Sunday, April 1, 2018

new oil well breakeven price charts; US offshore drilling lowest on record, all 7 Utica shale oil rigs shut down..

oil prices fell from last Friday's eight week high over the first three days of trading this week, but rebounded to recover part of their losses on Thursday, supported by a Wall Street rally and a weak dollar....after rising $3.45 a barrel to $65.88 a barrel last week, US light crude for May delivery opened 45 cents higher on Monday and briefly reached $66.55 a barrel before profit taking set in and drove prices lower, with prices ending down 33 cents at $65.55 a barrel at the close, as traders weighed the effect of trade tensions between the U.S. and China on prices...oil then fell another 30 cents to $65.25 a barrel on Tuesday as traders hedged their bets against an expected rise in crude inventories...prices fell again on Wednesday, when the weekly EIA report indicated a larger increase in oil supplies than market participants had anticipated, with May US crude ending down 87 cents at $64.38 a barrel...oil prices then rebounded 56 cents on Thursday to close at $64.94, as news that OPEC and Russia were working on a 10 to 20 year agreement to throttle supplies and other geopolitical concerns drove prices higher...since most markets were closed for Good Friday, oil prices ended the week with a loss of 94 cents or 1.34%, while they ended the first quarter 7.5% higher than at the end of 2017, the third straight quarterly rise...

to help us make some sense out of those oil prices, this week we have the results of the First Quarter Dallas Fed Energy Survey, wherein the Fed questioned 140 oil companies as to what oil prices they needed to run their current operations, and what prices they needed to turn a profit when drilling a new well...the Dallas Fed does these energy surveys every quarter during the year, but just once a year do they include a set of Special Questions about oil prices...during the period between March 14th and March 22nd, 136 oil and gas firms responded to the special questions survey...the first question they asked these companies was what oil price they needed to cover their operating expenses on existing wells, and the results are shown graphically below..

March 28 2018 operating expenses breakeven via Dallas Fed

in the above graph, the blue, brick, yellow, orange, green, and turquoise colored bars represent the price range of oil price responses to that operating expenses question given by oil company executives with operations in the Permian Midland shale, the SCOOP/STACK of Oklahoma, the Permian Delaware, other US oil producing shale basins, other Permian shale wells, and the Bakken shale of North Dakota addition, the violet bar on the far right represents the price range of operating expenses answers given by oil company executives with producing oil wells in non shale areas...across the bottom they've indicated the number of oil executives that responded to that headline question for each of those basins or collectives...thus, what the blue bar tells us is that for 15 oil execs with wells in the Permian Midland shale, at least one company needs $50 a barrel oil to cover its operating expenses, at least one can cover its expenses at $12 a barrel oil, and the average price needed to cover operating expenses for all  oil companies producing oil in that basin is $25...likewise, we can see that at least one oil executive with wells in the SCOOP/STACK can cover his expenses at $4 a barrel, but the average oil price needed by the 6 execs with wells in that basin is $ the Dallas Fed says, almost all respondents can cover operating expenses for existing wells at "current spot prices", which were $66 per barrel on March 23rd...

next we have a similar graphic showing what oil price each of those respondents said they needed to profitably drill a new well:

March 28 2018 well drilling breakeven via Dallas Fed

in the above graph, the blue, yellow, turquoise, green, brick, and orange colored bars represent the price range of oil price responses to that question given by oil company executives with operations in the Permian Midland basin, the Permian Delaware basin, the Bakken shale of North Dakota, other Permian shale wells, the SCOOP/STACK of Oklahoma, and all other oil producing shale basins addition, the violet bar on the far right represents the price range of answers given by oil company executives who might be drilling new wells non shale areas...again, across the bottom of the graphic, they've indicated the number of oil executives that responded for each of those basins or collectives...thus, what this graphic shows is that within the Permian's Midland basin (blue), the average breakeven oil price among 15 oil executives responding to that question was $47 a barrel, with breakeven prices as low as $20 a barrel to as high as $70 a barrel...similarly, for the 13 oil execs who would be drilling new wells in the Delaware basin of west Texas (yellow), responses ranged from a break even oil price of $39 a barrel to a break even price of $70 a barrel, with the average response for those drilling in that basin at $49 a, four oil execs with operations in the Bakken shale (turquoise) said they could break even in a range between $40 and $60 a barrel, with an average breakeven of $50 a barrel; then 18 drillers in the other parts of the Permian basin said they could break even with oil prices in a range between $40 and $72 a barrel, with an average of $52 a barrel...7 oil execs who are drilling in the SCOOP/STACK of Oklahoma felt they could be profitable in drilling for oil with oil prices from a low of $39 a barrel to a high of $64 a barrel, with the average response from those 7 at $53 a, the orange bar represents the responses the Dallas Fed got from companies with assets in other shale plays, which would include at least the Eagle Ford of Texas and the Niobrara of the Rockies; the seven responses from those other shale plays were between $30 and $70 a barrel, with an average break-even price of $54 a barrel...finally, the purple bar represents responses the Dallas Fed got from oil company executives who were exploiting non-shale oil deposits; there were 34 responses from such executives, with some feeling they could break-even at $20 oil, and others saying they needed at least $70 a barrel oil to be profitable...

needless to say, today's prices are obviously sufficient for new drilling to begin in the majority of oil shale plays...88% of the oil executives polled said they could be profitable at prices under $66 a barrel, which was the March 23rd oil price sited by this survey, just a dollar more than this week's closing price...of course, what price they get when the oil starts to flow months after drilling commences might be quite different, so most try to lock in a price by contracting to sell their output at a pre specified this time, future's prices are a bit lower than those of the widely quoted front month, so that would also shut out a small portion of those oil companies who would otherwise drill at today's Ohio, we saw oil drilling rigs increase by 7 after oil prices pushed above $65 in late January, so although regional Utica shale drillers weren't queried in this survey, that price also seems to be above the breakeven for oil drilling in the northern part of our state...

natural gas prices, meanwhile, ended the week higher on forecasts of continued colder than normal temperatures in the eastern half of the country through mid-April, and a larger than expected withdrawal of natural gas from storage for the week ending March 23rd...the contract to delivery natural gas in May rose 2.4 cents on Monday, another 5.7 cents on Tuesday, then fell 1.6 cents on Wednesday before rising 3.5 cents to $2.733 per mmBTU on Thursday after the storage report....unlike oil prices, these prices are seen to be below breakeven for most natural gas plays, since it has historically taken a natural gas price over $4 per mmBTU to generate a sustained increase in drilling...that may change, however, as additional pipelines distribute gas from areas where there is now a surplus to interstate pipelines feeding export terminals...the week's natural gas storage report indicated that natural gas in storage in the US fell by 63 billion cubic feet to 1,383 billion cubic feet over the week ending March 23rd, which left our gas supplies 672 billion cubic feet, or 32.7% lower than the 2,055 billion cubic feet that were in storage on March 24th of last year, and 346 billion cubic feet, or 20.0% below the five-year average of 1729 billion cubic feet typically in storage at the end of the twelfth week of the year....the average withdrawal of natural gas during the twelfth week of the year over the past 5 years has been 46 billion cubic feet, so the cited week exceeded the normal withdrawal by 17 billion cubic feet, in what still has been a warmer than average winter nationally...

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 23rd, showed a big jump in our oil imports while most other metrics were little changed, and hence we were able to add oil to storage for the 6th time in the past 9 weeks...our imports of crude oil rose by an average of 1,071,000 barrels per day to an average of 8,148,000 barrels per day during the week, after falling 508,000 barrels per day the prior week, while our exports of crude oil rose by an average of 5,000 barrels per day to an average of 1,578,000 barrels per day, which meant that our effective trade in oil over the week worked out to a net import average of 6,570,000 barrels of per day during the week, 1,066,000 barrels per day more than out net imports during the prior the same time, field production of crude oil from US wells rose by 26,000 barrels per day to a record high of 10,433,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 17,003,000 barrels per day during the reporting week..

during the same week, US oil refineries were using 16,795,000 barrels of crude per day, 18,000 barrels per day more than they used during the prior week, while at the same time 235,000 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 working supply of oil from net imports and from oilfield production was 27,000 barrels per day less than what refineries reported they used during the week plus what was added to account for that disparity, the EIA needed to insert a (+27,000) 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 for" oil, is explained here)...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 7,703,000 barrels per day, which was still 4.0% less than the 8,022,000 barrel per day average we imported over the same four-week period last year....the 235,000 barrel per day increase in our total crude inventories was all added our commercially available stocks of crude oil, as oil stocks in our Strategic Petroleum Reserve were unchanged...this week's 26,000 barrel per day increase in our crude oil production included a 25,000 barrel per day increase in output from wells in the lower 48 states, and a 1,000 barrel per day increase in output from Alaska...the 10,433,000 barrels of crude per day that were produced by US wells during the week ending March 23rd were the highest on record, 14.1% more than the 9,147,000 barrels per day that US wells were producing during the week ending March 24th of last year, and 23.8% above the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June, 2016...

meanwhile, US oil refineries were operating at 92.3% of their capacity in using those 16,795,000 barrels of crude per day, up from 91.7% of capacity the prior week, but still down from the wintertime record 96.7% of capacity set twelve weeks earlier, as US refineries have just come out of their pre-spring blend changeover and scheduled maintenance season....nonetheless, the 16,795,000 barrels of oil that were refined this week was a seasonal record, the most oil that refineries ever processed during February or March...while that elevated level of refining was still 4.6% less than the off-season record 17,608,000 barrels per day that were being refined during the last week of December 2017, it was 3.5% more than the 16,226,000 barrels of crude per day that were being processed during the week ending March 24th, 2017, when refineries were operating at 89.3% of capacity....

with the amount of oil being refined little changed, gasoline output from our refineries was higher than the prior week, increasing by 373,000 barrels per day to 10,305,000 barrels per day during the week ending March 23rd, after our gasoline output had decreased by 348,000 barrels per day during the week ending March a result, our gasoline production was 2.8% greater during the week than the 10,028,000 barrels of gasoline that were being produced daily during the week ending March 24th of last the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 341,000 barrels per day to 4,844,000 barrels per day, after falling by 646,000 barrels per day over the prior 6 weeks...hence, that increase still left the week's distillates production fractionally lower than the 4,872,000 barrels of distillates per day than were being produced during the equivalent week of 2017....    

even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week still fell by 3,472,000 barrels to 239,593,000 barrels by March 23rd, the fourth draw from supplies in a row, but just the fifth decrease in 20 weeks....our supplies were down even though our domestic consumption of gasoline fell by 116,000 barrels per day to 9,208,000 barrels per day, after falling by 318,000 barrels per day the prior week...that was because our exports of gasoline rose by 413,000 barrels per day to 1,099,000 barrels per day, while our imports of gasoline rose by 121,000 barrels per day to 685,000 barrels per even though our gasoline supplies have increased during 15 of the last twenty weeks, our gasoline inventories are still fractionally lower than last March 24th's level of 239,721,000 barrels, even as they are roughly 6.7% above the 10 year average of gasoline supplies for this time of the year...         

likewise, even with the production increase, our supplies of distillate fuels fell by 2,090,000 barrels to 128,954,000 barrels over the week ending March 23rd, after falling by 6,382,000 barrels the prior two weeks...our distillate inventories fell again largely because the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 458,000 barrels per day to 4,375,000 barrels per day, while our exports of distillates fell by 79,000 barrels per day to 918,000 barrels per day, and while our imports of distillates rose by 28,000 barrels per day to 150,000 barrels per day...after this week’s inventory decrease, our distillate supplies ended the week 15.7% lower than the 152,910,000 barrels that we had stored on March 24th, 2017, and roughly 7.9% lower than the 10 year average of distillates stocks at this time of the year…   

finally, due to the big increase in our oil imports, we were able to add to our commercial supplies of crude oil for the 8th time in 19 weeks and for the 16th time in the past year, as our commercial crude supplies increased by 1,643,000 barrels, from 428,306,000 barrels on March 16th to 429,949,000 barrels on March 23rd ...however, after falling most of the past year, our oil inventories as of that date were still 19.5% below the 533,977,000 barrels of oil we had stored on March 24th of 2017, 14.7% lower than the 503,816 ,000 barrels of oil that we had in storage on March 26th of 2016, and 1.8% below the 437,983,000 barrels of oil we had in storage on March 27th of 2015, at a time when the US glut of oil had already begun to surge...

This Week's Rig Count

US drilling activity decreased for the first time in six weeks and for just the 6th time in the past 21 weeks during the week ending March 30th, a period of rising oil prices that has seen the rig increases far exceed the few decreases...Baker Hughes reported that the total count of active rotary rigs running in the US fell by 2 rigs to 993 rigs in the week ending on Friday, which was sill 169 more rigs than the 824 rigs that were in use as of the March 31st report of 2017, while it was still down from the recent high of 1929 drilling rigs that were deployed on November 21st of 2014... 

the number of rigs drilling for oil fell by 7 rigs to 797 rigs this week, which was still 135 more oil rigs than were running a year ago, while it was also 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 4 rigs to 194 rigs this week, which was also 34 more gas rigs than the 160 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, addition, another rig that was considered "miscellaneous" started drilling this week, so now there are two such "miscellaneous" rigs active, the same number of "miscellaneous" rigs that were operating a year ago.

with a rig offshore from Texas shut down this week, drilling in the Gulf of Mexico fell to 12 rigs, which was the lowest number of rigs working in the Gulf or nationally in Baker Hughes records dating back to 1968, & down by 10 rigs from the 22 rigs that were deployed in the Gulf of Mexico a year the same time, drilling began from a platform on an inland lake in southern Louisiana this week, increasing the inland waters rig count to 4 rigs, the same number that were working on inland waters in southern Louisiana a year earlier...

meanwhile, the count of active horizontal drilling rigs was unchanged at 870 horizontal rigs this week, which was still up by 185 rigs from the 685 horizontal rigs that were in use in the US on March 31st of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...the vertical rig count was also unchanged at 63 vertical rigs this week, which was still down from the 69 vertical rigs that were in use during the same week of last year...on the other hand, the directional rig count was down by 2 rigs to 60 directional rigs this week, which was also down from the 70 directional rigs that were deployed on March 31st 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 30th, the second column shows the change in the number of working rigs between last week's count (March 23rd) and this week's (March 30th) count, the third column shows last week's March 23rd active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday of 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 31st of March, 2017...   

March 30 2018 rig count summary

from the above table, you wouldn't know that the majority of this week's large increase in rigs targeting natural gas took place in our state, as the 7 oil directed that had been operating in the Utica were all shut down, while 6 natural gas directed rigs started up, although in the case of any or all of those, it could have simply been a shift of an oil directed rig to target a natural gas resource...hence, Ohio alone accounted for the entire national decrease in oil rigs and leaves the state with no oil rigs active for the first time since November 10th...other than that surprising turn, there was also another natural gas rig addition in the Marcellus, where two rigs were added in Pennsylvania, where there are now 42, while one rig was shut down in West Virginia, where there are now 16...


Effort to ban fracking in Y’town returns to Ohio Supreme Court | For the third time, the Ohio Supreme Court will decide whether an initiative to ban fracking in Youngstown will be in front of city voters. Attorneys representing four city residents, who back the charter amendment, filed a writ of mandamus with the state’s high court against the Mahoning County Board of Elections and its four members. The legal filing seeks to overturn the board’s March 13 decision to keep the proposal off the city’s May 8 primary election ballot. Back in September 2015, the court ruled against the board in a 7-0 decision. They wrote the board of elections did “not have the authority to sit as arbiters of the legality or constitutionality of a ballot measure’s substantive terms. An unconstitutional amendment may be a proper item for referendum or initiative. Such an amendment becomes void and unenforceable only when declared unconstitutional by a court of competent jurisdiction.” The decision came after the city of Youngstown filed an objection to the board of elections not putting the issue on the ballot even though members of the administration didn’t support the proposal. They just wanted voters to have a choice.The charter amendment was rejected by voters in the November 2015 election – just as they did twice in both 2013 and 2014. It was also turned down by city voters in the November 2016 election. That’s six times for those keeping score at home. Then those backing the amendment submitted petitions to the board of elections in September 2017 seeking to put it on the ballot for a seventh time.

Residents near Wooster awoken by terrifying noise coming from nearby gas compressor station - Residents in two Northeast Ohio counties were startled out of sleep early Sunday morning by a scary, loud noise that lasted about an hour. "It was a huge, tremendous sound, as in a jet plane in my front yard or 100 Huey helicopters," said Debbie Bliss who lives on Bell Road in rural Ashland County. "I didn't know if I should pack and leave or stay and see what happened, but you obviously can't pack up farm animals and be gone in ten minutes." The sound started after 4 a.m. and continued until after 5 a.m. It could be heard by people a few miles away from the Wayne/Ashland County line and many of then dialed 911. "It's humongous," said one caller. "You can hear it all the way, it's coming down somewhere by Old (route) 30, which is a couple of miles from me." The noise came from a compressor station run by Texas company Energy Transfer. The company is leading the Rover Pipeline, a $4.2 billion project that will transport natural gas through dual 42" pipelines in Ohio, Pennsylvania and West Virginia. It includes 88 miles of pipe in Wayne and Ashland Counties. In a statement to News 5, Energy Transfer confirmed a change in pressure was detected at its compressor station, which resulted in the opening of a relief valve. 

FERC Scolds Rover Over Missed Deadlines for Restoration Work - Rover Pipeline LLC has not completed restoration work it agreed to when it received authorization to start up two compressor stations, an issue that could bear on pending  in-service authorizations, FERC told the developer this week.In a letter Monday, Federal Energy Regulatory Commission staff listed a series of restoration activities that it said Rover has failed to complete within the timeframes agreed to when the Commission cleared the pipeline’s Compress Station 1 (CS1) and Compressor Station 2 (CS2) to enter service in December and February, respectively.“Because restoration of these sites was not complete at the time of in-service authorization, Rover committed to completing the remaining restoration within specified dates...In turn, the Commission’s authorizations for commencement of service of CS1 and CS2 were based upon those commitments,” FERC wrote.“...However, as of March 20, our monitors’ reports indicate several instances where the agreed-upon restoration has not been completed (or, in some instances, started but incomplete).”FERC asked Rover to respond this week with an explanation for why the work was not completed on time and with “photographic evidence that these issues are being properly addressed.“Staff’s review of future in-service requests will depend, in part, on a demonstration of Rover’s commitment to satisfactory restoration of construction areas and workspaces, including our confidence that any locations where restoration is identified as a future action will receive the proper and agreed-upon attention,” the Commission wrote. In a filing Thursday, Rover answered the Commission’s letter with specifics related to the CS1 and CS2 restoration work, including estimated completion dates. The company attributed some of the delays to inclement weather and additional construction activities at the sites.

Counties with fracking have increased rates of sexually transmitted infections  - Researchers at the Yale School of Public Health have discovered that the rates of two major sexually transmitted infections (STIs), gonorrhea and chlamydia, are 21% and 19% higher, respectively, in Ohio counties with high shale gas activity ("fracking"), compared to counties without any fracking. Rates of a third STI, syphilis, were not elevated.  The findings are published in the journal PLOS One.Shale gas extraction is associated with large influxes of specialized, trained workers into rural areas to meet the labor demands of the drilling rigs, and commonly involves the formation of "work camps" composed of relatively young men. The influx of workers in these situations is thought to increase STI risk because male workers typically live and socialize in communities with masculinized social norms, do not bring families and thus have opportunities to seek other sex partners, and may have few emotional ties to the local community.  "Beyond some of the more familiar concerns about water quality and earthquakes, this report of increased rates of two major sexually transmitted infections suggests another potential health impact in communities hosting the emerging shale gas industry," said lead author Nicole Deziel, Ph.D., assistant professor at the Yale School of Public Health.  The study examined new well permits and reported STI cases, obtained from publicly available datasets, in all 88 Ohio counties from 2000 to 2016; this long follow-up period covered both pre- and post-fracking periods to account for any pre-existing trends in STI rates. The researchers accounted for several other factors, such as population density and age, using variables obtained from the US Census. "Similar patterns have been observed for other migratory labor movements, but the idea that this could be occurring for the current situation of increased hydraulic fracturing in the United States is only beginning to emerge," said senior author Linda Niccolai, Ph.D., Professor at the Yale School of Public Health. "These findings point to the potential importance of new shale gas extraction activities as a social determinant of health, one that changes the collective fabric of communities in a way that increases risk for STI transmission."

