet, just a couple of weeks before Exxon is due to send two surveying vessels to explore offshore Cyprus near the area where Turkey blocked an Eni drilling ship from prospecting in February, Turkish news outlet Ahval reports. Last year, ExxonMobil and Qatar Petroleum signed an exploration and production (E&P) sharing contract with the Cyprus government, under which the companies will start drilling in a block offshore Cyprus this year. Two weeks ago, Turkish Navy vessels threatened to sink a drilling ship that oil major Eni has hired to explore for oil and gas offshore Cyprus - a divided island whose northern part is run by Turkish Cypriots and is recognized only by Turkey. According to local media reports, four or five ships of the Turkish Navy tried to prevent Saipem’s 12000 drilling vessel from performing exploration in the Exclusive Economic Zone (EEZ) of Cyprus. Turkey, which recognizes the northern Turkish Cypriot government and doesn’t have diplomatic relations with the internationally recognized government of Cyprus, claims that part of the Cyprus offshore area is under the jurisdiction of Turkish Cypriots or Turkey. Earlier this month, Eni said that together with France’s Total, it had made a promising gas discovery offshore Cyprus, confirming that the Zohr-like play - where Eni found the biggest gas deposit in the Mediterranean offshore Egypt - extends into the Cyprus Exclusive Economic Zone.  According to Greek newspaper Ekathimerini, Exxon is intent on surveying its block offshore Cyprus despite the Turkish Navy activities and the blockade on Eni’s prospecting in the area. Cypriot Energy Minister Giorgos Lakkotrypis confirmed in the middle of February that Exxon had contacted Cyprus to express its support to the government of Cyprus and to confirm that it intended to meet its commitment to explore in Block 10, as per the exploration contract. Exxon is said to be sending two vessels with special robots to survey the best prospects for drilling that will begin in the second half of this year.

Aging Oil Fields Defy Gravity to Pump More Crude - Bob Dudley, in his 38 years in the oil industry, has never seen anything like what happened with BP Plc’s old fields last year: They gushed more crude. “I cannot remember ever in my career having seen a negative decline rate,” the British oil-giant’s chief executive officer said in an interview on the sidelines of the CERAWeek by IHS Markit energy conference in Houston.  The fact that Dudley isn’t alone in seeing mature fields dwindling less than expected -- and in BP’s case surprisingly increasing -- means the Organization of Petroleum Exporting Countries has one more thing to worry about. As if the shale boom wasn’t enough of a headache.Better results from legacy fields, also observed by producers like Royal Dutch Shell Plc and countries like Norway, further complicate efforts by petro-states like Saudi Arabia to push prices higher by curbing supplies.Across the industry, the results weren’t as spectacular as BP’s, but still impressive, executives and officials at CERAWeek said. According to the International Energy Agency, production from mature oil fields dropped last year by about 5.7 percent, the least in data going back one decade.  That comes as a huge surprise because the oil industry cut spending dramatically during the three-year downturn it’s just started to emerge from, and managing deep-water fields to arrest their demise can be a multibillion-dollar affair. So, OPEC was hoping thriftier times would lead to faster declines from mature wells that still account for more than half of the world’s output.But the need to stretch each dollar spent is exactly why Big Oil is getting more from those fields, according to Wael Sawan, executive vice-president for deep water at Shell. The lower decline rates are part of the response to low oil prices.

ExxonMobil sees hydrocarbons production growth of 1 million b/d by 2025 -- ExxonMobil expects to increase hydrocarbons production by more than 1 million b/d of oil equivalent by 2025, from 3.985 million boe/d in 2017, as output from the Permian Basin grows five-fold and 25 new startups globally come online, CEO Darren Woods said Wednesday. Higher production in the Permian Basin, where ExxonMobil has increased reserves to 9.5 billion barrels of oil equivalent from less than 3 billion boe over the past year, will complement ExxonMobil's massive refineries along the US Gulf Coast, Woods added. He did not say what the company's current output from the basin is. "We are in a solid position to maximize the value of the increased Permian production as it moves from the wellhead to our Gulf Coast refining and chemical operations, where we are focused on manufacturing higher-demand, higher-value products," said Wood speaking at ExxonMobil's 2018 Analyst Meeting at the New York Stock Exchange. ExxonMobil has two large refineries on the Texas Gulf Coast -- the 560,500 b/d Baytown and 362,300 b/d Beaumont plants -- that it is upgrading to increase production of higher-value products. It also plans "strategic investments" at its 502,500 b/d Baton Rouge refinery in Louisiana. A hydrofiner will come online this year at Beaumont, and expansion of light sweet crude processing capacity to run more Permian crude is expected to come online after 2020. The international projects that will contribute to growth out to 2025 include deepwater projects in Guyana and Brazil as well as LNG projects in Papua New Guinea and Mozambique. 

Planes, Trains and Trucks: Global Trade Boom Fires Up Oil Demand - For clues on accelerating oil demand, look to the seas and skies. The strength of oil consumption took analysts by surprise last year, and played a big role in crude’s recovery to a three-year high in January. Demand this year could even turn out to be “way in excess” of 2017’s exuberant levels, Khalid al-Falih, the normally cautious energy minister of Saudi Arabia predicts. Data from industries like aviation, shipping and trucking suggest he might be right. Oil demand growth hasn’t been this strong in decades: even the gloomiest estimates from three heavyweights of global forecasting -- the International Energy Agency in Paris, the U.S. Energy Information Information, and the Organization of Petroleum Exporting Countries -- show consumption expanding by a minimum of 1.4 million barrels a day every year from 2015 to 2018. For part of that time, OPEC and allied producer states have been cutting crude supplies to eradicate a global glut. “The market has certainly come very far in terms of rebalancing,” said Bassam Fattouh, director of the Oxford Institute for Energy Studies. “OPEC and non-OPEC have taken much credit for that, but stronger-than-expected demand was a key contributor.” While a lot of that growth is being driven by consumers in emerging markets taking to the roads for the first time, the strongest run in global trade expansion for several years is also boosting demand as planes, trucks and ships move more goods around the world. Though it may yet be at risk from the protectionist talk coming from Washington, the International Monetary Fund’s most recent estimates for world trade growth are that it will exceed 4 percent for three consecutive years through 2019, a feat last achieved when oil prices were surging to all-time records a decade ago. Here’s a run-through of some additional data points that support the idea of 2018 being a stronger year for oil demand than some expect: 

First Oil, Now Natural Gas: U.S. Emerging As India’s New Energy Partner -- India will be importing its first ever consignment of U.S. liquefied natural gas (LNG), a mere nine months on from signing up for its first consignment of American crude oil. In a statement on Monday (March 5), coinciding with the first day of IHS CERA Week in Houston, U.S. – an event that's considered one of the oil and gas sector's signature jamborees – Cheniere Energy, a leading American LNG exporter, said it would be sending its first consignment to India via the Sabine Pass Terminal in Louisiana.  The importer – Gas Authority of India Limited – one of New Delhi’s state-owned energy companies, said the takings would be under a 20-year sale and purchase agreement (SPA). Of course, the SPA is not new. It was signed back in December 2011 with Sabine Pass in its infancy. But with the facility’s clout and future potential now clearly apparent in 2018, the dispatching of 3.5 million tons of LNG per year to India is no small matter. For Cheniere President and CEO Jack Fusco, the shipment marks the start of “a long and productive relationship” between his company and its Indian client.

Chad, Congo, Malaysia Apply to Join OPEC - Congo, Chad and Malaysia have filed applications to join the Organization of the Petroleum Exporting Countries (OPEC), Equatorial Guinea’s Minister of Industry, Mines and Energy Gabriel Mbaga Obiang Lima told Sputnik on Wednesday.“In Africa,you have countries like Congo, you have initially a country like Chad, they are up-and-coming producers that are interested. Of course they are not producing right now, they are developing, but at the end they could be having 3,000 to 4,000 barrels per day,” Obiang said on the sidelines of the CERAWeek conference in Houston, Texas.The official added that new members would make the international community “see OPEC with a new face.” “The Asian countries — some of them are Indonesia, who initially left OPEC to be observers and now they want to return back and then you have other ones like Malaysia. The countries have already sent a letter, we are evaluating,” the minister explained. The minister also said that OPEC in general supports Venezuela’s proposal to extend the work of the OPEC, non-OPEC oil market monitoring by additional five years.

