Sunday, May 27, 2018

oil prices reverse May's gains; distillates supplies at a 4 year low, down 22% from a year ago; global oil stores down in April

oil prices fell for the first time in four weeks this week, giving up all of their May gains in the process, but not before hitting new three and a half year highs on Monday and again on Tuesday....after rising 58 cents to $71.28 a barrel last week, mostly on geopolitical fears, oil contracts for June delivery of US oil rose 96 cents to $72.24 a barrel on Monday, the highest since November 2014, on fears that Venezuela’s oil output would fall further after Trump added new financial sanctions to punish the country for re-electing their socialist president Maduro...oil prices then rose to another 42 month high of 72.83 a barrel on U.S. sanctions threats against Iran on Tuesday morning, but then fell back on renewed fears of a trade war between the US and China to close 11 cents lower, as trading in June US oil expired Tuesday afternoon at $72.13 a barrel, even as Brent crude for July, the global benchmark, still settled 35 cents higher, at another 3 1/2 -year closing high of $79.57 a barrel...with the contract for July US oil, which had fallen 15 cents to 72.20 on Tuesday, becoming the quoted front month oil price Wednesday, oil prices fell 36 cents to $71.84 a barrel on Wednesday, after the weekly EIA report showed a shockingly large increase in US oil stockpiles...oil prices then sank $1.13 to $70.71 a barrel on Thursday, on expectations that OPEC, meeting with Russia in St Petersburg, would increase oil output to cover the supply shortfalls expected out of Venezuela and Iran...US crude prices then fell as much as $3 in a broad selloff on Friday, after Saudi energy minister Al-Falih said OPEC and Russia were prepared to adjust oil policy in June, possibly by adding as much as 1 million barrels per day to global supplies, with oil closing the day $2.83 lower at $67.88 a barrel...thus the benchmark July US oil contract, which had ended last week at $71.37 a barrel, ended this week 4.9% lower, in its largest weekly retreat since early February...

since that end of the week oil price crash quickly reversed this month's worth of price increases, we'll include a quick graph of that interesting price trajectory here...

May 26 2018 2 hour oil prices since 8AM May 1

the above graph is an early Saturday morning screenshot of the live interactive US oil price graph at Daily FX, an online platform that provides trading news, charts, indicators and analysis of the markets, which we had set to show oil price changes every 2 hours...thus, each bar on this graph represents oil prices for 2 hours of oil trading between 8 AM on May 1st and the end of trading on Friday of this week, with green bars representing the two hour periods when the price of oil went up, and red bars representing the periods when the price of oil went down...for green bars, the starting oil price at the beginning of the 120 minute period is at the bottom of the bar and the price at the end of the period is at the top of the bar, while for red or down periods, the starting price is at the top of the bar and the price at the end of the 2 hours is at the bottom of the bar...also barely visible on this "candlestick" style graph are the faint grey "wicks" above and below each bar, to indicate trading prices during each 2 hour period that were above or below the opening to closing price range for that 2 hour period...   

as you can see, oil prices moved up fairly steadily throughout most of May, driven mostly by Trump's Iran sanctions, repeatedly hitting new 42 month highs on the way, till they reversed in the noon hour on Tuesday, which you can see as an obvious green to red peak...prices then fell in a steeping trajectory until the close, after which they still continued sliding in after hours trading...note that the odd price cite on the right margin was the morning price on May 1st, produced by the interactive function as i navigated the cursor to 8 AM on the graph...that $68.15 thus represents the price at that time, thus showing that oil prices are now down roughly 1% for the month...

natural gas prices, on the other hand, were 3.2% higher this week, hitting 17 week highs on three consecutive days before slipping a tenth of a cent to $2.939 per  mmBTU on Friday, as the temperature outlook progressively indicated a warmer than normal period ahead for most of the country, which would increase power burn for air conditioning, leaving less natural gas left over for storage...the natural gas storage report from the EIA for the week ending May 18th indicated that natural gas in storage in the US rose by 91 billion cubic feet to 1,629 billion cubic feet over the week, which still left our gas supplies 804 billion cubic feet, or 33.0% below the 2,433  billion cubic feet that were in storage on May 19th of last year, and 499 billion cubic feet, or 23.4% below the five-year average of 2,128 billion cubic feet of natural gas that are typically in storage on the third weekend in May...analysts had forecast a 92 billion cubic foot addition to storage, so while this 91 billion cubic foot addition was in line with expectations, it was still above the 74 billion cubic feet of gas that were added to storage over the week ending May 19th last year, and a bit above the average 89 billion cubic foot surplus of natural gas typically added to storage during the third week in May...however, except for the polar vortex year of 2014, natural gas supplies are still at their lowest on record for this time of year, and at 1,629 billion cubic feet they would need to increase by more than 98 billion cubic feet per week to get supplies up to the pre-winter average of 3,800 billion cubic feet by mid-October, a target that will get increasingly difficult as we move into the warmer part of the year, when demand for air conditioning is strongest...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering the week ending May 18th, indicated that due to a big jump in our oil imports and and an even larger drop in our oil exports, we had surplus oil to add to our commercial crude supplies for the tenth time in the past seventeen weeks...our imports of crude oil rose by an average of 558,000 barrels per day to an average of 8,159,000 barrels per day during the week, after rising by 258,000 barrels per day over the prior week, while our exports of crude oil fell by an average of 818,000 barrels per day from last week's record high to 1,748,000 barrels per day during this week, which meant that our effective trade in oil over the week ending the 18th worked out to a net import average of 6,411,000 barrels of per day during the week, 1,376,000 barrels per day more than the net of our imports minus exports during the prior the same time, field production of crude oil from US wells inched up by 2,000 barrels per day to a record high of 10,725,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 17,136,000 barrels per day during the reporting week...

meanwhile, US oil refineries were using 16,628,000 barrels of crude per day during the week ending May 18th, 7,000 barrels per day less than they used during the prior week, while at the same time 725,000 barrels of oil per day were reportedly being added to oil storage in the US....consequently, this week's crude oil figures from the EIA seem to indicate that our total working supply of oil from net imports and from oilfield production was 217,000 fewer barrels per day than what was added to storage and what refineries reported they used during the account for that disparity, the EIA needed to insert a (+217,000) 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"... (for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports slipped to an average of 7,908,000 barrels per day, which was 3.5% less than the 8,192,000 barrel per day average we imported over the same four-week period last year...the 725,000 barrel per day increase in our total crude inventories included a 825,000 barrel per day addition to our commercially available stocks of crude oil, which was partially offset by a 100,000 barrel per day decrease of the oil in our Strategic Petroleum Reserve, likely part of a sale of government owned oil mandated by this year's federal budget...this week's 2,000 barrel per day increase in our crude oil production included a 24,000 barrel per day increase in output from wells in the lower 48 states, which was mostly offser by a 22,000 barrel per day decrease in oil output from Alaska...the 10,725,000 barrels of crude per day that were produced by US wells during the week ending May 18th were nonetheless again the highest on record, 15.1% more than the 9,320,000 barrels per day that US wells were producing during the week ending May 19th of last year, and up by 27.2% from 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 91.8% of their capacity in using 16,628,000 barrels of crude per day during the week ending May 18th, up from 91.1% of capacity the prior week, but down from the seasonal high of 93.5% of capacity during the first week of April....the 16,628,000 barrels of oil that were refined this week were down 5.6% from the off-season record of 17,608,000 barrels per day that were being refined during the last week of December 2017, and 3.8% less than the 17,281,000 barrels of crude per day that were being processed during the week ending May 19th, 2017, when refineries were operating at 93.5% of capacity.... 

even though the amount of oil that was refined this week was little changed, gasoline output from our refineries was much lower, decreasing by 410,000 barrels per day to 10,052,000 barrels per day during the week ending May 18th, after our refineries' gasoline output had increased by 488,000 barrels per day during the week ending May 11th....with this week's decrease, our gasoline production was 1.9% lower during the week than the 10,243,000 barrels of gasoline that were being produced daily during the week ending May 19th of last the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 93,000 barrels per day to 4,938,000 barrels per day, after rising by 38,000 barrels per day the prior week....that left the week's distillates production 5.0% lower than the 5,197,000 barrels of distillates per day than were being produced during the week ending May 19th, 2017....      

however, even with the big drop in our gasoline production, our supply of gasoline in storage at the end of the week rose by 1,883,000 barrels to  233,897,000 barrels by May 18th, just the fourth increase in 12 weeks, but the 19th increase in 28 weeks, as gasoline inventories, as usual, were being built up over the winter months...our gasoline supplies rose this week because our exports of gasoline fell by 569,000 barrels per day to 356,000 barrels per day, and because our imports of gasoline rose by 342,000 barrels per day to 1,063,000 barrels per day, even as our domestic consumption of gasoline rose by 158,000 barrels per day to 9,689,000 barrels per day...but even after this week's increase, our gasoline inventories finished the week 2.5% lower than last May 19th's level of 239,882,000 barrels, even as they were still roughly 6.8% above the 10 year average of gasoline supplies for this time of the year...     

meanwhile, with this week's decrease in distillates production, our supplies of distillate fuels fell by 951,000 barrels to a four year low of 113,995,000 barrels during the week ending May 18th, the 10th decrease in eleven weeks, and after falling by 13,311,000 barrels over the prior five weeks, at a time of year when distillates supplies are typically increasing...our distillate inventories fell again because our exports of distillates rose by 562,000 barrels per day to 1,461,000 barrels per day, and because our imports of distillates fell by 53,000 barrels per day to record low 24,000 barrels per day, even while the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 585,000 barrels per day to 3,637,000 barrels per day...after this week’s inventory decrease, our distillate supplies ended the week 22.1% below the 146,339,000 barrels that we had stored on May 19th, 2017, and roughly 15.6% lower than the 10 year average of distillates stocks for this time of the year

with our supplies of distillates now at a 4 year low, we'll take a look at a graph of what that looks like, compared to recent history:

May 23 2018 distillate supplies as of May 18

in the graph above, copied from the weekly Petroleum Status Report (pdf), the blue line shows the recent track of US distillate inventories in millions of barrels over the period from January 2017 to May 18th, 2018, while the grey shaded area represents the range of distillate inventories in millions of barrels as reported weekly by the EIA over the 5 years prior to the time of year shown by the blue line...thus, on the extreme left of the graph, the grey shaded area shows shows the 5 year range of distillate inventories back to January 2012, while on the right side of the graph, the grey shaded area shows shows the 5 year range of distillate inventories back to December we can see by the blue line, as recently as February 2017 our distillate supplies were at an all time high, but in the 15 months since then, they've fallen to a 4 year low, largely because we've been exporting diesel fuel at a record pace...only at the end of the polar vortex winter of 2014 were our distillate fuel supplies lower than they are now, due at that time to the exceptionally large use of heat oil over that fact, the last time distillate supplies were this low after the third week of May was back in 2008, because they'd already recovered to 116,277,000 barrels by May 16, 2014....unlike natural gas, however, where we are largely dependent on storage for our winter supplies, any distillate shortfall during a cold winter could be quickly made up by increasing our distillates imports, albeit more than likely at a much higher price than we are now selling our exports for...

finally, with the big drop in our oil exports accompanied by a big increase in our oil imports, our commercial supplies of crude oil increased for the 11th time in 2018, but just for the 18th time in the past year, as our commercial crude supplies rose by 5,778,000 barrels during the week, from 432,354,000 barrels on May 11th to 438,132,000 barrels on May 18th...however, after falling most of the past year, our oil inventories as of May 18th were still 15.1% below the 516,340,000 barrels of oil we had stored on May 19th of 2017, 13.3% lower than the 505,571,000 barrels of oil that we had in storage on May 20th of 2016, and 1.9% below the 446,412,000 barrels of oil we had in storage on May 22nd of 2015, during a period when the US glut of oil had already begun to build from the nearly stable supply levels of the prior years...   

OPEC's Monthly Oil Market Report

next, we're going to take a look at OPEC's May Oil Market Report (covering April OPEC & global oil data) this week, as i didn't have time to get to it last week.. it's available as a free download and hence it's the report we check for monthly global oil supply and demand data, rather than the paywalled report of the IEA that's usually reported in the media...the first table from this monthly report that we'll look at is from the page numbered 51 of that report (pdf page 59), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to thus resolve any potential disputes that could arise if each member reported their own figures...   

April 2018 OPEC crude output via secondary sources

as we can see on this table of official oil production data, OPEC's oil output increased by 12,100 barrels per day in April to 31,930,000 barrels per day, from their March production total of 31,918,000 barrels per day, but that was a figure that was originally reported as 31,958,000 barrels per day, so their production for April was actually 27,900 barrels per day lower than the previously reported March figures (for your reference, here is the table of the official March OPEC output figures as reported a month ago, before this month's revisions) you can tell from the far right column above, an increase of 46,500 barrels per day in the output from Saudi Arabia was the main reason that the cartel's output rose, with Algeria also contributing a 17,700 barrel per day increase...however, with a quota of 10,060,000 barrels per day for the Saudis, and 1,040,000 barrels per day for the Algerians, both of those countries still remain well below their allocations, according to their original 31,930,000 barrels per day, OPEC oil output is now 800,000 barrels per day below the 32,730,000 barrels per day revised quota they agreed to at their November 2017 meeting, with only Iraq's 4,429,000 barrel per day output above their 4,350,000 barrel per day allocation... 

the next graphic we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from May 2016 to April 2018, and it comes from the page numbered 57 (pdf page 65) of the April OPEC Monthly Oil Market Report...on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale...   

April 2018 OPEC report global oil supply

OPEC's preliminary data indicates that total global oil production rose by a rounded 120,000 barrels per day to a record 97.89 million barrels per day in April, after March's global output total was revised down by .36 million barrels per day from the record 98.15 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by 110,000 barrels per oil output for April was also 2.08 million barrels per day, or 2.2% higher than the 95.81 million barrels of oil per day that were being produced globally in April a year ago (see the May 2017 OPEC report online (pdf) for the year ago data)... OPEC's March oil production of 31,930,000 barrels per day thus represented just 32.6% of what was produced globally, the same percentage as in March, as oil output increases by US, the UK, Brazil, and China were only partially offset by decreases in oil output from Canada, Ghana and Kazakhstan...OPEC's April 2017 production was at 31,732,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding their new member Equatorial Guinea, are now producing 71,000 more barrels per day of oil than they were producing a year ago, during the fourth month that their production quotas were in effect, with the increase in OPEC output from last year largely due to recoveries of oil production in Libya and Nigeria...   

however, even with the increase in global oil output that we can see in the above purple graph, April saw the first deficit in the amount of oil being produced globally so far this year, largely due to increasing demand, as this next table from the OPEC report will show us..       

April 2018 OPEC report 2018 global oil demand

the table above comes from page 32 of the May OPEC Monthly Oil Market Report (pdf page 40), and it shows regional and total oil demand in millions of barrels per day for 2017 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2018 over the rest of the table...on the "Total world" line of the third column, we've circled in blue the figure that's relevant for April, which is their revised estimate of global oil demand during the second quarter of 2018...     

thus, OPEC's estimate is that during the 2nd quarter of this year, all oil consuming regions of the globe will be using 98.08 million barrels of oil per day, which is an upward revision from their prior estimate of 97.84 million barrels of oil per the same time, as OPEC showed us in the oil supply section of this report and the summary supply graph above, after the OPEC and non-OPEC production cuts, the world's oil producers were only producing 97.89 million barrels per day during April, which means that there was a shortfall of around 190,000 barrels per day in global oil production vis-a vis estimated demand during the month...

meanwhile, as you see circled in green above, global oil demand figures for 2017 and for the first quarter of 2018 were also revised higher, which means that our previously computed oil surplus for the first quarter of 2018 and our oil shortfall figures for 2017 will also have to be revised... to start with, we had figured there was a surplus of around 750,000 barrels per day in global oil production vis-a vis demand during March; OPEC's revised figures show that demand was actually 150,000 barrels per day higher during the 1st quarter than they estimated last month, whereas we saw earlier, March global supply figures were revised 360,000 barrels per day lower...those revisions thus mean that the global oil surplus in March was just 240,000 barrels per day...meanwhile, the 0.15 million barrel of oil per day upward revision to 1st quarter demand means that the surpluses we had computed for January and February were that much lower; based on our figures from a month ago, that means that January's surplus would be revised down to 260,000 barrels per day, and February's surplus would be revised down to 420,000 barrels per day...hence, for the first three months of 2018, global oil production exceeded demand by roughly 20.6 million barrels...

on the other hand, cumulative global oil demand figures for 2017 were revised higher by 0.13 million barrels per day to 97.13 barrels per day (also circled in green) with this report, with revisions for each quarter of that year shown in the table on page 31 of the May OPEC Monthly Oil Market Report (pdf page 39)...while we're not about to recompute the surplus or deficit totals for each month of 2017, we can estimate that the total deficit for the year was roughly 47.5 million barrels than had previously been reported (0.13 bpd * 365 days)...that means our previously computed shortfall of 213 million barrels for 2017 oil supply would now be revised to show a global shortfall of 260.5 million barrels for the year, which, according to OPEC, had nearly eliminated the global glut of crude seen before their output cuts began...

This Week's Rig Count

US drilling activity increased for the 13th time in the past fourteen weeks and for 22nd time in the past 29 weeks during the week ending May 25th, a period of higher oil prices that has consequentially seen the rig increases far exceed the few decreases...Baker Hughes reported that the total count of active rotary rigs running in the US increased by 13 rigs to 1059 rigs over the week ending on Friday, which was also 151 more rigs than the 908 rigs that were in use as of the May 26th 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 week before OPEC officially began their attempt to flood the global oil market... 

the number of rigs drilling for oil was up by 15 rigs to 859 rigs this week, which was also 137 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 fell by 2 rigs to 198 rigs this week, which was only 13 more gas rigs than the 185 natural gas rigs that were drilling a year ago, and way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, addition, there are also two rigs running now that are listed as "miscellaneous", compared to the 1 "miscellaneous" rig that was operating a year ago....

drilling activity in the Gulf of Mexico was unchanged at 18 rigs this week, which was 5 fewer rigs than were drilling in the Gulf of Mexico a year ago...with a rig also drilling offshore from Alaska, the total US offshore count of 19 rigs was down by 4 from last year's offshore total of 23 rigs....meanwhile the count of active horizontal drilling rigs increased by 7 rigs to 926 horizontal rigs this week, which was 160 more horizontal rigs than the 766 horizontal rigs that were in use in the US on May 26th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, the vertical rig count increased by 5 rigs to 66 vertical rigs this week, which was still down from the 77 vertical rigs that were in use during the same week of last addition,, the directional rig count was up by 1 rig to 67 directional rigs this week, which was also up by 2 rigs from the 65 directional rigs that were deployed on May 26th 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 May 25th, the second column shows the change in the number of working rigs between last week's count (May 18th) and this week's (May 25th) count, the third column shows last week's May 18th active rig count, the 4th column shows the change between the number of rigs running on Friday and those of the equivalent weekend report 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 on Friday the 26th of May, 2017...         

May 25 2018 rig count summary

as we've seen many times this year, the lion's share of this week's drilling increase took place in the Permian, where 12 rigs were added through 4 Texas Railroad Commission Oil & Gas Districts in western Texas, while one Permian rig on the New Mexico side of the border was shut down...with the rig count up by one in both the Eagle Ford of south Texas and in the Barnett shale in the Dallas - Ft Worth area, that means 5 rigs outside of the major Texas basins, mostly in northeast Texas, were concurrently shut down in the state, to end with a net gain of 9 rigs for Texas for the week...meanwhile, natural gas rigs were down by 2 nationally despite the addition of one natural gas rig in the West Virginia Marcellus and the switch of an oil rig to natural gas in the Granite Wash tight sand of the Texas - Oklahoma panhandle area because a natural gas rig was shut down in the Eagle Ford while 2 oil rigs were added, and because 3 natural gas rigs in "other basins" not tracked separately by Baker Hughes were shut down at the same time...we should also note that other than the rig changes in the major producing states shown above, Mississippi also saw a rig shut down this week, leaving two rigs operating in the state, still up from one rig deployed in Mississippi the same week a year ago.... 


FirstEnergy must guarantee nuclear clean up, environmental groups tell feds - Plain-Dealer - FirstEnergy's power plant subsidiaries have not put enough money into federally mandated decommissioning trust funds to pay for the shutdown and cleanup of each of its four nuclear reactors, charges an environmental group with a reputation as a legally effective environmental advocate. The Chicago-based Environmental Law and Policy Center, or ELPC, made that charge in a petition filed in March with the Nuclear Regulatory Commission. The ELPC's intervention in the Peabody Energy bankruptcy led to the court requiring that company to purchase $1.2 billion in surety bonds to guarantee clean up. The ELPC wants the NRC to hold parent company FirstEnergy Corp. responsible for bankrolling what it argues could well be a multi-billion reactor cleanup shortfall, which taxpayers or customers could be forced to pay. The ELPC petitioned the NRC just days before the FirstEnergy Solutions Corp. filed for bankruptcy protection on March 31 and the FirstEnergy Nuclear Operating Co. told the NRC it would close its nuclear plants within two years. Now the ELPC, joined by the New York-based Environmental Defense Fund, the Ohio Environmental Council and Ohio Citizen Action, have intervened in the bankruptcy case under way in the U.S. Bankruptcy Court for the Northern District of Ohio. The groups want Judge Alan Koshik to "lift" the normal "stay" on legal action that companies seeking bankruptcy protection are normally afforded. "[We] are not seeking a money judgment, but, instead, are seeking leave to continue pursuing the legal and administrative remedies afforded them under federal and state laws and their constitutional right to petition their government," the environmental groups argued in their 96-page petition filed with the bankruptcy court. In other words, they want the judge to allow their action at the NRC to continue unimpeded by a decision in the bankruptcy case preventing it.

An Ohio legislator defied FirstEnergy lobbyists. Then a ‘dark money’ group helped sink her bid for Congress (Center for Public Integrity)  A “dark money” organization tied to a major electric company pumped significant cash into an Ohio congressional race in what a losing candidate describes as an act of retribution over a failed financial deal.Christina Hagan, a state representative who was running in the Republican primary for Ohio’s 16th congressional district seat, said a group called the Conservative Leadership Alliance targeted her with a barrage of attack ads after she declined to support legislation Akron, Ohio-based electric company FirstEnergy had lobbied her to help pass.The Conservative Leadership Alliance’s treasurer is Marc Himmelstein, who has worked for years as a FirstEnergy lobbyist in Washington, D.C. FirstEnergy has paid Himmelstein's firm, National Environmental Strategies, $640,000 since 2010, according to congressional lobbying filings.Hagan said she didn’t think the bill, which would have allowed FirstEnergy to collect an additional $300 million annually from customers to shore up its aging power plants, was fair to electric customers. House Bill 178 would have created “zero-emission credits” that would have raised customers’ monthly bills by about 5 percent. “I didn’t budge when they came into my office to lobby me,” Hagan said of her meetings with FirstEnergy officials, which took place over a period of many months. “I became the target of the company and the members of our leadership team who wanted to get it done but couldn’t because I wasn’t going to be supportive. I’m sure they just wanted to make an example of me in my race for higher office that if you don’t play well, this is what will happen to you.”

ODNR Issues a Single Permit in Ohio's Utica – The Ohio Department of Natural Resources last week issued just a single permit in eastern Ohio’s Utica shale and reported 20 rigs in operation.XTO Energy, a division of Exxon Mobil, received a permit for a new horizontal well in Belmont County, according to ODNR.As of May 19, ODNR has issued 2,830 permits for horizontal wells in the Utica, of which 2,343 are drilled and 1,898 are in production.There were no new permits issued for wells in Mahoning, Trumbull or Columbiana counties. Nor were there new permits issued in neighboring Lawrence and Mercer counties in western Pennsylvania, according to the Pennsylvania Department of Transportation.Earlier this month, the U.S. Energy Information Administration reported that the Appalachian region – which includes both Ohio’s Utica and Marcellus shale in Pennsylvania – is boosting oil and gas production each month.Net month, the Utica and Marcellus project production of 114,000 barrels of oil per day and natural gas production of 28.1 billion cubic feet per day. Net production of oil is projected to increase by 4,000 barrels a day in June, while net production of natural gas is anticipated to increase by 373 million cubic feet per day.

