Sunday, April 8, 2018

US oil supplies drop on record crude exports, new drilling at a 3 year high as active rigs top a thousand.

oil prices tumbled with equity markets over the past week, as the Trump administration doubled down on their tariff threats against China, and the specter of a full-scale trade war spooked the markets...after sliding 1.3% to close last week at $64.94 a barrel, US oil prices for May delivery fell $1.93, or nearly 3%, to a two-week low of $63.01 a barrel on Monday, following stocks lower after China retaliated against US tariffs on Chinese steel and aluminum, heightening concerns over a broadening trade war between the U.S. and China...however, oil prices then rebounded 50 cents to $63.51 a barrel on Tuesday as traders shifted their attention back to the oil supply situation and the week's expected draw from US crude inventories....oil prices then fell 14 cents to $63.37 a barrel on Wednesday, as a surprisingly large draw in U.S. crude supplies offset an early drop to lower prices after China proposed a further broad range of tariffs on U.S. exports...with US stock markets rebounding on Thursday, oil prices rose 17 cents to $63.54 a barrel, as Saudi Arabia unexpected hiked their crude prices, even as oil's gain was curbed by strength in the dollar....on Friday, however, Trump threatened an additional $100 billion in tariffs on Chinese goods, sending stocks plummeting 767 points, with oil prices following stocks lower, ending the day down $1.48 at $62.06 a barrel, for a net loss of $2.88 a barrel, or 4.4% for the week...

meanwhile, natural gas prices were also lower for the week, even as they appeared to remain immune to geopolitical influences...after rising to $2.733 per mmBTU on the forecast of colder weather last week, natural gas contract prices for May delivery fell 5 cents $2.683 per mmBTU on Monday, after a report that US natural gas output averaged 78.3 billion cubic feet per day over the prior three calendar days, up by 400 million cubic feet per day from the 77.9 billion cubic feet per day output averaged over March...natural gas prices then rose 1.4 cents on Tuesday and 2.1 cents on Wednesday on the persistence of colder than normal temperature forecasts for the northern half of the country, but then gave all those gains up in falling 4.3 cents to $2.675 per mmBTU on Thursday, on what was seen to be a bearish natural gas storage report, wherein the actual withdrawal of 20 billion cubic feet was less than the median forecast of a 26 billion cubic feet even though natural gas prices recovered 2.6 cents to $2.701 mmBTU on Friday on that cold April forecast, they still ended the week 3.2 cents lower than the prior week's close...

the week's natural gas storage report indicated that natural gas in storage in the US fell by 29 billion cubic feet to 1,354 billion cubic feet over the week ending March 30th, which left our gas supplies 697 billion cubic feet, or 34.0% lower than the 2,051 billion cubic feet that were in storage on March 31st of last year, and 347 billion cubic feet, or 20.4% below the five-year average of 1701 billion cubic feet typically in storage at the end of March...however, 9 billion cubic feet of this week's decrease was a non-flow-related adjustment to working gas stocks in the South Central Nonsalt region, and hence the actual withdrawal of gas from storage for consumption was 20 billion cubic feet....the average withdrawal of natural gas during the last week of March over the past 5 years has been 28 billion cubic feet, so this week's actual usage fell 8 billion cubic feet short of the norm, even though reported gas in storage fell more than the average amount... 

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 30th, showed that due to a big jump in our oil exports and a modest drop in our oil imports, we saw the largest drop in our crude oil supplies in twelve weeks...our imports of crude oil fell by an average of 250,000 barrels per day to an average of 7,898,000 barrels per day during the week, after rising by 1,071,000 barrels per day the prior week, while our exports of crude oil rose by an average of 597,000 barrels per day to a record average of 2,175,000 barrels per day, which meant that our effective trade in oil over the week worked out to a net import average of 5,723,000 barrels of per day during the week, 847,000 barrels per day less than our net imports during the prior the same time, field production of crude oil from US wells rose by 27,000 barrels per day to a record high of 10,460,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 16,183,000 barrels per day during the reporting week..

during the same week, US oil refineries were using 16,936,000 barrels of crude per day, 141,000 barrels per day more than they used during the prior week, while at the same time 660,000 barrels of oil per day were being pulled out of oil storage facilities in the US....hence, this week's crude oil figures from the EIA seem to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 93,000 barrels per day less than what refineries reported they used during the account for that disparity, the EIA needed to insert a (+93,000) 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"... (the details on 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 fell to an average of 7,677,000 barrels per day, which was 3.4% less than the 7,947,000 barrel per day average we imported over the same four-week period last year....the 660,000 barrel per day withdrawal from our total crude inventories was all taken from our commercially available stocks of crude oil, as oil stocks in our Strategic Petroleum Reserve were unchanged...this week's 27,000 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 2,000 barrel per day increase in output from Alaska...the 10,460,000 barrels of crude per day that were produced by US wells during the week ending March 30th were the highest on record, 13.7% more than the 9,199,000 barrels per day that US wells were producing during the week ending March 31st of last year, and 24.1% above the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June, 2016...

US oil refineries were operating at 93.0% of their capacity in using those 16,936,000 barrels of crude per day, up from 92.3% of capacity the prior week, but still down from the wintertime record 96.7% of capacity set during the last week of 2017, as US refineries are still ramping up after their pre-spring blend changeover and scheduled maintenance season....nonetheless, the 16,936,000 barrels of oil that were refined this week was a seasonal record, the most oil that US refineries have ever processed during February or March...while that elevated level of refining was still 3.8% 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 3.1% more than the 16,429,000 barrels of crude per day that were being processed during the week ending March 31st, 2017, when refineries were operating at 90.8% of capacity....

even with the increase in the amount of oil being refined, gasoline output from our refineries was lower than the prior week, decreasing by 190,000 barrels per day to 10,115,000 barrels per day during the week ending March 30th, after our gasoline output had increased by 373,000 barrels per day during the week ending March 23rd....nonetheless, our gasoline production was still 6.2% greater during the week than the 9,515,000 barrels of gasoline that were being produced daily during the week ending March 31st of last year....however, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 172,000 barrels per day to 5,016,000 barrels per day, after rising by 341,000 barrels per day during the prior week....hence, that increase meant the week's distillates production was fractionally higher than the 4,967,000 barrels of distillates per day than were being produced during the equivalent week of 2017....    

with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week fell by 1,116,000 barrels to 238,477,000 barrels by March 30th, the fifth draw from supplies in a row, but just the sixth decrease in 21 weeks....our gasoline supplies fell as our domestic consumption of gasoline fell by 5,000 barrels per day to 9,203,000 barrels per day, after falling by 116,000 barrels per day the prior week, and even though our exports of gasoline fell by 133,000 barrels per day to 966,000 barrels per day, while our imports of gasoline rose by 76,000 barrels per day to 761,000 barrels per day...with our gasoline supplies now down 5 weeks in a row, our gasoline inventories are fractionally lower than last March 31st's level of 239,103,000 barrels, even as they are roughly 7.2% above the 10 year average of gasoline supplies for this time of the year...         

with the increase in distillate's production, our supplies of distillate fuels rose by 537,000 barrels to 129,491,000 barrels over the week ending March 30th, after falling by 8,472,000 barrels over the prior three weeks...our distillate inventories rose because the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 488,000 barrels per day to 3,887,000 barrels per day, even as our exports of distillates rose by 233,000 barrels per day to 1,151,000 barrels per day, while our imports of distillates fell by 51,000 barrels per day to 99,000 barrels per day...but even after this week’s inventory increase, our distillate supplies still ended the week 15.0% lower than the 152,374,000 barrels that we had stored on March 31st, 2017, and roughly 7.2% lower than the 10 year average of distillates stocks at this time of the year…    

finally, to cover the big increase in our oil exports, we had to take oil out of our commercial supplies of crude oil for the 12th time in 20 weeks and for the 37th time in the past year, as our commercial crude supplies decreased by 4,617,000 barrels, from 429,949,000 barrels on March 23rd to 425,332,000 barrels on March 30th....hence, after falling most of the past year, our oil inventories as of March 30th were 20.6% below the 535,543,000 barrels of oil we had stored on March 31st of 2017, 14.7% lower than the 498,598,000 barrels of oil that we had in storage on April 1st of 2016, and 5.4% below the 449,662,000 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 from the stable levels of prior years... 

since our crude oil exports are the major reason for our falling supplies, and since this week saw a record high for those exports, we'll include here a graph of those exports over the past year and a half...

April 4 2018 crude exports as of March 30

the above graph of recent US crude oil exports came from the weekly package of oil graphs that John Kemp of Reuters emailed out on Wednesday, after the release of the weekly EIA shows weekly US crude oil exports in thousands of barrels per day over the past 18 months, and also highlights the exact amount of our crude exports in thousands of barrels per day over a few select weeks going back to September 1st, when our exports were choked off as Gulf Coast ports were shut down by Hurricane you can see, our oil exports had only topped a million barrels per day a few times prior to that date...however, after the price of US crude fell to a 10% discount to the comparable international grade in the wake of the hurricanes, US crude suppliers began to sell as much oil overseas as they could, and as a result our oil exports have stayed above a million barrels per day since...oil exports from the US are being sold from supplies benchmarked to the price of WTI, the light sweet grade of oil that's quoted daily...for the week ending March 30th, when these record exports were recorded, US light crude prices were quoted between $63.72 and $66.55 a barrel, with an average of around $ the same time, Brent crude, the similar North Sea grade of oil that serves as the international benchmark, was being quoted between $68.78 and $71.05 a barrel, with an average price of just under $70 a it's clear that even after accounting for shipping costs of as much as $2 a barrel, US oil producers are incentivized to sell as much of our oil into international markets as our pipeline and port infrastructure will allow for...

This Week's Rig Count

US drilling activity increased for the sixth time in seven weeks and for 15th time in the past 22 weeks during the week ending April 6th, a period of higher 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 rose by 10 rigs to 1003 rigs in the week ending on Friday, topping 1000 rigs for the first time since April 2nd, 2015...that was also 164 more rigs than the 839 rigs that were in use as of the April 7th 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 increased by 11 rigs to 808 rigs this week, which was also 136 more oil rigs than were running a year ago, while it was still 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 was unchanged at 194 rigs this week, which was 29 more gas rigs than the 165 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...however, one of the rigs that was listed as "miscellaneous" was shut down this week, so now there is just one such "miscellaneous" rigs active, down from the 2 "miscellaneous" rigs that were operating a year ago.

the count of drilling rigs working in the Gulf of Mexico was unchanged at 12 rigs, still the lowest number of rigs working in the Gulf or offshore 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 ago....the count of active horizontal drilling rigs increased by 14 rigs to 884 horizontal rigs this week, which was also up by 189 rigs from the 695 horizontal rigs that were in use in the US on April 7th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of addition, the directional rig count increased by 3 rigs to 63 directional rigs this week, which was still down from the 71 directional rigs that were in use during the same week of last year...on the other hand, the vertical rig count was down by 7 rigs to 56 vertical rigs this week, which was also down from the 73 vertical rigs that were deployed on April 7th 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 April 6th, the second column shows the change in the number of working rigs between last week's count (March 30th) and this week's (April 6th) count, the third column shows last week's March 30th 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 7th of April, 2017...   

April 6th 2018 rig count summary

you've probably noticed the two rig increase in the Utica shale; that increase holds no surprises this week, as both of those new rigs are targeting natural gas, with one of those in Ohio and the other in Pennsylvania, where there are now two rigs targeting the Utica for natural gas in Beaver county, PA...however, Pennsylvania was down a rig this week because two of their Marcellus rigs were shut down, while drilling the Marcellus was down by only one rig with the addition of another Marcellus natural gas directed rig in West Virginia...the natural gas rig count was unchanged, however, because two rigs targeting gas in the Cana Woodford of Oklahoma were switched out for two rigs targeting oil, while another rig targeting natural gas started up in an unnamed basin...also missing from the above tables were 5 new rigs targeting oil that were started up in "other basins", at least one of which was the Unitah of Utah, were there were at least 3 horizontal and two directional rigs working as of April 6th....meanwhile, other than the changes for the major oil & gas producing states shown above, Alabama's only working rig was shut down this week, down from 2 rigs a year ago and marking the first time there was no activity in the state since January 13, 2017, while Mississippi had a rig added and now has 5 deployed, the same as they had working a year ago...


FirstEnergy Solutions files for bankruptcy - Norwalk Reflector — With a late-night Chapter 11 bankruptcy filing by FirstEnergy Solutions and FirstEnergy Nuclear Operating Co., FirstEnergy Corp. — the parent company that for years has been one of the nation’s largest utilities — has further distanced itself from major power-generating units such as the Davis-Besse nuclear power plant in Ottawa County, the Perry nuclear power plant east of Cleveland, and the twin-reactor Beaver Valley nuclear complex west of Pittsburgh.Unable to make them profitable in an electricity market upended by record-low natural gas prices, the fate of those plants — plus two coal-fired power plants, one dual fuel gas/oil plant, and a pet-coke fired plant — appears even bleaker now unless a buyer or a bailout emerges.The market has been changed radically by a worldwide surge in fracking brought on a little more than a decade ago by a revolutionary horizontal drilling technique that allows the oil and gas industry to recover fuel from previously inaccessible areas. The Washington-based Nuclear Energy Institute has said it is especially hard for nuclear plants to compete in deregulated electricity markets, which Ohio and Michigan have had since 1996.Davis-Besse, Perry, and the two Beaver Valley units are the latest of several nuclear plants across America that have recently closed or have announced they will close prematurely because of failing economics.The anticipated closure date for Davis-Besse is now listed as May 31, 2020, by PJM Interconnection LLC, the Pennsylvania-based operator of the 13-state regional electric grid that includes Ohio — one of the nation’s largest electric grids.  Closure dates for Perry and Beaver Valley Unit 1 are May 31, 2021. For Beaver Valley Unit 2, it is Oct. 31, 2021.

FirstEnergy Solutions, power-generating subsidiary of Akron-based FirstEnergy Corp., files for bankruptcy protection --  The unregulated power generation arm of Akron’s FirstEnergy Corp. said in a 21-page document that it had more than $1 billion in liabilities and that reorganizing under the bankruptcy code was in the best interests of the company and creditors. FirstEnergy Solutions was due to make a significant debt payment on Monday but did not have the funds on hand to make the payment. The filing for bankruptcy protection includes FirstEnergy Solutions, along with all FES subsidiaries and FirstEnergy Nuclear Operating Co., according to a prepared statement released by FirstEnergy late Saturday night. The filing doesn’t involve FirstEnergy or its distribution, transmission, regulated generation and Allegheny Energy Supply subsidiaries. “FirstEnergy and its other subsidiaries are not part of this Chapter 11 filing,” FirstEnergy President and CEO Charles E. Jones said in the prepared statement. “The six million customers of our regulated utilities will continue to receive the same reliable service, while our regulated generation facilities will continue normal operations, with the same longstanding commitment to safety and the environment.” FirstEnergy had warned about the possibility since November 2016, with Jones telling analysts during a conference call that “competitive generation is weighing down the rest of the company” and noting that the odds were already stacking up against FES being able to service its debt on time. FirstEnergy is continuing its previously announced strategy to exit the competitive generation business and become a fully regulated utility company.

FirstEnergy Solutions filed for bankruptcy late Saturday - Toledo Blade — With a late-night Chapter 11 bankruptcy filing by FirstEnergy Solutions and FirstEnergy Nuclear Operating Co., FirstEnergy Corp. — the parent company that for years has been one of the nation’s largest utilities — has further distanced itself from major power-generating units such as the Davis-Besse nuclear power plant in Ottawa County, the Perry nuclear power plant east of Cleveland, and the twin-reactor Beaver Valley nuclear complex west of Pittsburgh.   Unable to make them profitable in an electricity market upended by record-low natural gas prices, the fate of those plants — plus two coal-fired power plants, one dual fuel gas/oil plant, and a pet-coke fired plant — appears even bleaker now unless a buyer or a bailout emerges. The market has been changed radically by a worldwide surge in fracking brought on a little more than a decade ago by a revolutionary horizontal drilling technique that allows the oil and gas industry to recover fuel from previously inaccessible areas. The Washington-based Nuclear Energy Institute has said it is especially hard for nuclear plants to compete in deregulated electricity markets, which Ohio and Michigan have had since 1996. Davis-Besse, Perry, and the two Beaver Valley units are the latest of several nuclear plants across America that have recently closed or have announced they will close prematurely because of failing economics. The anticipated closure date for Davis-Besse is now listed as May 31, 2020, by PJM Interconnection LLC, the Pennsylvania-based operator of the 13-state regional electric grid that includes Ohio — one of the nation’s largest electric grids.Closure dates for Perry and Beaver Valley Unit 1 are May 31, 2021. For Beaver Valley Unit 2, it is Oct. 31, 2021. While each of those plants is operating safely, there is no guarantee FirstEnergy Solutions will keep them running until those dates, either. Corporate executives have said FirstEnergy Solutions will not make any major improvements to those plants going forward, and have acknowledged the U.S. Nuclear Regulatory Commission will not allow them to continue operating if there comes a point in which substantial work would need to be done to ensure safety.

Coal power company files for bankruptcy and asks Trump for bailout -  The coal and nuclear divisions of Ohio power company FirstEnergy (FE) filed for Chapter 11 restructuring over the weekend, mere days after the company sent a letter to the Energy Department requesting emergency relief. They're seeking a bailout through a rarely-used section of federal law normally reserved for natural disasters or times of war.  A spokeswoman from the Energy Department said the FirstEnergy request is "now under review." FirstEnergy Solutions and FirstEnergy Nuclear Operating Company have been teetering on the brink of bankruptcy for months. They said they plan to use about $550 million in cash to continue operating and pay their 3,000 employees.  The divisions own and operate two coal-fired power plants, one dual natural gas/coal plant, one petroleum-coke plant and three nuclear power plants. FirstEnergy is a major customer of Murray Energy, the mining giant run by outspoken coal CEO Robert Murray.  The Chapter 11 filing does not include the parent company, Akron-based FirstEnergy. The bankruptcy case and bailout request show how the coal industry continues to face enormous pressure, mostly from cheap natural gas, despite Trump's promises to revive the industry by slashing regulations. "It really comes down to economics. Coal continues to be challenged by cheap and plentiful natural gas,"

Bankruptcy of FirstEnergy’s Power-Generation Fleet Will Test Trump’s Promises to Coal Industry -- The Trump administration’s commitment to coal is under its stiffest test yet after an Ohio energy company made a plea to favor that power source over its many rivals, including oil and natural gas, in a clash that could end with higher costs for consumers. FirstEnergy Corp.’s fleet of coal- and nuclear-power plants filed for bankruptcy over the weekend, just days after the company asked the federal government for an emergency declaration that would keep many of them open. That forces President Donald Trump’s Energy Department into a decision on whether to intervene under a lightly used, 83-year-old law and compel the nation’s largest electric-grid operator to dispatch power from FirstEnergy’s coal and nuclear plants effectively before any other. Trump has been one of the coal industry’s biggest boosters, campaigning on reviving a downtrodden industry, and his administration has voiced support for nuclear, too. Both of those fuels are facing tough competition as alternatives—including natural gas, and wind and solar power—have become cheap and more plentiful. Should the Ohio company’s plea succeed, it could protect thousands of jobs at nuclear and coal plants, as well as their suppliers. But it would hurt rival energy businesses and could raise electricity prices for companies and consumers across the Midwest and mid-Atlantic states. That poses significant risk to Trump by antagonizing supporters among electricity users and companies in the oil-and-gas industry that have become primary suppliers to power plants.

Power grid manager PJM to Energy Department: there is no emergency - Plain-Dealer-- Power grid manager PJM Interconnection on Friday urged the U.S. Department of Energy not to take extraordinary action ordering subsidies to keep uncompetitive coal and nuclear power plants operating. FirstEnergy's power plant subsidiary, FirstEnergy Solutions (FES), asked the DOE for the action on Thursday morning, about 18 hours after informing PJM and the Nuclear Regulatory Commission that it would close its three nuclear power plants within three years.The Akron-based company relied on a rarely used clause in the Federal Power Act authorizing the DOE to take extraordinary action to keep power plants running -- and the grid stable -- during extreme emergencies such as an act of war. PJM Interconnection is the federally approved manager of the high-voltage electric grid and wholesale power markets in Ohio, 12 other states and Washington, D.C.  "PJM can state without reservation there is no immediate threat to system reliability," wrote Vincent Duane, senior vice president and general counsel.  "Indeed, the FES units that announced their expected retirement earlier this week, by their own disclosures, will  remain operational in most cases until through May 2021."  FirstEnergy Solutions told PJM in writing that it plans to close its Davis-Besse nuclear plant near Toledo in 2020 and both the Perry nuclear plant in Lake County and the two-reactor Beaver Valley plant near Pittsburgh in 2021. The company said it informed the NRC orally, but the agency will not recognize the company's intentions until it files a written notice, said an NRC spokeswoman. In the letter to Energy Secretary Perry, Duane wrote that future power plant closings do not constitute the kind of emergency that the framers of the Federal Power Act had in mind.  And he noted that PJM will do a formal analysis of the grid impact of the planned closings of the FirstEnergy reactors in the next 30 days, using an analytical procedure approved by the Federal Energy Regulatory Commission. If the analysis shows the closings would in fact weaken the grid as FirstEnergy Solutions argues, PJM could ultimately join with the company's request, the letter states. "PJM therefore respectfully requests that the Secretary allow PJM's FERC-accepted process to unfold in an orderly manner and refrain from taking unnecessary, extraordinary and precedential immediate action as sought by FES," the letter concludes.