Frenemies: OPEC Finds U.S. Shale Oil an Intractable Problem - In front of the Petroleum Club of Midland, Texas -- capital of the booming Permian shale region -- an electronic display flashes two crucial pieces of information: the oil price and the number of drilling rigs. For the past year, both figures have been climbing as OPEC oil production cuts led to higher prices, spurring added drilling activity in the U.S. But the rise in the latter inevitably threatens the former. With the number of rigs up almost a third over the last year, U.S. production has surged above 10 million barrels a day, surpassing the all-time high set in 1970. That, in turn, puts downward pressure on crude prices, disrupting OPEC’s plans. And a lot more shale oil is coming, both in 2018 and beyond, executives and traders said. "At current prices, the market is incentivizing U.S. shale companies to produce more," said David Garza, a veteran oil executive who runs the Houston office of energy trading house Gunvor Group Ltd. The Organization of Petroleum Exporting Countries has been struggling with U.S. shale for almost a decade now. For the first few years, it downplayed the production as a mere blip. Then, in 2014, with the market oversupplied, it decided to fight head-on, opening the spigots and sending oil prices to below $30 a barrel in a war of attrition. After a two-year pump-at-will period, OPEC blinked first and cut production in 2016 in an effort to revive prices. After downplaying and then attacking, OPEC has spent the last year making nice with its U.S. shale adversaries, in an effort to understand the magnitude of the problem and perhaps convince the rival producers to show restraint. But despite dinner invitations and behind-closed-doors conversations, shale continues to increase output and grab market share. Rising global oil demand has so far absorbed the extra U.S. crude barrels, limiting the impact on prices. But for the cartel, shale remains as intractable as in the past. 

IEA Predicts Nightmare Scenario For OPEC - The U.S. will supply much of the world’s additional oil for the next few years, according to a new report from the International Energy Agency (IEA).Over the next three years, the U.S. will cover 80 percent of the world’s demand growth, the IEA says in its newly-released Oil 2018 annual report. Canada, Brazil and Norway will cover the remainder, leaving no room for more OPEC supply.The irony is that the substantial gains in output from shale will only be possible because of the OPEC cuts, which has tightened the market and boosted prices. This fact is not lost on OPEC producers. "If you are a shale oil producer, who brought you back? It was OPEC," the UAE’s oil minister Suhail Al Mazrouei, said at a recent industry conference, according to Bloomberg. "Without OPEC there’d be chaos in the market."Indeed, the IEA’s new report paints a pretty gloomy picture for OPEC members, who are hoping to phase out their supply cuts after this year. With non-OPEC supply rising quickly, particularly in the U.S., OPEC may struggle to figure out a way to increase output without pushing down prices, according to the IEA’s analysis.That could put pressure on the cartel to keep the production cuts in place for longer than they had wanted, although it seems hard to imagine they maintain the production ceilings for another three or four years. Doing so would mean handicapping themselves and ceding even more market share to U.S. shale and other non-OPEC producers. Still, it is unclear how this plays out – returning to full production, even if phased in gradually, presents its own problems, if the IEA’s forecast is accurate. The IEA sees demand for OPEC oil actually declining in absolute terms over the next few years as it is edged out of the market by non-OPEC supply. OPEC production only grows by 750,000 bpd through 2023 under the energy agency’s forecast, although that also takes into account a 700,000-bpd decline in Venezuela. The bottom line is that the IEA sees oil demand rising by 6.9 million barrels per day (mb/d) by 2023, with more than half of those increases coming from China and India. Meanwhile, supply grows by about 6.4 mb/d, with a whopping 3.7 mb/d coming from the U.S., nearly 60 percent of the total global supply increase.

Is “US Energy Dominance” Overhyped? Top Experts Doubts Claims About Future Net Energy Exports - U.S. shale has effectively upended the oil industry, withpredictions that total U.S. oil production will surpass Saudi Arabia’s output this year, in turn rivalling Russia’s to become the preeminent global producer. From its position of being dependent on, and subordinate to OPEC, the U.S. has seemingly become the big bad wolf. Through a catalogue of tactical errors and misplaced belief in its own muscle, the mighty brick edifice of OPEC has begun to look more like a bundle of sticks. The International Energy Agency (IEA) forecasts that the U.S. will become a net energy exporter by the late 2020s, but how accurate is that forecast, and to what extent is it mere hyperbole? In October last year there were already caveatsabout the nature of U.S. shale, with some warning that aggressive expansion was leading to rapid initial growth that would ultimately peak too soon. Mark Papa, former head of EOG Resources, raised the question of flatlining output in the face of the doubling of the oil rig count, “(h)ow can a rig count be double and yet production be stagnant?” Figures have also been influenced by the rapid pace of technological development, a pace which has itself plateaued. Robert Clarke, WoodMac research director for Lower 48 upstream, said that “(i)f future wells … are not offset by continued technology evolution, the Permian may peak in 2021”. IEA forecasts then, may be based on rapid growth and technological development that simply isn’t sustainable.   Is U.S. shale just a sheep in wolf’s clothing, its bite ultimately as benign as grandma’s? The IEA is still forecasting that the U.S. will be the number one oil exporter by 2023 at 12.1 million bpd, but at the CERAWeek Conference in Houston on Tuesday, Papa is set to turn that thinking on its head when he warns the industry that shale will hit roadblocks that prevent such forecasts from being realized. He saysthe best drilling locations in North Dakota and South Texas are already tapped out. “The oil market is in a state of misdirection now,” Papa told the WSJ. “Someone needs to speak out.” How much of this is indeed misdirection on his part? Papa is CEO at Centennial Resource Development, which holds the rights to 77,000 acres in the oil-rich Delaware sub-basin of the Permian. A slowdown in expansion and its potential consequence of increased oil prices is advantageous to Centennial’s shareholders, so who are we to believe guilty of misdirection?

China aims to produce record coal, natural gas volumes this year (Reuters) - China will cut its coal consumption to around 59 percent of the nation’s primary energy mix while raising natural gas consumption to 7.5 percent of the mix in 2018, the National Energy Administration (NEA) said on Wednesday. China also aims to slash coal consumption to just half of its energy mix by 2020 by raising output and demand for renewable fuels. The NEA said China will produce around 160 billion cubic meters of natural gas, a record and up 8.5 percent from 2017. Domestic coal production in 2018 will also reach an all-time high at 3.7 billion tonnes, up 7.3 percent from last year. 

U.S. crude exports to Asia are slumping as WTI outperforms other oils: Russell (Reuters) - Exports of U.S. crude oil to Asia appear to be starting to struggle under the weight of a narrowing discount for its domestic benchmark crude to international grades and efforts by other suppliers to maintain competitiveness. Vessel-tracking and port data suggest Asian imports of U.S. crude were equivalent to about 560,000 barrels per day (bpd) in February, down sharply from 676,190 bpd in January. March’s figure may be even weaker with data compiled by Thomson Reuters Oil Research and Forecasts pointing to Asian imports of only about 290,000 bpd. While these estimates are subject to revision, the March data shouldn’t change dramatically given any cargo due to be offloaded in Asia this month would have to have left a U.S. port by now, or at least within the next day or so. The main culprit for a slowdown in U.S. shipments to Asia is likely the narrowing discount of benchmark U.S. West Texas Intermediate (WTI) to Brent, the light crude grade used as a price marker for the rest of the world. The discount of WTI to Brent was $3.11 a barrel at Monday’s close, slightly more than $3 on March 1, which was the smallest gap in seven months. The spread between the two benchmarks blew out to $7.07 a barrel in late September in the aftermath of Hurricane Harvey, which knocked out refineries along the U.S. Gulf Coast, cutting demand for WTI crudes. It remained relatively wide for several months after that, ending the year at $6.48 a barrel, but the differential has been steadily narrowing this year in response to strong demand from U.S. refineries and from overseas buyers. Asian imports of 726,600 bpd of U.S. crude in November and January’s 676,190 bpd were the strongest two months on record, showing that the region’s traders were quick to take advantage of the weakening of WTI relative to Brent. It’s also likely that the spread for physical crude is actually narrower than that implied by the futures contracts. 

Nigeria Can Produce Oil At $20 A Barrel --  The Nigerian National Petroleum Corporation can produce crude oil at around US$20 a barrel, but there are plans to bring this even lower, to US$15 a barrel, the company’s group managing director Maikanti Baru told media. "The more we bring down the cost, the more the money that comes to the federal government and into the pockets of state and local governments," Baru said. Nigeria has pledged to keep its oil production at 1.8 million barrels daily after OPEC asked it to join the cut efforts to bring down the global inventory overhang. Yet independent local producers are eager to boost their production by 250,000 bpd by 2020. That’s part of a plan to bring Nigeria’s total to 2.5 million barrels daily. At such low production costs, the urge to expand production makes perfect sense.  The independents’ plans go counter to Nigeria’s pledge to support OPEC in its oversupply reduction efforts, but this doesn’t seem to have deterred the independents. Nigeria’s plans are for a total 700,000-bpd increase in production by 2020. How this will sit with OPEC is anyone’s guess, especially now, after the IEA warned that new non-OPEC supply would be enough to cover the growth in oil demand globally in the next five years.