Study links shale gas boom and sexually transmitted infections - Ohio’s shale gas country has had higher rates for two sexually transmitted diseases in the wake of the industry’s rapid expansion, new research reports. The study from a team at the Yale School of Public Health adds to a growing body of knowledge exploring public health and social impacts of the fracking boom. PLOS One published the report on March 23.  “The bottom line of our study was that we found that counties with high levels of fracking activity had 20 percent higher rates of two major sexually transmitted infections, or STIs, chlamydia and gonorrhea,” said lead study author Nicole Deziel, an epidemiologist at Yale. “And we did not observe a correlation for a third STI, syphilis.”  STIs are an important public health problem, with about 20 million new cases in the United States each year and billions in health care costs. In Ohio and elsewhere, drilling and fracking for shale gas typically brings in large numbers of specialized, trained workers. The labor force in those “work camps” is mostly young male workers. Typically those workers have few or no family nearby and no emotional ties to the communities where they work. Ready disposable income, a “hyper-masculinized” culture in the camps, and other factors could lead them to seek “multiple new or casual sex partnerships, which are all known risk factors for STI transmission,” Deziel explains.The phenomenon of labor migration potentially leading to increases in STIs has indeed been observed in other situations. But what sets shale gas operations apart “is really the sheer scale of the industry,” Deziel said.   Ohio has issued thousands of well permits, and more than 2,000 wells have been drilled in its Utica shale play. The state also has horizontal drilling in the shallower Marcellus shale play.  The drop in the number of well permits around 2015 correlated with falling market prices for natural gas, Deziel noted. Once STIs have been transmitted to members of the community, however, they can continue to infect people who live there long after temporary workers have left.

S Korean firm joins Ohio effort to build petrochemical plant — Gov. John Kasich said Monday that a major South Korean industrial plant builder has joined an effort to build a multibillion-dollar petrochemical plant in eastern Ohio to take advantage of the region's oil-and-gas boom. Kasich, a Republican, called the partnership between Seoul-based Daelim Industrial and Thailand's PTT Global Chemical a "game-changer" for the proposed plant, which has idled in the planning stages for years. Daelim, according to its website, is South Korea's oldest construction company and an expert in petrochemical technology. "If this can happen, and I'm more optimistic ultimately that this will happen, we're not just interested in this," he said during a news conference. "We're interested in building an entire community of technology." The U.S. subsidiary of PTT has been working for several years with officials from JobsOhio, Ohio's privatized economic development office, on a proposal to build the plant on the site of a former FirstEnergy coal-fired power plant along the Ohio River in Belmont County. The facility, commonly referred to as an ethane cracker, would convert ethane, a byproduct of natural gas drilling, into a hydrocarbon called ethylene that's further processed and used for plastics production and has other industrial uses. Monday's announcement again stopped short of a full commitment by either firm to build the plant, which Kongkrapan Intarajang, PTT's chief operating officer, said will approach $7.5 billion. JobsOhio officials said that decision could come by the end of 2018. "What they would build here would be probably the leading technological effort at cracking gas in the world," Kasich said, noting that he has told the two companies' leaders "guys, you can't wait."

Ethane Cracker Chemical Complexes are Very Expensive - Tom Gellrich, founder of Top Line Analytics–a consultancy focusing on downstream shale gas development like ethane crackers–spoke Wednesday at Kallanish Energy’s “Crackers, Storage & Pipelines 2018” event at Southpointe. He had some interesting things to say. Among them: The Marcellus/Utica region has enough ethane to easily support up to eight ethane cracker plants–plants the size of the massive Shell cracker being built now in Monaca (Beaver County), PA.So far only Shell has pulled the trigger and begun to build such a plant. PTT Global Chemical, based in Thailand, is actively considering (and likely) to build a second regional cracker plant in Belmont County (Ohio). So the multi-billion question is this: Why aren’t more companies building crackers in our region, given the abundance of cheap ethane? Gellrich had some thoughts on that…The reasons why there haven’t been any more ethane crackers announced for Appalachia — and the critical importance of large-scale storage to support the region’s burgeoning petrochemical industry — were big topics of discussion at an industry gathering Wednesday.The bottom line: The $3 billion to $6 billion that it costs to build an ethane cracker has to be approved by someone, and it’s a big commitment that would be extremely costly and potentially fatal to a company if it didn’t work out.“It is a bet-the-company and certainly bet-your-career,” said Tom Gellrich, founder of Top Line Analytics, a consultancy that focuses on downstream shale gas development like ethane crackers. Gellrich spoke at a pipeline and midstream conference held Wednesday at Southpointe by Kallanish Energy, a daily global energy news and analysis website.So far only Shell Chemicals, the division of Dutch multinational Royal Dutch Shell has made that billions-dollar commitment with the cracker it’s building in Beaver County. PTT Global Chemicals is moving to a final investment decision on a second potential cracker in Belmont County, Ohio.

Michigan approves 22 new anchors for Line 5 pipeline beneath Straits -- The twin oil pipelines crossing the Straits of Mackinac are expected to get additional structural support this summer, though environmental groups say it's a step in the wrong direction.  The Michigan Department of Environmental Quality has issued a permit for Enbridge to install 22 new anchor supports along the Line 5 pipeline crossing the Straits of Mackinac, the department announced in a press release Friday, March 23. The structures clamp the 65-year-old pipelines to the lake bed while powerful currents between Lake Michigan and Lake Huron change the underwater landscape, washing away large areas of soil underneath the pipes.  Enbridge calls the new anchors a preventative measure for the aging pipeline, while critics say the span should be decommissioned before it ruptures and spews oil into the water of the Great Lakes.  "Installing these anchor supports does not make Line 5 itself safe, they do not protect the Great Lakes from a catastrophic spill," Kate Madigan, an energy policy specialist for the Michigan Environmental Council, said in a statement.  The intent is to minimize the potential for any unsupported spans of pipeline greater than 75 feet, according to the information submitted by Enbridge. Enbridge 22 anchors.jpg Liz Kirkwood, executive director for Traverse City nonprofit For Love of Water (FLOW), argues that Enbridge's proposal amounts to a completely new design not included in the terms of the 1953 state easement under which the pipeline operates."A suspended pipeline in the currents of the Straits has not been approved and would never be approved today," Kirkwood said in a statement. "This is yet another example of the state allowing Enbridge to get around the laws designed to protect our Great Lakes." Line 5 is bent and deformed where Enbridge wants to anchor it.

More liquid spills by ETP Mariner in Pennsylvania - Energy Transfer Partners LP's Sunoco Mariner East 2 natural gas liquids pipeline gets a notice from Pennsylvania environmental regulators on Monday in regards to the violation for releasing fluids during drilling process into a wetland. The company argued and said that the release of fluids is less than one gallon. The release happened in the Shirley Township in Huntingdon County. The county is located at the distance of 129 kilometers from the state capital. The drilling during an oil and gas drilling activities spills the liquid. The Pennsylvania Department of Environmental Protection (DEP) has said ETP to stop the drilling and resume the same only after the approval is issued. This is not the first time that the spill has happened for this USD 2.5 bln project. There has been a long series of the spill during the project. The DEP identified 46 cases of violation of 108 inadvertent releases or spills from the project, since May 2017. The higher number of releases has prompted the environmental regulator to issue the notices. The last spill from the company ETP was during October, which was 5,000 to 10,000 gallons. The DTP has issued notice for the same too. The Pennsylvania utility regulators earlier in March have suspended ETP’s Sunoco Mariner East 1 operations owing to the discovery of the sinkholes near the project area. ETP has said it expects to complete Mariner 2 by the end of the second quarter. Once complete, Mariner 2 will expand the total capacity of the Mariner East project to 345,000 bpd and open the pipe to suppliers in Ohio and West Virginia.  

Nuns raise large cross next to Atlantic Sunrise pipeline - A group of Catholic nuns in Lancaster County held a Palm Sunday service in protest against the Atlantic Sunrise natural gas pipeline and erected a large cross on the construction site.About 60 people attended the service and prayed with the Adorers of the Blood of Christ. Last year the nuns filed a lawsuit against the pipeline company, Williams, and the Federal Energy Regulatory Commission, alleging the project violated their religious freedom, which is protected under the Religious Freedom Restoration Act.Williams had unsuccessfully tried to negotiated rights to the nuns’ land, and was then authorized to use eminent domain, giving it permanent rights to a 50-foot-wide area on approximately one acre. In October, 23 people were arrested on the nuns’ property after they attempted to block construction equipment.After a district court refused to hear the nuns’ case last fall, they filed an appeal, which is pending with the Third Circuit Court of Appeals in Philadelphia.  A Williams spokesman did not immediately respond to a request for comment Sunday. Previously, the company has said it respects the rights of people to peacefully protest.

LISTEN: Malinda Harnish Clatterbuck of Lancaster Against Pipelines - Last week’s Earth Watch guest on the Sojourner Truth Radio Show was Malinda Harnish Clatterbuck of Lancaster Against Pipelines, who discussed the dangers of the Atlantic Sunrise Pipeline in Western Pennsylvania.Here is some background on the Atlantic Sunrise pipeline from Atlantic Sunrise pipeline is a project by Williams Partners, a multi-billion dollar natural gas transportation and processing corporation based in Tulsa Oklahoma. The proposed fracked-gas pipeline would be an unprecedented 42” in diameter and 1200 – 1500 PSI. On February 21, 2014, an article in Lancaster Newspapers carried news of the pipeline proposal to thousands of people across Lancaster County.  The originally proposed route had the pipeline running directly through several popular Lancaster County conservancy properties, including Tucquan Glen Nature Preserve. The news ignited a groundswell of opposition, out of which Lancaster Against Pipelines was formed.  Since that original notification, the proposed route has been altered dozens of times. The pipeline has received approval from FERC and all the necessary permits to begin construction. The Atlantic Sunrise pipeline, if constructed, would disrupt preserved farms, precious woodlands, and families’ homes – with no benefit for Lancaster County.  The majority of the fracked gas that it would carry is intended for export at the Cove Point Liquid Natural Gas terminal.  The 42″, 1200-1500 PSI pipeline would be unprecedented in its size and pressure.  Pipeline explosions are relatively uncommon, but when they occur they are devastating.

Monroe judge reverses decision; lifts tree-sitter injunction in MVP pipeline case - Attorneys for MVP also provided the court with a map that Robinson’s team had put together after their survey along with previous survey data from Holland Engineering, a company contracted by MVP. That map would come back to haunt the MVP attorneys. On cross-examination, DePaulo asked Robinson to break down the map, detail by detail, questioning him on each one. Centering in on individual figures, DePaulo questioned the surveyor on why points of the map labeled in hundredths of a mile, or 52.8 feet, were indicated on the map as different lengths with a difference of up to 100 percent. Answering DePaulo, Robinson told the attorney that to be better shown on the map numbers had been rounded, but that in his professional opinion the protestors are located inside of MVP’s allowable zone. Measuring the distance between two sets of points that were labeled as equal in measure, DePaulo told the judge, before walking to the bench to show him, that by a simple eye test, those measures, which were supposed to equal, were noticeably unequal. DePaulo also called into question of why the Appalachian Trail, the central location in the no-cut zone, had not be used as the starting measuring point by the surveyors. Adding that the burden of proof was on the pipeline’s attorneys, DePaulo said that the attorneys had failed to show reliable information to argue the case. “The devil is like so much of things in life, the devil is in the details,” Judge Irons said before going over the inconsistencies that DePaulo highlighted. The judge also questioned the compelling urgency to reach a decision over two trees along a pipeline route that is hundreds of miles long, adding that based on the testimony heard, the facts did not add up. “I guess the thing that I’m troubled by, you know from the testimony to tie into really accurate, reliable control points,” Irons said. Telling the attorneys from MVP that he is not as convinced of the mapping data as they are, Irons denied their injunction against the tree-sitters.

W.Va. judge denies injunction to remove pipeline protesters from trees  - An attempt to flush pipeline protesters from their stands in trees atop Peters Mountain fell short Tuesday. Monroe County Circuit Judge Robert Irons denied a preliminary injunction requested by Mountain Valley Pipeline, which sought the court's intervention to remove what has become a troublesome obstacle to its plans to build a natural gas pipeline through West Virginia and Southwest Virginia. Although Irons said last week that he was inclined to grant the injunction, his view changed during a hearing Tuesday when William DePaulo, an attorney for the tree-sitters, argued that Mountain Valley has failed to prove they are actually in the route of the proposed pipeline. DePaulo repeatedly raised questions about the surveying, calculations and map drawing that Mountain Valley relied upon in asserting that the tree-sitters were blocking the pipeline's path."Like so many things in life, the devil is in the details," Irons said in announcing his decision. The surprise ruling came on the 23rd day of the tree-sit protest, which shows no sign of ending. It was not clear after the hearing what step Mountain Valley would take next. The company has said the protesters - on two small wooden platforms suspended by ropes about 25 feet above the ground - are sitting in trees that need to be cut down before a March 31 deadline imposed by federal wildlife protections. "While we are disappointed with the Court's decision, the MVP project team will continue to move forward with construction activities along other portions of the 303-mile route," Mountain Valley spokeswoman Natalie Cox said in a statement. "As always, we respect the opinions of those who are opposed to the MVP project and we want to ensure everyone's safety throughout the various phases of the construction process." But in court Tuesday, an attorney for the company made it clear that it needs the protesters gone from two oak trees in the Jefferson National Forest, near the Virginia state line. The Monroe County trees are very close to where the company plans to bore a tunnel for the 42-inch diameter steel pipe to pass under the Appalachian Trail before emerging on the Giles County side of the mountain. "They're in the area that we need to fell trees, and they're interfering with that,"

As a tree-sit protest of the Mountain Valley Pipeline continues, a crowd is gathering - A tree-top protest of the Mountain Valley Pipeline is drawing so much public attention that the U.S. Forest Service has designated a spot for supporters to gather.The Caldwell Fields Campground in the Jefferson National Forest has been established as a “safe location ... for people to exercise their First Amendment rights” about protesters who are sitting in two trees along the pipeline’s route in an attempt to block its construction, the Forest Service said Friday.The campground is in Montgomery County, miles from the spot where the tree-sit protest will soon enter a second month on national forest land atop Peters Mountain in West Virginia. “The Forest Service recognizes that First Amendment rights are an important privilege of every U.S. citizen,” Jessica Rubado, a spokeswoman for the agency, wrote in an email. “However, public health and safety also must be considered.” On Thursday, when word spread that the Forest Service might be starting an attempt to remove the tree-sitters, a crowd of about 20 supporters gathered on Pocahontas Road in Giles County, where a gate closing the road prevented them from getting any closer to the tree-sit site. The Forest Service road is closed, along with a 400-foot-wide corridor that follows the pipeline’s 3.5-mile path through the national forest, as officials monitor a situation in which protesters are perched on wooden platforms in two trees in Monroe County, West Virginia — next to where the pipeline would cross the Appalachian Trail and just across the state line from Giles County. Becky Crabtree, a Monroe County resident who is fighting plans for a natural gas pipeline that would pass through her family farm, was one of the people who gathered on Pocahontas Road with signs showing their support for the tree-sitters. The tree-sit protest began Feb. 26, with members of a loosely organized group who have mostly remained anonymous saying they were taking a stand against the environmental damage that would be caused by building a 303-mile pipeline through the two Virginias. What started as a low-key operation, with the remote location making communication difficult, is now capturing more attention as word spreads on social media and through rural communities where many landowners oppose the pipeline. “People want to help, and their numbers are growing,” Crabtree said. “Anytime an article runs, my phone blows up.”

MVP Pipeline Protesters Use New Tactics of Blocking Road and Pole Sitting - Authorities broke up a group of protesters who were blocking an access road that was being used for the Mountain Valley Pipeline. A protest that had been going on for about a month in the Jefferson National Forest on the border of West Virginia and Virginia escalated this morning when pipeline opponents blocked the access road.The protesters put up a large pole overnight across the access road to the project in the Jefferson National Forest on the West Virginia/Virginia border. In addition to that, about 30 protesters gathered at the access road gate along Pocahontas Road on Peters Mountain.The U.S. Forest service called the actions illegal and dangerous.About 4:30 p.m., the group Appalachians Against Pipelines wrote on social media that authorities had broken up the protest and arrested some of the organizers. The authorities were trying to get one of the protesters off the pole, the group wrote. The protester on the pole produced live video of the scene below. A little after 6 p.m. the protesters said the police had gone away, leaving the protester on the pole. The U.S. Forest Service, which has authority there, released a statement saying the location of the protest isn’t safe in the first place. “For the protesters in the areas under the closure order, the protest site is located within an area under emergency closure for the Mountain Valley Pipeline Project and is not a safe or legal location for a protest to occur,” stated Jessica Rubado, spokeswoman for the Forest Service.

Tree-sit protest that spilled over into Virginia broken up by authorities -A second protest site that had sprung up on the Virginia side of Peters Mountain was broken up Wednesday afternoon, leaving only a single protestor high up a wooden pole in the middle of a Jefferson National Forest access road.  According to the Appalachian Against Pipelines Facebook page, a large contingent of law enforcement, including Virginia State Police, U.S Forest Service officials and U.S Marshals, arrived at the protest location at approximately 3:30 p.m. Wednesday afternoon and arrested protest ground support members, as well as making the general protest supporters gathered at the location disperse. Earlier in the day, protestors had installed a blockade across the access road. The news release said that the blockade would prevent state and Mountain Valley Pipeline (MVP) workers from accessing the location of protesting tree-sitters in West Virginia and prevent the construction of a seven-mile-long road to the site of a proposed borehole near the summit of the mountain.The blockade included a 50-foot-tall log installed in the middle of the access road with a single protester near its top. "As I remember the local support the tree sits have received, and all the people already standing up against the destruction of their land and water along the MVP and ACP routes, I know we can be a strong force for a world without these pipelines,” the log-top protestor stated in a news release. "The flames of resistance are catching and they will spread." Along with the log-sitter, a group of supporters also gathered at the protest site. The new protest follows a denial of an injunction against the tree-sitters last week by Monroe and Summers County Circuit Court Judge Robert Irons. With a March 31 deadline for MVP to cut trees inside the forest looming, protest supporters fear that a last-minute attempt to remove the tree-sitters is possible.

Woman perches atop pole as protesters fight planned pipeline -- Opponents of a planned natural gas pipeline across parts of West Virginia and Virginia have launched a pole-sitting protest, the latest in demonstrations that prompted one arrest. The Roanoke Times reports protesters in West Virginia have entered their 30th day of sitting in two trees along the Mountain Valley Pipeline's proposed route.The newspaper also says a woman in Virginia perched Wednesday atop a 50-foot (15-meter) pole nearby in Virginia across the state line. It says a group of 20 others stood guard around the pole along a gravel road used by Mountain Valley crews. A spokesman for the U.S. Attorney's Office in Roanoke, Brian McGinn, confirmed one protester was arrested after officers ordered the crowd to disperse.

DEQ approves Mountain Valley Pipeline's plan to control erosion and sediment -  A plan to stem the dirty water that will flow from building a natural gas pipeline through Southwest Virginia was approved Monday by state environmental regulators, marking a key step forward for the controversial project.Erosion, sediment and storm water control plans for the Mountain Valley Pipeline “will protect water quality in all areas of Virginia,” the state’s Department of Environmental Quality announced in a 7:02 p.m. news release. Until now, work on the 303-mile buried pipeline has been limited to cutting trees along its path and leaving them where they fell. With DEQ’s approval of “land disturbing activities” — one of the last remaining regulatory reviews — Mountain Valley is now authorized to begin full-scale construction. Pipeline opponents have said for years that digging trenches for the pipeline along steep mountain slopes will produce sediment-laden runoff, contaminating pristine streams and infiltrating private wells and public water supplies.  “Today, the Virginia DEQ betrayed the public and doomed our streams, wetlands, and groundwater to dire threats and certain damages that should never be accepted,” David Sligh wrote in an email. A former DEQ employee, Sligh wrote that “the scientific evidence strongly shows that the kinds of pollution control plans MVP proposes cannot adequately protect our waters, yet it’s clear that DEQ’s technical experts never had permission to reject them.”

MVP contractor tied to pipeline cited for environmental violations - A construction company working on a natural gas pipeline that recently was accused of violating environmental standards also will work on the Mountain Valley Pipeline. Precision Pipeline, a Wisconsin-based construction company, will work on the Mountain Valley Pipeline, which is still in its nascent stages. It has been working on the Rover Pipeline, which is nearing completion. Rover Pipeline LLC was issued a cease-and-desist order from the West Virginia Department of Environmental Protection for 14 water-quality violations in Doddridge, Tyler and Wetzel counties, ranging from leaving trash and construction debris partially buried on the construction site, to improperly installing a perimeter control. The cease-and-desist is addressed to Rover Pipeline LLC and doesn’t address Precision’s involvement in construction, but critics of the pipeline said Precision’s reputation is tainted by its involvement in projects that break the rules. Precision Pipeline, based in Eau Claire, Wisconsin, was identified as one of the three contractors assigned to the Mountain Valley Pipeline during a preliminary injunction hearing in the Southern District of West Virginia, in which Mountain Valley Pipeline developers sued landowners over easement through eminent domain rights.

