Sunday, August 5, 2018

seasonal natural gas levels lowest in 15 years; US oil output down first time in 24 weeks, biggest drop in horizontal rigs since October

oil prices were lower for the 5th week in a row, albeit with an asterisk, because as we noted last week, the quoted US price for September oil, which is the current front month contract, did see a 43 cent increase to $68.69 a barrel last week, while a $2.20 a barrel drop in price of oil was logged on the switch from quoting the August contract to quoting the September contract...that September oil price quote started this week with an increase of $1.44 , or 2.1%, to $70.13 a barrel on Monday, after Saudi Arabia suspended oil shipments through the critical Bab el-Mandeb Strait, due to a Houthi attack on a pair of their oil tankers in the Red Sea...but oil prices then reversed and fell $1.37 to $68.76 a barrel on Tuesday, closing out July with the largest monthly loss in 2 years, as concerns about Mideast oil supplies eased and oil traders shifted their focus to the upcoming weekly data on U.S. oil inventories...when that EIA inventory data showed a surprise jump in US crude supplies, oil prices fell another $1.10 on Wednesday before closing at $67.66 a barrel....while oil prices were lower again Thursday morning, they bounced off a six week low of $66.92 to rise to $68.96 a barrel by the close, a gain of $1.30 on the day, on a report that oil inventories were down at the Cushing, Oklahoma crude storage hub, the depot where WTI oil is priced at...however, prices could not hold that gain and fell 47 cents to $68.49 a barrel on Friday, after China retaliated against Trump's latest tariff increase by levying their own 25% tariff on US LNG, raising concerns that they would also impose tariffs on US oil...oil prices thus ended the week 20 cents lower, down for the 5th consecutive week, although we'd note that some are considering last week's price to have increased, and thus are reporting oil prices down for the 4th week in 5...

natural gas prices, meanwhile, were a bit higher this week, but it took a seasonal record low for US natural gas supplies to get them there, as they were down 2.4 cents over the first three days of the past week before rising 5.8 cents after the natural gas storage report on Thursday and another 3.7 cents on Friday to end the week at $2.853 per mmBTU, still well below the price needed to break even on most new exploitation projects...this week's EIA natural gas storage report for week ending July 27th indicated that natural gas in storage in the US rose by 35 billion cubic feet to 2,308 billion cubic feet during the cited week, which still left our gas supplies 688 billion cubic feet, or 23.0% below the 2,996 billion cubic feet that were in storage on July 28th of last year, and 565 billion cubic feet, or 19.7% below the five-year average of 2,873 billion cubic feet of natural gas that are typically in storage after the last full week of July, and at the lowest for this time of year since July 25th, 2003 (xls file)...median forecasts from a number analysts set expectations for 43 billion cubic feet to be added during the week ended July 27th, and again the actual 35 billion cubic feet increase was lower than anyone had expected, and also below the 43 billion cubic foot average of surplus natural gas that has typically been added to storage during the last full week of July over recent years...

since our natural gas supplies have now broken below the often cited five-year historical range for this time of year, we'll include the graph from the storage report to show you what that looks like, and to explain what that implies...

August 2 2018 natural gas in storage as of July 27th

the above graph comes from this week's Natural Gas Storage Report, and it shows the quantity of natural gas in storage in the lower 48 states over the period from July 2016 up to the week ending July 27th 2018 as a blue line, the average of natural gas in storage over the 5 years preceding the same dates shown as a heavy grey line, while the grey shaded background represents the range of the amount of natural gas in storage for any given time of year for the 5 years prior to the two years shown by the graph…thus the grey area also shows us the normal range of natural gas in storage as it fluctuates from season to season, with natural gas in storage underground normally building to a maximum by the end of October, falling through the winter, and usually bottoming out at the end of March, depending of course on the weather during any given year...so we can see that we started the 2017-18 heating season with our natural gas supplies a bit below normal, short of 3,800 billion cubic feet, and first fell to below the five-year historical range during the cold outbreak during the week ending January 5th, when we withdrew 359 billion cubic feet of natural gas from storage in one week to cut our supplies back to 2,767 billion cubic feet...however, since the rest of this past winter had not been as severe as the polar vortex year of 2014, our supplies quickly moved back above 2014 levels into that five year range, and have been there since, until this week...

we should also note that the blue line above shows that the quantity gas we had stored throughout the summer and fall of 2016 was at a record high for each week during the year, up until October, when US natural gas supplies topped 4 trillion cubic feet for the first time in history...our natural gas supplies then dropped from that record to nearly normal by the end of December, at which time we noted that shouldn't have happened in a warmer than normal winter...by March of 2017, based on John Kemp's data that showed heating demand was 17% below normal for the year, we were warning that we were not covering our natural gas needs from production, even while winter temperatures were above normal, and that something would have to give if we ever saw a colder than normal winter...four weeks ago, the reason for our falling supplies became clear; when the EIA reported that although US natural gas production has been increasing at a 10% rate annually, consumption of natural gas has been rising at an 11% rate, which means each week that continues we fall farther and farther behind...

right now, and for most of this year for that matter, the level of our natural gas supplies has been playing tag with the levels seen during the polar vortex year of 2014, when natural gas supplies were at seasonal record lows for 48 months straight; no other year in the five-year historical range or in the ten year range, for that matter, even comes close...we have to go back to the pre-fracking era year of 2003 to find a year when natural gas supplies were lower at this time of year than they are now....after the severely cold winter of 2014, US natural gas supplies fell to a low of 824 billion cubic feet at the end of March...that brought on higher natural gas prices - nearly twice what they are today, and a subsequent wave of increased production that rapidly lifted 2014 supplies 1,564 billion cubic feet higher at 2,388 billion cubic feet by the 1st of August...in contrast, after a cooler than normal winter, this year's natural gas supplies were still at 1,354 at the end of March, and only have managed to increase by 954 billion cubic feet to 2308 billion cubic feet as of this week's report..

as we pointed out two weeks ago, the EIA has already forecast a 10 year low for natural gas supplies going into this coming winter, forecasting that natural gas in storage would rise to 3470 billion cubic feet by October 31st, which would be 10% lower than the five-year average of 3835 billion cubic feet for that time of year...however, to even start the winter at that low level, we'd now have to add an average of 83 billion cubic feet per week over the next 14 weeks, a target that looks increasingly unlikely with mid-summer additions so far averaging below 50 billion cubic feet per week over the past four weeks....even the wall street journal warned "don't get complacent about natural gas' this week, pointing out that if the rest of this summer and fall are like last year, then the starting level of storage for the upcoming heating season will be nearly identical to what it was in November 2013, before that polar vortex year, which "could set the natural gas market up for panicky winter buying"...however, if the natural gas isn't there in storage before hand, no amount of panicky buying during the coldest days of winter can make it magically appear...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering the week ending July 27th, showed that mostly because of a big drop in our oil exports, we had a surplus of oil to add to our commercial crude supplies for the fourteenth time in the past twenty-seven weeks... our imports of crude oil fell by an average of 21,000 barrels per day to an average of 7,749,000 barrels per day, after falling by an average of 1,296,000 barrels per day the prior week, while our exports of crude oil fell by an average of 1,373,000 barrels per day to an average of 1,310,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 6,439,000 barrels of per day during the week ending July 27th, 1,352,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be 100,000 barrels per day lower at 10,900,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 17,339,000 barrels per day during the reporting week... 

at the same time, US oil refineries were using 17,480,000 barrels of crude per day during the week ending July 27th, 195,000 barrels per day more than they used during the prior week, while during the same week 543,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 684,000 fewer barrels per day than what was added to storage plus what refineries reported they used during the week....to account for that disparity between the supply and the disposition of oil, the EIA needed to insert a (+684,000) 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"...with a difference between oil supply and its disposition as large as that, we have to consider the likelihood that one or more of this week's EIA oil metrics is in error.... (for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)... 

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports fell to an average of 8,004,000 barrels per day, now just 0.4% more than the 7,976,000 barrel per day average we were importing over the same four-week period last year....the 543,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, as the amount of oil in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported being down by 100,000 barrels per day to 10,900,000 barrels per day, because of a 68,000 barrel per day decrease in output from Alaska, on top of the 82,000 barrel per day decrease they experienced last week...that was enough to lower the national total, which is now being rounded to the nearest 100,000 barrels per day to more reflect the EIA's inability to accurately model oil output from all the wells in the lower 48 states....US crude oil production for the week ending July 28th 2017 was reportedly at 9,430,000 barrels per day, so this week's rounded oil production figure is roughly 15.6% above that of a year ago, and 29.3% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...

US oil refineries were operating at 96.1% of their capacity in using 17,480,000 barrels of crude per day during the week ending July 28th, up from 93.8% of capacity the prior week, a refinery capacity utilization rate that is again above historical norms...the 17,480,000 barrels of oil that were refined this week were also at a seasonal high, now for the 9th week in a row, as compared to any previous 4th week of July...however, this week's refinery throughput was only fractionally higher than the 17,408,000 barrels of crude per day that were being processed during the week ending July 28th 2017, when US refineries were operating at 95.4% of capacity....

with the increase in the amount of oil being refined this week, gasoline output from our refineries was also higher, increasing by 228,000 barrels per day to 10,483,000 barrels per day during the week ending July 27th, after our refineries' gasoline output had decreased by 37,000 barrels per day during the week ending July 20th...as a result of that increase, our gasoline production during the week was 1.8% more than the 10,295,000 barrels of gasoline that were being produced daily during the week ending July 28th of last year...meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 2,000 barrels per day to 5,159,000 barrels per day, after falling by 285,000 barrels per day the prior two weeks...hence, this week's distillates production was still 1.4% lower than the 5,232,000 barrels of distillates per day that were being produced during the week ending July 28th, 2017...

even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week still fell by 2,536,000 barrels to 230,968,000 barrels by July 27th, the 14th decrease in 21 weeks, but just the 15th decrease in 38 weeks, as gasoline inventories, as usual, were being built up over the winter months....our supplies of gasoline also fell this week because the amount of gasoline supplied to US markets rose by 32,000 barrels per day to a near record high of 9,878,000 barrels per day, after rising by 571,000 barrels per day the prior two weeks, and because our imports of gasoline fell by 92,000 barrels per day to 752,000 barrels per day, while our exports of gasoline fell by 156,000 barrels per day to 513,000 barrels per day....but even after this week's decrease, our gasoline inventories were still 1.4% higher than last July 21st's level of 227,679,000 barrels, and roughly 6.5% above the 10 year average of our gasoline supplies for this time of the year...     

with our distillates production little changed this week, our supplies of distillate fuels increased by 2,983,000 barrels to 124,193,000 barrels during the week ending July 27th, the 7th increase in 10 weeks...our supplies increased mostly because the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 556,000 barrels per day to 3,611,000 barrels per day, after increasing by 362,000 barrels per day over the prior 2 weeks, while our exports of distillates rose by 68,000 barrels per day to 1,279,000 barrels per day, and while our imports of distillates fell by 50,000 barrels per day to 157,000 barrels per day...however, since last week's distillate supplies were already at a 14 year low for this time of year, at a time of year when distillates supplies are usually increasing, this week's inventory increase still leaves our distillates supplies 16.9% below the 149,414,000 barrels that we had stored on July 28th, 2017, and roughly 15.6% lower than the 10 year average of distillates stocks for this time of the year...     

finally, with our oil exports falling by nearly 1.4 million barrels per day, our commercial supplies of crude oil increased for the 15th time in 2018 and for the 21st time in the past year, rising by 3,803,000 barrels during the week, from 404,937,000 barrels on July 20th to 408,740,000 barrels on July 27th...however, with our crude oil inventories falling most of last year, our oil supplies as of July 27th were still 15.2% below the 481,888,000 barrels of oil we had stored on July 28th of 2017, 16.9% below the 491,914,000 barrels of oil that we had in storage on July 29th of 2016, and 3.4% below the 423,226,000 barrels of oil we had in storage on July 31st of 2015, when US supplies of oil had already risen above the nearly stable levels of under 400 million barrels we saw during the prior years...  

This Week's Rig Count

US drilling activity decreased for the fifth time in eight weeks during the week ending August 3rd, following 11 consecutive weeks of increases, as the steady increases in drilling for oil we saw with higher oil prices during the first half of this year has now stalled with oil futures' prices in deep backwardation....Baker Hughes reported that the total count of active rotary rigs running in the US decreased by 4 rigs to 1044 rigs over the week ending on Friday, which was still 90 more rigs than the 954 rigs that were in use as of the August 4th report of 2017, but was down from the shale era 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 count of rigs drilling for oil fell by 2 rigs to 859 rigs this week, which was 94 more oil rigs than were running a year ago, while it was also well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the number of drilling rigs targeting natural gas formations decreased by 3 rigs to 183 rigs this week, which was also down by 6 rigs from the 189 natural gas rigs that were drilling a year ago, and way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008...however, a rig that was considered to be "miscellaneous" began drilling this week, and there are now two such "miscellaneous" rigs in use, in contrast to a year ago, when all rigs were specifically targeting either oil or gas..

one of the Gulf of Mexico drilling platforms that had been shut down in recent weeks was started back up this week, so there are now 16 rigs drilling in the Gulf of Mexico, same as the number that were drilling in the Gulf last year at this time...in addition, there is also a platform deployed offshore from Alaska this week, so the total national offshore count is now at 17 rigs, which is also the same as a year ago, when there was also a platform drilling in Alaska's Cook Inlet...

the count of active horizontal drilling rigs was down by 10 rigs to at 922 horizontal rigs this week, which was the biggest drop in horizontal drilling since October 20 2017...however, that was still 105 more horizontal rigs than the 807 horizontal rigs that were in use in the US on August 4th of last year, while it was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...on the other hand, the vertical rig count increased by 6 rigs to 62 vertical rigs this week, which was still down from the 73 vertical rigs that were in use during the same week of last year...meanwhile, the directional rig count was unchanged at 64 directional rigs this week, which was still down from the 74 directional rigs that were operating on August 4th 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 August 3rd, the second column shows the change in the number of working rigs between last week's count (July 27th) and this week's (August 3rd) count, the third column shows last week's July 27th active rig count, the 4th column shows the change between the number of rigs running on Friday and those of the equivalent weekend report of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was on Friday the 4th of August, 2017...     

August 3 2018 rig count summary

as you can see, the 3 rig decrease in West Virginia accounts for this week's natural gas rig losses by itself....however, since there was a gas rig startup in Pennsylvania, the Marcellus count was only down two rigs...the other natural gas rig that was shut down was in Ohio, which shows no change because that's where the so called "miscellaneous" rig was started...both of the "miscellaneous rigs" are listed as being into the Utica shale, but the Utica can hardly be considered miscellaneous...therefore it seems likely that the miscellaneous drilling cited by Baker Hughes is the exploratory drilling by Cabot Oil and Gas, where they are drilling a number of test wells in Ashland, Holmes, Knox, Richland and Wayne counties....those wells are said to be targeting a formation 4000 feet below the Utica shale, possibly the Knox dolomite, although they might just be exploring for anything they think they can exploit...

meanwhile, while the horizontal rig count was down by 10 rigs, it isn't evident where the losses were from Baker Hughes tables, which haven't been updated to show the newest exploited basins in at least a decade...without drilling through the individual well logs in their pivot table, we can guess that 2 of them might have been pulled out of the San Juan basin in New Mexico, which has seen increased drilling of late, but that's just an uneducated guess; other state counts offer no clue, because it's likely that the decrease of horizontal rigs was masked by the simultaneous start-up of vertical drilling in some states, leaving the overall count unchanged...we would note that outside of the major producing states shown above, Alabama also saw another rig begin drilling this week, and now has two rigs deployed, same as a year ago...

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FirstEnergy won’t say what it’s done with Ohio grid modernization money -- Ohio ratepayers have paid FirstEnergy’s utilities roughly a quarter of a billion dollars since January 2017 under a distribution modernization rider.Now, critics say FirstEnergy is stalling on saying just what it’s doing with that money, which regulators approved without any requirements that it pay for specific projects.The mandate for consumers to pay the rider is currently on appeal before the Supreme Court of Ohio. Meanwhile, FirstEnergy’s utilities have been collecting the $168 million per year, and regulators could renew the charge for another two years after 2019.“To date, FirstEnergy has stymied the efforts of the state-designated advocate of its consumers to discover information about its subsidy charges,” Ohio Consumers’ Counsel Bruce Weston and assistant counsel Zachary Woltz said in a July 13 brief.  They and other challengers see the charge as an unlawful “backdoor bailout” for FirstEnergy’s generation subsidiaries. And critics say any hypothetical rationale for the rider as a tool to boost the company’s credit position in advance of future projects became even weaker after FirstEnergy’s generation subsidiaries filed for bankruptcy five months ago.The charge was never justified to begin with, said attorney Madeline Fleisher of the Environmental Law & Policy Center, and “once they filed for bankruptcy, the show is over.” The regulatory case allowing the charge started as a bid for ratepayers to guarantee sales of all output from specific coal and nuclear plants. It then shifted to a “virtual” deal that would have avoided naming the plants but charged the same amount of money. Then the plan morphed into the current “distribution modernization rider.” Despite the name, the Public Utilities Commission of Ohio required no specific grid projects in return for the money.

Getting on the Ballot May be Easiest Part for Columbus Community Bill of Rights – After two previous attempts, the anti-fracking Columbus Community Bill of Rights (CBR) is one step closer to appearing on the November ballot. Columbus City Council is set to approve the ordinance for the ballot at their meeting on Monday, July 30, before it’s off to be verified and assigned an issue number by the Franklin County Board of Elections.What it’ll mean practically, however, is still undecided. The Columbus CBR, modeled after a similar initiative in Pittsburgh organized by the Community Environmental Legal Defense Fund (CELDF), is part of a state- and nationwide effort to transfer jurisdiction over oil and gas activities from states to individual municipalities. But, the Ohio General Assembly already voted in 2004 to assign the Ohio Department of Natural Resources (ODNR) with jurisdiction over the state’s oil and gas practices — eight years before the first city in Ohio, Broadview Heights, passed a bill of rights charter amendment.That decision by the General Assembly has caused trouble for Ohio towns attempting to actually enforce their ordinances, resulting in a series of lawsuits, and culminating in an Ohio Supreme Court decision in 2015 that effectively reasserted the state’s preemptive control over oil and gas activities.Tish O’Dell is one of the pioneers of Ohio’s CBR movement. She and a group of fellow Broadview Heights residents formed Mothers Against Drilling in Our Neighborhoods (MADION) to build community support around the initiative.After Broadview Heights’ CBR was approved by voters, other cities followed suit, and the next several years saw a string of lawsuits — against drilling companies for violating charter amendments and against the municipalities for interfering with drilling efforts approved by ODNR.In 2013, Munroe Falls sued Ravenna-based company Beck Energy, a case that garnered the interest of residents in Broadview Heights and North Royalton, who filed friend-of-the-court briefs in support of Munroe Falls. After plaintiff and defendant duked it out in the lower courts, the case reached the Ohio Supreme Court.In 2015, citing Ohio Revised Code 1509, the Ohio Supreme Court decided that ‘sole and exclusive authority’ to regulate oil and gas wells and production operations in Ohio belongs to the state. What does this mean, then, for Columbus’ own version? Local organizers with Columbus’ CBR say, regardless of court precedent, the city needs its own ordinance to challenge what they see as an unjust law prohibiting citizens from protecting their water, air, and soil.

Nexus Pipeline 80% complete, service to start in late Q3 -- The Nexus natural gas pipeline across northern Ohio is on schedule to begin service in the late third quarter of 2018, Kallanish Energy reports. That assessment came last week from officials of DTE Energy, one of the companies behind the pipeline that is 80% complete, company officials said, in an earnings call with analysts and the media. All mainline welding and 100% of mainline walling have been completed, said president and chief operating officer Jerry Norcia. He said 16 of 18 planned horizontal directional drilling holes under rivers and highways have been completed for the pipeline. “We are pleased with how the Nexus project is coming together,” he said. He added the project “is a long-term project that will help grow this business segment for many years to come.” The $2.6 billion natural gas pipeline will move Utica and Marcellus natural gas from the Appalachian Basin to the Midwest, the Gulf Coast and Ontario. The 256-mile pipeline across northern Ohio will transport natural gas from Ohio, West Virginia and western Pennsylvania. It is being developed by Michigan-based DTE Energy and Enbridge, and will transport up to 1.5 billion cubic feet per day.

Hess selling Utica joint-venture interests for $400 million - In its second quarter report, Hess Corp. said it will sell its joint-venture interests in the Utica shale play of eastern Ohio for around $400 million by the end of this year’s third quarter. CEO John Hess said sale of the Utica assets will help the company further focus its portfolio. He noted that the company delivered strong performance during the quarter, exceeding its production guidance by averaging 247,000 barrels of oil equivalent per day (boepd). Of that amount, 114,000 barrels were produced in the Bakken where Hess has five rigs operating and plans to add a sixth.Overall, Hess reported a net loss of $130 million for the quarter (48 cents per common share) compared to a net loss of $449million for the same quarter a year ago. On an adjusted basis, the company reported an after-tax net loss of $56 million (23 cents per common share) in the second quarter of 2018. The improved after-tax adjusted results reflect higher realized crude oil selling prices, lower operating costs and depreciation, depletion and amortization expense, partially offset by lower production volumes, primarily due to asset sales.Net production from the Bakken increased six percent to 114,000 boepd, up from 108,000 boepd a year ago. Hess attributed the increase to ongoing drilling activity and improved well performance. Production in the second quarter of 2018 was impacted by weather-related downtime in June. The company operated an average of four rigs in the second quarter, drilling 28 wells and bringing 27 new wells online. Full year production guidance for the Bakken remains 115,000 boepd to 120,000 boepd. Exploration and production net income in the second quarter was $31 million, compared to a net loss of $354 million a year ago. On an adjusted basis, second quarter 2018 net income was $21 million. The company’s average realized crude oil selling price—including the effect of hedging—was $62.65 per barrel, up from $45.95 per barrel at the same time a year ago.