Utica Shale well activity as of May 19 -

  • DRILLED: 289 (292 as of last week)
  • DRILLING: 161 (164)
  • PERMITTED: 482 (484)
  • PRODUCING: 1,898 (1,890)
  • TOTAL: 2,830 (2,830)


  • 1. CHESAPEAKE: 875 (875 as of last week)
  • 2. GULFPORT: 403 (403)
  • 3. ASCENT RESOURCES UTICA: 351 (351)
  • 4. ANTERO: 261 (261)
  • 5. ECLIPSE: 180 (180)
  • 6. RICE: 129 (129)
  • 7. HESS: 89 (89)
  • 8. CNX GAS: 84 (84)
  • 9. XTO: 67 (67)
  • 10. HILCORP: 55 (55)

Prudential Financial Inc. Acquires 576,699 Shares of Gulfport Energy --  Prudential Financial Inc. lifted its holdings in shares of Gulfport Energy Co. by 40.5% in the 1st quarter, according to its most recent Form 13F filing with the SEC. The firm owned 2,000,364 shares of the oil and gas producer’s stock after buying an additional 576,699 shares during the period. Prudential Financial Inc. owned approximately 1.09% of Gulfport Energy worth $19,303,000 at the end of the most recent quarter.  Other institutional investors and hedge funds have also made changes to their positions in the company. State of Alaska Department of Revenue acquired a new stake in shares of Gulfport Energy during the fourth quarter worth about $137,000. Oakbrook Investments LLC acquired a new stake in shares of Gulfport Energy during the fourth quarter worth about $180,000. Delpha Capital Management LLC acquired a new stake in shares of Gulfport Energy during the fourth quarter worth about $187,000. Nisa Investment Advisors LLC boosted its stake in shares of Gulfport Energy by 8,800.0% during the fourth quarter. Nisa Investment Advisors LLC now owns 17,800 shares of the oil and gas producer’s stock worth $227,000 after buying an additional 17,600 shares during the period. Finally, MANA Advisors LLC acquired a new stake in shares of Gulfport Energy during the fourth quarter worth about $268,000. Institutional investors and hedge funds own 92.27% of the company’s stock.

Community caretakers block access to Cabot Oil fracking site - In a symbolic gesture, proactive residents of Ashland, Holmes and Richland County temporarily blocked access to an exploratory well pad under construction in Green Township, Ashland County, Ohio.  The horizontal drilling being conducted by Cabot Oil and Gas Corporation is extremely unwanted and unwelcome.  The vast majority of folks who live here, about 98 percent according to door-to-door polling, are against this type of extractive industrialization in this north central Ohio country community known for beautiful scenery, rural farming and the millions of visitors who have come to enjoy outdoor recreation in the area’s two state parks, Malabar farm and Mohican.Last December several grass roots groups formed to educate the public about the change in conditions that will come from drilling activity of this type- increased truck traffic, water withdrawal from local water sources, deforestation and drilling activity 24 hours a day for weeks on end.Local legislators hands are tied in the effort to protect citizens, bound by state and federal law which has been drafted by pro-industry organizations such as the American Legislative Exchange Council (ALEC), bought by lobbying money and voted into law in favor of oil and gas drilling operations.  In fact, not one single landowner in the area of this horizontal well had any say in the matter of industrializing their community. The sub-surface mineral rights were held by Ohio Fuel Gas Company, a now defunct business that preceded Columbia Gas and Cabot was able to obtain a permit with just 136 acres claimed for drilling, according to the permit on file at the Ohio Department of Natural Resources (ODNR). Columbia Gas Transmission LLC owns the majority of sub-surface rights to around 4,000 feet due to the fact that this entire three county area sits above a massive gas storage field used to store excess resources during the summer and withdraw them during peak need times.All of this is changing with the exportation of American resources out of country. TransCanada acquired Columbia in 2016 and is in the process of replacing the 16-inch pipeline around the drilling site, so in addition to the massive drilling pad being built on this rural road, wooded residential lots are being clear cut for the pipeline right of way in preparation for major excavation activities to begin soon.

Gearing Up For Fracking Fight, Ohio Residents Turn To Pennsylvania For Advice – WOSU -- After 40 years, Kerri and Jeff Bond are moving from their small farm in Seneca Lake, Ohio.  The trees in their yard started to lose foliage and die last year. Their sheep, chickens and cats died, and their dogs developed tumors. The Bonds, themselves, say their family has developed ongoing rashes. “We’ve never had any of this before, ever,” Kerri Bond says. “And we’ve lived area our whole lives. We wanted to retire here. We can’t. We’ve got to move.” The Bonds blame the gas development that’s been building up all around them – numerous well pads, and the Crum Compressor Station sits about a quarter mile over the ridge from their farm. The nighttime sky lights up orange as the compressor station is vented. Then there’s all the diesel trucks creating traffic problems and emitting pollution. Bond was one of about 40 people who gathered recently at Salt Fork State Park in eastern Ohio for a meeting organized and funded by the Freshwater Accountability Project. It was an opportunity for residents to voice their concerns, and to hear from experts about the environmental, legal, and health issues of fracking. Environmental activist Teresa Mills says people like Bond aren’t getting assistance from Ohio officials.“The industry has everything locked down,” she says. “So people feel helpless.”This feeling of helplessness is why Mills helped organize this community meeting.“What we were hoping to do is to get everyone together, and show that together we can stand strong, and we can move forward,” she says.  Pennsylvanians have dealt with these issues, too. John Stolz, an environmental microbiologist at Duquesne University in Pittsburgh, has researched the environmental impacts of fracking for years. He says Pennsylvania regulators didn’t seem to take citizen complaints seriously. “The reality is you’ve got 9,000 people calling the [Pennsylvania] DEP [Department of Environmental Protection] over the past ten years to complain,” he says. “It got to the point where I finally came out and said, ‘We’re not dealing with crazy people.'”

Work on NEXUS pipeline in south Oberlin begins - — Construction has started this week on the NEXUS Gas Transmission pipeline in south Oberlin.“Specialized teams with years of extensive experience monitor the building process from start to finish to ensure there is minimal disturbance to landowners and the environment during pipeline construction and restoration,” said NEXUS spokesman Adam Parker in an email.The 255.8-mile pipeline was given the all-clear after months of litigation by homeowners and communities in its path from Columbiana County in eastern Ohio passing through Medina and Lorain counties seeking to block the pipeline. Construction in Ohio began in March after the Federal Energy Regulation Commission’s August approval of the plan and a federal judge’s December ruling that ended the main lawsuit trying to stop it.In south Oberlin, crews have set up access routes for workers and equipment to sites along state Route 58 and Reserve Avenue as well as West Hamilton Street and South Pyle-Amherst Road.The pipeline also will run through Pittsfield and New Russia townships. In all, about 5.11 acres of land will be used, according to a plan approved by FERC.

Ohio EPA seeks feedback on proposed pipeline to run through parts of Ohio Valley — The Ohio Environmental Protection Agency is seeking public feedback on a natural gas pipeline slated to run through the eastern half of Ohio.  Shell's Falcon Pipeline would start in Harrison County and carry ethane gas to Beaver County in Pennsylvania.The Falcon Pipeline would be a 44-mile stretch through Carroll, Harrison and Jefferson Counties. It's scheduled to start construction later this year, but the Ohio EPA is holding one more week of public comments on the potential impacts to Ohio’s sources of fresh water.Nearly two dozen people showed up at Harrison Central High School. Not even close to the 1,000 comments submitted to the Ohio EPA online. The stakes for the Falcon Pipeline are in backyards throughout the Ohio Valley.  "This project will affect 515 family homes, 20 businesses,” said Cheryl Johncos of the Ohio Sierra Club. “Twelve public parks, five schools and six daycare centers."Several Harrison County residents said they are worried about leaks into local water tables and the lack of documented maintenance plans from Shell on a pipeline stretching through rural landscapes.Industry representatives said the risks are not dire."The Falcon Pipeline is a piece of crucial energy infrastructure we need to put in place,” said Mike Chadsey of the Ohio Oil and Gas Association. “So, often we hear about what's going on in the drilling side of things, but this is really the next step in the development of the Utica Shale play."

Pennsylvania’s Phenomenal Increase in Natural Gas Production - Pennsylvania increased its permits for natural gas drilling by 51 percent in 2017 and its rig count by 65 percent, resulting in annual natural gas production increasing by 3 percent reaching a record 15 billion cubic feet per day, second only to Texas in natural gas production. The state’s permitting and drilling activity increase is a result of expanding regional pipeline capacity, moving natural gas to market centers outside of production areas. These new sources of natural gas are adding greatly to Pennsylvania’s economy and are increasing investment in the state. In the past, natural gas production in Pennsylvania was constrained by the lack of regional infrastructure to process and transport it out of the region. But, recently, several pipeline projects entered service including the Rockies Express Zone 3 expansion, moving natural gas westward from southwest Pennsylvania, and the Algonquin Incremental Market pipeline, primarily moving natural gas from northeastern Pennsylvania into New England. Two other projects—the Rover Pipeline Project and the NEXUS Gas Transmission Project, are expected to begin operations during the next few months.

Endocrine Activity of Air Pollutants from Marcellus Drilling & Fracking - In the last decade unconventional oil and gas (UOG) extraction has rapidly proliferated throughout the United States (US) and the world. This occurred largely because of the development of directional drilling and hydraulic fracturing which allows access to fossil fuels from geologic formations that were previously not cost effective to pursue. This process is known to use greater than 1,000 chemicals such as solvents, surfactants, detergents, and biocides. In addition, a complex mixture of chemicals, including heavy metals, naturally-occurring radioactive chemicals, and organic compounds are released from the formations and can enter air and water. Compounds associated with UOG activity have been linked to adverse reproductive and developmental outcomes in humans and laboratory animal models, which is possibly due to the presence of endocrine active chemicals. Using systematic methods, electronic searches of PubMed and Web of Science were conducted to identify studies that measured chemicals in air near sites of UOG activity. Records were screened by title and abstract, relevant articles then underwent full text review, and data were extracted from the studies. A list of chemicals detected near UOG sites was generated. Then, the potential endocrine activity of the most frequently detected chemicals was explored via searches of literature from PubMed. Evaluation of 48 studies that sampled air near sites of UOG activity identified 106 chemicals detected in two or more studies. Ethane, benzene and n-pentane were the top three most frequently detected. Twenty-one chemicals have been shown to have endocrine activity including estrogenic and androgenic activity and the ability to alter steroidogenesis. Literature also suggested that some of the air pollutants may affect reproduction, development, and neurophysiological function, all endpoints which can be modulated by hormones. These chemicals included aromatics (i.e., benzene, toluene, ethylbenzene, and xylene), several polycyclic aromatic hydrocarbons, and mercury. These results provide a basis for prioritizing future primary studies regarding the endocrine disrupting properties of UOG air pollutants, including exposure research in wildlife and humans. Further, we recommend systematic reviews of the health impacts of exposure to specific chemicals, and comprehensive environmental sampling of a broader array of chemicals.

Pennsylvania judge accuses pipeline company of prioritizing profit over ‘best engineering practices’ - Pennsylvania regulators ordered the owner of a natural gas liquids pipeline to suspend service on its existing pipeline and stop work on two proposed pipelines along the same route in Chester County, Pennsylvania where sinkholes appeared earlier this year. An administrative law judge at the Pennsylvania Public Utility Commission (PUC) issued her emergency order on Thursday in response to a petition filed by state Sen. Andrew Dinniman (D), who requested a halt to work on the pipeline project in West Whiteland Township, Pennsylvania, a part of Chester County that he represents.Sunoco Pipeline LP, a subsidiary of Energy Transfer Partners, owns the existing Mariner East pipeline, an eight-inch-diameter pipeline built in the 1930s. The company also is building two additional natural gas liquids pipelines located along the same route. Mariner East 2 is a proposed 20-inch-diameter pipeline and Mariner East 2X is a proposed 16-inch-diameter pipeline. The natural gas industry is finding the Marcellus and Utica shales in southwestern Pennsylvania rich with natural gas liquids. Wider-diameter pipelines are needed to get all of the natural gas liquids to terminals where they can then be shipped to overseas petrochemical plants. “Sunoco has made deliberate managerial decisions to proceed in what appears to be a rushed manner in an apparent prioritization of profit over the best engineering practices available in our time that might best ensure public safety,” PUC Judge Elizabeth Barnes wrote in her order. Given the accident history of construction on the two new Mariner East pipelines, such as sinkholes and spills, “there is a grave risk of rupture” on the existing Mariner East pipeline,” Barnes ruled. She also noted that water supplies have already been damaged in West Whiteland Township.

Mariner East construction, operation halted again in Chester County - A Pennsylvania judge on Thursday halted construction of Sunoco’s two new Mariner East pipelines, as well as the operation of the existing Mariner East 1 pipeline in Chester County’s West Whiteland Township, granting an emergency petition by state Sen. Andy Dinniman.Administrative Law Judge Elizabeth Barnes said in an order that she was persuaded by Dinniman’s argument that the pipelines are a risk to public safety in the township, and granted his emergency petition for a halt to construction and operation of the pipelines until the PUC determines that they are safe.“I find there to be an imminent risk to the public and a need for immediate relief and further study to be done on ME1, ME2 and ME2X for the Commission and its Bureau of Safety Engineers to evaluate before construction should resume on ME 2 or ME2X in West Whiteland Twp. and before a potential catastrophic event occurs on ME 1,” the judge wrote in an order issued Thursday after two days of hearings on the Senator’s petition earlier this month.“Additionally, local and state government needs time to create emergency evacuation and notification plans and to educate the public before operations should resume.”Energy Transfer Partners, parent company of Sunoco, blasted the judge’s decision, which it said was a “significant departure from the law” and from PUC’s due-process procedures. It will ask PUC to review the order.“The entire energy industry should be concerned about today’s order and consider this result when making decisions regarding future capital investments in the state as it upends Pennsylvania’s entire regulatory environment,” the company said in a statement. The order reimposes a shutdown on the operation of Mariner East 1 that the PUC ordered in early March after sinkholes appeared at Lisa Drive, a West Whiteland site where the new lines are being built alongside the existing pipeline. The first order was lifted in early May after the PUC concluded that there was no problem with the integrity of the old line.

West Virginia Oil & Natural Gas Association, environmental group argue over study — A trade association and an environmental group are taking opposing positions on a study about groundwater contamination and natural gas development of the Utica Sale.The West Virginia Oil & Natural Gas Association said the University of Cincinnati study, slated to be published in the June issue of “Environmental Monitoring and Assessment,” is more research showing no impact on groundwater from shale gas development.However, the sampling in the study was not enough to be accurate, said Cheryl Johncox, an organizer of the Beyond Dirty Fossil Fuels initiative in Ohio, a program of the Sierra Club. The study is “really not something to get excited about,” she said. “I have to say it’s a very small sample size,” Johncox said. The study is titled “Monitoring concentration and isotopic composition of methane in ground water in the Utica Shale hydraulic fracturing region of Ohio.” Most of the monitoring took place in Carroll County and the surrounding area, including Stark, Columbiana, Harrison and Belmont counties.  The study began in January 2012, at which time 150 drilling permits had been issued in Ohio, which increased to 1,600 by the end of February 2015, the study said. Researchers collected 180 samples through February 2015. Of those, 118 were collected from 24 drinking water wells, from two to eight times over the course of the study, in Carroll, Harrison and Stark counties.  Sites were based on landowner interest and participation was voluntary, the study said. No relationship was found between CHI4 (methane) in ground water and its location to active well sites, the study said.

Atlantic Coast Pipeline construction begins with groundbreaking in Lewis County - Representatives of the oil and gas industry, local leaders and elected officials from around the state celebrated the first major step toward completion of Dominion Energy’s Atlantic Coast Pipeline project Wednesday with a groundbreaking ceremony for the Marts Compressor Station in Jane Lew. The station, which will provide compression to support the transmission of natural gas, marks the beginning of major construction on the Atlantic Coast Pipeline, said Samantha Norris, communications specialist for Dominion.“Dominion Energy is very proud of the Atlantic Coast Pipeline project,” she said. “This is a project that we’ve been working on for almost four years now. We are ready to see that construction begin.” The pipeline will cross more than 600 miles between Harrison County and Greensville County, Virginia, to transport natural gas produced in West Virginia to energy users in Virginia and North Carolina. Construction will require more than 3,000 workers over the course of the project, Norris said. “This project means jobs in the state of West Virginia,” she said. “It is being done in a sustainable manner, both environmentally and for the longevity of this pipeline being able to produce a resource for generations to come.” Projections show that there is more than enough natural gas in the region to keep the pipeline active, Norris said. “Many scholars and researchers have identified our region that we are sitting on here in West Virginia as the Saudi Arabia of natural gas,” she said. “We have a rich and abundant resource of clean-burning natural gas right below the surface. We are excited that through projects like this, we are to bring this much-needed resource to the individuals, homes and businesses that want to take advantage of it.”

Atlantic Coast Pipeline Faces Civil Rights Complaint After Key Permit Is Blocked - A federal court has invalidated a key permit for the Atlantic Coast pipeline project, a step that could give civil rights advocates more time to build their environmental justice case against the $6 billion project to carry natural gas from West Virginia to North Carolina.Opponents of the Atlantic Coast pipeline allege the Dominion Energy-led project would have a disproportionate impact on people of color living along its route.A group of community and statewide advocacy groups in North Carolina, along with the national Friends of the Earth, filed a complaint with the U.S. Environmental Protection Agency's External Civil Rights Compliance Office on Tuesday asking the agency to overturn North Carolina state permits for the pipeline and for a new environmental justice analysis of it. On the same day, a three-judge panel in the 4th U.S. Circuit Court of Appeals invalidated a U.S. Fish and Wildlife Service permit for the pipeline, known as an "incidental take limit." The judges ruled that that permit, designed to limit the number of threatened or endangered species that could be harmed or killed during the pipeline's construction and operation, was too vague and could not be enforced. Dominion Energy said the decision only covered parts of the proposed 600-mile project and that the company will move forward with construction as scheduled.The community and environmental groups, meanwhile, say state and federal agencies failed to assess disproportionate health impacts the proposed pipeline project would have on minorities as required under the Civil Rights Act. They assert that an analysis by the Federal Energy Regulatory Commission erred in how it compared state, county and local community data in ways that disguised the real discriminatory effect of the route. "As most of the North Carolina counties along the proposed ACP corridor have communities of color significantly above the state average, this decision greatly minimizes the apparent disproportionality in minorities impacted," the complaint letter filed on Tuesday stated.

Despite federal court ruling, Atlantic Coast Pipeline construction continues - Despite the federal court order that's vacating a key permit in the Atlantic Coast Pipeline construction, the work will not stop.  Mike Cozad, the Community Liason for the Atlantic Coast Pipeline project tells the Upshur County Commission, "There will be no downtime as a result of that judge's decision." This ruling comes from the Fourth U.S. Circuit Court of Appeals saying that the U.S. Fish and Wildlife Service hadn't provided specific limits for the allowable impact on threatened and endangered species."What they said was that a small percent of an unknown population would be affected and that's just too vague," says the President of the Mountain Lakes Preservation Alliance April Pierson-Keating. 5 News reached out to Dominion Energy who wasn't available for an interview but did offer a statement saying in part quote, "We can say that the impact of the U.S. Fourth Circuit Court of Appeals ruling is on a small portion of the 600 mile route and there will be no impact in North Carolina" end quote. This ruling is based on an Incidental Take Statement, something that needs to be revised fast. " Atlantic has five days to identify the affected areas, but we don't think they can do it," says Pierson-Keating.  But Dominion Energy is already working towards that next step saying quote, "Our next steps will be to consult with the U.S. Fish and Wildlife Service who we expect will revise the Incidental Take Statement to provide limits that are more specific," and as for Upshur County, the construction plans aren't halting at all.  "Nobody in West Virginia is benefiting from this pipeline. In reality, anybody near this pipeline is going to lose property value, they're going to lose their way of life" says a board member for the Buckhannon River Watershed Association Kevin Campbell.  But Dominion Energy continues to show reassurance in the project and their research saying quote, "We had more than 300 route adjustments to avoid environmentally sensitive areas such as wetlands, wildlife habitats, drinking water sources, and sensitive geologic features" end quote.

Atlantic Coast Pipeline sees ruling sidelining only 10 miles of 2018 construction- Atlantic Coast Pipeline on Tuesday estimated that just 10 miles of its 2018 construction areas for the 600-mile natural gas pipeline project will need to be on hold because of the 4th US Circuit Court of Appeals decision striking ACP's permit allowing incidental take of protected species. In total, it plans to avoid 21 miles in West Virginia and 79 miles in Virginia until a revised incidental take statement is issued, Atlantic Coast said in a statement Tuesday. Lead developer Dominion Energy on Tuesday updated the US Federal Energy Regulatory Commission on the areas by milepost that it will avoid in the wake of the last week's court ruling. Less than 2% of the total project mileage, or about 10 miles, is in 2018 construction spreads, it said. Dominion did not publicly release the precise areas involved because it said locations of protected species are generally treated as privileged. The appeals court late May 15 vacated the Fish and Wildlife Service's "incidental take" statement for the project, a document that estimates the likely harm to endangered or threatened species. The court concluded that "limits set by the agency are so indeterminate that they undermine the incidental take statement's enforcement and monitoring function" under the act. Environmental litigants in the case continue to contend FERC needs to halt all construction on the project in response to the ruling. In its Tuesday letter to FERC, Dominion said it "confirms the company's commitment to avoid construction in these areas," adding it will not undertake any activity identified in the FWS biological opinion that is likely to affect protected species until the incidental take statement situation is resolved.

Atlantic Coast Pipeline to Sideline 100 Miles of Construction in Virginia and West Virginia - Builders of the controversial Atlantic Coast Pipeline told federal authorities they will delay construction along 21 miles in West Virginia and 79 miles in Virginia until the U.S. Fish and Wildlife Service (FWS) issues a revised "incidental take statement," which limits the number of threatened or endangered species that might be accidentally killed or harmed during development activities.Lead developer Dominion Energy filed documents Tuesday with the Federal Energy Regulatory Commission in response to the 4th U.S. Circuit Court of Appeals' ruling last week . The court sided with environmental groups and their lawyers that the FWS' initial review was not clear enough in the case of the $6.5 billion pipeline and vacated one of its key permits.Environmentalists worry that the 600-mile fracked gas pipeline from West Virginia to North Carolina could pose risks for a rare bumblebee, the Roanoke logperch and Indiana and Northern long-eared bats and other threatened or endangered species. It will also cut through through forests, pristine mountains and involve the blasting, excavation and removal of mountaintops along 38 miles of Appalachian ridgelines as part of the construction.In its letter to FERC, Dominion said construction will be avoided along those 100 miles in West Virginia and Virginia where protected species might be put at risk until the revised incidental take statement is issued.Dominion did not disclose the specific areas it will avoid "because this information contains the locations of sensitive species which are customarily treated as privileged and confidential," the company stated in a news release quoted by The Exponent Telegram .The Southern Environmental Law Center —which argued on behalf of the Sierra Club , Defenders of Wildlifeand Virginia Wilderness Committee at the appeals court—believes all pipeline construction cannot continue without a valid permit. "According to the Federal Regulatory Commission's own certificate, FERC's previous notices issued to Atlantic Coast Pipeline developers to proceed are no longer valid," said senior attorney D.J. Gerken in astatement . "If what FERC is now saying is that developers can proceed to construction without the Fish and Wildlife Service's valid permit, it is undermining its own requirements."