The Next Entrant in the Shale Revolution? Saudi Arabia -- Saudi Aramco, the world’s largest oil exporter, is set to join the shale revolution with plans to start producing unconventional natural gas this month and exploit a deposit that could rival the Eagle Ford formation in Texas.Saudi Arabia’s gas resources from shale and other alternative supplies are “huge,” Khalid Al Abdulqader, general manager of unconventional resources at Aramco, said Wednesday in Manama, Bahrain. Production at the kingdom’s North Arabia basin will start by the end of March and reach its target by the end of this year, he said, without giving details.Aramco is also drilling for unconventional gas in the South Ghawar and Jafurah basins, he said. Jafurah in eastern Saudi Arabia is similar in size to Eagle Ford, the second-biggest U.S. shale play for gas, Al Abdulqader said, without giving an estimate of the gas contained at Jafurah.“It’s completely believable,” Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy, said of the comparison. “Can they make a commercial proposition of it? That’s the question.” State-run Aramco, formally known as Saudi Arabian Oil Co., plans to spend $300 billion on projects over the next 10 years to maintain its spare production capacity for oil and boost exploration for and output of conventional and unconventional gas, Chief Executive Officer Amin Nasser said in July. Any increase in supplies of gas drilled from shale and other hard-to-access rocks would free up crude that Saudi Arabia uses in its power plants, enabling the country to export the oil for a bigger profit. Aramco plans to double its production of gas resources to 23 billion cubic feet a day over the coming decade, Nasser said. Saudi Arabia is also the biggest producer in the Organization of Petroleum Exporting Countries. Jafurah is located between Ghawar, the world’s largest oil field, and the Persian Gulf, near the hub of the Saudi energy industry. Pipeline networks and other facilities needed for Aramco to produce unconventional gas at Jafurah are nearby, and this existing infrastructure should help expedite the basin’s development, Mills said.

Oil Production Vital Statistics February 2018 - Last month I wrote this on the price of oil: A correction is now overdue and I suspect we see $65 before a significant move above $70. The only bearish signal is US+Canada production growth.  The Brent front month corrected to ~$63 and now stands on $64.37. Art Berman has an interesting article Oil Price Crossroad recognising that we are now in the territory of market indecision. The IEA OMR is confusing saying both “rebounding US production underpinned non-OPEC output growth” and “Non-OPEC output dropped by 175 kb/d in January” (I think the former is YoY and the latter MoM). Below the fold I simply try to look at the bare facts. The chart below from the February OMR is one of the more important produced by the IEA showing the balance between supply and demand leading to either stock draw or additions. My version of the IEA chart taken from my 2018 oil price scenario  is shown below and is based on their data. It is rather difficult to reconcile the historic data on their chart with mine.  The February IEA OMR says this;  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.  I have been following biofuel production, pointing out that it had been on a cyclical high last autumn and was scheduled to fall by ~ 1 Mbpd over the winter. Afall of 810,000bpd has now duly happened. Falling biofuel production will now cease to support the oil price and the coming rise may have the opposite effect. In summary, variance within OPEC+Russia is effectively “noise”, both groups pegged to production agreements. Production decline in Asia and Europe is offset by production growth in N America. The USA and Canada are the only countries displaying strong production growth.

Lawmakers fear Russian influence on energy markets | TheHill: Lawmakers are expressing concerns following a new House committee report detailing how Russians attempted to use social media platforms to manipulate U.S. energy markets. It’s the first acknowledgment from politicians that such websites were used to influence U.S. affairs outside political and social discourse. “I’m shocked,” Senate Intelligence Committee Chairman Richard Burr (R-N.C.) said on Thursday after the House Science, Space and Technology Committee released its findings.“Russia is continuing to extend its digital tentacles into every aspect of American life, it is absolutely chilling and profoundly dangerous to our future,” said Sen. Richard Blumenthal (D-Conn.). Blumenthal is a member of the Senate Judiciary Committee, which has examined Russian meddling efforts on social media. “We are in effect inviting them to a social media buffet of options to interfere with our Democracy and undermine our way of life without adequate response,” he said. The Science committee report found that 4 percent of all Kremlin-linked social media account posts were energy related, a number that it believes is significant given that 8 percent of posts by such accounts were found to be about the election.

Hedge funds recover nerve after oil sell-off: Kemp (Reuters) - Hedge funds rediscovered some of their confidence in the oil market in the final week of February, as OPEC reiterated its commitment to output restraint and benchmark prices stabilised above $60 per barrel.Hedge funds and other money managers boosted their combined net long position in the six most important futures and options contracts linked to petroleum prices by 68 million barrels in the week to Feb. 27.Portfolio managers boosted their net long position for the first time after reducing it by a total of 263 million barrels over the previous four weeks, according to records published by regulators and exchanges.Net length increased in Brent (+21 million barrels), NYMEX and ICE WTI (+18 million barrels), European gasoil (+15 million barrels), U.S. gasoline (+9 million barrels) and U.S. heating oil (+5 million barrels).The mild bout of liquidation that occurred between mid-January and the middle of February appears to have run its course without making much of a dent in hedge fund long positions ( managers still hold more than 11 long futures and options positions for every short across the petroleum complex, not far off the record set at the end of January.Bullish positions in crude and refined fuels remain at levels that had never been recorded before the start of this year, with fund managers holding long positions amounting to more than 1,400 million barrels.Yet few dare express a contrary bearish view. Short positions actually declined by 11 million barrels in the most recent week to just 126 million, the lowest level since June 2014, when Islamist militants were threatening the oilfields of northern Iraq.Lopsided hedge fund positioning remains an important source of downside risk to oil prices if and when fund managers try to realise some of their profits.For the time being, however, most portfolio managers seem convinced prices will rise further before the eventual correction. Global growth remains strong and oil consumption is set to increase by more than 1.5 million barrels per day for the fourth year running in 2018.

US Will Be World's Largest Oil Producer By 2023, But There Is A Catch - Last month, the US accomplished a historic achievement: thanks to soaring shale production, America surpassed Saudi Arabia as the world's second largest oil producer, pumping over 10 million barrels per day, while Saudi Arabia remains stuck just below the key mark as a result of the ongoing self-imposed production limit, meant to push the price of oil higher (a boon to US shale producers) and to reduce the global inventory overhang. Meanwhile, the world's top producer, Russia, remains safely in first place, with a daily output of roughly 11 million bpd.  That, however, is set to change however in the coming years according to the International Energy Agency, which in its highly anticipated Oil 2018 report released overnight predicted that the U.S. will overtake Russia to become the world’s largest oil producer by 2023, accounting for most of the global growth in petroleum supplies.  The IEA now expects the US to reach a record of 12.1 million barrels a day in 2023, up about 2 million barrels a day from this year, in the process surging past Russia. Furthermore, the IEA predicted that of the 6.4 million new barrels of oil that will be pumped every day between now and 2023, almost 60% will come from the U.S., the IEA said. Meanwhile, counting all liquids, including those derived from natural gas, U.S. production will rise to nearly 17 million barrels a day over the next five years from about 13 million today, the IEA predicted, far more than Saudi Arabia or Russia.  As the WSJ reports, the IEA’s closely watched five-year forecast showed the U.S. hitting new strides in its oil and gas boom, "helped by technological advances, improved efficiency and a fragile recovery in oil prices that is encouraging shale companies to ramp up their drilling."  In other words, becoming "energy independent." In doing so, American influence on global oil markets will also rise, with U.S. oil exports more than doubling to 4.9 million barrels a day by 2023, according to the IEA. Until 2015, the U.S. didn’t export any crude oil by law, but in five years it is expected to be among the world’s biggest exporters.That may be a tall order for a world where even the skeptics admit the US is headed for a recession in 1,2 years.

Oil prices score biggest one-day gain in nearly 3 weeks --Oil prices settled higher Monday, tallying their largest single-session dollar and percentage gain in nearly three weeks, following a reported drop in crude stocks at the U.S. storage hub in Cushing, Okla.Prices had seen some support from reports of temporary supply disruptions in Libya over the weekend and traders weighed comments from the International Energy Agency on U.S. production and global demand growth.On the New York Mercantile Exchange, April West Texas Intermediate crude rose $1.32, or 2.2%, to settle at $62.57 a barrel. May Brent crude, the global oil benchmark, added $1.17, or 1.8%, to $65.54 a barrel on London’s ICE Futures exchange. WTI and Brent marked their biggest dollar and percentage gains since Feb. 14, according to FactSet data.Traders “focused on the key Nymex delivery point that recently has been running dry,” said Phil Flynn, senior market analyst at Price Futures Group.  Data from Genscape reportedly show a sizable decline in last week’s crude supplies at Cushing, according to Bloomberg, which notes that supplies at the key pipeline hub are already at their lowest level since 2014. A forecast complied by Bloomberg also revealed that crude inventories at the hub fell by 600,000 barrels last week.  Meanwhile, the International Energy Agency on Monday forecast the U.S. would become the world’s top crude producer by 2023 with production hitting a record of 12.1 million barrels a day. ”The IEA said that “rising oil production from the U.S. alone will need to cover 80% of the world’s demand growth over the next two years,” with U.S. output set to grow by 3.7 million barrels per day over the next five years,.“If they are wrong and the U.S. misses that growth target, it is likely the globe will be woefully undersupplied,”