Chesapeake Seeks New Wells in Columbiana County – Chesapeake Energy Corp., fresh off its announcement last week that it would sell all of its assets in eastern Ohio’s Utica shale for $2 billion, has applied for permits that would add two new horizontal wells in Columbiana County, according to Ohio Department of Natural Resources records.Chesapeake subsidiary Chesapeake Exploration LLC filed applications for two permits on July 31 to drill horizontal wells in Washington Township, according to ODNR.The wells will target the Point Pleasant formation, a segment of what is collectively termed the Utica. The new well pad is slated for the Sevek farm.Last week, the Oklahoma City energy company announced it had reached a deal with Houston-based Encino Acquisition Partners to sell its leasehold position in the Utica, estimated at about 900,000 acres. The deal also includes 920 operating and non-operating wells that collectively produced an average of 107,000 barrels of oil equivalent per day in 2017.More than 50 of those wells are located in Columbiana County, according to ODNR records.  The transaction is expected to close in the fourth quarter.  Also last week, Houston-based Hilcorp Energy Co. filed applications to drill three new horizontal wells in Fairfield Township in Columbiana County. All applications must be approved by ODNR before a permit is awarded.

Huge gas production growth fuels CNX - Independent producer CNX Resources reported Thursday huge year-over-year second-quarter growth in natural gas production, led by a 277.6% leap in Utica Shale gas sales. For the three months ended June 30, the Pittsburgh-based company reported Marcellus Shale natural gas sales volumes of 51.1 billion cubic feet up 13.5% from the year-ago total of 51.1 Bcf. Utica Shale gas sales volumes jumped 277.6%, to 40.4 Bcf, from just 10.7 Bcf one year ago. Natural gas liquids volumes rose 3.7%, to 8.4 Bcfe from 8.1 Bcfe, Kallanish Energy reports. The average natural gas sales price fell from $2.81 per thousand cubic feet-equivalent, to $2.55/Mcfe, but the average oil price climbed to $9.72/Mcfe, from $8.03/Mcfe. Total production costs for the quarter fell to $2/Mcfe, from $2.20/Mcfe one year ago. The company reported net income of $61 million for 2018’s second quarter, compared to net income of $170 million in the second quarter of 2017. EBITDAX (earnings before interest, taxes, depreciation, amortization and exploration expenses) from continuing operations was $192 million for the 2018 second quarter, compared to $326 million in the year-earlier quarter. In the second quarter of 2018, CNX continued to operate three horizontal rigs and deployed a fourth in late June. The horizontal rigs drilled 16 wells including three dry Utica Shale wells in Monroe County, Ohio; four Marcellus Shale wells in Greene County, Pennsylvania; six Marcellus Shale wells in Washington County, Pennsylvania; and three Marcellus Shale wells in Tyler County, West Virginia. Drilling efficiencies continued to improve during the quarter, and the company successfully drilled a Marcellus Shale well in Greene County, Pennsylvania, in 10.8 days from spud to rig release. 

Pennsylvania, environmentalists settle pipeline dispute - Pennsylvania environmental regulators and groups that oppose the construction of a $2.5 billion pipeline across southern Pennsylvania have settled their dispute over the permits that were issued for the project. The Clean Air Council, Delaware Riverkeeper Network and Mountain Watershed Association had challenged 20 permits issued by the Department of Environmental Protection for Sunoco Pipeline's Mariner East 2 pipeline. The environmental groups called them incomplete and legally flawed. Sunoco has since nearly completed work on the 350-mile-long (563 kilometer), 20-inch (50-centimeter) diameter Mariner East 2 pipeline to carry propane, butane and ethane from western Pennsylvania to a terminal near Philadelphia. The settlement does not impact any of the permits, but requires DEP to put into place additional safeguards for future pipeline projects. 

Mariner East 2 permit appeals dropped but opponents still 'strongly resist' the project - Three environmental groups have ended their appeals of state permits issued to Sunoco Pipeline LP for construction of the Mariner East 2 natural gas pipeline.  Spanning Pennsylvania, the Mariner East 2 and the parallel Mariner East 1 pipeline are meant to carry pressurized propane, ethane and butane from the Marcellus shale region to a Sunoco refinery near Philadelphia. In Westmoreland County, the pipelines traverse Sewickley, Hempfield, Penn, Salem, Loyalhanna and Derry townships. No changes will be made to the 20 permits that had been challenged by the Melcroft-based Mountain Watershed Association, the Clean Air Council and the Delaware Riverkeeper Network, according to the state Department of Environmental Protection. In a settlement in the case approved Thursday, DEP agreed to make available online all non-privileged, non-confidential permit application materials and supporting documents for pipeline projects such as the Mariner East 2. That includes technical deficiency letters issued by the department and the resulting responses from applicants. DEP also plans to convene a group of stakeholders — including representatives of DEP, of the appealing organizations and of pipeline proponents — who will offer input as DEP develops “more formalized guidance on pipeline construction.” DEP has agreed to initiate the stakeholder group within 90 days and share documents developed through the group within a year.   The three environmental groups have been invited to each have a representative take part as DEP evaluates changes to the application process for erosion and sediment control permits for earth disturbance related to oil and gas facilities.  DEP fined Sunoco Pipeline $355,000 for violating the Clean Streams Law between May 2017 and February while it was building Mariner East 2.  Construction of the Mariner East 2 pipeline resulted in “an unpermitted discharge of drilling fluids to wetlands, wild trout streams and high-quality waters at a number of locations in Allegheny, Blair, Cambria, Cumberland, Dauphin, Huntingdon, Indiana, Lancaster and Washington counties” DEP said.

Ellen Gerhart, fighting pipeline on family’s land, jailed for allegedly violating court order -  Sunoco says she interfered with workers. The 63-year-old's daughter said that isn't true. Ellen Gerhart, a retired teacher who has led a fight to keep Sunoco from building a pipeline on part of her family’s Huntingdon County land, was jailed Friday after the company accused her of violating a court order that she not interfere with its workers. Gerhart, 63, was arrested on a bench warrant and is at Centre County Correctional Facility without bond on a charge of indirect criminal contempt, according to online court records and the Centre County prison’s records office. Gerhart’s daughter, Elise, said her mother has an Aug. 3 hearing date in Huntingdon County related to a previous allegation that she violated the court order in April. In a Huntingdon County Common Pleas Court filing July 26, Sunoco Pipeline L.P. said that since May, Ellen Gerhart continued to interfere with the Mariner East 2 pipeline site and workers. Among other things, the company claimed she spread spoiled food near the site to bother the workers and attract wild animals; that she started fires that threatened construction fences and equipment, and that workers had to put out; and that she went onto the easement and stood in front of a construction vehicle, forcing it to stop until she left. Sunoco asked that Gerhart’s bail be revoked and that she be found in contempt of court.

Environmental Activist Arrested and Placed in Solitary Confinement for Monitoring Pipeline Construction on Her Own Property -- On Tuesday, July 26, Sunoco Pipeline L.P. filed paperwork with a Pennsylvania court claiming that retired special education teacher Ellen Gerhart, 63, had violated an injunction. Three days later, Gerhart was arrested and jailed. She’s currently held in the Centre County Correctional Facility awaiting a hearing on $25,000 bail. She’s been kept in solitary confinement for much or all of that time, according to her supporters, who add that she is unable to afford bail.  Sunoco Pipeline obtained a right of way through the Gerharts’ land using the controversial legal doctrine of eminent domain, which allows private companies to seize land people refuse to sell that’s in the planned path of a pipeline project. Sunoco now claims Ellen Gerhart interfered with construction and alleges, among other things, that Gerhart tried to lure mountain lions and bears onto her property.“Mrs. Gerhart’s efforts to bait the property was [sic] successful and, on June, 24, 2018, a mountain lion was spotted on the edge of the easement,” the complaint filed by Sunoco Pipeline, L.P., which merged with Dakota Access builder Energy Transfer Partners in 2017, alleges. “Four days later, two bears were on the easement and fresh mountain lion tracks discovered.”These allegations have drawn ridicule from Gerhart’s supporters, who say the company’s claims that she is to blame for wildlife near construction are absurd.   A MoveOn petition calling the charges “outlandish and unprovable” and urging her release has attracted over 2,000 signatures.  The Gerharts have their own view of what led to Ellen’s arrest. “Energy Transfer Partners is yet again fabricating charges against my mom in attempt to silence her,” Ellen’s daughter Elise said in a statement. “Look at who has actually inflicted damage here: ETP has poisoned dozens of families’ wells across the state, spilled over 100 times, and harassed and intimidated anyone who opposes them.”

Factbox: Pipeline work in Pennsylvania to pressure natural gas prices, production -- Upcoming maintenance on Millennium Pipeline could put downward pressure on natural gas production and prices in northeast Pennsylvania starting Wednesday with impacts intensifying through the weekend.   On Friday, Millennium said gas transmission through its Wagoner West segment would be restricted to 759 MMcf/d from August 1 to August 2, followed by a further restriction to just 600 MMcf/d from August 3 to August 6, according to a revised critical notice posted to the company's electronic bulletin board. In July, flows on Millennium through Wagoner West have averaged 941 MMcf/d, rising to a high of 954 MMcf/d on four days over the past month, according to S&P Global Platts Analytics data.  Maintenance work at Wagoner West will reduce takeaway optionality for gas producers in northeast Pennsylvania, likely rerouting at least some production from the Bluestone Gathering and Laser Gathering systems to Tennessee Gas Pipeline. Upstream production on Millennium from the Bluestone and Laser systems has averaged nearly 1.1 Bcf/d in July. Approaching maintenance on Millennium has the potential to suppress upstream production by as much as 340 MMcf/d, based on scheduled volume restrictions and recent flow data. Total gas production from the Northeast Pennsylvania dry gas window has averaged nearly 9.7 Bcf/d in July, according to sample data from Platts Analytics.On Monday, upstream gas prices at Millennium East receipts and Tennessee Zone 4 300-leg, both of which could be impacted by the maintenance, were trading higher along with other points across Appalachia.Preliminary data from the Intercontinental Exchanged showed Millennium East up nearly 11 cents to $2.39/MMBtu; Tennessee Zone 4 300 was up 7 cents to $2.32/MMBtu.In July, basis prices at Millennium East and Tennessee Zone 4 300 have averaged roughly 60 cents/MMBtu and 54 cents/MMBtu, respectively, below the benchmark Henry Hub, according to S&P Global Platts data.

After 4 years of controversy, Atlantic Sunrise natural gas pipeline nearly finished in Lancaster County   --Four years after plans were first announced, construction of the controversial Atlantic Sunrise natural gas pipeline is nearly finished.In late August, Oklahoma-based Williams Partners said gas from Marcellus Shale wells in northeastern Pennsylvania should start flowing through the nearly 300-mile, $3 billion pipeline that traverses 10 Pennsylvania counties.In the 37-mile portion through western and southern sections of Lancaster County, the pipeline has been welded together, buried and backfilled in all but a few sections.“It is wrapping up,” said Christopher Stockton, spokesman for Williams Partners.“We are progressing with final cleanup and right-of-way restoration work. The contractor has demobilized much of the construction equipment in Lancaster County.” The pipeline work generated a famous pushback by Roman Catholic nuns who built an outdoor chapel in the path of the pipeline, and it led to 52 arrests of protesters, who engaged in sporadic actions that sometimes disrupted construction.Marcellus Shale gas production is expected to increase as a result of the new pipeline, and Williams — the country’s largest pipeline owner — said the project will bring affordable energy to customers up and down the Eastern Seaboard.But those opposed to the pipeline have a different perspective. They cite forced use of properties, reduced home values, the dangers of future explosions or leaks, and fragmentation of the county’s remaining forests.  Some of the gas — the percentage is hotly debated — will be exported overseas to markets in Japan and India via the newly opened Cove Point liquefied natural gas export facility near Baltimore.

Drilling rigs used in fracking found along nature trail irk some hikers -- This past June, approximately a thousand hikers joined in the 22nd running of the Rachel Carson Trail Challenge — a 35-mile all-day event that starts at 5:50 a.m. The deadline to finish was set at 8:54 p.m., or 15 hours and four minutes later. It should be noted that this is not a race. The goal is just to finish — while taking in all of the natural splendor that the trail offers as participants wind through terrain just north of Pittsburgh and its suburbs.Carson was a famous conservationist from the area who is credited with inspiring the global environmental movement with her 1962 book “Silent Spring.” Although the challenge was named in her honor, a few of the challenge participants became disgruntled when they discovered that signs of the growing fracking industry had shown up along the path. In one spot in Indiana Township, a large number of trees had been cleared to make way for a drilling rig for a Marcellus shale well pad that is being developed by Range Resources Corporation.“All we would have to do is put some kind of markers out that would keep people walking right across that,” says Bob Mulshine, the president of the Rachel Carson Trails Conservancy and director of the challenge. “And for us as a hiking group, this is not an inconvenience.”    “It's just not something you really want to see,” says Ganster of the drilling rig right off the path. “It's like a strip mine or anything else like that. You just really don't want to see it out here when you're coming to get away from all the industrialism and everything.”

Pennsylvanians who live near fracking are more likely to be depressed --People who live near unconventional natural gas operations such as fracking are more likely to experience depression, according to a new study.For the study, which is the first of its kind and published today in Scientific Reports,researchers from the University of California at Berkeley and Johns Hopkins University looked at rates of depression in nearly 5,000 adults living in southwestern Pennsylvania's Marcellus shale region in 2015.They found that people living near fracking-related operations are more likely to be depressed than the general population, and that stress and depression went up among people living closest to more and bigger natural gas wells. "Previously we've looked at the links between unconventional natural gas development and things like asthma exacerbations, migraine headaches and fatigue," study co-author Joan Casey, a postdoctoral scholar at UC Berkeley's School of Public Health, told EHN. "The next step was thinking about mental health, because we had a lot of anecdotal reports of sleep disturbances and psychosocial stress related to unconventional natural gas development." By the end of 2015, 9,669 wells had been drilled in Pennsylvania's Marcellus shale, and by 2016, the region led the nation in shale gas production. While there have been other small studies on the links between fracking and depression, this is the first to investigate a link between the two using a validated survey among a larger population.

U.S. court vacates two permits for EQT Mountain Valley gas pipeline (Reuters) - A U.S. appeals court on Friday vacated decisions by two federal agencies that allowed EQT Corp to build its $3.5 billion to $3.7 billion Mountain Valley natural gas pipeline from West Virginia to Virginia across federal land. The case is the latest victory in the U.S. Court of Appeals for the Fourth Circuit by the Sierra Club and other opponents of the pipeline. Analysts at Height Capital Markets in Washington said the decision could delay the project’s in-service date until the fourth quarter of 2019. The Sierra Club and others challenged decisions by the U.S. Bureau of Land Management and the U.S. Forest Service granting the pipeline rights of way across federal land. The court concluded certain aspects of the federal agencies’ decisions failed to comply with the National Environmental Policy Act, the Mineral Leasing Act and the National Forest Management Act.  “Mountain Valley Pipeline is working with the agencies to evaluate the effect of the order on construction activities in the National Forest, which amounts to about 1 percent of the overall project route,” said Natalie Cox, a spokeswoman for MVP.  The court remanded the case back to the BLM and Forest Service for further proceedings.

Federal ruling affects Mountain Valley Pipeline’s route through national forest  -- Federal appeals judges ruled two key federal approvals don’t provide adequate protection on the Mountain Valley Pipeline’s route through the Jefferson National Forest, which includes Monroe County.The Sierra Club and other environmental groups had challenged approvals by the U.S. Forest Service and the Bureau of Land Management over a 3.6-mile segment of the pipeline’s route through the national forest.The Mountain Valley Pipeline gained approval from the Federal Energy Regulatory Commission in mid-October.The $3.5 billion Mountain Valley Pipeline would extend 42-inch diameter natural gas pipeline over 303 miles  to transport West Virginia natural gas into southern Virginia.The path takes the pipeline not only through the national forest but also under the Appalachian Trail at Peters Mountain.The environmental groups questioned whether the plans for pipeline construction adequately control erosion and sediment.It wasn’t immediately clear if the ruling would affect other aspects of the pipeline’s construction and timetable.“I am very relieved that MVP cannot destroy the Appalachian Trail and our beloved Peters Mountain,” stated Maury Johnson, a Monroe County resident who is a part of Save Monroe, one of the parties to the federal lawsuit. “I feel that when other cases are heard by the Courts we will win these as well and hopefully MVP will just be a bad nightmare.”

Federal judges in Va. revoke permit for pipeline, saying impact on national forest not fully reviewed    — A panel of federal judges on Friday rescinded permits for a massive natural gas pipeline to cross the Jefferson National Forest, saying two U.S. agencies had not fully vetted the project and had simply accepted assurances from the builders.   Environmentalists called the decision a major blow against the 303-mile Mountain Valley Pipeline, which is being built from West Virginia though the rugged terrain of far Southwest Virginia. It will pass through 3.6 miles of the Jefferson National Forest along the West Virginia line in Giles County, tunneling under the Appalachian Trail. Pittsburgh-based EQT Midstream Partners, which is leading the coalition of companies building the pipeline, said it was “evaluating the court’s decision.”    The ruling did not appear to affect pipeline work outside the boundaries of the Jefferson National Forest. A three-judge panel of the U.S. Court of Appeals for the Fourth Circuit ruled unanimously that the U.S. Forest Service and the federal Bureau of Land Management had not properly reviewed the project’s impact on the forest. The “proposed project would be the largest pipeline of its kind to cross the Jefferson National Forest,” the judges wrote. “American citizens understandably place their trust in the Forest Service to protect and preserve this country’s forests, and they deserve more than silent acquiescence to a pipeline company’s justification for upending large swaths of national forestlands.”  The judges ordered the agencies to reconsider the permits using proper procedure.  The Mountain Valley Pipeline is the smaller of two natural gas projects underway in Virginia. The other, the Atlantic Coast Pipeline, is twice as long and passes through the center of the state, but not through the Jefferson National Forest. Work has been underway on both pipelines since early this year, with trees being cleared along the routes. Protesters have tried to delay the projects at every step, sometimes lashing themselves to trees or tall poles in the path of workers — including in the Jefferson National Forest.

Pipeline projects hit legal snags in federal court, work suspended in parts of Virginia, W.Va. -- Two multibillion-dollar natural gas pipelines hit legal snags on Friday, as the Atlantic Coast Pipeline voluntarily suspended planned crossings of rivers in West Virginia and a federal appeals court rescinded federal permits that allowed construction of the Mountain Valley Pipeline across national forest land in Virginia. The Atlantic Coast Pipeline, a 600-mile project crossing parts of three states, informed the 4th U.S. Circuit Court of Appeals on Friday that it had requested and received an administrative stay on construction of the project across all West Virginia rivers. The action allows further review by the U.S. Corps of Engineers of the project’s plans to meet state requirements for three contested river crossings. The Corps’ office in Huntington, W.Va., granted the temporary stay on Friday, just three days after Dominion Energy and its partners received federal permission to begin construction of the portion of the $5.5 billion pipeline that would cross North Carolina. The 4th Circuit, which had stayed construction of the 303-mile Mountain Valley Pipeline across West Virginia rivers last month, dealt the project another blow on Friday by vacating federal permits allowing the pipeline to cross 3.6 miles of the Jefferson National Forest in Virginia. The unanimous ruling by a three-judge panel of the Richmond-based appeals court cancels permits issued by the Bureau of Land Management and the U.S. Forest Service allowing the Mountain Valley Pipeline to cut through the Jefferson National Forest. The judges’ ruling accuses the agencies of ignoring environmental regulations in approving the project. 

Retired Schoolteacher Blockades Pipeline On Family Land — On Tuesday, July 31, a West Virginia grandmother halted construction of the Mountain Valley Pipeline (MVP) by blockading herself in a 1971 Ford Pinto elevated off the ground at a pipeline work site. The blockade is being carried out by 64-year old local resident, author, retired schoolteacher, and grandmother Becky Crabtree on the section of pipeline easement that is ravaging the land her family lives on in Monroe County. Banners at the site read “Defend What You Love” and “Resist All Pipelines;” messages on the Pinto include, “Power to the People” and “The Fire is Spreading.” Local residents and protesters have begun to gather on site scene in support of the blockade.  “I have talked to elected officials, signed petitions, written letters, submitted reports, and gone to court. I have exhausted the ‘usual’ methods of fighting injustice and have gotten no relief,” stated Becky Crabtree. “Officials have failed us in this fight; we need to fight for ourselves and each other.” The Pinto used in today’s action has sentimental significance for Becky, as it has been in her family since 1971 and it is the car she took on her honeymoon.  Virginia resident Doug Chancey stated his support for Becky’s action. “There is clear scientific proof that we do not need to rely on fossil fuels for energy. The need to make other energy sources available is urgent, and since the fight in the courts is slow and the pipeline work continues, direct action is necessary to halt construction until the weight of public opinion, fallen stocks, and court decisions sink this project.” The Mountain Valley Pipeline is a 42-inch diameter fracked gas pipeline that has been met with determined opposition since it was proposed over four years ago. Impacted residents have fought the pipeline with a variety of tactics, including a nonviolent direct action campaign that escalated when construction started earlier this year. In the past 6 months, pipeline fighters have delayed construction by erecting aerial blockades and by locking themselves to construction equipment. The property that the Crabtree family inhabits and cares for is located at the base of Peters Mountain, just a couple miles from the site of a tree sit blockade near the Appalachian Trail that prevented tree clearing for 95 days this spring.

In Appalachia, Women Put Their Bodies on the Line for the Land - Ollie Combs, a 61-year-old widow in Knott County, Kentucky, sat in front of bulldozers with her two sons at her side. It was 1965. Determined to not let the coal industry strip-mine her family land, she remained unmoved; officials were forced to physically carry her away—an image that drew national attention. So did, more recently, the story of Theresa “Red” Terry, a 61-year-old Roanoke County, Virginia, resident. In 2018, Terry lived in a “tree sit” alongside her grown daughter for more than a month, protesting the Mountain Valley Pipeline construction through her private property. Today, there’s Jill Antares Hunkler, 43, of Belmont County, Ohio, and 69-year-old Roxanne Groff of Athens, Ohio: two of the women working loudly and publicly to protect land in Appalachia from fracking. Fracking operations, which release and capture trapped natural gas deposits in sedimentary rock, concentrate in geologic reserves covering the area west of the Appalachian Mountains. Environmental disasters have been linked to fracking, including water source pollution, air quality issues, soil contamination, and earthquakes. At a time when Environmental Protection Agency (EPA) Administrator Scott Pruitt resigned due to “ethics controversies,” Appalachian women like Hunkler and Groff continue to lead their communities in efforts to protect local environments—partly due to the lack of protection from government agencies, and partly because such work by women is a strong component of Appalachia’s history.