New challenges for the disputed Atlantic Coast Pipeline - The proposed Atlantic Coast Pipeline, which would carry fracked gas 600 miles from West Virginia to North Carolina and possibly points farther south, has been hit with setbacks in recent weeks that raise questions about its future. Dominion Resources of Virginia, the pipeline's operator, holds a 48 percent stake in the pipeline, while North Carolina-based Duke Energy holds 47 percent and Georgia's Southern Company 5 percent. Dominion's and Duke's ratepayers would foot most of the bill for the $6.5 billion project.The most immediately consequential setback was last week's federal court order voiding a key permit. On May 15, a three-judge panel of the 4th U.S. Circuit Court of Appeals found that the U.S. Fish and Wildlife Service (USFWS) had failed to set clear limits for the pipeline's impact on threatened and endangered species. The order came in a case brought by the Southern Environmental Law Center on behalf of Defenders of Wildlife, Sierra Club, and Virginia Wilderness Committee, one of four pending suits brought by the SELC related to permits for the pipeline."Like other agencies, the Fish and Wildlife Service rushed this pipeline approval through under intense political pressure to meet developers' timelines," said D.J. Gerken, managing attorney in SELC's office in Asheville, North Carolina. "It's foolish and shortsighted to risk losing rare species for an unnecessary and costly pipeline boondoggle."The pipeline's construction — which got underway this week with a groundbreaking ceremony for a compressor station in West Virginia — imperils eight threatened or endangered species including a fish called the Roanoke log perch, two types of bats, and the rusty patched bumble bee that USFWS added to the endangered species list just last year. The appeals court panel found the agency's limit on "take" — which includes harassing, harming, wounding, and killing — of at-risk species was too vague and didn't satisfy basic legal standards. And because the USFWS's so-called "incidental take statement" is needed for the construction permit from the Federal Energy Regulatory Commission (FERC), SELC has said it believes the appeals court order should bring work to a halt. However, the developers this week submitted plans to FERC indicating they plan to avoid construction only in habitat areas amounting to 79 miles in Virginia and 21 in West Virginia. A FERC spokesperson said SELC's request to halt all construction remains under consideration. The agency has come under criticism in recent years for being too eager to approve gas pipelines.

Mountain Valley Pipeline Protesters Erect New Tree Sit - Protesters in Jefferson National Forest erected a new protest site today aimed at blocking construction of the Mountain Valley Pipeline.Fern MacDougal is the latest in a string of protesters to take to the trees in protest of the 303-mile pipeline.  In a press release, she said the pipeline threatens to damage the environment and the health and well-being of poor and oppressed communities."This pipeline will catalyze the growth and expansion of gas extraction across Appalachia, an industry which has already caused permanent harm to many communities," she said. "We are dedicated to resisting this reckless endangerment of the land and people as long as MVP continues to operate."  The new blockade is a 30-foot-tall platform suspended in the forest. Protesters say it’s hindering construction of an access road and boring site associated with the Mountain Valley Pipeline. Other protestors are currently camped out in trees along the pipeline’s path. That includes a tree-sit near the ridge on Peters Mountain and a monopod blockade on Pocahontas Road. The project also faces legal challenges by landowners. Construction of the Mountain Valley Pipeline is currently halted because of recent heavy rains. The pipeline developer was cited for erosion control problems in West Virginia last month. A request for comment from the pipeline developers was not immediately returned Monday.

New protester blocks pipeline workers - Another protester took a position Monday morning blocking construction in the Jefferson National Forest. People who have been to the location said that Fern MacDougal has created a new blockade, planning to stay on a platform about 30 feet off the ground.   Pictures showed ropes tied to nearby trees for support and a banner at the site reads, “still here.” She’s hovering over Pocahontas Road in Giles County. MVP workers have closed it to the public and Forest Service workers are enforcing the restricted access.   "Cutting through delicate karst topography and 300 miles of contiguous forest and family farms seized by eminent domain, MVP threatens to damage the health and wellbeing of poor and oppressed communities along the pipeline route by threatening the air, soil, and water,” MacDougal said in a statement.  Her location is about a two-to-three-hour hike from another location on the road where Forest Service workers have restricted access, according to people who have been there.  A woman going by the name “Nutty” was in her 55th day Monday blocking workers on the same Giles County road about three miles away in a so-called monopod. She’s been without access to fresh supplies, including food and water, for more than four weeks. Supporters have been staying nearby at a campsite monitoring the activity of workers during that time.  A legal group filed a lawsuit last week asking a judge to grant a physician access to Nutty to provide medical care. Forest Service workers haven’t allowed anyone besides MVP workers past the taped-off area since they originally blocked access after Nutty ascended to her position.  At least nine protesters have taken positions in trees, or other aerial positions, to block pipeline construction workers this year.

Tree-Sitters Launch 9th Aerial Blockade of Mountain Valley Pipeline - Resistance is growing against the controversial Mountain Valley Pipeline (MVP) designed to carry fracked gas 300 miles from northwest West Virginia to southern Virginia.  On Monday morning, a woman named Fern MacDougal strung up a platform 30 feet in the air that is suspended by ropes tied to surrounding trees in Virginia's Jefferson National Forest. MacDougal is now the ninth person in the last 85 days to stage tree-sits across the pipeline route in order to block its construction, according to Appalachians Against Pipelines. Her "aerial blockade," as the resistance group calls it, is located on Pocahontas Road, which Mountain Valley plans to use to reach a construction site. Opponents of the proposed Mountain Valley Pipeline, whose route cuts through one of the country's most iconic hiking trails , worry about its threat to the area's water supply and to wildlife habitat, as well as its potential harm to recreational lands and the health of surrounding Appalachian communities. Environmental groups also warn that the project sets a terrible precedent of building energy infrastructure through national forests. "Cutting through delicate karst topography and 300 miles of contiguous forest and family farms seized by eminent domain, MVP threatens to damage the health and wellbeing of poor and oppressed communities along the pipeline route by threatening the air, soil and water," said MacDougal in a statement. She added, "This pipeline will catalyze the growth and expansion of gas extraction across Appalachia, an industry which has already caused permanent harm to many communities. We are dedicated to resisting this reckless endangerment of the land and people as long as MVP continues to operate." MacDougal was inspired to follow the activism of a fellow tree-sitter named "Nutty," who has protested from her monopod a few miles up Pocahontas road since March 28, and by David Buckel , a civil rights lawyer who died last month after setting himself on fire to protest environmental destruction.

Rutherford Institute suing over doctor’s failed attempt to examine Mountain Valley Pipeline protester -- The Rutherford Institute is suing U.S. Forest Service officials on behalf of a Charlottesville doctor who makes medicine a ministry, saying officials violated his religious freedoms by preventing him from examining a Giles County tree-sitting pipeline protester. The Albemarle County-based constitutional rights organization filed the lawsuit Wednesday in U.S. District Court on behalf of Dr. Greg Gelburd. The lawsuit asks the court to force the Forest Service to allow Gelburd to examine the protester.Forest Service officials declined to comment, saying they have not reviewed the complaint. The lawsuit follows a First Amendment-based filing against federal officials submitted by state Sen. Chap Petersen, D-Fairfax, on behalf of persons who wanted to access the tree stand occupied by a protester nicknamed “Nutty.” That lawsuit claims that “by preventing people from using the road and requiring anyone who wants to reach the protest to hike through steep terrain,” the service is curtailing First Amendment rights. John Whitehead, president of the Rutherford Institute, said Gelburd’s medical ministry is a cornerstone of his religious beliefs. “He does this all over the world as his mission as a Christian,” Whitehead said. “It is reprehensible that the rights of corporations and the rights of politicians are superseding citizens’ rights to medical care and religious and free speech rights.” Gelburd’s suit claims that orders signed by the officials resulted in him being threatened with arrest when he attempted to provide medical assistance to Nutty. The suit states that this violated his First Amendment right to free practice of his religion. “By preventing Gelburd from examining Nutty and providing her with medical advice and assistance, the defendants and government agents acting under the authority and direction of the defendants have substantially burdened Gelburd’s exercise of his religious belief, to wit, that he is called and required to provide medical care and assistance,” the lawsuit states. 

Pipeline protester known as 'Nutty' has come down from her pole in Giles County  - On her 57th day perched atop a pole, a Mountain Valley Pipeline protester decided to come down Wednesday.  Known publicly only as “Nutty,” the woman wrote in a Facebook post that she ran out of food several days ago and was forced to leave her position on a small platform suspended from a 50-foot pole blocking a construction access road in the Jefferson National Forest.Law enforcement officers with the U.S. Forest Service had prevented the woman’s supporters on the ground from providing her with food and water since early April. “We knew it couldn’t last forever,” Nutty wrote in a post to the Facebook page of Appalachians Against Pipelines. “That’s how this works.”When the blockade was erected March 28 in the middle of Pocahontas Road in Giles County, organizers said they hoped to prevent construction crews from using the road to reach the top of Peters Mountain, where plans call for the buried natural gas pipeline to pass under the Appalachian Trial.  Even with Nutty gone, the road remains blocked.On Monday, a second aerial blockade went up. Fern MacDougal is camped out on a platform suspended about 30 feet high from ropes strung across the road, about a mile farther up the mountain from where the first roadblock stood.“If we rely on one location, one tactic, or one group of people to stop this pipeline, we will fail,” Nutty wrote. “But we’re not. I know that as this one facet of the struggle draws to conclusion, more people in other places are gaining momentum. The fire has already caught; we must not let it die.” According to Appalachians Against Pipelines, the woman came down under her own power, was taken to a hospital to be checked out, and was given a citation to appear in court on charges that include blocking a road that had been closed earlier by the Forest Service.

Tree-sitters put their lives in the balance to foil Appalachian pipeline - Way out in the Appalachian hills, on the line between Virginia and West Virginia, after an hour-long backwoods hike up Peters Mountain, an orderly clutch of tents were surrounded by a plastic yellow ribbon that read, “police line do not cross”.Past that, a woman sat on top of a 50ft pole.Opposite the knot of tents where the woman’s supporters kept 24-hour vigil lay an encampment of police, pipeline workers, and private security bearing floodlights, generators and hard, binocular-bespectacled stares.At the time of our visit, she had been up there for more than 50 days and had vowed to not come down until the police extracted her – at great danger to her life – or until she was starved out. She ate only a tiny amount of food everyday at 6 o’clock. The platform on which she sat was about the size of a bathtub.On Wednesday 23 May, the protester, nicknamed Nutty, finally came down after a record-breaking 57 days spent in the trees – the longest monopod protest sit in US history – to stop a fracked natural-gas pipeline from being built through the state. Her final three days in the trees were spent without food.  “I was and remain tremendously grateful to have been able to make an impact in the struggle against the Mountain Valley pipeline,” she wrote in a statement to the Guardian upon her descent. “And am committed to continuing to participate in the global struggle against the processes of violent extraction, and against the structures of colonization, capitalism, white supremacy, and patriarchy it feeds.”There are others, too, who remain in the forest and are still blocking construction by putting their lives on the line and refusing to move. On the far side of the mountain sits a man in a perch dangling from a tree.  A handful of folks have also taken to the trees in a place called Little Teel Crossing, and just this Monday, a woman named Fern MacDougal made her new home in another aerial blockade on Peters Mountain. A mother and daughter team, nicknamed Red and Minor respectively, came down from the trees after more than 30 days, on property that has been in their family for more than seven generations.

Construction halted at Mountain Valley Pipeline work site following severe erosion in Franklin County - State regulators have put a stop to construction of part of the Mountain Valley Pipeline swamped by a rainstorm, saying work cannot continue until proper erosion control measures are established.Crews were using heavy equipment to cut trees and clear land along the natural gas pipeline’s right of way in Franklin County when heavy rains Thursday night and Friday morning swept away much of the soil they had unearthed.Both lanes of nearby Cahas Mountain Road were covered by up to eight inches of mud. “It’s clearly unacceptable,” Ann Regn, a spokeswoman for the Virginia Department of Environmental Quality, said Sunday.According to both DEQ and Mountain Valley officials, none of the mudflow reached streams, where it could have done the most damage. Nonetheless, the agency is investigating how check dams and other erosion control measures failed to prevent the mess.Environmental regulators received several calls last week, before the rain started, from members of the public who were concerned that heavy equipment being used to remove trees and clear a 125-foot swath for pipeline construction was exposing the land to potential runoff problems.Although Mountain Valley crews had erosion control devices in place, “there were some things that completely disappeared” after the rains, including concrete barriers, Regn said. “Initial reviews indicate the controls were installed properly; however, the circumstances appear unusual and an ultimate cause is under investigation,” Mountain Valley spokeswoman Natalie Cox wrote in an email Friday.

Investigation underway into mudslide that halted pipeline construction - An investigation into what caused a mudslide to block a Franklin County road near construction of the Mountain Valley Pipeline is underway. Sediment broke through barriers Friday amid heavy rain, and neighbors said about a foot of mud blocked Cahas Mountain Road in Boones Mill. Pipeline workers installed new barriers on Monday and inspectors with the Virginia Department of Environmental Quality continued to look into what caused the earth to slide down the hillside, according to DEQ spokeswoman Ann Regn. Many people have expressed concerns in the last four years about the negative effect construction could have on water quality. Regn said the mud did not reach any streams. “It appears that water was channeled and then carried this mass of mud downhill,” she said. She said workers stopped construction when the mudslide happened and they won’t resume until the area is stabilized. “They will be in the area for the next three or four days to conduct inspections and to investigate what happened and why,” she said. MVP spokeswoman Natalie Cox said workers reported the problem when it started and an initial review shows workers installed the controls properly. She echoed that no streams were affected. “The circumstances appear unusual and an ultimate cause is under investigation. Upon learning of the issue, MVP crews promptly began remediation activities, and the road was reopened about 5:30 p.m. Friday. The project team remains committed to the safe and responsible construction of this important underground infrastructure project," Cox said. Regn said DEQ inspectors should know more about what caused the problem in about a week. 

Mountain Valley Pipeline Construction is One Muddy Mess - State regulators have put a stop to construction of part of the Mountain Valley Pipeline swamped by a rainstorm, saying work cannot continue until proper erosion control measures are established.Crews were using heavy equipment to cut trees and clear land along the natural gas pipeline’s right of way in Franklin County when heavy rains Thursday night and Friday morning swept away much of the soil they had unearthed.Both lanes of nearby Cahas Mountain Road were covered by up to eight inches of mud. “It’s clearly unacceptable,” Ann Regn, a spokeswoman for the Virginia Department of Environmental Quality, said Sunday.According to both DEQ and Mountain Valley officials, none of the mudflow reached streams, where it could have done the most damage. Nonetheless, the agency is investigating how check dams and other erosion control measures failed to prevent the mess. Environmental regulators received several calls last week, before the rain started, from members of the public who were concerned that heavy equipment being used to remove trees and clear a 125-foot swath for pipeline construction was exposing the land to potential runoff problems. Although Mountain Valley crews had erosion control devices in place, “there were some things that completely disappeared” after the rains, including concrete barriers, Regn said. Opponents have predicted that building a 303-mile buried pipeline along steep mountain slopes will dislodge sediment, which can contaminate private wells and public water supplies if it is allowed to enter nearby streams and wetlands.

New challenge to MVP project questions river crossing permit - In the wake of recent tragic school shootings, anxious parents are contemplating homeschooling to protect their children. After February’s school shooting in Parkland, Florida, the Miami Heraldreported that more parents were considering the homeschooling option. And after Friday’s disturbing school shooting in Santa Fe, Texas, a local ABC news affiliate in Alabama reported the increasing appeal of homeschooling. “If I had the time, I would teach my kids myself, and I would know that they’re safe,” a father of four told ABC station, WAAY31.A public school teacher interviewed by the channel disagreed with the idea of homeschooling. According to the news story, the teacher “says resorting to homeschooling is teaching your children to run from reality.”But that raises the question: Is compulsory mass schooling “reality”? Segregating children by age into increasingly restrictive, test-driven classrooms where they are forced by law to be unless a parent or caregiver liberates them is hardly “reality.” What’s worse is that young people are spending increasingly more time in this coercive “reality” than ever before.For young children ages six to eight, schooling increased from an average of five hours a day in 1981-82 to an average of seven hours a day in 2002-03. And for today’s teens, schooling consumes much more of their time than it did for previous generations, seeping into summertime and other historically school-free periods. According to data from the U.S. Bureau of Labor Statistics, 42 percent of teens were enrolled in school during July 2016, compared to only 10 percent enrolled in July 1985. In the case of teens, spending more time in school and school-like activities may be further separating them from the actual real world in which they previously came of age. As Business Insider reports: “Almost 60% of teens in 1979 had a job, compared to 34% in 2015.” Spending more time in the contrived reality of forced schooling and less time in authentic, multi-age, productive communities may be taking its toll on today’s youth.

Corps of Engineers suspends water permit for MVP --The U.S. Army Corps of Engineers has temporarily suspended portions of a river crossing permit for the $3.5 billion Mountain Valley Pipeline, Kallanish Energy reports. Mountain Valley Pipeline LLC, the developer of the under-construction natural gas line, received a streamlined federal review that is not allowed in cases of major stream crossings, pipeline opponents argued in a federal appeals court. Lawyers for five environmental groups fighting the pipeline urged the 4th U.S. Circuit Court of Appeals in Richmond, Va., to suspend the federal Clean Water Act permit for the entire pipeline until questions about crossings of the Elk, Gauley, Greenbrier and Meadow rivers in West Virginia can be answered. The Corps, which had approved the permit, agreed on Tuesday to temporarily block construction of those four river crossings, but refused to revoke the entire pipeline permit. The court gave lawyers for both sides a week to formally respond. The suspension of the permit could mean the MVP would have to seek individual permits for those four river crossings. The environmental groups contend that the pipeline will cross more than 1,000 waterways in its 300 miles. The streamlined review, called Nationwide 12, can only be used for projects in which stream crossings can be completed within 72 hours, West Virginia’s Department of Environmental Protection said. That condition was added last year by the state to the Corps’ streamlined permitting for pipelines before the state allowed such permit reviews in West Virginia. 

Army Corps of Engineers suspends parts of Mountain Valley Pipeline permit — The U.S. Army Corps of Engineers has indefinitely suspended parts of nationwide permit 12 for the Mountain Valley Pipeline (MVP) just a day after an environmental coalition sued them in federal court for a stay on the project.According to a news release from the Sierra Club, who is part of the coalition, the move also comes after a direct request was sent to the Corps on May 15.In its suit, the environmental coalition alleges that MVP construction across the Elk, Gauley, Greenbrier and Meadows rivers could not be completed in time restrictions implemented in the permit.While the permit from the Corps does not include a time limit, it requires state input and approval to move forward.In the permit granted to MVP, the West Virginia Department of Environmental Protection added the stipulation that construction across the waterways in the route of the pipeline must be completed in 72 continuous hours.With MVP’s permit now partially suspended, the Sierra Club’s release said that the belief is that the interests of MVP may have to seek out individual permits for each crossing.“The suspension means MVP may have to seek individual permits for those four crossings,” the release reads. “However, advocates for clean air and water say that the Corps’s action falls short of what they have asked a federal appeals court for because it lacks a commitment to wait for the federal court to rule and does not apply to all of the pipeline’s stream crossings.”According to the Sierra Club, the pipeline the 300-mile long pipeline crosses waterways in West Virginia and Virginia more than 1,000 times. “These four stream crossings signal one big problem — the Corps’ slipshod approach to overseeing this project. West Virginians deserve thoughtful permitting, not thoughtless rubber-stamped approvals,” said Angie Rosser, executive director of West Virginia Rivers Coalition in the release.

4 flown to hospital following oil tank explosion in Doddridge County - Four people were flown to the hospital after oil tanks exploded in Doddridge County Friday morning. A company was removing three oil tanks off a property on White Hair Lane, in West Union, at about 10 a.m. when the tanks exploded, said George Eidel, director of the office of emergency services in Doddridge County. The tanks were being “cut up for scrap, using some sort of torch,” Jake Glance, spokesman for the state Department of Environmental Protection, said in an email. The tanks were not entirely empty and caught fire, he said. Four people were flown to burn centers for their injuries, Eidel said. According to the DEP’s spill report, oil spilled into the stream, but officials didn’t know how much oil was spilled. Eidel didn’t know which company was removing the tanks or where the four people were flown.

Federal regulators vote to limit practice of measuring climate impact of pipelines -  Federal regulators appeared to defy a 2017 court ruling when they decided not to take greenhouse gas emissions into account as part of their review of natural gas pipeline applications. Last year, a federal court ruled that the Federal Energy Regulatory Commission (FERC) must fully consider the so-called downstream effects of a pipeline project’s greenhouse gases, particularly the effects of emissions from natural gas-fired power plants that contribute to climate change. .But in a 3-2 vote, FERC ruled Friday that federal laws do not require it to consider greenhouse gas emissions caused by the production or consumption of natural gas that would inevitably result from the approval of a pipeline project. The policy change wasn’t announced in its own separate order. Instead, it was tucked inside an otherwise routine decision rejecting an appeal of its approval of a pipeline project in New York proposed by Dominion Energy. Environmental groups and climate change activists have tried for years to get federal regulators to take greenhouse gas emissions into account when they review a natural gas pipeline application. In response to Friday’s decision, the Sierra Club, one of the groups that has been fighting to get FERC to take greenhouse gas emissions more seriously, hinted it may challenge the commission’s ruling in court.“The people demanded FERC do its job, and FERC refused. Then, the courts ordered FERC to do its job, but instead, it just keeps trying to evade the court’s order and shirk its responsibilities,” 

Think-tank warns on US gas plant investment costs - US companies risk making hundreds of billions of dollars of unnecessary investments in gas-fired power plants over the coming decade because regulators are obstructing spending in lower-cost alternatives, a leading environmental think-tank has argued.Rocky Mountain Institute has calculated that US power generators are on course to invest about $500bn in new gas-fired plants by 2030, but argues that much of that capacity could be replaced by a combination of renewable energy, battery storage, improved efficiency and measures for reducing demand at peak times.It argues that companies that invest in these plants risk finding themselves stuck with higher-cost options for meeting demand, angering customers and potentially exposing them to competition from lower-cost rivals.  Mark Dyson of RMI  urged investors and regulators to make sure companies were not building plants that could turn out to be uneconomic, particularly if gas prices rise. Gas-fired plants are the largest source of electricity in the US, providing 32 per cent of the country’s power last year. In the “reference case” central projections set out by the government’s Energy Information Administration, the US is expected to add 54 gigawatts of combined-cycle gas-fired generation capacity by 2030, more than a quarter of the total added over that period. One of the crucial arguments for gas-fired plants is that they are despatchable, in other words capable of being called on to meet demand as needed. With US gas prices at about $2.80 per million British thermal units for the Henry Hub benchmark, gas is also one of the lowest-cost forms of power generation in the US.

NH Supreme Court on natural gas pipeline expansion could provide spark for Northern Pass -  The state supreme court has given new life to Eversource’s multiyear effort to use money from electricity rates to help pay for a natural gas pipeline, and possibly to the stymied Northern Pass hydropower transmission project.The high court on Tuesday struck down a 2016 Public Utilities Commission ruling that denied Eversource’s request to use electric rates to pay for increasing capacity on the Algonquin pipeline, which carries natural gas from New York through Connecticut to eastern Massachusetts and Boston.The court sent the matter back to the PUC, and Eversource officials didn’t say what specific action they might take.However, the ruling could spark the totally unrelated Northern Pass project, the wildly controversial proposal to bring hydropower from Quebec through New Hampshire. Eversource “will revisit the PUC’s denial of the Power Purchase Agreement with Hydro Quebec ... over the Northern Pass transmission line,” spokesman Martin Murray said in a statement.

Tokyo Gas receives first LNG cargo from Cove Point – Japan’s largest city gas provider, Tokyo Gas, on Monday received the country’s first long-term delivery of liquefied natural gas (LNG) from U.S. shale producers through its 20-year contract with Dominion Energy, Kallanish Energy reports. The 70,000-ton cargo left Cove Point last month, passed through the Panama Canal, and arrived at Tokyo Gas’ Negishi LNG terminal, at the Yokohama port, on board of the LNG Sakura early on May 21. The volume unloaded is equivalent to the annual gas supply of 220,000 households, Tokyo Gas said, in a statement. The recently completed Cove Point terminal is a “premier facility” in Maryland, giving customers direct access to the Marcellus and Utica shale plays – two of the most prolific natural gas basins in North America. Through the joint-venture, Cove Point, Tokyo Gas, Sumitomo and Gail, have each contracted for half of the marketed capacity. The JV has committed to purchasing 2.3 million tons per annum (MTPA) from Cove Point, of which 1.4 MTPA is to be delivered to Tokyo Gas. 