Under proposed bill, cities may see financial benefits for storing fracking waste – WFMJ - Local lawmakers are looking for a way communities can benefit from storing fracking waste.State Representatives Glenn Holmes and Mike O'Brien introduced House Bill 578, that will reallocate 40 percent of fees paid by outside companies to store fracking wastewater in Ohio injection wells. “We think it is only fair that the community sees some type of remediation for the impacts of dumping in our communities. Furthermore, we need to explore the technologies to stop the need for injection wells altogether," said Holmes. Under the proposed bill, 37.5 percent of out-of-district injection well fees would be redirected to the local municipalities and townships housing the wells.  House Bill 578 also changes the injection well setback requirement to 300 feet. As of now, the Oil and Gas division of the Ohio Department of Natural Resources monitors injection wells and receives all payments from out-of-district entities.“This legislation will redirect fees to the communities that have been adversely affected by this industry, and a 300-foot setback is a more aesthetically appropriate setback,” said O’Brien. The lawmakers say the impact of injection wells on local areas include ecological contamination, noise, and excessive wear and tear on roads, as well as other costs incurred by communities surrounding the wells.

Bill would send fracking dollars to communities -- Ohio House Bill 578 was announced Thursday by Ohio Reps. Glenn Holmes, D-Girard, and Michael J. O’Brien, D-Warren, and would affect fees paid by outside companies who store fracking wastewater in Ohio injection wells, according to a news release from the representatives. The proposal, awaiting committee assignment in the House, would send 37.5 percent of out-of-district injection well fees to the local communities where the wells are located. The fees now are turned over to the Ohio Department of Natural Resources, which oversees state injection wells. The other portion of the funds would remain with ODNR. Holmes said his office is still waiting on figures to see how much money the bill could generate in local communities or cost the state agency.  “All we are asking for is that ODNR and the injection well industry be good community partners in dealing with this very sensitive issue,” said Holmes. “We think it is only fair that the community see some type of remediation for the impacts of dumping in our communities.”  The bill also doubles the setback requirement for the surface of the well from 150 feet to 300 feet. O’Brien said the larger setback is more “aesthetically appropriate.” Under the bill, the owners of new wells would have to get written permission from property owners to set up within 300 feet of certain types of occupied buildings and areas with lakes, streams and other bodies of water.

Six Permits Awarded in Ohio’s Utica Shale – The Ohio Department of Natural Resources issued six permits for horizontal wells to energy companies drilling for oil and gas in eastern Ohio’s Utica shale last week, the agency reports.Permits were awarded to XTO Energy Inc., a division of Exxon Mobil, to drill four new wells in Belmont County for the week ended March 31, ODNR said. Chesapeake Exploration LLC secured two new permits for wells in Harrison County.The rig count in the Utica rose last week to 23 from 19 the previous week, according to ODNR. As of March 31, ODNR had issued 2,799 permits for horizontal wells in the Utica, 2,314 of which are drilled and 1,871 of which are in production. No permits were issued in the northern Utica, which encompasses Mahoning, Columbiana and Trumbull counties. Nor were there new permits issued for neighboring Lawrence and Mercer counties in western Pennsylvania, according to the Pennsylvania Department of Environmental Protection.

Utica report card: Ohio's natural gas production at record levels - Ohio has produced more natural gas than it uses since early 2015. Driven by prolific Utica Shale wells, the state produced a record 1.7 trillion cubic feet of natural gas last year.Much of the regional economic development around that production has been in the form of pipelines and processing facilities.Two interstate natural gas pipelines — Energy Transfer’s Rover project and the NEXUS Gas Transmission pipeline — cross Stark and neighboring counties. Marathon Petroleum also has built or acquired assets in the region to supply its Canton refinery with liquids from Utica Shale wells.    Ohio’s industry boosters want to turn the state’s natural gas reserves into even more economic development, but are facing headwinds from Wall Street and Washington, D.C.Attendees of the fifth annual Utica Midstream conference on Wednesday heard updates on natural gas production, local pipeline projects and efforts to sell the Ohio River valley as the world’s next petrochemical hub. The Rover project is partially operational and will carry 3.25 billion cubic feet of natural gas a day to customers in Canada and the United States when completed. But the project has run afoul of environmental regulators in Ohio and West Virginia and encountered delays, notably after spilling drilling fluid into a wetland next to the Tuscarawas River in Bethlehem Township last year. But as soon as Rover began partial operation of one of its two 42-inch diameter mainlines last year, producers started shipping gas to reach better markets, which opened space on other pipelines that producers were also eager to use,  Construction on NEXUS started in October, and work crews in Michigan have already started welding and burying pipeline, said Erika Young, a business development project director with Enbridge, the Canadian company partnering with DTE Energy to build the pipeline.Locally, workers have been clearing trees and building work areas for NEXUS, which should be in service by the end of the third quarter. When completed, the 36-inch diameter pipeline will carry 1.5 billion cubic feet of natural gas a day to markets in Ohio, Michigan and Canada. Rover and NEXUS shipping natural gas should help to relieve the regional surplus, raise prices and spur more drilling, Breshears said.

Ohio expecting more multi-well pads, increase in oil, natgas production - — Ohio is expecting drilling in 2018 to continue to grow slowly and steadily, with development of numerous multi-well pads in 2018 and beyond a given.Those assessments came from Rick Simmers, chief of the Ohio Department of Natural Resources’ Division of Oil and Gas Resources Management.Oil production in Ohio is likely to increase slightly in 2018, Simmers said on Wednesday at the fifth annual Utica Midstream Conference at Walsh University in North Canton, Ohio. Kallanish Energy attended the one-day program, presented by and the Canton Regional Chamber of Commerce.Oil production from the Utica Shale in eastern Ohio has declined in the last two years, due to lower commodity prices, he said.Producers have also opted to drill instead in Ohio’s dry gas window to reduce costs. Drilling in the wet gas window can result in producers having to pay more to get the natural gas liquids removed.Ohio oil production in 2017 was 16.3 million barrels (MMBbl), down from a peak of 21.9 MMBbl in 2015.Natural gas production in Ohio is expected to continue growing, Simmers said. Ohio hit 1.7 trillion cubic feet (Tcf) of natural gas production in 2017, and that is likely to grow.Many Ohio producers in 2011 and 2012 built pads and drilled single wells in efforts to delineate holdings and to find the most productive areas, he said. Now those producers are going back and adding new wells to existing pads.There is one pad in southeast Ohio with 28 wells, and more are planned. More typically, Ohio producers are expected to add six to 12 wells per pad in an effort to reduce costs and boost production, Simmers said.

Cabot moving west, deeper in search of crude - Independent producer Cabot Oil & Gas, which has made its mark as the major dry-gas producer in the Marcellus Shale play in Northeast Pennsylvania, is branching out, both geologically and geographically.The Houston-based company is preparing  to drill a handful of test wells in Ashland and surrounding counties in north-central Ohio, in 100,000 acres.And the search could be for natural gas, natural gas liquids – or even crude oil.  “Our geologists are telling us they see something and we want to take a look,” George Stark, a Cabot spokesman tells Kallanish Energy. But we’re going below the Utica.” The Houston-based company has filed paperwork with the Ohio Department of Natural Resources (ODNR) for two well pads in Ashland County, and plans to drill up to five test wells in an area that also includes parts of Richland, Knox, Wayne and Holmes counties. During the early days of Utica Shale exploration, Devon Energy drilled a few test wells in the area Cabot is targeting, but found nothing to warrant a major drilling program, moved on. Stark told Kallanish Energy Cabot isn't drilling exactly where Devon drilled. Paperwork filed with ODNR indicates the company is targeting the Rome and Knox formations. Cabot plans to drill vertical wells and take samples that will show the ratio of oil to natural gas and the pressure and thickness of the rock, factors that determine whether it makes economic sense to drill more wells, Stark tells Kallanish Energy. According to a March presentation made at the Scotia Howard Weil Energy Conference, Cabot revealed it plans to spend $75 million in 2018 on “exploration areas,” with the Ashland County drilling program consuming a major part of that budget.  For the past 10 years, Cabot has been drilling Marcellus Shale horizontal wells in Pennsylvania’s Susquehanna County.Cabot was producing natural gas from 561 horizontal wells at the end of 2017, and has another 3,000 undrilled Marcellus locations among its 172,000 acres in northeast Pennsylvania, according to that same presentation. The company plans to drill roughly 85 Marcellus wells this year.

Oil and gas company eyes drilling in north-central Ohio - Cabot Oil & Gas is getting ready to drill test wells in Ashland and surrounding counties in north-central Ohio.“We’ve got a really neat group of geologists who think they see something in Ohio,” said George Stark, a Cabot spokesman based in Pittsburgh. “They see something, and we want to go touch it.”Cabot is looking for natural gas and oil a hundred miles northwest of the Utica Shale play’s core in eastern Ohio. The Houston-based company has filed paperwork with the Ohio Department of Natural Resources for two well pads in Ashland County, and plans to drill up to five test wells in an area that includes parts of Richland, Knox, Wayne and Holmes counties.  Stark will talk about Cabot at the fifth annual Utica Midstream Conference Wednesday at the Barrette Center at Walsh University. The Canton Regional Chamber of Commerce and are presenting the conference. During the early days of Utica exploration, Devon Energy drilled a few wells in the area Cabot is targeting, but moved on.  Cabot is planning to explore below the Utica Shale, Stark said. Paperwork filed with ODNR indicates the company is targeting the Rome and Knox formations, but Stark declined to be specific. The agency has yet to issue the company a drilling permit.The company plans to drill vertical wells and take samples that will show the ratio of oil to natural gas and the pressure and thickness of the rock, factors that determine whether it makes economic sense to drill more wells, Stark said.Cabot has obtained the right to drill vertical wells into rock formations 3,000 to 4,000 feet beneath a natural gas storage field owned by Columbia Gas Transmission, but Cabot still needs to get horizontal-drilling rights from surface landowners. Casings around the wells will isolate the wellbore from the storage field and any other formations that aren’t the target of the well, Stark said.

Property owners seek to limit fracking in Holmes, Ashland, Richland –  Cabot Oil & Gas is seeking to explore and develop potential subsurface natural gas resources in Ohio, prompting several area landowners’ groups to team up in opposition to the company’s efforts. The area being targeted for exploration lies beneath underground natural gas storage fields owned by Columbia Gas Transmission, LLC in Holmes, Ashland and Richland counties. On August 30, 2017, Cabot entered into a sublease agreement with Columbia to allow the company to explore and potentially develop natural gas resources beneath the storage fields through horizontal drilling and then extract those resources through hydraulic fracturing, a process commonly known as fracking.  “We believe that there is something there, a hydrocarbon, an oil, natural gas, natural gas liquid, something, in the layers below the Utica Shale, but the only way to find that out is to actually drill a well and test and see because we can’t just assume.” She noted that under the current sublease agreement, Cabot already has the right to drill vertical wells in the area, however, the company believes that doing so would not be environmentally sound or economically viable. However, before this can occur, the company needs property owners in the tri-county area to sign an amendment to their existing agreements with Columbia.  Bill Baker is the founder of a group called Frack Free Ohio that has been helping local landowner groups organize and mobilize against Cabot’s efforts. “I discovered through contacts in Ashland, Richland and Holmes counties that Cabot Oil was attempting to get folks to sign leases to do horizontal drilling in the area,” he explained. “They were concerned about this, so I worked with landowners in those three counties, and they decided to form individual groups to focus on their direct community to educate their neighbors and address this issue.” Out of the effort was born the Tri-County Landowners Coalition, comprised of several grassroots groups representing area landowners. Currently, the coalition includes the Hayesville Community on Fracked Gas (HCFG), representing landowners in Ashland County; the Clear Fork Landowners Group (CFLG), representing property owners from the Clear Fork Valley area of Richland County; Advocates for Local Land (ALL), comprised of landowners in Ash- land and Western Holmes counties; and the Monroe Township Landowners Coalition (MTLC), representing property owners in Monroe Township in Richland County.

COMMENTARY: In Ohio, it's the lobbies that are beating local rule – Thomas Suddes - Earlier, in 2004, the legislature denied Ohio’s 900-plus cities and villages any authority over the “permitting, location, and spacing of oil and gas wells.” You don’t want someone fracking in your neighborhood? Don’t waste your breath at City Hall: No mayor can do much to help. Instead, the Ohio Department of Natural Resources is supposed to police what the oil and gas industry does, including fracking.  That 2004 measure – which had bipartisan support – was House Bill 278. Its sponsor was then-Rep. Thomas Niehaus, a suburban Cincinnati Republican, later a state senator, then Senate president. Today, he’s a Statehouse lobbyist whose 30 clients include the Ohio Oil and Gas Association. Here’s how then-Justice William O’Neill explained HB 278 in a state Supreme Court dissent. O’Neill, a Chagrin Falls Democrat, is among six Democrats running for this year’s Democratic gubernatorial nomination.At issue in the Supreme Court case was a bid by Munroe Falls, the Akron suburb, to prevent Beck Energy Corp. from drilling an oil and gas well in Munroe Falls. In contrast, the Natural Resources Department – big surprise – had issued a permit for the Munroe Falls well. The Ohio Supreme Court sided with Beck Energy. O’Neill opposed the Supreme Court’s ruling. O’Neill’s dissent included this take on the court’s decision: “Under this ruling, a drilling permit could be granted in the exquisite residential neighborhoods of (Franklin County’s) Upper Arlington, (Greater Cleveland’s) Shaker Heights, or the (Hamilton County) village of Indian Hill – local zoning dating back to 1920 be damned.” Litigation over the 2004 law, and over fracking, continues. Meanwhile, though, amnesia is an Ohio politician’s best friend. So here, in alphabetical order, are people who today hold elected state office but in 2004, as Ohio House or Senate members, voted “yes” to pass House Bill 278 and thus strip Ohio cities and villages of power over oil and gas drilling:

Pipeline faulted for unauthorized drilling -- The builders of the Atlantic Sunrise natural gas pipeline have received a notice of violation from the Pennsylvania Department of Environmental Protection for using an unauthorized drilling method when placing the pipe underneath Interstate 81 in Lebanon County. Transcontinental Gas Pipe Line Company contacted DEP on March 24 to report a spill of 30 gallons of drilling fluids in Union Township, prompting a DEP inspection, according to the notice DEP issued Friday and posted on its website. Inspectors found construction crews using a horizontal directional drilling (HDD) method for installing pipes that DEP had not authorized at that location, the notice says.  The DEP required the pipeline company to submit several layers of documentation in response, including a "report documenting any other unpermitted changes made to the method for instillation of the Atlantic Sunrise pipeline." Chris Stockton, a spokesman for pipeline owner Williams, noted that Williams was allowed to bore at the location, just not by using the HDD method. "We take this permit violation very seriously and are working closely with the contractor, while in coordination with PADEP, to ensure this does not happen again." It is the second notice of violation DEP has issued in Lebanon County during Atlantic Sunrise pipeline construction. On March 2, DEP faulted Atlantic Sunrise contractors for a failure to install best management practices that led to sediment entering a wetland near the Quittapahilla Creek. Crews also began work on the pipeline's crossing of the creek in late January even though a high stream flow and localized flooding were predicted, the report said.  The construction of the Atlantic Sunrise pipeline near the Quittapahilla Creek crossing has been heavily criticized by a relative of a farm owner whose land borders the creek where construction is occurring. Jami Willard said in February that construction crews often weren't following best management practices and "just do what they want as easily and quickly as possible."

Mariner East Remains Offline, Raising Questions on Longer-Term Impacts - Ethane and propane transport on the Energy Transfer Partners LP (ETP) Mariner East (ME) 1 pipeline remains suspended more than a month after Pennsylvania regulators ordered a halt to operations because of sinkholes, with little clarity on exactly when service will resume. Three sinkholes, one of which came within 10 feet of a house’s foundation, formed in West Whiteland Township near the area where horizontal directional drilling for the ME 2X pipeline was underway. That prompted the Pennsylvania Public Utility Commission (PUC) to issue an emergency order in March directing ETP subsidiary Sunoco Pipeline LP to conduct an investigation of the integrity of ME 1 and geophysical testing in the construction area.The investigation was initially estimated by the state to last up to 14 days, but ETP said it could last up to six more weeks.PUC spokesperson Nils Hagen-Frederiksen said the emergency order and the suspension of natural gas liquids (NGL) transport on ME 1 remains in full effect. Under the terms of the order, Sunoco can’t resume operations on the system until regulators are satisfied with the test results and any corrective actions necessary. The order notes that Sunoco must share all of its findings and meet regularly with the PUC.The ongoing suspension indicates that various conditions, all of which are subject to the review and approval of the PUC, have not been met by Sunoco. “We are working with the PUC and appropriate agencies to complete the necessary testing and remediation in order to ensure integrity of the pipeline before putting it back into service,” said ETP spokesperson Lisa Dillinger. “We expect this work to take up to four-to-six weeks depending on what we do, or do not find.”

Sunoco pipeline offers $10,000 reward following equipment vandalism — Sunoco Pipeline is offering a $10,000 reward for information that leads to an arrest for construction equipment that was vandalized. Between April 2 and April 3, Sunoco Pipeline had multiple pieces of construction equipment vandalized, the company says. The incident occurred along the Mariner East 2 Pipeline in West Whiteland Township, Pennsylvania, according to Sunoco’s press release on Thursday. The vandalism was deliberate and caused a significant amount of damage and potentially harmful impacts, according to the release. Sunoco says, “We understand there are varying opinions about critical infrastructure projects like the Mariner East 2 Pipeline, and we respect the rights of all to peacefully protest, however, destruction of equipment is not peaceful.” In spite of the vandalism, construction continues on this infrastructure project. The mainline construction is currently 97 percent complete.  

Sunoco will temporarily relocate residents while it conducts pipeline sinkhole study - Sunoco Pipeline LP will temporarily relocate five Chester County families whose backyards were damaged last month after sinkholes developed along the Mariner East 1 pipeline, forcing the company to shut down operations over safety concerns after its bare pipeline was exposed. The company offered last week to temporarily relocate the families on Lisa Drive in Exton for up to the six weeks that it estimates it will take to conduct geotechnical studies in their backyards, where Sunoco’s construction of a second Mariner East pipeline caused sinkholes to develop.The backyards of homes on Lisa Drive in Exton, where sinkholes developed after Sunoco began horizontal directional drilling along its Mariner East pipeline route. The PUC halted pipeline operations on March 7 until Sunoco determines the extent of underground instability. The Pennsylvania Public Utility Commission (PUC) ordered Sunoco to shut down the existing pipeline on March 7 until remedial action was taken. At the time, Sunoco estimated the Mariner East 1 pipeline would be out of service for 10 to 14 days.But the shutdown of the 8-inch-diameter pipeline, which transports as much as 70,000 barrels a day of Marcellus Shale natural gas liquids such as propane to a terminal in Marcus Hook, now appears to be more likely to stretch into May, forcing Sunoco’s customers to seek other outlets for their products. Sunoco Pipeline is owned by Energy Transfer Partners (ETP), a giant Texas pipeline operator. Sunoco began preparatory work Friday for its “geotechnical data-collection activities,” installing plastic mats to protect the ground from equipment rutting. In a letter to residents, the company said the studies would involve making “small excavations” every 35 feet to confirm the location of the pipeline, followed by other work, “including the use of small auger drills to obtain core samples to identify subsurface voids, if any, in the area.”

Frac sand needs growing with laterals – When prices went into the ditch in 2014-2016, the U.S. energy industry hunkered down, concentrated operations to plays’ sweet spots, and discovered supersizing well laterals and frac sand usage were the way to succeed. Now, with crude prices remaining over $60 a barrel, the market for sand is surging once again as U.S. oil production rebounds in a big way, and the rising price of the tiny grains threatens to cut into energy companies’ profits. “Laterals are longer and the pounds of sand used per lateral-foot have increased considerably,“ Ryan Carbrey, Houston-based senior vice president with Rystad Energy, told Kallanish Energy. Sonny Randhawa, director and senior research analyst – Oilfield Service and Equipment at Seaport Global Securities in Houston, expects frac sand demand to increase to 100 million tons in 2018, and 115 million tons in 2019, up from 82 million tons in 2017. Laterals rapidly are approaching two miles in length — and beyond. Carbrey told Kallanish Energy he expects the volume of frac sand forced into each horizontal well drilled in the Marcellus and Utica Shale plays, along with the Permian’s Delaware and Midland sub-basins to jump an average of 26.6% from 2018 to 2021. Expert opinions vary as to whether increase drilling, plus longer laterals and more sand per lateral-foot will lead to a possible shortage. Carbrey, for example, told Kallanish Energy there currently is a frac sand shortage in certain areas, but it’s due to bad weather slowing shipments to the wellsite.  “The (frac sand ) companies are saying four to six weeks (of shortages), but we think it might be longer than that; the issue is slowly being mitigated and within two months this should be sorted out,” he said. While going to the beach with a highlift and loading dump trucks with sand doesn’t qualify as a solution to a possible frac sand shortage, once again the industry has discovered there is a viable substitute for the gold (or the white) standard of sand. . “They may need to switch to a lower quality sand for example, but should still be able to satisfy their needs.” The Marcellus/Utica Shale plays would be using primarily Northern White Sand because it’s not only the best sand, it’s also the closest.

