Sunday, May 6, 2018

distillate fuel supplies at a 45 month low, down 21% from a year ago; horizontal drilling at a 38 month high

US oil prices approached $70 a barrel in climbing to a new 42 month high this week, while international oil prices as represented by North Sea Brent crude breached the $75 a barrel level early in the week and again on Friday before closing at $74.87...after edging 30 cents lower to $68.10 a barrel over the prior week, contracts for June delivery of US crude rose from a session low of $67.17 a barrel to close 47 cents higher at $68.57 a barrel on Monday, after Israeli Prime Minister Netanyahu presented what he described as new evidence that Iran had lied about its nuclear capabilities, which spooked oil traders into thinking the Iran nuclear deal was in jeopardy...however, oil prices fell $1.32 or 2.5% to $67.25 a barrel on Tuesday, after the US dollar strengthened and Netanyahu's revelations were widely debunked...oil prices then turned higher again on Wednesday, rising 68 cents to $67.93 a barrel, after the Fed held US interest rates steady and expressed confidence in higher prices and the International Monetary Fund threatened to expel Venezuela and cut its funding for its failure to provide adequate economic data...oil prices added another 50 cents on Thursday to close at $68.43 a barrel, boosted by OPEC production cuts and the potential for new U.S. sanctions against Iran, with further gains limited by growing U.S. crude inventories...with growing concerns over the economic crisis in Venezuela and the May 12th deadline for Trump's approval of the Iran treaty looming, US oil prices pushed up to as high as $69.97 on Friday before settling at $69.72 a barrel, a three and half year closing high and an increase of $1.62 or 2.4% for the week....

    natural gas prices, on the other hand, were lower 4 out of 5 days this week, but still remained in the narrow 10 cent price band that they've been stuck in since mid-March, as the expected first addition to supplies this year was greater than expected...after falling 8 tenths of a cent on Monday, US natural gas prices for June delivery rose 3.9 cents on Tuesday, then fell a total of 9.1 cents over the next three days to end the week at $2.711 per mmBTU, down 6 cents, or 2.2%, from the prior week's close....the natural gas storage report from the EIA released on Thursday indicated that natural gas in storage in the US rose by 62 billion cubic feet to 1,343 billion cubic feet over the week ending April 27th, which left our gas supplies 903 billion cubic feet, or 40.2% lower than the 2,246 billion cubic feet that were in storage on April 28th of last year, and 534 billion cubic feet, or 28.4% below the five-year average of 1,877 billion cubic feet typically in storage at the end of April....the forecasts had been for a 52 billion cubic foot addition to storage, but while the 62 billion cubic feet actually added beat that, it was still below the 68 billion cubic feet of gas that was added to storage over the week ending April 28th last year, and the 69 billion cubic foot surplus of natural gas normally added to storage during the last week of April...

    The Latest US Oil Data from the EIA

    this week's US oil data from the US Energy Information Administration, covering the week ending April 27th, indicated that due to an increase our oil imports, a decrease in our oil exports, and pullback in the amount of oil used by our refineries, we had surplus oil to add to our commercial crude supplies for the ninth time in the past fourteen weeks...our imports of crude oil rose by an average of 80,000 barrels per day to an average of 8,549,000 barrels per day during the week, after rising by 1,259,000 barrels per day over the prior two weeks, while our exports of crude oil fell from last week's record by an average of 183,000 barrels per day to an average of 2,148,000 barrels per day during the week, which meant that our effective trade in oil over the week ending the 27th worked out to a net import average of 6,401,000 barrels of per day during the week, 263,000 barrels per day more than our net imports during the prior week...at the same time, field production of crude oil from US wells rose by 33,000 barrels per day to a record high of 10,619,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 17,020,000 barrels per day during the reporting week...

    meanwhile, US oil refineries were using 16,561,000 barrels of crude per day during the week ending April 27th, 60,000 barrels per day less than they used during the prior week, while at the same time 824,000 barrels of oil per day were 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 365,000 fewer barrels per day than what refineries reported they used during the week plus what was reportedly being added to storage...to account for that disparity, the EIA needed to insert a (+365,000) 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)...

    further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 8,400,000 barrels per day, which was 2.2% more the 8,216,000 barrel per day average we imported over the same four-week period last year...the 824,000 barrel per day addition to our total crude inventories included a 888,000 barrel per day increase in our commercially available stocks of crude oil, partially offset by a 64,000 barrel per day decrease of the oil in our Strategic Petroleum Reserve, possibly a sale of oil mandated by this year's federal budget...this week's 33,000 barrel per day increase in our crude oil production included a 25,000 barrel per day increase in output from wells in the lower 48 states and a 8,000 barrel per day increase in output from Alaska...the 10,619,000 barrels of crude per day that were produced by US wells during the week ending April 27th were the highest on record, 14.3% more than the 9,293,000 barrels per day that US wells were producing during the week ending April 21st of last year, and up by 26% 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 91.1% of their capacity in using 16,561,000 barrels of crude per day during the week ending April 27th, actually up from 90.8% of capacity the prior week, but still down from the off-season record 96.7% of capacity set during the last week of 2017...the 16,561,000 barrels of oil that were refined this week were the least oil processed since the first week of March, down 5.9% from the off-season record of 17,608,000 barrels per day that were being refined during the last week of December 2017, and 3.6% less than the 17,177,000 barrels of crude per day that were being processed during the week ending April 28th, 2017, when refineries were operating at 93.3% of capacity....

    even with the decrease in the amount of oil that was refined this week, gasoline output from our refineries was higher than the prior week, increasing by 159,000 barrels per day to 10,045,000 barrels per day during the week ending April 27th, after our refineries' gasoline output had decreased by 308,000 barrels per day during the week ending April 20th.... with that increase, our gasoline production was 2.7% greater during the week than the 9,783,000 barrels of gasoline that were being produced daily during the week ending April 28th of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 18,000 barrels per day to 4,995,000 barrels per day, after falling by 117,000 barrels per day the prior week....however, even with that increase, the week's distillates production was still 2.1% less than the 5,101,000 barrels of distillates per day than were being produced during the week ending April 28th, 2017....    

    with the increase in our gasoline production, our supply of gasoline in storage at the end of the week rose by 1,171,000 barrels to 237,978,000 barrels by April 27th, just the third increase in 9 weeks, but the 18th increase in 25 weeks, as gasoline inventories are normally built up over the winter months...our gasoline supplies rose as our domestic consumption of gasoline rose by 7,000 barrels per day to 9,090,000 barrels per day, and as our imports of gasoline rose by 27,000 barrels per day to 923,000 barrels per day, while our exports of gasoline rose by 110,000 barrels per day to 901,000 barrels per day...but even with this week's increase, our gasoline inventories are still 1.3% lower than last April 28th's level of 241,232,000 barrels, even as they are now roughly 11.2% above the 10 year average of gasoline supplies for this time of the year...          

    meanwhile, even with this week's small increase in distillates production, our supplies of distillate fuels fell by 3,900,000 barrels to 118,829,000 barrels over the week ending April 27th, the 7th decrease in eight weeks, after falling by 5,628,000 barrels the prior two weeks...our distillate inventories fell again because the amount of distillates supplied to US markets, a proxy for our domestic consumption, jumped by 736,000 barrels per day to 4,485,000 barrels per day, even as our exports of distillates fell by 581,000 barrels per day from last week's record high to 1,143,000 barrels per day, while our imports of distillates fell by 47,000 barrels per day to 76,000 barrels per day...after this week’s inventory decrease, our distillate supplies ended the week 21.0% lower than the 150,355,000 barrels that we had stored on April 28th, 2017, and roughly 13.8% lower than the 10 year average of distillates stocks at this time of the year…with our distillate supplies approaching a 4 year low, we'll take a quick look at a graph of what that looks like, compared to recent history:

    May 2 2018 distillate supplies as of April 27

    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 June 2016 to April 27, 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, ie, on the extreme left of the graph, the grey shaded area shows shows the 5 year range of distillate inventories back to June 2011, while on the right side of the graph, the grey shaded area shows shows the 5 year range of distillate inventories back to May 2013...as we can see by the blue line, as recently as February 2017 our distillate supplies were at an all time high, but in the 14 months since then, they've fallen to a 45 month 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, then due to the exceptionally large use of heat oil...

    finally, because of the increase our oil imports and the decrease in our oil exports, we were able to add to our commercial supplies of crude oil for the 10th time in 2018 and for the 17th time in the past year, as our commercial crude supplies increased by 6,218,000 barrels during the week, rising from 429,737,000 barrels on April 20th to 435,955,000 barrels on April 27th...however, after falling most of the past year, our oil inventories as of April 27th were still 17.4% below the 527,772,000 barrels of oil we had stored on April 28th of 2017, 14.9% lower than the 512,095,000 barrels of oil that we had in storage on April 29th of 2016, and 4.0% below the 458,181,000 barrels of oil we had in storage on May 1st of 2015, during a period when the US glut of oil had already begun to surge from the stable levels of prior years...    

    This Week's Rig Count

    US drilling activity increased for the tenth time in the past eleven weeks and for 19th time in the past 26 weeks during the week ending May 4th, 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 rose by 11 rigs to 1032 rigs in the week ending on Friday, which was also 155 more rigs than the 877 rigs that were in use as of the May 5th 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 began their attempt to flood the global oil market... 

    the number of rigs drilling for oil increased by 9 rigs to 834 rigs this week, which was also 131 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, 2014...at the same time, the number of drilling rigs targeting natural gas formations increased by 1 rigs to 196 rigs this week, which was 23 more gas rigs than the 173 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008...in addition, one rig began drilling that was listed as "miscellaneous", and there are now two such miscellaneous rigs deployed, up from the 1 "miscellaneous" rig that was operating a year ago.

    drilling activity in the Gulf of Mexico increased by one rig to 19 rigs rig this week, which is up from the 18 rigs drilling in the Gulf of Mexico a year ago...however, a year ago there was also a rig drilling offshore from Alaska, so the total offshore count of 19 rigs is the same as that of last May 5th...on the other hand, three of the platforms which had been drilling on inland lakes in southern Louisiana were shut down this week, leaving just 2 remaining, down from the 5 rigs that were deployed on inland waters a year ago..

    the count of active horizontal drilling rigs increased by 12  rigs to 913 horizontal rigs this week, which was the most horizontal rigs active since February 27, 2015, and 179 more horizontal rigs than the 734 horizontal rigs that were in use in the US on May 5th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...in addition, the vertical rig count also increased by 3 rigs to 55 vertical rigs this week, which was still down from the 76 vertical rigs that were in use during the same week of last year... on the other hand, the directional rig count was down by 4 rigs to 64 rigs this week, which was also down from the 67 directional rigs that were deployed on May 5th 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 basins...in both tables, the first column shows the active rig count as of May 4th, the second column shows the change in the number of working rigs between last week's count (April 27th) and this week's (May 4th) count, the third column shows last week's April 27th active rig count, the 4th column shows the change between the number of rigs running on Friday and as 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 5th of May, 2017...      

    May 4 2018 rig count summary

    as we can see from the basin table above, once again the Permian basin increase of 6 rigs accounted for the lion's share of this week's oil drilling increase, but in this week's case it was not in Texas, as New Mexico saw the 6 rig increase while the drilling in the Permian districts of Texas was unchanged...meanwhile, the single rig targeting natural gas was added in the Haynesville; as you can see, rig counts in both the Marcellus and Utica shale were unchanged...and in addition to the major producing states shown above, Mississippi saw two of their 5 rigs shut down this week, but at 3 rigs their count is still up from the 1 rig that was working the state a year ago, while Florida saw the first drilling rig operating in the state since August 2015...

    * * *

    on Tuesday of this week, the EIA's daily blog "Today in Energy" had some interesting and informative graphs accompanying their post titled U.S. crude oil production efficiency continues to improve that tie in to our discussion last week about why the number of rigs drilling for any given week has become decoupled from expected oil production at some future date...since we're segueing this from the weekly rig count discussion, we'll start with their graph showing the historical rig counts in each of the major US shale oil basins...

    May 2 2018 rig count by region

    as noted, the above graph came from the EIA post titled U.S. crude oil production efficiency continues to improve, and it shows the average number of rigs deployed monthly over the 11 years from the beginning of 2007 to the end of 2017, with the map insert providing a color coded key to the graph...as you can see, drilling in the Permian basin of west Texas and southeast New Mexico shown in brown has always led the nation in the number of horizontal rigs deployed, but early on drilling in the other basins was a larger contributor to the total...however, after OPEC knocked US drilling down to historical lows in 2016, new drilling in the Permian has far outnumbered that of everywhere else...for instance, if we look back at this week's rig count table for an exact number, we see that there were 458 rigs deployed in the Permian as of May 4th, which was a bit over half of all the horizontal rigs deployed national as of that date...

    next, we'll include the graph from that same post that shows what the average first month of oil production in each of those regions has looked like over time...

    May 2 2018 first month of oil production

    again, this graph came from the EIA blogpost titled U.S. crude oil production efficiency continues to improve, and it shows how that production has continue to improve by graphing the average first month of oil production in barrels per day for each of the major producing oil shale basins from 2007 to 2017, again color coded by basin as the map insert indicates...here we can see that up until mid 2009, first month oil production for all US basins other than the Bakken had averaged below 50 barrels per day, as the frackers were only partially successful at exploiting those basins early on...subsequently, first month production from the Eagle Ford of south Texas began to rise, and by the end of 2017, the average well in the Eagle Ford was also producing over 600 barrels per day during its first month of operation...other basins have been slower to increase output, but as you can see, first month output from the Permian has now risen from around 100 barrels per day in mid 2013 to over 500 barrels per day by the end of 2017...the reasons for the higher production per well are many-fold, but it's primarily due to longer horizontal laterals, multi-stage fracking in 50 stages or more, and using much more sand than previously, typically several thousand pounds of sand per foot of lateral, which is driven into the shale layer by water pressures at 10,000 pounds per square inch...using these techniques, the frackers are not merely fracturing the rock, but pulverizing it, and leaving enough sand between the fragments that a large percentage of the embedded oil and gas can escape...

    the last graph from the that post we'll include shows the historical well output over time for each of the oil producing regions therein discussed...

    May 2 2018 oil production by month of operation

    again, from that same EIA blogpost, this graphic actually includes 5 graphs, one for each of the major shale oil producing basins discussed, with the graphs again color coded by the adjacent map...the key to this graphic is in the series of years shown below the US map, which shows the relative darkness of each year as it's graphed in color in the individual maps...all 5 graphs above are constructed in the same manner; each graph has 5 production graph lines within it, one for each year since 2013, with 2013 being the lightest shade and 2017 being the darkest....each annual line then shows the average production of fracked wells for that given year for each month that oil wells started that year have been in operation...thus, for example, in the middle top graphic above for the Bakken, the lightest yellow line shows the average production record of all Bakken wells that were fracked and began producing oil in 2013, so by following along that line, we can see that in the first month 2013 Bakken wells began to produce, their output averaged around 330 barrels of oil per day, but by the time the 2013 Bakken wells were 12 months old, their production dropped to below 150 barrels per day, and by the time they were 24 months old, their production had slipped to below 100 barrels per day....go out to the end of that light yellow 2013 line, and we see that production of those 2013 wells had slipped to around 40 barrels per day by the 60th month of operation, and presumably continues to deplete further to this day...(NB: my numbers are estimates based on eyeballing the graphs; actual data behind the graphs was not supplied)

    if we then look at the 2014 yellow line, we see a bit higher production than in 2013; wells started that year produced around 380 barrels per day the first month, were producing over 150 barrels per day by the 12th month, and over 100 barrels per day in the 24th month...likewise, there continues to be greater output for each year thereafter in that Bakken graph until we come to the top graph, for wells drilled in 2017, which start with an initial production of around 680 barrels per day the first month, and are still producing 340 barrels per day by the 12th month, or more than the 2013 wells averaged at the beginning of their production...the point that we're making here is that there is no set relationship between the number of rigs drilling wells and expected oil production...however, we will continue to review the rig count because the drilling of new wells is the most obvious evidence of the environmental impact of the exploration and exploitation industry..

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    Grid Resiliency Risks Posed by US Nuclear Plant Closures - A new report released today by IHS Markit outlines the severe grid resiliency, environmental and financial consequences for customers served by the PJM Interconnection Energy Market (PJM) that will likely result from uneconomic nuclear plant closures. Five nuclear plants operating in the PJM region are slated to prematurely retire by 2025, including Oyster Creek (NJ), Three Mile Island (PA), Beaver Valley (PA), Davis-Besse (OH) and Perry (OH). The report concludes: “The primary finding is that the 65 million consumers who rely on PJM grid-based power supply are better off if something is done to prevent the uneconomic closures of PJM nuclear resources because the PJM power supply portfolio is more efficient, more resilient, and environmentally responsible with the continued contribution of cost-effective nuclear resources.”

    US Mid-Atlantic Grid says It Doesn’t Need Nuclear Plants for Grid Reliability - Mid-Atlantic grid operator PJM reported Monday that FirstEnergy’s plan to close three nuclear power plants by 2021 won’t threaten grid reliability and stability. FirstEnergy’s plan would certainly deliver a blow to PJM’s carbon balance, dropping nearly twice as many carbon-neutral nuclear megawatts from its generation mix as its total amount of wind and solar megawatts to date. But PJM’s “Generation Deactivation Notification Update,” found that the closures would not threaten reliability across the locational deliverability areas (LDAs) covering parts of Ohio and western Pennsylvania. “Sufficient transmission margin remains to import emergency power into impacted LDAs,” the report noted, meaning that enough transmission capacity exists to power those regions’ needs from outside.

    Closing FirstEnergy's reactors will not destabilize grid, says PJM, but launches probe into future fuel security -- PJM Interconnection today said it has determined that FirstEnergy's power plant subsidiary can shut down its three nuclear power plants within three years without destabilizing the 13-state power grid that PJM manages. At the same time, PJM announced its intention to look at "fuel security" in the face of the utility industry's growing fleet of natural gas turbine power plants. These plants, including 10 planned for Ohio, have made it difficult for some nuclear and old coal plants to compete. Both FirstEnergy and now FirstEnergy Solutions have said that PJM's market rules, which focus on the least expensive power that can reasonably be expected to support the grid, do not value old coal and nuclear plants. Don Moul, president of FES generation companies and chief nuclear officer, said in a statement that the PJM finding "ignores the value that these units offer the grid in terms of fuel diversity and zero-carbon emissions generation." The companies have tried to go around PJM twice and have sought intervention from President Donald Trump's administration. The current effort by FES asking the U.S. Department of Energy to use emergency powers to keep old coal and nuclear open in the PJM region as a national security issue, is pending. The DOE has not said when it will make a decision on the FES request, but has opened a special page on its website asking for email comments from the industry and the public. PJM itself is concerned about a massive switch to any one fuel source and has already begun "to analyze fuel security vulnerabilities and establish a system to use market competition to address the problem,"said Andy Ott, PJM president, in a news conference Monday.

    Power Plant Projects Invest $4.6B in 4 Counties — The investment numbers are unlike any the region has witnessed in decades – more than $4.6 billion scattered across four counties in or around the Mahoning Valley where new, nimble and efficient electrical power plants are either in operation, under construction or under consideration. It’s a signature of where growth in new energy will develop in America and what it will look like. This section of northeastern Ohio and western Pennsylvania – with its abundance of natural gas from the Utica and Marcellus shales – has emerged as the fulcrum for the industry’s future.  As older, less efficient power plants are retired or shut down, they’re being replaced with smaller, more cost-efficient combined-cycle plants that use natural gas and steam – not coal or nuclear power – to generate electricity for homes and businesses.   “What’s happening is companies like FirstEnergy had these plants and failed to modernize them. And now companies like ourselves are finding a market to produce electricity more efficiently and at less cost,”  FirstEnergy Corp. announced March 28 that it would close all three of its nuclear power plants – the Davis-Besse Nuclear Power Plant and the Perry Nuclear Power Plant in Ohio, and the Beaver Valley Power Station in western Pennsylvania – over the next three years, as well as its two remaining coal-fired power plants.“Though the plants have taken aggressive measures to cut costs, the market challenges facing these units are beyond their control,” said Don Moul, president of FES Generation Companies.Then on March 31, two of FirstEnergy’s subsidiaries – FirstEnergy Solutions, which operates its coal-fired plants, and First Energy Nuclear Operating Co. – filed for reorganization under Chapter 11 bankruptcy. On April 23, the parent company announced an agreement with key creditors that could allow for a quick exit from Chapter 11. Part of the agreement provides FirstEnergy Solutions and First Energy Operating Nuclear Co. with help from FirstEnergy on “key business matters” as it undergoes reorganization, the company said.

    Ohio’s top court further muddies fracking issue with new ruling | vindy.com: One consistent thing about the Ohio Supreme Court when it comes to decisions about whether it’s constitutional to put an initiative to ban fracking on the Youngstown ballot is its inconsistency. The Mahoning County Board of Elections has voted three times to not permit the measure to appear on the ballot. In September 2015, the Supreme Court voted 7-0 against the board and overturned that decision. In October 2016, the court voted 4-3 in favor of the board’s decision to not put the initiative on the ballot. And Tuesday, the court voted 5-2 against the board and ordered the charter amendment to be put in front of Youngstown voters.   The court ruled against the board of elections this time because of a minor change in the ballot language. The proposal rejected last October by the court would have authorized “private citizens to enforce their rights through nonviolent direct action or by filing suit as a private attorney general.” The court wrote of the previous decision: “We agreed with the board’s determination that a municipality lacks legislative power to authorize Youngstown residents to file suit as a ‘private attorney general’ because a municipality cannot create a new cause of action.” But in the new initiative, the court wrote that “the offending provision” is “not included in the proposed charter amendment now before us, and the board offers no clear support for its conclusion that relators’ current proposal is beyond the scope of the city’s legislative power.” The court added: “There was no creation of a private right of action – an ‘individual’s right to sue in a personal capacity to enforce a legal claim’” – in this case.

