Monday, May 20, 2019

horizontal drilling at a 14 month low; April's global oil supplies short of demand despite flat OPEC output

oil prices rose for the first time in four weeks this week, as the threat that hostilities in the Middle East would disrupt global oil supplies overshadowed the rapidly deteriorating trade dispute between the US and China...after falling 28 cents to $61.66 a barrel on a resumption of that trade war last week, prices of US crude for June delivery initially rose to as high as $63.33 a barrel early Monday on news that four ships, including two Saudi oil tankers, had been sabotaged off the UAE coast, just outside the Strait of Hormuz, but then gave up those gains and fell with Wall Street as a negative turn in the U.S.-Chinese trade talks spooked markets, with oil prices ending the day 1% lower at $61.04 a barrel...oil prices then opened lower on Tuesday but again jumped higher after Saudi Arabia reported a drone attack against its pipeline infrastructure that disabled two pumping stations and sent WTI crude to a gain of 74 cents, or 1.2 percent, at $61.78 a barrel...oil prices opened lower Wednesday on the Tuesday evening API report of a massive build of US crude inventories, but shrugged off that increase in crude stockpiles even when confirmed by the EIA later in the day to settle 24 cents higher at $62.02 per barrel....oil prices then jumped as much as 2% higher on Thursday after the Saudis launched air strikes in retaliation for the attacks on their pipeline infrastructure before settling 85 cents higher at $62.87 per barrel, the highest close in two weeks...oil prices then fell 11 cents to $62.76 a barrel on Friday on fears of falling demand due to a worsening standoff in Chinese-U.S. trade talks, but still ended the week with an increase of 1.8% on the deteriorating developments in the Middle East...

natural gas prices also ended the week higher, boosted by forecasts of much warmer than normal temperatures over the major power demand centers from the middle of the U.S. to the East Coast, as yet another above-normal inventory build was brushed off as natural gas for June delivery ended the week 1.2 cents higher at $2.631 per mmBTU...the natural gas storage report for the week ending May 10th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 106 billion cubic feet to 1,653 billion cubic feet by the end of the week, which meant our gas supplies were 130 billion cubic feet, or 8.5% more than the 1,523 billion cubic feet that were in storage on May 11th of last year, while still 286 billion cubic feet, or 14.7% below the five-year average of 1,939 billion cubic feet of natural gas that have typically been in storage as of the second weekend in May in recent years....this week's 106 billion cubic feet injection into US natural gas storage was in line with estimates from surveys of analysts of a 104 billion cubic foot increase in supplies, while it was somewhat higher than the 88 billion cubic feet of natural gas that have historically been added to gas storage during the same week of May....this week's increase was the seventh 5 year seasonal high injection in a row, and the 498 billion cubic feet of natural gas that have been added to storage over the past 5 weeks was the most natural gas added to storage over 5 continuous weeks since a record 562 billion cubic feet week added over the 5 weeks to June 20, 2014

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending May 10th, showed a sizable addition to our commercial supplies of crude for the sixth time in eight weeks, as a massive amount of crude oil that could not be unaccounted for shifted from the demand side to the supply side of the petroleum balance sheet...our imports of crude oil rose by an average of 919,000 barrels per day to an average of 7,612,000 barrels per day, after falling by an average of 721,000 barrels per day over the prior week, while our exports of crude oil rose by an average of 1,025,000 barrels per day to 3,347,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,265,000 barrels of per day during the week ending May 10th, 106,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be down by 100,000 barrels per day to 12,100,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,365,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 16,676,000 barrels of crude per day during the week ending May 10th, 271,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 524,000 barrels of oil per day were added to the oil that's in storage in the US....​hence, ​we can see that ​this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 835,000 barrels per day short of what was added to storage plus what the oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+835,000) 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"....with a switch in the unaccounted oil figure from -856,000 last week to +835,000 this week, we have to figure that both weeks' crude oil metrics are​ off by statistically significant amounts, and that week over week comparisons are essentially meaningless... (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) indicated that the 4 week average of our oil imports rose to an average of 7,217,000 barrels per day last week, still 9.6% less than the 7,986,000 barrel per day average that we were importing over the same four-week period last year...the 524,000 barrel per day increase in our total crude inventories ​was due to a​ 776,000 barrels per day addition to our commercially available stocks of crude oil, which was partially offset by a 252,000 barrel per day withdrawal from the oil stored in our Strategic Petroleum Reserve, part of a release from our reserves intended to blunt the shortage of crude in the Gulf resulting from the Venezuelan oil export sanctions...this week's crude oil production was reported to be 100,000 barrels per day lower at 12,100,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,600,000 barrels per day, while a 5,000 barrel per day increase to 481,000 barrels per day in Alaska's oil production was not enough to impact the final rounded national total...last year's US crude oil production for the week ending May 11th was at 10,723,000 barrels per day, so this reporting week's rounded oil production figure was 12.8% above that of a year ago, and 43.6% 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...    

meanwhile, US oil refineries were operating at 90.5% of their capacity in using 16,676,000 barrels of crude per day during the week ending May 10th, up from 88.9% of capacity the prior week, but still a bit below the historical refinery utilization rate for this time of year....however, the 16,676,000 barrels per day of oil that were refined this week were a bit more than the 16,635,000 barrels of crude per day that were being processed during the week ending May 11th, 2018, when US refineries were operating at 91.1% of capacity... 

even with the increase in the amount of oil being refined, gasoline output from our refineries was still somewhat lower, decreasing by 217,000 barrels per day to 9,912,000 barrels per day during the week ending May 10th, after our refineries' gasoline output had increased by 202,000 barrels per day the prior week....with that decrease in gasoline output, this week's gasoline production was 5.3% below than the 10,462,000 barrels of gasoline that were being produced daily during the same week last year....​however, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 175,000 barrels per day to 5,264,000 barrels per day, after that distillates output had decreased by 39,000 barrels per day the prior week...with this week's increase, the week's distillates production was 4.6% more than the 5,031,000 barrels of distillates per day that were being produced during the week ending May 11th, 2018.... 

with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week fell for the twelfth time in 13 weeks, decreasing by 1,123,000 barrels to 225,024,000 barrels over the week to May 10th, after gasoline supplies had fallen by 596,000 barrels over the prior week....our gasoline supplies fell even though the amount of gasoline supplied to US markets decreased by 723,000 barrels per day to 9,148,000 barrels per day, after increasing by 643,000 barrels per day the prior week, because our exports of gasoline rose by 294,000 barrels per day to 785,000 barrels per day while our imports of gasoline fell by 362,000 barrels per day to 752,000 barrels per day...so even after having reached an all time record high sixteen weeks ago, our gasoline supplies are now 3.0% lower than last May 11th's inventory level of 232,014,000 barrels, and remain roughly 2% below the five year average of our gasoline supplies at this time of the year...  

with the increase in our distillates production, our supplies of distillate fuels rose for the first time in 9 weeks, but only by 84,000 barrels to 125,647,000 barrels during the week ending May 10th, after our distillates supplies had decreased by 159,000 barrels over the prior week....our distillates supplies inched up even as the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 198,000 barrels per day to 4,094,000 barrels per day, as our exports of distillates fell by 128,000 barrels per day to 1,199,000 barrels per day while our imports of distillates fell by 70,000 barrels per day to 41,000 barrels per day ...​but even ​with this week's inventory decrease, our distillate supplies were ​still ​9.3% higher than the 114,946,000 barrels of distillate that we had stored on May 11th, 2018, even as they remain roughly 2% below the five year average of distillates stocks for this time of the year...

finally, despite ​near--​record oil exports and rising refinery throughput, our commercial supplies of crude oil in storage increased for the twelfth time in 17 weeks, rising by 5,431,000 barrels, from 466,604,000 barrels on 3rd to 472,035,000 barrels on May 10th....that increase​ ​lifted our crude oil inventories to 2% ​above the recent five-year average of crude oil supplies for this time of year, and to more than a third higher than the prior 5 year (2009 - 2013) average of crude oil stocks as of the first weekend in May, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of May 10th were 9.1% above the 432,354,000 barrels of oil we had stored on May 11th of 2018, but at the same time still 9.4% below the 520,772,000 barrels of oil that we had in storage on May 12th of 2017, and 7.4% below the 509,797,000 barrels of oil we had stored on May 13th of 2016...      