Pennsylvania judge distinguishes fracking from traditional mineral rights - A Pennsylvania appellate judge on Monday distinguished [opinion, PDF] the natural gas extraction practice known as hydraulic fracturing, or "fracking," from conventional drilling property rights and held that fracking is not subject to the same "rules of capture."In a suit brought against Marcellus Shale gas producer Southwestern Energy [corporate website] alleging trespass and conversion for producing gas under the plaintiffs' land, Senior Judge John Musmanno of the Superior Court of Pennsylvania [official website] explained that Pennsylvania courts have yet to determine whether the processes unique to fracking prevent its application to the same law of capture as traditional methods of drilling.Traditionally, the rules of capture assume that oil and gas originate in subsurface reservoirs or pools, and can therefore migrate freely within the reservoir and across property lines. However, the court explained, this is not true for the oil extracted via fracking from the Marcellus Shale formation. "Shale gas does not merely 'escape' to adjoining land absent the application of an external force," the court said. The court concluded that the rule of capture does not prevent liability for trespass due to fracking. The court did not rule on whether Southwestern actually trespassed on the property, but rather sent the case back to the Susquehanna County Court of Common Pleas to determine the facts in light of the Superior Court's ruling.

PA: Local fracking suit could have statewide impact - A Susquehanna County family can proceed with a lawsuit against an energy company that extracted natural gas from beneath their land using wells on an adjacent property, the state Superior Court ruled in a potentially precedent-setting decision.  The ruling in the suit Adam Briggs and his two siblings filed against Southwestern Energy Production Co. is important because it negates a legal principle in oil and gas law that allows companies to siphon natural resources from beneath land they do not own without compensating the landowner. Briggs filed suit in 2015 against Southwestern relating to an 11-acre property he, his brother, Joshua Briggs, and his sister, Sarah Briggs, own in Harford Twp. The suit alleges Southwestern operated two wells to extract natural gas from a Marcellus Shale formation under the Briggs’ property since 2011. The Briggs were never compensated for the gas, however, because the wells are on a neighbor’s land. Southwestern has a lease with the neighbor but not the Briggs family. A Susquehanna County judge dismissed the lawsuit in August, after finding Southwestern was not required to pay the Briggs family based on a legal principle known as the “rule of capture.” The rule allows companies to drain a natural resource, including oil, gas or water, from beneath property they do not own as long as they do not trespass on the land. In its ruling, the Superior Court noted the rule is based on the idea that ownership of underground pools of gas or oil cannot be determined because the resource naturally migrates between property lines. In his appeal, the Briggs’ attorney, Laurence Kelly, of Montrose, argued the rule should not apply to natural gas extracted through hydraulic fracturing because the gas contained in Marcellus Shale does not freely migrate. It is only freed by the fracking process. The Superior Court agreed.

Nexus pipeline construction slashes its way through Washtenaw County - A year ago, we told the stories of Washtenaw County residents trying to head off the construction of the Nexus pipeline, which was determined to use eminent domain to build a pipeline carrying fracked gas from Ohio to Canada, where pipeline owners hoped to sell it for a profit. Activists were mad as hell that the pipeline, a project of DTE Energy in partnership with an Enbridge subsidiary, was going to use eminent domain, which the Federal Energy Regulatory Commission grants because gas infrastructure is considered a public good — even though the gas would be bound to another country for sale. These eminent domain powers would allow the company to claim land, and the pipeline was routed near schools, private homes, through private recreational land, public parks, and even the centennial farm of resident Kathy Schoen.  Schoen had told us, "My fear is ... they're going to have to de-water our property. It sounds like they drive big steel sheets in at angles, and they pump the water out, and it's just going to be even worse. It won't ever be the same."  Pictures sent in over the winter show the toll construction has taken on Schoen's farm land. "Meanwhile, up at the Throw Shop, the disc golf shop run by Ben Calhoun, trees have been taken out and the land formerly used as a disc golf course is in upheaval.  Calhoun adds that Nexus was granted its odorization waiver. That means that any gas leaking from the pipe will not have the nasty smell the public is taught to associate with natural gas. While Calhoun says the decision poses long-term health and safety risks, it will save the pipeline operators money.  Meanwhile, critics of the pipeline remain convinced it is not needed and will not even prove profitable. DTE Energy, in fact, hedged its bets on whether it would make money, bringing a case before the Michigan Public Service Commission and saying that, should the line not be profitable, it would like permission to pass the costs of building Nexus on to DTE ratepayers.

Delinquent $13.8 Billion Pipeline Company Receives Minor Fine For Major Oil Spill – Real News Network, video & transcript - The transportation of oil via pipelines is encountering increasing resistance across North America. In what has been dubbed the Standing Rock of the North, indigenous Canadians, environmentalists, and ordinary citizens are battling the massive expansion of Kinder Morgan's Trans Mountain pipeline in Western Canada. Trans Mountain carries toxic tar sands bitumen from Alberta to British Columbia's Pacific Coast. Meanwhile, south of the border, many battles are raging as well. The Dakota Access Pipeline, the Nebraska arm of the Keystone XL, and the construction in Virginia and West Virginia of two proposed natural gas pipelines are all encountering strong resistance. In Virginia some protesters have spent 30 days positioned up in trees in the construction area of the pipeline. A new pipeline spill in Indiana confirms that the fears of pipeline resisters are well founded. In the Indiana spill approximately 1000 barrels, or 42000 gallons, of diesel fuel entered Big Creek, which feeds into the Wabash River. The company responsible, Marathon Petroleum Corporation, manages one of the largest petroleum pipeline networks in the United States, based on total volume delivered. A few days after the disclosure of the recent spill, the Environmental Protection Agency and Illinois Environmental Protection Agency announced an agreement with Marathon Pipeline to resolve a Clean Water Act violation stemming from its 2016 spill into the Wabash River, with civil penalties amounting to 335000 dollars.  With us to discuss the recent spill and Marathon's track record, we are pleased to be joined by Jodi Perras. Jodi manages Sierra Club's Beyond Coal campaign in Indiana, Kentucky, Michigan, and Ohio. Thanks for joining us today, Jodi.

Co-Tenancy is Now Law in West Virginia, More Gas Production - The co-tenancy legislation that passed during this year’s regular session in West Virginia is generally expected to aid natural gas development, but exactly how significant its impact will be remains unclear.  A long-awaited compromise aimed at helping shale gas producers develop more of their assets and, in particular, block-up more acreage for longer laterals, the co-tenancy bill was a top priority for West Virginia’s leading oil and gas trade groups. In West Virginia, mineral rights are severed from the surface. After more than 100 years of oil and gas development in the state, it’s not uncommon for producers to encounter mineral interests on a single property divided among dozens of family members, some of whom can be hard to track down or unwilling to allow development to occur. In cases where there are more than seven mineral rights owners on a single tract of land, the new law would require a producer to obtain consent from 75% instead of the 100% as was previously required. Before the bill was signed by the governor in early March, West Virginia was the only oil and gas producing state that allowed a single minority interest owner to prevent others from allowing drilling. The bill takes effect in June. Groups including the West Virginia Oil and Natural Gas Association had long maintained that the outdated mineral laws were putting the state at a competitive disadvantage. With co-tenancy on the books, industry representatives think it may attract additional investment, spur more job growth and provide more opportunities for mineral and surface owners. “Our companies, the big companies that are drilling here, they said to us, ‘get us co-tenancy, get us the ability to amass individual tracts of land with a super majority, not 100%, and we moved forward from there,” said executive director Charlie Burd of the West Virginia Independent Oil and Gas Association. “Co-tenancy absolutely moves the needle. It moves the needle in favor of producers’ need to accumulate more individual tracts to be able to get larger drilling units, not just larger units, but longer drilling units.

WVDEP launches webpage dedicated to helping citizens learn about pipeline projects - The West Virginia Department of Environmental Protection has created a new  webpage designed to help the public navigate maps and information about the five major natural gas pipelines in West Virginia that have been proposed or are under construction. In a news release Monday, WV DEP said the site includes, “detailed maps, transcripts, (and) permit information” on a single webpage.The five pipelines that are the focus of the webpage are the Atlantic Coast Pipeline, Mountain Valley Pipeline, the Mountaineer Gas Company Eastern Panhandle Expansion Project, Mountaineer Xpress Pipeline, and the Rover Pipeline. The webpage connects detailed maps of the proposed routes and DEP’s searchable online database with information about inspections and enforcement actions and any permit modifications. The site also links to find public hearing transcripts, responses to comments received at public hearings, and press releases about the pipelines. The DEP says the page will be updated as more information becomes available. The page also has a place to submit reports of possible permit violations.

W.Va. launches new webpage on five natural gas pipelines West Virginia’s Department of Environmental Protection has launched a new webpage to help residents learn about five natural gas pipelines proposed or under construction, Kallanish Energy reports.The pipelines are the Atlantic Coast Pipeline, Mountain Valley Pipeline, the Mountaineer Gas Co. Eastern Panhandle Expansion Project, Mountaineer Xpress and the Rover Pipeline.“We are making sure that anyone who has any questions about these pipelines can find those answers on one, easy-to-use webpage,” said WVDEP Cabinet Secretary Austin Caperton, in a statement.“People who live near these projects deserve to be able to find answers to their questions quickly and WVDEP is providing this new webpage to help them do that,” he said.The webpage includes maps, route descriptions, inspection and enforcement actions, permit modifications, public hearings and press releases.The page will be updated as more information becomes available on each pipeline. Citizens will be able to submit reports on possible violations via the webpage. The page is available at:

Tree Sitters Stall MVP Pipeline —  “Tree sitters" are stalling construction of the Mountain Valley Pipeline. Members of the group Appalachians Against Pipelines are physically occupying two trees and a vertical pole erected in the middle of the only access road on Peter's Mountain, which straddles the Virginia-West Virginia border. The pipeline partnership, led by gas company EQT, has obtained the necessary permits for the Mountain Valley project. But rules protecting a rare bat species forbid cutting trees there between April 1 and November.  Protester Alex - who didn't share his last name - spoke by cell phone from the tree he's occupied for more than a month."This is a victory, and the fact that we've been able to last this long and impede the construction is a testimony to the power that people have,” Alex said. “But if we were to get down tonight, I expect that they would try to clear tomorrow or the next day." Until this weekend, the MVP developers maintained they would meet a March 31 deadline to cut down the trees. And Alex acknowledged it may be impossible for tree sitters to permanently prevent the $3.7 billion project. Pipeline opponents say government agencies and the courts have so far failed to meet their responsibilities to protect landowners and the environment. And Alex said the public doesn’t have to accept the MVP.  “There are still a million ways to interrupt the inevitability. We can decide that together."

A tree-sit protest of the Mountain Valley Pipeline has spread to Roanoke County - Another pipeline protester has taken to the trees.The latest person to climb up a tree in the path of the Mountain Valley Pipeline — hoping to prevent tree cutting as construction of the project begins — got off the ground Monday on private land in Roanoke County.  Speaking from a tree stand about 30 feet high, the 61-year-old woman said she planned to hold her position in the woods along Poor Mountain Road for “as long as it takes.”  “I have three children, and this mountain is like my fourth child,” she said, identifying herself only by the nickname of Red. “And take it from me, I would do anything within my power to protect this mountain.  “I am very connected to this land. This is family property that has been in my family for seven generations.” The woman said she was inspired by another tree-sit operation three counties away, where two protesters have been holed up in trees along the proposed route of the natural gas pipeline in the Jefferson National Forest since Feb. 26.If the civil disobedience movement spreads, she said, “I’m hoping that people will open their eyes and look at the devastation that this will do.”While opponents have long argued in regulatory proceedings that the project will cause widespread environmental damage, the tree-sits are the first direct action taken in an effort to stop construction. However, a spokeswoman for Mountain Valley said the protests have so far failed to delay the company’s plan to have the 303-mile pipeline transporting natural gas through West Virginia and Southwest Virginia by the end of the year. “With the vast majority of the MVP project ready for the next phase of construction activity, there is more than enough work that can get underway and keep the project on track,”.

Tunnel Drilling Under the Blue Ridge Parkway is Asking for Trouble - Dominion intends to drill 4,639 feet through the Blue Ridge under the George Washington National Forest, Appalachian National Scenic Trail, and Blue Ridge Parkway. Dominion’s plans call for use of horizontal directional drilling (HDD) and contingency use of direct pipe installation (DPI) if the HDD operation fails. Given the topographic and geophysical challenges at the site, the Forest Service initially conditioned any authorization for ACP construction on prior successful completion of the proposed HDD or DPI operations. Should the HDD and DPI prove impracticable after ACP construction is underway, there will be a strong incentive for allowing an open-cut crossing of the Appalachian Trail and the Blue Ridge Parkway.The proposed drilling operations will have an extreme environmental footprint, requiring extensive excavation for entry and exit workspace, pipe pullback, fabrication, and testing workspace, as well as siting of heavy equipment for pipe handling, and a network of access roads – all on steep mountainsides with multiple stream crossings. As with other aspects of the ACP, the public and regulatory review agencies have not had access to detailed construction plans. The areas and amount of excavation required for construction have been imprecisely specified at best. The Dominion Pipeline Monitoring Coalition published a report in early 2017 describing both the risk of failure and the unavoidable environmental damage associated with the plans for drilling through the Blue Ridge. This report described the risk factors confronting both the HDD and contingency DPI operations. Although detailed geophysical investigation of the drill path is standard practice for assessing the feasibility of prospective HDD and DPI operations, the information considered during environmental review was limited in both scope and reliability. No subsurface borings were completed at or near the HDD endpoints and geophysical survey data were obtained for less than 25% of the drill path.

Thousands Call on VA Gov. Northam to Protect Virginia Streams from Fracked-Gas Pipelines — Citizens representing Virginia landowners, the faith community, scientists, people of color, water protectors and clean energy advocates today called on Governor Ralph Northam to protect Virginia’s waters by taking immediate action on the proposed Mountain Valley and Atlantic Coast pipelines. The action comes the morning after Virginia’s Department of Environmental Quality approved a key permit for the Mountain Valley Pipeline, paving the way for its construction. At a press conference at the Bell Tower on Capitol Square, citizens presented the Northam administration with petitions signed by more than 10,000 Virginian residents. The signatories call on the governor to protect the drinking water supplies of countless Virginians from the Mountain Valley and Atlantic Coast pipelines, which would cross streams and other waters more than 1,400 times across the state. The group also presented a petition from with more than 62,000 signatures from other concerned citizens from around the country calling on Governor Northam to reject the pipelines. In addition to the projects’ tremendous climate impacts that affect all Americans, the projects bisect national treasures including the Blue Ridge Parkway, the Appalachian Trail, and many miles of national forest land.  The petition demands that the Northam administration immediately halt the ongoing tree-felling along the routes, allow the public to review and comment on the erosion and stormwater control plans before they are finalized by the Department of Environmental Quality, and take action to ensure the state analyzes individual stream impacts, rather than the Trump administration’s Corps of Engineers.

Russian 'green' trolls are targeting the US energy sector, House report claims - Russian internet trolls from the same outfit blamed for meddling in the 2016 US presidential election also created more than 9,000 social media posts designed to stir up enmity around energy and natural gas projects in the US, such as the Dakota Access Pipeline, according to a report from the Republican majority of the House Science, Space, and Technology Committee. The House Science Committee, chaired by Republican Lamar Smith of Texas, prepared the report. It analyzed how that Russian troll farm — which is also under scrutiny by Special Counsel Robert Mueller — hyped controversies about pipelines, hydraulic fracturing and climate change on Facebook, Twitter and Instagram. Energy reporter Tim Puko of The Wall Street Journal says that while the posts, which were created by Russia's Internet Research Agency (IRA), were meant to create controversial debate in the US, they should also be viewed in terms of how they might have helped Russia's own energy sector. Social media companies turned over to the committee social-media posts from some of the same Russian agents who were caught up in the Mueller investigation, Puko says. Many were “meme-like posts created…to take the side of environmentalists in different controversies surrounding oil and gas development and new pipelines.” “It was pretty clear that these posts were designed to inflame fears in people who have environmental concerns or health concerns about, typically, fossil fuel development,” Puko says.

Protesters block Bayou Bridge Pipeline construction supply site in Calcasieu Parish -  Two women from New Orleans on Thursday morning dressed up as crawfish and chained themselves inside barrels parked in front of an industrial yard about 200 miles from their homes. By the end of the day, Renate Heurich, a retired teacher, and her friend, Sue Prevost, an active teacher, said they were facing counts along with two others who joined them in protesting construction of the 163-mile Bayou Bridge Pipeline across south Louisiana. The industrial yard in Iowa, which is outside Lake Charles, is stocked with railroad ties that trucks use to access muddy construction sites along the pipeline route, said Anne Rolfes, founding director of the Louisiana Bucket Brigade, which organized the protest. About 20 protesters blocked access to the industrial yard for more than three hours starting at 6 a.m., Rolfes said. About five trucks were trapped inside, she said, until the Calcasieu Parish Sheriff’s Office arrived about 9 a.m. All but two — Heurich and Prevost, the crawfish-festooned teachers in the barrels — complied with an order to disperse, Rolfes said. The protesters remained at the site but moved a distance away. Sheriff’s deputies eventually pushed aside the barrel containing Heurich, who willingly left the barrel. The five trapped truck drivers managed to leave once deputies removed the first barrel, Rolfes said, but she figured the lack of other trucks attempting to enter signified a wider disruption. “This is a busy yard on a usual day,” Rolfes said. “They are usually in and out of this yard every 10 minutes.” 

Louisiana and Minnesota Introduce Anti-Protest Bills Amid Fights Over Bayou Bridge and Enbridge Pipelines - This week, the Louisiana House of Representatives introduced new legislation aimed at criminalizing the activities of groups protesting the extraction, burning, and transport of oil and gas. The bill is similar to a modelcreated by the right-wing American Legislative Exchange Council. Indeed, in the wake of the massive protest movement at Standing Rock, which attempted to prevent completion of the Dakota Access pipeline, at least seven states have introduced or passed “critical infrastructure” legislation. Louisiana’s version comes as opponents of the Bayou Bridge pipeline have ramped up protest activities in the state, staging occupations and blockades aimed at halting construction of the project. The legislation creates new crimes that would punish groups for “conspiring” to trespass on critical infrastructure sites and prescribes particularly harsh penalties for those whose ideas, if carried out, would disrupt the operations of such infrastructure. The definition of the term critical infrastructure would be amended to include pipelines and pipeline construction sites. The language of the bill reaches far beyond cases of property destruction, and stands to net individuals who do not participate in or condone such activities. The Louisiana bill, unlike the ALEC model, does not require that any disruption to a facility’s functioning take place for penalties to apply — an individual could face huge fines or prison time without ever having set foot on the property. The proposed law appears to be designed to intimidate the array of groups working to halt construction of the 163-mile oil pipeline, which cuts through a sensitive wetland where Louisiana crawfish are harvested. The Bayou Bridge pipeline shares the same parent company, Energy Transfer Partners, as the Dakota Access pipeline. Indeed, the two projects represent the northern and southern ends of a larger pipeline system.

Pipeline Backed by Pruitt’s Oil Lobbyist Landlord Approved While EPA Chief Was Receiving Sweetheart Rent -- As U.S. Environmental Protection Agency ( EPA ) chief and reigning number one seed in the " worst Trump cabinet member " bracket Scott Pruitt attempts to beat back accusations that he violated ethics rules by renting a room from the wife of powerful energy lobbyist J. Steven Hart, the New York Times revealed late Monday that Pruitt approved a massive pipeline project supported by Hart's firm at the same time he had access to what critics argue was an unusually low-priced rental ."A giant pipeline that rips up a vast swath of America and wrecks the climate in exchange for a cheap condo," founder Bill McKibben tweeted in response to the new report. "Seems the perfect emblem of the Trumpyears."While EPA officials immediately pushed back against the notion that Pruitt approved the project as a favor in exchange for the cheap condo, government ethics experts argued that the pipeline approval at the very least gives off the appearance of a conflict of interest."Entering into this arrangement causes a reasonable person to question the integrity of the EPA decision," Don Fox, who served as general counsel of the Office of Government Ethics during the Obama and George W. Bush administrations, told the Times. During an appearance on MSNBC on Monday, former White House ethics official and vice-chairman at Citizens for Ethics and Responsibility in Washington Richard Painter called Pruitt's room rental "disgusting" and argued it is a clear "violation of the gift rule." Pruitt's decision to sign off on the project—an expansion of Enbridge's Alberta Clipper pipeline, which runs from Alberta, Canada to Wisconsin—came in March of last year, when his lease with the Washington, DC condo was still in effect.

LNG and pipeline reversals turn Louisiana gas market upside down, part 4. -- The Louisiana natural gas market is in a state of major flux. The state’s supply mix has changed drastically, with Offshore Gulf of Mexico production declining over the past few years and the long-dormant Haynesville Shale making somewhat of a comeback in the past year. At the same time, four new liquefaction trains at Cheniere Energy’s Sabine Pass LNG terminal have added more than 3.0 Bcf/d of export demand that didn’t exist before 2016. These trends signal a shift in Louisiana’s supply-demand balance and are a prelude to big changes yet to come as producers and midstreamers look to provide solutions for balancing the market. Today, we continue our deep-dive into recent and upcoming changes in the Louisiana market, this time focusing on flow trends across the state’s North, Offshore Gulf and Central pipeline corridors.  In Part 1, we looked at the growing importance of the Louisiana market in balancing the U.S. gas market. It’s at the epicenter of natural gas demand growth in the U.S. For that reason, it’s also the destination market that U.S. gas producers and midstreamers are targeting. We learned from our analysis in Part 2 that gas supply along the Upper East corridor is increasingly moving east from the Perryville Hub (in northeastern Louisiana) over the past year or so, and the aggregated capacity of the seven pipes in that corridor is nearly full.  In Part 3, we looked at flows on the western side of the state. Gas flows across the western Louisiana border have traditionally moved east from Texas and Oklahoma into Louisiana, and that continues to be the case. But the same pushback from Marcellus/Utica supply that’s displaced flows in the eastern Louisiana corridors also has affected flows on the west side, with a couple of pipes — TETCO and TGP — reversing direction.