What’s Driving Oil Prices Back Up? | - Oil prices rose on Monday and in early trading on Tuesday on news that Libya’s largest oil field was temporarily idled, as well as news that U.S. crude inventories may have posted a surprise decline last week.  OPEC officials, along with energy executives and oil analysts, gathered in Houston on Monday for the annual CERAWeek Conference. On Monday, several OPEC officials downplayed what is often billed as a rivalry with U.S. shale. OPEC Secretary-General Mohammed Barkindo said there is a “common understanding” between the two sides and that “we all belong to this industry.” OPEC officials had dinner with top shale executives on Monday in an effort to increase dialogue. However, Nigeria’s oil minister was a little less diplomatic than Barkindo, arguing that shale companies need to share the burden with OPEC. “We need to begin to look at companies that are very active in these areas and begin to get them to take some responsibilities in terms of stability of oil prices,” Nigerian Oil Minister Emmanuel Ibe Kachikwu told ReutersThe IEA published its annual Oil 2018 report on Monday, which detailed two broad conclusions: U.S. shale would dominate the supply picture for the next few years, leaving little room for OPEC to boost production. However, by the 2020s, the dearth of upstream investment over the past few years will finally start to bite, and with little spare capacity, the oil market could suffer from a supply crunch.    Genscape Inc. reported a drop in inventories at Cushing, OK last week, with storage levels already at the lowest level in four years. The bullish report stands in sharp contrast to expectations of a new wave of shale supply. “The trend in global inventories shows that the market is fundamentally under-supplied and that emphatically remains the case,” Pavel Molchanov, an energy research analyst at Raymond James, told Bloomberg. Still, overall crude inventories are expected to have increased last week.   Oil prices jumped on Monday because of the outage of Libya’s largest oil field, the Sharara. However, by Monday, output resumed at the 340,000-bpd field. Libya has been producing about 1.0 to 1.1 million barrels per day recently, before the outage, although a separate field was shuttered last week, temporarily knocking 90,000 bpd offline. 

Oil Prices Fall After API Reports Major Crude Build -- The American Petroleum Institute (API) reported a huge build of 5.661 million barrels of United States crude oil inventories for the week ending March 2, according to the API data. Analysts had expected a build of 2.723 million barrels in crude oil inventories. Last week, the American Petroleum Institute (API) reported a build of 933,000 barrels of crude oil. Last week’s API report showed a build in gasoline inventories of 1.914 million barrels.  This week, the API reporting a build for crude oil, but a draw for gasoline, possibly dampening the affects that such a large crude oil build could have. The API reported a draw of 4.536 million in gasoline stockpiles, compared to a 1.201-million-barrel draw that analysts had expected. The WTI benchmark was down on Tuesday, trading mostly down by $.05 (-0.08%) at $62.52, while Brent trading up $0.18 (+0.27%) at $65.72 at 3:32pm EST. Both benchmarks were trading down from last Tuesday afternoon. As crude oil inventories built for the week, US crude oil production for week ending February 23 also increased, coming in at 10.283 million bpd, well on its way toward the 10.7 million bpd that the EIA suspects will be seen in 2018. If met, this would be the “highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 million bpd set in 1970,” the EIA said in its latest Short Term Energy Outlook issued today. The EIA expects next year’s US production to average 11.3 million bpd, the report said.  Distillate inventories saw a build this week of 1.487 million barrels. Analysts had forecast a decline of 1.20 million barrels. Inventories at the Cushing, Oklahoma, site decreased by 790,000 barrels this week. By 4:35pm EST, the WTI benchmark was trading down even more at .019% on the day to $62.45 while Brent was trading up 0.18% on the day at $65.66.

WTI Down, RBOB Up After Huge Gasoline Draw, Crude Build - WTI/RBOB prices chopped around today, but drifted lower into the API data which shocked both ways. A larger than expected crude build sparked WTI selling and the biggest gasoline draw since October sparked RBOB gains. API

  • Crude +5.66mm (+3mm exp)
  • Cushing -790k exp
  • Gasoline -4.536mm - biggest draw since Oct 2017
  • Distillates +1.487mm

Prices limped lower into the print, but WTI kneejerked lower and RBOB higher after the data... “People are waiting to see: Will storage volumes point toward a tighter fundamental outlook?” said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut. “It does appear as if we need more evidence that the rebalance continues to really ignite a rally again.”

EIA's Short Term Energy Outlook Is Posted -- March 6, 2018 -- Oil Markets:

  • In February, the average Brent crude oil price dropped by $4 to $65 per barrel. EIA’s forecast expects prices to decline gradually, averaging $60 per barrel in the second half of this year. EIA expects annual average Brent crude oil prices to remain near $62 per barrel in both 2018 and 2019, which is lower than prices in recent weeks but is higher than the average in 2017 by less than $8 per barrel.
  • EIA estimates that U.S. crude oil production averaged 10.3 million barrels per day in February, up by 230,000 from the January level, which included some well freeze-offs in the Permian and Bakken. This month, we are reporting that total U.S. crude oil production averaged 9.3 million barrels per day in 2017, ending the year with production at 9.9 million in December.
  • EIA projects that U.S. crude oil production will average 10.7 million barrels per day in 2018, which would mark the highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 million barrels per day set in 1970. [Another nail in Hubbert's coffin.]
  • EIA forecasts that 2019 crude oil production will average 11.3 million barrels per day.”
  • For all of 2018, the forecast expects production to continue hitting new monthly highs—barring any significant energy disruptions. By the end of 2018, the short-term outlook is forecasting a new record average of 10.7 million barrels per day in U.S. crude oil production, and we continue toexpect production to average above 11 million barrels per day in 2019.
  • Following record high gas inventory withdrawals in early 2018, the short-term outlook estimates that inventories for March 2018 will total 1,481 billion cubic feet, which represents a nearly 28% drop from March 2017. In fact, March 2015 was the last time inventories came close to that level.
  • EIA expects U.S. natural gas production to reach new records in 2018. The forecast suggests that production will near 82 billion cubic feet per day in 2018 and, as a consequence, inventory levels will fully recover from this year’s low levels by next winter

The Truth About U.S. Energy Dominance -- President Trump tweet-gloated this morning: "We are getting it done - jobs and security!" - in response to the headlines that USA is set to become the world's largest oil producer. The bigger question is the narrative of US global dominance in the energy markets and the ugly narrative-bashing reality that USA is still a net-importing nation - somewhat battering the "security" meme Trump crowed about. As's Kurt Cobb explains, much of the media coverage of the American energy industry implies that America has become a vast and growing exporter of energy to the rest of the world and that this has created a sort of "energy dominance" for the country on the world stage. Whether such reports qualify as so-called "fake news" depends very much on three things: 1) How one defines "fake news," 2) whether writers of such reports qualify the words "imports" and "exports" with the word "net" and 3) which energy sources they are discussing. By that criterion anyone who claims that the United States is a net energy exporter would certainly be guilty of propagating "fake news." Energy statistics from the U.S. Energy Information Administration (EIA) show that in November 2017 (the most recent month for which figures are available) the United States had net imports 329.5 trillion BTUs of energy in all its forms.* That's down from a peak of 2.74 quadrillion BTUs in August 2006, something that is certainly a turnabout from the previous trend. But all claims that the United States is a net energy exporter must be labeled as unequivocally false. It turns out, however, that most people making misleading claims about America's energy situation don't actually say or write things which are technically false. What they do is use language which intentionally or unintentionally misleads the reader or listener. For example, the claim that the United States is an exporter of crude oil is true. But that claim is entirely misleading. While the United States exports about 1.5 million barrels a day (mbpd) of crude oil, it also imports 7.5 mbpd. That puts the net imports of crude oil at about 6 mbpd. (All numbers are four-week averages as of February 23.)

Oil prices fall as Trump adviser's exit stokes trade war fears (Reuters) - Oil prices fell on Wednesday, pulled down by weaker stock markets after a key advocate for free trade in the U.S. government resigned, stoking concerns Washington will go ahead with import tariffs and risk a trade war. Soaring U.S. crude oil production and rising inventories also dragged on crude prices, traders said. Gary Cohn, economic adviser to U.S. President Donald Trump, seen as a bulwark against protectionist forces within the government, said on Tuesday he was resigning, triggering a more than 1 percent fall in S&P 500 futures in early Wednesday trade. Crude oil followed suit, with Brent futures down 51 cents, or 0.8 percent, from their previous close at $65.28 per barrel at 0414 GMT. U.S. West Texas Intermediate (WTI) crude futures were at $62.13 a barrel, down 47 cents, or 0.75 percent. “The overhang from the Cohn resignation ... could see oil prices move lower during today’s session,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore. A voice for Wall Street in the White House, Cohn’s move to resign came after he lost a fight over Trump’s plans for hefty steel and aluminum import tariffs. Major powers, including the European Union and China, have warned that such tariffs could lead to retaliatory action and trigger a global trade war, which could grind to a halt economic growth and, by extension, oil consumption. Traders said oil prices were also weighed down by a reported rise in U.S. crude oil inventories. Crude inventories rose by 5.661 million barrels in the week to 426.880 million barrels, data from the American Petroleum Institute showed on Tuesday. 