    Anti-frackers hope to fool Y'town voters in primary - Youngstown Vindicator Editorial - Opponents of fracking in Youngstown are hoping the lipstick they’ve put on the pig – the proposed charter amendment in Tuesday’s primary election – will fool the voters.We hope it doesn’t.Youngstown residents have said “no” on six separate occasions to the group of self-appointed paragons of environmental virtue pushing an amendment to the Youngstown Home Rule Charter to ban fracking.We have long characterized the effort as a nonissue because there are no plans by any energy companies to drill for oil and gas in the city by use of hydraulic fracturing.Nonetheless, the anti-frackers, led by Ray and Susie Beiersdorfer, have adopted the attitude that they alone know what’s in the best interest of Youngstown residents.But it is revealing that the defeat of the anti-fracking charter amendment going back to the 2013 primary election has prompted the Beiersdorfers and their cohorts to change their strategy. They’re now using scare tactics.The issue was on the primary and general election ballots in 2013 and 2014, and the general elections of 2015 and 2016.In those years, it was called the “Community Bill of Rights” in support of their argument that the rights of Youngstown residents are being usurped by outside entities.This year, however, the issue carries the ominous title “Drinking Water Protection Bill of Rights” (the lipstick on the pig). The claim underlying the title is clear: Fracking in Youngstown will poison the city’s water.  But before Youngstown residents start having sleepless nights about the drinking water that could burst in flames due to all the chemicals, here’s a reality check: Fracking is not in the city’s future. Thus, the bottom line: The city’s drinking water is not in danger of becoming undrinkable.

    Ryan pushes for increased transparency of hydraulic fracturing - Youngstown Vindicator -- U.S. Rep. Tim Ryan of Howland, D-13th, has cosponsored the Fracturing Responsibility and Awareness of Chemicals Act (FRAC Act), a bipartisan bill that establishes common sense safeguards to protect groundwater from risks associated with the oil and gas drilling technique “hydraulic fracturing,” better known as “fracking.”The FRAC Act would require disclosure of the chemicals used in fracking fluids and would remove the oil and gas industry’s exemption from the Safe Drinking Water Act.“There’s no denying that there are immense climate-related benefits and economic benefits associated with the transition to natural gas, particularly here in Ohio. Even still, we must be vigilant ensuring that such benefits do not come at the expense of the health and wellness of our communities. We as lawmakers must make sure natural gas recovery is done in a way that puts community health front and center,” said Ryan. “I am proud to support this common sense legislation to promote the responsible development of natural gas.” The FRAC Act would:

    • Require disclosure of the chemical constituents used in the fracturing process.
    • Disclosure would be to the state, or to EPA, but only if EPA has primary enforcement responsibility in the state. The disclosures would then be made available to the public online.
    • Proprietary chemical formulas are protected under the bill – much like the way Coca-Cola must reveal the ingredients of Coke, but not their secret formula; oil and gas companies would have to reveal the chemicals but not the specific formula.
    • This bill does include an emergency provision that requires these proprietary chemical formulas to be disclosed to a treating physician, the State, or EPA in emergency situations where the information is needed to provide medical treatment.
    • Repeal a provision added to the Energy Policy Act of 2005 exempting the industry from complying with the Safe Drinking Water Act (SDWA), one of our landmark environmental and public health protection statutes.

    Most states have primacy over these types of wells, and the intent of this Act is to allow states to ensure that our drinking water is safe. EPA would set the standard, but a state would be able to incorporate hydraulic fracturing into the existing permitting process for each well, and so this would not require any new permitting process.

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

    Motion Challenges Fracked-gas Pipeline Threatening Ohio's Only National Forest - Center for Biological Diversity (press release)— Conservation groups are challenging a fracked-gas pipeline that would slash through Ohio’s Wayne National Forest, threatening forests, waterways, wildlife and thousands of people who visit the area. The project is owned by TransCanada Corp., which was responsible for a massive oil spill when its Keystone pipeline broke last fall.The Ohio Environmental Council, Sierra Club and Center for Biological Diversity on Monday filed a motion to intervene in a federal permitting process for the Buckeye Xpress pipeline in southern Ohio. The proposed 66-mile fracked-gas pipeline would cut through Ohio’s only national forest and cross 336 streams and 134 acres of wetlands. Building this pipeline through the Wayne would also increase pressure for more fracking leases in the national forest. “If approved, the project will only further incentivize the expansion of oil and gas development in the Wayne National Forest,” said Chris Tavenor, an attorney at the Ohio Environmental Council. “Last year the OEC and its partners sued BLM because of the immense environmental damages that will occur if the Wayne is fragmented for oil and gas lease sales. The Wayne is Ohio's only national forest, and federal agencies need to recognize the importance of these ecological treasures beyond their potential for pipelines and well pads.”Columbia Gas Transmission, a subsidiary of TransCanada Corp., is applying for a permit with the Federal Energy Regulatory Commission to build the pipeline from its Leach Xpress pipeline south through the Wayne National Forest and across the Ohio River to West Virginia. It would expand and replace an existing pipeline and dig up 225 acres as it crosses 12 miles of the Wayne National Forest’s Ironton unit. “There’s no such thing as a safe fracked gas pipeline, just like there’s no such thing as a safe fracking operation,” said Cheryl Johncox with the Sierra Club. “The Buckeye Xpress pipeline will threaten communities, Ohioans’ only national forest, and waterways while encouraging even more fracking operations. It must be halted.”

    FERC gives Rover OK to bring market segment, Vector station into service - Rover Pipeline won approval from the US Federal Energy Regulatory Commission Tuesday to bring more portions of the second phase of the 3.25 Bcf/d project into service, including the market segment of the pipeline, its Defiance Compressor Station and its Vector Pipeline delivery meter station. The approval will enable gas to be moved onto the Vector pipeline and then ultimately be delivered to the Dawn storage facilities in eastern Canada. Rover still does not have FERC approval to bring online its entire Mainline B between its upstream supply laterals and Defiance, suggesting that the current upside to flows on Rover may be limited. Rover received the green light for bringing a portion of its Mainline B into service on April 25, although that milestone has had minimal impact on flows along the pipeline, according to S&P Global Platts Analytics. The startup of the pipeline's Vector meter station and market segment will provide Rover with more downstream delivery options.  The approval came a day after Rover told FERC it expects to complete by June 30 restoration activities related to those areas, including addressing locations where ground "subsidence" had occurred. In the letter authorizing the startups, Rich McGuire, FERC director of the division of gas-environment and engineering, expressly referenced Rover's commitment to addressing remaining "punch-list" items and the subsidence by that date. "It is my expectation that these commitments will be honored and that any restoration issues that should arise will be addressed fully and promptly," McGuire said. 

    Enbridge fined for failing to fully inspect pipelines after Kalamazoo oil spill -  The Canadian oil pipeline company responsible for one of the largest inland oil spills on record has agreed to pay a $1.8 million fine for failing to thoroughly inspect its pipelines for weaknesses as required under a 2016 agreement. Federal officials say Enbridge, Inc., did not carry out timely and thorough inspections on one of its pipeline systems, as it had agreed to do as part of a consent decree reached with the U.S. Environmental Protection Agency and U.S. Department of Justice.The 2016 settlement stemmed from a massive 2010 oil spill into Michigan's Kalamazoo River. The spill required years and more than a billion dollars to clean up, and it highlighted the hazards of pumping heavy tar sands oil through pipelines. More than 1 million gallons of tar sands oil spilled into the Kalamazoo River near the town of Marshall when a 6-foot rupture opened in Enbridge pipeline 6B. Despite warnings of trouble, oil flowed for 17 hours before Enbridge shut down the pipeline. Ultimately, the oil pushed nearly 40 miles downriver, fouling 4,435 acres of land near the river's banks. It triggered a massive cleanup effort that cost the company $1.2 billion and kept the river closed for nearly two years.As part of a sweeping, $177 million settlement, Enbridge promised to look for cracks and corrosion on its Lakehead pipeline system, a nearly 2,000-mile grid of pipelines that brings oil from Canada into the United States.In adocument filed in a Michigan federal court on Tuesday, the government alleges that Enbridge failed to properly conduct six inspections. Although the company agreed to pay the fine, it nevertheless denied that it violated the terms of the consent decree and said it had properly inspected the pipelines.

    Line 5 Oil Spill Potential Damages and Economic Impacts to Michigan Could Top $6 Billion, FLOW Study Finds --A Line 5 oil spill at Michigan’s Straits of Mackinac could deliver a blow of $6 billion in economic impacts and natural resource damages to Michigan’s economy, according to a study commissioned by FLOW, a science, law and policy center in Traverse City, Michigan.Conducted by nationally respected ecological economist Robert Richardson of Michigan State University, the study adds up potential costs of a Line 5 spill into the Straits of Mackinac and adjoining waters under a realistic – but not worst-case – scenario.“This study puts credible numbers behind what common sense tells us, that a Line 5 spill could cause catastrophic economic impacts in addition to environmental destruction. It’s another compelling reason for the state to take swift action to shut down Line 5,” said Liz Kirkwood, Executive Director of FLOW.Enbridge Energy owns and operates the twin 65-year-old pipelines that span the Straits between Michigan’s Upper and Lower Peninsula. Faulty maintenance, unpredictable currents and an early April anchor strike that dented the lines have underscored the risk they pose to the Great Lakes. Enbridge is the same firm responsible for the largest (by surface area affected) and most costly inland oil spill in American history. An Enbridge pipeline ruptured near Marshall, Michigan in July 2010, and according to the company, it released more than 840,000 gallons of oil into the Kalamazoo River system.The report’s estimates are likely conservative. The study does not depict a worst-case spill. It estimates $697.5 million in natural resource damage costs and restoration and more than $5.6 billion in total economic impacts, including:  $4.8 billion in economic impacts to the tourism economy;$61 million in economic impacts to commercial fishing; $233 million in economic impacts to municipal water systems;Over $485 million in economic impacts to coastal property values.

    Natural Gas Is Leading West Virginia Down the Same Dark Path As Coal - It was a warm Monday afternoon in late February. Schools in all 55 counties were closed again. Teachers, cooks and janitors were in the third day of a strike. They wanted pay raises and a fix to the skyrocketing cost of their health insurance. On the other end of the state, at a town hall meeting with teachers in Wheeling, Gov. Jim Justice tossed out a possible solution: Fund the pay raises with an increase in taxes on the state’s booming natural gas industry. But what seemed like a stunning change of direction proved to be little more than a feint. Gas industry lobbyists strongly criticized the proposal and the governor’s tax hike idea quickly faded. West Virginia has been here before. Sixty-five years ago, then-Gov. William Marland, the son of a mine superintendent, shocked state lawmakers by proposing a new tax on coal to upgrade schools and roads. “Let’s use this equitable source of revenue, because whether we like it or not, West Virginia’s hills will be stripped, the bowels of the earth will be mined and the refuse strewn across our valleys and our mountains in the form of burning slate dumps,” Marland told a joint session of the Legislature in February 1953. Marland’s proposal was soundly defeated following an onslaught of criticism. One biographer called it “political suicide.” Today, West Virginia’s headlong race into the gas rush is taking the state down the same path that it’s been on for generations with coal. Elected officials have sided with natural gas companies on tax proposals and property rights legislation. Industry lobbyists have convinced regulators to soften new rules aimed at protecting residents and their communities from drilling damage.

    Fayette County learned how hard it is to fight the natural gas industry - Amid a natural gas boom, communities across the country have pushed to put limits on drilling and waste disposal. But Wender, his fellow commissioners and the residents of Fayette County soon found out that taking on natural gas isn’t any easier than it’s been for decades for other West Virginia communities to take on coal. The state’s laws create an almost insurmountable bar.The day after Fayette County leaders enacted their ban, EQT Corp., a Pittsburgh-based company that is West Virginia’s second-largest gas producer with $1.5 billion in income in 2017, filed suit. Company lawyers said the ordinance was so broad that it would halt any gas production in Fayette.On the morning of an evidentiary hearing, in June 2016, Wender and a few dozen Fayette County residents drove more than an hour over winding roads to Charleston, so they could fill the courtroom. Wender planned to tell the county’s story. The county’s lawyers lined up a Duke University scientist to describe the pollution found downstream from Danny Webb’s site.Just before the hearing, U.S. District Judge John T. Copenhaver Jr. issued a 45-page rulingthat threw out Fayette’s waste disposal ban. No hearing was needed to gather facts, the judge said. It was strictly a legal issue, and the law, at least in this case, was clear: Federal and state statutes govern such matters; county officials can’t ban drilling in their own community.The state of West Virginia “has concluded that oil and natural gas extraction is a highly valuable activity subject to centralized environmental regulation by” the state Department of Environmental Protection, the judge wrote. The County Commission “cannot interfere with, impede, or oppose the state’s goals.”  The state of West Virginia “has concluded that oil and natural gas extraction is a highly valuable activity subject to centralized environmental regulation by” the state Department of Environmental Protection, the judge wrote. The County Commission “cannot interfere with, impede, or oppose the state’s goals.” There was no testimony. Wender didn’t take the stand. The Duke scientist headed back to North Carolina.

    Charlottesville doctors turned away from pipeline protesters in tree -- Two Charlottesville doctors seeking to help a 61-year-old woman who has spent four weeks perched in a tree to halt construction of the Mountain View Pipeline say Roanoke County authorities did not permit them to provide her with medical supplies on Saturday.With a hearing in federal court scheduled for Tuesday afternoon, the family of Theresa “Red” Terry and her daughter, Theresa Minor Terry, 30, are anxiously waiting for a resolution to the ongoing standoff on property that has been owned by their family for seven generations. In an interview Monday, Dr. Greg Gelburd, of Downtown Family Health Care, said he and Dr. Paige Perriello, with Pediatric Associates of Charlottesville, visited Bent Mountain in Roanoke County over the weekend to assess the mother and daughter’s medical condition. Gelburd said being overly sedentary poses a health risk, as blood clots can form in the legs. He also said prolonged exposure to damp conditions can increase the risk of skin infections. After the mother-and-daughter pair recently said they had run out of food and other supplies, Roanoke County officials announced last week that authorities are conducting daily wellness checks and providing them what they need to ensure their physical needs are met.While family members and other supporters have sought to donate food and other supplies, police have placed those items at the base of the tree for Red to retrieve. “She reiterated that she would be arrested if she came down,”

    ATV traffic on the Appalachian Trail is the latest Mountain Valley Pipeline controversy -- Tire tracks and muddy ruts along the Appalachian Trail mark the spot where the Mountain Valley Pipeline will meet the scenic footpath.Although motorized traffic is generally prohibited, Mountain Valley security crews and U.S. Forest Service officials have been driving all-terrain vehicles on the trail to reach an area where pipeline protesters are stationed at the top of Peters Mountain in the Jefferson National Forest.“Motorized use is antithetical to the wilderness experience of the Appalachian Trial,” said Andrew Downs, regional director of the Appalachian Trail Conservancy. After receiving a complaint Sunday about ATV traffic on an approximately quarter-mile section of the trail that runs along the edge of Giles County, Downs contacted the Federal Energy Regulatory Commission, which is overseeing construction of the natural gas pipeline.A FERC official looked into the matter and was told that the Forest Service authorized the use of ATVs, according to FERC spokeswoman Tamara Young-Allen. Forest Service officials have also been four-wheeling on the trail, she said.

    Judge hears arguments for and against two pipeline protesters sitting in trees - Two pipeline protesters stuck to their positions in trees atop Bent Mountain on Tuesday while, in the valley below them, lawyers went to a federal courthouse to argue their fate. Attorneys for the Mountain Valley Pipeline said that 61-year-old Theresa “Red” Terry and her daughter, Theresa Minor Terry, are blocking tree cutting for the natural gas pipeline and should be found in contempt of court. They cited an order from U.S. District Court Judge Elizabeth Dillon that gave Mountain Valley the power, through the laws of eminent domain, to run its pipeline through private land owned by the Terry family. Roanoke attorney Tom Bondurant, who represents the Terrys, flipped that argument around — asserting it was Mountain Valley that should be held in contempt for misrepresenting to the court key facts during an earlier hearing in the condemnation proceedings. After hearing several hours of testimony and arguments, Dillon said she will issue a written opinion “as quickly as I can.” Some facts were not in dispute: The Terrys freely admit that they are attempting to stop construction of a natural gas pipeline that has been approved by regulatory agencies. Both sides agreed that the tree stands sit squarely in the pipeline’s path. But the Terrys question the way Mountain Valley obtained an easement through their land using eminent domain,

    Mother and daughter can stay in trees to protest pipeline – for now –  — A mother and daughter who have been perched on platforms in trees in Virginia for 28 days to protest a natural gas pipeline can stay there for now. Judge Elizabeth Dillon of the U.S. District Court for the Western District of Virginia said she would review testimony presented Tuesday before ruling in the case. That represents at least a short-term victory for Theresa Ellen Terry, 61, and her 30-year-old daughter, Theresa Minor Terry, says their lawyer, Justin Lugar. After all, Mountain Valley Pipeline, which plans a pipeline extending 300 miles from northwestern West Virginia to southern Virginia, had asked Dillon to declare the mother and daughter in civil contempt, fine them and order federal marshals to remove them from the tree. “They’re not in jail, so that’s very good news,” Lugar told TMN. He noted the Terry family has owned the land on Bent Mountain, about 20 miles southwest of Roanoke, Va., since the king of England granted it to Theresa’s husband’s family in colonial days. The Terrys had rejected Mountain Valley’s offer to seize the land under eminent domain and compensate the family. “This case comes down to whether the Terrys have a right to do what they’re doing on they’re own land, and we say they do,” Lugar said. “Just like you and me can go into our back yard or our kids can go in a tree house on their property, so, too, can the Terrys. They’re not doing anything to interfere with Mountain Valley’s rights at all.” Officials from Mountain Valley, which has begun cutting down trees in the area to make way for the pipeline, could not be reached for immediate comment Tuesday evening. 

    From Tree-Sitters to Water Protectors: Meet the Women On the Front Lines of Eco-Activism -- “Well, I’m currently based in a tree.”   That’s how one anonymous 22-year-old eco-activist with the group Appalachians Against Pipelines answered when we asked where she’s working. The activist is a member of a pipeline resistance group called Appalachians Against Pipelines, and she’s camped out high up in a tree in the Peters Mountain area of Jefferson National Forest in West Virginia. She’s one of a handful of activists who have been camping out in located within the National Forest since February, part of an effort to stop a pipeline from being constructed there.  There are many other activists on the front lines of direct action eco-activism projects, and a great number of them happen to be women. These activists are dedicated to not only protecting the environment but also empowering themselves to keep environmentally destructive pipelines out of their communities.  To protest the construction of the MVP, local farmers in Virginia have set up tree-sits to protect their farms, trees, water sources, and soil from destruction. A mother-daughter team of tree-sitters including Theresa “Red” Terry (pictured above) resisting the pipeline are currently facing criminal charges for refusing to abandon their trees.  Another group, called the Three Sisters Resistance Camp, made a camp in Virginia along the planned construction site for the Atlantic Coast Pipeline, another natural gas pipeline set to be built in West Virginia, Virginia, and North Carolina.  The 22-year-old activist protesting the MVP tells us that she feels direct action against pipelines is vital for what she calls “Earth liberation.” “I think the word ‘revolutionary’ can scare people away,” she tells us, “but it is revolutionary to resist the forces that seek to steal from us.”

    Road closure violates the free-speech rights of pipeline protesters, lawsuit claims - Closing a U.S. Forest Service road that leads to where protesters are challenging a natural gas pipeline violates their First Amendment rights, a lawsuit filed Wednesday claims. The lawsuit against the Forest Service takes issue with the closure of Pocahontas Road, which for the past five weeks has been the scene of protests against the Mountain Valley Pipeline and the route it will take through the Jefferson National Forest. A protester known as “Nutty” is camped out on a small platform suspended from a 50-foot pole in the middle of road, effectively blocking Mountain Valley crews from reaching a pipeline construction area on Peters Mountain. At first, a ground team of supporters that was supplying Nutty with food and water — along with others who came to cheer her on — drove about two miles on the gravel road in Giles County to reach the protest area. On April 7, the Forest Service closed the road to everyone except law enforcement and pipeline officials, citing the “hazards associated with constructing the Mountain Valley Pipeline.” The true reason for the closure, according to the lawsuit filed in U.S. District Court in Roanoke, was to prevent protesters from exercising their free-speech rights on public land. “This is a public land, it’s a public space, it’s a public venue,” said Chap Petersen, a Fairfax attorney who filed the lawsuit on behalf of three pipeline opponents.   Forest Service officials stationed at the head of Pocahontas Road have been telling members of the public that the only way to get to the protest site is to hike cross-country through the woods while maintaining a distance of at least 100 feet from the road, the suit says. The route traverses steep slopes, fallen trees and difficult steam crossings that can pose a danger to “all but the fittest and most experienced hikers,” the lawsuit states. 