U.S. liquefied natural gas projects buoyed by China import talks (Reuters) - China’s interest in reducing its trade surplus with United States through increased energy imports could advance plans for U.S. liquefied natural gas (LNG) plants, said energy executives involved in developing new facilities. The White House and China on Saturday said a U.S. trade team would travel to China to explore new energy and agricultural deals. The joint communiqué lowered trade tensions, lifting stock markets in Asia and the United States on Monday. There are over two dozen proposed U.S. LNG plants waiting for customer commitments to reach a final investment decision, many of them looking to China for deals. About 13 percent of U.S. LNG cargos went to China last year, according to data provider Genscape. China imported 5.6 billion cubic feet per day last year, making it the world’s largest buyer after Japan.  Delfin is proposing a floating LNG facility in the U.S. Gulf of Mexico and aiming for a final investment decision as early as this year to go ahead and produce up to 13 million metric tons per annum (mtpa) of LNG for export.   “For us, it’s strictly been about marketing to China,” said Greg Vesey, chief executive of LNG Ltd , which is developing an LNG plant in Louisiana and another in Nova Scotia in Canada. It hopes to reach a final investment decision on the U.S. project by year-end and begin exports in 2022, he said.  “If you look at some forecasts for 2035, there are really only two places that have significant increases in LNG imports. Europe goes up about 100 mtpa and China goes up about 200 mtpa,” Vesey said. Texas LNG, which is proposing a 4-mtpa export facility in Brownsville, Texas, and has five early-stage agreements with Chinese customers, hopes to make a final decision next year, about six months behind its original goal.

Cheniere Moves Ahead With Corpus Christi LNG Expansion (Reuters) - Cheniere Energy Inc said on Tuesday it had approved the construction of a third liquefaction unit, known as a train, at its Corpus Christi export terminal in Texas, the first new liquefied natural gas project to go ahead in the United States since 2015.The Houston-based company said it will instruct its contractors to proceed with the full build, which started in a limited fashion in late 2017. The first two trains at Corpus Christi are expected to enter service next year. The positive investment decision comes just days after the White House and China said a U.S. trade team would travel to China to explore new energy deals, prompting company executives to note that China could increase LNG imports to reduce its trade surplus with United States.

BP secures 2 mil mt/year of LNG from Louisiana's Venture Global Calcasieu Pass - BP has secured 2 million mt/year of LNG from the Venture Global Calcasieu Pass LNG export facility in Louisiana, under a 20-year sales and purchase agreement with Venture Global LNG, the companies announced Monday. BP will purchase the LNG on a free on board, or FOB, basis starting from the commercial operation date of the facility, currently expected in 2022. The agreement brings the exporter's total contracted quantity under the 20-year binding SPA to 6 million mt/year. BP joins Venture Global's other LNG partners, which include Shell, Edison S.p.A. and Galp. Venture Global LNG is developing two export facilities in Louisiana -- the 10 million mt/year Venture Global Calcasieu Pass facility at the intersection of the Calcasieu Ship Channel and the Gulf of Mexico, and the 20 million mt/year Venture Global Plaquemines LNG on the Mississippi River. "As we finalize our arrangements for Calcasieu Pass and proceed towards financing, we have now begun to execute binding commitments for our Plaquemines project, which will also supply low-cost, long-term LNG to our global customers," Venture Global LNG co-CEOs Mike Sabel and Bob Pender said. Venture Global has raised $525 million of capital to date to support the development of its projects.

NYMEX June natural gas futures down 2.5 cents at $2.822/MMBtu on weather outlook - NYMEX June natural gas futures fell in overnight US trading as revisions to weather forecasts look likely to cap early cooling demand.At 6:30 am EDT (1030 GMT) the contract was 2.5 cents lower at $2.822/MMBtu.National Weather Service outlooks show above-average temperatures across the whole US except for the Southeast in the six-to-10-day period, but receding to encompass just a little more than the western half of the country in the eight-to 14-day period. Early demand for cooling has led to higher gas demand of late. According to the Energy Information Administration's latest update for the week ended May 16, an 8% week-on-week rise in power burn as temperatures rose past 75 degrees Fahrenheit in parts of Texas and the Southeast led a 4% uptick in total gas consumption.

Weekly Natural Gas Storage Report - Cooling Demand Set To Moderate - The EIA reported a +91 Bcf change in storage for the week ended May 18. This brought storage to 1.629 Tcf. It compares to the +75 Bcf change last year and the +89 Bcf change for the five-year average. Going into this storage report, a Reuters survey of traders and analysts pegged the average at 92 Bcf with a range of +85 Bcf to +100 Bcf. We expected 85 Bcf and were 7 Bcf lower than the consensus. We were off by 6 Bcf on this storage report. Natural gas prices are still squeezing higher today following a neutral storage report. July contracts hit a high of $2.97/MMBtu. With natural gas prices now testing what we believe to be the new upper limits of the price band ($2.80-3/MMBtu), if the weather turns bearish, we could see prices establish a "higher low" before trending higher yet again. As we wrote before, the long-range weather outlook from ECMWF-EPS did show below-average temperatures starting June 4. Commodity Wx Group tweeted today that there are also signs from CFS 16-20 day suggesting much colder weather models going forward.Combining this observation with what we saw in the 15-day cluster from the ECMWF-EPS this morning, we could be looking at colder-than-normal temperatures in the East starting the second week of June. As you see in the first chart above, the cluster breakdown shows the majority of the ensemble members predicting colder-than-normal weather in the East. The composite on the 2m temperature anomaly chart for June 8 also shows colder-than-normal temperatures in the Northeast. As a result, CDDs will decrease, but warmer-than-normal temperatures in Texas and West coast will help keep demand well supported.

NYMEX June gas remains buoyant at $2.954/MMBtu amid fundamental support - NYMEX June natural gas futures were slightly higher ahead of Friday's open, amid lingering fundamental support. At 6:30 am ET (1030 GMT) the contract was up 1.4 cents at $2.954/MMBtu having traded in a range of $2.925-$2.955/MMBtu in the US overnight. Efforts to rebuild inventories slowed down in the most recent storage report, which outlined a net 91 Bcf injection for the week ended May 18 beating consensus estimates and historical averages, but trailed the robust 106 Bcf build reported the previous week. Total working gas stocks currently sit at 1,629 Bcf, still 804 Bcf below the year-ago level and 499 Bcf below the five-year average of 2,128 Bcf. Warmer weather which ramped up cooling demand during the storage report week is seen to have limited the amount of gas available to be moved into underground stocks. Additional warming which should keep cooling demand elevated is in store in the midrange, as revised National Weather Service outlooks show above-average temperatures spanning the bulk of the US in the six-to-10-day period and the entire country in the eight-to-14-day period.  

Steps toward making Louisiana a crude-exporting powerhouse, part 2. - The sharp increase in U.S. crude oil exports over the past couple of years is tied primarily to Texas ports — mostly Corpus Christi and the Houston Ship Channel. Louisiana, a distant second in the crude-exports race, has a long list of positive attributes, including the Louisiana Offshore Oil Port (LOOP) — the only U.S. port currently capable of fully loading the Very Large Crude Carriers that many international shippers favor. It also has mammoth crude storage, blending and distribution hubs at Clovelly (near the coast, connected to LOOP) and St. James (up the Mississippi). In addition, St. James is the trading center for benchmark Light Louisiana Sweet, a desirable blend for refiners. The catch is that almost all of the existing pipelines at Clovelly flow inland — away from LOOP — many of them north to St. James. That means infrastructure development is needed to reverse these flows southbound from St. James before LOOP can really take off as an export center. Today, we continue a blog series on Louisiana's changing focus toward the crude export market and the future of regional benchmark LLS.

State appeals ruling against Bayou Bridge Pipeline - The state Department of Natural Resources has appealed a judge's ruling that it had improperly permitted the controversial Bayou Bridge Pipeline. Filed Tuesday (May 22), the appeal asserts that DNR staff did not violate laws designed to protect the public and environment when it issued the permits for portions of pipeline.  “We feel our staff did their jobs the right way ... in issuing the permits," DNR spokesman Patrick Courreges said Wednesday. Judge Alvin Turner Jr., of the 23rd Judicial District Court in Ascension Parish, had ruled last month that the permit should be reconsidered and that DNR must require the pipeline company to develop a emergency evacuation and response plans for areas near the pipeline.The proposed 162-mile pipeline pipeline would run from St. James Parish to Lake Charles. A portion would cut through the Atchafalaya River Basin, a vast and ecologically rich swampland that conservationists hope to protect from potential oil spills. DNR's permit applies to a 17-mile portion of the route in coastal zone-classified areas of St. James and Assumption Parish.  After the ruling, lawyers representing environmental groups and St. James residents demanded that DNR order the halt of pipeline work. But Courreges said DNR couldn't stop work until either his agency decides not to appeal or the time to file an appeal runs out, which would have been mid-June. DNR's appeal kills any potential stop-work order based on the ruling. Meanwhile, work on the pipeline has intensified. Residents and activists report that workers set up powerful lights at a work site in Assumption Parish on Friday and worked through the night.

Trump’s Offshore Drilling Plan Puts 68 National Parks at Risk - Sixty-eight National Parks along the coastal U.S. could be in danger from devastating oil spills if President Donald Trump 's plan to open 90 percent of coastal waters to offshore oil drilling goes through, a reportreleased Wednesday by the Natural Resources Defense Council and the National Parks Conservation Association found.The report, SpOILed Parks: The threat to our coastal national parks from expanded offshore drilling , summarizes the danger drilling poses to parks that saw 84 million visitors in 2017, supported 59 thousand jobs and earned $5.7 billion. Parks threatened include iconic pieces of American culture and landscape, from the Statue of Liberty National Monument to the Everglades National Park to Alaska's Glacier Bay National Park and Preserve."These places matter, and we cannot completely protect them if we start to drill off our coasts," senior vice president of conservation programs for the National Parks Conservation Association Mark Wenzler told The San Francisco Chronicle .Expanded drilling threatens six national sites in the Bay Area alone.Secretary of the Interior Ryan Zinke announced the expanded drilling plans in January in response to an executive order by Trump ordering the rethinking of drilling bans implemented by former President Barack Obama, The San Francisco Chronicle reported. According to the new report, Zinke's plan would lease federal waters for oil and gas drilling and allow drilling in waters where it hadn't been allowed for decades, including areas off the coasts of Alaska and Florida and in the Atlantic and Pacific Oceans. "It may be stating the obvious to some," Franz Matzner, director of federal affairs for the Natural Resources Defense Council, told The San Francisco Chronicle of the report, "but it may not be obvious to the Trump administration, which is barreling ahead with a plan that is unprecedented."

Environment, tribal groups rally to fight Line 3 oil pipeline -- With just weeks left before Minnesota regulators decide the fate of Enbridge Energy's contentious Line 3 oil pipeline proposal, activists are gearing up their years-long fight against the project. A cadre of environmental and tribal groups camped in downtown St. Paul on Friday and Saturday for an anti-Line 3 rally and to take pledges from people who promise to continue fighting the pipeline, if it's approved. "The pledge of resistance says that we stand united against this proposed pipeline because of the threat it proposes to our air, our water, wild rice, Anishinaabe treaty territory and our climate," said Akilah Sanders-Reed, a climate activist. "As one of the dirtiest kinds of oil on earth, tar sands oil contributes to climate change more than any other kind of oil." The activists' camp was outside the Public Utilities Commission's office. The agency's five commissioners will have final say on whether to give Enbridge the necessary permits to build Line 3. Sanders-Reed said it was crucial to bring the anti-pipeline message right to the commission's doorstep. "We know that the public utilities commissioners are suposed to be making decisions that benefit the people of Minnesota. And so we're here outside their offices throwing this celebration of resistance to show them the world we believe in," she said. The pipeline would take crude from Canada's oil sands region and zig-zag across northern Minnesota toward the southwestern tip of Lake Superior near Duluth. Enbridge wants to replace its current Line 3 along a new route across northern Minnesota that avoids reservations but still travels through sensitive natural areas, including the Mississippi River headwaters and wild rice waters. 

How Enbridge Helped Write Minnesota Pipeline Laws, Aiding Its Line 3 Battle Today - The Minnesota section of Enbridge's Line 3 pipeline accounts for nearly 300 miles of the longest crude oil transport system in the world, and it is failing. The multi-billion-dollar transnational corporation has applied for a permit to replace it. Opposition from tribes in the region and environmental groups is slowing the project, but the process at times appears so tilted in Enbridge's favor that, watching the court battles and utility commission meetings, it almost feels like Enbridge wrote the rules.At one point in its application to build the new Line 3, Enbridge listed all the federal and state laws that regulate the permitting and construction of pipelines . Nearly all the Minnesota laws originated in one 1987 Senate bill: S.F. 90 .This bill was accompanied by unprecedented pipeline industry lobbying—led in spending by Enbridge—and included subtle but major handouts to pipeline companies. One such provision imposes a sweeping limit on the public's ability to oppose new pipelines, including the Line 3 replacement project. According to environmental lawyer Paul Blackburn, one of the largest barriers to pipeline regulation is actually the federal Pipeline Safety Act, which preempts most state regulations. He called the law "a beautiful example of how to appear to regulate something without actually regulating it at all."Still, Blackburn said there are ways for states to regulate pipelines, with some of the most powerful being zoning, permitting, and routing laws. However, S.F. 90 includes industry-friendly language that undercuts these and other potential regulations. The bill allowed pipeline operators to classify their own data after a spill, making it inaccessible to the public. It instituted stiff civil and criminal penalties for pipeline company employees who failed to alert the authorities or destroyed evidence after a spill, but the companies were subject only to relatively small fines.

State appeals court sends Enbridge pipeline permit back to county committee over insurance issue - A state appeals court on Thursday ordered a permit issued by Dane County for a high-capacity oil pipeline be sent back to the county committee that approved it so it can decide whether the pipeline owner has met state-mandated insurance requirements. A three-judge panel of the 4th District Court of Appeals said a group of landowners near Enbridge Energy’s expanded pumping station in the town of Medina has the right to challenge whether Enbridge had properly shown that it carries insurance that state law requires for operators of pipelines that carry hazardous liquids. The court also said that Enbridge had failed to show the Dane County Zoning and Land Regulation Committee that it carried the insurance, including coverage for “sudden and accidental pollution liability.” The decision reverses one issued in September 2016 by Dane County Circuit Judge Peter Anderson, who had also stricken a condition from the county-issued permit which required that Enbridge carry an additional $25 million in cleanup insurance. The appeals court, however, declined to renew the additional insurance requirement. Anderson struck the requirement because of a new state law that barred the county from imposing its own insurance requirement above the insurance required by the state. The county had continued to include the requirement in the pipeline’s permit — even though it knew it couldn’t be enforced — in case changes were made to the state law in the future. Enbridge needed the permit so it could expand a pumping station in the town of Medina for its pipeline that carries Canadian tar sands oil to a refinery in Illinois. Dane County Assistant Corporation Counsel David Gault said Thursday that the county agrees with the court’s opinion. “We are gratified that the court found the county’s argument persuasive that the appropriate remedy was for the circuit court to remand the case back to the county zoning agency, rather than simply striking the insurance conditions that were clearly an integral part of the zoning committee’s decision to issue the (permit),” Gault said in a statement. 

New sand mine planned for rebounding Eagle Ford shale - There's been a race to build new sand mines in West Texas' Permian Basin to satisfy all of the hydraulic fracturing needs for oil wells. But now there are signs of growth in South Texas' long-stagnant Eagle Ford shale.Fort Worth-based Black Mountain Sand said it plans to construct a new sand mine south of San Antonio near the Eagle Ford to serve the growing oil and gas production in the region as crude oil prices continue to rebound.After building two mines in the Permian, Black Mountain said it is turning its attention to the Eagle Ford. The company acquired 2,300 acres in Atascosa County with the aim of completing a mine by the end of this year that would churn out 2.2 million metric tons of sand annually. The mine would employ about 75 people.Ever-increasing large volumes of sand and water are required to frack the shale oil and gas wells to shatter the tough shale rock and release the petroleum.  "With the (Eagle Ford) region currently producing approximately 12 percent of the U.S. total oil production and growing, the need for local sand has become paramount for our customers," said Rhett Bennett, founder and chief executive of Black Mountain Sand.

Apache commits to Enterprise's 658-mile Shin Oak pipeline - Houston producer Apache Corp. said it partnered with a major Houston pipeline firm to transport its natural gas liquids from West Texas' Alpine High development to the Houston area.Apache signed on as an anchor customer of Enterprise Products Partners' Shin Oak NGL pipeline that will traverse 658 miles from Reeves County, Texas to Enteprise's storage hub just east of Houston in Mont Belvieu.The pipeline is under construction and is slated for completion in the second quarter of 2019. Apache now has the option of purchasing a 33 percent stake in the Enterprise pipeline.Earlier this month, Apache signed on as a major customer of the planned EPIC Crude Oil pipeline project to move crude from Apache's Alpine High to Corpus Christi, from where the oil can either be refined or exported.The Alpine High development, which is west of Fort Stockton in the Permian Basin, is expected to produce plenty of oil and natural gas liquids, called NGLs, much of which are used to manufacture plastics and other petrochemicals.Apache is committing to move more than 200,000 barrels of NGLs a day on the Shin Oak pipeline, which will have a capacity of 550,000 barrels a day initially."Alpine High is an enormous hydrocarbon resource that encompasses rich gas, dry gas and oil-bearing horizons. This agreement provides an efficient long-term outlet for the tremendous volume of NGLs that Apache plans to produce from the rich gas window of the play,"

Pipeline officials: Oklahoma City neighborhood safe after crude oil spill – Company officials say residents in a northwest Oklahoma City neighborhood do not need to be concerned after a crude oil spill earlier this month.On May 10, Oklahoma City firefighters and hazmat crews were called to the 16900 block of N. Pennsylvania Ave.  following reports of a yellow liquid spewing from the ground near an oil well site. Authorities were able to determine that a pipeline had ruptured and was releasing raw crude oil into the air.TAC 4: This is what the raw crude oil looked like when firefighters arrived earlier in the 16900 block of N Pennsylvania. This is all taken care of now. Cleanup will begin soon.— Oklahoma City Fire (@OKCFD) May 10, 2018After the spill was contained, residents in the SilverHawk neighborhood began assessing the mess left behind.“You can see the pipe up here on the roof, you can see the film all over the windows and it’s kind of, it’s an oily substance,” Kevin Mashburn told News 4 as he wiped his hand across his window.Officials with the Oklahoma Corporation Commission say about 15 barrels of oil were sent into the air, and settled on more than 220 homes and lawns in the area. OCC field inspectors, environmental professionals and a representative from the pipeline company, Sunoco, went to the neighborhood to check on the clean up process.

Keystone Pipeline project focus of court hearing  (AP) — Trump administration attorneys defended the disputed Keystone XL oil sands pipeline in federal court on Thursday against environmentalists and Native American groups that want to derail the project. President Barack Obama rejected the 1,179-mile (1,800-kilometer) line proposed by TransCanada Corporation in 2015 because of its potential to exacerbate climate change. President Donald Trump revived the project soon after taking office last year, citing its potential to create jobs and advance energy independence. Environmentalists and Native American groups sued to stop the line and asked U.S. District Judge Brian Morris to halt the project. They and others, including landowners, are worried about spills that could foul groundwater and the pipeline's impacts to their property rights. Morris did not immediately rule following a four-hour Thursday hearing in federal court in Great Falls. U.S. government attorneys asserted that Trump's change in course from Obama's focus on climate change reflected a legitimate shift in policy, not an arbitrary rejection of previous studies of the project. "While the importance of climate change was considered, the interests of energy security and economic development outweighed those concerns," the attorneys recently wrote. 

New Mexico senators want buffer around World Heritage site  (AP) — A swath of northwestern New Mexico's oil and gas country would be off limits to drilling under proposed federal legislation that seeks to make permanent a buffer zone that has kept development away from Chaco Culture National Historical Park and other sites held sacred by Native American tribes.The measure introduced Tuesday by U.S. Sens. Tom Udall and Martin Heinrich would prevent future leasing or development of minerals owned by the federal government within a 10-mile radius around the park.The two New Mexico Democrats and tribal officials voiced their concerns about the potential of expanded drilling despite decisions over the years by federal land managers to defer any interest by the oil and gas industry in parcels that fall within the buffer. Most recently, U.S. Interior Secretary Ryan Zinke in March halted a lease sale over concerns about cultural impacts after hundreds of people protested.Heinrich acknowledged that the San Juan Basin has a drilling history that dates back decades. As one of the oldest natural gas production areas in the U.S., the basin already contains thousands of wells, compressor stations and other infrastructure and many leases have yet to be developed. Still, Heinrich said there's consensus that the Chaco area is important and that such places should be "off the table."

Trump Opens Door to Dangerous Fracking in Northern Arizona - — A new Trump administration plan proposes to auction off 4,200 acres of public land for oil and gas development in northern Arizona. The lands straddle the Little Colorado River, are within three miles of Petrified Forest National Park, and are near habitat for a federally threatened fish called the Little Colorado spinedace. Drilling and fracking would threaten to deplete and pollute groundwater in the Little Colorado River Basin.The Bureau of Land Management is planning the September auction — which would convey development rights to fossil-fuel companies — without any site-specific public or environmental review, as required by federal law. Planning documents cite Trump policies that forego National Environmental Policy Act analysis to fast-track fracking on public lands. According to BLM, about 90 percent of new oil and gas wells on public lands are fracked.“This dangerous plan puts national parks, precious groundwater and wildlife in the crosshairs. We’ll do everything we can to stop it,” said Taylor McKinnon with the Center for Biological Diversity. “Fracking is a dirty, dangerous business that consumes enormous amounts of water and threatens wildlife and public health. Northern Arizonans won’t tolerate public lands being sacrificed as gifts from Trump to the fossil fuel industry.” The BLM is using a shortcut to bypass the analysis of fracking’s harm to the land and water that is required under NEPA. The sweeping “determinations of NEPA adequacy,” or DNAs, presume that oil and gas development complies with the agency’s 30-year-old resource management plan, which predates the U.S. fracking boom. The agency is also foregoing tribal consultations, stating that “tribal consultation was adequate for the [resource management plan].” By deferring all analysis until the drilling-permit stage — after industry has the right to develop the land — the bureau is unable to deny subsequent drilling plans.

Trump Administration proposes to sell protected land in Arizona for fracking -   The Trump Administration has announced a proposal to sell 4,200 acres of public, protected land in northernArizona for oil and gas development. The area in question crosses the Little Colorado River and is located only three miles from Petrified Forest National Park. It also is close to the habitat for the Little Colorado spinedace, a threatened species of fish. Oil and gas industrial activity, such as fracking, could also threaten the groundwater in the Little Colorado River Basin, potentially affecting drinking water. In September, the Bureau of Land Management is planning to auction the land to the highest bidder, without sufficient environmental and public review. The Center for Biological Diversity is pushing back against the Trump Administration as it advances its pro-industry agenda. “This dangerous plan puts national parks, precious groundwater and wildlife in the crosshairs. We’ll do everything we can to stop it,” said Taylor McKinnon at the Center for Biological Diversity. “Fracking is a dirty, dangerous business that consumes enormous amounts of water and threatens wildlife and public health. Northern Arizonans won’t tolerate public lands being sacrificed as gifts from Trump to the fossil fuel industry.”  Under guidelines issued in January 2018 by the Trump Administration, the Bureau of Land Management has made several assumptions in its approval process and has delayed any detailed analysis until the drilling permit stage. At that point, the site will already have been sold for oil and gas development. “Fracking or drilling development could be catastrophic for the region’s groundwater,” McKinnon said. “This is Trump’s energy dominance policy at work, where nothing matters except fossil-fuel interests.”

