oil prices ended lower for the 6th week in a row, largely on a Wednesday selloff tied to a major escalation of the ongoing trade war between the Trump administration and China...after slipping 20 cents to $68.49 a barrel last week, prices for US crude for September delivery rose 52 cents to $69.01 a barrel on Monday, after OPEC sources said Saudi crude output, which had been expected to replace sanctioned Iranian output, unexpectedly fell in July...prices then rose another 16 cents to $69.17 a barrel on Tuesday, after the U.S. imposed initial sanctions on Iranian goods, leading to further concern that oil sanctions would tighten global oil supplies...however, the bottom fell out of oil prices on Wednesday, as the Chinese responded to another increase in US tariffs on Chinese goods with new 25% tariffs on U.S. fuel and other imports, sending oil prices tumbling $2.23 to a seven week low of $66.94 a barrel....concerns about the accelerating trade wars weighed on prices again on Thursday as oil prices extended their slide another 13 cents to $66.81 a barrel, yet another new 7 week low...but oil prices rallied on Friday after the International Energy Agency raised their 2019 forecast for global oil demand growth by 110,000 barrels a day to 1.5 million barrels while at the same time analysts projected that Iranian crude exports would fall by between 500,000 and 1.3 million barrels per day, with oil finishing up 82 cents at $67.63 a barrel for the day, but still ending with a decline of 86 cents, or 1.2% for the week...
natural gas prices for September, meanwhile, extended last week's rally to a sixth day on Thursday before pulling back 1.1 cents on Friday, and ended the week 9.1 cents higher at $2.944 per mmBTU...while a forecast for warmer weather and hence a greater power burn in mid-August underpinned this week's rally, the natural gas storage deficit compared to the norm continues to be the major factor supporting natural gas prices.....this week's EIA natural gas storage report for week ending August 3rd indicated that natural gas in storage in the US rose by 46 billion cubic feet to 2,354 billion cubic feet during the cited week, which still left our gas supplies 671 billion cubic feet, or 22.2% below the 3,025 billion cubic feet that were in storage on August 4th of last year, and 572 billion cubic feet, or 19.5% below the five-year average of 2,962 billion cubic feet of natural gas that are typically in storage heading into the first weekend of August...since natural gas supplies rose by 82 billion cubic feet to 2389 billion cubic feet during the equivalent week of the modern low supplies year of 2014, this week's natural gas supplies are again the lowest for this time of year since August 1st, 2003 (xls file)...an S&P Global Platts' survey of analysts had forecast that 45 billion cubic feet of natural gas would be added during the week ended August 3rd, so the actual 46 billion cubic feet increase was a bit higher than expectations, but it was still well below the 53 billion cubic foot average of surplus natural gas that has typically been added to storage by the weekend at the beginning of August over recent years...
last year, we began the winter heating season with 3,790 billion cubic feet of natural gas in storage on November 3rd....looking over the modern natural gas storage records (xls), the 3,611 billion cubic feet of natural gas we had stored on November 7th 2014 appears to be the lowest prewinter natural gas storage figure of the past decade...we have to go back to 2008, when 3488 billion cubic feet of natural gas were in storage on November 14th, to find a lower winter start figure...hence, with 2,354 billion cubic feet in storage as of August 3rd, that means we have to add at least 81 billion cubic feet each week for the next 14 weeks to avoid eclipsing the 2008 prewinter low by the 2nd week of November this year...that's probably doable, if we get a cool September and a warm start to November...otherwise, the EIA forecast for a 10 year low for prewinter US natural gas supplies will also go by the boards, and we'll looking at an even more substantial record low for our prewinter supplies.....
The Latest US Oil Data from the EIA
this week's US oil data from the US Energy Information Administration, covering the week ending August 3rd, indicated that a modest increase in our oil imports was not enough to cover a large increase in our oil exports, and hence we had to withdraw oil from our commercial crude supplies for the fourteenth time in the past twenty-eight weeks... our imports of crude oil rose by an average of 182,000 barrels per day to an average of 7,931,000 barrels per day, after falling by an average of 21,000 barrels per day the prior week, while our exports of crude oil rose by an average of 540,000 barrels per day to an average of 1,850,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 6,081,000 barrels of per day during the week ending August 3rd, 358,000 fewer 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 10,800,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 16,881,000 barrels per day during the reporting week...
at the same time, US oil refineries were using 17,598,000 barrels of crude per day during the week ending August 3rd, 118,000 barrels per day more than they used during the prior week, while 193,000 barrels of oil per day were reportedly being pulled out of 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, from oilfield production, and from storage was 524,000 fewer barrels per day than what refineries reported they used during the week.....to account for that disparity between the supply of oil and the disposition of it, the EIA needed to insert a (+524,000) 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 has a statistically significant 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 rose to an average of 8,129,000 barrels per day, 1.4% more than the 8,014,000 barrel per day average we were importing over the same four-week period last year....the 193,000 barrel per day decrease in our total crude inventories was all withdrawn from 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 10,800,000 barrels per day because the output from wells in the lower 48 states was reported down by 100,000 barrels per day to 10,500,000 barrels per day, while oil output from Alaska rose by 4,000 barrels per day, and since the national total 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, that total fell by that amount as well.....US crude oil production for the week ending August 4th 2017 was reportedly at 9,423,000 barrels per day, so this week's rounded oil production figure is still roughly 14.6% above that of a year ago, and 28.1% 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...
since US crude oil production has now fallen two weeks in a row, after rising 23 weeks in a row and almost continuously since September 2016, we'll take a look at a graph of that and see if we can figure out what might be going on...
the above graph, from this week's OilPrice Intelligence Report, shows the history of confirmed oil production data monthly from January 2016 to May 2018 in blue, and then the weekly estimates of US oil production up until the current week in yellow after that period, with both metrics in thousands of barrels per day...above the graph, OilPrice also supplies the rounded weekly estimates of oil production in thousands of barrels per day for the weeks ending June 29th through August 3rd as reported by the EIA...as we've pointed out on previous occasions, the weekly oil data from the EIA that we cover each week is preliminary, and it is typically more than 2 months before the final confirmed figures, published monthly, are released...despite the likelihood of some inaccuracy in the weekly data, we follow it because it's what the oil traders follow, and hence it moves oil prices and ultimately the decisions on the part of exploitation companies to start drilling for oil...
up until last week, a similar graph of confirmed production through April traced in blue was fairly contiguous with the weekly estimates for May and beyond that was shown in yellow...however, when the confirmed production for May was reported last week, it came in at 10,442,000 barrels per day, qan unexpected drop from the 10,472,000 barrels per day reported in April, thus opening up the large gap between the confirmed data and the weekly estimates that we see at the white dashed perpendicular line above...not only did that mean May's estimates had been too high, but estimates of the following weeks were probably too high as well...thus, when the week ending July 27 data was released the week before last showed a 100,000 barrel per day decrease to 11,900,000 barrels per day, i assumed it was because the EIA model for estimating weekly oil production had been adjusted for the new data from May and produced a estimate for July 27th taking that May production drop into account...at that point, i felt that 100,000 barrel per day decrease did not mean that oil production had actually fallen week over week, but that it just meant that production had been rising more slowly than previous estimated, and that previously released weekly data was probably incorrect (note that the EIA does not revise published weekly estimates that are shown to be incorrect; they are left as is while the corrected data is shown in the confirmed monthly tables)...
however, the EIA only changes their model for estimating weekly oil production based on confirmed monthly figures once a month, the week those confirmed figures are released...that means that the 100,000 barrel per day decrease to 11,800,000 barrels per day for the current week reflects an actual decrease in production, not just a change in the EIA oil production model based on the May figures...some have speculated that oil production might have dropped because of a paucity of pipelines coming out of the Permian, but that could have not caused a drop in output unless the throughput of the extant pipelines had actually been reduced....so i have to go back to the EIA's Drilling Productivity Report for July, which showed there was an actual drop in well completions from May to June...thus, with the number of new wells coming into production stagnating, the well known depletion factor associated with fracked wells would become a major factor in our output; ie, if production from existing wells is falling faster than new well output is coming into production, then the losses from the depletion of the older wells aren't being replaced, and our net oil output will drop. so that is what appears to have happened this week, although we can no longer get a reasonable fix on how much the output drop really was, because as we've noted, those production figures are now being rounded to the nearest 100,000 barrels per day...
meanwhile, US oil refineries were operating at 96.6% of their capacity in using 17,598,000 barrels of crude per day during the week ending August 3rd, up from 96.1% of capacity the prior week, refinery capacity utilization rates that continue above historical norms...the 17,598,000 barrels of oil that were refined this week were also at a seasonal high, now for the 10th week in a row, as compared to any previous 1st week of August...however, this week's refinery throughput was only fractionally higher than the 17,574,000 barrels of crude per day that were being processed during the week ending August 4th 2017, when US refineries were operating at 96.3% of capacity....
even with the increase in the amount of oil being refined this week, gasoline output from our refineries was reported as being considerably lower, decreasing by 570,000 barrels per day to 10,483,000 barrels per day during the week ending August 3rd, after our refineries' gasoline output had increased by 228,000 barrels per day during the week ending July 27th...as a result of that big drop, our gasoline production during the week was 3.8% lower than the 10,301,000 barrels of gasoline that were being produced daily during the same week of last year...meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 78,000 barrels per day to 5,237,000 barrels per day, after falling by 283,000 barrels per day over the prior three weeks...hence, this week's distillates production was still 1.3% lower than the 5,305,000 barrels of distillates per day that were being produced during the week ending August 4th, 2017...
however, even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week still rose by 2,900,000 barrels to 233,868,000 barrels by August 3rd, just the 8th increase in 22 weeks, but the 24th increase in 39 weeks, as gasoline inventories, as usual, were being built up over the winter months....our supplies of gasoline rose this week because the amount of gasoline supplied to US markets fell by 532,000 barrels per day to 9,346,000 barrels per day, after rising by 603,000 barrels per day over the prior three weeks, and because our imports of gasoline rose by 183,000 barrels per day to 935,000 barrels per day, while our exports of gasoline rose by 75,000 barrels per day to 588,000 barrels per day....after this week's increase, our gasoline inventories ended up 1.2% higher than last August 4th's level of 231,103,000 barrels, and roughly 8.8% above the 10 year average of our gasoline supplies for this time of the year...
meanwhile, with the increase in our distillates production, our supplies of distillate fuels increased by 1,230,000 barrels to 125,423,000 barrels during the week ending August 3rd, the 8th increase in 11 weeks...our supplies increased even as the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 391,000 barrels per day to 4,002,000 barrels per day, after decreasing by 556,000 barrels per day the prior week, while our exports of distillates fell by 49,000 barrels per day to 1,228,000 barrels per day, and while our imports of distillates rose by 12,000 barrels per day to 169,000 barrels per day....however, since our distillate supplies are still coming off a 14 year seasonal low hit just 2 weeks ago, after they had been falling during a time of year when distillates supplies are usually increasing, this week's inventory increase still leaves our distillates supplies 15.1% below the 147,685,000 barrels that we had stored on August 4th, 2017, and roughly 14.9% lower than the 10 year average of distillates stocks for this time of the year...
finally, with our oil exports rising and our refineries using more oil while our oil production was falling, our commercial supplies of crude oil decreased for the 16th time in 2018 and for the 31st time in the past year, falling by 1,351,000 barrels during the week, from 408,740,000 barrels on July 27th to 407,389,000 barrels on August 3rd...and with our crude oil inventories falling most of last year, our oil supplies as of August 3rd were hence 14.3% below the 475,437,000 barrels of oil we had stored on August 4th of 2017, 17.4% below the 492,969,000 barrels of oil that we had in storage on August 5th of 2016, and 3.4% below the 421,822,000 barrels of oil we had in storage on August 7th of 2015, when US supplies of oil had already moved above the nearly stable levels of under 400 million barrels we saw during the prior years...
This Week's Rig Count
US drilling activity increased for the fifteenth time in the past twenty weeks during the week ending August 10th, and by the most in one week since May 25th.... Baker Hughes reported that the total count of active rotary rigs running in the US increased by 13 rigs to 1057 rigs over the week ending on Friday, which was also 108 more rigs than the 949 rigs that were in use as of the August 11th report of 2017, but was still 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 rose by 10 rigs to 869 rigs this week, which was 101 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the number of drilling rigs targeting natural gas formations increased by 3 rigs to 186 rigs this week, which was also up by 5 rigs from the 181 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008...in addition, two exploratory wells considered to be "miscellaneous" continued drilling this week, in contrast to a year ago, when all rigs were specifically targeting either oil or gas..
two more Gulf of Mexico drilling platforms were started back up this week, so there are now 18 rigs drilling in the Gulf of Mexico, up from the 17 rigs that were drilling in the Gulf last year at this time...in addition, another platform was deployed offshore from Alaska this week, where there are now two rigs drilling, so the total national offshore count is now at 20 rigs, up from 18 offshore rigs a year ago, when there was only one platform drilling in Alaska's Cook Inlet...
the count of active horizontal drilling rigs was up by 12 to 924 horizontal rigs this week, which was also 123 more horizontal rigs than the 801 horizontal rigs that were in use in the US on August 11th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count increased by 1 rig to 69 vertical rigs this week, which was still down from the 72 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 76 directional rigs that were operating on August 11th 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 10th, the second column shows the change in the number of working rigs between last week's count (August 3rd) and this week's (August 10th) count, the third column shows last week's August 3rd 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 11th of August, 2017...
unsurprisingly, the largest increase in US drilling since May was led by a 5 rig increase in the Permian, which now has 108 more rigs drilling than a year ago, thus accounting for the total rig increase in the US over the past year by itself...however, those Permian additions initially appear to have been in New Mexico, since the Texas rig count was down by 2 rigs...however, looking at the Texas Oil and Gas District counts in Baker Hughes state data, there appears to be an increase of three rigs in the core Permian districts, offset by a decrease of three rigs in districts that could be considered partially in the Permian, so without going through the individual well logs in Baker Hughes' pivot table, we can't be sure...meanwhile, Louisiana, with a 6 rig addition, saw the largest increase, on the back of the 2 rigs added in the Gulf offshore, and 4 more rigs in the northern part of the state, one of which was in the Haynesville...the Haynesville, by the way, accounts for two of the natural gas rig increases, since the only rig targeting oil in that basin was shut down this week, while two rigs targeting natural gas started up...other natural gas rig changes include a decrease of one rig in the Pennsylvania Marcellus, a decrease of one rig in the Arkoma Woodford of Oklahoma, a decrease of one rig in the Permian (where all rigs are now targeting oil), a decrease of one rig in the Granite Wash (where all rigs are now also targeting oil), an increase of one rig in Ohio's Utica shale, and an increase of four natural gas rigs in 'other' basins not tracked separately by Baker Hughes...we should also note that outside of the major producing states shown above, Alabama had a rig shut down this week, and now has just one deployed, down from two a year ago, that Florida had a land based rig start drilling this week for the first time since January 2014, and that Nebraska also saw a rig start up this week, for only the 2nd week of oilfield activity in the state in the past year...
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Big coal joins fight against Lake Erie green energy wind turbines - Cleveland Plain-Dealer- Boaters and birders have been upfront about their opposition to the six-turbine Icebreaker Wind project planned for Lake Erie, but a new, powerful voice of resistance has recently emerged: Big Coal.In documents and sworn statements filed with the Ohio Power Siting Board on Thursday, the wind farm developers presented evidence that Murray Energy Corp. has been bankrolling anti-Icebreaker consultants, as well as lawyers representing two Bratenahl residents who have testified against the project.Cody E. Nett, a spokesman for Murray Energy, confirmed the company's involvement by e-mail and said, "Murray Energy is pleased that its outside counsel... can assist the Bratenahl residents to prevent Icebreaker from steam-rolling this project through the Ohio Power Siting Board certification process without the public scrutiny and opposition that it deserves." Robert Murray, who has homes in Moreland Hills and Belmont County, is the founder and CEO of the nation's largest privately-owned coal company, with 16 active mines in five states and Colombia, South America. As coal sales plunge and hundreds of coal-fired power plants are shut down across the country, green energy facilities such as Icebreaker pose a formidable new source of competition for Murray's coal companies. Even if Murray had wanted to intervene in the state certification process for Icebreaker, he likely would have been denied, said David Karpinski, vice president of operations for the Lake Erie Energy Development Corporation. Interveners must first file a request to participate in the decision-making process with the siting board, which is responsible for reviewing applications for the construction of major utility facilities such as power plants and wind farms.
Eight Permits Awarded in Ohio's Utica Shale – Eight new permits were issued last week for horizontal wells across the Utica shale, according to the latest update from the Ohio Department of Natural Resources. Oklahoma City-based Ascent Resources received five permits to drill in the Utica. Two permits are for wells in Jefferson County, two others are targeted for Guernsey County and a single permit was issued for a well in Belmont County, according to ODNR. The agency issued two permits to XTO Energy for wells in Belmont County, while Eclipse Resources LP secured a single permit for a well in Monroe Township. According to ODNR, there were 18 rigs operating across the Utica during the week ended Aug. 4. No new permits issued in the northern tier of the Utica, which includes Mahoning, Trumbull and Columbiana counties. No new Utica well permits were issued to energy companies in neighboring Lawrence or Mercer counties in western Pennsylvania, according to the Pennsylvania Department of Environmental protection.
Cabot Oil & Gas opens Jeromesville office - - With exploratory drilling of fracking wells underway in Ashland County, Cabot Oil & Gas has set up a local office in Jeromesville. The Houston-based company marked the move with a ribbon cutting Monday at the newly leased office at 31 W. Main Street. "We were looking for a central location where we could be able to interact with the community, and this was the perfect spot... A lot of people have questions, and we want to provide answers," said George Stark, director of external affairs for Cabot's north region. The questions surround Cabot's current activities and future plans in Ashland and surrounding counties. The company is looking for fossil fuels-- either oil or natural gas-- below the Utica Shale formation. Cabot plans to drill at least five exploratory wells by the end of the year. After drilling about a mile below the ground vertically and then about two miles horizontally, Cabot uses a process called hydraulic fracturing to extract the fuels. Cabot has already drilled its first well in Green Township and plans to begin hydraulic fracturing there by the end of the month. Drilling will begin soon on a second well in Mohican Township, and a pad for a third well is being constructed in Vermillion Township. Stark indicated his company should know around the end of the year whether it intends to keep drilling in the area. "Right now we're still in the exploratory phase."
Pilot Flying J seeks drivers for Carroll County terminal - Crude oil production in the Utica Shale is driving a need for Pilot Flying J Crude Division to hire more truck drivers.. The prominent truck stop and retail plaza, also known as Pilot Flying J, in the 2300 block of Faircrest Street SW represents the retail end, the final product of the petroleum industry. Demand for Pilot Flying J Crude Division's transport services is to the point where the corporation needs more drivers to haul crude oil from well sites to the refineries. "Right now we have 24 drivers here in the Carrollton yard," said Christian Whitlock of Pilot Flying J. "We are looking to hire 10 more. They can't get enough drivers. It is a drivers' market right now. We have 14 trucks. There is plenty of it (petroleum) out there. We expect it to be here for a long time." Whitlock oversees the Pilot Flying J truck terminal in the 4100 block of Canton Road NW (state Route 43) in Carroll County's Harrison Township.A spokesman for the Ohio Department of Natural Resources' Division of Oil and Gas agrees with Whitlock's assessment."There is quite a lot of natural gas production as well as some oil production," said Steve Irwin, public information officer for the Ohio Department of Natural Resources. "Crude (oil) is fairly steady." Pilot Flying J tanker trucks haul crude oil for Shell Oil Co. and Chesapeake Energy to various regional refineries. The crude oil and natural gas being extracted out of the ground are products of the Utica Shale formation.
Encino Acquisition Partners agrees to acquire all of Chesapeake's Ohio Utica Shale oil and gas assets - EAP is acquiring 933,000 net acres of leasehold spanning the condensate, liquids-rich and dry gas windows of the Utica play in Ohio. On that property are 920 wells producing and non-producing wells, and EAP plans to operate multiple drilling rigs on the properties to increase production and cash flow. Chesapeake was the largest leaseholder in Columbiana County and at the forefront of the leasing boom in the Utica shale that began in 2010. Canada Pension Plan Investment Board and Encino Energy formed EAP in 2017 to acquire large, high-margin oil and gas production and development assets in the U.S. lower 48 states. In support of this acquisition, CPPIB will invest approximately $1 billion in EAP and will own approximately 98 percent of the partnership. Houston-based Encino will invest in EAP alongside CPPIB and will operate the acquired assets on behalf of EAP. Together, EAP’s owners plan to build a large, well-capitalized independent E&P company. “At EAP, Encino and CPPIB are building a company focused on shareholder returns with top-notch people, carefully managed risk and sustainable, safe operations,” said Hardy Murchison, Encino’s chief executive officer. “With a multi-decade inventory of development projects held by 920 producing wells, the Utica acquisition provides an excellent start for EAP. We are excited to work with Chesapeake’s employees in the Utica and all other stakeholders in the state of Ohio. With a strong balance sheet and a partner of CPPIB’s stature, EAP is well positioned for continued growth through drilling and acquisitions.”
Chesapeake leaving, but not done drilling yet –Chesapeake Energy may be selling its Utica Shale oil and gas assets in Ohio but the company is continuing to drill new wells in Columbiana County. Chesapeake’s subsidiary, Chesapeake Exploration, has applied to the Ohio Department of Natural Resources seeking permits to drill two new horizontal wells at an existing drill site in Washington Township. The site is the Sevek farm off Clarks Mill Road. The news comes 10 days after Houston-based Encino Acquisition Partners announced it had reached an agreement with Chesapeake to acquire all 933,000 net acres of leasehold spanning the condensate, liquids-rich and dry gas windows of the Utica play in Ohio. The deal is worth $2 billion and expected to be concluded sometime in the fourth quarter. Chesapeake has 920 producing and non-producing wells in Ohio, of which more than 50 are in Columbiana County. Chesapeake is the largest leaseholder in the county.
CNX Spending Increases on Well Issues, Water Costs -- CNX Resources Corp. on Thursday said it would spend more this year, primarily to cover higher-than-expected water costs and take care of problems at some of its well sites in Appalachia.The company is now guiding for capital expenditures (capex) to come in at $900-950 million instead of its previous forecast of $790-915 million. More than half of the increase is due to well remediations and the higher cost of getting water trucked to its completion operations. “We had four separate pads impacted in the first half of the year. That includes extended fishing operations on two pads where we had issues retrieving downhole equipment and two southwest Pennsylvania Marcellus pads where some abnormal conditions created issues with production casing cement that required repairs,” and slowed cycle times, COO Tim Dugan said during a call Thursday to discuss second quarter results. The issues have since been resolved or accounted for in the company’s revised spending plans, he said.The remainder of the capex increase was due to inflation, steel tariffs and a prepayment related to a three-year agreement for an electric fracturing fleet.CNX produced 122.6 Bcfe during the second quarter, up from 92.2 Bcfe in the year-ago period. Second quarter volumes declined from 1Q2018, when they came in at 129.5 Bcfe. The decrease was expected, however, after the company bought online just three wells during the second quarter, which was also its first without shallow oil and gas assets it sold at the beginning of the year. The Marcellus Shale continued to anchor sales volume. CNX produced 64.7 Bcfe from the formation in the second quarter, up 14% from the year-ago period. Utica Shale volumes also continued to soar, driven mainly by the company’s assets in Monroe County, OH. Utica production was 42.6 Bcfe, or 209% higher than it was in 2Q2017.
Breaking: Retired teacher sentenced to 2 - 6 months in case brought by Energy Transfer Partners - The retired special education teacher who has been in a years-long battle to protect her property and the environment from Energy Transfer Partners’ Mariner East 2 pipeline was sentenced to 2 — 6 months by Pennsylvania Court of Common Pleas Judge George Zanic. Ellen Gerhart was arrested last Friday for indirect criminal contempt after Energy Transfer Partners filed a motion that made charges including that she’d baited bears and mountain lions to the pipeline easement. (See www.dailykos.com/...) Few details are known about the sentencing. Indirect criminal contempt usually has a maximum sentence of 15 days, so it is unclear how the judge justified a sentence of 2 - 6 months. This post will be updated as we learn more.The case raises many important legal questions about what landowners can and cannot do on their own property after a portion of it has been taken by eminent domain, as was the case here. Sharon Kelly of DeSmog Blog wrote an excellent piece that looks at those issues. Here is the release issued by the Gerhart family and their attorneys.. On Friday, August 3, Huntingdon County Judge George Zanic sentenced 63-year-old grandmother, retired teacher, and landowner Ellen Sue Gerhart to two to six months in jail and a $2,000 fine for indirect criminal contempt of court. Judge Zanic’s decision was based on accusations from lawyers for Texas-based oil and gas giant Energy Transfer Partners (ETP), the developer of the pipeline project through Gerhart’s land. The company alleged that Gerhart had baited a bear onto the pipeline easement on her wooded 27-acre property. Elise Gerhart, daughter of Ellen, said, “If you build a pipeline through the woods, you should expect to see bears and other wildlife. Judge Zanic gave this $50 billion company the power of eminent domain over my family’s property and our governor gave them the permits. My mom’s protest on her own property is not the injustice here.” In an interview prior to her arrest, Ellen Gerhart said, “We’ve had no choice but to take a stand and defend what our government officials are unwilling to protect. Our right to peacefully object to an unjust and dangerous pipeline should be protected over the profit margin of these foreign corporations.”
Mariner East 2 pipeline nears completion -- Construction of Sunoco Pipeline LP's controversial Mariner East 2 pipeline is nearing completion, but natural gas isn't expected to flow through it for at least a couple more months. Sunoco spokeswoman Lisa Dillinger said this week that 99 percent of mainline construction - which includes areas in Berks County - is complete. However, an important part of construction is the additional safety testing once the pipeline is installed, she said. "These tests include hydrotesting - testing with water at higher-than-normal operating pressures - and inline inspection using a caliper pig," Dillinger said in an email. "Caliper pigs are a supplemental testing tool that continuously measure the inside diameter of the pipeline through an array of spring-loaded sensing fingers." These safety tests on the pipeline and related facilities are 79 percent complete, and Dillinger said she expects all construction and safety testing to be completed in the third quarter of this year.The $2.5 billion Mariner East 2 project traverses 17 counties in southern Pennsylvania. Work started in Berks in April 2017. Plans call for two new 20-inch pipelines that will run through Brecknock, Caernarvon, Cumru, Robeson, South Heidelberg and Spring townships, and New Morgan. The pipelines, known as Mariner East 2 and Mariner East 2X, will carry natural gas liquids east from the Marcellus and Utica shale areas in western Pennsylvania, West Virginia and eastern Ohio to the Marcus Hook Industrial Complex on the Delaware River in Delaware County. From Marcus Hook, most of those liquids - propane, ethane and butane - are shipped overseas for use in plastics manufacturing. The project has been plagued by leaks and construction setbacks, and in January the DEP halted all work on the pipeline, citing egregious and willful violations, including several in Berks County. After levying a $12.6 million civil penalty, DEP allowed work to resume in February.
DEP fines Sunoco $148000 for pipeline trouble -The state Department of Environmental Protection has fined Sunoco Pipeline LP $148,000 for violations of the Clean Streams Law and Dam Safety and Encroachment Act that occurred during the construction of the Mariner East 2 pipeline in Berks, Chester and Lebanon counties.In all three counties, Sunoco impacted the private water supplies of several residents by causing cloudy, turbid, discolored and/or lost water in their wells, in addition to causing pollution and potential pollution to waters of the commonwealth, according to a DEP news release.In Chester County, Sunoco also failed to immediately notify the DEP of the adverse impacts on private water supplies, the release said.“Sunoco's actions violated the law and will not be tolerated,” DEP Secretary Patrick McDonnell said in the release. “Sunoco cannot impact water supplies. If it does, Sunoco must address those impacts to the satisfaction of the water supply's owner, including replacement or restoration of the impacted water supply.”The collected penalty will be divided and deposited into the Clean Water Fund and the Dams and Encroachments Fund. “No company is above the law,” McDonnell added. “Sunoco must comply with all conditions in its permits. DEP will continue to monitor Sunoco's compliance with those conditions and take all steps necessary to ensure Sunoco complies with its permits and the law.”
Negotiations continue to move PennEast pipeline in Bethlehem Township – Negotiations are continuing over moving a section of the PennEast pipeline slated to run about 200 feet from a Bethlehem Township housing complex. Residents of the Hope Ridge development off Hope Road have deep concerns because of the pipeline’s proximity to dozens of the neighborhood’s 84 homes. PennEast has received approval from the Federal Energy Regulatory Commission to build a 120-mile pipe that will run from Luzerne County to Mercer County, N.J. In Bethlehem Township, a portion of the pipeline would run on the east side of Route 33, go across Easton Avenue, pass through township-owned property and behind a cell tower then take a series of 90-degree bends on a track that follows Hope Road. If the 36-inch natural gas pipeline were to rupture, Hope Ridge is within the 900-foot blast zone. About 30 residents on Monday implored Bethlehem Township commissioners to reject any effort by PennEast Pipeline to obtain easements to build a natural gas pipeline that would pass within 200 feet of their homes on Hope Road. “It is up to you gentlemen to protect us,” resident Phyllis Wertman said. . Kelly said the group discussed whether the pipeline could be moved onto land on Hope Road that is owned and used by PennDOT as a maintenance yard. “It would go through their [PennDOT] property. And PennDOT has been amenable to what makes sense,’’ Kelly said.