OPEC's Monthly Oil Market Report

next we're going to review OPEC's May Oil Market Report (covering April OPEC & global oil data), which was released on Tuesday of this past week and 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 57 of that report (pdf page 67), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to thus resolve any potential disputes that could arise if each member reported their own figures...

April 2019 OPEC crude output via secondary sources

as we can see from this table of official oil production data, OPEC's oil output fell by 3,000 barrels per day to 30,031,000 barrels per day in April , from their revised March production total of 30,034,000 barrels per day...however that March figure was originally reported as 30,022,000 barrels per day, so that means their production for April was, in effect, a 9,000 barrel per day increase from the previously reported figures (for your reference, here is the table of the official March OPEC output figures as reported a month ago, before this month's revisions)...

the largely involuntary Iranian output cuts of 164,000 barrels per day due to US sanctions on their exports were more than offset by increases in output from Iraq, Libya and Nigeria, which also served to offset production cuts from Saudi Arabia and Angola...the 28,000 barrels per day increase in output from Venezuela is a bit of a surprise; considering recent media reports that their production had continued to fall under pressure of the US led coup attempts...meanwhile, the 113,000 barrels per day increase in the output from Iraq now puts them back over the output allocations assigned to each member after their December 7th meeting, when OPEC agreed to cut 800,000 barrels per day as part of a 1.2 million barrel per day cut agreed to with Russia and other oil producers, as does the 92,000 barrels per day increase in the output from Nigeria, as can be seen in the table of OPEC production allocations we've included below:

February 6 2019 Platts on OPEC allocations

the above table came from a February 6th post on Saudi cuts and OPEC allocations at S&P Global Platts, and shows average daily production quota in millions of barrels of oil per day for each of the OPEC members for the first 6 months of this year, as was agreed to at their December 2018 meeting...note that Venezuela and Iran, whose oil exports are being sanctioned by the Trump administration, and Libya, which has been beset by disruptive civil strife, are exempt from any production quotas, and that only Libya had produced any more than they did in the 4th quarter of 2018, as ​can be seen in the fifth column of the OPEC production table above...

the next graphic we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from May 2017 to April 2019, and it comes from page 58 (pdf page 68) of the April OPEC Monthly Oil Market Report....on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale... 

April 2019 OPEC report global oil supply

despite the small increase in OPEC's production from what they reported a month ago, their preliminary estimate indicates that total global oil production fell by 0.07 million barrels per day to 98.82 million barrels per day in April, but that came after March's total global output figure was revised down by 310,000 barrels per day from the 99.26 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production fell by a rounded 70,000 barrels per day in April after that revision, with lower oil output from Kazakhstan, Canada, China and Russia the major reasons for the non-OPEC production decrease.... the 98.82 million barrels per day produced globally in April was ​still 1.05 million barrels per day, or 1.1% higher than the revised 97.77 million barrels of oil per day that were being produced globally in April a year ago (see the May 2018 OPEC report (online pdf) for the originally reported March 2018 details)...with little change in OPEC's output, their April oil production of 30,031,000 barrels per day represented 30.4% of what was produced globally during the month, up from the 30.2% share they reported for March, before revisions increase​d​ their March global share to 30.4%....OPEC's April 2018 production was reported at 31,930,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding Qatar from last year's total and new member Congo from this year's, are now producing 1,664,000 fewer barrels per day of oil than they were producing a year ago, when they accounted for 32.6% of global output, with a 668,000 barrel per day decrease in the output from Venezuela and a 1,269,000 barrel per day drop in output from Iran from that time more than offsetting the year over year production increases of 188,000 barrels per day from the Emirates, 194,000 barrels per day from Libya, and 201,000 barrels per day from Iraq... 

the 70,000 barrels per day decrease in global oil output ​that was ​seen during April, combined with the 310,000 barrels per day downward revision to March's global output, meant there was a deficit in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us... 

April 2019 OPEC report global oil demand

the table above comes from page 34 of the May OPEC Monthly Oil Market Report (pdf page 44), and it shows regional and total oil demand in millions of barrels per day for 2018 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2019 over the rest of the table...on the "Total world" line in the third column, we've circled in blue the figure that's relevant for April, which is their revised estimate of global oil demand during the second quarter of 2019...

OPEC is estimating that during the 2nd quarter of this year, all oil consuming regions of the globe will using 99.20 million barrels of oil per day, which was revised 0.02 million barrels of oil per day higher than their estimate for the 2nd quarter a month ago....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were only producing 98.82 million barrels per day during April, which means that there was a shortfall of around 380,000 barrels per day in global oil production when compared to the demand estimated for the month...

in addition, the downward revision of 310,000 barrels per day to March's global output that's implied in this report, combined with the 30,000 barrels per day upward revision to 1st quarter demand ​that ​we've circled in green means that the 240,000 barrels per day global oil output surplus we had figured for March would now be revised to a deficit of 100,000 barrels per day....however, that follows a revised 350,000 barrel per day global oil output surplus in February and a revised 260,000 barrel per day global oil output surplus in January, so despite OPEC cuts of more than 1.6 million barrels per day in the first quarter of this year, a small global oil surplus for the year to date still persists... 

we should also note that the previous estimate for 2018's oil demand was revised 30,000 barrels per day higher with this report, which we've also highlighted ​with​in that green ellipse...the 2018 demand table on page 33 of the May OPEC Monthly Oil Market Report (pdf page 43) indicates that demand revision was spread evenly across the year, so that means that for all of 2018, global oil demand exceeded production by roughly 18,040,000 barrels, still a comparatively small net oil shortfall that would be the equivalent of less than four hours and twenty minutes of global production at the December production rate...  

This Week's Rig Count

the US rig count was down by just one this past week, but that still meant it was at another 14 month low and continued the ongoing slide that has seen drilling rig activity decrease ​in ​twelve out of the last 13 weeks....Baker Hughes reported that the total count of rotary rigs running in the US fell by 1 rig to 987 rigs over the week ending May 17th, which was also down by 59 rigs from the 1046 rigs that were in use as of the May 18th report of 2018, and quite a bit below 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 fell by 3 rigs to 802 rigs this week, which was also 42 fewer oil rigs than were running a year ago, and less than half of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 2 rigs to 185 natural gas rigs, which was still down by 15 rigs from the 200 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

drilling activity offshore in the Gulf of Mexico increased by 2 rigs to 22 rigs this week, as 3 rigs were added offshore from Louisiana, where there are now 20, and one rig was shut down in Texas offshore waters, where just two rigs remain offshore...those totals are up from a year ago, when 18 rigs were deployed offshore, 17 in Louisiana waters, and one offshore from Texas...

the count of active horizontal drilling rigs was down by 6 to 866 horizontal rigs this week, which was also 53 fewer horizontal rigs than the 918 horizontal rigs that were in use in the US on May 18th of last year, and well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...that is the smallest number of horizontal rigs deployed since March 9th 2018, and means that horizontal rigs are also now at a 14 month low....meanwhile, the vertical rig count was up by 3 rigs to 48 vertical rigs this week, which was still down from the 61 vertical rigs that were in use during the same week of last year...in addition, the directional rig count was up by 2 rigs to 73 directional rigs this week, but those were up by 7 rigs from the 66 directional rigs that were operating on May 18th of 2018... 