Atlantic Coast Pipeline developers ask for and receive river crossing permit suspension — In an attempt to allay concerns raised by an environmental group, developers of the Atlantic Coast Pipeline have asked for, and been granted, a temporary suspension of a key river crossing permit.The Army Corps of Engineers, Huntington District, has granted the suspension, giving developers more time to provide plans and additional information with regard to some of the river crossings covered under the permit.The pipeline, expected to span about 600 miles from North Central West Virginia to North Carolina, has been the target of criticism from environmentalists since its inception. But developers have worked to address concerns. The most recent issue, raised in a lawsuit by the Sierra Club filed in the Fourth Federal Court Circuit based in Richmond, Virginia, is that an Army Corps of Engineers Permit 12, which allows the pipeline to cross rivers and streams, is flawed.Attorneys for the Sierra Club argue that the Atlantic Coast Pipeline can’t meet the requirements of Permit 12, which call for river crossings to be accomplished in a 72-hour period. They cite specifically in the motion for a stay the Greenbrier River in Pocahontas County, but there is also concern with two rivers in North Central West Virginia: The West Fork River, in an area located in Lewis County, and the Buckhannon River in Upshur County.The motion says the Greenbrier crossing would be 177 feet and could not be accomplished in 72 hours.

Court upholds Mountain Valley Pipeline water quality review   (AP) — A federal appeals court has upheld a Virginia agency's finding that says the Mountain Valley Pipeline is not expected to harm water quality.The Roanoke Times reports the Wednesday ruling by a three-judge panel with the 4th U.S. Circuit Court of Appeals applies to about 500 waterbody crossings the natural gas pipeline will make through southwest Virginia.The decision rejects arguments by conservation groups that say the State Water Control Board's findings are flawed. The ruling follows the state Department of Environmental Quality issuing the pipeline notices of violations last month after finding inadequate measures to control muddy runoff at several construction sites. The same panel ruled last week to revoke U.S. Forest Service and Bureau of Land Management permits allowing the pipeline to cut through the Jefferson National Forest.

FERC clears Atlantic Coast Pipeline for construction in North Carolina - Dominion and other supporters of the $6 billion Atlantic Coast Pipeline scored a big victory this week, but opponents are hoping the appeals court will intervene. SELC argues that allowing the company to move ahead with construction on one portion of the line — when not all approvals are in place — is improper. “It’s an all or nothing sort of deal," SELC attorney Patrick Hunter told the Virginia Mercury.FERC, however, has authorized construction to begin, allowing Dominion "full use of and improvements to access roads." The commission also said it reviewed FWS comments before making its decision, "and have confirmed that no additional consultation under the Endangered Species Act is required for the areas subject to this notice to proceed."Earlier this month, the commission authorized the construction of two other pipeline projects: the Eastern Panhandle Expansion Project and the Texas and Louisiana Market Expansion Project, as well as an upgrade to the North Seattle pipeline in Washington.Duke Energy and Southern Co. are also involved in the project's development. The pipeline will transport gas through parts of West Virginia, Virginia and North Carolina. SELC has argued on behalf of Defenders of Wildlife, Virginia Wilderness Committee and Sierra Club that the project should be halted entirely. Opponents of new gas plants say many of these pipelines and projects are not only environmentally harmful, but also unnecessary in the first place, as they can increasingly be replaced with renewables and storage.

Untangling the pipeline pileup in federal courts -- Federal judges are making their mark on natural gas pipelines.The past few months have featured a steady drumbeat of significant rulings, especially in the Mid-Atlantic region, from courts working their way through a stack of pipeline lawsuits that followed the industry's push to build out shale gas infrastructure.The issues are varied, encompassing landowner rights, Clean Water Act compliance, religious freedom, climate change and more. And the scorecard is mixed: Pipeline builders and the federal regulators who oversee their projects have triumphed over some challenges but faced remands and rebukes in others.The pipeline projects are still chugging along but have been delayed in some places where federal permits have been tied up in court. Here's a rundown of some key recent rulings.

  • Mountain Valley: Eminent domain.  The 4th U.S. Circuit Court of Appeals dismissed a case from a group of Virginia and West Virginia landowners near the 303-mile Mountain Valley pipeline who say the Federal Energy Regulatory Commission's eminent domain process for pipelines is unconstitutional. The landowners had argued that FERC routinely violates the Fifth Amendment by allowing pipeline companies to exercise eminent domain to cross holdout properties. But the 4th Circuit sided with a lower court that said it lacked jurisdiction to consider the arguments because the landowners didn't first go through FERC's standard administrative process for pipeline challenges (Energywire, July 26).
  • Mountain Valley: National forest crossing - Pipeline opponents were successful last week in a challenge to two federal approvals of the Mountain Valley pipeline. In another 4th Circuit case, a panel of judges ruled that the Forest Service and Bureau of Land Management didn't fully comply with the National Environmental Policy Act and other laws when they signed off on the project's crossing of the Jefferson National Forest in southern Virginia. (Energywire, July 30).
  • Mountain Valley: West Virginia water crossings - In yet another 4th Circuit case affecting the Mountain Valley pipeline, the court in June granted environmentalists' request to suspend the Army Corps of Engineers' approval of water crossings in West Virginia.Several groups had argued that the project's river crossings were too complex to be covered by the general nationwide permit the Army Corps applied. The court agreed to stay the permit (Energywire, June 22).
  • Atlantic Coast: Endangered species The Atlantic Coast pipeline, which runs 600 miles from West Virginia to North Carolina, ran into similar problems at the 4th Circuit when the court in May scrapped a key Endangered Species Act assessment.The court ruled that the Fish and Wildlife Service fell short of the ESA when it issued an incidental take statement — an estimate of affected species — that didn't set clear limits on how many ESA-protected animals could be affected (Energywire, May 16).
  • Atlantic Sunrise: Religious freedom - The Adorers of the Blood of Christ argued that the Federal Energy Regulatory Commission's approval of the pipeline's route across their land violated their religious rights. Their faith prioritizes the protection of the environment, and the group's lawyers argued that forcing the sisters to give up land for the pipeline amounted to a violation of the Religious Freedom Restoration Act. The 3rd Circuit tossed the case last week, ruling that the group should have first raised its concerns with FERC rather than going straight to court (Energywire, July 26).

Cabot to boost production with Atlantic Coast Pipeline - Cabot Oil & Gas Corp. reported second quarter 2018 net income of $42.4 million or 9 cents a share, Kallanish Energy reports. That compares to $21.5 million or 5 cents a share in 2Q 2017. It posted quarterly revenues of $453.4 million. The company, a major operator in the Marcellus Shale in Pennsylvania, said it expects production to grow in the second half of 2018, tied to the beginning of service in August on the Atlantic Coast natural gas pipeline. Cabot said it intends to place 37 net Marcellus Shale wells in Pennsylvania into production in 3Q 2018 because of that pipeline. In 2Q 2018, the company averaged 1,891 million cubic feet per day of net Marcellus production. That is an increase of 4% from 1Q 2018. It is operating three rigs and two completion crews in the Marcellus Shale. In 2Q 2018, Cabot drilled 24 wells and completed 23 wells. Cabot reported daily equivalent production of 1,895 million cubic feet equivalent per day, although he company listed no liquids production in 2Q 2018. That is a 4% increase from 1Q 2018 when adjusting for the Eagle Ford Shale divestiture that closed last February, the company said.

Summer natural gas price spreads between Henry Hub and Appalachian region have narrowed – EIA - Over the past decade, natural gas production in the Appalachian region has grown faster than capacity to move the gas into U.S. markets, pushing down local prices. More recently, pipeline infrastructure from Appalachia has increased capacity to deliver Appalachian natural gas to regional markets, increasing relative spot prices at Appalachian hubs, and narrowing their price spreads relative to the U.S. natural gas price benchmark Henry Hub in Louisiana. Natural gas production in the Appalachian region averaged 22 billion cubic feet per day (Bcf/d) in 2017, an increase of 25% from 2015 average levels. EIA’s latest data indicate that production has continued to increase, and production in the Appalachian region reached 26 Bcf/d in April 2018. Based on 2017 estimates, production in the Appalachian region accounted for almost half of total U.S. dry natural gas production. The difference in price between Appalachian hubs and Henry Hub tends to follow a seasonal pattern. Generally, this price spread widens in the summer months (April through September) and narrows in the winter months (October through March), when demand in regions with more pipeline capacity increases in the winter months. As infrastructure in the Appalachian region has increased, however, the summer price spread to Henry Hub has decreased. For example, in the summer of 2015, the Dominion South price was $1.48 per million British thermal units (MMBtu) lower than Henry Hub, but by summer 2017, the Dominion South Hub was $1.07/MMBtu lower than Henry Hub. Winter spreads at the Dominion South Hub, on the other hand, have remained relatively flat in recent years, averaging $0.90/MMBtu lower than Henry Hub.  Other hubs in Appalachia have followed a similar seasonal pattern. Most of the recent pipeline buildout in Appalachia, including the Rover and Rockies Express pipelines, have been concentrated near the southwest border of Pennsylvania where the Dominion South hub is located. As a result, the price spread between Dominion South and Henry Hub has narrowed more than other hubs in north-central Pennsylvania, such as Leidy and Marcellus.

Surprise, Surprise: Energy Department LNG Export Study Draft Ignores Climate Change -- The Department of Energy (DOE) missed the mark in its newly published draft Liquefied Natural Gas (LNG) study, ignoring economic costs associated with climate change and the growth of the renewable energy industry, dozens of national and grassroots environmental groups said in public comments filed with the DOE on Friday.In June, the DOE published a draft study that predicted expanding LNG exports worldwide could double American natural gas prices by 2040 — but that would carry relatively limited costs to the overall economy. “The draft study is deeply flawed, as the authors chose to ignore both climate science and climate action in favor of what appears to be a political imperative over any objective analysis,” Lorne Stockman, Senior Research Analyst with Oil Change International and lead author of the comments said in a statement. “In my experience, this would not stand up to peer review in any academic institution.”The new comments come the day after DOE Secretary Rick Perry arrived at a ribbon cutting for the Cove Point LNG export facility, now the second in the U.S., where he touted exports of more American fossil fuel to Europe and elsewhere. “We’re now exporting natural gas to 30 nations,” Perry said via Twitter.Earlier this week, the Trump administration also finalized rules that would speed up approvals for “small-scale” LNG projects that would ship American fossil fuel to countries that haven’t signed free trade agreements with the >U.S. The new rules, slated to go into effect on August 25, allow the DOE to skip a “public interest review,” replacing that process with the presumption that small export facilites are a postitive for the U.S.As the shale gas rush has flooded American markets with cheap fracked gas, the U.S. has switched from building LNG< import terminals to terminals for exporting super-chilled methane via ocean tanker. In 2016, the U.S. exported 0.5 billion cubic feet (Bcf) of gas per day; last year that figure nearly quadrupled to 1.94 Bcf.

Record high run rates in US refining industry - While crude oil producers in the prolific Permian Basin are living out a Shale Revolution, the Midcontinent region of the U.S. is having a Refining Renaissance. Crude takeaway constraints, mainly due to insufficient pipeline capacity, are driving the prices of crude in Western Canada and West Texas to attractive lows against the WTI NYMEX benchmark for crude at the Cushing, OK, hub. Cheaper oil can contribute to bigger margins for refiners, who are supplying increasing volumes into a retail market that’s selling gasoline at the highest prices in four years. What will happen if the refiners don’t rein in their runs? Today, we’ll explore the implications of record-high run rates in the U.S. refining industry. Refiners will push themselves to the limit if they can access cheap crude — and right now Canada’s got a lot of it. As we outlined in What Does It Take?, the Canadian glut is primarily due to capacity constraints, which drive values lower. On the whole, the Canadians’ shipping woes are a long-term problem. There’s ongoing environmentalist backlash against plans to build new pipelines, and railroads are hesitant to work with oil companies unless multi-year contracts are signed. In spite of their reluctance, Canadian crude-by-rail is moving out of the country at the highest rate ever — Canada’s National Energy Board reported a record-high 199 Mb/d of railed crude exports for May.

U.S. distillate fuel inventories are low for this time of year – EIA - Inventories of distillate fuel, a category that includes both diesel and home heating oil, were 117.7 million barrels at the end of June, the lowest end-of-June level since 2004. Distillate inventories have generally been lower than the previous five-year (2013–2017) average throughout 2018. Relatively low inventory levels reflect growth in distillate consumption during 2018 that has not been fully offset by increased domestic refinery production or by lower net exports of distillate. EIA estimates that U.S. consumption of distillate fuel averaged 4.12 million barrels per day (b/d) during the first half of 2018, which was 190,000 b/d (5%) higher than in the same period of 2017. This increase is largely attributable to an increase in trucking activity, which is the leading use of diesel fuel. Demand for trucking services tends to be closely correlated to economic growth and industrial activity, both of which have been higher in the first half of 2018 compared with the first half of 2017. Cold January temperatures in the Northeast also led to more heating oil consumption. In January 2018, temperatures in the Middle Atlantic and New England—regions with relatively high shares of homes using heating oil—were 25% and 21% colder, respectively, than in January 2017.  On the supply side, EIA estimates that refinery production of distillate fuel in in the United States averaged 5.0 million b/d in first six months of 2018, which was 30,000 b/d higher (1%) than in the same period of 2017. Net exports (gross exports minus gross imports) of distillate fuel averaged 1.1 million b/d in the first half of the year, which was 80,000 b/d (7%) lower than in the first half of last year. The lower net exports largely reflected an increase in imports during the first quarter of the year to meet increased demand for home heating oil.  The increase in domestic distillate consumption relative to supply has contributed to diesel prices rising by more than crude oil prices (the main input cost in distillate production) over the past year. The spot price of Brent crude oil averaged $71 per barrel (b) in the first half of 2018, an increase of $19/b, or 46 cents/gallon from the first half of 2018. The retail price of diesel averaged $3.11/gallon from January through June 2018, up 55 cents/gallon from January through June 2017.

Cultural survey by tribes for Enbridge pipeline could be largest effort of its kind -  Enbridge’s hotly contested new oil pipeline is slated to cross land claimed by indigenous people for thousands of years. But not before Indian tribes have completed an archaeological survey of the pipeline route, the largest effort of its kind in Minnesota and maybe the country. Surveyors, hailing from several Upper Midwest tribes, may have already found the remnants of a long lost tribal village. They are documenting everything from traditional wild ricing spots to buried artifacts. “We’re helping to preserve what’s ours,” Rob King, a member of the Fond du Lac Band of Lake Superior Chippewa and an electrician by trade, said as he used a screen to sift dirt at an archaeological dig. “If we find something, we make an impact.” Minnesota’s Ojibwe bands have fiercely opposed the $2.6 billion pipeline, fearing environmental havoc from oil spills. The tribal cultural survey won’t stop the pipeline. But it could result in small route changes that would forestall the disturbance of sacred tribal sites during pipeline construction, as has happened on state highway projects in recent years. The approved route of Enbridge’s new pipeline — a replacement for its current Line 3 that will carry Canadian oil to the company’s terminal in Superior, Wis. — runs through a pastiche of prairie, woods and wetlands in northern Minnesota. While state regulators have approved the project, Enbridge must get water-crossing permits from the U.S. Army Corps of Engineers for the pipeline. 

BP to Buy BHP Shale Assets for More Than $10 Billion - BP will buy the bulk of BHP Billiton’s U.S. onshore oil-and-gas unit for $10.5 billion, as the U.K. oil major rebuilds in the U.S. after the Deepwater Horizon disaster and BHP exits a business it has called a costly and mistimed investment.  The sale accelerates a reshuffling of assets among global energy companies as oil prices surge to levels not seen since 2014. Chesapeake Energy Corp. said Thursday it is selling oil-and-gas fields in Ohio for $2 billion, while Royal Dutch Shell has nearly completed a $30 billion asset-sale program begun after its roughly $50 billion acquisition of BG Group in 2016. It takes the total value of global oil-and-gas acquisitions unveiled in 2018 to almost $188 billion, closing in on last year’s $287 billion, according to Dealogic.  The deal is an important milestone for BP, which is in the middle of an ambitious growth plan. The company is on track to stage a comeback after years of retrenchment following its fatal blowout in the Gulf of Mexico in 2010.  The acquisition will grant the British oil giant access to some of the hottest acreage in the U.S. shale patch where logistical scale can provide a huge advantage. Big oil companies have historically focused more on giant offshore projects, but they are increasingly sinking money into shale developments that start producing and throwing off cash faster. For BHP, which will book a roughly $2.8-billion charge against the assets for its 2018 fiscal year, it ends a costly saga that has left the company roughly $20 billion worse off. When the shale boom transformed the U.S. energy landscape a decade ago, big global operators were caught off guard. Many overpaid for assets for fear of missing out and often bet on areas of the U.S. that weren’t that productive. They also misjudged the volumes of gas capable of being produced by new drilling techniques, which weighed heavily on prices. Now there is so much gas the U.S. exports the fuel around the world. BHP paid a combined $20 billion to acquire U.S. shale assets in 2011, and then spent billions more to explore and develop them. But a collapse in energy prices resulted in massive impairment charges, including a more than $7-billion pretax charge in 2016 that is its largest-ever single write down.

How BP found shale profits with 'crystal ball' oilfield technology Thousands of automated wells feed data on their performance into the firm’s supercomputers each evening. If they show a need for maintenance, an Uber-style system summons a subcontracted repair firm to keep the shale wells flowing at optimal output and minimal cost. Such technology has helped slash BP’s shale oil and natural gas production costs by 34 percent over five years. The shale business turned a profit for the first time in 2017, BP said, although the company declined to disclose the figure. BP’s progress in shale underpinned its $10.5 billion acquisition last week of BHP Billiton’s (BLT.L) U.S. shale operations. The deal highlighted BP’s newfound confidence in a sector that has challenged oil majors, which initially struggled to adjust to the quick pace and fast-evolving methods used to tap shale with horizontal drilling and hydraulic fracturing. BP and other majors that had traditionally focused on large, multi-year conventional drilling projects - such as Royal Dutch Shell and Chevron - were left behind when the shale boom took off a decade ago. The British energy giant is now catching up with smaller rivals, using technology and its institutional knowledge from global operations to push shale into a second phase that it hopes will reward its massive scale over the agility of smaller competitors. “We spent the last four years retooling our business and getting ready for this opportunity,” David Lawler, who heads BP’s shale business, said in a call with analysts after the BHP deal announcement. “We’re at the lowest production costs we’ve seen in many years. We’ll take that model, put that to work on these (BHP) assets and dramatically improve production and performance.” 

Deep Water - Contenders In The Race To Build Crude Oil Export Terminals Off The Texas Coast --As Gulf Coast marine terminal owners consider ways to at least partially load Very Large Crude Carriers (VLCCs) at their facilities, a handful of midstream companies also are planning offshore terminals in deep water that would allow the full loading of VLCCs via pipeline. Projects under development by Oiltanking and others for sites along the Texas coast would appear to have at least two legs up on the Louisiana Offshore Oil Port, or LOOP. For one, they’d have more direct access to the Permian, Eagle Ford and other crudes flowing to coastal Texas. For another, the new terminals would be focused on crude exports — no double-duty for them. Today, we begin a review of the projects vying to be the first LOOP-like project in the deep waters off the Lone Star State. U.S. crude exports hit the 3-MMb/d mark a few weeks back (the week ending June 22), and while they’ve since retreated slightly, there’s every reason to believe that export volumes will be ratcheting up in the months and years to come. They’ll almost have to, really. As we said in Got That Swing, the three production-forecast price scenarios that we assessed in our most recent update — crude prices flat at $70/bbl or $55/bbl to 2023, or (like the forward curve) ramping down to $55/bbl over the next five years — would result in crude production growth of between 2.0 MMb/d (under the flat-at-$55 scenario) and 5.0 MMb/d (under the flat-at-$70 scenario). That’s on top of the 11 MMb/d the U.S. is already producing, which is twice the 5.5 MMb/d rate back in 2010. U.S. refineries already are operating at close to full capacity with a mix of domestic and imported barrels that fits their hardward configurations, cranking out increasing volumes of gasoline, diesel and jet fuel for export, and while at least a few refinery expansion projects are being planned, they would only be capable of absorbing a small portion of the incremental crude production we’re likely to see. So export the U.S. must.

Bigger Oil Pipelines Are Coming to West Texas to Ease Bottleneck - Epic Midstream Holdings LP said last year it would build its first oil pipeline in America’s most active oil field. It won’t be finished until next year, but already Epic Midstream is considering making it bigger.  The upstart company, backed by private equity, had been planning to build a conduit capable of carrying 440,000 barrels a day from West Texas to Corpus Christi on the Gulf Coast. Now, it’s considering enlarging it to 675,000 barrels a day, after interest picked up in recent months. “We’re taking a look at upsizing very cautiously,” said Epic Midstream Chief Executive Phil Mezey. It plans to make a decision in coming weeks.  Bottlenecks have become a problem in the Permian Basin of Texas and New Mexico at the center of the shale boom. Drillers are pumping so much oil and gas that pipelines considered more than adequate just a few years ago now are overwhelmed.  That is creating opportunity for pipeline builders, who are planning an array of new oil and gas conduits in Texas, where they see increased demand from customers willing to pledge to contracts. Epic Midstream Holdings, Plains All American Pipeline LP, and Phillips 66 in a partnership with refiner Andeavor are building new oil pipelines aimed at Corpus Christi that are set to add upward of 1.8 million barrels of combined capacity late next year. Companies including Kinder Morgan Inc., meanwhile, are planning to build new natural-gas pipelines..