Atlantic Coast Pipeline plans moving along, environmental concerns remain - The Atlantic coast pipeline project is set to be in full effect at the end of March, but some people are hoping that it won’t come at all. "I still hold out hope that we could turn ourselves around," says President of the Mountain Lakes Preservation Alliance April Pierson-Keating. Pierson-Keating says that the location of the pipeline is a concern. "12,000 ft from our state police barracks and less than half a mile from our high school. So if it blew right there, it would take out the water tower, there’s a house right there, the state police barracks, those would be incinerated totally" says Pierson-Keating. But Dominion Energy's spokesperson says that West Virginia has abundant resources and the pipeline construction is allowing us to use them. "To get a very abundant natural resource that’s found right here in West Virginia to markets on the east coast, some of the fastest growing markets on the east coast will be recipients of this great resource that we proudly have here in our state," says Norris. But Pierson-Keating argues, "This pipeline is going to increase fracking across the state and the region, and we know that fracking toxifies millions of gallons of water on a daily basis and takes it out the water system so we can’t use it." Part of the update to the project is an upcoming job fair to employ local workers, and Norris says that more than 3,000 new jobs are being brought into West Virginia from the Atlantic coast pipeline project, but those aren't the only financial benefits. "When the pipeliners are here and they want to go out to eat one evening, they’re going to be eating in our local restaurants, they’re going to be staying in our local hotels, they’re going to be shopping in our local convenient stores, so this will have a trickling effect on our local economy" explains Norris.

Agency denies pipeline's request for more time to cut trees - A federal commission denied a request Wednesday from developers of the proposed Atlantic Coast Pipeline to continue cutting down trees along the project's route beyond an initial deadline designed to protect birds and bats.  Dominion Energy, leading percentage owner of the natural gas pipeline, told the Federal Energy Regulatory Commission earlier this month that it appeared workers couldn't complete tree felling in West Virginia, Virginia and North Carolina on time and asked for an extension.  Despite the denial Wednesday, a spokesman for the project said it will remain on track for completion by the end of 2019.  Dominion agreed to the tree-felling restrictions as part of the project's environmental review process. The windows vary from state to state but generally prohibit tree cutting from mid-March or early April through mid-September or mid-November. Virginia's restriction began March 15. Dominion, in a letter seeking an extension, wrote that the proposed modification would be at least as environmentally protective as the initially agreed-to limits.  FERC disagreed. A division director wrote in the denial letter Wednesday that the request "would not offer an equal or greater level of protection."  Environmental groups praised the decision.  FERC spokeswoman Tamara Young-Allen said the pipeline has 30 days to appeal the decision.  Pipeline spokesman Aaron Ruby said that, as of Wednesday, tree felling has been completed on more than 200 miles (320 kilometers) of the 600-mile (965-kilometer) route, less than initially planned for this year.

To protect birds and endangered bats, feds reject pipeline bid to continue cutting trees — The Atlantic Coast Pipeline got a rare rejection Wednesday from federal officials who nixed a request from the divisive Dominion Energy-led project to push past seasonal tree-cutting restrictions that are intended to protect endangered bats and migratory birds. In an order, the Federal Energy Regulatory Commission said Dominion’s request to extend the tree-cutting window two months to May 15 “would not offer an equal or greater level of protection.” The cutting restriction to protect species like owls, warblers and the Indiana Bat was “one of many” mitigation measures FERC considered in granting a certificate for the project, says the letter from Rich McGuire, FERC’s director of the gas division. Dominion stopped cutting trees March 14 and can resume again in the fall. Environmental groups have battled to slow and stall the 42-inch diameter pipeline from West Virginia to North Carolina, which will carve a 125-foot-wide temporary construction right of way across some of Virginia’s most mountainous terrain and, they fear, endanger pristine mountain streams and other waterways with the sediment generated. Many landowners are also opposed, with Dominion and its partners, armed with eminent domain power, taking dozens of uncooperative property owners to court for access to their land. Dominion spokesman Aaron Ruby said workers have completed tree-felling on more than 200 miles of the project, though that’s less than the company planned for this year. He wouldn’t say if the company would appeal the FERC order. “For any large infrastructure project, we have to plan for contingencies,” Ruby said. “By rearranging some of our construction plans and shifting some work to 2019, we’ll keep the project on track for completion by the end of next year.” 

Citizens group alleges unauthorized pipeline work - A citizens group has filed a complaint with the Federal Energy Regulatory Commission saying unauthorized work on the Atlantic Coast Pipeline has begun in Augusta County, and should be investigated. The Allegheny-Blue Ridge Alliance submitted its complaint to FERC on Thursday, saying aerial surveillance conducted by the group found a new section of access road, existing road improvements, construction of timber matting and timber bridges over water bodies or drainage ways. The area is located in Augusta County near where the pipeline would bore through the Blue Ridge Mountains. However, a spokesman for the Atlantic Coast Pipeline said the citizens group is in error, insisting that the work only involves a geotechnical survey that the property owner has already approved. The Allegheny-Blue Ridge Alliance submitted aerial photos it took earlier this month as part of its complaint with FERC, which has ultimate authority over the pipeline approval process. Rick Webb, a scientist with the alliance, said the activities "do not appear to have been authorized under any of the limited notices to proceed [that] FERC has issued." The complaint asks that an investigation to "discover the nature and extent of possible violations of requirements by ACP in the areas addressed here." But Aaron Ruby, a Dominion Energy and Atlantic Coast Pipeline spokesman, said no construction activity is being performed. "We're doing a geotechnical survey," Ruby said in a statement. "We're doing it with the permission of the landowner.." 

The Koch Brothers Vs. God -- Rev. Paul Wilson is whipping up a crowd of demonstrators in downtown Richmond, Virginia, where they’re waiting to make a short march from Richmond’s Capitol Square Bell Tower to the nearby National Theatre. They’ve gathered for the Water Is Life Rally & Concert, an event to protest the proposed construction of the Atlantic Coast Pipeline. The development, a joint venture between several energy companies (including Richmond-based Dominion Energy), would carry natural gas 600 miles from West Virginia to North Carolina. The pipeline’s proposed route runs directly between Union Hill and Union Grove Baptist churches, the two parishes where Wilson serves as pastor in rural Buckingham County, 70 miles south of Richmond. The proposed site for the pipeline’s 54,000-horsepower, gas-fired compressor station is also set to be built right between them. Wilson fears the station could put his congregation and the surrounding community at risk of a range of ailments, especially asthma, because those living near natural gas facilities often suffer from chronic respiratory problems. “God gave man dominion over the earth, but not permission to destroy it,”    Drums and tambourines reverberated in unison to chants of “No justice, no peace! No pipelines on our streets!”, and the event’s other speakers railed against the greed of Big Oil companies and U.S. imperialism. At another rally focused on fossil fuels a year earlier in Richmond, religion was front and center. As a sea of hands waved through the air as eyes closed in prayer, what many in the crowd didn’t know was that they were the target of a massive propaganda campaign. One of the event’s sponsors was a fossil-fuel advocacy group called Fueling U.S. Forward, an outfit supported by Koch Industries, the petrochemicals, paper, and wood product conglomerate founded by conservative billionaires Charles and David Koch.

Gas pipeline forges ahead as environmentalists call on Northam to slow process — Environmental groups had planned an event here Tuesday to call on Gov. Ralph Northam (D) to slow the permitting process for two major natural gas pipelines, only to learn that one of the projects got its permits the night before.The state Department of Environmental Quality announced that it had issued approvals for the Mountain Valley Pipeline after 7 p.m. Monday. Workers on the project have begun clearing trees along its path, but this sign-off from the state will let full construction get underway.  Opponents of the 303-mile pipeline, which runs the length of West Virginia and through the heart of Virginia’s mountainous southwest, said the process was flawed.  Residents along the Mountain Valley route have “been asking Gov. Northam and his administration for one more chance to review these critical water pollution control plans before the DEQ finalized them and allowed construction to proceed. In an affront to all Virginians, this decision shut them out,” Peter Anderson of the group Appalachian Voices said via email. But the environmental department said the project has been subjected to “enhanced review” and that every step has been open to public scrutiny.  Ann Regn, spokeswoman for the state environmental agency, said the announcement had been delayed for several weeks as the review was completed. “It is not at all connected to when [the environmental groups] were coming to town. We were trying to get it out as soon as they had the plans up,” Regn said.The Mountain Valley Pipeline is being built by a coalition of companies, led by EQT Midstream Partners, to carry fracked natural gas. A bigger project led by Dominion Energy, the Atlantic Coast Pipeline, is being planned simultaneously for the western and southern parts of the state, and is several weeks behind Mountain Valley in the permitting process.

A battle is brewing as pipeline companies prepare to break ground in Virginia -- A long-simmering war between homeowners and environmentalists on one side and companies planning controversial pipelines on the other is escalating as the two projects are nearing construction. Virginia State Police and other law enforcement agencies have undergone special training to deal with protests against the $6.5 billion Atlantic Coast Pipeline that starts in West Virginia, stretches through Virginia and ends in North Carolina. A smaller project, the Mountain Valley Pipeline, is planned through much of Southwest Virginia. Protesters have been active for about four years. But now the pipeline companies have most of their permits and have begun some limited tree-cutting to clear rights of way. Protesters are adamant about stopping the projects, which they believe are fire and explosion hazards, harm fauna and flora, threaten water and air supplies and ruin visually appealing landscapes. One question is whether protests could become violent, as some have against the Keystone XL pipeline and other projects in the Dakotas, among other areas. Those protests are so strong and vivid that they have attracted international attention. A real possibility is that what has happened on the prairie could be replicated in the Piedmont. In West Virginia, protesters attempting to stop tree cutting for the Mountain Valley Pipeline erected temporary housing in trees in the path of the cutting. A judge ruled against a temporary injunction sought by the pipeline firm to force the squatters from their tree stands near Union, W.Va. In Virginia, protesters complain that private security companies hired by pipeline firms have harassed and intimated them by photographing them and their car license plates when they attend state regulatory hearings concerning pipeline permits. The Blue Ridge Environmental Defense League has sent letters to the governors of Virginia and North Carolina asking them to intervene. 

No matter what else happens in the energy industry, there's a reason why local natural gas producers already see a big year in 2018 - This year will mark a turning point in the local natural gas industry: The time when there is enough pipeline capacity to move Marcellus and Utica shale gas to markets where producers get closer to prevailing price. That insight about takeaway capacity is a key takeaway from a new study from, which predicted the constraint — known in the industry as bottlenecking — would be lifted beginning in the third quarter of 2018.  The de-bottlenecking will have a real impact on the price of natural gas coming out of the Marcellus and Utica shales, which has been held down traditionally because of an ever-increasing supply but without enough places for it to sell. Maria Sanchez, manager of energy analysis at, said Northeast natural gas sold an average of $1 below the per-thousand-BTU standard price, known as the Henry Hub, between 2013 and 2016. That could be closed up to between 20 cents and 40 cents below Henry Hub pricing by the end of 2018, Sanchez forecast.And that's based on the takeaway capacity being added by new pipelines by Energy Transfer Partners, Nexus, Transco and Columbia. Other projects, such as EQT and EQT Midstream Partners' massive Mountain Valley Pipeline to Virginia, will go online later in 2018 and into 2019."It will have a huge impact on the prices here," The anticipated growth in natural gas liquids in Appalachia will help boost the construction of pipelines in the tri-state region, Rick DeCesar, vice president of pipeline and midstream services at Aecom, told a conference held Wednesday by Kallanish at the Hilton Garden Inn at Southpointe moderated by Stone Pier Capital Advisors Managing Director Charlie Schliebs. DeCesar said he didn't think that the pipeline construction in the future would be long distance, as it has been, but instead gathering and trunk lines for natural gas production and connections for the petrochemical industry.But,'s Sanchez said, the de-bottlenecking — and the boost to prices — won't benefit one particular gas region in the Marcellus. That's because pipeline projects like the Constitution to serve New York and New England are stalled in the permit stage. "It doesn't apply to northeast Pennsylvania," Sanchez said.

State lawmaker secretly sends constituent’s emails to gas pipeline lobbyist - A Massachusetts state legislator emailing with a citizen concerned about new gas pipelines surreptitiously shared those emails with a lobbyist who runs a fossil-fuel front group advocating for more pipelines, according to the messages that HuffPost obtained. The constituent wrote to state Rep. Steve Howitt (R) to express concern that a pending climate change bill could actually pave the way for a tax to fund new pipelines in Massachusetts and allow the state to treat natural gas as clean energy. Howitt thanked the constituent, and the two exchanged follow-up emails about specific language in the bill. But the emails indicate that Howitt also blind-carbon-copied another person ― William Ryan, a veteran lobbyist who owns the Boston-based firm Pilgrim Strategies and was recently hired to run the newly formed Mass Coalition for Sustainable Energy. As HuffPost revealed last month, the “coalition” is in truth an astroturf group with funding from Canadian pipeline giant Enbridge and gas-based utilities Eversource and National Grid ― all of which are currently trying to expand the regional Algonquin Pipeline. Ryan also consults for Enbridge on its Atlantic Bridge Project, another pipeline upgrade in the area. Ryan appears to have accidentally outed himself on the thread by replying all, using the same email address he has previously used to register as a lobbyist with the state. “Perfect response to her, Steve,” he wrote, adding a link to a study that he said “really does a good job if [sic] explaining the power problem we have and how problematic the inadequate supply of natural gas is to our region.” When the constituent inquired about the additional person copied on the email, Howitt tried to cover by suggesting that the other individual was a government official.   When the correspondent pressed further about who had been added to the conversation, Howitt replied, “My liasons [sic] within the government agencies are for reps and senators only to address constituent concerns and assist or provide information.” The legislator did not respond to further inquiries from the constituent. 

Boston Judge Acquits 13 Pipeline Protesters in Groundbreaking Decision - A Boston judge on Tuesday sided with 13 climate activists who were arrested for protesting the West Roxbury Mass Lateral Pipeline .Judge Mary Ann Driscoll of West Roxbury District Court decided it was necessary for the protestors to engage in civil disobedience to block the construction of Spectra Energy's high-pressure fracked gas pipeline and acquitted the activists of civil infractions, according to media reports.  The judge made the decision after hearing each defendant's testimony. They argued the threat of climate change necessitated their civil disobedience. Shadowproofreported:"Part of why Judge Mary Ann Driscoll found no liability was because they engaged in a sustained effort to end the project and attempted legal remedies by the city council, mayor, and other agencies to stop the pipeline.Even though the pipeline was still constructed and operational by January 2017, that was irrelevant. The judge found the activists were not liable. "Karenna Gore, the director of Center for Earth Ethics and daughter of former Vice President Al Gore , was one of the 23 people arrested during a 2016 protest of the pipeline."What happened today was really important," she said. "Essentially, the people that put themselves in the way of building this fossil fuel pipeline were found 'not responsible' by reason of necessity." "The irony of that is that we are making ourselves responsible. We are part of the the movement that is standing up and saying we won't let this go by on our watch. We won't act like nothing's wrong."

Judge rules civil disobedience a ‘necessity’ to prevent climate change  --A Massachusetts judge found that 13 pipeline protesters "not responsible by reason of necessity" because the action was taken to avoid serious climate damage.  For almost a year, hundreds of protesters in Massachusetts took action to stop construction of a high-pressure fracked gas pipeline, which would have run for five miles through the Boston neighborhood of West Roxbury. The demonstrations, which featured protesters sitting in holes dug for the pipeline, lead to the arrests of nearly 200 people, many of whom faced criminal charges for trespassing and disturbing the peace.  On Tuesday, the final 13 protesters facing charges over the demonstrations were found not responsible by a Massachusetts judge, who ruled that the potential environmental and public health impacts of the pipeline — including the risk of climate change — had made civil disobedience legally necessary.  According to the Climate Disobedience Center, which supported the protesters in their demonstration, this is the first example of a judge finding defendants not responsible on the basis of a necessity defense — something that has been used by the climate movement increasingly in recent years as a basis for direct action against fossil fuel infrastructure. “We believe this is a first,” Marla Marcum, director of the Climate Disobedience Center, told ThinkProgress. “It’s pretty powerful, to us, that a judge listened very carefully and determined, essentially, that it was necessary for these people to take this action in an attempt to prevent a greater harm.”

Bill to ban oil, gas drilling in state waters passes Senate -  Bipartisan legislation to ban offshore drilling in state waters and to prohibit infrastructure there from supporting drilling in federal waters off New Jersey, was approved 37-0 on Monday by the state Senate. “This is a back-door way of blocking the offshore drilling that would be allowed by the federal action,” said co-sponsor Sen. Jeff Van Drew, D-Cape May, Cumberland, Atlantic. “We control the first 3 miles at the state level, so we will use that authority to try to hinder or block drilling along the Jersey coast, which is vital for the fishing industry.” President Donald Trump has proposed opening up drilling in federal waters along the Atlantic Coast. State waters run to three miles out, and federal waters from three to 200 miles out. The Shore Tourism and Ocean Protection (STOP) from Offshore Oil and Gas Act (S-258/A-839) had already passed the Assembly and now goes to Gov. Phil Murphy’s desk. Murphy, an opponent of offshore drilling in the Atlantic, is expected to sign it. Co-sponsor Sen. Chris Brown, R-Atlantic, said protecting the environment is not a Republican or Democrat issue. “All of our Atlantic County families, retirees and our local economy depend on us protecting our beaches and waterways,” Brown said. “It simply makes sense to preserve our $44 billion tourism economy and our commercial and recreational fisheries for our children and grandchildren.” It would prohibit offshore drilling in state waters and ban the leasing of tidal or submerged lands in state waters for oil or natural gas production, exploration or development. It would also prohibit the Department of Environmental Protection from issuing any permits and approvals for the development of offshore drilling facilities, said Brown, who has launched an online petition to oppose the federal plan to drill off the Atlantic Coast.

House Dems demand hearing over Zinke offshore drilling plan | TheHill: Three top House Democrats are demanding a hearing with Interior Secretary Ryan Zinke to discuss his proposal to expand offshore drilling.House Natural Resources Committee Ranking Member Raúl M. Grijalva (D-Ariz.) and Reps. Alan Lowenthal (D-Calif.), chair of the Subcommittee on Energy and Mineral Resources, and A. Donald McEachin(D-Va.), chair of the oversight subcommittee, are demanding a full committee hearing on the development of Interior's offshore leasing plan.In a letter sent Thursday to committee Chairman Rob Bishop (R-Utah) requesting the hearing, the members cite a recent Politico report that Zinke had been in close contact with Florida Gov. Rick Scott’s (R) office for months before announcing that his state was exempt from the drilling plan."The available information strongly suggests that the meeting and decision to remove Florida from the offshore leasing program was driven by political considerations related to the Governor’s potential race for the U.S. Senate seat," the Democrats said in a statement. At the time, it appeared that Zinke's decision to remove Florida from the drilling list was an impromptu one. But Politico concluded, after reviewing thousands of documents after an open records request, that the decision was "choreographed" to politically benefit the governor. Thursday's letter to Bishop is the Dem lawmakers' second request for a hearing with Zinke on offshore drilling. They first sent a request to his office on January 24 following conflicting statements over whether Florida would be exempted from the new drilling policy. Thursday's letter says that since then, "the situation has gotten less clear." "It is clear that we do not know the entire story about how first draft of the 5 year program was put together, nor what led to the meeting between the Governor and the Secretary at the Talahassee airport," the letter read. "The Chairman is reviewing the letter and we are working to determine the next best steps forward," said Katie Schoettler, a spokeswoman for the committee.