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 oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of May 17th, the second column shows the change in the number of working rigs between last week's count (May 10th) and this week's (May 17th) count, the third column shows last week's May 10th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before 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 18th of May, 2018...       

May 17 2019 rig count summary

as ​you can see, there was a 4 rig increase in Ohio's drilling activity this week, despite the pullbacks elsewhere, while the Utica shale only shows an increase of 3 rigs...since the North America Rotary Rig Count Pivot Table (xls) shows that only Utica natural gas rigs are active in Ohio, we can figure that the sole Utica shale rig that had been deployed in Pennsylvania was shut down this week, along with 2 Marcellus rigs that had been operating in the Keystone state, to bring the Utica rig count into balance...the Marcellus shale, meanwhile, shows a three rig decrease, because a Marcellus rig that had been operating in West Virginia was also shut down at the same time...in addition to those, 2 natural gas rigs were also shut down in the northwestern Louisiana portion of the Haynesville shale, but the national natural gas rig count still showed an increase of 2 rigs because ​a net of ​4 natural gas rigs were concurrently started up in basins not tracked separately by Baker Hughes, with Wyoming and Louisiana the most likely locations for those..

oil rigs, meanwhile, were shut down in Texas and also in Oklahoma, even though the Cana Woodford in central Oklahoma had an oil rig start up...in the Permian basin of western Texas, three rigs were shut down in Texas Oil District 8, which​ would be the core Permian Delaware, and three more were shut down in Texas Oil District 8A, or the northern Permian Midland basin, while two rigs were added in Texas Oil District 7C, or the southern Permian Midland basin...since the Permian ​basin ​shows a net 3 rig decrease, those Texas changes means that the rig that was added in New Mexico was deployed in the far western portion of the Permian Delaware...for the remaining changes in activity in Alaska, Oklahoma, and Wyoming, check out the North America Rotary Rig Count Pivot Table (xls), which lists the details on each rig deployment individually, ...

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Senate Bill 33 labeling some types of trespass a felony threatens Ohioans' rights - Editorial Board, cleveland.com and The Plain Dealer - A pernicious bill seeking to curtail Ohioans’ protest rights that died at the end of the last General Assembly session is back. And this time, Senate Bill 33 -- part of a nationwide effort to limit protest rights at natural gas pipelines -- appears to be headed for passage. Republican legislators in Ohio who treasure constitutional rights and the rule of law should push back.  SB 33 would make certain types of protest at “critical infrastructure facilities” like pipelines or telecommunications facilities a third-degree felony, which can carry a prison sentence of nine months to five years. It would also subject organizations supporting such protests to fines ten times the maximum now provided in Ohio law -- that is, up to $100,000 per violation. And whistle-blowers who warn of safety concerns at infrastructure projects could be subject to similar sanctions. The intent is obvious: to suppress protests or any impediments to such projects, curtailing Ohioans’ free-speech rights in the process, along with the right to peaceable assembly guaranteed in the state constitution.  In Ohio Senate testimony last month, Jen Miller, executive director of the League of Women Voters of Ohio, warned that the bill’s vague language could make something as innocuous as posting notice of a legal protest on a telephone poll subject to the bill’s criminal charges and fines. SB 33′s harsh penalties also could “intimidate whistleblowers” into remaining silent on safety hazards, Miller warned. As our editorial board noted in opposing a version of this bill that died at the end of last year, SB 33 is unneeded. Ohio already has perfectly adequate laws on criminal trespass, criminal mischief and aggravated trespass. Nor can backers of the law point to a single incident in Ohio that merits such legislation. Yet earlier this month, SB 33 flew out of the Ohio Senate on a largely party-line 24-8 vote, with the support of a number of usually level-headed local Republican lawmakers. They included Sens. John Eklund of Geauga County, Kristina Roegner of Summit County and Kirk Schuring of Stark County. The bill is now pending in the Ohio House Public Utilities Committee, led by Rep. Jamie Callender of Lake County. It should be shelved, for the good of all Ohioans and to preserve the free-speech rights that all of us treasure.

Strs Ohio Has $364000 Stake in ONEOK, Inc. - Strs Ohio grew its position in ONEOK, Inc. by 8.3% in the 1st quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission (SEC). The firm owned 5,226 shares of the utilities provider’s stock after buying an additional 400 shares during the period. Strs Ohio’s holdings in ONEOK were worth $364,000 as of its most recent SEC filing. ONEOK, Inc, together with its subsidiaries, engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates through Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines segments. The company owns natural gas gathering pipelines and processing plants in the Mid-Continent and Rocky Mountain regions.

Groundbreaking set today for gas-fired power plant in Columbiana County - A clean energy project that developers say will create hundreds of construction jobs is scheduled to get underway in southern Columbiana County today. South Field Energy LLC will hold a groundbreaking ceremony this afternoon for a new 1,182-megawatt, combined-cycle natural gas electric generating facility on 20 acres of land about three miles outside Wellsville. State-of-the art technology is designed to make the $1.1 billion plant an efficient and environmentally-friendly natural gas electric generating facility. The development of the site will employ approximately 1,000 construction workers and 25 full-time employees upon completion in mid 2021. Once in operation, South Field Energy will sell capacity and energy into PJM, the largest regional transmission organization within the United States. Avanced Power, which is behind the project, announced on Tuesday that it has sold a 15% membership interest in South Field Energy Partners LLC to ENEOS Power USA LLC, an affiliate of JXTG Nippon Oil and Energy Corporation, a leading oil and energy company in Japan. In addition to South Field Energy, Advanced Power also developed, financed and now manages the approximately 700 MW Carroll County Energy project in Carroll County, Ohio and approximately 1,100 MW Cricket Valley Energy project in Dover, New York. The South Field project is not the Valley's first natural gas generating facility. The Lordstown Energy Center has been generating 940-megawatts of power since its opening on Henn Parkway last fall. Clean Energy Future LLC plans to break ground this summer on 945-megawatt plant near the existing Lordstown plant.

Saltwater injection wells may be coming to Belmont County near St. Clairsville - Martins Ferry Times Leader— Residents near the intersection of U.S. 40 and Ohio 331 have learned that a pair of saltwater injection wells to hold fracking waste may be coming to the site.Property owners within 500 feet of the proposed site received notification in early April from Gerard Russomagno, CEO of the Omni Energy Group LLC out of New Jersey, informing them that the application has been filed with the Ohio Department of Natural Resources.“Our permit’s filed with them, with traffic patterns. Actually our traffic will be much less than (what people believe),” Russomagno said last week, adding that there will not be thousands of trucks on the route daily. “I can’t take more than I can put underground. Our maximum perceived capacity now, until we drill and find out, is coming at somewhere between six and eight trucks per hour.”He added that the area is zoned as commercial/industrial.“This is not a temporary facility,” he said. “We’re going to be here for quite some time.  I understand there’s some homeowners, and they own homes in an industrial/commercial zone. At some point whether it’s me or something else, there’s going to be some risk of some commercial industrial operation that has the right to operate on that property.”He said developing the property should be completed quickly should the permit be approved.“That part of the process we’re expecting to only take about 30 days in total,” he said, adding that the total property is a little less than seven acres and would hold two injector wells.