Too big to fail: How one gas company can leave a mark on Pennsylvania -- Diversified Gas & Oil PLC may be the largest operator of old oil and gas wells in the country. Another way of saying that is the Alabama-based company might have the most responsibility for plugging wells across Appalachia. That’s not lost on Pennsylvania regulators. On July 25, the state Department of Environmental Protection announced that it had ordered three companies — Alliance Petroleum Corp., XTO Energy Inc. and CNX Gas Co. — to plug 1,058 abandoned wells statewide after production records showed the wells had not produced any oil or gas for a year.The agency didn’t spell out a key detail: Nearly all of those unproductive wells are now owned by Diversified, which has grown at a breakneck pace over the past year — swallowing up smaller companies and picking up shallow gas assets that the company has referred to as “unloved” and “forgotten” by big shale drillers. Diversified is following a strategy of keeping the conventional wells active as long as possible without drilling new ones — counting on its volume and efficiency to allow it to profit on the fuel production that others have abandoned. And Pennsylvania is increasingly alarmed that, once the wells have been wrung dry, the cost of plugging all of them might overwhelm the company and land in the state’s lap. The state has never before faced such a concentration of liabilities in one company. While the companies that sold to Diversified hailed their release from long-term liabilities, those same liabilities didn’t seem to weigh down Diversified’s balance sheet. When EQT Corp. announced the sale of many of its conventional wells to Diversified in June, the Pittsburgh-based firm boasted that it had shed nearly $200 million in plugging and well abandonment liabilities. But what showed up on Diversified’s books was $70 million.CNX Resources was glad to get rid of $197 million in plugging costs for its shallow wells, which Diversified recorded as a $22 million liability.
Pittsburgh train derailment points to failing infrastructure --A freight train derailed Sunday afternoon in downtown Pittsburgh with massive fright cars and debris landing less than 100 feet from a light-rail and bus station where passengers were waiting for their bus or train. Several cars landed on the track used by the light-rail train. A light-rail train had passed through the area just a few minutes before the accident. A fast thinking Port Authority employee who was working the ticket booth at the time quickly directed passengers from both platforms and away from the accident. Public safety officials said that no one was hurt and none of the cars were carrying hazardous or flammable chemicals. The route is often used by trains pulling oil tankers, natural gas and chemicals used in the fracking of natural gas.The freight train was traveling west along the Norfolk and Southern Railway line near Station Square when the cars fell off the track around 1 p.m. A spokesperson for the railway said that crews that specialize in removing and cleaning up from train derailments were on route for Pittsburgh. A special crane capable of lifting the loaded cars off the hill would have to be brought in as well. On Monday morning, crews could be seen working to stabilize the fallen cars and beginning the removal process. Several cars could be seen dangling and a large crane was being used as a brace to keep the cars from rolling further down the hill. Over 26,000 people use the light-rail service each day to get into and out of the city for work.
API Strikes Back At Cuomo For "Extreme Energy Policies" - The American Petroleum Institute has attacked New York Governor Andrew Cuomo for his energy agenda, which, API New York executive director Karen Moreau said in a statement, is hurting the most vulnerable members of society. The statement comes in response to Governor Cuomo’s refusal to renew the air quality permit of the gas-fired Competitive Power Ventures Power Plant in the state. “Governor Cuomo has sided with environmental extremists over New York’s most vulnerable: low-income families and seniors,” Moreau said. “Gov. Cuomo’s actions to close Indian Point coupled with efforts to stifle new clean natural gas power generation are creating a manufactured, needless energy crisis throughout New York and the northeast that will harm residents in the region – disproportionately hurting low-income and elderly residents who rely upon affordable electricity to heat, cool, and power their homes.” The New York Governor is on a quest to put an end to fossil fuel and nuclear power use in the state, and this quest has already cost New Yorkers substantial increases in their utility bills. A May report from the Consumer Energy Alliance found that New Yorkers pay some 44 percent more for electricity than their neighbors in Pennsylvania, which has abundant gas reserves and the pipelines to send this gas to New York. In January 2018, the Alliance said, “spot market prices in the New York City region jumped to a record high of $140.25 for natural gas, as compared to the average natural gas spot market price for New York in 2017 was $3.08. New Yorkers were subjected to prices that were $137 higher due to self-inflicted capacity constraints created by their own elected officials.” Also in May, Governor Cuomo said all natural gas plants operating in New York will be eventually closed and that he will not approve any new gas-fired plant projects.
FERC overturns N.Y. denial of Northern Access -- The Federal Energy Regulatory Commission yesterday overruled New York's decision on an embattled natural gas pipeline, marking at least the second major FERC action against New York's pipeline blockade.It's not yet clear whether that gives the 99-mile Northern Access 2016 pipeline the necessary clearances to begin construction. National Fuel Gas Co., its developer, said yesterday it's still digesting the FERC action. And New York says it will object."If FERC fails to reverse its misguided decision, DEC will appeal to the 2nd Circuit and seek a stay of any construction and continue to vigorously use every legal avenue to protect our state's resources," the New York State Department of Environmental Conservation said in a statement today.Nevertheless, the action is a significant marker in the ongoing battle to define federal and state powers over gas pipelines. Under the Clean Water Act, states have a well-established legal authority to review, and deny, pipelines over their water impacts. But after New York denied several projects in recent years, the gas pipeline industry and congressional Republicans accused the state of abusing its power. The issues — what the law really says and how FERC ought to interpret it — are now getting worked out in various courts and before FERC. New York cases have played a front-and-center role. In one case involving Constitution Pipeline Co., FERC backed New York's decision to block the project (Energywire, Jan. 12). In another case regarding the Valley Lateral pipeline, a federal appeals court sided with the developer — and FERC — and said it could build (Energywire, March 13). In each of these cases, "waiver" is a key concept. Under Section 401 of the Clean Water Act, after states receive an application for a water permit, they have a year to conduct the review. If they exceed that year, FERC can determine the state's taken too long — "waived" its authority — and advance the project anyway.
The Latest Pipeline Battle Is Ramping Up in New York - It’s understandable that New Yorkers are not looking kindly upon a new fracked-gas pipeline that’s proposed to snake its way mere miles from the same areas hardest hit by Hurricane Sandy. Banding together in a coalition of environmental groups and local communities, they are now organizing to prevent the construction of the Northeast Supply Enhancement pipeline. Developed by Williams, a publicly traded, Fortune 500 company, the NESE is proposed to span Lower New York Bay, from Sayreville, New Jersey, to the Rockaways in Queens. The project would be an extension of the existing Transco pipeline, which stretches from Texas to New York. There is already one segment of the Transco that crosses Lower New York Bay, just south of where the NESE is slated. “Unfortunately, due to the growing popularity of gas, the existing pipeline operates at maximum capacity,” says Chris Stockton, a Williams spokesperson. Williams contends that the NESE is necessary to feed New York’s growing energy needs, particularly in light of the city’s oil-to-gas boiler conversion program. Under a 2011 law, buildings in the five boroughs must switch their heating fuel from soot-producing oils to relatively cleaner alternatives, such as gas, by 2030. This environmental initiative, Williams insists, has created demand that surpasses the capacity of the existing Transco pipeline; thus, the NESE is necessary to increase supply to providers like National Grid, which fills residential, commercial, and industrial gas needs in Staten Island, Queens, and Brooklyn, as well as Long Island. “Williams claims that the pipeline would bring gas supply that New Yorkers desperately need,” says Kim Fraczek, director of the Sane Energy Project, a sustainable-energy-advocacy group. “However, New York City’s boiler conversions would require only a max 6 percent increase in National Grid supply, which will be more than accounted for in building-efficiency improvements and the transition to renewables.” To corroborate that 6 percent figure, Fraczek points to an assessment commissioned by the city itself. Similarly, in comments to the Federal Energy Regulatory Commission, National Grid states that it needs only a 10 percent increase in gas supply to cover both New York City and Long Island. The NESE, on the other hand, would increase capacity by more than 64 percent.
WVU Shale Lab Digs Into Marcellus-Utica Permeability Testing —West Virginia University (WVU) is one of many universities that are digging into shale research labs as part of their course curriculum within their petroleum and natural gas engineering programs. Because of special funding and support from the energy industry and government agencies, these future engineers are able to actively receive a head start on their site work.During a recent tour of WVU’s petroleum and natural gas engineering department, Professor Kashy Aminian of the Benjamin M. Statler College of Engineering and Mineral Resources, shared several working labs where energy companies and alumni have provided financial support and equipment to simulate various operations of the natural gas industry. In 2017, Dominion Energy donated more than $150,000 in meters and regulators to WVU. The engineering department conducted a special ceremony naming the state-of-the- art lab as the “Dominion Energy Natural Gas Measurement Laboratory.” One of the most interesting shale technology labs that Aminian highlighted during the tour was a shale lab called the Precision Petrophysical Analysis Laboratory (PPAL). He demonstrated that the lab has measurable capabilities of determining; permeability (nano-darcy range), pore volume (0.1% accuracy), absolute permeability (gas pressure correction), impact of stress (reservoir conditions), impact of adsorption and pore structure characterization. Aminian is also a specialized consultant in the oil and gas industry who consults energy companies on how to “predict production” so they may increase on their return on investments. With a research grant from the U.S. Department of Energy National Energy Technology Laboratory (NETL), the PPAL will be advantageous for natural gas companies at their E&P divisions.
Documenting Fracking Impacts: A Yearlong Tour from a Bird's-Eye-View - I always tell people that you can’t really understand or appreciate the enormity, heterogeneity, and complexity of the unconventional oil and gas industry’s impact unless you look at the landscape from the cockpit of a Cessna 172. This bird’s-eye-view allows you to see the grandeur and nuance of all things beautiful and humbling. Conversely, and unfortunately more to the point of what I’ve seen in the last year, a Cessna allows one to really absorb the extent, degree, and intensity of all things destructive. I’ve had the opportunity to hop on board the planes of some amazing pilots like Dave Warner, a forester formerly of Shanks, West Virginia, Tim Jacobson Esq. out of La Crosse, Wisconsin, northern Illinois retired commodity and tree farmer Doug Harford, and Target corporate jet pilot Fred Muskol out of the Twin Cities area of Minnesota. Since joining FracTracker I’ve been fortunate to have completed nearly a dozen of these “morning flights” as I like to call them, and five of those have taken place since August 2017. I’m going to take the next few paragraphs to share what I’ve found in my own words and by way of some of the photos I think really capture how hydraulic fracturing, and all of its tentacles, has impacted the landscape. The following is by no means an empirical illustration. I’m increasingly aware, however, that often times tables, charts, and graphs fail to capture much of the scale and scope of fossil fuel’s impact. Photos, if properly georeferenced and curated, are as robust a source of data as a spreadsheet or shapefile, both of which are the traditional coins of the realm here at FracTracker.
Mountaineer Gas pipeline to change path - As the first segment of Mountaineer’s pipeline — a 22.5 mile line of pipe to run from Berkeley Springs to Martinsburg — inches toward completion, the company is altering the route of its second segment originally slated to run from Martinsburg through Kearneysville to Charles Town.Instead, according to Mountaineer Gas’ July 31 application to the West Virginia Public Service Commission, that pipeline will instead run to Ranson, with the goal to hook up with the $150 million Rockwool manufacturing plant being built there. The company’s filing papers outline it plans to build an extension down from Martinsburg to the Rockwool plant located at the former Jefferson Orchards Farm and pick up any other new customers that appear. The company’s Ranson extension line must be approved by the PSC.“We plan on building a pipeline out to the Rockwool area,” said Moses Skaff, senior vice president and chief administrative officer of Mountaineer Gas. “Our overall intentions have not changed.“Our strategy is still to go where existing opportunities require us,” Skaff said. “When we get big business developments we are going to continue to go in that direction. We are going to go where businesses want us to be. We still plan on going in that direction, it just may be a little more strategic.”Mountaineer eventually plans to build pipeline extensions into other parts of Jefferson County, Skaff said. “We are continuing to move in that direction, but because of new business development, the actual direction — or how we get there — may change a little bit,” Skaff said. “As we are building that, we’ll pick up customers along the way.”Mountaineer in its PSC filing last year said it planned to spend $15 million to build line extensions to Charles Town and Shepherdstown that were listed as segments 2 and 3. Skaff said Mountaineer had never actually filed papers with the PSC for what the company had originally envisioned as extensions 2 and 3.
US halts construction on EQT West Virginia to Virginia Mountain Valley gas pipeline (Reuters) - U.S. energy regulators have told EQT Corp and other companies building the $3.5-$3.7 billion Mountain Valley natural gas pipeline from West Virginia to Virginia to stop all construction. The action by the U.S. Federal Energy Regulatory Commission (FERC), in a filing on Friday, followed a July 27 order from the U.S. Court of Appeals for the Fourth Circuit that vacated decisions by the Department of the Interior’s Bureau of Land Management (BLM) and the Department of Agriculture’s Forest Service authorizing construction of Mountain Valley across federal lands. That court decision was the most recent appeals court victory by the Sierra Club and other opponents of the pipeline. Mountain Valley is one of several pipelines under construction to connect growing output in the Marcellus and Utica shale basins in Pennsylvania, West Virginia and Ohio with customers in other parts of the United States and Canada. FERC said in its decision Friday that it cannot predict when the BLM or Forest Service may act or whether the agencies will ultimately approve the same route for Mountain Valley. “Should the agencies authorize alternative routes, (Mountain Valley) may need to revise substantial portions of the project route across non-federal lands, possibly requiring further authorizations and environmental review,” FERC said in its filing. In response to the FERC order, EQT spokeswoman Natalie Cox said in an email on Saturday the company “respectfully disagrees with the breadth of the August 3 stop work order.” “We will continue to work closely with all agencies to resolve these issues and look forward to continuing the safe construction of this important infrastructure project,” Cox said. Before the FERC decision, EQT delayed its target date to finish the pipeline to the first quarter of 2019 from late 2018. Analysts at Height Capital Markets in Washington, however, projected the project may not enter service until the fourth quarter of 2019.
US FERC halts work on full route of Mountain Valley natural gas pipeline after court ruling — The US Federal Energy Regulatory Commission late Friday halted work on the full route of the 301-mile, 2 Bcf/d Mountain Valley Pipeline, in light of an appeals court ruling that struck the federal permits allowing the natural gas project to run through national forest land.The decision marks another hurdle for a project that would move West Virginia production to downstream markets in Transcontinental Pipe Line's Zone 5 near the Virginia-North Carolina border.In a letter order Friday, Terry Turpin, director of FERC's Office of Energy Projects, said: "Allowing continued construction poses the risk of expending substantial resources and substantially disturbing the environment by constructing facilities that ultimately might have to be relocated or abandoned," should federal resource agencies need to authorize alternative routes.The order responded to a July 27 decision by the 4th US Circuit Court of Appeals vacating US Bureau of Land Management and US Forest Service rights-of-way and temporary use permits that allowed the project to traverse about 3.6 miles of the Jefferson National Forest. There is no reason to assume the federal agencies would not be able to comply with the court's remand instructions and reissue the rights-of-way, Turpin said. "However, commission staff cannot predict when these agencies may act or whether these agencies will ultimately approve the same route," he added. Among several problems, the court found BLM ran afoul of the Mineral Leasing Act requirement that it favor routes using existing rights-of-way unless those alternatives were impractical. The court also found the USFS failed to explain why it adopted findings in FERC's environmental impact statement even though USFS had previously disputed the percent efficacy of erosion barriers included in the document. Further, it found fault with changes to the forest management plan made to accommodate the right-of-way. Mountain Valley is one of numerous pipeline projects targeting deliveries to Transco's mainline, including Atlantic Sunrise, WB XPress, and Atlantic Coast Pipeline. Natalie Cox, a spokeswoman for EQT, said the sponsor agreed with FERC that the BLM and USFS will be able to satisfy the court's requirements, and suggested the agencies will be able to work quickly to supplement their initial findings. In addition, she said EQT believed BLM was correct about the impracticality of route alternatives. Given that Mountain Valley has halted work in the national forest, she said "we respectfully disagree with the breadth" of FERC's order temporarily halting work on the pipeline.
An order stops work on the Mountain Valley Pipeline, but for how long? - As construction of a mammoth natural gas pipeline grinds to a halt, there’s already talk of when it might restart. In a statement from Mountain Valley Pipeline late Friday night, several hours after the company was ordered to stop all construction for a review of environmental concerns, a spokeswoman expressed hopes for a quick turn-around. “We will continue to work closely with all agencies to resolve these issues and look forward to continuing the safe construction of this important infrastructure project,” Natalie Cox wrote in an email. Opponents of a 303-mile buried pipeline that is cutting a path through Southwest Virginia were both surprised and elated Friday when the Federal Energy Regulatory Commission directed that all construction must “cease immediately.” FERC, the lead agency overseeing the project, cited a July 27 ruling by a federal appeals court that reversed two approvals — one by the U.S. Forest Service and another by the Bureau of Land Management — allowing the pipeline to pass through the Jefferson National Forest. Although the forest accounts for just 1 percent of the pipeline’s total length, its protected ridgelines have become a formidable obstacle that Mountain Valley must now clear. That’s because the stop-work order covers the project’s entire route, for as long as it takes the Forest Service and the bureau to reconsider Mountain Valley’s plans to control construction-related erosion and sediment in the public woodlands. “ Tammy Belinsky, a Floyd County attorney who joined lawyers with the Sierra Club in successfully challenging the Forest Service approval, said parts of the review process ordered by the 4th U.S. Circuit Court of Appeals could take six months to complete. Cox declined to speculate on the timing. But in earlier court filings involving a different phase of construction, Mountain Valley warned that an eight-month delay would cost the company more than $600 million. In a written declaration dated June 1, project manager Robert Cooper said that if the 4th Circuit stayed a permit allowing the company to cross streams and wetlands in West Virginia, it would cause “irreparable harm” to the $3.7 billion project. A few weeks later, the appeals court granted the stay sought by the Sierra Club and other conservation groups, preventing Mountain Valley from starting work on more than 500 water body crossings.
Mountain Valley Pipeline Snitches Now Have Nothing to Do - Our lead story today is that the Federal Energy Regulatory Commission has temporarily shut down all work on the Mountain Valley Pipeline, in both Virginia and West Virginia. A shame. We spotted another story about a group of landowners and outside radical anti-fossil fuelers who call themselves Mountain Valley Watch. The group, adamantly opposed to MVP, flies drones over work areas to see if they can spot the least little “violation” by workers (Look! That guy just dropped a Snickers bar wrapper on the ground!). The members and fawning media try to label them as “citizen-scientists,” which is laughable. They’re snitches. They run around spying on their neighbors (i.e. workers) hoping to catch them in violation of some obscure code–all in the name of “being an extra set of eyes.” That’s why there’s environmental agencies with trained regulators and inspectors–to do that kind of work. But it’s just so much fun flying drones around, being a virtual peeping Tom. Trouble is, now that MVP construction is stopped, what will the pipeline snitches do with their time? Their neighbors might want to keep an eye out for drones buzzing overhead… The following article was run by the Associated Press in dozens of publications, spoon-fed to it from a non-profit called the Energy News Network, a partisan, anti-drilling outfit funded by the Rockefellers and Park Foundation (among other Big Green funders). It’s a totally biased article, but useful to make our point that these people are snitches, plain and simple: Citizen group provides extra eyes on the ground for pipeline regulators
4th Circuit Court Suspends Atlantic Coast Pipeline at Blue Ridge Parkway - A federal appeals court on Monday threw out construction certificates for the Atlantic Coast Pipeline, likely halting work on the $6 billion project planned by major Southeastern utilities. Monday’s court ruling is a significant setback for developers of the 600-mile Atlantic Coast Pipeline, planned by Dominion Energy, Duke Energy and Southern Co. Environmental advocates and local landowners argued that the NPS permit to build the pipeline ignored how tree clearing would impact the scenic and conservation goals of the Parkway, a nearly 500-mile road that runs through Virginia and North Carolina. The court sided with complaints, ruling that NPS decision on Blue Ridge “is not accompanied by any explanation, let alone a satisfactory one.” The ruling means there is “a hole in the 600-mile pipeline now that it has no right to cross,” said DJ Gerkin, attorney at the Southern Environmental Law Center, which argued the case. The project is planned to run from West Virginia to deliver gas to customers in Virginia and North Carolina.In the same decision, the court also detailed its justification for a May ruling that invalidated permits issued by the Fish and Wildlife Service (FWS) for Atlantic Coast because they did not properly assess the impact of the project on five animal species covered by the Endangered Species Act. Because FERC was not a party to the case, which pitted environmentalists versus NPS and FWS, the court could not order FERC directly to issue a stop-work order for Atlantic Coast (ACP). It did, however, issue a stern warning to the pipeline developers that they should stop building.“FERC’s authorization for ACP to begin construction is conditioned on the existence of valid authorizations from both FWS and NPS,” Chief Judge Roger Gregory wrote for the three-judge panel that decided the case. “Absent such authorizations, ACP, should it continue to proceed with construction, would violate FERC’s certificate of public convenience and necessity.”With the certificate vacated, “the pipeline cannot exist in its proposed form with its current authorizations,” and instead “would have to be re-authorized with a new permit or possibly a new route to proceed,” Gregory added in a footnote.
US appeals court vacates permit for Atlantic Coast natural gas pipeline to cross Blue Ridge Parkway — Presenting a further legal hurdle to the Atlantic Coast Pipeline natural gas project, the US 4th Circuit Court of Appeals on Monday vacated a permit the National Park Service issued that allowed the pipeline to cross under the scenic Blue Ridge Parkway. The court also fleshed out reasoning for its May order vacating a Fish and Wildlife Service permit that authorized harm to threatened or endangered species from the construction. The 600-mile, 1.5 Bcf/d pipeline project, stretching from Harrison County, West Virginia, to Virginia and North Carolina, is part of a batch of projects totaling 6.5 Bcf/d in capacity that would take Appalachian supply to downstream markets in the Mid-Atlantic region. Like the neighboring Mountain Valley Pipeline, its permits to cross forested, mountainous areas have been the target of legal challenges from environmentalists. Considering the National Park Service right-of-way that allowed for the pipeline to pass under the Blue Ridge Parkway, the court found NPS invoked inapplicable laws to back its decisions. Moreover, it found NPS failed to assure the action was consistent with purposes of the scenic parkway and conservation goals of the national park system. It pointed to NPS' own studies about visual impacts on views from the parkway, and called the agency's lack of explanation on consistency issues "particularly troubling." Turning to the incidental take permit for species, the court found FWS failed to comply with requirements for when habitat can be used as a surrogate for setting a numeric limit on "take" of species. It dismissed as "circular and unavailing" claims that some numeric limits were not possible because FWS lacked survey data or Atlantic Coast had not completed the surveys. "FWS cannot escape its statutory and regulatory obligations by not obtaining accurate scientific information," it said. While the agency said it lacked time, the court found FWS "incorrectly characterizes" the law in arguing it needed to complete its consultation within 90 days. The decision came one business day after the US Federal Energy Regulatory Commission halted work on the Mountain Valley Pipeline following a 4th Circuit ruling striking permits for national forest crossings for that project. Given that action, "FERC should immediately halt all construction on the Atlantic Coast Pipeline," said SELC Senior Attorney Greg Buppert."This is an example of what happens when dangerous projects are pushed through based on politics rather than science," added Southern Environmental Law Center attorney DJ Gerken.
Second Controversial Fracked Gas Pipeline Runs Into Legal Trouble - Three days after the U.S. Federal Energy Regulatory Commission (FERC) ordered work to pause on the Mountain Valley Pipeline, its sister pipeline also ran into legal trouble.A federal appeals court on Monday vacated two permits required by the Atlantic Coast Pipeline to complete its 600 mile project beginning in West Virginia and traveling through Virginia to North Carolina, The Associated Press reported."There is no right way to build these dirty, dangerous fossil fuel projects, and people in Virginia and across the country will continue to come together to fight them until they are permanently halted," Sierra Club Executive Director Michael Brune told The Associated Press. The Sierra Club was one of the groups, along with Defenders of Wildlife and the Virginia Wilderness Committee, that brought the case that led to the ruling by the 4th U.S. Circuit Court of Appeals. The case was argued by the Southern Environmental Law Center.The court ruled that the a National Park Service (NPS) permit allowing the pipeline to pass under the Blue Ridge Parkway was invalid because it did not explain how the pipeline's construction would not contradict the scenic purpose of the parkway, which connects Virginia's Shenandoah National Park to North Carolina's Great Smoky Mountains National Park.Construction would require cutting enough trees that a gap in the forest would be visible from at least one parkway observation point.Chief Judge Roger Gregory called the permit "arbitrary and capricious" in his ruling. "Arbitrary and capricious" were also the words used by the court to justify vacating a second permit granted by the U.S. Fish and Wildlife Service because it didn't specify any limits to the pipeline's impact on five threatened or endangered species.The revoking of the second permit built on a ruling in May, in which the court initially found that the "incidental take statement," which is the statement that sets limits on the impact of projects on vulnerable species, was not sufficiently clear. Following that initial ruling, the pipeline's builders said they would suspend construction along 21 miles in West Virginia and 79 miles in Virginia until a new "incidental take statement" was completed.
More federal pipeline permits scrapped by appeals court - The Atlantic Coast pipeline suffered a major setback this week as an appeals court scrapped another federal approval for the natural gas project.The 4th U.S. Circuit Court of Appeals yesterday issued an opinion vacating a National Park Service right of way allowing the pipeline to cross the iconic Blue Ridge Parkway in central Virginia.The opinion also elaborates on the court's May 15 decision to scrap an endangered species assessment prepared by the U.S. Fish and Wildlife Service. The appeals court found both decisions arbitrary and capricious."We're grateful that the 4th Circuit recognized what a treasure the Blue Ridge Parkway is," Southern Environmental Law Center attorney D.J. Gerken, who argued the 4th Circuit case, told E&E News.SELC is now calling on the Federal Energy Regulatory Commission to block construction on the 600-mile Atlantic Coast pipeline, which stretches from West Virginia to North Carolina. If the scenario sounds familiar, that's because a similar one just played out for the Mountain Valley pipeline, another Appalachia natural gas project. The 4th Circuit vacated Forest Service and Bureau of Land Management approvals for that pipeline last month.On Friday, FERC halted construction on Mountain Valley while the agencies address the deficiencies with their approvals (Energywire, Aug. 6).Atlantic Coast opponents say the same standard should apply in their case. SELC attorney Greg Buppert and Appalachian Mountain Advocates attorney Ben Luckett sent a letter to FERC last night urging it to issue another stop work order.The 4th Circuit did not address the issue directly yesterday but in a footnote seemed to agree. "As noted previously, FERC's authorization for ACP to begin construction is conditioned on the existence of valid authorizations from both FWS and NPS," the court wrote. "Absent such authorizations, ACP, should it continue to proceed with construction, would violate FERC's certificate of public convenience and necessity."
Latest action from federal judges puts further pressure on Virginia’s gas pipelines - Two massive natural gas pipelines that have stirred fierce environmental opposition in Virginia are facing new hurdles after key permits were rejected by federal judges. On Monday, a three-judge panel of the U.S. Court of Appeals for the Fourth Circuit threw out a pair of permits for the Atlantic Coast Pipeline. One permit addressed protections for endangered species; the other allowed the project to tunnel under the federally owned Blue Ridge Parkway. Late last month, the same court revoked a different permit for the separate Mountain Valley Pipeline, one that would have allowed that project to cross a 3.5-mile stretch of the Jefferson National Forest. On Friday, the Federal Energy Regulatory Commission called a halt to all work on the full, 300-mile length of the Mountain Valley Pipeline until the national forest permit issue is resolved. Though the hitches for both projects could prove temporary, environmental groups that brought the cases said the mounting legal troubles show the pipelines were approved in a hasty manner. “This is an example of what happens when dangerous projects are pushed through based on politics rather than science,” lawyer D.J. Gerken, who argued the Atlantic Coast Pipeline case for the Southern Environmental Law Center, said via email. The companies behind both projects said the issues raised by the court cases are not major threats and defended the pipelines as having been exhaustively reviewed by government agencies. The Atlantic Coast project is the bigger of the two, and is being built by a consortium of companies led by Dominion Energy. It would carry natural gas 600 miles from West Virginia through central Virginia and down into North Carolina. Tree-felling for the project stopped in Virginia in March, and the state has not yet given final approval to erosion and sediment control plans, so work on that pipeline in the state was on hold even before the federal permit revocations. The route for the Atlantic Coast Pipeline is slated to pass under the Blue Ridge Parkway near the Wintergreen ski resort in Nelson County near Charlottesville. The parkway is controlled by the National Park Service, which had approved the plan. But the judges, in a 62-page opinion written by Fourth Circuit Chief Judge Roger Gregory and joined by judges James A. Wynn Jr. and Stephanie D. Thacker, said the Park Service “acted arbitrarily and capriciously by failing to explain why ACP’s pipeline is not inconsistent with parkway purposes.”
Another federal permit struck down? No big deal, Dominion says - Dominion Energy, the lead partner in the 600-mile Atlantic Coast Pipeline, says Monday’s decision by a federal appeals court stripping its authority to drill under the Blue Ridge Parkway isn’t that big a deal. The company expects that the National Park Service “will promptly re-issue the permit.” “Ample evidence to support the requisite finding that the permit is consistent with applicable statutory purposes has previously been provided to the NPS,” Dominion wrote Tuesday in a letter to the Federal Energy Regulatory Commission. “Atlantic is confident that the NPS will quickly issue a new permit resolving the court’s concerns. Furthermore, there is no reason to believe that the NPS will consider any change in the location of ACP’s crossing under the Blue Ridge Parkway.”However, opponents of the deeply controversial natural gas pipeline have called on FERC to order a halt to all construction, as it did last week with Mountain Valley Pipeline, a separate project that lost its authority to cross U.S. Forest Service lands, likewise at the hands of the U.S. Court of Appeals for the 4th Circuit. The same court also revoked a key approval issued by the U.S. Fish and Wildlife Service that was intended to gauge the harm the Atlantic Coast Pipeline posed to threatened and endangered species. The court found it too vague to be enforceable and sent the agency back to the drawing board. Dominion is still proceeding with construction along parts of the route in West Virginia and North Carolina, though it still lacks approvals to begin work in Virginia. “Should the commission allow Atlantic to proceed with construction, it would risk foreclosing new alternatives required as a result of the additional review by the National Park Service and the Fish and Wildlife Service,” the Southern Environmental Law Center wrote in a letter to FERC Monday. “As the commission observed in its letter to MVP, ‘allowing continued construction poses the risk of expending substantial resources and substantially disturbing the environment by constructing facilities that ultimately might have to be relocated or abandoned.'”