More than 4000 acres of land in northern Arizona to be auctioned for gas and oil exploration - Cronkite News – A Trump administration plan calls for auctioning off about 4,200 acres of public land for oil and gas development in northern Arizona, but environmental groups are poised to block the measure in court.It’s been more than five months since the White House rolled back environmental protections for oil and gas leasing on public lands.Taylor McKinnon, public lands campaigner with the Center for Biological Diversity, said his group is already involved in federal lawsuits to protect public lands from oil and gas exploration.“What we’re seeing in this instance is the Bureau of Land Management, as we’re seeing all over the country, skipping environmental and public review when holding this lease sale and conveying development rights to industry. And that’s dangerous,” he said.The center said the land straddles the Little Colorado River, and drilling and fracking in the area would threaten to deplete and pollute groundwater.McKinnon said the administration is ignoring federal law. “The National Environmental Policy Act requires federal decisions, like oil and gas leasing, be subject to approval under that law. In this case they’re skipping that step,” he said.Lawsuits already have been filed by his organization against BLM in Ohio and Colorado, specifically related to fracking. McKinnon said his organization is prepared to do the same in Arizona. Trump has billed his energy strategy as part of his promise to bring U.S. “energy dominance” to the rest of the world, according to Time.

Over 4000 Acres Of Land In Northern Arizona To Be Leased For Gas And Oil Exploration - The Trump administration will auction off over 4,000 acres of public land for oil and gas development in northern Arizona.Environmental groups are poised to block the measure in court.It’s been over five months since the White House rolled back environmental protections for oil and gas leasing on public lands.  Taylor McKinnon, public lands campaigner with the Center for Biological Diversity, said his group is already involved in federal lawsuits to protect public lands from oil and gas exploration. “What we’re seeing in this instance is the Bureau of Land Management (BLM), as we’re seeing all over the country, skipping environmental and public review when holding this lease sale and conveying development rights to industry. And, that’s dangerous,” he said.    McKinnon said the Trump administration is ignoring federal law, explaining, “The National Environmental Policy Act requires federal decisions, like oil and gas leasing, be subject to approval under that law. In this case they’re skipping that step.” Lawsuits have already been filed by his organization against BLM in Ohio and Colorado, specifically related to fracking. McKinnon said his organization is prepared to do the same in Arizona.

Stopping a Dakota Access Pipeline Leak in Under 10 Minutes? A Fairy Tale, Say the Standing Rock Sioux - Nine minutes. That's the longest it would take to detect a leak and shut down the Dakota Access Pipeline(DAPL) should the crude oil within begin escaping into the North Dakota prairie or the Missouri River. At least that's what Energy Transfer Partners (ETP), the pipeline's owner, says. It's a claim that the Standing Rock Sioux tribe calls completely unrealistic given the company's "inadequate" emergency response plan. This is just one of the problems examined in a new report recently submitted to the U.S. Army Corps of Engineers, which last February approved DAPL's controversial route snaking less than a mile from the tribe's reservation and upriver of tribal lands. In more than 300 pages, the document details many issues that the government never fully investigated when conducting its environmental review in 2016. The report, written by the Standing Rock Sioux and independent experts, delves into treaty agreements, the history of government takeover in the region, the inadequacy of ETP's risk analysis, and how one accident could ruin land, water, and a way of life. But ETP's assertion that it could shut the pipeline down in under 10 minutes is what the report takes particular issue with—something tribe member Dave Archambault Sr. calls "pure folly" and a "fairy tale." Don Holmstrom, an author of the report who worked with the U.S. Chemical Safety Board for 17 years, says that after noticing a break, workers would first have to decide what steps to take to stop the oil from coursing through the steel, an often stressful judgment. Then they must find and close the emergency flow restriction devices one by one, which can take time depending on how much pressure has built up in the pipeline. Of course, all that hinges on whether ETP realizes there's a leak in the first place. In reality, oil pipeline leaks frequently don't even register with control systems and operators; a farmer will simply notice a growing stain darkening a remote field and call it in. According to records obtained by the tribe and its technical team, no one at the company would be able to tell something was amiss if less than 1 percent of the 600,000 billion barrels it transports each day was oozing out. That comes to 6,000 barrels―still a lot of oil.

Dems introduce bill to block Alaska refuge drilling | TheHill: A group of House Democrats introduced legislation Tuesday that would block oil and natural gas drilling in Alaska’s Arctic National Wildlife Refuge (ANWR). The bill from Reps. Jared Huffman(D-Calif.), Raúl Grijalva (D-Ariz.) and others would reverse Congress’s decision last year to approve drilling in a portion of ANWR, which was included as part of the Republican tax overhaul. The sponsors of the anti-drilling legislation warned that with the Trump administration hoping to hold an auction for drilling rights next year, lawmakers have to work fast to overturn the provision.“Plain and simple: the Arctic National Wildlife Refuge is a national treasure worth protecting for future generations,” Huffman said in a statement. “Although Republicans in Congress snuck a dangerous drilling provision into their tax bill last year, it’s not too late to keep drills out of this iconic landscape,” he continued. “But time is not on our side: we need to repeal this oil and gas giveaway soon to ensure that the Arctic Refuge’s coastal plain remains unspoiled for future generations to experience and enjoy.” Last year’s tax law passed with only GOP support. After decades of efforts by Alaskans, the oil industry and Republicans, it for the first time allowed drilling in ANWR’s small coastal plain, subject to the same environmental rules as other federal land areas. The Interior Department was instructed in the law to hold at least two drilling rights lease sales in the next decade, limited to 2,000 acres leased. Polling has consistently showed that most Americans oppose ANWR drilling. The conservative-leaning Rasmussen Reports found last year that 53 percent of Americans opposed it, and only 12 percent supported it. But most Alaskans and state leaders have long supported drilling. 

The Rise of Shale Oil – St Louis Fed - Technological advances that allow oil producers to extract crude oil from shale rock formations have reshaped the landscape of U.S. oil production over the last 10 years. Since 2008, shale oil production has increased from around 450,000 barrels per day (bpd) to over 5 million bpd and now accounts for more than half of total U.S. crude oil production. This increase in production is unmatched on a global scale: In 2017, the U.S. became the largest oil-producing country with an average of 14.6 million barrels per day of crude oil, petroleum, and biofuels, 2 million barrels per day more than Saudi Arabia.Shale oil production is different from traditional production in two key ways:

  • Multiple wells can be drilled from one platform.
  • It appears that shale oil production responds differently to changes in oil prices compared with traditional wells.

The figure shows both the spot price of oil (as measured by West Texas Intermediate at Cushing, Okla.) and the U.S. production of oil broken down by shale and conventional production. Between June 2014 and February 2016, the price of WTI oil dropped from $105.79 to $30.32 (red line). At the time, the belief was that the precipitous drop in prices would lead oil-producing firms in the U.S. to cut back production in shale oil fields. During the period, total oil production in the U.S. dropped from about 9.6 million bpd to about 8.6 million bpd (sum of blue and orange bars). Production has subsequently has recovered to about 10 million bpd—in part because of a strengthening global economy. However, one might ask how a sustained decline in oil prices would affect U.S. oil production that has become increasingly reliant on extraction from unconventional oil fields.

The Shale Oil Ponzi Scheme Explained: How Lousy Shale Economics Will Pull Down The U.S. Economy - Few Americans realize that the U.S. economy is being propped up by the Shale Oil Industry.  However, the shale oil industry is nothing more than a Ponzi Scheme, so when it collapses, it will take down the U.S. economy with it.  Unfortunately, the reason few Americans understand how lousy the economics are in producing shale oil and gas is due to the misinformation and propaganda being put out by the industry and energy analysts.I am quite surprised how bank analysts and brokerage firms can continue to fund the shale oil and gas or advise clients to purchase stock when the industry is behaving just like the Bernie Madoff Ponzi Scheme.  The only big difference is that the U.S. Shale Industry is a Ponzi at least four times greater than Madoff’s $65 billion fiasco.I decided to discuss in detail why the U.S. Shale Oil Industry was a Ponzi Scheme in my newest video.  I provide some interesting charts that explain how the huge decline rates and massive debt are going to bring down the industry, much quicker than the market realizes.In the video, I show just how quickly two of the largest U.S. shale oil fields decline.  The chart below was developed by Enno Peters at the website.  The Permian, the largest shale basin in the United States, decline rate was a stunning 60% in just two years.  Thus, the companies producing oil in the Permian are forced to spend boatloads of Captial Expenditures (CAPEX) to grow or just maintain production:Furthermore, I explain how many of these shale oil companies are using debt to fund operations. However, lousy shale economics are not allowing these companies to pay back debt, so they must borrow new debt to pay back existing debt.  This is the very definition of a Ponzi Scheme.  The table below shows how EOG has structured its debt to be repaid over two decades:

US oil and gas production is leaving Saudi Arabia and Russia behind - For seven straight years, the US has pumped more oil and gas out of the ground than any other country. That lead will only widen, states the US Energy Information Administration (EIA). The independent energy statistical agency describes the US as “the undisputed oil and gas leader in the world over the next several decades.” It comes as Russia and Saudi Arabia are constraining production to lift prices, while new technology is making vast new pools of once unprofitable hydrocarbons economical to extract in the US. In an analysis released May 21, the EIA estimates that the US pumped the equivalent of 30 million barrels of oil per day in 2017, a record high. (The figure includes all hydrocarbons such as natural gas, crude oil and others.) That puts the US well ahead of other major producers, including Russia and Saudi Arabia. US natural gas production stole the top spot from Russia in 2008, and exceeded Saudi Arabia’s oil production in 2013. Since 2008, US petroleum and natural gas production has jumped nearly 60%. What happened? New fracking and drilling technology unlocked cheap ways to extract US shale oil and natural gas, even as consumption stayed steady. That has allowed the US to satisfy more of its own consumption, while relying on Canada for most (40%) of its imports. Petroleum imported from Persian Gulf countries now accounts for just 1.74 million barrels per day, or 17% of the total. While good news for the US economy, it has done nothing to stem the overwhelming threat confronting the planet: rising temperatures. Scientists agree the pace of climate change form human emissions is now unprecedented. If catastrophic global warming is to be stopped, we need to aim for zero greenhouse gas emissions as soon as possible. The period when we can safely burn our hydrocarbons is almost over.

The United States is a net energy importer from Canada – EIA - Canada is the largest energy trading partner of the United States, based on the combined value of energy exports and imports. Although the value of bilateral energy trade with Canada has varied over the past decade, driven primarily by changes in the prices of oil and natural gas, the overall structure of bilateral energy trade flows has changed relatively little, with the value of U.S. energy imports from Canada consistently exceeding the value of U.S. energy exports to Canada by a large margin. Increasing energy commodity prices in 2017 led to growth in the value of both exports to and imports from Canada. Based on the latest annual data from the U.S. Census Bureau, energy accounted for $18 billion, or about 6%, of the value of all U.S. exports to Canada. Energy accounted for $73 billion, or about 24%, of the value of all U.S. imports from Canada in 2017, up from 19% in 2016. Canada is the main source of U.S. energy imports and the second-largest destination for U.S. energy exports behind only Mexico. Crude oil accounts for most U.S. energy imports from Canada, averaging 3.4 million barrels per day (b/d) in 2017. Canada is the largest source of U.S. crude oil imports, providing 43% of total U.S. crude oil imports in 2017. The value of U.S. crude oil imports depends on both volume and price. In 2017, the value of U.S. imports of Canadian crude oil increased, reaching $50 billion, as a result of both an increase in oil prices and an increase in volume. Canadian crude oil imported by the United States is largely produced in Alberta and consists mainly of heavy grades shipped primarily to the Midwest and Gulf Coast regions. Until the removal of restrictions on exporting U.S. crude oil in December 2015, virtually all U.S. crude oil exports went to Canada. Since the United States began exporting more crude oil to other countries, Canada’s share of U.S. crude oil exports has fallen, although Canada still remains the largest destination for U.S. crude oil exports. In 2017, for the first time, the United States exported more crude oil, in total, to other countries (794,000 b/d) than it exported to Canada (324,000 b/d). U.S. crude oil exports to Canada are typically light sweet grades that are shipped to the eastern part of the country.  

Environmental Groups Vow to Block Tar Sands Oil Project: 'We Are Going to Not Allow Kinder Morgan to Finish This Pipeline' -- As the clock ticks down until the May 31 deadline for the controversial Kinder Morgan Trans Mountain pipeline project, which will triple the amount of tar sands being transported from Alberta to the British Columbian coast, the campaign against its expansion is spreading abroad. On Sunday in Seattle, more than 120 miles south of where the pipeline hits the coast, hundreds of "kayactivists" took to the water to protest against the pipeline.  Kinder Morgan has given the federal government of Canada until the end of the month to resolve outstanding financial and legal issues surrounding the pipeline. Last week, in order to appease the Texan oil company, Trudeau's government announced that it will effectively give Kinder Morgan a "blank check" " to indemnify " the pipeline "against any financial loss," suffered if they build the pipeline. The move seems to have backfired and emboldened everyone fighting the pipeline. And as the May 31 deadline gets closer, there is a growing awareness not only of the threat that the pipeline poses to the climate, but also to marine life as it would massively increase the tanker traffic up the west coast of Canada and the U.S. Indeed, last week the Natural Resources Defense Council warned Kinder Morgan that the pipeline project, could be "illegal" under the Endangered Species Act, which is seen as one of the world's strongest species protection laws."It's not just about the spills, it's not just about the orcas," said Graham Clumpner, one of the paddlers with the Mosquito Fleet: "The bigger issue that we are all facing is climate change ," he said. "We are going to not allow Kinder Morgan to finish this pipeline."

For sale: stalled pipeline project, protesters included -  Justin Trudeau’s pipeline nightmare may be only getting started. As Kinder Morgan Inc. drives a hard bargain in Canada’s attempt to save the Houston-based company’s embattled Trans Mountain project, the prime minister could end up fighting for an asset that hardly anybody wants. Pipeline giant Enbridge Inc., for one, signaled it doesn’t. Trudeau’s government upped the ante this week, with Finance Minister Bill Morneau pledging to indemnify the C$7.4 billion ($5.8 billion) project for politically motivated delays and backstop any company willing to take it on. Trudeau said “there are alternatives if Kinder Morgan” decides it wants out.Alberta’s oil sands are a crucial part of Canada’s economy and the expanded pipeline to British Columbia’s shore could help get better prices for the country’s crude in Asia. But finding an alternative investor in the face of fierce opposition in the coastal province would be easier said than done, according to Jihad Traya, manager of strategic energy advisory services for HSB Solomon Associates LLC in Calgary.  “I’m a little perplexed,” Traya said, adding that any attempt to sell the project would be very cumbersome. “So, what part are they going to take over? The expansion? And then, that creates some very interesting intra-agency issues.”   Kinder, which is set to decide by the end of the month whether to abandon the project because of the heated political battle over its construction, was lukewarm in its response to Morneau’s public comment as talks with the government continue. Chief Executive Officer Steve Kean said that “while the discussions are ongoing, we are not yet in alignment and will not negotiate in public.”

Kinder Morgan set to pull the plug on Canadian crude export pipeline - Ever since Canada’s Liberal government came to power in late 2015, the 525,000 b/d Northern Gateway and the 1.1 million b/d Energy East pipeline projects fell off the radar, while a final investment decision remains due on the 870,000 b/d Keystone XL pipeline, which received a fresh lease of life after US President Donald Trump resurrected it last year. The clock is now ticking fast for the 590,000 b/d Trans Mountain Pipeline Expansion, for which developer Kinder Morgan has a set a self-imposed deadline of May 31 on whether to proceed with the estimated $5.6 billion investment. The expectation is that Kinder will likely pull the plug, as all other options start thinning out. The Houston-based midstream company has been pursuing the expansion project since 2012 and has also received full shipper commitment from nearly a dozen oil sands producers in Alberta and refiners in the US. But last month Kinder decided to stop further spending unless it had clarity on the way forward. Its stance came after relentless opposition from stakeholders in British Columbia, particularly the provincial government, which has not spared any efforts to come in the way of shovels being put in the ground thus summer. Be it court cases or the announcement of an 18-month study to determine the environmental impact of a likely spill from the existing Trans Mountain pipeline, the ostensible plan of the British Columbia government was to delay start of construction, which in turn would drive up project costs and deliver its desired goal of Kinder abandoning the project. Such actions irked neighbor Alberta, where the provincial government has been banking on the Trans Mountain Expansion to ensure uninterrupted growth of its multibillion-dollar oil sands industry. 

Two of Canada’s biggest provinces are feuding over an oil pipeline--Trudeau is caught in the middle   — An increasingly bitter dispute between two of Canada’s largest provinces over expansion of a pipeline for tar sands oil is pitting environmentalists against business and posing a major political challenge for Prime Minister Justin Trudeau. At the heart of the battle are plans to triple the capacity of the 65-year-old Trans Mountain pipeline, allowing more crude to flow from northern Alberta to the port of Burnaby, B.C. , adjacent to Vancouver. The province of Alberta says the $5.7 billion project, which the Trudeau government approved in late 2016, is crucial to the growth of its oil industry, which is increasingly dependent on tar sands extraction facilities. In Alberta, tar sands are mined in massive open-pit operations and must be partially processed to create a crude known as diluted bitumen before it is sent by pipeline or rail to be refined into gasoline and other petroleum products. Because of capacity constraints and roadblocks facing several other pipeline projects, the province is finding it increasingly difficult to get its oil to market.Next door, in the province of British Columbia, the eco-friendly government of Premier John Horgan is challenging the pipeline expansion in court, claiming better protection of the province’s scenic coastline is needed in case of a tanker spill. That has enraged Alberta, which has vowed to retaliate by introducing legislation to “turn off the taps” of diesel and gasoline to British Columbia, vital to that province’s economy. “On the one hand, they don’t want our oil, and on the other hand, they are suing us to give them our oil,” Alberta Premier Rachel Notley said this week after British Columbia hit back with another lawsuit and said it will seek an injunction to stop Alberta from cutting off its fuel supply. Earlier this year, Alberta also threatened to retaliate against its neighbor by banning the sale of British Columbian wine in the province.

Government announces plan to accelerate fracking developments by fast-tracking private companies' planning applications - New plans to accelerate fracking development have been released by the government, amid accusations that the move will harm the environment and local communities. Proposed changes to the planning process could put an area nearly the size of Wales at immediate risk of drilling.The measures are intended to speed up planning applications and make decisions “faster and fairer” for all those involved. Greg Clark, the business, energy and industrial strategy secretary, and James Brokenshire, the housing and communities secretary, issued a joint statement in which they reiterated the government’s position on the importance of “safe and sustainable exploration and development of our onshore shale gas”. The government said it will streamline and improve the regulation process for fracking planning applications so decisions are made faster, describing recent decisions as “disappointingly slow”. Other measures proposed include a £1.6m shale support fund for local authorities and a consultation on whether exploration wells could be drilled without seeking a planning application.Campaigners said the latter move would “pervert the planning process” and open nearly 18,000 square kilometres of England’s countryside up to “cowboy” operations.

Green Groups Balk at England’s Plan to Fast Track Fracking -- Government ministers published proposals Thursday that would speed the development of fracking in England, igniting opposition from environmental groups and local communities, The Independent reported .The rule changes could open an area almost as large as Wales for immediate drilling."Communities and their local councils across the UK have said no in every way they can, but the government have turned a deaf ear to everyone who doesn't own a fossil fuel company," Rebecca Newsome of Greenpeace UK told The Independent.The proposals would give planning authorities £1.6 million to speed up application processing time, create a new shale environmental regulator, allow companies to drill at test sites without prior permission and shift approval for new wells from the local to the national level by declaring fracking sites "nationally significant infrastructure," The Guardian reported.Greenpeace further criticized the proposals in The Guardian, saying they would make "exploratory drilling as easy as building a garden wall or conservatory."The Local Government Association also expressed concern that fracking decisions would be taken out of the hands of impacted communities."We are clear that it should be up to local communities to decide whether or not to host fracking operations in their areas," environment spokesperson, councilor Judith Blake told The Guardian.

Cuadrilla seeks consent to frack UK´s first horizontal shale gas well - Cuadrilla has applied to the Government for consent to frack the UK’s first horizontal shale gas well, the company said.The well was completed last month at the firm’s Preston New Road site in west Lancashire, with drilling through the Lower Bowland shale at a depth of 2,700 metres below ground.Cuadrilla now needs the go-ahead from Greg Clark, the Secretary of State for the Department of Business, Energy and Industrial Strategy, for hydraulic fracturing to commence. Francis Egan, CEO of Cuadrilla, said: “Following the Government’s very recent announcement which underlined the national importance of shale gas, we are very pleased to submit our application for hydraulic fracturing consent to the Secretary of State. “We are now very close to demonstrating that Lancashire shale gas can be commercially developed in a safe and environmentally responsible manner. We look forward to receiving consent to progress from the Secretary of State at the earliest opportunity.” The drilling of a second horizontal shale gas exploration well through the Upper Bowland shale is nearing completion, added Cuadrilla. A similar application to the Government for fracking consent at the second well will then be submitted. Based on its current operations schedule, Cuadrilla said it plans to be in a position to conduct fracking in the second half of this year. Cuadrilla says it will then run an initial flow test of both wells for six months, with plans to then eventually connect those wells to the local gas grid network in 2019. 

Experts warning of 'serious earthquake risk' posed by drilling for shale gas -- Former advisor to No 10, Professor Peter Styles, said hydraulic fracturing in former coal mining areas increases the probability of earthquakes on faults that have already been subject to movement through mining. As the Government announced plans to speed up fracking developments by fast-tracking private companies’ planning applications, Professor Styles has called for more rigorous checks to identify the dangers. In his new report, Fracking and Historic Coal Mining: their relationship and should they coincide? He said there was a “serious earthquake risk” posed by fracking in former coalfields, because induced tremors would be “dramatically enhanced”. Although the Fylde has no mine workings, the Blackpool area was hit by two induced tremors in 2011 linked to Cuadrilla’s fracking operation at the now abandoned Preese Hall drill site.He said: “Unfortunately the physics of it means you cannot see those faults with the (survey) waves that you put into the earth. To date it does not appear that any proper industry or government due diligence has taken place with regards to fault lines mapped.” But shale industry body UKOOG said mapping had been done and that a “traffic light” monitoring system had been put in place to prevent tremors using Cuadrilla’s monitoring stations (pictured). Prof Styles recommends a 850-metre buffer zone between fracking and any significant natural fractures or faults. There are faults beneath the Fylde.

Russia Tightens Grip on Europe’s Gas With Gazprom Deal -- Russia’s natural gas export monopoly is set to expand its position as the dominant fuel supplier to Europe after a deal between the two resolved a seven-year-old anti-trust dispute. The agreement between Gazprom PJSC and the European Commission gives gas buyers more flexibility in handling imports and greater leverage to push for lower prices. That’s likely to make flows from Russia more attractive than alternatives such as expensive new links to fields at Europe’s southeast corner or tanker shipments of liquefied natural gas. Easing tensions with Russia will make it more difficult for countries from the Middle East and Americas to get a piece of Europe’s lucrative energy market, where gas is trading at roughly double the level prevailing in the U.S. Cheaper supplies on more flexible terms also makes it more difficult for Europe to broaden its sources of energy to reduce the risk of a cutoff from any one of them, an idea that President Donald Trump’s administration has been pressing.“Gazprom knows that Europe will always represent its key market, it knows that it’s very difficult to diversify away from Europe,” said Simone Tagliapietra, analyst at the Bruegel research group in Brussels. “If the Russian gas becomes cheaper, U.S. LNG will be less competitive if the U.S. is not able to cut down the price.” Europe relies on Russia for about a third of its gas, and Gazprom’s shipments to the continent reached a record a last year and are only expected to grow. In recent weeks, as the weather warms and demand for heating eases, the pipeline company is shipping in supplies of the fuel to replenish depleted storage sites at rates that are more typical for a hard winter.