Injection Well Safeguards Vital – editorial - Truck traffic seems to be the primary concern on the minds of some people living near a site where two injection wells to accept fracking waste from oil and gas drilling are to be located. But state officials considering permits for the project should be focused on what may go on underground. Out of sight, out of mind won’t work on this one.A New Jersey firm, Omni Energy Group LLC, is planning the injection wells on a site of nearly seven acres near the intersection of U.S. 40 and Ohio 331 in Belmont County. Plans are for two saltwater injection wells.Though some residents of the area worry about increased heavy truck traffic, Omni Energy CEO Gerard Russomagno says that should not be a problem. No more than six to eight trucks per hour are expected to carry fracking waste to the wells, he explained. Ohio Department of Natural Resources officials say permits for the project are under review. How long that may require is uncertain. Some means of disposing of the enormous quantity of wastewater generated by modern oil and gas drilling is essential. Injection wells — pumping the fluid into underground chambers — are a popular choice.But ODNR officials must look carefully at potential environmental impact. One concern is ensuring fluid from the injection well does not migrate into drinking water supplies.Another worry is earthquakes. ODNR officials concluded a series of quakes in the Youngstown area more than seven years ago was caused by injection wells. The phenomenon is not yet understood well, according to the U.S. Geologic Survey. But the need for some safeguards against injection well quakes is known. ODNR officials should insist such measures be followed to the letter at the Belmont County site.

As Ohio Valley Ponders Plastics Growth, Report Warns Of Threat to Climate -  As a new plastics industry emerges in the Ohio Valley, a report by environmental groups warns that the expansion of plastics threatens the world’s ability to keep climate change at bay. The report released Wednesday by the Center for International Environmental Law, Environmental Integrity Project, FracTracker Alliance, and others used publicly available emissions data and original research to measure greenhouse gas emissions throughout the entire life cycle of plastics. That includes the  extraction of natural gas, used as a feedstock for plastic production, to the incineration of plastic products or their final resting place in the world’s oceans.“Ninety-nine percent of what goes into plastics is fossil fuels and their climate impacts actually start at the wellhead and the drill pad,” said Carroll Muffett, president of the nonprofitCenter for International Environmental Law and one of the authors of the report. “In light of the fact that the build-out of plastics infrastructure is ongoing and accelerating, we wanted to better understand the implications of that massive new build out of plastics infrastructure for the global climate.” The report estimates production and incineration of plastic this year will add more than 850 million metric tons of greenhouse gases to the atmosphere, or equal to the pollution of building 189 new coal-fired power plants.That figure will rise substantially over the next few decades as the demand for single-use plastic continues to grow, the report finds. By 2050, emissions from the entire plastics life cycle could account for as much as 14 percent of the earth’s entire remaining carbon budget.Plastics manufacturers are investing millions into new petrochemical plants, including in the Ohio Valley, driven by demand and cheap natural gas from the fracking boom. Shell’s Monaca ethane cracker plant currently under construction in Beaver County, Pennsylvania is permitted to release up to 2.25 million tons of greenhouse gas pollution annually. Similarly, Thailand-based PTT Global Chemical is seeking permits for a cracker plant in Belmont County, Ohio, across the Ohio River from West Virginia.  The plant would be permitted to release the equivalent carbon dioxide emissions of putting about 365,000 cars on the road. Muffett said that sort of increased investment in plastics manufacturing was one of the main reasons the groups decided to highlight the climate implications associated with plastics. “This petrochemical build-out is a key driver of plastics contribution to climate impacts now and in the future,” he said. “This build-out is going to lead to the production of massive quantities of new plastics. It's also going to lead to the incineration and disposal of massive amounts of new plastics.”

Why Not Store Highly Volatile Ethane in Caverns Under West Virginia? - The Appalachian Storage Hub (ASH), sometimes called the Appalachian Storage and Trading Hub, is a proposal for underground storage of various natural gas byproducts that could support a plastics industry. Natural gas is mostly methane, but in some formations, significant amounts of other gases and liquids (including propane, butane, and especially ethane) occur with the methane. These are usually separated from methane because they burn hotter or have more value for manufacturing purposes.Without a market, these may be “flared” (burned off to eliminate them). But converting ethane to ethylene and polyethylene makes the ethane valuable for plastics. The process requires multi-billion-dollar “cracker” plants, several of which are proposed for West Virginia and adjoining states to take advantage of the ready supply from the fracking boom and the large volumes of these liquids. But a cracker plant wants a steady supply of ethane, and the ASH is needed to store the large volumes needed. Neither the ASH nor the crackers are economically viable without the other. Proponents argue that the ASH is the key to $100 billion in investments and tens of thousands of jobs. In 2015, almost all nations signed the Paris Climate Agreement, committing these nations to reduce greenhouse gas emissions to keep global warming below 2o C, and striving for 1.5o C.  Construction of a large gas industry is fundamentally incompatible with that goal. Yet none of the proponents will discuss this issue, or even admit that it is real. None of the major investors in the ASH or cracker plants or related industries are including greenhouse gas mitigation in their business plans.  Ethane crackers create more demand for fracking and natural gas wells, pipelines and related facilities. These all emit methane, and some emit a lot. Methane is 84 times more effective at capturing heat than carbon dioxide (over a 20-year life span). Ethane crackers also use tremendous amounts of electricity, most of which is expected to come from fossil fuels. It is expected that the plastics industry will account for one-sixth of all greenhouse gas emissions by 2050. Most importantly, investments in fossil fuel infrastructure slow the transition to sustainable, renewable energy sources.

Significant Erosion & Sediment Violations Logged on Mountain Valley Pipeline - Developers of the Mountain Valley Pipeline have agreed to pay a fine of nearly $266,000 for violating environmental regulations in West Virginia. The agreement, outlined in a consent order from the West Virginia Department of Environmental Protection, marks the first financial penalty for problems with storm water runoff caused by building a 303-mile pipeline that will also cross the New River and Roanoke valleys. Photographs included in the 179-page document show a “drastic change” in streams since work on the buried pipeline began last winter, said Angie Rosser, executive director of the West Virginia Rivers Coalition. “These are clear-running streams and they have been forever,” Rosser said. “And you look at the photos now and they are just brown.” Mountain Valley faces similar issues in Virginia. A lawsuit filed in December by the Department of Environmental Quality alleges more than 300 violations of erosion and sediment control measures. Online court records indicate the case is still pending. In West Virginia, 26 notices of violation filed from April to November of last year were resolved by the consent order. The agreement, signed May 6 by Robert Cooper, Mountain Valley’s senior vice president for engineering and construction, states the company will pay a fine of $265,972 and submit a plan of corrective action to state regulators.

Mountain Valley Pipeline to pay $266,000 penalty for environmental violations — The Mountain Valley Pipeline and the West Virginia Department of Environmental Protection have entered into a consent order, and the MVP will be paying almost $266,000 for environmental violations. The Charleston Gazette-Mail reports that the agreement comes after several notices of violations that have been issued to the pipeline for violations that were discovered in Braxton, Wetzel and Monroe counties starting in April 2018. Several of the violations were discovered by citizens and reported to the DEP. The consent order contains around 150 pages of photos showing violations, mostly violations related to erosion and water contamination, according to the Charleston Gazette-Mail Penalties are calculated based on the potential that the violation has to harm the environment. The project was originally estimated to cost $3.7 billion and is now expected to cost $4.6 billion, and the completion date has been pushed back from the end of 2018 to the end of 2019, The Charleston Gazette-Mail reports. You must be logged in to react.