First Evergas very large ethane carrier takes to the water --The first of a pair of very large ethane carriers (VLECs) under construction at the Dalian Shipbuilding Industry Co (DSIC) shipyard for Evergas has been floated out from its building dock. The occasion was accompanied by cutting first steel for the second of the pair.The two 85,000 m3 ethane carriers will be chartered to INEOS Trading & Shipping to carry ethane from the US Gulf to China. SP Chemicals has contracted to buy the cargoes that the first of the two VLECs will transport, for use as feedstock in a new 650,000 tonnes per annum ethylene cracker it is building at Taixing in China’s Jiangsu province.The two newbuildings represent an extension of the ethane delivery capabilities of the shipping and trading arm of the giant INEOS petrochemical group. INEOS Trading & Shipping already charters eight 27,500 m3 Evergas-operated, Dragon-class ethane carriers for the transatlantic delivery of competitively priced US ethane to group ethylene crackers at Grangemouth in Scotland and Rafnes in Norway.The first of the DSIC newbuildings is due for completion in Q1 2019. The pair, like the Dragon-class ethane carriers, are being built to the semi-pressurised/fully refrigerated (semi-ref) gas carrier design.The vessels represent the first application of the semi-ref design to very large gas carriers and will be fitted with the largest IMO Type C pressure vessel cargo tanks ever constructed. IMO Type C gas tank containment systems do not require a secondary barrier.Three of the four cargo tanks on each VLEC are being built to the Star Tri-lobe configuration to help optimise the cargo-carrying space available when the Type C containment system is chosen. The largest of the tri-lobe units, which consist of three cylinders combined into one, on the DSIC VLECs has a capacity of 23,000 m3 and weighs 1,800 tonnes. For a given hull envelope, the tri-lobe solution offers a 20% increase in cargo space compared to using bi-lobe tanks.
Haynesville Natural Gas Production Reaches Five-year High --The U.S. Energy Information Administration (EIA) reports that in June, natural gas production in the Haynesville shale formation in northeastern Texas and Louisiana averaged 6.35 Bcf/d, accounting for 8.5% of the total U.S. dry natural gas production, Haynesville’s highest production level since November 2012. The Haynesville formation lies deep underground between 10 500 and 13 500 ft. In comparison, the depth of the Marcellus shale ranges between 4000 and 8500 ft. This depth makes drilling costs in the Haynesville shale generally higher than other shale plays. However, breakeven costs have decreased in recent years, making Haynesville natural gas economic at its current prices, according to the EIA.
China Threatens 25% Import Tariff On U.S. LNG --In the latest trade war tit-for-tat, China has included for the first time liquefied natural gas (LNG) in its list of goods up for a potential 25-percent import tariff, should the United States impose additional tariffs on Chinese imports.As the U.S.-China trade spat turns into a full-blown war with tariffs and retaliatory tariffs and threats of further tariffs, U.S. energy exports to China may suffer if Beijing follows through with its threat to slap tariffs on U.S. oil and oil product imports.Up until Friday, China had excluded LNG from the goods that it would hit with an import tariff in retaliation for a possible new U.S. round of tariffs on Chinese goods.The Friday statement from the Chinese commerce ministry has already had Chinese LNG end-users and suppliers saying that they would likely deter spot procurement of U.S. LNG cargoes in the near term if the tariff comes into effect.“[A] 25% [tariff] is not something we can absorb even if domestic demand is strong,” a source at a state-owned Chinese company told Platts on Monday. “So while this uncertainty persists, I doubt buyers will be buying a lot of spot US LNG.”
China adds US LNG to list of products for potential 25% import tariff — China has added US LNG to its list of products liable to a potential 25% import duty if the US follows through on threats to expand its existing round of tariffs on Chinese exports, according to an announcement Friday by the Customs Tariff Commission of the State Council. The move by Beijing comes in response to US President Donald Trump's decision earlier this week to explore the possibility of 25% tariff on $200 billion worth of Chinese products as the trade war between China and the US continues to escalate.US LNG imports into China do not attract any duty currently.The trade war between the US and China escalated in June when China announced an additional 25% tariff on $50 billion worth of US goods, including energy and agricultural products. But LNG, demand for which is rising in China, was not on the list.China is on track to become the largest buyer of US LNG this year. It has imported more than 1.25 million mt to date this year, compared with 1.61 million mt in the whole of 2017, behind Mexico and South Korea, according to data from S&P Global Platts Analytics. China became the largest contributor to global LNG consumption growth in 2017. It surpassed South Korea as the world's second-largest LNG importer and its share of global LNG demand is expected to rise to the same level as Japan's by 2030.
Exxon Seeks Long-Term Deals for U.S. Oil Exports -- Exxon Mobil Corp. is courting refiners with rare long-term U.S. crude export deals, according to people familiar with the matter, as the company expands its trading scope.The oil giant has approached several refiners to discuss contracts for exports of light, sweet crude from the prolific Permian Basin starting as early as this year, said the people, who asked not to be identified because the discussions are private. The talks are in early stages, with volumes, timing and price still to be determined.Long-term contracts -- which involve the sale of cargoes of a certain quality, volume and price over a set period from as little as 6 months to multiple years -- for U.S. oil are uncommon, with the sector still in its early innings after a decades-long export ban was lifted in late 2015. Rather, most deals are done on a spot basis, depending on the relative cost of American supplies versus cargoes from the Middle East and Asia. The move is a next step for the Irving, Texas-based oil major as it seeks to capitalize on its extensive global network of oil production and refineries. In recent months, the firm has hired senior traders and analysts to expand its operations beyond just selling its own crude and refined products and into proprietary trading, seeking to boost performance that has lagged its competitors. Exxon’s move to secure potential customers comes at a time when Chinese buyers such as Sinopec have delayed purchases of U.S. oil due to the escalating tariff conflict. The company first focused on waterborne cargoes, according to people familiar with the matter, to take advantage of its strong position in the Permian and access to pipelines and storage. Exxon said earlier this year it wanted to triple production by 2025. The company has also been exporting at least double the amount of crude it moved last year, people familiar with the matter said in June.
Race is on to build Texas' first offshore oil export terminal -- HoustonChronicle --The race is on to build Texas’ first offshore oil-exporting terminal that could accommodate the world’s largest crude-carrying vessels. The global commodities trading firm Trafigura Group will announce Monday that it plans to build the Texas Gulf Terminals Project in the Gulf of Mexico, off the coast from Corpus Christi. An offshore terminal would avoid port traffic and float in waters deep enough to handle the largest ships. Trafigura is unveiling the project almost three weeks after the Houston energy company Enterprise Products Partners said it plans to build an even larger offshore oil exporting terminal south of Galveston. Corpus Christi and the Houston Ship Channel have led the nation in oil exports ever since Congress lifted the nation’s decades-old crude export ban at the end of 2015. The timing coincided with a boom in U.S. oil production, especially in West Texas’ Permian Basin, pushing crude volumes to record highs this summer. More of that oil is exported because domestic consumption remains relatively flat. Just as there’s a rush to build pipelines hundreds of miles from the Permian to port and refining hubs near Houston and Corpus Christi, there’s also competition to construct oil exporting terminals to ship out the crude. The Port of Corpus Christi is expanding to handle the flood of oil, and several companies along the Houston Ship Channel are expanding terminals. But the ports still aren’t able to handle the largest oil tankers, known as very large crude carriers, or VLCCs. Despite ongoing dredging efforts, the channels at Texas ports aren’t deep enough for the giant ships to leave the ports filled to capacity. Very large crude carriers can only fill up partially at Texas ports, and then receive the remaining oil volumes from another ship in deeper waters. It’s a more time-consuming and expensive process.
Higher Oil Prices Turn Texas Main Road Into The ‘Death Highway’ - Rising oil prices have led to an increase in trucking of frac sand, water, oilfield equipment, pipes, and fuel in West Texas. Together with the higher truck traffic on a main road in Texas, fatalities involving truckers have surged since oil prices resumed their upward trend last year, according to data by the Texas Department of Transportation compiled by Bloomberg. Long shifts behind the wheel, inexperienced truck drivers, and speeding on one of the main roads in Texas used for trucking sand, water, and equipment have earned Route 285 the name of the “Death Highway” among locals. According to the Texas Department of Transportation, 93 people died in fatal accidents involving trucks in 2017 just on the Permian section of the “Death Highway”, a highway that runs for 845 miles through the states of Texas, New Mexico, and Colorado. That’s 43 percent higher than the number of fatalities back in 2012. According to locals, there is a correlation between the price of oil and the number of fatal accidents along the highway in Texas. The number of deaths dropped in 2015, when oil prices crashed, but they started to rise again with the rally in the price of oil. Route 285 may very well be “the deadliest highway in the United States,” While truckers are currently in high demand in Texas where the Permian oil production is booming, some new hires and inexperienced truck drivers are just trying to make as much money as they can, and they sometimes sit behind the wheel tired and don’t stop for rests. “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,”
Sixty-three-year-old pipeline worker killed in blast in Texas -- A pipeline worker was killed in Midland County, Texas, while responding to a leak in the El Paso Natural Gas Pipeline last Wednesday. The worker has been identified as 63-year-old Bud Taylor of San Angelo, Texas, a 30-year veteran of the energy industry and operations manager at Navitas Midstream Partners. The explosion that killed Taylor occurred around 11:30 a.m. and was followed by two others. Four other pipeline workers and two firefighters who have yet to be identified were also injured in the blasts.The five workers were airlifted Wednesday to University Medical Center in Lubbock, Texas, where Taylor died from his injuries on Friday. According to a hospital spokesman, one worker remained in critical condition and two in serious condition. A fifth worker was released earlier in the week after being treated. Two other workers with less-severe injuries were treated at Midland Hospital. Taylor attended Crane High School in Crane, Texas, and leaves behind his wife, Rita Seymour Taylor. A former coworker described Taylor on his LinkedIn profile as “a strong leader and very detail oriented…good to work for and will listen to the opinions of others.”Midland is home to the Permian Basin oilfield, the largest oilfield in the United States, and is crisscrossed by both oil and natural gas pipelines. The causes of the leak, which led to the explosion and the fires that followed, are unknown, according to press reports, but are currently under investigation by pipeline operator KinderMorgan. KinderMorgan had isolated a part of the El Paso Natural Gas Pipeline as a precaution after it was alerted to the fire drawing near to its line. One of the workers airlifted last Wednesday was a KinderMorgan employee.
Welcome to the 'Man Camps' of West Texas – There’s not much to look at except dirt, mesquite, and sagebrush around the 10 acres of flat, almost treeless land near Goldsmith, Texas, where Aries Residence Suites runs a housing complex used by itinerant oil workers. Three years ago, all 188 rooms were as empty as the landscape—a testament to crude’s tumble from more than $100 a barrel to $30. Today, prices are up around $70 and almost every Aries bed is occupied, just as at many other “man camps” throughout West Texas. The Permian Basin, a more than 75,000-square-mile expanse of sedimentary rock that’s one of the world’s biggest oil plays, is drawing billions of dollars in new investment. Companies are scrambling to find people to do everything from operating drilling rigs to driving trucks. Wages have reached such lofty levels that even unskilled laborers can earn $100,000 a year. Many of the jobs are in remote areas with no houses, schools, or supermarkets, so free room and board are essential perks for workers, most of whom elect to leave their families at home. Thousands of workers now reside in dormitory-like compounds in West Texas and eastern New Mexico, and more are on the way. Aries, which has 11 locations spread out over North Dakota, Oklahoma, and Texas, is expanding Goldsmith, which is near capacity, to 400 beds and will soon break ground on a 500-bed facility in Orla, Texas, a town with new oilfield activity but a population of less than 300. Permian Lodging, which operates one of the biggest man camps in the basin, says all 1,200 units at a 90-acre lot outside Midland, Texas, are occupied, and it recently built a slightly smaller facility roughly 100 miles southwest, near Pecos. The company is also readying two other camps in Texas and one in New Mexico, for a total of almost 1,300 beds. “It’s crazy,” says Dennis Noland, founder of Alpha Resources, a human resources consultant that does work with companies in the Permian. “It is the best example of a boomtown, Wild West area that I’ve ever seen.”
EOG sees Permian hydraulic fracturing work slowing in 2nd half (Reuters) - Independent oil and gas producer EOG Resources on Friday said Delaware Basin completions will make up a smaller percentage of its overall hydraulic fracturing work in late 2018, a signal that pipeline constraints may continue to choke growth in the largest U.S. shale play. Activity in the Permian Basin, which includes the Delaware, has outpaced pipeline takeaway capacity in recent months as U.S. oil production has hit record highs. The pipeline constraints have pushed down the price of local oil and prompted some companies to reallocate resources to other basins. EOG said Delaware completions made up about 40 percent of its total hydraulic fracturing work during the first half of the year, but expected that to decline to 30 percent in the second half of 2018. Conversely, the company expects completions in Wyoming’s Powder River Basin, North Dakota’s Bakken, and Colorado’s DJ basin to climb from 10 percent to 20 percent of its total hydraulic fracturing work in the second half. Noble Energy on Friday said it would slow Permian hydraulic fracturing completions during the second half of the year, shifting more resources to the DJ basin. EOG this week said it was expanding its presence in Wyoming’s Powder River Basin, tapping into the Mowry and Niobrara resource plays, in addition to the Turner formation. That basin is now the company’s third largest asset. The company said it is designing a gas gathering and compression system to facilitate takeaway away from the Powder River Basin. EOG is also evaluating opportunities to move crude from the Powder River Basin to the U.S. Gulf Coast, executives told analysts during the company’s quarterly earnings call. Anadarko Petroleum Corp this week also said it was growing its footprint in the Powder River Basin.
Locked Into Hedges, Shale Misses Out On Oil Price Rally - The shale industry is set to enjoy its best year, arguably in its history, but some drillers are not benefitting as much as expected because they locked themselves into hedges at lower prices.Shale drilling has historically been a loss-making proposition. The precipitous decline in output from shale wells meant that companies had to use the revenue from one well to drill the next well. Cash was continuously recycled back into new wells, and shareholders rarely saw any profits flow back to them.That is set to change this year. “Higher prices and operational improvements are putting the US shale sector on track to achieve positive free cash flow in 2018 for the first time ever,” the International Energy Agency (IEA) wrote in a recent report on energy investment.But not everyone is raking in as much money as they might have wanted. A handful of shale companies posted lower-than-expected profits in recent days, owing to the fact that they secured hedges for their second quarter production at prices that were lower than the prevailing market price. Among the companies that undershot expectations were Devon Energy, Anadarko Petroleum and Chesapeake Energy. As Reuters notes, many shale companies hedged at around $55 per barrel in the second quarter while WTI was much higher. Those hedges were likely secured last year, when oil traded at lower levels. The shale companies locked in those positions as a risk management strategy, guarding against the possibility of a meltdown in prices. If the economy had crashed or OPEC decided to flood the market once again for some reason, and oil prices fell back below $50 per barrel this year, those companies would have been protected.As it happened, however, prices surged in the first half of this year. WTI surpassed $70 per barrel in the second quarter, rising to its highest point in more than three years. Some shale drillers were stuck selling their oil for prices in the mid-$50s. Anadarko said that it missed out on nearly $300 million in pre-tax revenue because it was locked into hedges. Devon Energy also missed expectations for its quarterly earnings, noting that it earned 20 percent less in oil sales than would have been the case absent the hedges. When asked if the company would revise its hedging plans, Devon’s CEO David Hager said it would stick with the strategy. “We think it's important to underpin the cash flows of the company to make sure that we have a certain level of consistency in cash flows to be able to fund the capital program,” Hager said on an earnings call. “And so we are doing this through a systematic program largely, where we're reaching out 18 months and hedging production at any given time.”
Plains to Bring Permian Projects Online Early Amid Pipeline Bottlenecks (Reuters) - Plains All American Pipeline LP said two West Texas crude pipeline projects would begin partial operations slightly ahead of their original schedules as bottlenecks in the region depress prices to the weakest level in four years. One of the two, the Sunrise expansion project, is expected to go into partial service in the fourth quarter this year while the Cactus II line will begin partial service in the third quarter of 2019, the company said on a conference call late on Tuesday. The Sunrise extension will add about 500,000 bpd of capacity from Midland to Colorado City and Wichita Falls, Texas, and provide connections to the oil-storage hub of Cushing, Oklahoma. Full service on the 670,000 barrels per day (bpd) Cactus II line from the Permian basin to Corpus Christi is targeted for April 2020. By late this year, a portion of the line, from Wink, to McCamey, Texas, will begin partial service, the company said. "We expect continued growth across our gathering and intrabasin pipeline systems (in the Permian) and to operate at or near capacity on our takeaway pipelines throughout the second half of the year," said Greg Armstrong, Plains chief executive. The company also is developing projects in Canada that would increase oil gathering for existing systems and boost utilization on its Rainbow pipeline system that serves western Canada. It also is considering a project that could add volumes to its Wascana system. These projects are in the early phases of development and would likely take 12 to 24 months to bring into service, Plains said. The Permian basin in West Texas and western Canada has been grappling with takeaway constraints as oil production in the region has outpaced pipeline capacity. Prices in Midland, Texas, sank to a $17 discount to benchmark futures last week while Western Canada Select oil last week traded at $34.15 per barrel lower than West Texas Intermediate light oil, the biggest differential since November 2013.
Tanker carrying fracking water crashes, spills near Poudre River -- A tanker truck containing fracking water crashed and spilled its fluid on Poudre Canyon Road on Thursday night, according to the Colorado State Patrol. The driver, Oswaldo Valenzuela-Inzunza, was uninjured, CSP Trooper Gary Cutler said Friday afternoon. Cutler said citations, if any, have not yet been made regarding the crash. Valenzuela-Inzunza has a Mexico driver's license, Cutler said CSP troopers responded at 11:05 p.m. to the crash site at 9552 Colo. 14, which follows the Poudre River. Despite the road's close proximity to the water, Cutler said CSP has not notified the federal government of any water contamination, meaning the spill did not reach the Poudre River. Cutler said CSP requested an independent contractor to help clean up the spill, though the amount of spilled liquid remained unknown as of Friday afternoon. He added that both lanes of traffic were closed almost immediately after the spill Thursday night, and heavy equipment crews continued to clean up the wreck until 6:24 a.m. Friday, when the roadway reopened.
Bella Romero Fracking Draws Ire of Community, Activist and Initiative 97 Decides Future of Fracking - Cullen Lobe’s environmental consciousness was awakened during the Dakota Access Pipeline standoff in 2016 between the Standing Rock Sioux Tribe and companies planning to run a gas pipeline underneath the Missouri River, the tribe’s only source of fresh water. After returning to Colorado, Lobe soon encountered what he calls the local version of the DAPL fight at Bella Romero Academy, a predominantly low-income, minority, fourth-through-eighth-grade school in Greeley whose ballfields could soon be less than 1,000 feet from 24 fracking wells. Earlier this year, a handful of local activists including Lobe entered Extraction’s fracking site to stage a protest that included Lobe locking himself to one of the company’s bulldozers. The protest was streamed to Facebook, putting a national spotlight on local concerns about the risks and potential health impacts of a fracking site so close to a school. But what activists believed to be a simple act of civil disobedience has landed them in court, with Lobe, who’s studying journalism and environmental studies at Colorado State University, facing up to a year in jail. Lobe sees communities across Colorado fighting fracking developments that are increasingly encroaching on neighborhoods and schools. Activists like Lobe, environmental groups and even cities are fighting back, hoping that state regulators and companies will hear their pleas. Voters may even get to decide in November how close fracking wells can be to the public. The controversy over the Bella Romero project dates back to 2013, when a company called Mineral Resources was granted a permit for a fracking operation near a south Greeley charter school called Frontier Academy. Mineral Resources was acquired by Extraction Oil and Gas in 2014, which abandoned its plans near Frontier Academy after significant pushback from parents. An alternative to the Frontier Academy site was found, about ten minutes to the east. The new site was right behind Bella Romero Academy, where more than 90 percent of students qualify for free and reduced lunch. Extraction didn’t return requests for comment for this story, but it recently told the New York Times that the Bella Romero location offered an opportunity to pipe out oil and gas, which would reduce truck traffic at the site, and to employ sound-minimizing rigs thanks to the availability of electric utilities on the site.
Boulder eyes pollution tax on drillers as Longmont preps for fracking 'deep underneath' a reservoir “Boulder’s City Council wasted little time Tuesday night in advancing two measures aimed at potential oil and gas drilling, including a pollution tax on any future extraction and a statement condemning an industry-backed ballot initiative,” reports The Boulder Daily Camera. “Both items, on the consent agenda, were discussed only briefly. The pollution tax would be levied against drillers: up to $6.90 per barrel of oil and 88 cents per thousand cubic feet of natural gas. The tax would apply only to resources extracted within city limits; there is currently no expressed interest or plans for such projects, and Boulder has a timeout on applications in place through June 2020. Councilwoman Cindy Carlisle was the only council member to speak about the tax, calling out statements made by industry group Colorado Oil and Gas Association in opposition. In remarks to the Camera, the group’s head Dan Haley called the measure a tax increase; Carlisle clarified that it was not a tax on citizens, but on drillers.” “Longmont City Council was assured by the city staff Tuesday night that future fracking to free up oil and gas deposits deep underneath Union Reservoir — and the subsequent drilling and extraction of those minerals — pose minimal risks to the quality of the water it stores,” reports The Longmont Times-Call. “During a study-session review of the staff’s research, however, several council members indicated they wish they had more of a guarantee that oil and gas companies drilling from surface sites far away from the reservoir and its shorelines could be held financially responsible for rapid and complete response to spills, leaks or other problems. Before the staff presented its report, however, a handful of residents stated their opposition to allowing hydraulic fracturing and horizontal drilling under the reservoir east of Longmont, even though the city is currently in a binding agreement the council approved last spring to keep wells and related equipment off the actual surface of city-owned lands near the reservoir.”
Dakota Access developer amends $1B racketeering lawsuit (AP) — The developer of the Dakota Access oil pipeline on Monday amended a $1 billion racketeering lawsuit it filed last August against three environmental entities after a federal judge criticized the original filing as vague and threatened to throw it out of court.The latest blow to the lawsuit came Friday, when U.S. District Judge Billy Roy Wilson said Texas-based Energy Transfer Partners hadn't proven its case against the Earth First environmental movement, though he said it could sue individual members if it had enough evidence.ETP on Monday added five individual defendants: a man allegedly affiliated with Greenpeace, two Iowa women who have publicly claimed to have vandalized the pipeline, and two people associated with the Red Warrior Camp, a protest group alleged to have advocated aggressive tactics such as arson. The company also amended its accusations, limiting defamation and business interference claims to Greenpeace and adding a criminal trespass count against all defendants."We are confident this move to include even more bogus claims in an already broad and baseless case will be the final nail in the coffin of a sham legal tactic," said Greenpeace attorney Deepa Padmanabha. ETP initially sued Greenpeace, BankTrack and Earth First, alleging the "rogue eco-terrorist groups" worked to undermine the $3.8 billion pipeline that's now moving oil from North Dakota to Illinois. The groups said the lawsuit was an attack on free speech, and Earth First also maintained it's an unstructured social movement similar to Black Lives Matter and can't be sued. Wilson on July 24 dismissed BankTrack for lack of evidence, a day after he had ordered ETP to show why Earth First shouldn't be tossed. Company attorneys countered that Earth First should be held accountable for "eco-terrorist activities" and argued that ETP at the very least should be given permission to add the Florida-based Earth First Journal to the lawsuit. The company had tried earlier to serve the lawsuit on the Journal, but the publication effectively argued it was not the same as the movement.
Oil pipeline inspection industry ‘going wrong’ as surveys fail to prevent spills -- In September 2015, Shell’s San Pablo Bay oil pipeline burst near the Californian town of Tracy, contaminating the surrounding soil with 900 barrels of crude.Two months later, in November, Shell was conducting tests to fix the problem when the pipeline spilled again.Pipelines fail: it’s a widely understood risk when liquids are pumped at pressure across land and sea. Since 1986 there have been nearly 8,000 oil and gas pipeline incidents in the US, spilling 76,000 barrels per year, resulting in more than 500 deaths, 2,300 injuries and nearly $7 billion in damage, according to the Center for Biological Diversity.Tiny cracks, often invisible to the eye, appear as infrastructure ages. Detecting them before they cause spills is a multi-billion dollar global business.But according to industry insiders and a prominent accident investigator, oil pipeline inspection companies may be overstating their ability to find these defects. A California state fire marshal report, accessed through a records request by Climate Home News, said three separate inspection companies assessed the San Pablo Bay pipeline during a series of accidents between September 2015 and May 2016. All of them failed to detect anomalies in the areas that burst.After the two 2015 spills, Shell hired Rosen Group, an international inspection company, headquartered in Switzerland, to replace T.D. Williamson, another global company.The state fire marshal reported that Rosen tested the pipeline in December 2015. The company found more than 20 abnormalities, which were repaired. Later, more abnormalities were identified, of which some were also repaired. After that round of maintenance Rosen told Shell there were no “actionable defects” on the line, the fire marshal said. After receiving the Rosen analysis, Shell increased the pressure in the pipeline on 17 May, 2016. Three days later, it ruptured again, and 500 barrels spilled.
BLM seeks public opinion about fracking on California public lands– More than a million acres of public land in California may soon be opened for fracking and oil drilling. The Bureau of Land Management is seeking comments on the potential harm created if 400,000 acres of public land and an additional 1.2 million acres of federal mineral estates in the Bakersfield Field Office Planning area, which includes Kern, Fresno, Kings, Madera, San Luis Obispo, Santa Barbara, Tulare and Ventura counties, are approved for fracking and oil drilling. Fracking is an oil-extraction process that inject fluids into shale beds to access oil or natural gas. The BLM intends to prepare a supplemental Environmental Impact Statement (EIS) and a potential Resource Management Plan. To comment on the issue, email blm_ca_bkfo_oil_gas_update@blm.gov or mail letters to Bakersfield Field Office, Bureau of Land Management, Attn: Bakersfield RMP Hydraulic Fracturing Analysis, 3801 Pegasus Drive, Bakersfield, CA 93308. The Center for Biological Diversity and Los Padres ForestWatch successfully sued BLM for approving a resource management plan allowing oil and grass drilling and fracking on stretches of public lands in California without adequately analyzing and disclosing the impacts of fracking on air quality, water and wildlife, according to Center for Biological Diversity. “This step toward opening our beautiful public lands to fracking and drilling is part of the Trump administration’s war on California,” Clare Lakewood, a senior attorney at the Center for Biological Diversity, said in a news release from her agency. “We desperately need to keep these dirty fossil fuels in the ground. But Trump is hell-bent on sacrificing our health, wildlife and climate to profit big polluters.” As a result of the lawsuit, BLM agreed to complete a new analysis of the pollution risks before deciding to allow drilling and fracking on public lands in California. The BLM’s 30-day comment period for the proposal begins Wednesday.
Trump Moves to Open 1.6 Million Acres of California Public Lands to Fracking - The Trump administration took the first steps on Wednesday towards opening up 1.6 million acres of public land in California to fracking and oil drilling, The Sacramento Bee reported.In a notice of intent published on the Federal Register Wednesday, the Bureau of Land Management (BLM) said it would prepare an environmental impact statement on the use of fracking on 400,000 acres of public land and 1.2 million acres of mineral estate overseen by BLM in California counties including Fresno, San Luis Obispo and Santa Barbara, The Hill reported.Concerned citizens have 30 days from Wednesday to comment on the proposal.The move would lift a five-year moratorium on leasing federal land in California to oil companies, The Center for Biological Diversity (CBD) said in a statement.It also comes less than a week after the Trump administration proposed revoking California's waiver to set its own vehicle emissions standards under the Clean Air Act and just days after Trump blamed the state's environmental policies for the record-breaking wildfires it is currently battling."It's a coordinated attack on California by the Trump administration," CBD senior attorney Clare Lakewood told The Hill.No federal lands in the state have been leased to oil companies since 2013, when a federal judge found that the BLM had leased land in Monterey County without fully considering the environmental impact of fracking.Environmentalists are concerned that fracking can increase the risk of earthquakes and contaminate groundwater, The Sacramento Bee reported. The later risk is increased in California, a 2015 report from the California Council on Science and Technology found, because fracking in the state happens in areas with shallow depths close to groundwater and uses an especially high amount of toxic chemicals, The CBD reported.
Fracking Fracas: BLM to Open California Public Lands - Jerri-lynn Scofield - The US Bureau of Land Management (BLM) took initial steps yesterday to open 1.6 million acres of California public lands to fracking and conventional oil drilling, ending a five-year moratorium on such practices in the state. In its Notice of Intent, the BLM announced it will analyze the impact of fracking thought the state and will prepare a Supplemental Environmental Impact Statement and a potential Resource Management Plan. The BLM has solicited public comments according to a tight schedule; the comment period closes on September 7, 2018. The Center for Biological Diversity (CBD) noted in a press release, Trump Administration Moves to Reopen California Public Lands to Oil Leasing that the notice covers 400,000 acres of public land and an additional 1.2 million acres of federal mineral estate, located in Fresno, Kern, Kings, Madera, San Luis Obispo, Santa Barbara, Tulare, and Ventura counties. It also provided background on the current moratorium: In 2015 the Center for Biological Diversity and Los Padres ForestWatch, represented by Earthjustice, successfully sued the BLM for approving a resource management plan allowing oil and gas drilling and fracking on vast stretches of California’s public lands without adequately analyzing and disclosing the impacts of fracking on air quality, water and wildlife. As a result of the groups’ legal victory, the BLM agreed to complete a new analysis of the pollution risks of fracking before deciding whether to allow drilling and fracking on public land across California’s Central Valley, the southern Sierra Nevada and in Santa Barbara, San Luis Obispo and Ventura counties. In BLM kicks off review of Calif. fracking impacts, Energy Wire discussed what followed from the US district court for the central district of California’s 2016 ruling in this action and its wider significance: The Sacramento Bee reported in Trump administration moves to open 1.6 million acres to fracking, drilling in California that county supervisors in San Luis Obispo have placed a measure on the November ballot that would ban new oil exploration and new fracking operations in unincorporated regions of the county: The CBD further emphasized: A 2015 report from the California Council on Science and Technology concluded that fracking in California happens at unusually shallow depths, dangerously close to underground drinking water supplies, with unusually high concentrations of chemicals, including substances dangerous to human health and the environment.