Not so fast on fracking, UN agency tells developing countries - The hydraulic extraction of natural gas, commonly known as fracking, produces cleaner energy than oil and coal, but it is not necessarily in the best interests of the world’s poorest countries, UN development experts said on Thursday.A new report by UNCTAD, the UN Conference on Trade and Development, describes natural gas as a useful “bridge fuel” for States aiming to move towards more environmentally-friendly renewable power sources. But it has disadvantages too, not least the fact that its main component is methane gas, which has a global-warming potential 28 times higher than the carbon dioxide found in other fossil fuels. The fuel “should contribute…to achieving a low-carbon economy” by 2030, the report says, while pointing to “gaps in local geological and hydrological knowledge” and inadequate regulations that may represent “major obstacles to hydraulic fracturing as a method of extracting shale gas”. Janvier Nkurunziza, chief of UNCTAD’s Commodity Research and Analysis Section, said that the report was “not saying (fracking) is good or bad”. That was something that only governments could do, the UN official added, based on variables including their investment capacity and the possible contamination of underground water sources. “Whether it’s really good, or bad, depends on a number of factors that we analyse in this report: geology, sources of water for example; if you are increasing your water stress by using a lot of water, infrastructure and so on and so forth,” said Nkurunziza, adding that “we are not saying it’s good or bad, just look at the conditions and the region (where) you want to explore this resource, and then you can determine whether you can do it or not.” Citing data from the United States Energy Information Administration, the UNCTAD report indicates that the world has around 60 years’ worth of shale gas left before the resource is exhausted. Around half of the 215 trillion cubic metres this represents is in Algeria, Argentina, Canada, China and the United States—although the US is the world’s leading shale gas producer, with 87 per cent of total output. “The US is like an exception,” said Nkurunziza, noting that no other country has the “huge investments” necessary to fund shale gas exploration on such a scale. 

Race on to boost gas supply to Australia's east coast (Reuters) - A pipeline across Australia and gas imports from as far away as the United States are on the drawing board as the country races to plug a domestic supply gap that is driving up east coast gas prices and threatening jobs. Although Australia is the world’s No. 2 liquefied natural gas (LNG) exporter, much of its east coast gas is tied up in long-term export contracts while mainstay supplies in the populated southeast are drying up more quickly than expected. Imports will be needed within four years, warn industry executives and experts, which means gas prices that have more than doubled in the past three years aren’t going to fall and could even rise another 50 percent to match global spot prices. “Some people still find the import of LNG to what is meant to be an energy superpower absurd, and they have a point, it does seem very weird,” said Tennant Reed, national public policy adviser at the Australian Industry Group. The government is under fire from angry household gas users and industry, particularly big gas users such as petrochemical and fertilizer manufacturers which have warned that high prices are making some businesses uncompetitive. Coal seam gas from Queensland, which now supplies around 30 percent of the east coast market, costs around A$6 ($4.50) a gigajoule (GJ) to produce, then has to be piped at a cost of around A$1.85-A$2.45 per GJ, which has driven up gas prices to well above A$8. Shortages will grow from 2022 due to a steep output decline in the main gas field that has supplied southern Australia for five decades, the Australian Energy Market Operator has warned. In the longer term, gas is expected to flow from developments around the country, including more coal seam gas from Queensland, new finds off the coast of Victoria, and shale gas from the Northern Territory, but these are years from development. 

India's GAIL to nearly double LNG imports in fiscal 2018-2019- India's state-owned gas utility GAIL aims to almost double LNG imports to 100 cargoes in the fiscal year ending March 2019, up from 52 cargoes a year earlier, to meet India's growing demand as the share of gas in the country's energy mix is set to rise to 15% in five years, from the current 6.5%. GAIL will import 60 cargoes from the US and eight cargoes from Russia's Gazprom under long-term contracts, and will buy the remaining 32 cargoes on a short-term basis, company officials said Thursday. GAIL's focus is to acquire a larger share of its LNG from the short-term markets, and enjoy greater destination, volume and delivery flexibility to be able to more effectively hedge risks against price volatility, said GAIL Chairman B.C. Tripathi, after releasing the company's annual results. He added that new long-term contracts are not a priority, as the global LNG market is moving from long-term deals to short-term and spot deals. GAIL will receive its first cargo under a renegotiated deal with Gazprom on June 4. The company plans to maintain an LNG portfolio of 14.3 million mt/year from fiscal 2022-23 to meet demand from cooking gas users, power and fertilizers plants and city gas distributors. The portfolio comprises 5.8 million mt/year from the US, 2.5 million mt/year from Gazprom, 5 million mt/year from India's Petronet LNG and 1 million mt/year from Qatar. Tripathi said India's gas market is expected to grow 6-7% annually over the next five years.

Venezuela's oil meltdown  - Despite holding one of the world's largest reserves of heavy crude oil, Venezuela cannot feed its people.Hyperinflation, along with a $70bn bond default means that basic food and medicine can't be imported. The military has been put in charge of food distribution, and the government is running out of cash.But despite the near economic collapse, President Nicolas Maduro is standing for re-election. The United States, the European Union and 15 of Latin America's biggest countries have already said they will not recognise the result.The country's sole source of income is oil, but even the industry is in meltdown.The oil price recovery has done little to help Venezuela. The Organization of the Petroleum Exporting Countries (OPEC) says oil production is down to a 30-year low of around 1.4mn barrels a day. And troubles are mounting for Venezuela's state-run oil company PDVSA as lawsuits over unpaid bonds are bubbling. This week, the Caribbean Island of Curacao ruled that US oil major ConocoPhillips could seize assets owned by PDVSA. Venezuela uses refineries on the Island of Curacao to store a significant portion of the oil it exports to its foreign markets. Direct sanctions on the oil sector are also a possibility. "Until now, a perception within markets has been that Venezuela pays late, but pays," explains Diego Moya-Ocampos, senior analyst for the Americas for IHS Markit."Few creditors have dared to initiate or file legal actions against Venezuela to try to seize assets. Instead, they've preferred to look behind the scenes from some sort of payment agreement. After Conoco and the recent actions of these days, we're seeing a more aggressive stance and less patience from creditors trying to seize Venezuelan assets, and certainly, no one wants to be the last in line." Moya-Ocampos believes that even though global oil prices are increasing, "the market has already absorbed the idea that Venezuela increasingly will no longer be a key player within OPEC and that all production will systematically continue declining."

Train Carrying 250,000 Liters of Fuel Derails on Kenyan Coast - A cargo train carrying 250,000 liters (66,000 gallons) of super petroleum , or unleaded gasoline, derailed off its tracks after taking a sharp turn along Kenya's eastern coast, forcing the closure of a major highway over the weekend, according to local reports.The accident occurred early Sunday in Kibarani in Mombasa County, and prompted authorities to completely close off Makupa Causeway, the main link between the mainland and Mombasa Island, fearing a fire would break out after spillage of the highly flammable liquid, The Star, Kenya reported.Thousands of commuters were left stranded until the highway was reopened Monday after experts determined the area was safe. No injuries were reported and the exact cause of the derailment is not yet determined.The 16-wagon Kenya Railways train was headed towards Nairobi and was carrying fuel for Vivo Energy.Maritime and Shipping Affairs Principal Secretary Nancy Karigithu said about 3,000 liters (790 gallons) leaked from the impacted wagons. Authorities have contained the fuel with foam and coolant, she said."The leakage came from two wagons, one of them was profuse. Luckily enough, no oil was spilled into theocean ," Karigithu said, as quoted by The Star, Kenya.  Karigithu added that experts are working to ensure the fuel does not enter the ocean and affect the marine system.

Europe to ditch US dollar in payments for Iranian oil – source - The European Union is planning to switch payments to the euro for its oil purchases from Iran, eliminating US dollar transactions, a diplomatic source told RIA Novosti.  Brussels has been at odds with Washington over the US withdrawal from the Iran nuclear deal, which was reached during the administration of Barack Obama. President Donald Trump has pledged to re-impose sanctions against the Islamic Republic.“I’m privy to the information that the EU is going to shift from dollar to euro to pay for crude from Iran,” the source told the agency.Earlier this week, EU foreign policy chief Federica Mogherini said that the foreign ministers of the UK, France, Germany, and Iran had agreed to work out practical solutions in response to Washington’s move in the next few weeks. The bloc is reportedly planning to maintain and deepen economic ties with Iran, including in the area of oil and gas supplies.Mogherini stressed that the sides should jointly work on the lifting of sanctions as an integral part of the historic nuclear deal. “We're not naive and know it will be difficult for all sides.”The Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), was sealed three years ago in Vienna between Tehran and the P5+1 powers (China, France, Russia, UK, US, plus Germany). The agreement saw decades-long international sanctions lifted in exchange for Iran curbing its controversial nuclear program. On January 16, 2016, the parties to the deal announced the beginning of its implementation. The lifting of international sanctions gave Iran access to the world’s markets for the first time in nearly four decades. Since then, Tehran has managed to significantly increase its exports of crude. However, oil is pegged to the US dollar on international markets, making it difficult for Iran’s partners to make payments for crude and for Tehran to receive them. With the dollar playing the leading role on international financial markets, re-imposing sanctions would mean cutting Iran off from the global financial system.

Iran says Europe's support for nuclear deal not enough (Reuters) - The European Union is not doing enough to preserve the benefits for Iran from the 2015 international nuclear pact following the withdrawal of the United States, Iran's foreign minister told the EU's energy chief on Sunday. Miguel Arias Canete, European Commissioner for energy and climate, said Tehran wanted the 28-nation bloc to act fast to preserve its oil trade with Iran, and to consider making direct euro-denominated payments for Iranian oil to Iran’s central bank, bypassing the U.S. financial system. "With the withdrawal of America .... the European political support for the accord is not sufficient," Mohammad Javad Zarif told Arias Canete in Tehran, Iran's state news agency IRNA reported. Since President Donald Trump announced on May 8 that he would pull the United States out of the deal, the U.S. Treasury said Washington would reimpose a wide array of Iran-related sanctions after the expiry of 90- and 180-day wind-down periods, including sanctions aimed at Iran’s oil sector and transactions with its central bank. The EU leaders have pledged to try to keep Iran’s oil trade and investment flowing, but conceded that would not be easy. "Our message is very clear. This is a nuclear agreement that works," Arias Canete told Western journalists after two days of meetings with Iranian officials in Tehran. With the threat of new U.S. sanctions looming over them, some foreign firms have already started signaling their intention to pull back from Iran. "The announcement of the possible withdrawal by major European companies from their cooperation with Iran is not consistent with the European Union's commitment to implementing (the nuclear deal)," Zarif was quoted as saying. He appeared to be referring to announcements by several large European companies last week suggesting their activities in Iran would end or be curtailed because of the reimposition of U.S. sanctions. 

Iran’s top envoy to China calls on Beijing to help safeguard nuclear deal | South China Morning Post: Iran has called on China to help safeguard the nuclear deal it reached with other major world powers, saying Tehran will resort to “other options” if its interests are threatened by US sanctions. The nation’s ambassador to China Ali Asghar Khaji said Beijing had a positive role to play in upholding the deal, and should boost economic cooperation with Tehran. He also said the Iranian foreign minister chose Beijing as his first stop on a whirlwind diplomatic tour last week because of China’s “importance” to Iran. “We expect other remaining members of the Joint Comprehensive Plan of Action, including China, to help implement and continue this deal, and fulfil their commitment and obligations according to this deal,” Khaji said, referring to the plan reached in 2015 that will see Iran significantly reducing its uranium stockpile by 2030 in exchange for the lifting of economic sanctions. “If we could gain these rights and benefits from this deal we will stay in it. If these Iranian rights were not satisfied, and our interests were not reached, we will think about other options,” he said in an interview with the South China Morning Post last week, without specifying what the other options were. >German newspaper Welt am Sonntag reported on Sunday that diplomats from Europe, China and Russia are discussing a new accord to offer Iran financial aid to curb its ballistic missile development, in the hope of salvaging the 2015 deal, according to Reuters. The officials will meet in Vienna in the coming week under the leadership of senior European Union diplomat Helga Schmid to discuss the next steps.  Last week, Iranian foreign minister Mohammad Javad Zarif met his counterparts from China and Russia, as well as Britain, France, Germany and the European Union, in a bid to rescue the deal. Despite Washington’s withdrawal, all the other signatory nations have vowed to keep the pact alive.

Tehran eyes path ahead after US withdrawal from nuclear pact | Asia Times: The Trump administration’s withdrawal from the Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), has monopolized the highest levels of government in Tehran around the clock since the decision was announced on May 9. Prime Minister Mohammad Javad Zarif, who met yesterday with the European Union’s energy chief Miguel Arias Canete, reiterated that mere words of support from the Europeans are not enough. The JCPOA joint commission meets in Vienna this coming Friday to analyze all options ahead. EU diplomats in Brussels told Asia Times that, contrary to rumors, the European Union is not considering offering financial aid to Tehran in exchange for concessions towards a possible new nuclear deal. What Brussels is desperate to achieve before the first US sanctions kick in from August is to devise a mechanism to contest the dominance of extraterritorial American law – and reassure President Hassan Rouhani, who allegedly has “limited” trust that France, Britain and Germany will affirm an independent foreign policy. Tehran, meanwhile, is considering conducting all its trade and commercial transactions in euro and yuan.

Iran pins hopes on EU measures to get around US oil sanctions - Iran is pinning its hopes on the European Union in its efforts to skirt new US sanctions, while also courting Russian and Chinese investments to keep its oil ambitions alive. "We expect Europe to help us receive the money for the oil we are exporting. We are receiving most of our oil revenue in euros and it needs to have circulation in European banks. This is one of the main [items on the agenda] that we discussed with the European Union," Iranian oil minister Bijan Zanganeh told journalists Saturday after meeting with EU officials in Tehran. Europe is a key outlet for Iran's oil, taking around 700,000 b/d, or a third, of Iranian crude exports. A number of European companies have also signed agreements to help Iran develop its oil and gas sector. The EU itself wants to negotiate sanctions waivers with the US for contracts signed by European companies with Iran before May 8, and is committed to helping Iran maintain its crude oil exports, EU Climate Action and Energy Commissioner Miguel Arias Canete said Saturday. Ar "We are going to engage with the US to negotiate the possibility of acceptance of waivers, at least to grandfather contracts concluded at the time the US was a party to the [nuclear] deal, which is particularly important for our companies," Canete said. This, along with a raft of measures announced on Friday, is designed to shield European companies from the impact of sanctions. France's Total on Tuesday halted plans to develop Iran's giant South Pars gas field as it seeks to clarify whether the investment can avoid falling foul of US sanctions. Speaking after a meeting in Tehran with Zanganeh, Canete said that the EU was "going to start legislation to protect companies against sanctions with the Blocking Statute." This is meant to nullify the effects on the EU of any foreign court judgments. 

‘Plan B’: Tehran Gives European Powers One Week to Salvage Nuclear Deal - The Western European signatories to the Iran nuclear deal have until next Friday to provide Tehran with concrete proposals to offset the consequences of the US decision to pull out of the Joint Comprehensive Plan of Action (JCPOA), a senior Iranian official said.  "To be honest with you, we are not confident," the official said, speaking to reporters before the start of Friday's talks with representatives from Iran, Russia, China, the UK, France and Germany on how Tehran might mitigate the financial and economic impact of Washington's withdrawal from the JCPOA."We expect the (economic) package to be given to us by the end of May," the official noted, according to Reuters. "I'm sorry to say that we haven't seen Plan B yet. Plan B has just started to be figured out." According to the official, European measures to encourage Tehran to remain committed to the nuclear deal would need to include guarantees concerning the continuation of Iranian oil exports, as well as guarantees about access to the SWIFT international bank payments system. Earlier Friday, Iranian Deputy Foreign Minister Abbas Araqchi confirmed that Tehran still had to make a decision on the JCPOA. "The European countries should tell us how they would be able to secure Iran's interests in the JCPOA in the absence of the United States and with the return of the country's sanctions," he said.   The JCPOA was signed in 2015 by Iran, the US, Russia, China, France, the UK, Germany and the European Union. President Trump's decision to pull out of the deal was met with condemnation from the other signatories, which are concerned that the United States may be pushing the Middle East into a nuclear arms race.

Iran's Demands: Europe Must Guarantee It Will Buy Iranian Oil... Or Else   Iran’s Supreme Leader Ayatollah Khamenei has issued five demands to the European Union (EU)—including Europe guaranteeing Iran’s oil will be completely sold—that European leaders could find quite difficult to meet. “Iran will resume halted nuclear activities if Europe fails to provide guarantees,” Ayatollah Khamenei said, a week after the EU said that it would act to protect the interests of EU companies investing in Iran as part of the European bloc’s continued commitment to the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal.After the U.S. withdrew from the deal, the EU, China, and Russia are trying to salvage the deal, and their diplomats are expected to meet with Iranian counterparts for talks in Vienna on Friday.Ahead of those talks, Iran’s Supreme Leader stated his demands:

  • 1. “The US has rejected the Resolution 2231 [the UN resolution endorsing the Iran nuclear deal]; Europe needs to issue a resolution against the US’s violation of it.”
  • 2. “Europe must promise not to raise the issues of missiles and regional affairs of the Islamic Republic.”
  • 3. “Europe must encounter any sanction against the Islamic Republic and explicitly stand to US’s sanctions.”
  • 4. “Europe must guarantee that Iran’s oil will be completely sold. If the US can damage the sale of our oil, we must be able to sell as much oil as we want. Europeans must guarantee that they compensate for the loss, and that they buy Iran’s oil.”
  • 5. “European banks must guarantee transactions with the Islamic Republic. We have no conflicts with regard to these three countries; but we do not trust them, based on previous experience.”

According to Eurasia Group analyst Henry Rome who spoke to CNBC, Khamenei’s demands should not be taken as the final position, because he is known to have changed his mind in the past.

Analysis: India could provide Iranian crude with stable outlet at least in near term -- Indian refiners could offer Iran some respite at least for the next few quarters as the South Asian crude oil importers are keen to adhere to their term supply contract obligations with the Persian Gulf producer, undeterred by Washington's efforts to restrain Tehran's oil sales. The US' re-imposition of sanctions on Iran has exerted little impact on the trade flows between India and the OPEC producer so far. India's state-run Bharat Petroleum Corp. Ltd., for one, is set to receive its regular monthly term crude oil cargo from National Iranian Oil Company in the coming days. BPCL's 190,000 b/d Kochi refinery on the west coast of India will receive 130,000 mt of its monthly term Iranian crude oil for May, trade sources with knowledge of the matter told S&P Global Platts last week. Indian state-run refiners typically source their crude oil requirements through term contracts with a host of suppliers, including Iran. BPCL currently holds a term contract with NIOC to buy 1 million mt for its Kochi refinery over April 2018-March 2019. In April, the refinery received two cargoes totaling 260,000 mt of Iranian crude oil. The impact of US sanctions could be felt after six months, but "not immediately," a New Delhi-based trade source said. India's flagship state-run refiner Indian Oil Corp. also holds a term contract with Iran to receive 180,000 b/d in the current fiscal year ending March 2019. 

Hedge funds exit crude oil but stay bullish on fuels: Kemp (Reuters) - For all the bullish commentary about oil prices at the moment, hedge fund managers have continued to take profits after the recent rally and are trimming their net long positions rather than adding to them.Focusing on what people do rather than what they say is one of the most important lessons for any good analyst (actions always speak louder than words).Hedge funds and other money managers cut their net long position in the six most important petroleum futures and options contracts by 16 million barrels in the week to May 15 ( managers have cut their net long position in the petroleum complex in each of the last four weeks by a total of 71 million barrels, according to records published by regulators and exchanges.Liquidation has been concentrated in crude oil, where the net long position in Brent and WTI has been reduced by a total of 124 million barrels over the last four weeks.Net long positions in Brent have fallen by 84 million barrels over five consecutive weeks, while net length in NYMEX and ICE WTI has dropped by 53 million over four weeks.  But, while portfolio managers have been reducing their bullish exposure to crude, they have been boosting their net long positions in refined fuels. Portfolio managers have accumulated record net positions of 124 million barrels in U.S. gasoline and 160 million barrels in European gasoil, as well as a near-record 86 million barrels in U.S. heating oil.The rotation of positions from crude to fuels reflects strong consumer demand and shrinking inventories of products, coupled with profit-taking in crude oil after a strong rally since the end of June 2017.

Crude oil futures rise as US-China trade war on 'hold', US rig data --Crude oil futures were higher during mid-morning Asia trade Monday as concerns of a US-China trade war abated after US Secretary Steven Mnuchin said that both countries were "putting the trade war on hold" as they worked out an agreement. The bullish Baker Hughes report on US shale oil rig count had also provided some support to oil prices. At 11.25 am Singapore time (0325GMT), July ICE Brent crude futures was up 54 cents/b (0.69%) from Friday's settle to $79.05/b, while the June NYMEX light sweet crude contract rose 59 cents/b (0.83%) to $71.87/b. The trade war between US and China is currently "on hold" after the two countries agreed to drop their trade tariff threats to work on a broader trade agreement, U.S. Treasury Secretary Steven Mnuchin Sunday said. Even though the agreement lacked the specific $200 billion reduction in the US trade deficit with China that was US President Donald Trump's signature demand on trade, the president halted tariffs he had threatened to impose on $150 billion in Chinese products. Chinese Vice-Premier Liu He described the deal as a "win-win choice". "The agreement to suspend plans for further imposition of tariffs ahead of the consultation deadline for the $150 billion tariff plan did help to hold up the near term sentiment with respect to this geopolitical concern," IG market strategist Pan Jingyi said. Meanwhile, data released by Baker Hughes Friday showed that US shale rig count were unchanged for the week ending May 18 at 844. 

Oil Prices Up almost 50% Year-over-year - First, an excerpt from a research note by Merrill Lynch economists today: If bad luck intersects with bad policy, a recession becomes a real risk. We would keep a particularly close eye on two traditional business-cycle killers-the Fed response to stronger-than-expected inflation in the US and a growing shortage of oil, pushing prices to new heights. So far the increase in oil prices isn't a concern for the economy, but it is something to watch. The first graph shows WTI and Brent spot oil prices from the EIA. (Prices today added). According to Bloomberg, WTI is at $71.40 per barrel today, and Brent is at $78.30. Prices collapsed in 2008 due to the financial crisis, and then increased as the economy recovered.   Oil prices collapsed again in 2014 and 2015, mostly due to oversupply. Now oil prices are rising sharply again.  The second graph shows the year-over-year change in WTI based on data from the EIA. Six times since 1987, oil prices have increased 100% or more YoY.  And several times prices have almost fallen in half YoY.   Oil prices are volatile! Currently WTI is up about 50% year-over-year.

Rising Fuel Prices Could Offset Tax Cuts - The U.S. Environmental Protection Agency (EPA) is reviewing the fuel economy standards that is says are “not appropriate”, putting the federal government and California on a collision course over the plans to weaken the rules. Amid this debate and the rising oil prices that led to continuously rising gasoline prices for American consumers at the start of the peak summer driving season, Securing America’s Future Energy (SAFE)—an organization which advocates for policies to boost U.S. energy security by significantly reducing dependence on oil and promoting responsible use of domestic energy resources—is calling on EPA Administrator Scott Pruitt to seize the fuel standard revision opportunity “to protect American businesses and consumers by optimizing, not weakening, fuel economy standards.” Rising gas prices at the pump as we enter the summer driving season threaten to offset the benefits of President Trump’s tax cuts, John W. Handy and Michael Johnson—members of SAFE’s Energy Security Leadership Council (ESLC)—argue in an article published in The Hill. That’s why they are calling on U.S. policymakers to address both supply-and demand-side solutions for reducing America’s dependence on foreign oil. These include maintaining fuel economy standards to help cut the U.S. reliance on oil, whose price has jumped by 67 percent in the past 11 months to more than US$70 a barrel.  “The U.S. consumes one-fifth of daily global supply and has a transportation system that is 92 percent dependent on oil, leaving our economy exposed on both the supply and demand side to an opaque, volatile, and unfree oil market,” SAFE’s leadership council members say. The key argument in their call on EPA’s Pruitt is that by maintaining the fuel standards by 2030, the U.S. will significantly boost its oil exports and cut reliance on oil imports.“Since they were introduced in response to the 1973 oil embargo, fuel economy standards are the single most impactful policy we have in protecting ourselves from oil price volatility,” Handy and Johnson wrote.