Natural gas storage design capacity increased slightly in 2017 - Over the past four years, relatively little new underground natural gas storage capacity was built in the Lower 48 states. EIA measures natural gas storage capacity in two ways: design capacity and demonstrated maximum working gas volume (or demonstrated peak). In 2017, design capacity grew by about 1%, and demonstrated peak fell by 1%. Design capacity is the sum of the working gas capacity for all active facilities in the Lower 48 states as of November 2017. Design capacity is based on the physical characteristics of the reservoir, installed equipment, and operating procedures particular to the site. Nationally, design capacity rose by 34 billion cubic feet (Bcf), or 0.7%, between November 2016 and November 2017. This increase was driven by expansion in the East storage region, where design capacity grew by 30 Bcf (2.9%) in 2017.Most of the incremental capacity in 2017 came from expansions to existing facilities, and expansions were heavily concentrated in the East region, where natural gas production has grown almost continually since 2009. Several facilities in Ohio and West Virginia likely expanded in 2017 to accommodate increasing levels of natural gas production in the Appalachian Basin.    Demonstrated peak is the sum of the highest storage levels reached by each storage facility over the most recent five-year period, with the most recent period covering December 2012 to November 2017 (the beginning of each yearly heating season). Demonstrated peak indicates how storage facilities were actually used, not just how they were designed. The demonstrated peak fell by 46 billion cubic feet (Bcf), or 1.0%, in 2017. EIA began tracking peak capacity metrics in 2011, and 2017 marks the first year that the demonstrated peak declined. The decline was partly because the new five-year range does not include 2012, a year that saw very high inventory levels because of record warm weather.

May NYMEX natural gas futures pull back to $2.688/MMBtu ahead of EIA storage report -- NYMEX May natural gas futures lost footing overnight in the US ahead of Thursday's open, amid anticipation of a slowdown in the pace of inventory erosion approaching the traditional end of the withdrawal season. At 6:41 am ET (1041 GMT) the contract was down 3.0 cents at $2.688/MMBtu. Abating weather-related demand support associated with the arrival of spring is seen to have minimized the rate of weekly storage draws when the US Energy Information Administration releases its storage report later today for the week ended March 30. Estimates gathered by S&P Global Market Intelligence call for a consensus withdrawal of 25 Bcf. That would follow a 63 Bcf draw reported for the previous week which left total working gas stocks at 1,383 Bcf, or 672 Bcf below the year-ago level and 346 Bcf below the five-year average of 1,729 Bcf. Higher low temperatures generated by lingering cold in spring are expected to have contributed to diminished heating demand and the anticipated step down in the pace of storage erosion in the forthcoming report. "Even with the cold temperatures, nat gas heating-related demand (although above normal) is nothing like demand during the height of the winter heating season," Energy Management Institute principal Dominick Chirichella said in a note to clients. "This week's inventory withdrawal level will likely be below normal or the five-year average for the same week." 

Natural Gas Futures Slide as EIA Storage Stats Seen Bearish - A bearish government storage report helped fuel a natural gas futures retreat Thursday as lingering cold couldn’t overshadow signs of a well-supplied market. Spot prices were mixed, with a few New England points spiking and California prices eased amid moderate demand in the region; the NGI National Spot Gas Average climbed 14 cents to $2.92/MMBtu. The May contract settled at $2.675, down 4.3 cents on the day, enough to erase gains from the previous two trading sessions. June settled 3.7 cents lower at $2.729.The Energy Information Administration (EIA) reported a weekly storage withdrawal that came in looser versus market expectations, although a reclassification resulted in a slightly larger net decrease to inventories overall.  EIA reported a net decrease of 29 Bcf for Lower 48 gas stocks for the week ending March 30, but the figure came with an asterisk. In a footnote, the agency said the implied flow for the week was actually a withdrawal of 20 Bcf, with “nonflow-related adjustments” accounting for a 9 Bcf decrease in inventories in the South Central Nonsalt region for the period. Markets seemed to latch on to the less impressive minus 20 Bcf “implied flow.” As soon as EIA’s 10:30 a.m. ET report crossed trading desks, the May contract slid close to 4 cents to as low as $2.651 before settling into a range of around $2.665-2.675 over the next half hour. By 11 a.m. ET, May was trading around $2.662, down about 5.6 cents from Wednesday’s settle.  The 20 Bcf implied withdrawal compares with a 4 Bcf pull in the year-ago period, while the five-year average is a withdrawal of 28 Bcf.  Last week, EIA reported a 63 Bcf withdrawal for the week ended March 23. Prior to the report, the market had been looking for a larger withdrawal than the implied flow. The median taken from a Bloomberg survey had showed traders and analysts expecting a 26 Bcf withdrawal for the week, with responses ranging from 22 Bcf to 39 Bcf. A Reuters survey of 23 participants had settled on a median 26 Bcf draw with a range of 19 Bcf to 35 Bcf. IAF Advisors analyst Kyle Cooper had called for a withdrawal of 23 Bcf, in line with Intercontinental Exchange EIA storage futures, which had settled Wednesday at a withdrawal of 23 Bcf. OPIS by IHS Markit expected a withdrawal of 27 Bcf. Including the net 9 Bcf decrease because of reclassification, total working gas in underground storage stood at 1,354 Bcf as of March 30, versus 2,051 Bcf a year ago and five-year average inventories of 1,701 Bcf, according to EIA. The year-on-year deficit increased week/week from 672 Bcf to 697 Bcf, while the year-on-five-year deficit widened slightly from 346 Bcf to 347 Bcf, EIA data show.

EPA grants 25 small refiner exemptions to fuel mandates — The Environmental Protection Agency (EPA) has so far granted 25 small US refiners exemptions from federal fuel blending mandates for 2017, dragging down the market for compliance credits and infuriating biofuels groups. EPA did not comment on the associated number of renewable identification numbers (RINs) associated with small refinery exemptions to the Renewable Fuel Standard (RFS). The number of approved waivers — more than double the previous year and all but four of the applications received for 2017 — surged after Congress and federal courts told the agency last year it had overstepped its authority by limiting the number of waivers. "It appears the agency has initiated a fire sale on RFS demand," Renewable Fuels Association chief executive Bob Dinneen said. RFS requires refiners, importers and other companies to each year ensure minimum volumes of renewables blend into the fuel they add to the US transportation supply. Companies acquire RINs needed to prove compliance by blending approved renewable and conventional fuels. Obligated parties that lack infrastructure for that activity purchase RINs from blenders. Congress created a hardship waiver for refineries with less than 75,000 b/d of capacity. Facilities must convince the Department of Energy and EPA that compliance creates an economic hardship. The waivers apply to individual facilities, rather than an overall company. EPA does not adjust a year's minimum volume after waiving a small facility's obligation. Such waivers instead effectively reduce obligations for all obligated parties and increase the supply of available RINs, cutting costs. The agency has historically granted few waivers, though given little detail on who received the benefits or how decisions were reached. Because the waivers hinge on economic hardships, they are treated as confidential business information. A 2011 list of candidate refineries prepared by the Department of Energy was also redacted.

Oil and Gas Drilling Blamed for Sinkholes Threatening to Swallow Parts of Texas - Oil and gas extraction in west Texas is causing the formation ofmassive sinkholes, according to a new study. As the fossil fuel industry has expanded its operations in the region, an increase in seismic activity and other “alarming” geological hazards have been recorded. Two giant sinkholes near the Texan town of Wink have previously been linked with such operations, but they may just be the tip of the iceberg.  The geophysicists who first alerted the world to the threat posed by the expansion of Wink’s sinkholes undertook further research and found unusual land movement throughout the wider west Texas region.“The ground movement we’re seeing is not normal,” said Professor Zhong Lu, an expert in satellite radar imagery analysis at Southern Methodist University.“The ground doesn’t typically do this without some cause.”Having previously used satellite radar images to study the Wink sinkholes, Professor Lu and his collaborator, Dr Jin-Woo Kim, used similar methods to explore the link between such phenomena and human activities.“This region of Texas has been punctured like a pin cushion with oil wells and injection wells since the 1940s and our findings associate that activity with ground movement,” said Dr Kim. In their study, published in the journalScientific Reports, the researchers demonstrated significant ground movement across a 4000-square-mile area of Texas. Combining their imagery with oil well data for the region allowed the scientists to conclude that this unstable ground was associated with decades of fossil fuel extraction.

Fracking activist tries to gauge power plant emissions -- Sharon Wilson stood in a lecture hall at the University of Texas Rio Grande Valley Tuesday with two side-by-side photos of a local power plant on the projector. What followed were gasps from the roughly 70 students in attendance.The well-known environmental activist is a licensed thermographic camera user. The Environmental Protection Agency, Texas Commission of Environmental Quality and the oil and gas industry all use the same equipment to measure hydrocarbon emissions, which are invisible to the naked eye.“They use the same cameras but they try to criticize the videos that I take,” Wilson said.  Wilson has alleged that although government entities and the industry use the same equipment, they are prohibited from using memory cards to avoid a paper trail. TCEQ has been using thermographic cameras for about a decade and reported having 20 in 2015. “The cameras detect hydrocarbons, but they don’t identify which specific hydrocarbons are being emitted,” said Andrew Keese, a media relations specialist with TCEQ. “It’s a general tool we use to identify potential things we need to look into. … It may or may not indicate an issue. So, if something was detected, then an investigator would have to go and follow up.”  Wilson visited several power plants in the area and compared the images to the audience at UTRGV, presenting Tuesday on the effects of the oil and gas industry in Texas. She said the images taken from power plants in Hidalgo County — Calpine Magic Valley, Merit Compressor Station and STEC Red Gate power plant — were “as bad as (she’s) seen anywhere.”

Trump’s SEC Blocks Shareholder Climate Resolution at Oil Company’s Request  -  The Securities and Exchange Commission (SEC) has blocked a shareholder resolution to set greenhouse gas-emissions targets, setting a troubling precedent for shareholders who want to use their collective power to fight climate change , Axiosreported Monday.The investment firm Trillium Asset Management had intended to propose a resolution at an annual shareholders' meeting this spring calling on EOG Resources, the largest oil-producer in Texas, to set dates for reducing greenhouse gas emissions. But EOG complained to the SEC in December, asking the government agency to bar the resolution from a vote on the grounds that it would " micro-manage " the company.The SEC ruled in EOG's favor in February, and rejected an appeal from Trillium in March, marking the first time that the SEC has ruled to block an emissions-related proposal for non-technical reasons."What the SEC has done here really feels like interfering with the marketplace, substituting their judgment for what shareholders and investors already think and do," Trillium shareholder-advocacy director Jonas Kron told Axios. Trillium is far from the first investment group to use a similar proposal as an attempt to push fossil-fuelcompanies to reduce greenhouse-gas emissions. Axios cited data from the Sustainable Investments Institute saying that 130 such resolutions had been proposed since 2010.

Investors stunned over oil producer’s climate-change exemption -  A new twist is unfolding in the fight between activist investors and the oil industry: an unprecedented move by federal regulators allowing a major producer to preemptively kill a shareholder resolution on climate change without a vote. The Securities and Exchange Commission’s support of oil producer EOG Resources is emerging as a flashpoint in what has become America’s central battleground over climate change: what investors do about it. It’s an arcane fight, but a consequential one too, because President Trump is reversing course on climate policy. “What the SEC has done here really feels like interfering with the marketplace, substituting their judgment for what shareholders and investors already think and do.” For the record, spokespeople at the SEC and EOG both declined to comment.  Trillium proposed a resolution calling on EOG to set a target to reduce its greenhouse gas emissions. EOG complained to the SEC in late December that the proposal would micromanage the company, calling it a "rigid, time-bound" target, and asked to omit it from consideration. Responding in late February, the SEC agreed and took a veiled shot at shareholders, implying they don’t know enough to set company policy. The SEC sent another letter last month to Kron’s firm rejecting an appeal request. EOG is the largest oil producer in Texas, according to state data. It also has operations throughout the U.S. and a few places overseas. Kron, whose firm manages more than $2 billion in investments with a focus on sustainability, said other oil producers, like Hess Corporation, have committed to greenhouse gas reduction targets. The development comes ahead of this year’s annual shareholder meetings that run through spring. Numerous energy companies are expected to face investor votes on non-binding, but symbolically important, climate resolutions in a process known as “shareholder democracy.” Investors, including large asset managers BlackRock and Vanguard, are putting increasing pressure on fossil-fuel companies to acknowledge the risks climate change pose to their bottom lines.

Permian Differentials Widening On A Wave Of New Crude Supplies -- Price differentials in the Permian Basin are widening at a rapid pace. The discount for Midland crude to West Texas Intermediate (WTI) at Cushing has widened by over $4/bbl since the beginning of March and the discount to Magellan East Houston (MEH) crude was over $7/bbl yesterday. Permian production is increasing at a breakneck pace as new players are entering the scene. Private equity-backed exploration and production companies (E&Ps) are no longer just acquiring and flipping acreage, as they are being forced to prove their assets are profitable and can generate a return on investment. The combination of large drilling plans from the majors and new production from these smaller operators — with no new pipeline takeaway capacity in sight — has sent Permian crude pricing into a tailspin. Today, we begin a new series on the recent slide in Permian prices, how new producer strategies are contributing to it, and what it means for pipeline space, trucking and midstream infrastructure.

Texas oil output surge clogs pipelines, depresses prices (Reuters) - The Permian basin in Texas is leading the way as U.S. oil production has reached an all-time high, but the prolific output is causing bottlenecks as pipelines transporting the crude have filled up more quickly than expected.   That has depressed prices there, posing a threat to future production, while providing a boost to pipeline companies as the lines have filled to near-capacity.  With few new pipeline projects scheduled for this year, producers may be forced to slow drilling, or even shut in active production. The problem illustrates the snags that can arise in transporting crude to the U.S. Gulf Coast as oil prices have rebounded to more than $60 a barrel and companies have reduced costs to make drilling more profitable in the Permian. Production there is estimated to have hit a record 3.08 million bpd in March, nearly a third of overall U.S. production of 10.4 million bpd, according to the Energy Information Administration (EIA). Permian drillers are branching out into relatively less-profitable areas of the region, said John Zanner, energy analyst for RBN Energy. “As these fringe areas begin to get exploited, we are seeing more and more crude that needs to find a pipeline to Cushing or the Gulf Coast,” he said.  Most analysts estimated pipelines out of the Permian would fill completely by mid-2018, but this may already be happening. According to market intelligence firm Genscape, pipeline utilization from the Permian to the Gulf Coast averaged about 89 percent this year and 96 percent in the last four weeks.

Another sign of Permian boom: record electricity demand - In West Texas, an oil and gas drilling rush has overwhelmed local roadways, housing supplies and a limited pipeline network. Now, the shale boom is straining the region’s electric grid, which was designed to handle a fraction of the power needed by the oil and gas producers that dominate the West Texas economy.  Driving the booming power demand is a transformation in oil and gas operations as companies forgo expensive diesel and natural gas generators to power compressors and pipelines in favor of the cheaper option of hooking up to the grid. The unprecedented spike in electricity consumption coupled with inadequate transmission have slowed the development of new projects, such as sand mines, that support the energy industry. Excessive demand on a limited system also threatens the grid’s reliability in West Texas, and could lead to blackouts caused by the voltage overload. “To say that this is load growth like we have not experienced before is kind of an understatement,” . “There is not an area in ERCOT that has seen that kind of load growth before. That is unheard of.” Fixing the bottlenecks has implications not only for the oil and gas industry, but also for the Texas economy, the environment and electric customers across the state.  Under state regulations, the costs of transmission projects are shared by all users of the power grid, regardless of whether they are served directly by the transmission or the utility building it. Dallas utility Oncor, which serves the Permian Basin, is asking regulators to expedite two transmission projects, costing an estimated $223.6 million, to meet the skyrocketing demand in the oil patch. “Is the rest of the state subsidizing these capital investments to handle peak loads?”  It’s too soon to tell how much Oncor’s and other transmission projects in West Texas might add to electricity bills. Three utilities, Oncor, AEP Texas and Texas-New Mexico Power, serve a majority of the region around the Permian Basin that covers 24,000 miles, with an average of just 16 people per square mile. By 2022, the power demand in the area is projected to climb to 1,000 megawatts, up from just 22 megawatts in 2010.

West Texas oil, gas growth means more electricity needed - In West Texas, an oil and gas drilling rush has overwhelmed local roadways, housing supplies and a limited pipeline network. Now, the shale boom is straining the region's electric grid, which was designed to handle a fraction of the power needed by the oil and gas producers that dominate the West Texas economy. The Houston Chronicle reports driving the booming power demand is a transformation in oil and gas operations as companies forgo expensive diesel and natural gas generators to power compressors and pipelines in favor of the cheaper option of hooking up to the grid. The unprecedented spike in electricity consumption coupled with inadequate transmission have slowed the development of new projects, such as sand mines, that support the energy industry. Excessive demand on a limited system also threatens the grid's reliability in West Texas, and could lead to blackouts caused by the voltage overload. "To say that this is load growth like we have not experienced before is kind of an understatement," said Jeff Billo, senior manager of transmission planning with the Electric Reliability Council of Texas, which oversees 90 percent of the state's grid. "There is not an area in ERCOT that has seen that kind of load growth before. That is unheard of." Fixing the bottlenecks has implications not only for the oil and gas industry, but also for the Texas economy, the environment and electric customers across the state. New and expanded transmission would allow energy companies to lower costs, improve profit margins, increase production and continue to hire and expand, not only in West Texas, but in Houston and other parts of the state — including burgeoning Gulf Coast ports where abundant supplies of crude and natural gas are sent, stored and exported. 

Cyber attack cripples system that manages Dallas company’s national pipeline network - A system that digitally processes customer transactions for a major pipeline network in the U.S. was shut down Monday after a cyber attack.The electronic data interchange provided by third-party Energy Services Group LLC for Energy Transfer Partners's natural gas pipeline system was attacked Monday and will be hobbled until "further notice," Energy Transfer said in a notice to shippers.The shutdown could affect a network of major pipelines owned by subsidiaries, including Panhandle Eastern Pipe Line Company, which owns lines from Michigan to Texas, Transwestern Pipeline Company and Rover Pipeline. The EDI system, designed to cut costs and boost speed, is used to conduct business through a computer-to-computer exchange of documents. Though it's not clear who was responsible for the attack, it comes after U.S. officials warned in March that Russian hackers are conducting a broad assault on the nation's electric grid and other targets. Last month, Atlanta's municipal government was hobbled for several days by a ransomware attack. "This situation has not impacted our operations. We are handling all scheduling in house during this time," Vicki Granado, a spokeswoman for Energy Transfer, said in an emailed statement. Energy Services Group was not immediately available for comment.  Energy Transfer, run by billionaire Kelcy Warren, isn't the only pipeline company using EDI. Other operators with the system include Kinder Morgan Inc. and Tallgrass Energy Partners LP, according to their websites. Kinder Morgan wasn't affected, spokeswoman Melissa Ruiz said in an email. Tallgrass didn't immediately respond to requests for comment.The Panhandle natural gas pipeline network includes four large-diameter pipelines stretching from the Anadarko Basin of Texas and Oklahoma into several other midwestern states. The Trunkline system, which extends from the Gulf Coast into the Southeast and Midwest, and the Sea Robin system in the Gulf of Mexico are also part of the Panhandle network.

Cyberattack Pings Data Systems of At Least Four Gas Networks -  On Tuesday, Oneok Inc., which operates natural gas pipelines in the Permian Basin in Texas and the Rocky Mountains region, said it disabled its system as a precaution after determining that a third-party provider was the “target of an apparent cyberattack."  A day earlier, Energy Transfer Partners LP, Boardwalk Pipeline Partners LP, and Chesapeake Utilities Corp.’s Eastern Shore Natural Gas reported communications breakdowns, with Eastern Shore saying its outage occurred on March 29. The Department of Homeland Security, which said Monday it was gathering information about the attacks, had no immediate comment Tuesday.  “We do not believe any customer data was compromised,” said the Latitude Technologies unit of Energy Services Group, which Energy Transfer and Eastern Shore both identified as their third-party provider. “We are investigating the re-establishment of this data,” Latitude said in a message to customers.  The company wasn’t ready to make a statement or discuss the details of the service disruption yet, Carla Roddy, marketing director at Energy Services Group, said in a brief interview at the company’s headquarters in Norwell, Massachusetts.  The attacks follow a U.S. government warning in March that Russian hackers are conducting an assault on the U.S. electric grid and other targets. Last month, Atlanta’s government was hobbled by a ransomware attack.   At least some of the websites went down on March 29 and didn’t start returning until Monday, according to Dan Spangler, pipeline manager for data provider Genscape Inc. in Boulder, Colorado.  “Although all of the sites are back up now, many of them are still missing” data for March 30 and April 1, he said. “Other than Energy Transfer pipes and the pipelines hosted by Latitude, we haven’t seen any issues with gas data.”

