oil prices ended lower this week, despite last Friday's agreement between OPEC, Russia and other oil producers to cut output by 1.2 million barrels per day during the first half of 2019...after ending last week 3.3% higher at $52.61 a barrel on that OPEC announcement, contract prices of US oil for January delivery fell $1.61 or more than 3% to $51.00 a barrel on Monday on what some called profit taking after the 2% OPEC rally, in the absence of other relevant news...oil prices then rose over a dollar early Tuesday, but pared their gain to 65 cents after Mr Trump threatened to shut down the federal government if he didn't get funding for his Mexican border wall, with oil closing at $51.65 a barrel...oil prices rallied early again on Wednesday, on export cuts from Libya and OPEC's production cuts, but slid to a loss of 50 cents for the day at $51.15 a barrel as the EIA reported that US crude supplies rose less than had been expected and Iran’s oil minister said that OPEC was divided and that other cartel members had been unfriendly at last week's meeting...oil continued lower Thursday morning, falling to as low as $50.35 a barrel, but then rallied Thursday afternoon on a report from the International Energy Agency that the combined production cuts by OPEC, Russia and Canada would create an oil market supply deficit by the second quarter of next year, with oil closing $1.43 higher at $52.58 a barrel...but oil prices gave back most of those gains on Friday, sliding $1.38 or 2.6% to $51.20 a barrel, as Wall Street stock averages fell to 7 month lows on weak production and sales data from China, with their car sales heading for first annual drop since early 1990s...oil prices for January thus finished the week 2.7% lower than they ended last week, despite the imminent loss of 1.2 million barrels of Russian and OPEC oil production...
meanwhile, natural gas prices saw their largest one week drop in nearly three years, as persistent forecasts for warmer December led to falling prices each of the last four days, capped by a 29.7 cent drop on Friday, which left closing natural gas prices for January delivery at $3.827 per mmBTU, a loss of nearly 15% on the week....the natural gas storage report for the week ending December 7th from the EIA showed that the quantity of natural gas in storage in the US fell by 77 billion cubic feet to 2,914 billion cubic feet over the week, which left our gas supplies 722 billion cubic feet, or 19.9% below the 3,636 billion cubic feet that were in storage on December 8th of last year, and 723 billion cubic feet, or 19.9% below the five-year average of 3,637 billion cubic feet of natural gas that are typically in storage after the first week of December....this week's 77 billion cubic feet withdrawal from US natural gas supplies was below the consensus average of 83 billion cubic feet that analysts had expected, and was a bit less than the average of 79 billion cubic feet of natural gas that have been withdrawn from storage during the first week of December in recent years...natural gas storage facilities in the East saw a 20 billion cubic feet drop in supplies over the week, which increased the region's gas supply deficit to 14.5% below normal for this time of year, and natural gas supplies in the Midwest fell by 29 billion cubic feet as their supply deficit rose to 14.7% below normal for the first weekend of December...despite a surprise 8 billion cubic feet injection of natural gas into salt dome storage facilities, the South Central region still saw a net 7 billion cubic feet drop in their supplies, as their natural gas storage deficit slipped to 26.6% below their five-year average for this time of year...at the same time, 8 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region as their deficit from normal rose to 22.7%, while 15 billion cubic feet were withdrawn from storage in the Pacific region, where their natural gas supply deficit rose to 28.3% below normal for this time of year....
putting that storage data into historical perspective, the 2,914 billion cubic feet of natural gas that we had in storage on December 7th was 13.2% lower than the previous early December 5 year low of 3,359 billion cubic feet that was set on December 5th of 2014, and was 11.5% below the previous 10 year low of 3,291 billion cubic feet that was set on December 5th of 2008...this year's December 7th storage was also 1.7% below the the 15 year low of 3,166 billion cubic feet of natural gas that we had in storage on December 9th of 2005, and 2.3% below the 2,984 billion cubic feet that were in storage on December 5th of 2003, a year when supplies had peaked at a lower level than this one...we have to follow the archived records (xls) back 16 years, to December 6th of 2002, when 2,794 billion cubic feet of natural gas were in storage, to find a lower quantity of natural gas in storage at this time in December than we have now....
over the four weeks of this year's heating season to date, 333 billion cubic feet of natural gas have withdrawn from storage in the lower 48 states; that compares to the 164 billion cubic feet that were used in the first five weeks of last year's heating season; when withdrawals began during the first week of November...for other recent years, there were 241 billion cubic feet of gas withdrawn for use in the 4 weeks up to December 9th of 2016, 154 billion cubic feet in the four weeks up to December 11th of 2015, 252 billion cubic feet withdrawn in the 4 weeks to Dec 5th or 2014, and 301 billion cubic feet withdrawn in the 4 weeks to Dec 6th of 2013...the comparative withdrawals in the 3 years prior to that were all smaller than 123 billion cubic feet, so there is nothing in the recent storage data history (xls) that approaches the early winter natural gas storage withdrawals we have seen this year...
The Latest US Oil Data from the EIA
this week's US oil data from the US Energy Information Administration, reporting for the week ending December 7th, showed that despite a big drop in the amount of oil we exported, we still needed to withdraw oil from our commercial crude supplies for the second time in 12 weeks...our imports of crude oil rose by an average of 174,000 barrels per day to an average of 7,393,000 barrels per day, after falling by an average of 943,000 barrels per day the prior week, while our exports of crude oil fell by an average of 929,000 barrels per day from last week's record to an average of 2,274,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,119,000 barrels of per day during the week ending December 7th, 1,103,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells reportedly fell by 100,000 barrels per day to 11,600,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,719,000 barrels per day during this reporting week...
meanwhile, US oil refineries were using 17,436,000 barrels of crude per day during the week ending December 7th, 51,000 barrels per day less than the amount of oil they used during the prior week, while over the same period 172,000 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 would seem to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was still 545,000 barrels per day short of what refineries reported they used during the week....to account for that disparity between the supply of oil and the consumption of it, the EIA inserted a (+545,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....
further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 7,582,000 barrels per day, still 1.9% more than the 7,442,000 barrel per day average that we were importing over the same four-week period last year....the total 172,000 barrel per day decrease in our total crude inventories included a rounded 173,000 barrel per day withdrawal from our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported as down by 100,000 barrels per day to 11,600,000 barrels because the rounded figure for output from wells in the lower 48 states fell by 100,000 barrels per day to 11,100,000 barrels per day, while a 8,000 barrel per day decrease to 491,000 barrels per day in oil output from Alaska was not enough to change the rounded national total...last year's US crude oil production for the week ending December 8th was at 9,780,000 barrels per day, so this week's rounded oil production figure was 18.6% above that of a year ago, and 37.6% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
US oil refineries were operating at 95.1% of their capacity in using 17,436,000 barrels of crude per day during the week ending December 7th, down a bit from last week's 95.5% of capacity, but still a rather high capacity utilization rate for November or for any time of year....the 17,436,000 barrels per day of oil that were refined this week were still at a seasonal high for the time of year for the 25th time out of the past 28 weeks, and 2.9% higher than the 16,952,000 barrels of crude per day that were being processed during the week ending December 8th, 2017, when US refineries were operating at 93.4% of capacity...
despite the small drop in the amount of oil being refined, the gasoline output from our refineries was much higher, increasing by 791,000 barrels per day to 10,457,000 barrels per day during the week ending December 7th, after our refineries' gasoline output had decreased by 502,000 barrels per day during the week ending November 30th...after that big increase in this week's gasoline output, our gasoline production during the week was 3.2% higher than the 10,129,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 26,000 barrels per day to 5,545,000 barrels per day, after that output had increased by 100,000 barrels per day the prior week....despite that decrease, this week's distillates production was 5.7% higher than the 5,247,000 barrels of distillates per day that were being produced during the week ending December 8th, 2017....
with the big jump in our gasoline production, our supply of gasoline in storage at the end of the week increased by 2,087,000 barrels to 228,337,000 barrels by December 7th, the 3rd increase in the past 8 weeks, which still left our gasoline supplies 7,835,000 barrels lower than they were on the 5th of October....our gasoline supplies rose this week even though the amount of gasoline supplied to US markets rose by 159,000 barrels per day to 9,036,000 barrels per day and even though our exports of gasoline rose by 310,000 barrels per day to a record high 1,311,000 barrels per day, as our imports of gasoline rose by 336,000 barrels per day to 525,000 barrels per day to offset those exports...while our gasoline inventories are no longer at a seasonal high, they were still 0.8% higher than last December 8th's level of 226,546,000 barrels, and roughly 6% above the 10 year average of our gasoline supplies for this time of the year...
even with the elevated level of our distillates production, our supplies of distillate fuels decreased for the tenth time in twelve weeks, falling by 1,475,000 barrels to 124,137,000 barrels during the week ending December 7th, after our distillates supplies had increased by 3,811,000 barrels during the prior week...our distillates supplies decreased because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 433,000 barrels per day to 4,469,000 barrels per day, and because our imports of distillates fell by 292,000 barrels per day to 144,000 barrels per day, while our exports of distillates rose by 5,000 barrels per day to 1,431,000 barrels per day....with this week's decrease, our distillate supplies finished the week 3.1% below the 128,076,000 barrels that we had stored on December 8th, 2017, and almost 8% below the 10 year average of distillates stocks for this time of the year...
finally, despite this week's drop in our oil exports, our commercial supplies of crude oil still decreased for a second week after 10 increases, and for the 23rd time in 2018, falling by 1,208,000 barrels during the week, from 443,162,000 barrels on November 30th to 441,954,000 barrels on December 7th ...but even with that decrease, our crude oil inventories are still roughly 7% above the five-year average of crude oil supplies for this time of year, and over 28% above the 10 year average of crude oil stocks for the first week of December, with the disparity between those figures arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...however, since our crude oil inventories had been falling through most of the past year and a half until just recently, our oil supplies as of December 7th were still fractionally below the 442,986,000 barrels of oil we had stored on December 8th of 2017, 8.5% below the 483,193,000 barrels of oil that we had in storage on December 9th of 2016, and 3.5% below the 458,354,000 barrels of oil we had in storage on December 11th of 2015..
OPEC's Monthly Oil Market Report
today we'll also review OPEC's December Oil Market Report (covering November OPEC & global oil data), which was released on Wednesday of this past week, and which is available as a free download, and hence it's the report we check for monthly global oil supply and demand data...the first table from this monthly report that we'll look at is from the page numbered 58 of that report (pdf page 70), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to thus resolve any potential disputes that could arise if each member reported their own figures...
as we can see on this table of official oil production data, OPEC's oil output slipped by an insignificant 11,000 barrels per day to 32,965,000 barrels per day in November, from their October production total of 32,976,000 barrels per day....however, that October figure was originally reported as 32,900,000 barrels per day, so OPEC's October output was therefore revised 76,000 barrels per day higher with this report (for your reference, here is the table of the official October OPEC output figures as reported a month ago, before this month's revisions)...as you can tell from the far right column on the table above, the increase of 377,000 barrels per day in the oil output from Saudi Arabia almost completely offset the decrease of 380,000 barrels per day in Iranian output, and the increases of 71,000 barrels per day in the oil output from the United Arab Emirates and 45,000 barrels per day in the oil output from Kuwait almost offset all the other decreases, leaving total output from the cartel little changed....however, excluding new member Congo, the November output of 32,645,000 barrels per day from the other 14 OPEC members was still 85,000 barrels per day below the 32,730,000 barrels per day revised quota they agreed to at their November 2017 meeting, mostly due to the big drop in Venezuelan output, another OPEC country that has also been impacted by US sanctions...
the next graphic we'll look at shows us both OPEC and global monthly oil production on the same graph, over the period from December 2016 to November 2018, and it's taken from the page numbered 59 (pdf page 71) of the December OPEC Monthly Oil Market Report...on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the millions of barrels per day of global output shown on the right scale...
OPEC's preliminary estimate indicates that total global oil production rose by 500,000 barrels per day to a record high 100.64 million barrels per day in November, after October's total global output figure was revised up by 380,000 barrels per day from the 99.76 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 440,000 barrels per day in November after that revision, with increased US and Canadian output the major contributors to the non-OPEC increase....global oil output during November was also 3.05 million barrels per day, or 3.2% higher than the revised 97.69 million barrels of oil per day that were being produced globally in November a year ago (see the December 2017 OPEC report online (pdf) for the originally reported year ago details)...with the November decrease in OPEC's output following the upward revision to their October output, their November oil production of 32,965,000 barrels per day represented 32.8% of what was produced globally during the month, down from the 33.0% share reported for October....OPEC's November 2017 production was reported at 32,448,000 barrels per day, which means that the 14 OPEC members who were part of OPEC last year, excluding new member Congo, are only producing 197,000 more barrels per day of oil than they were producing a year ago, during the eleventh month that their production quotas were in effect, with a 697,000 barrel per day decrease in output from Venezuela and a 864,000 barrel per day decrease in output from Iran from that time nearly offsetting the production increases from the Saudis, the Emirates, Iraq and Libya...
the 500,000 barrel per day increase in global oil output in November, combined with the upward revision to October's global output, meant that we finally saw a surplus in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...
the table above comes from page 32 of the December OPEC Monthly Oil Market Report (pdf page 44), and it shows regional and total oil demand in millions of barrels per day for 2017 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2018 over the rest of the table...on the "Total world" line in the fifth column, we've circled in blue the figure that's relevant for November, which is their revised estimate of global oil demand during the fourth quarter of 2018...
OPEC's estimate is that during the 4th quarter of this year, all oil consuming regions of the globe are using 99.98 million barrels of oil per day, which was unrevised from their estimate of a month ago....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, the world's oil producers were producing 100.64 million barrels per day during November, which means that there has been a surplus of around 660,000 barrels per day in global oil production as compared to the demand estimated for the month...
meanwhile, a month ago we estimated a global shortfall of around 220,000 barrels per day in global oil production during October, based on figures published at that time...however, as we saw earlier, October's global output figure was revised up by 380,000 barrels per day from those figures...thus instead of the shortfall indicated by last month's figures, we now find that oil production in October was running roughly 160,000 barrels per day greater than demand...
since there are no revisions to supply or demand for the prior months, the surplus or shortfall figures for those months that we had recomputed last month remained unchanged; for September, oil supply and demand just about matched, while August saw a 550,000 barrels per day shortfall, and July's shortfall was even greater at 930,000 barrels per day....for the remainder of the year, the 2nd quarter months saw shortfalls of 170,000 barrels per day in June, 610,000 barrels per day in May, and 400,000 barrels per day in April, while the first quarter recorded smaller surplus figures of 20,000 barrels per day in March, 200,000 barrels per day in February, and 40,000 barrels per day in January...
by totaling up those 11 monthly estimates of surplus or shortfall, we find that for the first eleven months of 2018, global oil demand exceeded production by roughly 49,070,000 barrels, actually a comparatively tiny net oil shortfall that is the equivalent of less than 12 hours of global oil production at the November production rate...while November global production would be expected to rise from its current 100.64 million barrels per day; so too would global demand, which OPEC is forecasting to average 100.08 barrels per day through 2019...so should the entirely of the 1.2 million barrel production cut come to pass, instead of an oil surplus, we would be looking at a shortfall of up to 640,000 barrels per day during the coming year...it does not appear that the market is yet taking the possibility of an oil shortfall of that magnitude into account..
This Week's Rig Count
US drilling activity decreased for the fourth week in a row, and was hence down for the 6th time in the past 12 weeks during the week ending December 14th, as drilling for oil slowed with currently lower prices, while severe backwardation in natural gas futures is preventing today's drillers from taking advantage of its temporarily higher price... Baker Hughes reported that the total count of rotary rigs running in the US decreased by 4 rig to 1071 rigs over the week ending December 14th, which was still 141 more rigs than the 930 rigs that were in use as of the December 15th report of 2017, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...
the count of rigs drilling for oil decreased by 4 rigs to 873 rigs this week, which was still 126 more oil rigs than were running a year ago, while it was 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 was unchanged at 198 natural gas rigs, which was still 15 more rigs than the 183 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...
offshore activity was again unchanged with 23 rigs continuing to drill in the Gulf of Mexico, which was 4 more rigs than the 19 rigs active in the Gulf of Mexico and in total a year ago...the count of active horizontal drilling rigs decreased by 6 rigs to 927 horizontal rigs this week, which was still 125 more horizontal rigs than the 801 horizontal rigs that were in use in the US on December 15th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...on the other hand, the vertical rig count increased by 1 rig to 71 vertical rigs this week, which was also up from the 60 vertical rigs that were in use during the same week of last year....in addition, the directional rig count also increased by 1 rig to 73 directional rigs this week, which was also up from the 69 directional rigs that were operating on December 15th 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 December 14th, the second column shows the change in the number of working rigs between last week's count (December 7th) and this week's (December 14th) count, the third column shows last week's December 7th active rig count, the 4th column shows the change between the number of rigs running on Friday and those running on the equivalent weekend 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 the 15th of December, 2017...
Texas Oil District 8, which would correspond to the core Permian - Delaware basin, saw an increase of 2 rigs, while drilling in other Texas Oil Districts in or partially in the Permian basin were unchanged, so it appears that all 5 of the rigs shut down in New Mexico this week had been oil rigs targeting the Permian...the 5 rig increase in Wyoming, on the other hand, does not represent new drilling in any of the basins shown above, since activity in the Niobrara chalk of the Rockies front range was unchanged, so those 5 rigs could represent new drilling in the Green River basin, the Powder River basin, the Wind River basin or the Bighorn basin, or even some where else in Wyoming...the three rig drop in the Williston basin includes the 2 rigs shut down in North Dakota plus a rig in Montana, not shown above, which still has 3 rigs active, up from the one rig in Montana a year ago...meanwhile, natural gas rigs ended the week unchanged despite the rigs shut down in Pennsylvania's Marcellus, Oklahoma's Arkoma Woodford, and northwestern Louisiana's Haynesville because there was a natural gas rig added in Ohio's Utica and two natural gas rigs added in "other" basins not shown above or tracked separately by Baker Hughes...finally, we should note that in addition to Montana and the major producing states shown above, Illinois, which has seen on and off drilling with one rig over the past year, saw their lone rig shut down this week, while Mississippi also saw a rig shut down but still had four left running, up from 2 rigs in Mississippi a year ago...
Meadville-to-Ohio pipeline project receives FERC approval -- An $86 million natural gas pipeline has received approval from the Federal Energy Regulatory Commission to move forward. RH energytrans is making arrangements for pre-construction activity for the Risberg Line project, which was granted a Certificate of Public Convenience and Necessity from the FERC on Friday deeming it a public convenience and necessity — a mandatory step before the project could move forward. The permit approval from FERC was a huge step in the timeline of this project because the FERC, "under the federal Natural Gas Act, has responsibility for evaluating environmental and landowner impacts associated with project construction and must determine whether the project is required by the public convenience and necessity," according to RH energytrans. After receiving notice for construction approval, RH energytrans said it will review the 72-page FERC Certificate Order and submit the required additional information. RH energytrans expects to begin construction before the end of this year and looks forward to "continuing to work closely with regulators, landowners and all of our stakeholders,” said Dennis Holbrook, RH energytrans spokesperson. The Risberg Line Project is a 28-mile natural gas pipeline addition to the 32-mile pipeline already existing in Pennsylvania. The additional pipeline will go from Meadville up through northwest Ashtabula County. About 16 miles of pipeline will be added in Pennsylvania and 12 miles will be added in Ohio. The pipeline will reach a point in Conneaut, Ohio, and end in North Kingsville, Ohio.
13 Well Permits Approved in Ohio's Utica – The Ohio Department of Natural Resources last week approved 13 new permits for horizontal wells targeting the Utica shale, according to the most recent data. Eclipse Resources secured seven new permits for wells in Belmont and Monroe counties, while Ascent Resources obtained permits for six wells in Guernsey County for the week ended Dec. 8, ODNR said. As of Dec. 8, ODNR has issued 2,948 permits in the Utica, and energy companies have drilled a total of 2,467 wells. There were 2,088 wells in production as of that date, the agency reported. The rig count across Ohio’s Utica stood at 17 during the week, according to ODNR. There were no new permits issued for wells in Mahoning, Columbiana or Trumbull counties in the northern section of the Utica, according to ODNR. Most of the drilling activity has concentrated in the southern tier of the oil and gas play, where wells are the most productive. The Pennsylvania Department of Environmental Protection, which monitors oil and gas activity in Pennsylvania, reported no new Utica permits issued in neighboring Lawrence or Mercer counties.
New Plastics Factory Means More Health Problems for Ohioans - A giant multinational company wants to build a dirty facility known as an ethane cracker in eastern Ohio's Belmont County, and we need your help to stop it. "Cracker" is industry lingo for a plant that takes fracked gas and breaks it into smaller molecules to create ethylene. This is turned into plastic pellets used to make throwaway products like bags and straws. If this project is approved by the Ohio EPA, it will turn fracked gas into 1.5 million tons of plastic per year. It would discharge pollutants directly into the Ohio River, a drinking source for 5 million people. And it would emit toxic chemicals, like benzene, that cause cancer and breathing problems. The world's largest petrochemical companies have their sights set on the Ohio River Valley to build billion-dollar complexes for making plastics. These plants are an important part of the industry's horrifying goal to increase global plastic production by 40 percent by 2030. On a planet drowning in plastic pollution, more plastic is the last thing we need.
Marcellus shale transload facility receives federal grant - The U.S. Department of Transportation has awarded Hannibal, Ohio, a $20 million grant to improve a rail and pipeline energy transload facility. The money will be used to construct a pipeline-to-rail transloading facility that will include truck racks and ladder racks connected to a recently constructed loop track. The Long Ridge Energy Terminal where the funds will be used is located in the heart of the Marcellus and Utica shale gas plays. The facility generates power, stores natural gas liquids and brings in frack sand. In addition to the rail infrastructure, the facility is located on the Ohio River and has two barge docks. The funding for the project was made available through the DOT’s program called the Better Utilizing Investment to Leverage Development Transportation Discretionary Grants program (BUILD). The program is designed to support roads, bridges, transit, rail, ports or intermodal transportation. Senator Rob Portman, R-OH, said the project will increase energy exports from the Marcellus and Utica. Long Ridge is a subsidiary of Fortress Transportation and Infrastructure Investors LLC, the owner of the facility. Fortress trades on the New York Stock Exchange under the ticker symbol FTAI. In addition to the Long Ridge assets, Fortress also owns a multi-modal crude oil and refined products terminal in Beaumont, Texas.
Snyder to sign Enbridge Line 5 tunnel bill after lawmakers give final OK – The Legislature sent Gov. Rick Snyder a bill on Tuesday to allow construction of a $350-million tunnel across the Straits of Mackinac, despite concerns the plan leaves the Great Lakes at risk for a catastrophic spill and still could pose legal and other troubles for the Mackinac Bridge Authority.Snyder, a Republican, said Tuesday he will sign the bill as he continues to negotiate tunnel details with Canadian energy giant Enbridge, the owner of the 65-year-old oil pipeline that the tunnel is intended to replace and encase.Snyder said he'll make appointments to a new three-member tunnel authority "fairly soon."Snyder wants to complete the deals before the end of the year, when two Democrats assume statewide office — Gov. Gretchen Whitmer and Attorney General Dana Nessel — who oppose the tunnel plan and say they want to shut down Line 5 as quickly as possible.Strong public opposition continues to Senate Bill 1197, despite a retreat by Snyder and the Republican-controlled Legislature that is supposed to remove the proposed tunnel from oversight by the Mackinac Bridge Authority. Concerns remain that the bridge authority remains tangled with the new tunnel authority and could get caught up in costly litigation, lawmakers were told Tuesday.The House passed the tunnel legislation in a 74-34 vote and the Senate went along with a minor House amendment a short time later. Last week, the Senate passed the bill, 25-13. Enbridge is picking up the cost of the tunnel. But after first saying the tunnel would come at no cost to taxpayers, the Legislature appropriated $4.5 million to pay for project oversight. There are also concerns about potential state legal costs down the road.
Michigan Gov. Signs Bill to Keep Line 5 Pipeline Flowing - Michigan's outgoing Gov. Rick Snyder signed legislation on Wednesday that creates a new government authority to oversee a proposed oil tunnel in the Straits of Mackinac to effectively allow Canadian oil to keep flowing through the Great Lakes.The controversial tunnel will encase a replacement segment for Enbridge Energy's aging Line 5 pipelines that run along the bottom of the Straits, a narrow waterway that connects Lakes Huron and Michigan.The new law creates a three-member Mackinac Straits Corridor Authority that is required to enter an agreement with the Canadian oil company on the construction and operation of the tunnel before the end of the month.Snyder signed Senate Bill 1197 just a day after the GOP-controlled Michigan Legislature approved the bill—a move seen as a lame-duck rush before Democrats Gretchen Whitmer and Dana Nessel take over as governor and attorney general respectively, as the Detroit Free Press noted. Both Whitmer and Nessel made campaign promises to shut down Line 5 over fears that the 65-year-old twin pipelines could spill and contaminate the Great Lakes, a source of drinking water for tens of millions of people. Line 5 has spilled 1.1 million gallons of oil into the lakes since 1968. Environmentalists say Snyder's move has effectively allowed Line 5, which pumps up to 23 million gallons of oil and liquefied natural gas a day, to run for another decade while the tunnel is being built. Under the new plan, the existing pipelines will be replaced with a new tunneled pipeline under the bedrock of the Straits of Mackinac. The project will take seven to 10 years to complete and cost as much as $500 million. Enbridge will foot the bill.
Snyder creates Line 5 tunnel authority; appoints 3 members — Michigan Gov. Rick Snyder wasted no time Wednesday signing into law legislation creating an authority to oversee the construction of a tunnel to house Enbridge’s Line 5 oil pipeline under the Straits of Mackinac. Snyder signed the legislation a day after both the Republican-controlled Senate and House approved it over the objections of environmentalists, who argue Line 5 should be immediately decommissioned to prevent a potential major oil spill. Snyder also announced his appointees to the Mackinac Straits Corridor Authority, which included two Democrats and one Republican. The term-limited Republican governor seemed to be extending an olive branch to critics, and perhaps Democratic Gov.-elect Gretchen Whitmer, by appointing two Democrats who support the tunnel project. The legislation requires that at most two authority members can be from the same political party. The appointees include Democrat Geno Alessandrini of the Michigan Laborers District Council; Democrat Tony England, an engineering and computer science dean at the University of Michigan-Dearborn; and Republican Michael Zimmer, Snyder’s cabinet director. The three members will serve six-year terms while overseeing the tunnel construction, which is expected to cost up to $500 million and take more than 10 years to complete.
Michigan, Great Lakes at risk for oil spills beyond Line 5, report says - As Michigan lawmakers jockey over the fate of the Line 5 oil pipeline in the Straits of Mackinac, a new report says more than a dozen other spots in the Great Lakes are also vulnerable to oil spills. Crude oil production has surged across parts of the northern United States and western Canada since 2010, expanding oil transportation networks of pipelines and rail. That has brought new risks to the Great Lakes, which hold 20 percent of the world’s surface freshwater.In a report released Monday, the Science Advisory Board of the International Joint Commission, an American-Canadian advisory body, identified 15 areas of “higher ecological vulnerability” to oil spills. That includes the Straits, where Enbridge Energy’s 65-year-old Line 5 has attracted the lion’s share of attention from those who fear a catastrophic rupture, however unlikely.Those vulnerable areas range from wetlands and marshlands to fish spawning grounds, and the threatened species run the gamut, depending on the location. Lake sturgeon, walleye, suckers, northern pike, lake whitefish would be of concern in Lake Michigan, for instance, along with migratory and nesting birds, amphibians, reptiles and other animals. “All levels of the aquatic food chain would be impacted by a spill, from plankton to fish to fish-eating birds and mammals,” the commission said in a news release Monday. “Because the lakes provide the largest source of fresh surface water for almost 40 million people and drinking water for many of these residents, the risk of a spill affecting drinking water may be significant, particularly when currents transport crude oil to the vicinity of drinking water intakes.” Most of the vulnerable areas are near rail corridors or pipelines, and five are near refineries, according to the commission, which was established under a 1909 treaty to investigate cross-border water issues and approve certain water projects.