    Va. state senator files suit against Forest Service in support of pipeline protests - A Virginia state senator filed suit against the U.S. Forest Service on Wednesday, claiming that federal officials are illegally blocking access to a road in the Jefferson National Forest where several people are protesting construction of a natural gas pipeline.State Sen. Chap Petersen (D-Fairfax), who is a lawyer, filed the suit at the federal courthouse in Roanoke after being prohibited from using the road to reach the protesters last week.His action opens another legal front in the fight over the right to protest the Mountain Valley Pipeline, a 303-mile project that starts in West Virginia and crosses through Virginia’s southwest mountains. A separate set of tree sitters was in federal court in Roanoke on Tuesday, as EQT Midstream and other companies behind the pipeline argued that Theresa “Red” Terry, her daughter Theresa Minor Terry and other members of the family are illegally blocking a stretch of the planned pipeline through their land. The builders of the pipeline want a judge to hold the Terry family and their allies in contempt.  Petersen’s suit is aimed at a site on Peters Mountain in Giles County along the West Virginia line. There, a protester identified only as “Nutty” has been living suspended from a pole, or monopod, since March 27, blocking efforts to clear trees.

    Dominion's Long Term Plans Include Eight New Natural Gas Plants in Virginia - Regulation of power station carbon dioxide (CO2) emissions at the federal or state level is a virtual fait accompli, according to Dominion Energy Virginia, whose plans to meet that challenge include more renewable-fueled generation and construction of eight natural gas power plants by 2033."Although federal executive and judicial actions have halted implementation of the U.S. Environmental Protection Agency's Clean Power Plan, the Commonwealth of Virginia has attempted to address carbon emissions through regulatory action," Dominion said in a 231-page Integrated Resource Plan (IRP) filed Tuesday with the Virginia State Corporation Commission."Specifically, the Virginia Department of Environmental Quality has released a draft proposal capping CO2 emissions from the state's electric generating units. The draft proposes linking a cap-and-trade program in Virginia with the existing Regional Greenhouse Gas Initiative now being implemented in the northeastern United States. Regardless of the precise mechanism of carbon control, the company is committed to reducing greenhouse gas emissions."Such reductions would be achieved by shifting the state's power generation fuel mix away from coal and toward natural gas and renewables, according to the IRP.In addition to the 1,585 MW gas-fired Greensville County Power Station, a quintet of alternative plans in the IRP all call for the addition of eight gas-fired facilities using combustion turbine technology with a combined 3,664 MW capacity by 2033. Other common elements of the five plans include development of 4,720 MW of solar photovoltaic (PV) generation and another 760 MW of non-utility generator solar PV generation, 20-year operating license extensions for four nuclear units at Dominion's Surry and North Anna power stations, and demand-side management capable of reducing overall customer energy usage by 805 GWh, all by 2033.

    Virginia Democrats release statement against Mountain Valley Pipeline, Atlantic Coast Pipeline - The group says that these pipelines pose a clear threat to our Commonwealth’s drinking water, and is an abuse of eminent domain.  “We, the undersigned Virginia Democratic Committees and Chairs, do hereby call for Governor Ralph Northam, Attorney General Mark Herring, and the Virginia Department of Environmental Quality to do all they can to stop the Mountain Valley and Atlantic Coast Pipelines. These two pipelines are a clear abuse of eminent domain laws, as they do not benefit the people whose property is being irreparably damaged, and as they will potentially deprive surrounding areas of life-sustaining drinking water, as well as recreation and tourism dollars. The two pipelines will serve to move finites resources through unstable terrain to benefit the natural gas pipeline and utility companies involved in the project. The fact is, the Mountain Valley and Atlantic Coast Pipeline represent the death rattle of an obsolete industry, one being rapidly overtaken by clean energy sources like wind and solar, and pose a clear threat to Virginia’s groundwater and waterways. Throughout his political career, Governor Northam has shown great concern regarding environmental abuses in the Chesapeake Bay and has strongly supported efforts aimed at removing phosphorus, nitrates and other pollutants from the Bay. As a result, today the Bay is doing much better, with vegetation now growing in areas that were once barren. We are grateful for Governor Northam’s foresight and efforts in this area, and implore him to also protect the rest of the state’s waters from environmental damage. We have seen the destruction that fossil fuel pipelines can cause to fragile ecosystems and to drinking water sources in other states. Our citizens should not be forced to hand over Virginia’s pristine landscape and safe drinking water to corporate profiteers who care little, if at all, for the well-being of our communities.

    State senator files complaint asking PUC to halt Mariner East pipeline construction - State Senator Andy Dinniman is trying to halt construction on two natural gas liquids pipelines, in West Whiteland Township, Chester County, alleging they pose a serious threat to public health and safety.Dinniman filed a formal complaint and petition for emergency relief Thursday with the state Public Utility Commission. At issue is Sunoco Logistics’ Mariner East pipeline project, which has been plagued with technical, legal, and environmental problems. It includes three parallel natural gas liquids lines — the Mariner East 1, the Mariner East 2, and the Mariner East 2X.The PUC suspended service on the Mariner East 1 line earlier this spring, citing safety concerns related to sinkholes, and saying that a pipeline leak could have a “catastrophic” effect on public safety.   Dinniman’s complaint and petition relate to the second two lines — the Mariner East 2 and 2X.  “I have a moral, ethical, and constitutional duty to stand for the safety of the people of Chester County and the protection of their children and families, as well our environment, drinking water, natural resources, and public infrastructure,” said Dinniman, a Chester County Democrat. “I am asking the PUC to consider all of that – the numerous drilling problems, the risks to safety, the proximity to homes and schools, and the unique and problematic geology of the region – in concluding that these pipelines should not be built here period.” Dinniman is calling on the PUC to prohibit “the construction of ME2 and ME2X in areas of West Whiteland Township where ME1 is located within 50 feet of a private dwelling, industrial building or place of public assembly, and grant such other relief as the Commission finds to be just and appropriate.” Sunoco has 20 days to respond to the complaint. The Office of Administrative Law Judge will also schedule a hearing on Dinniman’s petition for emergency relief and decide to grant or deny it. Both the complaint the petition will then go to the full Commission.

    New sinkholes appear near Mariner East 1 pipeline in Thornbury -- Residents are concerned after what appears to be two new sinkholes recently developed directly above the Sunoco Mariner East 1 pipeline. Much larger sinkholes had developed in East Whiteland Township and led to last month’s shutdown of the Mariner East 1 pipeline. Similar holes recently developed in Edgmont, about a mile south of the Thornbury holes. The new holes are located at the Andover subdivision, at the intersection of routes 352 and 926. Sunoco spokeswoman Lisa Dillinger had said those Edgmont holes were created by rodents. Dillinger denied the Thornbury depressions are sinkholes. “The holes and fencing observed within our ROW in Thornbury Township are actually a routine part of safe pipeline construction called ‘potholing’ where holes are dug to identify the exact location and depth of our existing pipeline and other utility facilities. The orange fencing is for safety,” she said in a written statement. Jennifer Berlinger’s home is about 100 feet away from the pipeline right-of-way. Construction has started there on the Sunoco Mariner East 2 pipeline in the same right-of-way as the 1930s-era Mariner East 1 pipeline. Berlinger pointed to where Sunoco had axed 180-year-old trees. Two big pines, a walnut tree and a gingko were all cut down on Andover subdivision homeowner’s association property. “It’s scary,” Berlinger said. “I’m angry. They wanted something that wasn’t theirs and they just took it.” Berlinger said she is “stuck” at her home. “No one is going to buy my home — I’m stuck with the danger. Do I look a buyer in the eye and not tell them? This is not political. They can’t just take what they want. It’s hard to believe this can happen in America.” 

    Mariner East pipeline fined $355K for spills in Lancaster, 8 other counties - The state has fined the builders of the Mariner East 2 pipeline $355,000 for pollution of streams in Lancaster County and eight other counties.The penalty is on top of a $12.6 million fine the state Department of Environmental Protection levied against pipeline builder Sunoco Pipeline LP in February on separate violations. The fine was announced Thursday, the same day that the Pennsylvania Public Utility Commission voted unanimously to allow the pipeline to be restarted. The pipeline has been shut down since March after sinkholes opened in Chester County adjacent to the pipeline construction. The PUC’s Bureau of Investigation recommended restarting the pipeline, noting that it is “of the opinion that the integrity of the (existing) ME1 pipeline has not been compromised by the soil subsidence events that triggered this investigation.”The most recent fine is for spillage of drilling fluids into wild trout streams, wetlands and streams rated as high quality.Included were seven spills in West Cocalico Township. Drilling fluids were discharged into streams, a wetland adjacent to endangered bog turtle habitat and on the Middle Creek Wildlife Management Area. The $3 billion, 350-mile-long Mariner East 2 pipeline is to carry natural gas liquids from the Marcellus Shale and Utica Shale regions of western Pennsylvania and Ohio to a refinery in Marcus Hook, near Philadelphia.

    Sunoco pipeline fined for 1 gas pipeline, restarts another   (AP) — Sunoco Pipeline can resume operations on a natural gas liquids pipeline crossing southern Pennsylvania while it agreed to pay $355,000 for polluting waterways in 14 counties while building a sister pipeline. The Pennsylvania Public Utility Commission on Thursday lifted a stop-work order it imposed March 7 on the Mariner East 1 pipeline. It says owner Sunoco Pipeline adequately addressed concerns over sinkholes developing along its path in residential areas in southeastern Pennsylvania. The sinkholes appeared to be related to construction on the adjacent Mariner East 2 pipeline. Meanwhile, Sunoco Pipeline is paying fines to settle 69 citations from the Department of Environmental Protection for spilling drilling fluids into waterways during Mariner East 2's construction. Sunoco Pipeline already drew $12.6 million in fines for violations on the 350-mile Mariner East 2. 

    US Top Court Rejects Constitution Pipeline Over New York Permit - (Reuters) - The U.S. Supreme Court on Monday dealt another setback to a proposed natural gas pipeline running from Pennsylvania to New York, rejecting Constitution Pipeline Co's bid to challenge New York state's refusal to issue a needed water permit for the project. The high court left in place an August 2017 ruling by the New York-based 2nd U.S. Circuit Court of Appeals in favor of the state. Partners in the 125-mile (201-km) pipeline project include Williams Cos Inc, Duke Energy Corp, WGL Holdings Inc and Cabot Oil & Gas Corp. The U.S. Federal Energy Regulatory Commission (FERC), which regulates pipelines, first approved construction of the project in 2014 and then again in 2016, conditional upon other approvals. Constitution, which filed with FERC to build the pipeline in 2013, separately sought water quality certification with the New York Department of Environmental Conservation in August 2013. But the state denied the application in April 2016, saying the company failed to provide sufficient information to determine whether the project would comply with the state's water quality standards. Constitution appealed that decision to the 2nd Circuit, but lost. The Supreme Court's refusal to hear the company's appeal of the 2nd Circuit's ruling does not necessarily kill the project. The company has separately petitioned FERC to overturn the state agency's decision. In March, the federal regulator gave itself more time to consider the issue. If built, the pipeline would transport 0.65 billion cubic feet per day of shale gas. New York uses on average about 3.6 bcfd of gas. 

    New York prevails on natural gas pipeline denial - The nation's highest court dealt another setback this week to a proposed $750 million natural gas pipeline that would connect the gas fields of Pennsylvania to New York. The U.S. Supreme Court declined to consider an appeal from developers of the proposed Constitution pipeline, who last summer lost a lower federal court challenge to a state ruling that blocked the pipeline. The highest court let stand a ruling from the U.S. Court of Appeals Second Circuit rejecting Constitution's claims that the state Department of Environmental Conservation unfairly denied critical water quality permits in April 2016. Passing through Broome, Chenango, Delaware and Schoharie counties, the 121-mile pipeline would connect Pennsylvania fracked gas fields to the Iroquois pipeline in Schoharie County. There, owners have been considering whether to direct the flow of gas north toward Canada. From there, gas could move in other pipes, flowing toward potential export facilities planned on the Atlantic coast. DEC refused to issue water quality permits under that act after the company ignored repeated state requests to provide plans showing how the pipeline could cross 251 streams by going under the streams, rather than digging trenches through them.

    Study: Fracking Chemicals Alter Immune System in Mice - Researchers from the University of Rochester have found the first evidence that early life exposure to groundwater contaminated by fracking chemicals "alters" the immune system in mice.The paper, published Tuesday in Toxicological Sciences , could imply potential health dangers for the roughly17.6 million Americans living within a mile of least one active oil or gas well.For the study, researchers exposed pregnant mice to a mixture of 23 chemicals found in fracking groundwater that are known endocrine disruptors.The researchers then observed that the mouse pups, particularly females, exposed to the 23 chemicals in the womb had "abnormal immune responses" in fighting off several types of diseases, including an allergic disease, a type of flu and a disease similar to multiple sclerosis, according to a press release of the analysis."The mice whose moms drank water containing the mixture had faster disease onset and more severe disease," lead author Paige Lawrence, the chair of Environmental Medicine at the University of Rochester Medical Center, explained to Environmental Health News . Human and mice immune systems are "more similar than they are different," Lawrence added to the news site. "This provides information as to what to look for in people."

    Study links fracking chemicals to immune imbalance - Among predictions of a second fracking boom in the US, the first evidence that chemicals found in ground water near fracking sites can impair the immune system will be published in Toxicological Sciences on May 1. The study, performed in mice, suggests that exposure to fracking chemicals during pregnancy may diminish female offspring's ability to fend off diseases, like multiple sclerosis.  Fracking, also called hydraulic fracturing or unconventional oil and gas extraction, involves pumping millions of gallons of chemical-laden water deep underground to fracture rock and release oil and gas. About 200 chemicals have been measured in waste water and surface or ground water in fracking-dense regions and several studies have reported higher rates of diseases, like acute lymphocytic leukemia and asthma attacks, among residents in these areas."Our study reveals that there are links between early life exposure to fracking-associated chemicals and damage to the immune system in mice," said Paige Lawrence, Ph.D., chair of Environmental Medicine at the University of Rochester Medical Center, who led the study. "This discovery opens up new avenues of research to identify, and someday prevent, possible adverse health effects in people living near fracking sites."Of the 200 fracking chemicals found in ground water, 23 were recently linked to reproductive and developmental defects in mice. Susan Nagel, Ph.D., associate professor of Reproductive and Perinatal Research at the University of Missouri School of Medicine and a co-author of this study, classified the chemicals as endocrine disrupters, meaning they can interfere with hormones and derail hormone-controlled systems. Because the immune system is greatly influenced by hormones, Lawrence tested the immune impact of those 23 fracking chemicals on mice. Lawrence's team added the chemicals to the drinking water of pregnant mice at levels similar to those found in ground water near fracking sites.

    Gov. Larry Hogan's support of a Maryland fracking ban camouflages a pro-fracking policy - Gov. Larry Hogan’s policies on fracking — natural gas extraction through the technology known as hydraulic fracturing — are disingenuous. Hogan did sign 2017 legislation banning fracking in the state with laudable words about protecting our “clean water supply and natural resources.” But this is just astute political maneuvering. The truth is that the governor doesn’t support clean-energy policies and has been busy bolstering a robust and statewide infrastructure for fracked gas. After allaying concerns by signing the fracking ban into law, Hogan — along with his allies on the Public Service Commission and in the state Department of Energy — has been kick-starting a natural gas boom by aggressively promoting a dangerous web of fracked gas pipeline infrastructure and gas combustion projects throughout the state. Take, for example, the Potomac Pipeline, recently green-lighted by Hogan despite fierce opposition from activists, health professionals and residents concerned about the safety of the drinking water that millions of people get from the Potomac River. This pipeline is a project of TransCanada Corp., responsible for the infamous Keystone XL line that experienced leaks in 2016 and 2017. It will carry fracked gas from Pennsylvania across Maryland to West Virginia. With no oversight by the state, TransCanada will be allowed to excavate for and drill a 3.4-mile pipeline under the Potomac. Another project, the proposed Delmarva Pipeline, would travel 190 miles from Rising Sun down the Eastern Shore, passing through eight of the Shore’s nine counties and substantial amounts of farmland. While the gas industry will surely profit, Maryland will suffer scarred landscapes, air and waterways pollution and risks to local livelihoods. Any financial gain for the Eastern Shore will come at a steep price. The most telling indicator of Hogan’s support of for the fracked gas industry is his attitude toward the people of Lusby in Southern Maryland. They live alongside Cove Point, the newly expanded liquefied natural gas export terminal on the Chesapeake Bay. The terminal is owned by Virginia-based Dominion Energy Co.

    NYMEX Jun natural gas futures rebound from lows, up 0.1 cents at $2.772/MMBtu -- NYMEX June natural gas futures fell only to rebound in overnight US trading as traders mull the onset of the injection season. At 6:45 am EDT (1045 GMT) the contract was 0.1 cents higher at $2.772/MMBtu after trading a range of $2.756/MMBtu to $2.778/MMBtu. Storage erosion continued three weeks beyond the usual start of the injection season, with data from the Energy Information Administration showing an 18-Bcf draw for the week ended April 20 compared with a 71-Bcf injection a year earlier and the 60-Bcf five-year average build. However, changing weather indicates a possible switch to injections. The National Weather Service sees below-average temperatures restricted to the lower tier of the Northeast, much of the mid-Atlantic, most of the Midwest and a few patches of the south-central US in the six-to 10-day period and to most of the eastern US in the eight-to 14-day period. 

    NYMEX June natural gas futures up 3.4 cents at $2.797/MMBtu on low stocksNYMEX June natural gas futures rose in overnight US trading on low inventories but were capped by the expected start of the injection season.At 6:50 am EDT the contract was 3.4 -  cents higher at $2.797/MMBtu."The industry has a significant volume of Nat Gas to make up for total inventories to get back to a comfortable level...," Energy Management Institute Principal Dominick Chirichella said in a note.  US inventories have continued to draw three weeks into what is usually the injection season, reaching 1.281 Tcf, or 897 Bcf below a year earlier and 527 Bcf below the five-year average, after the Energy Information Administration reported an 18-Bcf withdrawal for the week ended April 20. Market participants are already looking to a changeover to storage builds, however, when the next storage report covering the week ended April 27 is released on Thursday.

    The US gas market braces for a storage surge --The U.S. gas market in April — the first month of the official storage injection season — was anything but typical. Production was at record highs, nearly 8.0 Bcf/d higher than last year. At the same time, weather in April was exceptionally cold, which meant storage activity remained in withdrawal mode on a net U.S. basis through the first three weeks of the month — a first for the April gas market going back at least eight years. That anomaly, in turn, led to an expanding deficit in storage compared to previous years, deferring the inevitable — shoulder season weather and supply surpluses — for another month. But now, in May, with the cold-weather effects on gas demand fading and record production levels here to stay, the market is bracing for a storage tsunami. The question is, will it be enough to erase the massive inventory deficit compared to recent years? Today, we update our analysis of the gas market balance and implications for the 2018 injection season. This is the latest of our regular updates of the gas market fundamentals. When we last checked in on the gas supply and demand balance last month in Ghost On the (Trading) Floor, the market was exiting a withdrawal season with a massive 700-Bcf deficit in storage compared with the prior winter (2016-17), despite record production levels and lackluster winter weather and demand. But as we noted then, that year-on-year storage differential was due more to an incredibly mild winter last year than to this winter being particularly cold. In fact, putting it into historical context, winter 2017-18 ranked the ninth-warmest in nearly five decades. In other words, had winter 2016-17 been a more normal one, this past winter would have come out much less bullish by comparison, particularly given the supply surplus — the implication being that as soon as the cold weather and related heating demand dissipated, soaring production volumes would inundate the market and rapidly shrink the year-on-year storage deficit. But that didn’t happen, at least not in April.

    Weekly Gas Storage: Spring Build Begins -- The EIA released its weekly Natural Gas Storage Report today, outlining how national natural gas stocks have changed in the last week. In total, the EIA reports natural gas stocks rose by 62 Bcf last week, increasing from 1,343 Bcf to 1,299 Bcf. This is 40.2% below the 2,246 Bcf that was in storage at this point last year, and is 28.4% below the five-year average of 1,877 Bcf. This week’s storage draw was in line with expectations, as analysts predicted a draw of 52 Bcf.

    NYMEX June gas mixed on EIA stocks data, edges fractionally higher at $2.727/MMBtu - NYMEX June natural gas futures inched fractionally higher in overnight US trading supported by lingering storage deficits but struggled to hold onto the gains due to the onset of the injection season. At 6:45 am EDT (1045 GMT) the contract was just 0.1 cent higher at $2.727/MMBtu, after trading in a $2.724-$2.742/MMBtu range. US inventories finally began rebuilding well after the traditional April 1 start of the injection season, with a 62 Bcf addition to stocks reported by the Energy Information Administration in its storage data for the week ended April 27. Although the reported storage build exceeded market expectations, it was below both 68 Bcf a year earlier and the 69 Bcf five-year average. Total working gas stocks climbed to 1.343 Tcf, but deficits widened to 903 Bcf against a year earlier and 534 Bcf against the five-year average.

    Fracking's methane leaks may cook the planet -- Jim Warren, the executive director of the Durham-based consumer advocacy group NC Warn, seems these days like a frantic lead character from a 1950s science fiction movie. He has seen an invisible gas being released by powerful corporations that is endangering the planet — but no one will listen to him. He's not surprised that the corporations – especially Duke Energy – don't want to believe him. But he's mystified that news outlets that usually would pounce on such news are oddly indifferent. Warren is desperately trying to break through with the message that natural gas is not — as utilities claim and the media often repeat — a cleaner fossil fuel than coal whose increased use will slow the buildup of greenhouse gases. Burning natural gas does indeed produce less carbon than burning coal, but the process of collecting natural gas using hydraulic fracturing, or fracking, is releasing high levels of methane — a gas than can be 80 times more potent than carbon dioxide in causing atmospheric warming. "We are up against the wall as far as halting peak emissions soon," Warren said. "If they don’t start heading down, we will have baked in so much that it will move ahead at it own momentum, at a pace no one can predict. Its happening a lot more quickly than anyone believed. Within a decade, we could have abrupt, cascading changes happening."To heighten awareness of the methane threat, the Environmental Defense Fund said in April that it will spend millions of dollars to launch a satellite by 2021 that will spot methane leaking from oil and gas facilities worldwide. It hopes the detection will create pressure to cap the leaks. “Cutting methane emissions from the global oil and gas industry is the single fastest thing we can do to help put the brakes on climate change right now,” said Fred Krupp, EDF president. But that message is being drowned out by utilities promoting clean-burning natural gas.