Peak Shale? 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. This is only fair. After all, it was oilfield service providers that accounted for the bulk of the almost half a million layoffs in the industry during the downturn. It was oilfield service providers that greatly contributed to those notorious efficiency improvements that producers like to brag about so much. In the providers’ case, efficiencies meant cut-throat prices for their services.The recovery is not universal, though, as Forbes’ Dan Eberhart noted in a recent story on the sector. Smaller services providers—and even some big ones—are still in the red and struggling to return to profit. . Producers, in other words, might be in for a blow to their profit margins as service providers recover.

Oil Production Per Rig -- EIA Data May Be Very, Very Wrong -- April 2, 2018 -- I apologize to a reader for the late response / delayed posting of his note. The reader sent me two notes regarding my post regarding "oil production per rig." In the first note, the reader wrote: I read somewhere using Oil Production Per Rig as a metric for the Permian was inaccurate because so many newly drilled wells go into DUC status.  He then backed up that statement with a link to this site: EIA drilling production report misleading the market, dated July 25, 2017. My hunch is that the reader is completely correct. But if this is the way the EIA is calculating rig efficiency, wow -- talk about huge mistake. It certainly misconstrues everything. Very, very bothersome.

U.S. production of crude oil grew 5% in 2017, likely leading to record 2018 production - Annual average U.S. crude oil production reached 9.3 million barrels per day (b/d) in 2017, an increase of 464,000 b/d from 2016 levels after declining by 551,000 b/d in 2016. In November 2017, monthly U.S. crude oil production reached 10.07 million b/d, the highest monthly level of crude oil production in U.S. history. U.S. crude oil production has increased significantly over the past 10 years, driven mainly by production from tight rock formations using horizontal drilling and hydraulic fracturing. EIA projects that U.S. crude oil production will continue to grow in 2018 and 2019, averaging 10.7 million b/d and 11.3 million b/d, respectively.  Although much has changed since 1970, Texas continues to produce more crude oil than any other state or region of the United States. Texas has held the top position in nearly every year since 1970, with the exceptions of 1988, when Alaska produced more crude oil than Texas, and from 1999 through 2011, when production from the Federal Gulf of Mexico was higher. Texas crude oil production averaged 3.5 million b/d in 2017 and reached a record high monthly level of 3.95 million b/d in December 2017. Texas’s 2017 annual production increase of nearly 300,000 b/d—driven by significant growth within the Permian region—was more than all other states and the Federal Gulf of Mexico combined.  Growth in the Permian region, which spans parts of Texas and New Mexico, also contributed to a 74,000 b/d production increase in New Mexico, the state with the second-largest growth in 2017. New Mexico surpassed California and Alaska to become the third-largest crude oil-producing state in the second half of 2017, although it produced less than those states on an annual average basis.

About 7% of fossil fuels are consumed for non-combustion use in the United States -  While most fossil fuels in the United States are burned, or combusted, to produce heat and power, EIA estimates that the equivalent of about 5.5 quadrillion British thermal units of fossil fuels were consumed for non-combustion purposes in the United States in 2017. Over the past decade, non-combustion consumption of fossil fuels has typically accounted for about 7% of total fossil fuel consumption and about 6% of total energy consumption in the United States. Fossil fuels can be consumed, but not combusted, when they are used directly as construction materials, chemical feedstocks, lubricants, solvents, waxes, and other products. Common examples include petroleum products used in plastics, natural gas used in fertilizers, and coal tars used in skin treatment products. In 2017, about 13% of total petroleum products consumed were for non-combustion use. Natural gas non-combustion use accounted for about 3% of total natural gas, while coal was less than 1%.. Estimation of fossil fuels for non-combustion consumption is essential to calculate total U.S. carbon dioxide emissions. In the non-combustion use of these fuels, some (but not all) of the carbon is sequestered and not included in the fuel consumption values for emissions calculations.   Petroleum products account for about 86% of non-combustion consumption. Hydrocarbon gas liquids (HGL) such as ethane, ethylene, butane, butylene, isobutane, isobutylene, propylene, and natural gasoline and petrochemical feedstocks such as naphthas are important components for making plastics. HGL are used as intermediate products, while petrochemical feedstocks are used directly at chemical plants. Other petrochemical feedstocks are used to make synthetic fabrics, such as Kevlar, synthetic rubbers, detergents, and other chemical products.  Asphalt and road oils are used for roofing and paving construction. Lubricants, which include motor oil and greases, are used in vehicles, machinery, and various industrial processes. Petroleum coke is used as a chemical catalyst, while special naphthas are used in petroleum-based paints. Other petroleum products include distillate and residual fuel oils used as chemical feedstocks as well as polishes and waxes.   Natural gas is used as feedstock to make nitrogenous fertilizers and a range of chemical products including ammonia, hydrogen, and methanol.

Western natural gas markets whack Rockies producers - Efforts to increase natural gas production in the Rockies are running into a brick wall — make that several brick walls. To the east, burgeoning gas production in the Marcellus/Utica region is surging into Midwest markets, pushing back on Rockies gas supplies. To the south, Permian gas production is ramping up toward 8 Bcf/d, most of it associated gas from crude-focused wells — volumes that will be produced even if gas prices plummet. To the west, Rockies gas faces an onslaught of renewables in power generation markets, where wind and solar are increasingly replacing gas fired and coal generation, especially during non-peak periods when the sun is shining and the wind is blowing. To the north, Western Canadian producers facing a where-do-we-send-our-gas problem of their own are only days away from having expanded pipeline access to U.S. West Coast markets — access likely to displace some of the Rockies gas which has been flowing west. Today, we discuss highlights from a new report by our friends at Energy GPS that assesses these developments and explores their implications.  There was a time, many years ago, when the Rocky Mountain states (Colorado, Utah, Montana and Wyoming) represented the fastest-growing gas-producing region in the country. From 1998 to 2008, Rockies dry gas production more than doubled, increasing by 6 Bcf/d (from 5 Bcf/d to 11 Bcf/d) while the U.S. as a whole increased by only 3 Bcf/d. Thus, Rockies gas production was growing while the rest of the U.S. was in decline. The region was growing so rapidly that severe pipeline takeaway capacity constraints developed, prompting construction of Rockies Express (REX), the largest pipeline built in a decade at that time, which was completed in November 2009 to bring 1.9 Bcf/d of Rockies gas all the way to Clarington, OH. Then shale happened. But not to the Rockies. Gas producers shifted their attention to the big shale producing basins, leaving the Rockies to muddle along. Rockies production flat-lined.  

Wyoming judge decides oil and gas firms will not have to comply with controversial emissions rule --  Oil and gas firms will not have to comply with a signature environmental rule from the Obama era, a federal judge in Wyoming decided Wednesday.  Most have lost count of the times that the Bureau of Land Management’s methane waste rule has been laid before a judge or gone in and out of effect.  A previous decision in early February had essentially ordered industry to comply while the Interior Department revised the standards.The rules would curb venting and flaring from industry infrastructure and require more labor-intensive checks for accidental leaks.Whether the rules were necessary, worth the cost and within the Bureau of Land Management’s authority are points of division among industry, states and environmental groups. After the February decision from a judge in northern California, industry groups said it would be impossible for many firms to comply overnight, and it remained unclear at the time how and if the Bureau of Land Management would enforce the rules. But environmental groups applauded the decision, one of a host in favor of the rules in 2017. They argued that industry had had years to prepare.  Industry groups attempted multiple times to halt compliance on aspects of the rule.Congress also went after the rules, attempting to axe them completely via a rarely-used provision to eliminate midnight decisions of an outgoing president. That also failed. The Interior Department tried to rescind the rule, but was chided by the courts for not following the administrative process of undoing a rule. Since that decision the Interior has proposed a revision which would eliminate some of the most contested aspects, like using radar equipment to identify leaks from pipelines.  Wyoming federal judge Scott Skavdahl bemoaned the back and forth on the standards in his written decision Wednesday, saying compliance with the rules, given that those requirements will soon disappear, “makes little sense.” “And unfortunately, it is not the first time this dysfunction has frustrated the administrative review process in this Court.” The judge did not rule on the merits of the rule, so addressing methane leaks and flares is still going to have its day in court. But until then, the judge said, the rules should be on hold.

33 accidents happened at oil refineries as EPA delayed updating disaster rule, says environmentalist group - At least 33 fires, explosions and chemical releases at U.S. oil refineries and industrial plants have occurred in the last year as the Environmental Protection Agency delayed updating a Chemical Disaster Rule intended to stop many of those accidents from occurring, a coalition of environmental groups said in a report released Tuesday.Titled “A Disaster in the Making,” the report is intended to illustrate how inadequate safety measures can threaten public health, said the group of 10 environmental organizations across the country that sponsored the report, including California Communities Against Toxics and the Union of Concerned Scientists.“The Chemical Disaster Rule includes much-needed improvements to the EPA’s Clean Air Act Risk Management Program and would prevent and reduce chemical disasters, hazardous releases and resulting chemical exposures, while strengthening emergency preparedness and coordination with local first responders,” the groups said in a news release accompanying the report.“When developing the rule, the EPA determined that prior protections failed to prevent over 2,200 chemical accidents around the country during a 10-year period, including about 150 incidents per year that caused reportable harm.” Three of those 33 accidents cited in the report, including two on the same day last summer, happened in the South Bay:

Chinese lender gets in line behind Alaska LNG project - A major Chinese bank is among the financial entities tasked with raising equity to develop a liquefied natural gas project in Alaska, the developer said. Alaska Gasline Development Corp. wants to build pipelines and associated infrastructure to process state gas into liquefied natural gas, a super-cooled form of gas that has more maneuverability than other piped resources. The project includes an 807-mile pipeline across Alaska. The Alaskan company announced late Tuesday that Bank of China Ltd. and Goldman Sachs agreed to serve as the global capital coordinators for the project. Both entities will help AGDC raise equity to fund full-scale development once all the necessary permits are in place. "Bank of China and Goldman Sachs are well positioned to provide AGDC with world-class institutional knowledge and resources required to arrange the equity and debt financing to build Alaska's natural gas infrastructure and LNG export project," Keith Meyer, the president of AGDC, said in a statement. In November, the state government and the AGDC signed an agreement with Chinese lenders and China Petrochemical Corp., or Sinopec, to advance discussions on the LNG potential in Alaska. China could secure LNG from cheaper reserves closer to home, notably from Australia or Qatar, which already have established LNG infrastructure. The United States, meanwhile, is on pace to become the third-largest LNG exporter within the next two years. The first deliveries from Alaska are planned for 2025. 

After Targeting U.S. Farms, China Can Strike America's Shale -  Beijing on Wednesday took aim at America’s rural heartland by proposing levies on politically sensitive farm commodities such as soybeans, which were among 106 U.S. products targeted. The list also included petrochemicals and liquefied propane, indicating that the world’s biggest oil buyer is willing to use energy as a weapon to retaliate against planned American duties on its high-tech goods.While officials from the world’s two largest economies had sought to calm markets by showing a willingness to negotiate, U.S. President Donald Trump on Thursday ordered his administration to consider tariffs on an additional $100 billion in Chinese imports. The Asian nation is the biggest regional buyer of American oil as well as liquefied natural gas, and the critical commodities may be swept up in the trade war if tensions flare further. “China can ditch American energy at any time because there’s plenty of supplies elsewhere, whereas for the U.S., energy is a sensitive subject,” said Will Yun, a commodities analyst at Hyundai Futures Corp. in Seoul. “The two countries may eventually come to an agreement and China may not use energy so soon into the dispute. It will use the card wisely.”

Arrests to Continue as Kinder Morgan Protests Heat Up  - Organizers of the recent wave of protests at the Kinder Morgan site on Burnaby Mountain say we can expect more large protests and arrests as the battle shifts up and down the intended pipeline expansion route this year.  Police have arrested 176 people so far at the Burnaby Mountain site since March 10, according to Eugene Kung, a staff lawyer at West Coast Environmental Law.“Folks are getting arrested for violating a court injunction,” Kung said. “They’re being charged with contempt of court for breaching or violating a court order that says you are not allowed to go within five metres of the Kinder Morgan terminal.”  These are the technical legal grounds that allow for the arrest of protesters at the Burnaby Mountain protests. The question about why people are choosing to get arrested vary from “standing in solidarity for Indigenous rights, having fears of a spill or tank farm fire, and the contribution of climate impacts of this project,” Kung said.   Grand Chief Stewart Phillip, president of the Union of BC Indian Chiefs, said the organization around the ongoing protests is organic and that no central group is spearheading the gatherings.“On April 7, we’re going to be hosting another large gathering [at the Kinder Morgan Burnaby Mountain site],” Phillip said. “I will be present and I’ll likely be arrested on that day.”  Phillip, who was arrested Nov. 27, 2014 at a protest at the site, said it’s appropriate to demonstrate solidarity with the people who have already been arrested in the past weeks, and that the location of the protests will change.  “There could be a point where the action will shift from Burnaby Mountain to Cold Water,” Phillip said. “Over the next several months, you can expect there to be an ebb and flow with this battle.”

How First Nations are keeping watch over an embattled Canadian pipeline - After its completion on March 10, George, a member of the Tsleil-Waututh First Nation, told Earther he and others would be living at the watch house that sits just off a public walking trail in Burnaby, a suburb of Vancouver. From it, they would be keeping an eye on Kinder Morgan, the company planning to construct a 715-mile pipeline to carry crude oil from Alberta’s tar sands through George’s ancestral territory.   “The watch house would be watching for enemies of the territory who would be coming for raids,” . “This was a call to all the thousands of people who marched here yesterday to warrior up.”   In many ways, the watch house embodies the existential struggle over Canada’s most controversial pipeline, which pits a coalition of climate activists and suburbanites, led by First Nations, against energy giant Kinder Morgan—or as George calls them, “the enemy.” The escalating discord over the pipeline gives it an air of the North Dakota Standing Rock protests set in the suburbs.  If completed, Kinder Morgan’s new Trans Mountain Pipeline would triple the capacity of tar sands flowing from Albertan fields to coastal British Columbia and into the global marketplace. The proposed route largely mirrors the current Trans Mountain Pipeline, which has been in use since 1953, and also cuts across First Nations land.The bitumen the new pipeline carries is extremely hard to clean up because it’s so viscous. Any spill could poison waterways the Tsleil-Waututh and other First Nations rely on for resources and spiritual renewal.“The water is very important to us, it’s our spiritual highway,” George told Earther. After years of degrading First Nations, including by building the first Trans Mountain Pipeline without their consent, Prime Minister Justin Trudeau promised reconciliation to atone for past wrongdoings. First Nations activists opposed to the new pipeline see the government’s green lighting of this project as a huge betrayal of those promises. And the George family, long a fixture of activism and leadership, is once again leading the charge for justice.  The fight is also about the future of Canada’s economy and its role in curbing climate change. Building a pipeline that ships some of the dirtiest oil in the world is a huge step backward from Canada’s climate rhetoric.

BC Government Withheld Information on Dangers of Unregulated Fracking Dams - Early last spring, provincial civil servants cut off virtually all communication about what the government knew about a sprawling network of potentially dangerous and unregulated dams in northeast B.C. on the pretext they could not comment because of the impending election.  The co-ordinated effort meant there was virtually no comment until months after voting day from frontline agencies on how 92 unlicensed dams were built on the BC Liberal government’s watch. Details about muzzling government communication on the dams — which were built to trap freshwater used in natural gas industry fracking operations — are contained in some of the 8,000 pages of documents released by the BC Oil and Gas Commission in response to Freedom of Information requests by the Canadian Centre for Policy Alternatives, which was the first to report on the dams early last May. The initial CCPA report, published one week before the election and widely covered by media outlets, exposed how fossil fuel companies had built “dozens” of unlicensed fracking dams.  “Guidelines on ‘managing records during an election’ cannot trump the law,” said Colin Bennett, a University of Victoria political scientist. “If there is a public interest in disclosure, then the election period is irrelevant.”  Bennett added that B.C.’s Freedom of Information and Protection of Privacy Act clearly states that government officials should proactively release information that is in the public interest without delay. That did not happen in this case. Not only did it not happen, but the OGC insisted on formal FOI requests being filed to obtain the information. By doing so, the commission — with the knowledge of the Ministry of Natural Gas Development — ensured that documents on the troubling dams would not be released until long after the election.

How Canadian Drillers Adapt To Extreme Crude Discounts -- Canada’s oil producers had just started to slowly recover from the oil price crash when they began to face increased constraints in marketing and monetizing their heavy crude oil. Transportation bottlenecks widened the discount to which Western Canadian Select (WCS)—the benchmark price of oil from Canada’s oil sands delivered at Hardisty, Alberta—trades relative to West Texas Intermediate (WTI), weighing on Canadian producers’ revenues and profits, increasing their debts, and battering their share prices.Some Canadian producers have started to actively market non-core assets, trying to dispose of heavy oil portfolios that they can’t monetize efficiently with WCS at some $20 or higher discount to WTI. Others have slowed down production in response to increased market access constraints. Some analysts even think that producers would better allocate the cash they make to buying back shares instead of drilling new wells to boost production.Earlier this week, Obsidian Energy said that it was exploring a potential sale of the Alberta Viking assets and that it was in talks with China Investment Corporation (CIC) to sell its share of the jointly owned Peace River assets. Obsidian plans to use any potential proceeds from sales to fund growth at its core Cardium assets, cut debt, and buy back shares. “In addition to exploring the sale of our Alberta Viking and Peace River assets, we are actively reviewing industry consolidation opportunities with significant synergies,” said David French, President and CEO of Obsidian Energy, which has divested around US$1.8 billion (C$2.3 billion) worth of assets over the past three years.Obsidian is not alone in seeking to sell assets to strengthen the balance sheet and cut debt.Crescent Point Energy Corp continues to market non-core asset packages and to increase commodity hedges to protect cash flows, it said in the 2017 results release last month.Crescent Point is looking to sell part of its Western Canadian Sedimentary Basin (WCSB) assets, if it could get the right price for them, COO Neil Smith told S&P Global Platts. Some of the biggest Canadian producers are slowing heavy oil production to mitigate the impact of the wide WCS-WTI differential.

North Sea, Mexico most attractive as oil, natural gas industry costs fall: Wood Mackenzie - The UK, Mexico and shallow-water Norway are now the most competitive locations for new oil and gas projects following cost-cutting by the offshore industry globally, consultancy Wood Mackenzie said Thursday. Related news: Dated Brent crude oil differential drops to almost 2.5-year low ahead of expected May rally In a new report, Wood Mackenzie forecast that breakeven costs for major new investment projects would fall by another 15% this year to $44/barrel of oil equivalent, and said it expected 30 major projects to be approved this year, in line with last year's 32. It gave a cautious view on spending levels, predicting that investment per barrel of reserves would rise slightly this year for deepwater projects, to almost $10/boe, but the average price tag of newly approved major projects would fall for a third year in a row, to $2.2 billion, from $2.7 billion last year, which was the lowest in a decade. It noted that already in the first quarter six of the 30 projects that it forecast would be approved this year had got the go-ahead, in the UK, Norway, Israel, the Netherlands, Malaysia and China. The report chimes with surveys and comments from industry leaders applauding improvements in the North Sea, which was long viewed as exceptionally expensive.  . But Wood Mackenzie noted a sharp drop in the average volume of oil and gas reserves associated with each project approved last year, accompanied by an increase in the number of countries where projects were approved, from eight in 2016 to 19 in 2017. The average project size last year was 376 million boe, down from 909 million boe in 2016 and 537 million boe in 2015, the consultancy said.  "We cannot rely on smaller projects forever, and when we look at LNG in particular, we see a lot of big projects on the horizon." 

Runaway Arctic Ice Menaces Oil Rigs and Shipping as the Planet Warms - As the planet warms, giant icebergs and sea ice that once would have remained trapped in the frozen Arctic are moving southward faster and more frequently, menacing shipping and oil and gas drilling operations.In the North Atlantic, scientists say the number of icebergs spotted south of 48 degrees latitude—where they start to get into more shipping lanes—is up again this year, following a series of extreme iceberg seasons."So far, iceberg numbers crossing south of 48 degrees look to be higher this year than last, and last year saw a relatively high iceberg flux year—about 1,000 icebergs crossing 48 North, compared to the long-term mean of 450," said University of Sheffield geographer Grant Bigg, who studies icebergs and climate.That ice can pose serious risks to ships and offshore oil and gas rigs. Last year, strong storms sent a swarm of icebergs surging into the oil and gas drilling field at the Grand Banks off Newfoundland, marking the fourth extreme iceberg season in a row, according to International Ice PatrolCommander Gabrielle McGrath."There were so many in the area that we couldn't count them all. Our models couldn't keep up with how quickly they were moving to the south," she said. During one week, the number of icebergs in McGrath's watch area in the North Atlantic surged from 37 to 455. At the peak of the iceberg invasion, the trackers also found seven icebergs outside their normal monitoring area, creating what McGrath described as the most dangerous possible situation for North Atlantic mariners.