Cove Point LNG terminal feedgas volumes rise as it prepares to receive tanker - Implied feedgas volumes at Dominion Energy's Cove Point LNG export terminal in Maryland rose Monday to the highest level in more than three weeks as the facility prepared to receive a tanker that could usher in the start of commercial service under long-term contracts, S&P Global Platts Analytics data show.The increase in implied feedgas is similar to the timing of a previous surge in mid-February, before the shipment of the plant's first -- and, so far, only -- commissioning cargo on March 2, which was delivered to the UK. Dominion and Cheniere Energy are currently the only US exporters of LNG produced from shale gas that have facilities in operation. A handful of terminals are under construction, while another dozen or so have been proposed.  company had previously said that commercial service at Cove Point, under contracts with Gail India and a joint venture involving Japan's Sumitomo and Tokyo Gas, would begin in early March. But feedgas activity at the facility declined following the commissioning cargo's departure. Implied feedgas peaked at 920 MMcf on the day of the cargo's departure and then dropped to 242 MMcf the following day. By March 3, implied feedgas estimates had dropped to 18 MMcf/d, a level that had held mostly steady since then. That changed over the weekend when implied feedgas volumes for Cove Point surged, reaching 640 MMcf Monday. The commissioning meters associated with the export facility simultaneously increased from previous levels of around 140 MMcf/d to over 350 MMcf/d for Monday's gas day, the Platts Analytics data show. New pipeline capacity contracts executed between Cove Point Pipeline and Pacific Summit Energy -- the marketing subsidiary of LNG offtaker Sumitomo -- and Gail Global (USA) LNG become effective March 31, records show. Both shippers executed transport contracts for 430 MMcf/d over a roughly 20-year term, with primary receipts sourced from Columbia Gas Transmission and Transcontinental Gas Pipe Line interconnects and primary delivery to the liquefaction facilities.

U.S. liquefied natural gas exports quadrupled in 2017 - U.S. exports of liquefied natural gas (LNG) reached 1.94 billion cubic feet per day (Bcf/d) in 2017, up from 0.5 Bcf/d in 2016. As LNG exports increased, shipments went to more destinations. U.S. LNG exports in 2017, all of which originated from Louisiana’s Sabine Pass liquefaction terminal, reached 25 countries.  More than half (53%) of U.S. LNG exports in 2017 were shipped to three countries: Mexico, South Korea, and China. Mexico received the largest amount of U.S. LNG exports, at 20% of the 2017 total. Growing natural gas demand in Mexico, particularly from the power generation sector, and delays in the construction of domestic pipelines connecting to U.S. export pipelines led Mexico to rely on LNG imports to supplement imports of natural gas by pipeline.  In Asia, the widening difference between the Henry Hub natural gas price—to which U.S. LNG contract prices are indexed—and crude oil—to which LNG prices are benchmarked in Asia—helped to drive increases in LNG imports from the United States. Exports to South Korea accounted for 18% of total U.S. LNG exports in 2017 and were part of long-term contracts between sellers Cheniere Energy and Shell and the Korean natural gas buyers. Exports to China made up 15% of total U.S. LNG exports. These exports were sold mostly on a spot basis, with volumes in October, November, and December increasing as record-high LNG demand prompted China to seek additional LNG on the global spot market to supplement contracted volumes.  Almost 60% of U.S. LNG in 2017 was sold on a spot basis to more than 20 countries in Asia, North and South America, Europe, the Middle East and North Africa, and the Caribbean. Although liquefaction capacity at Sabine Pass is fully contracted under long-term contracts to various buyers, flexibility in those contracts’ destination clauses allows U.S. LNG to be shipped to any market in the world.   Four more projects are scheduled to come online in the next two years: Elba Island LNG in Georgia and Cameron LNG in Louisiana in 2018, then Freeport LNG and Corpus Christi LNG in Texas in 2019. Once completed, U.S. LNG export capacity is expected to reach 9.6 Bcf/d by the end of 2019. As export capacity continues to increase, the United States is projected to become the third-largest LNG exporter in the world by 2020, surpassing Malaysia and remaining behind only Australia and Qatar.

Lake Charles area petrochemical firms to pay $11 million for hazardous waste violations -- Three major Lake Charles-area petrochemical companies have agreed to pay $11 million to federal and Louisiana government agencies to settle charges that they illegally disposed of hazardous waste that damaged natural resources in part of the Calcasieu River estuary for decades, according to a notice in the Thursday (March 29) edition of the Federal Register.Federal and state officials have been attempting to deal with hazardous wastes found in different water bodies connected to the Calcasieu River that were believed to come from the chemical plants for decades, according to a civil complaint filed in U.S. District Court in Lake Charles on March 22. According to the settlement agreement filed in federal court in Lake Charles on March 22, Citgo Petroleum Corp., Occidential Chemical Corp., Oxy USA Inc., and PPG Industries Inc. will pay $7.96 million of the settlement money into a special Bayou d'Inde Area of Concern Site Restoration Account. The money will be used on projects "that restore, rehabilitate, replace and/or acquire the equivalent of the natural resources alleged to be injured" as a result of the wastes released or that could still be released by the companies.The companies also will provide $1.3 million to the U.S. Fish & Wildlife Service and $1.7 million to the National Oceanic and Atmospheric Administration (NOAA) to reimburse the agencies for past assessment costs. The Louisiana Department of Environmental Quality will be paid $62,914, and the Louisiana Department of Wildlife & Fisheries will be paid $290 for their past assessment costs.

Bayou Bridge Pipeline equipment reported vandalized; company offers reward for tips -  Bayou Bridge construction equipment has been vandalized in Assumption Parish according to the sheriff's office, and on Thursday the pipeline company offered a reward of up to $10,000 for information leading to an arrest.Vandals cut hydraulic hoses and electrical lines, broke windows and spray painted messages on backhoes and bulldozers, though the pipeline itself did not appear to be damaged, said sheriff's spokesman Lonny Cavalier.The contractor has estimate damage of at least $50,000 but possibly much more, Cavalier said.Bayou Bridge is designed to carry crude oil between Lake Charles and St. James. Supporters say it will be a safe, necessary and lucrative way to bolster Louisiana's energy economy, while opponents have argued that it has already destroyed wetlands and threatens to leak oil and endanger drinking water once complete. A federal judge previously halted work in the Atchafalaya Basin, though an appeals panel overturned the decision.The recent incident happened sometime over the weekend off La. 998 near Belle Rose, Cavalier said. He said deputies are still investigating, though the company has blamed environmental extremists based on some of the spray painting. Company officials declined to say what was spray painted on the construction equipment.

LNG and pipeline reversals turn Louisiana gas market upside down, part 3 - With LNG export demand rising along the Gulf Coast, there are big changes coming to the Louisiana natural gas supply-demand balance, with significant implications for the national benchmark pricing location Henry Hub. The state’s growing demand center is attracting midstream investment and supply from two of the fastest growing producing regions — Appalachia’s Marcellus/Utica and West Texas’s Permian. An analysis of pipeline flow data is already providing clues as to how markets will evolve in the Bayou State. Today, we continue our flow analysis of the Louisiana pipeline corridors, this time with a focus on interstate flows across the state’s western border.  In Part 1, we laid out the big-picture trends that are transforming the Louisiana market  — and with them, the natural gas supply-demand fundamentals influencing key Louisiana pricing hubs, including Perryville Hub and none other than the U.S. gas market benchmark price — Henry Hub (see Roll With Me Henry). On the demand side, Cheniere Energy’s Sabine Pass LNG facility in Cameron Parish, LA, over the past two years has brought online more than 3.0 Bcf/d of new demand from four liquefaction trains, which are all running near full capacity most of the time. And, there is more liquefaction capacity on the way along the Louisiana coastline. At the same time, Louisiana’s export demand is competing with rising demand at the Texas-Mexico border as Mexico’s power sector ramps up, and soon also from Texas’s LNG export facilities.

April NYMEX gas extends gains to $2.650/MMBtu, buoyed by cold, ahead of contract expiry - NYMEX April natural gas futures remained buoyed by recent and projected cold in US overnight trade ahead of Tuesday's open and the contract's roll off the board at the close of business. At 6:55 am ET (1055 GMT) the contract was 3.2 cents higher at $2.650/MMBtu. Lingering cold of late is expected to have driven a better-than-average rate of weekly storage withdrawals in the forthcoming inventory data due out from the US Energy Information Administration on March 29, despite higher low temperatures associated with the arrival of spring. Market participants looking to the upcoming storage report that will cover the week ended March 23 call for draws from stocks in the upper 60s Bcf to the low 70s Bcf, which would exceed the 46 Bcf five-year-average withdrawal and a 58 Bcf year-ago pull. Approaching the traditional end of the withdrawal season on March 31, the EIA sees working gas stocks ending the season 19% lower than the five-year average at 1,373 Bcf, assuming storage draws match the five-year average for the remainder of the season. Additional cold over major heat-consuming regions in midrange projections looks to drive heating demand, likely to extend storage erosion into early April. 

NYMEX May natural gas futures fall 0.3 cent overnight to $2.711/MMBtu - NYMEX May natural gas futures seesawed in search of direction ahead of Wednesday's open, supported higher by end-of-season storage expectations and midrange weather outlooks but pressured by impending warming. May futures traded in a range of $2.695-$2.731/MMBtu overnight and at 7:15 a.m. ET (1115 GMT) was 0.3 cent lower at $2.711/MMBtu. For storage data due out Thursday for the week ended March 23, market participants are predicting a 68-71 Bcf withdrawal, which would exceed both the 46 Bcf five-year average and a 58 Bcf year-ago pull. Total working gas stocks are currently 1,446 Bcf, or 667 Bcf below the year-ago level. Weather in store points to ongoing storage erosion into early April, as lingering cold in forecasts looks to drive up heating demand. But a warming trend that should erode demand as spring unfolds alongside expectations of production growth contain bullish sentiments.

Why Natural Gas Prices Will Rise This Summer  - Record production of natural gas is snuffing out any price rally that might have occurred from the bout of cold weather this winter. The gas market saw a jolt at the end of December and in early January due to extremely cold temperatures across much of the U.S. This winter was about 13 percent colder than last year, which pushed up residential and commercial gas demand by 3.5 billion cubic feet per day (Bcf/d), according to Barclays. At the same time, demand continues to grind higher on a structural basis, with more LNG exports leaving U.S. shores and more utilities burning gas for electricity. That led to a sharp drawdown in gas inventories, pushing them 16 percent below the five-year average in the first quarter. Nevertheless, the price impact was muted. In the past, severe cold snaps have led to sharp price spikes. While that happened in regional spot markets, the price increases were very short-term and nothing like the price increases during the 2014 Polar Vortex. After the cold subsided, Henry Hub spot prices fell back below $3/MMBtu. Gas traders are so sanguine because the U.S. is producing more natural gas than ever. And 2018 is shaping up to be a record year for new gas output. A mild streak during February eased some pressure on inventories as well. As a result, the U.S. will likely see “heavy” gas injections during the second quarter, according to Barclays.  Inventories will rebuild quickly this spring, but the U.S. will still enter summer months with inventories 17 percent below the five-year average.  But, ultimately, prices will have to go up ahead of next winter in order to adequately replenish gas inventories. If prices were to remain where they currently are, there would be a much larger coal-to-gas switch happening for electricity generation. Leaning harder on gas-fired power plants, made possible by low prices, would result in a smaller gas injection into storage. In other words, if natural gas prices do not rise, the U.S. would enter the winter season with too little gas on hand.

U.S. Oil & Gas Exports Hit All-Time High - U.S. energy exports rose to record levels last year, with both petroleum and natural gas posting record-highs as the shale boom and the second full year of no restrictions on crude oil exports boosted overseas shipments of liquefied natural gas (LNG) and oil.According to the latest Monthly Energy Review by the U.S. Energy Information Administration (EIA), total petroleum exports—crude oil and petroleum products—jumped to average 6.343 million bpd in 2017 from 5.261 million bpd in 2016. Of these, crude oil exports surged to average 1.1 million bpd last year, from 591,000 bpd in 2016.Booming U.S. production, expanding pipeline and export capacity, and the more than $3-a-barrel discount of WTI spot prices to Brent supported the surge in U.S. oil exports last year, which was the second full year since the restrictions on U.S. crude oil exports were removed in late 2015.In natural gas trade, total U.S. natural gas exports also increased to the highest on record, and exports in terms of billions of cubic feet exceeded total natural gas imports for the first time.The U.S. energy trade deficit last year narrowed to the lowest since 1998, EIA data showed.U.S. exports of liquefied natural gas (LNG) quadrupled last year compared to 2016, and the U.S. is expected to become the world’s third-biggest LNG exporter by 2020, the EIA said on Tuesday. More than half of all U.S. LNG exports in 2017 went to three destinations—Mexico, South Korea, and China.  Mexico’s demand for natural gas is growing, while it has delayed some pipeline construction, while LNG exports to Asia were driven by widening difference between the Henry Hub natural gas price—to which U.S. LNG contract prices are indexed—and crude oil—to which LNG prices are benchmarked in Asia.U.S.  Since 2016, two LNG projects--Sabine Pass in Louisiana and Cove Point in Maryland—have come online and four other projects are expected to come online in the next two years.

Inside the Tax Bill's $25 Billion Oil Company Bonanza -- Republicans primary objective is to hold onto their majorities in the House of Representatives and the Senate, and the key mechanism for doing so is to ride the coattails of the Tax Cuts and Jobs Act. More than 50 percent of the tax bill's benefits will go to the wealthiest 5 percent of Americans, and more than 25 percent to the wealthiest 1 percent, according to theInstitute on Taxation and Economic Policy. As Businessweek put it, "President Donald Trump and Republicans sold their $1.5 trillion tax cut as a boon for workers, but it's becoming clear just two months after the bill passed that the truly big winners will be corporations and their shareholders." Pacific Standard's original analysis finds that it is the oil and gas industry, including companies that backed the presidency of Trump and whose former executives and current boosters now populate it, that are among the tax bill's largest and most long-lasting financial beneficiaries.Just 17 American oil and gas companies reported a combined total of $25 billion in direct one-time benefits from the 2017 Tax Cuts and Jobs Act. Many of the companies will also receive millions of dollars in income tax refunds this year. Looking forward, the Tax Act then reduces all corporate annual tax bills by a minimum of 40 percent every year in perpetuity, while adding new benefits that function as government subsidies for the oil and gas industry. The companies' activities in the United States are made less expensive, thereby encouraging a further expansion of oil and gas operations. Pacific Standard reviewed the Annual 10K and Fourth Quarter Reports filed with the U.S. Securities and Exchange Commission for 2017 by 17 U.S. oil companies, looking at the largest companies in production, refining, and pipelines that also clearly specified the impacts of the Tax Act in their results. Private companies, such as Koch Industries, which undoubtedly benefit from the legislation, could not be included because they are not required to make these financial reports publicly available.

The US is on the threshold of the biggest oil and gas boom ever -- The U.S. is set to enjoy the biggest increase in oil and gas production the world has ever seen over the next few years, according to a new report out Tuesday. The report from the International Energy Agency (IEA), a Paris-based think tank, is a thumping endorsement for the shale sector’s resilience in the face of a two-year attempt by Saudi Arabia and others to squeeze it. That’s already visible in U.S. government forecasts, which say U.S. crude oil production will rise from an average of 9.2 million barrels a day this year to 9.9 million barrels a day in 2018, a new all-time high beating a record set in 1970. The IEA said the U.S. will account for 80% of the increase in global oil supply between now and 2025, as shale producers find ever more ways to pump oil profitably even at lower prices. By the late 2020s, the U.S. will become a net exporter of oil for the first time since the 1950s. In natural gas the trend is the same, only faster. By the mid 2020s, the IEA expects the U.S. to become the world’s biggest exporter of liquefied natural gas, demand for which is set to rise strongly as China, India, and Southeast Asia all turn away from coal to cleaner energy sources.  .“The U.S. will become the undisputed global oil and gas leader for decades to come,” IEA executive director Fatih Birol said at a press conference in London. He said that the increase in absolute terms will dwarf even the ramp-ups delivered by Saudi Arabia and Russia in the post-war period. Between 2005 and 2030, total U.S. oil output will double from less than 15 million barrels of oil equivalent a day to over 31 million.

Goldman Sachs: Oil's Seven Sisters Enter a 'Golden Age' -- The world’s largest oil companies have survived a life-changing crisis, and are now poised to reap the rewards, Goldman Sachs Group Inc. said. Big Oil is in a sweet spot with rising oil prices and low operating costs, leaving them with the biggest cash-flow growth in two decades and boosting earnings, Goldman said in a report Monday. That will increase their attraction for investors after years of elevated spending followed by crude’s slump sent their weighting in global equity indexes to a 50-year low, according to the bank. “We see this as the start of a new golden age for Big Oil’s reborn Seven Sisters,” said analysts led by Michele Della Vigna, referring to the seven largest non-state oil companies. It is “also a favorable environment for returns in the commodity.” Crude’s slump since the middle of 2014 wiped out some smaller companies and changed the way the biggest operate as they continue to drive down costs in an attempt to survive. A downturn is typically followed by a period of relative plenty as the cost of getting new barrels out of the ground takes time to catch up with the crude price, widening profit margins. The majors are leading the pack. While crude’s collapse pushed the weight of oil companies in equity indexes to about 5 percent, less than half their normal level, Big Oil is now in a position to regain its standing. The slump culled smaller drillers and has left the larger ones with the opportunity to take more market share. Royal Dutch Shell Plc, Total SA and BP Plc are among the majors that reported the highest earnings in years last quarter. Some even started share buybacks and others are promising higher dividends. They are also benefiting from the start up of projects sanctioned years ago but were delayed by the downturn, Goldman said.

Analysis: Diesel drives gains in US cracking yields - Refining margins were higher across the board in the US last week, as refined products price gains outpaced a climb in crude supply costs, an analysis of S&P Global Platts data showed Monday. US Gulf Coast Light Louisiana Sweet cracking margins climbed 98 cents to average $9.77/b last week, while Maya coking margins climbed $1.32 to average $11.85/b. Platts margin data reflects the difference between a crude's netback and its spot price. Netbacks are based on crude yields, which are calculated by applying Platts product price assessments to yield formulas designed by Turner, Mason & Co. LLS cracking yields climbed $3.67 to average $77.20/b last week, surpassing the $2.69 climb in LLS spot prices. ULSD led the way higher in the USGC, ending the week up $4.73 at $83.77/b, Platts data showed. ULSD prices have been driven higher by strong demand associated with wintry Northeast weather, farming demand in the Midwest, and continued export demand on the USGC. With the exception of the USAC, diesel stocks are tight throughout the US. For instance, combined low and ultra low diesel stocks on the USGC at 33 million barrels the week ending March 16 were 15% below the five-year average, according to the US Energy Information Administration. 

Exclusive: Firms complain of contaminated crude from U.S. reserve (Reuters) - Three firms that bought crude oil last year from U.S. emergency stockpiles raised concerns about dangerous levels of a poisonous chemical in the cargoes, according to internal Energy Department emails and shipping documents reviewed by Reuters. Problems with crude quality would make the U.S. Strategic Petroleum Reserve (SPR) less useful in an emergency because refiners would need to spend time and money removing contamination before producing fuel. The reserve is the world’s largest government stockpile, currently holding 665 million barrels. Hydrogen sulfide (H2S) occurs naturally in crude and natural gas, but oil producers typically decontaminate such products before delivery to buyers. High levels of H2S can corrode refinery parts and pipelines - and can be lethal to humans in gas form. The U.S. government established its reserve in 1975 following the Arab oil embargo. The U.S. Department of Energy oversees the reserve and periodically sells some of its oil at times when there are no emergencies, as it did with the sales that sparked contamination concerns. Department Spokeswoman Shaylyn Hynes declined to comment about the contamination complaints uncovered by Reuters. The three firms that raised concerns about high H2S levels were Royal Dutch Shell Co, Australian bank Macquarie Group and PetroChina International America, the U.S. trading arm of state-owned energy firm PetroChina Co Ltd, according to the shipping documents, emails provided by the Energy Department in response to a public records request, and a department official who declined to be identified. 

Oil Production Improves 32.5% In The Permian - We pulled the data of 847 2016 horizontals and 903 in 2017 and this shows a significant improvement in the Midland Basin. Midland and Howard counties improved the most, from 120 KBO to 185 KBO over the first 12 months of well life.Oil production per foot is the focus of operators, and there is a good possibility this will continue in 2018.Increasing demand should offset increased US production during driving season and we think the USO could rise to $14.87 in the next couple of months. Operators continue to improve well design, and this could place a ceiling on oil prices. Rising US production has been offset by very good demand. We think WTI will peak between $70/bbl and $75/bbl this driving season. If this occurs, the US Oil ETF (USO) could increase 12% in just a couple of months. Operators in the Midland Basin are well motivated to increase production, and the best operators better placed this driving season. There are arguments on both sides of the well design argument. We continue to see operators improving oil production per location. This has been accomplished targeting lesser geology.