Trans-Atlantic Oil-Price Spread Soars as Supply Glut Disappears - WSJ -- U.S. oil prices are lagging behind global oil prices climbing toward $80 a barrel, the latest sign of a market that has gone from glutted to exceptionally tight in the past year. U.S. oil futures are trailing Brent, the global benchmark, by nearly $7 a barrel, settling at $72.24 a barrel on Monday. Last week, the difference was even wider, approaching $8 a barrel, based on closing prices. The two benchmarks haven’t been that far apart since 2015, before U.S. crude could be freely exported. The divergence is a sign of how stretched global oil supplies have become even as U.S. output has marched higher, overtaking Saudi Arabia and rivaling Russia. That has contributed to soaring U.S. exports, which have hit a record of nearly 2.6 million barrels a day as users clamor for it. “The market is screaming right now, ‘We need every barrel we can get,’ ” said Phil Flynn, an analyst at the Price Futures Group. Both benchmarks have been on a tear lately. The Organization of the Petroleum Exporting Countries and its allies have been holding some oil off the market for more than a year, and demand has surged as the global economy roared to life. .Unexpected disruptions, such as plunging oil production from Venezuela, have tightened supplies even further. A glut of oil that held prices down for years is essentially gone. Higher oil prices are starting to boost inflation and some worry that they will rein in the pace of economic growth, cutting into disposable income. .U.S. gasoline prices have climbed to nearly $2.93 a gallon on average, and are already more than $3 in several states. Companies such as Walmart Inc. have warned that higher fuel prices are starting to threaten margins.   Retail fuel prices have historically been more closely tied to the world benchmark rather than the national one, since gasoline is exported. Lately, Brent has been pulling ahead of West Texas Intermediate, the U.S. benchmark. Tensions in the Middle East and anticipation that renewed sanctions will crimp Iran’s oil exports are having an outsize impact on global prices. 

Forget About Oil at $80. The Big Rally Is in Forward Prices -- Brent crude oil grabbed all the attention after spot prices hit $80 a barrel last week. And yet, almost unnoticed, a perhaps more important rally has occurred in the obscure world of forward prices, with some investors betting the "lower for longer" price mantra is all but over. The five-year Brent forward price, which has been largely anchored in a tight $55-to-$60 a barrel range for the past year and a half, has jumped over the last month, outpacing the gains in spot prices. It closed at $63.50 on Friday. "For the first time since December 2015, the back end of the curve has been leading the complex higher," said Yasser Elguindi, a market strategist at Energy Aspects Ltd. in New York. "It seems that the investor community is finally calling into question the ‘lower for longer’ thesis." While spot prices fluctuate wildly, often driven by geopolitics such as U.S. sanctions on Iran, the five-year forward usually trades in a narrower range, anchored by longer views about future supply and demand. Over the past three years, long-dated prices had been weighed down by the belief the growth in U.S. shale production, combined with the adoption of electric vehicles, would keep prices under control. Investors are now questioning that hypothesis, pushing up forward prices. Over the past month, Brent five-year forward futures gained 11 percent, compared with a 6.8 percent increase in futures for immediate delivery. 

Crude Oil Prices Settle Higher Amid Rising Geopolitical Uncertainty – WTI crude oil prices settled higher on Monday as geopolitical uncertainty rose after weekend elections in Venezuela viewed as illegitimate raised the prospect of US sanctions on the country’s exports. On the New York Mercantile Exchange crude futures for July delivery rose 1.4% to settle at $72.24 a barrel, while on London's Intercontinental Exchange, Brent gained 1.06% to trade at $79.36 a barrel. Venezuela’s Nicolas Maduro risked further pressure from the International community as his re-election win on Sunday, raised the prospect of US sanctions on the Venezuela, which would further batter the country’s beleaguered energy industry. Ahead of U.S. sanctions on Iran, meanwhile, U.S. Secretary of State Mike Pompeo threatened even tougher sanctions against the Islamic Republic. Pompeo claimed the sanctions would be the “strongest in history when complete.” The prospect for a disruption to global oil supplies is expected to increase the pace of rebalancing in the oil market, prompting analysts to raise their forecast for oil prices. Citigroup raised its base-case oil-price forecast by $10 a barrel in 2018, up to $75 barrel annual average and said oil prices would continue to trend higher through 2018. "Our expectation for balancing, from a market currently in deficit, has been pushed to the second quarter of 2019 from the third quarter of 2018 period we expected previously," Citigroup said. The bank sees Venezuelan production likely falling below 1 million barrels per day before the end of the year. Output in Venezuela has dropped by a third in two years to its lowest in decades, according to Reuters. Traders, continued, however, to take profits on the recent rally in oil prices as data showed they cut their bullish bets on crude oil for the fourth straight week.

Iran Tensions Send Oil Spiking Again - Oil prices rose on Monday after the U.S. announced a bellicose list of demands on Iran, leaving little chance of a new accord. Oil prices were up “specifically because of Pompeo’s speech,” Thomas Pugh, commodities economist at Capital Economics, told the Wall street Journal. “It certainly looks like the U.S. is going to go as hard as possible on sanctions and try their best to make it hurt.”. On Monday, Secretary of State Mike Pompeo issued a long list of extreme demands on Iran as prerequisites for a new deal, without offering any concessions or carrots. The demands include stopping all uranium enrichment activity and also stopping all support for militants in the Middle East. Unsurprisingly, Iran immediately rejected the demands. Pompeo’s speech was clearly not designed to reach an understanding between the two countries, and it puts the U.S. and Iran on track for more confrontation. America’s top diplomat also signaled that there would be little leeway granted to European companies seeking to do business with Iran. . Iran is leaning on the EU to make euro-denominated purchases of Iranian oil as a way to avoid U.S. sanctions. Iran says Europe’s effort to rescue the nuclear deal is so far insufficient.   On Monday, the Trump administration barred the purchase and sale of Venezuelan government debt, including new debt issued by PDVSA and the central bank. The U.S. held off on sanctions on oil sales for now, but a State Department official said those measures were “under active review.” Venezuela might avoid being hit by those harsher measures because oil prices have climbed to three-year highs. “I really don't think they will ban imports in this price environment,” David Goldwyn, president of Goldwyn Global Strategies and a former special envoy for international energy affairs under the Obama administration, told S&P Global Platts.  OPEC is reportedly watching Venezuela’s plunging oil production, which could force the group to tweak its output limits at the upcoming meeting in Vienna. “Maybe, if the market is tight, there will be a need to make some adjustment,” one OPEC delegate told Reuters.

Crude higher on possible supply disruptions in Venezuela; ICE Brent at $79.64/b, NYMEX WTI $72.51/b- Crude oil futures trended higher during Tuesday morning European trading, underpinned by news that the US will impose new sanctions on Venezuela following Sunday's re-election of Nicolas Maduro as president. At 1125 GMT, ICE July Brent crude futures were up 42 cents from Monday's settle at $79.64/b, while the NYMEX June light sweet crude contract was up 27 cents/b at $72.51/b. "The market is contemplating the impact of further economic decline in Venezuela as a result of US sanctions and what this will mean in terms of the quantity of production and exports," Ole Hansen, head of commodity strategy at Saxo Bank, said. The new penalties to be imposed by the US on the South American country will bar US companies from the purchase or sale of any debt or accounts receivable from the Venezuelan government, including PDVSA, the state-owned oil and gas company. In the meantime, speculation into whether OPEC and Russia will step away from the deal to cap crude oil production sooner rather than later was said to be preventing prices from climbing even higher. "It may not be in OPEC's interest to see prices higher than they are now," said Hansen. "The yet unquantifiable reduction in Iran has been priced in and hedge funds have been rallying to reduce positions in anticipation that OPEC may want to step away from the deal."

Crude Oil Prices Settle Lower Despite Expectations for Global Supply Shortage - WTI crude oil prices settled lower after hitting a three-and-a-half year high on Tuesday as the prospect of global supply disruptions remained elevated amid looming sanctions on Iran and falling Venezuelan crude output. On the New York Mercantile Exchange crude futures for July delivery fell 11 cents to settle at $72.13 a barrel, while on London's Intercontinental Exchange, Brent rose 0.52% to trade at $79.63 a barrel. The United States imposed new sanctions on Venezuela on Monday following President Nicolas Maduro re-election on Sunday – viewed as illegitimate. While the immediate sanctions were aimed at restricting the South American country from selling assets, reports said sanctions on the country’s oil industry may soon follow. Venezuelan production would likely fall below 1 million barrels per day before the end of the year, Citigroup said on Monday. The prospect of lower output from Venezuela raised expectations that the market will be undersupplied as Iran sanctions loom and global demand rises. The United States on Monday, meanwhile, threatened even tougher sanctions against Iran as U.S. Secretary of State Mike Pompeo claimed the sanctions would be the “strongest in history when complete.” “Our expectation for balancing, from a market currently in deficit, has been pushed to the second quarter of 2019 from the third quarter of 2018 period we expected previously," Citigroup said. Heading into settlement, meanwhile, sentiment on oil prices were also supported by expectations U.S. crude supplies would fall for a third-straight week. A fresh batch of inventories data from the U.S. Energy Information Administration data on Wednesday is expected to show U.S. crude stockpiles fell by 1.567 million barrels last week. 

OPEC looking closely at Venezuelan oil output drop: sources (Reuters) - OPEC is looking closely at a drop in oil output from Venezuela to see if the loss of supply from the member state warrants action by the group, sources familiar with the matter said. This marks a shift from earlier this year, when OPEC officials downplayed the drop in Venezuelan production. And it follows a rise in prices and a decline in global inventories that is making tighter supply more significant. Falling Venezuelan output due to an economic crisis has helped the Organization of the Petroleum Exporting Countries deliver a bigger cut than intended under its pact with Russia and other producers to curb supplies and remove a global glut. The pact, which began in January 2017 and runs to the end of 2018, will be reviewed when OPEC meets on June 22 to review policy. OPEC’s compliance with the deal reached an unprecedented 166 percent in April, meaning it has cut well above its target. “Maybe, if the market is tight, there will be a need to make some adjustment,” one OPEC delegate who declined to be identified said, referring to the June meeting. Global inventories have eased back close to their five-year average, the measure originally targeted by OPEC and its allies. The output reductions combined with worries about supply disruptions due to U.S. sanctions on Iran pushed oil prices above $80 a barrel last week, the highest since November 2014. Brent crude, the global benchmark, was trading at $78.33 on Monday. Iranian supply has not yet been affected by the U.S. decision to withdraw from an international nuclear deal and its warning of that it would impose touch sanctions. The energy minister for the United Arab Emirates, which currently holds the OPEC presidency, said last week that OPEC had more significant issues to deal with than Iran. He cited Venezuela. 

Oil Holds Near 3-Year High Amid Venezuela Sanction Concerns -- Oil settled slightly lower after trading near the highest price in almost 3 1/2 years as new sanctions on Venezuela and shrinking U.S. crude inventories spurred concerns about tightening worldwide supplies.Futures fell 0.2 percent on Tuesday after rising earlier. President Donald Trump’s latest sanctions against the regime of Venezuelan leader Nicolas Maduro that threaten to further choke the Latin American nation’s already-hobbled petroleum industry. Meanwhile, a U.S. government tally on Wednesday is expected to show crude inventories fell for a third straight week, which would be the longest streak of declines since January.  Oil is trading at the highest levels since late 2014 as Middle East conflicts, U.S. sanctions on Iran and plunging Venezuelan output intensify supply concerns. The Organization of Petroleum Exporting Countries and allied nations have been curbing output since the start of 2017 to prop up prices. Still, some traders were cautious about how durable the rally will be, given weakness in the spread between futures contracts pegged to different months, a gauge of the health of the physical market. OPEC may raise oil output as soon as June on concerns about Venezuelan production and possible Iranian supply shortages, Reuters reported, citing OPEC and oil industry people that weren’t identified. “That means inventories wind down a little slower than people thought,” West Texas Intermediate for June delivery, which expired Tuesday, fell 11 cents to settle at $72.13 a barrel on the New York Mercantile Exchange, after earlier touching $72.83. The July contract fell 15 cents to $72.20. Brent futures for July settlement advanced 35 cents to $79.57 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $7.37 premium to WTI for the same month.

RBOB Extends Losses After Surprise Gasoline Inventory Build -- After the worst day for energy stocks in two weeks as crude turned negative amid reports that OPEC is said to be considering raising oil output, WTI rallied and RBOB kneejerked lower after API reported a smaller than expected crude draw and surprise gasoline build. API:

  • Crude -1.3mm (-1.9mm exp)
  • Cushing -822k (-250k exp)
  • Gasoline +980k
  • Distillates -1.3mm

The International Energy Agency has started discussions with major oil-producing countries about their ability “to make up the loss from Venezuela or elsewhere,” Executive Director Fatih Birol said in a Bloomberg Television interview.But, analysts remain convinced that things are going to get tighter...“The fundamental picture continues to show signs of tightening,” said Gene McGillian, market research manager at Tradition Energy. “The uncertainty on geopolitical issues is also contributing to the rally.”But prices slid today into the API print...then diverged (WTI higher, RBOB lower) after…

How To Mitigate The Risk Of Peak Oil Demand - There is a lively debate in the world of oil & gas surrounding the concept of peak demand. In essence, this debate centers around the question of when oil & gas demand will reach its peak and begin to decline. This debate has become especially heated due to three recent catalyst. Firstly, the adoptions of electric vehicles (EVs) and their potential to disrupt oil’s number one pillar of demand: gasoline. Secondly, the continued growth of renewables, which have the potential to disrupt the largest natural gas market: electricity generation. Finally, the general public’s increasing awareness of, and concern about, greenhouse gas emissions and their impact on the climate. The subject of peak demand has raised concern among shareholders of International Oil Companies (IOCs), and some are now even trying to force their companies to study the subject. The shareholders’ concern is explained by the fact that if peak demand occurs, the oil companies might be left with “stranded assets” – assets in which billions of shareholder dollars have been invested. However, since the lion’s share of oil existing reserves are not held by the IOCs, but by OPEC’s members (and the NOC’s that produce these resources), it would seem logical that it is the NOCs that have to worry most about peak demand and stranded assets. If/when peak demand hits, the global oil & gas markets will change fundamentally. Not because oil and gas demand would disappear overnight – that is not a realistic assumption considering the multitude of uses of the two commodities. But peak demand would result in another major supply glut, especially as shale technology is opening up new opportunities for production, putting downward pressure on oil prices. In the “lower forever” environment that might result from this permanent glut, profit focused organizations would look to the lowest cost basins, most of which are located in OPEC’s major oil producing nations –Venezuela, Saudi Arabia, Iran, UAE, Kuwait, and Russia. Therefore, in what seems an ironic twist of fate, the countries that seem to have most to fear from peak demand will also most likely be the ones that remain standing if / once peak demand happens.  It is other nations with more complex geological or political realities such as Indonesia that will feel the immediate pain of peak demand. Interest in their production potential will disappea as drillers will find it too burdensome and thus too costly to explore, develop or produce at lower prices levels.

WTI/RBOB Plunge After Massive Surprise Crude Inventory Build - WTI and RBOB are trading lower since last night's API data, but plunged as DOE reported a massive surprise 5.78mm crude build, a surprise gasoline build, and a new record for US crude production.Bloomberg Intelligence Senior Energy Analyst Vince Piazza notes that inventory draws across the petroleum value chain are supporting oil prices and refining margins, though unexpected strength in output is a counterweight."It’ll be interesting to see how the data will look today, especially with pressure ahead of Memorial Day," says Tariq Zahir, commodity fund manager at Tyche Capital Advisors LLC."We’ll be expecting to see a bit of a tick up in gasoline demand" DOE

  • Crude +5.778mm (-2mm exp)
  • Cushing -1.123mm (-250k exp)
  • Gasoline +1.883mm (-1.43mm exp)
  • Distillates -951k

Shockingly yuuuuuge crude build... and not helped by a big surprise gasoline build... Total crude and product inventories increased 6.73 million barrels, the biggest jump since February. On the supply side, there has been a steeper than usual rise in rig counts since the start of April and production continues to surge to ever-increasing record highs as crude prices  - although the last week saw only a modest rise of 2k b/d...A production decline in Alaska was more than offset by a 24,000 barrel-a-day increase in the Lower 48. On the demand side of the equation, Bloomberg's David Marino notes that gasoline is nearing $3 a gallon for the first time since 2014 as Memorial Day weekend approaches. The IEA, Total's CEO and India's oil minister all expressed concern last week that crude above $80 a barrel may deflate demand growth. Crude exports slowed by 818,000 barrels a day, not helping the overall bearish picture for oil.

Oil falls on shock U.S. stock builds, OPEC supply worries - (Reuters) - Oil benchmarks fell on Wednesday after an unexpected build in U.S. crude and gasoline inventories despite strong demand, and as traders weighed a possible increase in OPEC crude output to cover any shortfalls in supply from Iran and Venezuela. U.S. crude inventories rose 5.8 million barrels last week, while gasoline stocks increased by 1.9 million barrels, the Energy Information Administration said. [EIA/S] “Normally, you don’t see builds at this time of year. With Memorial Day Weekend and summer driving season coming up, we were expecting a draw. And getting a build - and such a large build, was surprising,” said Tariq Zahir, managing member at Tyche Capital Advisors. Brent crude LCOc1 futures slipped 23 cents to settle at $79.80 a barrel, while U.S. crude CLc1 lost 36 cents to $71.84 a barrel. “A 5.8 million-barrel build is kind of like a slap in the face, where it’s like, ‘Where did this oil come from?’ And as you look through the numbers, it doesn’t make a lot of sense,” said Phil Flynn, analyst at Price Futures Group in Chicago. “It is definitely a shock to the system.” The increase in U.S. inventories came from a combination of reduced exports and rising imports. The latter is somewhat surprising, Flynn said, because Brent crude is trading at more than a $7 premium to U.S. crude, making exports more attractive.

Has oil price reached its peak? OPEC could swing into action that may turn the heat off of oil - Crude oil price has surged about $30 a barrel in last nine months, unleashing anxiety on countries such as the United States, India, and China. The crude oil price rallied mainly on production cuts by OPEC-members and non-members led by Russia but other geopolitical factors contributed too.Now that the oil is hovering around $80 a barrel, a Reuters report said that OPEC may decide to raise oil output, which subsequently may bring down the international oil prices. Gulf OPEC countries are leading the initial talks on when the exporting group can boost oil production to cool the oil market after crude rose above $80 a barrel last week, and how many barrels each member can add, Reuters reported quoting unnamed sources.The production cut target reached unprecedented 166% in April as Venezuelan economic crisis led to a bigger cut than intended. Meanwhile, Saudi Arabia is also monitoring the impact on oil supplies of the US withdrawal from the Iran nuclear deal and is ready to offset any shortage but it will not act alone to fill the gap. Oil prices fell on Thursday, pulled down by expectations that OPEC members could step up production. International benchmark Brent futures were down 15 cents, or 0.19%, at $79.65 per barrel and US West Texas Intermediate (WTI) crude futures were down 10 cents, or 0.14%, at $71.74 a barrel.

Oil slips further below $80/bbl on talk OPEC may lift output (Reuters) - Oil prices fell about $1 on Thursday, with expectations building that reduced supplies from Venezuela and Iran could prompt OPEC to wind down output cuts in place since the start of 2017. Brent crude LCOc1 futures fell $1.01 to settle at $78.79 a barrel, a 1.27 percent loss. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $1.13 to settle at $70.71 a barrel, a 1.57 percent loss. The Organization of the Petroleum Exporting Countries may decide in June to lift output to make up for reduced supply from crisis-hit Venezuela and Iran, which was stung by the U.S. decision to withdraw from the nuclear arms control deal, OPEC and oil industry sources told Reuters.  Russian Energy Minister Alexander Novak said production cuts could be eased “softly” if OPEC and non-OPEC countries see the oil market balancing in June, the Interfax news agency reported.  Russia and Saudi Arabia have a common position on the future of the oil output cut deal, Novak told Interfax news agency, though he said the deal would stay in place for now. Russia’s Lukoil  said the deal should remain in place but needs to be altered. “We still believe that a production increase will still be forthcoming that will become official at next month’s OPEC meeting,”   “In the meantime, even the slightest suggestion of such a decision, especially from the Saudis, could force a 1-2 percent price selloff as seen this morning.” Venezuela’s output has fallen to about 1.4 million barrels per day, according to OPEC secondary sources, as its economic crisis grows and state-run PDVSA struggles to pay debts and fund operations.  Supply concerns have pushed crude to multi-year highs, with Brent last week breaking above $80 a barrel for the first time since November 2014. OPEC and some other major oil producers, scheduled to meet in Vienna next month, previously agreed to curb combined output by about 1.8 million bpd to boost prices and clear a supply glut.

OPEC may decide to ease oil supply curbs in June: sources (Reuters) - OPEC may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters. Gulf OPEC countries are leading the initial talks on when the exporting group can boost oil production to cool the oil market after crude rose above $80 a barrel last week, and how many barrels each member can add, the sources said. The Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia have agreed to curb output by about 1.8 million barrels per day (bpd) until the end of 2018 to reduce high global oil stocks, but the inventory overhang has now fallen close to OPEC’s target. “All options are on the table,” one Gulf oil source told Reuters, adding that a decision to raise output might be taken in June when OPEC next meets to decide on its output policy, but there is no certain number yet by how much the group would need to ease its oil supply curbs. OPEC and its non-OPEC allies may opt to relax record high compliance with the supply curb agreement, another source said. OPEC’s compliance with the deal reached an unprecedented 166 percent in April, meaning it has cut well above its target. “We are still studying the different scenarios,” the second source said, adding that even if OPEC decided to ease the output restrictions in June it may take three to four months to put into effect. “That is one of the options,” an OPEC source said, referring to adding more supply at the June meeting. 

Compliance relaxation on St Petersburg agenda -- Saudi Arabia, Russia and the president of Opec are likely this week to discuss a controlled relaxation of over-compliance with the Opec and non-Opec production-cut target. Saudi oil minister Khalid al-Falih, his Russian counterpart Alexander Novak, and UAE energy minister Suhail al-Mazrouei, the Opec president, will meet in St Petersburg. Such a relaxation is a "big possibility", said a Gulf source familiar with Saudi thinking. An agreement would mean Opec's kingpin, the leading non-Opec participant in cuts, and the current Opec head would have a strong proposal to take to next month's gathering of oil ministers in Vienna. An early full unwinding of the Opec and non-Opec cuts is not currently under consideration. The production agreement, which runs to the end of this year, aims to take around 1.7mn b/d out of production. A collapse in Venezuelan output means compliance of Opec's 14 members rose to a record high of 181pc in April, according to Argus estimates. Non-Opec discipline is less impressive but overall compliance still provides scope for participants with spare capacity to relax their output constraint and bring the overall rate closer to 100pc. Saudi Arabia is the custodian of the bulk of Opec spare capacity and Russian companies are keen to boost output. Saudi Arabia is keen to preserve long-term co-operation with Moscow on balancing the market and so is very likely to agree that Russia benefits from a relaxation. In assessing the current market, Opec confronts several issues. The source said "fundamentals are sound" — OECD commercial inventories are falling and are likely to hit their moving five-year average by the end of 2018 or sometime in the first quarter of next year, which would argue for keeping current production levels in place. Opec had indicated that bringing down OECD commercial stocks to their five-year average would indicate a balanced crude market. Al-Falih and ministers from participating countries have over recent weeks said the search for alternative metrics is underway. The Gulf source said prices are rising on expectations of a further decline in Venezuelan output and a possible decline in Iranian exports because of US sanctions, rather than on actual current supply-demand fundamentals. The uncertainty surrounding how US sanctions will affect Iranian exports means Opec and its main Mideast Gulf producers — particularly Saudi Arabia, the UAE and Kuwait — will keep issuing reassurances that they will plug any shortages that arise.

OPEC, Russia prepared to raise oil output under U.S. pressure (Reuters) - Saudi Arabia and Russia are discussing raising OPEC and non-OPEC oil production by some 1 million barrels a day, sources said, while OPEC’s chief said a complaint from U.S. President Donald Trump over high prices had triggered the idea of upping output. Riyadh and Moscow are prepared to ease output cuts to calm consumer worries about supply adequacy, their energy ministers said on Friday, with Saudi Arabia’s Khalid al-Falih adding that any such move would be gradual so as not to shock the market. Raising production would ease 17 months of strict supply curbs amid concerns that a price rally has gone too far, with oil LCOc1 having hit its highest since late 2014 at $80.50 a barrel this month. OPEC began a discussion about easing production cuts following a critical tweet from Trump, OPEC’s Secretary-General Mohammad Barkindo said. Trump tweeted last month that OPEC had “artificially” boosted oil prices. “We pride ourselves as friends of the United States,” Barkindo told a panel with the Saudi and Russian energy ministers in St. Petersburg at Russia’s main economic forum. The Organization of the Petroleum Exporting Countries and allies led by Russia have agreed to curb output by about 1.8 million barrels per day (bpd) through 2018 to reduce global stocks, but the inventory overhang is now near OPEC’s target. In April, pact participants cut production by 52 percent more than required, with falling output from crisis-hit Venezuela helping OPEC deliver a bigger reduction than intended. Sources familiar with the matter said an increase of about 1 million bpd would lower compliance to 100 percent of the agreed level. 