Fracking firm says first horizontal well at Lancashire is complete - The first large-scale fracking in Britain has moved a step closer after an energy firm said it had completed drilling the UK’s first horizontal well at a site in Lancashire. Cuadrilla said the development was a “major milestone” towards the first shale gas exploration in the UK since 2011, when work was halted after it triggered a minor earthquake. The company said it hoped to begin fracking at its site on Preston New Road, near Blackpool, in the summer, pending government approval. Cuadrilla has reported signs of a “sizeable quantity of shale gas” on the site and said its tests suggested each well could extract enough gas to power 5,000 homes for 30 years.The drilling announcement was met with scorn from environmentalists and protesters, however, about 200 of whom were outside the gates of the fracking site on Tuesday. Doug Parr, the chief scientist for Greenpeace UK, said: “Just as Bloomberg reveal that solar plants have dropped in cost by 20% in the last 12 months, Cuadrilla announces that seven years after the last UK well was fracked, they are almost ready to have another go, notwithstanding local opposition, pending government permission, sometime in the summer, maybe.“And this announcement of yet another delay in getting started is what Cuadrilla are trying to pass off as a success.” The announcement coincided with the start of three months of protests at the site, beginning with a women’s week to mark 100 years since some women won the right to vote. Some protesters wore suffragette sashes and chanted to the beat of a samba band as they prepared to take “non-violent direct action” against trucks attempting to enter the site on Tuesday.

Venezuela's Oil Sector May Soon Have New Owners - Venezuela’s oil production fell by another 100,000 barrels per day (bpd) in March, a devastating blow that will only make the country’s economic crisis worse. Output is expected to continue its downward spiral; the only uncertainty is over the pace of decline. As Venezuela comes apart at the seams, it will hand over more and more control of its natural resources, and even power over its institutions, to China, according to a new report from the Washington-based Center for Strategic & International Studies. The report argues that enormous levels of foreign investment may seem beneficial, but that Venezuela’s economic predicament has actually been made much worse by China. Taking advantage of Venezuela’s desperation, China has managed to convince Caracas to sign “one-sided financial agreements” that perpetuate the economic malaise afflicting the country.Over the past decade, China has sent an estimated $62 billion to Venezuela in one form or another, representing about half of all the money that China has lent to Latin America. For years, Venezuela has been sending oil shipments to China as repayment, and last year it shipped roughly 330,000 bpd to China, sales that earned Caracas little or no revenue.China’s patience with Venezuela seems to have worn thin. Reuters reported last month that China is likely to roll over a current financing arrangement it has with Venezuela, allowing for lenient repayment terms, but that it won’t lend the Venezuelan government any more money than it already has. China remains Venezuela’s largest debt owner with $23 billion in outstanding debt. But CSIS argues that China remains a key piece of the puzzle propping up President Maduro’s repressive “narco-regime.” The think tank says that China’s excessive influence is both bad for Venezuela and it also raises security concerns. China’s hunger for commodities has led to “long-term dependency,” essentially preventing Venezuela – and other commodity-exporting countries in Latin America – from ever developing more sophisticated valued-added sectors of the economy. Venezuela will remain in a colonial-like state, serving as a place for resource extraction for China’s benefit. Indeed, China’s appetite for commodities is only expected to grow. 

Brazilian Auction Draws Oil Companies Back to Offshore Drilling — Exxon Mobil and other oil companies opened their wallets at an offshore oil auction in Brazil on Thursday in a sign that the industry was stepping back into the deepwater drilling business. It was the third encouraging Brazilian offshore auction since September, and a vote of confidence for the country’s energy reform program at a time when oil companies have been reluctant to make ambitious offshore investments. As oil prices plunged in recent years, global investment in offshore oil and gas operations collapsed to roughly $160 billion in 2017, from a high of $335 billion in 2014. Rystad Energy, a Norwegian energy consulting firm, projects that offshore investments will level off at $155 billion this year, and gradually pick up over the next five years. But BP, Royal Dutch Shell and Germany’s Wintershall defied the global trend and were among the big winners at the Brazilian auction on Thursday. Chevron had kept a low profile in Brazil since an oil spill in 2011 off the coast of Rio de Janeiro, but it successfully bid for four exploration units. Particularly aggressive was Exxon Mobil, which is eager to replace depleted reserves and increase production. Along with several partners, Exxon Mobil won eight bids for covering 640,000 acres of fields, including one bid valued at $848 million. Combined, the auction brought the Brazilian government more than $2.4 billion in payments for both deepwater and shallow-water prospects. On Wednesday, two choice offshore blocks were withdrawn from the auction by a Brazilian court, which argued that they should be granted only under a production sharing model that would benefit the government. But Brazilian officials and energy analysts argued that the auction was a success anyway.

Indonesia state firm says oil spill due to cracked underwater pipeline  (Reuters) - Indonesia’s state oil company Pertamina said on Wednesday a cracked underwater pipeline was the cause of an oil spill off the coast of a port city on Borneo island that has prompted a major clean-up operation in the area. Authorities rushed to contain the spill off Balikpapan, which started on Saturday and sparked a fire that killed four people at the weekend. TV footage has shown officials scooping up buckets of oil from the sea and dumping them in pits on shore. “The pipe was found ... in a broken condition. There were external factors that caused that,” said Togar MP, general manager of Pertamina’s refinery in Balikpapan. “We are still calculating the volume of the leak and losses,” he said at a news conference in Balikpapan, adding the leak was of crude oil. It was not immediately clear if the pipeline had been repaired. A government official in Jakarta said it was unclear what had caused the leak. “It could be that the pipeline is rusty or an anchor hit it,” said Djoko Siswanto, director general of oil and gas at the energy ministry. The state energy firm said on Sunday initial tests showed the oil was marine oil used in boats. Balikpapan city, a major mining and energy hub, declared a state of emergency on Monday, warning residents to stay away from the coast because the area was prone to fires.

Cracked Undersea Pipeline Caused Deadly Oil Spill in Indonesia - A burst undersea pipeline owned by Indonesian state-owned oil and natural gas corporation Pertamina caused a deadly oil spill on Saturday that left Balikpapan Bay in Borneo "like a gas station." The company initially said the disaster had nothing to do with its nearby refinery or undersea pipelines that run across the bay, noting that its own tests on oil spill samples found marine fuel oil used for ships, not crude oil. But on Wednesday, Pertamina admitted that its crude oil pipeline was indeed the cause. A company manager noted the distribution line was closed immediately after divers detected the leakage on Tuesday. A test on a tenth oil spill sample also confirmed that it was crude. The firm is now calculating the amount of oil leaked into the bay. The government, however, insists the incident is not Pertamina's fault. An energy ministry official cast blame on a foreign coal vessel that dropped anchor in the bay and dragged the pipeline 120 meters from its initial location, causing it to crack. Indonesia declared a state of emergency on Monday after the spill ignited and killed at least five people in the port city of Balikpapan over the weekend. Hundreds of locals reported health issues including difficulty breathing, nausea and vomiting from the smell of fuel and black smoke that emanated from the blaze.

Oil Spill Now Larger Than Paris Ravages Indonesian Island, 5 dead - An oil spill in Borneo that began over the past weekend has now spread across an area greater than the city of Paris and is heading out to the open ocean, the Indonesian government said.  The spill, first reported on March 31, stems from a pipeline operated by state-owned oil firm Pertamina in the city of Balikpapan, in East Kalimantan province. A report released April 4 by the Ministry of Environment and Forestry said the slick was spreading out from Balikpapan Bay and into the Strait of Makassar, covering some 130 square kilometers (50 square miles).  Pertamina, which for days had denied responsibility for the disaster, finally admitted on April 4 that one of its pipes used for transporting crude oil was the source of the slick.  "Our preliminary investigation had indicated that the oil was ship fuel, but it was only until [the evening of April 3] that we got confirmation that it was from us," Pertamina general manager Togar M.P. told reporters. "Ever since the incident was discovered, we have shut down the pipes."  The incident has been blamed for the deaths of five fishermen in a fire sparked by clean-up workers who were trying to clear the oil by burning it off the water's surface.  Some 84 acres of mangrove forests are covered in oil, the environment ministry report said. The slick is also believed to have led to the death of an endangered Irrawaddy dolphin (orcaella brevirostris), a protected species under Indonesian law, which was found washed up on the coast near the site of the spill.  Thousands of people in Balikpapan, a city of 700,000, have also complained about health problems from the toxic slick.Authorities declared a state of emergency in the city on April 3, and warned residents not to light cigarettes in the area. They also distributed gas masks to protect against the acrid fumes and smoke.

BP thinks an oil spill in Australia would be ‘welcome boost’ for locals -- BP, the company behind the deadly Deepwater Horizon oil spill disaster, the biggest in history, has claimed an oil spill off the South Australian coast would be a good thing, as the clean up would boost local economies.  BP made the outlandish claim as part of its bid to drill for oil in the pristine Great Australian Blight. “In most instances, the increased activity associated with cleanup operations will be a welcome boost to local economies,” it said, in its second rejected environmental safety plan, submitted to the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) in March 2016.The strange argument was uncovered thanks to a two-year-old freedom of information request made by Climate Home News. Government documents reveal Australia’s doubts about the oil giant’s proposal.  In a letter to BP, NOPSEMA pointed to a number of statements that BP should remove from its proposal. These included the “welcome boost” claim and the giant firm’s allegation that a spill would not have a social impact, which it said meant, “BP interprets this event to be socially acceptable.”The authority took issue with this statement because of the impact a spill would have on recreation, fishing and tourism. It also told BP it would need to make a “significant modification” to its submission, in order to comply with environmental laws and to address more environmental impacts. In its proposal, BP admitted an oil spill could affect 750 km of coastline beaches within 300 days. NOPSEMA found BP’s plan lacking in relation to mobilizing equipment and the personnel needed for such a clean-up.

China Looks To Double Its LNG Terminals - China’s seemingly endless thirst for natural gas is on a collision course with not only U.S.-based liquefied natural gas (LNG) project developments, but others as well, including Russia and Australia, in a move that is revolutionizing global markets for the super-cooled fuel. Per China’s government mandate to replace coal-based power generation with natural gas, the cleaner burning fuel is set to make up at least 10 percent of the country’s energy mix by 2020, with further earmarks after that.Not only is China’s pivot away from coal to natural gas changing natural gas market dynamics, both piped gas and LNG, it is also causing a knee jerk response among the country’s state-owned oil majors. Yesterday, state-owed Sinopec Group said that it aims to more than double its receiving capacity for LNG over the next six years. The company will add new LNG receiving facilities along China’s east coast for a total of 26 million tonnes annually by 2023, up from the current 9 million tonnes. Currently, China has 17 LNG import receiving terminals.The company also wants to increase its domestic shale gas production by two-thirds by 2020. Sinopec said it will have some 60 billion cubic meters (bcm) of gas capacity, which includes imports and also domestic production by 2023. In 2017, it produced only 27 bcm of gas.Last week, the company said that Fuling, China’s first shale gas field, had built up an annual capacity of 10 bcm. Dai Houliang, Vice Chairman and President of Sinopec Corp. made the announcement at a news conference in Hong Kong when it disclosed its 2017 annual results. In 2016, the field generated over 6 bcm of shale gas.  The company has also made new advances in its shale gas business, with a recent discovery in the Weirong block in southwestern Sichuan province, said Sun Huanquan, general manager of the group’s oilfield development division. He didn’t elaborate on the new find but said it should contribute to the group’s shale gas production target.

In Unprecedented Move, China Plans To Pay For Oil Imports With Yuan Instead Of Dollars - Just days after Beijing officially launched  Yuan-denominated crude oil futures (with a bang, as shown in the chart below, surpassing Brent trading volume) which are expected to quickly become the third global price benchmark along Brent and WTI, China took the next major step in the challenging the Dollar's supremacy as global reserve currency (and internationalizing the Yuan) when on Thursday Reuters reported that China took the first steps to paying for crude oil imports in its own currency instead of the US Dollars. A pilot program for yuan payment could be launched as soon as the second half of the year and regulators have already asked some financial institutions to "prepare for pricing crude imports in the yuan", Reuters sources reveal.According to the proposed plan, Beijing would start with purchases from Russia and Angola, two nations which, like China, are keen to break the dollar’s global dominance. They are also two of the top suppliers of crude oil to China, along with Saudi Arabia.A change in the default crude oil transactional currency - which for decades has been the "Petrodollar", blessing the US with global reserve currency status - would have monumental consequences for capital allocations and trade flows, not to mention geopolitics: as Reuters notes, a shift in just a small part of global oil trade into the yuan is potentially huge. "Oil is the world’s most traded commodity, with an annual trade value of around $14 trillion, roughly equivalent to China’s gross domestic product last year." Currently, virtually all global crude oil trading is in dollars, barring an estimated 1 per cent in other currencies. This is the basis of US dominance in the world economy. However, as shown in the chart below which follows the first few days of Chinese oil futures trading, this status quo may be changing fast.

Qatar says too early to exit OPEC oil cuts as investment still low (Reuters) - OPEC and its allies should maintain oil supply curbs to guarantee healthy price levels which will allow increased investment in the industry and help avoid a supply and price shock in the long run, OPEC member Qatar said. Qatar’s Energy Minister Mohammed al-Sada told Reuters he also supported the idea of creating a permanent platform for OPEC’s cooperation with Russia even after the current round of joint oil supply cuts ends. “There is a clear recovery in oil prices. But it has not been met with an increase in investments ... Investment has been very low. My concern is that medium- to long-term demand is met comfortably,” Sada said in an interview. “Investors are still cautious and over-conservative”. Sada said that global oil demand was set to rise by at least 1.5 million barrels per day this year or by a healthy 1.5 percent. But the global oil investment purse of around $400 billion was still too small to guarantee the required level of investment to replace production from mature fields and the launch of new projects. “I would see the need to keep the (OPEC cooperation) momentum ... We need to restore investments. It could take months ... OPEC could start being concerned about gross over-tightening.” OPEC and its allies led by Russia have reduced production since the start of 2017 to ease a global oil glut stemming from the U.S. shale oil boom that saw oil prices crashing to below $30 per barrel and investment in the oil sector falling by over $1 trillion in the past three years. OPEC’s production restraints have helped cut global oil stocks in industrialized nations from as high as 350 million barrels above the five-year average to as low as 50 million barrels, Sada said. The tightening of the market propelled oil prices above $70 per barrel this year but also encouraged U.S. shale oil drillers to increase investments and return to record production growth.

Bahrain says new discovery contains an estimated 80 billion barrels of tight oil (Reuters) - A new discovery off the coast of Bahrain is estimated to contain at least 80 billion barrels of tight oil, the kingdom’s biggest ever find, its oil minister said on Wednesday.  Bahrain said on Sunday it had discovered extensive tight oil and deep gas resources off the west coast of the kingdom. Independent appraisals by U.S.-based oil consultants DeGolyer and MacNaughton and oilfield services company Halliburton had confirmed Bahrain’s find of “highly significant quantities of oil in place ... with tight oil amounting to at least 80 billion barrels, and deep gas reserves in the region of 10-20 trillion cubic feet,” Oil Minister Sheikh Mohammed bin Khalifa al-Khalifa said. Tight oil is a form of light crude oil held in shale deep below the earth’s surface that is extracted with hydraulic fracturing, or fracking, using deep horizontal wells. “Agreement has been reached with Halliburton to commence drilling on two further appraisal wells in 2018, to further evaluate reservoir potential, optimize completions, and initiate long-term production,” Sheikh Mohammed told a news conference in Manama. He said he was not sure yet how much of the estimated 80 billion barrels was recoverable, but the kingdom aims to attract foreign oil and gas firms to develop the resources. Sadad al-Husseini, a former senior executive at Saudi Aramco and now an energy consultant, said the discovery was positive news for Bahrain, but more data gathering, evaluation and well testing needed to follow to determine whether there are any future commercial opportunities in the resources. “Converting resource estimates to reserves is an intense and costly process and not all the resources may ultimately be upgraded to reserves,” he said. 

Bahrain Discovers Largest Oil Field With 80 Billion Barrels - Bahrain officials have revealed that the tiny gulf kingdom has discovered some 80 billion barrels of shale (otherwise known as tight) oil - the kingdom's largest oil and gas find ever. The field also discovered 14 trillion cubic feet of natural gas beneath an existing field. Oil Minister Sheikh Mohammed bin Khalifa Al Khalifa said the kingdom has not yet determined how much of the oil can be easily extracted, according to the Associated Press. The oil fields were discovered in the offshore Khalij al-Bahrain Basin, which covers some 770 square miles in the shallow waters off Bahrain's west coast.The underwater shale would dwarf the country's existing reserves.According to figures from the US Energy Administration, Bahrain currently pumps about 45,000 barrels a day from its Bahrain Field. It also shares income from a deposit with Saudi Arabia that produces about 300,000 barrels a day."Initial analysis demonstrates the find is at substantial levels, capable of supporting the long-term extraction of tight oil and deep gas," the Sheikh said. He added during the news conference, which was held in Manama on Wednesday, that Bahrain's National Oil and Gas Authority hoped to lure foreign oil and gas firms to develop the field where the reserves were found, per the BBC. Bahrain has been pumping oil since 1932 and was among the first Arab Gulf states to extract oil.

How Fracking Is About To Change The Middle East's Oil And Gas Dynamic - Hydraulic fracturing (“fracking”) opened new oil and gas opportunities for the United States when the advanced techniques became common practice beginning in the late 1990s in the Permian Basin (Texas), Eagle Ford (Texas), Bakken (South Dakota) and Marcellus (New York). Though they have received less attention, similar fields were discovered in Russia, China and Argentina. Now, tight oil and gas fields are gaining attention in the Middle East. In 2014, Saudi Aramco held a workshop on fracking at its Houston-based Aramco Research Center. At the time, Saudi Aramco was exploring and studying several areas in Saudi Arabia for their fracking potential. Four years later, in 2018, Aramco announced the discovery of its own shale oil fields. The Jafurah field, at the southeastern end of the Ghawar oil field in the eastern area of Saudi Arabia, rivals the Eagle Ford in size. Eagle Ford is the second largest natural gas producing shale play in the United States. Aramco is specifically looking at using fracking to produce more natural gas. Saudi Arabia hopes to convert all of its oil-burning power plants to natural gas in the near future. It is unlikely at this point that Saudi Arabia would try to produce significant amounts of oil from fracking, because it produces plenty of oil from conventional fields and does so at costs far below what it would face in a fracking enterprise. If Saudi Arabia starts producing significant amounts of natural gas to feed its electrical grid, this would ease domestic Saudi demand for oil. Saudi Arabia could either increase exports or cut production while maintaining the same exports. This would give the impression that global oil supply is decreasing even though the same amount of oil is still entering the global market. Saudi Arabia is not the only Middle-Eastern oil producer with major shale fields. Bahrain recently announced a significant find on the west coast of the tiny island kingdom. The discovery of this oil and gas field is the most significant discovery in Bahrain since 1932.

Is Russia Cheating On The OPEC Deal?   -- After three months of steady output, Russia’s crude oil production increased in March to 10.97 million bpd, the highest level since April 2017, as the top two Russian companies boosted their production. According to data by the Russian Energy Ministry, Russian oil production in March was 46.39 million tons, or 10.97 million bpd, up from 41.85 million tons in February, or 10.95 million bpd.The March production level showed the first increase since December 2017, and is slightly above Russia’s quota in the production cut deal. Russia’s pledge in the OPEC/non-OPEC deal is to shave off 300,000 bpd from its October 2016 level, which was the country’s highest monthly production in almost 30 years—11.247 million bpd.Last month, the two largest Russian oil producers, Rosneft and Lukoil, both raised their production by 0.1 percent compared to February, according to energy ministry data, carried by Reuters. On the other hand, production from projects under production sharing agreements (PSAs) dropped by 0.6 percent in March.The Russian compliance with the OPEC/non-OPEC deal last month was at 93.4 percent, Energy Minister Alexander Novak said on Monday, explaining the lower compliance with seasonality on the domestic market. Still, Novak reiterated that his country was committed to achieving the oil market rebalancing.Earlier this month, Novak once again confirmed that Russia would continue to comply with the OPEC/non-OPEC deal until the end of this year and even into 2019 if need be. Novak added, however, that Russia is also on board with an earlier end to the deal, should its partners decide it was the best course of action to follow.

Private equity firms becoming longer-term players in the oil patch, investors say - Private equity investors say they're holding onto footholds in the U.S. oil patch for longer periods than in previous years, attempting to more fully develop their assets amid a lack of available capital at potential public company buyers and an anemic IPO market.Historically, the role of private equity capital in the oil industry hasn't been to fund substantial production gains, but to prove oil and gas can be captured economically. But over the next few years, these investments firms will have to focus more on squeezing cost efficiencies and productivity gains from the oil fields they invest in, said Carl Tricoli, managing partner at private equity firm Denham Capital in Houston. "You'll see more private equity money going into drilling wells," Tricoli said. "The next iteration will be, instead of taking and selling the acreage, you might see us holding onto the acreage longer – and that's where efficiency gains come. How do I change my estimated ultimate returns? How do I affect the cost structure in a more meaningful way? That'll happen over the next three to five years."

Hedge fund oil bulls downplay macro risks: Kemp (Reuters) - Hedge fund managers have turned bullish again towards oil prices, casting aside the caution that prevailed during much of February and March. 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 85 million barrels in the week to March 27.Portfolio managers have increased their net long position in Brent, NYMEX and ICE West Texas Intermediate crude, U.S. gasoline, U.S. heating oil and European gasoil by a total of 180 million barrels over the two most recent weeks.Net long positions stood at 1.396 billion barrels, not far below the record 1.484 billion barrels set nine weeks ago on Jan. 23 ( Fund managers’ long positions outnumber their short ones by a record ratio of 12.5:1, according to an analysis of records published by regulators and exchanges.On most measures, portfolio managers’ positioning in crude and refined products looks increasingly stretched and lopsided.Large concentrations of positions such as this, on either side of the market, have typically preceded a sharp reversal in prices since the start of 2015.With so many long positions already established and few short positions left to cover, there may not be much more buying to support prices if the holders of existing longs try to realise some of their profits.But the same risk factors have been evident for the last three months and so far prices have been steady with little day-to-day volatility.Most hedge fund managers seem convinced the next major move in prices is more likely to be on the upside. OPEC has signalled its willingness to continue supporting prices by indicating it will extend output curbs through the end of 2018.