Coke, Meth, And Booze: The Flip Side Of The Permian Oil Boom --- The fastest-growing oil region in the U.S. is fueling not only the second American shale revolution - it’s fueling a subculture of drug and alcohol abuse among oil field workers.  The Permian shale play in West Texas is once again booming with drilling and is full of oil field workers, some of which are abusing drugs and alcohol to help them get through long shifts, harsh working conditions, and loneliness and isolation.  Drugs are easily accessible in the Permian, which is close to highways and to Mexico. For oil field workers making six-figure salaries, money is not a problem to buy all kinds of illegal substances to shoot, snort and swallow to get through 24-hour-plus shifts. The physically exhaustive work also sometimes causes aches for workers, making them susceptible to getting hooked on prescription painkillers.  The drug and alcohol abuse subculture in the Permian is a known—yet rarely reported or discussed—issue in the most prolific U.S. shale play, where oil production is booming, and relentless drilling attracts oil field workers from all over Texas and all parts of the United States. Oil workers are not speaking up at work about their addiction for fear of getting fired, Pierce said, adding that he doesn’t have anything negative to say about the oil industry, which is the backbone of the economic growth in the Permian. Some oil field workers and contractors use drug cocktails or various substances depending on the condition they seek to achieve during their 24-hour-plus shifts. At the beginning of a long or overnight shift, they would use ‘uppers’ like cocaine and methamphetamines, and finish the shift with ‘downers’ such as prescription medication or alcohol, Kayla Fishbeck, regional evaluator for Prevention Resource Center Region 9, a data repository for 30 counties in West Texas, told Rigzone.  The Permian’s drug of choice is crystal meth, a stimulant increasingly supplied by Mexican drug cartels, according to law enforcement officials who spoke to the Houston Chronicle in May. There is a strong correlation between the rise of drilling activity and the number of crystal meth seizures by authorities in the Permian area, Houston Chronicle’s cross-analysis of data from the Texas Department of Public Safety and the rig count shows.

The U.S. Oil Production "Mirage" -  Some of the surge in U.S. oil production this past spring might have been “a mirage.” On July 31, the EIA released monthly data on U.S. oil production, which revealed a decline in U.S. output of 30,000 bpd in May, compared to a month earlier. The dip is a surprise, given the widespread assumption that U.S. shale production was continuing to grow at a blistering pace.To be sure, a big reason for the decline in overall output was the 75,000-bpd decline in production from offshore Gulf of Mexico. But Texas production only rose by 20,000 bpd, a disappointing figure that likely came in far below what most analysts had expected. Moreover, the monthly total of 10.442 million barrels per day (mb/d) for May is sharply lower than what EIA itself thought at the time. Here are the weekly estimates for U.S. oil production that the EIA put out back then:  The weekly estimates tend to be less accurate than the retrospective monthly numbers. That is not a new dynamic, and estimating on a weekly basis inherently involves a lot of guesswork, so this is not a knock on the EIA.   Yet the discrepancy is rather striking. Not only did the EIA estimate that production in April and May was much higher than it actually was, but the agency also thought production was rising quickly.If the weekly estimates were to be believed at the time, production would have climbed from 10.525 mb/d in early April to 10.769 mb/d by the end of May, an increase of 244,000 bpd over a roughly eight-week period.Not only was production lower than that, but it didn’t actually increase at all. The EIA’s more accurate monthly figures show a slight decline in output, falling from 10.472 mb/d in April to just 10.442 mb/d in May..This is a rather significant development, and it has implications for more recent data releases.  “It is time to deal with the statistical gorilla on the oil trading floor,” Horsnell of Standard Chartered wrote, along with analyst Emily Ashford. “We think US crude oil production has not reached the 11 million barrels per day (mb/d) shown in recent weeks in the Energy Information Administration (EIA) weekly data, and that it is significantly below 11mb/d, with growth slowing.” That is a reasonable conclusion, given the roughly 300,000-bpd difference between the two surveys for May. The EIA has since switched its reporting for the weekly surveys by rounding off to the nearest 100,000 bpd, but data points from the last few weeks look like this:  It’s a little tricky trying to discern patterns from that data given the rounding off, but a few things jump out.  First, production dipped at the end of July, a rather surprising move. Output from Alaska fell150,000 bpd over the last two weeks, which likely explains much of the move. However, production from the Lower 48 has only increased 100,000 bpd since the week of June 22, which suggests that the Permian basin is starting to run into production constraints because of pipeline bottlenecks. 

Hell In Texas - A New Drill Down Report On Permian Gas Takeaway Constraints And Their Effects -- A big push is on to mitigate and ultimately fix the Permian’s natural gas takeaway constraints, which in recent months have widened the price spread between gas at Waha and at Henry Hub to levels not seen in years. Despite the efforts to quickly add incremental capacity to existing pipelines and build greenfield pipes, however, the momentum behind Permian crude production growth — and, with it, the production of more associated gas — make a months-long blowout in the Waha basis in 2019 a good bet.  Questions about the degree and duration of that basis pain and the amount of new pipeline capacity that will be needed (and how soon) can only be answered by taking a detailed look at what’s been happening and what’s being planned. Today, we discuss highlights from our new 24-page report on Permian gas takeaway constraints and their effects.  In January 2017 — just a year and a half ago — Permian natural gas production was sitting just above 5.5 Bcf/d, up by little more than 0.5 Bcf/d from the previous January. Crude oil prices — the primary driver of the crude-focused drilling and associated gas production volumes in the Permian — were barely above $50/bbl. The rig count in the basin was still in recovery phase, totaling about 270 after having dropped to a low point of 134 in mid-2016. Outflows of Permian supply were still well below the takeaway capacity out of the basin and near-term prospects for demand growth from exports to Mexico were still a realistic possibility. Spot gas prices at the Waha Hub, the benchmark location for Permian supply, were trading not far from historical ranges: about 15-20 cents/MMBtu behind the Henry Hub national benchmark in Louisiana.

Natural gas pipeline explosion in Texas critically injures five  (Reuters) - A series of natural gas pipeline explosions in Midland County, Texas sent five people to hospital with critical burn injuries, and interrupted energy pipeline operations in the area, officials said. The region is the home to the Permian Basin, the largest U.S. oilfield, and is crisscrossed by oil and gas pipelines. The cause of the explosion and fire were not immediately known. Five workers with critical injuries were airlifted to University Medical Center in Lubbock, Texas, and were being treated at the center’s burn unit, said University Medical Center spokesman Eric Finley. Pipeline operator Kinder Morgan said on Wednesday it had isolated a portion of its El Paso Natural Gas Pipeline (EPNG) as a precaution, after being alerted to the fire near its line. One of its employees was injured and taken to hospital, spokeswoman Sara Hughes said. “There was a third-party pipeline involved that also experienced a failure, and preliminary indications are that the third-party line failure occurred before the EPNG line failure,” Kinder Morgan’s Hughes said in an email. The company is investigating the cause of the fire and evaluating any damage to its property. Regulatory agencies and customers were notified of the incident, she added. “Fire Department personnel suppressed the fire, however approximately one hour later a second and third small explosion followed,” said Elana Ladd, public information officer for the city of Midland, in emailed comments. Multiple pipelines are located near the site, Ladd said, adding that first responders were focusing on shutting off pressure and flow to the pipelines at the site. The pipeline explosion occurred on a rural road, FM 1379, about five miles south of Highway 158 at around 11:30 a.m. local time (1630 GMT), Ladd said, adding that the road had been closed. 

7 Hospitalized After Pipeline Explosions in Texas --Seven people were injured and hospitalized after a series of natural gas pipeline explosions in Midland County, Texas on Wednesday, according to local media.  All pipelines in the region have been shut in. Midland sits in the booming oil- and shale-rich Permian Basin, which has multiple pipelines serving the field.The operator of the pipeline in question is unknown at this time, Midland public information officer Elana Ladd said to the Midland Reporter-Telegram. She added that fire department personnel are allowing the remaining gas to burn off.The incident occurred on a rural road, FM 1379. KWES reported that three total explosions occurred—the first at 11:30 a.m. After that fire was suppressed, a second and third explosion followed at 12:30 p.m. The cause is not yet known."They had a leak on the pipeline. Fire department responded to it. Midland Fire Department and Greenwood Fire Department. And while they were down there, they were fighting some grass fires along with it. Apparently something happened to the pipeline. We don't know what it is yet, because we can't get in there to look at it. But they had a failure within the pipeline itself and the first one exploded. Then they had two other small explosions, one medium and one small," .Initial reports said five people were injured from the explosions. Updated reports increased the number of injured people to seven. The seven were taken to the hospital with critical injuries, four with burns, according to CBS 7. One firefighter with the Greenwood Fire Department and another firefighter with Midland Fire Department were among the victims. The Midland Reporter-Telegram posted an eye-witness' video footage of the fire that broke out. Kinder Morgan told Reuters it isolated a portion of its El Paso Natural Gas Pipeline after being alerted of the fire near the line. One of its employees was injured and hospitalized, spokeswoman Sara Hughes said. "There was a third-party pipeline involved that also experienced a failure, and preliminary indications are that the third-party line failure occurred before the EPNG line failure," Hughes told Reuters in an email.

Texas investigators probe pipeline blaze that injured seven (Reuters) - Authorities on Thursday were investigating what caused a fire and a series of natural gas pipeline explosions in Midland County, Texas, that sent seven people to hospital and shut down five lines before being extinguished. Workers from two companies with adjacent pipelines were sent to the area Wednesday morning because of an underground gas leak when one pipeline caught fire and exploded, said Midland County Fire Marshal Dale Little, who is conducting an investigation. The blast affected lines that furnish gas processing plants in the area but outages were not significantly impacting pricing or supplies, analysts said. Pipelines operated by Kinder Morgan Inc and Navitas Midstream Partners LLC both suffered damage, said Little. No cause for the blast has yet been determined. Navitas Chief Operating Officer Bryan Neskora said in a statement that company employees were among the injured. Five workers with critical injuries were treated at the burns unit of the University Medical Center in Lubbock, Texas. One man remained in critical condition and three others were upgraded to serious condition, all with burn injuries, medical center spokesman Eric Finley said on Thursday. A fifth worker was released after treatment. Two firefighters who were at the site when the explosions occurred also were taken to hospital on Wednesday for treatment of burns, said Elana Ladd, public information officer for the city of Midland. Ladd said the explosions occurred just outside Midland on a rural road. Oil and gas pipelines crisscross Midland County, which is located in the Permian Basin, the largest U.S. oilfield. The explosions affected five pipelines that share a transit channel and which were all shut in by operators, a Midland city official said on Wednesday. 

Oil Industry Plans to Keep Workers Safe—by Firing Them and Having Robots Do Their Jobs -- The oil and gas industry is finally acknowledging how dangerous employment can be for its workers after years of touting the sector as a beacon of worker safety. This sudden honesty about the dangers of working in the oil patch coincides with the industry’s new solution to greatly improve the safety of those workers — which is to fire them and replace them with robots.  Perhaps the most bizarre example of this occured this June at the U.S. Energy Information Administration (EIA) annual conference, which featured a panel called “Technological progress in U.S. tight oil production.”   One of the panelists was Stephen Ingram, Vice President of Technology Solutions and Innovation, for oil field services company Halliburton. Ingram made the following argument for why the industry was shifting toward automation: “The most unsafe act that we provide as a service company to our employees is getting them to location today. So we’re engineering out the safety issues. Where we are focused right now is not on removing people from location because it derives a lower cost, it’s because the worst thing that we can physically do for our employees right now is drive them from the district camp to the well site. If you ever go out to Midland, Texas, you’re putting your life in your own hands driving up and down the highway.” It is true that traffic deaths in Texas have been on the rise since the 2008 fracking boom gripped the state, according to a 2014 investigation by the Midland Reporter-Telegram. However, Halliburton doesn’t suggest addressing the root cause of those accidents: the glut of commercial trucks, often serving frack sites, operating with “potentially life-threatening safety problems like defective brakes, bald tires, inoperable safety lights and unqualified, unfit, or intoxicated drivers.” Instead, to be safe, Ingram suggests eliminating the jobs at oil and gas wells that require workers to drive there. Which means those workers can look forward to risking their lives on the deadly highways of Texas driving to the unemployment office, but that no longer becomes Halliburton’s problem.

Oil Prices, Truck Fatalities Intersect at Texas' 'Death Highway' - The number of traffic deaths involving big trucks shrank in 2015, when oil prices started to collapse. They surged last year as crude rallied, boosting the need for more and more truckers to manhandle the huge 18-wheelers that can carry anything from water and sand, to steel pipes and fuel. Route 285, which runs through Pecos, Texas, and Carlsbad, New Mexico, may be “the deadliest highway in the United States,” said Ralph McIngvale, a partner at Permian Lodging, which builds and runs so-called man camps in the region. “You’ve got to be very defensive. You’ve got to look as much in your rear-view window as your front windshield.” Drivers are so in demand in the basin that one can easily rake in $120,000 a year, Midland County Sheriff Gary Painter said in an interview. But that comes with its problems. “Some of them are speeding, some of them are too tired to be driving, but they’re making money,” he said. “Some of these guys are just trying to make as much money as they can.” “When you’ve been in the oilfield for ten to 11 days, working 14 hours a day, you just become so tired that you’re not thinking straight,” he said in an interview. “You’re just brain dead, because you’re living off four to six hours of sleep.” The pool of drivers with at least two to three years of oilfield experience with the big rigs “has dwindled to nothing,” Walker said. Companies now are “substituting formal training for experience.”The worst of the driving stems from over-sized trucks being on roads that weren’t designed for the amount of traffic they’re now carrying, Walker said in an interview.In New Mexico, where Walker lives, drivers hit sinkholes that can run several feet wide, a phenomenon many people blame on fracking, Walker said. And finding funds to repair the road is a “never-ending battle,” he said.

Report: Keystone XL would have no major impact on Nebraska (AP) — A new planned route for the Keystone XL pipeline through Nebraska would not have a major impact on the state's water, land or wildlife, according to an updated environmental study produced by the Trump administration. The U.S. State Department released a draft study Monday of the pipeline's potential environmental impact in Nebraska, where opponents have repeatedly thwarted the project. The study is now subject to public input through Aug. 29 before it's finalized.The announcement marks another step in pipeline developer TransCanada's quest to finish the 1,184-mile oil pipeline, although the company continues to face obstacles in Nebraska.Environmentalists, Native American tribes and an organized minority of landowners in the state have prevented the company from moving ahead with construction, and they're now trying to block the project with a lawsuit currently pending before the Nebraska Supreme Court. Oral arguments in that case aren't expected until October at the earliest, and a decision won't come down until months later.

Report: Keystone XL would have minimal environmental impact on Nebraska - An alternative route approved through Nebraska for the Keystone XL pipeline would have minimal impact on the environment, according to a draft environmental assessment released Monday by the State Department.The 304-page document looked at eight potential areas the proposed pipeline might affect, ranging from air and water quality to noise to cultural issues, and found only three where it would have more than a minor impact.According to the review, the pipeline would have "minor-to-moderate" effects in the areas of noise and vibration, water resources and biological resources. It would have minor impacts on soils, air quality and cultural resources, negligible-to-minor impact on socioeconomics and environmental justice, and a negligible impact on land use and recreation.A spokesman for TransCanada, the company building the pipeline, told Bloomberg that it would review the report and comment to the State Department as necessary.The slightly longer "mainline alternative" route cuts farther east than what TransCanada proposed. It then runs parallel with the existing Keystone pipeline for about 95 miles, with a 30-mile detour in Seward County. It also would require an additional pumping station in the state.The "mainline alternative" route was approved by the Nebraska Public Service Commission in November on a 3-2 vote. Several landowners filed a lawsuit over that decision, and the case is set to go before the Nebraska Supreme Court as early as October.

Trump State Dept. Attempts 'Shortcut' to Build KXL Pipeline, Groups Say --Environmentalists spoke out against President Donald Trump's State Department after it found "no significant environmental impacts" in its review of TransCanada's long-gestating Keystone XL (KXL) pipeline.The alternative route approved by Nebraska regulators in November would have "minor to moderate" impacts from its construction and operation, according to the 300-page draft report released Monday. It said the route would not have a major impact on the state's water resources, soils or wildlife. It may cause minor impacts on cultural resources such as Native American graves.Once built, the $8 billion 1,180-mile pipeline will transport heavy crude from Alberta's tar sands to U.S. Gulf Coast refineries. The controversial project has been at the center of an environmental fight for a decade. President Obama rejected the KXL in 2015 partly due to concerns about its contribution to climate change, but President Trump reversed the decision just days into office.In a press release, the Sierra Club said that Trump's approval of the KXL was based on an outdated Environmental Impact Statement from 2014 and accused the administration of short-cutting the permitting process."Once again, the Trump administration is attempting to take a shortcut around the legally required review process on Keystone XL, putting our communities at risk for the sake of propping up the Canadian tar sands industry," said Sierra Club Beyond Dirty Fuels Campaign Director Kelly Martin in a statement. "Keystone XL was a bad idea when it was proposed a decade ago, it was a bad idea when former President Obama rejected it, and it's an even worse idea now. This pipeline is a threat to our land, water, wildlife, communities, and climate, and we will continue fighting, in the courts and in the streets, to ensure that it is never built."The group noted that in November, Nebraska regulators rejected TransCanada's preferred route for the pipeline. Instead, they voted for a new route that had not been assessed. KXL opponents are now trying to block the State Department's approval of the pipeline "based on this insufficient analysis" in federal court, the Sierra Club said.

The fracking enemy is at the gate -   The "dirty tricks" by the fracking industry to derail ballot Initiative 97 (which would set back fracking wells 2,500 feet as opposed to the current 500) that Boulder Weekly has reported on are desperate. Clearly, frackers have little confidence in Colorado voters, nor should they.For starters, the whole concept of drilling thousands of tunnels in the earth's crust is reckless and irresponsible. It's playing with fire, literally — the molten lava that lays beneath us. An Oklahoman told me that since his state was fracked, it now has 25-to-30 earthquakes a year. Science magazine paraphrases a study as concluding, "the deeper the injection site, the stronger the quake."It also plays havoc with our water, endangering its purity and claiming millions of gallons that are badly needed elsewhere.The voters of Fort Collins, Longmont and other towns tried to ban fracking but were over-ruled by a Colorado Supreme Court disingenuously claiming fracking falls under "eminent domain," the legal notion that the rights of the individual must sometimes give way to the greater good. The implication is that Colorado just has to have that fracked gas to survive. However, our "shale gas" is most likely sent to China.There's a reason New York City, the Catholic Church, Ireland, many universities and now even, ironically, the Rockefeller Brothers Fund are divesting from fossil-fuel. Fracking is the industry's last fling.  Weld County has been raped by fracking; will the rest of Colorado follow? The enemy is at the gate; let's stop this madness now. Be certain to sign that petition to put Initiative 97 on the ballot; talk to your neighbors; canvass if you can. And if some ignorant, bought-and-paid-for punks try to stop you, tell them they need to get out of the way of democracy

Chesapeake eager to expand oil drilling in Powder River Basin --On the day that Chesapeake Energy announced it is selling its Utica Shale assets in Ohio for $2 billion, the Oklahoma-based energy company said it intends to ramp up drilling for crude oil in the Powder River Basin in Wyoming. The Powder River Basin is developing “into the oil-growth engine of the company,” it said in a statement. Chesapeake is confident that Wyoming oil will boost company profitability moving forward, Kallanish Energy has learned. “It’s a very strong oil growth asset for us,” president and CEO Doug Lawler said. “We are experiencing improved drilling and completion costs and reduced drilling and completion time.” Chesapeake said it plans to add a fifth drilling rig and boost drilling in Wyoming. Total net Powder River Basin production on July 22 hit a new record of about 32,000 net BOE per day (42% oil, 41% natural gas and 17%% natural gas liquids), it said. That compares to production of 18,00 BOE per day in 4Q 2017. It recently reported a 78% increase in net production in the basin, compared to the average 2017 4Q rate. Chesapeake is projecting that net production in the basin will reach 38,000 BOE per day by Dec. 31 and it expects that production to more than double again in 2019. 

Kuwait firm borrows $1.1bn to expand Canadian fracking operations -- Kuwait Foreign Petroleum Exploration Co. is borrowing $1.1 billion to spend on oil and natural gas projects as the company plans to expand its shale operations, chief executive Officer Sheikh Nawaf Saud Al-Sabah said. Sumitomo Mitsui Banking Corp. and Societe Generale SA were the joint lead arrangers of the five-year loan for Kufpec, a unit of state-run Kuwait Petroleum Corp. Kufpec, which currently produces 100,000 barrels of oil equivalent per day, expects to pump 119,000 next month and 150,000 in 2020, a level it will maintain until 2040, it said in a statement. The company is producing 38,000 barrels of oil equivalent a day in Australia and 30,000 in Norway, and it has drilled 120 wells to produce gas and condensates at shale fields in Canada’s Alberta province. Kufpec is currently producing 8,000 barrels of oil equivalent a day in Canada and plans to gradually increase output there by drilling a total of 2,000 wells, Al-Sabah said. The company’s total reserves comprise 494 million barrels of oil equivalent, and the Canadian project will add 28 million to that.

Central Alberta man charged in 'elaborate' $2.6M fracking fraud -- A central Alberta man is facing fraud charges after a five-year investigation and more than $2 million in losses to investors. RCMP say Dane Skinner, 53, misrepresented and advertised a revolutionary fracking product, enticing numerous investors who reportedly lost more than $2.6 million. "This fraud was very elaborate, and consequently, our investigation has been very elaborate and has involved substantial resources and time" Const. Bill Lewadniuk with the RCMP financial crimes unit said in a news release Friday. The offences occurred between Dec. 5, 2007, and Feb. 28, 2013 in Lacombe, involving two numbered companies as well as N.E.X.T. Legacy Technologies Ltd., police say. RCMP launched an investigation in September 2013 involving several officers from various units. On Wedesday, police arrested and charged Skinner with fraud, laundering the proceeds of crime and uttering threats. He was released from custody and is scheduled to appear in Red Deer provincial court on Aug. 8. 