    Federal judge skeptical about pipeline's impact on wetlands -  One of the federal judges considering whether to allow construction of a crude oil pipeline to continue in an environmentally fragile Louisiana swamp seemed to downplay concerns Monday about the project's impact on forested wetlands. A three-judge panel of the 5th U.S. Circuit Court of Appeals heard arguments over whether to permanently throw out a lower court's preliminary injunction that initially stopped construction in the Atchafayala Basin. A different panel of the appeals court last month suspended the injunction by Baton Rouge-based U.S. District Judge Shelly Dick, who is presiding over the lawsuit filed by Sierra Club and other environmental groups against the U.S. Army Corps of Engineers and Bayou Bridge Pipeline LLC. The lawsuit alleges the Corps violated the Clean Water Act and other environmental laws when it approved a permit for the project. In issuing the February injunction, Dick concluded the project's irreversible environmental damage outweighed the economic harm that a delay brought to the company. Earthjustice attorney Jan Hasselman said "the record is replete with evidence of significant impact" that the pipeline will have on the environment, including the destruction of some trees that are thousands of years old and a reduction in the crawfish population. But Judge Edith Jones appeared skeptical of some of Hasselman's claims on the environmental dangers from the pipeline. "They are not destroying wetlands. That's a little inaccurate," Jones said,

    US proposes to ease some requirements of an offshore drilling safety rule - The US is proposing to ease some of the requirements included in a key offshore drilling safety rule in order to save operators millions of dollars and "reduce unnecessary burdens." The proposed changes to the well control rule, enacted in 2016 in response to the 2010 Deepwater Horizon disaster, affect only a small portion of that rule's requirements and will not reduce safety, the Interior Department's Bureau of Safety and Environmental Enforcement said Friday. The changes will "reduce regulatory burdens" and save offshore operators approximately $946 million over the next 10 years, BSEE said. Friday's announcement did not contain many specifics. But Interior officials emphasized that the changes, to be detailed in the next few days, only applied to about 18% of the provisions of the original well control rule. The "engineers on our team have gone in with a scalpel and been very precise" about which provisions of the rule they chose to revise, Principal Deputy Assistant Secretary for Land and Minerals Management Katharine MacGregor said on a call with reporters. "Our process has been tailored and measured," focusing on safety "without lessening safeguards," BSEE Director Scott Angelle said. 

    U.S. crude output jumps to record 10.26 million barrels per day in February - (Reuters) - U.S. crude oil production jumped 260,000 barrels per day (bpd) to 10.26 million bpd in February, the highest on record, the Energy Information Administration said in a monthly report on Monday. Production in Texas rose by 106,000 bpd to above 4 million bpd, also a record high based on the data going back to 2005. The Permian basin, which stretches across West Texas and eastern New Mexico, is the largest U.S. oilfield. Output from North Dakota declined marginally to 1.15 million bpd, while output in the federal Gulf of Mexico rose by 89,000 bpd to 1.72 million bpd. The agency also revised January U.S. oil production up by 40,000 bpd to about 10.004 million bpd. U.S. natural gas production in the lower 48 states rose to an all-time high of 87.6 billion cubic feet per day (bcfd) in February, up from the prior record of 87.3 bcfd in December, according to EIA’s 914 production report. Output in Texas, the nation’s largest gas producer, increased 1.5 percent in February to 22.4 bcfd, the most since December. In Pennsylvania, the second biggest gas producer, production increased 2.1 percent to a record high 16.4 bcfd in February. That compares with 15.0 bcfd in the same month a year ago. Total oil demand in February was up 2.4 percent, or 460,000 bpd, to 19.62 million bpd versus last year, EIA data showed, as strong demand for distillates helped soften weakness in gasoline demand. Distillate demand in February was up 1.5 percent, or 57,000 bpd, to 3.96 million bpd versus last year, EIA data showed. Gasoline demand in February was down 1.9 percent, or 169,000 bpd, to 8.81 million bpd, EIA data showed. Gasoline demand was up 2.8 percent year-over-year in January.

    U.S. crude oil production efficiency continues to improve - U.S. tight oil production increased in 2017, accounting for 54% of total U.S. crude oil production, in part because of the increasing productivity of new wells. Since 2007, the average first full month of oil production from new wells in regions tracked by EIA’s Drilling Productivity Report (DPR) has generally increased. These growing initial production rates have helped tight oil production to increase despite slowdowns in drilling activity when oil prices fell. The average new well in each DPR region in 2017 produced more oil than wells drilled in previous years in those same regions, a trend that has persisted for nearly ten consecutive years. More effective drilling techniques, including the increasing prevalence of hydraulic fracturing and horizontal drilling, have helped to increase these initial production rates. In particular, the injection of more proppant during the hydraulic fracturing process and the ability to drill longer horizontal components (also known as laterals) have improved well productivity.  This increasing well productivity has supported tight oil production even in years such as 2015, when crude oil prices fell and rig counts dropped. In 2016, rig counts continued to decline sharply and total tight oil production decreased for the first time in 10 years. Fewer wells were drilled; however, those that were drilled were drilled more quickly and located in more productive areas, which led to increased per-well production and profitability.  As rig counts continue to recover from decreases that occurred during 2015 and 2016, producers have increasingly targeted the Permian region, which spans parts of western Texas and eastern New Mexico. The geological structure in the Permian region is more complicated than in other regions, and it took producers more time to advance the drilling and completion technology in the region. However, the Permian region is larger and has more potential for oil production than other regions. Total production and production per new well have increased in the Permian for 11 consecutive years.

    E&P profits appears ready to take off this year after turning a corner in 2017 - The plunge in crude oil prices that started in mid-2014 had a major and lasting impact on the 44 exploration and production companies (E&Ps) we’ve been tracking, triggering a $188 billion swing in net results — from $57 billion in pre-tax operating profits in 2014 to $131 billion in losses in 2015. Defying predictions of widespread bankruptcies, the industry undertook a dramatic strategic and operational transformation that enabled it to emerge from the abyss and return to profitability — albeit just barely — in 2017. Key factors in the industry’s impressive turnaround include the high-grading of portfolios, intense capital discipline and a laser-like focus on operational efficiencies. Today, we dive into the 2017 financial reporting of these companies to identify how these changes have affected income statements and set up the industry for future profitability growth.

    Crude Prices Up, Crude And Gas Production At Record Highs, More Midstream Infrastructure Needed --  Seems like just about everything to do with energy markets is up these days.  Crude oil prices are back to the levels of late 2014.  Crude production hit a 10.6 MMb/d record volume last week, while lower-48 natural gas has been bouncing around an 80 Bcf/d record level. Exports of crude, gas and NGLs are at all-time highs.  But all those hydrocarbon molecules must find their way from the wellhead to market, and in several high-growth regions, that is becoming increasingly problematic, as midstream infrastructure struggles to keep up. In our recent School of Energy, we examined these developments, considering their impact on production trends, domestic demand and the outlook for growth in export volumes. Did you miss it?  Not a problem. We taped the whole conference, andSchool of Energy Online is now available in 12 hours of streaming video, along with all the Excel models, slides, and graphics that we use to tie energy markets together. Today, in this unabashed advertorial, we review some of the highlights of the conference. If you are a trend-follower, you should like Figure 1, which shows U.S. crude oil price, production and exports since 2016. From the depths of despair two years ago, crude oil prices have almost tripled, from $26/bbl in February 2016 to $68/bbl on Friday (April 27). U.S. crude oil production has ramped up 25%, from 8.5 MMb/d in mid-2016 to 10.6 MMb/d in the Energy Information Administration’s (EIA) most recent numbers.  And crude oil exports have skyrocketed from about 0.5 MMb/d in 2016 to 2.3 MMb/d last week. It’s a similar story for production and exports of natural gas and natural gas liquids, although the prices of those commodities have not shot up like oil.

    Citi: US To Become World's Top Oil Exporter | OilPrice.com --As global oil markets shift their attention from U.S. shale oil production back to a resurgent Saudi Arabia and Russia and geopolitical concerns bearing down on oil prices, Citigroup said last Wednesday that the U.S. is poised to surpass Saudi Arabia next year as the world's largest exporter of crude and oil products. The U.S. exported a record 8.3 million barrels per day (bpd) last week of crude oil and petroleum products, the government also said Wednesday. Top crude oil exporter Saudi Arabia's, for its part, exported 9.3 million bpd in January, while Russia exported 7.4 million bpd, the bank added. However, it should also be noted that the Citi projection is for both crude and finished (refined) petroleum products, not only crude oil. Saudi Arabia remains the world's largest exporter of crude, though since January amid the OPEC/non-OPEC production cut agreement that figure has fallen. On April 10, the Saudi oil minister said that the kingdom planned to keep its crude oil shipments in May below 7 million bpd for the 12th consecutive month. Saudi Arabia has also trimmed its oil production more than 100 percent of the output cuts it agreed to under the January 2017 production deal. In March, Saudi crude production was at 9.91 million bpd, below the deal's output target of 10.058 million bpd. Russia, however, also part of the global oil protection cut agreement, increased its crude oil production by 0.2 percent to 10.97 million bpd in March, compared to the previous month and an 11-month high. Though Citi has projected that the U.S. could bypass Saudi Arabia in the export of crude and petroleum products, U.S. crude oil exports have been relatively low compared to other major oil producers since the Obama Administration lifted the ban of American crude oil exports in 2015.

    Oil Production Vital Statistics April 2018 -  On the World stage, momentous events are unfolding. The USA, UK and France have bombed Syria risking confrontation with Russia. The Israelis are more than a little concerned about Iranian involvement in Syria. And on the Korean peninsula, peace between N and S is on the cards spreading prosperity and more energy consumption for all. On the second tier, oil production in Venezuela and Mexico continue to tank. No one should be surprised, therefore, that Brent has breached $74/bbl. The only thing standing in the way of another severe oil price spike is the N American frackers going back more seriously to work. They may one day be joined by frackers in Saudi Arabia, China and Russia. The chart below from the February OMR is one of the more important produced by the IEA showing the balance between supply and demand leading to either stock draw or additions. So important in fact that I have decided to leave it there from the last report 2 months ago so that it can be compared with the equivalent chart from the April OMR that is reproduced just below it.The difference between the two charts are quite subtle but with dramatic impact. Data revisions result in crude oil stock draws for 7 quarters backdated from 4Q 18. This has meant that the IEA now sees OECD crude oil stocks at the 5 year mean at the present day. The momentum of the trend will see OECD crude oil stocks shooting to the low side. Even higher oil prices may be on their way. Oil price data updated to 30 April 2018 using data from the EIA.

    • Figure 1 Oil prices are heading higher since the double bottom of January 2016. The WTI – Brent spread, a symptom of the high oil price era has re-opened.
    • Figure 2 Longer term view of daily oil price. Note how the Brent-WTI spread was a feature of the high oil price era.
    • Figure 3 WTI minus Brent. At its peak, the spread reached $30 per barrel. Is this a significant indicator of things to come?
    • Figure 4 Stacked area chart showing North America total rig count. Not much to comment on here.
    • Figure 5 Stacked area chart of US Total rig count showing the oil – gas split. Signs that the US rig count is picking up pace with a renewed marginal shift towards gassy plays.
    • Figure 6 Same data as above but plotted as an unstacked line chart. The response of US frackers returning to work is so far very muted. But the efficiency of what they are doing must be factored in.
    • Figure 7 US rig count broken out by sedimentary basin / petroleum systems play. The Permian play in Texas remains by far the most important.
    • Figure 8 Drilling has slumped in the North Sea to a record low since 1995. Precious little sign yet of a drilling revival in the North Sea.
    • Figure 9 Drilling within OPEC remains close to a cyclical high. Signs of an uptick in OPEC drilling.

    Boom in West Texas oil patch lifts wages, prices (Reuters) - In West Texas, rising oil prices are fueling a sharp economic upswing, lifting employment and pay to records, driving up spending at hotels, restaurants, and car dealerships, and raising the cost of housing and other essentials. This parched patch of land, under which lies the largest oil-producing rock formations in the United States, is the epicenter of a growth binge that shows just how tight the link remains between low unemployment, rising wages, and upward pricing pressure. After a two-year crash, the price of crude CLc1 began to recover in 2016 and pierced $60 a barrel early this year. But oil is still far cheaper than at the peak of the previous eight-year boom that began in 2006 North Dakota’s Bakken oil patch and supercharged the city of Williston. In the Permian basin, which stretches across West Texas and eastern New Mexico, the latest boom is being helped by advances in technology that allow drillers to extract much more from each acre. “$60 is like the new $100,” said Dallas Fed economist Michael Plante in a mid-April interview. Breakeven costs are now as little as $25 per barrel, according to the Dallas Fed’s most recent survey, so energy companies here no longer need $100 oil to make lots of money. And Midland and its neighbor Odessa, the biggest towns for miles and the regional base for major oil producers in the Permian Basin,

    Despite Disappointing Returns, Oil Driller Pushes Ahead With Fracking Near Rare Texas Wildlands - Sharon Kelly, DeSmogBlog - If you ask the CEO of Apache Corp., his company made in 2016 the kind of once-in-a-lifetime find that every oil driller dreams of: a massive oil and gas field that no other company noticed, where thousands of wells could be drilled and fracked to produce massive amounts of fossil fuels -- and, in theory, profits.Indeed, Apache expects a staggering amount of oil and gas can be found in this stretch of West Texas desert: 3 billion barrels of oil; 75 trillion cubic feet of natural gas; and even more natural gas liquids like ethane and propane, which feed plastics production. And it all sits on the outer margins of the famously prolific Permian Basin, where in 2017, one out of every three barrels of shale oil in America was pumped.Alpine High, as the company named its  discovery, was in a little-drilled area near Pecos, Texas, right on the outskirts of the Permian, on land ignored by other drillers who assumed there would be little potential for big oil finds letting Apache buy up leases for a fraction of the price of nearby land. But Apache's big oilfield dreams risk doing irreversible harm to an irreplaceable place -- and, some financial analysts warn, with no clear promise of big profits. Already, there are signs the wells may not live up to Apache's early hopes and pressure has been growing from Wall Street to stop pouring money into huge infrastructure projects based on risky assumptions. Nonetheless, Apache seems to still be dreaming big, pressing forward with plans to drill up to 5,000 wells, each with its own toxic wastewater, gas flares, and air pollution, all in the middle of one of the most ecologically sensitive places in West Texas.

    Drilling rig count jumps in Permian, but not in Texas  - The number rigs actively drilling for oil spiked yet again in the booming Permian Basin, but not in Texas.Instead, the growth came in the relatively smaller portion of the Permian that extends northwestward into neighboring New Mexico, according to weekly data from Baker Hughes, a GE company.The overall drilling rig count jumped by 11 this week, including nine rigs seeking crude oil. Six of those came in New Mexico, while Texas only gained two active rigs. Other states with tiny gains included Oklahoma, Louisiana and North Dakota.There are now 834 rigs drilling for oil with more than half of them - 458 - situated in the Permian. There are 196 gas-seeking rigs and two miscellaneous rigs, creating a total rig count of 1,032, the highest count since March 2015. The total count is up from an all-time low of 404 rigs in May 2016.

    EPA Gives Biofuel Waiver To Billionaire Icahn’s Oil Refinery - The U.S. Environmental Protection Agency (EPA) has granted an oil refinery owned by billionaire Carl Icahn a waiver from the biofuel blending regulations—a waiver typically given to companies in financial hardship.Under the Renewable Fuel Standard (RFS), oil refiners are required to blend growing amounts of renewable fuels into gasoline and diesel. Refiners that don’t have the infrastructure to blend biofuels must purchase tradeable blending credits known as Renewable Identification Numbers, or RINs.The EPA has the authority to grant waivers from the renewable fuel standard to refineries whose oil processing capacity is below 75,000 bpd if the companies owning the refinery can prove that the credits they must buy are causing them financial hardship.The EPA waiver for the 74,500-bpd Wynnewood, Oklahoma, refinery owned by Icahn’s CVR Energy has been granted in recent months, Reuters sources said, without specifying exactly when the waiver was given. “This one’s going to be hard for [Scott] Pruitt to explain,” Brooke Coleman, head of the Advanced Biofuels Business Council industry group, said in an email to Reuters on Friday, referring to the EPA administrator.

    Investigators search for cause of Wisconsin oil refinery explosion (Reuters) - Tens of thousands of residents of a northern Wisconsin city were cleared to return to their homes on Friday, the day after a blast at a Husky Energy Inc refinery injured at least 15 people, a local official said. Investigators searched for the cause of the massive Thursday morning explosion at the refinery, capable of processing up to 38,000 barrels of oil a day, which shook the city of Superior, Wisconsin, home to about 27,000 people. “All indications are that the refinery site is safe and stable and the air quality is clean and normal,” Superior Mayor Jim Paine said in a Facebook posting, noting that the evacuation order was lifted as of 6 a.m. local time (1100 GMT). At least 15 people were injured, local media reported, and at least 10 people - one seriously injured - were taken to area hospitals, said a spokeswoman for Essentia Health-St. Mary’s Medical Center, which operates hospitals in Superior and nearby Duluth, Minnesota. What ignited the blast was not clear. After an initial blaze was extinguished, a storage tank was punctured, and a second fire erupted, Husky Energy spokesman Mel Duvall said. Another tank caught fire at 3:15 p.m., a local ABC affiliate reported, citing Douglas County authorities.Thick black smoke billowed from the facility and hung over Superior throughout the day on Thursday, forcing tens of thousands to flee homes and businesses. Friday classes were canceled in Superior and nearby Maple school districts. There were no reports of fatalities, and all of the refinery’s workers have been accounted for, Husky Energy’s Duvall said.

    Colorado Fracking Company Wants to 'Silence' Opposition to Massive Drilling Project, Lawyer Says - A college student, a legal observer, and a videographer attended a protest at an oil and gas construction site in Greeley, Colorado in early March and all three are now getting sued by the company behind the massive project.The student, Cullen Lobe, already was facing criminal charges in Weld County, Colorado for lockinghimself to a bulldozer as part of an act of civil disobedience at the oil and gas construction site. But for Extraction Oil and Gas, the government’s criminal charges against Lobe weren’t enough. The Denver-based company decided to take legal action of its own.The company’s civil lawsuit names Lobe and four others — John Lamb (the legal observer), Brian Hedden (the videographer), Jeremy Mack, and Mary Delffs — as defendants. While Lobe was arrested and now faces criminal charges, the four other individuals were not arrested but instead were given criminal citations by the Weld County Sheriff’s Department for trespassing at the Extraction Oil and Gas drilling site.The legal action against Lamb, a legal observer with the National Lawyers Guild who was acting as a legal observer at the March 8 protest, and Hedden, an independent journalist who videotaped the protest, comes at a time of increasing concern surrounding the arrest and prosecution of reporters and protesters critical of U.S. government and powerful corporations.  During protests of Donald Trump’s inauguration in Washington D.C., at least six journalists and filmmakers were charged with felony rioting offenses. Legal observers also were rounded up as part of the D.C. police’s strategy to trap and then arrest everyone who was on the street. The charges were eventually dropped against the legal observers and most, but not all, the journalists. A reporter who went to trial as part of the first group of inauguration defendants was found not guilty. Another journalist is among the defendants still facing prosecution.

    Colorado Dem Who Compared Fracking To Rat Poison Accuses Lawmakers Of Being Irrational : A Democratic lawmaker in Colorado compared fracking to manufacturing rat poison Monday after chastising Republican counterparts for not acting rationally on oil and gas development in the state. Colorado citizens have a right to be terrified at the possibility that energy producers might put a natural gas well near their homes, Rep. Matt Gray of Broomfield, Colo., said on the floor of the Colorado House. He then suggested enacting more natural gas wells might be too risky for the public. “They would be incredibly upset about that. If they were going to put a rat poison manufacturing facility in your district, you’d be incredibly alarmed about that,” said Gray, who was commenting on a bill that would force existing wells to be moved further away from schools and other buildings. “If all you hear about what’s going on is what happens at this well, what you see in the newspaper, you don’t understand what that means to the residents who are affected by that,” he said. “You would understand it if somebody said, ‘I want to put a fireworks factory in your district.’ People would be like, ‘What is going on, you’re going to put that next to a neighborhood?’” Broomfield passed a measure in 2017 to enable the city require additional protections before permitting drilling. Weld County is the state’s largest oil and gas producer, with 91 percent of Colorado’s oil production. Much of the animus against hydraulic fracturing has emanated from Colorado, despite the state’s reliance on the oil and gas industry. Colorado officials have nevertheless taken a hard tact against the state’s anti-frackers.