Trade War Looms Over Oil Markets -- Oil prices, along with equities across the board, were dragged down on Monday over fears of a brewing trade war. China announced $3 billion of tariffs on U.S. goods, including pork and recycled aluminum. The move came as a retaliation to the Trump administration’s 25 percent tariff on steel and aluminum imports. China’s tariff announcement on Monday sent global financial equities careening downwards, and the losses were likely magnified by President Trump’s Twitter attacks on Amazon, which sparked a selloff in tech stocks.Fears of a global trade war are again on the rise. The worrying thing is that China’s tariff measures on Monday were somewhat narrow, and only came as retaliation to the steel/aluminum tariffs, not the $60 billion in tariffs the Trump administration announced more recently, which specifically targeted China.Chinese officials reiterated a desire to avoid a trade war, but China might not hold its fire forever, and the government could be preparing a larger set of trade tariffs in response.  In other words, there is a decent chance that the trade dispute continues to escalate. That is bad news for oil prices. The case for oil going higher largely hinges on exceptionally strong demand scenarios for 2018. “Our latest forecast suggests that demand will grow by 1.7 million b/d in 2018, the fifth-highest this century,” WoodMac said in a recent note. A trade war would seriously upend that forecast.

US crude sinks 3%, settling at $63.01, as geopolitical anxiety that fueled a rally fades - Oil prices fell 3 percent in thin trading on Monday, as the geopolitical concerns that underpinned last week's rally faded. Crude futures had risen in overnight trading, lifted by a drop in drilling activity in the United States and concerns that Washington could reintroduce sanctions against Iran, OPEC's third-biggest oil producer. U.S. WTI crude futures ended Monday's session down $1.93, or 3 percent, at $63.01 a barrel, after finishing the first quarter up 7.5 percent.  Brent crude futures were down $1.59, or 2.3 percent, at $67.75 per barrel by 1:55 p.m. ET, having nearly touched the contract's 2018 high of $71.28 last week. Trading volume was lower than normal as many countries were still on Easter holiday.Tensions between Saudi Arabia and Iran, two of OPEC's top three crude producers, have somewhat receded, though traders were still covering bets that oil prices would fall heading into the long holiday weekend, analysts said."With nothing happening and no catalyst to keep it up here, you're starting to see this weak length coming out of the market," said John Kilduff, founding partner at energy hedge fund Again Capital."The anxiety just comes racing out of the market if nothing happens."President Donald Trump has threatened to pull out of a 2015 international nuclear deal with Tehran under which Iranian oil exports have risen. He has given the European signatories a May 12 deadline to "fix the terrible flaws" of the deal.Those concerns have been amplified by Trump's nominating Iran hardliner Mike Pompeo to be secretary of State and naming noted hawk John Bolton as national security advisor, said Tom Kloza, global head of energy analysis at Oil Price Information Service. "Those two guys have probably propped up crude by a couple dollars a barrel, pending appointments or confirmation," he told CNBC.

Financial Turmoil Hits Oil Markets Hard - Oil prices sold off along with everything else on Monday, falling despite the surprising decline of the U.S. rig count posted last week. The drop in prices appeared to have been triggered by rising Russian production and the record low levels of shorts in the market. Oil prices rebounded slightly on Tuesday. Tesla raced against the clock last week to produce as many Model 3s as possible, just as the first quarter came to a close.  The company’s fortunes took another bad turn last week when a motorist was killed using the driver-assistance system Autopilot. Meanwhile, Moody’s also just downgraded Tesla’s credit rating deep into junk territory.   FirstEnergy put a fleet of its power generation units into Chapter 11 bankruptcy, just days after it sent a plea to the U.S. government for a bailout. FirstEnergy’s coal and nuclear power plants are increasingly uncompetitive in a market of cheap natural gas and cheap renewable energy. Earlier this year U.S. FERC rejected a proposal that it intervene to prop up failing coal and nuclear plants. The latest request, which, if granted, would require the PJM grid to use the power from FirstEnergy’s aging fleet. The Energy Department says the request will be reviewed. But a decision won’t come in time to save FirstEnergy’s fleet.  A Wall Street Journal survey of 15 investment bank points to higher oil prices. The average forecasted price for Brent and WTI for 2018 from the 15 banks came in at $63 and $59 per barrel, respectively. Both of those figures are up $1 per barrel from last month’s survey, an indication that falling crude oil inventories and rising geopolitical concerns are leading to a more bullish outlook. . China responded to U.S. tariffs on Monday by imposing $3 billion worth of tariffs on U.S. goods, including pork and recycled aluminum. The levies come as retaliation to President Trump’s steel and aluminum tariffs, which means that China could be preparing more retaliatory moves in response to the follow-up China-specific tariffs that the U.S. imposed more recently. The tit-for-tat risks a broader trade war, and that led to a global financial selloff, which dragged down oil prices and energy stocks on Monday.

Oil inches up, but rising Russian output still weighs (Reuters) - Oil prices inched up on Tuesday as rising Russian output and expectations of a reduction in Saudi Arabian crude prices were offset by a potential slowdown in U.S. production. U.S. WTI crude futures were at $63.2 a barrel at 0117 GMT, up 18 cents, or 0.3 percent, from their previous settlement. Brent crude futures rose to $67.84 per barrel, up 20 cents, or 0.3 percent, after it fell more than 2 percent on Monday. Greg McKenna, chief market strategist at futures brokerage AxiTrader, said traders were wary of the fact that the market was still holding large amounts of long positions which will need to be sold off at some stage. "That makes prices vulnerable to bad news," he said, pointing to rising Russian production and a likely drop in Saudi physical crude prices. Brent reached a 2018 high of $71.28 in January but hassince struggled to pass that level. Two rallies last week ran out of steam just above $71. There was also pressure coming from the physical market, where top exporter Saudi Arabia is expected to cut prices for all crude grades it sells to Asia in May. This came amid rising supplies. Top producer Russia pumped 10.97 million barrels per day (bpd) of crude in March, up from 10.95 million bpd in February, official data showed, an 11 month high. One of the key price drivers going forward will be crude output from the United States, which has risen by almost a quarter since mid-2016 to 10.43 million bpd, overtaking Saudi Arabia's and coming in just shy of Russia's. A dip in drilling activity for new production could imply that the relentless rise in U.S. production could be tapering off toward the middle of the year. 

Western Canadian heavy crude surges to 2018 high while light grades fall - Western Canadian heavy pipeline crude rose sharply Tuesday to its strongest differential this year on what traders described as firm buying activity and the expectation of further production cutbacks. Light grades fell. Western Canadian Select at Hardisty, Alberta, the heavy benchmark, was assessed at WTI CMA minus $18.25/b, a gain of $3.65/b from where it was last assessed. The assessment marked the first time the grade has risen above minus $20/b this year. It was last assessed higher on December 5, when it reached WTI CMA minus $17.65/b. One trader described the day as marked by "lots of buying" and guessed that participants "might be short from the last trade cycle." Another trader said that a decline in heavy crude production from Cenovus and other small players had contributed to the strength.The day's rise for WCS at Hardisty gives some reprieve for a market that has struggled to alleviate a supply glut in Alberta following the temporary shutdown of the Keystone Pipeline on November 16. Cenovus Energy said last month it would curtail oil sands production to cut losses spurred by a lack of market access and crude price discounts, and Canadian Natural Resources said in its earnings call earlier in March that it was cutting heavy oil drilling in northern Alberta to reduce overall company costs. While heavy crude rose Tuesday, light grades moved in the opposite direction. Syncrude Sweet Premium at Edmonton was assessed at WTI CMA minus $1/b, down $2.80/b from Thursday and the lowest since February 6. Canadian markets were not assessed Friday and Monday because of the Easter holiday. 

Oil Prices Fall as China Imposes Tariffs on US Goods- Oil prices fell on Wednesday after China said it would impose tariffs on a number of U.S. goods including agricultural products, raising the prospect of a growing trade war that could impact global growth. China, the world’s largest importer of raw materials, hit back at the Trump administration’s plan to levy tariffs on $50 billion of its goods, retaliating with a list of duties on U.S. imports including soybeans, planes, cars, whiskey and chemicals. Equity and commodity markets dropped sharply, reflecting growing nervousness among traders and investors. Brent crude futures fell $1.23 on the day to $66.89 a barrel by 0918 GMT, bringing losses for the week so far to nearly 5 percent. U.S. WTI crude futures were last down $1.18 at $62.33 a barrel. Oil prices had already been under pressure earlier in the day ahead of a possible rise in U.S. inventories, as reported by the Energy Information Administration (EIA) later on Wednesday. “We’re seeing the reaction across the board … crude oil is keeping an eye on stocks and with S&P (futures) down … we’re seeing renewed weakness ahead of the EIA this afternoon,” Saxo Bank head of commodities strategy Ole Hansen said. Yet fund managers hold more bets on a sustained rise in the price of Brent crude oil than at any time, data from the InterContinental Exchange shows.

WTI/RBOB Rebound After Big Surprise Crude Draw - WTI/RBOB tumbled after China's trade war retaliation, erasing gains on OPEC's lowest output in a year, but rebounded after DOE reported a bigger-than-API-reported and surprising 4.6mm barrel crude draw - the most in 3 months. Prices jumped despite a new record high in US crude production.

  • Crude -4.617mm (+2mm exp, -3.28mm API) - biggest draw in 3 months
  • Cushing +3.666mm (+4.06mm API) - biggest build since Dec 2016
  • Gasoline -1.16mm (-1.5mm exp, +1.12mm API)
  • Distillates +537k (+2.2mm API)

API showed an unexpected 3.28mm draw overnight and DOE confirmed it as even larger - the biggest crude draw since early January. Following the prior week's biggest surge in Cushing stocks in over a year (and API's spike), DOE reported a huge-er spike in Cushing stocks this week - the biggest build since Dec 2016.

Should the US government stockpile gasoline and jet fuel? - Capitol Crude podcast - As the US government continues to sell off hundreds of millions of barrels from its crude oil stockpile, a new report argues that the Trump administration should start building reserves of gasoline, jet fuel and other refined products. Phillip Cornell, the author of the study, joins the podcast to talk about where these product reserves should be built, how much they’d cost and whether an emergency fuel reserve needs to be used in order to be effective. Cornell is a nonresident senior fellow at the Atlantic Council’s Global Energy Center and a former adviser to both Saudi Aramco’s chairman and CEO and the executive director of the International Energy Agency.

Oil Climbs with Equities, Saudi Arabia Hikes Crude Prices - (Reuters) - Oil prices rose on Thursday, helped by gains in U.S. equities markets and Saudi Arabia's unexpected hike in crude prices, though crude's advance was curbed by strength in the dollar. Brent crude futures gained 31 cents to settle at $68.33 a barrel, and U.S. West Texas Intermediate crude rose 17 cents to settle at $63.54 a barrel. Oil prices drew support as Wall Street rose. Equities investors shrugged off fears of an escalating trade conflict between the United States and China and looked forward to the quarterly earnings season. U.S. officials said the countries could negotiate. "Oil prices are profiting from the general brightening of sentiment on the markets as signs emerge that the trade dispute is easing between the U.S. and China," analysts at Commerzbank said in a note. Saudi Arabia announced that it would increase its official selling prices of May crude, and the move supported prices, The strength of the U.S. dollar limited oil's gains, analysts said. The U.S. dollar rose to its highest in more than one month against a basket of major currencies. Because oil is dollar-priced, a stronger greenback makes purchases in other currencies more expensive. Market intelligence firm Genscape said inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, rose 2.5 million barrels for the week to April 3, according to traders who saw the data. Wednesday's weekly inventory figures showed that U.S. crude stocks unexpectedly declined by 4.6 million barrels in the most recent week. U.S. production hit a new high last week. The extent to which it counterbalance output cuts from the Organization of the Petroleum Exporting Countries (OPEC) will be critical, said Gene McGillian, manager of market research at Tradition Energy in Stamford. The energy minister of OPEC member Qatar told Reuters that the organization and its allies should maintain supply cuts, which are set to run until the end of 2018.

Oil Prices Crash Despite Bullish Fundamentals -- The escalating trade war between China and the U.S. is likely drowning out a rather bullish EIA report, which showed a strong inventory decline last week. The oil market is tightening, but trade concerns are dominating headlines.  In a rapidly escalating trade war, President Trump called China’s recent tariffs “unfair,” and said he was considering an additional $100 billion in tariffs on China. Trump said that the tariffs on U.S. soy and pork would hurt American farmers, and he instructed the Department of Agriculture to come up with a plant to protect the U.S. agricultural sector. If the administration follows through on the $100 billion in tariffs, China’s Commerce Ministry said it would “follow suit to the end, not hesitate to pay any price, resolutely counterattack and take new comprehensive measures in response.” A wide range of U.S. industries are opposed to the Trump administration’s actions. Dean Garfield, president of the Information Technology Industry Council, a high-tech trade group, called the Trump move “irresponsible and destabilizing,” according to the WSJ.  Crude oil prices sank after each round of tariffs, and while there are real concerns about the ripple effects on demand and global economic growth, it is unclear whether or not the oil and gas relationship will be directly targeted in a major way. China needs the energy, and oil and gas exports have succeeded in cutting the U.S. trade deficit, a particularly concerning metric for the Trump administration. Some analysts think U.S. oil and gas exports to China are too important for both countries. But not everyone agrees. “China can ditch American energy at any time because there’s plenty of supplies elsewhere, whereas for the U.S., energy is a sensitive subject,” Will Yun, a commodities analyst at Hyundai Futures Corp. told Blomberg. “If China shows its willingness to impose tariffs on crude, it will send a shock wave through markets,” said Min Byungkyu, a global strategist at Yuanta Securities Co.

Oil Prices Bristle As US Rig Count Climbs -- Baker Hughes reported a 10-rig increase to the number of oil and gas rigs this week. The total number of oil and gas rigs now stands at 1003, which is an addition of 164 rigs year over year.The number of oil rigs in the United States increased by 11 this week, for a total of 808 active oil wells in the US—a figure that is 136 more rigs than this time last year. The number of gas rigs held steady this week, still at 194; 29 rigs above this week last year.The oil and gas rig count in the United States has increased by 80 in 2018. While US drillers seem determined to add rigs, Canada continued its brutal losing streak, with a decrease of 23 oil and gas rigs, after losing 168 rigs last week in the four weeks prior. At just 111 total rigs, Canada now has 21 fewer rigs than it did a year ago. Oil prices were trading down on Friday, with West Texas Intermediate trading down $0.27 (-0.42%) at $63.27 at 9:17am EST. The Brent benchmark was trading down $.011 (-0.16%) at $68.22. Price pressures persisted on Friday as the China and US trade tiff heated up, with President Trump announcing billions in additional tariffs in a tit-for-tat measure after China’s latest round of tariffs. Also weighing on prices this week is the ever-present threat of climbing US crude oil production, which rose again in the week ending March 30, reaching 10.460 million bpd—the sixth build in as many weeks—well on its way to the 11 million bpd mark that analysts see coming in 2018. At 8 minutes after the hour, WTI was trading at $62.41 (-1.78%) and Brent was trading at $67.43 (-1.32%).

U.S. drillers add oil rigs for the third week in four: Baker Hughes - U.S. energy companies added oil rigs for the third time in four weeks as crude prices drifted from a three-year high hit earlier this year amid concerns of a trade war between U.S. and China. Drillers added 11 oil rigs in the week to April 6, bringing the total count up to 808, the highest level since March 2015, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. This was the biggest weekly addition in about two months. The U.S. rig count, an early indicator of future output, is much higher than a year ago when 672 rigs were active. Energy companies have been steadily increasing spending since mid-2016 when crude prices began recovering from a two-year crash. U.S. crude futures traded around $62.30 a barrel this week, moving away from the three-year high of $66.66 hit in late January, but up from the $50.85 average hit in 2017 and $43.47 in 2016. Looking ahead, futures were trading around $61.60 for the balance of 2018 and $58 for calendar 2019. In anticipation of higher prices, U.S. financial services firm Cowen & Co said 58 of the roughly 65 exploration and production companies they track have already provided guidance indicating an 11 percent increase this year in planned capital spending. Cowen said those E&Ps that have reported capital plans for 2018 expected to spend a total of $80.5 billion in 2018, up from an estimated $72.4 billion in 2017. . So far this year, the total number of oil and natural gas rigs active in the United States has averaged 969, up sharply from an average of 876 rigs in 2017 and 509 in 2016, and not far from the total of 978 in 2015. Most rigs produce both oil and gas. 

Oil futures end 2.3% lower amid trade worries, rising rig count - Oil futures ended sharply lower Friday, weighed down by rising trade tensions between the U.S. and China and data that showed an increase in the number of U.S. rigs drilling for crude. West Texas Intermediate oil for May delivery on the New York Mercantile Exchange dropped $1.48, or 2.3%, to settle at $62.06 a barrel. For the week, the U.S. benchmark declined around 4.6%. Oil prices were under pressure after U.S. President Donald Trump threatened to expand planned tariffs on Chinese imports, prompting Beijing to warn of further retaliation. Meanwhile, oilfield services firm Baker Hughes said the number of U.S oil rigs rose by 11 to 808 this week.

Oil sinks as China-U. S. trade battle escalates - A combination of rising China-U. S. trade tensions and the highest number of U.S. oil rigs in three years saw oil futures end sharply lower Friday, sealing the biggest weekly decline for the U.S. benchmark since early February. On the New York Mercantile Exchange, West Texas Intermediate futures for May delivery, the U.S. benchmark, dropped $1.48, or 2.3%, to end at $62.06 a barrel. June Brent crude the global benchmark, dropped $1.22, or 1.8%, to close at $67.11 on London’s Intercontinental Exchange. Both benchmarks posted their lowest close since March 19. WTI fell 4.4% for the week, its biggest such decline since the week ended Feb. 9. Brent saw a 3.2% weekly fall, its biggest since the week ended March 2.Losses mounted after oil-field services firm Baker Hughes said the number of U.S. oil rigs rose by 11 to 808, the highest number since March 2015. That underscored worries about rising U.S. output. Oil began the day under pressure after the White House said, in a statement after the market close Thursday, that Trump has asked the U.S. Trade Representative to consider an extra $100 billion in Chinese goods to face tariffs and to identify the products that could be targeted, escalating protectionist trade tensions that market participants fear could disrupt global economies and potentially impact crude demand, even if on a short-term basis. “After all, the U.S. and China are the world’s largest oil consumer and oil importer countries. If the trade conflict escalates and slows oil demand in the U.S. and China, this would have an impact on the market balance that could hardly be ignored,” wrote commodity analysts led by Eugen Weinberg at Commerzbank.

OPEC Production Slumps To 12-Month Low - Crude oil production across OPEC slumped by 170,000 bpd last month to 32.04 million bpd, a Bloomberg survey among energy analysts. This is the lowest daily production rate in the cartel since April 2017, when it pumped 31.9 million bpd.Yet once again the drop was not the result of a conscious effort. Venezuela’s production continued to fall, shedding another 100,000 bpd in March, which made the struggling South American economy the main—if unwilling—contributor to the OPEC production decline. Venezuela pumped 1.51 million bpd last month, versus its OPEC quota of 1.97 million bpd. The country’s cumulative cut as of March stood at 557,000 bpd, versus a pledge cut of just 95,000 bpd.Algeria was another contributor to the production decline, with output there falling by 40,000 bpd to 1 million bpd as field maintenance season kicked in. Libya was also an unwilling participant in the overall decline, with production there slipping below 1 million bpd on field outages.  Saudi Arabia also continued to pump less than it had pledged to, with the daily average falling by another 10,000 bpd last month to 9.87 million bpd. In comparison, Russia’s production hit the highest in 11 months in March, at 10.97 million bpd, still almost in line with its pledge to OPEC, which was for a cut of 300,000 bpd from its November 2016 average daily of 11.247 million bpd. In the United States, daily crude production averaged 10.398 million bpd in March, data from the Energy Information Administration shows.OPEC has been upbeat about its compliance with the cuts agreed in November and December 2016, but the fact that it w as Venezuela that the cartel had to thank for this compliance in large part has not gone unnoticed by industry observers. In fact, the International Energy Agency recently warned that Venezuela’s falling production could at some point tip the market into a deficit. This prospect, however, is for now remote in the face of growing production from non-OPEC producers led by the United States.

Saudi Officials Worried About Oil’s Future - Saudi government officials like talking to the media about oil. They invariably come across as upbeat, confident that the OPEC deal will achieve its goal of shrinking the global oversupply, and equally confident that U.S. shale will not seriously eat away at their oil revenues, however fast it grows.The general message seems to be: We can handle everything. Behind the scenes, however, things look differently, Time reports, citing former and current U.S. government officials with experience in the Kingdom.Following an interview with Crown Prince Mohammed, in which he anticipated a bright future for crude oil thanks to new strong demand, Time talked to several U.S. officials who shared their concern about how realistic this view of the industry actually is.In fact, these officials believe Saudi Arabia is still overdependent on crude oil, and this could spell trouble for the barely contained powder keg that is the Middle East—a ripple in crude oil would likely set the region all ablaze. What’s more, they say, Saudi Arabia is still unable to make ends meet, even at the current higher oil prices. If prices fall and its deficit deepens further, the Kingdom would be hard pressed for an urgent change in its heavily subsidized economic model. There is even a danger of the economy crashing, one U.S. official said, and should this happen, chaos will ensue.  It is possible that Saudi officials are downplaying some very real threats to all the ambitious economic reform plans initiated by Mohammed bin Salman. However, it seems difficult to gauge the importance of these threats when Saudi sources are often at opposing ends of the opinion spectrum. Some, U.S. officials say, are adamant that everything around the reforms is proceeding smoothly. Others are equally adamant that the Kingdom is running on fumes that will soon evaporate.