Permian crude oil takeaway capacity maxing out? - Crude oil production in the Permian Basin is coming on strong — faster than midstreamers can build pipeline takeaway capacity out of the basin. You can see the consequences in price differentials.  On Friday, the spread between Midland, TX and the Magellan East Houston terminal (MEH) on the Gulf Coast hit almost $5.00/bbl, a clear sign of takeaway capacity constraints out of the Permian. We’ve seen different variations of this scenario play out in recent years, most recently last fall, just before the first oil started flowing through the new Midland-to-Sealy and Permian Express III pipelines, and it’s not good news for Permian producers. Now Permian output is again bouncing up against the capacity of takeaway pipelines and in-region refineries to deal with it. As we’ve seen in the past, that’s a warning sign for possible price-differential blowouts. Today, we discuss the fast-changing market dynamics that put Permian producers at risk for another round of depressed Midland prices.

Texas-Sized Gas Conundrum Plagues America's Busiest Oil Play -- America’s most prolific oil field is now its worst market for natural gas. A pipeline shortage that’s leaving gas trapped in West Texas’ Permian Basin means prices for the fuel there are the lowest of any major U.S. hub, wresting that distinction from Appalachia’s Marcellus Shale. Prices for Permian gas, produced alongside oil in the play, have tumbled 32 percent from a year ago, while output rose to a record. And the pipeline crunch is also pummeling the region’s oil market. All that gas production is creating a dilemma for drillers, who may be forced to curtail oil output if they can’t get their gas to market. Producers can burn off some of the gas -- a process known as flaring -- but state regulators typically won’t allow that to happen indefinitely. And as mild spring weather limits demand for the heating fuel, explorers may be giving their gas away, according to broker Ion Energy Group LLC. In the next three to four weeks, “natural gas prices in the Permian can go to zero because it’s literally a byproduct,” Kyle Cooper, consultant for Ion Energy in Houston, said by telephone. “There’s so much gas coming the system really pushes and fights to get it out.” The low-cost crude oil reserves buried in the Permian’s layers of shale have drawn explorers in droves, but roughly a third of the output from those wells is gas, according to RS Energy Group. As gas production from the play surges, however, pipeline capacity has failed to keep pace. One emerging outlet for the glut: Mexico. Demand for the fuel has jumped in the nation’s newly deregulated electricity market as a raft of new gas-fired power plants are built. And while companies from Sempra Energy to TransCanada Corp. are developing conduits to shuttle gas from Texas to Mexico, several of those projects are facing delays south of the border, often due to opposition from indigenous groups. Volume on pipes to Mexico “looks to be very light,” Colton Bean, director of midstream research at Tudor Pickering Holt & Co., said by telephone. “The issue is you haven’t necessarily built out the in-country connectivity on the other side of the border.” 

The U.S. Faces A Pipeline Crisis - The U.S. threatens to swamp the world with oil in the next few years, although that will only be possible if there is a commensurate construction boom for pipelines to move all of that oil to market.The Permian basin will account for the bulk of the production growth going forward. The International Energy Agency predicts that the U.S. will add about 3.7 million barrels per day (mb/d) between now and 2023, and 2.7 mb/d – or more than 70 percent – of that new supply will come from the Permian and the Eagle Ford.But those two shale plays are a long way from the Gulf Coast, where the oil can either be refined into fuels or exported abroad. Thus, the oil industry needs a lot of pipeline capacity.Already, there has been an enormous buildout of pipelines in the last few years. Between 2012 and 2014, the surge in output from the Permian was impressive, but it was also constrained by the lack of pipeline capacity, which forced producers to sell their product at a discount, which reached as high as $20 per barrel relative to WTI. However, new pipelines smoothed out those price differentials, easing the bottleneck that had cropped up when oil production skyrocketed. The problem is that oil production is set to double in West and South Texas over the next five years, which means that another pipeline wave will be required if the U.S. is to actually expand oil production by as much as everyone thinks it will.

EIA’s estimates for Texas crude oil production account for incomplete state data - Crude oil and lease condensate production data for Texas, published by EIA in its Petroleum Supply Monthly (PSM) and by the Texas Railroad Commission (TRRC), reflect differences in the treatment of incomplete and lagged data. Data published by state agencies are often incomplete when first published because of a combination of late reporting and processing delays. TRRC’s most recent report (published March 2018, with estimates through December 2017) is consistent through January 2017 with production estimates in the PSM, but, after January, the two sources diverge. This divergence increases for more recent months: EIA’s most recent production estimates for Texas, published in the PSM on February 28, 2018, show Texas’s crude oil production reaching 3.93 million barrels per day (b/d) in December 2017. TRRC’s values show production at 2.99 million b/d in that same month. EIA develops state-level production estimates for Texas based on its EIA-914 survey. The EIA-914 survey for oil production was established in 2015, in part to make up for the deficiencies of estimating based on initial state agency reports. EIA monthly oil production volumes are different from the Texas Railroad Commission volumes initially, but as time passes, these differences diminish as TRRC updates and revises its data. EIA's methodology anticipates and accounts for these expected revisions.   Because EIA’s methodology anticipates revisions, PSM estimates are generally consistent across vintages of data releases, meaning they do not show large revisions as later reports are issued. By contrast, TRRC estimates are consistently revised upward as later reports are issued. The TRRC data are revised upwards over a period of one to two years.

Shale Operators Running Out Core Drilling Locations? Not Yet -- Filloon -- Earlier this post: Update on the Permian -- Mike Filloon.  Link here. Part 2 here.

  • Occidental, Chevron, EOG, and RSP Permian  have the top oil curves of operators with multiple completions
  • Delaware well design improvements have increased oil production per location by 18% yoy. We believe there is greater upside in the Delaware in 2017 than in Midland. It is possible the Delaware has more upside than any other US play
  • Lea County is starting to separate itself as the best county, although northern Loving has had a few mammoth results
  • the drop in world oil inventories is enough to start pushing short pops in prices. We think WTI will push above $70/bbl by June, but pushing above $75 will be difficult

There was something else Mike mentioned in that article -- in fact, he led with it:  In our previous article, we provided oil production data from the Midland Basin. From 2016 to 2017, this improved 32.5%.  Oil bears have stated that they believe operators will run out of core geology, and this will seal the fate of unconventional US oil producers. It is inevitable that shale will eventually dry up, but it doesn't seem to be occurring in the near future. In a recent article, we provided an oil price estimate for the 2018 driving season. US operators continue to increase oil production, but it probably will not meet increased demand. We expect relatively large oil draws, and WTI to eclipse $70/bbl and peak at $75. This should push the US Oil ETF higher by 12% in just a few months. Oil prices should drop after and trade in the $60 to $70 range throughout 2018. It will be difficult to push oil prices above $75, as the resultant oil production could outpace demand.

Payback Time: Oilfield Services Raise Prices -- Oilfield service providers are upping their prices, the latest Dallas Fed Energy Survey has found, confirming what producers began to complain about last year when oil prices started recovering.The survey found the index of input costs for oilfield services jumped from 46.8 from 30.9 this quarter from last. The index for oilfield service prices was also higher in Q1 2018, at 27.9 from 22.6.Further strengthening the view of an industry in recovery, the survey also found that the index for utilization of oilfield service equipment was higher this quarter, at 40.4. That’s up 11 points from the reading for the last quarter of 2018, the Dallas Fed noted.Higher oilfield services prices began pressuring producers’ margins soon after the industry officially swung into recovery and growth mode. It was only to be expected because the services sector suffered a harder blow from the oil price collapse, with providers forced to offer huge discounts to drillers in order to stay in business.Once prices began rising again, producers were eager to start pumping more again and not long after there was a shortage of frack crews and equipment on the horizon. This shortage led to a price spike for oilfield services and longer waiting periods. It also led to new optimism about the services industry.

US oil producer costs climb with more drilling: Fed Survey (Reuters) - Oil and gas business activity continued to climb last quarter, driven by an improved oilfield services sector, but costs for goods and labor also rose, the Federal Reserve Bank of Dallas said on Wednesday in its quarterly energy survey. About 65 percent of the 140 energy firms surveyed in Texas, southern New Mexico and northern Louisiana reported increased activity from a year ago. During that time, U.S. oil prices have climbed more than 30 percent to near $65 a barrel CLc1. About 77 percent of the respondents reported an improved company outlook, with over 80 percent of oilfield services firms offering a better view for the future. The uptick in activity is driving up costs, companies said, with the Fed’s index for wages and benefits climbing to 46.5 from 40.6 last year. Its index for service firms’ input costs rose by 14 percent from a year ago and over 50 percent from last quarter. Despite higher costs, the index for prices received for oilfield services fell to 35.7 from 44 a year ago. Less than half of firms reported receiving higher prices and 10.7 percent reported a decrease. “E&P companies are still holding service prices down at every turn. On the flip side, our costs of goods, fuel and wages are climbing every day. It is time for rate increases to ensure a profit and sustainability,” said one respondent. On average, companies said they needed $52 per barrel oil prices to profitably drill new wells, $2 over the prior year’s breakeven. In the Permian Basin, companies said they needed $50 a barrel oil for new wells, also up $2 from last year.  Around 20 percent of the firms reported increased uncertainty from last quarter, driven partly by the Trump Administration’s decision to tax steel imports.

Texas sinkholes: oil and gas drilling increases threat, scientists warn -- According to geophysicists from Southern Methodist University, the ground is rising and falling in a region that has been “punctured like a pin cushion with oil wells and injection wells since the 1940s”.There were nearly 297,000 oil wells in Texas as of last month, according to the state regulator. Many are in the Permian Basin, described in a Bloomberg article last September as the “world’s hottest oil patch”.But the Southern Methodist report warns of unstable land and the threat of sinkholes. “These hazards represent a danger to residents, roads, railroads, levees, dams, and oil and gas pipelines, as well as potential pollution of ground water,” Zhong Lu, a professor, said in a statement. Wink – a tiny town 400 miles west of Dallas – attracted national headlines in 2016 when the same scientists warned that the land between two expanding sinkholes a mile apart was deteriorating, risking the formation of more sinkholes or even the creation of a colossal single hole.  Injection of wastewater and carbon dioxide increases pore pressure in rocks, a likely cause of uplift. Lu told the Guardian that cracks and corrosion from ageing wells may help explain the sinking. A “subsidence bowl” near one of the Wink sinkholes has sunk at a rate of more than 15.5in a year, probably as a result of water leaks through abandoned wells causing salt layers to dissolve, the report found. Elsewhere, a lake formed after 2003 as a result of sinking ground and rising water. Another Southern Methodist University study last year indicated that wastewater injection, often a byproduct of fracking, is a likely cause of recent earthquakes in Texas – with the Dallas-Fort Worth area, one of the most populous in the country, a hotspot. Seismic activity in previously quiet and sparsely-populated parts of west Texas has soared in the past couple of years as the energy industry has expanded its attention beyond the Midland-Odessa area towards a mountainous and tourist-centric region near the border with Mexico.

America’s Oil Boom Can Not Happen Without Groundwater  - CARLSBAD, NM — Deep beneath the desert that surrounds this oil boomtown is a fossil fuel bounty of staggering riches reachable only by penetrating vulnerable beds of porous limestone and soluble salt at considerable environmental and public risk. Carlsbad is the industrial hub of southeast New Mexico’s mammoth Permian Basin oil field that yields more than 540,000 barrels a day — 30 percent more than a year ago and a record in a region that has been exploring for oil and gas since the late 1920s. The field’s surging production has pushed New Mexico to the #3 spot, behind only Texas and North Dakota, as one of the nation’s most prolific oil producers. The city looks the part. At night the steel superstructures of 85 drilling rigs, lit like carnival rides, fill the horizon. The long white flames of flared gas are a constellation of ground-level stars adorning the dark. Just how hot the oil play has become was illustrated last September when developers paid $130.9 million for the right to tap the layers of carbon-rich shale below 15,491 acres of federal land near Carlsbad — the highest price ever for an oil and gas lease sale in New Mexico. Months earlier Exxon Mobil paid $5.6 billion for 250,000 acres of New Mexico desert already leased for energy exploration. But unleashing billions of barrels of oil locked in beds of shale 10,000 feet deep is only possible if the oil industry — and state and federal regulators — safely manage production challenges involving the region’s other primary resource: water. Drilling, fracking, and extracting crude oil and natural gas from shale requires prodigious volumes of water in the world-class energy fields in New Mexico, Texas, and five other Great Plains states that now supply almost 70 percent of the country’s 10.1 million-barrel-a-day production, the most ever. But because of distinctive geology and unusual hydrological conditions, nowhere are the ties between oil and water more demanding than in New Mexico’s Permian Basin. 

Central to Enbridge's new Minnesota pipeline request is how much oil is needed - At Flint Hills Resources’ sprawling refinery in Rosemount, Enbridge’s proposed new oil pipeline is seen as vital. Flint Hills wants to increase production there, but says it needs more oil to do so and Enbridge is its main supplier. Enbridge says its six pipelines across northern Minnesota are so full that oil is being rationed, hurting refineries across the Midwest including Flint Hills. Enbridge wants to spend $2.6 billion to replace its aging and corroding Line 3. It says without the increased capacity from that project, the rationing — or apportionment as it’s known in the oil business — will just get worse. “The current Enbridge Mainline fails to meet refinery demand for crude oil, despite a series of expansions over the last 15 years,” Neil Earnest, a consultant for Enbridge, said in testimony filed with state regulators. And the company forecasts continuing growth in Canadian oil production well into the 2030s, even as changes in the global auto market portend weaker gasoline demand and national experts have predicted market changes because of that. The need for that oil will play a key role when the Minnesota Public Utilities Commission decides on Enbridge’s request to build its new Line 3, a decision expected in June. The Minnesota Department of Commerce — tasked with looking out for the public interest in pipeline matters — said the need for Enbridge’s oil isn’t enough to trump the potential risks to society, especially oil spills in pristine waters and wildlife areas. 

What Happened To Crude Oil Flows And Prices At The Guernsey Hub? -- With crude prices in the $60s, oil-producing basins other than the Permian are finally seeing signs of life, and that includes the Rockies. But volumes flowing through the most important Rockies crude oil hub — at Guernsey, WY — are down. Moreover, the price of oil at Guernsey is up, trading at least flat and sometimes at a premium to the downstream market at Cushing, OK, suggesting that committed shippers are having to bid up the price at Guernsey to secure barrels for their downstream pipeline commitments. What about production from the nearby Powder River Basin? Well, Powder River oil production is up, and the rig count there is double what it was this time last year, so you might think there would be more than enough barrels at Guernsey. But not so. Who’s to blame? We need to look no further than the Bakken and the Dakota Access Pipeline (DAPL) to discover our culprits. Today, we check in on the market at Guernsey and consider the impact of DAPL, the implications for Rockies crude oil outflows, and what it all means for Guernsey price differentials.

In fracking approach, Lafayette finds itself in the crosshairs of dueling interests - Boulder Daily Camera -  A call to restore legislation that would shield anti-fracking protesters from prosecution back into Lafayette's Climate Bill of Rights — the heady, activist-driven law that has come to embody the Front Range's subversive post-Firestone regulation efforts — will likely remain unheard.Lafayette's City Council on Tuesday rejected a proposal to reintroduce the bill with its original language — and with it the controversial enforcement clauses that were abandoned prior to approval last year.  “I don't think it's enforceable," Mayor Christine Berg said Tuesday. "The language is loose, it's hard to interpret. I don't think it needs to be in our code." Barring a sudden shift in political philosophies, the decision likely portends an approach by the current leadership that favors a regulatory preemption of oil and development.   It may spur a lawsuit from one of the county's most prominent anti-fracking groups, East Boulder County United, which argued that any efforts by the city to regulate oil and gas would conflict with the Climate Bill's effective ban on any new drilling.  "Everything the City Council has done so far shows they're willing to use the police force against its own citizens," Cliff Willmeng, of EBCU, said Wednesday. "At this stage, we have no indication that the six out of seven councilors are interested in anything other than the drilling of this town."

Federal lease sale fails to impress, but nets $10 million for Wyoming despite concerns over sage grouse, historic sites - The first Wyoming oil and gas lease sales of the year closed Thursday, raking in $20 million from operators looking to drill on federal land and stoking pushback from environmental groups that say the areas overlap with sage grouse habitat and a cultural center.Thursday’s results fall short of surprising highs set last spring, when the price of crude began to marginally improve and confidence in deregulation from the newly minted president was strong. About half of the income from Bureau of Land Management lease sales goes to Wyoming.The two-day federal bidding war follows a one-week lease sale on state lands. Officials said they would not release the final results of the state sale as they had in the past. Those numbers will come out after members of the State Lands and Investment Board meet in mid-April.However, the public auction is hosted online and the unapproved results show a number of pricey bids in the Powder River Basin.The most expensive state parcel came in at more than $4,000 an acre for 36 acres north of Glenrock, an area proposed for a massive oil and gas project in the coming years. The second highest offer was in Laramie County, for more than $1,000 per acre on a parcel north of Cheyenne.The federal auction also led to a number of high bids in the Powder River Basin, a hotspot for current oil and gas interest.Titan Exploration paid the highest price tag at more than $12,000 per acre. The company has also paid premiums at earlier lease sales, raising eyebrows last year and stoking confidence in the Powder River Basin. A number of protests were lodged with federal officials over this quarter’s sale, with some raising concerns about sage grouse habitat and others noting the proximity of potential drilling to locations like Fort Laramie. 

Aliso Canyon Disaster Highlights Risks, Inadequate Safety Rules Governing Natural Gas Storage - A recent report spearheaded by researchers at the University of Southern California blames the largest greenhouse gas leak in U.S. history on dysfunctional management and poor regulatory oversight. Southern California Gas (SoCalGas) is the company that operates the Aliso Canyon natural gas storage facility near the Los Angeles neighborhood of Porter Ranch, which suffered a catastrophic methane leak that lasted from October 2015 to February 2016.“SoCalGas had lenient requirements for infrastructure record keeping, no comprehensive risk management plan, and no testing programs or plans in place to remediate substandard wells,” concluded Najmedin Meshkati, University of Southern California professor of civil and environmental engineering and senior author on the report. The study was published in the Journal of Sustainable Energy Engineering.In addition to its notable contribution to global warming, the massive methane leak also required the evacuation of two schools and at least 8,000 residents for months while SoCalGas tried to stop the leak.The California Public Utilities Commission also issued a report evaluating the failed storage well at Aliso Canyon, and noted that “severe external corrosion was observed in the failure areas.” Based on these reports, it appears that SoCalGas had a policy of allowing its gas storage wells to operate until they failed, such as at Aliso Canyon. DeSmog reached out to SoCalGas for comment on the University of Southern California study but did not hear back.

North Dakota to ask feds for money for pipeline protest cost -  The state of North Dakota still plans to go after the federal government to recoup costs associated with policing the Dakota Access oil pipeline protests in a project by a Dallas-based company. Attorney General Wayne Stenehjem tells The Bismarck Tribune he plans to file a claim with the Army Corps of Engineers and possibly other federal agencies. If it’s rejected, the state might sue. Protests in 2016 and 2017 brought thousands of pipeline opponents to the state who at times clashed with police, resulting in 761 arrests over a six-month span. The state’s protest-related costs total nearly $38 million. Dallas-based pipeline developer Energy Transfer Partners has given North Dakota $15 million to help with the bills. The state also has received a $10 million grant from the U.S. Justice Department for the same purpose.

Richmond County to revisit fracking issue | The Chronicle Herald - After getting a lot of phone calls, Richmond County Warden Brian Marchand thinks his council should revisit their position on hydraulic fracturing. “The public out there feels there’s not a safe way of doing this, or that they’re not willing to risk a chance, even if it’s one in a thousand, of contaminating drinking water,” said Marchand on Wednesday. “I will have to speak to council.” At its last regular meeting Richmond County council moved to send a letter to the premier’s office advocating that a hydraulic fracturing pilot project be allowed in the province. The municipality had received a letter from neighbouring Municipality of the District of Guysborough asking them to support lifting the current fracking ban. In January Guysborough launched a campaign to get the ban lifted after the release of the Nova Scotia Onshore Petroleum Atlas. The atlas estimates there to be about 6.5 trillion cubic feet of recoverable natural gas in the Cumberland and Windsor Basins. The two geological formations make up about 30 per cent of onshore Nova Scotia — the other 70 per cent of the province is not analyzed in the atlas. Of that gas, 4.3 trillion cubic feet is considered shale gas and would require hydraulic fracturing. The estimated market value of the reserves, according to the atlas, is $20 billion to $60 billion. The vast majority is located in Cumberland County, one of the poorest counties in Nova Scotia.