A meeting between Secretary Perry and OPEC? Unlikely, say analysts -- It would be unprecedented, but Senate Democrats want the Trump administration to send Energy Secretary Rick Perry to Vienna next month for an OPEC meeting. Perry should go to the June 22 meeting in Vienna "to personally communicate the importance of maintaining stable crude oil prices," four senators wrote in a letter to President Trump Wednesday. The letter, signed by Democratic senators Chuck Schumer of New York, Maria Cantwell of Washington, Robert Menendez of New Jersey and Edward Markey of Massachusetts, includes a list of requests to Trump, including pressing Saudi Arabia to increase oil production, all aimed at lowering domestic gasoline prices. Trump is unlikely to even consider most of the requests, sources said, but could his recent focus on OPEC's supply cut agreement and political pressure from Democrats on gasoline prices prompt the first-ever visit by a US energy secretary to an OPEC meeting? "It's pretty unlikely to me that they would even send Secretary Perry to Vienna," said Jason Bordoff, a former energy policy adviser to former President Barack Obama and founding director of Columbia University's Center on Global Energy Policy. Bordoff said in previous administrations officials have pressed some OPEC ministers to consider the impact high energy prices may have on global economic growth. 

Factbox: OPEC strategy reversal hits energy resources – Platts - Global oil prices fell by up to 3% Friday after Saudi Arabia said it is working on a plan with allies to boost oil supplies in the second half of this year.  OPEC and its partners led by Russia had been expected to maintain their strategy of 1.8 million b/d of cuts until the end of the year. However, the group has faced mounting criticism from major consuming nations over failing to dampen prices climbing above $80/b. Saudi energy minister Khalid al-Falih said Friday that the OPEC-led coalition will consider gradually increasing oil production quotas within the next few weeks. The reversal in strategy comes as the market faces a loss Venezuelan barrels and disruption to Iranian crude exports following the introduction of new US sanctions by year-end. ICE Brent futures fell to an intra-day low of $76.63/b in London mid-morning trade, a fall of $2.18/b from the Thursday's settlement. OPEC and 10 non-OPEC producers, led by Russia, are in the midst of a 1.8 million b/d supply cut deal which is scheduled to run through the end of 2018. The Vienna-based group and other key producers will meet in late June in the Austrian capital to review the oil market. The following is a summary of background details to Falih's remarks and energy market price reaction.  The International Energy Agency has warned that a potential supply crunch from Iran and Venezuela could present a "major challenge" for oil producers if they are to fend off sharp price rises and fill the gap. The IEA also said OECD oil stocks had fallen below the five-year average level for the first time in March, by 1 million barrels, representing a benchmark for the success of OPEC/non-OPEC production cuts. In its monthly oil market report the IEA lowered its estimate for growth in world oil demand this year to 1.4 million b/d, from 1.5 million b/d due to higher oil prices.

U.S. Rig Count Rises Amid Crashing Oil Prices - US drillers added 13 rigs to the number of oil and gas rigs this week, according to Baker Hughes, with oil rigs increasing by 15 and gas rigs dipping by 2. The oil and gas rig count now stands at 1,059—up 151 from this time last year. The Permian basin saw the biggest increase in the number of rigs, at 11. Meanwhile, neighboring Canada lost 2 oil and gas rigs for the week. Both the Brent and WTI benchmark took a steep nosedive on Friday day at 9:03am EST with both benchmarks sustaining more than a 2% loss on the day, as Saudi Arabia—OPEC’s largest member by production—and Russia were reportedly discussing lifting production by some 1 million barrels per day, with a decision expected on June 22 at the OPEC meeting in Vienna. This, despite OPEC’s compliance which has been over 100% for every month this week. Saudi Arabia and Russia are working to offset market fears that there will be imminent supply issues courtesy of Venezuela and Libya, and the possibility of disruption in oil supply from Iran due to the US sanctions that will go into effect later this year. At 9:03 am, WTI crude was trading down $1.90 (-2.69%) at $68.81, with Brent crude trading down $1.91 (-2.42%) at $76.92—an almost $3.00 loss over last week. US oil production is also pressing down on oil prices, and for the week ending May 18, reaching 10.725 million bpd—the thirteenth build in as many weeks, although this week saw a smaller growth than in recent weeks. US production has steadily increased since OPEC engaged in a supply cut deal that sought to remove 1.8 million bpd from the market. At the time the deal was announced, the US was producing 8.6 million bpd. Today, the US is producing more than 2.0 million bpd over that figure, while OPEC/NOPEC continues to curb supply on its end. At 8 minutes after the hour, WTI was trading down 4.02% at $67.87, with Brent trading down 3.04% at $76.43—for a staggering loss week on week.

OPEC Sends Oil Prices Crashing - Oil prices plunged in early trading on Friday on news that OPEC and its partners, including Russia, are considering a loosening of their production limits (more below). Both WTI and Brent fell by more than 3 percent Friday morning. Saudi Arabia and Russia are in discussions about raising their production limits, perhaps adding as much as 1 million barrels per day to the market. The group could announce a change in Vienna next month. The steep losses from Venezuela meant that OPEC’s compliance with the cuts surpassed 150 percent last month. The idea would be to bring compliance back down to 100 percent, which would mean allowing members to produce more to offset Venezuela’s declines. Nothing is finalized yet and the talks will continue for the next few weeks. Oil prices sank on the news.  U.S. oil exports hit a new record at 2.6 million barrels per day two weeks ago, but have dipped since then. Most analysts see exports continuing to rise, particularly with WTI trading at a steep $8-per-barrel discount relative to Brent. However, there are concerns that U.S. port infrastructure won’t be able to handle much higher levels of exports. Export capacity data isn’t tracked and the exact capacity is not known, although it is thought to be around 3.5 mb/d. As of now, the Louisiana Offshore Oil Port (LOOP) is the only Gulf Coast port that can handle very large crude carriers (VLCCs). “So far, export capacity is keeping pace, but we are walking a tightrope,” Bernadette Johnson, vice president at DrillingInfo, told ReutersBP said it will slash 3 percent of its workforce in its upstream unit this year, eliminating more than 500 positions. The oil giant said the move was done in the name of efficiency and competitiveness.  Industry veteran Mark Papa, CEO of Centennial Resource Development and former head of EOG Resources says that the growth projections for U.S. shale are overly optimistic. Papa says growth disappointed last year and would continue to undershoot expectations, largely because the best sites have already been drilled. In the Eagle Ford and the Bakken “my estimate is that about 70% of the good quality drilling locations have already been drilled," Papa said, according to S&P Global Platts.

Oil Plunges Below $70 After Saudis, Russia Say "Likely Supply Boost" In Second Half Of 2018 -  There are certain benefits when the president of the US is BFFs with the ruling Saudi regime, especially when the price of oil rises so high it threatens to not only undo the US president's tax reform, but to slowdown the overall economy even as said president is injecting a $1 trillion fiscal stimulus in it. We saw that in practice moments ago when Saudi energy minister Khalid Al-Falih said OPEC and Russia are prepared to adjust policy in June, and that it is likely that there will be a gradual oil supply boost in the second half.  The stated reason: "The anxiety of consumers is now a concern to us", translated: between the IEA's forecast of demand destruction the higher the price of oil rises, and Trump's periodic reminders to pump more as US gas prices are getting too high, Saudi Arabia had no choice but to take the first step toward undoing the Vienna oil supply cut agreement. As Bloomberg adds, "the proposal would end a period where the group made significantly deeper output reductions than specified in their original agreement, while also preserving the political and economic alliance between Moscow and Riyadh that has reshaped the global oil market and the balance of power in the Middle East." The group is still debating whether resuming normal compliance with the accord would mean nations individually return to 100 percent compliance with their targets, or whether the group as a whole would aim for that level, the people said, asking not to be identified because the talks are private. The Saudi hedged, saying “we will ensure that the market remains in its trajectory towards rebalancing, but at the same time we will not over-correct,” Al-Falih said. While scaling back the supply caps is “on the table,” no decision has been made.

Crude Oil Prices Settle 4% Lower as Traders Cut Bets on Global Supply Shortage – A wave of selling hit crude oil prices Friday on signs of increasing U.S. oil expansion and reports OPEC and its allies could lift output to counter a supply shortage from Iran and Venezuela. On the New York Mercantile Exchange crude futures for July delivery fell 4% to settle at $67.88 a barrel, while on London's Intercontinental Exchange, Brent fell 2.98% to trade at $76.44 a barrel. The number of oil rigs operating in the US jumped by 15 to 859, its highest level since March 13, 2015, according to data from energy services firm Baker Hughes, pointing to signs of an expansion in U.S. output. That comes as the Energy Information Administration said Wednesday U.S. oil output rose to 10.7 million barrels a day last week. “The data is likely seen to be as a slight negative for WTI oil prices as the oil rig count had its biggest one week increase in three and a half months,” National Alliance said. Oil prices started the session on the back foot as Reuters said major oil producers could raise output by as much as 1 million barrels, eroding the risk-premium in oil prices. OPEC and its allies had been expected to adhere to the production-cut agreement to curb 1.8 million barrels of oil per day through 2018 but that now looks increasingly unlikely as major oil producers consider exiting the deal. "The moment is coming when we should consider assessing ways to exit the deal very seriously and gradually ease quotas on output cuts," Novak said in televised comments, according to Reuters. Over recent weeks, oil prices had rallied sharply on expectations that falling Venezuelan and Iranian output would disrupt global supplies. Oil prices snapped a three-week winning streak and suffered their biggest weekly fall since February.

Russia’s OPEC Deal Dilemma Worsens as Idled Crude Capacity Grows - Russia will face a tough choice in talks with OPEC next month as an increasing number of its valuable oil wells lie idle. Almost 4 percent of Russian production capacity isn’t being used, Citigroup Inc. said in a report on Wednesday. That raises questions about how the country will approach its June summit with OPEC amid growing signals of a tighter market, including shrinking global inventories and possible supply losses from Iran. “The Kremlin faces the dilemma of either continuing to extend” output cuts or allowing companies to boost production, Citi analysts said. “Either way, Moscow is flexing its muscles globally with oil as an instrument of strategic policy.” Russia will meet its OPEC allies next month in Vienna, where the signatories to 2016’s landmark deal to cut production will discuss the future of the accord. Several Russian companies have in the past questioned the wisdom of prolonging output curbs when oil prices are rising. The country has about 11.3 million barrels a day of production capacity, of which an estimated 408,000 barrels a day are idle, according to Citigroup, which cited growth in new oilfield startups. That puts it in second place behind Saudi Arabia, which has 2.12 million barrels a day of spare capacity, according to the International Energy Agency.  ‘

The Crown Prince of Riyadh vs. the Crown Prince of Jihad: Al-Qaeda Responds to Mohammed Bin Salman’s Reforms -  Mohammed bin Salman, the 32-year-old crown prince of Saudi Arabia, recently wrapped up a highly touted and well-choreographed tour of the West, during which he appeared with prime-time television journalists, celebrities, business leaders, and presidents. Major media outlets seemed to unquestionably portray the royal descendant as a forward-looking reformer on a courageous crusade to “transform the Middle East.”  There was dissent, of course. MBS, as he has come to be called, was met by pockets of protestors from Washington, D.C., to London, Paris, and Madrid. Human rights activists and organizations expressed concern over issues such as the prince’s role in the Yemen conflict, which has been dubbed the “world’s worst humanitarian crisis,” and his repression of dissidence. Yet a more dangerous reaction to Salman’s charm offensive has come from someone with a comparable pedigree. Al-Qaeda has been seeking to exploit domestic skepticism of the prince’s modernization efforts, which are aimed at changing the way the country engages with gender, culture, religion, and the economy. The jihadi organization hopes to foment a backlash that helps it to better position Hamza bin Laden, son of Osama, as heir to his father’s throne and to continue a longstanding feud between al-Qaeda and the House of Saud. These efforts, if successful, will pit the reformist ambitions of the crown prince of Riyadh against the revolutionary Salafi-jihadism promoted by the crown prince of jihad. This war of two princely visions may shape the future of the Middle East.  Al-Qaeda is positioning itself to reclaim the mantle of jihad from ISIL and to reassert itself through a more population-focused and long-term strategy. If Salman’s reforms fall short or fail, al-Qaeda will seek to fill the void with a jihadist alternative that will have greater resonance, just as it did after the failure of the Arab Spring. The United States should not be fooled by the cosmetic reforms that MBS is promoting. The roots of extremism in Saudi Arabia run deeper, and HBL and his associates in al-Qaeda have been able to target these points of weakness through their own counter-propaganda offensive.

Here's The Viral Interview Of Exiled Saudi Prince Calling For Regime Change In Riyadh (video) Speaking to Middle East Eye early this week, Prince Khaled appealed specifically for his relatives Prince Ahmed bin Abdulaziz and Prince Muqrin bin Abdulaziz to mount a coup, saying that "99 percent of the members of the royal family, the security services and the army would stand behind them." Ahmed bin Abdulaziz was longtime deputy minister of interior from 1975 to 2012 and briefly served as minister of interior in 2012; and Muqrin bin Abdulaziz was briefly named crown prince in 2015 before quickly being replaced, and was head of Saudi intelligence until 2012. "There is so much anger within the royal family,” Prince Khaled told Middle East Eye, "I took this information and appeal to my uncles Ahmed and Muqrin, who are the sons of Abdulaziz and are highly educated, well versed and able to change things for the better. I can say that we are all behind them and support them."Though it's unclear how much clout, if any, Prince Khaled actually has inside the kingdom, his interview went viral this week amidst speculation and wild rumors claiming that Mohammed bin Salman (MbS) was injured or killed after not being seen in public since April 21 — the same day gunfire was widely reported near the prince's residence, which the Saudis blamed on a toy drone breaching the security perimeter.The Saudis appear to have quieted the stories questioning bin Salman's whereabouts and status by releasing a official photo of him chairing a meeting of government ministers. Much of the initial sourcing behind claims that the toy drone incident was actually a coup attempt come from both Iranian state media and a mysterious Saudi opposition blogger only known under the pseudonym Mujtahidd.Prince Khaled, however, said the drone was a cover story which makes no sense: “I personally believe that this was not necessarily an attempt to bring down Mohammed bin Salman but rather an act of protest against him” he explained.

Saudi Women's Driving Activists Accused Of Running "Spy Cell" - Could Face Execution -Weeks before Saudi Arabia is set to lift its longtime ban on women driving, a group of seven women's rights activists has been arrested on treason and espionage related charges offenses which can bring the death penalty. The kingdom plans to lift the driving ban on June 24th, though significant restrictions will still remain to allow women to drive "in accordance with Islamic laws."  On Saturday Human Rights Watch (HRW) and the Gulf Centre for Human Rights issued a statement indicating the seven activists have been detained since May 15th, and further that they had come to the attention of Saudi authorities as leading voices campaigning on behalf of women driving, and against the male guardianship system in general. They had reportedly been previously ordered by the royal court to cease all contact with foreign media, something which they apparently defied. The detained include a prominent Saudi blogger, Eman al-Nafjan, and Lujain al-Hathloul, who had previously been imprisoned for 73 days after driving from UAE into Saudi Arabia. Multiple reports indicate further that the crackdown on women's rights activists may be ongoing, and that charges have reached the level of espionage.And perhaps most shockingly, the detained activists could face the death penalty, as Middle East Eye reports: According to Saudi lawyers and judges, the prominent women’s rights activists, who were arrested last week and branded as "traitors" by government-aligned media outlets, may by sentenced to death should investigations result in the charge of treason and conspiracy against the state. The Riyadh-based English language daily newspaper, Arab News, has accused the women of being part of a "spy cell" supported by hostile foreign entities echoing the claims of Saudi authorities and the official Saudi Press Agency: Members of a “spy cell,” arrested by Saudi Arabia’s state security presidency two days ago, sought to “incite strife by communicating with foreign entities hostile to the Kingdom and to establish a false legal organization," according to information received by Asharq Al-Awsat from informed sources.

Iraqi voters undermine Trump’s Iran strategy | Asia Times: In an ironic twist, May 12, which was the deadline for US President Donald Trump’s decision on the Iran nuclear deal, also happened to be the day the Iraqi parliamentary elections took place. Yet no one seemed to take note of the symbolism. In the event, the Iraqi election results seriously hinder Trump’s agenda of rolling back the Iranian presence in the northern tier of the Middle East comprising Iraq, Syria and Lebanon. Of these three countries, Iraq is arguably the most crucial theatre of contestation between the United States and Iran. The fate of the Iranian presence and Iranian capacity to influence the politics of the entire Shi’ite arc will be critically dependent on its standing and influence in Baghdad. The stakes have never been as high as they are today. To be sure, the Iraqi election results that were formally announced on Sunday constitute a stunning setback for Trump’s containment strategy against Iran. Washington had bet heavily on the alliance led by Prime Minister Heidar al-Abadi to win, but it has been relegated to third place, winning only 42 seats in the 329-member parliament. Worse still, two staunchly anti-American alliances – led by Muqtadar al-Sadr and Hadi al-Amiri – secured first and second places respectively. Coalition making will be a long drawn out process, but what is clear is that the next government in Baghdad will have a pronouncedly anti-American tilt and the probability is high that it could evict US troops and contractors totaling 100,000 in Iraq. 

The Gaza Massacre. Western Governments Complicit in Crimes against Humanity -- This week, 61 killed and over 770 wounded: Palestinian civilians were targeted by IDF snipers with live ammunition. Not a single Western country has sofar ordered the expulsion of Israeli diplomats in protest over the mass killings of Palestinian civilians by IDF snipers.  A crime against humanity under international law is casually dismissed. Double standards is an understatement: Flashback to early March 2018. When the Skripal affair broke out in the U.K., the Kremlin was accused without evidence of poisoning double agent Peter Skripal and his daughter Yulia, with the deadly novichok nerve gas. Pressured by London and Washington, more than twenty Western countries ordered the expulsion of more than 100 Russian diplomats. In the meantime the Skripals have fully recovered. Nobody was killed. In contrast, following the Gaza massacre, not a single Israeli diplomat has been expelled from the member states of the European Union. “Israel has the right to defend itself”, says  US Secretary of State Mike Pompeo. No UN member “would act with more restraint than Israel has.” said US Ambassador to the UN Nicki Halley.The lie becomes the truth. These statements are tantamount to an endorsement of crimes against humanity by the self-proclaimed “international community”.And the corporate media applauds. Palestinians are tagged as terrorists. While the Skripal affair was the object of extensive (invariably biased) coverage largely with a view to upholding Theresa May’s baseless accusations against Russia, the reports pertaining to the Gaza killings largely uphold the notion that “Israel has the right to defend itself”. The broader issue of crimes against humanity under international law is barely mentioned. What we are facing is the political acceptance of the Gaza massacre which is tantamount to the criminalization of the Western governments which represent us.

Calls for international force for Gaza - Turkish president Recep Tayyip Erdogan has called for an "international peace force" to protect Palestinians after dozens were shot dead by Israeli forces on the Gaza border. Speaking at the 57-member Organisation of Islamic Cooperation (OIC), which was hosted in Istanbul on Friday, Erdogan said Israel should be held accountable for the killings. "To take action for Palestinians massacred by Israeli bandits is to show the whole world that humanity is not dead," Erdogan said. Muslim leaders pledged to take "appropriate political [and] economic measures" against countries that followed the US in moving their Israel embassies to Jerusalem from Tel Aviv. Erdogan, who is campaigning for re-election next month, used the summit to verbally attack Israel. He also castigated America, saying its decision to move its embassy had emboldened Israel to put down the protests at the border with Gaza with excessive force. Most countries say the status of Jerusalem - a sacred city to Jews, Muslims and Christians - should be determined in a final peace settlement between Israel and Palestinians and that moving their embassies now would prejudge any such deal. Donald Trump's step to recognise Jerusalem as Israel's capital and move the embassy there reversed decades of US policy, upsetting the Arab world and Western allies. Guatemala last week became the second country to move its embassy to Jerusalem, and Paraguay said it would follow suit this month. The final declaration of the meeting of the OIC described the killing of 60 Palestinians, protesting against the embassy move on Monday, as "savage crimes committed by the Israeli forces with the backing of the US administration". It said the violence should be put on the agenda of the UN Security Council and General Assembly, and called on the United Nations to investigate the killings.

Israel, US attempt to block Security Council resolution on Gaza - Israel and the United States made a joint effort Sunday to foil a similar Kuwaiti-Palestinian attempt to pass a resolution in the United Nations Security Council calling for the stationing of an international force in the Gaza Strip to defend Palestinians from "Israeli aggression."  The Israeli-American push was intended to head off Palestinian attempts to secure the nine country majority—out of the Security Council's 15 member states—needed to pass the resolution. The current council makeup could be said to be especially troublesome in this regard—with African, Asian and Latin American countries having a significant majority—giving Palestinians a more than fair chance of passing the resolution in its current wording. If that eventuality comes to pass, US Ambassador Nikki Haley has already promised to her Israeli counterpart Danny Danon that the US will exercise its veto power.  If the US does veto the pro-Palestinian measure, the Palestinian delegation has announced they will summarily appeal to the organization's General Assembly and pass it there, where they enjoy something of an automatic majority.  However, unlike the Security Council, the General Assembly's resolutions are merely declarative in nature and it lacks any concrete means to implement its resolutions.  The original draft resolution was submitted by Security Council member Kuwait, with the text speaking of defending civilians in zones of armed conflict and denouncing Israel for its excessive use of live fire against civilian protesters and for the killing and wounding of many civilians, including children, doctors and journalists.

Image Of Jewish Temple Photoshopped Over Jerusalem Mosque Embroils US Embassy In Controversy   --As if US-Palestinian relations weren't already at the lowest point in perhaps all of history, they just sank even lower after a controversial photo (to put in mildly) surfaced of the American Ambassador to Israel, David Friedman, receiving a large aerial photograph of Jerusalem as he toured the largely ultra-Orthodox Jewish city of Bnei Brak, just east of Tel Aviv.As Ambassador Friedman attended an event sponsored by an Israeli charity, one of the staff members presented him with the framed photograph which featured a photoshopped imagined Jewish Temple in the place where Al-Aqsa mosque and the Dome of the Rock currently stand.  The Israeli Haaretz newspaper describes the image as "bearing a simulation of the Third Temple" placed in the photograph at the heart of Jerusalem's walled old city, with the 'Third Temple' featured front and center. Israelis refer to the area on top of which Islam's third holiest mosque sits as the "Temple Mount" as it is purported to be the site of two Jewish temples in ancient times, now the location of the Western Wall. There has long been a Jewish and Christian Zionist movement dedicated to restoring the temple, which was destroyed by the Romans in about 70 A.D. an initiative that's practically impossible because it would mean razing the Islamic holy site. Concerning the long-term controversy that's raged over the fate of the Temple Mount and the Dome of the Rock, the US has long held its official position of observing the status quo of the separate religious communities being allowed access their respective sites.

Erdogan calls on Muslim countries to unite and confront Israel - Turkish President Recep Tayyip Erdogan has called on Muslim leaders to unite and confront Israel, days after scores of Palestinians were killed by Israeli snipers as they marked 70 years of Israeli occupation. Speaking at an extraordinary summit of the Organization of Islamic Cooperation (OIC) on Friday, Erdogan said Israel should be held accountable over the killings which drew widespread international condemnation and triggered a wave of protests from Asia, through the Middle East, to North Africa."To take action for Palestinians massacred by Israeli bandits is to show the whole world that humanity is not dead," Erdogan told the group of Muslim leaders gathered in Turkey's largest city, Istanbul. The Turkish president described Israel's killing of Palestinians as "thuggery, atrocity and state terror," and said the US' recognition of Jerusalem as Israel's capital would inevitably haunt it.