    Trump Fracking Leases Threaten Already Smog-choked Communities - — New federal fracking leases threaten to worsen ozone pollution in communities across the country ― within and near places the Environmental Protection Agency today designated as exceeding federal limits for deadly ozone pollution. The Trump administration declared new “nonattainment” areas today in some of the same places where it has approved massive fracking leases ― including urban centers and rural communities in Utah, Colorado and Texas. However the EPA today failed to declare part of Colorado’s Weld County as a nonattainment area despite pollution from thousands of oil and gas wells that contribute to some of the highest smog levels in the state. People who live in places with unhealthy levels of air pollution are at risk for premature death, lung cancer, asthma attacks and cardiovascular problems. Living in these areas also increases the risk of stillbirths and developmental delays in children. “It’s despicable for the Trump administration to gamble with the lives of children to appease fossil fuel interests,” said Diana Dascalu-Joffe, a senior attorney at the Center for Biological Diversity. “Allowing oil and gas development in areas already choking on pollution is making a bad situation much worse. They’re creating toxic environments for communities and wildlife and destroying public lands in the process.” Ozone, commonly known as smog, stems from tailpipes, smokestacks and industrial activities like oil and gas development. The EPA strengthened its ozone standard following an exhaustive scientific review in 2015. According to the agency’s own estimates, meeting the standard will prevent hundreds of deaths, as well as 230,000 asthma attacks in children, each year.  Pollution exceeds new federal limits in several metropolitan areas along Colorado’s Front Range, including in Denver, Boulder and Fort Collins. Since 2017 the Bureau of Land Management has issued multiple leases to oil and gas companies in or near these nonattainment areas. Public health problems from fracking along the Front Range have been well documented. Still EPA failed to designate heavily polluted northern Weld County as exceeding federal ozone limits.

    Large Oil Spill Reported on Montana Reservation, Contaminating Pond - A well operated by Anadarko Minerals Inc. spilled a " substantial " amount of oil in the central region of the Fort Peck Reservation in northeast Montana, according to local media.An estimated 600 barrels of oil and 90,000 barrels of brine (production water) leaked from the well, theGlasgow Courier reported, citing officials with the reservation's Office of Environmental Protection and the Bureau of Land Management.The spill was first discovered by a farmer doing a flyover in the area. The farmer immediately notified Valley County authorities about the incident.According to a press release received by MTN News , the spill was reported to the reservation's Office of Environmental Protection on April 27. The exact date that the leak occurred is not yet clear. The well was shut in late December.Fort Peck Reservation, which lies north of the Missouri River, is home to members of the Sioux and Assiniboine nations. Members adamantly oppose the proposed Keystone XL (KXL) pipeline and its potential to endanger their water supply. The press release states that the spill further reinforces tribal officials' opposition to the KXL and pipeline development on or near the reservation. Oil and brine from the leak has now traveled roughly 200 yards downhill to a stock pond used by tribal entities to water livestock. The extent of the pond's contamination is not yet determined, the press release continued. According to initial assessments, about three to six inches of oil currently sit on top of the water.

    Coalition to Protect SLO County gathers 14000 signatures supporting prevention of fracking - After two months and thousands of clocked volunteer hours, Coalition to Protect San Luis Obispo County has all but guaranteed the “Protect Our Water, Air, and Land: Ban Fracking and Oil Expansion in SLO County Initiative” a place on the ballot for the November election. An estimated 14,000 signatures from county residents now support this citizens’ initiative to prevent new oil and gas extraction in all unincorporated lands of San Luis Obispo County. This would remove rural areas such as Nipomo, Oceano, Los Osos, Templeton and Santa Margarita from potential new oil and gas well drilling or ban fracking, permanently. The initiative was founded in August 2017 after the owner of the Arroyo Grande Oil Fields requested an aquifer exemption from the California’s Division of Oil, Gas and Geothermal Resources. The exemption would allow increased wastewater injections into the Arroyo Grande aquifer. If made law, the coalition’s initiative would prohibit this expansion but would not hinder the fields’ existing operations. “Our campaign is really going to be about education,” the coalition’s co-founder Charles Varni said. “We have our folks that are going to support us no matter what. We have folks that are going to be against us no matter what. And then we have this group in the middle saying, ‘Give me more information.’” Volunteers with the coalition had until April 30 to collect and substantiate petition signatures. Records were turned in to the Office of the County Clerk-Recorder May 1. The city then has 30 days to verify that the coalition met the minimum 8,580 valid signatures to secure a spot on the ballot. The City of San Luis Obispo has announced plans to pursue new sources of renewable energy. Varni said this initiative falls in line with that prioritization. 

    Pipeline shortage could choke North America’s oil supply with ‘serious implications for global markets’, IEA warns –- Canada will continue to pump out more barrels from the oilsands over the next few years, but delays to pipeline approvals and uncertainty over the provision of more export capacity is undermining the next wave of development, according to the International Energy Agency.In its annual five-year oil forecast published Monday, the IEA warned that Canadian oil pipeline constraints are part of a wider capacity crisis brewing across North America.“Colossal growth in North American supply from 2018 to 2023 raises the crucial question of whether there is enough pipeline capacity to transport and sell all of that oil,” the Paris-based agency said in a report. “If sufficient capacity is not built, the increase in production we foresee could be at risk, with serious implications for global markets.”Despite the pipeline shortages, Canada will be among the countries leading growth in oil output over the next few years, taking its overall production to 5.6 million barrels per day by 2023, compared to 4.8 million bpd this year.But the surge would come at a time of limited export options. “During 2018-19, West Texas and West Canada are likely to face shortages in midstream capacity brought about by a rapid production increase,” the IEA said. “The situation will be much more severe in Canada than West Texas as legal delays mean capacity is unlikely to increase before the end of 2019.”  Choked pipelines means Canadian heavy oil benchmark Western Canada Select is currently trading at a $31 per barrel discount against the West Texas Intermediate U.S. crude oil benchmark, compared to $12 at the same time last year, according to Petroleum Services Association of Canada data. Over the next few years, Canadian takeaway capacity will likely come from Enbridge Inc.’s Line 3 replacement between Hardisty, Alberta, and Superior, Wisconsin.. Another 125,000-bpd of takeaway capacity may come from Enbridge optimising its Mainline conduit. Kinder Morgan Canada Inc.’s Trans Mountain pipeline also faces significant opposition, as does TransCanada Corp.’s Alberta-to-Nebraska Keystone XL pipeline. The IEA does not expect either of the pipelines to be ready before 2021.

    U.S. imports of Canadian crude oil by rail increase - Growth in Canadian crude oil production has outpaced expansions in pipeline takeaway capacity and, along with past pipeline outages, has driven Canadian crude oil prices lower and increased Canadian crude oil exports by rail to the United States. However, the outlook for increased volumes of Canadian crude oil shipped by rail to the United States is highly uncertain despite significant U.S. demand for Canadian crude oil, specifically on the U.S. Gulf Coast. Crude oil production in Canada increased to 3.9 million barrels per day (b/d) in 2017, up approximately 300,000 b/d from 2016. However, crude oil pipeline capacity out of Canada has failed to keep pace with growing production. Consequently, volumes of Canadian crude oil exported to the United States by rail increased in 2017. In December 2017, U.S. imports of Canadian crude oil by rail set a monthly record of 205,000 b/d, nearly matching the amount of crude oil shipped by rail within the United States that month (246,000 b/d). Changes in the relative prices of two crude oils—Western Canada Select (WCS) in Hardisty, Alberta, and West Texas Intermediate (WTI) in Cushing, Oklahoma—demonstrate the effects of transportation constraints. Until late 2017, WCS prices averaged $10 to $15 per barrel (b) lower than WTI, largely reflecting differences in the quality of the two crudes. In late 2017 and early 2018, as crude oil production began to exceed pipeline capacity and demand to transport crude oil by rail increased, WCS priced about $25/b lower than WTI. The price spread between WCS and WTI has since narrowed to an average of $16/b in early April, suggesting some demand for transporting Canadian crude oil by rail has lessened. Low WCS prices may have led some Canadian crude oil producers to reduce output and advance schedules for planned maintenance, likely reducing the need to move crude oil by rail.

    Calfrac revenue doubles as oil price rebound puts fracking crews back on job | Calgary Herald: Higher oil prices are helping energy producers to pull the Canadian well completion business out of the deep funk it entered after the crude price crunch of 2014. On Tuesday, Calgary-based Calfrac Well Services Ltd. reported it more than doubled its first-quarter revenue compared with the same period last year and is reactivating equipment it parked over the past three years. Meanwhile, both Calfrac and its crosstown rival, Trican Well Service Ltd., have been rehiring. According to disclosure documents, Calfrac added 1,000 employees in 2017 to take its total to 3,800 at year-end and Trican hired almost 900 people to jump to 2,067 staff. By comparison, Calfrac had 4,900 employees and Trican had 6,741 at the end of 2014.

    Oilsands thirst for natural gas hits record, environmentalists decry it as 'waste' – Nearly one-third of the natural gas burned in Canada last year was used to produce crude from the oilsands, the country’s energy regulator said Wednesday, something environmentalists called a “waste” of a cleaner-burning resource. According to a National Energy Board report, nearly 2.38 billion cubic feet per day or a record 29 per cent of purchased natural gas was used for oilsands production in Alberta in 2016. That’s up from the 730 million cf/d or 12 per cent of total demand in 2005.Natural gas is used in the oilsands to generate steam to inject into underground formations to thin the heavy, sticky bitumen crude and allow it to be pumped to the surface.The growth in so-called “thermal” projects is the main driver behind increased oilsands demand for natural gas, the NEB said.Environmentalists said that natural gas could be better used to heat houses, generate electricity or make plastics.“Rather than wasting this relatively low-carbon fuel to extract high-carbon oil from tarsands, let’s use it to heat homes as we speed the transition to the 100 per cent renewable future that science demands,” said Greenpeace campaigner Mike Hudema in an email.Andrew Read, a senior analyst with the Pembina Institute, said the report highlights the need for a national energy plan that aligns use of energy with Canada’s climate targets. “This is basically using our cleaner fossil fuel resources to produce dirtier transportation fuels,”

    Feature: Western Canadian heavy crude discount seen widening to 'high teens' on rail - Western Canada's benchmark heavy crude differential has tightened since early April, but observers say this could widen back out to reflect the cost of moving crude by rail and as heavy crude production increases. WCS has been assessed at a $15-$18/b discount to the NYMEX light sweet crude futures calendar-month average (WTI CMA) since April 3, S&P Global Platts data shows. That is in from a discount of $30.55/b in early February, when WCS was depressed by a lack of pipeline takeaway capacity following an unplanned Keystone Pipeline outage in November. Price swings going forward are likely to hinge on whether producers and rail companies are able to sign contracts for dedicated crude unit trains, traders and analysts say. "We expect volatility between unit train and pipeline economics," said Kevin Birn, a senior analyst with IHS Markit. "It's going to be very hard to predict pricing until it makes a definite switch." Birn said it was likely a WCS differential based on the cost of shipping by unit train will likely take hold over the course of this quarter, which would imply a discount to the WTI CMA of around $17-$19/b. Cenovus Energy CEO Alex Pourbaix made a similar prediction on an earnings call late last month, saying that once rail volumes ramp up he expects the WCS differential to "persist in the high teens to get rail down to the Gulf Coast." While price discounts tend to narrow as producers start moving more crude by rail to reduce a backlog, shipping by dedicated crude trains is still more expensive than using pipelines. The all-in cost of moving barrels by unit train from Alberta to the US Gulf Coast -- including loading, unloading, tariffs, fuel and car rental -- is currently estimated at $12.50/b by S&P Global Platts Analytics, with a higher rate for unexpected spot cargoes. The cost of shipping crude from Hardisty, Alberta, to Houston via Cushing, Oklahoma, is around $11/b, according to current pipeline tariffs.

    Europe's biggest bank retreats from the oilsands - Europe's largest bank has joined the list of global investors retreating from new financial commitments in the fossil fuel industry, including investments in oil-rich Alberta. HSBC, whose global assets total more than $2 trillion, announced Friday that as the climate change crisis deepens, it will no longer finance new coal-fired power plants (with a few targeted exceptions), Arctic drilling or new oilsands projects, including pipelines. The announcement comes as part of strengthened "energy policy" that aims to help customers transition to a low-carbon economy in a sustainable way, while "closing relationships with those who do not meet minimum standards."  "We recognize the need to reduce emissions rapidly to achieve the target set in the 2015 Paris Agreement to limit global temperature rises to well below 2 degrees Celsius, and our responsibility to support the communities in which we operate," said Daniel Klier, HSBC's global head of sustainable finance, in a Friday morning press statement.

    Andrew Scheer warns against using public money for Trans Mountain | Calgary Herald: Conservative Leader Andrew Scheer raised a red flag Friday over the potential use of taxpayers’ dollars by the federal and Alberta governments to backstop the expansion of the Trans Mountain pipeline. With British Columbia’s NDP government trying to kill the $7.4-billion pipeline project, and proponent Kinder Morgan setting a May 31 deadline for the uncertainty around the project to be resolved, one option raised by the Notley and Trudeau governments to move the pipeline forward is public investment. Possibilities that have been floated range from insurance guarantees to reimburse Kinder Morgan for losses caused by delays, to equity investments, to Alberta’s outright purchase of the pipeline. Scheer, speaking at a Calgary Chamber of Commerce luncheon at the Westin Hotel, said it’s absurd the situation has devolved to a potential government subsidy for a private company willing to spend its own money as long as it is confident it can proceed. “I think everyone can agree, regardless of their political stripes, that the federal government investing tax dollars in an energy project is not the optimal solution,” said the Regina Qu’Appelle MP, who was elected Conservative leader in an extremely close race last year. However, Scheer did not categorically rule out backing government investment in the pipeline, given that Kinder Morgan could walk away from the project at the end of the month.

    Catastrophic Cyberattacks Threaten Big Oil -  There are over a million oil and gas wells in the United States. There are also several hundred thousand miles of pipelines. Digitization is on the rise in the notoriously conservative oil and gas industry as companies wake up to the cost and operational efficiency boost that sensors and algorithms can offer them. Meanwhile, cybercriminals are keeping ahead of the learning curve, but oil and gas is largely pretending not to notice them. Energy companies - including E&Ps, pipeline operators, and utilities - spend less than 0.2 percent of their revenues on cybersecurity, two security consulting firms have calculated. This compares with three times this portion of revenues spent on cybersecurity by financial services providers and banks.  Oil and gas producers don’t seem to see themselves a likely target of a cyberattack even though such attacks against the industry have been growing in frequency. Symantec, according to Bloomberg, is tracking as many as 140 cybercriminal groups that target the energy industry. That’s up from 87 in 2015. Last year, Deloitte reported that the energy industry was the second most popular target for cyberattacks in 2016. Almost three-quarters of U.S. oil and gas companies, the consultancy said, had a cyber incident in that year, yet only a tiny majority cited cyber risk as a major concern in their annual reports. This is what makes the cybersecurity situation in oil and gas very worrying. A month ago this worry materialized in the hack attack against the communications system supplier to five pipeline operators. While the consequences of the hacking were not particularly serious, the attack should serve as an urgent warning to the industry: the more reliant it becomes on tech, the more vulnerable it becomes.  It’s only a matter of time before someone makes a blockbuster movie about hackers taking over oil producing infrastructure to remotely wreak havoc on the industry. Unfortunately, it may only be a matter of time before something like this happens in real life as well. Deloitte said as much in its 2017 report: “If a cyber attacker were to manipulate the cement slurry data coming out of an offshore development well, black out monitors’ live views of offshore drilling, or delay the well-flow data required for blowout preventers to stop the eruption of fluids, the impact could be devastating.”

    Environmental charity intervenes in fracking legal challenge -An environmental charity has intervened in the legal challenge to the Scottish Government’s fracking ban.Petrochemical giant Ineos, alongside Aberdeen firm ReachCSG, is taking Scottish ministers to court over their decision to convert a moratorium on the controversial gas extraction technique into an indefinite ban.Friends of the Earth Scotland (FoE Scotland) has submitted a public interest intervention in the case, due to be heard in May at the Court of Session. Announcing plans to seek a judicial review in January, Ineos said there were “very serious errors” in the decision-making process. The firm, which owns two fracking licences in Scotland, is challenging the legality of the ban and seeking compensation.However, FoE Scotland will argue the ban is lawful, and arguably required in order to meet Scotland’s legally binding climate change commitments.The organisation’s lawyers say it is the first public interest intervention granted in the Court of Session on environmental grounds. The charity’s head of campaigns Mary Church said: “We are getting involved in Ineos’s judicial review of the fracking ban in order to put forward crucial climate change arguments in support of the ban that otherwise would not have been heard.

    BP profits leap by 71% as oil prices rebound - BP’s profits jumped 71% during the first three months of the year, in the latest sign that the British oil company is back on the path to growth. The continued increase in crude and gas prices combined with a 6% rise in production to push profit up to $2.6bn (£1.9bn), the firm’s highest since 2014. While the growth in earnings was greater than its European peers, BP’s profit was still lower than the Anglo-Dutch company Shell’s $5.32bn and the French group Total’s $2.9bn. Cash flow was nearly $1bn below what analysts had expected, at $5.4bn. BP also had a $1.6bn compensation bill for the Deepwater Horizon disaster, on top of the $65bn it has already paid out since the 2010 oil spill.

    Fracking may have caused rare S. Korea quake: study | Daily Mail Online: Fracking may have induced a rare strong earthquake last year in South Korea, a study said Friday, a potential "game changer" for the contentious practice of pumping water into the ground to extract energy.The 5.5 magnitude quake on November 15 injured scores in the South Korea port city of Pohang and caused major damage.It was one of the largest on record to rattle the Korean peninsula, where significant natural seismic activity is unusual.The quake struck at a shallow depth and in close proximity to a geothermal energy site.Workers at the site had been injecting high pressure water underground in the months before the quake, prompting scientists to speculate human intervention may have caused the tremors.Using seismic data, the study from experts from across Europe concluded that the shallow depth of the quake pointed to the activity at the site as the potential cause."According to our analysis it seems plausible that the occurrence of this earthquake was influenced by these industrial activities," said the study, which was published by respected industry journal "Science".

    Nord Stream 2, other disputes fail to dent Russian natural gas flows to EU - Russia’s Gazprom continues to supply high volumes of natural gas to the EU despite long-running disputes over pipelines, competition and Ukraine, the latest S&P Global Platts guide to EU-Russian natural gas relations shows.Flows via its 55 Bcm/year Nord Stream 1 pipeline to Germany hit a record high of 51 Bcm in 2017, helped by increased access to the onshore OPAL gas pipeline, at first just in January and then continuously from August.The European Commission’s decision in October 2016 to allow Gazprom to access up to 12.8 Bcm/year of extra OPAL capacity through public auctions was intended to settle that particular dispute, running since 2013.But state-owned Polish gas company PGNiG gained an interim court order to suspend the decision, causing the interruption in capacity sales from February to July. It has also asked the EU General Court in Luxembourg to annul the decision completely. The court has said it will rule on this in 2019, and that capacity booked for after this ruling may not be guaranteed. That leaves an element of doubt over Gazprom’s future access to OPAL until the ruling is given.

    Exxon pushes ahead with Rosneft LNG project despite sanctions: sources -  Exxon Mobil is pushing ahead with efforts to develop its $15 billion Far East Liquefied Natural Gas (LNG) project with Russia’s Rosneft despite being forced to exit some joint ventures due to Western sanctions. Two months ago Exxon invited companies including China National Petroleum Corporation’s [CNPET.UL] engineering arm to bid for construction contracts by October, sources with knowledge of the matter said. A final investment decision is due in 2019, they said. The project is being jointly developed with Rosneft using gas from the Sakhalin-1 venture which will be chilled into liquid to underpin the LNG plant’s initial annual output target of 6 million tonnes. Western sanctions forced Exxon to exit some joint ventures with Rosneft in late February, but LNG is not part of the sanctions. The Russian company said the move would not affect the Sakhalin-1 oil and gas production-sharing JV struck in the mid-1990s. “The Sakhalin-1 consortium continues to explore every opportunity to monetize Sakhalin-1 gas resources,” Exxon spokeswoman Julie King said. “A liquefied natural gas plant is an option to maximize benefits to the consortium and the Russian state and its citizens,” she added. Exxon-Rosneft have also held discussions about feeding gas from Sakhalin-1 fields into a planned third production unit at an existing LNG plant run by Gazprom (GAZP.MM) on Sakhalin Island, industry sources said. Rosneft was not available for immediate comment. Exxon’s LNG footprint is expanding rapidly with major new projects planned in Qatar, Mozambique, Papua New Guinea and the United States as demand in China and Southeast Asia booms. Gas accounted for 43 percent of Exxon output last year, according to BMO Capital Markets, a share set to rise as new LNG projects start up. 

    Deepwater section of first TurkStream natural gas pipeline complete: Gazprom - Work to lay the first string of the TurkStream natural gas pipeline in the deep water of the Black Sea is now complete, Russian gas giant Gazprom said Monday, as the project designed to eliminate Ukraine as a transit route for Russian gas to Turkey continues on schedule. The 31.5 Bcm/year, two-string pipeline is set to begin flowing Russian gas in 2019, with the first line set to flow gas directly to Turkey to complement supplies through the other Russia-Turkey Black Sea pipeline, Blue Stream. Russian gas deliveries to Turkey via the TransBalkan pipeline via Ukraine are expected to cease once TurkStream begins operations. Turkey is a key market for Gazprom -- its second biggest export market after Germany -- with supplies in 2017 reaching a record high of 29 Bcm. That was 4.3 Bcm -- or 17.3% -- more than in 2016. "The deepwater pipelay for Line 1 of TurkStream has been completed today," Gazprom said Monday. "Upon completion of the landfall sections the works on the first line will be completed," it said. According to the works schedule, the Allseas-owned vessel Pioneering Spirit will continue the deepwater pipelay of Line 2 in the third quarter of 2018. Some of the second line has already been laid, with Gazprom CEO Alexei Miller saying the project progress was moving "at a high rate." Since May 2017, when the pipelaying campaign began, a total of 1,161 km of pipes has been laid, or 62% of the overall gas pipeline length. 