Trump’s Trade Wars Could Spark A Massive Drop In Oil -  I generally try to steer clear of politics and to avoid being alarmist or overly sensational. What has forced me to ignore both rules is the announcement on Thursday by Donald Trump that he is going to enact tariffs on steel and aluminum next week. Politicians in general have less influence on economies than they think, but they can cause disruption, and particularly when they make economic decisions for political reasons. That is what this is, and it has the potential to cause a massive selloff of oil and other commodities. You may feel that this is ultimately good policy and given the circumstance, a strong argument can be made that is true. Here though, the timing of the announcement suggests that it is in response to what looks like increasing chaos in the administration and a Special Counsel’s investigation that seems to be moving inexorably closer to the President himself. In other words, it is a political play, regardless of the potential short-term economic consequences. The actual results of imposing tariffs and sparking retaliation, however, are not the point. What matters, as is so often the case, is perception, and the perception of traders will be that measures such as those proposed could pose a serious threat to global growth and thus cripple demand for oil. . Again, even if that is not the end result here, the fear of it is enough to cause disruption. The reaction to the announcement so far, both in oil and stocks, has been somewhat muted. Both have dropped over the last two days, but in a relatively orderly fashion. Presumably that is because some people believe that pressure from the President’s economic advisors such as Gary Cohn and fellow Republicans appalled by what they see as policy that is ideologically unsound will force a change of heart. That, however, looks unlikely. Consistency has not exactly been a hallmark of Trump’s political career thus far, but the one area where it has been seen is in protectionism. It was a theme throughout his campaign and has remained one, so hoping for a reversal at this point makes no sense.

WTI/RBOB Rebound After Inventory Data Despite Record Production - RBOB has given up its post-API gains and RBOB is sliding into the DOE data but both jumped as Gasoline inventories drew down and crude's build was bigger than the whisper number. Production jumped to a new record high. Notably, Bloomberg Intelligence Energy Analyst Fernando Valle points out that the prospect of a trade war raised by U.S. President Donald Trump is narrowing distillate crack spreads even as demand remains robust. The fear is that a dispute would dampen industrial activity, reducing demand for diesel fuel that powers trucks and machinery. DOE:

  • Crude +2.408m (+3mm exp, whisper +2mm)
  • Cushing -605k (-600k exp)
  • Gasoline -788k (+1mm exp)
  • Distillates -559k

Inventories are just 2% above the five-year norm, with Cushing stockpiles more than 45% below the average. All eyes are again on US crude production after EIA upped its forecasts and OPEC begged for Shale to stop... but production jumped 86k last week to a new record high...

Oil prices fall with Wall Street and as US crude output, stocks rise (Reuters) - Oil prices tumbled on Wednesday as financial markets slid amid concerns that Washington’s plans for import tariffs could spark a trade war, and after U.S. government data showed an increase in crude inventories and output. Brent crude futures for May delivery fell $1.45 to settle at $64.34 a barrel, a 2.20 percent loss. Brent traded between $63.83 and $65.80 during the session. West Texas Intermediate (WTI) crude futures for April delivery fell $1.45 to settle at $61.15 a barrel. It fell 2.3 percent on the day, its biggest daily percentage loss since Feb. 9, and traded between $60.58 and $62.58. The resignation of Gary Cohn, economic adviser to U.S. President Donald Trump, who was seen as a bulwark against protectionist forces in the government, triggered a drop in Wall Street’s three main stock indexes and tempered investor risk appetite. Oil has recently moved in tandem with the equity market. Cohn’s resignation came after he lost a fight over Trump’s plans for hefty steel and aluminum import tariffs. Major powers, including the European Union and China, have said such tariffs could lead to retaliatory action and trigger a global trade war. “The generalized market anxiety over what could end up being a global trade war is dragging everything down,” “It does not bode well for future economic growth and increased energy demand.” A further increase in U.S. output also weighed on prices. Weekly data from the U.S. Department of Energy showed weekly U.S. crude production hit a record high last week of almost 10.4 million barrels per day (bpd). The EIA said on Tuesday it expects U.S. crude output in the fourth quarter of 2018 to reach an average of 11.17 million bpd, up from the previous forecast a month ago of 11.04 million bpd. This would make it a bigger producer than Russia, now ranked No. 1. Last year, the United States surpassed Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries. 

Exxon Says Watch for Oil Shocks as Demand Becomes Market Driver -- Soaring demand is the main reason for the rebound in oil prices -- but if the economy falters, crude could tumble back to $40 a barrel, according to Exxon Mobil Corp.Cuts by OPEC countries have helped, but economic expansion is what’s “really driving demand at levels much higher than recent history,” Chief Executive Officer Darren Woods said Wednesday in a presentation to analysts in New York.Surging production from U.S. shale, particularly the Permian Basin in Texas, is swallowing up most demand growth and will do so to 2020, the International Energy Agency said this week. That leaves OPEC with a tough choice: either maintain cuts and risk losing market share, or end them and see the price of crude plunge.“When that demand starts to tail off, if Permian production continues to rise, I think that you’re going to see a different rebalancing of the market and OPEC will have to make some calls around how they want to manage that,” Woods said.  West Texas Intermediate crude dropped 2.6 percent to $60.99 a barrel at 1:21 p.m. in New York. Exxon can’t rely on short-term market swings to make long-term investment plans, so the company tests its decisions with oil at $40 a barrel, Woods said. “You could find yourself back in there, depending on how this all plays out.”

Crude Oil’s Next Move? Clues from Soybean Oil - CME Group - As we observed in our past research , soybean oil prices often lead the movement in crude oil prices.  The past year has been no exception.  Even as WTI crude prices soared from $42 to $66 per barrel between June 22, 2017, and January 25, 2018, soybean oil traders weren’t buying in.  Soybean oil prices peaked on November 9, 2017, at 35.38 U.S. cents per pound and began a 10% sell off that started two and a half months before the recent peak in crude oil prices (Figure 1).  This is the eleventh such episode of soybean oil prices leading crude oil prices since 2005. Here is a list of the various episodes: [11 items]Soybean oil prices have not to-date staged any sort of sustained recovery and this might suggest lower prices for WTI in the weeks ahead.  Once soybean oil does eventually hit bottom, however, it will be interesting to see if WTI once again follows it higher for a 12th episode as outlined in our brief history of the relationship between soybean oil and crude oil – a story that works just as well when one looks at Bursa Malaysia’s palm oil futures when converted from the Malaysian ringgit to U.S. dollars.On another note, WTI and soybean options traders perceive largely opposite risks.  While they agree that there isn’t a huge amount of risk going forward – at-the-money (ATM) volatility is closer to historic lows than to record highs for both products – (Figure 2), the ‘smile’ chart of option volatility suggests that soybean oil traders fear upside risk (Figure 3), whereas the concerns of WTI traders are dominated by the downside (Figure 4).

Oil rally stalls amid rising production forecasts: Kemp (Reuters) - Despite the overwhelmingly bullish sentiment that still dominates talk about oil prices, the rally that started at the end of June 2017 seems to have run out of momentum. Front-month Brent futures prices peaked in the final week of January and have since been on a gently declining trend ( Brent calendar spreads peaked even earlier in January and have also been gently softening for nearly two months now. Prices and spreads are back to levels they first reached in the middle of December ensuring there has been no real increase for three months. Hedge funds and other money managers remain overwhelmingly bullish, with a net long position in futures and options linked to Brent equivalent to 544 million barrels. Hedge fund long positions in Brent outnumber short ones by a ratio of more than 14:1, suggesting most portfolio managers still believe prices will rise further in the short term. But the net position also peaked in late January and has been slowly slipping since then, according to exchange data. Gross long positions have declined from a record 643 million barrels on Jan. 23 to 585 million barrels on Feb. 27. Hedge fund managers have been quietly liquidating some of their bullish long positions as prices have stopped rising. In the oil market, actions speak louder than words, and fund managers have turned more cautious over the last six weeks. The critical question is whether this is merely a pause, and the rally will resume shortly, or whether it marks a peak, at least temporarily. Brent prices have averaged just over $67 per barrel so far in 2018, which is not far from the forecast of $65 predicted by energy professionals in a survey at the start of the year. Recent news flow has been mixed, with oil consumption rising strongly, but production forecasts also being revised sharply higher. 

Oil falls with U.S. output climb pushing prices to a more than 3-week low -  Oil logged a second straight decline on Thursday, as continued gains in U.S. crude production pushed prices to their lowest finish in more than three weeks.Prices had dropped by more 2% Wednesday, pressured by a report that showed U.S. oil production hit a new weekly record. President Donald Trump's plans to set tariffs on steel and aluminum imports and the recent resignation of top White House economic adviser Gary Cohn also sparked worries over a potential trade war—raising concerns about global demand for U.S. oil.April West Texas Intermediate crude fell $1.03, or 1.7%, to settle at $60.12 a barrel on the New York Mercantile Exchange, after a 2.3% drop Wednesday. It marked its lowest finish since Feb. 13, according to FactSet data. May Brent crudethe global oil benchmark, lost 73 cents, or 1.1%, to $63.61 a barrel on the ICE Futures Europe exchange, also the lowest finish since mid-February.“The surging growth in U.S. oil production has again become a growing headwind on the energy market as growth levels are three-to-four times what was expected in 2018,” “The market had not priced in such a rapid rise in domestic upstream operations,” he said. “Unless we see material moderation in the U.S. production trends in the coming weeks, or a bullish development overseas, the energy rally is at risk.”   The Energy Information Administration on Wednesday reported that total U.S. crude production continued to climb to a fresh weekly record—up 86,000 barrels in the latest week to 10.369 million barrels a day.  On Nymex Thursday, April gasoline RBJ8, +0.31%  fell 2.2% to $1.868 a gallon, while April heating oil HOJ8, +0.22%  lost 0.8% to $1.859 a gallon. In other energy action, natural-gas futures maintained earlier declines after the EIA on Thursday reported that domestic supplies of natural gas fell by 57 billion cubic feet for the week ended March 2. Analysts surveyed by S&P Global Platts had forecast a decrease of 59 billion, but the five-year average withdrawal is 129 billion.