Pa. DEP orders Energy Transfer to fix damage to streams and wetlands -- Twenty-three streams that flowed through southwestern Pennsylvania before Energy Transfer built its Revolution pipeline have been filled with dirt. Seventeen wetlands no longer exist because of the 40-mile line, whose explosion in Center Township last September has brought even more scrutiny to the pipeline company that is already among the most investigated in the state. The early morning blast, caused by a landslide, has been followed by months of continuing violations of state laws meant to protect streams and wetlands. A month after the explosion, the Pennsylvania Department of Environmental Protection ordered Texas-based Energy Transfer to stop trying to repair the pipeline and focus instead on stabilizing the nearby ground. DEP also told the company to survey what damage it might have done to water resources along the path of the natural gas gathering line. Those findings — submitted in February — provided the foundation for the DEP’s new order issued on Monday, setting a timeline for Energy Transfer to do a more comprehensive search for unpermitted damage to water resources and to come up with a plan to repair that damage. According to the February report, Energy Transfer filled in 23 streams, about a dozen of which flowed into Raccoon Creek. It piled soil and dirt into portions of other streams, eliminating a total of 3,100 feet of streams along its right of way. The company also altered 70 wetlands, in addition to the 17 that were eliminated. The construction process caused 31 new wetlands and eight new streams to form. “The water that was flowing or being stored in these [altered] streams and wetlands had to go somewhere else,” explained DEP spokesman Elizabeth Rementer. “The erosional forces of the water basically carved out new stream channels.” Earth-moving activities such as laying pipelines do disturb some natural features, although “pipeline projects do not typically eliminate streams and wetlands,” Ms. Rementer said. “Any proposals to do so would have to be set forth in permit applications with appropriate justification.” The streams and wetlands that were part of Monday’s order exist outside of the permitting process. The DEP called them “illegal.”

Pennsylvania House debates bill to require compensation if Delaware River Basin Commission bans fracking — The state House Tuesday began debate on legislation that would require the Delaware River Basin Commission to compensate landowners for economic losses stemming from a possible ban on natural gas fracking. The bill being considered by the state House would mandate that landowners unable to benefit from natural gas drilling due to a current moratorium that could become a permanent ban be compensated as they would in an eminent domain action. The sponsor of the bill is northeastern Pennsylvania Republican Jonathan Fritz. “If the Delaware River Basin Commission is going to prevent a landowner from using his or her property, they must pay for that taking," Fritz said. Delaware and Montgomery counties Democrat Greg Vitali argues that the bill is unconstitutional. “The state of Pennsylvania unilaterally is attempting to interfere with a multi-state and federal compact," he said. The House Tuesday adjourned for the day without taking a vote on the bill.

Countdown for pipeline begins - At one minute before midnight May 15, a state regulator will decide whether to green-light the Williams Transco pipeline, which would travel across New York harbor to the Rockaway Peninsula. The $1 billion project, which will feed fracked gas to National Grid for the outer boroughs and Long Island, either will rescue builders from a looming moratorium on natural-gas hookups or threaten marine life and deepen dependence on fossil fuels.The choice, apparently, is Gov. Andrew Cuomo's. The Department of Environmental Conservation can block the project by deciding it does not meet water-quality standards. Because the route goes through New Jersey as well, Gov. Phil Murphy, whose deadline is June 5, also could forbid it.The politicians would then have to weather the storm that would ensue if National Grid denies, as promised, natural-gas service to new projects, including the Belmont Park redevelopment. The fight over the 24-mile pipeline has heated up as city Comptroller Scott Stringer—a foe—has squared off against Con Edison. The New York utility would not be connected to the tube but announced last month that it might declare its own moratorium in New York City if the project were nixed.

New York Regulators Block Underwater Natural Gas Pipeline - State regulators have denied a water quality permit for a 24-mile underwater pipeline that has drawn protests from environmental groups while backers say it's crucial for meeting rising demand for natural gas in New York City and Long Island.The Northeast Supply Enhancement project from New Jersey to Queens would expand the Transco pipeline, which extends from Texas to the Northeast coast. It would allow National Grid to bring natural gas from Pennsylvania's shale gas fields to the metropolitan region.Environmental groups say it threatens marine life and extends reliance on fossil fuels rather than renewable energy sources.The permit denial was announced Wednesday. A spokesman for pipeline developer Williams Partners says it will quickly resubmit the application. New Jersey regulators must also decide on the project by June 5

New York Rejects Keystone-Like Pipeline In Fierce Battle Over The State's Energy Future - In a major victory for environmental activists, New York regulators on Wednesday rejected the construction of a heavily disputed, nearly $1 billion natural gas pipeline, even as business leaders and energy companies warned that the decision could devastate the state’s economy and bring a gas moratorium to New York City and Long Island.The pipeline was planned to run 37 miles, connecting natural gas fields in Pennsylvania to New Jersey and New York. Its operator, the Oklahoma-based Williams Companies, pitched it as a crucial addition to the region’s energy infrastructure, one that would deliver enough fuel to satisfy New York’s booming energy needs and stave off a looming shortage.But environmental groups said Williams was manufacturing a crisis to justify a project that would rip apart fragile ecosystems, handcuff New York to fossil fuels and hobble the state’s march toward renewable resources. The result was an arcane but fevered battle over what was potentially New York’s most fraught environmental decision since it banned fracking in 2014. The fight also took on political overtones, as progressive activists pressed Gov. Andrew M. Cuomo to urge his Department of Environmental Conservation to reject the application, casting it as a threat to his environmental legacy.In a statement announcing the denial, the conservation department did not refer to the firestorm that had preceded its decision, aside from noting that it had received comments from more than 45,000 people about the project — 90 percent of whom opposed it. The department laid out its decision in technical terms, noting that construction would contaminate New York’s waters with mercury and copper. “Construction of the NESE pipeline project is projected to result in water quality violations and fails to meet New York State’s rigorous water quality standards,” the department said, referring to what is formally called the Northeast Supply Enhancement pipeline.

In U.S., New York latest to say no to natural gas infrastructure plans (Thomson Reuters) - A bid to build a controversial pipeline to boost New York’s natural gas supply was rejected by authorities on Wednesday, the latest manifestation of a nationwide divide over the United States’ energy future. The denial of the Northeast Supply Enhancement (NESE) project, whose plans included about 23 miles (37 km) of submarine pipeline off New York City’s coast, came as Washington state and Los Angeles also turned their backs on natural gas. The nearly $1 billion plan by energy infrastructure firm Williams was denied by the New York Department of Environmental Conservation, which cited concerns over water quality and aquatic life. “Construction of the proposed project would result in significant water quality impacts from the re-suspension of sediments and other contaminants, including mercury and copper,” it said in a statement. The decision comes a week after Washington state Governor Jay Inslee opposed two natural gas projects in his state, and three months after Los Angeles Mayor Eric Garcetti said the city would phase out natural gas operations at three power plants. In a statement, Williams lamented the decision and said it would resubmit an application to obtain the permits “quickly”. “The Department of Environmental Conservation raised a minor technical issue with our application for water quality certification,” said Chris Stockton, a Williams spokesman. Natural gas consumption has been growing steadily across the United States, totaling nearly 30,000 billion cubic feet last year, according to the U.S. Energy Information Administration. The NESE project would have added 0.4 billion cubic feet a day. It takes one billion cubic feet to supply about 5 million U.S. homes for a day. Though natural gas emits less planet-warming carbon dioxide than other fossil fuels, the pipeline would have been “a step in the wrong direction”, locking the country into a high-carbon future, said Robert Howarth, a professor at Cornell University. A landmark United Nations report on climate change said last year that to keep the Earth’s temperature rise to a 1.5 degrees C (2.7 F) target would require that renewable energy supply 70% to 85% of electricity by 2050, compared with about 25% now. 