    ExxonMobil restarts second PNG LNG train; resumes export -- ExxonMobil PNG Ltd has restarted the second liquefied natural gas train at the Papua New Guinea LNG project nearly three weeks after the first train was restarted, as the project recovers from the impact of the earthquake in February. "The plant is now operating at normal production rates, and exports of LNG have resumed," ExxonMobil, which is the main operator of PNG LNG, said in a statement Monday. The restart of PNG LNG's second train was expected to be bearish on prices, especially after Platts JKM LNG prices rose from $7.625/MMBtu last Monday to close the week at $8.125/MMBtu Friday, on demand for short-covering. Market participants were watching for exports from PNG LNG to return to normal levels of around two to three cargoes a week. Two LNG carriers--the Bahamas-flagged Gigira Laitebo and Spirit of Hela -- were currently offshore PNG LNG, S&P Global Platts' vessel tracking system, cFlow, showed. PNG LNG has a nameplate capacity of 6.9 million mt/year but had consistently operated above that level. It expected rates to remain above 8.5 million mt/year, which equated to around two to three cargoes a week. "The company expects to reach full capacity in May," ExxonMobil said, adding that production at PNG LNG had been gradually increasing since the Hides gas conditioning plant, and one train at the PNG LNG plant, restarted earlier in the month. PNG LNG restarted its first processing train on April 12, more than two weeks ahead of schedule, following a shutdown after the 7.5-magnitude earthquake hit the PNG Highlands on February 26, causing widespread destruction. 

    ExxonMobil gas project a disaster for Papua New Guinea’s people - The massive $US19 billion ExxonMobil-led liquid natural gas (LNG) project in the Hela region of Papua New Guinea (PNG) has failed to deliver a promised economic boom for the country, a non-government organisation report has found.The Jubilee Australia report, titled “Double or Nothing; the Broken Economic Promises of PNG LNG,” says the project “has contributed to PNG going backwards on most economic indicators.” According to the author Paul Flanagan, a former Australian treasury official, the country’s impoverished population would have been better off “on almost every measure of economic welfare” without the project.ExxonMobil, the lead operator, is supported by the Australian-PNG company OilSearch. Both have stakes of just under one third in PNG LNG. The PNG government also has a large stake, as does Australian gas company Santos. The project, expected to run for 30 years, ships liquefied gas to Japan, South Korea and China.The operation was substantially financed by the US Export-Import Bank, backed by a $A500 million loan from the Australian government’s Export Finance and Insurance Corporation. ExxonMobil invested primarily in order to profit from low labour and start-up costs. The company began exporting LNG in 2014, amounting to 7.9 million tonnes per year, delivering an initial boost to the country’s output. In 2016, however, the global economic crisis saw a precipitous drop in LNG prices to $US6.45 per million British thermal units (Btu), from a peak of $19.70. The facility remains vital to Washington’s geo-strategic interests in the Asia-Pacific.

    India's first floating regasification terminal to start operations in Q4 2018 - India's first floating storage and regasification terminal or FSRU could begin importing LNG as early as the fourth quarter of this year on the country's west coast, the project's developer H-Energy Gateway Private Ltd and France's Engie, said in separate statements this week. The Norway-flagged FSRU, named GDF Suez Cape Ann, which is under long-term timecharter with Engie, arrived Tuesday at Jaigarh Port in the western state of Maharashtra for its inauguration. The 80,780 dwt vessel marks the first deployment of floating gas infrastructure in India, which has lagged neighboring Pakistan and Bangladesh in installing floating gas systems, as it already has a network of onshore LNG terminals. India is Asia's and the world's fourth-largest liquefied natural gas importer, but its onshore LNG terminals have remained underutilized due to relatively high gas prices and a lack of pipeline interconnectivity. 

    Venezuela Offers India 30% Discount On Oil...If It Pays In Cryptocurrency  - Venezuela has offered India a 30-percent discount on crude oil purchases, but only if India agrees to pay in El Petro, the cryptocurrency that Venezuela is touting as the first national digital currency backed by crude oil reserves, the Indian outlet Business Standard reports. Venezuelan blockchain department experts visited India in March and struck an agreement with Delhi-based Bitcoin trading firm Coinsecure to sell the Venezuelan cryptocurrency Petro in India, Business Standard reported, quoting multiple sources.Maduro’s propaganda machine is touting the digital coin as a ‘ground-breaking’ first-ever national crypto currency, El Petro—backed by 5 billion barrels of oil reserves in Venezuela’s Orinoco Belt. But most observers see this crypto issuance as a desperate attempt to skirt U.S. financial sanctions.In March 2018, U.S. President Donald Trump banned U.S. purchases, transactions, and dealings of any digital coin or token issued for or by the government of Venezuela. Now Venezuela wants to add the Petro as a cryptocurrency on Coinsecure to trade Petro against Bitcoin and the Indian rupee, according to Coinsecure CEO Mohit Kalra quoted by Business Standard. “They are going to different countries and making offers. The offer that they have given to the Indian government is: you buy Petro and we will give you a 30 per cent discount on oil purchases,” Kalra told Business Standard.Earlier this month, Coinsecure said that US$3.5 million worth of Bitcoins had been stolen from the exchange and blamed for this its Chief Security Officer (CSO) Amitabh Saxena. Investigation is still under way, Coinsecure said on Sunday. Meanwhile, India’s crude imports from Venezuela - whose oil industry is collapsing rapidly - dropped to around 300,000 bpd between November 2017 and February 2018, down by 20 percent on the year, to the lowest level since 2012, Reuters reported in March, citing data from shipping and industry sources.

    Russian Oil Turns Its Back On Its Biggest Customer - Since the start of 2018, Russia’s pipeline crude oil exports to China have been growing, while its seaborne shipments to Europe have been falling.At the beginning of this year, Russia doubled the capacity of pipeline exports to China, where it has been the top oil supplier for more than a year after overtaking OPEC’s top exporter and de facto leader Saudi Arabia last year.While Russia is trying to get a bigger chunk of the fast-growing Chinese oil market, it is doing so at the expense of its number-one oil customer, Europe. Decreased seaborne crude oil shipments to Europe may prompt European refiners to buy more Middle Eastern barrels and crude oil from the U.S., analysts say. In addition, lower Russian seaborne shipments could add to the woes of the tanker freight sector, which is also feeling the decline of OPEC’s exports due to the oil cuts pact and an oversupply of tankers.According to loading programs obtained by Bloomberg, Russia’s crude oil exports from its western ports on the Black and Baltic Seas—most of which go to Europe—will have dropped by 19 percent to 1.86 million bpd between January and May 2018. At the same time, Russia’s exports via pipeline to China soared 43 percent to around 750,000 bpd in Q1 2018, data by pipeline operator Transneft shows.In March, Russia kept its top oil supplier spot to China for a 13th month running, with exports up 23.6 percent on the year to 1.36 million bpd, ahead of Saudi Arabia’s 1.09 million bpd exports. Russian oil exports to China jumped 22 percent annually in the first quarter of 2018.

    China is replacing Europe as Russia’s No. 1 oil customer -- Since the start of 2018, Russia's pipeline crude oil exports to China have been growing, while its seaborne shipments to Europe have been falling.At the beginning of this year, Russia doubled the capacity of pipeline exports to China, where it has been the top oil supplier for more than a year after overtaking OPEC's top exporter and de facto leader Saudi Arabia last year.While Russia is trying to get a bigger chunk of the fast-growing Chinese oil market, it is doing so at the expense of its number-one oil customer, Europe. Decreased seaborne crude oil shipments to Europe may prompt European refiners to buy more Middle Eastern barrels and crude oil from the U.S., analysts say. In addition, lower Russian seaborne shipments could add to the woes of the tanker freight sector, which is also feeling the decline of OPEC's exports due to the oil cuts pact and an oversupply of tankers.According to loading programs obtained by Bloomberg, Russia's crude oil exports from its western ports on the Black and Baltic Seas—most of which go to Europe—will have dropped by 19 percent to 1.86 million bpd between January and May 2018. At the same time, Russia's exports via pipeline to China soared 43 percent to around 750,000 bpd in Q1 2018, data by pipeline operator Transneft shows.In March, Russia kept its top oil supplier spot to China for a 13 th month running, with exports up 23.6 percent on the year to 1.36 million bpd, ahead of Saudi Arabia's 1.09 million bpd exports. Russian oil exports to China jumped 22 percent annually in the first quarter of 2018. As Russia is boosting crude oil supply to China at Europe's expense, European refiners may look to replace some of the Russian barrels with Middle Eastern and U.S. crude oil, according to Alan Gelder, Vice President Refining, Chemicals and Oil markets, at Wood Mackenzie.

    Shifting Energy Import Patterns Enhance China's Clout In The Middle East - Subtle shifts in Chinese energy imports suggest that China may be able to exert influence in the Middle East in alternative and subtle ways that do not involve military or overt economic pressure.The shifts involve greater dependency of the Gulf states on oil and gas exports to China, the world’s largest importer, at a time that the People’s Republic has been diversifying imports at the expense of Gulf producers. The shifts first emerged in 2015 when Chinese oil imports from Saudi Arabia rose a mere two percent while purchase of Russian oil jumped almost 30 percent. Russia rather than Saudi Arabia has been for much of the period since China’s biggest crude oil supplier. The shifts were reinforced by the US shale boom, a resulting drop in US imports from the Gulf, and President Donald J. Trump’s tougher trade policies. At the same time, China became in 2016 the largest investor in the Arab world with investments worth $29.5 billion, much of which targeted infrastructure, including the construction of industrial parks, pipelines, ports, and roads.Compounding the impact of shifts in Chinese energy imports is the fact that despite support for Russian policy in the Middle East, Beijing increasingly fears that Moscow’s approach risks escalating conflicts and has complicated China’s ability to safeguard its mushrooming interests in the region. Viewed from Beijing, the Middle East has deteriorated into a part of the world in which regional cohesion has been shattered, countries are fragmenting, domestic institutions are losing their grip, and political violence threatens to effect security and stability in northwest China.China’s concern is likely to increase if and when the guns fall silent in Syria and the country begins to focus on reconstruction. Already China worries that Uyghur foreign fighters in Syria and Iraq are heading to areas closer to Xinjiang in Pakistan and Afghanistan.

    Iraq data: April crude exports fall sharply on bad weather, port maintenance - Iraq's federal crude oil exports in April fell 3.3% from March to 3.34 million b/d due to weather-related disruptions and maintenance issues, according to oil ministry data and sources. The northern Persian Gulf, from where Iraq ships all of its crude saw three days of inclement weather in the month, sources said Wednesday. The bad weather was compounded by the suspension of loadings from the Khor al-Amaya terminal, due to leaks at an old pipeline, and one of the single-point moorings (SPM-1), which was under maintenance. Khor al-Amaya can load up to 300,000 b/d of crude. A new pipeline to the terminal has been laid, but sources said it had not yet been connected. Iraq has four SPMs, each with a loading capacity of 900,000 b/d, but only two are usually operated at any time. Sources said SPM-1 is currently unusable due to a broken hose. A replacement is expected to take weeks to arrive and be installed. Originally planned for April, the installation was pushed back to May as Iraq awaits delivery of the hose. Despite the 113,000 b/d drop in exports from March, the April exports are still above Iraq's 2017 average of 3.309 million b/d. Federal exports averaged 3.427 million b/d in the first four months of the year, up nearly 5% from 3.276 million b/d in the same period of 2017. The oil ministry did not provide any estimate of exports from the semi-autonomous Kurdistan Regional Government. S&P Global Platts estimates total country-wide exports at 3.640 million b/d in April, with the addition of around 300,000 b/d shipped by the KRG from Turkey's Ceyhan port on the Mediterranean. These shipments are opposed by Baghdad as unconstitutional and the KRG has not published its own data on exports for months. The oil ministry did not give a breakdown of its shipments for its two export grades, Basrah Light and Basrah Heavy. The lighter grade typically accounts for 75% of shipments. 

    OPEC Cuts May Go Deeper as Another Member Sees Output Slump  (Bloomberg) -- While plunging output in Venezuela captures the oil world’s attention, problems are quietly festering in another OPEC nation. Angola, once Africa’s biggest crude producer, is suffering sharp declines at under-invested offshore fields, with output dropping almost three times as much as the nation pledged in an accord with fellow OPEC members. With the losses set to accelerate -- a shipping program seen by Bloomberg News shows crude exports will fall in June to the lowest since at least 2008 -- the cartel risks tightening supply too much. “Angola has a serious problem, with its decline rates becoming increasingly visible,” said Richard Mallinson, an analyst at consultants Energy Aspects Ltd. in London. “The low figure in June doesn’t look like a pattern of maintenance but points to steeper, structural declines.” The Organization of Petroleum Exporting Countries and its allies have succeeded in wiping out an oil glut through production cuts launched in early 2017, boosting prices to a three-year high above $75 a barrel. Their efforts have been aided by accidental losses in member nation Venezuela, which is cutting six times the amount it promised as a spiraling economic crisis batters its oil industry. The risk OPEC faces now is tightening world markets too sharply, and sending prices to levels that either crimp oil demand or provoke a new tide of rival supply from the U.S. As Angola’s creeping decline adds to the ongoing slump in Venezuela, that danger only grows. Output interruptions among the organization’s members could send Brent crude prices above $80 a barrel, Bank of America Merrill Lynch analysts including Francisco Blanch, head of commodities research, said in a note to clients. Unintended supply disruptions are rife in the cartel. Nigeria and Libya were exempt from the deal to cut output because their production had already been diminished by local instability, while Iraq’s implementation of the accord only improved after a political dispute halted exports. Some traders are already shunning Iranian crude in fear that President Donald Trump will re-impose sanctions.

    OPEC Ditches Its Rear-View Mirror for Something Worse - OPEC's multi-year attempt to steer the oil market by focusing on inventory levels was always like trying to drive a car while looking only in the rear view mirror. The inventory data is historical and reflects what the market was like a month or more ago. By the time OPEC gets the data, the world has already moved on. If you thought that was a bad idea, wait until you hear this. The most important metric for OPEC and its friends, according to Saudi oil minister Khalid Al-Falih, is the level of investment in future oil production capacity. Speaking after the group’s gathering in Jeddah on April 20, he said they all need to promote confidence in the long-term market in order to attract capital, not to target price. The world needs to add 4 million to 5 million barrels a day of new production capacity each year to meet rising demand and offset declines, he said. The industry is far from reaching that goal. OPEC may be starting to shift its goalposts away from returning inventories to a 5-year average level, however it chooses to measure that target. Now the group seems to want to keep cutting output until investment in new upstream projects picks up.But this is a much worse guide to the state of the market even than inventory levels. Stocks are at least 2 months out of date, but investment plans reflect price levels of 12 to 24 months ago and a whole host of other considerations, too. The group is abandoning the rear-view mirror in favor of a telescope. Light travels so fast that what you see in the former is mere nanoseconds out of date compared to what the latter reveals. 

    Not Everyone Gets Why OPEC Is Determined to Stick With Cuts - OPEC and Russia seem determined to keep on cutting production even after their campaign to rebalance world oil markets achieved its main target. The primary justification for doing so looks shaky.Sixteen months of output curbs have all but eliminated surplus oil inventories and prices are near a three-year high. But Saudi Arabia says the “mission is not accomplished yet” and is urging fellow producers to keep output restrained to fulfill a new priority: encouraging companies around the world to invest more in future supply.The Organization of Petroleum Exporting Countries isn’t the only voice warning about a lack of spending on new projects. Influential figures from the International Energy Agency to the boss of oil major Total SA have warned a supply shortage could emerge early next decade after a period of deep cuts in spending. Under-investment could push prices as high as $300 a barrel within a few years, prominent hedge-fund manager Pierre Andurand said this week.  Yet there’s also no shortage of people who see OPEC’s concern about investment as a pretext for prolonging a strategy that keeps oil prices as high as possible. First-quarter earnings showed major companies including Royal Dutch Shell Plc, Eni SpA and Chevron Corp. are spending less but still expanding production thanks to cost cuts. U.S. oil drillers are deploying more rigs and maxing out pipelines. At current prices the industry is already on track to deliver the extra output the world needs, according to Rystad A/S.

    OPEC Production Cuts: Is Russia Complying? - Russia’s oil production held onto an 11-month high in April, flat compared to March and above its quota under the OPEC/non-OPEC deal for a second consecutive month, according to data by Russia’s Energy Ministry. Russia pumped a total of 10.97 million bpd of oil in April, unchanged from March, and slightly above its quota under the production cut deal, according to energy ministry data, as carried by Reuters.Russia’s pledge in the OPEC/non-OPEC deal is to shave off 300,000 bpd from its October 2016 level, which was the country’s highest monthly production in almost 30 years - 11.247 million bpd.Last month, production at the larger Russian companies increased, while a decline at the smaller firms offset that growth. Production at Rosneft, the largest Russian oil company, inched up by 0.1 percent in April over March, while Gazprom Neft—which has an ambitious production growth plan—saw its oil production increase by 0.9 percent month on month. The combined production of the smaller oil companies decreased by 0.9 percent last month, offsetting the production gains at the bigger producers.After three months of steady output, Russia’s crude oil production increased in March to 10.97 million bpd, the highest level since April 2017, as the top two Russian companies - Rosneft and Lukoil - boosted their production. Russia is leading the non-OPEC group of oil producers part of the pact with OPEC to cut production in order to draw down inventories and boost oil prices. Analysts and official figures are already estimating that global oil stocks in developed economies are very close to or already within the five-year average—OPEC’s metric for the deal’s success. Nevertheless, OPEC’s leader Saudi Arabia insists that there is more work to be done and the cuts should continue by the end of this year, as planned. Russia is more careful in comments, although it has repeatedly said that it is committed to the deal. Last month, Russia’s Energy Minister Alexander Novak said that at the June meeting, OPEC and allies could discuss ‘easing the cuts’ until the end of the year.

    Russia stands by OPEC deal even after two months of overproducing -- Russia reaffirmed its pledge to an alliance with OPEC, despite two months of breaching its target under a global oil-output deal. The country remains “fully committed” to bringing balance to the crude market, Russia’s Energy Minister Alexander Novak said in a statement Thursday. Russia’s compliance with the deal was 95.2% in April, after a rate of 93.4% in March. While this over-production is more than offset by slumping output from some members of the Organization of Petroleum Exporting Countries, missed Russian goals could become a feature of the pact, according to Massachusetts-based ESAI Energy LLC. “Six months from now, Russia may follow Kazakhstan’s example, restraining output at some fields to demonstrate ‘good intentions’ even as overall production climbs,” ESAI Energy Principal Andrew Reed said by email. Growing spare capacity at oil projects run by state-controlled Rosneft PJSC and Gazprom Neft PJSC “will soon lead to weakening Russian compliance.” OPEC and its allies led by Russia have nearly succeeded in wiping out an oil glut through production cuts initiated in early 2017, boosting prices to a three-year high. While the deal formally expires at the end of this year, Saudi Arabia has signaled the curbs could be extended into 2019. Novak said earlier this month that the partners will discuss further cooperation in June, with all options on the table, including easing the caps, depending on the market situation. The compliance rate of the OPEC members was 168% in April, up from a revised 165% in March, according to a Bloomberg survey. 

    Russian energy minister Novak says April conformity to OPEC/non-OPEC oil output deal 95.2% - Russian energy minister Alexander Novak said Thursday Russian conformity to the OPEC/non-OPEC crude oil production cut deal was 95.2% in April. This indicates that the ministry estimates April output was 285,600 b/d below October 2016 which is the baseline to assess Russian compliance with the deal. "Fluctuations in liquids output in April were due to increased activity at projects covered by production sharing agreements," Novak said. On Wednesday the Central Dispatching Unit said Russia produced 44.878 million mt of liquids in April. This is equivalent to around 10.965 million b/d, using Platts conversion rate of 7.33 barrels per metric ton. This indicates Russia's compliance was 94%, at 282,000 b/d below the October 2016 level of 11.247 million b/d. Russia committed to cut production by 300,000 b/d under the deal. Energy ministry figures traditionally show higher compliance as they are based on individual coefficients for each field when evaluating the output in barrels, while the CDU data is provided in metric tons, leading to a discrepancy in calculations. In March, the energy ministry reported compliance with the output cut agreement below 100% for the first time since Russia reached its target at the end of April 2017. At the time, energy minister Alexander Novak said there had been a seasonal rise in gas demand that resulted in higher gas output and corresponding increase in associated gas liquids that are included in total liquids output. Novak Thursday also reiterated that Russia is fully committed to balancing the oil market and evening out production volatility.

    Hedge funds trim positions in crude but boost fuels: Kemp (Reuters) - For all the bullish chatter, hedge fund managers have become cautious about increasing their exposure to crude oil, though they are becoming increasingly optimistic about the outlook for refined fuels again. Hedge funds and other money managers cut their combined net long position in the six most important futures and options contracts linked to petroleum by six million barrels in the week to April 24. Net length was reduced in NYMEX and ICE WTI (-17 million barrels), Brent (-7 million) and European gasoil (-2 million) but increased in U.S. heating oil (+7 million) and especially U.S. gasoline (+13 million). Portfolio managers have not really increased their net long position in WTI and Brent since the start of April and arguably not since the start of February, which is perhaps a sign they are now fully invested. In contrast, fund managers have been adding net long positions in gasoline and heating oil, after cutting them in February and March, according to position records published by regulators and exchanges. By April 24, funds held a record net long position in U.S. gasoline equivalent to 111 million barrels as well as a net position in heating oil equivalent to 69 million barrels (https://tmsnrt.rs/2JEyL9A ). Hedge fund managers have amassed a near-record position of 1.405 billion barrels in petroleum and show no signs of rushing to take profits despite the rise in prices to their highest level since 2014. But if there has been no liquidation, there has also been no further buying, except for refined fuels, and overall there has been no upward buying momentum in the petroleum complex for over two months. For the time being, most funds have already put on their positions, and are now waiting to see if the fundamentals will validate their bullish expectations. 