This Canadian pipeline battle is starting to feel a lot like Standing Rock  - In the city of Burnaby, British Columbia, indigenous-led pipeline opponents are revving up their efforts to stop a 715-mile pipeline expansion that’ll essentially create an entirely new oil pipeline across Western Canada. They’ve been out in the streets since March 10, and law enforcement has arrested 172 people since then. It’s getting real. The relentless attempts to keep construction of the Trans Mountain pipeline expansion at bay—including people locking themselves to excavators,chaining themselves to vehicles, and even climbing trees at a Trans Mountain site—feel eerily reminiscent of what the world saw at Standing Rock two years ago. So does the Burnaby Royal Canadian Police’s response of handcuffing and arresting these environmental defenders. The existing pipeline, owned by North American energy company Kinder Morgan, already runs 715 miles. This expansion would add a similar crude oil line to run the same course between the Alberta oil sands and a British Columbia oil terminal, nearly tripling the system’s capacity from 300,000 barrels to 890,000 a day.  Well, that’s if it can overcome the opposition. First Nations—including the Tsleil-Waututh, Squamish, and Musqueam—are determined even if the fight isn’t leaning in their favor. Prime Minister Justin Trudeau supportsthe project even though he’s supposed to be all about helping Canada’s indigenous tribes. The B.C. government, which opposes the pipeline, attempted to overturn a decision from the National Energy Board that allowed Kinder Morgan to ignore city bylaws, but a federal appeals courtrefused to hear the case Monday. The company also met its March 26 deadline to have trees cleared before migratory birds come to nest. A court-ordered injunction prohibiting protesters from obstructing construction is behind most of the mass arrests, but this kind of policing comes with a price—one that Burnaby Mayor Derek Corrigan is not happy about because his city wasn’t the one that approved the expansion. Ottawa did.

Canada's Cenovus cuts oil sands production on lack of market access -- Canada's Cenovus Energy is curtailing oil sands production to cut losses spurred by the continued lack of market access and deep crude price discounts, the company said Thursday. "When Canadian heavy oil is selling at a wide discount to the WTI due to transportation bottlenecks, we have significant capacity to store barrels in our oil sands reservoirs to be produced and sold at a later date," Cenovus CEO Alex Pourbaix said in a statement. As a "prudent response," the company has been operating its Christina Lake and Foster Creek facilities at reduced production rates since February, Pourbaix said, adding that despite the reduced output Cenovus expects to exit 2018 within its guidance range of 364,000 b/d to 382,000 b/d. Cenovus is continuing talks with railroads to resolve the issue of locomotive hauling capacity that is preventing the company from fully utilizing its own crude loading terminal at Bruderheim, Alberta. The nameplate capacity of that terminal in 75,000 b/d, but in the fourth quarter of 2017 the average throughput was just 12,000 b/d, . Cenovus did not say when it would resume full oil sands production.  The wide price spreads between the Western Canadian Select and WTI has become a root cause of worry for Alberta's oil sands producers, as revenues are being lost and there being no clear line of sight on when new takeaway capacity will be added from Western Canada,. "Cenovus may be an exception and the verdict is still out if others will also start reducing output,"

Unauthorized Fracking Dam Problem Growing -- The number of unlicensed and potentially dangerous dams built in recent years in northeast British Columbia is nearly double what has been reported, according to one of the province's top water officials.  At least 92 unauthorized dams have been built in the region where natural gas industry fracking operations consume more water than just about anywhere on Earth.  That's far more than the 51 dams previously identified in documents obtained through Freedom of Information (FOI) requests by the Canadian Centre for Policy Alternatives (CCPA). With the number of unlicensed dams built to impound freshwater used in fracking operations approaching 100, more questions are being raised about how so many structures were built without provincial agencies halting their construction. Ted White, director and comptroller of water rights in BC's Water Management Branch, confirmed the higher number, which includes an additional 41 dams to those originally documented by the CCPA, all built on private lands, most if not all, on rural farm lots in the provincial Agricultural Land Reserve . The report, posted without an accompanying press release, called some of the unauthorized dams potential "time bombs" and said a top priority must be "to find the high consequence dams and make sure they are properly constructed and operated and maintained in an appropriate manner before any of them fail." Jim Mattison, who wrote the report, was also once B.C.'s water comptroller. Mattison based his conclusions on satellite imagery analyzed by ministry staff who looked at the vast network of artificial water bodies in the northeast where B.C.'s largest natural gas reserves are found. The analysis revealed that nearly 8,000 water bodies have been constructed in the region, more than half of which are relatively small holes or "dugouts" in the ground that capture and store water used by farmers or natural gas companies. Additionally, the report identified 268 "large" or "very large" artificial water bodies that could be dam reservoirs.

New Canadian Bill Would Help Cities Sue Oil Industry for Climate Damages - A Canadian legislator introduced a bill on Monday to protect Ontario residents from the costs of climate change-related damages and to make it easier to force fossil fuel companies to pay for infrastructure improvements needed to protect communities from climate impacts. “This act will give Ontarians the legal means to seek compensation from the world’s major polluters for their fair share of those costs,” said Peter Tabuns, a Member of Provincial Parliament (MPP) who introduced the bill. “There is an assumption in this bill that climate change is caused by man-made action—the emission of CO2 into the atmosphere—and it sets a threshold for determining whether a particular event has caused damage,” said Tabuns. “This Bill appears to be the first in the world to directly impose strict liability—liability without proof of fault—on fossil fuel companies for climate impacts,” said Andrew Gage, staff lawyer for the West Coast Environmental Law Association (WCEL), which endorsed the bill.

Repsol, Premier Oil win Burgos Basin blocks in Mexico's Round 3.1 auction - Mexico's hydrocarbon auction round 3.1 for shallow waters saw mixed results Tuesday, as oil companies competed for all the blocks offered in the Cuencas del Sureste basin, but mostly overlooked the gas rich blocks at the Burgos and Tampico-Misantla-Veracruz (TMV) basins. Mexico's National Hydrocarbon Commission (CNH) awarded a total of 16 blocks out of 35 blocks available. No bids were submitted Tuesday for the 17 blocks holding gas resources in the Burgos and TMV basins as companies focused on areas suspected to hold oil. Mexico was auctioning a total of 8.2 billion boe of prospective resources. It awarded 2.23 billion boe of prospective resources with 780 million boe coming from Cuencas del Sureste and over 760 million boe in TMV's Marine Golden Lane. CNH expects production from the awarded blocks to start in 2022, with oil production peaking at 235,000 b/d by 2025 , and natural gas output peaking at 220 MMcf/d. Analysts had expected companies to submit bids in the prolific Cuencas del Sureste basin. The region holds over three quarters of Mexico's current oil production, which was 1.95 million b/d in 2017. Seven highly contested oil-rich blocks were awarded in the Cuencas del Sureste basin which received a combined 27 offers. As a result of the auction, seven wells will be drilled in this region. The Mexican government received $124 million in cash payments for the three most highly contested blocks -- 28, 29 and 30. Bidders and government officials at the auction said activity was so high because the blocks lie north of the prolific Zama and Amoca discoveries, which are estimated to hold up to 1.8 billion boe of oil in place.

More Than 2,400 Animals Killed by Oil Spill in Colombia - An oil spill of approximately 550 barrels (23,100 gallons) has killed more than 2,400 fish, birds and reptiles near the city of Barrancabermeja, Colombia, RCN Radio reported.Oil started spilling from the Lizama 158 oil field in early March and spread down 15 miles of the Lizama river and 12.4 miles of the Sogamoso river.According to local media, it took Colombia's state oil company Ecopetrol three weeks to respond to the environmental disaster.Colombia Reports noted that the crude started escaping the oil field on March 3 but it was only this past Saturday that Ecopetrol vowed to send heavy equipment that could stop the spill.The company said Tuesday that the spill is fully controlled and workers are carrying out environmental monitoring of the rivers. The cause of the spill is currently unclear but an investigation is underway.In addition to the 2,400 animals who died, Claudia Gonzalez, director of the National Agency of Environmental Licenses (ANLA) told RCN Radio that 1,300 animals were rescued alive.About 1,080 trees of different species were also affected by the spill and about 70 people had to be relocated from the area, with some people reporting health problems.  "I have practically nothing to eat, we have lived through the river all our lives and the contamination has already reached the Magdalena,"

Keep off our land, indigenous women tell Ecuador's president  -- Amazon indigenous women leaders have told Ecuador’s president Lenin Moreno to limit oil drilling and mining in their territories and combat the sexual violence and death threats they claim accompany the industries. The delegation of women dressed in traditional tunics and with intricately painted faces were granted a meeting with Moreno after nearly 100 of them camped in Quito’s central plaza in front of the Carondelet government palace for five days, earlier this month. “We gave him our demands, which was what we intended to do. We will return to our communities and wait for a response from the government. If we do not receive a response in two weeks, we will be back,” said Zoila Castillo, vice president of Ecuador’s principal Amazon indigenous federation CONFENIAE. In the first presidential meeting granted to the women’s movement, Moreno assured them he would heed their demands and try to find consensus but added “it’s almost impossible for a world to exist without oil and mining.” In December, Moreno agreed to a moratorium on new auctions of oil and mining concessions without the prior and informed consent of local communities, following a two-week march by hundreds of indigenous people from the Amazon to Quito. But in February his government announced a new oil auction and handed out several new mining concessions. Moreno was praised by environmentalists last year after promising the United Nations he would do more to protect the Amazon.  Your government cannot permit that our rights continue to be violated,” Patricia Gualinga, an indigenous Kichwa from Sarayaku, told the president during the meeting. “Ecuador has to change its energy policy. It could be an example for the world,” she said.Gualinga, who received death threats in January, said environmental defenders, particularly women, were increasingly at risk in Ecuador. “The threats against women are a consequence of extractivism,” Nina Gualinga, a 24-year-old activist from the same community, told the Guardian. “Women don’t want more oil and mining exploitation. It is women who care for the children, who care for the land so it should be women making these decisions.”

From Ecuador's Amazon to president's palace, indigenous women demand end to drilling - Indigenous women from Ecuador’s Amazon rainforest have called on the country’s president to end oil and mining projects on their ancestral lands, as the nation pushes to open up more of its rainforest to drillers. Their meeting with Lenin Moreno at the presidential palace in the capital Quito late Thursday comes after the Andean nation launched a new bidding round this month for foreign companies to develop oil and gas reserves. Ecuador, one of the smallest producers in the Organization of the Petroleum Exporting Countries (OPEC), hopes to attract some $800 million in investment to boost production that the government says is vital to improve its sluggish economy. But women from Amazon indigenous groups say oil exploration damages their livelihoods, the environment and water sources on ancestral lands, and comes amid growing deforestation in unspoiled areas of the biodiverse region. “We don’t want more oil and mining companies,” Alicia Cahuiya of the Waorani group told the president at the meeting. “Oil has not brought development for the Waorani - it has only left us with oil spills and sickness.” The women also told the president, who was flanked by several ministers, that the government was failing to consult properly with indigenous communities about planned oil and mining projects on their lands, a right they are entitled to under law. “The oil and mining issue does not stop worrying me, because there is a future to take care of,” Moreno said at the meeting, which was streamed live on Facebook. “What you are completely right about is the importance of dialogue consensus, dialogue decisions ... about any decisions of my government with respect to oil and mining concessions.” The women presented the president with a list of demands they call the “Mandate of Amazonian Women”, which includes stopping oil, mining and logging projects, and conducting official investigations into attacks against indigenous leaders.

Venezuela Tries To Pay Russian Debt With Cryptocurrency -- If crisis-hit Venezuela was hoping to pay off its US$3.15-billion debt to Russia with its new cryptocurrency, those hopes have been shattered as the Russian Finance Ministry announces that it won’t be accepting digital coin. Venezuela will not be paying any part of its debt to Russia with its cryptocurrency, the head of the Russian Finance Ministry’s state debt department, Konstantin Vyshkovsky, has said.In November last year, Russia threw a life-line to Venezuela after the two countries signed a deal to restructure US$3.15 billion worth of Venezuelan debt owed to Moscow. Under the terms of the deal, Venezuela will be repaying the debt over the next ten years, of which the first six years include “minimal payments”.The following month, Venezuelan President Nicolas Maduro announced that his country would be issuing an oil-backed cryptocurrency, which it did, in February this year.Maduro’s propaganda machine is touting the digital coin as a ‘ground-breaking’ first-ever national crypto currency, the El Petro--backed by 5 billion barrels of oil reserves in Venezuela’s Orinoco Belt. But most observers see this crypto issuance as a desperate attempt to skirt U.S. financial sanctions.Earlier this month, U.S. President Donald Trump banned U.S. purchases, transactions, and dealings of any digital coin or token issued for or by the  government of Venezuela.

Scientist claims enormous holes are formed by Russia’s attempts to exploit vast gas reserves - Vladimir Putin’s quest for lucrative Arctic natural gas is behind bizarre exploding craters in the tundra, according to a top scientist. The mysterious holes first appeared in 2014 and led to wild speculation that they were caused by Kremlin missile tests, aliens, or that they were manmade – as a prank. Later scientists agreed they were formed by underground methane eruptions in thawing permafrost. Now experts have found from satellite image analysis that the craters – which fill with water – are prone to explode more than once.  And Russia's leading authority on the bizarre phenomenon claims that many  explosions may have been triggered by the massive exploitation of natural gas for exports to Europe - including Britain - and China. Professor Vasily Bogoyavlensky said he suspected ‘human activities’ – namely interfering with nature by drilling for vast Yamal gas reserves, vital for the Russian economy – were to blame.Leaks from gas wells lead to unstable pockets of methane accumulating under frozen soil, he said.Initially these cause swelling pingos - or mounds - in the tundra which explode when the gas builds up under a thick cap of ice.

Germany Approves Russia-Led Nord Stream 2 Gas Pipeline - Germany approved on Tuesday the construction and operation of the Russia-led Nord Stream 2 gas pipeline in its territorial waters, thus issuing all necessary permits for the German section of the project that has torn Europe and EU member states over the implications of Russia’s gas giant Gazprom gaining even more foothold on the European gas market.Hailing the project as necessary to cover Europe’s future supply gap and contributing to the “security of supply and competition in the EU gas market,” the pipeline company Nord Stream 2 AG said on Tuesday that the permitting procedures in the other four countries along the route – Russia, Finland, Sweden and Denmark – were proceeding as planned.“Further permits are expected to be issued in the coming months. Accordingly, scheduled construction works are to be implemented in 2018 as planned,” the company said.Germany is the key beneficiary of Nord Stream 2 and supports the project on the grounds that it is an economic issue.Other EU states, however--including Poland and the Baltic states, as well as the European Union institutions--argue that the project further solidifies Russia’s grip on Europe’s gas market and undermines efforts to diversify supplies.For Russia, Nord Stream 2 – a project to twin the existing Nord Stream pipeline between Russia and Germany via the Baltic Sea -- not only boosts its gas supplies to the EU, but also bypasses the Ukrainian transit route. With the spy poisoning scandal in the UK and the West-Russia tension high, Nord Stream 2 has taken center stage in energy policies again in recent weeks. Earlier this month, U.S. Senators urged the U.S. Administration “to utilize all of the tools at its disposal to prevent its construction.”

Nord Stream 2 natural gas link completes permitting for construction in German waters - The Nord Stream 2 operating company said late Tuesday it has received the permit from the German authorities to build the part of the planned 55 Bcm a year gas pipeline from Russia that will pass through Germany's offshore Exclusive Economic Zone, completing the German offshore permitting process. Nord Stream 2 had already received the permit from the German authorities to build the pipeline in its territorial waters in February. Nord Stream 2 now requires permits from Russia, Finland, Sweden and Denmark to be able to begin construction of the controversial pipeline, with a planned start date of summer 2018. Factbox: Russia's role in supplying the UK natural gas market "We are pleased that all necessary permits are now in place for the German section of the route, which has an overall length of 85 km [53 miles]," said Jens Lange, permitting manager, Germany, at Nord Stream 2. The operating company said the national permitting procedures in the other four countries along the route -- Russia, Finland, Sweden and Denmark -- were also proceeding "as planned." Nord Stream 2 CFO Paul Corcoran told S&P Global Platts in an interview in January that the only possible delay in the permit process was if Denmark chose to enforce a new law allowing it to take foreign policy goals into account when allowing infrastructure to be built in Danish territorial waters. As things stand, Nord Stream 2 is planning for the permit to be awarded for the original proposed route through Danish territorial waters, though it has a contingency plan to re-route if required.

Denmark faces dilemma over Russian gas pipeline (Reuters) - Denmark is under pressure to rule on whether a new Russian pipeline supplying gas to Germany can be built near its Baltic coast, a decision that puts it in the line of fire from friend and foe alike. Pipes are stacked for storage near the northern port of Mukran, on the island of Ruegen, Germany, February 28, 2018. Axel Schmidt/Nord Stream 2 Handout via Reuters Denmark does not want to act alone in resolving one of the biggest foreign policy quandaries that the small European Union nation has faced since the Cold War. But its search for a united EU stance on the proposed pipeline is deadlocked by divisions among member states over whether to do more business with Moscow despite its military incursions in Ukraine and Syria and accusations it used a nerve agent in an attempted assassination on British soil. The Danish government is facing fierce lobbying by Russia, EU allies and the United States over the 9.5 billion euro ($11.7 billion) Nord Stream 2 project championed by President Vladimir Putin and financed by five Western firms. “They are under huge pressure from all sides,” one senior EU official said. There is no definite timing for a decision, which had been expected this spring but has been delayed while Denmark considers the security implications. But officials say it cannot be postponed indefinitely. A Danish veto, under new legislation allowing it to do so on security grounds, would force Russia, which supplies about one third of Europe’s gas needs, to find a new route for the pipeline. “This is not about gas, it is one of the most important foreign policy decisions in Denmark since the Cold War,”. A delay would weaken Russian gas giant Gazprom’s hand in talks with Ukraine for a new gas transit deal after 2019 and create uncertainty for the firm’s partners: Germany’s Uniper and Wintershall, Anglo-Dutch Shell, Austria’s OMV and France’s Engie. 

China data: Feb LPG imports plunge 38% on month, 16% on year to 1.22 mil mt - China imported around 1.22 million mt of LPG in February, down 37.8% from January and 16.1% year on year, data released by the General Administration of Customs on late Tuesday showed. It exported 91,215 mt of LPG in February, down 7% month on month and 11.4% year on year, the data showed. As a result, China's net LPG imports in February were down 39.5% month on month and 16.4% year on year at around 1.13 million mt, according to S&P Global Platts calculations based on the customs data. Fewer LPG cargoes arrived last month amid lower market activity because of public holidays for Lunar New Year and the Lantern Festival, market sources said. Besides, major LPG buyer and propane dehydrogenation plant operator Oriental Energy resold two VLGC cargoes for delivery in February in the international market due to maintenance at its Zhangjiagang PDH plant, leading lower LPG imports last month, sources noted. The Zhangjiagang PDH plant was interrupted intermittently in February because of technical problems in late January. It was finally shut for maintenance on February 7, Platts reported earlier based on data from domestic information provider JLC. Platts calculates China's LPG imports by adding the propane and butane figures to those for "other LPG" under HS code 7111990, aiming to reflect China's imports of liquefied gases more accurately.

China's crude oil futures contract should confound the skeptics: Kemp (Reuters) - China’s new crude oil futures contract, which began trading this week, has a good chance of confounding the doubters and becoming a regional benchmark where other contracts have failed. The history of futures and options trading is littered with new contracts launched amid great fanfare but which subsequently failed to develop sufficient liquidity and have been discontinued or faded into irrelevance.But the new crude futures contract launched on the Shanghai International Energy Exchange comes after years of meticulous preparation and has many of the ingredients needed to be successful. Three elements determine the success or failure of a new futures contract, according to an extensive literature review prepared for the Shanghai Futures Exchange three years ago. The contract must fulfill a commercial need for hedging. It must succeed in attracting a pool of speculators. And public policy must not be too adverse. China’s new oil futures contract clearly meets the first two criteria and has a fair chance of succeeding on the third as well.  China has already overtaken the United States to become the world's largest crude importer, so there is a clear need to hedge the resulting price risks.The need for a new contract and its basic features were showcased two years ago in a presentation by China’s leading crude importer.China’s refiners import mostly medium and heavy sour crudes, which trade at a substantial discount to lighter and sweeter oils.The two main existing benchmarks, Brent and U.S. light sweet crude, also known as WTI, are based on light low-sulphur crude oils.In contrast, the new Shanghai futures contract is based on a basket of medium and heavy crudes from the Middle East and China itself with a significantly higher sulphur content. Foreign crudes deliverable against the contract include oils from the United Arab Emirates, Oman and Iraq, which all trade freely.But they also closely resemble other grades China imports in significant volumes, including crude from Saudi Arabia, Iran and Russia. The new contract is denominated in yuan rather than U.S. dollars, allowing refiners to manage their price risks more effectively.