Crude Oil Prices Settle 1.68% Lower as Rising US Production Fears Persist - WTI crude oil prices settled sharply lower as traders continued to fret rising U.S. production while a stronger dollar added to downside momentum. On the New York Mercantile Exchange crude futures for April delivery fell 1.68% to settle at $60.12 a barrel, while on London's Intercontinental Exchange, Brent fell 0.84% to trade at $63.80 a barrel. Crude prices looked set for a second-straight weekly decline as negative sentiment on oil prices continued after the Energy Information Administration weekly crude totals Wednesday showing crude supplies rose less than expected failed to lift sentiment amid persistent rise in U.S. output. Inventories of U.S. crude rose by 2.408 million barrels for the week ended March 2, below expectations for a 2.723 million barrels increased but that was offset by a rise in U.S. output to a record high per day of nearly 10.4 million barrels last week. The dollar also played its part in keeping oil prices languishing at lows as the greenback rose sharply after the euro slumped on dovish ECB remarks. Dollar-denominated assets such as oil are sensitive to moves in the dollar – a rise in the dollar tends to make oil more expensive for holders of foreign currency and thus, reduces demand. Upbeat comments from Saudi oil minister Khalid Al-Falih suggesting that OPEC together with Russia could continue agreed production cuts after 2018 failed to stem losses in crude prices as investors continued to bet that with oil prices at $60 barrels, U.S. shale producers would add to oil output. "When it’s time to lift, we will lift gradually’ Al-Falih said. “We adjust to the seasonality. If we lift the curbs in the first quarter, we will need to be conscious of refining maintenance season and lower demand. So we cannot lift all of the curbs and flood the market at a time when demand is less."

Oil Prices Bounce After A Tough Week - Oil posted some steep losses mid-week after the EIA reported another crude oil inventory increase. Some fears about U.S. steel tariffs, and follow up tit-for-tat protectionist measures, also weighed on crude sentiment. But news that Trump would allow some exceptions to the tariffs, as well as a strong jobs report and a falling U.S. oil rig count sent oil prices bouncing back up on Friday.   Over the next 25 years, the oil industry will need another $25 trillion in investment just to meet expected demand, while also accounting for natural depletion at existing fields, Aramco’s CEO Amin Nasser said at the CERAWeek Conference on Tuesday. The sentiment came after the IEA warned that the oil market will be short on supply in the 2020s without an increase in upstream spending. In fact, there is a growing chorus of analysts who agree with the basic premise that the oil market could be well-supplied in the near-term because of U.S. shale, but faces supply risks in the early- to mid-2020s because of low upstream investment. "I am not losing any sleep over peak oil demand or stranded resources," Nasser added. Total OPEC production dropped to 32.14 million barrels per day in January, according to Argus Media, a 9-month low. That was largely the result of a sharp decline in output from Nigeria and Venezuela, and OPEC officials waived away concerns about the drop. "There is no plan to do anything (about Venezuela's output) at this point," Saudi oil ministry adviser Ibrahim Al-Muhanna said at the CERAWeek Conference. "The market has not reached the point of balance … there is no need to address it this year."  . After vociferously opposing President Trumps’ steel tariffs, some in the energy industry were somewhat relieved when the White House said it would allow certain companies and industries to apply for an exemption if they cannot procure enough steel domestically. Many parts of the energy industry, including pipeline construction, involves a special type of steel that is difficult to source in the U.S. A long list of companies warned that the tariffs could have a negative impact on oil and gas. For instance, Royal Dutch Shell said that the duties could impact the company’s decision to move forward on a major oil project in the Gulf of Mexico.

Baker Hughes: US rig count up 3 from last week -The US drilling rig count is up 3 units for the second week, reaching 984 rigs working during the week ended Mar. 9, data from Baker Hughes indicate. This total is up 216 units from a year ago. Offshore units were down 1 unit from last week with 13 rigs working in the Gulf of Mexico. A total of 967 rigs were drilling on land, up 4 from last week. The number of rigs drilling in inland waters remained unchanged at 4 units.Rigs targeting oil were down 4 units from last week to 796, but up from the 619 rigs drilling for oil this week a year ago. Gas-targeted rigs were up 7 rigs to reach 188 units. This time a year ago, 151 units were drilling for gas.Among the major oil and gas-producing states, Texas saw the largest increase in rigs week-over-week with a 7-unit gain to reach 490 rigs working. North Dakota is up 3 rigs from last week to reach 50 rigs running. Pennsylvania and Colorado each gained 1 unit to reach respective counts of 42 and 31 rigs running.Oklahoma dropped 4 units, falling to 120 rigs running, and Alaska lost 2 rigs to reach 9 units. New Mexico, Louisiana, and Utah each dropped 1 unit to reach 87, 58, and 9 rigs running, respectively.  Five states remained unchanged, namely Wyoming, 31; Ohio, 22; West Virginia, 16; California, 14; and Arkansas, 0.  Canada lost 29 rigs to 273 from a week ago. There are 42 fewer rigs working than this week a year ago. Oil-directed rigs decreased 15 units this week to 196, while those targeting gas fell 14 units to 77.

US Oil Rig Count Falls As Gas Rig Count Soars - Baker Hughes reported another 3-rig increase to the number of oil and gas rigs this week.The total number of oil and gas rigs now stands at 984, which is an addition of 216 rigs year over year.Despite the overall increase, the number of oil rigs in the United States decreased by 4 this week, for a total of 796 active oil wells in the US—a figure that is 179 more rigs than this time last year. The number of gas rigs rose by 7 this week, and now stands at 188; 37 rigs above this week last year.The oil and gas rig count in the United States has increased by 60 in 2018.Canada continued its losing streak, with a decrease of 29 oil and gas rigs for the week. Canada now has fewer rigs than it did a year ago. Despite multiple bearish events this week, oil prices managed to climb, buoyed in part on Friday by positive job reports and reports about a possible meeting between President Donald Trump and North Korea’s leader, Kim Jong Un. Neither the threat of steel tariffs—which some analysts opine could increase pipeline and other oil infrastructure costs—nor US crude oil production, which rose again in the week ending March 2nd to 10.369 million bpd, according to the EIA were able to keep oil prices down.At 11:45 am EST, the price of a WTI barrel was resilient, trading up $1.72 (+2.86%) to $61.84—a significant increase from last week’s prices. The Brent barrel was also trading up on the day, by $1.76 (+2.77%) to $65.37.Alaska, Louisiana, New Mexico, Oklahoma, and Utah all lost rigs this week, with Texas adding 7 rigs for a total of 490 active rigs—an increase of 98 over this time last year. At 1:09pm EST, both benchmarks had lost some ground, with WTI trading at $61.77 (+$1.65) and Brent trading at $65.13 (+$1.52).

Crude Oil Prices Settle Higher as US Oil Rigs Fall For First Time in 7 Weeks - WTI crude oil prices notched a weekly gain after settling more than 3% higher on Friday as traders cheered data showing the number of U.S. oil rigs fell for the first time in seven weeks, pointing to a potential slowdown in U.S. oil output. On the New York Mercantile Exchange crude futures for April delivery rose $1.92 to settle at $62.04 a barrel, while on London's Intercontinental Exchange, Brent rose 2.97% to trade at $65.50 a barrel. The number of oil rigs operating in the U.S. fell by four to 796, according to data from energy services firm Baker Hughes. That helped ease investor concerns somewhat that rising U.S. production - largely driven by shale - would continue unabated after data this week showed that U.S. output rose to a record high. The Energy Information Agency reported Wednesday that U.S. output jumped to a record high per day of nearly 10.4 million barrels last week. Also adding support to oil prices was data showing the labor market added 313,000 jobs last month, pointing to underlying strength in U.S. economy, raising hopes for an increase in oil consumption. "Economic optimism and oil consumption go hand-in-hand, therefore, any adverse impact on the health of the global economy will dampen oil demand growth prospects," said Stephen Brennock. The weekly gain for oil prices this week was far from straightforward after slipping on both Wednesday and Thursday as traders feared that with crude prices above $60 a barrel, U.S. shale producers would continue to ramp up output. “The United States is set to put its stamp on global oil markets for the next five years,” said Fatih Birol, the IEA’s executive director, in a statement. He added that the IEA could revive its estimate for US output upward should oil prices remain above $60.