    Rising oil prices put demand destruction back on the agenda: Kemp (Reuters) - Rising oil prices over the last two years have put the issue of demand destruction back on the agenda, as producers, traders and analysts try to estimate how consumers will respond. Demand destruction always becomes a topic of discussion during this stage of the price cycle, and the current discussion resembles previous episodes of high and rising prices in 2005-2008 and 2011-2014. Brent prices have surged by $47 per barrel (170 percent) from their low point in early 2016 and are now trading close to $75 per barrel. Over the same period, weighted-average U.S. gasoline pump prices have risen by almost $1.13 per gallon (61 percent) and now stand just a few cents below $3 per gallon. Crude and gasoline prices are still well below the levels of $115 per barrel and $3.80 per gallon where they stood just before oil prices started slumping at the end of June 2014. But crude and fuels are no longer particularly cheap and most traders and oil exporting nations expect prices to increase further over the next year. In real terms, oil prices are close to the average level for the whole of the last cycle from late 1998 through early 2016. As the price-cycle matures and prices move towards their next peak, the focus on consumer responses is set to intensify. In an early sign of political sensitivity in consuming countries, U.S. President Donald Trump blamed OPEC for rising oil prices via a message on his Twitter account on April 20. “Oil prices are artificially Very High! No good and will not be accepted”, the president wrote with his customary directness. In contrast, OPEC officials have indicated they see no adverse impact on oil consumption as a result of price increases so far. “I have not seen any impact on demand with current prices. We have seen prices significantly higher in the past – twice as much as where we are today,” Saudi Arabia’s oil minister told reporters in Jeddah. “Reduced energy intensity and higher productivity globally of energy input levels leads me to think that there is capacity to absorb higher prices,” the minister said on April 20.

    Lack of fuel subsidies could hasten Asian crude demand destruction: Russell (Reuters) - The term “demand destruction” is again entering the lexicon of the current crude oil market as the sharp rise in prices raises concerns about when do consumers start cutting back on their fuel consumption.  While it’s probably impossible to pick the exact point at which this happens, the risk in the current cycle of rising prices is that it happens earlier than in the past in Asia, the main region driving rising crude demand. The reason for this is that many countries in Asia used the prior period of falling crude prices to end, or dramatically scale back, their fuel subsidies. This means that this time consumers in countries such as India, Indonesia and Malaysia are fully exposed to rising crude prices, something that hasn’t been in the case in previous bull cycles. The combined oil consumption of those three countries is about 6.5 million barrels per day (bpd), with India alone accounting for about 4.3 million bpd. Even a 5 percent drop in demand for fuel in those countries would knock about 325,000 bpd from global crude oil consumption. So far, it appears that consumers in those countries haven’t been exposed to the full extent of the crude oil increase. Global benchmark Brent crude closed at $74.64 a barrel on April 27, up 11.6 percent since the end of last year and 66.5 percent from last year’s low in June. The price of a liter of diesel in New Delhi was 65.93 rupees on Sunday, according to data on the website of Indian Oil. This is equivalent to about $1 a liter. At the end of last year, the price of a liter of diesel was 59.64 rupees, meaning it has risen by 10.5 percent so far this year, not quite keeping pace with the rise in Brent crude oil. When crude was at its 2017 low in June, diesel was 53.46 rupees a liter in New Delhi, meaning it has risen about 23.3 percent since then, while Brent has jumped by 66.5 percent. What appears to have happened is that the state-controlled oil majors such as Indian Oil have largely absorbed the cost of rising crude prices, partly because of government pressure to do so. But there has to be a question mark as to how long this can continue to be the case.

    Goldman's Clients Are Getting Concerned About Rising Oil Prices - It's been a while since the US made a wholesale push to get more cash and income-strapped households into the ever more unaffordable American dream of owning a house, three years to be exact, which is when nationalized housing agency Freddie Mac last rolled out a conventional mortgage that only required a 3% down payment for certain borrowers.The problem is that what modest requirement the mortgage program had back in 2015, meant that most Americans who needed access would be excluded. The program, which as we described at the time was designed for qualified (that being the key word) low-and moderate-income borrowers - i.e., Millennials - saw limited progress over the last few years, with FHFA Director Mel Watt telling Congress last year that Freddie’s 3% down program (along with a similar one from Fannie Mae) was continuing to grow.It just wasn't growing fast enough, because while putting 3% down may not have been especially challenging for most Americans, having even the modest income required to go along with it, was.So fast forward to last week, when Freddie Mac announced on Thursday it was about to supercharge its 3% down program and launch a widespread expansion of the offering, when it announced that it is rolling out a new conventional 3% down payment option for qualified first-time homebuyers, - effectively the same as the 2015 program... with one small difference: there would be no geographic restrictions; more importantly there no longer will be any income restrictions. To wit:   In other words, whereas many Americans could not qualify for the original 3% down program because, well, they lacked virtually any income, that will no longer be a hindrance and the government will effectively backstop the lack of income as a new wave of 'income-challenged' Americans rushes in to buy houses.

    Oil Hedge Fund Manager Andurand Says $300 Oil 'Not Impossible’  -  Pierre Andurand, one of oil’s most prominent hedge fund managers, said the current reluctance of energy companies to invest in new production meant $300 a barrel was "not impossible" within a few years. Andurand, who’s often espoused bullish views, said in a series of tweets on Sunday that concern about the impact of electric vehicles on future demand was limiting investment in projects with long lead times. "So paradoxically these peak demand fears might bring the largest supply shock ever," he wrote. "If oil prices do not rise fast enough, $300 oil in a few years is not impossible." The hedge fund manager, who runs oil-focused Andurand Capital Management LLP, also went against the conventional view that triple-digit oil prices will dampen demand growth. "So no, $100 oil will not kill the economy," he wrote. "And we need +$100 oil to encourage enough investments outside of the U.S." A spokesman for Andurand declined to comment on the tweets, which were later removed from Andurand’s Twitter account. His comments on demand echo those of Saudi Oil Minister Khalid Al-Falih, who earlier this month suggested that prices could rise further from their current level close to $75 a barrel without doing economic damage. “We have seen prices significantly higher in the past, twice as much as where we are today”, and the global economy has the ability to absorb costlier crude, Al-Falih said. In 2008 Brent crude rose to nearly $150 a barrel, before crashing. Andurand was among top commodity hedge fund managers who met with Al-Falih in July in London to discuss the state of the oil market. The Organization of Petroleum Exporting Countries and its partners plan to maintain their production cuts this year, which have helped to boost oil prices. Andurand posted a near 10 percent drop in the first two months of the year as his fund stumbled against a background of zig-zagging energy prices, according to people familiar with the matter. The fund made money in March, one of the people said, asking not to be named discussing private data. He launched his hedge fund in 2013 and it has been positive every year since.  

    Crude Oil Prices Spike on Israeli Comments on Iran - Crude oil prices rebounded from session lows rising above 68-per barrel mid-day after testing below that handle early in the North American trading session. As oil exports are on the rise, higher prices are increasing demand for WTI which is much lower than Brent given its land locked nature.  Comments from the Israeli PM about Iran’s Nuclear program has generated upward momentum in crude oil prices.  Prime Minister Benjamin Netanyahu made a statement on a significant development regarding the nuclear agreement with Iran, Israeli media reports indicate Netanyahu will address the Iran nuclear deal and how he believes Iran is cheating which sent oil prices higher. U.S. oil exports just hit a record high, a sign that the shale boom will continue to lead to higher shipments abroad, despite some infrastructure bottlenecks. Last week, the U.S. averaged 2.3 million barrels per day in crude oil exports, the highest average for any week on record. Another reason for the upward trend in exports is the renewed price differential between Brent and WTI. While the oil market is global, the two benchmarks reflect some unique geographical circumstances. WTI is dragged down by the surging U.S. shale supply, while Brent is seeing tighter conditions, in part because of the OPEC production cuts, but also because of strong demand in much of the world.  Gasoline stocks are below the top end of the 5-year historical range, but the decline in last weeks production could be a sign that refiners have enough stocks.  The Energy Information Administration currently forecasts that drivers in the United States will pay an average of $2.74 per gallon this summer for regular gasoline, the highest average summer gasoline price in four years. EIA’s forecast gasoline price for summer 2018 will be $0.26 per gallon higher than the average price last summer, largely reflecting changes in crude oil prices.

    Oil Rises as 'Alarm Bells' Sound Over Unraveling Iran Nuke Deal (Bloomberg) -- Crude rose after Israeli intelligence about Iranian nuclear ambitions heightened concern an international accord may unravel. Futures in New York rose 0.7 percent on Monday to settle just pennies shy of a three-year high. Israeli Prime Minister Benjamin Netanyahu said Iran had a secret plan to build nuclear weapons. The announcement comes less than two weeks before U.S. President Donald Trump decides whether to scrap the Iranian nuclear deal and reimpose sanctions against OPEC’s third-biggest oil producer. Brent crude, the international benchmark traded in London, closed at a level not see since late 2014. “The geopolitical risk temperature is about to move a little higher here,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. “This is, at least in my mind, raising some alarm bells.” Israel shared with the U.S. documents on a secret Iranian nuclear-weapons program and the U.S. has verified their authenticity, according to a person familiar with the matter. Meanwhile, Iranian Foreign Minister Mohammad Javad Zarif said Netanyahu allegations were lies, according to state-run FARS. Trump declined to say what he’ll do on the Iran deal. Crude rallied 5.6 percent this month amid heightened geopolitical tensions and Trump’s indications he may scrap the 2015 nuclear deal that eased sanctions against Iran in exchange for a halt to nuclear weapons research. At the same time, OPEC-led production cuts have continued to tighten global markets, despite record-setting U.S. crude output. In Texas, oil production climbed to an all-time high in February, the federal government said. West Texas Intermediate crude for June delivery climbed 47 cents to settle at $68.57 a barrel on the New York Mercantile Exchange. Total volume traded was about 15 percent above the 100-day average. A measure of oil market volatility climbed to the highest level in two weeks. Brent crude for June settlement, which expires Monday, advanced 53 cents to end the session at $75.17 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $6.60 premium to June WTI. The more-active July contract closed rose 90 cents to close at $74.69. 

    Oil Prices Fall Despite Looming Iran Deal - OilPrice Intelligence Report - Oil prices fell on Tuesday morning following a big spike on Monday. A U.S. withdrawal from the Iran deal appears to have been all but factored in to oil markets, allowing a soaring dollar to send oil prices tumbling back down.   Israeli Prime Minister Benjamin Netanyahu said new intelligence proved that Iran was deceiving the world on its nuclear program. However, the details he offered were already known to the International Atomic Energy Agency and experts said he disclosed nothing new. Moreover, experts noted that doubts about Iranian intentions are exactly why the 2015 nuclear deal is important. But, the political objective for Netanyahu was clear – he was likely trying to convince the Trump administration to move forward with a hostile approach towards Iran. Judging by Trump’s reaction, the political theater has been largely successful. With the odds of U.S. sanctions on Iran rising as the May 12 deadline approaches, Saudi Arabia is positioned to benefit from the confrontation if Iranian oil is forced off of the market. Saudi Arabia has around 2.5 million barrels per day of spare capacity and could easily ramp up output to replace lost Iranian supply. "Saudi Arabia is not likely to sit on the sidelines and let things play out," Ellen Wald, president of Transversal Consulting and a non-resident scholar at the Arabia Foundation, told S&P Global Platts. "Saudi Arabia likes to present itself as the stable, reliable producer, always there to satisfy customer demands, and this is the perfect opportunity to step in." The EIA said that U.S. output surged by a massive 260,000 bpd in February, taking output up to 10.264 mb/d. The gains are consistent with the weekly estimates that have shown strong gains through April. The monthly estimates, published on a several-month lag, are more accurate but offer only a retrospective look at output. The latest figures show that shale drillers continued to post strong gains through February.

    WTI/RBOB Shrug At Bigger Than Expected Crude Build - Dollar strength sparked WTI/RBOB weakness on the day but a bigger than expected crude build reported by API did nothing for futures which, after an initial drop, popped back to practically unchanged.API

    • Crude +3.427mm (+1.23mm exp)
    • Cushing +725k
    • Gasoline +1.062mm
    • Distillates -4.083mm

    The crude build would be largest since early March (and biggest distillates draw since early March) if EIA data confirms it... WTI/RBOB price action was minimal around the data (RBOB maybe slightly lower)...

    Crude Oil Prices Settle Nearly 2% Lower as Traders Fret US Output Expansion - WTI crude oil prices settled sharply lower as signs of rising US oil production renewed focus on the rapid pace of US output ahead of supply data expected to show U.S. crude stockpiles rose for a second-straight week. On the New York Mercantile Exchange crude futures for June delivery fell 1.93% to settle at $67.25 a barrel, while on London's Intercontinental Exchange, Brent fell 1.90% to trade at $73.27 a barrel. The Energy Information Administration on Wednesday is expected to report crude supplies rose by 0.739 million barrels last week. Expectations for a second-straight weekly build in crude supplies did little to ease fears of ongoing US oil output after the EIA reported Monday U.S. oil production rose to a record 10.264 million barrels a day in February. The weakness in crude prices comes despite the growing prospect of new U.S. sanctions against Iran. Israeli Prime Minister Benjamin Netanyahu presented data on Monday, claiming it was evidence of a secret Iranian nuclear weapon. The data, however, did not contained new information that was unknown to diplomats who had negotiated the landmark Iran nuclear deal in 2015. U.S. President Donald Trump must decide on May 12 whether to restore U.S. sanctions on Iran. If Trump does scrap the deal, it could lead to the re-imposition of secondary sanctions on Iran, pressuring countries to cut their purchases of Iranian crude, denting global supplies, pushing oil prices higher. Goldman Sachs, said, however, that geopolitical risks have had an “only modest role” in the oil price rally, citing “strong” fundamentals and ongoing OPEC cuts as far more important catalysts to curb excess supplies and extend the rally in oil prices. "The oil market deficit is driven by the combination of strong demand growth and remarkably strong OPEC compliance to the cuts, two dynamics that we expect will continue in coming quarters,"Goldman Sachs said in a note to clients. 

    RBOB Extend Losses After Big Surprise Crude, Gasoline Build - WTI/RBOB flatlined after last night's bigger-than-expected crude build from API, but both has slipped lower since Europe opened ahead of the DOE data. Prices extended their losses after DOE confirmed a much bigger-than-expected crude build (+6.22mm vs +1.23mm exp) and surprise gasoline build. DOE:

    • Crude +6.218mm (+1.23mm exp)
    • Cushing +416k
    • Gasoline +1.171mm (-500k exp)
    • Distillates -3.9mm (-1.5mm exp)

    Biggest build in crude since January and a surprise build in gasoline confirmed API's data... Bloomberg Intelligence's Energy Analyst Fernando Valle noted that wide crude price differentials are likely to be pushing refinery utilization higher in the Mid-Continent and Gulf Coast regions, slowing the pace of product-inventory draws. As usual production is a key focus. Bloomberg Intelligence's Senior Energy Analyst Vince Piazza explains that growing strength in Brent prices combined with elevated U.S. crude output is widening the discount for WTI vs. seaborne blends and encouraging domestic production. And sure enough US crude production rose 33k b/d to a new record high...

    Crude Oil Price Wobbles After Huge Addition to Stockpiles - The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning showing that U.S. commercial crude inventories increased by 6.2 million barrels last week, maintaining a total U.S. commercial crude inventory of 436 million barrels. The commercial crude inventory remains in the lower half of the average range for this time of year.Tuesday evening the American Petroleum Institute (API) reported that crude inventories rose by about 3.4 million barrels in the week ending April 27. Gasoline inventories rose by about 1.6 million barrels, and distillate stockpiles decreased by 4.1 million barrels. For the same period, analysts expected crude inventories to increase by about 840,000 barrels and gasoline inventories to drop by 587,000 barrels. Diesel inventories are seen down about 1.3 million barrels.Total gasoline inventories increased by 1.2 million barrels last week, according to the EIA, and remain in the upper half of the five-year average range. U.S. refineries produced over 10  million barrels of gasoline a day last week, up by more than 100,000 barrels compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged over 9.3 million barrels a day for the past four weeks, up about 1.2% compared with the same period a year ago.  Before the EIA report, benchmark West Texas Intermediate (WTI) crude for June delivery traded up about 0.1% at around $67.32 a barrel and dipped to around $67.05 (down about 0.3%) shortly after the report’s release. WTI settled at $67.25 on Tuesday and opened at $67.44 Wednesday morning. The 52-week range on June futures is $44.54 to $69.55.

    Oil prices finish higher as IMF move threatens Venezuelan output --After trading on a mixed note for much of Wednesday’s session, oil prices settled decidedly higher, as the International Monetary Fund’s threat to expel Venezuela reignited market concerns over the struggling nation’s crude production.The IMF news broke not long before futures prices settled. Prices had been pressured by a weekly rise in U.S. crude supplies that was more than three times higher than expected, but they had also found support from global inventoFy risks tied to the possibility of the U.S. pulling out of the Iran nuclear agreement.June West Texas Intermediate crude oil climbed by 68 cents, or 1%, to settle at $67.93 a barrel on the New York Mercantile Exchange. Its close at $67.25 Tuesday marked the lowest finish since April 17.International benchmark July Brent tacked on 23 cents, or 0.3%, to $73.36 a barrel on ICE Futures Europe. Tuesday’s settlement at $73.13 was also the lowest in about two weeks. The IMF said it has issued a “declaration of censure” against Venezuela for its failure to implement certain remedial measures and failure to comply with specific obligations. The IMF said it called on Venezuela “to adopt specific remedial measures and will meet again within 6 months to consider Venezuela’s progress in implementation.” “It is another nail in the coffin for the Venezuelan oil industry,”

    Oil up on OPEC output cuts, worries about Iran sanctions (Reuters) - Oil prices rose on Thursday, boosted by OPEC production cuts and the potential for new U.S. sanctions against Iran, but gains were limited by growing U.S. crude inventories.Brent crude futures rose 26 cents to settle at $73.62 a barrel, a 0.35 percent gain. U.S. West Texas Intermediate (WTI) crude rose 50 cents to settle at $68.43 a barrel, a 0.74 percent increase."The price move today is probably based off Iran and the tight oil supply market that we already have," said Rob Thummel, portfolio manager at energy investment manager Tortoise Capital in Leawood, Kansas. "The margin for error right now is just so low in the oil market that you can't just take supply off the market."Iran's foreign minister said U.S. demands to change its 2015 nuclear agreement with world powers were unacceptable as a deadline set by President Donald Trump for Europeans to "fix" the deal loomed.Trump has all but decided to withdraw from the accord by May 12, sources said on Wednesday, though exactly how he will do so remained unclear.Iran re-emerged as a major oil exporter in January 2016 when international sanctions against Tehran were suspended in return for curbs on Iran's nuclear program.Also supporting prices, North Sea oilfields connected to the Brent oil pipeline have stopped production due to a shutdown at the UK's Sullom Voe oil terminal, the Brent pipeline operator said, reducing output of the crude.

    Continental Resources' Harold Hamm credits OPEC for boosting oil prices (Reuters) - U.S. shale oil billionaire Harold Hamm, who once called the Organization of the Petroleum Exporting Countries, a "toothless tiger," here is now crediting the 14-nation group for its steps to boost crude prices. Hamm, founder and chief executive of North Dakota oil producer Continental Resources Inc, acknowledged in a Thursday conference call with investors that OPEC’s actions have drained a global crude glut, leading to prices near $68.50 a barrel, roughly 26 percent higher than when the cuts began. “It has taken since November 2016, when OPEC entered into production cuts along with Russia, to reduce the crude oil overhang in the world to the current level,” Hamm told investors. A joint OPEC and non-OPEC technical panel concluded last month that the 17-month-old plan to cut output by about 1.6 million barrels per day had succeeded in its mission to lower oil inventories in developed nations to a five-year average. Hamm’s change of heart comes ahead of his planned speech to an OPEC meeting next month in Vienna. He appeared to praise OPEC’s strategy on Thursday. “Global crude inventories are slowly being systematically drawn down, which should bode well for stabilized oil prices for some time in the future,” said Hamm, who chairs the Domestic Energy Producers Alliance (DEPA), a U.S. lobbying group. Hamm, who has in the past used OPEC as a foil for the U.S. shale industry and was a vocal supporter of ending the U.S. crude export ban in 2016 here, is benefiting from OPEC's restraint. He has repeatedly urged his U.S. shale peers not to use the crude price rebound to overproduce. Yet last quarter his company’s production jumped 35 percent, the second consecutive quarter of year-over-year production increases.  