Liquefied natural gas imports limited price spikes in New England this winter - During winter 2018–2019, imports of liquefied natural gas (LNG) at terminals serving New England played an important role in moderating natural gas prices in the region. LNG imports are regasified at these terminals and then sent to natural gas distribution networks. These sendout volumes increased during times of high spot natural gas prices at the Algonquin Citygate, a widely referenced trading hub and benchmark for natural gas prices in New England, effectively limiting further increases in spot prices. Spot natural gas prices in New England are more volatile during winter months when cold weather contributes to rising regional natural gas demand and leads to more congestion on the natural gas pipeline network. Because New England does not have underground natural gas storage infrastructure and is not a natural gas-producing region, LNG imports to the region can be a key marginal source of natural gas supply during times of high natural gas demand in the winter. During the bomb cyclone event in early January 2018, spot natural gas prices at Algonquin Citygate spiked to nearly $80 per million British thermal units (MMBtu) on January 4, 2018. During the most recent winter, daily prices at Algonquin Citygate remained lower than $14/MMBtu and averaged about $7/MMBtu in January and February. New England receives LNG imports from three regional regasification facilities: the Canaport LNG onshore terminal (1.0 billion cubic feet per day (Bcf/d) capacity) in New Brunswick, Canada; the Everett LNG onshore terminal (0.7 Bcf/d capacity), near Boston, Massachusetts; and the Northeast Gateway Deepwater Port offshore terminal (0.4 Bcf/d capacity), also near Boston. From November 2017 through March 2018, LNG imports into New England averaged 0.14 Bcf/d and peaked at 0.88 Bcf/d on January 6 during the bomb cyclone event. From November 2018 through March 2019, LNG imports into New England averaged 0.24 Bcf/d and peaked at 1.48 Bcf/d on February 1.

Hotter Weather Trends Help Give Natural Gas Prices A Boost -Natural gas prices advanced higher today, closing at their highest levels since the middle of April, with the June contract up nearly 1.5% on the day.  While the front of the curve led the charge, we saw some solid strength throughout the forward curve.   What factors led buyers into the market? One reason is that we saw a rather large dip in today's production data.   There can be some revisions to this data, but will likely remain as a decent day over day decline, even if only temporary.   The other bullish catalyst today? It was the weather. We continue to gradually add demand to the forecast over the next couple of weeks.   This comes as models converge on a persistent upper level trough over the western U.S, pumping up a strong downstream warm ridge over the eastern half of the nation, seen in today's 6-10 day GEFS modeling:   This results in much warmer than normal temperatures over the majority of demand centers from the middle of the U.S. to the East Coast.   The pattern type largely remains the same in the 11-15 day projections:   This will no doubt conjure up memories of a year ago, when the pattern turned hotter and stayed that way all summer long, leading to one of the hottest summers on record for the nation as a whole, contributing to the very low end-of-season natural gas storage levels at the end of Summer 2018. Is history going to repeat itself this year?

Another Big EIA Build, But Natural Gas Futures Rebound as Summer Heat Nears - With summer heat in the offing for the Southeast and Mid-Atlantic next week, natural gas futures rebounded Thursday as traders brushed off government storage data that continued the recent run of above-normal inventory builds. In the spot market, prices mostly pushed lower, with the largest declines recorded in California, West Texas and the Northeast; theNGI Spot Gas National Avg. dropped 5.0 cents to $2.160/MMBtu. The June Nymex futures contract settled 3.8 cents higher at $2.639 Thursday as the bulls reclaimed some of the ground they’d lost during a 5.8-cent sell-off the previous session. Models suggest the hotter temperatures won’t be “unending” like the pattern observed last year, with recent data “showing the heat relax as we head toward early June,” according to Bespoke. Meanwhile, the Energy Information Administration (EIA) on Thursday reported an on-target 106 Bcf weekly injection into U.S. natural gas stocks, and futures gained following the news. The 106 Bcf figure, covering the week ended May 10, compares with a 104 Bcf build recorded in the year-ago period and a five-year average 89 Bcf injection. Estimates prior to the report had EIA unveiling a low-triple-digit build in line with the actual number. Major surveys had pointed to a 104 Bcf build, with predictions ranging from 93 Bcf to 125 Bcf. Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at 105 Bcf, while NGI’s model predicted a 102 Bcf injection. Bespoke viewed the EIA report as neutral, with the final injection matching the firm’s prediction and generally matching the consensus. “Balance-wise, this is tighter than last week’s 85 Bcf build,” Bespoke said, estimating that recent balances would put the market on track to end the injection season with 4.0 Tcf in the ground. Still, “weather adjusting can be more difficult in these low demand times of the year. While 4.0 Tcf is probably unrealistic, it shows that we still need to see material improvement in balances to avoid a large storage total heading into winter.” Total Lower 48 working gas in underground storage stood at 1,653 Bcf as of May 10, 130 Bcf (8.5%) above year-ago levels but 286 Bcf (minus 14.7%) below the five-year average, according to EIA. By region, the South Central posted the largest weekly injection at 32 Bcf, including 25 Bcf into nonsalt and 6 Bcf into salt stocks. The East injected 31 Bcf, while the Midwest injected 27 Bcf. In the Pacific, EIA recorded a 12 Bcf build, while 4 Bcf was refilled in the Mountain region for the week. The 106 Bcf build implies the market was 0.1 Bcf/d looser than last year after adjusting for weather, according to Raymond James & Associates analysts. By their estimate the market has averaged 2.0 Bcf/d looser over the past four weeks. Analysts with Jefferies LLC observed that the past six weeks have “certainly given storage a head start before we enter the hottest parts of summer, with all April/May injections above average.”

Gas production expected to jump from May to June - Natural gas production from the Lower 48 U.S. states’ seven most productive unconventional plays and basins will jump by nearly 1 billion cubic feet per day (Bcf/d) from May to June, the Energy Information Administration reports. In its just-released Drilling Productivity Report (Dpr) for May, EIA expects natural gas production to grow by 943 million cubic feet per day (Mmcf/d), bringing total production from the seven plays/basins to 80.66 Bcf/d, up from 79.72 Bcf/d in May. (All numbers are rounded.)  The biggest May-to-June natural gas production increase is expected in Appalachia, the combination of the Marcellus and Utica shale plays. In this region, gas production will jump 366 Mmcf/d, to 32.11 Bcf/d, from 31.74 Bcf/d in May, the Dpr projects.Five of the seven basins/plays are expected to report a month-to-month natural gas production increase, with three of those regions projected to see triple-digit increases, Kallanish Energy reports.The Haynesville Shale will see its production rise to 11.36 Bcf/d, from 11.07 Bcf/d, a 287 Mmcf/d May-to-June increase. And the Permian’s associated gas production is expected to jump 241 Mmcf/d from May to June, bringing the basin’s gas production to 14.41 Bcf/d in June, from 14.17 Mmcf/d in May, EIA reports. The Anadarko Basin is expected to see its natural gas production fall 31 Mmcf/d from May to June, with total basin production dropping to 7.52 Bcf/d, from 7.55 Bcf/d in May.

Atlantic Coast Pipeline ruling not expected until August — A representative of Dominion Energy’s Atlantic Coast Pipeline says the company doesn’t expect a federal court ruling that could greatly impact the project’s future until at least August. The U.S. Court of Appeals for the 4th Circuit held a hearing Thursday regarding its December ruling that stayed authorization of a key permit previously issued by the U.S. Fish and Wildlife Service, said ACP spokesman Karl Neddenien. The court will now take several months to consider the facts of the case before issuing a decision, Neddenien said. “We look forward to seeing the court’s opinion,” he said. “Based on past practice, we expect that the court would issue its opinion by August.” Dominion officials are hopeful the court will rule in its favor, Neddenien said. “We believe the issues raised by the court in its August 2018 opinion were thoroughly resolved by the United States Fish and Wildlife Service when it reauthorized the project’s Biological Opinion and Incidental Take Statement in September 2018,” Neddenien said. “We also believe that the new issues raised by the petitioners have all been properly addressed and documented in the 80,000-page record for the new Biological Opinion and Incidental Take Statement.” It would take the company some time to ramp back up to full construction on the project even if they receive authorization to resume in August, Neddenien said. “If the court rules that corrections to the Biological Opinion and Incidental Take Statement are needed, we expect that the Fish and Wildlife Service would work expeditiously to issue an amended Biological Opinion in a timeframe consistent with a restart of at least partial construction during the fourth quarter,” he said. The company is also fighting a separate legal battle for the ACP, an attempt to appeal a decision by U.S. Court of Appeals for the 4th Circuit not to reconsider a ruling that denied a permit allowing the pipeline’s route to go through two national forests and across the Appalachian Trail. A panel of three judges in December ruled that the U.S. Forest Service lacked the authority to issue the permit and Dominion officials have said they plan to take the matter to the U.S. Supreme Court. The challenges to the pipeline’s continued construction have come from several environmental advocacy groups, including the Sierra Club, the Shenandoah Valley Network and others.