Surrounded by Oil Fields, an Alaska Village Fears for Its Health - Martha Itta, of the Nuiqsut village government, was at her desk when a colleague burst through the door and shouted "Check Facebook!" A worker on an oil well site 18 miles away, owned by the Spanish company Repsol, had posted a video. "Rig's having a blowout here. They're evacuating the rig," the worker said as drilling mud and smoke spewed into the air and onto the tundra. "Ain't f---ing looking so good." Itta scrambled to dial any authority she could think of—the North Slope Bureau, the EPA—to find out if Nuiqsut should be evacuated. "We weren't getting any answers," she said. Air monitoring in Nuiqsut is done by ConocoPhillips because it owns major drill sites just beyond town, but the monitor was down for routine maintenance at the time of the explosion. Martha Itta saw her own young son struggle with respiratory illness and believes pollution blowing in from the North Slope's oil fields is raising the risks. "Our community was pretty much in panic mode. We didn't have any data—no air monitoring to show us what was out there in the air or if we should evacuate," Itta said. Villagers recall that dozens of people in the town got sick that day. For many in this largely Inupiaq community, the Repsol disaster underscored their worst fears of a link between the oil drilling boom surrounding the town and respiratory illness.It's not just blowouts that concern Itta now. She fears every-day pollutants in the wind, coming from vast drilling operations, turning the sky a hazy green some days and leaving black soot on the snow on others. When that happens, noses run and asthma flares up. Nuiqsut is the only town planted in the midst of Alaska's most prolific oil region on the state's North Slope, which today is poised for another drilling boom. Just eight miles from the grid of single family homes, government offices, a grocery store and schools, more than 50,000 barrels of oil—or roughly a tenth of the state's oil production—is pumped each day from oil fields owned by ConocoPhillips. Repsol, Armstrong and Oil Search also have oil fields just outside town. Parents get a view of the newest well, three miles from town, when they drop their kids at school.

Mexican president-elect vows to end use of fracking (AP) — Mexico's president-elect said Tuesday that he will end fracking, the oil and gas extraction method that has just begun to take root in areas of the country's north. Asked about the potential risks of fracking at a news conference, Andres Manuel Lopez Obrador said, "We will no longer use that method to extract petroleum." Mexico has a huge potential shale formation in the Burgos basin, similar to the Texas Eagle Ford fields. But while a few wells have been drilled, the Mexican government has only recently scheduled bidding on opening some blocks for commercial development through fracking. Lopez Obrador also railed against private electricity generation contracts that displaced the government-owned Federal Electricity Commission, known as the CFE. He said that trend would be "corrected," without saying whether he would seek to overturn existing contracts. "The neoliberal governments deliberately closed the CFE plants in order to buy electricity from foreign companies at very high prices," Lopez Obrador said. "All of that will be corrected." 

Perry: US to become net energy exporter within 18 months | TheHill: Energy Secretary Rick Perry on Tuesday predicted that the United States will become a net exporter of energy within the next 18 months, an outlook that seemingly clashes with his department's data office. “Here we are, the No. 1 oil and gas producing country in the world now,” he said on Fox News’s “Fox & Friends.”“In just a few years, probably within the next 12 to 18 months, we will become a net exporting energy country.” Reaching net energy exports will mean that the United States exports more energy than it imports. Perry’s forecast doesn't match the Energy Information Administration (EIA), the data office within his own department. The EIA predicted earlier this year in its Annual Energy Outlook that the United States would become a net exporter in 2022, two years later than Perry’s expectation. That analysis, however, said 2020 is a possibility in a case in which the nation’s oil and natural gas resources and technology prove to be better than predicted. Perry credited the approaching milestone at least somewhat to advances in oil and natural gas production like hydraulic fracturing and directional drilling. But he also more generally credited President Trump and the GOP policy changes since the beginning of last year. “It’s been this mindset that, you know, you can spend your money and have a chance to have a return on your investment. “People know now that they can build an LNG plant and it’s not going to get locked up, or a pipeline. You think about the pipelines that got stopped by the previous administration. Because if you can’t move this energy to the marketplace, it’s going to have a real negative effect on people going out and spending money.” 

Ignoring Climate Threat and Economic Realities, Trump Brags About Building Fleet of LNG Terminals in EU—And Europe 'Will Pay For' Them - Responding to questions from reporters during a joint press conference with Italy's Prime Minister Giuseppe Conte at the White House on Monday, President Donald Trump echoed his "And-Mexico's-Gonna-Pay-for-It" routine by announcing plans to build liquefied natural gas (LNG) terminals across the continent for the expressed purpose of importing fracked gas from the United States.   "We are already talking to the European Union about building anywhere from nine to 11 ports—which they will pay for—so that we can ship our LNG over to various parts of Europe," Trump stated. "And that will be more competition." In response to a question about a gas pipeline from Russia, Trump said, "I'd like to see a competing pipeline" to that. Turning to Conte, Trump added, "So Mr. Prime Minister, I hope we're going to be able to do that competing pipeline." The comments come on the heels of Trump boasting last week that the EU would "be buying vast amounts of LNG!" after he reached an agreement with European Commission President Jean-Claude Juncker. Critics, however, quickly denounced the president's latest comments for both environmental and economic reasons."The Trump administration continues to not only ignore climate change, the greatest economic and security threat the world faces, when imagining that the world needs all this LNG, but also ignores economic reality," Lorne Stockman, senior research analyst at Oil Change International, explained to Common Dreams in an email.  Despite the president's claims about what the EU will do, there's little evidence to support the idea that Europe is on the verge of a giant LNG import binge. As Reuters noted, "three-quarters of Europe's existing import facilities lie empty while demand for U.S. LNG on the continent remains limited." According to an analysis by Food & Water Watch Europe released earlier this year, the utilization rate of Europe's existing LNG import terminals shows there is no need for new facilities.

E.U. unlikely to build up to 11 plants to import LNG from U.S., as Trump says - Europe is unlikely to veer from its current plans to build a small number of new plants for importing liquefied natural gas, energy experts said, casting doubts on President Trump’s claims Monday that he had secured commitments from the European Union for the construction of nine to 11 plants to boost U.S. exports.In comments at the end of a joint news conference with Italian Prime Minister Giuseppe Conte on Monday, Trump portrayed the commitment as a victory in his “fantastic meeting” with European Commission President Jean-Claude Juncker last week.But while there have already been about a dozen proposals on the drawing boards, no more than three or four new plants will be built anytime soon. That’s because the existing 24 LNG import facilities now operating in Europe are running at about a quarter of their capacity, said Thierry Bros, senior fellow at the Oxford Institute for Energy Studies.What’s more, there are limited tools the E.U. can use to speed up construction of new plants by private companies. “We have enough capacity. We may need a little bit more in some dedicated areas. Otherwise I don’t see how we can need 11” new plants, Bros said.   LNG will also have to compete against three large gas pipeline projects — two from Russia and one from the Caspian Sea. The NordStream 2 will deliver gas from Russia to Germany. The TurkStream will bring gas from Russia to Turkey and then Central Europe, circumventing Ukraine. And the Shah Deniz 2, which just started transporting gas from the Caspian to Turkey, will be extended into Greece, Albania and Italy. “The E.U. does not decide how many LNG terminals to build; those are commercially driven decisions,”   “Those that are built will source gas from the most competitive sources, which may or may not be U.S. LNG. The market will decide whether the E.U. takes more LNG from the U.S., not Juncker.”

Asininity is Believing the *EU* Will Buy More US LNG -- After the supposedly triumphal meeting between Trump and EU Commission President Jean-Claude Juncker, The Orange One loudly exclaimed that Europeans would buy lots more natural gas in the form of liquefied natural gas (LNG). Recall that LNG is the product of, well, liquefying natural gas for the purposes of transporting it over long distances--usually overseas--when pipelines are physically or economically unfeasible to build. That said, there are additional costs incurred by both sellers and buyers in handling gas-to-liquid and liquid-to-gas conversions, respectively. Therein lies the rub this time: given current efficiencies, it doesn't make much economic sense for Europeans to buy American LNG. Let's begin with the (sadly) expected Trumpian hyperbole:President Donald Trump’s plan for “vast amounts” of U.S. liquefied natural gas (LNG) to be sold to the European Union after trade talks with its top representative faces a reality test...“European Union representatives told me that they would start buying soybeans from our great farmers immediately. Also, they will be buying vast amounts of LNG!,” Trump wrote in a Tweet.  But alas, such is not the case. Given the greater distances involved, European destinations are not quite economically viable for trade in LNG. Locations near Western Europe cost lower given advantages of geographic proximity and a cheaper way of transporting natural gas--through pipelines that do not require conversion of gas into liquid form and back again; e.g., Trump's favorite Russian pipelines:  We come around to the same issue concerning the similar Trump-Juncker "agreement" with soybeans discussed in an earlier post. The last time I checked, the European Union was composed of 28 (soon 27) sovereign nations that don't take orders on where to buy energy from, least of all the European Commission. Short of EC subsidies, market access to American LNG is already as good as it gets since tariffs on LNG are essentially zero: The EU-28 are not command economies like China where you can rely on an apparatchik to make state-owned firms buy US LNG if agreed to. So, even European gas projects in America may find it more economically feasible to sell to nearby markets given the aforementioned costs that increase with distance:

August 2 Natural Gas Storage Report: Inventories To Remain Below 5-Year Minimum For A Few Weeks (At Least) -- U.S. Energy Information Administration should report a larger change in natural gas storage this week compared to the week prior. We anticipate to see an injection of 43 bcf (in line with 5-year average and in line with the comparable figure in ICE's latest report for the EII-U.S. EIA Financial Weekly Index, but 25 bcf larger than a year ago).Last week, the number of total degree-days (TDDs) dropped by around 3% w-o-w, as cooling demand subsided in most parts of the country. Concurrently, heating demand went up - especially in the Midwest and Central parts of the country. We estimate that total energy demand was no less than 8% above last year's level. Please note that during this time of the year, heating degree-days (HDDs) have almost no effect on natural gas consumption. Cooling degree-days (CDDs) now have a disproportionately stronger effect on consumption and traders should be paying attention to changes in CDDs. This week, the weather cooled down further. We estimate that the number of CDDs will drop by another 10.0% w-o-w in the week ending August 3. Still, cooling demand should be no less than 3% higher vs. a year ago. Next week, cooling demand is expected to increase, as heat would be making a comeback - particularly, in the Central and Midwest parts of the country. We expect nationwide CDD and TDD counts to increase by 15.0% w-o-w in the week ending August 10 (see the chart below). The latest numerical weather prediction models are returning some bullish results (in absolute terms): a double deficit in natural gas inventories - i.e., the amount of natural gas in the underground storage is smaller compared to previous year and also compared to 5-year average. Next three EIA reports are expected to confirm the expansion of "5-year average deficit" by a total of 15 bcf and the contraction of "annual deficit" by a total of 41 bcf. If we are correct in our latest projection and the EIA reports a 43 bcf injection this Thursday, then storage level would increase to 2,316 bcf and would be 14 bcf below 5-year minimum. Storage level that is below a 5-year minimum is actually a rather rare occurrence. It happened in January 2018 but only briefly (see the chart below). Another, more prolonged period of low inventories took place during a very cold winter of 2013-2014 when inventories remained below 5-year minimum for 48 consecutive weeks. We currently expect storage level to remain below 5-year minimum for at least 8 consecutive weeks. Please note that we update our storage forecast on a daily basis.

Don't get complacent about natural gas - The first week of August seems like an odd time to fret about a frigid winter, but perhaps not for people who buy, sell and store natural gas.  Following Thursday morning’s weekly report from the Energy Information Administration, the amount of gas in U.S. underground storage will be at around 2.3 trillion cubic feet and should keep rising for the next three months. Yet that cushion now stands 24% below where it was this time last year and 20% below the five-year average. Futures prices don’t reflect any scarcity, being exactly where they were a year ago.  The main reason traders are so sanguine is that the U.S. has been in a natural-gas glut for the past decade. There are areas of the country such as the prolific Permian Basin where some producers would practically give away their gas for nothing given the option. New pipelines in the prolific Utica and Marcellus shale formations coming online in the next weeks and months will allow even more of the region’s gas to reach gas to reach users this winter. But what seems like ample supply could set the market up for panicky winter buying. The last time that happened was in the winter of 2013-2014. Between the first day of that heating season and the peak in mid-February, Henry Hub natural-gas futures prices surged by 75% to a peak of $6.15 a million British thermal units. Local cash prices in areas with surging demand briefly reached over $100/MMBtu. In that season, gas in underground storage dropped by nearly 3 trillion cubic feet between November and April after starting out on the low side. If the rest of this summer and fall resemble last year, though, then the starting level of storage for the upcoming heating season will be nearly identical to what it was in November 2013.  Conditions nationwide don’t have to be extreme as long as it is cold in the right places. For example, the National Oceanic and Atmospheric Administration says the period from December 2013 through February 2014 was only the 34th coldest for the contiguous 48 states since reliable records began in 1895. That season was in the top 10 for states like Michigan, Illinois, Wisconsin, Missouri that rely on gas rather than heating oil or electric heat pumps to stay warm.  Production is higher today, but so is underlying demand. The agency noted at the beginning of the year that more natural-gas-fired generating capacity would come online this year than any year since 2004. Energy-market history won’t repeat itself, but gas traders shouldn’t dismiss the possibility that it will rhyme.

EIA Delivers Another Shocker, Reports 35 Bcf Storage Build; Natural Gas Markets Unfazed - The Energy Information Administration (EIA) reported a 35 Bcf build into natural gas storage inventories for the week ending July 27, well below market expectations that clustered around a build in the low 40 Bcf range.Last year, some 18 Bcf was injected into storage inventories for the similar week, and the five-year average stands at 42 Bcf. Working gas in storage stood at 2,307 Bcf as of July 27, 688 Bcf below year-ago levels and 565 Bcf below the five-year average.  By region, the East injected 25 Bcf into inventories, the Midwest injected 28 Bcf and the South Central withdrew 12 Bcf. The Pacific also posted a withdrawal of 7 Bcf.  Market action immediately following the report was swift as the Nymex September futures contract climbed as high as $2.795 within minutes of EIA’s 10:30 a.m. ET release, and continued to trade near that level at 10:55 a.m. September opened at $2.745, and fell as low as $2.74 before the EIA storage data was released. Prior to the report, consensus had settled around a build in the low 40 Bcf range, in line with the five-year average. Kyle Cooper of IAF Advisors had projected a 40 Bcf build, while Genscape Inc. expected a 45 Bcf injection. A Bloomberg survey had a range between 25 Bcf and 58 Bcf, with the median response of survey participants coming in at 43 Bcf. Intercontinental Exchange settled at 43 Bcf. The EIA’s reported 35 Bcf build was 5 Bcf below projections by Bespoke Weather Services, which said “today’s print continues to demonstrate a tight market (albeit one that has loosened slightly from last week’s print).

NYMEX Sep gas settles 5.8 cents higher at $2.816/MMBtu on lower-than-expected storage build - The NYMEX September natural gas futures settled 5.8 cents higher Thursday at $2.816/MMBtu after the US Energy Information Administration announced a lower-than-expected storage build for the week that ended July 27. The front-month contract traded Thursday between $2.740/MMBtu and $2.828/MMBtu. The EIA announced a storage build of 35 Bcf for the week that ended July 27, lifting US inventories to 2.308 Tcf. Total stocks are 688 Bcf below inventories one year ago and 565 Bcf below the five-year historical average. This announcement made last week the fourth consecutive week of lower-than-expected builds. The initial price reaction to the storage number was an increase of about 5 cents, as supply concerns intensified. An S&P Global Platts survey of analysts called for a 45-Bcf injection. Looking ahead to the NYMEX winter strip, the January and February contracts have broken above the $3/MMBtu mark. Inventories are so far below the usual level, but the front month is trading below the $3/MMBtu the market would expect to see, sources said. "This shows how the market isn't quite concerned about stocks, mainly because the market believes that US producers can knock production out of the park," said Phil Flynn, Price Futures Group senior market analyst. A recent decrease in power burn demand and continued strong dry gas production could narrow the storage deficit, sources said, but forecasts projecting a warmer-than-average August may delay any catch-up. US dry gas production is expected to fall 700 MMcf day on day to 79.1 Bcf on Thursday, which would be its second consecutive day below 80 Bcf, according to S&P Global Platts Analytics. The Marcellus Shale play was responsible for most of the fall, decreasing 210 MMcf to 21.09 Bcf, according to Platts Analytics.

New EIA Storage Report Provides Hope For (Temporary) Higher Natural Gas Prices -- It's that time of year again - you know, the time of the year when hope starts to spring eternal in the oil and gas industry that this winter will finally be the winter when natural gas prices firm up again.  Such hopes have been largely dashed upon the shoals of high storage levels in recent years, but a new report from the U.S. Energy Information Agency (EIA) is suddenly providing cause for some renewed optimism. In its August 1 Weekly Natural Gas Storage Report, the EIA shows that July's total natural gas storage volumes broke down below the rolling 5-year range minimum for the first time in several years. In the attached chart, DrillingInfo projects future storage levels through the end of October using 2016 injection rates, 2017 rates and the five-year average rates.  Under all three of these injection scenarios, storage levels fall further below the five-year range minimum as we move into the winter withdrawal season.  As the Wall Street Journal notes, though injections will continue over the next three months, the current storage levels reported by EIA are a very substantial 24% below their level at the same time in 2017, and 20% lower than the 5-year average.  Is that cause for panic?  No, but it is cause for some concern, because such comparatively low levels of storage could lead to temporarily higher prices and even some isolated shortages of natural gas for home heating and electric power generation should the U.S. experience a cold winter for 2018/2019.  Extremely cold weather conditions could lead to widespread shortages and very significant spike in natural gas prices.

Student, 14, referred to terror prevention programme after he was ‘groomed’ by anti-fracking activists  -- A 14-year-old A* student was referred to the Government’s anti-terror programme after being “groomed” by anti-fracking activists online. The boy, known by the pseudonym Aaron, was targeted via social media after signing an online petition, according to a report on preventing extremism in Greater Manchester commissioned in the aftermath of last year’s Manchester Arena attack.Aaron was referred to the anti-terror programme Channel by his school, due to concerns about his extreme beliefs in relation to the environment, specifically issues around fracking. According to the report Aaron was encouraged to participate in protests against fracking by local activists, however the approaches from activists become “progressively more aggressive to the point where Aaron was on the periphery of engaging with criminal behaviour” and was being frequently reported as missing by his parents. Activists only ceased contact with the boy when police made them the subject of an abduction notice prohibiting them from making contact with him. A breach of such a notice is a criminal offence.While in contact with activists Aaron's school attendance declined. He continued to visit rallies and began engaging with other activists on the dark web, according to the report by the Greater Manchester Preventing Hateful Extremism and Promoting Social Cohesion Commission. The commission found mental health and learning difficulties were a common feature in the cases they examined.

France, Spain and Portugal eye gas as they diversify energy - The leaders of France, Spain and Portugal say they are moving ahead with plans to diversify their energy sources, which could mean more imports of liquefied natural gas from the United States.The leaders said after a three-way energy summit Friday it is “essential” to build infrastructures enabling them to import, store and transport natural gas, including through new pipelines described as “key.”Portugal is keen to keep large quantities of U.S. natural gas in underground storage facilities at one of its Atlantic ports and send it via pipeline across Spain into France.The strategy would help reduce Europe’s reliance on Russian gas, and the U.S. government is keen to increase energy exports. The three countries regard gas as a stopgap as they increasingly shift from coal to renewable energy sources.

BP offloads oil cargo to Shandong refiner after two-month delay on water - sources (Reuters) - Oil major BP has started discharging about 1 million barrels of Angolan crude to a Chinese independent refiner, after holding the oil on water for two months due to slowing demand from private refiners, sources said on Thursday. The Mercury Hope supertanker, chartered by BP and carrying about 2 million barrels of Angolan oil, offloaded part of the cargo in late May at Qingdao and has since been at sea in nearby waters, said the sources with knowledge of the matter. The tanker began offloading the remaining part of its cargo to Shandong Qingyuan Group, a privately-controlled refiner based at Linzi, Shandong province, late on Wednesday. The group, which operates a 104,000 barrels per day refiner, is a regular customer of BP which has expanded its crude oil marketing to Chinese independent refiners since 2015 after China opened crude oil imports to nearly 40 local plants. Mercury Hope is one of four supertankers that BP brought to China carrying Angolan oil several months ago, but which have been held up or delayed off China’s east coast, unable to fully discharge oil due to slowing buying from private refiners. . In early July, BP discharged nearly 1 million barrels of oil from Texas, another of the four tankers, also to Qingyuan. Qingyuan, one of China’s largest independently run lubricant producers, has received an annual crude import quota of 4.04 million tonnes for the last two years. Shippers and oil traders said it was not unusual for producers like BP to ship cargoes before finding a buyer, but having cargoes orphaned for two months was less common. 

Petrobras targets larger China market share with new crude oil (Reuters) - Brazil’s state-controlled energy company Petrobras plans to push more crude oil to top importer China by marketing a new medium-sweet grade that could be shipped from October, two sources with knowledge of the matter said. Petrobras expects to start pumping pre-salt oil from new platforms in the fourth quarter that would add to output from Latin America’s biggest producer and lift its exports. The new supply could enlarge Brazil’s market share in China as buyers there cut oil imports from the United States following Beijing’s announcement it would impose tariffs on U.S. crude in retaliation against similar moves by Washington. “Petrobras’ oil export curve is increasing and China is currently the company’s main market,” a Petrobras spokesman said in an e-mail. “With (Chinese) refineries’ growing interest in buying oil directly from producers ... Petrobras will grow its presence with these refiners.” Petrobras started production in April at its wholly-owned Buzios pre-salt field in the Santos basin from platform P-74, located about 200 km off the Rio de Janeiro coast in water depths of 2,000 metres, according to the company’s website. Two more platforms, P-75 and P-76, are to come online in the fourth quarter. Total Buzios output is expected to grow to 750,000 bpd by 2021, once an additional four platforms come online, the company said. 

Iraqi southern July crude oil exports hit record high of 3.543 million b/d - Amman — Iraqi southern crude oil exports in July surged to a record high of 3.543 million b/d, data from the oil ministry showed Wednesday, despite OPEC's second largest oil producer facing major protests near its key oil assets. Exports in July were up 22,000 b/d from June as loadings from the Persian Gulf terminals beat the previous record of 3.535 million b/d set in December 2017, data showed. The rise occurred despite the continued suspension of loadings from the Khor Al-Amaya terminal due to sea line leaks and routine maintenance. The exports comprised 2.70 million b/d of Basrah Light crude and 843,000 b/d of Basrah Heavy, according to figures obtained from sources close to the State Oil Marketing Organization. Iraq oil output and exports have not been impacted by civil disturbances and violent demonstrations around some of the key oil fields such as Rumaila (1.5 million b/d), West Qurna 1 (500,000 b/d) and West Qurna 2 (380,000 b/d), all in Basra province, which currently account for 55% of federal Iraq production. The demonstrations are over jobs and basic services, with anger at the government directed at the oil industry of which Basra is by far the largest participating province. The ministry statement quoted spokesman Asim Jihad as saying the average provisional price during July was $69.16/b, a rise of 40 cents/b from the price in June while oil revenues totaled $7.6 billion last month. All of the federal exports were from Iraq's southern Persian Gulf oil terminals, with no shipments from the Turkish port of Ceyhan. A political dispute with the semi-autonomous Kurdistan Regional Government has prevented federal exports of some Kirkuk crude through the region's own pipeline to Turkey, while the federal pipeline to Turkey was destroyed by the self-styled Islamic State militant group in early 2014. Meanwhile, the KRG shipped 9.8 million barrels or 316,129 b/d in July compared to 9.5 million barrels or 316,666 b/d in June, according to reports obtained from sources at Ceyhan.