Regulatory ‘Burden’? A Mere $2,000 Would Have Saved This Man’s Neighborhood -- The exasperation was apparent in Jesse Marquez's voice recently as he testified at a public hearing in Washington DC, about a U.S. Environmental Protection Agency proposal to roll back a safety rule that would make the chemical industry more accountable for public health.Marquez was 17 years old when he and his family witnessed a massive explosion right in front of their house in the LA community of Wilmington. The explosion occurred at the Fletcher Oil and Refining Co., located across the street in the city of Carson, California, where Marquez and his family were living at the time. Four oil tanks exploded, and one tank roof top flew 700 feet into the air, landing in the middle of the street intersection. All seven members of his family suffered from burns ranging from 1st degree to 3rd degree. Déjà vu gripped Marquez in the spring of 2015, when he heard about an explosion at ExxonMobil's oil refinery in neighboring Torrance. The explosion occurred just a few m iles down the road from the explosion he had lived through 46 years earlier. The blast narrowly missed a tank of highly toxic hydrofluoric acid, which if released, would have lethally gassed thousands of people. Shaken by news of this new explosion and many others over the years, Marquez began researching steps the oil refinery could have taken to avert it. His research disclosed that if the refinery had spent just $2,000 on a gas leak detector, ExxonMobil could have found the gas leak that triggered its explosion and the explosion at the Fletcher Oil refinery in Carson could have also been prevented. Recently, after the Trump EPA postponed a new final rule that would require ExxonMobil and other companies to take basic steps to prevent future chemical releases, Marquez and other members of communities affected by chemical disasters traveled to Washington to testify before EPA. There have been at least 48 disasters, and counting, since the original effective date of the amendments.
Southern California Gas Agrees to Settlement for 2015 Methane Leak - A California utility has agreed to a $120 million civil settlement for a massive gas leak that drove thousands of families from their Los Angeles homes. Southern California Gas Co. will pay civil penalties and for programs to mitigate methane emissions for the October 2015 leak at the Aliso Canyon natural-gas storage field northwest of Los Angeles. The company has already pleaded no contest to criminal charges for the leak, which released 109,000 metric tons of methane near the community of Porter Ranch, according to state air officials. The new settlement requires the company to mitigate the effects of that methane, authorities and the company announced Wednesday. “There is no excuse for what happened,” California Attorney General Xavier Becerra said in a statement. “This leak undermined our crucial work to reduce greenhouse gas emissions and protect our people and the environment.” The company said its mitigation programs would capture methane from dairy farms and waste for use in transportation. The settlement money will also pay for a long-term health study on the effects of the leak, and the settlement requires the company to take several other steps to improve safety and publicly monitor methane levels around the facility. The Aliso Canyon underground site is the fifth-largest such gas-storage facility in the U.S. and is essential to the region’s power industry. It gushed methane—one of the most potent heat-trapping gases responsible for climate change—for 15 weeks, leading California to declare a state of emergency while locals reported headaches, nosebleeds, rashes and other woes. It eventually led to a federal review that called for a sweeping safety overhaul of more than 400 underground natural-gas storage fields. The settlement, if approved by the Los Angeles Superior Court, would resolve all the claims in several government lawsuits against the company, Mr. Becerra’s statement said. Along with the state attorney general, the California Air Resources Board, Los Angeles City Attorney Mike Feuer and the County of Los Angeles are part of the settlement.
Court Rules that Portland Oil Terminal Ban Does not Violate the Commerce Clause -- In a big win for the City of Portland, Oregon, the Oregon Court of Appeals issued a ruling that the city had not violated the U.S. Constitution’s Commerce Clause by voting to ban any new fossil fuel terminals within its borders. “This is a major victory for the climate and our communities,” said Maura Fahey, staff attorney at Crag Law Center, which represented environmental groups intervening in the case, in a statement. “Industry couldn’t even get its foot in the door of the courtroom to try to overturn the City’s landmark law. This sends a powerful message to local communities that now is the time to take action to protect our future.” This ruling could have important implications for other communities fighting fossil fuel projects because the court ruled that the city’s ban did not violate the Commerce Clause, which is the main argument the oil industry has used against bans like the ones in Portland, Oregon and other cities.The Commerce Clause gives Congress the sole power to regulate interstate and foreign trade, and oil companies have argued that bans like the one in Portland are impacting interstate trade. With this ruling, the Oregon Court of Appeals has dealt a significant blow to that legal argument. This new ruling in Oregon appears to be a path for other port cities to issue a blanket ban on new oil infrastructure projects instead of having to fight them on a project-by-project basis. And cities have been doing just that.
Fracking scheduled for British Columbia -(UPI) -- A review of operational plans for shale exploitation in British Columbia confirms the prospects for a pioneering fracking campaign, Calima Energy stated. The company announced Friday that a study commissioned from Canadian Discovery Ltd., a consultant firm, of more than 500 drilling sites near Calima's acreage revealed promise for a hydraulic fracturing campaign in the Montney shale basin in British Columbia. "The extensive review conducted by Canadian Discovery gives us confidence that our drilling plans are aligned with the best practice of other successful operators in northern British Columbia," Calima Managing Director Alan Stein said in a statement emailed to UPI. Calima said it now plans to drill three wells in the Montney formation. The program will have a core well with two horizontal extensions. Oil and gas exploration since the 1950s has utilized conventional operations to tap into a basin that straddles the borders of Alberta and British Columbia. Advances in horizontal drilling and hydraulic fracturing, or fracking, have uncorked new opportunities and Calima said federal data point to as much as 449 trillion cubic feet of marketable natural gas and 1.1 billion barrels of marketable oil in the Montney formation. Drilling is scheduled for December, with production testing schedule for four to six weeks. The Australian energy company operates more than 70,000 acres in the Montney shale. It received authorization from the provincial oil and gas commission to build, maintain and operate a road into its holdings early this year.
Trans Mountain Expansion Could Cost More Than Expected - The Trans Mountain pipeline expansion project could end up costing more than initially estimated, documents filed with U.S. regulators by Kinder Morgan suggest, according to a Reuters report.The document Reuters cites is a report Kinder Morgan filed with U.S. regulatory authorities following its deal with the Canadian federal government to sell it the controversial project. In it, Kinder Morgan’s financial adviser TD Securities notes that the project could incur additional costs of between US$770 million to US$1.46 billion (C$1-1.9 billion) and face a delay of up to 12 months, to December 2021.The initial estimated capital cost of the project was US$5.67 billion (C$7.4 billion), with the estimate provided by TD Securities. Earlier this year Ottawa agreed to buy the project for US$3.45 billion (C$4.5 billion) to save it, although now it needs to find investors to sell it on to. Meanwhile, it will provide the funding necessary for restarting work on the project until the deal closes.The Trans Mountain expansion has become one of the most controversial pipeline projects in North America as it pitted two provinces against each other, sparking both protests and support rallies. Alberta heavy oil producers need more pipeline capacity as their production grows but pipeline capacity stays the same. British Columbia’s new NDP government, which came into office last year, however, is against any new oil pipelines, although it doesn’t mind getting the crude it gets currently through the existing pipeline. The government has repeatedly cited higher risks of spills not just along the pipeline but at the port of Vancouver from where the crude sent via Trans Mountain should be loaded and sent to international markets.
Canada's Biggest Producer Cuts Drilling As Heavy Oil Price Tumbles -- Canada Natural Resources, the largest producer, is allocating capital to lighter oil drilling and is curtailing heavy oil production as the price of Canadian heavy oil tumbled to a nearly five-year-low relative to the U.S. benchmark price.Due to the transportation bottlenecks, the discount at which Western Canadian Select (WCS)—the benchmark price of oil from Canada’s oil sands delivered at Hardisty, Alberta—trades relative to WTI has been more than US$20 this year.On Thursday, that discount blew out to US$30.80 a barrel—the largest WCS-WTI differential since December 2013, according to data compiled by Bloomberg.Canada Natural Resources said on Thursday in its Q2 results release that its North America crude oil and natural gas liquids (NGLs) production in the second quarter dropped by 3 percent from the first quarter of 2018, primarily as a result of production curtailments and shut-in volumes of around 10,350 bpd as well as reduced drilling activity and delayed completion and ramp up of certain primary heavy crude oil wells drilled in Q1 and Q2.“Due to current market conditions the Company has exercised its capital flexibility by shifting capital from primary heavy crude oil to light crude oil in 2018, resulting in an additional 7 net light crude oil wells targeted to be drilled in the second half of the year. Primary heavy crude oil drilling was reduced by 24 net primary heavy crude oil wells in Q2/18, with an additional 35 primary heavy crude oil well reduction targeted for the second half of the year,” Canada Natural Resources said yesterday. Canada is producing record amounts of heavy oil from the oil sands and its economic recovery is driven by the oil industry, but drillers are finding it increasingly difficult to get this oil to market because pipelines are running at capacity and new ones are finding opposition from various groups.
Canadian Oil Crisis Continues As Prices Plunge Canadian oil producers are once again suffering from a steep discount for their oil, causing the largest spread between Canadian oil and WTI in years.Western Canada Select (WCS) recently fell below $40 per barrel, dropping to as low as $38 per barrel on Tuesday. That put it roughly $31 per barrel below WTI, the largest discount since 2013.The sharp decline in WCS prices is a reflection of a shortage of pipeline capacity. Much of the talk about pipeline bottlenecks these days focuses on the Permian basin, and the unfolding slowdown in shale drilling, which could curtail U.S. oil production growth. But Canada’s oil industry was contending with an inability to build new pipeline infrastructure long before Texas shale drillers.However, the problem has grown more acute over the last 12 months. Even as pipeline takeaway capacity hasn’t budged, Canadian oil production continues to rise. Output could jump by around 230,000 barrels per day (bpd) in 2018, followed by another 265,000-bpd increase in 2019, according to the International Energy Agency. As more supply comes online, the pipelines are filling up, and there is little relief in sight. Until Enbridge’s Line 3 replacement is completed – targeted for late 2019 – midstream capacity won’t expand. Enbridge recently received a crucial permit from the state of Minnesota, through which the pipeline will traverse, even though state regulators questioned the need for the pipeline. Environmental groups and Native American tribes affected by the pipeline have vowed to mount a resistance to the replacement and construction of the Line 3, echoing the protests of the Dakota Access Pipeline from two years ago. “They're bringing highly toxic, highly poisonous tar sands oil directly through major watersheds and the last standing reserve of wild rice that the Ojibwe have to harvest,” Bill Paulson, a member of the Ojibwe tribe, told CNN last month. “Our culture is the wild rice and gathering and being out in the woods. If there's a threat to that, then there's a direct threat to the people.”
Natural Gas Crawled Higher And Makes It To The Midpoint - In mid-February, the price of September NYMEX natural gas futures hit a low at $2.674 per MMBtu.As the daily chart highlights, over the next four months, the price action in the September futures contract trended higher hitting a peak of $3.018 on June 18. The $3 per MMBtu level proved too high to handle for the energy commodity, and the price corrected over the next month. Natural gas fell to a low of $2.671, just 0.3 cents below its mid-February bottom on July 19. While price momentum has risen into overbought territory, open interest has moved higher with the price in a sign that more speculators on the long and short side have come to the market over recent sessions. At 1.576 million contracts on August 2, is at a record high, and at its highest level since June 19 when natural gas hit its peak price at over the $3 per MMBtu level. Natural gas was trading at around the $2.86 level on Friday, August 3. Despite record production and massive reserves of natural gas in the United States, the energy commodity has been trickling, rather than flowing, into storage. As the chart shows, on Thursday, August 2, the Energy Information Administration reported another small injection of natural gas into storage of 35 billion cubic feet. Total stocks stood at 2.308 trillion cubic feet for the week ending on July 27 which was 23% below last year's level and 19.7% below the five-year average for this time of the year. While production continues at a record level in the U.S., demand is apparently just as strong as the amount flowing into storage for the coming winter season has been low. The latest price appreciation from $2.671 per MMBtu on July 19 has been, at least partially, the result of the low level of inventories. As the daily chart shows, the midpoint of the price range stands at $2.8445 per MMBtu, and last week the price made it up to the $2.86 level on Friday. The midpoint is the 50% retracement level of the move from the June high to the July low and stood as technical resistance for the futures contract.
The U.S. Remains The Natural Gas King - Data from the 2018 BP Statistical Review of World Energy show that last year the U.S. maintained a healthy lead as the global natural gas powerhouse.In 2017, the U.S. produced an average of 71.1 billion cubic feet per day (Bcf/d) of natural gas. That’s a 1.0 percent increase from 2016 production, but not quite good enough to beat the 2015 record of 71.6 Bcf/d.That was still good enough for a 20.0 percent share of the world’s total natural gas production. To put the U.S. production numbers in perspective, natural gas production for the entire Middle East was 63.8 Bcf/d. Russia, in second place among countries, saw its natural gas production surge by 8.2 percent, but at 61.5 Bcf/d that was still well behind the U.S. The U.S. had dominated global natural gas production until the 1980s, at which time it ceded the lead to Russia. The Middle East has grown its natural gas production at a much faster rate over the past 50 years, though, and is on pace to take the lead during the next decade. U.S. natural gas production had been in decline until the fracking boom that began in the middle of the previous decade. Production grew in the U.S. by an astounding 51 percent from 2005 to 2015, which pushed the U.S. back into the global lead.U.S. consumption has also grown rapidly as power plants have turned increasingly to natural gas as both a replacement for coal-fired power, and a backup for new renewable capacity. Another important outlet for U.S. natural gas production has been exports, both via pipeline and as liquefied natural gas (LNG). Last week RBN Energy reported that in early July, pipeline exports to Mexico breached 5.0 Bcf/d for the first time ever. The U.S. may continue to lead the world in natural gas production for a few more years, but the level of proved natural gas reserves implies that our lead could be short-lived.The Middle East’s proved natural gas reserves at the end of 2017 were 2.8 quadrillion cubic feet, nearly ten times U.S. proved reserves of 309 trillion cubic feet. For perspective, U.S. proved reserves are only 4.5 percent of the global total.Russia has more proved natural gas reserves than any other country with 1.23 quadrillion cubic feet, followed by Iran with 1.17 quadrillion cubic feet. Total proved natural gas reserves at the end of 2017 were enough to satisfy 2017 global production rates for 52.6 years.
NYMEX September gas rises as warmer weather intensifies supply concerns — The NYMEX September natural gas futures contract increased Tuesday 3.7 cents to settle at $2.897/MMBtu as the market picks up strength amid expected warm weather and supply concerns. The front-month contract traded Tuesday between $2.857/MMBtu and $2.900/MMBtu. Even though power burn and production backed off from recent levels, the market picked up strength as supply concerns and warmer weather expected in mid-August added to bullish sentiment.US dry gas production fell 1.4 Bcf/d day on day to 79.8 Bcf/d Tuesday, as production dipped in the Rockies and fell 700 MMcf/d, according to S&P Global Platts Analytics data. This marks the lowest level dry gas production has seen since June 26, but dry production has averaged 80.56 Bcf/d since that time. The strong production seen in the summer months has not made the storage deficit smaller as power burn records were set during the warmer-than-average summer. Looking ahead, the most recent six- to 10-day temperature forecast from the National Weather Service calls for higher-than-average temperatures for most of the Upper Midwest and Northeast, which is expected to add to the strength the market has experienced lately. Traders, analysts and other market sources have been debating about the market's position in terms of supply, and about whether current production is strong enough to make up for deficit. Bullish fundamentals of the storage deficit are currently being counteracted by the bearish strong production the market has seen, Looking ahead to the NYMEX winter strip, the December, January and February futures contracts were all trading above $3/MMBtu for the second consecutive day Tuesday. The front-month and winter strip have both gained some momentum as supply concerns intensify.
Just How Imbalanced Is Natural Gas Supply And Demand, And What Does it Mean for Prices? . Since the beginning of 2018, the natural gas storage deficit versus the 5-year average has ballooned from -362 BCF to -557 BCF, a 4-year high. During this same period, however, prices have tumbled from a peak of $3.63/MMBTU on January 29 to just $2.85/MMBTU on August 2, a correction of 22%. And despite storage levels being down a massive 688 BCF year over year, natural gas prices are actually down around 1% year over year. So, what explains this disconnect between price and storage level? As most natural gas investors are aware, the primary driving force maintaining and growing the storage deficit has been the goodwill of Mother Nature. A brutally cold start to 2018 driving the first -300 BCF weekly withdrawal on record, a late end to the season with weekly draws persisting into the second half of April, and a series of heatwaves this summer have all served to boost first residential/commercial heating demand and then powerburn cooling demand. Without the favorable influence of 2018 weather, goes the conventional wisdom, the bearish influences of record production and plateauing LNG and Mexican exports would have quickly erased this deficit. And based on the laws of averages, eventually, temperatures will normalize, and natural gas storage injections will turn dramatically bearish, thereby justifying the seeming disconnect between observed inventories and prices. However, the assumption that natural gas supply and demand is "dangerously imbalanced" seems to be frequently thrown around with little justification beyond record domestic production which, while admittedly is up an alarming 8 BCF/day year over year, ignores gains in gas demand. While a portion of demand gains have been driven by favorable winter and then summer temperatures - and this contribution will indeed fade once temperatures do normalize - there has also been a significant increase in natural gas infrastructure over the past year driving new temperature-independent gas demand. This article examines natural gas supply/demand balance under a microscope and calculates the true temperature-adjusted supply/demand imbalance and uses this calculation to project natural gas inventories through the end of the year and estimates the impact on natural gas price.
US natural gas storage volume rises 46 BCf to 2.354 TCf: EIA — The amount of natural gas in US storage facilities increased 46 Bcf to 2.354 Tcf in the week that ended August 3, the US Energy Information Administration reported Thursday. The build was slightly larger than an S&P Global Platts' survey of analysts expected. The analysts' consensus call was for a 45 Bcf injection. The injection was larger than the 29 Bcf build reported in the corresponding week in 2017, but again lower than the five-year average addition of 53 Bcf, according to EIA data. As a result, stocks were 671 Bcf, or 22%, below the year-ago level of 3.025 Tcf and 572 Bcf, or 20%, under the five-year average of 2.926 Tcf. The injection was larger than the 35 Bcf build reported a week earlier as cooler weather dampened gas-fired power generation in multiple regions and production ticked up in the Northeast and Gulf of Mexico, according to data from S&P Global Platts Analytics. The NYMEX September gas futures contract slipped 1 cent to $2.94/MMBtu following the 10:30 am EDT storage announcement. The EIA reported a 23 Bcf injection in the East to raise stocks to 575 Bcf, compared with 670 Bcf a year ago; a 27 Bcf build in the Midwest to lift inventories to 579 Bcf, compared with 769 Bcf a year ago; a 2 Bcf addition in the Mountain region to nudge stocks up to 148 Bcf, compared with 202 Bcf a year ago; a 5 Bcf withdrawal in the Pacific to drop inventories to 245 Bcf, compared with 290 Bcf a year ago; and a 1 Bcf pull in the South Central region to drop stocks to 807 Bcf, compared with 1.095 Tcf a year ago. Total inventories are now 97 Bcf below the five-year average of 672 Bcf in the East, 153 Bcf less than the five-year average of 732 Bcf in the Midwest, 32 Bcf under the five-year average of 180 Bcf in the Mountain region, 71 Bcf below the five-year average of 316 Bcf in the Pacific, and 219 Bcf beneath the five-year average of 1.026 Tcf in the South Central region. There are 12 to 14 more weeks of injections likely before the flip to withdrawal season based on EIA's historical data. Over the past five years, stocks have increased by 903 Bcf between now and early November. If storage increased in line with the average, the heating season would begin with 3.25 Tcf in storage. However, due to elevated production, Platts Analytics is estimating the season will start at 3.37 Tcf at a roughly 500 Bcf deficit to normal.
Analysis: US LNG export demand faces steep ramp up — Natural gas demand from US LNG export terminals is set to double over the next year as a spate of new liquefaction projects now nearing completion enters service. By September 2019, the startup of Elba Island Trains 1-10, Sabine Pass Train 5, Corpus Christi Trains 1-2, Cameron Train 1 and Freeport Train 1 will add a combined 3.7 Bcf/d in new liquefaction capacity, according to a forecast published by S&P Global Platts Analytics. As early as next month, initial feedgas demand from Elba Island Trains 1-6 could come online, eventually ramping up to approximately 210 MMcf/d. The company's full 10-Train Moveable Modular Liquefaction System or MMLS would consume just 350 MMcf/d upon completion, making it the smallest of the first-wave US LNG liquefaction projects. Following an early July order from the US Federal Energy Regulatory Commission authorizing the introduction of fuel gas at Cheniere Energy's Corpus Christi Train 1, Texas' first LNG liquefaction facility could be the next in line to begin exporting, with commissioning cargoes expected by first-quarter 2019. Based on Cheniere's previous timeline from fuel-gas authorization to initial feedgas deliveries, which averaged roughly 120 days at Sabine Pass, it is possible that the Corpus Christi terminal could see a first export cargo as early as February. According to Cheniere CEO Jack Fusco, exports from Sabine Pass Train 5 won't be far behind. . During the second half of 2019, Platts Analytics is forecasting an even steeper ramp up in LNG demand with the startup of Elba Island's remaining Trains, 7-10 in July, followed by Cameron LNG Train 1, Freeport Train 1 and Corpus Christi Train 2 by next September. Combined, the seven liquefaction trains would add another 2 Bcf/d in US liquefaction demand. Looking further ahead, while Cameron, Freeport and Corpus Christi's remaining trains, currently under construction, seem certain to enter service over the next two to three years, LNG export projects still in search of buyers seem less certain now, thanks to an increasingly bitter trade war between Washington and Beijing. While the two sides' tit-for-tat tariffs have yet to engulf the LNG industry, some industry analysts and market participants worry that the Chinese market, now the third largest for US LNG exports, could soon impose a crippling 25% tariff on US liquefied gas.
New wave of mega LNG projects is approaching (Reuters) - A new race to build multi-billion dollar liquefied natural gas (LNG) plants is gaining momentum after a long hiatus in investments as energy giants sense a widening supply gap within five years. Spending on new, complex facilities that super-chill gas into liquid in order to allow its transportation dried up following the collapse in energy prices in 2014. Appetite was further dampened by fears that a plethora of LNG plants built since the late 2000s would lead to a large supply glut until early in the next decade. But sentiment has radically changed over the past year. Buoyed by rising oil prices and exceptionally strong demand from rapidly growing economies such as China and India, executives are increasingly confident conditions are once again ripe for new projects. Qatar, the world’s largest LNG producer, is preparing to expand its facilities by around one third to produce 100-108 million tonnes per year (mtpa) by 2023-2024. The state-owned company expects long-standing partners Exxon Mobil, Royal Dutch Shell, Total and ConocoPhillips to help build and fund the new expansion phases as well as possibly new entrants, he said. A major change in the outlook happened after China strongly boosted imports of LNG in recent years to reduce coal burn in its fight against pollution. “The supply-demand balance definitely looks more favorable towards producers these days,” “China will continue to make the real difference in demand. I don’t see them slowing down. They are shifting attention to building more and more infrastructure,” The LNG market will require over 200 million tonnes per year of new supply through to 2030, or roughly 25-30 mtpa per year in new capacity additions to 2025, The main source of growth is expected to come from the United States, where supplies rose sharply and prices plummeted with the expansion of shale drilling.
Europe wants U.S. LNG if the price is right - Europe relies heavily on Norway and Russia for oil and natural gas. Natural gas, from Russia in particular, is a source of tension given anti-trust concerns about Russian energy company Gazprom and the tendency of the Kremlin to use energy as a tool for political influence.Announcing the implementation of the July agreement, Juncker said Thursday that Europe was ready to move on U.S. LNG. "The growing exports of U.S. liquefied natural gas, if priced competitively, could play an increasing and strategic role in EU gas supply," he said in a statement. "But the U.S. needs to play its role in doing away with red tape restrictions on liquefied natural gas exports."The U.S. Energy Information Administration reported total LNG exports quadrupled in 2017 from the previous year. All of the LNG shipped from the United States came from the Sabine Pass terminal in Louisiana, reaching more than two dozen countries. Four more terminals are expected online within the next two years, boosting export capacity from 1.94 billion cubic feet per day last year to 9.6 billion cubic feet per day. The U.S. National Defense Authorization Act, meanwhile, states that U.S. efforts should promote energy security in Europe, noting Russia uses energy "as a weapon to coerce, intimidate and influence" countries in the region.
Europe Getting Serious About Buying U.S. LNG -- European nations are far behind Mexico and China when it comes to receiving liquefied natural gas from the U.S., but the region is making its biggest effort to date to change that. European Commission trade officials will travel to Washington on Aug. 20 to follow up on an energy agreement last month between the Commission’s President Jean-Claude Juncker and U.S. President Donald Trump. Europe pledged to import more LNG in a bid to diversify imports, while America is seeking new markets for its expanding production of the fuel. Russia is currently Europe’s biggest supplier. “The European Union is ready to facilitate more imports of liquefied natural gas from the U.S. and this is already the case as we speak,” Juncker said in a statement on Thursday. “The growing exports of U.S. liquefied natural gas, if priced competitively, could play an increasing and strategic role in EU gas supply.” Europe received about 10 percent of total U.S. exports last year, up from 5 percent in 2016 after the American shale gas revolution went global with the opening of the Sabine Pass export facility on the country’s Gulf of Mexico coast. Since then, Europe has imported more than 40 LNG cargoes from the U.S., or 2.8 billion cubic meters, the Commission said. Still, that’s just a fraction of Europe’s demand of almost 550 billion cubic meters last year. Most gas arrives by pipelines from Russia and Norway, as well as in LNG tankers from Qatar, the biggest producer of the super-chilled fuel. As the region’s own fields deplete and nuclear and coal plants are decommissioned, demand for the fuel is rising. European buyers are taking a closer look at U.S. gas after Brent oil futures, a key pricing component for much of the LNG sold across the globe, soared to a 3 1/2-year high earlier this year, Greg Vesey, chief executive officer of Liquefied Natural Gas Ltd., said Wednesday in an interview in New York. Russian gas supplies to Europe are also linked to crude, and moves in the commodity affect gas prices at the region’s hubs. U.S. supplies, in contrast, are tied to low-cost shale gas at the benchmark Henry Hub in Louisiana. The discount for Henry Hub versus futures at the U.K’s National Balancing Point has widened to about $5 per million British thermal units, the most for this time of the year since 2013. “Now the prices actually make sense with where crude is going, the spreads are there and it’s worthwhile to talk about U.S. gas,” said Vesey, whose company is developing an export terminal in Louisiana.
US-German tensions rise as construction starts on Nord Stream 2 gas pipeline -- Work has finally begun laying pipes for the $11.5 billion Nord Stream 2 gas pipeline that is at the centre of a bitter dispute between Washington and Berlin. Pipe installation commenced at the end of July near Greifswald, on Germany’s Baltic coast. Completion of the 1,200-kilometre line is anticipated by the end of 2019, with the new pipe carrying Russian gas starting in 2020. The route largely follows that of the Nord Stream 1 line, which has been operating since 2011. The new line will double the capacity for the transport of natural gas from Russia under the Baltic Sea to Germany, where it is further distributed across Europe in two overland pipelines. The construction of the Nord Stream 2 line has been the subject of fierce disagreement ever since it was originally proposed in 2012. The German government, whose former Social Democratic chancellor Gerhard Schröder is chairman of the Nord Stream AG operating company, regards the expansion as vital to ensure Germany benefits as a central hub for the distribution of gas throughout much of Europe—as well as shoring up its own energy supplies. Opposition to the construction of Nord Stream 2 has formed a part of an increasingly bellicose US foreign policy and military encirclement of Russia, first under Barack Obama and now Donald Trump. It is also bound up with Trump’s targeting Germany to divide and weaken the European Union (EU), which he regards unambiguously as a competitor rather than an ally.
Scientists Want Oil Drilling Ban In British County After Series of Earthquakes - Four senior geologists are calling for a moratorium on oil and gas drilling in Surrey in the UK, southeast of London, after 12 earthquakes were registered in the area over the past four months.Between April 1 and July 18, a total of twelve seismic events were detected in the Newdigate, Surrey area, the British Geological Survey (BGS) says. “We are aware there is public concern over human activities, a number of which are capable of producing earthquakes. We are not able to say if there is a connection between oil and gas activities, or any other man-made activities, and the events,” BGS said. Companies exploring for oil and gas in the area are using only conventional processes since fracking is not authorized in Surrey. Now four geologists are calling for a moratorium on drilling in the area in a letter to The Times on Monday, in which they say: “We believe that public health and the environment are not being adequately protected given the unstable geology, which had not been identified before permits were issued for the currently active drill sites.” “There are two oil sites in the immediate area: Horse Hill and Brockham. A causal link with either well site cannot be ruled out, so we need the full picture for the risk assessment,” say Stuart Gilfillan FGS, senior lecturer in geochemistry at School of GeoSciences, University of Edinburgh; Stuart Haszeldine FRSE, professor of geology, University of Edinburgh; Bill McGuire, emeritus professor in geophysical and climate hazards, UCL; Richard Selley, emeritus professor of petroleum geology, Imperial College London. Brockham site operator Angus Energy, for its part, claims that regional geology means that it is physically impossible for its drilling to have caused the earthquakes.