Michigan governor reaches final deal on Great Lakes pipeline (AP) — Michigan Gov. Rick Snyder’s administration said Thursday it had wrapped up negotiations with Enbridge Inc. on building a tunnel to contain an oil pipeline beneath a Great Lakes waterway. Snyder’s office released a series of agreements with the Canadian pipeline company, including details and timelines for the plan to drill the tunnel through bedrock under the Straits of Mackinac, which connects Lakes Huron and Michigan. The project would lead to decommissioning of dual pipelines that run more than four miles (6.4 kilometers) across the bottom of the straits and have been in place since 1953. The Michigan Legislature voted this week to establish a panel that will oversee construction and operation of the tunnel. The Mackinac Straits Corridor Authority could approve the Enbridge deals during its first meeting next Wednesday, fulfilling Snyder’s wish to have the plan etched in stone before he leaves office this month. The two-term Republican’s successor, Democrat Gretchen Whitmer, has spoken against the plan and called for shutting down Enbridge’s Line 5. “There’s going to be a lot more that needs to be done, but this starts the process of building the tunnel,” said Ed Golder, spokesman for the Department of Natural Resources. The document that will be submitted to the straits corridor authority says Enbridge will be “solely responsible for all costs of designing, constructing, operating, maintaining and decommissioning the tunnel,” which the company has estimated at up to $500 million. It sets deadlines for steps such as selecting a team to develop project specifications, applying for construction permits and requesting proposals from contractors. After the tunnel is built, the straits corridor authority would assume ownership and grant Enbridge a 99-year lease. Other utility infrastructure, such as electric cables, could be placed in the tunnel. “The Snyder-Enbridge backroom deal may be good for Enbridge but it’s certainly not what’s best for Michigan and the Great Lakes,” said Mike Shriberg, director of the National Wildlife Federation’s regional office and a member of Snyder’s Pipeline Safety Advisory Board.
Judge grants first eminent domain case to PennEast in Pennsylvania - A federal judge granted PennEast Pipeline Co. the right of eminent domain to build its pipeline on a property in Carbon County, in the first ruling of its kind over the controversial project in a Pennsylvania court.U.S. Judge Malachy Mannion of the Middle District of Pennsylvania last week rejected an argument by Susana Bullrich, a landowner in Towamencin Township, that PennEast could not build the pipeline on her property because it has yet to receive approval from some authorities, including the State of New Jersey, to go ahead with the project. Bullrich argued that the missing permits mean that a certificate of approval from the Federal Energy Regulatory Commission, issued in January this year, was only conditional, and so PennEast had no legal right to file eminent domain suits while some of FERC's conditions remain unmet.But Mannion, in a 13-page opinion, said there's no requirement in either the FERC certificate or the federal Natural Gas Act that a holder of the certificate must meet all of its conditions before taking possession of a property."If the FERC certificate was to be interpreted as requested by Bullrich, no entry on a private property could take place before all pre-conditions were met, and yet many of the pre-conditions cannot be met without access to the property," the judge wrote. "This contorted reasoning would make the FERC certificate nothing more than a meaningless piece of paper." The judge ruled that PennEast has met all the conditions that allow a party to exercise eminent domain under federal law, and said it has the "substantive right" to condemn the stated portions of Bullrich's eight-acre property.
Court rejects another plea from pipeline foes — The Pennsylvania Supreme Court declined to consider a challenge from the Clean Air Council and local landowners concerning Sunoco’s use of eminent domain to acquire land for their controversial Mariner East 2 pipeline. The Dec. 5 decision involved an April Commonwealth Court opinion, with all but one claim thrown out. Arguments may still be heard by the Commonwealth Court on Pennsylvania’s Environmental Rights Amendment.“The Supreme Court doesn’t take many cases,” explained Alex Bomstein, senior litigator attorney for the Clean Air council, on Monday. “There’s not enough room on the docket. Always when a decision is appealed you don’t anticipate the Supreme Court is going to take the case and usually doesn’t.”The trial court ruled in Clean Air Council’s favor. That decision was overturned by Commonwealth Court. Bomstein argued against allowing the company to use eminent domain, saying the project does not serve a public purpose, it is not paramount to the benefit of the public and is an export project for European plastic manufacturers.
Pennsylvania judge rejects shutting Energy Transfer's Mariner East pipelines (Reuters) - A Pennsylvania administrative law judge on Tuesday denied a petition by state residents asking utility regulators to prohibit the operation of Energy Transfer LP and its Sunoco subsidiary’s Mariner East pipelines. The petition filed in November sought interim emergency relief, citing risks from the pipelines in the area and urging the state’s Public Utility Commission to direct Sunoco to stop operation of its Mariner East 1 pipeline and prohibit operation of its Mariner East 2 pipeline. The residents alleged that the company did “not provide adequate notice of procedures sufficient to ensure the safety of the public in the event of a leak or rupture,” according to the petition. Judge Elizabeth Barnes ruled that the petitioners presented no evidence of the risk of death from an accidental pipeline leak, and failed to demonstrate a need for immediate relief. “We are pleased with the judge’s ruling,” Energy Transfer spokeswoman Lisa Dillinger said in an emailed statement, adding that the company expects Mariner East 2 to be put into service by the end of the year. Mariner East transports liquids from the Marcellus and Utica shale fields in western Pennsylvania to customers in the state and elsewhere, including international exports from Energy Transfer’s Marcus Hook complex near Philadelphia. Mariner East 2 and another Energy Transfer project, the Rover natural gas pipe from Ohio to Michigan, were delayed over the past year in part because the projects together racked up more than 800 state and federal permit violations while the company raced to build them.
We must protect Pa. children from leaking natural gas infrastructure - Pennsylvania has a natural gas problem. While no one would argue the economic benefits of natural gas, there are nevertheless hidden costs that must be paid. All too often, those paying the biggest price are our children, both pre-born and born.Children are not simply little adults. Their brains, hearts, lungs, and entire bodies are still developing. The fugitive methane and Volatile Organic Compounds (VOCs) leaking from our natural gas industry is stunting these developments. According to a peer-reviewed study commissioned by the Environmental Defense Fund, Pennsylvania spews out over 520,000 t ons of fugitive methane each year, five times what industry reports to DEP. What’s more, we are also leaking VOCs at a rate of 54,000 tons per year – almost nine times what is reported.Numerous medical studies demonstrate convincingly that babies born to Pennsylvania mothers who live within a half mile of a fracking site are 25 percent more likely to have low birth weight compared to babies born to mothers living two miles away or farther. Over 311,000 Pennsylvania kids go to school within that same half mile radius of either a fracking site or other natural gas facility. Other studies have confirmed early term births, developmental disabilities, brain damage, increased cancer rates, and other significant life-altering, and even life-threatening, impacts.The children who are lucky enough to live and go to school away from production sites are still not safe. Smog caused from fracking will result in over 30,000 additional asthma attacks across our Commonwealth each year, with over 3,000 in the York area alone. Our kids are at risk. This is not theoretical. It’s past time to act, and the good news is, we know what we need to do. It’s as simple as reducing fugitive methane and VOCs, a choice that should be easy if we believe our children are important. The leaks can be minimized with zero net cost to the natural gas industry. Technologies exist today that allow for fugitive emission decreases by 40-50 percent with the saved natural gas paying the costs.
Explosion at natural gas facility injures four - AN explosion at MarkWest natural gas processing facility in Pennsylvania, US, has injured four people. The explosion occurred just after 18:00 local time on 13 December, followed by a fire. The incident happened close to two temporary tanks that were on site for routine maintenance. The fire started in a tank which holds 200 bbl of liquid ethylene glycol and hydrocarbons. Four workers sustained burns and were airlifted to hospital. The cause of the explosion is currently unknown. The processing plant was not involved in the incident, but has been shut down as a precaution. MarkWest Energy Partners, owned by Marathon Petroleum, is one of the largest processors of natural gas in the US. It is involved in gathering, processing and transporting natural gas, transporting, fractionating and storing natural gas liquids, and gathering and transporting crude oil.
Over 90,000 Petitions Demanding Fracking Ban Delivered - Representatives of Pennsylvania organizations submitted 90,039 signed petitions to Governor Wolf at his Capitol office today. The petitions, collected by groups representing members in all four states that are part of the Delaware River Watershed, asks the Governors to vote at the Delaware River Basin Commission for a complete and permanent ban on fracking and its activities. The petitions call for a ban on fracking throughout the Delaware River Basin, a ban on frack wastewater processing and discharges in the Basin, and a ban on water exports from the Delaware River Watershed to fuel fracking elsewhere.The Delaware River Basin Commission, made up of the governors of Pennsylvania, New York, New Jersey and Delaware, and the Army Corps of Engineers representing the federal government, are expected to vote in the coming months on the proposed fracking ban. "It is clear from Pennsylvania's experience with the shale gas industry that fracking is harmful to our communities, our natural resources, and the climate," said Joanne Kilgour, Director of the Sierra Club PA Chapter. Kilgour continued, "Governor Wolf and the Delaware River Basin Commission are in a unique position to prevent this harm in the Delaware River Watershed by enacting a complete ban on fracking and related activities - such as waste water disposal - which is exactly what the public and the residents of the watershed are calling on them to do today.”
Report highlights need for ethane hub - — A federal report issued this week cites the economic potential from additional ethane hubs in the United States.Natural gas processing capacity has expanded more than 10-fold from 2010 to 2016 in Kentucky, Ohio, Pennsylvania and West Virginia where the boom in crude oil and natural gas production from shale formations across the U.S. and in the Marcellus and Utica shales “has transformed global energy markets and may present opportunities for industry to establish additional hubs,” according to Ethane Storage and Distribution Hub in the United States, a report to Congress by the U.S. Department of Energy. Natural gas plant liquids, especially ethane, are used in the production of plastics and other compounds. “The large increase in (natural gas liquids) will come from the Marcellus and Utica plays production in the East and from the Permian basin in the Southwest over the next 10 years,” the report said. “This growth is explained mainly by the close association between the production of (natural gas production liquids) and the development of natural gas and crude oil resources in those regions.”The report, released on Tuesday, details the potential for a petrochemical hub located in the Appalachian region and emphasizes benefits for the economy in America that an ethane hub would have.“This report affirms what we have been talking about for years,” U.S. Rep. David McKinley, R-W.Va., said. “Natural gas production in the region has grown by leaps and bounds over the past decade. The next logical step is to take full advantage of this resource and develop a petrochemical industry in the region.” The report points out 95 percent of the country’s petrochemical industries are located on the Gulf Coast in Texas and Louisiana where production could be disrupted by hurricanes. “This concentration of assets and operations may pose a strategic risk to the U.S. economy moving forward as extreme weather events impacting petrochemical and plastics production on the Gulf Coast can limit the availability of feedstocks to manufacturers across the United States,” the report said. Disruptions from Hurricane Katrina in 2005 caused price spikes of 20 to 30 percent in the resins used to make plastics. “It is in the national interest to diversify and build a secondary hub in West Virginia, Ohio, Pennsylvania, and Kentucky,” he said.
Petrochemical Booster Rick Perry Rides to the Rescue of the Fracking Industry - Food and Water Watch --When he took the job, Energy Secretary Rick Perry didn’t seem to know what the Department of Energy actually did. But since then, he has committed himself to one mission: promoting fossil fuels and petrochemicals.Specifically, Perry is pushing a massive petrochemical buildout in Pennsylvania, Ohio and West Virginia, which would turn the Tri-State area into a new epicenter of highly polluting petrochemical manufacturing to rival the Gulf Coast. Last week, the Energy Department released a Report to Congress boasting the erroneous benefits of a key piece of infrastructure called the Appalachian Storage Hub. Secretary Perry also gushed about the storage hub on the op-ed page of the Pittsburgh Post-Gazette.The Trump administration’s push for petrochemicals is perfectly in sync with what major corporate powers are proposing. Right now, investors are pouring billions of dollars into Appalachia to create a cluster of gas infrastructure and plastics and petrochemical factories. An alliance of industry players, government officials and regional universities have also been promoting this substantial investment.Two of the facilities are petrochemical crackers that turn the natural gas liquid ethane into a chemical used to make plastic (one in Pennsylvania is under construction, while the other is proposed in Ohio). The third piece is the Appalachian Storage Hub in Ohio, which received partial approval early this year for a $1.9 billion Department of Energy loan. The Storage Hub would hold natural gas liquids like ethane underground and connect with a web of pipeline infrastructure to supply regional petrochemical and plastics facilities. The whole reason the industry and its lackeys are pushing this petrochemical proliferation is to ride to the rescue of the struggling fracking industry. Surging fracked gas production has collapsed natural gas prices, spawning a crisis for the frackers. From 2008 to 2017, the real wholesale price for natural gas fell by 60 percent as total gas production rose. The Energy Department report even admits that the fracking boom in the Tri-State area is producing way more natural gas (and ethane) than can be used, outpacing the growth in associated infrastructure.
Gov. Cuomo Vetoes Gas Leak Bill, Citing 'Fatal Flaws' -- Gov. Andrew Cuomo has vetoed a bill that would have forced utility companies to reveal locations of their underground gas leaks, citing "fatal flaws." However, Cuomo said he supported the intent of the bill to require gas companies to report leaks to public safety officials. He directed the Public Utility Commission to review the idea and recommend rules to improve communication. Cuomo said he vetoed the bill Friday because it also required a change in state law any time a federal standard changes, which would make it cumbersome to keep consistent with federal changes and potentially jeopardize federal funding. The bill, which passed unanimously in the state Senate and 93-33 in the State Assembly, was first introduced in 2014 after an I-Team investigation revealed how natural gas companies routinely kept the locations of their known leaks secret from the public – even as they encouraged the public to be alert and report unusual gas odors. Lawmakers have voted to require that utilities publicly disclose the locations of known gas leaks after an I-Team investigation found gas companies keeping leak locations secret. Chris Glorioso reports. Utility companies expressed concern about the legislation, but over time the natural gas industry has withdrawn objections, said Assemblywoman Amy Paulin (D – Scarsdale), who sponsored the bill. According to an I-Team analysis of lobbying records, utilities have spent more than a million dollars on lobbyists seeking to influence the governor’s thinking on natural gas issues since 2016. Some of those lobbyists have close ties to Cuomo. Cordo and Company, a firm that listed the gas leaks bill on its lobbying disclosure, used to employ Cuomo’s top aide, Melissa DeRosa.
Anti-fracking advocates push for action on Delaware River Basin - — A coalition of environmental groups presented over 100,000 signatures to Gov. Andrew M. Cuomo on Monday, urging him to support a full ban on hydraulic fracking and its related activities in the Delaware River Basin. The activists gathered at the state Capitol's historic Million Dollar Staircase and called on the governor to expand the state's 2014 ban on hydraulic fracking by prohibiting use of the basin for treatment and processing of fracking waste, or for water withdrawals for fracking. Cuomo is among four state governors and a regional U.S. Army Corps engineer — the federal representative — who make up the Delaware River Basin Commission that was created in 1961. The commission is expected to vote on proposed regulations to permanently ban fracking in the basin, which stretches more than 300 miles from the Catskill mountains to the Delaware Bay south of New Jersey. Four years ago, Cuomo announced the statewide ban on fracking. Advocates say expanding the ban is a crucial step in shifting New York off fossil fuels to renewable energy. "The underlying principle of New York's fracking ban is that it is too dangerous to be done safely anywhere," said Roger Downs, conservation director for the Sierra Club Atlantic Chapter. "To still have the Delaware River Basin, a drinking water source for 17 million people, remain potentially open to drilling represents a disproportionate risk that defies common sense and the science that supports effective public health policy. The petition effort was led by groups including Food & Water Watch, Catskill Mountainkeeper, Sierra Club Atlantic Chapter, Riverkeeper, Environmental Advocates of New York, Earthworks, Delaware Riverkeeper and the Natural Resources Defense Council. Lawmakers, including state senators Liz Krueger and Brad Hoylman, joined the advocates at their news conference calling for an expansion of the state's fracking ban. "The dangers of fracking have been well established, to the point that New York state has banned the practice outright," Krueger said. "So it makes no sense to allow fracking or fracking waste anywhere near the Delaware watershed, or to let this pristine public water resource be used to support fracking operations elsewhere."
PRESS RELEASE: Virginia Attorney General Brings Suit Against the MVP Pipeline - —Attorney General Mark R. Herring and the Virginia Department of Environmental Quality today announced the filing of a lawsuit against Mountain Valley Pipeline, LLC for repeated environmental violations in Craig, Franklin, Giles, Montgomery, and Roanoke Counties, particularly violations that occurred during significant rain events over the last year. The suit alleges that MVP violated the Commonwealth’s environmental laws and regulations as well as MVP’s Clean Water Act Section 401 Water Quality Certification by failing to control sediment and stormwater runoff resulting in impacts to waterways and roads. The suit seeks the maximum allowable civil penalties and a court order to force MVP to comply with environmental laws and regulations. The matter was referred to the Office of Attorney General by the Director of the Department of Environmental Quality (DEQ) after numerous inspections identified violations at multiple construction sites.“This suit alleges serious and numerous violations of environmental laws that caused unpermitted impacts to waterways and roads in multiple counties in Southwest Virginia,” said Attorney General Herring. “We’re asking the court for an enforceable order that will help us ensure compliance going forward, and for penalties for MVP’s violations.” “The Northam administration has empowered DEQ to pursue the full course of action necessary to enforce Virginia’s environmental standards and to protect our natural resources,” said DEQ Director David Paylor. “In this case, we determined referral to the Office of the Attorney General was prudent in order to seek faster resolution to these violations. We appreciate the Attorney General’s coordination to ensure necessary compliance.”The complaint against MVP alleges that DEQ inspectors identified violations of environmental laws, regulations, and permits in May, June, July, August, September, and October 2018 while investigating complaints it had received. In addition, an inspection company contracted by DEQ to monitor MVP’s compliance identified more than 300 violations between June and mid-November 2018, mostly related to improper erosion control and stormwater management. Among the laws that MVP is alleged to have violated are:
Virginia files lawsuit against Mountain Valley Pipeline - The company building a natural gas pipeline through Southwest Virginia violated environmental regulations more than 300 times, a lawsuit filed Friday by Virginia’s top lawyer alleges. Mountain Valley Pipeline is facing “the maximum allowable civil penalties and a court order to force MVP to comply with environmental laws and regulations,” according to a statement from Attorney General Mark Herring. Since work began earlier this year, inspections have found that crews failed to prevent muddy water from flowing off pipeline construction easements, often leaving harmful sediment in nearby streams and properties. Covering a span of seven months and nearly 100 miles of the pipeline’s route through five counties, the lawsuit is one of the most comprehensive summaries to date of the environmental toll taken by running a 42-inch diameter pipeline across rugged slopes and through pure mountain streams. Herring’s office filed the case on behalf of Department of Environmental Quality Director David Paylor and the State Water Control Board. “The Northam administration has empowered DEQ to pursue the full course of action necessary to enforce Virginia’s environmental standards and to protect our natural resources,” Paylor said in a written statement. “In this case, we determined referral to the Office of the Attorney General was prudent in order to seek faster resolution to these violations.” A Mountain Valley spokeswoman said Friday that “unusually wet conditions and periods of record rainfall” since construction began have posed unexpected challenges along the pipeline’s 303-mile path from northern West Virginia to Pittsylvania County. “The MVP project team has worked diligently to ensure appropriate soil erosion and sediment controls were implemented and restored where necessary along the route,” Natalie Cox wrote in an email. Mountain Valley “takes its environmental stewardship responsibilities very seriously and appreciates the guidance and oversight by the VDEQ,” she wrote. “MVP will continue to comply with the relevant laws and regulations related to the safe and responsible construction of this important infrastructure project in order to meet public demand for natural gas.” The lawsuit, filed in Henrico County Circuit Court, does not state an exact monetary amount being sought by the state. In July, DEQ issued a notice of violation to Mountain Valley, informing the company that its measures to control erosion and sediment had failed at multiple locations in the counties of Giles, Craig, Montgomery, Roanoke and Franklin. The matter was later referred to the attorney general’s office, which spent several months preparing a 27-page lawsuit that makes more sweeping allegations. It’s rare for such a case to end up in court, said David Sligh, a former environmental engineer for DEQ who is now fighting the pipeline as conservation director of Wild Virginia. Most notices of violations are handled administratively, with the most severe action a fine that is generally less than what a judge might impose, he said.
Eco-groups file motion with Ferc on MVP Southgate project - Six environmental groups are seeking to intervene in the Federal Energy Regulatory Commission’s proceedings on whether to approve an extension to the under-construction Mountain Valley Pipeline and its Southgate project, Kallanish Energy reports. The motion was filed Monday by the Center for Biological Diversity and allies Appalachian Mountain Advocates, Appalachian Voices, the Sierra Club, Haw River Assembly and the Chesapeake Climate Action Network. The Mvp Southgate extension by Mountain Valley Pipeline would move Appalachian Basin natural gas from the southern terminus of the 303-mile Mvp in Virginia’s Pittsylvania County, south roughly 72 miles to Alamance County, North Carolina. Construction would begin in the first quarter of 2020, and the pipeline would likely be in service by the fourth quarter of 2020. The eco-groups say the pipeline extension would harm plants and animals and threaten water supplies and local air quality along the Virginia-North Carolina border. It would also harm air and water quality in the Appalachian Basin by encouraging more drilling, they said. Work on the $4.6 billion Mvp has been halted at least temporarily by federal authorities over permits to cross streams in West Virginia.
Atlantic Coast Pipeline: construction halts for endangered species - Construction on the Atlantic Coast Pipeline could be delayed for months after a federal court in Richmond ordered the 600-mile interstate natural gas project to stop all work on Friday. The U.S. Court of Appeals suspended the federal permits from the U.S. Fish and Wildlife Service, which in September had cleared the way for pipeline construction in sensitive habitats. The habitats are home to four endangered species: a bee, a bat, a mussel and a crustacean. Lawyers for the pipeline, which would run through eight counties in North Carolina, asked the court late Friday to reconsider the ban, saying it was too far-reaching. The Atlantic Coast Pipeline’s lawyers said, for example, that none of the four endangered species have sensitive habitats in North Carolina, suggesting that pipeline construction work could continue in the state. “Due to the scope of the court’s order, Atlantic will be unable to proceed with any construction in the ‘action areas’ despite the lack of potential harm,” the pipeline’s lawyers wrote in a court filing. A court hearing on the validity of the federal permit is not scheduled until March. The permit allows pipeline construction to accidentally harm wildlife protected by the federal Endangered Species Act. But in the meantime the Atlantic Coast Pipeline and environmental groups who oppose the project are locked in a legal battle on whether the temporary construction ban should apply to the entire pipeline or just the areas with the endangered species. DJ Gerken, a lawyer for the Southern Environmental Law Center, said Saturday in a phone interview that the sensitive habitat of the Indiana bat, one of the endangered species, covers most of the pipeline’s projected path in West Virginia and Virginia. Gerken said his clients, which include the Sierra Club and the Virginia Wilderness Committee, oppose any construction work under an invalid federal permit.
Dominion suspends work on full route of Atlantic Coast Pipeline natural gas project after court stay — Dominion Energy has suspended construction on the full 600-mile route of the Atlantic Coast Pipeline, except for some 'stand-down' activities, after an appeals court stay last week, the company told the US Federal Energy Regulatory Commission Friday. Dominion said its action to halt work on the natural gas project was in response to the 4th US Circuit Court of Appeals' stay of implementation of the US Fish and Wildlife Service's biological opinion and incidental take statement. Both documents relate to the project's impact on vulnerable species. The court stay is in effect pending review of environmentalists' challenge to the documents, and oral argument in the case is scheduled in March (Defenders of Wildlife, et al., v. US Fish and Wildlife Service, 18-2090). Dominion, however, has called the stay "overly broad" and filed an emergency request that the court clarify the geographic scope of the stay or reconsider its pause. Only four species and about 100 miles of the project in West Virginia and Virginia are involved, it said, suggesting, for instance, that those species are not present in North Carolina. The 1.5 Bcf/d pipeline project is designed to move Appalachian shale gas to downstream Mid-Atlantic markets. The same court earlier this year struck the previous incidental take statement -- which allows for certain actions that unintentionally harm species -- for failing to set clear, enforceable limits on such actions. But the agency issued a new opinion and statement September 11, maintaining its view that the project is unlikely to jeopardize the continued existence of a handful of vulnerable species. It also issued a fresh incidental take statement setting revised numerical limits, among other things. Environmentalists then went back to court to challenging recently reissued federal permits they contend were rushed through the door. Southern Environmental Law Center has contended that more surveying was needed and that route alternatives should be considered in light of new information on the presence of the rusty patched bumble bee and a species of mussel known as the clubshell. It also contended that FWS reauthorized the pipeline despite additional data confirming that it would put critically endangered species in jeopardy of extinction. It also argued FWS omitted important habitat for the Indiana bat in its considerations. Login/Register
Quoting ‘The Lorax,’ federal judges reject pipeline’s effort to cross Appalachian Trail - A federal appeals has thrown out another key permit for the Atlantic Coast Pipeline, increasing the likelihood that work on the 604-mile multi-state project could be held up until this summer if not longer. The appeals court in Richmond on Thursday invalidated a federal permit for the planned pipeline to cross 21 miles of national forest in Virginia, including a section of the Appalachian Trail. The court said that the U.S. Forest Service ignored federal law and its own agency rules in granting the permit, which will clear a 125-swath of habitat during construction and leave a 50-foot wide lane in perpetuity for maintenance.The same court last week rejected a permit by the U.S. Fish and Wildlife Service to cut trees and grade land in sensitive habitats that are home to four endangered wildlife species. The consortium building the $7 billion pipeline, led by Charlotte-based Duke Energy and Richmond-based Dominion Energy, vowed to appeal the ruling and fight to get it reversed. The companies are planning to bring natural gas from fracking fields in Pennsylvania and West Virginia into North Carolina.They contend the Atlantic Coast Pipeline is “the most thoroughly reviewed infrastructure project in the history of our region,” and noted that 56 oil and gas pipelines have operated across the Appalachian Trail. They contend that cheap and abundant natural gas will keep down energy costs for decades and will provide a cleaner-burning alternative to coal-burning power plants, which are being phased out.“If allowed to stand, this decision will severely harm consumers and do great damage to our economy and energy security,” pipeline spokesman Aaron Ruby said in an emailed statement. “Public utilities are depending on this infrastructure to meet the basic energy needs of millions of people and businesses in our region.” In its ruling Thursday, the U.S. Court of Appeals for the Fourth Circuit quoted the Dr. Seuss classic, “The Lorax,” to summarize its decision. The court noted that the U.S. Forest Service outlined a litany of environmental concerns with the pipeline’s crossing of national forests, then abruptly did an about-face, dropped its objections, and approved the energy project.“We trust the United States Forest Service to ‘speak for the trees, for the trees have no tongues,’ ” the court wrote. “A thorough review of the record leads to the necessary conclusion that the Forest Service abdicated its responsibility to preserve national forest resources. This conclusion is particularly informed by the Forest Service’s serious environmental concerns that were suddenly, and mysteriously, assuaged in time to meet a private pipeline company’s deadlines.”