Kuwait crude oil production at 2.8 million b/d, highest since December 2016: minister - Kuwait's crude oil production currently stands at 2.8 million b/d, the country's oil minister Bakheet al-Rashidi said Wednesday, up about 90,000 b/d from June levels. That would be the highest since December 2016, the last month before OPEC's supply cut agreement went into force, when Kuwait reported production of 2.84 million b/d. OPEC is set to reveal its July production figures in its closely watched monthly oil market report August 13. The producer group on June 23 agreed with Russia and nine other allies on a 1 million b/d output increase to head off any supply shortages emerging from US sanctions on Iran and Venezuela's continued decline, among other market disruptions. OPEC has not said how those extra barrels will be allocated among its members. In comments to Kuwait's Al-Rai newspaper, Rashidi said: "We are reaching a very stable stage for the crude market, whether for producers or consumers." He added that he was optimistic that crude production in the Neutral Zone shared by Kuwait and Saudi Arabia could resume soon. S&P Global Platts reported last month that the two countries were aiming for a December restart of production at the fields, which could bring up to 500,000 b/d to the market at a time when many analysts expect global supplies to be tight.

Russian oil output up 150,000 bpd in July - Under an initial deal between OPEC and non-OPEC producers, Moscow had agreed to cut 300,000 bpd from the production level of 11.247 million bpd Russia reached in October 2016. When oil prices subsequently rose, the producers decided on June 22 to increase their combined output by 1 million bpd, of which Russia was to contribute 200,000 bpd starting on July 1. According to the ministry data, Russian oil production rose to 11.21 million bpd in July, up from 11.06 million bpd in June. That brings the combined Russian increase to 263,000 bpd compared to the initial cut agreed two years ago. According to the energy ministry’s data almost all Russian firms showed an increase last month. Russian Energy Minister Alexander Novak said on Wednesday higher production by Moscow was aimed at “maintaining stability of the (global) oil market within the framework of joint actions of OPEC and non-OPEC countries.”

OPEC Oil Production Climbs as Saudi Arabia Pumps Near Record - OPEC’s crude output increased last month as Saudi Arabia pumped near-record volumes to make good on a pledge to consumers that demand would be met. The kingdom’s oil production grew by 230,000 barrels a day in July, to 10.65 million barrels per day. This is just shy of an all-time peak reached in 2016, according to a Bloomberg survey of analysts, oil companies and ship-tracking data. Higher crude output from the Saudis, along with Nigeria and Iraq, pushed up total production from the Organization of Petroleum Exporting Countries by 300,000 barrels a day, offsetting losses from a spiraling economic collapse in Venezuela, political clashes in Libya and the onset of U.S. sanctions against Iran. The group’s 15 members, which now include Congo, collectively produced 32.6 million barrels per day.

Saudi VLCCs gather off Oman after Bab el-Mandeb ban — Saudi-owned VLCCs have started to gather off the southern coast of Oman after state-owned Saudi Aramco temporarily halted oil shipments through the Bab el-Mandeb strait at the bottom of the Red Sea, impeding its access to Europe. Three part-laden VLCCs owned by Saudi state shipping company Bahri -- the Marjan, the Khuzama and the TI Hawtah -- have interrupted their voyages over the past 24 hours to wait at the port of Salalah in south-west Oman, according to S&P Global Platts trade flow software cFlow. State-owned Saudi Aramco temporarily suspended its oil shipments through the Bab el-Mandeb strait on July 25 after it said two of its VLCCs were attacked by Houthi militants. The strait is a critical chokepoint through which some 4.8 million b/d of crude and refined products are shipped, according to US Energy Information Administration data from 2016, and the bulk of Europe's crude imports from the Middle East traverse it on their way to the SUMED pipeline or the Suez Canal. Waiting at Salalah would allow the tankers to resume their journeys promptly, were Saudi Aramco to rescind its ban within the next few days. Two more Bahri-owned VLCCs, the Abqaiq and the Arsan, appear to have shut off their transponders and have not updated their location through the automatic identification system since July 25 and July 23 respectively, according to cFlow. An unladen VLCC, the Hilwah, passed through the strait on Sunday and is headed for Ras Tanura on Saudi Arabia's east coast. It may have been permitted to take this route because it was carrying no cargo.

Why is Saudi halting oil shipments through the Red Sea? (Reuters) - Saudi Arabia announced last week it was suspending oil shipments through the Red Sea’s Bab al-Mandeb strait after Yemen’s Iran-aligned Houthis attacked two ships in the waterway.   To date, no other exporters have followed suit. A full blockage of the strategic waterway would virtually halt shipment to Europe and the United States of about 4.8 million barrels per day of crude oil and refined petroleum products.  Western allies backing a Saudi-led coalition fighting the Houthis in Yemen expressed concern about the attacks, but have not indicated they would take action to secure the strait. That would risk deeper involvement in a war seen as a proxy battle for regional supremacy between Saudi Arabia and Iran.  The threat to shipping in Bab al-Mandeb has been building for some time, with the Houthis targeting Saudi tankers in at least two other attacks this year. It is not unusual to reevaluate security after such an incident, but Riyadh’s announcement also carries a political dimension.   Analysts say Saudi Arabia is trying to encourage its Western allies to take more seriously the danger posed by the Houthis and step up support for its war in Yemen, where thousands of air strikes and a limited ground operation have produced only modest results while deepening the world’s worst humanitarian crisis.  “Rather than allowing these hostile maneuvers to go unnoticed in the eyes of the world, the Saudi (energy) minister has placed Iran’s subversions of the whole global economy under the spotlight for everyone to see,” said energy consultant Sadad al-Husseini, a former senior executive at Saudi Aramco. “The capture of the port of Hodeidah will go a long way towards putting an end to these disruptions.”  Hodeidah, Yemen’s main port, is the target of a coalition offensive launched on June 12 in a bid to cut off the Houthis’ primary supply line. After failing to make major gains, the coalition halted operations on July 1 to give the United Nations a chance to resolve the situation, though some fighting has continued.  The suspension of Saudi shipments - with the implied threat of higher oil prices - may also be aimed at pressuring European allies, who have continued to support the nuclear deal with Iran following the U.S. withdrawal in May, to take a stronger stance against Tehran’s ballistic missiles program and support for armed groups across the region.  There was no official confirmation that the move was coordinated with Washington but one analyst said it would be astonishing if it were not, given the strategic alliance between the two countries.

Minimal impact seen on Asian mid distillates market even as Red Sea shipping concerns remain –-- The Asian middle distillates market was holding steady this week even as traders kept a keen eye amid shipping concerns over the Red Sea, following last week's attack on two Saudi Aramco VLCCs by Yemeni Houthi militants in the area. S&P Global Platts reported last week that following the attack, Aramco temporarily halted all oil shipments through the Bab al-Mandab strait in the interest of safety.The Bab al-Mandab strait is a key transit route for oil, with Europe importing the bulk of its jet fuel consumption from the Middle East, almost all of which moves through the strait. Products like gasoil and diesel also move to Europe and Turkey from Asia through the strait. In addition, the strait is also critical to Saudi Arabia's own Red Sea refineries.While there were supply concerns due to worries about delays and that other shippers would also avoid the strait following the news, traders in Singapore said this week that the impact on the market has largely been subdued for now."There isn't any material impact on shipping so far -- we've checked with owners and they are still going via the strait as usual," a middle distillates source said Tuesday. "Even guys from the insurance side haven't given us any alerts so far," he said.Still, another Singapore-based middle distillates trader said Monday that the impact remained unclear. "We haven't seen any impact yet," the trader said, noting that vessels had yet to go around the Cape of Good Hope."Maybe just delayed arrivals to Europe for middle distillates ... not much impact," he added.

Tehran says Trump wrong to expect Saudis to cover loss of Iran oil supply (Reuters) - Iran said on Tuesday U.S. President Donald Trump was mistaken to expect Saudi Arabia and other oil producers to compensate for supply losses caused by U.S. sanctions on Iran, after OPEC production rose only modestly in July. The comments, from Iran’s OPEC governor, came a day after a Reuters survey showed OPEC production rose by 70,000 barrels per day in July. Saudi production increased but was offset by a decline in Iranian supply due to the restart of U.S. sanctions, the survey found. “It seems President Trump has been taken hostage by Saudi Arabia and a few producers when they claimed they can replace 2.5 million barrels per day of Iranian exports, encouraging him to take action against Iran,” Hossein Kazempour Ardebili told Reuters. “Now they and Russia sell more oil and more expensively. Not even from their incremental production but their stocks.” He said oil prices, which Trump has been pressuring the Organization of the Petroleum Exporting Countries to bring down by raising output, will rise unless the United States grants waivers to buyers of Iranian crude. “They are also calling for the use of the U.S. SPR (Strategic Petroleum Reserve). This will also mean higher prices. U.S. waivers to our clients if they come is due to the failure of bluffers (Saudi and the other producers) and, if not given, will again push the prices higher,” he said. “So they hanged him (Trump) on the wall. Now they want to have a mega OPEC, congratulations to President Trump, Russia and Saudi Arabia.” 

Oil prices steady as fund managers cease liquidation: Kemp (Reuters) - Hedge funds appear to have completed the recent wave of liquidation, with bullish positions increased slightly last week after heavy falls the week before, helping to steady the main crude oil benchmarks.Hedge funds and other money managers raised their net long position in the six most important petroleum futures and options contracts by 37 million barrels in the week to July 24.The boost was a marked turnaround from the previous week, when net long positions were cut by 178 million barrels, one of the heaviest bouts of liquidation on record.In the most recent week, portfolio managers raised net long positions in Brent (+14 million barrels), U.S. gasoline (+11 million), U.S. heating oil (+12 million) and European gasoil (+11 million).The only selling came in NYMEX and ICE WTI, where net long positions were reduced by 11 million barrels last week, according to data published by regulators and exchanges (https://tmsnrt.rs/2K3n5Nn).The recent wave of liquidation, which started in late April, and accelerated in mid-July, has blown off some of the froth from the top of the market.Portfolio managers remain exceptionally bullish on the outlook, but some of the momentum-chasing and more tactical long positions have been squared up. Long positions in the petroleum complex outnumber short ones by more than 1 billion barrels, but that is down from a net long position of more than 1.4 billion barrels three months ago.

US crude rises 2.1%, settling at $70.13, boosted by signs of tight oil supply - Oil prices rose back above $70 a barrel on Monday, with U.S. crude posting its best one-day dollar gain in over a month, after four weeks of losses for the benchmark.U.S. West Texas Intermediate crude ended Monday's session up $1.44, or 2.1 percent, to $70.13 a barrel. While the contract has risen in seven of the last previous 10 sessions, it has not posted a gain of more than $1 a barrel since June 27.  As of Friday, WTI was down more than 7 percent over the last four weeks, as heavy losses in a handful of trading sessions wiped out a string of modest daily gains for the benchmark.  The contract to deliver international benchmark Brent crude for September was up 83 cents, or 1.1 percent, at $75.12 a barrel by 2:08 p.m. ET. The September contract expires on Tuesday. Trading was heavier for the October contract, which is up 97 cents, or 1.3 percent, at $75.73.  Prices got support after Saudi Arabia announced it would suspend shipments of oil through the critical Bab el-Mandeb Strait, after Houthi rebels in Yemen attacked a pair of oil tankers in the Red Sea. The Saudis have led a military coalition against the Iran-aligned Houthis for more than three years. Risk consultancy the Eurasia Group says the attack on the tankers "represents a serious escalation in dynamics around the Yemen conflict.""While Houthi rebels probably long possessed the capability to threaten Saudi oil shipments in the Bab-al Mandab Strait, their willingness to use it is the result of rising tensions in the region," Ayham Kamel, head of Eurasia Group's Middle East and North Africa practice said in a research note, using an alternative spelling for the strait."The attack was probably encouraged by the Iranian leadership to demonstrate to the US, Saudi Arabia, and Israel that Iran and its allies retain a capacity to respond to intensifying economic, political, and military pressure." 

Oil Prices Seesaw As Uncertainty Grips Markets -- Oil prices rose on Monday, in part because of a weaker dollar. But prices then fell significantly on Tuesday. “The market’s attempting to stabilize,” Gene McGillian, vice president of research at Tradition Energy, told the Wall Street Journal. “Right now we’re seeing a balance between the ideas that the increase in production from Saudi Arabia and Russia is going to offset the loss in Venezuela and Iran.” As July draws to a close, oil is set for its largest monthly loss in over a year. Iranian officials said on Tuesday that oil prices would rise if the U.S. did not grant waivers to countries purchasing Iranian oil. Iran said that it would be wrong to assume that Saudi Arabia could cover for the supply shortfall. “It seems President Trump has been taken hostage by Saudi Arabia and a few producers when they claimed they can replace 2.5 million barrels per day of Iranian exports, encouraging him to take action against Iran,” Hossein Kazempour Ardebili, Iran’s OPEC governor, told Reuters. Meanwhile, Trump said that he would meet Iranian leadership without preconditions, if they wanted. “I would certainly meet with Iran if they wanted to meet,” Trump said. “I do believe that they will probably end up wanting to meet. I'm ready to meet whenever they want to.”  BP saw its profits rise in the second quarter by fourfold, and unlike some of its rivals, it avoided punishment from Wall Street. The strong results were welcomed, and BP’s CEO Bob Dudley used that good will to make a case for stepping up investment for growth. BP announced a $10.5 billion acquisition of BHP’s shale assets in recent days. “We’ve turned around and retooled the company over seven years,” Dudley said in a Bloomberg television interview. “It shows more confidence than we’ve had in a long time.” BP also hiked its dividend last week for the first time since 2014. Permian pipelines are starting to max out, according to data from Kayrros. That means that price differentials are set to widen through mid-2019 as production continues to edge up. The earliest relief will come from the BridgeTex pipeline expansion, which will come online in early 2019, but it will only add 40,000 bpd. The bottleneck is expected to force a slowdown in production growth, and Morgan Stanley estimates that the Permian might only be able to add 360,000 bpd next year, down from the Wall Street consensus of about 650,000 bpd.

Oil prices drop on oversupply concerns as OPEC output increases in July -Oil prices fell on Tuesday, with Brent futures set for their biggest monthly loss in two years, as oversupply concerns rose after a Reuters survey showed OPEC output rose in July to its highest for 2018. September Brent crude futures fell 25 cents, or 0.3%, to US$74.72 a barrel by 0654 GMT after rising nearly 1% on Monday. The September contract expires later on Tuesday and the more-active October contract was down 0.3% at US$75.35. US West Texas Intermediate crude futures (WTI) were down 24 cents, or 0.3%, at US$69.88 a barrel, after rising more than 2% in the previous session. For the month, Brent futures are set to drop about 6%, the most since July 2016, while WTI futures set to decline 5.8%, the biggest monthly drop since October 2017. The Reuters survey showed OPEC increased production 70,000 barrels per day (bpd) to 32.64 million bpd in July, the most this year. The group has pledged to offset the loss of Iranian supply as looming sanctions have already started to cut exports from OPEC's third-largest producer. US President Donald Trump appeared to soften his approach to Iran, saying on Monday he would meet with President Hassan Rouhani without any preconditions. This was only a week after he threatened on Twitter to unleash severe consequences on the country. The United States has indicated that it wants Iranian exports cut to zero under the sanctions it pledged to reintroduce in May and that would go fully into effect in November.

Oil posts biggest monthly loss since 2016 as OPEC boosts output (Reuters) - Oil prices fell on Tuesday, closing out the largest monthly decline in two years on supply worries after OPEC output reached a 2018 high in July, overshadowing reports that the United States and China might reopen trade talks that could boost demand.   October Brent crude futures fell $1.34 to settle at $74.21 a barrel. The September contract, which expires later on Tuesday, settled at $74.25. U.S. crude futures fell $1.37, or nearly 2 percent, to settle at $68.76. Brent lost more than 6 percent in July, while U.S. crude futures slumped about 7 percent, the biggest monthly decline for both benchmarks since July 2016. Oil prices extended losses in post-settlement trade, with U.S. crude at $68.32 a barrel, after data from the American Petroleum Institute showed domestic crude inventories rose 5.6 million barrels last week.   A Reuters poll forecast stocks fell 2.8 million barrels.  Signs that a supply disruption in the Bab al-Mandeb Strait in the Red Sea could be resolved weighed on prices throughout the trading session, said John Kilduff, partner at Again Capital Management in New York. Yemen’s Houthi group said it was ready to unilaterally halt attacks in the Red Sea to support peace efforts. Saudi Arabia suspended oil shipments through the strait last week after the Houthis attacked two Saudi oil tankers. Russia and the Organization of the Petroleum Exporting Countries boosted output in July, according to a Reuters production survey on Monday. It showed OPEC members boosted output in July by 70,000 barrels per day (bpd) to 32.64 million bpd, a high for the year. “We’re seeing some more production come online, so that weighs on prices,”

Lots Of Oil Still Sloshing Around -- WTI Off Almost 2% -- Now Under $68/Bbl Again -- Gasoline Prices To Plummet -- Link here.

  • US crude oil inventories: another build, this time -- 3.8 million bbls
  • US crude oil inventories: 409 million bbls (threshold - 400 million bbls) -- only 1% below the 5-eyar average, and that 5-year average includes the Saudi Arabia surge, 2015 - 2017, which greatly distorted things -- in other words -- still a lot of oil sloshing around
  • refineries operating at 96.1% capacity: trending up
  • gasoline production: 10.5 million bbls (threshold: 10 million bbls)
  • distillate fuel production: 5.2 milion bbls (threshold: 5 million bbls)
  • gasoline demand graphic will be posted later

Gasoline prices in our neighborhood continue to trend up. Something tells me refiners are doing very, very nicely.

WTI Extends Losses After Huge Surprise Inventory Build -- Having posted its biggest monthly loss since 2016, amid over-supply fears, all eyes are back on API tonight with bulls hoping that last week's across the board inventory draws continue... but it reported a shocking 5.59mm inventory build and WTI dropped. API

  • Crude +5.59mm  (-3mm exp)
  • Cushing -930k (-500k exp)
  • Gasoline -791k
  • Distillates +2.89mm

Just like we saw two weeks ago, a shockingly large crude inventory build reported by API... WTI was hovering around $68.75 into the API print and kneejerked lower...

Crude Oil Analysis: API and Intensifying Trade War Weigh on Oil Prices -- Brent and WTI crude futures are down over 1% breaking below $74 and $68 respectively. One of the reasons for soft oil prices was due to yesterday’s API crude oil inventory report, which showed a surprise build in crude stocks of 5.6mbpd vs. Exp. -2.8mbpd. Consequently, this provides an indication as to how the DoE crude oil inventory report may take shape, which is scheduled for release at 1430GMT.  Overnight, China's manufacturing sector grew at the slowest pace since November 2017 as export orders declined yet again in sign of a worsening outlook for the Chinese economy and businesses amid the ongoing trade war tensions between China and the US. The Caixin Manufacturing PMI fell to 50.8 in July from 51 in the prior month. Alongside this, latest reports suggested that the US will place tariffs of 25% as opposed to 10% against $200bln worth of Chinese goods, which in turn has dampened the sentiment for risky assets including oil prices. Another factor for lower oil prices is due to the de-escalation of tensions in the Red Sea. Yemen’s Houthi rebels stated that they would stop attacks in the Red Sea for two weeks from 2000GMT today to support peace efforts. This comes days after Saudi Arabia had stopped oil exports through the Bab al-Mandeb strait after two crude tankers had been attacked. If indeed talks are somewhat successful this could potentially allow for crude tankers to resume activity through the strait, in which 4.8mbpd of crude products are typically shipped.

WTI Holds Below $68 After Surprise Crude Inventory Build - WTI has extended its losses since last night's surprise API-reported crude inventory build., and DOE confirmed with a surprise 3.8mm bbl inventory build and while WTI tried to rally (smaller build than API), the jump stalled at $68.00...  DOE:

  • Crude  +3.803mm (-3mm exp, -850k whisper)
  • Cushing -1.338mm (-500k exp)
  • Gasoline -2.536mm (-2mm exp)
  • Distillates  -101k (+500k exp)

So another surprise build - not a seasonal norm - but smaller than API-reported... US crude production dipped on the week... NOTE: As Erik Townsend pointed out, EIA changed the rules June 1st - now they round to the nearest 100k bbl. So the week-to-week production data is now next to worthless. The reason it LOOKED LIKE a ‘surge’ of 100k bbl last week is because that was from prior weeks (reported as zero). Each time is crosses the half-way point, they bump the official number up 100k. WTI traded below $68 ahead of the DOE data, and kneejerked up to 68 the figure on the print...

Oil falls 2 pct on rising supply, concern about trade... (Reuters) - Oil prices fell about 2 percent on Wednesday as a surprise increase in U.S. crude stockpiles fed concerns about global oversupply, while investors worried that trade tensions could hit energy demand. Brent crude futures fell $1.82 to settle at $72.39 a barrel, a 2.5 percent loss. U.S. West Texas Intermediate (WTI) crude futures fell $1.10 to settle at $67.66 a barrel, a 1.6 percent loss. U.S. crude inventories rose 3.8 million barrels last week as imports jumped, the government's Energy Information Administration said. Analysts polled by Reuters had expected a decrease of 2.8 million barrels. Still, oil futures pared losses briefly after the data, which also showed growing U.S. demand. "It was surprising to see the build in crude, but it was a little bit offset by the bigger-than-expected draw in gasoline and the draw in Cushing," said Tariq Zahir, managing member at Tyche Capital Advisors. Gasoline stocks declined 2.5 million barrels, while crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures fell by 1.3 million barrels, EIA data showed. On Tuesday, the EIA reported that U.S. crude production fell 30,000 barrels per day to 10.44 million bpd in May. Oil prices are also being pressured by concern that global trade tensions could crimp economic growth. China said it would hit back if the United States takes further steps hindering trade, as the Trump administration considers slapping a 25 percent tariff on $200 billion worth of Chinese goods. Last month, Brent fell more than 6 percent and U.S. crude slumped about 7 percent, the biggest monthly declines for both benchmarks since July 2016. Russian oil production last month was on average above the level Moscow promised following the Organization of the Petroleum Exporting Countries and non-OPEC meeting in June, energy minister Alexander Novak indicated on Wednesday. Novak said that higher production was due to the need to maintain the market's stability. His comments indicate that Russia was producing above the level announced by Moscow after the OPEC+ meeting in June. Last month, Novak had said that Russia may surpass the 200,000 bpd level of increases if there is a need for it.