Petrobras’ Net Profit Rises Thirty-Fold On Higher Oil Prices -- Brazil’s state-run oil firm Petrobras benefited from the rising oil prices and booked a thirty-fold yearly jump in its second-quarter net income, which also beat analyst expectations.Petrobras said on Friday that its Q2 net income surged to US$2.68 billion (10.072 billion Brazilian reais) from US$84 million (316 million reais) in the second quarter of 2017, helped by rising Brent prices, which resulted in higher margins in oil exports and oil product sales in Brazil. Other factors that contributed to the thirty-fold profit increase included the depreciation of the Brazilian currency, lower interest expenses due to debt reduction, and lower general and administrative expenses and equipment idleness.The profit jump was also well ahead of analyst estimates for US$1.505 billion in Q2.For Q1 2018, Petrobras had posted what was then its highest quarterly profit since the beginning of 2013 on the back of higher oil prices and proceeds from asset sales.For the first half of 2018, Petrobras also saw soaring profits, at US$4.54 billion (17.033 billion reais), the net income was 257 percent higher compared to the first half of 2017, and the best first-half performance since 2011. The heavily indebted company also cut more of its debt in the first half of 2018. Petrobras’s net debt stood at US$73.662 billion at end-June, down by 13 percent compared to the end of December last year.
Venezuela's oil major PDVSA cut debt to Russia's Rosneft $400 mil in Q2 — Venezuela's state oil and gas company PDVSA cut its debt to Russia's top crude producer Rosneft by $400 million in the second quarter to $3.6 billion as of the end of June, Rosneft's second-quarter results presentation showed Tuesday. Rosneft agreed prepayment deals for crude and products deliveries with Venezuela between 2014 and 2016, the last of which is due to expire at the end of 2020. The company gave Venezuela a total of $6.5 billion in pre-payments, a Rosneft official said earlier this year.Venezuela's debt to the Russian major thus shrank by $1 billion in the six months since the end-2017 figure, according to the presentation.Rosneft reported in May that Venezuela had paid off $600 million of debt in the first quarter. The Russian company also said it reduced crude purchases from the Latin American country in the first three months of the year.With the Venezuelan economy moving downhill and its oil industry crumbling in recent years, PDVSA told customers earlier this year it was not able to fully meet its supply requirements. Due to provide Rosneft with 222,000 b/d of diluted crude oil, or DCO, PDVSA only had 116,000 b/d available in June, a PDVSA source said earlier.In the face of crushing debt, crumbling infrastructure, worker unrest, hyperinflation and US sanctions, Venezuelan oil output dropped by 670,000 b/d in a year to 1.24 million b/d in July, according to S&P Global Platts OPEC survey. This is the lowest level in the 30-year history of the Platts OPEC survey, except a debilitating worker strike in late 2002 and early 2003. With economic hardship, Russia and Rosneft have provided extensive economic support to Venezuela and PDVSA in recent years. Late last year, Russia's finance ministry agreed to refinance Venezuela's $3.15 billion loan, extending the payment period to 2026 and introducing more favorable conditions on servicing the loan.Rosneft also has stakes in upstream projects in Venezuela, including five oil projects: Petromonagas, Petrovictoria, Petroperija, Boqueron and Petromiranda, which together account for around 4% of Venezuela's overall production, according to the Russian company.
State refiners drive India's July Iran oil imports to a record: trade sources (Reuters) - India’s monthly oil imports from Iran surged by about 30 percent to a record 768,000 barrels per day (bpd) in July, as state refiners’ intake surged ahead of U.S. sanctions in November, preliminary tanker arrival data obtained by Reuters showed. The shipments also include some parcels that were loaded in June and arrived in India last month, the data obtained from trade sources showed. July volumes were about 85 percent higher than year ago shipments of about 415,000 bpd, the data showed. State refiners that had cut imports from Iran in 2017/18 due to a dispute over development rights of a giant gas field, have tied up significantly higher volumes for this fiscal year that began in April, drawn to the discounts offered by Iran. Tehran had offered almost free shipping and an extended credit period for oil sales to India, its top oil client after China. Iran was hoping to sell more than 500,000 bpd of oil to India in 2018/19, its oil minister Bijan Zanganeh said in February. State refiners accounted for about four-fifth of Iranian oil imports in July with Indian Oil Corp along with its unit Chennai Petroleum Corp getting about 300,000 bpd oil from Tehran, the preliminary data showed. In April-July, the first four months of this fiscal year, India’s oil imports from Iran has risen by an annual 40 percent to about 677,500 bpd, the data showed. Purchases from Iran could slow from August as imports from Tehran are getting tougher after the United States in May pulled out of a 2015 nuclear deal and announced the renewal of sanctions against Tehran. Some sanctions will take effect from August 6 while others, notably on the petroleum sector, will take effect on Nov 4.
India’s Top Refiner Buys U.S. Oil To Partially Replace Iranian Crude - Indian Oil Corp, the biggest refiner in India, has purchased a total of 6 million barrels of U.S. crude oil for delivery between November and January, as it has started to look for a replacement of Iranian oil cargoes ahead of the U.S. sanctions on Iran’s oil exports returning in early November. The 6-million-barrel purchase was the first time that Indian Oil Corp (IOC)—which was the first Indian refiner to buy U.S. oil last summer—has bought U.S. crude oil through a mini-term tender, the Indian company’s Director of Finance A.K. Sharma told Reuters on Wednesday.IOC is buying 2 million barrels of U.S. Mars for November delivery, one million barrels of Mars and Eagle Ford each in a combination cargo for December delivery, and 2 million barrels of Louisiana Light Sweet (LLS) to be delivered in January next year, Sharma said.Ahead of the return of the U.S. sanctions on Iran, India’s state refiners boosted their Iranian oil purchases, pushing up Indian oil imports from Iran by 30 percent from June, to a record 768,000 bpd in July, according to preliminary tanker arrival data that Reuters has obtained from trade sources.Iran is said to have started to offer India cargo insurance and tankers operated by Iranian companies as some Indian insurers have refused to cover oil cargoes from Iran in the face of the returning U.S. sanctions on Tehran. Hindustan Petroleum was said to have cancelled a crude oil shipment from Iran after its insurer refused to provide coverage for the cargo on concern about U.S. sanctions.India’s imports from Iran could start to slow from August as some big Indian refiners worry that their access to the U.S. financial system could be cut off if they continue to import Iranian oil, prompting them to reduce oil purchases from Tehran.
U.S. crude exports to India surge as China intake fades: Russell (Reuters) - U.S. crude oil producers appear to have found an alternative buyer for cargoes no longer heading to China, with India on track to import record volumes in August. India has booked a total of 9.94 million barrels of crude, about 319,000 barrels per day (bpd), to arrive from the United States this month, according to vessel-tracking and port data compiled by Thomson Reuters Oil Research and Forecasts. This would be almost triple the 119,000 bpd India imported from the United States in July, and well above the 190,000 bpd for November last year, the previous record for a month. The August total is also likely to be just above the 9.65 million barrels imported over the first seven months, showing the scale of acceleration in India’s imports of U.S. crude. Indian refiners’ interest in U.S. crude will be welcome news to shale producers looking for buyers outside of China, which is likely to scale back imports as the trade dispute between the administration of President Donald Trump and Beijing escalates. Although not imposed as yet, China has proposed import taxes of up to 25 percent on U.S. crude, as well as on liquefied natural gas and coal. While U.S. crude exports to China appear to have held up in August, with about 342,000 bpd expected to arrive, they seem set for a slump in September. So far, about 203,000 bpd of U.S. crude have been booked for arrival in China next month, according to vessel-tracking data, and the window for more cargoes to be added is closing, given it takes at least three weeks for a tanker to make the journey from the Gulf of Mexico to China’s east coast. For U.S. crude exporters, India is a market ripe for expansion, given the voyage from the Gulf of Mexico to India’s west coast takes about three weeks, much the same as it does to China’s east coast. This means shipping costs are more or less in line with sending cargoes to China.
Indian Oil Corp signs first US term crude deal, buys 6 million barrels for Nov-Jan delivery — State-run Indian Oil Corp has signed its first US term crude oil deal, buying 6 million barrels, as the Asian buyer steps up efforts to devise an alternative buying strategy amid uncertainty about purchases from Iran because of US sanctions. IOC's director of finance A.K. Sharma told S&P Global Platts that the volumes would be shipped in in three VLCCs -- one each for delivery in November, December and January. "Yes, we have signed the deals," Sharma said, but did not provide price details. The deal is believed to be the first term deal by an Indian refiner. Until now, Indian refiners have been buying mainly spot cargoes from the United States. A question mark on India's future strategy in buying crude oil from Iran as well as Beijing's trade war with Washington have opened a window of opportunity for Indian refiners to dramatically step up purchases from the US, a trend that could continue in the coming months, analysts told Platts earlier this week. According to the latest US census export data, from an average of 29,000 b/d of crude flow from the US to India in the January-April period, the volume jumped sharply to 152,000 b/d in May, and 261,000 b/d in June, a new monthly record. Private refinery sources in India added that an improvement in shipping logistics in the US had boosted the appetite of many Indian refiners for American crude on a regular basis, and some were also considering term purchases. Sharma did not identify the exact crude grades that the state-run refiner bought on the latest US crude term deal, but some Asian trade sources based in Singapore said the Indian end-user could have bought a combination of light sweet grades and medium sour Mars Blend crude.
At Iran's Risk, Trump Is Winning Over Fastest Growing Oil Market -- One of Iran’s biggest oil customers is buying more U.S. crude as President Donald Trump sticks to his pledge to squeeze the Persian Gulf nation’s energy trade.State-run refiner Indian Oil Corp., which had been buying U.S. crude in the spot market, signed a term tender to purchase American oil for delivery every month between November and January, according to Finance Director Arun Kumar Sharma. That will help more than double the company’s shipments from the U.S. so far this year compared to last fiscal year.“This tender is the first step toward future imports of U.S. crude oil through term contracts,” Sharma said in a phone interview on August 8.A greater commitment to U.S. crude may help shield India from supply disruptions when sanctions on oil aimed at curbing the Islamic republic’s nuclear program begin in early November. It also gives American producers greater inroads to the fastest-growing oil consumer, a market that’s currently dominated by Middle-Eastern suppliers.American oil giant Exxon Mobil Corp. is said to be courting Asian refiners with rare long-term U.S. crude export deals in a bid to expand its trading scope. Long-term contracts -- which involve the sale of cargoes of a certain quality, volume and price over a set period from as little as 6 months to multiple years -- for American oil are uncommon and most deals are done on a spot basis after a decades-long export ban was lifted in late 2015.“Long-term contracts will be central to the U.S. strategy,” said Abhishek Kumar, a senior energy analyst at Interfax Energy in London. “That ensures the U.S. will have customers for its hydrocarbons in the medium-to-long term.”Indian Oil agreed to buy 6 million barrels of U.S. crude through the term-tender, taking its American crude purchases to 16 million barrels in total since April. That compares to its previous year’s spot purchases of 6.6 million barrels from the shale producer. The nation’s biggest refiner said in May that it plans to nearly double its oil imports from Iran to 7 million tons during the financial year that began in April. But Trump’s push to isolate the Islamic Republic is forcing it to prepare alternative plans. Indian Oil is still awaiting direction from its government on Iranian crude imports, Sharma said.
Analysis: India's love affair with US crude intensifies amid Iran puzzle — A question mark on India's future strategy in buying crude oil from Iran as well as Beijing's trade war with Washington have opened a window of opportunity for Indian refiners to dramatically step up purchases from the US, a trend that could continue in the coming months. As plentiful volumes of US crude might be looking for new homes when China imposes a 25% import tariff on American crude, a large number of the displaced barrels could make its way to India, analysts said.According to the latest US census exports data, from an average of 29,000 b/d of crude flow from the US to India in the January-April period, the volume jumped sharply to 152,000 b/d in May and 261,000 b/d in June, a new monthly record."We believe that any cutback in China's crude oil imports from the US due to US-China trade tensions will see more US crude cargoes heading towards Europe, India and Southeast Asia," Lim Jit Yang, director for Asia at S&P Global Platts Analytics, said.China received 14.65 million barrels of US crude in June, a historical high, but volumes have more than halved to just 6.9 million barrels in July, according to Platts' vessel tracker cFlow. Arrivals in August are expected to shrink even more to around 6 million barrels. Oil tankers laden with US crude that were initially headed to China appear to be getting diverted to other buyers."We are seeing that Indian refiners are now more open to consider mini term deals for US supplies -- for example one US cargo per month. This will help them import US crude on a regular basis," Senthil Kumaran, senior oil analyst at Facts Global Energy, said. Private refinery sources in India added that an improvement in shipping logistics in the US had whetted the appetite of many Indian refiners to buy American crude on a regular basis."We will definitely see more US crude coming to India in H2. Shipping is now much more smoother and whenever economics works, we will see more volumes of US crude coming to India," a source at a private refiner said.FGE added, however, that US would be only filling a part of the void created by a fall in imports from Iran.
Indonesia bets big on biodiesel to limit costs of oil imports (Reuters) - Indonesia plans to require all diesel fuel used in the country contain biodiesel starting next month to boost palm oil consumption, slash fuel imports, and narrow a yawning current account gap. While the proposal has been welcomed by the palm oil industry and government, it has raised concerns among the automobile industry the fuel could impact engine performance. Environmentalists fear the boost to local palm oil consumption will hasten Indonesia’s already fast spreading deforestation. Indonesia currently imports around 400,000 barrels per day of crude oil and a roughly similar amount of refined products, which makes Southeast Asia’s largest economy vulnerable to the sort of increases in global crude prices seen over the past year. With the current account deficit estimated to grow by $8 billion in 2018, the plan is to cut diesel imports by mandating that all diesel consumers, including power plants and railways, use biodiesel that contains 20 percent bio-content (B20), typically palm oil. Officials estimate this will save Indonesia around $6 billion per year. The program will increase domestic consumption of palm oil in the world’s largest producer of the edible oil, providing a market for output that has climbed by 35 percent over the past five years. In Indonesia, the bio component in biodiesel consists of fatty acid methyl esters (FAME) made from palm oil. Indonesia has 26 FAME producers, including units of palm oil giants like Sinar Mas Group, Wilmar (WLIL.SI), and Musim Mas, according to the Indonesian Biofuels Producers Association (APROBI). FAME is supplied to fuel distributors including Pertamina, blended with petroleum-based diesel and sold to end-users. For a graphic on Indonesia's energy sector, click reut.rs/2Mc915Y Currently only around one-quarter of Indonesia’s FAME production capacity is utilized, and the new program could raise this to up to 50 percent, said Togar Sitanggang, a senior official at the Indonesia Palm Oil Association (GAPKI). The government has said it will provide incentives to biodiesel producers, but has not provided details.
The Trump-Putin friendship could be all about oil and China - Trump’s revealed preferences and prejudices, along with the beliefs that he would like others to hold, can serve as useful guides as to what could explain the Trump-Putin relationship, and what they discussed in Helsinki.The president has made it clear that he has a preference for white people, Christians and the rich and powerful. He perceives the economy, trade and money as zero-sum games. His world is full of competitors but no partners, deal-makers and deal-breakers. His end game with Russia could be to drive a wedge between the Russians and the Chinese, and another between the Russians, Iran and Syria. After all, Russia is white, Christian and not a real economic competitor. The Chinese are non-white, non-Christian and a growing formidable economic power that is contesting American dominance in almost all economic domains. Iran and Syria are primarily Muslim countries and enemies of Israel, and belong to a group of nations for whom Trump has shown nothing but disdain and contempt.But why would Trump attack traditional partners (the European Union, Great Britain, Canada and other NATO countries) when presumably he could have courted the Russians without having to insult his old partners? Well, it could be that Trump is demonstrating and setting an example for Putin to follow.
PRC Tells Yanquis to Shove It On Iran Oil Imports - Truly *independent* countries--from American influence, at least--are free to buy Iranian oil.It's odd that Trump campaigned on American isolationism--withdrawing from misadventures in Afghanistan, Iraq, Syria, et cetera--and then to see his actions on Iran. Being the archetypal Stuck in the 80s sort of guy, Trump seems to have an odd fixation on bashing Iran. Famously leaving the agreement struck on Iranian compliance on limiting enriched nuclear materials in exchange for lifting sanctions, the United States wants to get its way when none of the other signatories to the JCPOA agreement have left it.The oddity here is that the United States wants everyone else to follow through with re-implementing sanctions on Iran. If this isn't a prime example of playing "globocop" and busybodying in world politics, then I don't know what is. Given the commercial ties of countries like Western European ones with the United States, it's certainly difficult for them to ignore American pressure to stop buying Iranian fuel. For instance, the Germans may chafe at the neophyte US ambassador telling them to stop buying Iranian fuel, but they ultimately will have to comply lest they face American economic sanctions. Thankfully, though, there is someone bucking the trend. What's more, it's a JCPOA signatory, a permanent member of the UN Security Council, and now the largest buyer of Iranian oil. Yes, I am talking about China: The U.S. has been unable to persuade China to cut Iranian oil imports, according to two officials familiar with the negotiations, dealing a blow to President Donald Trump’s efforts to isolate the Islamic Republic after his withdrawal from the 2015 nuclear accord... Teams of U.S. officials have been visiting capitals around the world to try to choke off sales of Iranian oil by early November, when U.S. sanctions are due to snap back into effect. Francis Fannon, the assistant secretary of state for the Bureau of Energy Resources, was recently in China to discuss sanctions, according to a State Department spokesperson. Unfazed, the administration has warned that even allies would face sanctions if they didn’t show “significant” progress in reducing Iranian oil purchases by Nov. 4, ruling out broad exemptions or waivers. Instead of putting the brakes on its Iranian oil purchases, China has hit the gas instead.
Chinese State Oil Major Suspends U.S. Oil Imports Amid Trade War --Due to the rising trade tension between China and the United States, the trading arm of Chinese state oil major Sinopec has suspended imports of crude oil from the United States, Reuters reported on Friday, citing sources familiar with the plans.Sinopec’s trading unit, Unipec, has not booked new purchases of U.S. crude oil at least until October, one of Reuters’ sources said. Yet it was not immediately clear how long the suspension of U.S. oil imports would last.Earlier this year, Unipec had planned to trade up to 300,000 bpd of U.S. crude oil by the end of 2018, which would have been triple the volume of U.S. crude oil that it traded last year.Amid the ongoing trade war between the United States and China, however, Chinese buyers have scaled down purchases of American oil after China threatened to impose a 25-percent import tax on U.S. energy imports if the United States imposed additional tariffs on more Chinese products. U.S. energy exports to China may suffer if Beijing follows through with its threat to slap tariffs on U.S. oil and oil product imports. China is America’s second-largest crude oil customer after Canada.
Despite Weak Teapot Demand, China’s Oil Imports Recover In July - China’s crude oil imports in July rose for the first time in three months, but were still at their third lowest monthly level so far this year, as independent refiners continue to suffer from the new tax regime eroding their refining margins.According to data by China’s General Administration of Customs compiled by Reuters, Chinese crude oil imports increased to 8.48 million bpd in July from 8.36 million bpd in June and from 8.18 million bpd in July last year.In June, China’s crude oil imports had dropped for a second consecutive month and hit their lowest level since December 2017 on the back of trimmed purchases by the independent refiners—the so-called ‘teapots’. Chinese imports stood at 8.36 million bpd in June, down by 9 percent from May’s imports of 9.2 million bpd, and down compared to the 8.8 million bpd imports in June 2017. In July, Chinese imports recovered somewhat as some of teapots returned from maintenance and as refining margins for the state-held majors improved amid higher fuel prices and waning competition from the independents. Under the stricter tax regulations and reporting mechanisms effective March 1, the teapots now can’t avoid paying consumption tax on refined oil product sales—as they did in the past three years—and their profit bonanza is coming to an end.
The Unforeseen Consequences Of China’s Insatiable Oil Demand - While it’s true that China’s crude oil imports recovered slightly in July, it was still among the lowest so far this year due to a decline in demand from smaller so-called independent “teapot” refineries.However, for the first seven months of the year, China imported some 8.98 million barrels per day (bpd) of crude oil, up 5.6 percent from a year earlier. Total natural gas imports, including both pipeline gas and liquefied natural gas (LNG), rose to 7.38 million tonnes during the same period, up 28.3 percent from a year ago, according to customs data. Moreover, amid both economic growth as well as Beijing’s mandate that gas make up at least 10 percent of the country’s energy mix by 2020 to offset the effects of rampant air pollution from dirtier thermal coal power production, the long term trajectory for both China’s natural gas consumption, as well as oil usage, will continue to increase, posing both a geopolitical and financial dilemma for the country that the U.S. and many western powers grappled with for decades. Going forward, China’s gas demand is projected by the IEA to rise by 60 percent between 2017 and 2023 to 376 billion cubic meters (bcm), including a spike in its LNG imports to 93 bcm by 2023 from 51 bcm last year. The IEA has also projected that China will become the world’s top natural gas importer (both pipeline and LNG) by next year. This marked increase in Chinese LNG procurement has changed the global LNG market from one that was projected to remain in a supply overhang scenario until around 2022 or even later to one that is now projected to have possible shortfalls of the super-cooled fuel around the same time frame. It has also ushered in new confidence for global LNG producers and talk of pushing ahead more greenfield LNG projects to meet this demand, a possibility unheard of just a year ago. This increase in gas usage will also mean that China’s domestic gas output, though it will be the world’s fourth largest gas producer by 2023, will be unable to keep up, with China increasingly becoming more reliant on gas imports from both established LNG producers like Australia, the U.S. (current trade tensions notwithstanding) and Russia, but also more geopolitically volatile producers such as Qatar, still the world’s top LNG producer, Yemen, Oman, Papua New Guinea, in time Mozambique, and others.
China Just Laid Down The Gauntlet, Proposes Tariffs On US Natural Gas -- President Donald Trump’s trade war with China could reach a whole new level if Chinese officials follow through on a threat to impose tariffs on U.S. natural gas. Trump’s trade war is escalating rapidly. The back-and-forth began when the White House in July slapped a 25-percent tariff on a litany of Chinese goods worth around $34 billion, a move intended to punish them for intellectual property theft and unfair trade practices. Chinese leaders immediately retaliated with similarly sized tariffs on vehicles, soybeans, pork and other U.S. commodities. Now — in response to the Trump administration threatening to raise the tariff rate on other Chinese goods — its government is teasing a 25-percent tariff on imports of U.S. natural gas. If enacted, the tariff would be a major blow to the American natural gas industry, which, thanks to the development of hydraulic fracturing, has been experiencing unprecedented growth in recent years. Cheaper and less polluting than other fossil fuels, the production and consumption of liquified natural gas (LNG) has grown rapidly. The trade of LNG has also jumped. U.S. natural gas exports quadrupled in 2017, according to the Energy Information Administration. Over half of those exports went to Mexico, South Korea and China. If President Xi Jinping decides to follow through on a 25-percent tariff, the result would have major ramifications for American shale producers. Cheniere, America’s biggest exporter of natural gas, saw its shares drop nearly 8 percent upon the report. “At least in the short term any Chinese buyer looking for long-term supply would have to drag their feet on signing a U.S. contract,” Notably, China’s threats follow a July meeting between Trump and European Commission President Jean-Claude Juncker, where the EU leader promised to purchase more U.S. natural gas.
China removes US crude oil from latest round of import tariffs - — China announced Wednesday retaliatory tariffs on an additional $16 billion worth of US imports, including oil products, LPG and coal in a new list of affected goods but leaving off widely-expected import duties on US crude. The Chinese Ministry of Commerce's latest list imposes 25% tariffs on a swathe of energy commodities from August 23 including "asphalt shale, oil shale and tar sand."But the ministry said the latest tariffs remove a previous reference to US crude in earlier proposals announced on June 16. Naphtha, propane and butane all remain on the new list which also covers waste metals, petrochemical products and cars.The latest tit-for-tat escalation in the trade war between the two countries comes after the US earlier Wednesday said it would implement a 25% tariff on an additional $16 billion worth of Chinese imports from August 23.Removing crude from the list may reflect China's inherent energy security concerns, ClearView Energy Partners said in a note Wednesday."Simply put, crude may have been a bluff -- and LNG could be too -- and energy scarcity may have led China to retreat from its threat posture," managing director Kevin Book said in the note. Another explanation could be that China is rationalizing its crude import policies to defend its plan to continue importing Iranian crude after US sanctions snap back November 4. US tariffs implemented on July 6 saw China retaliate by imposing a 25% tariff on $34 billion worth of US imports of food products, agricultural commodities such as soybean, and motor cars. China's Ministry of Commerce said then that it has been "forced to fight back." China has already shortlisted US LNG imports for 25% tariffs in a previous round of retaliatory duties announced on August 3, but this has yet to be implemented. In addition to energy commodities including road fuels, naphtha and coal, the latest list covers waste metals and cars under the $16 billion worth of US products that China will target from August 23.
China State Firms to Expand Domestic Oil, Gas Exploration After Xi's Call (Reuters) - China's state energy giants pledged this week to expand domestic oil and gas exploration and production and increase in particular natural gas supplies following an instruction from President Xi Jinping to boost national energy security. China National Offshore Oil Company, China's offshore oil and gas specialist, said on Wednesday it aims to boost domestic oil and gas proven reserves including a 10-year plan to stabilise annual output at its top fields at Baohai Bay at 30 million tonnes, a statement on the company's website said. On Tuesday top energy group CNPC said one of its key tasks in response to Xi's call to ensure energy security was to fast-track investments in natural gas production and infrastructure including underground storage. China suffered a severe natural gas crunch last winter as demand spurred by Beijing's massive gasification push expanded much faster than domestic fields could supply and a lack of pipelines and storage hindered gas deliveries. Li Jiewen, spokeswoman for CNOOC Ltd, said the fact that companies issued statements around the same time was because it was when mid-term management meetings were held and companies normally issue strategic remarks after those meetings. "(In implementing top-level instructions) Companies will follow their own development characteristics and proceed with plans accordingly," said Li. China, the world's top energy user and also largest crude oil importer, is facing declining reserves and soaring development costs at mature oilfields. Rapid growth in natural gas demand has led to surges in imports which made up some 45 percent of total consumptions last year and the country is set to overtake Japan as the world's top gas buyer next year, as estimated by the International Energy Agency. The state oil firms' remarks came as China is entangled in a tit-for-tat trade war with the United States. Beijing has added both U.S. crude oil and liquefied natural gas on its proposed retaliatory tariff list.
Iran’s Oil Exports Drop For Third Consecutive Month --Iran’s oil exports dropped by 7 percent to 2.32 million bpd in July—their lowest level in four months—as South Korea and Europe are slashing imports ahead of the return of the U.S. sanctions on Tehran, data from S&P Global Platts showed on Tuesday.However, Iranian oil exports to its top two customers—China and India—continued to stay high last month. Exports to China rose to 799,452 bpd in July from 722,100 bpd in June, while Iranian oil sales to India increased by more than 40,000 bpd from June to 706,452 bpd in July, S&P Global Platts data shows.Europe—which as a whole has been Iran’s third-biggest single customer—saw imports drop to 465,450 bpd last month from 485,768 bpd in June, with demand from France, Spain, and Turkey down and purchases from Italy and Greece steadily up. In Europe, spot demand for Iranian crude is sharply down, but refiners with term contracts are still honoring them, according to sources who spoke to Platts.Analysts expect Iran’s oil exports to drop more noticeably beginning in September, and the rate of decline to accelerate as the United States looks to have Iran’s current customers reduce Iranian oil imports to ‘zero’. In June, although China and India held their Iranian oil purchases high, the top Asian oil importers and Iranian oil customers—China, India, Japan, and South Korea—bought in June their lowest combined volume of Iranian oil in seven months, as South Korea slashed Iranian purchases. Starting in July, South Korea is halting Iranian oil imports for the first time since 2012 amid pressure from the United States to discontinue purchases from Iran. Analysts expect the U.S. sanctions to take between 500,000 bpd and 1 million bpd of Iranian crude oil off the market when full sanctions return in early November, and some experts think that the figure will be closer to 1 million bpd.
U.S. Grants Iran Sanctions Waiver To Southern Gas Corridor --The U.S. is granting an Iran sanctions waiver to the Southern Gas Corridor natural gas pipeline projects designed to carry Azeri gas from the Caspian Sea to Turkey and onto Europe by-passing Russia.Iran’s NICO holds a 10-percent stake in the Shah Deniz consortium that is developing the Shah Deniz 2 gas deposit in Azerbaijan, which will be the starting point for the Southern Gas Corridor.The executive order signed by U.S. President Donald Trump on Monday contains a “Natural Gas Project Exception” which describes the Southern Gas Corridor without naming it.The natural gas project exemption is referencing the Iran Threat Reduction and Syria Human Rights Act of 2012, which stipulates that the act has exceptions for certain natural gas projects “for the development of natural gas and the construction and operation of a pipeline to transport natural gas from Azerbaijan to Turkey and Europe”, and “that provides to Turkey and countries in Europe energy security and energy independence from the Government of the Russian Federation.”Last month, BP and its partners started up the US$28-billion Shah Deniz 2 gas development in Azerbaijan—the starting point of the Southern Gas Corridor for gas supplies into Europe expected to reduce European dependence on Russian gas. The Southern Gas Corridor consists of several separate energy projects with a total investment of around US$40 billion. Apart from the Shah Deniz 2 development, the Corridor will include three pipelines—the South Caucasus Pipeline (SCPX) to Azerbaijan and Georgia; the Trans Anatolian Pipeline (TANAP) to Turkey; and the Trans Adriatic Pipeline (TAP) planned to cross Greece, Albania, and end up in Italy.