Court Tosses Controversial Pipeline Permits, Rules Forest Service Failed to ‘Speak for the Trees’ - The Lorax would not approve of the Atlantic Coast Pipeline—the controversial pipeline intended to carry fracked natural gas through 600 miles in Virginia, West Virginia and North Carolina. That's the sentiment behind a ruling by a Virginia appeals court Thursday tossing out a U.S. Forest Service permit for the pipeline to cross 21 miles of national forest in Virginia, including a part of the Appalachian Trail, The News & Observer reported."We trust the United States Forest Service to 'speak for the trees, for the trees have no tongues,'" the Richmond, Virginia U.S. Court of Appeals for the Fourth Circuit wrote in its ruling, quoting the Dr. Seuss classic. "A thorough review of the record leads to the necessary conclusion that the Forest Service abdicated its responsibility to preserve national forest resources. This conclusion is particularly informed by the Forest Service's serious environmental concerns that were suddenly, and mysteriously, assuaged in time to meet a private pipeline company's deadlines." Dominion Energy, Duke Energy, Piedmont Natural Gas and the Southern Company, the companies behind the pipeline, had sought permission to cross the George Washington National Forest and the Monongahela National Forest. Work would have required clearing a 125-foot path for construction through the forests and leaving a 50 foot path around the pipeline for maintenance. Sierra Club lawyer Nathan Matthews told The News & Observer that the companies would have to build 50 to 100 more miles to navigate around the forests. "This is a really consequential decision for this project," Greg Buppert, an attorney with the Southern Environmental Law Center, which brought the lawsuit against the permit on behalf of several environmental groups including the Sierra Club, told The Virginia Mercury. "If I were Dominion I would be panicked." The court's decision comes nearly a week after the same court halted construction on the pipeline until it can rule on permits granted by the U.S. Fish and Wildlife Service allowing the pipeline to build in the habitat of four endangered species. "This decision reinforces that the tide has turned against fracked gas pipelines," Matthews said in a Sierra Club statement. These dirty and destructive projects are no longer a done deal. It's simple, there is no right way to build the Atlantic Coast Pipeline—or any fracked gas pipeline. For the sake of our health, climate, communities, and its own ratepayers, Dominion should abandon this dirty, dangerous project once and for all.”
Virginia regulators just rejected Dominion’s long-range resource plan - Virginia utility regulators took the unprecedented action Friday of ordering Dominion Energy to totally redo a long-term energy plan it submitted for approval in May. The 231-page forecast covered details such as customer base and power-supply build-out from 2019 to 2033.“The commission finds, based on the record of this proceeding and applicable statutes, that the Company has failed to establish its 2018 IRP, as currently filed, is reasonable and in the public interest,” commissioners said. Dominion has 90 days to refile a corrected version of its 2018 Integrated Resource Plan, the State Corporation Commission (SCC) wrote in a 10-page decision. The changes have potential ripple effects on the region’s clean energy transition. Here are a few takeaways based on reactions from critics of the utility reached late Friday afternoon: The commission has never before rejected a Dominion plan as insufficient, according to Will Cleveland, an attorney with a Charlottesville advocacy group that has consistently challenged Dominion’s plans. “This is a big deal, especially if you’re super-duper wonky about utility planning.”Utility regulators nationwide rarely reject such plans, noted Dan Bakal, director of electric power programs for Ceres, a Boston-based nonprofit that works with investors and companies on sustainability issues. “I take a national view of these things for my job, and from my standpoint it is very unusual to have an IRP rejected outright like this.” Bakal Friday’s decision is also a good sign that Virginia regulators are not OK with being a rubber stamp for the state’s largest utility. “This ruling means that the State Corporation Commission is doing its job by adequately scrutinizing Dominion’s plans and raising concerns about its assumptions and estimates,” Bakal said. Critics said the decision validates something they have been saying for years: that Dominion’s energy forecasts are not credible.
NAACP duped into backing pipeline in Virginia, foe says — A massive winter storm delayed a closely watched vote in Virginia on a natural gas pipeline compressor station that has been the frequent target of protests, including an accusation that the NAACP was duped into supporting the project. A citizen panel that votes on air pollution permits was set to decide Monday whether Virginia’s most powerful corporation can build a natural gas compressor station in a historical African-American community. But the state on Sunday announced the meeting was being pushed back to Dec. 19 because of a winter storm that has made roads dangerous. Dominion Energy needs the State Air Pollution Control Board to sign off on a permit to build a station in Buckingham County to pump gas through the planned Atlantic Coast Pipeline. The upcoming vote has become a flashpoint in the yearslong fight over the pipeline and a political imbroglio for Gov. Ralph Northam, who has come under intense criticism for his recent removal of two board members ahead of the vote. The proposed site is about an hour west of Richmond in Union Hill, a community founded by freed slaves. Dominion, the lead developer of the pipeline and dominant force in Virginia politics, said it chose the location because it had sufficient acreage for sale and intersects with an existing pipeline. The proposed 600-mile Atlantic Coast Pipeline would carry fracked natural gas from West Virginia into Virginia and North Carolina. But opposition has been fierce, both from groups that don’t want the pipeline built at all and by others who worry exhaust from the compressor station will hurt the low-income and elderly residents who live nearby. Some opponents have accused Dominion of trying to take advantage of Union Hill’s Black residents.Richard Walker, who says his great-grandfather bought a 25-acre homestead in Union Hill for $15 in 1885 as a freed slave, said the company is engaged in “environmental racism.” He said Dominion recently duped the state NAACP into sending a letter to public officials saying it was satisfied with the progress Dominion was making with Union Hill residents. The NAACP quickly reversed course and reaffirmed its opposition to the compressor station after the letter was made public.
Winter storm outages weaken gas-demand response in Carolinas— Widespread power outages from a winter storm that pummeled the Carolinas on Saturday and Sunday weakened the gas-demand response from power generators, but otherwise had minimal market impact. Duke Energy said Monday that power had already been restored to 500,000 customers across North and South Carolina. Heavy snow and ice, which downed power lines over the weekend, continued to leave another 156,000 customers across the two states without service as of Monday. In North Carolina, where the storm had its largest impact, gas delivered to local distribution companies (LDCs) was up sharply over the weekend. The uptick in demand from power plants was notably muted, though, underperforming levels seen during a similar cold front which swept across the state over the recent Thanksgiving holiday. On Monday, temperatures across the Carolinas warmed only into the upper 30s to low 40s Fahrenheit. High temperatures are forecast to remain in that range through Thursday, according to data from the National Weather Service and S&P Global Platts Analytics. At Transco Zone 5 in North Carolina, gas prices were down Monday about 14-15 cents/MMBtu as the storm's demand impact continued to wane. All three Transco zone 5 hubs were poised to settle near $5.20/MMBtu on Monday, according to preliminary settlement data from S&P Global Platts. Beginning Saturday, sample gas demand from LDCs and power generators in North Carolina edged up in response to the colder weather. Power plant demand, though, was notably weaker than might be anticipated, averaging about 12.8 Bcf/d over the past three days, Platts Analytics data showed. In late November, a cold front that dropped temperatures in North Carolina to similar levels, pushed power burn demand to an average 14.6 Bcf/d over the three-day period. The weaker demand response suggests power outages across the state were likely responsible for lost burn demand in total at least 1.5 Bcf/d and possibly more, Platts Analytics data shows. In the residential-commercial sector, gas demand has averaged 15.7 Bcf/d since Saturday, up about 5 Bcf/d from the prior seven-day average. With temperatures expected to remain in the mid-30s to low 40s through Thursday, demand levels in North Carolina and beyond are expected to remain elevated over the next several days.
Natural gas price bump could cause higher heating bill - Natural gas has reached its highest price in more than four years, a spike expected to hit consumers in their wallets just as winter weather begins.The price of natural gas — which is used to heat nearly half of all U.S. households — has surged beyond market forecasts for the year, according to the U.S. Energy Information Administration.A Nov. 23 spot check on the price of natural gas showed it to be at $4.70 per million British thermal units. The last time the price of natural gas reached that level was June 2014, according the U.S. Energy Information Administration. The higher prices were spurred by lower temperatures that boosted the use of natural gas while there was little already in storage, according to the EIA. If colder temperatures keep up, households could end up paying around 5 percent more in heating costs this winter, said Bob Wilkens, University of Dayton associate dean of research who spent two decades working at Shell Oil Company.“If we have an extended really cold period then it’s going to take stockpiles a while to replenish themselves,” Wilkens said. “It all depends on what mother nature throws at us.” November was a colder month for the Midwest in 2018 than it typically has been the last 10 years, according to data from the National Oceanic and Atmospheric Administration. Despite the colder fall, the EIA is projecting the price of natural gas to drop in the coming months.
Listen: Rally in natural gas prices, lower storage throws uncertainty into US winter power outlook (podcast) The recent rise in natural gas prices, combined with lower gas storage and a late November cold snap, has added some uncertainty to the US winter power outlook. S&P Global Platts editors Eric Janssen, Kassia Micek and Tyler Godwin discuss the major issues in a roundtable discussion led by Andrew Moore. The group looks at everything from power prices and coal retirements to reliability concerns and the overall power mix.
Natural Gas Volatility Isn't Going Anywhere - It was another very volatile day in the natural gas space, as prices gapped up decently last evening, sold off through the morning, spiked on cold risks in American model guidance mid-day and then sold off hard into the settle. After all this the January contract settled up 1.3% on the day. The January contract was the only one to log a gain on the day; the rest of the strip logged a small loss. The result was a decent tick back up in the F/H January/March spread following major declines last week. These changes came as traders struggled to determine how best to react to weekend weather trends. In our Morning Update we highlighted that 15-day Gas Weighted Degree Day forecasts were quite similar to what we forecast on Friday. In fact, we noted that 6-10 and 8-14 Day forecasts were almost exactly what we had predicted on Friday. Yet though the weather analysis was right and prices did initially sell off this morning on "Slightly Bearish" weather trends, that did not last long. Cold risks remained on long-range GEFS American weather model guidance, which helped spike gas prices mid-day (images courtesy of Tropical Tidbits). Medium-range warm risks continued to intensify too, though, which tempered gains and was reflected again on afternoon Climate Prediction Center forecasts. The mixed strip action and shifting forecasts shows that traders are struggling to determine exactly which way to push natural gas prices in this narrowing wedge.
Natural Gas Finally Collapses Lower -The January natural gas contract got hit hard today, shooting over 6% lower as balances loosened on warmer weather and long-range forecasts showed only limited colder risks. The January contract again logged the largest loss on the day, a testament to the role weather had in pushing prices lower. This has already fit very well with our weekly natural gas sentiment sent to subscribers on Monday which was "Slightly Bearish." As expected, weather model guidance was rushing long-range cold risks, with further warm trends in overnight weather model guidance seen in our Morning Update. We also saw power burns and other demand loosen today, as yesterday in our Note of the Day for clients we warned that loosening was likely through the week. When combined with consistent warm risks through Week 2, this was all the natural gas market needed to sell off significantly. Meanwhile, traders will be paying close attention to tomorrow's EIA print to see how much gas we drew last week, when cold came on late in the week. Our early estimate is that this print will be similar in balance to the one saw last week, as we expect a solidly larger draw thanks to decently more GWDDs on the week. Yet despite storage levels being so low and this draw being rather large, the March/April H/J spread fell off today on those warmer weather trends we had been calling for. It will certainly be another busy day with gas prices breaking down below the forming pennant, and we expect volatility to again be elevated with another EIA print. In our Afternoon Update we outlined how we saw risk skewed and prices likely to trend from here.
EIA Reports Slightly Bearish 77 Bcf Draw as Salts Inject 8 Bcf; January NatGas Trims Gains - The Energy Information Administration (EIA) reported a 77 Bcf withdrawal from natural gas storage inventories for the week ending Dec. 7, slightly below market consensus. The gas market responded immediately to the bearish print as it trimmed gains from earlier in the morning. The Nymex January futures contract was trading about 14 cents higher at around $4.270 just prior to the EIA’s 10:30 a.m. ET release, but then gave back about 4 cents shortly after the print hit the screen. Just before 11 a.m., the prompt month was back up to around $4.258, up about 12 cents on the day. The 77 Bcf withdrawal was larger than last year’s 59 Bcf pull for the week, but just below the five-year average pull of 79 Bcf. The draw was also 5 Bcf below Bespoke Weather Service’s 82 Bcf estimate. After the firm missed 7 Bcf too low last week, “this again appears to be standard EIA noise as we saw a hefty 8 Bcf build across salts that was a bit larger than expected,” Bespoke chief meteorologist Jacob Meisel said. The 8 Bcf injection into salt dome storage facilities took other market observers by surprise as well, but some suggested more injections could come given the holidays are soon approaching, and weather is expected to be rather mild. Most, however, agreed, that salt injections were not likely in next week’s report given cold weather earlier this week. The salt build, and overall smaller drawdown even with some impressive cold to end the week, was seen as slightly bearish for the natural gas market overall, helping ease storage concerns (with the March contract hit hard post-number), according to Bespoke. The Nymex March contract, which had traded as high as $3.976 before the storage report, was down to $3.929 just before 11 a.m. Broken down by region, the EIA reported a 29 Bcf withdrawal in the Midwest, a 20 Bcf draw in the East, a 15 Bcf pull in the Pacific and a 7 Bcf draw in the South Central. Total working gas in storage fell to 2,914 Bcf, 722 Bcf below last year and 723 Bcf below the five-year average.
Weekly Natural Gas Storage Report - Bulls Losing Patience - EIA reported a storage draw of 77 Bcf for the week ending Dec 7. This compares to the -80 Bcf we projected and consensus average of -83 Bcf. The -77 Bcf was smaller than the five-year average of -79 Bcf but larger than last year's -69 Bcf. For the week ending 12/14, we currently have a forecast of -135 Bcf. We have April 2019 storage at 1.15 Bcf. Last night's ECMWF-EPS long-range outlook was not a favorable one for the bulls. As we wrote in our Tuesday NGD, we said the following: “CWG is using the analog of 2014 and 2002. In both years, November was colder than normal followed up with a warmer than normal December. Both years had weak to moderate El Nino conditions, and both years showed much more bullish January and February weather set-ups. If such a scenario plays out (above forecast), we think there could be a reasonable downside to our EOS forecast of 1.05 Tcf. We think storage could finish around ~800 Bcf. But the issue is that if the market is already somewhat expecting a bullish set-up, does it make sense to bet on it today? This is where we differ strongly from the market. We don't see how the market can currently ignore the increasingly bearish trend toward the end of December while focusing intently on the set up in January. As you can probably guess by looking at the price action today, the natural gas bulls will have to wait an additional week or more for the bullish set-up in Jan. As you can see, the models progressively got worse. The ECMWF-EPS 00z also did not help the bulls' cause as HDDs were revised lower and the warmer than normal weather is persisting. Combine all of these weather forecasts with the technical signal that natural gas prices broke down two days ago, and bulls are losing patience and getting out of their long positions before the weekend:
December Warmth Crushes Gas All Week - The January natural gas contract got crushed this week, settling down almost 15% for the week as the market finally reacted to significantly warmer weather trends. It took awhile for the market to begin reacting to this warmth in December, but this is not particularly a surprise as all the way back in September and October we were warning clients that December had some of the most pronounced warm risks of the winter. Even when November surprised cold we remained consistent in our calls for December warmth. Then last week we warned subscribers that over last weekend and into this week we would struggle to see long-range cold risks on weather model guidance move forward, as the warm pattern had some durability and models were likely too quick in showing cold return. . All week we warned of short-term downside for natural gas prices from this warmth, something that played out best today with a significant collapse lower at the front of strip as the January contract plummeted 30 cents. Many lingering natural gas bulls finally threw in the towel as long-range forecasts trended back warmer again today, which Climate Prediction Center Week 2 forecasts showed well today too. This comes as Gas Weighted Degree Days are expected to remain below seasonal averages through at least the next two weeks, and potentially longer. Tropical forcing appears at least partially to blame, as all week we were warning clients to favor European modeling guidance that showed more warm risks and other models have now trended towards. It has handled this recent tropical forcing event well, and shows tropical forcing lingering over the Maritime Continent through Week 2, sustaining bearish US weather risks. Additionally, we have seen natural gas balances loosen recently with warm weather moving on out of the region. Prices have stayed a bit more firm with LNG exports staying at record highs, though the amount of demand that provides is only very incremental compared to the amount of weather-driven demand eliminated from forecasts this week. Traders are now looking to January to see when cold may be able to return to the forecast. .
Rising Forecasts For 2019 US Natural Gas Production Keep Prices Low - It has become a monthly occurrence now: the U.S. Energy Information Administration's Short-Term Energy Outlook increasing its projection for 2019 U.S. natural gas production.In fact, since September alone, EIA's National Energy Modeling System has upped its forecast for 2019 output by over 5.3 Bcf/d, or 6.3%. For perspective, this means that the U.S. is now expected to have an additional Niobrara shale's worth of extra gas supply in 2019 than was expected just a few months ago. That is how fast the shale industry is soaring. The gas rig count last week was at 198, the highest since early-June. Per EIA, current U.S. gas production stands at around 87 Bcf/d, well above the 78 Bcf/d that we saw this time last year. Holding the mighty Marcellus and Utica shale plays, Appalachia this month is producing an astounding 30.4 Bcf/d, more than a 15% increase since last December. And the region will supply the largest incremental growth of all fields in the country, surging to a total output of 45 Bcf/d within five years. In fact, great expectations and rising EIA forecasts for domestic production explain why the U.S. gas futures market has held backwardation even though near-term pricing has spiked.
Environmental groups will join 16 SC cities to sue over offshore drilling tests -- Nine conservation groups and 16 South Carolina coastal communities are expected to sue the Trump administration Tuesday to stop leases to explore for natural gas and oil offshore. Tracts off South Carolina are among the waters up for grabs. The groups said they will file two separate lawsuits, both in U.S. District Court in Charleston. The lawsuits will claim the leases violate the federal Marine Mammal Protection Act, which prohibits harassing or killing animals such as whales or dolphins. The exploration would include seismic blast testing that involves loud airguns considered harmful to marine mammals and other sea life. “Ignoring the mounting opposition to offshore drilling, the decision to push forward with unnecessary seismic testing violates the law, let alone common sense,” said Charleston-based attorney Catherine Wannamaker, with the Southern Environmental Law Center. “An overwhelming number of communities, businesses and elected officials have made it clear that seismic blasting — a precursor to drilling that nobody wants — has no place off our coasts,” she said. The 16 municipalities are Charleston, Mount Pleasant, Isle of Palms, Folly Beach, Edisto Island, Seabrook Island, Kiawah Island, James Island, Beaufort, Hilton Head Island, Bluffton, Port Royal, Awendaw, Pawleys Island, Briarcliffe Acres and North Myrtle Beach. Also part of the litigation is the S.C. Small Business Chamber of Commerce. The South Carolina Environmental Law Project sued on their behalf.
Administration’s permits to harm marine animals during oil and gas exploration face a court fight - A coalition of environmental groups is suing the Trump administration for granting permits to seismic-mapping companies that allow them to harass and harm marine animals while blasting deafening sounds under the Atlantic Ocean in search of oil and gas deposits.The lawsuit, filed Tuesday in a federal court in Charleston, S.C., claims that the National Marine Fisheries Services, a division of the National Oceanic and Atmospheric Administration known as NOAA Fisheries, violated several federal laws that protect animals when it issued “incidental take” permits to five companies that submitted applications to carry out the seismic surveys.“This action is unlawful, and we’re going to stop it,” said Diane Hoskins, campaign director at Oceana, a nonprofit group. “Seismic air gun blasting can harm everything from tiny zooplankton and fish to dolphins and whales. More than 90 percent of the coastal municipalities in the blast zone have publicly opposed seismic … blasting off their coast.”The groups — the Natural Resources Defense Council, the Center for Biological Diversity, the Surfrider Foundation, Earthjustice and the Southern Environmental Law Center, among others — disagreed with an assessment by NOAA Fisheries that no animals would die as a result of the ear-piercing surveys. Dolphins and whales use echolocation to communicate and hunt, and some scientists say the blasts can damage their hearing.“The Trump administration is letting the oil industry launch a brutal sonic assault on North Atlantic right whales and other marine life,” Kristen Monsell, ocean program legal director at the Center for Biological Diversity, said in a statement. “Right whales will keep spiraling toward extinction if we don’t stop these deafening blasts and the drilling and spilling that could come next.” Tuesday’s lawsuit is the latest volley in a war being waged across the Eastern Seaboard against the Trump administration’s ambition to offer federal offshore leases to the oil and gas industry and possibly drill in the Atlantic for the first time in about 50 years. Every governor south of Maine has raised opposition to the proposal, part of a five-year federal offshore energy resource management plan. Nearly a dozen South Carolina lawmakers and mayors prepared to speak out against the seismic permits and reaffirm their opposition to oil exploration for a second time this year. On the West Coast, the governors of California, Oregon and Washington are aligned in opposition to a similar plan there.
Scientists: Offshore testing puts whales at risk — The iconic North Atlantic right whale, a critically endangered species teetering at the brink of extinction, possibly faces a new threat, marine scientists say. President Donald Trump wants to open the Atlantic coast to oil and gas exploration as part of a strategy to help the U.S. achieve "energy dominance" in the global market. His administration recently gave fossil-fuel exploration companies a green light to conduct seismic surveys across a stretch of ocean floor between Delaware and Florida. While the testing won't be conducted off the New England coast, scientists say air guns used in the testing can harm or kill marine animals far away. "The sound from seismic testing is so loud that it can literally travel for hundreds of miles," said Scott Kraus, vice president and chief scientist for marine mammals at the New England Aquarium. "It can disturb and kill mammals like whales, fish and even invertebrates like scallops, while displacing animals from areas of critical marine habitat." Air guns are towed behind ships and send loud blasts of compressed air through the water, which then create seismic waves through the seabed. The reflected waves are measured to reveal information about buried oil and gas deposits. Blasts are repeated every 10 to 12 seconds during testing, which in some cases can continue around the clock for days, according to industry groups. Right whales, which number only about 411 worldwide, migrate each winter from feeding grounds off New England to calving grounds in the warmer waters off the southeast coast. Seismic testing could create more stress on the whales, scientists say, resulting in fewer births for a species that is already suffering from a lack of reproduction. "There's a real possibility that the chronic noise from seismic activity could interfere with reproduction in right whales," Kraus said. What's more, right whales and their offspring communicate using sound, and disruptions from acoustic testing could cause babies to get separated from mothers, he added.
‘Beyond foolish’ not to study possible oil spills in Gulf Stream, drilling opponents say -The federal government’s failure to study risks of oil spills in the powerful Gulf Stream is “stunning” and “beyond foolish” given the stakes and current’s force, drilling opponents said this week.Packing more power than all of the world’s freshwater rivers combined, the Gulf Stream flows about 55 miles off the South Carolina coast.Yet federal regulators haven’t done computer simulations of how oil spills would interact with this mighty river in the sea, The Post and Courier reported earlier this year in its investigative project “Into the Gulf Stream.”Critics said this omission is particularly glaring in the wake of the Trump administration’s recent approval of seismic testing off the East Coast, a major step toward drilling. But the federal Bureau of Ocean and Energy Management (BOEM) hasn’t done simulations for potential spills in the Gulf Stream and elsewhere on the East Coast. The Post and Courier filled this risk analysis gap earlier this summer by doing its own spill simulations. Using a federal computer program, the newspaper simulated what would happen if spills occurred off the Southeast coast. Using a computer program built by the National Oceanic and Atmospheric Administration, the newspaper generated more than 1,000 spill scenarios. These scenarios showed that the Gulf Stream is like a high-velocity pump. Some simulations showed that within just 24 hours, a spill off Charleston would travel more than 90 miles.Other simulations showed that in just two weeks, slicks off Georgia could shoot toward the Outer Banks and then move into deeper waters off Virginia and pivot toward Europe. The current’s force would pose immense if not impossible challenges for cleanup crews.The newspaper’s work “is stunning and creates a stark visual for people trying to imagine a new reality of drilling off their coast,” said Alexandra Adams, legislative director for nature programs at the Natural Resources Defense Council.Two years ago, the group commissioned its own study to model potential spills in the Arctic, another area with swift currents that oil interests want to tap. The study found spills could quickly spread 700 miles, oiling the Alaskan, Canadian and Russian coasts.“Oil exploration is a deeply dangerous and risky business, and the unwillingness to acknowledge this is distressing,” Adams said.
Oil Spills from Well in Rattle Snake Bayou -- The U.S. Coast Guard is responding to an oil discharge near Port Sulphur, Louisiana. On Sunday, Watchstanders at Coast Guard Sector New Orleans received a report from the National Response Center that a crude oil well in Rattle Snake Bayou, southwest of Port Sulphur, was leaking. The amount discharged has not been determined; the well is rated to produce 5,476 gallons of oil per day, but it is not known when the discharge began.The source of the discharge has not been secured. Hilcorp, the owner of the well, has contracted ES&H as an oil spill response organization. ES&H currently has four response boats and 13 personnel conducting containment and cleanup operations. Wild Well Control has been contracted to work on securing the source. Also involved in the response are Plaquemines Parish Sherriff’s Department, the Louisiana Oil Spill Coordinator’s Office and the National Oceanic Atmospheric Administration. The cause of the incident is under investigation. In March last year, the U.S. Coast Guard responded to a natural gas and crude oil discharge from an abandoned wellhead owned by Hilcorp near mile marker 10 on the Lower Mississippi River, southwest of Venice, Louisiana. In 2016, a Hilcorp Energy pipeline was determined to be the source of a spill of 4,200 gallons of crude oil near Lake Grande Ecaille.
Coast Guard- Crude oil well leaking in Rattlesnake Bayou - The U.S. Coast Guard is responding to a crude oil spill near Port Sulphur, La. in the Rattlesnake Bayou, according to a Coast Guard news release. The source of the leak was not secured as of Sunday evening (Dec. 9), the Coast Guard said. It was not known when the leak began or how much oil has been spilled. The well produces an estimated 5,476 gallons of oil per day, according to the Coast Guard. Oil spill response teams were working on containing and cleaning the spill Sunday, and the Wild Well Control has been hired to secure the source of the leak. The well is owned by Hilcorp, the Coast Guard said. Coast Guard officials issued a warning to boaters in the area. The Plaquemines Parish Sheriff’s Department, the Louisiana Oil Spill Coordinator’s Office and the National Oceanic Atmospheric Administration are also assisting with the response.
Containment, clean-up continues in Port Sulphur oil spill- Dozens of boats and more than 100 workers are trying to clean up and contain an oil spill in Plaquemines Parish. We know nearly 5,000 gallons of oil and water has been collected, but there’s still plenty more work to be done. “It’s a big spill,” said Plaquemines Parish Director of Homeland Security and Emergency Preparedness Patrick Harvey. “Luckily, they were able to get on top of it rather quickly.” Already, personnel recovered more than 4,800 gallons of oil and water. "Hopefully, the impact is not as bad as it was originally thought to be and, hopefully, they can get it cleaned up in a short period of time," said Harvey. The Coast Guard is still trying to figure out what caused the spill, first spotted Sunday. Petty officers say an oil well head was leaking a mix of crude oil, gas and water. It’s not leaking anymore, but it’s not fixed. A Coast Guard spokesperson says they’re pumping a salt water solution into the well to keep it from leaking until repairs are made. “It had quite a bit of oil out there, more sheen than anything else,” said environmental consultant P.J. Hahn. Hahn says he saw the leak in Rattlesnake Bayou on Wednesday and snapped photos. He applauds the efforts of those who responded and says Mother Nature is helping, too, taking out the tide and oil along with it. “It’s so much harder to clean the marsh than if it just went out into the open. It’s easier to clean up out in the open,” Hahn said. “Once it gets in the marsh, it destroys it quickly. It’s almost impossible to get it out of the marsh without causing more damage.” Hahn says, it's unfortunate, but on a working coast like the Gulf of Mexico, spills are inevitable.