Oil steadies to trade higher after losses -Oil prices rose on Thursday, steadying after losses over the past two days from a surprise increase in U.S. crude inventories and renewed concerns over trade friction between the U.S. and China. Brent crude futures were up 16 cents, or 0.2 percent, at $72.55 a barrel by 0503 GMT, after dropping 2.5 percent on Wednesday. U.S. West Texas Intermediate (WTI) crude futures increased by 6 cents, or 0.1 percent, to $67.72 a barrel. They fell 1.6 percent in the previous session. Oil prices are feeling the effects of ongoing tensions over global trade, with markets concerned about any slowdown in growth around the world. "A clear definition around the macros is what the market is looking for and until we get that, it is likely to be volatile in the range," said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney. U.S. President Donald Trump has sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports.China said it would hit back if the United States takes further steps on trade. Brent prices fell more than 6 percent in June and U.S. crude slumped about 7 percent, the biggest monthly declines for both benchmarks since July 2016. Tensions between the U.S. and Iran are also supporting the market, Barratt said. The United States believes Iran is preparing to carry out a major exercise in the Gulf in the coming days, apparently moving up the timing of annual drills amid heightened tensions with Washington, U.S. officials told Reuters on Wednesday. U.S. President Donald Trump&apos;s decision to pull out of an international nuclear deal and reimpose sanctions on Iran has angered Tehran. Senior Iranian officials have warned the country would not easily yield to a renewed U.S. campaign to strangle Iran&apos;s vital oil exports. "There are a lot of escalation points that could occur very quickly and that worries me," Barratt said. U.S. crude inventories rose 3.8 million barrels last week as imports jumped, the government&apos;s Energy Information Administration said. Analysts polled by Reuters had expected a decline of 2.8 million barrels. 

OPEC Nears 100 Percent Compliance -- Oil prices are set to close out the week slightly down, although WTI and Brent regained some lost ground on Thursday. Oil traders are trying to balance two competing narratives. The first, is that rising OPEC production and a growing global trade war will cause a demand surplus. The second, that strong demand and an increasing amount of supply disruptions will lead to a shortage of oil in global markets.. OPEC boosted production by 340,000 bpd in July, as several members of the group ramped up output. Saudi production jumped to 10.63 million barrels per day (mb/d), close to a record high, according to S&P Global Platts. Kuwait, the UAE, Iraq and Algeria all boosted output to their highest levels since December 2016, just ahead of the implementation of the original OPEC+ deal. Meanwhile, Iran’s production fell to 3.72 mb/d in July as buyers began to curtail imports. Venezuela’s production also fell to 1.24 mb/d. Libyan output fell to 670,000 bpd. Overall compliance with the agreed upon cuts slipped to 105 percent, down from 131 percent in June.  The EIA reported that U.S. oil production fell to 10.472 mb/d in May, down 30,000 bpd compared to a month earlier. The decline was a surprise because the agency had previously estimated that production was surging. While offshore Gulf of Mexico accounted for a big loss, U.S. shale grew slower than expected. The latest monthly figures raise the possibility that U.S. oil production might also be lower today than most analysts believe.   In apparent response to harsh rhetoric from President Trump, Iran began naval exercises near the Strait of Hormuz, according to the Wall Street Journal. The exercises are annual, but analysts say they were moved up by a few days, suggesting they are in response to Trump’s verbal assault. “We’re watching it pretty closely,” a U.S. military official said. As expected, the Trump administration released a proposal to water down fuel efficiency standards for cars and light trucks. Instead of ratcheting up each year through 2025 at over 50 miles per gallon, automakers will only have to achieve a fleet wide standard of about 37 mpg after 2020. Crucially, the Trump administration wants to take away California’s authority to set its own fuel efficiency requirements, a move that will likely result in a lengthy legal battle.

Falling Rig Count Supports Oil Prices -  Baker Hughes reported a decrease to the number of active oil and gas rigs in the United States on Friday. Oil and gas rigs decreased by 4 rigs, according to the report, with the number of active oil rigs decreasing by 2 to 859 this week, while the number of gas rigs dipped by 3, hitting 183. There was one miscellaneous rig addition for the week as well.The oil and gas rig count now stands at 1,044—up 90 from this time last year.Canada’s oil and gas rigs for the week held steady, at 223 rigs, which is 6 more than this time last year, with a 2-rig loss for oil and a 2-rig gain for gas.Cana Woodford lost 3 rigs this week—the biggest of the losers. Marcellus lost 2 rigs, and Williston added one. Granite Wash (+2) and the Mississippian (+1) both gained rigs, while the Permian, which saw over a hundred rigs added over the last year, held steady this week at 480 rigs.Oil prices were fairly stable on Friday morning as Iran/US tensions continued to play out in part over Twitter, and an S&P Global Platts survey that showed that OPEC had increased oil production in July by 340,000 bpd. WTI was trading down at 10:40am EDT $0.19 (-0.28%) at $68.77, with Brent crude trading up $.04 (+0.05%) at $73.49. For WTI, that’s almost flat week on week. For Brent, it’s almost a dollar per barrel loss.EIA estimates for US production were down for the week ending July 27, at 10.9 million bpd. By 1:10pm EDT, WTI and Brent were trading down—widening the WTI discount to Brent. WTI was trading down 0.87% (-$0.60) at $68.36. Brent crude was trading down 0.34% (-$0.25) at $73.20 per barrel.

Oil prices pull back as trade tensions weigh on market(Reuters) - Crude futures pulled back on Friday, giving up gains from the previous session as trade concerns weighed on the market and fueled concerns about demand. U.S. West Texas Intermediate (WTI) crude futures CLc1 settled down 47 cents at $68.49 a barrel. Brent crude futures LCOc1 settled at $73.21 per barrel, down 24 cents from their last close. Both grades briefly traded down more than $1 a barrel. U.S. crude ended the week down 0.4 percent, while Brent has fallen 1.5 percent in the week so far. Fears that Chinese demand could taper fueled the pullback on Friday after state oil major Sinopec cut its purchases of U.S. crude. China’s Unipec, the trading arm of Sinopec, has suspended crude oil imports from the United States due to the growing trade spat between Washington and Beijing, three sources familiar with the situation said on Friday. “Chinese demand from the independent refiners is also lower while the escalating trade war also doesn’t help sentiment,” China has said it plans to impose tariffs on liquefied natural gas, raising concerns that it could also impose tariffs on oil, said John Kilduff, partner at Again Capital Management in New York. U.S. nonfarm payrolls rose in July, but the U.S. trade deficit recorded its biggest increase in more than 1-1/2 years in June as the boost to exports from soybean shipments faded and higher oil prices lifted the import bill. The Commerce Department said on Friday the trade gap surged 7.3 percent to $46.3 billion. Russian oil output rose by 150,000 barrels per day (bpd) in July from a month earlier to 11.21 million bpd, energy ministry data showed on Thursday. Output by top exporter Saudi Arabia has also risen recently, to around 11 million bpd, and U.S. production is around that level as well. Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production to help to compensate for an anticipated shortfall in Iranian crude supplies once planned U.S. sanctions take effect later this year. But a complete halt to Iranian supplies looks unlikely with Bloomberg reporting on Friday that China, Iran’s biggest customer, has rejected a U.S. request to cut imports from the OPEC member.

Crude oil falls on higher OPEC supply, US-China trade spat — Crude futures fell Friday on rising OPEC and Russian output and concerns that a trade dispute between the US and China will affect demand. October ICE Brent settled 24 cents lower at $73.21/b, while September NYMEX crude settled 47 cents lower at $68.49/b. OPEC produced 32.66 million b/d in July, up 340,000 b/d from June, according to an S&P Global Platts survey Friday, as increases from Saudi Arabia, Kuwait, Iraq, Algeria and the UAE offset declines from Libya and Venezuela. Russia's crude output climbed nearly 150,000 b/d in July, the energy minister said Thursday, largely in line with Moscow's late-June agreement with OPEC. Russian output is now just 15,000 b/d below the record high of 11.23 million b/d set in October 2016. "Rising Saudi Arabian and Russian oil supply, coupled with concerns about demand due to the further escalating trade conflict between the US and China, the two largest oil consumer countries, is weighing on the [Brent] price," Commerzbank analysts said in a note Friday. Weekly rig data reported by Baker Hughes Friday did little to move the market. US rigs fell by four to 1,044 this week, while the Permian oil rig count was unchanged at 479. The Permian count has lingered between 473 and 479 since the end of May, reflecting a slowdown in activity on tight pipeline takeaway capacity, and suggesting production growth will slow. US crude exports have slowed in recent weeks, likely because the US-China trade war has reduced flows to China, the single largest buyer of US crude in May. US Energy Information Administration data shows that on a four-week average basis US crude exports have slowed to 1.87 million b/d during the week that ended July 27 from 2.43 million b/d July 27. With refinery maintenance season around the corner, US crude inventories could start to rise, especially if exports do not pick up again. West African crude market sources Friday warned that reduced refinery runs would lead to higher US crude exports into Europe competing with Nigerian light sweet crudes.

Saudi Arabia Planned to Invade Qatar Last Summer. Rex Tillerson’s Efforts to Stop It May Have Cost Him His Job. - Thirteen hours before Secretary of State Rex Tillerson learned from the presidential Twitter feed that he was being fired, he did something that President Donald Trump had been unwilling to do. Following a phone call with his British counterpart, Tillerson condemned a deadly nerve agent attack in the U.K., saying that he had “full confidence in the U.K.’s investigation and its assessment that Russia was likely responsible.”White House Press Secretary Sarah Sanders had called the attack “reckless, indiscriminate, and irresponsible,” but stopped short of blaming Russia, leading numerous media outlets to speculate that Tillerson was fired for criticizing Russia.  But in the months that followed his departure, press reports strongly suggested that the countries lobbying hardest for Tillerson’s removal were Saudi Arabia and the United Arab Emirates, both of which were frustrated by Tillerson’s attempts to mediate and end their blockade of Qatar. One report in the New York Times even suggested that the UAE ambassador to Washington knew that Tillerson would be forced out three months before he was fired in March.The Intercept has learned of a previously unreported episode that stoked the UAE and Saudi Arabia’s anger at Tillerson and that may have played a key role in his removal. In the summer of 2017, several months before the Gulf allies started pushing for his ouster, Tillerson intervened to stop a secret Saudi-led, UAE-backed plan to invade and essentially conquer Qatar, according to one current member of the U.S. intelligence community and two former State Department officials, all of whom declined to be named, citing the sensitivity of the matter. In the days and weeks after Saudi Arabia, the UAE, Egypt, and Bahrain cut diplomatic ties with Qatar and closed down their land, sea, and air borders with the country, Tillerson made a series of phone calls urging Saudi officials not to take military action against the country. The flurry of calls in June 2017 has been reported, but State Department and press accounts at the time described them as part of a broad-strokes effort to resolve tensions in the Gulf, not as an attempt by Tillerson to avert a Saudi-led military operation..

US preparing for regime change and war against Iran -- Just days after President Donald Trump publicly threatened Iran with “consequences the likes of which few throughout history have ever suffered,” his National Security Adviser John Bolton held a top-level meeting to discuss US plans to confront Iran.Notorious for his own belligerent threats against Iran, Bolton chairs the Principals Committee on national security matters, whose members include Defence Secretary Jim Mattis and Secretary of State Mike Pompeo. Officials told the Wall Street Journal it was only the third such meeting Bolton had convened since his installation as national security adviser in April.In May, the Trump administration effectively sabotaged the 2015 deal with Iran, under which Tehran severely restricted its nuclear programs and placed its nuclear facilities under intense international scrutiny in exchange for the winding back of crippling economic sanctions. US sanctions will be re-imposed next month on Iran’s auto industry, as well as trade in gold and other metals. In November, bans will come into force on Iran’s energy sector—the mainstay of its exports and government finances—along with shipping and insurance and central bank transactions. Washington has vowed to reduce Iranian oil exports to near zero. The Trump administration’s decisions have provocatively ramped up a dangerous confrontation with Iran. They also have worsened relations with US allies in Europe, which have developed economic links with Tehran since 2015. Washington has refused to exempt European companies from the sanctions, thus threatening to exclude them from the US financial system if they continue to do business with Iran. An Australian Broadcasting Corporation (ABC) article last Friday provided further evidence that the Trump administration is preparing to attack Iran. “Senior figures in the Turnbull [Australian] Government have told the ABC they believe the United States is prepared to bomb Iran’s nuclear facilities, perhaps as early as next month, and that Australia is poised to help identify possible targets,” it stated.

US Considering Attacking Iran, With Saudi Forces Leading Strike -- Is the United States preparing to attack Iran? On Friday, Defense Secretary James Mattis dismissed this idea as “fiction,” back when the sources were in the Australian military. Yet other US officials have since been quoted as saying the attack is still being considered.The pretext for this war appears to be the ongoing Yemen War. Last week, Saudi state media claimed that Yemen’s Houthi rebels attacked and slightly damaged a Saudi oil tanker. The Saudis have previously alleged the Houthis are tied to Iran, and US media is treating this as some sort of transference, and reporting that Iran attacked the Saudi oil tanker, even though no one alleged that ever happened.Since the US has spent years presenting oil security as a reason for war with Iran, they are considering using that excuse. Officials say that this would be mostly a Saudi-led attack, with Saudi Arabia and its allies doing the bulk of the fighting, and relying on the US for support.Officials say this would require a “long-term military effort” against Iran. The US expectations that they might keep their involvement limited to a support role appears particularly unrealistic, given how much the same Saudi-led coalition has struggled to conquer Yemen.The danger here is that both the US and what it envisions to be its proxy army are going to each go into a war with high expectations for one another, and each get into a much bigger war than they bargained for. There are few specifics about what form this war would take, as US officials were insisting as recently as a few days ago that they are not interested in regime change in Iran. It is hard to imagine, however, that they could get the major Sunni Arab states to attack Shi’ite Iran with any hope of it being “limited.”

Direct warfare with the US is out of the question for Iran, analysts say — here’s why  -- When Iran threatens war with the U.S., it's not necessarily talking about war in the conventional sense. But where Tehran can cause damage is an escalation of activities that's likely to send further ripples across regional conflicts and oil markets.  The battle of words between Iran and the U.S. hit its latest peak Thursday after the Islamic Republic's top general warned that if President Donald Trump started a war with his country, Iran would end it. "If you begin the war, we will end the war. You know that this war will destroy all that you possess," Major General Qassem Soleimani said from Hamedan, Iran, in a message directed at Trump. It followed several days of back and forth acrimony between Iranian President Hassan Rouhani and Trump and his Secretary of State Mike Pompeo. The open threat was significant, coming from a man who largely operates in the shadows: as the commander of the Quds Force, the elite external branch of Iran's Revolutionary Guard Corps (IRGC), Soleimani is believed to be the single most powerful figure in Iran's entire establishment. To many, he is the most influential operative in the entire Middle East. Regional experts dismiss the likelihood of Iran directly targeting the U.S. or venturing into open warfare. With a spiraling economy and nascent civil unrest at home, not to mention the distinct military and technological advantage of the U.S. and its ally Israel, Tehran is not keen to engage in conventional combat. But Iran has a range of other tools at its disposal to harm U.S. interests, many of which have long been in play and whose deployment is now likely to intensify.  Soleimani "knows he has a range of indirect options to needle U.S. interests across the region,"   These include disrupting sea lanes, ballistic missiles against Riyadh, threatening U.S. forces in Iraq and Syria, and meddling in Bahrain through its Shia population, to name a few.

Iran's Currency Craters Most On Record Amid Panicked Scramble Into US Dollars -- Iran's rial flashed lower on Sunday against the US Dollar, as panicked Iranians scrambled into USD amid deepening economic woes and the imminent return of full US sanctions. The unofficial "black market" rate stood at 102,000 Rials by mid-Sunday according to website Bonbast, and confirmed to AFP by a currency trader.  The Rial has lost half its value against the US Dollar over the last four months - breaking through the 50,000:1 mark in March for the first time. In April, Tehran deployed a series of measures to try and stop the slide - including firing the governor of the central bank, fixing the Rial at 42,000 and threatening to crack down on black market traders.  But the selling continued as Iranians have panicked about a prolonged economic downturn, turning to dollars as a safe way to store their savings, or as an investment in the hope the rial will continue to drop, according to France24.With banks often refusing to sell their dollars at the artificially low rate, the government has been forced to soften its line in June, allowing more flexibility for certain groups of importers. The handling of the crisis was one of the reasons behind last week's decision by President Hassan Rouhani to replace central bank chief, Valiollah Seif.Alas for the Islamic Republic, none of it has worked.  As Johns Hopkins economist and Senior Cato Institute Fellow Prof. Steve Hanke noted in late June, "The Islamic Republic of Iran remains in the ever-tightening grip of an economic death spiral. The economy is ever-vulnerable because of problems created by the last Shah, and added to massively by the incompetence and shenanigans of the theocratic regime. Indeed, the economy is more vulnerable to both internal and external shocks than ever. How fast the death spiral will spin is anyone’s guess."

Iran Preparing Massive Military Exercise To "Demonstrate Ability" To Block Persian Gulf: Report After days of heated barbs exchange back and forth between Washington and Tehran, Iran's elite Islamic Revolutionary Guard forces are expected to begin a major exercise in the Persian Gulf as soon as the next 48 hours, which could be aimed at demonstrating their ability to shut down the Strait of Hormuz, CNN reports citing two US officials."We are aware of the increase in Iranian naval operations within the Arabian Gulf, Strait of Hormuz and Gulf of Oman. We are monitoring it closely, and will continue to work with our partners to ensure freedom of navigation and free flow of commerce in international waterways," Captain William Urban, chief spokesman for US Central Command, told CNN. The Strait of Hormuz - a strategically critical passageway linking the Persian Gulf to the Arabian Sea which is crucial to shipping of global energy supplies - has emerged as a focal point in the escalating war of words between presidents Trump and Rouhani, after Iran threatened to block off the Persian Gulf if the US proceeds with fully implementing oil export sanctions on Iran.Officials told CNN that while the US sees no immediate signs of hostile intent from Iran, the IRGC show of force has US military intelligence "deeply concerned" for three fundamental reasons according to officials:

  • The exercise comes as rhetoric from the IRGC towards the US has accelerated in recent days.
  • It appears the IRGC is ramping up for a larger exercise this year than similar efforts in the past.
  • The timing is unusual. These types of IRGC exercises typically happen much later in the year.

In the US military's assessment, the IRGC has assembled a fleet of more than 100 boats, many of them small fast moving vessels. It's expected Iranian air and ground assets including coastal defensive missile batteries could be involved, while  hundreds of Iranian troops are expected to participate and some regular Iranian forces could be involved as well.  The IRGC exercise comes as the US has only one major warship, the USS The Sullivans inside the Persian Gulf, several officials say. Other US warships are nearby and there are numerous combat aircraft in the region. The US military has been trying to encourage other nations in the region, especially Saudi Arabia to take a strong line on keeping the Gulf open in the face of rising Iranian rhetoric. They have also expressed concern about keeping open the waterways off Yemen where Iranian backed rebels have attacked oil tankers.

Iran Starts Naval Exercise Near Vital Strait, U.S. Says —Iran began a major naval exercise near the Strait of Hormuz Thursday, in an apparent response to rhetoric from President Donald Trump in recent days that he would ratchet up pressure against Tehran, U.S. defense officials said. The U.S. believes the exercises “fully started” Thursday, one defense official said, and could continue until Aug. 6. A second official said there are more than 100 boats and ships participating in the exercise, but most are considered smaller craft. On Thursday, the U.S. saw boats going in and out of port, the first defense official said. An air component, consisting primarily of unmanned aerial vehicles, or UAVs, are also are participating in the exercise, a military official said.  Alireza Miryousefi, press counselor for Iran’s United Nations mission, didn’t respond directly to questions about the military exercise, but pointed to a Twitter post written Thursday by Foreign Minister Javad Zarif criticizing the U.S. Navy for referring to the Persian Gulf as the Arabian Gulf and for patrolling waters “in our backyard.”  The annual exercise appears to have been moved up on the Iranian calendar by several days, reinforcing the view that it is a response to Mr. Trump’s recent comments.Some officials in the U.S. military believe the Iranians are simply trying to send a message that if Tehran wanted to close the Strait of Hormuz, a critical shipping route that links the Persian Gulf with the Arabian Sea and ultimately, the Indian Ocean, it could do so.“We’re watching it pretty closely,” said a military official.On Monday, during a press conference with Italian Prime Minister Giuseppe Conte, Mr. Trump appeared to extend an olive branch to Iran, saying he would meet its leaders with “no preconditions.” Iran rejected that proposal. The U.S. naval presence in the region currently is somewhat below levels that have been considered normal for the area in recent years. There is no aircraft carrier strike group after the USS Harry S. Truman left the region last month. In recent weeks, the most prominent U.S. naval presence in the Middle East was the amphibious warship Iwo Jima, which arrived in the Persian Gulf last month and has since left.