Japan Negotiating with U.S. For Iranian Oil Import Exemption - Japan will continue to negotiate with the United States to seek exemption from the U.S. sanctions on Iran’s oil, as Tokyo wants to avoid negative impacts on its energy supply and business activity, Japan’s public broadcaster HNK quoted Trade Minister Hiroshige Seko as saying on Tuesday. Japan and the United States held talks earlier this month on Iran’s sanctions, Seko told reporters today, adding that he conveyed Japan’s position that the sanctions shouldn’t disrupt the Japanese corporate activity.“The Japanese side insisted on the basic principle that [the US sanctions] should not affect energy supply or have a negative impact on Japanese corporate activities,” Platts quoted Seko as saying at a news conference. According to data by the Japanese Ministry of Economy, Trade and Industry (METI), Japan’s oil imports from Iran stood at 162,222 bpd on average between January and June 2018, down by 2.7 percent year on year. The imports from Iran accounted for 5.3 percent of Japan’s total crude oil imports in the first half this year. As early as in May, when U.S. President Donald Trump announced that sanctions on Iran would return, Japan signaled that it would seek some kind of exemption from Iran’s oil sanctions. Talks have been held throughout the summer, and reports have had it that the U.S. had asked Japan to completely stop importing Iranian crude oil. In the middle of July, the head of the Japanese oil refiners’ association said that Japan was likely to stop purchasing Iranian crude oil, with last loadings expected by the middle of September and arriving in Japan by mid-October. On Monday, when asked about the talks with Japan over a U.S. waiver, a senior U.S. Administration official told reporters via teleconference that “We don’t disclose private deliberations with other governments over these things. As we’ve said, we – our goal is to get the import of Iranian oil to zero. We are not looking to grant exemptions or waivers, but we do and are glad to discuss requests and look at requests on a case-by-case basis. But beyond that, we don’t comment on it.”
Egypt To Start Importing Israeli Gas For Re-export In Early 2019 - An Egyptian company is set to begin importing gas from Israeli offshore fields in the first quarter of 2019 and to re-export it as part of its plan to become a regional gas hub, sources in Egypt’s energy industry tell Reuters.In February this year, Israel’s Delek Group and Houston-based Noble Energy—the main partners in two large gas fields offshore Israel—signed agreements to sell significant quantities of natural gas from the Leviathan and Tamar fields to Dolphinus Holdings to supply gas in Egypt.These agreements, one for natural gas from Leviathan and one for Tamar, each provide for total contract quantities of 1.15 trillion cubic feet of natural gas. The natural gas sales, both under 10-year contracts, are expected to supply industrial and petrochemical customers as well as future power generation in Egypt, Noble Energy said back in February.The price of the gas to be supplied under both export deals will be set by a price formula linked to Brent Crude prices. Delek has estimated that the total revenues from the Tamar and the Leviathan gas sale deals to Egypt may reach US$15 billion.Egypt has received the backing of the World Bank in its efforts to be a regional oil and gas trading hub, as several new gas projects started up recently in the Mediterranean country. Following the start-up of the giant gas field Zohr, Egypt has become an important player in the Mediterranean. Zohr, discovered by Eni in 2015, plays a key role in helping Egypt to avoid the need to import liquefied natural gas (LNG), according to the Italian oil and gas major. In June, Egypt issued what is likely to be its last LNG import tender, and could begin exports early in 2019, Egypt’s Petroleum Minister Tarek El-Molla told Bloomberg at the time. The June tender was for Egypt’s third-quarter gas needs, and it might not need to import LNG for the fourth quarter and onwards, the minister said.
Saudi Arabia resumes oil exports through Red Sea lane (Reuters) - Top oil exporter Saudi Arabia said on Saturday it has resumed all oil shipments through the strategic Red Sea shipping lane of Bab al-Mandeb. Saudi Arabia halted temporarily oil shipments through the lane on July 25 after attacks on two oil tankers by Yemen’s Iran-aligned Houthi movement. A statement by the Energy Ministry said shipments had resumed on Saturday. “The decision to resume oil shipment through the strait of Bab al-Mandeb was made after the leadership of the coalition has taken necessary measures to protect the coalition states’ ships,” Energy Minister Khalid al-Falih said in the ministry statement. Saudi Aramco confirmed that shipping had resumed effective immediately. “The company is careful to continue monitoring and evaluating the current situation in coordination with the relevant bodies and take all necessary procedures to ensure safety,” Aramco said in a statement. Yemen, where a Saudi-led coalition has been battling the Houthis in a three-year war, lies along the southern end of the Red Sea, one of the most important trade routes in the world for oil tankers. The tankers pass near Yemen’s shores while heading from the Middle East through the Suez Canal to Europe. The Bab al-Mandeb strait, where the Red Sea meets the Gulf of Aden in the Arabian Sea, is only 20 km (12 miles) wide, making hundreds of ships potentially easy targets. After Saudi’s decision to halt shipments, Yemen’s Houthi group said on July 31 it would halt attacks in the Red Sea for two weeks to support peace efforts. The Saudi coalition intervened in Yemen’s civil war in 2015 to restore the internationally recognized government of exiled president Abd-Rabbu Mansour Hadi.
OPEC Oil Output 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 Arabia’s production increase shows it’s delivering on promises to prevent prices from damaging the global economy after Brent crude reached a three-year high above $80 a barrel earlier this summer. The kingdom has been under acute pressure from President Donald Trump to open the taps as he chokes off exports from Saudi’s political rival, Iran. When OPEC met in June, the organization agreed it had been cutting supplies excessively and should restore output to 100 percent of a target set in late 2016. With the production increases made since then, they’ve succeeded: compliance was at 104 percent in July. However, the organization is bitterly divided on the interpretation of the June agreement. While the Saudis and their Gulf allies said they would increase production to make up for countries unable to, Iran argues that they’re violating individual country targets and ultimately betraying the organization. Although the sanctions don’t officially take effect until November, Iran is already seeing customers flee as the U.S. imposes penalties on buyers after Trump quit a nuclear accord with the country.
Iran accuses OPEC/non-OPEC committee of trying to redistribute crude oil output quotas - Iran accuses OPEC/non-OPEC committee of trying to redistribute crude oil output quotas — The six-country OPEC/non-OPEC committee overseeing the agreement improperly attempted to redistribute crude oil production quotas at its July 18 meeting in Vienna, Iranian oil minister Bijan Zanganeh wrote to UAE energy minister and OPEC President Suhail al-Mazrouei on Wednesday. Should the committee persist in its efforts, Zanganeh said he would request an extraordinary OPEC meeting to resolve the conflict. The committee, called the Joint Ministerial Monitoring Committee, and its subsidiary Joint Technical Committee are only charged with assessing member compliance with the agreement, Zanganeh wrote in a letter posted online by Iran's oil ministry news service Shana. Iran, which has steadfastly maintained that the deal does not allow members to produce above their individual quotas, attended the committee meeting as a non-voting observer. "To our dismay we witnessed that some members attempted to redistribute over-conformity in production adjustment level among themselves, and attempts to hand over OPEC countries' over-conformity to non-OPEC countries," Zanganeh wrote. "This very procedure is totally in contradiction with the monitoring task of both JMMC and JTC, and indicates misinterpretation by the JMMC over its mandate, as well as disregard for the decision of the 174th Meeting of the OPEC Conference." Mazrouei had no immediate comment on the letter, UAE officials said. OPEC and 10 non-OPEC allies led by Russia agreed on June 23 to raise production by about 1 million b/d by reducing overcompliance with production cuts that had been in force since January 2017. But the coalition has left unsettled how those barrels will be divvied up. Several members are unable to raise production; Venezuela is in the throes of an economic crisis, while Iran faces the snap back of US sanctions in November. That leaves primarily Saudi Arabia and its Gulf allies, along with Russia, to account for the bulk of the increase by tapping into their spare capacity. Iran has said that the deal still maintains individual quotas, while Saudi Arabia and Russia have said the deal has morphed into a collective supply ceiling.
Saudi Arabia pumped less crude oil in July: OPEC sources (Reuters) - Top oil exporter Saudi Arabia pumped around 10.290 million barrels per day of crude in July, two OPEC sources said on Friday, down about 200,000 bpd from a month earlier. The amount of oil supplied to the market in July was slightly higher at 10.380 million bpd, the sources said. Supply to the market - domestically and for export - may differ from production depending on the movement of barrels in and out of storage. Saudi Arabia told the Organization of the Petroleum Exporting Countries that the kingdom pumped 10.488 million bpd of crude oil in June, an increase of 458,000 bpd from the production figure it submitted for May. However, crude supply to the market in June was higher than wellhead production at 10.579 million bpd, a figure that includes domestic consumption and all exports, including from storage tanks. OPEC agreed with Russia and other oil-producing allies in June to raise output from July, with Saudi Arabia pledging a “measurable” supply boost. OPEC and the non-OPEC producers said they would raise supply by returning to 100 percent compliance with previously agreed output cuts, after months of underproduction. That would mean a roughly 1 million bpd increase in output.
OPEC Sources: Saudis Cut July Production | Rigzone -- Saudi Arabia, which recently pledged oil-supply increases to tame rallying crude prices, cut production last month, according to OPEC delegates familiar with the matter. The biggest member of the Organization of Petroleum Exporting Countries pumped 10.3 million barrels a day in July, according to the delegates, who asked not to be identified because the data is private. The kingdom told the cartel it produced 10.489 million in June. The cutback comes despite promises from Saudi Energy Minister Khalid al-Falih that key OPEC members and their allies would add about 1 million barrels of supply, doing "whatever is necessary to keep the market in balance." Under pressure from U.S. President Donald Trump to reassure markets, the kingdom was said to have been preparing to pump 10.8 million or 11 million barrels a day. The lower number follows signs that the Saudis couldn't ultimately find buyers to justify pumping at record output levels. U.S. crude futures lost more than 7 percent in July, their steepest drop in two years, amid signs that a surplus is re-emerging in some parts of the world market. There are growing fears that the trade war between the U.S. and China could impair demand.
Analysis: Saudi crude oil production data catches market by surprise, but not all are convinced — The unexpected news last week that Saudi Arabia cut crude oil production by 200,000 b/d last month has the market scratching its head. The kingdom, which had signaled after the June 23 OPEC meeting that it could pump as high as 11 million b/d, instead produced a much more modest 10.29 million b/d in July, Saudi sources told S&P Global Platts on Friday, down from 10.49 million b/d in June. Crude supplied to market was 10.38 million b/d, the sources added, indicating that Saudi Arabia pulled barrels out of storage. The figures are at odds with several independent assessments of Saudi production, including Platts' OPEC survey released earlier Friday, which pegged the kingdom's July output at 10.63 million b/d. "We haven't seen any destocking that could justify why the supply to market was higher than production at 10.38 million b/d," said one Platts survey participant, adding that he would not be revising down his production estimate. Others, however, were more willing to take at face value the Saudi source numbers, which were reported by several news agencies. One participant cited lower export figures in the month and indications that Saudi Arabia was having trouble placing its barrels into the market. Platts tanker tracking software cFlow shows Saudi crude exports dropped 461,000 b/d from June to 7.140 million b/d, despite the country's OPEC Governor Adeeb al-Aama saying July 19 that exports would be flat month-on-month. The Platts OPEC figures are compiled by surveying OPEC and oil industry officials, traders and analysts, all of whom remain confidential, as well as reviewing proprietary shipping data. Saudi officials did not elaborate on why production fell in July. But in a sign that expected robust demand is not materializing for Saudi crude as hoped, Aramco last week slashed its official selling prices for crude to Asia and Europe loading in September. In his July 19 statement, Aama said that Saudi Arabia "does not try to push oil into the market beyond its customers' needs."
Why Saudi Oil Production Suddenly Dropped - As if oil market participants haven’t had enough conflicting market forces to digest over the past week, reports that Saudi Arabia’s crude oil production surprisingly dropped in July by around 200,000 bpd from June further confounded the market and sent oil prices rising on Monday.Last week, several surveys of OPEC’s crude oil production in July showed that the cartel is pumping at high rates, and Saudi Arabia is nearing its production record. But on Friday, Saudi sources and OPEC sources told news agencies that the Saudi oil production was not even close to record figures—and it actually dropped last month compared to June. The Saudis pumped 10.29 million bpd in July, Saudi sources told S&P Global Platts on Friday. On the same day, two OPEC sources told Reutersthat Saudi Arabia’s crude oil production in July was 10.29 million bpd. According to OPEC’s secondary sources, the ones the cartel uses to calculate quotas and compliance, Saudi Arabia’s oil production had jumped in June by 405,400 bpd compared to May, to reach 10.420 million bpd.According to a Reuters survey from last week, Saudi Arabia’s production in July was 10.65 million bpd, but exports were close to June’s levels because the Saudis increased domestic use at power plants and refineries. OPEC’s crude oil production jumped by 340,000 bpd in July from June, as Saudi Arabia pumped near-record volumes, the S&P Global Platts survey showed on Friday.The numbers leaked by Saudi and OPEC sources on Friday are in stark contrast with many of the surveys. Some of the Platts survey participants think that Saudi Arabia may have trouble placing its barrels on the market, and demand for Saudi crude may not have been as robust as the Kingdom had expected. “I think what they’re trying to do is, there’s a story in the market that the Saudis and the UAE and Kuwaitis and Russians were all vastly increasing production well ahead of any cutbacks from Iran, and I think they are trying to change the narrative,” a Platts survey participant said.
Discrepancy Over Saudi Oil Data Could Rattle Markets -Saudi Arabia has pressed independent energy analysts to alter their estimates of its oil production, people familiar with the matter said, a move that could put it in conflict with other members of the fractious Organization of Petroleum Exporting Countries. The world’s largest oil exporter has told OPEC it cut output in July, according to delegates, but estimates from the U.S. government and independent agencies say it boosted production—amounting to a huge difference of as much as half a million barrels a day. The data showing differing trends between official and independent estimates of Saudi output is set to be published Monday in the cartel’s monthly report, potentially causing confusion in trading markets about how much oil is reaching consumers. “The Saudis have been giving the impression they know what they are doing...They could lose credibility,” said John Hall, chairman of U.K. consultancy Alfa Energy. “It could increase volatility” in prices. The kingdom has called some agencies over the last week, asking that analysts change their estimates, according to people familiar with the discussions. Some agencies rebuffed the request but others bowed to the pressure, they said. There is no specific requirement that Saudi Arabia accurately report its production but the discrepancy is highly unusual and adds to tensions within OPEC over whether to boost output. Saudi officials told OPEC delegates last weekend that the kingdom’s production had fallen by 200,000 barrels to 10.29 million barrels a day in July, according to energy ministry officials. Oil prices rose 1.6% in New York Monday.But according to New York-based S&P Global Platts, a provider of energy information, Saudi production increased to about 10.6 million barrels a day last month. The Energy Information Administration, a branch of the U.S. Department of Energy, arrived at the same estimate.
Oil market enters post-OPEC era: Kemp (Reuters) - Saudi Arabia and Russia started to raise their oil production several weeks before the formal decision to increase output was taken by OPEC and its allies towards the end of June. Saudi Arabia increased its production to 10.49 million barrels per day (bpd) in June from 10.03 million in May and 9.87 million bpd in April, according to government data submitted to OPEC (tmsnrt.rs/2M7dhH5). Russia’s Rosneft also started to raise output from late May, anticipating a relaxation of the supply curbs, according to an investor presentation released with the company’s second-quarter results on Tuesday. The two largest suppliers within OPEC+ adjusted production first and then invited other members to ratify the decision that had already been taken when OPEC and non-OPEC producers met in Vienna on June 22 and 23. The sequence of events confirms the locus of decision-making and power has shifted decisively away from OPEC and OPEC+ to Saudi Arabia and Russia. OPEC has been marginalised as a decision-making group; the oil market has moved into a post-OPEC era where management is undertaken by Riyadh and Moscow with some political input from Washington. The implication that the decision to increase production was taken and started to be implemented well before the OPEC+ meeting is consistent with movements in hedge fund positioning, spot prices and spreads. The fact that the decision to raise output, and probably by how much, had already been taken helps explain much of what transpired in Vienna. Iran’s oil minister, who initially appeared to oppose any rise in output, eventually consented to a statement that signalled an increase but without numbers or country allocations. Because the output increase had already been agreed between Saudi Arabia and Russia, and was in fact underway, Iran had little choice. The same is true for a number of other OPEC members that opposed an output increase. The Iranian minister could have refused to agree to the statement, in which the output increase would have continued anyway, or agreed to a consensus statement that omitted contentious allocations. Unsurprisingly, the minister opted for the latter, since it provided a modicum of face-saving, but it shows the extent to which other members of OPEC now have minimal bargaining power.
Fund managers turn bullish on gasoline: Kemp (Reuters) - Fund managers are rebuilding a big bullish position in U.S. gasoline futures and options - even as they remain on the sidelines across other petroleum contracts.Hedge funds and other money managers raised their combined net long position in the six most important futures and options contracts linked to petroleum prices by 22 million barrels in the week to July 31 (https://tmsnrt.rs/2LZzVkT).Net position changes were small in Brent (+5 million barrels), NYMEX and ICE WTI (-5 million barrels), U.S. heating oil (+3 million barrels) and European gasoil (+5 million barrels).But portfolio managers raised their net long position in U.S. gasoline by 15 million barrels, after increasing it by 11 million barrels the week before.Funds' long positions in gasoline outnumber shorts by 105 million barrels, up from a recent low of 78 million at the end of June.Positioning has become exceptionally stretched, with bullish long positions outnumbering bearish short ones by more than 25:1.In other contracts, however, hedge fund activity has remained subdued over the last two weeks, after heavy liquidation in the middle of July.Long positions remain very high (1.16 billion barrels), but well below the record set at the start of the year (1.63 billion).Short positions continue to trend downward and now amount to only 110 million barrels in total across all six contracts, just 1 million barrels above multi-year lows.With the exception of gasoline, fund managers may have become less convinced prices will rise further - but few are willing to bet that they will pull back significantly.
Oil prices edge up after Saudi output dips; US drilling stalls - Oil prices edged up on Monday as Saudi crude production took a surprising dip in July and American shale drilling seemed to plateau. Markets also anticipated an announcement from Washington due later on Monday detailing renewed US sanctions against major oil exporter Iran. Spot Brent crude oil futures were trading at $73.26 per barrel at 0101 GMT on Monday, up 5 cents from their last close. US West Texas Intermediate (WTI) crude futures were up 12 cents, or 0.2 per cent, at $68.61 barrel. US energy companies last week cut oil rigs for a second time in the past three weeks as the rate of growth has slowed over the past couple of months. Drillers cut two oil rigs in the week to August 3, bringing the total count down to 859, Baker Hughes energy services firm said on Friday. Many US shale oil drillers posted disappointing quarterly results in recent weeks, hit by rising operating costs, hedging losses and a fall in crude prices away from 2018 highs reached between May and July. Outside the United States, top crude exporter Saudi Arabia pumped around 10.29 million barrels per day (bpd) of crude in July, two OPEC sources said on Friday, down about 200,000 bpd from a month earlier. That drop came despite a pledge by the Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, in June to raise output from July, with Saudi Arabia pledging a "measurable" supply boost. Still, with Russia, the United States and Saudi Arabia now all producing 10 million to 11 million bpd of crude, just three countries now meet around a third of global oil demand.
The Oil Bulls Are Back --Oil prices edged up at the start of the week on the implementation of the first round of sanctions on Iran. The Trump administration is talking tough about trying to get Iran’s oil exports to zero. That remains to be seen, but the market took on a bullish tinge at the start of the week, expecting losses from Iran to begin to pile up (more below). The Trump administration moved to implement sanctions on Iran this week, a decision announced months ago. The first round of sanctions applies to the sale of U.S. dollars to Iran, the purchasing of Iranian sovereign debt, Iran’s automotive industry and the trade in precious metals. The oil-related sanctions will take effect in November, and analysts expect countries to begin cutting their imports from Iran with that deadline now only three months away. Estimates on outages vary, but many analysts expect the losses to top 1 mb/d. Amrita Sen of Energy Aspects said oil could hit $90 by the end of the year. Related: Pakistan: Exxon Is Close To Making A Mega Oil Discovery In a surprise move, Saudi Arabia cut its oil production in July to 10.29 mb/d, down 200,000 bpd from a month earlier. The unexpected reduction came after Saudi Arabia reportedly could not find buyers for the price that it demanded, opting to cut output rather than offer discounts. The move indicates a desire by Riyadh to keep prices from falling from current levels.. Saudi Arabia resumed oil shipments through the Strait of Bab el-Mandeb after a two-week hiatus due to security concerns. Reuters argues that oil policy is now being driven by Saudi Arabia and Russia, and OPEC, as we have known, is obsolete. “OPEC is no longer the primary decision-making forum for producing countries trying to coordinate policy on output and prices. Real decision-making power has passed from OPEC and its group of allies into the hands of Saudi Arabia and Russia,” Reuters wrote.
Oil markets tread water ahead of renewed U.S. sanctions against Iran (Reuters) Oil markets started cautiously on Tuesday, as many traders in Asia were reluctant to take on new positions ahead of the introduction of U.S. sanctions against major crude exporter Iran. Spot Brent crude oil futures were at $73.74 per barrel at 0100 GMT on Tuesday, down 1 cent from their last close. U.S. West Texas Intermediate (WTI) crude futures were down 8 cents at $68.93 barrel. U.S. sanctions against major oil exporter Iran are set to kick in at 12:01 a.m. U.S. Eastcoast time (0401 GMT) on Tuesday. Traders in Asia said they were holding back on making bets on oil ahead of European and U.S. trading hours, which tend to see much higher liquidity and stronger price movements. “The U.S. seems hell-bent on regime change in Iran and is reimposing sanctions at midnight Washington time as the 6th becomes the 7th of August,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader. Many other countries, including U.S. allies in Europe and also China and India oppose the introduction of new sanctions, but the U.S. government said it wants as many countries as possible to stop buying Iranian oil. “It is our policy to get as many countries to zero as quickly as possible. We are going to work with individual countries on a case by case basis, but our goal is to reduce the amount of revenue and hard currency going into Iran,” said a senior U.S. administration official on Monday. ANZ bank said a 24-hour strike at three North Sea oil and gas platforms operated by Total, which started at 0500 GMT on Monday, was also supporting prices.
Oil Trades Flat After API Reports Major Crude Draw - The American Petroleum Institute (API) reported a crude oil inventory draw of 6 million barrels of United States crude oil inventories for the week ending Aug 4, compared to analyst expectations that this week would see a draw in crude oil inventories of 3.33 million barrels. Last week, the American Petroleum Institute (API) reported a build of 5.59 million barrels of crude oil.The API reported a build in gasoline inventories for week ending Aug 4 in the amount of 3.1 million barrels. Analysts predicted a draw of 1.7 million barrels.Oil prices were trading up modestly on Tuesday prior to the release of the API data on inventories, and failed to move much after data release, with WTI trading up 0.12% (+$0.08) at $69.09 per barrel, with Brent crude trading up 1.02% (+$0.75) at $74.50 per barrel as continued trade tensions with China persist and as the United States levied the first round of sanctions on Iran, with the promise of more to come in November. Muddying the waters is the mystery surrounding Saudi Arabia oil production figures which some say was up in July and others say was downUS crude oil production as estimated by the Energy Information Administration came off last week's new high of 11 million bpd, settling back down to 10. 9 million bpd this week, based on weekly estimates provided by the EIA.Distillate inventories were up this week—by 1.8 million barrels, compared to an expected build of 220,000 barrels. Inventories at t he Cushing, Oklahoma site decreased this week by 576,000 barrels.
WTI Dips As Big Product Build Offsets Crude Inventory Draw - WTI gave back overnight (Iran sanctions) gains coming in to the API print unchanged, then whipsawed up and down after a bigger than expected crude draw was offset by big builds on the product side. API
- Crude -6mm (-3mm exp)
- Cushing -576k (-1mm exp)
- Gasoline +3.1mm
- Distillates+1.8mm
After another surprise crude build last week, API was expected to be a decent draw and did but the big builds on the product side offset the gains. Additionally today, Energy Information Administration forecasts domestic oil output to average 11.7 million barrels a day next year, down from a previous estimate of 11.8 million a day. The agency also lowered its outlook for output this year. Last month, the agency said the U.S. is set to become the world’s top oil producer in 2019. The EIA still sees production reaching 12 million barrels a day by the end of next year.
Oil rises as U.S. sanctions on Iran stir supply worries (Reuters) - Oil prices rose on Tuesday after U.S. sanctions on Iranian goods went into effect, intensifying concerns that sanctions on Iranian oil, expected in November, could cause supply shortages. Renewed U.S. sanctions against OPEC member Iran officially went into effect at 12:01 a.m. EDT. The sanctions did not include Iran’s oil exports. The country exported almost 3 million barrels per day (bpd) of crude in July. The sanctions target Iran’s U.S. dollar purchases, metals trading, coal, industrial software and its auto sector. U.S. sanctions on Iran’s energy sector are set to be re-imposed after a 180-day “wind-down period” ending on Nov. 4. “It certainly is a reminder to everyone that the U.S. is serious about sanctions, and it’s doubtful they will grant waivers,” said John Kilduff, partner at Again Capital Management in New York. Brent futures LCOc1 rose 90 cents, or 1.2 percent, to settle at $74.65 a barrel, after hitting a session high of $74.90. U.S. West Texas Intermediate (WTI) crude futures CLc1 settled 16 cents, or 0.2 percent, higher at $69.17 a barrel, down from an earlier high of $69.83. Along with geopolitical tensions that could impact Iran’s crude output, traders are also keeping a close eye on U.S. inventories, which are expected to fall 3.3 million barrels in the week ended August 3, according to analysts polled on Tuesday. [EIA/S] Crude futures briefly rose in post settlement trade, with WTI at $69.07 a barrel, on data from the American Petroleum Institute that showed U.S. crude inventories fell 6 million barrels last week. Oil prices rose earlier in the trading session after the U.S. sanctions on Iran went into effect, but gains were limited as market participants lacked clear signs on just how much the proposed oil sanctions would affect Iranian crude output, Kilduff said.
$90 Oil Is A Very Real Possibility | OilPrice.com - U.S. sanctions on Iran could push oil prices up to $90 per barrel later this year. The first round of U.S. sanctions on Iran just took effect, a slew of measures targeting Iran’s currency and its financial sector. The U.S. sanctioned the trading of bank notes issued by the Iranian government, the trade of gold and precious metals, any transactions involving the Iranian rial, Iran’s sovereign debt and its automotive sector. The sanctions will tighten the screws on the Iranian economy, and the measures have already sent the currency tumbling. However, the more important sanctions – targeting Iran’s oil exports – take effect in November. There is still a wide range of possibilities for what is set to occur over the next three months in regards to the impact on production and exports. Originally, the Trump administration stated its desire to push Iran’s exports to “zero.” The subsequent spike in oil prices forced them to backtrack quite a bit. But, the Trump administration has made it clear that it wants to cut off as much Iranian supply as the market can bear without sending prices up too much. Those are, in many ways, conflicting goals, but it likely means that a significant chunk of Iranian production will be disrupted. “I don’t think the market has fully baked in losses over a few hundred thousand barrels [per day]. That’s where the price impact potentially would come in,” Richard Nephew, a senior research scholar at the Center on Global Energy Policy at Columbia University, told S&P Global Platts Capitol Crude on Monday. “I think Iran will lose between 600,000 and 1 million barrels per day in exports, and that’s up from what I would have thought back in February,” he added, citing the Trump administration’s determination to push exports as close to zero as possible and the willingness from countries around the world to comply with American sanctions.
WTI Drops Back Below $68 After Big Gasoline Build, Small Crude Draw - WTI has tumbled this morning (back below $68) as Bloomberg Intelligence Senior Energy Analyst Vince Piazzanotes that optimism for crude oil has softened from previous highs this summer. Elevated U.S. production, concerns about tariffs slowing global economic growth and rising world oil output have weakened sentiment. Renewed U.S. sanctions on Iran partially offset the bearishness. DOE:
- Crude -1.35mm (-3mm exp)
- Cushing (-1mm exp)
- Gasoline +2.9mm (-1.9mm exp) (first build since June)
- Distillates
After last week's surprise 3.8mm crude build, DOE reported a considerable smaller than expected (and API-reported) draw but a big build in gasoline and distillates is putting pressure on WTI prices...Cushing stocks have now fallen for 12 straight weeks to the lowest since 2014. Production fell for the 2nd week in a row (remember the EIA rule changes mean we are now only getting incremental 100k shifts rounded up or down)...
Oil Prices Slide As China Imposes 25% Tariff On U.S. Oil - Amid a steep correction in crude prices, China said on Wednesday that it would impose a 25-percent tariff on U.S. imports worth US$16 billion, including crude oil, diesel, cars, coal, and steel products, in retaliation to the U.S. list of US$16 billion worth of Chinese imports that will be taxed by U.S. authorities from August 23.On Wednesday, the Office of the United States Trade Representative (USTR) released a list of around US$16 billion worth of imports from China that will be subject to a 25-percent additional tariff as part of the United States’ response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property, the office said.“This second tranche of additional tariffs under Section 301 follows the first tranche of tariffs on approximately $34 billion of imports from China, which went into effect on July 6,” it added.China didn’t waste time in retaliating, and said today that its tariffs on 333 U.S. products, including crude oil, would also take effect on August 23. As the U.S.-China trade spat turns into a full-blown war with tariffs and retaliatory tariffs and threats of further tariffs, U.S. energy exports to China may suffer with Beijing now following through with its threat to slap tariffs on U.S. oil and oil product imports. China has, in recent years, become a key export market for growing U.S. energy exports. In fact, China is America’s second-largest crude oil customer after Canada. Chinese imports of U.S. crude oil in May, for example, averaged 427,000 bpd, more than any other destination and surpassing Canada’s 289,000 bpd imports, EIA data shows.