Analysis: Iraq could overtake Saudi Arabia as top crude supplier to India - Iraq could overtake Saudi Arabia as the biggest crude oil supplier to India in the current fiscal year ending March 31 as an attractive Basrah crude price and Riyadh's strong commitment to the OPEC production cut agreement pave the way for Baghdad to boost its market share in South Asia. India, the world's third-largest crude importer, bought 38.9 million mt from Iraq during the first 10 months of fiscal 2017-2018, provisional data from the oil ministry showed. Saudi Arabia was the second-biggest crude supplier with 30.9 million mt over the April 2017-January 2018 period, the oil ministry data showed. In the previous fiscal year, Saudi Arabia was the top crude supplier with 39.5 million mt, followed by Iraq with 37.5 million mt and Iran with 27.2 million mt. Saudi Arabia's faltering market share in India is in line with crude import trends seen in Northeast Asia over the past few quarters. The biggest OPEC producer's strong commitment to limit production may have helped some of its rival producers gain market share across Asia, market participants said. Since early in the third quarter last year, Saudi Aramco has been regularly slashing its monthly crude term allocations to various customers in Asia, prompting them to shift to Iraq as the country's production has been relatively unfazed by OPEC output cuts.In addition, the attractive price tag on Iraq's flagship Basrah crude could draw even more Asian consumers going forward, regional sour crude traders said. The official selling price differential of Basrah Light recently fell below rival Saudi Arab Medium for the first time in more than a year. 

OPEC, Russia consider 10- to 20-year oil alliance - Saudi Crown Prince (Reuters) - Saudi Arabia and Russia are working on a historic long-term pact that could extend controls over world crude supplies by major exporters for many years. Saudi Crown Prince Mohammed bin Salman told Reuters that Riyadh and Moscow were considering a deal to greatly extend a short-term alliance on oil curbs that began in January 2017 after a crash in crude prices. “We are working to shift from a year-to-year agreement to a 10 to 20 year agreement,” the crown prince told Reuters in an interview in New York late on Monday. “We have agreement on the big picture, but not yet on the detail.” Russia, not a member of the Organization of the Petroleum Exporting Countries, has worked alongside the 14-member group during previous oil gluts, but a 10 to 20 year deal between the two would be unprecedented. Top OPEC producer Saudi Arabia recruited Russia and other non-OPEC countries to help drain oversupply when oil prices collapsed to below $30 a barrel in 2016 from over $100 in 2014. Crude has since recovered to $70 but fast-rising output from U.S. shale producers has capped prices. “This is all about whether the arrangement is a short-term expedient to deal with this particular crisis in the oil market, or whether it reflects a realignment in world oil,” said oil historian Daniel Yergin, vice chairman at consultancy IHS Markit. “OPEC countries want to find a way to institutionalize this relationship rather than to have it be a one-shot deal.” Robert McNally at consultancy Rapidan Energy Group said Riyadh wanted help in breaking the boom-bust cycles that characterize oil markets by capping crude on the upside as well as by helping lift low oil prices. “History shows that without a long-term, powerful, competent coherent, disciplined swing producer in the oil markets ... you get space-mountain oil prices. Wild volatility of the sort we have seen in the past 10 to 15 years and that Saudi Arabia and Russia do not want to see again,” McNally said. He said that would require Russia to join Saudi in building spare production capacity to use when prices rise too much. 

The US can breathe easy on Russia-OPEC deal | TheHill: Saudi Arabia and Russia are considering a long-term agreement to extend cooperation with the Organization of the Petroleum Exporting Countries (OPEC). The potential deal, announced during Saudi Crown Prince Mohammed bin Salman’s weeks-long tour of the U.S., would see the two states enter into a 10- or even 20-year agreement to manage oil markets. While the pact signals closer Russian-Saudi cooperation on energy, it does not necessarily signal a Saudi pivot towards Russia or an abandonment of the U.S.-Saudi alliance. Surprisingly, the deal could actually benefit U.S. oil producers.King Salman became the first Saudi monarch to visit Moscow in October 2017. He oversaw the signing of several bilateral energy pacts during his visit, including an agreement to create a $1 billion joint energy fund, joint investment deals worth over $3 billion, and a $1.1 billion agreement for Russian petrochemical company Sibur to build a plant in Saudi Arabia. The two states, whose combined oil production totals one-fifth of global supplies, also led the way to a deal to cut OPEC and non-OPEC oil production by 1.8 million barrels per day in early 2017. Saudi Arabia recruited Russia, which is not an official OPEC member, along with other non-OPEC oil exporters, to remove oversupply from the market after oil prices collapsed to $26 per barrel in 2016. Intended to boost prices by cutting production levels and drawing down global stockpiles, Riyadh and Moscow extended the deal in November 2017 to cover all of 2018, and it will be reviewed again in June and December. Whether or not the arrangement holds will rest largely on Moscow’s willingness to give up its ability to manipulate oil policy in exchange for the stability of a long-term deal. Russia’s appetite for taking OPEC’s official policy stances, particularly when OPEC’s goals and Russia’s aims do not align, is evidently low. Russia has already expressed dissatisfaction at the length of the extension and would prefer to exit sooner. The utility of a rise in oil prices is limited for Moscow, which continues to suffer from a dampened environment for domestic investment, unless production volumes can be increased as well to boost revenues. 

Oil market 'locked', almost all funds expect further price rises: Kemp (Reuters) - Hedge funds had turned more bullish on the outlook for petroleum prices, even before the decision to replace the U.S. president’s national security adviser with an anti-Iran hawk was announced on Thursday.Hedge funds and other money managers increased their net long position in the six most important futures and options contracts linked to petroleum prices by 95 million barrels in the week to March 20.The combined increase was the largest since the end of October and reversed a draw of 73 million barrels over the two previous weeks, according to records published by regulators and exchanges.Fund managers now hold a net long position of 1.311 billion barrels across Brent, NYMEX and ICE WTI, U.S. gasoline, U.S. heating oil and European gasoil ( combined net long position is 170 million barrels below the record 1.484 billion barrels set on Jan. 23 but more than four times higher than the recent low of 310 million set at the end of June 2017.Hedge fund positioning remains extremely lopsided, with almost all funds expecting prices to rise further rather than fall. Portfolio managers hold 11.7 long positions for every short one, the second-highest ratio on record after 11.9 on Jan. 30. Almost no one seems willing to bet against the trend. Short positions across the complex have declined to just 122 million barrels, the lowest level since May 2014. In some parts of the complex, positioning has become even more extreme. In U.S. gasoline, for example, long positions (94 million barrels) outnumber short ones (4 million) by a ratio of almost 22:1. The current positioning across the complex is a classic example of a market that has become “locked” with all traders trying to position themselves the same way. Locking often precedes a sharp reduction in liquidity, an increase in volatility and an eventual reversal in the price trend.  Extreme one-way positioning could herald a shift in oil prices into a new, higher trading range, such as happened in the fourth quarter of 2017. But with so few speculative short positions remaining to be covered, there may be few buyers around if and when the holders of long positions decide to realise some of their profits and try to sell them.

Oil retreats from multiweek high as U.S., China trade concerns weigh - Oil prices settled lower Monday, pulling back from the multiweek highs scored last week, with traders weighing trade tensions between the U.S. and China, as China marked the start of trading for its own crude futures contract. Oil’s decline Monday was “simply profit taking after the large upward move last week, as well as the fact that around $70 Brent and $66 WTI have been the ceiling for several months now,” Michael Corley, president of Mercatus Energy Advisors, told MarketWatch.   May West Texas Intermediate crude lost 33 cents, or 0.5%, to settle at $65.55 a barrel on the New York Mercantile Exchange. The contract settled at $65.88 Friday, which was the highest finish for a front-month contract since Jan. 26, according to FactSet data. It rose roughly 5.6% for last week. May Brent crude slipped by 33 cents, or 0.5%, to $70.12 a barrel on ICE Futures Europe. The front-month Brent contract had settled Friday above $70 a barrel for the first time since late January. The contract scored a weekly jump of 6.4%. China played a significant role in the oil markets Monday, “as the looming prospect of [a] trade war with the U.S. weighed on oil prices,” said Mihir Kapadia, chief executive officer and founder of Sun Global Investments.Trade tensions appeared to ease a bit on Monday, however, as The Wall Street Journal reported that China and the U.S. have quietly started negotiating to improve U.S. access to Chinese markets. But that “comes as Shanghai crude oil futures made a strong debut and was well received by investors,” Kapadia said in emailed commentary. “The emergence of a new financial oil price benchmark in Asia has been long-awaited and may prove to have a significant influence over the oil markets in the years to come.”

Oil Prices Slip On Profit Taking -- Oil prices dipped on Monday as traders booked profits following last week’s enormous jump, and while they fell slightly on Tuesday morning as well, both WTI and Brent are still sitting comfortably above last week’s range. . About a third of the top 25 shale producers have either paid or have promised to pay a dividend this year, according to Reuters. That is the largest number in over a decade since the shale revolution began. The shale industry has largely been unprofitable, even when oil prices were high prior to the collapse in 2014. Low prices forced an efficiency drive, and with WTI now above $60 per barrel, a lot of shale companies are beginning to post profits for the first time. Shareholders are finally starting to see some return. Diamondback Energy became the first shale company in years to initiate a dividend last month when it announced a 12.5-cent quarterly dividend. “You’re going to see more shale producers focus on dividends,” Leigh Goehring of energy investment research firm G&R Associates told Reuters. “Shareholders are demanding it and a trend is forming.” PDVSA might be forced to shut down three of its four domestic refineries because of a shortage of feedstock and refinery workers. Argus reports that the refineries facing potential closure include the 305,000 bpd Cardon refinery, the 140,000 bpd El Palito refinery, and the 190,000 bpd Puerto La Cruz refinery. Taken together, they account for about half of PDVSA’s 1.3 mb/d refining capacity. Meanwhile, Reuters reports that PDVSA might shut the Petromonagas oil upgrader in April for maintenance, a joint venture with Russia’s Rosneft. Venezuela’s refineries are in a decrepit state, forcing PDVSA to rely more on imports. But without cash, the imports are becoming harder to finance. 

Oil Prices Rise Amid Middle East Tension, Strong Shanghai Crude Oil Futures - Oil prices rose on Tuesday morning in Asia, lifted by concerns that tensions in the Middle East could disrupt oil supplies. Meanwhile, China’s new crude futures kicked off to a roaring start. Crude Oil WTI Futures for May delivery were trading at $65.78 a barrel in Asia at 11:20PM ET (03:20 GMT), up 0.35%. Brent Oil Futures for June delivery, traded in London, up 0.29% at $69.72 per barrel. Escalating concerns that the U.S will reimpose sanctions on Iran, which would severely limit Tehran’s ability to export crude oil, have pushed up oil prices. Further supporting oil markets is Saudi Arabia’s push for production curbs led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to be extended into 2019, in an effort to prop up oil prices. Iraq, the second biggest producer within OPEC, said on Monday that it also supports the agreement to cut oil output. However, such a move could face opposition given the relentless increase in U.S. crude production. U.S. production has already jumped by almost a quarter since mid-2016, to 10.4 million barrels per day (bpd), surpassing top exporter Saudi Arabia and within reach of top producer Russia, which pumps around 11 million bpd. Production curbs from OPEC inadvertently enable the U.S. to take more market share. Also supporting oil markets are hopes that behind-the-scenes talks between the U.S. and China will prevent a looming trade war between the world’s two biggest economies. Meanwhile in Asia, Shanghai crude oil futures saw their second day of trading repeating Monday’s high volumes. Over the first 24 hours of its trading, Shanghai’s spot crude volumes made up 5 percent of the global market, versus 23 percent for Brent and 72 percent for West Texas Intermediate (WTI). The launch of China’s yuan-denominated oil futures is expected to give the world’s largest energy consumer more power in pricing crude sold to Asia, as well as provide a third global price benchmark alongside Brent and WTI. 

Oil briefly hits $71, with U.S. supply, Middle East in focus (Reuters) - Oil hit $71 a barrel before retreating on Tuesday, supported by concern about possible disruption to Middle East supply but capped by fast rising global output and a dollar recovery. Brent crude futures LCOc1 were up 18 cents at $70.30 by1404 GMT, down from its brief high. West Texas Intermediate(WTI) futures CLc1 slipped 6 cents to $65.49, after touching$66.41. The dollar recovered from earlier lows, erasing some gains in oil, which had neared its highest since late January. The oil price has risen more than 7 percent so far thismonth and by 5.3 percent in the first three months of 2018,putting it on track for a third consecutive quarterly gain, amove seen in late 2010. Supply curbs by OPEC, Russia and their allies have helped push Brent above $70 this year for the second time since late2014, but analysts said this strength may not persist long. "For oil, we expect the supply deficit of the past couple of quarters to give way to a surplus, driven largely by strong growth in U.S. tight oil supply," Barclays Research analysts said in a note, a reference to U.S. shale production. "Supply risks in Venezuela and Iran may perk up the patient,but we do not expect them to change the market balance significantly," they wrote. The Organization of the Petroleum Exporting Countries,Russia and others began their supply curbs in January 2017. The deal is due to expire at the end of 2018. Saudi Crown Prince Mohammed bin Salman told Reuters thatOPEC and Russia were working on a long-term deal to cooperate onoil supply curbs that could extend controls over supplies by major exporters for years to come.  Geopolitical factors have also offered support. The United States has threatened to withdraw from a nuclear deal that Iran signed with Washington and other world powers in 2015, setting deadline of May and raising the possibility of sanctions on Tehran that could hinder oil exports. 

WTI/RBOB Extend Losses After Surprisingly Large Crude Build - The whole energy complex tumbled today (as the usd strengthened) amid the riskoff rout, and extended losses after API reported an unexpectedly large crude build.“Oil prices gained and now they’re testing this key resistance level” of the January high, said Hans Van Cleef, senior energy economist at ABN Amro. “We’re waiting for the inventory data to see if it can push prices higher. Markets expect them to remain little changed, so any surprise drop could do the trick.” API:

  • Crude +5.321mm (+850k exp)
  • Cushing +1.655mm
  • Gasoline -5.799mm
  • Distillates -2.23mm

The 4th weekly crude build in the last 5 - and much bigger than expected - but gasoline and distillates saw notable draws... “It’s slowing the momentum just enough to stop us from making new highs right now,” said Phil Flynn, senior market analyst at Price Futures Group. Inventory data this week is “going to be critical for the mood of the market.” Prices were heading south into the API print and kneejerked lower after  -though RBOB's draw is stabiliziung price action...

Oil drops on equity weakness, surprise API build (Reuters) - Oil prices settled slightly lower on Tuesday, only to fall in post-settlement electronic trading as stocks slumped and industry group data showed a surprising increase in crude inventories. Brent crude futures touched $71 a barrel before retreating, and settled down 1 cent at $70.11 a barrel in what traders characterized as profit-taking following several days of gains. West Texas Intermediate (WTI) futures fell 30 cents to settle at $65.25 a barrel. In post-settlement trading, when volumes are thinner, prices for both benchmarks slipped in tandem with equities markets, and then dropped again after industry group American Petroleum Institute (API) reported a larger-than-expected rise in U.S. oil inventories. At one point, WTI fell more than $1. It traded at $64.69 a barrel, down 86 cents, as of 4:42 p.m. EDT (2042 GMT). Crude inventories rose by 5.3 million barrels in the week ended March 23 to 430.6 million, API said. U.S. inventories were expected to fall by 287,000 barrels; the U.S. Energy Department releases its figures Wednesday morning. The dollar rebounded from a five-week low hit earlier in the session as trade tensions eased. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies.   Brent has risen by more than 5 percent this month while WTI is up over 4 percent. They are on track for a third consecutive quarterly gain, which last happened in 2010.   The spread between the two May contracts has widened, he noted, which implies OPEC’s success in trimming supplies.

WTI/RBOB Pump'n'Dump After Huge Cushing Build, Record Crude Production - WTI/RBOB extended losses following API's surprisingly large crude build (not helped by risk-off and dollar's spike), but jumped initially after DOE reported a smaller-than-API crude build of 1.64mm. WTI prices shrugged off the fact that US Crude production hit a new record high.  DOE:

  • Crude +1.64mm (+850k exp)
  • Cushing +1.804mm  (+1mm exp) - biggest since March 2017
  • Gasoline -3.47mm
  • Distillates -2.09mm

This is the 4th weekly crude build in the last 5 weeks (but less than API), However, Cushing saw its biggest restocking since March 2017... Fears are building again of a renewed glut in crude as oil prices head for their longest losing streak in a month...  Of course, US crude production remains a key swing factor, and rose once again last week to a new record high...

Oil falls about 1 percent after surprise US crude build (Reuters) - Oil prices fell about 1 percent on Wednesday after data showed U.S. crude inventories unexpectedly rose 1.6 million barrels last week, weighing on market sentiment. Brent June crude futures settled 70 cents lower at $68.76 per barrel, while the front month May contract LCOc1, which expires on Thursday, fell 58 cents, or 0.8 percent, to settle at $69.53 a barrel. West Texas Intermediate (WTI) crude CLc1 futures for May delivery fell 87 cents to $64.38 a barrel, a 1.3-percent loss. U.S. crude stockpiles rose as net imports soared by 1.1 million barrels per day, according to data from the U.S. Energy Information Administration. Stocks at the Cushing, Oklahoma, delivery hub for U.S crude futures also rose 1.8 million barrels, EIA said. “Oil supplies at Cushing, Oklahoma are starting to replenish, which is bearish for prices, but they have a long way to go to near normal levels of supply,”  U.S. crude production also inched up last week to fresh record high at 10.433 million bpd. Output has risen by nearly 25 percent in the last two years to over 10 million bpd, taking it past top exporter Saudi Arabia and within reach of the biggest producer, Russia, which pumps around 11 million bpd. U.S. crude’s discount to Brent widened to as much as $5.22, the biggest since Jan. 24.  Brent prices have risen in seven out of the last nine months and have increased by more than 4 percent so far this year. Prices have also had three consecutive quarters of gains, the longest stretch since late 2010 and early 2011, after production curbs led by the Organization of the Petroleum Exporting Countries since last year. 

OPEC to stick to supply curbs despite oil rally to $71: sources (Reuters) - OPEC and its allies look set to keep their deal on cutting oil supplies for the rest of 2018, five sources familiar with the issue said, although some producers are starting to worry that high prices may be giving too much stimulus to rival output. FILE PHOTO: A man fixes a sign with OPEC's logo next to its headquarter's entrance before a meeting of OPEC oil ministers in Vienna, Austria, November 29, 2017. REUTERS/Heinz-Peter Bader/File PhotoOPEC, Russia and several other non-OPEC producers have curbed output since January 2017 to erase a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018, and meet on June 22 to review policy. The deal has boosted oil prices LCOc1, which topped $71 a barrel this year for the first time since 2014. They were close to $70 on Wednesday. But it has also encouraged a flood of U.S. shale oil, fuelling a debate about how effective the curbs are. “June will be a rollover until the meeting later in the year to make a decision for next year, depending on market conditions,” an OPEC source from a major Middle East producer said, referring to the supply-cuting deal. The source said achieving a balance between supply and demand in the second half of 2018 was “the most likely scenario, if production, demand and compliance levels stay as now.” The chance of a significant tweak to the deal being agreed in June is low, most OPEC delegates say. But some officials are privately talking about the issue, a sign that prices have risen more strongly than expected. “The level of oil prices from now until the June meeting is going to affect the decision at that time,” said a non-Gulf OPEC source, who asked not to be identified by name. “Prices between $60 and $65 can support the continuation of the agreement for the rest of 2018,” he said, referring to benchmark Brent crude. “A very high price could convince the parties to the agreement to reconsider it.” The deal has delivered an even bigger cut than called for, mainly because of a drop in Venezuelan production, where output is collasping due to an economic crisis. Compliance with the deal reached an unprecedented 138 percent in February. 