"No Preconditions": Trump Will Meet Iran's Rouhani "Any Time They Want” - President Trump said on Monday that he is willing to meet with Iranian President Hassan Rouhani with "no preconditions," exactly one week after he blasted out a fiery all-caps threat to the regime over Twitter.  “I would certainly meet with Iran if they wanted to meet. I don’t know if they’re ready yet,” Trump said, responding to a reporter's question during a White House press conference alongside Italy's new Prime Minister Guiseppe Conte. .@POTUS on Iran: "I'm ready to meet anytime that they want to and I don't do that from strength or from weakness. I think it's an appropriate thing to do... No preconditions. If they want to meet, I'll meet." pic.twitter.com/KhRc38jrt3— FOX Business (@FoxBusiness) July 30, 2018  Watch for the MSM to follow the North Korea playbook on this one - blasting Trump for failing to follow "protocol" as he carves a new path through international relations.  Following a warning from Rouhani earlier in the month that hostile US policies could trigger the "mother of all wars," after which Trump blasted back via Twitter:   Trump's decision to meet with Rouhani would be the first major step towards mending relations after he pulled out of the Obama-era Iran nuclear agreement in which Tehran committed to curtailing its nuclear program in exchange for reduced sanctions.  Just yesterday we noted that Iran's currency is in freefall - pegging 102,000 Rials to the US Dollar on the black market, according to currency website Bonbast, and confirmed to AFP by a currency trader.  Trump suggested a meeting with Rouhani would be the "appropriate thing to do," and that it would come neither from a position of strength nor weakness, reports Fox News.

China Defies Trump, Rejects US Request To Halt Iran Crude Imports - Though no shocker as we predicted previously, China has refused to cut Iranian oil imports at the United States' request in a severe blow to White House efforts to intensify pressure and economically isolate the Islamic Republic after the US withdrawal from the 2015 nuclear deal. However, Beijing has reportedly agreed not to accelerate purchases.  China, itself a target of ratcheting US economic pressure especially after Wednesday's shock news that President Trump may impose a 25 percent tariff on $200 billion worth of Chinese goods, remains the world's top crude importer and is Iran's top buyer. Bloomberg reported overnight, citing two officials familiar with the negotiations, that limited concessions have been made, howeverBeijing has, however, agreed not to ramp up purchases of Iranian crude, according to the officials, who asked not to be identified because discussions with China and other countries continue. That would ease concerns that China would work to undermine U.S. efforts to isolate the Islamic Republic by purchasing excess oil. China has long been on record as opposing unilateral sanctions and further according to Bloomberg accounted for 35 percent of Iranian exports last month, based on ship tracking data.  Meanwhile Iran's foreign minister welcomed the news: “The role of China in the implementation of JCPOA, in achieving JCPOA, and now in sustaining JCPOA, will be pivotal,” Mohammad Javad Zarif said, according to Reuters. The Trump White House currently has teams of negotiators around the world pressuring European and other capitals to cut off trade with Iran largely unsuccessful to date in an attempt to cut its oil exports to zero by November 4.

How BRICS Plus clashes with the US economic war on Iran - The key take away from the BRICS summit in Johannesburg is that Brazil, Russia, India, China and South Africa – important Global South players – strongly condemn unilateralism and protectionism.The Johannesburg Declaration is unmistakable: “We recognize that the multilateral trading system is facing unprecedented challenges. We underscore the importance of an open world economy.” Closer examination of Chinese President Xi Jinping’s speech unlocks some poignant details.Xi, crucially, emphasizes delving further into “our strategic partnership.” That implies increased BRICS and Beyond BRICS multilateral trade, investment and economic and financial connectivity.And that also implies reaching to the next level; “It is important that we continue to pursue innovation-driven development and build the BRICS Partnership on New Industrial Revolution (PartNIR) to strengthen coordination on macroeconomic policies, find more complementarities in our development strategies, and reinforce the competitiveness of the BRICS countries, emerging market economies and developing countries.”If PartNIR sounds like the basis for an overall Global South platform, that’s because it is.In a not too veiled allusion to the Trump administration’s unilateral pullout from the Iran nuclear deal (JCPOA), Xi called all parties to “abide by international law and basic norms governing international relations and to settle disputes through dialogue and differences through consultation,” adding that the BRICS are inevitably working for “a new type of international relations.”Relations such as these certainly do not include a superpower unilaterally imposing an energy export blockade – an act of economic war – on an emerging market and key actor of the Global South. Xi is keen to extol a “network of closer partnerships.” That’s where the concept of BRICS Plus fits in. China coined BRICS Plus last year at the Xiamen summit, it refers to closer integration between the five BRICS members and other emerging markets/developing nations.

Israel Threatens Military Response If 'Iran-backed' Houthis Block Red Sea Strait -- Will the war in Yemen become the next battleground in the ongoing Iran-Israel proxy war for the Middle East?   Israel has echoed US charges that Iran supplies Yemen's Shia Houthi rebels with ballistic missiles capable of hitting Riyadh, while the Shia rebels have accused the "Zionist" Saudis of massacring the civilian population as the kingdom's covert intelligence sharing alliance with Israel has become public knowledge of late. While the two have waged what is largely up to this point a war of words in Yemen, trading accusations of operating in the shadows, Israel has now openly threatened to intervene off the coast of Yemen if Houthi forces block the vital waterway through which cargo ships bound for Israel pass from Asia. According to a breaking Reuters story, "Israel would deploy its military if Iran were to try to block the Bab al-Mandeb strait that links the Red Sea to the Gulf of Aden, Prime Minister Benjamin Netanyahu said on Wednesday."This is the first significant threat of deploying military force issued from Tel Aviv in the Yemeni theater, and comes after the temporary halt in shipments through the strategic Bab el Mandeb strait which began a week ago. The halt followed a Saudi accusation that Iran-backed Houthi rebels in Yemen had attacked two Saudi oil tankers traversing the waterway, driving home the threat that the conflict poses to a key chokepoint in international trade and the flow of Gulf oil to world markets. The Houthis for their part claimed they had actually attacked a Saudi warship rather than oil tankers.Saudis have in previous months accused the Houthis of attacking Saudi commercial ships passing through the strait with surface-to-surface missiles supplied by Iran.

'It was a massacre': Dozens killed in Saudi air raids on Hodeidah - At least 55 people, including women and children, have been killed in Yemen's Red Sea port city of Hodeidah in air raids carried out by a Saudi and UAE alliance battling Houthi rebels,  the rebel-run health ministry said. In a statement issued late on Thursday, the ministry said the attacks, which targeted the city's Public al-Thawra Hospital and a busy fishing port, wounded at least 124 Yemenis.The Reuters news agency put the death toll at 28 late on Thursday, while China's Xinhua said it stood at 70 early on Friday.Taha al-Mutawakil, the Minister for Public Health and Population in the Houthi-led administration, said local authorities were struggling to cope with the number of casualties, and ambulances feared transporting the wounded to Sanaa or other provinces due to fears of being targeted by air attacks. The International Red Cross, which supports the al-Thawra hospital, said it sent surgical supplies that will be enough to treat up to 50 patients who are in critical condition."What we have seen in Hodeidah is a heinous crime," Mutawakil was quoted by the Houthi-run SABA news agency saying.He added that US shared responsibility for the deaths.With logistical support from the US, Saudi Arabia and the UAE have been carrying out attacks inside Yemen since March 2015 in an attempt to reinstate the internationally recognised government of President Abu-Rabbu Mansour Hadi. At least 10,000 people have been killed in the fighting and more than 100,000 children have died from extreme hunger and starvation.  Mohamed al-Hasni, the head of Hodeidah's fishermen union, told Al Jazeera that there were no military targets in the area and "the targeting of fishermen was not expected"."The port and market were full of people. It was a massacre," he said. "There was no military presence in the area. No armed men were around at all. The targeting was aimed at spreading fear and terror.

U.S.-Backed Saudi Airstrike on Family With Nine Children Shows “Clear Violations” of the Laws of War - Shortly before 10 p.m. on the night of May 14, more than a dozen members of the Maswadah family, including nine children, lay sleeping in tents in the shadow of a cliff in Yemen’s northern governorate of Saada. The nomadic family had been eking out a living raising sheep and doing farm work in the region most heavily targeted by the U.S.-supported, Saudi-led bombing campaign that began in 2015.   Unbeknown to the Maswadahs, Royal Saudi Air Force drones had been hovering for 45 minutes over their dwellings at the edge of the wide plain walled by mountains. Saudi duty officers more than 550 miles away watched the family’s tents on their screens, along with two “hot spots” likely created by the body heat of people and animals inside.   What happened next in the Saudi war room is described in a U.S. intelligence report seen by The Intercept. The minute-by-minute account of a single airstrike provides a small yet detailed window into the Saudi-led bombing campaign in Yemen, showing how officers in charge of daily air raids are ignoring their own procedures aimed at minimizing civilian casualties. Specialists in international humanitarian law say the incident described in the document shows “clear violations” of the laws of war.The duty officers monitoring drone feeds in the Joint Forces Command National Defense Operations Center in the Saudi capital of Riyadh on the night of May 14 saw the Maswadahs’ tents, but observed “no personnel or vehicles visible, nor any other intelligence information about the location,” according to the report. The Saudi brigadier general in charge on May 14 wasn’t present in the operations center, so the duty officers called him twice to describe the target. At 9:25 p.m., the absent general issued the order to strike the tents. The RSAF, which was monitoring the site separately, added its own recommendation to strike. “At 2156, an unknown coalition aircraft released a single GBU-12 on the target,” notes the document, referring to a 500-pound, American-made precision-guided bomb that was dropped at 9:56 p.m., less than 50 minutes after the Saudis first caught sight of the tents.

Why We Know So Little About the U.S.-Backed War in Yemen - Matt Taibbi - Thursday, from Al Jazeera: “Yemen ‘on Brink of New Cholera Epidemic,’ Charity Warns.” The piece details how recent developments in the Yemeni civil war — specifically, the possible siege of the port city of Hodeidah — may cause a surge in cholera cases. There wereover a million reported cases of cholera between the fall of 2016 and spring of 2018, the largest documented outbreak in modern times. The rate of infection had slowed, but observers now fear resurgence. Since the conflict began, medical services have been devastated across the war-torn country, and children in particular have been affected, with as many as 400,000 at imminent risk of starvation. In April, U.N. General Secretary Antonio Guterres said that 8 million people in Yemen didn’t know where they were getting their next meal.  If you want to be saddened to the point of nausea, look at these images, in which weeping mothers can be seen holding their malnourished babies and saying things like, “I’m losing my son and there’s nothing I can do about it!”Yemen is a catastrophe on a scale similar to Syria, but coverage in the United States has been sporadic at best. PBS News Hour did a thorough three-part series, but MSNBC, for instance, has barely mentioned the crisis in a year, during a period when it has done 455 segments on Stormy Daniels (this according to media reporter Adam Johnson).The reason for inattention is obvious: The United States bears real responsibility for the crisis. A quote from a Yemeni doctor found in PBS reporter Jane Ferguson’s piece sums it up:“The missiles that kill us, American-made. The planes that kill us, American-made. The tanks … American-made. You are saying to me, where is America? America is the whole thing.”The Yemeni civil war pits Iran-backed Houthi rebels against Saudi-backed government forces, who receive weaponry and other forms of assistance from the U.S., including the in-air refueling of Saudi warplanes. You can see the reporter Ferguson touring collections of American-made weapons dropped on Yemen — including cluster bombs — at about 2:40 of this video. Leaving aside the complex question of who is right and who is wrong in this multipolar war (which also includes Al-Qaeda/ISIL forces), there is no question that masses of innocent civilians have wrongly become targets. Hospitals, schools, mosques and other non-military locations have been destroyed indiscriminately.

Robert Fisk: "I Traced Al-Qaeda Missile Casings In Syria Back To Their Original Sellers" -  Finally, a journalist for a mainstream UK media outlet is methodically tracking weapons shipment serial numbers and English-language paperwork recovered from al-Qaeda groups in Syria, and he's literally showing up at arms factories and questioning arms dealers, including officials at the Saudi Embassy in London, asking: why are your weapons in the hands of terrorists?   Veteran Middle East war correspondent Robert Fisk recently published a bombshell report entitled, I traced missile casings in Syria back to their original sellers, so it’s time for the west to reveal who they sell arms to.   His "detective story" as he calls it actually seems to solicit the help of the public, and begins as follows:    Note down this number: MFG BGM-71E-1B. And this number: STOCK NO 1410-01-300-0254. And this code: DAA A01 C-0292. I found all these numerals printed on the side of a spent missile casing lying in the basement of a bombed-out Islamist base in eastern Aleppo last year. At the top were the words “Hughes Aircraft Co”, founded in California back in the 1930s by the infamous Howard Hughes and sold in 1997 to Raytheon, the massive US defence contractor whose profits last year came to $23.35bn (£18bn). There were dozens of other used-up identical missile casings in the same underground room in the ruins of eastern Aleppo, with sequential codings; in other words, these anti-armour missiles – known in the trade as Tows, “Tube-launched, optically tracked and wire-guided missiles”...  Fisk continues by relating the moment he confronted a former Hughes Aircraft (now Raytheon) executive about finding their product in the hands of terrorists: I met an old Hughes Aircraft executive who laughed when I told him my story of finding his missiles in eastern Aleppo. When the company was sold, Hughes had been split up into eight components, he said. But assuredly, this batch of rockets had left from a US government base. Amateur sleuths may have already tracked down the first set of numbers above. The “01” in the stock number is a Nato coding for the US, and the BGM-71E is a Raytheon Systems Company product. There are videos of Islamist fighters using the BGM-71E-1B variety in Idlib province two years before I found the casings of other anti-tank missiles in neighbouring Aleppo. As for the code: DAA A01 C-0292, I am still trying to trace this number. Fisk writes further that even if he doesn't ultimately come up with the American base from which the missiles originated, as well as specific factory they were made, he knows one thing for sure, that both Hughes/Raytheon and the US government have erected a paper trail system designed to shield them from violating anti-terror laws.

Russian Electronic Warfare Against US Troops In Syria Enters Dangerous Phase: Report --"All of a sudden your communications won’t work, or you can’t call for fire, or you can’t warn of incoming fires because your radars have been jammed and they can’t detect anything" a retired Army colonel who specializes in electronic warfare told Foreign Policy. A new report details the Pentagon's growing alarm at increased instances of Russian electronic jamming attacks on American troop positions in Syria, which number according to public Pentagon statements at 2000 or more, located on and near a dozen or more "secret" bases mostly in Syria's northeast and embedded among the mostly Kurdish US-backed Syrian Democratic Forces. Russia, alongside the Syrian government sees US troops as foreign uninvited occupiers, which have committed acts of aggression against the Syrian state, killing hundreds of Syrian Army soldiers (and instances of Russian mercenaries killed, though they were not under orders by Moscow) during multiple incidents near front lines in Deir Ezzor.And now, as Gen. Raymond Thomas, head of U.S. Special Operations Command, recently stated at an intelligence and military tech conference, Syria has become "the most aggressive [electronic warfare] environment on the planet."He said of Russian, Iranian, and Syrian "adversaries": "They are testing us every day, knocking our communications down, disabling our EC-130s [the Air Force's large Airborne Battlefield Command and Control Center aircraft]."Foreign Policy (FP) indicates that electronic jamming by Russian forces signifies an "escalatory" threat in an already confused environment given the broad array of groups and state actors operating in Syria.

Are We About to Witness the Last Battle of the Syrian War? -- For three years, Idlib has been the dumping ground for all of Syria’s retreating Islamist militias, the final redoubt of every combatant who has chosen to fight on, rather than surrender to the Syrian army and the Russian air force – and to Hezbollah and, to a far smaller degree, the Iranians. Brigadier general Suheil al-Hassan, the “Tiger” of Syrian military legend and myth – who can quote the poet Mutanabi by heart but prefers to be compared to Erwin Rommel rather than Bernard Montgomery – will surely take his “Tiger Forces” with him for the final reckoning between the Damascus regime and the Salafist-inspired and western-armed Islamists who dared to try, and very definitely failed, to destroy Bashar al-Assad’s rule.  Thanks to Donald Trump, it’s all over for the “rebels” of Syria because they have been betrayed by the Americans – surely and finally by Trump himself in those secret discussions with Vladimir Putin in Helsinki, perhaps the most important of the “unknowns” of that translators-only chat – as they have by the Gulf Arabs.  Three weeks earlier, the Americans had told the rebels of southwestern Syria below the Israeli-occupied Golan Heights that they were on their own, and could expect no more military assistance. Even the White Helmets, the first-responder heroes or propagandists of the rebel war (take your pick, but be sure they will soon be described as “controversial”) have been rescued with their families from the rebel lines by the Israelis and dispatched to safety in Jordan.

China's Military To Help Assad Retake Rest Of Syrian Territory, Ambassador Suggests - The Chinese Ambassador to Syria, Qi Qianjin, has shocked Middle East pundits and observers with statements this week indicating the Chinese military may directly assist the Syrian Army in an upcoming major offensive on jihadist-held Idlib province.The "[Chinese] military is willing to participate in some way alongside the Syrian army that is fighting the terrorists in Idlib and in any other part of Syria," the ambassador said in an interview with the pro-government daily newspaper Al-Watan, subsequently translated by The Middle East Media Research Institute (MEMRI). Substantial rumors from pro-Damascus sources of a major Syrian-Russian led offensive to take back Idlib, held since 2015 by a Nusra Front dominated coalition (since rebranding itself as Hayat Tahrir al-Sham/HTS), have been swirling since the now successful Assad campaign to take back the whole of the south was initiated, and these sources indicate the battle could begin as early as September.But crucially, Idlib province is now the ground zero gathering point of nearly all jihadist and ISIS factions remaining in Syria, including foreign fighters. According to some estimates there are upwards of 40,000 armed jihadists within the main anti-Assad factions in Idlib, embedded within a population of about 2 million civilians and internally displaced persons (IDP's). Thus the coming battle for Idlib is expected to be among the most bloody and grinding of the entire seven years of war, similar to Aleppo in 2016. China is chiefly interested in allying with Syrian government forces to root out the significant component of Chinese Muslim foreign fighters operating in Idlib. The hardline Islamist Uyghur militants have entered Syria in the thousands over the past few years from the western Chinese province of Xinjiang, where the minority ethno-religious group has found itself under increased persecution and oversight by the state.

‘Our life is hell’: Iraq’s IDPs suffer interminable wait for home -- For Hend Ali, there was no other option but to stay put. The 36-year-old mother of six has been living for three years now at al-Khadra, a camp for internally displaced persons (IDPs) tucked behind blocks of dilapidated apartment buildings in Iraq's capital, Baghdad. Like many others across the country, Hend was forced to flee her home in 2015 as military operations and ISIL attacks escalated after the armed group's fighters swept through Iraq, occupying one-third of its territory. Following Baghdad's victory over ISIL last year, the families in the camp, which numbered in the hundreds in 2016, were expected to return to their homes. But dozens of them, including Ali's, had nothing to go back to. "I visited my home three months ago, but everything was destroyed," says Hend, recalling her trip to al-Qa'im town in Anbar province. "The walls and windows are gone. The foundations [of the house] are gone. It's just part of the roof that remains." The devastation, poverty and a lack of services in the recaptured areas forced Hend, like many other displaced Iraqis, to choose the lesser of two evils and stay in the camp. "I came back to the camp because there was nothing [in Anbar]," she says. "[There's] no water, no electricity, and no work." 

Israel bans entry of fuel and gas into besieged Gaza Strip -- The step comes weeks after Israel closed sole commercial crossing in retaliation to burning kites launched from Gaza. Israel has blocked the supply of fuel and gas to the besieged Gaza Strip, saying it was in retaliation over Palestinians setting fire to Israeli land, local media reported. Minister of Defence Avigdor Lieberman ordered the halt in fuel shipments via the partially sealed off Karem Abu Salem commercial border crossing. The decision, which came into effect on Thursday, will continue until further notice. Al Jazeera's Stefanie Dekker, reporting from Gaza, said at least 19 fires were reported by Israel on Wednesday. The move was to place "pressure on the leadership here to stop the incendiary kites and balloons," Dekker said, referring to Hamas - the group that governs the Gaza Strip. On July 9, Israel shut down the sole commercial crossing to the besieged Palestinian territory, cutting the supply of essential commodities to the nearly two million residents. The move only allowed for the transfer of humanitarian needs such as cooking gas as well as wheat and flour into Gaza, an official responsible for coordinating the movement of cargo through the border confirmed to Al Jazeera last month. The closure also affected Gaza's exports, further straining an already crippled economy brought to its knees by the 12-year blockade.

Ahed Tamimi’s Bravery Exposes Israeli, US Cowardice (Real news Network, interview and transcript) Palestinian teenager Ahed Tamimi is free after eight months in an Israeli prison. While her bravery in confronting occupying Israeli soldiers has been celebrated around the world, Western media outlets have gone to great lengths to portray her as an aggressor. We speak to Ali Abunimah of the Electronic Intifada

Be Suspicious Of Everyone Who Habitually Defends The Powerful From The Weak --Caitlin Johnstone Teenage Palestinian civil rights icon Ahed Tamimi was released from an Israeli prison yesterday. Viral images of Tamimi standing up to the Israeli armed forces who’ve brutalized her family have made her a powerful symbol of the greater Palestinian struggle for justice against a vastly more powerful oppressor.m The Palestinian issue is not complicated, and it is not difficult to see who is in the wrong in the debate about it. Anyone who says otherwise is advocating for the powerful against the disempowered. In addition to being an extremely well-funded military and nuclear power whose immense network of allies includes the United States, which has the most deadly military force the world has ever seen, the Israeli government also enjoys support from virtually all mainstream political and media voices in the western world. And what do the Palestinians have? Kites. Kites and rocks. There is a very clear and undeniable power discrepancy here. Generally speaking, whenever you see people loudly and habitually advocating for the powerful side of a power discrepancy, they are showing you that they are servants of power. Their interest is not in truth, justice or compassion, but in helping power maintain itself. Being aware of this gives you a very useful tool for navigating a confusing media landscape that is immersed in propaganda, spin, and disinformation. This applies across the board. When you see anyone advocating on behalf of the US empire against the latest Official Bad Guy Nation, when you see them advocating on behalf of the plutocrat-owned mass media machine against alternative media outlets, when you see them advocating on behalf of the Pentagon, the CIA and the Democratic Party against Julian Assange, when you see them advocating on behalf of fossil fuel companies against indigenous protesters, when you see them advocating on behalf of America’s increasingly militarized police force against unarmed black men, when you see them advocating on behalf of the wealthy against the poor, when you see them advocating on behalf of the status quo against activists and organizations pushing for change, they are giving you valuable information about themselves.

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