Crude Tumbles to Lowest Point in Nearly Seven Weeks-- Crude tumbled to a nearly seven-week low as the escalating trade dispute between the world's biggest economies overshadowed a decline in U.S. crude stockpiles. Futures declined 3.2 percent on Wednesday in New York, the biggest drop in more than two weeks. China will levy 25 percent tariffs on billions of dollars in U.S. gasoline, diesel and other goods in a matter of weeks. Meanwhile, American crude inventories fell by just a fraction of what was forecast, while the gasoline surplus expanded for the first time since June, the Energy Information Administration reported. Investors are focused on "the geopolitical issues that the market is facing right now, especially the Chinese tariffs on gasoline and refined products in general, which can certainly impact near-term pricing," said Adam Wise, who oversees an $8 billion energy portfolio at John Hancock Financial Services Inc. in Boston. "The key to future global demand growth, and therefore, the underlying commodity price, is China and so to the extent that you're seeing noise around that, you're going to get softness in the crude market." The U.S. benchmark crude has traded below $70 a barrel this month as the U.S.-China dispute percolated. As American sanctions isolate Iran, exports by OPEC's No. 3 producer have fallen and the Islamic Republic is relying more on its own tanker fleet to deliver oil to customers, according to ship-tracking data compiled by Bloomberg. West Texas Intermediate crude for September delivery dipped $2.23 to settle at $66.94 a barrel on the New York Mercantile Exchange. Brent for October settlement slid $2.37 to end the session at $72.28 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $6.03 premium to WTI for the same month.
Oil prices plunge to nearly 7-week low amid US-China trade tension - Oil prices fell sharply on Wednesday, hammered by an escalating trade dispute between the United States and China, weak Chinese import data and a smaller-than-anticipated drop in American crude stockpiles. U.S. West Texas Intermediate (WTI) crude futures ended Wednesday's session at a seven-week low, dropping $2.23, or 3.2 percent, to $66.94. Front-month Brent crude oil futures fell $2.40, or 3.2 percent, to $72.25 a barrel by 2:20 p.m. ET, after hitting a three-week low at the bottom of the session. WTI has now failed to break through $70 a barrel several times this week, and fell through a recent low near $67 on Wednesday, said John Kilduff, founding partner at energy hedge fund Again Capital. "If we get below $66 here, you're arguably violating the long-term uptrend channel," he said, referring to technical levels that bracket U.S. crude's upward trajectory this year. China on Wednesday threatened to slap a 25 percent tariff on $16 billion of U.S. goods. The move came in response to the Trump administration's plan to slap the same tariff on an equal amount of Chinese imports in the coming weeks. The mounting trade tension has raised concerns that global economic growth will slow, lowering demand for crude oil in the process. The list of U.S. goods released by China on Wednesday includes diesel, fuel oils and other petroleum products. China announced plans on Friday to place tariffs on U.S. liquefied natural gas. "It's certainly going to impact on movement between the U.S. and China, making it less efficient, meaning pressure on prices here," said Andrew Lipow, president of Lipow Oil Associates. Earlier on Wednesday, government data showed China's imports of crude oil in July rose slightly after falling in the previous two months. However, July imports still ranked as the third lowest monthly level this year, Reuters reported.
After Wednesday's Wild Ride, Crude Oil Stabilizes - A day after hitting a nearly seven-week nadir, crude oil futures regained traction on Thursday but still ended the day lower. “After falling to fresh lows Wednesday, oil prices stabilized on Thursday – trading in a tight range of less than a dollar per barrel for both the September WTI contract and the October Brent contract,” said Delia Morris, Houston-based commodity pricing analyst. “Yesterday’s developments around an escalating trade dispute between the U.S. and China continued to weigh on prices.” The WTI traded from $66.49 to $67.41 before settling at $66.81 a barrel – a 13-cent decline for the day. Meanwhile, the Brent lost 21 cents to end Thursday’s session at $72.07 a barrel. “The downside risk of China imposing tariffs on U.S. exports of gasoline and diesel, and also potentially crude oil, is driving price movements more than any future price benefits, such as the reinstatement of Iranian sanctions, which could remove substantial supply from global markets,” said Morris. September gasoline futures also declined Thursday, losing two cents to end the day just under $2.00 a gallon. Henry Hub natural gas futures bucked the overall trend for the day, edging upward less than a penny to settle at $2.955 per million British thermal units.
Crude Oil Prices Settle Lower on Concerns Trade War May Hurt Demand - - WTI crude oil prices settled lower Thursday on worries the escalating U.S.-China trade war may hurt global crude demand. On the New York Mercantile Exchange crude futures for September delivery fell 13 cents to settle at $66.81 a barrel, while on London's Intercontinental Exchange, Brent fell 0.19% to trade at $72.16 barrel. In what was a rocky session for oil prices, investors continued to fret about the impact of a trade war between the U.S. and China ahead of Chinese tariffs on U.S. goods, which come into effect Aug. 23, and threaten demand for oil-derived fuels. The Chinese Ministry of Commerce slapped a 25% tariff on an additional $16 billion worth of U.S. products on Wednesday. In a surprise move, however, the ministry removed U.S. crude from the list of goods subject to the levy, but included oil products. "Some traders swooped in and picked up oil as it is relatively cheap today, but there is still a lot of uncertainty surrounding its prospects," said David Madden at CMC Markets. "The Energy Information Administration report yesterday, pointed to a fall in U.S. demand," Madden said. ."Traders are also concerned about China's demand, given the country is locked in a trade spat with the U.S." Oil prices are on track to post a loss for the week after suffering their biggest one-day drop in more than three weeks Wednesday on the back of data showing a smaller-than-expected draw in U.S. crude supplies and rising product inventories. Inventories of U.S. crude fell by 1.351 million barrels for the week ended Aug. 3, missing expectations for a draw of 2.800 million barrels, according to data from the Energy Information Administration (EIA) on Wednesday. The smaller-than-expected draw in crude supplies came as imports rose by about 2.64 million barrels a day (bpd) and exports rose by 5.40 million bpd, data from EIA showed. Oil-market observers will likely turn to the Baker Hughes rig count data Friday for signs that U.S. output continues to tighten after data on Wednesday, showed U.S. oil output fell to 10.8 million barrels a day last week.
Slowing global economic momentum holds oil prices in check (Reuters) - Oil prices have stalled over the last two months as the prospect of tough sanctions on Iran’s exports from November is offset by concerns about a slowdown in global economic growth later in 2018 and 2019.Brent futures prices for crude delivered in 2019 have been flat since late May, after rising strongly since February, with the calendar strip steadying around $71-73 per barrel. The U.S. government estimates Iran’s oil exports will be cut by between 0.7 and 1.0 million barrels per day from November as a result of sanctions (“U.S. forecasts 50 percent cut in Iran oil sales”, Bloomberg, Aug. 10).But the prospective loss of crude has failed to lift prices as traders focus on compensating increases in production from Saudi Arabia and Russia, as well as slower growth in consumption.Brent’s six-month calendar spread has slumped from a steep backwardation in April and May into a contango structure as traders anticipate more oil availability (https://tmsnrt.rs/2MAQVuG).Some of the shift stems from the big increase in production by Saudi Arabia and Russia that started in late May and June, which should help build up stocks ahead of the reimposition of sanctions in November.But it also coincides with a weakening of the global economic outlook that suggests slower growth in consumption of diesel and other refined products later this year and into 2019.The Organization for Economic Cooperation and Development’s composite leading indicator has slipped since the start of the year and “is pointing tentatively to easing growth momentum in the OECD area as a whole”.Growth is easing in Canada, Germany, France and Britain though it remains stable in the United States and Japan (“Composite Leading Indicators,” OECD, Aug. 8).The World Trade Organization’s trade outlook indicator also points to a slowdown in the momentum of global trade growth in the months ahead (“World Trade Outlook Indicator”, WTO, Aug. 9).Export orders have declined steadily since the start of the year, while air freight volumes and container port throughput are growing above trend but appear past their peak, according to the WTO. The WTO notes air freight has proven to be a timely indicator of overall world trade and an early signal of turning points in economic activity.
IEA raises 2019 oil demand growth estimate to 1.5 million b/d from 1.4 million b/d — The International Energy Agency on Friday raised its estimate of world oil demand growth next year to 1.5 million b/d from 1.4 million b/d, anticipating the impact of price rises will peter out, and highlighted robust non-OPEC oil output growth. In its monthly oil market report the IEA also raised its estimates of the "call" on OPEC, or the need for OPEC crude, by 300,000 b/d in 2018 to 32.3 million b/d, and by 500,000 b/d in 2019 to 31.9 million b/d. However, following a strong first quarter this year it said world oil demand had grown by a mere 750,000 b/d on the year in the second quarter, constrained by sharp price rises and currency depreciations, and highlighted "risks to the forecast from escalating trade disputes and rising prices if supply is constrained." European oil demand fell 120,000 b/d on the year in the second quarter as the stimulus from low prices ended, it said. By contrast, China and India remain "on course to grow solidly this year," the IEA said. "Oil demand growth is expected to remain relatively subdued in Q3 2018 before rebounding in Q4 2018," it added. On the supply side, the IEA raised its estimate for growth in non-OPEC oil output next year to 1.9 million b/d, from 1.8 million b/d in its previous report. Growth will be led by the US, with a 1.25 million b/d increase, Brazil with an extra 350,000 b/d, and Canada and Russia each increasing output by 210,000 b/d. OPEC held its production steady in July at 32.18 million b/d, with Saudi Arabia producing 10.35 million b/d, the IEA said. Russia, OPEC's partner in production cuts, increased its crude and condensate output by 150,000 b/d in July to 11.21 million b/d, the IEA added.. Iran's output was the lowest since April last year at 3.75 million b/d as Europe reduced its Iranian crude imports and South Korea completely stopped its Iranian imports. But Iranian shipments to Asia overall crept up to 1.65 million b/d, and shipments to India reached a record 770,000 b/d, the IEA said. It said second-largest producer Iraq had raised its production by 200,000 b/d in July to 4.56 million b/d, with exports from the south of the country at a record high as Basra Light exports hit 3.54 million b/d, offset by subdued volumes through the Kurdistan pipeline to Turkey of 330,000 b/d. The IEA also said oil stocks in the OECD countries had reduced to 32 million barrels below the five-year average in June, falling seasonally by 7.2 million barrels on the month to 2.82 billion barrels.
Oil Prices Take A Breather As Supply Jumps - Oil markets took a breather at the end of the week as new supply from Russia and Saudi Arabia calmed fears of a tightening market, but there are plenty of bullish catalysts on the horizon. The IEA said in a new report that more supply from Saudi Arabia and Russia has eased supply concerns, but that the current lull in the oil market might only be temporary with sanctions on Iran looming. . The International Energy Agency said that higher output from Saudi Arabia and Russia have tamped down concerns about supply. The partial recovery in Libya has also dialed down the danger to the oil market. The IEA slightly revised up its forecast for demand growth in 2019 to 1.5 million barrels per day (mb/d), up 0.1 mb/d from last month. For this year, however, demand growth slowed in the second and third quarter, after a blistering first quarter. This “cooling down” of the oil market – both in terms of fewer disruptions and slower demand – has caused prices to fall back from a few weeks ago. But it could be temporary. With Iran sanctions set to take effect in November, it could be “very challenging” to ensure adequate global supply, the IEA said. . Despite having proposed to include American crude oil under its list of tariff targets, China left oil off of its list this week when it imposed $16 billion worth of tariffs on U.S. products. The decision, analysts say, is a reflection of China’s import needs, particularly with supplies from Venezuela in decline and supplies from Iran potentially disrupted. Still, Chinese refiners have begun ratcheting down purchases of American oil and LNG anyway, in anticipation of potential tariffs. The trade fight helped push down oil prices this week, even though crude oil was not caught up in the new tariffs, as the oil market grew concerned about the impact on the global economy.
US Oil Rig Count Grows By 10 - U.S. energy companies this week added the most oil rigs since May as drillers follow through on plans to spend more on exploration and production in anticipation of higher crude prices in 2018 than recent years.Drillers added 10 oil rigs in the week to Aug. 10, bringing the total count to 869, the highest level since March 2015, Baker Hughes said in its weekly report. That rig count increase occurred despite U.S. crude prices being on track to fall for a sixth week in a row for the first time since August 2015 on worries trade tensions between the United States and China could hurt oil demand.The U.S. rig count, an early indicator of future output, is higher than a year ago when 768 rigs were active as energy companies have been ramping up production in anticipation of higher prices in 2018 than previous years.So far this year, U.S. oil futures have averaged $66.28 per barrel. That compares with averages of $50.85 in 2017 and $43.47 in 2016.Looking ahead, crude futures were trading near $67 for the balance of 2018 and over $64 for calendar 2019. In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co. this week said the E&P companies it tracks, including Anadarko Petroleum Corp., Apache Corp. and Cabot Oil and Gas Corp., have provided guidance indicating an 18% increase this year in planned capital spending.
Baker Hughes: US Drillers Add Most Oil Rigs Since May (Reuters) - U.S. energy companies this week added the most oil rigs since May as drillers follow through on plans to spend more on exploration and production in anticipation of higher crude prices in 2018 than recent years. Drillers added 10 oil rigs in the week to Aug. 10, bringing the total count to 869, the highest level since March 2015, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday. That rig count increase occurred desite U.S. crude prices being on track to fall for a sixth week in a row for the first time since August 2015 on worries trade tensions between the United States and China could hurt oil demand. More than half the total oil rigs are in the Permian basin in west Texas and eastern New Mexico, the nation's biggest shale oil field. Active units there increased by six to 485, the most since January 2015. The U.S. rig count, an early indicator of future output, is higher than a year ago when 768 rigs were active as energy companies have been ramping up production in anticipation of higher prices in 2018 than previous years. So far this year, U.S. oil futures have averaged $66.28 per barrel. That compares with averages of $50.85 in 2017 and $43.47 in 2016. Looking ahead, crude futures were trading near $67 for the balance of 2018 and over $64 for calendar 2019 . In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co this week said the exploration and production (E&P) companies it tracks, including Anadarko Petroleum Corp, Apache Corp and Cabot Oil and Gas Corp, have provided guidance indicating an 18 percent increase this year in planned capital spending. In recent weeks, Anadarko, Apache, Cabot and other energy firms have boosted the amount of capital they plan to spend on drilling and completions in 2018. Cowen said the E&Ps it tracks now expect to spend a total of $85.2 billion in 2018, up from an estimate of $83.6 billion last week. That compares with projected spending of $72.2 billion in 2017.
US Oil & Gas Rigs Jump By 13; Analysts Bullish on International Growth - Oil and natural gas supply and price signals are still telling exploration and production (E&P) companies to drill, according to the latest U.S. rig count from Baker Hughes, a GE company (BHGE).For the week ending Aug. 10, BHGE found that the number of active oil rigs increased by 10 to 869, while the number of rigs drilling for natural gas increased by three to 186. Respectively, these figures represent 13% and 3% premiums to last year’s rig count for the week.The rig report came during a week where both natural gas and crude prices enjoyed gains. With help from some late-session buying, September natural gas rallied for a sixth straight day on Thursday to close at $2.955. Meanwhile, September crude futures are still comfortably above the $60/bbl mark. The contract opened Friday morning approximately 41 cents higher than Thursday’s close at $67.22/bbl.Taking a closer look at the BHGE report for the week, the most action -- unsurprisingly -- took place in the Permian Basin. According to the data, the basin added five rigs for the week to finish at 485, with five rigs added to Delaware sub-basin, one added to the Midland sub-basin and one rig being laid down in the “other Permian” classification.Around the rest of the country, gains and losses were minimal. The Utica Shale added one rig to 24, while the Marcellus Shale dropped one to 52. The SCOOP (South Central Oklahoma Oil Province), Barnett and Eagle Ford plays all lost one apiece to 29, two and 79 rigs, respectively, while the Granite Wash and Haynesville each added one rig to total 17 and 49 rigs respectively.On the international drilling scene, a team from Evercore ISI said “global oil markets have tightened,” which will keep the commodity’s price elevated for the next few years leading to a “strong and long” global upcycle. “Global E&P spending must accelerate significantly, particularly internationally, as it becomes increasingly clear that the current state of projects will inadequately produce the supply to meet demand over the next few years,”
Oil set for sixth weekly loss as trade war stokes demand fears --Oil was poised for a sixth weekly loss in New York, the longest run of declines in three years, as a trade war between the world's two biggest economies stokes fears of weaker growth in energy demand. Futures rose 0.7 percent, but were still headed for a 1.8 percent loss this week. The U.S. and China are threatening to slap additional tariffs on imports from each other in a matter of weeks, with the tit-for-tat protectionist measures set to expand. At the same time, fears about global oil supplies have receded after producers pumped more, according to the International Energy Agency. Oil is trading near a seven-week low on fears the intensifying trade tension will crimp global economic growth and increase financial vulnerability. Supply fears could still return to the fore later this year due to U.S. sanctions on Iran, the IEA said, with some crude buyers already looking elsewhere for supplies before the restrictions take effect in November. West Texas Intermediate crude for September delivery traded at $67.27 a barrel on the New York Mercantile Exchange, up 46 cents, at 8:31 a.m. in New York. The contract slipped 13 cents to $66.81 on Thursday. Prices are headed for the longest run of weekly declines since August 2015. Total volume traded was about 15 percent below the 100-day average.Brent for October settlement rose 51 cents to $72.58 on the London-based ICE Futures Europe exchange. Prices dropped 21 cents to $72.07 on Thursday, and are headed for a 0.8 percent drop this week. The global benchmark crude traded at a $6 premium to WTI for the same month.
Oil prices end up for the day on forecast for rising demand, but lower for the week -- Oil prices settled higher Friday as a forecast for rising global crude demand, and supply boosts from Russia, offset lingering concerns about trade tensions cutting global consumption of energy products.The International Energy Agency raised its forecast for global oil demand growthby 110,000 barrels a day to 1.5 million barrels for 2019. Its monthly report also said global supply had risen by 300,000 barrels a day last month, mainly because of higher output from Russia and higher output from the Organization of the Petroleum Exporting Countries. Global markets were also watching developments in Turkey, where a currency crisis bubbles, and in Russia, for any potential implications for global economic growth. West Texas Intermediate futures for September delivery on the New York Mercantile Exchange rose 82 cents, or 1.2%, to $67.63 a barrel. The gain halted a two session skid for the contract. Brent crude for October 74 cents, or 1%, to $72.81 a barrel. Both contracts booked weekly declines, with WTI posting a fall over the 5-session stretch of 1.3%, and Brent posting a drop over the same period of 0.6%. Investors have also been monitoring the back-and-forth tariffs introduced by the U.S. and China, fearing that the trade spat could eventually impact global growth. So far, U.S. crude has been excluded from China’s list. Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil increased by 10 to 869 for the week, coming after the report showed a decline of 2 in the earlier period. The total active U.S. rig count, which includes oil and natural-gas rigs, increased by 13 to 1,057 from 1,044, according to Baker Hughes. September natural gas lost 1.1 cent, or 0.4%, to settle at $2.944 per million British thermal units, snapping what had been a sixth straight advance for the contract, its longest stretch of gains since Nov. 10, 2017. For the week, the natural-gas contract climbed by 3.2%.
America's About To Unleash Its NOPEC 'Superweapon' Against The Russians & Saudis - The US Congress has revived the so-called “NOPEC” bill for countering OPEC and OPEC+. Officially called the “No Oil Producing and Exporting Cartels Act”, NOPEC is the definition of so-called “lawfare” because it enables the US to extra-territorially impose its domestic legislation on others by giving the government the right to sue OPEC and OPEC+ countries like Russia because of their coordinated efforts to control oil prices.Lawsuits, however, are unenforceable, which is why the targeted states’ refusal to abide by the US courts’ likely predetermined judgement against them will probably be used to trigger sanctions under the worst-case scenario, with this chain of events being catalyzed in order to achieve several strategic objectives. The first is that the US wants to break up the Russian-Saudi axis that forms the core of OPEC+, which leads to the second goal of then unravelling the entire OPEC structure and heralding in the free market liberalization of the global energy industry. This is decisively to the US’ advantage as it seeks to become an energy-exporting superpower, but it must neutralize its competition as much as possible before this happens, ergo the declaration of economic-hybrid war through NOPEC. How it would work in practice is that the US could threaten primary sanctions against the state companies involved in implementing OPEC and OPEC+ agreements, after which these could then be selectively expanded to secondary sanctions against other parties who continue to do business with them.The purpose behind this approach is to intimidate the US’ European vassals into complying with its demands so as to make as much of the continent as possible a captive market of America’s energy exporters, which explains why Trump also wants to scrap LNG export licenses to the EU.
Iranian Navy Holds Drills In Persian Gulf After Threats To Block Strait Of Hormuz Iran's Revolutionary Guard on Sunday confirmed rumors that they moved up the timing of a large naval drill in the Persian Gulf several days ahead of the Islamic Republic's planned annual exercises, according to Reuters. State news agency IRNA said the war games were aimed at "confronting possible threats" from enemies. “This exercise was conducted with the aim of controlling and safeguarding the safety of the international waterway and within the framework of the program of the Guards’ annual military exercises,” Guards spokesman Ramezan Sharif said, according to IRNA. The U.S. military’s Central Command on Wednesday confirmed it has seen increased Iranian naval activity. The activity extended to the Strait of Hormuz, a strategic waterway for oil shipments the Revolutionary Guards have threatened to block. –Reuters While Iran didn't comment on the size of the drill, Haaretz reported on Friday that "more than 100 vessels" would participate, citing a U.S. official. The U.S. military’s Central Command on Wednesday confirmed it has seen an increase in Iranian naval activity, including in the Strait of Hormuz, a strategic waterway for oil shipments that Iran’s Revolutionary Guards have threatened to block. “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,” said Navy Captain Bill Urban, the chief spokesman at Central Command, which oversees U.S. forces in the Middle East. A third official said the Iranian naval operations did not appear to be affecting commercial maritime activity. -Haaretz
Iran arrests central bank's top foreign exchange official - The Iranian central bank's top foreign exchange official has been arrested, according to a judiciary spokesperson, as tensions rise in advance of the imminent return of sanctions by the United States.Ahmad Araghchi, who was a vice-governor at the bank in charge of forex, was arrested along with several other unnamed individuals, including a government clerk and four currency brokers, state broadcaster IRIB cited spokesperson Gholam-Hossein Mohseni Ejeie as saying on Sunday.The arrests come as Iranians brace for the reimposition of US sanctions on Tuesday, following Washington's withdrawal from a multinational nuclear deal with Iran. Meanwhile, news of protests continues to filter in from around the country, driven by concerns over water shortages, the economy and wider anger at the political system.The government of President Hassan Rouhani has also faced heavy criticism from conservative opponents, who have demanded action on corruption and renewed efforts to rescue the economy.On Sunday, his cabinet announced it was easing foreign exchange rules, undoing a disastrous attempt to fix the value of the rial in April. The April decision - combined with fears over US sanctions - fuelled a run on the currency that saw it lose more than half its value.
Iran says delivery of ATR planes "positive" gesture of Europe - (Xinhua) -- Delivery of five ATR 72-600 passenger aircraft to Iran is a positive step by the European Union to fulfil its obligations subject to the bilateral deals signed in the aftermath of the 2015 international nuclear accord, an Iranian minister said on Sunday. The French-Italian aircraft manufacturer ATR delivered five more turboprops to Iran on Sunday, official IRNA news agency reported. The ATR 72-600 passenger planes landed at Tehran's international Mehrabad airport on Sunday morning, a day before the United States reimposed the first round of sanctions on Iran. Abbas Akhoundi, Iranian minister of road and urban development, expressed hope that Iran's cooperation with European countries, as well as with China, Russia, India, Turkey and neighboring states, will help Iran tackle the existing difficult situation due to the U.S. sanction threats. The world is facing challenges that U.S. President Donald Trump has brought about, but it is important to know how to act under such conditions to remain unaffected, said Akhoundi at the receiving ceremony of the ATR planes. Besides, Farzaneh Sharafbafi, head of Iran Air airline, said the procedure is underway to receive remaining ATR planes. Despite the U.S. deadline for European and its own companies to cut their relations with Iran, "we managed to secure the delivery of (part of) the remaining ATRs through negotiations with French and Italian officials," Sharafbafi said.
Russia Slams Leak Of Secret Memo On US-Moscow Cooperation in Syria -- There's been a number of hugely significant developments in Syria at the end of this week— all of which point to the war's end, with President Bashar al-Assad and the Syrian Army ultimately emerging firmly victorious. Even Israel seems to have changed its tune, with Defense Minister Avigdor Lieberman telling reporters on Thursday, "From our perspective, the situation is returning to how it was before the civil war, meaning there is a real address, someone responsible, and central rule."But now there's a diplomatic scramble underway and exchange of accusations related to potential Russia-United States cooperation on rebuilding Syria, repatriating refugees, and rooting out the remaining jihadist pockets. On Friday Reuters published a bombshell report based on a leaked US government memo revealing a secret deal possibly in the works between top Russian and American generals initiated by the Russian side last month during the very week that President Donald Trump met with Russian President Vladimir Putin in Helsinki .Russia has since slammed the leak, but has confirmed it confidentially extended the hand of cooperation on Syria. According to the Reuters report, Russia has used a closely guarded communications channel with America’s top general "to propose the two former Cold War foes cooperate to rebuild Syria and repatriate refugees to the war-torn country, according to a U.S. government memo."
US Coalition Cooperates With Al-Qaeda In Yemen, Associated Press Confirms -- A new Associated Press report confirms what was long ago detailed by a number of independent investigative journalists, and even in some instances buried deep within sporadic mainstream reports of past years: the US-coalition in Yemen is actually cooperating with al-Qaeda terrorists in the campaign to dislodge Shia Houthi militants.The AP report begins dramatically as follows:Again and again over the past two years, a military coalition led by Saudi Arabia and backed by the United States has claimed it won decisive victories that drove al-Qaida militants from their strongholds across Yemen and shattered their ability to attack the West.Here’s what the victors did not disclose: many of their conquests came without firing a shot.That’s because the coalition cut secret deals with al-Qaida fighters, paying some to leave key cities and towns and letting others retreat with weapons, equipment and wads of looted cash, an investigation by The Associated Press has found. Hundreds more were recruited to join the coalition itself. And contrary to the normative response of US officials to such allegations, which as in the case of US support to jihadists in Syria typically runs something like "we didn't know" while hiding behind a system of 'plausible deniability' — in the case of Yemen officials involved have now admitted to the AP that coalition allies knowingly allowed al-Qaeda in the Arabian Peninsula (AQAP) to survive and flourish.
Pro-ISIS Media Outlet Signals Imminent Biological Attack On The West -- Over the past week, a pro-Islamic State (ISIS) media group has published a series of posters encouraging biological attacks on Western targets. Excerpt from the transcript (MEMRI):“While the world is watching silently! The European governments are developing satanic chemical attack systems to be brutally tested on the cities and peoples, which refused humiliation and humiliation so the Muslim countries in Africa and Khorsan turned into testing fields of phosphorus bombs and toxic gas. The crusader alliance continues bombing Mosul, Raqqa, Al-Anbar and others… with various types of chemical bombs and incendiary gases. And similar to the enemies of God! We invite you, oh Muwahid [monotheist] who lives between the Mushrikeen [idolaters] that you clean the dust of humiliation and to renew the fatal nightmare in the land of the devil worshipers with a silent destructive weapon. It can not be detected or tracked it can not be escaped or avoided with simple equipment, extract the most harmful viruses and infection bacteria then release them safely by following these simple steps: First, try to find the most severe epidemics to treat.” “Hantavirus, derived from the feces and droppings of rats that carry the plague of the most serious plague at the moment. The Cholera virus is extracted from the patient’s waste. Typhoid bacteria, found in human and animal wastes in general and frequent in the dirty areas.”: “Second, spread the bacteria extracted by type as follows.”: “Sprinkle the liquid substances or the basics of bacteria with drinking water to take effect automatically. Sprinkle the crushed material on exposed fruit and public foods or scatter them in the air in crowded places – with caution.”
Saudi Arabia to freeze new trade with Canada, recalls ambassador -- Saudi Arabia said on Sunday that it is ordering Canada's ambassador to leave the country and freezing all new trade and investment transactions with Canada in a spat over human rights."We consider the Canadian ambassador to the Kingdom of Saudi Arabia persona non grata and order him to leave within the next 24 hours," Saudi Arabia's Foreign Ministry said on Twitter. The ministry added that Saudi Arabia is recalling its ambassador to Canada. Both the Saudi and Canadian ambassadors were away on leave at the time of the announcement.The dispute appears to be over a tweet on Friday from Global Affairs Canada."Canada is gravely concerned about additional arrests of civil society and women's rights activists in Saudi Arabia, including Samar Badawi. We urge the Saudi authorities to immediately release them and all other peaceful human rights activists," the tweet said. The Saudi Foreign Ministry called the use of "immediately release" in Canada's tweet "unfortunate, reprehensible, and unacceptable in relations between states."It dismissed Canada's characterization of the activists as "an incorrect claim" and said Canada's attitude was "surprising." "Any other attempt to interfere with our internal affairs from Canada, means that we are allowed to interfere in Canada's internal affairs," it said.Saudi state television later reported that the Education Ministry was coming up with an "urgent plan" to move thousands of Saudi scholarship students out of Canadian schools to take classes in other countries. The sudden and unexpected dispute bore the hallmarks of Crown Prince Mohammed bin Salman, Saudi Arabia's 32-year-old future leader, whose recent foreign policy exploits include the war in Yemen, the boycott of Qatar and Lebanese Prime Minister Saad Hariri's surprise resignation broadcast during a visit to the kingdom. Hariri later rescinded the resignation, widely believed to be orchestrated by Riyadh, and returned to Beirut.