Oil prices rise with Wall Street; US crude discount widens(Reuters) - Oil prices rose on Thursday as the equities markets rallied and as market participants weighed a rise in U.S. crude inventories and production against continued OPEC supply curbs. Prices for the more actively traded June Brent crude futures were up 58 cents to settle at $69.34, while the May contract LCOc1 expiring on Thursday was up 74 cents at $70.27. West Texas Intermediate (WTI) crude futures gained 56 cents to settle at $64.94. WTI’s discount to Brent WTCLc1-LCOc1 has grown to more than $5 a barrel, the biggest since January, making Brent-linked crudes less attractive to refiners. Oil has risen about 4 percent since January, on track for the longest stretch of quarterly gains since late 2010. “The equities market is rallying and that’s lending support to oil,” The dollar against a basket of currencies .DXY was flat on Thursday, which was supportive for crude prices, Strong compliance on supply cuts from members of The Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia have pushed up prices. OPEC sources said the group and its allies are likely to keep their deal on cutting output for the rest of 2018. But growing supply in the United States is pressuring prices. Commercial U.S. stocks rose 1.6 million barrels in the past week, while output hit a record 10.43 million barrels per day (bpd). Geopolitical concerns, especially tensions between Saudi Arabia and Iran, continued to prop up the market, said Gene McGillian manager of market research at Tradition Energy in Stamford. Meanwhile, “worries about demand being affected by a possible trade war kind of receded,” he said. 

Oil Prices Bounce Back On Geopolitical Concerns - Oil prices closed out the first quarter on a high note, with Brent hovering around $70 and WTI at $65. Rising geopolitical concerns – declines in Venezuela and fears that the U.S. will step up confrontation with Iran – are elevating crude prices.   There have been rumors for some time that OPEC and Russia are looking at ways of institutionalizing their cooperation beyond the current production cut agreement, which may or may not expire at the end of this year. Reuters reported this week that they are working on something much more ambitious than previously thought: OPEC and Russia are looking at solidifying their cooperation for the long-term. “We are working to shift from a year-to-year agreement to a 10 to 20 year agreement,” Saudi crown prince Mohammed bin Salman told Reuters in an interview on Monday. “We have agreement on the big picture, but not yet on the detail.” OPEC and its non-OPEC partners are reportedly considering an extension of the current production cut agreement for six months, through mid-2019, according to Iraqi oil minister Jabbar al-Luaibi. “By the end of this year, we will assess and decide how to go ahead,” he said at the Iraq Energy Forum. “Some are suggesting a three-month extension, some suggest a six-month extension.”  Saudi Arabia and Japan’s SoftBank announced plans to build a 200 GW solar project in Saudi Arabia, which would be about 100 times larger than the largest project currently installed. The project would be built in phases through 2030, and would amount to a major investment in Saudi Arabia’s post-oil economy. Still, there are questions about the viability of the project, given the multiple solar targets announced in the past that have gone nowhere.

Crude oil prices flat as most markets closed for Good Friday -- Crude oil prices are mostly flat today - WTI is registering small gains while Brent is flat. As most markets are closed for Good Friday today, news relating to the commodity is fairly limited. The latest crude benchmark from Shanghai is now trading at par with WTI. Most traders have been shorting the benchmark price in Shanghai, as doubts grow regarding Chinese refiner demand. In its first week of trading, Shanghai crude prices have fallen by around 10%. Last year, China became the world's largest crude oil importer. Beyond concerns regarding liquidity and the mechanics of the new contract, the Chinese crude benchmark is a lower quality relative to WTI and Brent. The Shanghai benchmark primarily trades medium-sulfur crude from the Middle East, while WTI and Brent are based on light crude. Our short-term outlook and medium-term outlook on crude oil is bullish. WTI is currently trading above $64.80. Brent crude is currently above $69.30. Looking at US crude oil stocks, the most recent EIA figures (March 28) showed rising crude oil stocks and falling refined product inventories. Crude oil inventories were higher than estimates (+1.6m vs. +0.9m expected). Gasoline stocks were down (-3.5m vs. -2.3m expected) while distillate stocks (-2m vs. -1.5m expected) were also down. Looking at reactions in markets, crude oil prices strengthened following the EIA report.

US rig count decreases this week - (Xinhua) -- The U.S. rig count dipped slightly this week as a large decline in oil rigs was mostly offset by an increase in rigs seeking natural gas, according to weekly data collected by Baker Hughes released on Friday.Houston-based oilfield services company Baker Hughes reported that the number of oil-seeking rigs fell by seven, but natural gas drillers added five rigs, bringing the net decline to two.The Texas Permian alone now accounts for 443 oil rigs - 56 percent of the oil rig count nationwide. Likewise, Texas is home to 496 total rigs - half of the nation's total of 993 rigs. The overall rig count, including oil and gas rigs, has sat below 1,000 since April 2015 when oil prices collapsed.

US Oil Rig Count Dips As Prices Rise - Baker Hughes reported a 2-rig decrease to the number of oil and gas rigs this week. The total number of oil and gas rigs now stands at 993, which is an addition of 169 rigs year over year. The number of oil rigs in the United States decreased by 7 this week, for a total of 797 active oil wells in the US—a figure that is 135 more rigs than this time last year. The number of gas rigs rose by 4 this week, and now stands at 194; 34 rigs above this week last year. The oil and gas rig count in the United States has increased by 69 in 2018. While US drillers seem determined to add rigs, Canada continued this week its (seasonal) losing streak, with a decrease of 27 oil and gas rigs, after losing 58 rigs last week, 54 rigs the week before, and 29 rigs the week before that. At just 134 total rigs, Canada now has 21 fewer rigs than it did a year ago.   Oil prices are down this week versus last Friday, with both benchmarks losing about $1 per barrel as API and EIA crude oil inventory data showed a build Also weighing on prices this week is US crude oil production, which continued its uptick in the week ending March 23, reaching 10.433 million bpd—the fifth build in as many weeks. While prices are down week over week, on the day, both benchmarks were up ahead of the data. At 12:44 pm EST, the price of a WTI barrel was trading up $0.29 (+0.45%) to $64.67. The Brent barrel was trading up by $0.26 (0.38%) at $69.02. At 1:08pm EST, WTI was trading at $64.83 (+$0.45) and Brent was trading at $69.18 (+$0.42).

Crude Declines for the Week Despite Falling Rig Count -  Crude oil prices were lower for the week moving down 1.43%. The rise in crude oil inventories, and uptick in imports, took some of the luster off prices. Total inventories did move lower as refiners ramped up production increasing input as product inventories declined. Look for imports to drop back this week, but domestic U.S. production should continue to climb. A decline in the Baker Hughes active oil rig count should help buoy prices.  Refinery operations are on the rise which generated a 18K increase in barrel per day usage up to 16.8 million barrels per day during the week ending March 23, 2018. The Energy Information Administration reported that refineries operated at 92.3% of their operable capacity last week. Gasoline production increased last week, averaging over 10.3 million barrels per day. Distillate fuel production increased last week, averaging over 4.8 million barrels per day. Despite an uptick in crude oil imports, the monthly average remains lower than the same period last year. The EIA revealed that U.S. crude oil imports averaged about over 8.1 million barrels per day last week, up by 1.1 million barrels per day from the previous week. Over the last month, crude oil imports averaged 7.7 million barrels per day, 4.0% less than the same four-week period last year. Distillate fuel imports averaged 150,000 barrels per day last week. The rise in crude oil imports led to an increase in U.S. inventories. The EIA said that U.S. commercial crude oil inventories increased by 1.6 million barrels from the previous week, more than the unchanged figure expected. U.S. crude oil inventories are in the lower half of the average range for this time of year. Gasoline inventories decreased by 3.5 million barrels last week, more than the 1.9 million barrel draw expected. Distillate fuel inventories decreased by 2.1 million barrels last week which was more than the 1.5-million barrel draw expected. Total commercial petroleum inventories decreased by 1.6 million barrels last week.

New Satellite Imagery Shows Shocking Yemen Devastation As Saudi Crown Prince Tours US - Saudi Arabia and other oil rich Gulf Cooperation Council (GCC) allied states like the UAE have long managed to escape the scrutiny of media and international human rights bodies thanks to their deep pockets and security relationship with the West. . This is currently being demonstrated more than ever during Saudi Crown Prince Mohammed bin Salman's (MBS) extensive and ongoing tour of the United States after a visit to the UK earlier this month. The kingdom’s heir apparent landed in Washington nearly two weeks ago and met with Trump and other high US officials before embarking on a multi-city tour across the United States. Last Tuesday MBS met with Bill and Hillary Clinton, Kissinger, Senator Chuck Schumer, and UN Secretary General Antonio Guterres during a stop in New York City.  On Friday, he also met with the CEOs of Morgan Stanley and JPMorgan, James Gorman and Jamie Dimon. Not unexpectedly, mainstream media and politicians have fawned over the 32-year old prince's visit. Americans can even find a slick, nearly 100-page, ad-free magazine at their local supermarket newsstand which is entirely devoted to praising MBS and his "New Kingdom" (in the words of the magazine's title), produced by the owner of the National Enquirer - American Media Inc.The magazine of course has conveniently left out news of Saudi Arabia's vicious 3-year long scorched earth bombing campaign over Yemen, which has left millions of Yemeni civilians displaced since 2015, and according to conservative UN estimates from early this year, has killed over 5,000 civilian noncombatants. However, yet more hard empirical proof has emerged demonstrating that MBS and his allies in the West are decimating entire cities and civilian infrastructure in already deeply impoverished Yemen in their fight against Houthi rebels.

Barclays: Iran Could Find Other Buyers For Its Oil If Sanctions Tighten - Iran could do a lot of different things to kind of skirt possible tighter sanctions on its oil sector, such as sending oil to different places, Michael Cohen, head of energy commodities research at Barclays, told Bloomberg on Monday.“There’s a lot of different things that Iran can do to kind of skirt sanctions. In the past, they’ve used more oil in their power sector, they’ve actually sent oil to different places that can take it,” Cohen told ‘Bloomberg Daybreak: Americas’.Commenting on last week’s oil price rally that diverged from a general slump in equities, Cohen said that at the end of last week that oil prices were supported by EIA’s Wednesday inventory report that reported a decline in crude oil inventories of 2.6 million barrels for the week to March 16, and the appointment of John Bolton, an Iran hawk and a proponent of war, as National Security Advisor.   With Bolton’s appointment, market participants are looking at pretty much an end to the Iranian nuclear deal as of May 12, Barclays’ Cohen said today.“I think that the market pretty much assumes that there’s going to be some kind of reduction in Iranian supply,” he said, but added: “I’m not so sure that that’s the case.”There is some wiggle room and Iran could send oil to other places, according to Cohen.Asked about if Saudi Arabia could increase its oil production in the event of reduced Iranian supply, Cohen said that “there is some wiggle room at least in terms of other OPEC suppliers, but they are all committed to this OPEC deal and I don’t expect them to diverge from that either.”While OPEC is expected to continue to stick to its production cut agreement with Russia, at least for now, analysts believe that the geopolitical risk premium in oil prices has definitely returned, and the month of May could be important for oil prices, because of the deadline for the Iranian deal on May 12 and elections on May 20 in Venezuela, whose oil production is in freefall.

US carries out first drone strike in southern Libya --Over the weekend, US Africa Command (AFRICOM) conducted its first ever drone strike against Al-Qaeda militants in the southern Libya, killing two militants in the southern village of Ubari. The attack marks a new stage in the expansion of the American military offensive in Libya and northern Africa since the Trump administration took office. Notably, the strike was not accompanied by a public acknowledgement from AFRICOM.While officials did not disclose the origins of the drone’s base of operations, AFRICOM has been preparing for a massive escalation of armed drone flights conducted across the African continent from its recently constructed base in neighboring Niger, at Agadez.The strike occurred in an extremely remote region of Libya, located some 435 miles south of Tripoli and about 250 miles from the border with Algeria. The region is known as a haven for Islamist militants who have spilled into Libya and south into the Sahel since the 2011 US-NATO bombardment of the country.Geographically, the area around Ubari is roughly equidistant to the borders of the neighboring countries of Algeria, Chad, and Niger, and has long functioned as a thoroughfare for the smuggling of weapons, drugs, and immigrants traversing the lawless, vast expanse of desert of the Sahara comprising the countries of Libya, Niger, Chad, Algeria, and flowing through to Mali. Following the international outcry provoked by the killing of four Green Berets in an ambush last October in Niger, which exposed the advanced nature of American military operations in West Africa, AFRICOM has sought to keep secret subsequent operations, and did not provide a press release for the strike.

Syria – The East-Ghouta-Afrin Exchange Is Complete – Where Will The SAA Go Next? - After the Syrian army had taken all rural parts of east-Ghouta three pockets of densely upbuild areas were left in terrorist hands. Negotiations had started about transfer of the armed men to Idleb governorate in the north. Some 100,000 people moved from the besieged areas to the Syrian government side. Surrounded by widely superior forces, devoid of human shields and without any chance of relief the terrorist groups are now giving up one by one.First to surrender were Ahrar al-Sham fighters who held the Harasta suburb. 1,500 of them and their families, in total 4,500 people were transferred to Idleb by government buses. They had to give up all heavy weapons and were only allowed to carry one hand-weapons and no ammunition.Next to give up were Faylaq al-Rahman who held the southern pocket. While the leadership of the group was negotiating with the government side some of the group fired barrages of missiles into Damascus city and killed dozens of people. Shortly thereafter two dozen of foreigners who had been fighting with Faylaq al-Rahman turned up dead. Having eliminated those irreconcilable elements Faylaq al-Rahman burned its headquarter and agreed to be transferred. The men and their families are now being evacuated to Afrin, a formerly Kurdish area in the north-west which Turkish supported gangs recently captured. The total of this transfer were some 7,000 people. The last area in to be taken in east-Ghouta is Douma. It is held by Jaish al-Islam, a group of Wahhabi Islamists with intense support from Saudi Arabia. But Jaish al Islam will not want to go to Idleb. They have long fought with other Islamists and especially with HTS, aka Jabhat al-Nusra, which now rules in most of Idleb. Jaish al-Islam still tries to negotiate some autonomy for Douma but the Syrian government will not have any of that. It can not and will not allow a pocket of 'autonomous' Saudi financed Jihadis a few miles from the capital. The group will have to give up completely or agree to be transferred elsewhere.

Turkey's Erdogan Announces Iraq Military Incursion, Threatens Americans Over Manbij - On Sunday President Recep Tayyip Erdogan announced the beginning of Turkish military operations in Iraq's Sinjar region a week after Turkey and allied Syrian FSA groups captured Afrin from Kurdish fighters. During that prior victory speech immediately on the heels of the Syrian Kurdish retreat from Afrin, Erdogan had promised further "extensions" of his forces in the region, including into Eastern Syria and Iraq, while making repeat historical references to the Ottoman empire.Erdogan warned at the time that Turkish troops would keep pushing east further into Syrian Kurdish YPG territory (Kurdish "People's Protection Units" which Turkey considers an extension of the terrorist PKK), which would eventually pit his forces against the US armed and trained Syrian Democratic Forces (SDF).  During Sunday's speech he pledged to take Tal Rifaat (northwest of Aleppo) and Manbij: "the U.S. needs to transfer the control of Manbij to its real owners from the terrorist organization as soon as possible," according to the Turkish daily Hurriyet. US-backed forces are present in both places.  Erdogan also in typically brazen fashion put Iraq's government on notice, saying "We have told the central [Iraqi] government that the PKK is establishing a new headquarters in Sinjar. If you can deal with it, you handle it. But if you cannot we will suddenly enter Sinjar one night and clear this region of terrorists." It appears he is ready to make good on that promise, as the AP reports:

War Preparations: Leaked Images Allegedly Show US Military Tanks Arriving In Jordan - Syrian government forces have now secured most of the eastern Ghouta enclave, the last remaining rebel-held area near Damascus, the capital and the largest city of the Syrian Arab Republic.With Syrian forces nearing full control of the war-torn region, U.S. Ambassador to the United Nations Nikki Haley recently warned, Washington “remains prepared to act if we must,” if the United Nations Security Council fails to act on Syria for its assault on eastern Ghouta. Last week, Russian Deputy Foreign Minister Sergei Ryabkov commented on the critical situation in eastern Ghouta and called on Washington to completely abandon its plans for a military strike against Syrian government forces.“We’ve warned and warned the US that these plans must be unconditionally refused. Any such unlawful use of force, similar to what happened almost a year ago at the Shairat air base, would be an act of aggression against a sovereign state, as defined by the relevant article of the UN Charter,” he said. Washington had the previous experience of launching a military intervention without the consent of the United Nations Security Council, when President Donald Trump lobbed 59 Tomahawk missiles onto Syria’s Shairat airbase in April 2017.According to Muraselon news agency, Syrian forces have acquired most of the eastern Ghouta region through “achieving sweeping military victories or concluding evacuation deals.” The independent media outlet says Syrian forces “will most probably be heading to the country’s south in order to secure the borders with Jordan.”Could Syria’s southern border with Jordan be the next confrontation zone in the country’s multiple regional wars? Sputnik news agency recently uncovered leaked images of U.S. military equipment arriving in Jordan’s Aqaba Industrial Port via the vehicle carrier ship “Liberty pride” for the upcoming participation in the annual w ar drill “Eager Lion.” During the unloading process, the images reveal the “M1A2 Abrams main battle tanks, the M113’s variation for medical evacuation and the M2A3 Bradley armored personnel carriers” were offloaded from the 199-meter (652 feet) military transport vessel, said Sputnik.

Caught On Camera: Israel Targets Civilians With A Chemical Weapon Drone -- For the first time, Lebanon-based Al-Mayadeen TV released new dramatic footage showing Israeli forces using a weaponized unmanned aerial vehicle (UAV) against a Hamas rally in the Gaza Strip, according to the Times of Israel.  The short video clip published by Al-Mayadeen shows a weaponized unmanned aerial vehicle (UAV) targeting demonstrations in the southern Gaza Strip, controlled by the Palestinian militant group Hamas.The UAV is seen flying through the skies above hundreds of protestors, while operators of the aircraft drop chemical weapons into the crowd. The Times of Israel states that the UAV released tear gas, formally known as a lachrymator agent, which causes severe eye and respiratory pain, skin inflammation, bleeding, and even blindness.The intense footage could provide us with the early knowledge that governments are willing to use high-tech military technology against civilians in a non-combat environment…Israeli Border Police Deputy Commissioner Yaakov Shabtai, the government official behind the deployment of the weaponized unmanned aerial vehicle (UAV), told Hadashot TV news that the tear gas drone provides security forces with an extended range to hurl chemical weapons at protestors.“Beyond the fact that this equipment neutralizes any danger to the troops, it enables reaching places that until now we could not get to,” Shabtai told Hadashot TV news. The weaponized unmanned aerial vehicle (UAV) “can carry up to six canisters at a time, and drop them individually, as clusters, or all at the same time,” said the Times of Israel.   The Israeli-based online newspaper did not provide the manufacture’s name of the UAV, but it is rumored that ISPRA Ltd in Herzelya, Israel, is the developer of the drone, dubbed Cyclone Riot Control Drone System. Developers of ISPRA present a short informational video of how the chemical weapon drone works.

Israel kills 17 border demonstrators in Gaza -- Israeli troops, using live fire, killed at least 17 Palestinians and injured more than 1,400 during demonstrations along Gaza’s border with Israel and in cities throughout the Palestinian enclave. The demonstrators were armed solely with stones and homemade firebombs.  The Israeli army, using riot control measures, injured a further 27 Palestinians in clashes in the city of Nablus as nearly 900 Palestinians demonstrated in cities throughout the West Bank.  The organisers of the protests have called for six weeks of demonstrations, called the “Great Return March,” along the border of Gaza that has been subject to an 11 year-long illegal and inhumane blockade by Israel and Egypt. The demonstrations, starting on Friday, are set to continue for six weeks until May 15, the 70th anniversary of the establishment of the state of Israel and the subsequent war between Israel and her Arab neighbours, which the Palestinians commemorate as Nakba (Catastrophe) Day. Following the 1948-49 war, only about 200,000 of the 1.2 million Palestinians remained in the parts of Palestine that had become Israel. While many fled to avoid the war, most left out of fear of what might happen to them at the hands of Zionist terrorists.  One of the most notorious incidents was the Deir Yassin massacre where 250 men, women and children were murdered in cold blood by Menachem Begin’s Irgun group, as it went from house to house to drive out the Palestinians. Israel adamantly refuses to acknowledge the principle of the right of return for Palestinian refugees and their descendants because this would be tantamount to accepting responsibility for what happened to them.  A key demand of the Great Return March is the full implementation of the United Nations General Assembly Resolution 194 of December 1948, which stipulates that “the refugees wishing to return to their homes and live at peace with their neighbours should be permitted to do so at the earliest practicable date.”

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