Oil gains for the week, buoyed by potential U.S.-North Korea meeting - Oil prices received a boost on Friday, notching a gain for the week, as the possibility of a meeting between U.S. President Donald Trump and North Korea’s leader prompted investors to take some geopolitical risk out of the equation for the crude market.News of the first weekly decline in the U.S. oil-rig count in seven weeks also contributed to oil’s price rise.April West Texas Intermediate crude CLJ8, +3.33%  rose $1.92, or 3.2%, to settle at $62.04 a barrel on the New York Mercantile Exchange, turning what would’ve been a weekly loss into a climb of roughly 1.3% from the week-ago settlement. May Brent crude LCOK8, +2.96% the global oil benchmark, rose $1.88, or 3%, to end at $65.49 a barrel on the ICE Futures Europe exchange—up 1.7% for the week. Both WTI and Brent on Thursday had marked their lowest settlements since mid-February.Oil prices responded positively to an announcement late Thursday that Trump accepted an invitation to meet with North Korea’s Kim Jong Un.“Geopolitical stability defiantly supports” demand for oil, said Naeem Aslam, chief market analyst with ThinkMarkets.Crude futures had a turbulent week, with prices pulled down in earlier sessions after Energy Information Administration data showed U.S. crude stocks rose 2.4 million barrels and production hit a record high in the week ended March 2.  Analysts warn that oil prices aren’t out of the woods.  “The rapid growth of oil production in the U.S. is continuing to generate selling pressure,” said analysts for Commerzbank in a recent note. “After all, it is attractive to drill for shale oil at prices above $60.”

OPEC Feb crude oil output 32.39 mil b/d, down 70,000 b/d from Jan: Platts survey -- A continued collapse in Venezuela's oil industry to a historic nadir and field maintenance that dropped UAE output to almost two-year lows drove down OPEC's crude production to 32.39 million b/d in February, according to an S&P Global Platts survey released Tuesday. Related tables: OPEC crude oil output and production vs. cut allocations That is a 70,000 b/d decline from January, even as Libyan and Nigerian production hit multi-year highs in their recovery from civil unrest, the Platts review of analysts, industry sources and proprietary data found. The February output figure was 340,000 b/d below OPEC's notional ceiling of about 32.73 million b/d, when every country's quota under its production cut agreement is added up. The cuts, which began January 2017 and are scheduled to run through the end of this year, are aimed at rebalancing the market by inducing draws of barrels held in storage. Venezuelan production, which has been in freefall as the country struggles with a host of economic and financial afflictions, slumped another 70,000 b/d in February to 1.57 million b/d, as Platts survey participants cited state oil company PDVSA's difficulties in securing diluent and other chemicals needed to pump crude, keeping its refineries operational and maintaining deteriorating infrastructure. This was the seventh straight month in which Venezuelan output fell and is the lowest level recorded since Platts began its OPEC survey in 1988, save a major industry strike in late 2002 and early 2003. Analysts expect further declines, which could be exacerbated if the US imposes additional sanctions that hamper PDVSA's ability to export crude, import diluent or refinance its debt, as the Trump administration is considering.

Global oil sector needs $20 trillion investments over 25 years: Aramco CEO  (Reuters) - The global oil and gas industry needs to invest more than $20 trillion over the next 25 years to meet expected growth in demand and compensate for the natural decline in developed fields, Saudi Aramco Chief Executive Officer Amin Nasser said on Tuesday. Speaking at the CERAWeek conference in Houston, Nasser said the industry has already lost $1 trillion of investments since the oil price downturn from 2014 to 2016. Future investments needed “will only come if investors are convinced that oil will be allowed to compete on a level playing field, that oil is worth so much more, and that oil is here for the foreseeable future,” Nasser said. “That is why we must push back on the idea that the world can do without proven and reliable sources. We must challenge mistaken assumptions about the speed with which alternatives will penetrate markets.” He noted that about 99 percent of passenger vehicles on the road use internal combustion engines, even hybrid vehicles, and said electricity produced for battery-powered vehicles comes through power generation, which is still dominated by coal, particularly in markets like India and China. Nasser said that even with the growth of electric vehicles, increased demand from petrochemical markets over the next two decades will necessitate additional investment and need for crude oil. He noted “even conservative estimates” suggest the need for about 20 million barrels per day of new capacity in the next five years. He said he was confident that oil market fundamentals and future demand growth would be healthy, despite significant oil price volatility and forecasts of rising shale oil production. 

Saudi Arabia's former oil minister says don't worry about demand -  Saudi Arabia’s former oil minister has some advice for anyone worried about a possible drop in future demand for crude: Chill. "I would like to put everyone at ease, there are no such worries," Ali al-Naimi said in Manama, Bahrain, when asked if he sees a threat to oil demand from climate policies and increasing use of electrical vehicles. Any slowdown in demand from transportation will be more than offset by growth in other industries, he said. Saudi Aramco, the world’s biggest oil exporter, is investing in developing more efficient gasoline-powered engines to prolong the global demand for petroleum for decades to come, even as electric vehicles and alternative sources of energy nibble away at crude’s market share. Rapid adoption of EVs could mean oil demand peaks by the 2030s, according to Bank of America and BP Plc. Aramco, with an estimated 260 billion barrels of oil reserves, is the centerpiece of Saudi Arabia’s mission to re-invent itself as a diversified economic powerhouse. The government plans this year to sell about 5 percent of the company, known officially as Saudi Arabian Oil Co., in what could be a record public offering. Al-Naimi served for almost 21 years as the kingdom’s petroleum and mineral resources minister before stepping down in 2016. He was the most influential minister in the Organization of Petroleum Exporting Countries, and the oil market hung to his every word as he steered the group through wild price swings, regional wars, technological progress and the rise of climate change as a key policy concern. 

Saudi Aramco international share sale might never happen: Kemp - (Reuters) - Saudi Aramco's partial privatisation has loomed over the oil market for the last two years, influencing expectations about oil prices, but what if it never happens?The possibility of selling a minority stake in the giant oil company was first mentioned in a newspaper interview published in January 2016 by then-Deputy Crown Prince Mohammed bin Salman.The possibility merited little more than a brief mention in a section about economic reforms, diversification and privatisation of state assets. ("Interview with Muhammad bin Salman", Economist, Jan. 6, 2016).But this passing reference has spawned an enormous amount of activity from consultants, bankers, stock exchanges, governments and journalists all competing to benefit from the sale of the century.Saudi Aramco has reportedly prepared a set of corporate accounts to international standards and commissioned an external audit of its oil reserves ready for investors.The pending sale has triggered a scramble among stock exchanges, including in the United States, the United Kingdom and Hong Kong, to secure a slice of the listing, with each receiving government backing.Technical preparations for a sale appear to have been largely completed over the last two years but the actual date for any sale has been repeatedly pushed back.The decision on whether, where and when to list shares lies with the government rather than Aramco, which means that it is in the hands of the newly promoted crown prince.But there is still no timeline for a decision, let alone an actual listing, and the timetable now appears to have slipped into 2019.Saudi policymakers have indicated shares will be listed on the domestic stock exchange but there is in fact no firm commitment to list them internationally.

Saudi's Foreign Exchange Reserves Take An Unexpected Dip -- March 5, 2018 - Just when it appeared that Saudi Arabia had turned the corner with regard to "foreign exchange reserves," a small hiccup, as they say.  In September, 2017, Saudi's foreign exchange reserves hit a recent low but then gradually increased (coincident with a number of things, including a shakedown of a hundred or so Saudi princes, but that's another story for another day). Saudi's foreign exchange reserves showed a small increase over the next three month, but then, in January, 2018, the most recent month for which we have data, foreign exchange reserves fell. Considering that the price of oil has trended upward this past month, the decrease was unexpected. See chart below at this link: Foreign Exchange Reserves in Saudi Arabia decreased to 1854380 SAR Million in January from 1861588 SAR Million in December of 2017. Foreign Exchange Reserves in Saudi Arabia averaged 2209808.62 SAR Million from 2010 until 2018, reaching an all time high of 2796941 SAR Million in August of 2014 and a record low of 1569145 SAR Million in April of 2010.

Saudi crown prince seeks solution to banks' $2.6 billion Islamic tax row: sources (Reuters) - Crown Prince Mohammed bin Salman has directed the Saudi government to resolve a dispute with banks facing higher Islamic tax liabilities, banking sources say, in an attempt to avoid any damage to his push to diversify the economy. It follows disclosures by major Saudi banks in recent weeks that the government’s General Authority of Zakat and Tax (GAZT) is asking them for additional payments of zakat - the name of the tax - for years going back as far as 2002. In some cases, the demands exceed half of a bank’s annual net profit. Banks are contesting the extra payments, which are estimated at around 9.8 billion riyals ($2.6 billion) across 11 of the kingdom’s 12 listed banks. Analysts have warned the liabilities could hurt liquidity at the banks, the majority of which are main financiers of the budget deficit through purchases of local bonds. They would also restrict banks’ ability to lend to the private sector, a key element in the government’s reform plan to move the economy away from reliance on oil and create jobs for hundreds of thousands of unemployed Saudis. A committee with representatives from GAZT, the central bank and other parties was recently formed to look into the issue at the behest of the crown prince, widely known by his initials MbS, the sources told Reuters. The committee, chaired by former central bank governor Fahad al-Mubarak, currently an adviser to the Royal Court, has handed its recommendations to the court and they could be announced as soon as in the next few weeks, one of the sources said. 