In the LOOP: Three VLCCs depart LOOP for India, South Korea -- Three VLCCs departed the Louisiana Offshore Oil Port over the week ended December 8, with the crude cargoes on board bound for India and South Korea.LOOP did not release the names of the vessels that were loaded and it was unclear exactly which VLCCs departed the port for export. However, cFlow, Platts’ trade flow software, reported that three laden or partially laden VLCCs exited LOOP last week.The Khurais set sail from LOOP on December 5 and is bound for Kochi, India, according to cFlow. It is expected to arrive at the west coast of India on January 12. Another vessel, Lulu, left LOOP on December 7 and is expected to arrive at India’s east coast port of Paradip on January 19. The third VLCC, Maharah, was loaded at LOOP and set sail December 2. It is expected in Daesan, South Korea, on January 23.The three VLCCs were loaded with crude sourced from LOOP’s Clovelly Hub, including a light sweet crude grade, most likely either LLS or WTI MEH, according to industry sources. The remaining two cargoes could contain Mars, Poseidon or LOOP Sour crude. The three VLCCs were loaded one after the other, representing a reduced overall load time at the port, according to LOOP.Both sweet and sour grades have made their way to India and South Korea in recent months, including WTI MEH, Mars and Poseidon grades. The month two Dubai and month one WTI swap spread, has widened 41 cents/b to $6.75/b since the start of the fourth quarter. As Dubai’s premium over WTI increases, WTI-based grades become more competitive with comparable Dubai-based grades in export markets.On Monday, S&P Global Platts assessed LOOP Sour CFR North Asia at $60.76/b, falling below the comparable values for competing grades Dubai, assessed at $62.33/b, and Basrah Light, at $61.88/b. The assessed WTI MEH CFR North Asia value of $63.93/b, while higher than competing grade Murban at $63.35/b, was still slightly lower than the CFR value of Forties at $64.01/b. US crude oil exports surged to reach a new all-time high of 3.2 million b/d for the week ending November 30, according to data released last Thursday by the Energy Information Administration. The total surpassed the previous record of 3 million b/d, which occurred the week of June 22. The record exports helped create a draw on crude oil inventories, which came after 10 weeks of builds.
Reverse-lightering crude oil supertankers along the Gulf Coast. There’s a reason why more than half a dozen midstream companies and joint ventures are clamoring to build deepwater loading terminals on the Gulf of Mexico: because it’s a major pain to load Very Large Crude Carriers (VLCCs) any other way. These days, the standard operating procedure for loading the vast majority of VLCCs along the Gulf Coast involves a complex, time-consuming and costly process of ship-to-ship transfers called reverse-lightering, in which smaller tankers ferry out and transfer crude to VLCCs in specified lightering areas off the coast. Today, we ponder the current dynamics for U.S. crude exports via VLCC. In the past three years, the growth in export volumes has been stunning — from 590 Mb/d in 2016, on average, to 1.1 MMb/d last year and 1.9 MMb/d through October in 2018. As the market looks to the immediate future, projections for rising crude production from the prolific Permian, Eagle Ford and SCOOP/STACK shale plays suggest that the export wave could soon look more like a tsunami, especially after a few new crude pipelines come online.
Maiden LNG Cargo Leaves Corpus Christi - Cheniere Energy, Inc. reported Tuesday that the first commissioning cargo of liquefied natural gas (LNG) has loaded and departed from its Corpus Christi liquefaction terminal in Ingleside, Texas. The loading and departure of LNG carrier Maria Energy, chartered by Cheniere Marketing, LLP, marks the first export of LNG from Texas and from a greenfield liquefaction facility in the Lower 48 states, Cheniere added. “This milestone further reinforces Cheniere’s position as the leader in U.S. LNG, with a world-scale liquefaction platform that provides significant competitive advantages as we continue to execute on our growth strategy,” Jack Fusco, Cheniere’s president and CEO, said in a written statement. Cheniere noted that its Corpus Christi liquefaction project comprises three large-scale trains and supporting infrastructure. The first train produced first LNG in November and should reach substantial completion in First Quarter 2019, the company stated. Furthermore, Cheniere reported that its second and third trains should reach substantial completion during the second half of 2019 and second half of 2021, respectively. Along with seven smaller trains under development, Cheniere stated that it expects the Corpus Christ facility’s total nominal LNG production capacity to reach 23 million tonnes per annum. According to port calls listed on the Marine Traffic website, Liberia-flagged Maria Energy arrived at the Cheniere facility in Ingleside on Dec. 1 and departed Tuesday morning.
Permian Oil Reserves May Be Twice As Big As We Thought --The U.S. Geological Survey has revised the technically recoverable reserves in the Wolfcamp Basin, in the Permian shale play, to 46.3 billion barrels of crude and 281 trillion cu ft of natural gas. That’s up from 20 billion barrels of crude and 16 trillion cu ft of gas in recoverable reserves in late 2016.It’s worth noting, however, the new estimate also includes the Bone Spring formation that makes up part of the Delaware Basin in the Permian. This is the first time this formation is included in the USGS oil and gas reserves assessment. Recoverable reserves are calculated based not just on exploration results and geology but also on the price level that makes the oil and gas commercially viable for extraction. The USGS carried out its revision earlier this year, so it must have reflected the improvement in oil prices, notably West Texas Intermediate that has now largely disappeared, sparking worry about the sustainability of production growth, which has been steady throughout the year. The national total hit 11.7 million bpd last month, an all-time high and also the highest in the world and the Permian was the major driver behind this growth. It is the shale play that produces the most oil and also boasts the fastest rate of production growth: in November the Permian yielded 3.63 million bpd of crude and the Energy Information Administration expects this to rise further to 3.695 million bpd this month. So, the Permian is already a star, but now it will shine more brightly. The USGS numbers mean it is the largest single reservoir of oil and gas in the United States and one of the largest on a global scale.
The Real Implications Of The New Permian Estimates -This week the United States Geological Survey (USGS) announced a groundbreaking oil and gas discovery in West Texas’ Permian Basin. According to the organization’s recent press release, a whopping 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas, and 20 billion barrels of natural gas liquids are now believed to lie untapped in the Wolfcamp Shale and overlying Bone Spring Formation area of Texas and New Mexico’s Permian Basin. Major players in the energy industry already have a significant presence in Wolfcamp and Bone Spring, including Occidental Petroleum Corp. and Pioneer Natural Resources Co. It was already well known and well documented that these fields were remarkably fertile grounds for oil extraction, but the jaw-dropping extent of the new figures released this week by the USGS has made the massive crude and shale reserves of the Permian Basin freshly headline-worthy. The figures in this week’s press release are in fact, in the case of Wolfcamp Shale, more than double the previous resource assessment. The USGS assessed the area more than two years ago in 2016, and has officially determined that it contained the largest estimated quantity of continuous oil in the entire United States. "Christmas came a few weeks early this year," said U.S. Secretary of the Interior Ryan Zinke in response to these momentous figures. "American strength flows from American energy, and as it turns out, we have a lot of American energy. Before this assessment came down, I was bullish on oil and gas production in the United States. Now, I know for a fact that American energy dominance is within our grasp as a nation." The USGS qualifies the figures of their massive discovery as consisting of undiscovered, technically recoverable resources, which they define as, "those [resources] that are estimated to exist based on geologic knowledge and already established production, while technically recoverable resources are those that can be produced using currently available technology and industry practices. Whether or not it is profitable to produce these resources has not been evaluated."
Rystad Energy- Permian gas flaring hits all-time highs - Gas flaring in the Permian basin reached an all-time high in this year’s third quarter as the persistent rise in production collided with severe takeaway capacity challenges, according to Rystad Energy. Rystad estimates that gas flaring in the Permian averaged 407 MMcfd in the third quarter, and this number is likely to climb even higher once final disposition figures are registered, given the substantial level of underreporting that still exists for September. Rystad also expects flaring to rise well into 2019, reaching a level of at least 600 MMcfd by mid-2019 assuming West Texas Intermediate oil prices recover to $60/bbl to support existing activity levels. The energy research company also noted that, in Texas, there is an increased tendency whereby gas is flared on new wells for extended periods—often between 4-6 months—far beyond the 45-day period covered by the initial flaring permit.
With special gear and righteous anger, activists document emissions in the Permian oil fields - — Environmental activist Sharon Wilson knows what she’s likely to get from her regular trips to the Permian Basin: a headache and sore throat from the fumes and a dark mood from the bleak industrial landscape. Still, she returns, armed with more than $100,000 worth of camera equipment and righteous anger over what few people see in the heart of the U.S. oil industry. Wilson, a senior organizer for the environmental group Earthworks and a longtime critic of fracking, is working to prove that those invisible emissions are worse than originally thought. The impact of those gases ranges from exacerbating global climate change to polluting the air. "Right now, the Permian Basin is the most important place on earth to show what's happening, and what we have to stop," Wilson said, referring to oil and gas drilling. Month after month, Wilson, 66, records infrared video of oil and gas facilities that she says are spewing methane and other hydrocarbons into the air. Some of the emissions are permitted by state law, some are forgiven as accidents and some are noted as violations. It’s a job, Wilson says, that regulators have all but abdicated. The Texas Commission on Environmental Quality has just four air monitors in the Permian Basin, which includes all or parts of 61 counties. Most emissions data is industry-reported. Alan Septoff, an Earthworks spokesman, described the Texas approach as “drill and then regulate when possible.” “There’s no one out there trying to quantify this,” he said.
US rig count drops by seven to 1,172- S&P Global Platts Analytics -- — US rig counts declined for a third straight week as sustained lower oil prices continued to weigh on drilling activity, according to S&P Global Platts Analytics data released Thursday.The number of total active oil and natural gas rigs fell by seven to 1,172 during the reporting week ended Wednesday, Platts Analytics data showed.Despite three weeks of declines taking rig counts to a seven-week low, US drilling activity remains strong with 112 more active combined oil and gas rigs than during the same week a year ago.An eight-rig dip in oil rig counts to 933 led the nationwide decline. The number of rigs chasing primarily gas and those chasing both oil and gas were unchanged at 218 and 16, respectively. An addition of a single cyclic steam rig pared the nationwide decline to seven. Click here for full-size graphicWhile nationwide rig counts continued to fall last week, the number of drilling permits rose for a third week to 1,528, up 88 from the week prior.The number of active permits came in just shy of a nine-year high seen in early November. While permit numbers are volatile week to week, last week's uptick appears to be running against a historic trend of permitting activity waning during the final weeks of the year. Rig counts in the Permian Basin were stable at 480 last week, following two weeks of declines. Notably, the number of permits filed for potential drilling in the basin jumped 26 to 216, the highest since June.The Permian is the largest producing basin in the US, with an estimated average production of 3.9 million b/d of oil and 8.1 Bcf/d of dry gas, according to Platts Analytics, but pipeline and other takeaway capacity are limited and virtually match production.The uptick in permit activity suggests rig counts may resume their climb in the near term. Widening price differentials for Permian crude in recent weeks have increased production incentives for operators that can overcome takeaway constraints.Last week, prompt-month Platts WTI Midland was assessed at an average of minus $8.59/b compared with WTI at Cushing, Oklahoma. The assessment was minus $7.73/b during the week prior and minus $5.87/d in November. Rig counts in several other major oil-focused plays were also static. The number of rigs in the SCOOP-STACK and Eagle Ford basins were flat at 108 and 93, respectively, while the Denver-Julesburg play added one rig for a total of 33. In contrast, the Bakken rig count fell by one to 61.
US Oil Rig Count Drops for Second Week in a Row - For the second week in a row, the U.S. dropped oil rigs, according to weekly data compiled by Baker Hughes, a GE Company. After declining by 10 oil rigs last week, the U.S. dropped another four rigs this week, bringing the total oil rig count to 873. Gas rigs remained flat this week, with no rigs added or cut.The Eagle Ford and Utica both added a rig apiece this week while several other basins cut rigs.The Permian, which accounts for more than half of the nation’s oil rigs, cut three rigs this week, as did the Williston. The Arkoma Woodford, Granite Wash, Haynesville, Marcellus and Mississippian all dropped an oil rig apiece this week. The overall rig count total for this week is 1,071, higher than one year ago when the count was 930.Earlier this week, the U.S. Energy Information Administration forecasted that U.S. oil producers would pump an average of 12.06 million barrels of oil per day in 2019.
Hundreds of Texas Oil and Gas Workers to Lose Jobs in New Year - A few hundred oil and gas workers will find themselves without jobs near the start of the New Year. In recent months, Pioneer Natural Resources, Covia, Petrobras and Siemens have all announced staff reductions at Texas facilities. Details surrounding the job cuts, sent to the Texas Workforce Commission, are below.
- Pioneer Sands LLC, acquired by Pioneer Natural Resources in 2012, will shut down operations at its plant in Brady, Texas, which currently employs 219 employees. Employment separations will occur in phases beginning Jan. 14, 2019 through the end of 2019.
- Covia Holdings Corp. is ceasing operations at its Voca, Texas, facility Jan. 31, 2019. A total of 93 employees will be affected. The company said a small number of employees may be retained beyond Jan. 31 to wind down operations, though all employees are expected to be terminated within 90 days following the closure date, except for one employee who has been reassigned.
- Petrobras America Inc. is downsizing its facility in Houston, Texas, beginning Feb. 28, 2019 as a direct result of the company selling all of its assets in the Gulf of Mexico. Layoffs of more than 50 employees (more than 33 percent of the company’s workforce) will occur from Feb. 28 through Oct. 31, 2019.
- Siemens is closing its Houston Service Center and will transfer all manufacturing activities to other Siemens facilities due to market conditions and network overcapacity. This will result in the elimination of 17 positions Jan. 13, 2019.
Good vibrations- Neutrons lend insight into acoustic fracking - A team of researchers at the Department of Energy's (DOE's) Oak Ridge National Laboratory (ORNL) are using a combination of neutron and X-ray scattering to make the process safer and more efficient. They want to improve hydraulic fracturing, or fracking, by blasting well surfaces, or bores, with acoustic energy, which would enhance the ability of fracking to penetrate fractures in wells and drastically reduce the amounts of water and chemicals needed."There's tremendous benefit for fracking oil and gas wells with less chemicals and water," said Richard Hale, a researcher in ORNL's Nuclear Science and Engineering Directorate investigating whether acoustic energy can be used for that purpose.Hale says the idea is to alter the essential structure of a well with ultrasonic vibrations to allow oil and gas to flow more effectively. Primarily, acoustic energy hasbeen used to clear away debris in and around the surface of the well, but Hale and the team want to take that concept to the next level to see if acoustic energy can alter the porosity and permeability of formations far below the surface to reach more isolated pockets of oil and natural gas. "It's all about supplying energy into the formation to release hydrocarbons,"
Whatever happened to enhanced oil recovery? - Throughout the history of the oil industry, technological progress has found a way to bring new resources into play. The shale revolution and the expansion of deepwater output are prime examples. But there’s another longstanding technological effort that rarely generates headlines, but plays an important role in oil supply: the effort to improve recovery from a wide variety of fields via enhanced oil recovery (EOR). Even with modern production techniques, a large share of the oil in a reservoir is not produced during primary and secondary recovery (read a description of EOR on our new CCUS page or in the explainer below). Some of this oil can, however, be accessed through the use of more complex and energy intensive extraction techniques such as the injection of heat, chemicals, CO2 or other gases. These techniques have been successfully and commercially deployed in multiple countries over many decades. With this commentary, we are also releasing an up-to-date list of EOR projects around the world, filling in an important data gap. We also explore the outlook for EOR in different scenarios from the new World Energy Outlook.
Fatal Oklahoma rig explosion due to unsafe equipment, lawsuit says — Drilling company officials ignored multiple warnings that safety equipment at an Oklahoma gas well was malfunctioning before an explosion that killed five workers, including a man from Colorado, and badly injured another, the family of one of the dead workers contends in a recent court filing. Parker Waldridge’s family alleges in a Dec. 4 amendment to their wrongful death lawsuit that a “cascade of errors and multiple departures from safe drilling practices” by drilling company Patterson-UTI Drilling led to the Jan. 22 blowout near Quinton, which is about 125 miles east of Oklahoma City. The lawsuit alleges that at least two days before the explosion, the rig superintendent, manager and several other Patterson employees received email results of a laboratory test warning of problems with the rig’s accumulator, a piece of safety equipment that closes part of the well to prevent an uncontrolled release of fluids. The warnings even came with a “skull and crossbones graphic (literally),” the lawsuit said. The accumulator wasn’t able to fully close the well on the day of the blast, the U.S. Chemical Safety and Hazard Investigation Board found. “Patterson Drilling had the most direct control over the drilling operations and emergency response to changing conditions and failed to use ordinary care with respect to its conduct,” the lawsuit alleges. Red Mountain Energy, which owns the well and hired Patterson to work it, issued a statement saying that Patterson’s “gross negligence led to a terrible tragedy.” “The facts cited in the amended petition demonstrate exactly which parties failed to perform basic safety procedures prior to this accident,” said Red Mountain, which is also a defendant in the lawsuit. Patterson, meanwhile, issued its own statement, calling Red Mountain Energy’s allegations “inflammatory” and blaming the company for the well’s design and drilling program.
Ignored and Infuriated, Pawnee Stop Illegal Fracking Plans on Tribal Lands -- After stumbling upon a work crew surveying for a proposed pipeline in 2015, Walter Echo-Hawk, a member of the Pawnee Nation of Oklahoma, called the oil company responsible to find out more information. The company stonewalled him. Eventually, Echo-Hawk learned the truth: Two years prior, regulators had approved 17 oil and gas leases on Pawnee lands. They didn’t bother to notify the tribe. Echo-Hawk immediately began mobilizing fellow tribal members to fight the leases. But regulators at the Bureau of Indian Affairs and Bureau of Land Management said it was too late. The leases had already been approved. The agencies also claimed the Pawnee couldn’t take them to court because the tribe had failed to ask for reconsideration of those decisions when they were made. The Pawnee, however, hadn’t been aware of the decisions because the agencies — in violation of their own rules — neglected to notify the tribe in any way. Echo-Hawk was furious that federal agencies were treating Pawnee lands like “an oil and gas fiefdom.” After all, it was hardly the first time the U.S. government had run roughshod over tribal rights. In addition, the Pawnee were already gravely familiar with the threats posed by oil and gas drilling. Over the years, previous operations had left a legacy of contaminated groundwater and illegal wastewater dumping on tribal land. In addition to water contamination, geologists have linked fracking to a surge in earthquakes, both in Oklahoma and across the country. Despite this threat, government regulators didn’t bother to address the earthquake risk when approving the leases. Nor did they address the impacts of drilling near the Cimarron River, a 698-mile cinnamon- and paprika-colored ribbon of water that supports a native fishery protected under Pawnee tribal law. In early September 2016, the tribe’s fears about fracking were realized after the most powerful earthquake recorded in Oklahoma history struck the Pawnee area. The jolt was also felt by six neighboring states. Shortly after, Earthjustice filed a lawsuit against the Bureau of Indian Affairs and the Bureau of Land Management on behalf of the Pawnee Nation, as well as Echo-Hawk and other individual Pawnee members. Earthjustice attorney Mike Freeman says the Pawnee situation illustrates a larger pattern where the federal government violates the law by approving oil and gas projects on tribal lands without telling the affected tribes. The Bureau of Indian Affairs, for example, has used a similar maneuver in recent years in New Mexico, Maine, and on tribal lands in Oklahoma.
Trump’s Attack on the Clean Water Act Will Fuel Destructive Pipeline Boom - A new water rule that will strip federal protections from an estimated 60-90 percent of U.S. waterways will dramatically ease restrictions on how polluting industries do business. According to the rule, which is due out next week, streams that don’t run year-round and many wetlands will no longer be subject to the Clean Water Act. As a result, a wide range of industries — including agriculture, mining, waste management, chemical companies, real estate development, and road construction — will be free to pollute, reroute, and pave over these waterways as they see fit. But oil and gas transport companies may benefit most from the imminent shift. When the rule takes effect, pipeline construction projects that are currently required to undergo months, or even years, of scrutiny from water experts in order to minimize their environmental impact will be allowed to speed forward. For energy companies that have been pushing for exactly these changes for years, the new rule may be well worth the wait. The energy company ONEOK should have applied for permits to work on its Arbuckle II pipeline by now. The $1.3 billion project, which will transport natural gas liquids 530 miles from the company’s supply basins in Velma, Oklahoma, to its storage facilities on the Gulf Coast of Texas, will cross dozens of waterways in both states. As of Friday, however, the company hadn’t submitted any applications for the permits required to build its pipeline across waterways, according to the Army Corps of Engineers offices in Tulsa, Fort Worth, and Galveston, which are responsible for permitting pipelines under the Clean Water Act. The Trump administration rollback of water regulations will allow ONEOK and other companies involved in the energy pipeline boom now underway to simply bulldoze through waterways that are currently protected without any environmental scrutiny at all.
Superior residents ask feds to end use of toxic chemical at refinery -- Federal officials heard an earful Wednesday at a public meeting in Superior, Wis., about the explosion and fire at the nearby Husky Energy refinery that injured 36 people and forced the evacuation of much of the city last spring. About two dozen residents from Duluth, Superior and surrounding areas addressed the three sitting members of the U.S. Chemical Safety and Hazard Investigation Board, who had come to town at the request of several Minnesota and Wisconsin congresspeople. Most speakers were emphatic in their insistence that Husky energy stop using hydrogen fluoride at the refinery. The toxic chemical is used to make high-octane gasoline, but can cause lung disease and skin damage in people who are exposed to it. The April explosion occurred about 150 feet from a spot on the refinery grounds where 15,000 pounds of the chemical was stored. Shrapnel from the blast punctured a nearby tank of asphalt, which gushed out and caused a massive fire to burn for about four hours, creating an enormous black smoke plume. But debris from the explosion did not damage the tank containing the hydrogen fluoride, and a fire suppression system kept the tank protected. Still, Norm Herron of Duluth told board members that Husky should replace the chemical with something less hazardous. "The cost to manufacture a product must never take precedence over the safety and health of the people who reside and work in the Twin Ports," he said.
State regulators deny opponents' petition to reconsider Line 3 pipeline route - State utility regulators denied requests Thursday morning to reconsider a route permit they granted earlier this year to Enbridge Energy to replace its Line 3 oil pipeline. With little discussion, the Minnesota Public Utilities Commission unanimously rejected the request, which had come from landowners, environmental groups and the Mille Lacs Band of Ojibwe. The five-member commission voted unanimously in June to allow Enbridge to replace its aging Line 3 pipeline, which has been in operation since the 1960s. Enbridge says the replacement is necessary because the current Line 3 is corroded and cracked, which means it is more prone to leaking and can't transport as much oil as it has in the past. At its June vote, the commission also took up the question of the pipeline's route, and in a 3-2 vote decided to allow Enbridge to build the new line along its preferred route, far south of the current line, with a few modifications. Enbridge preferred that new route in part because the Leech Lake Band of Ojibwe did not want a new pipeline to cross its reservation. About 20 percent of the current route across the state crosses the tribe's reservation. But many pipeline critics have argued that the new route opens up a second pipeline corridor across northern Minnesota to the risk of an oil spill and potential damage to wild rice and other resources. So in September, environmental and tribal groups petitioned the PUC, asking it to reconsider its decision. When regulators denied their request Thursday morning, commissioner Katie Sieben said the replacement was for the good of the state.
Where the Enbridge Line 3 pipeline project stands, and where it goes from here - Calgary-based Enbridge is close to building a crude oil pipeline through northern Minnesota’s lake country after its plans received key approval from state energy regulators this year.But despite the green light from the Public Utilities Commission, Enbridge has yet to break ground for its $2.6 billion, 337-mile Minnesota portion of the Line 3 project. That’s because the company still faces several government hurdles and legal challenges to moving the pipeline ahead. At the same time, Enbridge will also be navigating a new political environment in the state, now that the DFL gained a majority in the state House and DFLer Tim Walz was chosen to succeed Gov. Mark Dayton. Here’s where the project stands, and where things go from here:Enbridge is currently subject to a consent decree with the federal government t hat was issued following 2010 oil spills in Michigan and Illinois. The Michigan leak spewed hundreds of thousands of gallons of crude oil into the Kalamazoo River and Talmadge Creek, and as part of the decree, the government ordered the company to replace the U.S. portion of the existing Line 3 as long as it could get approval to do so.The new Line 3 is set to be a 36-inch pipeline that follows the current pipeline’s route from the Minnesota border to Enbridge’s Clearbrook terminal, southeast of Lower Red Lake. The new line would then jog south before turning east near Park Rapids, passing through north-central Minnesota’s lake country before ending in Superior. It’s expected to carry roughly 760,000 barrels of oil per day. The state’s Public Utilities Commission has already granted the Line 3 project a Certificate of Need and OK’d the route, probably the two most important and difficult permissions needed for Enbridge to start construction.The PUC, a panel of five commissioners appointed by the governor, will decide Thursday whether to reconsider that route decision. While it voted unanimously to give Enbridge its Certificate of Need, the vote to approve the pipeline course was 3-2.
Trump Auctions Off 150,00 Acres of Public Lands for Fracking Near Utah National Parks - On Tuesday the Trump administration offered more than 150,000 acres of public lands for fossil-fuel extraction near some of Utah's most iconic landscapes, including Arches and Canyonlands national parks.Dozens of Utahns gathered at the state Capitol to protest the lease sale, which included lands within 10 miles of internationally known protected areas. In addition to Arches and Canyonlands, the Bureau of Land Management leased public lands for fracking near Bears Ears, Canyons of the Ancients and Hovenweep national monuments and Glen Canyon National Recreation Area."Utahns have demonstrated their commitment to transition away from dirty fossil fuels through clean energy resolutions passed in municipalities across our state. Yet, these commitments continue to be undermined by rampant oil and gas lease sales, which threaten our public health, public lands, and economy. While Utah's recreational and tourism economies continue to flourish, these attempts to develop sacred cultural, environmental, and recreational spaces for dirty fuels remain a grave and growing threat." said Ashley Soltysiak, director of the Utah Sierra Club. "Utah is our home and the reckless sale of our public lands with limited public engagement is simply unacceptable and short-sighted."Fracking in these areas threatens sensitive plants and animals, including the black-footed ferret, Colorado pikeminnow, razorback sucker and Graham's beardtongue. It also will worsen air pollution problems in the Uinta Basin and use tremendous amounts of groundwater. Utah just experienced its driest year in recorded history. "This is a reckless fire sale of spectacular public lands for dirty drilling and fracking," said Ryan Beam, a public lands campaigner at the Center for Biological Diversity. "These red-rock wonderlands are some of the West's most iconic landscapes, and we can't afford to lose a single acre. Fracking here will waste precious water, foul the air and destroy beautiful wild places that should be held in trust for generations to come."
North Dakota oil production, natural gas flaring reach new highs - — North Dakota oil production hit a record 1.39 million barrels per day in October, a 2.4 percent increase as operators accelerated production ahead of winter, the state’s top regulator said Friday, Dec. 14. Natural gas production also hit another record, but so did the volume of gas that was flared. The percentage of gas flared in October grew to 20 percent, the highest the state has seen since August 2015. Lynn Helms, director of the Department of Mineral Resources, said he expects oil production to slow due to lower oil prices and winter weather setting in, which makes oil activity more difficult. Challenges with capturing natural gas also will continue to affect production until construction of gas plants, pipelines and other infrastructure catches up. The industry produced 2.56 billion cubic feet per day of natural gas in October, a 1.4 percent increase since September, according to the preliminary figures. Operators captured nearly 2.04 billion cubic feet of natural gas per day, but flared about 527 million cubic feet per day, an all-time high. Sixteen percent of natural gas produced was accounted for as flaring from wells that are connected to a pipeline with inadequate infrastructure to capture all of the gas, Kringstad said. The remaining 4 percent of natural gas produced was flared from wells that are not connected to a pipeline. Several natural gas processing plants are under construction or in development to catch up to the production. The flaring figures mean the industry fell short of the North Dakota Industrial Commission goal of capturing 85 percent of Bakken gas for the sixth month in a row. Regulators are evaluating the figures to determine if any companies will be ordered to restrict oil production for excessive flaring, though those production limits are rare.