President Trump aims to open natural gas pipelines with two executive orders - In a victory for the Marcellus Shale re­gion, President Donald Trump signed two executive orders last month aimed at get­ting natural gas into more homes around the country. Spurred on by states that invoked the Clean Water Act and other environmental protections to block construction of natu­ral gas pipelines, President Trump signed the executive orders to speed up construc­tion. “Too often, badly needed energy infra­structure is being held back by special in­terest groups, entrenched bureaucracies and radical activists,” Trump told a crowd at the International Union of Operating Engineers training center in Crosby, Texas, when signing the executive orders. “This obstruction does not just hurt families and workers like you. It undermines our inde­pendence and national security.” The Northeast has been dealing with shortages of natural gas for years, even though it’s cheaper and cleaner than oil and plentiful in the United States. Opposi­tion to building new pipelines or expand­ing existing ones by states and environ­mentalists have created huge delivery issues in the Northeast. These issues were on full display in March when Con Edison took the extreme step to place a moratori­um on new natural gas hookups in parts of Westchester County. The region’s biggest utility said it didn’t have enough pipelines to meet the need. The lack of natural gas supply in the Northeast has resulted in skyrocketing prices during the coldest days and nights of the winter. In last year’s snow bomb cy­clone— an intense wind and snow storm — New England residents saw energy prices jump more than 40%. Pennsylvania, Ohio and West Virginia lead the nation in com­bined total natural gas production, but the New England region has had to import natural gas from Russia to get through the winter. In one of the executive orders Trump calls for an efficient permitting process that provides clear and reasonable timetables to approve new pipelines. The order also tasks the Environmental Protection Agency with overhauling how states use the Clean Water Act when approving pipelines. “Outdated Federal guidance and regula­tions regarding section 401 of the Clean Water Act…are causing confusion and un­certainty and are hindering the develop­ment of energy infrastructure,” the White House said in the executive order. A second executive order signed by Trump places the power to approve cross- border energy infrastructure projects in the president’s hands. The order is aimed at streamlining the approval process for international energy projects. It’s part of an effort by the White House to speed up the construction on projects, includ­ing the controversial Keystone XL, which will bring oil from Canada to the Gulf of Mexico.

North American Pipeline Project Roundup: May 2019 -- North American Oil & Gas Pipelines (press release) The following oil and gas pipeline projects have been announced. Projects are in order of most recent approximate starting date. All projects are for 2019 unless noted. (list of dozens)

Is North America Facing a Pipeline Bubble? – North America’s shale boom is paralleled by the record pace of pipeline construction and now, a long pipeline of projects await a final investment decision. Pipeline Bubble, produced by Global Energy Monitor, now calculates that capital spending on proposed North American pipelines will reach $232.5 billion and raise global pipeline capacity by a third. Pipelines have an operational life of at least 50 years and investors are betting on higher volumes of domestic oil and gas output both for local consumption and for export, as the world’s demand for energy, led by India and China, is forecast to rise by a third by 2040. According to the EIA Annual Energy Outlook 2019 reference case, U.S. natural gas output is expected to rise 36 percent to 43.4 trillion cubic feet by 2050. Crude oil is set for annual records through to the mid- 2020s and remains greater than 14 million barrels a day until 2040. Also, Natural gas plant liquids production is set to reach 6.0 million barrels a day by 2030. Projections of supply and demand appear to favor a boom in pipeline construction and underpins the fact that gas pipe projects outnumber oil, four to one. The power sector as a major gas customer will see the share of natural gas rise from 35.1 percent today to 39 percent in 2050 to satisfy rising demand and feed the rise in new gas peaking plants, which will be needed to provide base load and back-up for the anticipated rise in renewable energy. Likewise, with demand for polyethylene expected to grow from 40 million metric tons last year to 60 million metric tons in the next two decades, new pipelines are under construction to meet the needs of new ethane cracker plants located along the Ohio River.Increased drilling in oil formations in the East and Southwest of the country and burgeoning oil output from the Permian Basin has caused congestion of existing pipeline capacity to refineries on the Great Lakes as well as oil export terminals Houston and Corpus Christi on the Gulf Coast. New take-away pipes are close to completion and more are planned. Keeping oil prices low at home is an American imperative, but producers needing higher prices and increased sales will look to foreign markets. A case in point is the Keystone pipeline extension which will boost pipeline capacity between Canada’s Albertan tar sand oil fields as well as the Bakken fields of North Dakota and Montana and U.S. Gulf Coast refineries and export terminals.  In Texas burgeoning output is creating a need for new take-away pipes to access Gulf Coast ports, newly built LNG export terminals and to satisfy rapidly growing demand for gas from Mexico’s power sector. Since early 2016, U.S. LNG exports have benefitted from higher prices in Asia, particularly in South Korea, China, Taiwan and India. More will be needed as U.S. LNG export capacity is expected to rise to 86 million tonnes in 2025 and to a hefty 115 million tonnes in 2040.

After Standing Rock, protesting pipelines can get you a decade in prison and $100K in fines - Cherri Foytlin and her fellow protestors spent much of last summer suspended 35-feet in the air in “sky pods” tied to cypress trees.  Though the protesters were on private land with the landowner’s permission, somewere eventually arrested by St. Martin’s Parish Sheriff’s deputies in mid August. The pipeline was completed in March, yet Foytlin could still face up to five years in prison and $1,000 in fines. That’s because Louisiana’s Governor John Bel Edwards, a Democrat, signed HB 727 into law last spring, making trespassing on “critical infrastructure” property a much more serious crime than garden-variety trespassing. What was once a misdemeanor is now a felony. The law takes a broad view of what’s “critical”: pipelines, natural gas plants, and other facilities, as well as property on a proposed pipeline route, even if the pipeline isn’t there yet. Foytlin is one of at least 16 people in Louisiana who’ve been arrested and charged with felonies under the new law, according to Loyola University law professor Bill Quigley, who’s representing Foytlin. All of them were jailed and had to post bonds, some as high as $20,000 to get out. The district attorney hasn’t officially charged any of them yet, Quigley said.“These are people saying let’s make sure we have something left for future generations in the most beautiful swamp in the world,” Foytlin said. “And for that we were charged with felonies, we were beaten, we were stepped on, I was choked.” To her, the law allows the state to jail people for unpopular political views. (Messages left with the St. Martin Parish Sheriff’s Office weren’t returned.)The effort to punish pipeline protestors has spread across states with ample oil and gas reserves in the last two years and, in some cases, has garnered bipartisan support. Besides Louisiana, four other states — Oklahoma, North Dakota, South Dakota and Iowa — have enacted similar laws after protests against the Dakota Access Pipeline generated national attention and inspired a wave of civil disobedience. Just last week in Texas, House lawmakers passed a bill that makes interfering with some oil and gas operations a third-degree felony — on par with indecent exposure to a child. Lawmakers in at least seven other states, including Minnesota, Kentucky, and Illinois, are considering similar legislation. All these efforts have garnered broad support from the oil and gas industry. And many of the bills bear a startling resemblance to model legislation being pushed by the American Legislative Exchange Council, a conservative nonprofit backed by the Koch Brothers.