Saudi Arabia’s Spat With Canada Risks Backlash From Investors - Saudi Arabia’s diplomatic rupture with Canada risks complicating the kingdom’s efforts to woo foreign investors as it seeks to overhaul its economy. Saudi Arabia on Monday declared Canada’s ambassador persona non grata, and gave him 24 hours to leave the country. The decision to expel the Canadian ambassador, Dennis Horak, came after Canada’s Foreign Ministry criticized Saudi Arabia for arresting human-rights activists. In pushing back against what it described as an unacceptable attempt by Canada to interfere in its domestic affairs, the Saudi Foreign Ministry announced it “will put on hold all new business and investment transactions with Canada.” The diplomatic spat with Canada will also affect 7,000 Saudi students who are currently in Canada on government-sponsored scholarships. The spokesman for Saudi Arabia’s Ministry of Education, Mubarak al-Osaimi, on Monday said that the kingdom would stop funding scholarships and training programs in Canada, and that it would help transfer Saudis affected by the decision to other countries. Separately, Saudia airlines, the national carrier, announced it would suspend flights to Canada from Aug. 13. Canada’s Foreign Minister Chrystia Freeland said Monday the government was “deeply concerned” by Saudi Arabia’s move to expel Canada’s ambassador on the basis of statements “in defence of human-rights activists detained in the kingdom.” At a press conference in Vancouver, she said officials were waiting to hear from Saudi Arabia about how the relationship between Canada and the kingdom unfolds given this diplomatic row. “We stand by what we have said,” she said. “We will always speak up for human rights and women’s rights.” Saudi Arabia’s Crown Prince Mohammed bin Salman has launched a grand reform plan, called Vision 2030, that aims to transform the kingdom from a staunchly conservative petrostate to a more socially liberal country less dependent on oil. But Prince Mohammed has also made it clear he won’t brook outside criticism of key decisions—a stance that analysts say could threaten capital flows that Saudi Arabia needs for its overhaul. “Branding Saudi Arabia as an attractive destination for investment and trade is one of the underlying assumptions of Saudi Vision 2030,” said Thomas Juneau, an assistant professor and Middle East expert at the University of Ottawa. “Impulsive foreign-policy decisions like this have the exact opposite effect.”
Saudi Arabian agency stops buying Canadian wheat, barley (Reuters) - Saudi Arabia’s main state wheat buying agency has told grains exporters it will no longer buy Canadian wheat and barley in its international tenders, European traders said on Tuesday, as a diplomatic dispute between the two countries escalates. Traders said they had received an official notice from the Saudi Grains Organization (SAGO) about its decision. Canada on Monday refused to back down in its defense of human rights after Saudi Arabia froze new trade and investment and expelled the Canadian ambassador in retaliation for Ottawa’s call to free arrested Saudi civil society activists. “As of Tuesday August 7, 2018, Saudi Grains Organization (SAGO) can no longer accept milling wheat or feed barley cargoes of Canadian origin to be supplied,” a copy of the notice seen by Reuters said. One European trader said it was not clear if the decision involved only new purchases or delivery of previously agreed contracts. “But I would not deliver Canadian grains to Saudi Arabia now, even on previous contracts,” the trader added. Another trader said: “This is to me clearly part of the diplomatic dispute between Saudi Arabia and Canada, there is no other reason.” Winnipeg-based grain trader G3 said it was continuing with business as normal. G3 is a partnership of Saudi Arabian agriculture company SALIC and U.S. grain handler Bunge Ltd (BG.N). The SAGO agency generally specifies that wheat purchased at international tenders must be sourced from the European Union, North America, South America or Australia. In SAGO’s last purchase of 625,000 tonnes of wheat in an international tender on July 16, Canada was seen as a possible supplier. Analysts said the Middle East had been importing less wheat from Canada and the United States in recent years due to higher shipping costs, while China has become a bigger barley buyer. “There will be plenty of opportunities for Canada to sell barley and wheat elsewhere,”
Saudi Arabia suspends Toronto flights in row with Canada –-- Saudi Arabia's state airline has suspended its direct flights to Toronto after Canada called for the release of detained activists for civil society and women's rights.The Middle Eastern country has also frozen all trade and expelled Canada's ambassador over the "interference".Canada has responded by saying it "will continue to advocate for human rights".Those held include the Saudi-American human rights campaigner Samar Badawi, sister of jailed blogger Raif Badawi.Canada's Foreign Affairs Minister Chrystia Freeland said she was "deeply concerned" by the diplomat's expulsion, but added: "Canada will always stand up for the protection of human rights, including women's rights and freedom of expression around the world. "We will never hesitate to promote these values and we believe that this dialogue is critical to international diplomacy." Her Saudi counterpart, Adel al-Jubeir, had earlier tweeted that Canada's position was based on "misleading information", adding that anyone arrested was "subject to Saudi laws that guarantee their rights". The leading Saudi women's rights campaigner Manal al-Sharif thanked Canada for "speaking up" and asked when other Western powers would do the same. In what appeared to be a further sign of deteriorating relations between the two countries, a verified Twitter account, which is reportedly linked to Saudi authorities, shared an image of a plane flying towards Toronto's famed CN Tower. The image was overlaid with text, including a quote which read "he who with what doesn't concern him finds what doesn't please him".
Saudi Arabia to Continue Selling Oil to Canada Despite Diplomatic Tensions - Saudi Arabia’s oil shipments to Canada will remain steady despite growing tensions between the two countries, the Saudi energy minister has promised. “The current diplomatic crisis between Saudi Arabia and Canada will not, in any way, impact Saudi Aramco’s relations with its customers in Canada,” he promised. The clash between the two countries arose following Saudi Arabia’s move to detain activist Samar Badawi. Canadian Minister of Foreign Affairs Chrystia Freeland criticized the action and voiced her country’s concerns, demanding all detained activists be released. Responding to Canada’s comments, Riyadh has frozen all new trade and investment in Canada, canceled flights via its national carrier to Toronto and ordered thousands of Saudi students studying through official scholarships in Canada to leave and find new academic programs in other countries. The kingdom further forbid Saudis from seeking medical treatment in the North American country, saying it would move patients already in Canada to hospitals elsewhere.
Saudi Arabia Crucifies Man In Mecca While Decrying Canada's Human Rights - Saudi Arabia has executed a man by crucifixion inside Mecca, considered Islam's holiest city, Bloomberg reports. It was carried out Wednesday, during the same week a Saudi spat with Canada over human rights criticisms has dramatically escalated into a full-blown diplomatic and economic war. Ironically the crucifixion was carried out a day after Saudi-owned media began calling out Canada's human rights record through a series of bizarre videos aired on state channels, in response to Canada's own initial criticism of the kingdom's detention of activists. The crucifixion sentence, considered the kingdom's most brutal method of capital punishment, is typically reserved for the most egregious of crimes — in this case a Myanmar man was convicted of breaking into a woman's home, threatening her with a gun, and subsequently murdering her by repeated stabbing. Other charges the immigrant faced ranged from theft of weapons to separate instances of attempted rape and murder, including in a separate home invasion charge. The accused criminal, Elias Abulkalaam Jamaleddeen, was executed after the crucifixion penalty was upheld by the country's supreme court and given final approval by the king. Like with the more common and "routine" Saudi capital punishment method of public beheading, crucifixions are intended to send a severe deterrent message to the broader Saudi populace. Amnesty International provides the following description of the gruesome practice:Crucifixions take place after the beheading. The body, with the separated head sewn back on, is hung from or against a pole in public to act as a deterrent. The pole is sometimes shaped in the form of a cross, hence the use of the term “crucifixion”. Saudi Arabia is among the world's top executioners, and beheaded over 48 people within only the first four months of 2018, according to Human Rights Watch.
Did Saudis Just Threaten Canada With 9/11-Style Attack for Crime of Criticizing Their Atrocious Human Rights Record? -- As tensions between Saudi Arabia and Canada continue to soar after the Canadian Foreign Ministry dared to condemn the kingdom's imprisonment of dissidents and human rights activists, a verified Twitter account connected to the Saudi government tweeted a graphic on Monday that appeared to threaten Toronto with a 9/11-style attack. The image—which was deleted after it sparked widespread outrage—showed an Air Canada jet flying in the direction of the 1800-foot CN Tower, invoking memories of the September 11, 2001 attack on the World Trade Center that killed thousands, including 26 Canadians. Overlaying the image was the quote, "He who interferes with what doesn't concern him finds what doesn't please him." After deleting the initial tweet and replacing it with a graphic without the Canadian jet, the Saudi account apologized for posting the "inappropriate" image and implausibly claimed that the message behind the graphic—which was clear as day to most observers—was misinterpreted. The Saudi account insisted that the Canadian jet flying toward CN Tower was supposed to represent Riyadh's expulsion of the Canadian ambassador, who was kicked out following Canada's criticism of Saudi Arabia's notoriously appalling human rights record. Saudi Arabia's Media Ministry later shut down the infographic account and said it is investigating the matter. Journalists and other commentators from Canada and around the world were wholly unimpressed by Saudi Arabia's explanation and apology. Highlighting the well-known fact that 15 of the 19 September 11th hijackers were Saudi citizens, German political scientist Marcel Dirsus offered the Saudi government some free PR advice: "If you represent a kingdom which brought forth the majority of 9/11 attackers, don't use a plane flying into a tower in North America when you have a disagreement with Canada. It doesn't help."
Canada to Ask Allies to Help Cool Saudi Dispute; US Offers No Aid -- Canada plans to seek help from the UAE and Britain to defuse an escalating dispute with Saudi Arabia, sources said on Tuesday, but close ally US made clear it would not get involved. The Saudi government on Sunday recalled its ambassador to Ottawa, barred Canada‘s envoy from returning and placed a ban on new trade, denouncing Canada for urging the release of jailed rights activists. Riyadh accused Ottawa on Tuesday of interfering in its internal affairs. One well-placed source said the Liberal government of Prime Minister Justin Trudeau – which stresses the importance of human rights – planned to reach out to the UAE. “The key is to work with allies and friends in the region to cool things down, which can happen quickly,” said the source, who declined to be identified because of the sensitivity of the situation. Another source said Canada would also seek help from Britain. The British government on Tuesday urged the two nations to show restraint. The US, traditionally one of Canada‘s most important friends, stayed on the sidelines. US President Donald Trump – who criticised Trudeau after a Group of Seven summit in June – has forged tighter ties with Riyadh. “Both sides need to diplomatically resolve this together. We can’t do it for them; they need to resolve it together,” US State Department spokeswoman Heather Nauert told a briefing.
Saudi claims ‘badge of pride’ in break with Canada | Asia Times: Saudi Arabia on Wednesday pulled the plug on medical care for its citizens in Canada, the latest move in a crisis analysts say has less to do with Ottawa and more to do with Riyadh’s desire to project power. The sudden deterioration in ties started with a Tweet.Canada’s foreign ministry raised alarm over the arrest of a number of Saudi activists, including Samar Badawi, the sister of the jailed blogger Raif Badawi. Raif’s wife and children reside in Canada. Most irksome to the Saudi authorities, Canada labeled those arrested as “peaceful human rights activists” and called for their “immediate release.” The Saudi foreign ministry snapped back with a barrage of Tweets, calling the Canadian appeal an attack on its sovereignty, announcing a freeze on new trade deals, and declaring the Canadian ambassador a “persona non grata.” Riyadh quickly cancelled all academic scholarships for its students in Canada, who number in the thousands. A $15 billion sale of Canadian combat vehicles, inked under the previous administration, hangs in the balance. It was a shock response, but one that analysts say was calibrated to send a big message with minimal cost. Canada, with which Saudi Arabia has relatively insignificant trade ties – around $3 billion per year (compared to over $45 billion with the US) – presented an opportune foil. “Criticism like this is always taking place. Just look at the number of people from the US who’ve criticized Saudi Arabia in one way or another over the years,” said analyst Kamran Bokhari of the Center for Global Policy in Washington, DC. For Saudi Arabia, the Canadian criticism offered a “relatively low-cost opportunity” to fire back. “This is a way to showcase that Saudi Arabia is willing to confront even Western allies,” Bokhari told the Asia Times.
The Blowup With Canada Is the Latest Saudi Overreach. Will They Ever Pay a Price? --Have the Saudis gone stark-raving bonkers? First, they pick a fight with Canada — yeah, that Canada! Maple syrup-loving, hockey-playing, poutine-eating, liberal, multicultural Canada; the land with free health care and a prime minister who wears “Eid Mubarak” socks. On Sunday, Saudi Arabia (over)reacted to a single tweet from the Canadian foreign ministry. The tweet called on the Saudis to “immediately release” imprisoned activist Samar Badawi, sister of Raif, as well as “all other peaceful #humanrights activists.” The Saudi foreign ministry lambasted the Canadians for an “unfortunate, reprehensible, and unacceptable” statement, announced the “freezing of all new trade and investment transactions” with Canada, demanding the Canadian ambassador leave the country “within the next 24 hours.” At the same time, Saudi trolls took to Twitter to declare their loud support for … Quebec’s independence. Who knew that an absolute Persian Gulf monarchy was so passionate about a French-speaking secessionist movement 6,000 miles away? (Hey, Canadian trolls — if you even exist — my advice would be to retaliate by offering Ottawa’s backing for independence in the restless, Shia-dominated Eastern Province of Saudi Arabia. It’ll drive them totally nuts.) Saudi Arabia was just getting started. And Saudi Arabia was just getting started. On Monday, the kingdom escalated the row by suspending scholarships “for about 16,000 Saudi students” studying in Canada, the Toronto Star reported, “and ordered them to attend schools elsewhere.” (Can you think of a better example of biting your bigoted nose to spite your intolerant face?) Then — and this is my favorite part of this whole bizarre episode — a Saudi group put out an image on Twitter of a Canadian airliner flying directly toward Toronto’s tallest building over a warning against interfering in others’ affairs. (The Saudi group later deleted it and apologized) Are. You. Kidding. Me?
Canada Frees Itself From Saudi Oil Imports -- The ongoing political row between Canada and Saudi Arabia over Ottawa’s demand that the kingdom release detained women’s rights activists in the country is picking up momentum. Earlier this week, Saudi Arabia ordered the Canadian ambassador to leave Saudi Arabia “within 24 hours” after his country criticized the recent arrest of Saudi women’s rights activists. However, Saudi Arabia, showing heightened sensitivity into what it perceives as foreign intrusion into its own affairs, upped the ante even more, by saying it would freeze "all new business" between the kingdom and Canada and also in an admittedly knee-jerk response, recalled thousands of Saudi students attending Canadian universities, a move to hurt Canada financially.Omar Allam, a former Canadian diplomat and head of Allam Advisory Group, said the recall of 12,000 to 15,000 Saudi students from Canada, and accompanying relatives, is going to remove as much as CAD$2 billion in annual investment in the Canadian economy. Judith Dwarkin, chief economist with RS Energy Group in Calgary, said Wednesday that Canada could easily replace the oil it imports from Saudi Arabia should relations with the kingdom deteriorate to the point that trade in crude is halted. She said that eastern Canadian refineries import about 75,000 to 80,000 barrels per day (bpd) of Saudi crude, adding that since its only 10 percent of total Canadian oil imports, it represents a “drop in the bucket” compared to that of the U.S. which covers two-thirds of Canadian oil imports and could increase that level if needed. "The Saudis, if they choose to supply less to Canada, will divert those barrels, possibly to China, and U.S. barrels that would have gone to China, but are uncompetitive under Chinese tariffs, come to Canada," Dwarkin said. "Basically, the cupboard gets rearranged."
Yemen war: Saudi-led air strike on bus kills 29 children --At least 29 children have been killed and 30 wounded in a Saudi-led coalition air strike in Yemen, the International Committee of the Red Cross says. The children were travelling on a bus that was hit at a market in Dahyan, in the northern province of Saada. The health ministry run by the rebel Houthi movement put the death toll at 43, and said 61 people were wounded. The coalition, which is backing Yemen's government in a war with the Houthis, said its actions were "legitimate".It insists it never deliberately targets civilians, but human rights groups have accused it of bombing markets, schools, hospitals and residential areas.Meanwhile the new UN special envoy to Yemen, former British diplomat Martin Griffiths, is planning to invite the warring parties to Geneva in September to discuss a framework for negotiations. UN envoy Martin Griffiths says that if peace efforts in Yemen fail, the world could be looking at “Syria-plus".He told the BBC's Lyse Doucet that if the conflict is left unresolved, Yemen could collapse and the international community could be looking at "Syria-plus" in the years to come. "The war in Yemen will get more complicated the longer it goes on. There will be more international interest and polarisation in terms of the parties, it will fragment further, it will be more difficult to resolve - even more than it is now."
US complicit in air strike that murdered dozens of children in Yemen -- Countless atrocities have been carried out by Washington and its local proxies over the 17 years since the launching of the “global war on terror,” a pretext invoked to justify wars of aggression aimed at solidifying the control of US imperialism over the oil-rich and strategically vital Middle East. Entire countries, including Iraq, Libya and Syria, have been decimated, and entire cities, including Mosul and Raqqa, have been reduced to smoking rubble. The victims, the dead and maimed, number in the millions, while those driven from their homes include many tens of millions. Still, there are specific acts of sheer brutality and contempt for human life that stand out and sum up the criminality of this entire enterprise. Such was the bombing carried out Thursday in Yemen by a Saudi warplane, a jet supplied by the US, which dropped American-made bombs and missiles and was guided to its target with the aid of US intelligence officers, and refueled in midair by American tanker aircraft. The target selected was a crowded marketplace area in the center of the city of Dahyan in Yemen’s northern province of Saada. Witnesses reported that the warplanes had been hovering over the town for over an hour, so those ordering the strike had to have a clear idea of what they would be hitting. Residents said they didn’t believe a crowded market would be targeted so they went about their business. The Saudi warplane scored a direct hit on a bus loaded with school children traveling through the market from their summer camp to a mosque for an annual celebration marking the end of summer vacation.The International Committee of the Red Cross (ICRC) reported that its hospital had received the lifeless bodies of 29 children pulled from the smoldering wreckage of the bus. Most of these children were under the age of 10, some of them as young as eight. According to Saada’s medical office, the air strikes killed 47 people, including people in the streets near the bus. At least 77 more were wounded, some of them grievously, with the death toll likely to rise.
Watch Reporters Slam US For Refusing To Condemn Saudi-US Airstrike On Yemen School Bus In Live Briefing -- Just as expected, State Department spokesperson Heather Nauert refused to condemn Thursday's coalition airstrike on a school bus in Yemen, which left as many as 50 people dead and 63 injured — the vast majority of which were children. As we reported previously, Saudi-US/UK coalition jets scored a direct hit on the school bus packed with children as it drove through a crowded market place in Dahyan, in the rebel-held north of Yemen.During the State Department's daily press briefing, Nauert was asked point blank by journalists, starting with the AP's Matt Lee, whether the US condemns the attack.The whole testy exchange on Yemen is worth watching, especially as Matt Lee lays out the case for direct US complicity in the attack on the bus packed with children from the start of his question: "The Saudis obviously are the ones who conducted this, but they do that with weapons supplied by the U.S., with training supplied by the U.S., and with targeting information, targeting data, supplied by the U.S. How can something like this happen?" he said. Watch the State Department's response here:
Russia to Deploy Military Police to Golan Heights -- (Reuters) - Russia will deploy its military police on the Golan Heights frontier between Syria and Israel, its defense ministry said on Thursday, after weeks of mounting volatility in the area. Syrian President Bashar al-Assad’s sweeping away of rebels in southwestern Syria has worried Israel, which believes it could allow his Iranian backers to entrench their troops close to the frontier. Underlining the tensions, Israel killed seven militants in an overnight air strike on the Syrian-held part of the Golan Heights, Israeli radio said on Thursday. Sergei Rudskoi, a senior Russian defense ministry official, said that Russian military police had on Thursday begun patrolling in the Golan Heights and planned to set up eight observation posts in the area. He said the Russian presence there was in support of United Nations peacekeepers on the Golan Heights who, he said, had suspended their activities in the area in 2012 because their safety was endangered. “Today, UN peacekeepers accompanied by Russian military police conducted their first patrols in six years in the separation zone,” Rudskoi told a briefing for journalists in Moscow. “With the aim of preventing possible provocations against UN posts along the ‘Bravo’ line, the deployment is planned of eight observation posts of Russia’s armed forces’ military police,” Rudskoi said. He said the Russian presence there was temporary, and that the observation posts would be handed over to Syrian government forces once the situation stabilized.
Mass protest led by Druze against Israel’s Nation State law -- Tens of thousands of Israelis, waving Druze and Israeli flags and calling for equality, gathered in Rabin Square in downtown Tel Aviv Saturday to demonstrate against the Nation State Law that enshrines Jewish supremacy. The Druze are angered by being rendered second-class citizens. The demonstration was reported to be around 150,000 strong, making it the largest-ever Druze rally. Dozens of protesters also demonstrated outside Finance Minister Moshe Kahlon’s house in the northern city of Haifa. The Druze are a minority Muslim sect, numbering around 120,000 in Israel, less than 2 percent of its population, but with larger Druze communities in neighbouring Lebanon and Syria. Unlike other Palestinian Israelis, who along with the Circassian community and the Bedouin form 21 percent of Israel’s nine million population and are exempt from military service, the Druze serve in the Israel Defense Forces, Border Police and the Civil Administration and are active participants in the government and media, with some rising to high positions. The Nation State law enshrines Israel as “the national home of the Jewish people,” declaring that “the right to exercise national self-determination in the State of Israel is unique to the Jewish people.” It includes Jews not just in Israel but throughout the diaspora who have automatic right to immigration and citizenship, and proclaims Jerusalem “complete and united” as Israel’s capital. It sanctions the apartheid-style exclusion of Arabs from exclusively Jewish communities, declaring, “The state views the development of Jewish settlement as a national value and will act to encourage and promote its establishment and consolidation.” It demotes Arabic from its position as an official state language and gives official and exclusive standing to Jewish symbols, including declaring “Hatikva” the national anthem. It prevents Palestinians from getting Israeli citizenship by marrying Israelis and future asylum seekers from entering Israel. The law makes no mention of Israel’s non-Jewish citizens, democracy or equality and has sparked widespread criticism from Israel’s Palestinian citizens, opposition parties and Jewish groups abroad. Criticism from the Druze—despite their small numbers—is significant because of their previous stalwart support for the Israeli state.
Swedish-flagged Flotilla Vessel Intercepted by Israel– The Israeli army Saturday morning said that it had taken over a European ship, the Swedish-flagged “Freedom,” captained by John Turnbull of Vancouver, that was aimed at breaking the naval blockade imposed on the Gaza Strip by the occupation forces 12 years ago. After the brutal violence and theft that the Norwegian-flagged Al Awda was subjected to, just days before, Captain Turnbull had stated that the participants and crew of the Freedom will not resist if boarded. On its website, Ship To Gaza – Sweden, published the following statement; “We now have confirmed information that S/Y Freedom to Gaza have been boarded on international waters, by Israeli navy. Latest reported position was about 40 nautical miles of the coast of Gaza at 8.06 pm. Onboard Freedom for Gaza was a crew of twelve persons from five different countries. They are now captured and taken to Israel against their will (For full list follow this link). The boat also carries a cargo of medical supplies. In this situation, the demands of Ship to Gaza are that the ship with its crew and cargo will be returned to the site of the boarding, and that they will be allowed to go in peace through international and Palestinian waters in accordance to international law. In effect, this is a demand that the eleven years-long illegal and destructive blockade on Gaza will be lifted at last. The government of Sweden have repeatedly stood behind demands on a lifting of the blockade. We now expect that the same government, in the capacity of flag nation of the attacked vessel, will also support our specific demands regarding the ship, crew and cargo.”
PayPal closes pro-Palestinian group’s account in collusion with Israeli government -- PayPal has closed the account of the French web site Agence Media Palestine in response to a global campaign by Israel to organise a crackdown on Palestinian supporters and critics of Israel, using fabricated claims of anti-Semitism.The closure of the account by the American payment-processing corporation poses difficulties for Palestinians and Palestinian journalists, as there are few other international payment mechanisms. It marks a dangerous new stage in the ongoing campaign to isolate the Palestinians, criminalise political expression and censor freedom of speech on the Internet.Agence Media Palestine, a Palestine solidarity organisation, publishes articles on Palestine in French, translating many from sources published elsewhere. It lists as its supporters prominent figures in France, such as the late author and concentration camp survivor Stéphane Hessel, Israeli filmmaker Eyal Sivan and human rights activist Mireille Fanon-Mendès France. Within hours of Agence Media Palestine receiving notification from PayPal that it had closed its account, without citing any reason or violations of the terms of agreement, the web site received an email from Benjamin Weinthal, saying, “Your organisation lists PayPal as a donation method, but the payment is blocked.”
Turkey to Freeze Assets of 2 U.S. Officials As Retaliation for Sanctions — Turkey’s president said Saturday the country will freeze the assets of two United States officials in retaliation for sanctions against Turkey’s justice and interior ministers over the detention of an American pastor, while attempting a conciliatory tone.Speaking in Ankara, President Recep Tayyip Erdogan said Turkey had been “patient” since the U.S. Treasury sanctions imposed Wednesday, but ordered authorities to “freeze the assets of America’s justice and interior ministers in Turkey, if there are any.” It is unclear who that would affect, due to differing Cabinet roles in the United States than in Turkey, or if the intended officials even have any holdings in Turkey.Turkey’s Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul mocked the sanctions this week, saying they have no assets in the U.S, but the sign of deteriorating Turkish-American relations sent Turkey’s national currency — the lira— tumbling.Erdogan called the sanctions a “serious disrespect towards Turkey” and accused the U.S. of hypocrisy for demanding the release of evangelical pastor Andrew Craig Brunson while ally Turkey tries him over alleged links to terror groups. Brunson, jailed in December 2016, is now under home detention. He is facing a 35-year sentence if convicted of the charges of “committing crimes on behalf of terror groups without being a member” and espionage. Top U.S. officials, including President Donald Trump and Vice President Mike Pence, have said there is no evidence against Brunson and demanded his release.
Turkish Lawyers Want To Raid Incirlik Air Base, Arrest US Troops For Terrorist Ties - A group of lawyers aligned to Turkish President Recep Tayyip Erdogan has filed formal charges against a number of US Air Force officers who are stationed at Turkey’s Incirlik Air Base. The complaint accuses them of having ties to terrorist groups, and of being in league with the banned Gulenist organization. Since the failed 2016 military coup, Erdogan has blamed cleric Fethullah Gulen for plots against him, and has been targeting any and all perceived enemies, accusing them of being in league with Gulen. This is the first time US troops, let alone US troops inside Turkey, have faced such charges. Analysts say they believe the charges are a direct response to last week’s imposition of sanctions against two Turkish cabinet members by the US. The sanctions were imposed in protest of Turkey’s detention of American pastor Andrew Brunson, who has been held since 2016 on accusations of Gulenist ties. The criminal complaint names Cols. John C. Walker, Michael H. Manion, David Eaglen, David Trucksa, Lt. Cols. Timothy J.Cook, Mack R. Coker, and Sgts. Thomas S Cooper and Vegas M. Clark. Air Force officials said they were “aware” of the complaint but would not comment beyond that. The lawyers demanded the government halt all flights out of Incirlik to keep the US officers from fleeing the country, and called on the government to raid the base and seek to capture the officers.
Turkey's Agony Explodes As Trump Doubles Steel, Aluminum Tariffs -- Just when you thought Turkey's moment of agony couldn't get any worse, it did moments ago when watching the collapse of the Turkish Lira and sensing perhaps that Erdogan's end is near, President Donald Trump blindsided the NATO member state with a tweet, announcing that he is doubling Turkey's steel and aluminum tariffs to 50% and 20%, respectively. Why? Because as he said "Our relations with Turkey are not good at this time!"I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!— Donald J. Trump (@realDonaldTrump) August 10, 2018Trump's ask: the release of Pastor Brunson, which Erdogan has so far staunchly refused to agree to.In response, the Turkish Lira which already had its worst day ever, just plunged even more with the USDTRY surging as high as 6.3839, an all time high.
"This Crisis Is Created By America": Turks Blame Trump For Economic Collapse - Turkey's economy may be in freefall with soaring inflation, a plunging currency, sliding stocks and a gaping current account deficit, but don't dare tell the locals that it is president Erdogan's fault for keeping interest rates low and preventing an even greater crisis: according to Serap, a 23-year-old clerk at a clothes store in central Istanbul, there is only one entity to blame for the precipitous slide in Turkey’s lira currency."This crisis is created by America," she said.And a crisis it is: prices are soaring as a result of the collapsing currency - which this year has lost more than 35% against the dollar, and has overtaken the Argentine Peso for the worst performing currency of 2018 - with food, rents and fuel prices in Turkey surging, and the country's pipeline operator raising the price of natural gas for electricity production by 50%.But when one asks the local population who is responsible for this economic inferno, the answer is surprising. Serap’s sentiments about the causes of the crisis are shared by many Turks and hint at why support for President Tayyip Erdogan, who after surviving a fake military coup in the summer of 2016, won re-election in June with super-charged presidential powers, looks untouched, at least for now. Erdogan's loyal supporters see the currency sell-off as a U.S. attempt to undermine their country and president according to Reuters.That's also known as the Maduro defense: blame all domestic problems on "shady" foreign actors, usually involving the US. But while the US certainly has its history of intervening in foreign events, this time the crisis is entirely home grown, although predictably, Erdogan would be the last to admit it."If they have their dollars, we have our people, our God,” Erdogan said in a speech on Friday morning, casting the lira’s slide as a campaign against the nation.His comments were all the rage, in some cases literally, across Turkey’s overwhelmingly pro-government media on Friday. Newspapers and TV stations have cast the lira crisis as a political assault, spiraling out of U.S. sanctions imposed on two Turkish ministers last week in a row over the detention of a U.S. evangelical pastor, Andrew Brunson.“They issued a scandalous decision last week about our ministers,” said Serap, the store clerk. She didn’t know exactly what steps Washington had taken against Turkey, but said her country would not be pushed around. “It’s not so easy to make us bow down to their demands.”
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