Tribes seek to challenge Corps’ Dakota Access pipeline study (AP) — Four Native American tribes that are fighting the Dakota Access oil pipeline in court are seeking to challenge the recent conclusion of federal officials that a spill would not greatly impact tribal populations. The Standing Rock, Cheyenne River, Yankton and Oglala Sioux tribes have all sought permission from U.S. District Judge James Boasberg to contest recent findings that the U.S. Army Corps of Engineers provided the judge. Boasberg is working with the North Dakota and South Dakota tribes, along with the Corps and Texas-based pipeline developer Energy Transfer Partners, to determine the best way to proceed. A status conference is scheduled Wednesday in his courtroom in Washington. Here’s a look at where the lengthy legal battle stands. WHAT’S NEW? The 140-page report from the Corps details more than a year of what the agency says is “additional analysis” of the $3.8 billion pipeline, which began moving North Dakota oil to a shipping point in Illinois in June 2017. But even the nature of the work is in dispute. The tribes contend the Corps has simply rubber-stamped earlier conclusions that were blessed by pro-energy President Donald Trump days after he took office . The tribes call the work a sham and argue that the Corps either didn’t allow them adequate input or give enough weight to the information they provided. The Corps has said the tribes have been difficult to work with.
Well pad oil spill contaminates rangeland in Dunn County-- BISMARCK, N.D. (AP) — Some rangeland was contaminated when nearly 6,900 gallons of oil spilled at a well pad in Dunn County. The state Health Department says a valve failure caused the spill on Dec. 8 at a Burlington Resources Oil and Gas Co. site about 11 miles north of Killdeer. About 6,300 gallons of the spilled oil were recovered. The other 600 gallons went through a storm water gate in the containment berm and impacted rangeland. Health Department officials are inspecting the site..
Judge denies TransCanada request for pre-construction work on Keystone XL pipeline - The company behind the controversial Keystone XL pipeline can't begin digging, building camps or any other pre-construction field work until the government's environmental review is completed, a federal judge in Montana ruled Friday.U.S. District Judge Brian Morris’ ruling was a clarification of his Nov. 8 decision, which halted construction by TransCanada but allowed certain pre-construction activities. In that ruling, Morris said President Donald Trump's administration violated U.S. environmental laws when approving a federal permit for the pipeline.Friday's clarification permits TransCanada to continue surveying, maintaining security and planning, but it blocks all physical construction. Jane Kleeb, founder and president of Bold Alliance and chairwoman for the Nebraska Democratic Party, said rural Nebraskans are thankful for the decision. "Farmers and ranchers thank the judge for seeing through TransCanada's transparent power grab," Kleeb said. "The Trump administration keeps thumbing their noses at the concerns of rural communities. We want our property rights and water protected, yet all the Trump administration cares about is aiding a foreign oil corporation."
Fracking on CA public lands draws environment, water concern - Thousands of people have voiced concerns over the prospect of fracking on public lands that are open to oil and gas exploration across Central California.Around 400,000 acres of public land managed by the Bureau of Land Management are available for new oil and gas leases, including on the coast, and that could mean more fracking.The Bureau of Land Management’s Bakersfield Field Office was flooded with 8,399 faxes, letters and emails about the issue during a 30-day public comment period, according to a scoping report released by the office Thursday.“The BLM report proves what we already know – that residents and businesses throughout the central coast are overwhelmingly opposed to drilling and fracking our region’s iconic landscapes,” said Jeff Kuyper, executive director of Los Padres ForestWatch, said in a statement to The Tribune. “Some of the issues brought up were air quality, water quality, water quantity, siesmicity and a host of other things such as wildlife resources, oil and gas resources,” Gabe Garcia, the BLM Bakersfield field manager, told The Tribune Thursday morning.View a map of open leases here. Most comments were submitted as form letters, but many people and organizations across the state weighed in after significant media about the potential for more fracking. Garcia said about 200 oil and gas wells are permitted in the Bakersfield district that stretches from Fresno to Ventura counties, and fracking is already used on about 20 percent of the wells.“We need to protect our groundwater from contaminants, especially in America’s most populous state. ... And please know that a large percentage of the residents here on the Central Coast do not want ANY expansion of fracking,”
EIA Says US Domestic Oil Production Rising Despite Lower Prices -- The U.S. government left its forecast for domestic crude production unchanged for 2019 even with prices averaging almost $11 a barrel lower than its previous estimate. Oil producers will pump an average 12.06 million barrels a day next year, up from 10.88 million in 2018, the Energy Information Administration said in a monthly outlook. The agency saw output dropping during October, when some offshore production was shut in due to Hurricane Michael, before recovering in November. The swift growth of American shale production has complicated efforts by OPEC and its allies to trim supply and support prices. While bottlenecks in areas such as the Permian Basin of West Texas and New Mexico pose a risk to future growth, new pipelines coming online in late 2019 and 2020 should ease that congestion. The U.S. will account for almost one-fifth of global petroleum liquids output next year. The agency also raised its global demand forecast for next year to 101.61 million barrels a day from 101.51 million. In the U.S., almost half of the growth next year will come from gas liquids, with gasoline demand rebounding from a decline this year. Producers aren’t shying away from spending money in U.S. fields, despite prices dropping more than 30 percent from the October highs. ConocoPhillips said Monday it’s spending half its 2019 budget in the continental U.S., while Chevron Corp. is investing $3.6 billion in the Permian Basin alone.
Oil Price Plunge Clouds Some E&Ps' Fourth-Quarter Outlook -- The third quarter of 2018 was a moment in the sun for U.S. exploration and production companies. The 44 major companies we track reported a 35% increase in pre-tax operating income over the previous quarter and seven-fold increase from the year-ago period on rising commodity prices and narrowing differentials in some key regions. Oil-Weighted producers outside the infrastructure-constricted Permian posted generally higher realizations, and a number of Permian-focused E&Ps minimized the impact of takeaway constraints by employing basis hedges, utilizing firm transportation contracts and reducing their operating costs. Diversified producers saw higher quarterly per-unit profits thanks to the tilt of their portfolios toward oil. And as lower Appalachian differentials lifted the realizations of Gas-Weighted producers, portfolio readjustments and the liquids content of production also positively impacted their profitability and cash flow. Today, we analyze third-quarter results by peer group, and discuss the potential impacts of the sudden plunge in oil prices this fall.
Chevron Boosts Spending on Shale Projects -- Chevron Corp. raised its spending budget for the first time since 2014 even as crude prices plummet, doubling down on U.S. shale. The world’s third-largest oil producer by market value will increase investments by 9.3 percent to $20 billion next year, according to a statement Thursday. The U.S. will account for 38 percent of the spend, the highest portion in at least a decade, as Chevron seeks to expand its foothold in the Permian Basin of West Texas and New Mexico. The Tengiz megaproject in Kazakhstan is also a key growth area for the company. Chevron is the first of the supermajors to detail its 2019 spending plans, which are being set during a period of considerable price volatility: Crude has lost about a third of its value in New York since early October. Meanwhile, Saudi Arabia and Russia are struggling to orchestrate production cuts as OPEC and its allies meet in Vienna this week. Chief Executive Officer Mike Wirth’s decision to raise spending while oil is in free fall shows how the industry has become more comfortable operating at lower prices after cutting costs and shunning complex projects in recent years. But in March he pledged to keep annual budgets at no more than $20 billion for the next three years, about half the amount earmarked for 2014 when the company was overspending on gas projects in Australia. “Our investments are anchored in high-return, short-cycle projects, with more than two-thirds of spend projected to realize cash flow within two years,” Wirth said in the statement. Chevron’s U.S. spend will focus on the Permian, which will receive $3.6 billion, a 9 percent increase on this year. Growth has been rapid in the region which now accounts for about one in every 10 barrels the company pumps worldwide. The region is currently producing at levels about a year ahead of its long-term plan, CFO Pat Yarrington said last month.
ConocoPhillips Plans for $6.1B Capital Spend in 2019 - ConocoPhillips plans to keep its capital expenditures flat at $6.1 billion in 2019, the Houston-based E&P company announced Monday.The Lower 48 is expected to account for about half of the CAPEX budget at $3.1 billion, with a focus on 10-11 rigs in the Eagle Ford, Bakken and Delaware unconventional plays. Additionally, ConocoPhillips plans to use a portion of the Lower 48 budget on exploration and appraisal activity in the Louisiana Austin Chalk play and conventional drilling in the region.“As we head into 2019, we plan to keep capital flat, increase our payout target and deliver high-margin production per-share growth,” Ryan Lance, ConocoPhillips CEO said in a release.The company also plans to up production to between 1.3 and 1.35 million barrels of oil equivalent per day. Other region’s budget allocations are as follows:
- Alaska - $1.2 billion, or about 20 percent
- Canada - $500 million, or about 8 percent
- Europe and North Africa - $700 million, or about 11 percent
- Asia Pacific and Middle East - $500 million, or about 8 percent
- Other - $1 million, or about 2 percent
Gasoline keeps flowing from US refineries despite a huge cut to profits – Platts podcast - Why would a refiner keep making gasoline at a loss? That's the situation facing US companies with gasoline cracks dipping into negative numbers against major US and European crude grades. Jeff Bair and Seth Clare of the US gasoline team break down the numbers and take look at what analysts are saying lies ahead for crack spreads.
US dominance in oil markets is only going to get bigger, the IEA says - The U.S. might have been left out from the big summit between OPEC and non-OPEC producers in Vienna last week but the country's influence over global oil markets is only going to get stronger, the International Energy Agency (IEA) stated in its latest report."While the U.S. was not present in Vienna, nobody could ignore its growing influence," the IEA said in its December report, published Thursday. "Last week's meeting reminded us that the Big Three of oil – Russia, Saudi Arabia and the United States – whose total liquids production now comprises about 40 percent of the global total, are the dominant players," the IEA said.When OPEC and non-OPEC producers met last week in Vienna to hammer out a deal to cut their oil production there was an uninvited, but unavoidable, presence at the summit: The U.S.President Trump has repeatedly criticized OPEC for its dominance over oil prices, at times asking (usually via Twitter) it to produce more oil and then telling the cartel to leave its production well alone. Iran joked last week that the U.S. wanted to join OPEC as it appeared keen to influence the meeting's outcome.The U.S. has become a dominant competitor in oil markets in its own right, however, and has taken a place among the world's largest oil producers, thanks to its shale oil revolution.On the day OPEC ministers sat down to talk in Vienna last Thursday, the IEA noted that an important piece of data was published, noting that "according to the (U.S.) Energy Information Administration, in the week to 30 November the U.S. was a net exporter of crude and products for the first time since at least 1991."In 2018 to date, U.S. net imports have averaged 3.1 million barrels a day (mb/d). Ten years ago, just ahead of the shale revolution, the figure was 11.1 mb/d., the IEA said. "As production grows inexorably, so will net imports decline and rising U.S. exports will provide competition in many markets, including to some of the countries meeting in Vienna last week."
No, The US Is Not A Net Exporter Of Crude Oil - Last week Bloomberg created quite a stir with this story: The U.S. Just Became a Net Oil Exporter for the First Time in 75 Years. I have seen a number of follow-up stories that praised the significance of this development, but others laughed it off as misleading or incorrect. There is some truth to both viewpoints. Yes, the headline is somewhat misleading and requires some context. But there continues to be a trend in the direction of energy independence for the U.S. So, today I want to break down the numbers so readers can understand the truth about U.S. petroleum production, consumption, and exports. The Bloomberg story is based on data from the Energy Information Administration (EIA). Each week the EIA publishes detailed statistics on U.S. oil production, consumption, exports, and inventories in a report called the Weekly Petroleum Status Report. So, let’s go straight to the source. For the week ending 11/30/18, the EIA reported that the U.S. produced 11.7 million barrels per day (BPD) of crude oil. That represents a 2 million BPD increase from the year-ago number. This number is generally accepted even by those who believe the Bloomberg headline was misleading. Further down in the report, the category of Products Supplied is listed at 20.5 million BPD. This is approximate U.S. crude oil consumption for the week. Thus, as some skeptics of the story suggested, the bottom line is that the U.S. is burning more than 20 million BPD while producing less than 12 million BPD. Thus, the conclusion for some was that the U.S. isn’t close to being energy independent. But there is a large U.S. production number that isn’t included in the crude oil production numbers. There is a line item called Other Supply, which consists primarily of natural gas liquids (NGLs) and fuel ethanol. This category represents a significant input to refiners in addition to the 11.7 million BPD of production (and the 4.0 million BPD of net crude oil imports). Other Supply represented 6.9 million BPD of production, and it mostly ends up as feedstock for refiners or petrochemical production. (Note that this category also includes “Refinery Processing Gain” of 1.2 million BPD, which results from refiners making products that are of a lower density than crude oil). So, Domestic Production of crude oil plus Other Supply is equal to (11.7 + 6.9) = 18.6 million BPD — which is still about 2 million BPD less than the U.S. consumes.
After Quakes, Frackers Ordered to Halt Operations near Fort St. John - B.C.’s Oil and Gas Commission says earthquakes that rattled residents of Fort St. John and shook the Site C dam construction site last week were likely caused by fracking or salt water disposal wells operated by Canadian Natural Resources Ltd (CNRL).*The commission has ordered a 30-day halt to all hydraulic fracturing in a densely drilled region 20 kilometres south of Fort St John.“This will provide the Commission with sufficient time to conduct a thorough investigation,” said an OGCbulletin. “CNRL’s operations may not continue without the written consent of the Commission,” it added.On Nov. 30 the industry, which has already changed seismic patterns in the region, triggered three quakes ranging from 3.4 to 4.5 magnitude at three different sites south of Fort St. John.CNRL, Canada’s largest methane producer, leases more than a million hectares in northeastern B.C. It operates 10 large pads from which it drills and fracks multiple horizontal wells. The company’s website has released no information on the events. Local residents described the tremor as a major event felt more than 30 kilometres from Fort St. John. “All of a sudden we heard a bang and the house shook violently for five to six seconds,” said Strasky. “We could tell it was a seismic event.” Twenty to 40 minutes later there was an aftershock, he said. “There were no vertical movements. It just shook the house back and forth a few times.” Strasky said tremors triggered by the fracking industry also shook the farm house last April and left a crack in the basement.
Regulator halts fracking operations in northeastern BC while it investigates earthquakes - The B.C. Oil and Gas Commission has shut down oilfield fracking operations for at least 30 days in northeastern British Columbia while it investigates earthquakes that occurred there on Nov. 29. The regulator says the seismic events, which measured between 3.4 and 4.5 magnitude, took place near hydraulic fracturing operations being conducted about 20 kilometres southeast of Fort St. John by Calgary-based Canadian Natural Resources Ltd. The practice is also known as fracking. It says the company immediately suspended work on Nov. 29 and it won't be allowed to resume without the written consent of the commission. Six companies in or close to the area have also suspended fracking operations. The area closed off is 11.6 kilometres by 6.4 kilometres in size, says the regulator. According to Natural Resources Canada, the 4.5 magnitude earthquake was felt in Fort St. John, Taylor, Chetwynd and Dawson Creek but did no damage. It was followed by two smaller aftershocks. Fracking, along with injecting oilfield liquids into disposal wells, have been linked by the B.C. commission to previous incidents of "induced seismicity," although it notes on its website none of the events in B.C. have resulted in hazards to safety or the environment or property damage. Honn Kao, a seismologist with Natural Resources Canada, told CBC's Daybreak North that most fracking operations don't produce induced earthquakes, and when they do, they're relatively small and shallow. The earthquake last week came close to matching the world's largest fracking-induced earthquake which occurred a little further north in 2015 and registered magnitude 4.6. The Fort St. John and District Chamber of Commerce says the shutdown is an attack on the already suffering oil and gas industry. "We do not need to go through another three years or another month even of shutdowns, because people are finally just starting to get back to work."
First Nation next to planned fracking sand mine says environmental concerns 'have already been dealt with' - Hollow Water First Nation Chief Larry Barker says his community is in support of the mine. "We did our homework, we had numerous meetings with the company and any environmental concerns have already been dealt with," Barker said in a news release. "The plant is going to have the best ventilation available."Barker responded Tuesday to reporting last month where critics alleged a proposed frack sand mine along the east shore of Lake Winnipeg would create health and water quality problems, such as exposure to tiny sand particles described as a cancer risk. The development will dig for high-purity quartz sand needed by drillers fracking for oil and gas. The company behind the mine hopes to start building next year.It has rights to more than 2,700 acres of land with an estimated resource of 600 million tonnes. NDP environment critic Rob Altemeyer argued in the legislature last month that the mine's neighbours weren't properly consulted. He said members of the Hollow Water community were in the legislature gallery that day, joining his call for more input. Three days later, Canadian Premium Sand, which owns the proposed development, about 200 kilometres northeast of Winnipeg, announced it had reached an economic agreement with Hollow Water First Nation. The media release said employment, contracting and training initiatives would be provided to community members.
Enbridge to swap 50,000 b/d of Bakken for WCS to ease Alberta's oil woes — Enbridge's plan to swap 50,000 of North Dakota's Bakken barrels with Western Canadian barrels on its Mainline by mid-2019, after coming to an agreement with one of the shippers on the line, furthered strengthened Western Canadian crude prices. "Discussions are underway with our [Bakken] shippers to consider a temporary suspension of deliveries to Cromer [Manitoba] that would allow the Mainline capacity to be served from Edmonton," said Enbridge CEO Al Monaco at the company's analyst day in New York Tuesday. Western Canadian Select crude prices strengthened further after the announcement. WCS ex-Hardisty for January delivery was heard traded at a $12.75/b discount to the NYMEX calendar-month average, Platts assessments showed, while December-delivery barrels were heard trading at a $20/b discount to the NYMEX calendar-month average. This is sharply higher than the quarter-to-date average discount of $38.90/b discount, Platts assessments showed. WCS prices have moved up recently, following the announcement of 325,000 b/d production cuts mandated by the Alberta government to begin in January. Replacing Bakken with WCS would provide some incremental relief ahead of the start-up of Enbridge's Line 3 Replacement Project. Line fill on the Canadian part of the line, which runs from Edmonton, Alberta, to Superior, Wisconsin, will begin in July 2019, with US operations starting up in November 2019. When fully operational, Line 3 will add 370,000 b/d of pipeline takeaway capacity for Western Canada's oil producers, buckling under oversupply and weak prices. "Following completion of the Line 3 replacement, Mainline capacity will be restored to approximately 3.225 million b/d, 3 million of which can serve our extensive refining markets in the US, Monaco said.
From 'Too Cheap' To 'Too Expensive' - Canadian Crude Soars Over 80% After Output Cuts - Since Alberta Premier Rachel Notley announced an oil production cut of 325,000 bpd beginning next month, the spot price for Western Canadian Select has gained over 85%... Additionally, OilPrice.com's Irina Slav writes that the deep discount, at certain times more than US$40 a barrel, had closed by more than half over the last eight days since the cut was announced. The discount could narrow even further as the cut enters into effect in January and producers and refiners negotiate future deliveries. This will in turn benefit Canadian producers who have already begun revising capital expenditure plans for 2019 pressured by the low price of their oil.Last week, Premier Rachel Notley announced that the government of the province will enact an 8.7-percent crude oil production cut to clear excess stockpiles as pipeline bottlenecks and growing volumes of oil being transported by the costlier railway pressured Western Canadian Select to historic lows against the U.S. benchmark, WTI. Premier Notley last week described the situation as “fiscal and economic insanity.” Alberta now has to buy more oil trains—a more dangerous way to transport oil than pipelines—because production is rising inexorably while pipeline capacity remains the same in the face of fierce opposition from environmentalist groups and First Nations against new pipeline projects. The National Energy Board recently said crude oil production in Canada this year will average 4.59 million bpd, up by 22,000 bpd from earlier forecasts. However, plans for 2019 are for reduced spending, Bloomberg notes, as producers feel the bite of low oil prices deeper. The decision to start cutting production would save not just spending, but also jobs because many companies had planned substantial layoffs and reduced spending to a minimum to stay afloat. The lower spending could mean lower production growth, too, which would serve to keep prices higher.
This Bird Breeding Haven Could Be Next in Line for Arctic Oil Drilling - Each spring, hundreds of thousands of birds from five continents follow an ancestral tug toward Teshekpuk Lake, a 320-square-mile marvel surrounded by ponds, wetlands, and soggy tundra in far northern Alaska, where shorebirds raise chicks and geese hunker down to molt their feathers. They’re not the only ones lured to the remote spot. For decades, energy companies have eyed the same swath of coastal plain, an area as rich in oil as it is in bird life—and recent fossil-fuel discoveries have intensified their interest. This tension between wildlife and energy is inherent to the 23-million-acre National Petroleum Reserve-Alaska (NPR-A), the nation’s biggest chunk of federal land. Although the reserve was created in 1923 as an oil resource for the U.S. Navy, Congress later broadened its purpose to provide “maximum protection” for wildlife and subsistence hunting. That includes the birds and herds around Teshekpuk Lake, in the NPR-A's northeastern corner. Unlike other parts of Alaska's oil-rich North Slope, development in the reserve is still in its infancy. The first NPR-A oil production began on Alaska Native land in 2015, and oil started flowing from a federal NPR-A lease this past October. But it’s likely to accelerate soon as the Trump administration prepares to write a new management plan for the NPR-A. On November 20, the Bureau of Land Management (BLM) announceda 45-day public scoping period to shape what should be considered in a new plan, one that will promote “clean and safe development in the NPR-A while avoiding regulatory burdens that unnecessarily encumber energy production” and could open new, sensitive areas to development. It’s part of Zinke’s broader push, outlined last year, to boost oil and gas production across the far north, including in the Arctic National Wildlife Refuge. “These are the two places we should be conserving, yet there’s a headlong rush to open them up and put infrastructure in there and start drilling,” says Susan Culliney, policy director for Audubon Alaska. “Given the Trump administration’s ‘energy dominance’ rhetoric, we’re concerned, especially with Teshekpuk Lake in the bullseye.”
Trump Administration's Alaska Oil and Gas Lease Sale a 'Major Flop' - Despite the Trump administration's unrelenting quest to drill the Arctic, Wednesday's oil and gas lease sale in the National Petroleum Reserve-Alaska (NPR-A) yielded a "disappointing" return of $1.5 million, E&E News reported. Oil and gas giants ConocoPhillips, Emerald House and Nordaq Energy were the three companies that made uncontested bids on 16 tracts of land out of 254 tracts made available by the Bureau of Land Management's (BLM) annual sale in the western Arctic.In all, the companies swooped up roughly 174,000 acres of the 2.85 million acres offered, working out to an average of just $6.50 an acre."Federal officials [cited] a lack of access to the most promising areas as a reason for the modest bidding," theAnchorage Daily News reported.But the Center for American Progress said the result was a "major flop that shortchanged taxpayers" and also puts the nearby Arctic National Wildlife Refuge (ANWR) environment at risk."These results show that the fiscal arguments—including promises of more than $1 billion, or bids of $1,000 per acre—made for drilling in the neighboring Arctic National Wildlife Refuge were a complete scam," the organization tweeted. "Taxpayers are being sold a false bill of goods in the Arctic Refuge, and stand to lose America's last best wilderness in the process." The Trump administration is moving forward on its controversial oil and gas drilling plans in the pristine Arctic reserve, a habitat for polar bears, caribou, migratory birds and other species.
Cuadrilla pauses gas fracking at English site after more tremors (Reuters) - British shale gas company Cuadrilla has again paused fracking at its Preston New Road site in Lancashire, northwest England, after tremors were detected, the company said. This marks the third time operations have been halted at the site following seismic activity under Britain’s so-called traffic light regulation system, since they began in October. “A series of micro seismic events in Blackpool have been recorded on the British Geological Survey website this morning following hydraulic fracturing at our shale gas exploration site in Preston New Road, Lancashire,” Cuadrilla said in a statement. The largest tremor, of 1.5 magnitude, took place after fracking activities had already stopped, it said. “According to recent research by the University of Liverpool the impact would be like dropping a melon,” Cuadrilla said. Fracking, or hydraulically fracturing, involves extracting gas from rocks by breaking them up with water and chemicals at high pressure. It is opposed by environmentalists who say extracting more fossil fuel is at odds with Britain’s commitment to reduce greenhouse gas emissions. However, the government is keen to reduce the country’s reliance on imports of natural gas, which is used to heat around 80 percent of Britain’s homes. The company, which is 47.4 percent owned by Australia’s AJ Lucas and 45.2 percent owned by a fund managed by Riverstone, first attempted to frack gas near the coastal town of Blackpool in northwestern England in 2011, but the practice led to a 2.3 magnitude earth tremor. It said then that the quakes at that site were caused by an unusual combination of geological features, but they led to an 18-month nationwide ban on fracking while further research was carried out. The government has since introduced a traffic-light system that immediately suspends work if seismic activity of magnitude 0.5 or above is detected.
Biggest tremor on record forces immediate halt to fracking in Lancashire - A tremor measuring 1.5 magnitude has forced Cuadrilla to halt fracking at the Lancashire site. The British Geological Survey (BGS) recorded a series of tremors this morning at the controversial fracking site at Preston New Road, Little Plumpton. Nine tremors were detected at the site within 90 minutes this morning, with the latest tremor measuring a magnitude of 1.5ML. Regulations state that fracking must be halted if tremors exceed 0.5ML. According to the BGS database, the 1.5 magnitude tremor is the largest detected at the site since monitoring began. It has been claimed the tremor was felt in the Blackpool area. The nine tremors recorded today are also the most recorded at the site in a single day. The earlier eight tremors measured magnitudes between - 0.4 and 0.0, between 9.35am and 10.18am this morning. But the latest 1.5ML tremor,which occurred at 11.21am, exceeds the maximum magnitude allowed for fracking. Caudrilla has now been forced to take immediate action and halt fracking at the site for 18 hours. A quake measuring a magnitude of - 0.3 was also recorded at the site yesterday. They are the latest in a series of minor tremors since Cuadrilla began fracking at the site in October, after spending two years exploring the site. “Cuadrilla will pause and continue to monitor micro seismicity for at least the next 18 hours, in line with the traffic light system regulations. Well integrity has been checked and verified.”
Activist on Fracking: They Could Damage Infrastructure, Damage Well - Caudrilla has had to halt its fracking operation in Lancashire in Britain after the largest tremors registered to date. Earlier Sputnik spoke to Activist Tina Rothery who is at the site about the latest tremors and what it will mean for the future of fracking in the UK.
- Sputnik: What do you make of the latest tremors from fracking by Caudrilla?
- Tina Rothery: We are unsurprised, but deeply concerned. They are residents that went to bed worried last night, totally terrified. I'm standing outside the frack site, and the neighbours are talking that it might be well and good Caudrilla saying it's about as much energy as dropping a watermelon on the floor, they didn't hear the bang or feel the shaking that our neighbours felt. The protests have been going on here at the side of this road for 712 days now continuously and non-stop and the only time we get earthquakes is when they frack. Now we've had a total of 48 earthquakes, this area has not seen this level seismic activity ever.
- Sputnik: How damaging is fracking having on the environment in the area?
- Tina Rothery: What concerns us most is deep underground where they are fracking and where the fracking are occurring is around the pipe, so they could damage the infrastructure down there and they could damage the well. Then all of the substances they are using down there could leak into our water supply. We haven't got to that stage yet but these are the things we see that are evident in Canada, Australia and America
North Sea oil field reawakened seven years after leak - An oil field in the central North Sea has resumed production seven years after a leak forced its shutdown.Current operator Tailwind Energy said late Sunday evening that the redevelopment of Gannet E had been a success.Shell initially developed the field via three wells connected to the Gannet Alpha platform, about 110 miles east of Aberdeen.First oil was achieved in 1998, some 16 years after the field’s discovery. But production was halted in 2011 in the wake of a pipeline leak, which led to 200 tonnes of oil escaping into the sea.The incident cost Shell about £45 million.Aberdeen Sheriff Court fined the Anglo-Dutch major £22,500 in 2015. But Gannet E came back online after a new pipeline was installed connecting the field to the nearby Triton floating production, storage and offloading vessel, which is operated by Dana Petroleum. Tailwind chief executive Stephen Edwards said the project was completed in September with first oil delivered “on budget and on schedule”.That same month, Tailwind completed the acquisition of Shell and ExxonMobil’s stakes in the Triton cluster.London-headquartered Tailwind became operator of Gannet E, with a 100% interest. Mr Edwards said Gannet E is currently producing about 10,000 barrels of oil per day (bpd).