    Crude rises on geopolitical jitters; July ICE Brent at $73.82/b, June NYMEX WTI $68.56/b - Crude futures strengthened on Friday morning in Europe on the back of the looming risk of a US withdrawal from the Iranian sanctions deal and other geopolitical risks, while waiting for further signals of growing US production later in the day. At 1040 GMT, July ICE Brent crude futures were up 2 cents at $73.82/b, after rising from negative territory earlier in the morning, while the June NYMEX light sweet crude contract was up 16 cents at $68.56/b. The US dollar was down 0.18% on Wednesday morning, which is typically bullish for oil prices, making the product more affordable for investors who hold other currencies. However, overall the dollar has been in the midst of a sustained rally, reaching its highest level in 2018 to date earlier in the week. Friday marks the end of another unsteady week on crude markets, as fundamental signals battled with geopolitical jitters. "A slew of risk events lie on the horizon," said Stephen Brennock, an analyst at PVM Oil Associates, including the Iranian sanctions deadline in one week's time, and the May 20 elections in Venezuela, which has seen its oil output crash amid political and economic crisis. "The geopolitical landscape will therefore remain tense and price conditions volatile." On Friday, the market was looking ahead to news from the US, including the latest set of the Non Farm Monthly Payrolls data, an indicator of overall economic growth, and its impact on the greenback. Later on Friday, the Baker Hughes rig count data will also be released, which is used as a proxy to track the pace of US crude production. US production, driven by the explosion of shale output, is forecast to surpass 11 million b/d before the end of this year, which would make the US the world's largest crude producer, surpassing both Saudi Arabia and Russia at current rates. However, fundamental signals this week have frequently taken a backseat to speculation over the fate of the 2015 Iranian nuclear deal, which eased economic sanctions in return for curbs on Iran's nuclear program. US President Donald Trump is facing a May 12 deadline to decide whether to withdraw from the deal and reimpose sanctions, imperiling the deal as a whole and restricting the flow of Iranian oil. If the US does decide to withdraw from the deal, as many analysts expect, that would be bullish for oil prices in the long-term, although some expect that if a withdrawal has been baked into current levels for crude, an immediate sell-off could follow. On Thursday, Iranian foreign minister Mohammad Javad Zarif said in a public statement that the deal was not renegotiable.

    All Eyes On Iran As Oil Prices Soar - Oil prices saw a strong rally on Friday as the fate of the Iran nuclear deal, and its possible impact on global oil supply, overshadowed a rising U.S. oil rig count.  The IEA said in a new report that while overall offshore oil production will likely remain flat through 2040, output will shift from shallow water to deepwater. Brazil will stand out as the most attractive place for deepwater development. In a separate scenario that incorporates more sustainability goals, offshore wind thrives while offshore oil production withers.   Pemex is gearing up to develop its first offshore discovery since Mexico’s energy reform more than four years ago. "That is going to be a very big milestone in the energy sector in Mexico," said Carlos TreviƱo, Pemex’s CEO. He said Pemex was evolving to run more like an international oil company rather than a state-run company. Russia lacks the expertise to develop complicated new projects, which could result in output peaking in 2020 and declining thereafter. "Technological sanctions will have an impact over time," Tatiana Mitrova, a fellow at Columbia University's Center on Global Energy Policy, said at a conference in Washington. "There is no expertise in Russia. Rosneft tried to do it in-house. They're realizing you cannot replace the global oil service industry." That conclusion was echoed by Rystad Energy late last month, which predicted that there was a dearth of new discoveries in Russia and even the discoveries that have been made over the past decade have not been given the greenlight because of cost and complexity. Rystad also predicted Russia’s oil production would erode beyond 2020. Total SA purchased a stake in the Waha oil field from Marathon Oil, a $450 million deal that was closed in March, but Libya’s National Oil Corp. is not handing over Total’s share of crude cargoes from the project, according to Reuters. Libyan officials have some objections about the deal and it appears that the NOC is intervening and withholding cargoes as the dispute lingers.

    Oil Prices Rise Despite Rig Count Gains - US drillers added 11-rigs to the number of oil and gas rigs this week, according to Baker Hughes, adding 9 active oil rigs and 1 active gas rig, with an addition of 1 miscellaneous rig.Meanwhile, neighboring Canada lost 7 rigs for the week, after shedding hundreds rigs (seasonal effects) in the last couple of months. Both the Brent and WTI benchmark were trading up on the day earlier on Friday, supported by the Iran nuclear sanctions issue that is set to come to a head on May 12, and falling production in Venezuela that is expected to continue as the country slips further into disarray.U.S. President Donald Trump has one more to decide the fate of the sanctions against Iran, although it is largely expected that he will refuse to waive the sanctions—a theory that has in itself supported the price of oil this last month, with Brent briefly breaching beyond $75 to its highest price level since November 2014. Prices are expected to be volatile as we move closer to the deadline for the decision.For Venezuela’s part, while production is not expected to reclaim its previous levels, the presidential election in Venezuela scheduled for May 20 is yet another May decision that will impact already volatile prices. West Texas Intermediate was trading up $0.35 (+0.51%) at $68.78 at 11:01pm EST. The Brent benchmark was trading up $0.29 (+0.39%) at $73.91.  US oil production rose again in the week ending April 27, reaching 10.619 million bpd—the increase in as many weeks—less than a 400,000 bpd off the 11.0 million bpd forecast that many predict for 2018. At 8 minutes after the hour, WTI was trading up 2.05% at $69.83, with Brent trading up 1.87% at $74.93.

    Oil hits highest since Nov. 2014 as Iran tensions mount (Reuters) - Oil prices rose about 2 percent on Friday, with U.S. crude hitting its highest in more than three years, as global supplies remained tight and the market awaited news from Washington on possible new U.S. sanctions against Iran. Bob Yawger, director at Mizuho, noted the looming May 12 deadline that U.S. President Donald Trump had set for Europeans to “fix” the deal with Iran over its nuclear programme or he would refuse to extend U.S. sanctions relief for the oil-producing Islamic Republic. “You have the May 12 Iran and Trump headlines that support the market,” he said. U.S. light crude settled up $1.29 at $69.72 a barrel. It touched a session peak of $69.97 for the first time since November 2014. It was on track to gain just over 2.3 percent on the week. Brent crude oil settled up $1.25 at $74.87 a barrel. The global benchmark was set to end the week up 0.3 percent. Iran’s foreign minister said on Thursday that U.S. demands to change its 2015 agreement with world powers were unacceptable. Trump has said European allies must rectify “terrible flaws” in the international accord by May 12. European powers want to hand Trump a plan to save the Iran nuclear deal next week. But they have also started work on protecting EU-Iranian business ties if Trump makes good on his threat to withdraw. Iran resumed its role as a major oil exporter in January 2016 when international sanctions were lifted in return for curbs on Tehran’s nuclear program. Surging production in the Permian shale basin is outpacing pipeline capacity, while local refining issues have exacerbated oversupply. The United States now produces more crude oil than top exporter Saudi Arabia, and two weeks of U.S. inventory builds have limited the oil market’s upside. U.S. energy companies added oil rigs for a fifth straight week, with higher crude prices boosting profits and pushing nationwide production to record highs 

    Saudi Arabia wants higher prices to kick oil addiction: Kemp (Reuters) - Saudi Arabia’s financial position has stabilised as a result of the increase in oil prices as well as efforts to raise non-oil revenues and trim government spending. But the country probably needs even higher prices and revenues in the next few years to pay for its ambitious transformation programme while maintaining internal stability.The government wants to shift the focus of the economy towards the non-oil private sector, but the transition will require enormous investment, even assuming it is eventually possible. Economic transformation will need hundreds of billions of dollars, and financing can come only from the kingdom’s internal resources, or in the form of foreign loans, equity sales or direct investment. The crown prince’s recent extended tour of the United States and Europe was intended partly as a roadshow to encourage foreign investment and partly to cement government-to-government alliances. But foreign investment on its own is unlikely to be enough, given the scale of the task and lingering concerns about the kingdom’s political direction and business environment. So the country will need to find hundreds of billions of dollars from its own resources to complete the transformation programme and smooth the difficult transition. Official foreign assets amount to almost $500 billion and there are more held in various other government funds. But the kingdom needs to maintain a large cushion of liquid assets to ensure confidence in its fixed exchange rate against the dollar. Asset confiscations from wealthy Saudis and the nationalisation of domestic companies could raise extra funding but risk damaging investor confidence, so the potential for such measures is limited. As a result, the kingdom badly needs to maximise oil revenues now to pay for the transition to a less oil-dependent economy in future.

    Slumping economy overhangs Saudi reforms as officials, businessmen meet (Reuters) - A slump in Saudi Arabia’s economy cast a shadow over ambitious plans for reform this week as top officials met businessmen to discuss freeing the kingdom from its dependence on oil exports. At a conference with hundreds of foreign and local bankers and potential investors, ministers said privatizations and partnerships between the government and private companies to build infrastructure projects would begin within months. They pointed to major successes since Crown Prince Mohammed bin Salman launched the reform program in April 2016. A huge state budget deficit, which threatened the stability of the currency, is shrinking. Foreign portfolio funds are pouring into the country after a revamp of the stock market. But data released during the conference showed the private sector, which the reform program assumes will create hundreds of thousands of jobs and play a much bigger role in the economy in the next decade, is struggling. A monthly survey of companies’ purchasing managers, published on Thursday, found growth in private business activity slowed in April to its lowest since the survey started in August 2009. New orders shrank for the first time in the survey’s history, suggesting there is little new business on the way. Bank lending to the private sector shrank from a year earlier in March for the 13th straight month, according to central bank data released on Monday; banks are awash in funds, but private firms see little point in borrowing to invest. Car sales shrank an estimated 24 percent in 2017. The main problem, businessmen say, is part of the reform program itself: austerity measures designed to cut the budget deficit, including 5 percent value-added tax imposed in January, higher domestic fuel prices, and rising fees which companies must pay to hire foreign workers. 

    Saudi Arabia Needs Much Higher Oil Prices -- Saudi Arabia needs oil to trade at US$85 a barrel to fill its budget gap, IMF’s head for the Middle East and Asia said today.“The improvement in the overall economic conditions with growth recovering this year - it is expected to be at 1.8 percent - will help them to maintain the pace of fiscal adjustment and at the same time will allow the economy to grow again,” Jihad Azour said, as quoted by Reuters.The Kingdom presently plans to have a balanced budget by 2023, but this will only happen if oil prices are high enough, it seems. For this year, Saudi Arabia has stipulated a budget deficit of around US$52 billion, which represents 7.3 percent of GDP.The bad news is that the oil price that the Kingdom needs to make ends meet is rising. Last year, Azour said, it was US$83 a barrel. This year, it will be between US$85 and US$87 a barrel. The silver lining, according to some analysts, is that the discrepancy between breakeven and actual oil price will stimulate the government to persist with its reform efforts.“I think the fact that we are currently witnessing a recovery globally and in the region, and the fact that the oil price is going up, shouldn’t at any point in time be considered as a way for them to relax efforts and to be complacent,” the IMF official said. Meanwhile, Saudi Arabia’s Finance Minister told CNBC that oil prices will not have any impact on the pace of reforms the Kingdom has undertaken, even though he acknowledged the price improvement over the last two years has helped the Kingdom reduce its deficit by as much as 40 percent.

    Saudi Arabia Needs $88 Oil - Higher oil prices have provided a boost to the economies of oil-exporting nations such as Saudi Arabia. But the economic risks going forward are “skewed to the downside,” the International Monetary Fund said in a new report, in which it urged Saudi Arabia and other oil exporters to press on with reforms.  Oil price volatility, trade tensions, geopolitical risk and a “sharp tightening of global financial conditions” are just a few of the potential pitfalls that lie ahead.  But the IMF paid extra attention to the debt levels of some oil producers. “The tightening of global financial conditions, if interest rates will continue to go up and liquidity will be less available, this will affect countries with a high level of debt — mainly oil importing countries where the average debt exceeds 80 percent (of gross domestic product)," Jihad Azour, director of the Middle East and Central Asia Department at the International Monetary Fund, told CNBC on Monday. The IMF said that Saudi Arabia needs to continue “structural reforms,” largely referring to the Vision 2030 plan spearheaded by crown prince Mohammed bin Salman. New taxes, deficit reduction, labor market reforms and investments in non-oil sectors of the economy are crucial. While the economies of oil exporters have improved as oil prices have jumped to a three-year high, economic growth “is projected to remain well below its pre-2014 oil shock levels,” the IMF said. High levels of debt will act as a drag on the economy, limiting the extent to which governments can spend to improve short-term demand. And for Saudi Arabia, oil prices are still too low to fully balance the books. The IMF claims that the Kingdom needs about $88 per barrel to balance its budget, up sharply from $70 per barrel last year. The sudden jump in the fiscal breakeven price is the result of an increase in spending expectations.

    Audit Puts Aramco's Oil Reserves At 270 Billion Barrels - An international independent audit of the oil reserves of Saudi Aramco has more than confirmed the official figures released by Riyadh for three decades, putting the number at 270 billion barrels, two unnamed sources close to the company told Reuters. The audit was conducted by companies including DeGolyer and MacNaughton, and Baker Hughes’ Gaffney, Cline, and Associates. It is being watched closely because the reserve base of the company will have a direct bearing on its valuation ahead of the much-hyped initial public offering.The figure may come as something of a surprise because for thirty years, Aramco has been reporting unchanged reserves of about 261 billion barrels despite active production. Yet barrels are not the only factor considered in an oil company’s valuation as Bloomberg Gadfly’s Liam Denning noted in an analysis earlier this year, even though they are an important indicator of the company’s long-term viability and profitability.Also Bloomberg this month took a look at Aramco’s accounts, reporting that the company booked a net profit of US$34 billion for the first half of 2017. The significance of the figures was naturally questioned by skeptic analysts aware that balance sheets can be adjusted to present the information about a company’s performance in the most favorable way.Bloomberg itself made a note of pointing out that despite Aramco’s negligible debt levels and super-low production costs, the company is Saudi Arabia’s cash cow: cash flow is not great because such a large part of the Saudi economy and society literally depend on Aramco.  Interestingly enough, Aramco said the numbers were inaccurate, adding that they were mere speculation. The company is also understandably sensitive to oil prices, which is why Saudi officials have been pushing so vehemently for higher oil prices ahead of the IPO.

    Green Berets Are Now On The Ground Assisting The Saudi War On Yemen In "A Marked Escalation" - Once again a creeping, years' long shadow war is expanding from indirect proxy intervention to direct engagement, complete with US "boots on the ground" where no American ground forces were previously thought to exist. And it's not Syria, or Libya, or central Africa where the now familiar pattern played out before, but in the Arabian peninsula where the Pentagon has long claimed to merely coordinate intelligence, refuel jets, and provide logistical support to the Saudis which have been bombing Yemen since March of 2015. On Thursday The New York Times revealed for the first time that US special forces have been on the ground supporting Saudi coalition forces since late last year:But late last year, a team of about a dozen Green Berets arrived on Saudi Arabia’s border with Yemen, in a continuing escalation of America’s secret wars.With virtually no public discussion or debate, the Army commandos are helping locate and destroy caches of ballistic missiles and launch sites that Houthi rebels in Yemen are using to attack Riyadh and other Saudi cities.Details of the Green Beret operation, which has not been previously disclosed, were provided to The New York Times by United States officials and European diplomats.According to the report, the elite Army operators were sent to assist the Saudis starting in December, weeks after ballistic missiles fired by Yemeni Houthi rebels came close to directly hitting Riyadh's international airport, though the Saudis claimed to have intercepted it - a claim which was subsequently cast into doubt by weapons experts.At that point, a worried Crown Prince Mohammed bin Salman reportedly renewed calls for the the United States to send ground troops in order to bolster Saudi-led operations aimed at rooting out the source of the sophisticated Yemeni missile attacks, which have occurred on multiple occasions over the past year of fighting.

    Iran's Oil Exporters Have Record Month Before Possible Sanctions-- Iran’s crude exporters had a banner April, with shipments soaring to a record right before the possible re-imposition of U.S. sanctions on their oil sales. Crude exports by OPEC’s third-biggest producer totaled 2.61 million barrels a day, according to the Iranian Oil Ministry’s Shana news service. That beat the previous high of 2.44 million barrels a day in October 2016, it said. U.S. President Donald Trump will decide by May 12 whether to keep America in an international agreement that restricts Iran’s nuclear activities in exchange for relief from sanctions and a restriction on oil sales. Since sanctions were eased as of January 2016, Iran’s crude production has almost doubled. China and India together took 1.4 million barrels a day from Iran in April, according to Shana. Some oil traders are already unwilling to sign contracts for Iranian crude and refined products that would be valid after May 12, according to recent interviews with six companies that buy and sell oil in the Middle East. Iran’s crude and condensate exports in April were 2.87 million barrels a day, Shana reported. Observed shipments of both rose to 2.83 million barrels a day from 2.48 million barrels in March, according to ship-tracking data compiled by Bloomberg. Crude volume alone rose to 2.48 million barrels from 2.06 million, the data show.

    Iran Works to Keep Europe On Board Amid Uncertainty Over Nuclear Deal -- Iran is trying to keep Europe on its side as questions mount about the future of its nuclear deal with Western powers and suspected Israeli airstrikes on its bases in Syria. Short of military options and economically distressed at home, Iran appears to be calibrating its response to escalating diplomatic and military pressure from the U.S. and its allies Israel and Saudi Arabia. Tehran’s goal is to blunt the Trump administration’s ability to reimpose sanctions, retain its influence in Syria and avoid a wider regional war, some analysts said. President Donald Trump has set a May 12 deadline to decide whether to scrap the deal, which lifted most sanctions on Iran in exchange for curbs on its nuclear program. Mr. Trump, Israel and, increasingly, European leaders have expressed alarm about Iran’s ballistic-missile program and its influence in conflicts in Syria and Yemen, which aren’t covered by the deal. In the event the U.S. moves to reimpose financial restrictions on Iran, Tehran is working “to divide the EU and U.S. in order to ensure the U.S. sanctions are ineffective,” said Stratfor, the U.S. geopolitical security firm. Iranian President Hassan Rouhani spent an hour on the phone with French President Emmanuel Macron on Sunday, calling the nuclear deal nonnegotiable, Iranian state media reported. He added that Iran was “ready for dialogue” on regional stability. 

    Netanyahu Accuses Iran Of Developing Secret Project To "Test And Build Nuclear Weapons" - Oil is soaring to $69.34/bbl, the highest price since 2014, after Israeli Prime Minister Benjamin Netanyahu accused Iran of secretly developing and building nuclear weapons. In a global televised address, Netanyahu unveiled a cache of 55,000 pages of documents and 183 CDs, comprising Iran's alleged "atomic archive" of documents on its nuclear program; the files allegedly prove Tehran ran a secret program, called Project Amad, to "test and build nuclear weapons." While Iranian leaders have long said their nuclear program is only for peaceful purposes, Netanyahu claimed this was not the case according to tens of thousands of pages of documents, which he said were copied from a "highly secret location" in Iran. Those files detail Project Amad, which Netanyahu described as "a comprehensive program to design, build and test nuclear weapons." “These files conclusively prove that Iran is brazenly lying when it says it never had a nuclear weapons program,” Netanyahu said. “The files prove that.” He says the US has vouched for the authenticity of the secret archive obtained by Israel, and that it would make the documents available to the UN atomic agency and other countries. According to Netanyahu, the files provided "new and conclusive proof of the secret nuclear weapons program that Iran has been hiding for years from the international community in its secret atomic archive." Netanyahu concluded by saying "Iran lied about never having a secret nuclear program. Secondly, even after the deal, it continued to expand its nuclear program for future use. Thirdly, Iran lied by not coming clean to the IAEA," he said, adding that, "the nuclear deal is based on lies based on Iranian deception." Watch a recording to Netanyahu's speech below:

    Iran Blasts "Child Killer" Netanyahu After Nuclear Program Accusations - In a predictably furious response to a presentation delivered Monday by Israeli Prime Minister Benjamin Netanyahu, Iran's Foreign Ministry denounced allegations that the Islamic Republic had been carrying on its nuclear program in secret, calling Netanyahu "an infamous liar" and accusing him of being the head of a "child-killing Zionist regime," according to a statement published in English on Iran's Ministry of Foreign Affairs website.  The statement was attributed to Foreign Ministry Spokesman Bahram Qassemi.Iran’s Foreign Ministry Spokesman Bahram Qassemi has lashed out at Israeli Prime Minister’s Monday speech against Iran, calling Netanyahu’s move a propagandistic one and one of his most recent theatrical presentations on Iran’s "secret" nuclear program.In a Tuesday statement, Qassemi described Netanyahu’s claims as worn-out, useless and shameful. He added that such remarks are futile efforts by a "broke and infamous liar who has had nothing to offer except lies and deceits."He further noted that Zionist leaders see the survival of their "illegal regime", which is established based on lies, in viewing others as a threat using battered charlatanism of the ignorance age and unawareness of the world’s public opinion.Qassemi also stressed that the futility and uselessness of such claims is now obvious more than ever."Netanyahu and the notorious, child-killing Zionist regime must have reached the basic understanding that the people of the world have enough awareness and cognisance," he added.

    Mossad's stunning op in Iran overshadows the actual intelligence it stole -  While revealing a truly impressive intelligence coup by the Mossad, Prime Minister Benjamin Netanyahu on Monday night did not present evidence that Iran had violated the 2015 nuclear deal, nor did the material shed dramatically new light on the Islamic Republic’s pre-agreement atomic program.  Indeed, as Netanyahu noted, Iranian officials lie when they say their country never planned to manufacture nuclear weapons and put them on ballistic missiles. They did, and probably still do.  But the information proving their deception, while perhaps not widely known, was well-documented and made publicly available in its entirety — not by Israel, but by the International Atomic Energy Agency watchdog — back in 2011. The details about Iran’s AMAD nuclear weapons program, the identity of project leader Mohsen Fakhrizadeh, Tehran’s plans to put a nuclear warhead on a Shahab-3 ballistic missile, the suspicion that efforts to create an atomic bomb continued after AMAD was formally shuttered in 2003 — all “revealed” by Netanyahu on Monday night — can be found in the heavily footnoted IAEA report from nearly seven years ago. The main difference, perhaps, is that the IAEA’s 25-page, abbreviation-filled document lacks the panache of Netanyahu’s exhibition.

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