Saudi Arabia's powerful crown prince is opening the military to women — moving the kingdom in 'almost an unthinkable direction' -- If you are a Saudi woman with a high school diploma, between the ages of 25 and 35, at least 155 centimeters tall and in good physical condition, Saudi Crown Prince Muhammad bin Salman may want you in the Saudi Arabia defense forces. Last week, the crown prince, known as MBS, took his ambitious reform program a step further by opening the ranks of non-combat positions in the military to women. According to two leading Israeli analysts of Saudi Arabia, Joshua Teitelbaum of Bar-Ilan University's Besa Center and Brandon Friedman of Tel Aviv University's Dayan Center, bringing about greater equality for women is an integral part of MBS's drive to transform Saudi Arabia into a more open and modern 21st century society and to diversify its economy beyond oil exports.   "In analyzing reform you have to compare declaration to implementation. But here even the declaration is important," Friedman said. "It's signaling a new direction and if you look back five to ten years, it's almost an unthinkable direction."

Made in America, But Lost in Iraq  -- The U.S. company that repairs Iraq’s American-made M1A1 Abrams tanks has pulled many of its people from Iraq after at least nine of the armored vehicles ended up in the hands of pro-Iran militias. Now, many of Iraq’s tanks are immobilized for want of maintenance, potentially jeopardizing the country’s ongoing campaign against Islamic State militants. Iraq bought 140 of the 63-ton M1s for $2 billion starting in 2008 in order to re-equip some armored units that previously operated Soviet-made vehicles — many of which the U.S.-led coalition destroyed when it invaded Iraq in 2003. As part of the tank sale, the Pentagon brokered an arrangement whereby workers from Michigan-based General Dynamics Land Systems, which manufactures the Abrams, would maintain Iraq’s tanks, repair battle damage and train Iraqi mechanics to fix the vehicles themselves. The U.S. Army has paid General Dynamics $320 million for the work starting in 2012. Then in late December 2017, most of the General Dynamics contractors abruptly left Iraq. “We were informed that the [U.S. government] shut the program down until such time [as] the few M1s are returned to us,” one contractor told Foreign Policy on the condition we not print their name, as they’re not authorize to speak to the press. As early as 2015, at least nine M1s showed up in the arsenals of several pro-Iran militias that have been fighting the Islamic State alongside the Iraqi army, according to a quarterly report from the inspector general for the U.S. war efforts in Iraq and Syria, released in February.  In January 2015, a video circulated depicting an M1 flying the flag of Kataib Hezbollah, which the United States has labeled a terrorist group. A second video from February 2016 showed an M1 flying the flag of Kataib Sayyid Al Shuhada, another militia with ties to Iran.

US Threatens to Sanction Iraq If They Buy Russian Air Defense Missiles --Buying up equipment for their military, Iraq is in the market for some new air defense systems. That’s got the potential of putting them at odds with the United States, and potentially facing US sanctions for buying the wrong product.As with other nations in the region, Iraqi Foreign Minister Ibrahim Jaafari is confirming his nation is considering buying the S-400, an advanced Russian-made air defense system which is favored as both cost-effective and capable.Buying that instead of a pricier US equivalent could have consequences, with State Department spokeswoman Heather Nauert confirming Iraq and other governments have already been warned they’d face sanctions for buying Russian, saying it’s in violation of US law.Iraqi officials confirm the US opposition is an obstacle to buying the S-400, but they’re not necessarily ruling it out. Turkey, Iran, and Syria are all going with similar Russian air defenses, so it likely makes sense from Iraq’s perspective to go that route. While the US expressed anger at Turkey for buying S-400 instead of US equivalents, they didn’t ultimately do anything to sanction the Turks. That may, however, reflect Turkey’s regional influence and status as a NATO member, while the US may feel going after Iraq is easier and has less chance of backfiring.

Syria Sitrep – Afrin, Idlib and East-Ghouta - After a slow start the Turkish and Jihadi attack on the Afrin canton in north-west Syria is making some progress. Despite intimate knowledge of the terrain and years of preparation the local Kurdish forces of the YPK have little chance to withstand.  Turkish air and artillery support for the attacking force opponents is overwhelming the Kurds. The ground troops Turkey is using are mostly Islamist Free Syrian Army fighters directed by Turkish officers. A few Turkish special forces are acting as forward observers to call in artillery and airstrikes. Only yesterday the Turkish air force flew more than 30 bombing missions on a rather small front. Today some 36 fighters were killed by Turkish air strikes. Last week the local Kurdish forces were reinforced by other Kurdish forces and Syrian government paramilitaries. Some of the Kurdish groups had split off from the U.S. supported SDF in east Syria, crossed through Syrian government held land and reached Afrin. Kurdish groups in Aleppo city gave control of two of the three districts they held to the Syrian government to join their brethren in Afrin. A contingent of 500 Syrian paramilitary fighters from two Shiite towns near Afrin also joined the fight. The Turkish army tried to interdict the convoys reinforcing Afrin but most of the fighters reached the front lines. The Syrian Red Cross sent a convoy with humanitarian goods for the about one million inhabitants of the canton. The Kurdish YPG forces in control of Afrin have a choice. The Russian and the Syrian government have offered their full support if the Kurds submit to Syrian government control just like any citizen of Syria is supposed to do. If they agree, the Turkish planes will immediately vanish from the skies over Afrin. But the Kurds insist on keeping their own military and police forces as well as their unelected local administration. If they keep doing so the Turkish forces will role them up and all will be lost. It is a simple and obvious choice to make.

The Truth About the Russian Deaths in Syria -- Der Spiegel - "Son of a bitch" is the mildest cuss word that comes out of the militia member's mouth as he rants furiously about the inferno created by the hours-long American airstrike southeast of the city of Deir ez-Zor. Even as smoke continues to billow from burned out SUVs around them, he and five other men have come to remove the shattered body of one of their fellow fighters from the glowing embers of a bombed-out building.   The scene comes from a two-minute video of the battlefield that one of the fighters took on the afternoon of Feb. 8, hours after the firestorm, and provided to DER SPIEGEL and the Euphrates Post, a news site providing coverage of the region. It's the first photographic documentation of one of the most mysterious battles yet in this increasingly complex war. Initially, the United States military announced on Feb. 8 it had attacked "pro-regime forces" of Bashar Assad's southeast of the city Deir ez-Zor to ward off an attack on a base belonging to the Kurdish-led Syrian Democratic Forces (SDF), who are allies of the Americans. The U.S. said the pro-Assad forces had attacked the SDF base with tanks and mortars. The U.S. fired back in response, claiming to have killed "more than 100" of the fighters in what was described as an act of self-defense.   But who exactly were these attackers? And what really happened that night in the small, half-deserted villages on the east bank of the Euphrates River? Did American bombs decimate Russian troops? Could the attack even be a foreboding of coming skirmishes between the Americans and Russians?A team of DER SPIEGEL journalists spent two weeks interviewing both witnesses to, and participants in, the battle. The team also spoke to a staff member at the only hospital in Deir ez-Zor as well as an employee of the local military airport in an attempt to get a clear picture of exactly what took place during the three-day battle.   The accounts largely corroborate each other and the image of events that emerges is one that contradicts what has been reported in the Russian and international media.

Turkey Threatens Exxon Mobil & The US 6th Fleet Off Cyprus - Turkish Prime Minister Binali Yıldırım threatened not only hydrocarbon survey ships of oil giant Exxon Mobile but also the US 6th Fleet is participating in a naval exercise in the area 7-18 March 2018. As reports, Yildirim said: “The Republic of Cyprus would not be allowed to get away with selling the energy resources surrounding the island,” Yildirim said on Wednesday. With reference to the turkey-occupied North part of Cyprus, he added “the natural riches surrounding the island of Cyprus is the common wealth of all the people who live on the island.” And he threatened that:“This and other provocative activities that create faits accomplis will be responded to in an appropriate fashion.”It was a clear message even to the US Fleet as some media have linked its presence off  Cyprus to the Exxon survey, saying the Fleet was going to protect the Exxon Mobile survey vessels. Last month, Turkish war ships threatened to sink drilling ship commissioned by Italy’s ENI and ultimately managed to block the process as the Italian diplomacy did not dare to put the lives of their fellowmen at risk. A day earlier, President Recep Tayyip Erdogan, reacting to U.S. Sixth Fleet heading to East Mediterranean, said , “while European states’ boats abandoning refugees to death, we try to rescue every innocent’s life. You can only make it there with your Sixth Fleet, aircraft carrier.” Turkey has been illegally occupying 40% of Cyprus since 1974. It is only Turkey that recognizes “North Cyprus” as ‘state’, while the rest of the world considers as an “illegal” …something with no sovereign rights at all.

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