Inside the Dutch province where gas extraction tremors left houses crumbling - The village of Doodstil - which translates as 'dead quiet' in Dutch - feels like it could have been named as part of an elaborate joke.Despite its name and appearance, this cluster of homes surrounded by flat, green fields and picturesque dykes actually sits in an unlikely earthquake zone.Fifty-five years of conventional gas extraction from Europe’s largest field h ave made The Netherlands’ province of Groningen anything but calm. Now, warned of the risk of a catastrophic earthquake that could cost lives and homes, the Dutch government is gradually turning off the tap to a gas field that has delivered it more than €265 billion (£237 billion) since 1963.
EU lawmakers repeat call to stop Russia's Nord Stream 2 natural gas link — The European Parliament has called for Russia's planned 55 Bcm/year Nord Stream 2 natural gas link to Germany to be cancelled in a non-binding resolution adopted late Wednesday. The resolution has no legal force but reinforces the parliament's long-standing opposition to what it sees as a "political project" intended to undermine Ukraine's position as a key Russian gas transit partner for the EU. Russia plans to bring both Nord Stream 2 and its 31.5 Bcm/year TurkStream pipeline to Turkey online by the end of 2019, after which it will be able to cut flows to the EU via Ukraine from some 94 Bcm in 2017 to just 10-15 Bcm/year from 2020. The European Commission, which is also a vocal critic of Nord Stream 2's expected impact on Ukraine, has proposed changing the EU's gas directive to apply internal energy market rules to offshore gas links with non-EU countries. If approved into law -- which is not guaranteed -- these proposals could see Nord Stream 2 having to submit to transparent, non-discriminatory tariff regulation for the EU section of the pipeline, for example. That could make it easier for Ukraine to know what transit tariffs to offer in order to compete more successfully with Nord Stream 2 from 2020. Both the parliament and the EU Council, representing the 28 national governments, have to agree a common text before the EC's proposals can become law. The parliament adopted its negotiating position in March, in which it backed the EC's proposals and called for any agreed waivers from the rules to be limited to five years. The parliament is now waiting for the council to agree a negotiating position so that informal talks can start between them on a final text.
US State Department sees increased interest from Congress in targeting Russian energy exports - — The US Congress appears increasingly interested in legislation targeting Russian energy exports to counter Moscow's aggression against Ukraine since the Sea of Azov incident, a top State Department official said Monday. The House of Representatives is set to vote Tuesday on a non-binding resolution expressing opposition to the completion of the 55 Bcm/year Nord Stream 2 natural gas pipeline from Russia to Germany. "We certainly are monitoring the level of interest that Congress has," Assistant Secretary for Energy Resources Francis Fannon told reporters during a briefing. "We've been monitoring the bills -- something like 10 bills out there -- all of which include Russian energy as a key component." Fannon said he cannot comment on any particular legislation. Last month, Moscow seized three Ukrainian navy ships and their crews in the Kerch Strait offshore Crimea. Russia's state-owned gas company Gazprom plans to build Nord Stream 2 across the Baltic Sea along a similar route to the original 55 Bcm/year Nord Stream pipeline, which came online in 2011. The US has long opposed the Nord Stream expansion, arguing that Europe should not be so dependent on Moscow for energy. The government has recently been touting US LNG exports as an alternative to Russian gas, in addition to supporting the Southern Gas Corridor from the Caspian region to the EU. The House resolution up for vote on Tuesday, if passed, would offer support for imposing sanctions on Nord Stream 2 under the Countering America's Adversaries Through Actions Act. The resolution would also call on European governments to reject Nord Stream 2 and urge President Donald Trump to "use all available means to support European energy security through a policy of diversification to lessen reliance" on Russia. The House bill says Nord Stream 2 would increase Russian control over the European energy market. It says Russia already controls 40% of Europe's gas supply, and 11 European countries rely on Russian gas for at least 75% of their needs. "Russia's geopolitical interest in Nord Stream II is not to increase European energy security, but rather to drive a wedge between countries in Europe and drastically diminish the existing Ukrainian gas transit system," the bill says. Representative Michael Conaway, Republican-Texas, introduced the bill in July.
China increases natural gas imports to avoid winter shortage - China National Petroleum, the country’s biggest gas producer supplying more than half of winter demand, is running its fields at full tilt and has made more storage available after promising to increase supply to customers. CNPC has also hooked up its pipelines with domestic rivals to help better distribute gas from the south and east to the chillier north. And, the nation is buying more from abroad, helping to soak up a global glut of the fuel, with imports surging 34% in the first 11 months of the year. China’s gas use has jumped more than a fifth this year to 226 Bcm through October. Better-organized supply and warmer weather have so far helped avoid last year’s failures.
China becomes world’s largest natural gas importer, overtaking Japan - China’s combined imports of natural gas by pipeline and in the form of liquefied natural gas (LNG) have become the world’s largest consistently for the past six months, overtaking Japan, and exceeding 12 billion cubic feet per day (Bcf/d) in August and September, according to data from China’s Administration of Customs. In the first nine months of this year, China’s total natural gas imports averaged 11.4 Bcf/d, a 2.9 Bcf/d (34%) increase over the same period last year, and more than doubled since 2014, when imports averaged 5.6 Bcf/d. Strong growth in China’s natural gas imports was led by the increase in domestic consumption, stimulated by government policies promoting coal-to-natural gas switching in an effort to reduce air pollution and meet emissions targets. While China’s domestic natural gas production, which provides more than one half of its total supply, has also grown, it was outpaced by the growth in imports. Between 2014 and 2017, domestic production in China increased by a net of 1.4 Bcf/d, according to BP’s Statistical Review of World Energy, while combined pipeline and LNG imports have increased by 3.4 Bcf/d during the same period. The growth in China’s natural gas imports was led primarily by the growth in LNG imports. In 2017, China became the world’s second largest LNG importer, with LNG imports growing steadily every year since 2006—when China began importing LNG—except 2015. In the first nine months of 2018, LNG imports averaged 6.5 Bcf/d, 1.5 Bcf/d (30%) higher than in 2017, and are poised for further growth as China continues to expand its LNG import capacity. China’s current LNG import capacity stands at 8.6 Bcf/d, and two more terminals (totaling 0.4 Bcf/d) are expected to come online by the end of the year. Once all the terminals currently under construction are completed, China’s LNG import capacity is expected to reach 11.2 Bcf/d by 2021.
LNG Project Sanctions Set to Surge in 2019 - Uncontracted demand by the world’s seven largest liquefied natural gas (LNG) buyers could increase four-fold to 80 million tonnes per annum (mtpa) by 2030, according to Wood Mackenzie. “As China pushes on towards a lower-emission economy, its demand for gas and LNG has grown significantly and we expect the trend to continue in the longer term,” Nicholas Browne, research director with Wood Mackenzie, said in a written statement emailed to Rigzone. “Other traditional major buyers, on the other hand, are facing legacy contract expiries and will be on the hunt for a mix of contracts to lower average costs and security in supply sources.” According to Wood Mackenzie, the top seven LNG buyers - accounting for more than one-half of the global LNG market - have become increasingly active in global LNG contracting activity. The consultancy added that thsee Northeast Asian buyers have announced more than 16 mtpa of contracts in 2018. In addition, it noted that the growth in contracting is happening at a time when supply growth is poised to surge. Wood Mackenzie stated that it predicts 2019 could be a record year for LNG project sanctions, with more than 220 mtpa of gas targeting final investment decision (FID). A “bumper year beckons,” the firm stated. LNG projects that Wood Mackenzie considers “frontrunners” to reach FID include:
- The $27 billion Arctic LNG-2 project in Russia
- One or more projects in Mozambique
- Three U.S. projects
- “Expansion and backfill projects” in Australia and Papua New Guinea
As LNG buyers seek a variety of contracts to meet their different needs, LNG suppliers will need to ensure that they can address these changing needs, Wood Mackenzie cautioned. The firm noted that, in addition to price, LNG buyers will be sensitive to considerations such as contract flexibility, index, source diversification, upstream participation and seasonality. Browne emphasized that 2019 should be unprecedented in terms of LNG liquefaction capacity sanctioned. “Asia’s major buyers will be at the forefront in ensuring this next generation of LNG supply is brought to market,” Browne concluded.
Mexico Cancels Two Oil and Gas Auctions Mexico’s administration, led by new president Andres Manuel Lopez Obrador, has canceled two February bidding rounds, including one auction that would have been the first in Mexico’s history offering blocks targeting shale resources. In a release published Dec. 11 on the website of Mexico's independent oil regulator the National Hydrocarbon Commission (CNH), the CNH announced it had canceled bid rounds 3.2 and 3.3, the latter which include nine unconventional onshore blocks with wet and dry gas. Round 3.2 include 37 conventional onshore blocks with light crude oil and wet and dry gas. The release also stated that the CNH would be postponing seven farmouts with PEMEX. Mexico’s president Lopez Obrador, who took office Dec. 1, stated in July that he wanted to boost Mexico’s crude output to 2.5 million barrels per day. The veteran leftist also previously said that Mexican oil auctions would be suspended until contracts already awarded had been reviewed. Lopez Obrador has been critical of former president Enrique Pena Nieto’s administration of opening the oil industry to private capital and plans to strengthen PEMEX during his time as president of Mexico.
Italy's state-backed oil giant makes a major discovery off the shores of Angola -- Eni, the state-backed Italian oil giant and 10th largest producer in the world by revenue, said it has made a new oil discovery in offshore Angola. The Afoxé exploration prospect is located offshore in a deepwater region West of Soyo and is estimated to hold between 170 million and 200 million barrels of light oil in place, according to company. "Eni is committed to developing this discovery leveraging its best-in-class time-to-market, whilst at the same time launching an intense exploration campaign that will fully support the Company’s mid-term organic growth in the Country," chief executive Claudio Descalzi said in a statement Monday.Eni’s production has been on the rise, boosted by its presence in offshore Angola. In October, the company said its Ochigufu start-up helped production rise by 3.9% in the nine months through September to more than 1.8 million barrels of oil equivalent per day. The discovery comes at an uncertain time for the energy market. Oil prices have lost nearly a quarter in value over the past three months, with the global benchmark currently trading around $60 per barrel. In attempt to support prices, OPEC and other major producers agreed this month to cut coordinated production levels. As a net importer of crude oil and natural gas, Italy depends on foreign countries for about 93% of its energy needs to maintain exports of refined petroleum products, according to the Energy Information Administration.
Chevron Bets Big On Supergiant Oil Field -Chevron announced last week its capital and exploratory budget for 2019, which sees the first annual increase in spending since the 2014 oil price crash.While most of the investment is geared toward short-cycle projects that could start bringing in cash flows within two years, the U.S. supermajor continues to channel a significant portion of its upstream investment into a major capital-intensive project to boost the production of a supergiant oil field in western Kazakhstan. Chevron will invest US$4.3 billion in 2019 in the Future Growth Project at the Tengiz field which lies deep beneath the western Kazakhstan steppe—the deepest producing supergiant oil field and the largest single-trap producing reservoir in existence. The investment in boosting production at the giant oil field will take most of Chevron’s US$5.1 billion upstream program for major capital projects in 2019. For this year, Chevron had allocated US$3.7 billion to the Tengiz field expansion project. The Kazakhstan field expansion and the U.S. shale patch are the two pillars of Chevron’s capital spending for next year—growing shorter-cycle shale production and continuing investments in a supergiant oil field that is expected to pump oil for decades. For 2019, Chevron has earmarked US$3.6 billion for expanding its production in the Permian and another US$1.6 billion will be invested in other shale plays in the United States. That makes a total of US$5.2 billion for U.S. shale, which is substantially higher than this year’s shale budget of US$4.3 billion. The so-called Future Growth and Wellhead Pressure Management Project (FGP-WPMP) is planned to increase crude oil production at Tengiz by about 260,000 bpd, and was estimated to cost US$36.8 billion when Chevron approved the expansion project back in 2016. Tengiz and Kazakhstan operations continue to be a priority for Chevron, while the U.S. major is considering selling its interests in the oil industry of another former Soviet republic—Azerbaijan, as it is re-aligning its global operations to its new priorities after the downturn. Chevron is looking to sell its 9.6-percent stake in the giant Azeri oil field Azeri-Chirag-Gunashli (ACG) in the Caspian Sea and its 8.9-percent interest in the BTC pipeline, which carries oil from the ACG field and condensate from Shah Deniz across Azerbaijan, Georgia, and Turkey.
60,000 Liters of Oil Spills From Pipeline Into Brazilian Bay --About 60,000 liters (15,850 gallons) of oil spilled from a pipeline into the Estrela River and spread to Rio de Janeiro's famed Guanabara Bay over the weekend, according to Reuters and local reports.The pipeline is owned by Transpetro, the largest oil and gas transportation company in Brazil, and a subsidiary of Petroleo Brasileiro (commonly known as Petrobras). Transpetro claims the leak resulted from an attempted robbery. "It was a leak of significant proportions, with an impact on the mangroves," said Maurício Muniz, an analyst at the Instituto Chico Mendes, which is associated with the Brazilian environment ministry, according to Reuters.Aerial footage of the accident shows large slicks of oil contaminating the waters.Guanabara Bay was also the site of a major spill in January 2000, when a pipeline released 1,300,000 liters (340,000 gallons) of oil into the waters. The leak stemmed from an oil refinery operated by Petrobras.Muniz said Saturday's spill was the worst he has seen in the decade at his job, as quoted by the news website Project Colabora. He added that the bay has not fully recovered since the 2000 spill. "The scene I witnessed was devastating: oil concentrated with garbage mainly at the mouth of the Rio Estrela," he explained (via Google translate). "The oil stain is almost reaching Paquetá [an island in Guanabara Bay].
Libya's NOC demands immediate withdrawal of PFG forces at Sharara oil field — Libya's National Oil Corporation (NOC) has declared force majeure on crude oil loadings from the country's biggest oil field due to a forced shutdown caused by the presence of militia, it said Monday. NOC demanded that the armed militia claiming attachment to the local Petroleum Facilities Guard (PFG) immediately withdraw from the Sharara field without "pre-condition." "The shutdown of Sharara will result in a daily site production loss of 315,000 b/d, with an additional loss of 73,000 b/d at El Feel due to its dependence on Sharara for electricity supply," NOC said in a statement. Operations at the Zawiya refinery are also at risk due to their dependence on Sharara and the refinery "will cease producing essential fuels for local consumption unless alternative supply is identified," it said. The "unnecessary shutdown" at Sharara will cost the Libyan economy $32.5 million/day, NOC said. The PFG occupied the field on Saturday with the help of locals. The country's southern region is suffering from severe economic conditions and frequent power outages. Earlier this week, NOC also warned that the forced closure would have "devastating" effects on the country's economy, other nearby upstream and downstream projects and would exacerbate a local fuel supply crisis. "The presence of this group is a real threat to the field and to the future of our country" said NOC chairman Mustafa Sanalla. "I want to be clear, this militia has to leave the field immediately. We stand wholeheartedly with the people of the south and understand their concerns. At NOC we are doing all we can to improve the living conditions of the residents. Their legitimate demands and grievances however have been used by criminals who are only in pursuit of self-interest."
Struggling OPEC Agrees on Cuts, Crisis Not Over -- OPEC officials have stated that the oil cartel has agreed on an 800,000-barrel per day (bpd) production cut, while non-OPEC is being asked to commit to around 400,000 bpd to be cut at the same time. Optimism surfaced straight away within the oil markets as crude oil prices jumped immediately after the news. However, the optimism should still be taken with a pinch of salt, as discrepancies in views inside of OPEC will continue, and a large part of the success depends on the willingness of non-OPEC members, especially Russia, to cut their production by 400,000 bpd. Optimism could also falter if OPEC and non-OPEC will decide that the cuts being made are related to current production levels, and not to former production agreements. In recent months Russia, Saudi Arabia and the UAE have substantially increased their overall production, while others have shown a tendency to grow production too. Normally, OPEC meetings in Vienna are mainly for visibility while trying to get a country’s message into the media. The last couple of meetings however have shown a much more politicized approach, as regional power politics have taken over the normal focus on oil prices and market fundamentals. The last OPEC meeting already showed that there was a major conflict brewing between the Saudi-Russia led production cut approach and the Iran-Venezuela anti-cut movement. The latter, especially Iran, has been vehemently against any production cuts or market regulating arrangements, as Tehran is currently in a conflict with Saudi Arabia regionally, while at the same time its hands are bound behind its back due to US sanctions. Tehran, partly right, perceived any Saudi movement as a potential threat to its own market share. Riyadh and Abu Dhabi, partly supported by Moscow, were expected to fill in the gaps caused by the U.S. sanctions on Iran. Tehran, supported by hardliners such as Venezuela and hit by U.S. sanctions, put all its might behind a blockade of the Saudi-Russian approach. The latter failed. The current OPEC meeting reflected the same scenario again. Iran bluntly said not to accept any production cuts, especially if this would include Iranian production. At the same time, Qatar announced it would leave the cartel, supposedly due to a lack of influence and reorientation on LNG. The Qatari move has clearly put additional pressure on the cartel, and we now see the result. The position of the total OPEC group is now being questioned, as major partners such as Venezuela, Algeria or Nigeria feel sidelined. The role of Iran is that of an outsider, as it can’t influence the market at present anymore. At the same time, several small producers are asking themselves if they need to follow Qatar’s steps, as the cartel now seems to be the one-man show of Saudi Arabia, based on support of the UAE, Kuwait and Bahrain.
OPEC Is Alive and Highly Relevant - OPEC is alive and well and highly relevant. That’s according to a new report from Fitch Solutions Macro Research, which was sent to Rigzone following OPEC+’s decision to cut 1.2 million barrels per day from the market. “Despite Qatar’s departure from OPEC, the group was able to build consensus internally and effect substantial cuts,” the report stated. “This action has reassured markets of OPEC’s commitment to act as a moderator of the oil markets, providing stability and long-term oversight of prices,” the report added. “In addition, this re-establishes the availability of spare capacity among OPEC members, which would help buffer prices against unexpected supply shocks,” the report continued. Fitch Solutions Macro Research believes cuts made at the level announced will not hike up oil prices to threatening levels for the United States or emerging market economic growth. The company is forecasting Brent to average $75 per barrel next year. “President Trump’s reaction to the efforts to reduce production will be closely watched, in particular his support of embattled Saudi Arabia’s Crown Prince Mohammed Bin Salman,” the report stated. “Rhetoric from Trump is to be expected, but we believe U.S. and Saudi Arabian relations will not be diminished through this level of OPEC action,” the report added. “The Trump administration could even put a positive spin on the cuts, given that price stability will be supportive of growth in the U.S. shale patch,” the report continued. ‘We Expected a Deal’Wood Mackenzie (WoodMac) expected an output cut deal at the latest OPEC+ meeting, according to Ann Louise Hittle, vice president of macro oils at WoodMac, who stated that “the stakes were high given the excess supply the market faces in 2019.” “The complicated issues facing OPEC delayed the agreement, in what seemed like a replay of the delicate talks that led to the first OPEC/non-OPEC production cut agreement in December 2016,” Hittle said in a statement sent to Rigzone. “This time, however, rather than the talks leading up to the deal being held over months, they were largely held [over a] week,” Hittle added. The WoodMac representative said a production cut of 1.2 million barrels per day would tighten the oil market by the third quarter of 2019 and cause prices to rise back above $70 per barrel for Brent.
OPEC Cut Was Not Easy - The move to cut 1.2 million barrels per day from the market was not easy, Suhail Mohamed Al Mazrouei, UAE minister of energy and industry and president of the OPEC conference, has revealed in a television interview with Bloomberg. “I think this is first of all a very responsive move from both OPEC and non-OPEC. It was not easy because of the dynamics since the summer,” Mazrouei said in the interview. “The market have asked us to take action and increase production a few months ago and we did. So to come and convince all of those countries that you need to reverse that and go and remove production again was not easy but I think the trust on the organization, the trust of the technical team, on their analysis, have led us to become responsive,” he added. The production cuts are effective as of January 2019 for an initial period of six months. The contributions from OPEC and non-OPEC will correspond to 800,000 barrels per day and 400,000 barrels per day, respectively. The next OPEC and non-OPEC ministerial meeting is scheduled to convene in Vienna, Austria, in April next year.
Defying Trump, Saudi Arabia chooses 'Saudi first' oil policy at OPEC meeting -- President Donald Trump has told foreign leaders that "America First" means he will always put the needs of America ahead of the needs of other nations — and that they should do the same for their own country.Saudi Arabia's leadership appears to be on board with that message.Last week, Saudi Arabia disregarded Trump's public pressure campaign to keep pumping at full throttle and cut fuel costs. The kingdom instead persuaded two dozen oil producers to cut output and announced a steep drop in Saudi production over the next two months."Saudi Arabia today had a 'Saudi first' policy," Helima Croft, global head of commodity strategy at RBC Capital Markets, said on Friday. Hours earlier, OPEC, Russia and several other producers agreed to take 1.2 million barrels per day off the market beginning in January.The decision marks a reversal in Saudi energy policy. Over the last six months, the Saudis ramped up production by more than 1 million bpd — a move cheered by Trump. Now, the kingdom will endeavor to cut about 900,000 bpd in just two months.On the surface, the decision looks like a stinging and risky insult to a critical ally. It comes as U.S. lawmakers are threatening to punish the kingdom after Saudi agents killed U.S. resident and Washington Post columnist Jamal Khashoggi in Istanbul in October. But with oil prices mired in a bear market, few commodity analysts doubted Saudi Arabia would cut production. The kingdom needs Brent crude to rise about $25 a barrel just to balance its budget, according to the International Monetary Fund.
US' Perry pushes for stable oil supply in talks with Saudi minister, Aramco CEO — US Energy Secretary Rick Perry stressed the importance of "stable supply and market values" during a meeting last week with Saudi energy minister Khalid al-Falih and the CEO of Saudi Aramco, the Department of Energy said Monday. The Trump administration has not yet reacted to OPEC and its non-OPEC partners' decision Friday with to cut oil production by 1.2 million b/d starting January in an effort to stabilize prices. DOE's statement about Perry's visit to Saudi Arabia and Qatar did not comment on the OPEC outcome.DOE said Perry and Falih discussed this year's sharp increase in Saudi oil production and the impact it had on world markets in the wake of the US re-imposing sanctions on Iran.In Qatar, Perry met with Qatar's new energy minister Saad al-Kaabi, urging him to expand joint partnerships with the US as Qatar seeks to grow its LNG operations around the world. They also talked about Qatar Petroleum potentially increasing investment in the US energy sector.
US pushes Iraq to boost crude exports to Turkey ahead of sanctions deadline - — US Energy Secretary Rick Perry pressed Iraq's new government Tuesday to boost crude production and exports north to Turkey, as the US considers extending Baghdad's sanctions waiver, allowing it to import Iranian natural gas. In a readout of the Baghdad meeting, the Department of Energy suggested that an extension of the waiver may be tied to Iraq's ability to increase crude exports "to levels not seen since 2017." DOE did not immediately respond to a request for comment.Perry told the Iraqi leaders that the US is "serious about its desire to help make Iraq energy independent; however, further steps are needed to improve the business climate and reduce the malign influence of Iran," DOE said. The US pushed Iraq to significantly increase crude exports, increase domestic electricity generation and decrease natural gas flaring.DOE said Perry "reiterated that it is a priority of the US government to make this happen and we stand ready to offer our assistance in achieving this goal."The US granted Baghdad a waiver last month allowing it to import natural gas and electricity from Iran in the face of chronic power shortages, especially in the oil-rich province of Basra in the south. The waiver expires December 18.US sanctions against Iran's oil customers went back into force November 5, with Iraq receiving relief for electricity imports, while eight other countries including China and India secured permission to keep importing Iranian crude at reduced levels. While rolling out the sanctions and waivers last month, the State Department touted Iraq as one of four countries -- along with the US, Saudi Arabia and Russia -- that were pumping oil at record levels. It was the first visit to Iraq by a member of President Donald Trump's cabinet, and only the second such visit since Trump took office.
Saudi oil exports seen down 1 mln bpd in Jan from Nov levels - sources (Reuters) - Saudi Arabia’s crude oil exports are expected to drop next month by some 1 million barrels per day (bpd) from November levels, two sources familiar with the matter said on Saturday. The world’s top oil exporter is expected to ship about 7.3 million bpd in January, one of the sources said, due to softening seasonal demand and as Riyadh follows through on a global deal to cut output to prevent a build up in oil supplies. The sources did not give a figure for December oil exports. OPEC and its Russia-led allies agreed on Friday in Vienna to slash oil production by more than the market expected in a bid to shore up prices despite pressure from U.S. President Donald Trump to reduce the price of crude. Saudi Energy Minister Khalid al-Falih said in Vienna this week that the kingdom’s oil exports would be less than 8 million bpd in December, down from around 8.3 million bpd in November. He also said Saudi Arabia would pump about 10.2 million bpd in January, down from about 10.7 million bpd in December. His ministry tweeted on Saturday that the decision taken by the oil exporters who met in Vienna would be “reflected in the stability and the equilibrium of the oil market.”
Venezuela’s Oil Cuts Beat Saudi Arabia in the Worst Way - Almost a week on from OPEC’s theatrical deal with Russia and others to cut oil supply, the market just isn’t feeling it. Brent crude traded below $60 a barrel on Thursday morning, having closed last Friday at almost $62. Skepticism about the group’s ability to deliver persists, and such hopes as there are on the part of bulls rest largely on involuntary cuts from the likes of sanctioned Iran and collapsing Venezuela.The latter, in particular, hit a grim milestone last month.Since the first round of supply targets kicked in at the start of 2017, I’ve been tracking cumulative adherence by the original 11 OPEC members subject to them. In broad terms, that group held a theoretical 948 million barrels of crude oil off the market through the end of November, which is actually more than the 814 million the targets implied, for compliance of 116 percent (all data are taken from OPEC’s monthly reports, using secondary sources). Beneath this, however, the real story was that, for much of the period, Saudi Arabia, Angola and Venezuela went above and beyond to curb supply.That changed this summer, when Saudi Arabia began to raise production aggressively. In November, its output breached 11 million barrels a day, versus a target of 10.1 million, and its cumulative contribution dipped sharply to 292 million barrels withheld. Venezuela’s collapse, on the other hand, kept right on going, and its cumulative cuts jumped to 296 million barrels — surpassing those of Saudi Arabia for the first time.It is shocking that Venezuela has surpassed Saudi Arabia in absolute terms; its production was less than one-fifth that of OPEC’s de facto leader when the cuts were agreed. In terms of compliance, the picture is even starker:Venezuela stands out in the worst possible way when it comes to compliance with OPEC targets, even as Saudi Arabia has slipped below 90 percent Little wonder Venezuela was made exempt from targets in last week’s updated agreement. Not that it matters for practical purposes. There is little to stop Venezuela’s downward spiral from continuing. On Thursday, the International Energy Agency took an ax to demand forecasts for the country as its economy looks set to end 2019 at half the size it was in 2013 in real terms. If your first thought is that this frees up more supply for export, bear in mind that domestic demand fell by perhaps 80,000 to 90,000 barrels a day this year, but production is down nearly 600,000 barrels a day for the year through November. And potential U.S. sanctions over President Nicolas Maduro’s efforts to change Venezuela’s constitution could add further pressure in 2019.