Saudi Oil Tanker Hit In Houthi Missile Attack Off Yemen - In the latest attempt by Houthi rebels to strike directly at Saudi Arabia, the Kingdom said Tuesday a Saudi oil tanker in the Red Sea was hit in a Houthi attack off Yemen’s main port city of Hodeidah, Al-Arabiya reported on Tuesday, citing a statement from the Saudi-led coalition.The oil tanker was attacked by Houthi rebels at 1:30pm local time on Tuesday, said Colonel Turki al-Maliki, a spokesman for the coalition forces, as quoted by Al Arabiya. He said the attack took place in international waters west of the port of Hodeidah, which is under the control of Houthi armed militias.Al-Maliki said the attack failed after one of the alliance's naval vessels intervened, adding that the oil tanker suffered only minor damage. The vessel continued on its navigational line and sailed north following the incident, while being accompanied by alliance ships. As Reuters adds, the Iran-aligned Houthi group said they had targeted a warship of the coalition in the Red Sea in response to an air strike in Yemen’s Hodeidah province on Monday.

Attack on Saudi tanker could mean higher oil prices - An attack on a Saudi super tanker by Yemen's Houthis this week signals further escalation in the efforts to take the war in Yemen directly to Saudi Arabia and its oil facilities. Saudi Arabia entered the war three years ago, but the proxy battle between it and Iran has so far not added much of a premium to the price of oil. However, that could change if the Iranian aligned Houthis are more successful in their attacks on Saudi Arabia and its oil facilities."This could eventually prove to be the tripwire for a direct confrontation between Saudi Arabia and Iran," said Helima Croft, head of global commodities strategy at RBC. Crown Prince Mohammed Bin Salman led the kingdom into the regional war after the Houthi rebels forced Yemen's president Abd Rabbu Mansour Hadi into exile. "Imagine if that tanker was seriously damaged. Is this going to start a tanker war situation? I worry about this not being a one off and there becomes concerns about the security of the straits. They just had a missile strike on Riyadh a week ago," Croft said.   John Kilduff of Again Capital said oil did not jump on news of the attack but it did hold up during a sell off in global risk assets Tuesday. West Texas Intermediate crude futures were trading up about a half percent at $63.67 per barrel in late trading Wednesday afternoon.

Saudi-Iran Proxy War Threatens OPEC Deal - Tensions between Iran and Saudi Arabia triggered doubts about the success of the OPEC+ oil production cut deal two years ago when it was first being hatched. Now, with the deal in its second year, these doubts have been rekindled by the escalation between the two regional rivals. There is no end in sight for the proxy war that Saudi Arabia and Iran are fighting in Yemen, and it could spell the end of the deal.There are already doubters that the deal will survive beyond the June 2018 meeting of the partners. Earlier this year, commodity analysts from leading investment banks warned that for some of the partners in the deal, oil prices are getting too high for comfort. Russia was a notable example in this respect: with its economy mainly export-oriented, it could use lower oil prices to keep the ruble low and maintain demand for its export goods.Iran seems to also be on the side that is fine with sub-$70 Brent. Last month, Energy Minister Bijan Zanganeh told the Wall Street Journal in an interview that Iran was uncomfortable with oil at US$70, as this price level would stimulate more U.S. shale production. Indeed, U.S. production has been growing inexorably, last week hitting 10.43 million bpd. Now the growing hostility between Riyadh and Tehran could become the last straw. ETF Securities commodities strategist Nitesh Shah this week told CNBC that these bilateral relations that have so far had only a fleeting effect on oil markets could now lead to an earlier end to the deal.

A proxy war between Saudi Arabia and Iran could be the nail in OPEC’s coffin -- Tensions between Iran and Saudi Arabia triggered doubts about the success of the OPEC+ oil production cut deal two years ago when it was first being hatched. Now, with the deal in its second year, these doubts have been rekindled by the escalation between the two regional rivals. There is no end in sight for the proxy war that Saudi Arabia and Iran are fighting in Yemen, and it could spell the end of the deal. There are already doubters that the deal will survive beyond the June 2018 meeting of the partners. Earlier this year, commodity analysts from leading investment banks warned that for some of the partners in the deal, oil prices are getting too high for comfort. Russia was a notableexample in this respect: with its economy mainly export-oriented, it could use lower oil prices to keep the ruble low and maintain demand for its export goods. Iran seems to also be on the side that is fine with sub-$70 Brent. Last month, Energy Minister Bijan Zanganeh told the Wall Street Journal in an interview that Iran was uncomfortable with oil at US$70, as this price level would stimulate more U.S. shale production. Indeed, U.S. production has been growing inexorably, last week hitting 10.43 million bpd. Now the growing hostility between Riyadh and Tehran could become the last straw. ETF Securities commodities strategist Nitesh Shah this week told CNBC that these bilateral relations that have so far had only a fleeting effect on oil markets could now lead to an earlier end to the deal.

Saudi Crown Prince: Iran’s Supreme Leader ‘Makes Hitler Look Good’ - This much, at least, can be said for Mohammed bin Salman, the putatively reformist crown prince of Saudi Arabia: He has made all the right enemies. Among those who would celebrate his end are the leaders of ISIS, al-Qaeda, Hezbollah, and Hamas, as well as Yemen’s Houthi rebels, and the entire clerical and military leadership of the Islamic Republic of Iran. As a bonus, there are members of his own family, the sprawling, sclerotic, self-dealing House of Saud, who would like to see him gone—or at the very least, warehoused at the Ritz-Carlton in Riyadh, where the 32-year-old prince recently imprisoned many of his enemies and cousins during an anti-corruption sweep of the kingdom.The well-protected Prince Mohammed does not seem particularly worried about mortal threats, however. He was jovial to the point of ebullience when I met him at his brother’s compound outside Washington (his brother, Prince Khalid bin Salman, is the Saudi ambassador to the U.S.). Prince Mohammed (who is known widely by his initials, MbS) seemed eager to download his heterodoxical, contentious views on a number of subjects—on women’s rights (he appears doubtful about the laws that force Saudi women to travel with male relatives); on Iran’s supreme leader, Ayatollah Khamenei, who is, in the prince’s mind, worse than Hitler; and on Israel. He told me he recognizes the right of the Jewish people to have a nation-state of their own next to a Palestinian state; no Arab leader has ever acknowledged such a right. Prince Mohammed, who is on a seemingly endless pilgrimage to the nodes of American power (he is in Hollywood this week) is an unfamiliar type for Middle East reporters accustomed to a certain style of Saudi leadership, which is to say, the functionally comatose model of authoritarian monarchism. Prince Mohammed’s father, the 82-year-old King Salman, is not overly infirm, but it is clear that his son is already in charge. And if the prince, his many handlers, and his partisans on Wall Street and in the White House (especially his fellow prince, Jared Kushner) are to be believed, he is in a genuine hurry to overturn the traditional Saudi order.

Sunni Saudi Arabia courts an ally in Iraq's Shia -  Najaf, the Iraqi holy city for Shia Muslims, might seem an unlikely place for anyone but Shia pilgrims to seek out. Yet the city, 160km south of Baghdad, has an unusual new suitor — the oil-rich power on the other side of Islam’s sectarian divide, Saudi Arabia. The Sunni Gulf kingdom’s courting of Iraq’s Shia clerical elite over the past year could mark a transformational shift in Riyadh’s regional strategy.  For decades, Saudi Arabia and its Shia rival Iran have exploited the centuries-old schism between Islam’s Shia and Sunni sects to serve their modern-day power struggles. Now, Saudi officials are discreetly shuttling messages to Najaf’s leading Shia clerics, who, although wary of being drawn into a proxy struggle, want to hear Riyadh out.  Last year foreign minister Adel al-Jubeir made the first visit to Iraq by a senior Saudi official since 1990. Iraqi leaders have hinted that Crown Prince Mohammed bin Salman could also visit the country soon, with some saying he would include Najaf on any itinerary. But the Saudi foreign ministry was forced on Saturday to issue a statement saying that no such trip was planned, after a protest in Baghdad at the end of last week against such a visit. The stakes of this tentative rapprochement are high. At its best, Riyadh’s efforts to find Shia allies against Iran could defuse sectarianism that has sewn a bloody trail of conflict across the region. At its worst, the push could turn Iraq into yet another stage for Iranian-Saudi rivalries, played out most recently in Yemen, Syria and Lebanon.

New Study Provides Yet More Proof Of Saudi State Sponsorship Of ISIS - During the same week Saudi Arabia's crown prince Mohammed bin Salman (MbS) admittedto the The Atlantic's Jeffrey Goldberg that Saudi nationals have funded terror groups, a prominent Georgetown University counterterrorism expert and field researcher has published his findings based on extensive interviews with former ISIS members which identifies Saudi Arabia as a key source of the now defunct Islamic State's prior rapid growth.  The findings were summarized in the Government and Technology Services Coalition's Homeland Security Today online journal, and authored by Georgetown University professor Ahmet Yayla, who during the past four years has interviewed over 40 ISIS defectors in Turkey while conducting on the ground research along Syria's border.Yayla's findings entitled, To Truly Fight Terror, Counter Salafist Jihadist Ideology First, confirm that: “The majority of the ISIS shaykhs (imams and teachers) who were preaching in ISIS-controlled territories and schools were from Saudi Arabia.”— Max Abrahms (@MaxAbrahms) April 3, 2018 Though documentation on Saudi Arabia's role in financing global jihad has been abundant over the past years of war in Syria and Iraq, Professor Yayla's field research provides yet further empirical confirmation and proof of Saudi Arabia's role in fueling both ISIS and al-Qaeda terrorism.

Capitalism and the artificial intelligence revolution - Last month, over 3,000 Google employees signed a letter taking a stand against Google’s collusion with the United States’ drone assassination program, which has killed and maimed tens of thousands of people throughout the Middle East and North Africa.  Google employees demanded that the company end its participation in “Project Maven,” a system of mass drone surveillance integrated with the US drone warfare program, declaring, “We believe that Google should not be in the business of war.” It called for the adoption of a policy stating that “neither Google nor its contractors will ever build warfare technology.”Google’s collusion with the drone assassination program highlights the growing integration of the major technology companies with the US military, which, having declared a new era of “great-power competition” with Russia and China, sees pressing Silicon Valley into its war plans as the only way to regain its military power on the world stage.Just as ominous is Google’s role in mass domestic surveillance and censorship. In April, Google announced changes in its search algorithms—implemented through the use of “deep learning” and artificial intelligence technologies—to promote “authoritative content” over “alternative viewpoints.” These changes led to a sharp fall in search referrals to left-wing web sites by as much as 75 percent—with the World Socialist Web Site a central target.  More broadly, Google, Facebook and Twitter have hired tens of thousands of professional censors, many with backgrounds in the military, police and intelligence agencies, to train and augment their artificial intelligence systems to censor and police what people say and read online.

Syria debacle deepens crisis of Trump administration - The last significant enclave held by US-backed groups near the Syrian capital of Damascus collapsed Sunday with the agreement of two groups to evacuate and of another to submit to Russian military police acting on behalf of President Bashar al-Assad.The fall of Eastern Ghouta, with a population estimated at 400,000 people, is the biggest debacle suffered by the US-backed Islamist groups since the Assad regime recaptured the country’s largest city, Aleppo, in December 2016.The largest rebel group in Eastern Ghouta, Jaish al-Islam, which controlled Douma, the biggest population center in the area, reached an agreement Sunday on evacuating the enclave, according to the Syrian government news service SANA. Other reports said Jaish al-Islam was still pressing for Russian military police to be introduced as a buffer force between its own fighters and Syrian army troops.Jaish al-Islam agreed Saturday to evacuate its wounded to Idlib, in northwestern Syria, the last province in the country under the control of Islamist forces opposed to Assad. The group was in negotiations with the Assad government through Russian mediators. Two smaller rebel groups reached a full evacuation deal with the Russian intermediaries, which called for the evacuation of 19,000 people to Idlib, including fighters from the Faylaq al-Rahman and Ahrar al-Sham groups, their families, and residents who wished to join them.  It is the comprehensive defeat of the US-backed rebels and the consolidation of the Assad regime’s control over the last area from which attacks could be mounted on the capital that underlies the evident disarray in US policy in Syria. On Thursday, President Trump told a campaign-style rally in Richfield, Ohio that US forces would “be coming out of Syria, like, very soon. Let the other people take care of it now.” While the remark came in the context of Trump boasting about the successes of US military forces against ISIS in eastern Syria and western Iraq, his suggestion that the 2,000 US troops now in Syria could soon be withdrawn contradicted the official policy of his own administration.

France To Send Military Forces To Syria As Trump Prepares To Withdraw; Turkey Furious - On the same day that Trump made his unexpected announcement that US troops would be "coming out of Syria very soon," French President Emmanuel Macron reportedly pledged to send a French military force into northern Syria in support of US-backed Kurdish forces near Afrin - now under Turkish control.News of Macron's promise to Kurdish officials in a closed door meeting was met with a swift and harsh response from Turkey: “If it’s accurate, the statement on mediation between Turkey and SDF amounts to crossing the line,” President Recep Tayyip Erdogan said on Friday. “Those who yesterday hosted terrorists at the highest level once again should know this is only an expression of enmity against Turkey,” Erdogan added, essentially calling France a 'state sponsor' of terror.  Though the French Presidency did not immediately confirm the news Thursday, reports circulated widely after Macron met with a delegation of Syrian Kurdish officials on Thursday representing the self-declared autonomous region of Rojava, of which the Syrian Kurdish People's Protection Units (YPG/YPJ) are the prime defense forces on the ground.Turkey's Erdogan has repeatedly denounced the YPG as a terrorist extension of the PKK, and after successfully c apturing the largely Syrian Kurdish Afrin canton following a bloody two-month cross border operation, has vowed to continue pushing deeper into Syrian territory toward Manbij and Tal Rifaat. Early this week Erdogan put the US on notice while addressing a crowd in the Black Sea province of Trabzonin: "the U.S. needs to transfer the control of Manbij to its real owners from the terrorist organization as soon as possible," Erdogan brazenly declared, while adding, "of course we will not point gun to our allies, but we will not forgive terrorists."

Erdogan Calls Israel A "Terrorist State" After "Inhumane Attack" In Gaza - In response to the killing of 16 Palestinians by the Israeli army following clashes during a demonstration on March 30 on the Gaza-Israeli border, Turkey's president Recep Tayyip Erdoğan accused Israel of being a "terrorist state and occupier," and its army of "inhuman cruelty" in its crackdown on Palestinian protesters. “Oppressor Israel and its army are only courageous against the oppressed in Gaza, Jerusalem, they are cowards when it comes to facing others,” Erdogan said at a ruling Justice and Development Party (AKP) congress in the southern province of Adana on April 1, addressing Israeli Prime Minister Benjamin Netanyahu according to Turkey's Hurriyet. “He says our soldiers are oppressing people in Afrin. Netanyahu, you are very weak, very poor. We [Turkey] are dealing with terrorists. But you are not concerned about terrorists because you are a terror state,” Erdoğan said. Calling the Israeli leader “an occupier” in Palestine, Erdogan said Netanyahu has no right to criticize Turkey. “You are not popular. The step you took regarding Jerusalem at the United Nations is out in the open. The answer you received is out in the open. Stop bragging about owning nuclear weapons. The time may come when those weapons don’t work,” Erdoğan added. "You are also a terrorist. History is recording what you have done to all those oppressed Palestinians,” Erdoğan said, adding that he believes Israelis too are disturbed by Netanyahu’s misdeeds. Erdogan's harsh language came after tens of thousands of Palestinians marched to Gaza’s border with Israel on March 30; at least 16 were killed and hundreds injured when Israeli forces opened fire on protesters marking “Land Day.” Land Day is an annual Palestinian commemoration of the deaths of six Arab citizens of Israel killed by Israeli forces in 1976 during demonstrations over government land confiscations in northern Israel.

US media’s silent complicity in Israeli massacre in Gaza -- Major American media outlets, led by the New York Times, are treating the Israeli military’s mass killing and wounding of unarmed, peaceful Palestinian protesters in Gaza as a non-event.On Friday, as tens of thousands of Palestinians gathered near the militarized border with Israel to protest Israeli expropriation of Palestinian land and demand the right of Palestinian refugees to return to their homeland, Israeli troops and sharpshooters opened fire, killing at least 16 people and wounding some 1,400 more.Millions around the world reacted with shock and horror at the scenes of deliberate murder, using live ammunition. One video showed a young man running away from the border fence who was shot in the back and killed by Israeli troops. Another showed that at least two of those killed were unarmed as they walked slowly towards the Israel border.The Israel Defence Forces (IDF) deployed troops and more than 100 snipers to shoot unarmed protestors demonstrating in the towns and cities of the tiny enclave as well as the thousands who gathered at the border with Israel.According to Hamas, the bourgeois Islamist group that controls the Palestinian enclave, only five of those killed on Friday belonged to Hamas’s military wing, the rest being civilians. The US intervened at the United Nations Security Council to block a resolution put forward by Kuwait calling for an independent investigation into the mass shooting, and Israeli spokesmen flatly rejected any such probe, congratulating the Israeli soldiers for “defending Israeli sovereignty.”

NPR Runs IDF Playbook, Spinning Killing of 17 Palestinians - NPR, as FAIR has noted throughout the years (e.g., 8/14/01, 11/01, 2/5/02, 11/15/12, 10/10/14), takes a default pro-Israel line when reporting on the affairs of Israel/Palestine. Its correspondents almost always live in West Jerusalem or in Israel proper, are rarely Palestinian or Arab, and they work consistently to deflect blame for Israeli violence—either shifting blame onto Palestinian victims or dispersing it through false parity. A segment from Friday (All Things Considered, 3/30/18) on Israel’s killing of  Gaza protesters provides a case study in this process. NPR host Ari Shapiro set up the segment, an interview with reporter Daniel Estrin, by blaming the 17 dead and hundreds of injured Palestinians on “the militant group Hamas,” framing Israel as totally defensive. From the very first line, blame is deflected from the Israeli military:Today saw some of the most violent clashes in years between Palestinian demonstrators and Israeli troops. We do not have one party’s snipers opening fire on another, unarmed party; we have “violent clashes”—a term, as FAIR (8/12/17) has noted before, that implies symmetry of forces and is often used to launder responsibility. The whitewashing got worse from there: Tens of thousands of people in Gaza answered the militant group Hamas’ call to protest. Palestinians have no organic reasons for wanting to protest the occupation of their homes; the whole thing was a top-down decree from “the militant group” Hamas. They threw rocks and firebombs near the border fence with Israel. On the other side, Israeli troops assembled. This conveys the impression the Israeli military was just sitting around, minding its own business, when it was aggressively attacked by hundreds of Palestinians, then responded to this assault. The “firebombs” claim is repeated later in the piece by Estrin himself: “Israel responded to Palestinians throwing rocks, firebombs, burning tires.” This isn’t qualified with “according to the IDF” or “the Israeli government”—even though as of now, there’s no independent evidence firebombs were used, much less used before any sniper fire from Israel. The issue isn’t trivial: The matter of first blood when it comes to the  Palestinian/Israeli “conflict” is a crucial one (, 12/8/17); framing Israel as always responding to threats, rather than inflicting aggressive violence on an occupied people, is a critical difference.

Analysis | For Israel, there's little political cost to killing Palestinians - Washington Post - This weekend in Gaza, Palestinians buried their dead after Israeli soldiers killed at least 18 Palestinian protesters and wounded hundreds more on Friday. About 30,000 Palestinians had gathered near the fenced barrier separating the Gaza Strip from Israel, both protesting the stifling blockade on their territory and mourning the dispossession of their ancestral lands at the hands of the Israeli state. As in many other Palestinian protests that take place in the occupied territories, most protesters were unarmed and nonviolent. Families picnicked in the shadow of the Israeli border and flew Palestinian flags. But like so many other Palestinian protests, this one ended in tears. “I took my grandchildren. We went to a peaceful demonstration,” Fayik Sabbagh told The Washington Post. “We went there to tell them this is our land, but what we found was different.” Israeli authorities claimed they opened fire in response to some protesters who had encroached near the fence, burning tires and hurling stones or molotov cocktails. Footage that emerged from the chaotic scene suggested Israeli soldiers targeted unarmed protesters, including some who were running away and were shot from a distance by snipers. One victim was 20-year-old Badr Sabbagh, Fayik’s son, who was killed just minutes after arriving to watch the protests. “He asked for a cigarette, I gave it to him, he had two puffs, and then he was shot in the head,” his brother Mohammed told The Post.The right-wing government of Israeli Prime Minister Benjamin Netanyahu offered neither sympathy nor remorse. “Israel is acting determinedly and decisively to protect its sovereignty and the security of its citizens,” The Israeli leadership had reason to feel comfortable in its defiance. The most vocal criticism from abroad came from Iran and Turkey; censure from either country is more likely a source of relish for Netanyahu than unease. And at the United Nations, the Trump administration blocked the Security Council from issuing a statement that called for an “independent and transparent investigation” and affirmed the Palestinians’ right to peaceful protest.

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