Uncertainty Lingers In Oil Markets Despite OPEC Cuts - Saudi Arabia will lower oil exports by 1 mb/d beginning in January. Sources told Reutersexports will drop to 7.3 mb/d, down from 8.3 mb/d in November. Despite the hyped Trump-Xi truce, the trade war may only be on hold. U.S. Trade Representative Robert Lighthizer said on Sunday that tariffs would rise on March 1 if a significant deal cannot be reached. Meanwhile, the political turmoil in the UK following the cancelled parliamentary vote on the Brexit package also fed uncertainty. Financial markets started the week in the red. Russia and other non-OPEC producers agreed to cut a combined 400,000 bpd at the OPEC+ meeting, but the reality is beginning to sink in. The cuts may only be phased in over time. Russia may only cut output by 50,000 to 60,000 bpd in January, according to Russian energy minister Alexander Novak. That could mean that actual reductions from the entire group may trail the headline figure of 1.2 mb/d in cuts. The U.S. shale industry is likely rejoicing after the successful OPEC+ meeting, which should tighten the market and push up prices. But some analysts believe the deal won’t significantly alter the shale supply picture. “I just think there's a lot of uncertainty and this is a pretty small cut,” Amy Myers Jaffe, director of the Council on Foreign Relations' energy security and climate program, told S&P Global Platts. The duration of the deal is an open question, as is compliance. The outlook for the global economy could loom much larger for shale operators. “I don't think OPEC has the will to make the kind of cuts we'd need to make if we saw a real recession,”
Shale growth may force OPEC into another production cut in April, Citi says - OPEC may not have gone far enough to hoist oil prices through 2019 — and a weak demand outlook could prompt the need for another production cut by the cartel and its allies by spring next year, Citi's top commodities analyst said Wednesday."I think they went far enough for the time being," Ed Morse, Citi's global head of commodities research, told CNBC, describing last weekend's OPEC and non-OPEC agreement led by Saudi Arabia and Russia to cut crude output by 1.2 million barrels per day (bpd) by January."They're going to have to re-address this issue sometime next year, but I'm glad they're meeting for their sake in April, and it may be by April they're going to have to confront another cut," Morse said of the organization's next summit in Vienna.When asked about the size of this potential cut, Morse stopped short of making a call, instead pointing to the bigger picture: booming production volumes from the U.S. threatening OPEC's power to shape the oil market."I like to call it the struggle of the bear, the camel and the eagle," Morse said, referring to Russia, Saudi Arabia and the U.S., the world's top three oil producers. "Saudi Arabia discovered that OPEC doesn't have the clout it used to have."The 15-member cartel has a current output of roughly 35 million bpd. That's just over its late 1970s level of around 30 million bpd, when global oil demand was in the 60 million bpd range, according to the Energy Information Administration (EIA). Global demand is now in the 100 million bpd range."So by definition, they lost market clout," Morse said. The recent departure announcement by Qatar, scheduled for January 1, has added further questions as to the future of the group. "[OPEC is] now confronting the result of the higher prices that they've orchestrated, namely this incredible rebound in U.S. production which is overwhelming their efforts to deprive the world of inventory." -Ed Morse, Global head of commodities research, Citi
Analysis- Oil and gas traders fret over elevated risks in US-China trade— An unrealistic window for Chinese importers to ramp up purchases of US oil and gas, and unstable relations between the US and China have elevated the risks of US-China trades, according to market participants in China and Singapore. Commodity traders said boosting purchases of US crude oil for a 90-day period is inconsistent with the normal trading cycle for physical barrels, and for natural gas the prevailing conditions in the Asian LNG market make an immediate increase in spot procurement very difficult. In most cases, Chinese oil and gas companies will struggle with reconciling commercial interests with Beijing's diktats, and are likely to take market positions that involve significantly higher risk. Market uncertainties surged with the mid-week arrest of the chief financial officer of China's Huawei Technologies in Canada after an extradition request by the US, the latest jolt to the trade war ceasefire. Several Singapore- and Shanghai-based commodity traders said the incident forced them to reconsider any opportunities that had emerged after the trade talks between US President Donald Trump and Chinese President Xi Jinping last weekend. The lack of details around the agreement has not helped market confidence. Chinese oil and gas companies had to wind down exposure to US energy supplies when the trade war escalated earlier this year, resulting in disruptions to trade flows, losses and general market uncertainty. They could now be forced to ramp up trades in a short 90-day span ending March 1. This is problematic for several reasons. A Sinopec refinery typically submits its crude purchasing plan to the trading arm Unipec at least three months ahead of actual procurement, an executive with a Sinopec refinery, said. Additionally, it takes around 50-60 days for a crude cargo to be shipped from the US to China. That is at least a five-month trading cycle for importing a US oil barrel into China, not counting the amount of time taken by Unipec to conduct spot trades. A key sticking point is the 90-day window. A vessel that departs the US by end-December will barely make it to Chinese ports by the end of February when the deadline ends. But the Lunar New Year in February will mean that ports are congested and risks of delays are high.
Oil traders focus on deteriorating economic outlook rather than OPEC: Kemp (Reuters) - The weakening outlook for oil consumption coupled with rising output from U.S. shale and softer than expected U.S. sanctions on Iran have convinced most traders the market is moving into a period of oversupply. In the run up to last week's OPEC meeting in Vienna, hedge fund managers had little confidence in the organisation's ability to cut production by enough to avoid an oversupplied market next year. Fund managers sold another 32 million barrels of Brent futures and options in the week to Dec. 4, bringing total sales over the last 10 weeks to a record 360 million barrels. Funds now hold just over two long positions for every short one, down from a ratio of more than 19:1 at the end of September, and the least-bullish position for 17 months. Bearish short positions have risen to 117 million barrels, up from just 27 million at the end of September, and the largest number since June 2017. Pessimism about the outlook for crude prices was reflected by a similar collapse in sentiment towards middle distillates such as gasoil (https://tmsnrt.rs/2PtIemz ). Fund managers sold another 20 million barrels of European gasoil, bringing total sales in the last eight weeks to 82 million barrels. Funds are the least-bullish towards middle distillates since July 2017, according to an analysis of position data from ICE Futures Europe. Middle distillates are heavily geared towards the economic cycle because most distillate fuel oil is used in freight transportation (shipping, railroads, aviation, trucks), manufacturing, mining and farming. So the collapse in sentiment towards distillates is consistent with growing concerns about the outlook for the global economy in 2019. Investors' fears about the impact of trade tensions and heightened uncertainty on business investment and growth next year is darkening the outlook for distillates just as it is hitting equity markets.
Oil extends gains after OPEC-led group seals deal to cut supply - Oil prices rose on Monday, extending gains from Friday when producer club OPEC and some non-affiliated producers agreed a supply cut of 1.2 million barrels per day (bpd) from January. Despite this, the outlook for next year remains muted on the back of an economic slowdown. International Brent crude oil futures were at $62.21 per barrel at 0218 GMT, up 54 cents, or 0.9 percent, from their last close. Prices surged on Friday after the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including heavyweight Russia announced they would cut oil supply by 1.2 million bpd, with an 800,000 bpd reduction planned by OPEC-members and 400,000 bpd by countries not affiliated with the group.U.S. West Texas Intermediate (WTI) crude futures were at $52.63 per barrel, up 2 cents, held back as the booming U.S. oil industry is not taking part in the announced cuts.The OPEC-led supply curbs will be made from January, measured against October 2018 output levels."Our key conclusion is that oil prices will be well supported around the $70 per barrel level for 2019," analysts at Bernstein Energy said on Monday.Despite the cuts, that was still a price forecast reduction of $6 per barrel as Bernstein reduced its crude oil demand forecast from 1.5 million bpd previously to 1.3 million bpd for 2019.U.S. bank Morgan Stanley said the cut was "likely sufficient to balance the market in 1H19 and prevent inventories from building".It added that it expected "Brent to reach $67.5 per barrel by 2Q19, down from $77.5 before."Oil prices have been pulled down sharply since October by signs of an economic slowdown, with Brent losing almost 30 percent in value.Japan, the world's third biggest economy and No.4 oil consumer, on Monday revised its third quarter GDP growth down to an annualized rate of -2.5 percent, down from the initial estimate of -1.2 percent. Meanwhile the two world's biggest economies, the United States and China, are locked in a trade war which is threatening to slow global growth and battering investor sentiment.
Oil Prices Slump on Profit-Taking After OPEC Production Curb -- Oil prices slumped on Monday, erasing some of last week’s strong gains from an agreement among major producers to curb output in the coming year, while analysts debated whether the deal is enough to rebalance the market. New York-traded West Texas Intermediate crude futures fell 96 cents, or 1.82%, at $51.65 a barrel by 9:02 AM ET (14:02GMT). Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded down 78 cents, or 1.26%, to $60.89. OPEC announced Friday that it will reduce overall production among its members by 1.2 million barrels per day (bpd) during the first six months of 2019 in an effort to stave off a global glut in supplies and prop up prices. The cartel will curb output by 0.8 million bpd from October levels, while non-OPEC allies contribute an additional 0.4 million bpd of cuts, in a move to be reviewed at a meeting in April. The agreement initially sent oil prices sharply higher. West Texas Intermediate and Brent ended the week with gains of around 3.3% and 5% respectively. U.S. bank Morgan Stanley said the cut was "likely sufficient to balance the market in 1H19 and prevent inventories from building". It added that it expected "Brent to reach $67.5 per barrel by 2Q19, down from $77.5 before." Merrill Lynch said the reduction "should lead to a relatively balanced global oil market and will likely push Brent and WTI prices back to our respective expected averages of $70 per barrel and $59 per barrel in 2019." But the bank still warned on Monday that “the surge in U.S. supply in recent months should be a reason for caution”. Along similar lines, Edward Bell of Emirates NBD bank said “the scale of the cuts ... isn't enough to push the market back into deficit” and that he expected “a market surplus of around 1.2 million bpd in Q1 with the new production levels”.
Oil Prices Settle Lower - West Texas Intermediate (WTI) crude oil for January delivery declined by $1.61 Monday to settle at an even $51 a barrel. During the early-week session, the WTI traded between a low of $50.68 and a high of $52.81. The February Brent crude oil price also ended the day $1.70 lower, settling just shy of the $60 mark at $59.97 a barrel. Barani Krishnan, senior analyst with Investing.com, told Rigzone that Monday’s drop in oil prices stems in part from a slump in the equities markets and concerns about the world economy. “Today’s play in oil is more about equities than crude, with the combination of the rout in tech and pharma stocks along with global growth, trade war and Brexit worries leading to risk aversion across the board,” Krishnan said. Additionally, Krishnan pointed out that the recent decision by OPEC members and Russia to curb output raises an important question for traders. “There’s another question which will be asked with greater resonance in the coming days and weeks and that is: are the cuts pledged by OPEC+ enough?” said Krishnan. “On the surface, 1.2 million barrels (per day) is pretty close to what the market was promised. But what the Vienna meeting also appears to have completely ignored is the sheer tsunami of U.S. supply that could come on board if you add another $5 or $10 to crude prices.” Like the WTI and Brent, reformulated gasoline (RBOB) also declined Monday. The January RBOB contract price shed nearly 7 cents to settle at $1.42 a gallon. “RBOB is taking its hit from crude as well with the crack, or margin, versus WTI down to just over $15 a barrel now, from highs above $18 when U.S. crude stood at four-year highs in early October,” Krishnan explained. “To the regular guy, the most visible clue of what’s going on would be the pump price of gasoline, which is averaging at just around $2.50 a gallon in the East Coast. That’s down 40 cents a gallon over the past three months and 22 cents in the last three weeks alone.”
Citi forecasts oil goes nowhere in 2019 as OPEC cuts and US pumps more -Citi believes international oil prices will average $60 a barrel in 2019, remaining near current levels as OPEC-led production cuts encourage U.S. drillers to put more crude on the market. OPEC, Russia and other producers agreed on Friday to remove 1.2 million barrels per day from the market beginning in January. The move follows a more than 30 percent collapse in oil prices that saw international benchmark Brent crude fall from more than $86 a barrel to a 13-month low of $57.50 last month.Some analysts forecast the production cuts will cause Brent to rebound back toward $70 or $80 a barrel.However, Citi says an earlier round of production cuts from the so-called OPEC+ alliance has only delayed the inevitable. Rather than putting oil on a steady upward trajectory, the new supply cuts "almost certainly" set up another sell-off."OPEC+ did the work of drawing down inventories that otherwise would have to be done through a painful period for shale producers," Citi said in a research note written by a team led by Ed Morse, the firm's global head of commodities.According to the bank, "the more OPEC+ tries to support prices by withholding oil from the market, the more they give the US shale sector an out from rationing supply growth themselves." Citi says U.S. crude prices would need to hold steady around $45 a barrel in order keep American production flat. U.S. output has recently risen to an estimated 11.7 million barrels per day, making the United States the world's biggest crude oil producer. In its primary forecast, Citi sees Brent crude trading at $55 to $65 a barrel in 2019, as global oil stockpiles continue to rise through the middle of the year. If the OPEC+ production cuts fall apart, Brent could fall back into the $40s, Citi says. On the other hand, if OPEC and its partners decide to take more oil off the market, or if supply disruptions develop, Brent could rise back to $70 or $80.
Bank of America is more bullish than most on its oil price forecast for 2019 --Despite dramatic slides in the oil market, some forecasters remain positive on prices and demand going into 2019. A year ahead outlook report from Bank of America Merrill Lynch expects Brent crude to regain its recent losses in 2019 and settle at $70 a barrel. But amid mounting global uncertainty on everything from trade and monetary policy to politics, that forecast is far from consensus. "Volatility will be high in the near future, but going into 2019, we are constructive on oil prices," Hootan Yazhari, head of global frontier markets equity research at Bank of America Merrill Lynch, told CNBC's Dan Murphy on Tuesday. "We believe oil prices will resume their path back up to $70 average next year, potentially higher in the second quarter for a brief spell of time. We believe the (OPEC) cuts were sufficient," Yazhari said, predicting a "relatively balanced oil market" and stable inventories next year. But worries over the strength of crude remain rife, with other market analysts pointing to $60 barrels or lower in the coming year. Brent crude is down nearly 30 percent from its October highs of more than $86. After a dramatic summit of OPEC and non-OPEC members over the weekend that triggered an immediate boost in oil prices, the commodity has already dropped back to pre-meeting levels, falling 3.1 percent by the end of Monday. The 15-member cartel, led by Saudi Arabia, agreed with Russia to cut production by 1.2 million barrels per day (bpd) by January to support prices amid a global supply glut and fears of waning demand.
STEO highlights: EIA cuts Brent, WTI 2019 forecasts nearly $11/b amid supply glut — The US Energy Information Administration on Tuesday reduced its forecasts for WTI and Brent spot prices in 2019 by nearly $11/b, largely due to record global output, particularly in the US, and lower-than-expected demand. In its Short-Term Energy Outlook, EIA forecast WTI to average $54.19/b in 2019, down $10.66/b from the agency's forecast last month, and Brent to average $61/b in 2019, down $10.92/b from last month's forecast.The dramatically reduced price forecast comes after Brent traded within a range around $17.49/b in November, its most volatile month since 2012, and WTI traded in a range around $15.98/b, its most volatile month since 2014."The implied volatility of Brent and WTI, calculated from options prices, more than doubled during the month, reflecting the market's heightened uncertainty regarding future oil supply and demand," EIA said. EIA expects that the magnitude of the recent price declines combined with the OPEC production cuts will bring 2019 supply and demand numbers largely into balance, which EIA forecasts will keep prices near current levels in the coming months."EIA's December short-term outlook largely attributes the recent decline in Brent crude oil spot prices, which averaged $65 per barrel in November, to record production among the world's largest crude oil producers and concerns about weaker global oil demand," EIA Administrator Linda Capuano said in a statement.Other highlights from the report include:
- **EIA forecasts WTI to average $65.18/b this year, down $1.61/b from last month's forecast, and Brent to average $71.40/b, down $1.72/b from last month.
- **EIA attributed recent a decline in prices to: output at or near record levels from the US, Russia and Saudi Arabia; the US issuing waivers to some of the largest purchasers of Iranian crude, including China and India, as it reimposed sanctions on November 5; and stagnant economic growth.
- **EIA forecasts US oil production to average 10.88 million b/d in 2018, up from 9.35 million b/d in 2017, and then climb to 12.06 million b/d in 2019.
- **Capuano said that the US will end 2018 as the world's largest crude oil producer.
- **EIA forecasts oil production in the Lower 48 states, which averaged 7.18 million b/d in 2017, to climb to 8.68 million b/d in 2018 and then to 9.63 million b/d in 2019. US Gulf of Mexico production, which averaged 1.68 million b/d in 2017, will climb to 1.73 million b/d in 2018 and 1.95 million b/d in 2019, EIA said Tuesday.
- **EIA called last week's agreement by OPEC, Russia and other producing countries to reduce production by 1.2 million b/d a "response to increasing evidence that oil markets could become oversupplied in 2019."
- **OPEC members produced 32.98 million b/d in November. EIA expects OPEC production to average 32.57 million b/d in 2018, down 70,000 b/d from last month's outlook, and average 31.79 million b/d in 2019, down 410,000 b/d from last month's outlook.
- **EIA expects OPEC production to average 32.06 million b/d in first-quarter 2019 and 31.8 million b/d in Q2 2019, down 300,000 b/d and 400,000 b/d, respectively, from last month's forecast.
Oil logs a modest gain as traders weigh output-cut pact, demand prospects -- Oil futures edged higher Tuesday, in the wake of a short-term disruption in Libyan output, but settled off the session's high on the back of uncertainty surrounding compliance with an oil-producer agreement to cut output, as well as concerns over a potential slowdown in energy demand. Meanwhile, in a report issued Tuesday, the Energy Information Administration reduced its oil-price forecasts for this year and next, following the recent price declines that came ahead of Friday's decision by the Organization of the Petroleum Exporting Countries and some nonmember allies to cut production starting in January. West Texas Intermediate crude for January delivery tacked on 65 cents, or 1.3%, to settle at $51.65 a barrel on the New York Mercantile Exchange, after trading as high as $52.43. It lost 3.1% Monday to settle at $51, the lowest since Nov. 30. Global benchmark February Brent crude edged up by 23 cents, or 0.4%, at $60.20 a barrel on ICE Futures Europe after finishing Monday at $59.97, also the lowest in just over a week. Libya's national oil company has declared force majeure on exports from its El Sharara field after a weekend militia attack on the facility, The Wall Street Journal reported. Commerzbank analysts said in a note Tuesday that "just short of 400,000 barrels per day of Libyan oil are currently missing because production has been interrupted at Libya's largest oil field." On Friday, OPEC agreed to reduce its overall member production by 800,000 barrels a day from October's levels for six months, beginning in the new year. The cartel didn't specify the output cut by nonmember allies, which include Russia, but news reports pegged the nonmember cuts at 400,000 barrels a day, to bring the total reduction to 1.2 million barrels a day. "While the general OPEC+ agreement on additional supply cuts could still support the market in the months ahead, the lack of country-specific targets has the market hesitant to aggressively price in those actions,"
Oil rises more than 1 percent on OPEC-led supply cuts, trade talk hopes - Oil prices climbed by more than 1 percent on Wednesday, lifted by expectations that an OPEC-led supply cut announced last week for 2019 would stabilise markets as well as hopes that long-running Sino-American trade tensions could ease.Disruptions to Libyan oil exports after local militia seized the country's biggest oil field, El Sharara, were also buoying prices, traders said. International Brent crude oil futures were at $60.89 per barrel at 0212 GMT, up 69 cents, or 1.15 percent from their last close.U.S. West Texas Intermediate (WTI) crude futures were at $52.25 per barrel, up 60 cents, or 1.2 percent.The higher prices came amid a broader increase in Asian stock markets after U.S. President Donald Trump told Reuters in an interview that trade talks with China were taking place to defuse the trade disputes between the world's two biggest economies.Core to oil markets was a decision by the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia last week to cut supply by 1.2 million barrels per day (bpd)."OPEC production curbs will stabilise the market," ANZ bank said on Wednesday.Crude prices had lost a third of their value between early October and the announcement of the cuts. Some analysts warn, however, that the agreement may not have the effect OPEC is hoping for.
OPEC's oil production dips in November as Iranian output plunge offsets Saudi surge -- Oil production from OPEC nations dipped in November, as a sharp drop in Iranian supplies offset a surge in Saudi output to all-time highs. The group's latest monthly report comes just days after the 15-member organization reached a deal with 10 exporter nations, including Russia, to remove 1.2 million barrels per day from the market. OPEC alone will slash output by 800,000 bpd. The decision follows a plunge in oil prices since the start of October, in part due to projections that the oil market will be oversupplied next year. Slowing economic growth and financial strain in key oil-consuming nations are also raising concerns about energy demand in 2019. "After a healthy start to the year, the world economy in 2018 was marked by a rising divergence in growth trends," OPEC warned in a statement. "Rising trade tensions, monetary tightening and geopolitical challenges are among the issues that skew economic risks even further to the downside in 2019." In November, OPEC's output slipped by about 11,000 bpd to 32.965 million bpd, according to independent sources that OPEC cites in its monthly report. Saudi Arabia pumped just over 11 million bpd, with monthly production jumping by 377,000 bpd. Figures provided directly by the Saudis indicate the kingdom pumped at nearly 11.1 million bpd. That is set to plunge over the next two months. Saudi Energy Minister Khalid al-Falih said he expects output to drop to about 10.2 million bpd in January. The November increase from Saudi Arabia was wiped out by a 380,000 bpd plunge in Iran's output, as the nation grapples with U.S. sanctions that snapped back into place on Nov. 5. Last month, Iranian production dipped below 3 million bpd for the first time since January 2016, when international sanctions on the country over its nuclear program were lifted during the Obama administration. The United Arab Emirates and Kuwait also raised output last month, but those increases were offset by declines in Iraq, Gabon, Libya, Nigeria and Venezuela. The remaining OPEC members held production roughly steady.
WTI Tumbles After Surprisingly Small Crude Draw -- Having surged overnight on the heels of a huge API-reported crude draw (don't forget the seasonal incentive to lower taxable inventories), WTI Crude has quickly faded back this morning (despite dollar weakness) as OPEC dats this morning suggests a deeper supply cut may be needed in late 2019 to balance world markets.As Bloomberg notes, even if OPEC cuts as planned, a surplus will re-emerge in late 2019... Traders remain concerned that record American oil production and shaky fuel consumption could foment a new glut.“The agreed production cuts will not be enough to ensure sustained and immediate recovery in oil prices,” consultants at Oslo-based Rystad Energy ASsaid. “However, the decision does stand as a Christmas gift to budget-setters in the U.S. shale industry, where the relentless growth in production is set to continue also for the second half of 2019 and beyond.” DOE:
- Crude -1.21mm (-3.5mm exp)
- Cushing +1.148mm (+1.1mm exp)
- Gasoline +2.09mm (+2mm exp)
- Distillates -1.475mm (+1.6mm exp)
After last week's huge draw, DOE reports a considerably smaller than expected 1.21mm barrel crude draw and a surprise distillates draw. Production has been flat at record highs for the last few weeks (remember only moves in 100k increments now), but slipped lower last week...
Oil Stays Below $52 -- Oil traded below $52 a barrel after U.S. crude inventories slid less than expected and added to concerns that the OPEC+ coalition’s output cuts won’t be enough to avert a supply glut. Futures in New York were little changed, after sliding 1 percent in the previous session. U.S. Energy Information Administration data showed inventories fell by 1.21 million barrels last week, well below the 10.2 million cited in an industry report Tuesday. Meanwhile, an OPEC report showed deeper supply cuts may be needed in late 2019 to counter a looming surplus of oil. Crude’s still in a bear market after reaching a four-year high in October as investors remain worried over supply and demand. Record American output, which is expected to boom to more than 12 million barrels a day in 2019, is threatening to overwhelm the market. The U.S. has also allowed some nations to temporarily buy Iranian oil despite the implementation of sanctions, while the unity of the Organization of Petroleum Exporting Countries is at risk. West Texas Intermediate for January delivery traded 4 cents lower at $51.11 a barrel on the New York Mercantile Exchange at 8:35 a.m. in London. Prices decreased 50 cents to $51.15 on Wednesday after the stockpiles data, erasing earlier gains of as much as $1.23. Total volume traded was 44 percent above the 100-day average. Brent for February settlement lost 5 cents to $60.10 a barrel on London’s ICE Futures Europe exchange. Futures settled 0.1 percent lower at $60.15 on Wednesday. The global benchmark crude traded at an $8.75 a barrel premium to WTI for the same month. While U.S. crude inventories declined for a second week to about 442 million barrels, they are still above the five-year average of 410 million barrels, according to data compiled by Bloomberg. Stockpiles at the nation’s storage hub of Cushing, Oklahoma, increased for a third week to the highest since January, the EIA data showed. While production curbs agreed by OPEC and its allies are on track to balance global oil markets in the first half of next year, rising U.S. shale supplies mean they would need to almost double the cutback to prevent a new surplus in the fourth quarter, according to a report from the group. Supplies from outside OPEC, boosted by U.S. shale drillers, are poised to expand by more than global oil demand next year, at 2.16 million a day versus 1.29 million a day, the report showed. Even if the cartel restricts output to the level agreed last week, the market could tip into oversupply again during the second half of next year.
Oil ends lower as U.S. crude supplies post smaller-than-expected decline - Oil prices gave up earlier gains Wednesday to finish a bit lower, after U.S. government data showed domestic crude supplies declined for a second week in a row, but by much less than the market expected. The Energy Information Administration reported early Wednesday that U.S. crude supplies fell by 1.2 million barrels for the week ended Dec. 7. Supplies had also declined the week before, marking the first weekly decline in 11 weeks. However, analysts and traders, on average, expected to see a larger decline of 2.8 million barrels in crude supplies, according to a survey conducted by The Wall Street Journal, while the American Petroleum Institute on Tuesday reported a drop of 10.2 million barrels. West Texas Intermediate crude for January delivery CLF9, +0.49% fell 50 cents, or 1%, to settle at $51.15 a barrel on the New York Mercantile Exchange. Prices, which touched an intraday high of $52.88, had pared earlier gains shortly after the release of the supply data. Global benchmark February Brent crude LCOG9, +0.23% shed 5 cents, or less than 0.1%, to $60.15 a barrel on ICE Futures Europe. After Tuesday’s “mammoth drop from the API, this morning’s EIA report has yielded a much more modest draw,” said Matt Smith, director of commodity research at ClipperData. “Refinery runs ticked a little lower, but still remain nearly half a million barrels per day above year-ago levels.” “Crude exports continue to be robust, also helping to keep inventories in check,” he told MarketWatch. “Implied demand for last week ticked higher, keeping a gasoline build in check, while encouraging a distillate draw.” The EIA reported that gasoline stockpiles climbed by 2.1 million barrels last week, while distillate stockpiles, which include heating oil, declined by 1.5 million barrels. The Wall Street Journal survey had shown expectations for supply increases of 1.8 million barrels in gasoline and 1.3 million barrels in distillate inventories.
Oil prices inch up amid US stockpile drop, signs of easing trade tensions - Oil prices rebounded in choppy trading on Thursday, with traders pointing to a report indicating that crude stockpiles are falling at a closely-watched delivery hub in Cushing, Oklahoma. Benchmark North Sea Brent crude oil was up 30 cents at $60.45 per barrel by 10:30 a.m. ET (1530 GMT).U.S. West Texas Intermediate light crude was 29 cents higher at $51.44.Crude futures gave up overnight gains earlier in the session, under pressure from high global inventories and a smaller-than-expected drawdown in U.S. crude stockpiles last week.U.S. crude inventories fell by 1.2 million barrels in the week to Dec. 7, disappointing some investors who had expected a decrease of 3 million barrels. The data showed stockpiles jumping by 1.1 million barrels in Cushing, the deliver point for the benchmark WTI contract.But data cited by traders indicates that stocks are now falling at Cushing.Global oil supply has outstripped demand over the last six months, inflating inventories and pushing crude oil to its lowest in more than a year at the end of November.OPEC and other big producers, including Russia, said last week they would try to trim surplus supply, agreeing to cut production by a total of 1.2 million barrels per day.That should be enough to give the market a supply deficit by the second quarter of next year, if OPEC and the other large producers stick to their deal, the International Energy Agency said in its monthly Oil Market Report on Thursday. "The Brent crude oil price seems to have found a floor, remaining close to $60 a barrel," IEA said.
Saudis Reportedly Target US Inventories By Slashing Oil Exports - WTI prices briefly popped above $52 before fading quickly after Bloomberg reported that after flooding the US market in recent months, Saudi Arabia plans to slash exports starting in January in an effort to dampen visible build-ups in crude inventories. Bloomberg reports that, according to people briefed on the plans of state oil company Saudi Aramco, American-based oil refiners have been told to expect much lower shipments from the kingdom in January than in recent months following the OPEC agreement to reduce production Oil traders were not that impressed... And while the plan to slash Saudi exports to America may ultimately convince a skeptical oil market about the kingdom’s resolution to bring supply and demand incline, it may anger President Trump, who has used social media to ask the Saudis and OPEC to keep the taps open. Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices! — Donald J. Trump (@realDonaldTrump) December 5, 2018 We wonder how quick the response will be from POTUS - will he suddenly be convinced that MbS is guilty?
Oil prices rise as Sino-U.S. trade tensions show signs of easing (Reuters) - Oil prices climbed more than 2 percent on Thursday, after data showed inventory declines in the United States and as investors began to expect that the global oil market could have a deficit sooner than they had previously thought. OPEC’s output agreement with Russia and Canada’s decision to mandate production cuts could create an oil market supply deficit by the second quarter of next year, if top producers stick to the deal, the International Energy Agency said in its monthly Oil Market Report. [IEA/M] U.S. crude inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, fell by nearly 822,000 barrels in the week through Dec. 11, traders said, citing data from market intelligence firm Genscape. Brent crude LCOc1 settled $1.30, or 2.16 percent, higher at $61.45 per barrel while U.S. light crude CLc1 rose $1.43, or 2.8 percent, to end the session at $52.58 a barrel. “Other than some additional bullish statement out of the Saudis or Russians regarding strict adherence to last week’s agreement or a supply disruption somewhere around the globe, we don’t expect any headlines capable of pushing oil values much above this month’s highs even when stretching a view through year’s end,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. Global oil supply has outstripped demand over the last six months, inflating inventories and pushing crude oil’s price at the end of November to its lowest in more than a year. But the Organization of the Petroleum Exporting Countries and other big producers including Russia said last week they agreed to cut production by 1.2 million barrels per day (bpd). Still, oil demand growth is slowing, OPEC said. OPEC said on Wednesday that demand for its crude in 2019 would fall to 31.44 million bpd, 100,000 bpd less than predicted last month and 1.53 million bpd below what it currently produces.
Oil prices fall as investors take profits amid China economy worries --Oil prices fell on Friday after China reported slower economic growth, pointing to lower fuel demand in the world's biggest oil importer, although market sentiment was supported by supply cuts agreed last week by major crude producers.Brent crude was down 41 cents at $61.04 per barrel, on course for a decline this week of around 1 percent.U.S. light crude was 32 cents lower at $52.26."The energy complex is on the back foot this morning as a batch of soft Chinese economic data triggers a flurry of pre-weekend profit-taking," PVM Oil analyst Stephen Brennock said."This pullback provides a timely reminder that current levels of upside potential are meek at best."China, the world's No.2 economy, on Friday reported some of its slowest growth in retail sales and industrial output in years, highlighting the risks of its trade dispute with the United States.Chinese oil refinery throughput in November fell from October, suggesting an easing in oil demand, though runs were 2.9 percent above year-ago levels. Concerned by mounting oversupply, the Organization of the Petroleum Exporting Countries and other oil producers including Russia agreed last week to reduce output by 1.2 million barrels per day (bpd), or more than 1 percent of global demand.
Oil ends lower for the week; natural gas sees biggest weekly plunge since 2016 - Oil prices fell on Friday, settling lower for the week, as a stronger dollar cut global demand for U.S.-priced commodities and a slide for the stock market sullied the risk-taking mood.Meanwhile, natural-gas futures took a plunge that left them down nearly 15% for the week — the largest such loss in nearly three years, as weather forecasts dulled prospects for demand.Oil prices had climbed Thursday as traders contemplated data showing a blip higher in monthly OPEC output even as future cuts loom, as well as a recent report of a weekly decline in U.S. crude supplies and production. Gains picked up late Thursday after a news report said Saudi Arabia plans to cut shipments to U.S. refiners to avoid an expansion of U.S. stockpiles.On Friday, West Texas Intermediate crude for January delivery fell $1.38, or 2.6%, to settle at $51.20 a barrel on the New York Mercantile Exchange. The contract was down 2.7% for the week. Global benchmark February Brent crude fell $1.17, or 1.9%, to $60.28 a barrel on ICE Futures Europe, down about 2.3% for the week. U.S. stocks traded lower as signs of China’s economic slowing hit equities and raised fresh concerns about the economic giant’s thirst for oil moving forward. The U.S. Dollar Index DXY, +0.34% meanwhile, rose 0.6%, as growth worries and geopolitical jitters sparked haven-related flows.In its closely watched monthly oil market report, the International Energy Agency said Thursday that crude output by OPEC rose by 100,000 barrels a day on month to reach 33.03 million barrels a day in November. Saudi Arabia — the de facto head of OPEC — churned out 410,000 barrels a day to a historic high of 11.06 million barrels a day.But the agency’s report stands in contrast to OPEC’s own monthly oil market data, which was released Wednesday and showed a slight decline in the cartel’s November output despite ballooning Saudi production. Both reports come less than a week after OPEC agreed with its nonmember partner producers — led by Russia — to collectively cut crude output by 1.2 million barrels a day starting in January. OPEC is slated to curb production by 800,000 barrels a day, while Russia and nine allied producers will shoulder the remainder of the cuts.
Has OPEC+ Stabilized Oil Markets? - The OPEC+ deal put “a floor” beneath oil prices, according to the IEA’s latest Oil Market Report. The agency said that non-OPEC supply could still outgrow demand next year, expanding by 1.5 mb/d while demand may only soak up 1.4 mb/d of that additional supply. As such, OPEC+ might be forced to maintain the cuts through the end of the year. However, there are plenty of uncertainties, including the extent of losses from Iran and Venezuela, while additional outages could come from Libya or elsewhere. For now, the IEA says the production cut deal will keep prices from falling further, but it is still too early to tell if the agreement will significantly boost prices. EIA said in its latest Short-Term Energy Outlook that the U.S. should average 12.1 mb/d in 2019, up sharply from a 10.9 mb/d average this year. Notably, the production estimate is mostly unchanged from previous months, even though oil prices have crashed. The EIA even lowered its expected price for Brent and WTI in 2019 by roughly $10 per barrel, but the agency clearly thinks that the production gains are mostly baked in already. Refining figures in Asia suggest demand could be slowing down in the region, Bloomberg reports. Asian refining margins are at an eight-month low, which could be a leading indicator of slowing consumption. OECD stocks rose above the five-year average in October (the latest month for which data is available) for the first time since March. Saudi Arabia and Kuwait are nearing a deal to restart idled oil fields in disputed territory along their shared border. The so-called Neutral Zone oil fields have the capacity to produce 500,000 bpd, but have been offline for several years. The U.S. government has leaned on both countries to resolve their differences, with an eye on shrinking supply from Iran. Chevron, which jointly operates one of the fields in Kuwait, said it maintains “readiness for a production restart when that time comes,” according to the Wall Street Journal.
OPEC's Unplanned Supply Losses Could Double Its Cut -- OPEC may be about to succeed by accident, again. Unplanned supply losses from members Iran and Venezuela could effectively double the intended cutback of 800,000 barrels a day the cartel pledged last week, according to the International Energy Agency. There’s a precedent for this: It was the Latin American country’s collapsing oil industry that accelerated OPEC’s effort to clear a supply glut in 2017. This time, U.S. sanctions on the Persian Gulf nation could amplify that effect. OPEC production may decline by 1.4 million barrels a day from October levels to 31.5 million a day during the first quarter and then slip further to 31.2 million in the second, according to the IEA’s monthly oil market report. The reduction, which the agency says is an assumption rather than a forecast, includes both the planned OPEC cutback of 800,000 barrels a day, plus involuntary losses of 600,000 barrels day in the first quarter from Iran and Venezuela -- both of whom are exempt from making voluntary cuts. In the second quarter, the pair’s reduction will rise to 900,000 barrels a day, the IEA said. If the agency’s assumptions are correct, global oil inventories could shrink substantially in the second quarter, a phenomenon that’s often accompanied by rising prices.
Market Could be Oversupplied by 2020 - The market could be quite tight in the first half of 2019 but oversupplied again by 2020, according to a new industry note from Jefferies, which was sent to Rigzone on Thursday. “The combination of OPEC+ cuts, curtailments in Canadian production and further sanctions-related declines in Iranian exports should be sufficient to drive OECD inventories back below their trailing five-year average during 1H19,” the note stated. “The market could be quite tight and the forward curve could very well shift into backwardation. We estimate the market will be undersupplied by 800,000 barrels per day in 1H if OPEC adheres to its production targets,” the note added. Jefferies warns in its note however that U.S. growth looms. “U.S. growth will almost inevitably re-accelerate in 2H19 as incremental pipeline capacity is installed in the Permian Basin. This means that by early 2020 the market could move back into oversupply,” the note stated. “By 2020 the Saudis would need to reduce their production to 9.2 million barrels per day to keep the market in balance. We are thus lowering our Brent price forecast to $65.75 per barrel from $75.00 per barrel in 2019 and to $62.75 per barrel from $70.00 per barrel in 2020,” the note added. OPEC+ production cuts are effective as of January 2019 for an initial period of six months. The contributions from OPEC and non-OPEC will correspond to 800,000 barrels per day and 400,000 barrels per day, respectively. The next OPEC and non-OPEC ministerial meeting is scheduled to convene in Vienna, Austria, in April next year. OPEC was described as “alive and well and highly relevant” following the announcement of its latest output cut deal in a Fitch Solutions Macro Research (FSMR) report. FSMR is forecasting Brent to average $75 per barrel next year. Wood Mackenzie’s Vice President of Macro Oils, Ann Louise Hittle, believes a production cut of 1.2 million barrels per day would tighten the oil market by the third quarter of 2019 and cause prices to rise back above $70 per barrel for Brent.
Why The OPEC+ Deal Won't Cut It - Now nearly a week removed from the OPEC+ agreement, confidence in the efficacy of the deal is becoming shaky.Immediately after OPEC+ announced cuts of 1.2 million barrels per day (mb/d), a flurry of reports from oil analysts and investment banks congratulated the group on a job well done. After all, the 1.2 mb/d figure was larger than the market had anticipated.However, reality is beginning to set in. First, the cuts might not be realized in January, despite the promise. Russia indicated that it was going to slow walk the cuts, phasing in an initial 50,000 to 60,000 bpd in reductions in January. This is significant because Russia is the main actor in the non-OPEC cohort. The non-OPEC group is expected to slash output by 400,000 bpd, but if Russia is only going to do its part gradually over the next few months, the non-OPEC cuts might not reach the promised levels anytime soon. Moreover, because there are no country-specific allotments, it will be hard to hold any producer accountable.That undermines confidence in the deal.“Compared to early last week, the outcome was rather disappointing, the whole process wasn’t convincing, and it’s still uncertain whether they will actually cut,” ABN Amro senior energy economist Hans van Cleef told Bloomberg.While oil traders are suddenly doubting the integrity of the deal, even if OPEC+ were to adhere to its promised cuts, it still might not be enough. That’s because there are other factors that could leave the market oversupplied. Cracks in the global economy are growing, demand is showing signs of strain, and supply continues to rise.The EIA just issued its latest Short-Term Energy Outlook, and the agency still expects significant production growth from U.S. shale despite the downturn in prices. The EIA lowered its forecasted 2019 WTI prices by $10 per barrel from its previous report, yet it kept its supply forecast unchanged – it still thinks that U.S. oil production will rise from 10.9 mb/d in 2018 to 12.1 mb/d in 2019, despite the significant downward revision in prices. In other words, U.S. shale production may not be slowed by the recent downturn in prices in any dramatic way, and at the same time, with its production cut agreement, OPEC+ reassured shale executives that it wouldn’t let prices fall any lower. “The US is not only the world’s largest oil producer at present, but will also remain the leading marginal producer in future,” Commerzbank said in a note.
Saudi Arabia Sets Up a Scrappy New Year With Trump -- If Friday’s last-minute deal by the OPEC-plus group sparks a big rally in oil prices, then it and Saudi Arabia, especially, can probably expect a few holiday tweets from a certain president. Judging from comments made by Khalid Al-Falih, the country’s energy minister, they seem to expect as much.OPEC says it will cut 800,000 barrels a day of production starting in January, while its 10 partner countries have pledged to take out 400,000 a day. Oil prices jumped, erasing the plunge that followed Thursday’s inconclusive meeting. Even so, Brent crude oil is still only at $63 a barrel. That could change, however, if Saudi Arabia follows through on comments made by Al-Falih at Friday’s press conference.While the group didn’t give specific quotas for each member, the overall figure implies a cut of 3 percent versus October production except for the three countries exempted (Iran, Libya and Venezuela). That would mean Saudi Arabia going from about 10.6 million barrels a day to 10.3 million. However, Al-Falih said the country produced 11.1 million barrels in November and guided for 10.2 million barrels a day in January, when the cuts are due to begin. So rather than cutting 300,000 barrels a day, Saudi Arabia may be taking out three times that amount in the near term, more than OPEC’s entire pledge.That sharp cutback looks designed to mitigate the seasonal slowdown in oil demand. While OPEC’s forecasts imply a pre-cut surplus next year of almost 1.5 million barrels a day, the figure for the first quarter is almost 1.8 million barrels a day. If Saudi Arabia held that January level for the whole quarter, and the rest of the OPEC-plus group fulfilled their obligations, then the overall cuts would almost exactly match that projected surplus, wiping it out. Saudi Arabia’s move could push oil prices back toward the $70 or $80 level where Trump’s twitter fingers get itchy.
Free Gas Over Yemen's Skies- Saudi Jets Refueled By American Taxpayers Due To Accounting Errors - The White House wants to stay the course in Yemen even as the Senate is set to push back against US military support to the Saudi-led bombing campaign. But now a bombshell report reveals the Pentagon has been fueling Saudi and UAE jets free of charge due to "errors in accounting where DoD failed to charge" according to US defense officials. The huge significance is summarized in the opening lines of The Atlantic report which broke the story over the weekend: President Donald Trump, who repeatedly complains that the United States is paying too much for the defense of its allies, has praised Saudi Arabia for ostensibly taking on Iran in the Yemen war. It turns out, however, that U.S. taxpayers have been footing the bill for a major part of the Saudi-led campaign, possibly to the tune of tens of millions of dollars.For the entire three-and-a-half years of the program, the Pentagon never had an official servicing agreement in place with the Saudis and further never informed Congress.The vital refueling role that the US military has played in the war goes back to March 2015 and is reported to be "enormously expensive". The recipient country, in this case the Saudis, is required by law to pay the costs but the Pentagon now admits "they in fact had not been charged adequately" in an official DoD letter obtained by The Atlantic.The Pentagon is now “currently calculating the correct charges” but it's unclear if the missing funds going back years — footed by the American taxpayer — will ever be obtained especially as the DoD doesn't even know what it's owed. Information on the "accounting errors" began to emerge after Senators asked defense officials last March to account for Saudi coalition refueling costs. After eight months, just a day ahead of the Nov. 28 Senate vote to debate ending the war in Yemen, the Pentagon admitted it could answer this question. Senator Jack Reed, the top Democrat on the Senate Armed Services Committee, told The Atlantic that likely "tens of millions of dollars" worth of fuel was supplied to the Saudi coalition for free. However, this figure (again which the Pentagon says it can't account for) is possibly in the hundreds of millions, considering the following: Records provided by the Defense Logistics Agency this March indicated that since the start of fiscal year 2015 (October 2014), more than 7.5 million gallons of aerial refueling had been provided to the UAE, and more than 1 million gallons to the Saudis. Those figures were for all aerial refueling, not necessarily only related to operations in Yemen.
Warring Sides in Yemen Agree to Truce in Key Port City - NYT— Yemen’s warring parties have agreed to a cease-fire in the crucial port city of Hudaydah, the United Nations chief said on Thursday, announcing the biggest step toward peace in years for a war that has produced the world’s worst humanitarian crisis.The Saudi-led coalition and Houthi rebels have agreed to withdraw their forces from Hudaydah, the main conduit for humanitarian aid entering Yemen, and to implement a cease-fire in the surrounding province, Secretary General António Guterres told reporters.He made the announcement in Rimbo, Sweden, at the end of a week of negotiations intended to pave the way for full peace talks. Amid smiles and handshakes, representatives from the two sides also agreed to a prisoner exchange involving as many as 15,000 people, and to allow a humanitarian corridor into the city of Taiz, Yemen’s third-largest city. They agreed to meet again in January.The terms of the deal announced by Mr. Guterres were vague in places, with talk of a “mutual redeployment” to stop the fighting in Hudaydah, and a “leading role” for the United Nations in the city. The United Nations is due to oversee the withdrawal of all combatants from the city within 21 days, but there was little detail about how that will happen.Although the agreement offered a glimmer of hope for a conflict whose dire toll has drawn global outrage, numerous earlier peace efforts in Yemen have quickly crumbled, and analysts warned that this one required urgent, concerted international support to save it from a similar fate.
Mohammed bin Salman, Regional Menace - Hisham Melhem has written a searing denunciation of Mohammed bin Salman’s disastrous foreign policy record and his destabilizing domestic power grabs. Here he calls out the crown prince’s responsibility for the destruction and starvation of Yemen: But the culprit responsible in the main for condemning the country once known as Arabia Felix for an agonizing slow death is Saudi Arabia. For this reason alone, Mohammed Bin Salman should be boycotted by the democracies of the world. The war on Yemen has been the crown prince’s signature policy, and it was the very first thing that he did after he was made defense minister by his father. The reckless decision to intervene and the stupid determination to persist in an unwinnable war told us everything we needed to know about Mohammed bin Salman’s judgment and competence a long time ago, but unfortunately it took several more years and many more outrages and crimes for a lot of people to catch on that he was a menace and a war criminal rather than a reform-minded visionary. It isn’t surprising that someone as ignorant and hapless as Jared Kushner has been taken in by Mohammed bin Salman, but what is everyone else’s excuse? Many American policymakers and politicians have downplayed and whitewashed Saudi coalition crimes in Yemen because of our government’s involvement in the disaster, and some of them are so obsessed with Iran that they have been prepared to ignore or explain away any number of atrocities as long as they can claim that opposing Iran is the goal. Mohammed bin Salman hasn’t had many successes in the last few years, but he did know which buttons to push to get credulous Western pundits, businessmen, and politicians to fawn over him as if he were Ataturk reborn. To their lasting discredit, the crown prince’s fan club were more concerned with “rooting” for his success than they were about the lives of Yemeni civilians and the rights of his many jailed, tortured, and murdered critics. Every puff piece profile of Mohammed bin Salman has been sure to mention that he permitted women to drive, but there have not been nearly as many articles talking about the torture of women’s rights activists detained by the Saudi government: Following the interrogations, sources said, the women showed physical signs of torture, including difficulty walking, uncontrolled shaking of the hands, and red marks and scratches on their faces and necks. At least one of the women attempted to commit suicide multiple times, the sources said.
MbS Tries to Restart the Lebanese War - The record of Crown Prince Mohammed bin Salman (MbS) as de facto ruler of Saudi Arabia has included a trail of regional destabilization. Foremost on this record has been an air war in Yemen that has turned that nation into a humanitarian disaster. Other entries on MbS’s foreign affairs resumé have included extraterritorial reprisals against domestic critics (most notably the murder in a consulate in Turkey of Jamal Khashoggi) and an attempt to foment a governmental crisis in Lebanon by detaining its prime minister and coercing him into a short-lived resignation. Now the Lebanese-American journalist Hisham Melhem reports another attempt by MbS to destabilize Lebanon—one that, if successful, would involve nothing less than restarting the Lebanese civil war that raged from 1975 until the end of the 1980s. MbS reportedly tried to drum up interest in both Washington and Beirut in a scheme to arm the Lebanese Forces, the Christian-dominated Lebanese political party that, despite its name and its history during the civil war as a militia, has renounced violence and no longer has a military wing. The purpose of such arming would be to turn the party into a lethal opponent of Hezbollah. MbS failed to get support for his project, but that did not stop him from a parallel effort to interest Palestinian leader Mahmoud Abbas in arming Palestinians in Lebanon to make them combatants in a fight against Hezbollah. Abbas politely rejected the proposal. The Lebanese civil war had significant negative repercussions beyond Lebanon’s boundaries, including on U.S. interests. The world, the region, and the United States do not need that war to resume. External actors had major effects on the war, some positive. Saudi Arabia, then ruled by King Fahd, played a key role in brokering the power-sharing agreement, signed in the Saudi city of Taif, that brought most of the fighting in Lebanon to an end.
How a chilling Saudi cyberwar ensnared Jamal Khashoggi - When Jamal Khashoggi entered the Saudi Consulate in Istanbul on Oct. 2, he didn’t know he was walking into a killing zone. He had become the prime target in a 21st-century information war — one that involved hacking, kidnapping and ultimately murder — waged by Saudi Crown Prince Mohammed bin Salman and his courtiers against dissenters. How did a battle of ideas, triggered by Khashoggi’s outspoken journalism for The Post, become so deadly? That’s the riddle at the center of the columnist’s death. The answer in part is that the United States, Israel, the United Arab Emirates and other countries that supported Saudi counter-extremism policies helped sharpen the double-edged tools of cyberespionage that drove the conflict toward its catastrophic conclusion in Istanbul. Ground zero in this conflict was the Center for Studies and Media Affairs in Riyadh, run by Saud al-Qahtani, a smart, ambitious official in the royal court who played Iago to his headstrong, sometimes paranoid boss. Qahtani and his cyber colleagues worked at first with an Italian company called Hacking Team, and then shopped for products produced by two Israeli companies — NSO Group and its affiliate, Q Cyber Technologies — and by an Emirati firm called DarkMatter, according to many knowledgeable sources who requested anonymity to discuss sensitive intelligence matters. Gradually, Qahtani built a network of surveillance and social-media manipulation to advance MBS’s agenda and suppress his enemies. For the Saudis, as for Russian hackers in their assault on the 2016 U.S. presidential election, the information space became a zone of warfare. The weapons of defense and offense became interchangeable. As one European intelligence official told me ruefully: “The tools you need to combat terrorism are the same ones you need to suppress dissent.” The Saudis pushed hard on this double throttle. “Every new surveillance tool has a potential for abuse. That’s why in this country, we have a robust system of law and even a special court to oversee how they are used. In places with fewer legal protections for individuals and no real oversight from other parts of government, these tools are easily abused, and that should concern us all.”
Iran Confirms Pompeo's Charge Of Testing New Ballistic Missile "Capable Of Hitting Europe" - Iranian media has quoted a senior Revolutionary Guards commander on Tuesday as confirming Iran had recently carried out a ballistic missile test, which is the first time the country has owned up to allegations made by US officials previously this month. The confirmation appeared in the semi-official Fars News Agency and is the first time Iran affirmed charges made by US Secretary of State Mike Pompeo, who earlier this month said Iran had test-fired “a medium range ballistic missile that is capable of carrying multiple warheads.” Pompeo made the charge on December 1st while calling on Iran "to cease immediately all activities relating to ballistic missiles designed to be capable of delivering nuclear weapons." The "senior IRGC commander" did not specify precisely what type of missile had been tested, nor the range or capabilities. Though Pompeo's identifying it as a "medium-range" missile means it would be capable of hitting southeastern EU states, according to recent reports. Despite US condemnation, Iranian leaders have remained defiant after the US pullout of the 2015 JCPOA last May. Brigadier General Amirali Hajizadeh, head of the Revolutionary Guards’ airspace division, told Iranian media, “We will continue our missile tests and this recent action was particularly significant.” And he added: “The reaction of the Americans shows that this test was very important for them and that’s why they were shouting.”The IRGC airspace division commander further said Iran carries out out up to 50 missile tests a year, and that it would continue to doing so; however, he denied pursuing nuclear-capable missiles and described the program as "defensive" in nature.
Lira Tumbles After Erdogan Says Turkey Will Launch New Military Operation In Syria "In Days" - The Turkish Lira tumbled to session lows after President Recep Tayyip Erdoğan said that Turkey will start a new military operation in Syria east of the Euphrates river in northern Syria in a "few days". "It is time to realize our decision to wipe out terror groups east of the Euphrates," Erdogan said in a speech at the Turkish Defense Industry Summit held at the presidential complex in Ankara on Dec. 12."We will start the operation in east of the Euphrates in a few days to save it from the separatist terrorist organization," Erdoğan added, referring to the YPG. "Turkey's target is never the U.S. soldiers, but rather the members of the terror group."Turkey has repeatedly threatened to attack Kurdish militants in the region, who are backed by the U.S. but viewed by Turkey as an extension of a terrorist organization, the PKK.The Pentagon had announced on Dec. 11 that American observation posts in northern Syria, meant to prevent altercations between the Turkish army and US-supported YPG, have been erected, despite Ankara’s request to scrap the move. The Turkish army since 2016 has already launched two military operations in Syria, the last of which saw Ankara-backed Syrian rebels take the border city of Afrin from the YPG in March.the United States has long been complained that tensions between Turkey and the SDF, of which the YPG is the backbone, have at times slowed down progress on fighting the ISIL.In the same speech, Erdoğan also slammed the new US plan for 'protecting terrorists, not Turkey.'"There is no Daesh threat in Syria any longer," Erdoğan said accusing the U.S. of "delaying tactics" regarding its promise to clear the northeastern Syrian town of Manbij from YPG members. "It is clear that the purpose of U.S. observation points in Syria is not to protect our country from terrorists but protect terrorists from Turkey," he noted.
“Unacceptable”: Pentagon Warns Against Turkish Invasion of Syria — The latest in months of such threats, Turkish President Recep Tayyip Erdogan announced Wednesday that Turkish forces will invade northeastern Syria “within a few days,” aiming to clear all territory held by the Kurdish YPG east of the Euphrates River. This is virtually all of the territory east of the Euphrates within Syria. The Pentagon responded to Erdogan’s threat by saying any Turkish invasion would be “unacceptable” and a grave concern to the US military forces present in Syria. Pentagon spokesman Commander Sean Robertson warned that the war against ISIS is not over and the Kurds are a “committed partner” against them. Kurdish officials have warned that a Turkish invasion would derail their fight against ISIS further to the south. Early in the Kurdish offensive against ISIS, they’d also had to withdraw for a time because of Turkish threats. Turkey has repeatedly attacked Kurdish territory in Syria throughout the Syrian War, and Erdogan had previously insisted that the Kurds could hold no land west of the Euphrates. Now, he is vowing to clear out all land east of the Euphrates as well. But Erdogan has threatened to attack this area a lot of times, without having done so before. US officials have made efforts to placate him with promises of observation posts on the border, though Erdogan is now accusing the US of building such posts to protect the “terrorists” and not Turkey.
15,000 Syrian Rebels Ready to Back Turkish Military Against US-Backed Forces — Up to 15,000 Syrian rebels are ready to join a Turkish military offensive against US-backed Kurdish forces in northeast Syria, but no date has been set for the operation, a spokesman for the main Turkish-backed Syrian rebel group said on Thursday, reported Reuters. #Infographic: More than 1.5 million #Syrians are now living with permanent, war-related impairments. READ: http://ow.ly/8l7f30l7Z47
No comments:
Post a Comment