N Carolina panel comparing fracking regulations around US - (AP) — The state commission directed to regulate oil and gas fracking that could someday rise in North Carolina is sorting out regulation of the nascent industry.The North Carolina Oil and Gas Commission meets Tuesday in Raleigh and will discuss how the state compares to others in details like how far wells must be from water supplies and neighbors.The commission has held six meetings in the 14 months since it was revamped after lengthy legal fights. Commissioners are picked by the governor and legislative leaders. The legislature altered the commission following a 2016 state Supreme Court ruling that struck down its composition.

Rebounding Haynesville shale breaks 2011 production record - The Haynesville shale in East Texas and Louisiana hasn't boomed for nearly a decade, but a recent resurgence in activity has pushed the gassy shale play's output to a record high this spring. The Haynesville is churning out a record high of 10.5 billion cubic feet of natural gas a day this April, surpassing the 2011 peak of more than 10.4 billion cubic feet daily, according to the U.S. Energy Department, which projects that output will jump to 10.75 billion cubic feet a day in May. The surge is buoyed by moderately higher gas prices and increasing demand coming from the influx of new liquefied natural gas export projects coming online along the Texas and Louisiana Gulf Coast. Maybe most important is the Haynesville's proximity to the Gulf Coast compared to other gas-producing areas. The gas also is selling to petrochemical plants for feedstock, and a lot of it is even being piped to Mexico. The Haynesville was the nation's leading natural gas source until 2012 when it was surpassed by the Appalachia region, including the Marcellus and Utica shale plays mostly in Pennsylvania, West Virginia and Ohio. The Haynesville also dropped off as gas prices fell and energy companies shifted their focus to shale plays that contained larger volumes of crude oil like South Texas' Eagle For shale. West Texas' booming Permian Basin also has surpassed the Haynesville entirely from all the associated gas that comes along with the oil production. The Permian is producing almost 14 billion cubic feet of gas a day, although pipeline shortages in the region have meant many companies are paying to have the gas shipped away for no profit. In the Haynesville though, production also has become much more efficient during the course of the past decade, according to a new report from the Moody's Investors Service. "The economics of production in the Haynesville have improved since earlier in the decade, and the basin is now experiencing a resurgence of activity as the economics of production have improved," Moody's noted.

KBR Wins Texas LNG Project -- Freeport LNG Development, L.P. has selected KBR, Inc. as the preferred bidder for the engineering, procurement, construction and commissioning (EPC) contract for Train 4 at its LNG export facility near Freeport, Texas, KBR reported Monday.KBR stated that it will provide engineering, procurement, construction, commissioning and startup of a nominal 5-million ton per annum (mtpa) LNG train and associated gas pre-treatment plant under the anticipated EPC contract. The company added that it was selected following a nine-month front-end engineering and design (FEED) verification, execution planning and EPC proposal process.According to Freeport LNG’s website, the company is adding a fourth liquefaction train adjacent to the first three trains at its facility on Quintana Island in Brazoria County, Texas. The new 5-mtpa Train 4 will raise the facility’s total LNG export capacity to 20 mtpa, Freeport LNG stated.  The fixed price EPC contract should be concluded this quarter, KBR noted. In addition, the company stated that it expects a subsequent limited notice to proceed period that will include early engineering and commitment of critical long-lead equipment orders. KBR anticipates a full notice to proceed for the Train 4 project during the second half of this year.

China's ramping up of tariffs on U.S. LNG means nothing, everything -(Reuters) - China’s decision to hike import duties on U.S. liquefied natural gas (LNG) is a move that means very little for the market in the short term, but it has the potential to deliver outsized consequences the longer the levies remain in place. As part of its latest round of retaliatory tariffs on U.S. imports, Beijing increased the duty on LNG shipments from 10 percent to 25 percent. This will make it even more uneconomic for Chinese buyers to purchase LNG cargoes from the United States. The 10 percent tariff put in place last year has already devastated the trade, with China’s imports of the fuel dropping sharply. China imported 25 U.S. LNG cargoes in the first half of 2018, and this slipped to just eight in the second half, according to vessel-tracking data compiled by Refintiv. This year, a mere three cargoes have been delivered, one each in January, February and March, and no more are currently scheduled to arrive in the coming months. This means in practical terms that raising China’s import duty will have little impact on global LNG flows. But there are certain to be longer-term consequences from the fastest-growing LNG market effectively locking out the world’s fastest-growing supplier. Much of the new LNG coming on stream this year and next is based in the United States, as companies rush to take advantage of the plentiful and cheap supplies of natural gas delivered by the nation’s shale boom. It’s also worth noting that the United States is the dominant player in the next wave of LNG projects being planned around the world. The United States currently has 64.2 million tonnes of annual LNG capacity under construction, the bulk of which will hit the market this year and next. Together with Canada, it also has a further 164.2 million tonnes in capacity for which the final investment decisions are due by the end of next year. The market expectation is that China will overtake Japan as the world’s largest LNG importer sometime in the next decade, even though its annual rate of growth will moderate from the breakneck pace of more than 40 percent for the past two years. This means China will become the most important single player in the LNG buyers’ market, just as it already is for several other commodities, such as iron ore, copper, crude oil and coal. Both existing and emerging U.S. LNG producers won’t want to be shut out of that market, but if the trade war continues for several years it’s likely that some projects will struggle to secure the necessary financing to progress.

Cleanup continuing in Houston Ship Channel after vessels collide and spill gas product – CNN - Ship and barge traffic is resuming in the Houston Ship Channel as cleanup efforts continue in the aftermath of a spill that sent thousands of barrels of gasoline blending product into the channel, officials said Sunday. The spill came after a collision in the channel Friday between a 755-foot oil tanker and a tug pushing two barges. The impact capsized one barge, damaged the other and triggered the leak of gasoline blending stock that the barges were carrying, the US Coast Guard said. The barges -- pushed by the towing vessel Voyager -- were loaded with the gasoline blending component reformate, which leaked into the water after the collision near Bayport, Texas, officials said. About 9,000 barrels of reformate spilled into the channel, according to incident commander Jim Guidry, an executive with Kirby Inland Marine, owner and operator of the Voyager. There were no reported injuries during the collision with the tanker, the Genesis River. An estimated 25,000 barrels of gasoline blend stock were loaded on each barge, a Coast Guard statement said. Federal, state and local agencies are involved in the cleanup and environmental monitoring. A statement from those agencies Sunday said that the damaged barges have been secured and efforts were underway to remove cargo from the barges. "Work is expected to continue throughout the day with an established priority of ensuring the protection of (Galveston) Bay from the additional release of product," the statement said. Officials at a news conference Sunday said some 2,700 air monitoring samples from the area had been taken and none of them exceeded "established action levels," meaning they don't pose a health risk at this point. Water quality testing is being done along the bay, the statement said.

Investment firm pays $6.5B for pipeline operator Buckeye Partners - Houston pipeline firm Buckeye Partners will sell for $6.5 billion to an Australian investment firm focused on pipelines, terminals, roads and other infrastructure. Buckeye Partners, which had struggled financially of late, decided to sell itself to IFM Investors after a strategic review, previously selling a large chunk of assets last year. "Buckeye's Board recently reviewed strategic options for the business and determined that IFM's proposal to acquire Buckeye is in the best interest of Buckeye," said Buckeye Chairman and Chief Executive Clark Smith. The all-cash deal is a 27 percent premium on Buckeye's stock price on Thursday. Buckeye owns about 6,000 miles of petroleum pipelines, 115 terminals and a large supply of storage tanks focused primarily along the East Coast and Gulf Coast.

Texas Lawmakers May Stiffen Penalties for Pipeline Damage (AP) — Lawmakers in Texas are considering a bill that would stiffen penalties for damaging or trespassing around oil and gas operations despite opposition from environmental groups who say it would quell peaceful protests and overly criminalize offenses. Environmental activists and oil and gas lobbyists returned to the Texas capital on Wednesday to go head-to-head over the bill at a public hearing. There, they clashed over its necessity and whether the bill would suppress Texans' right to legally protest pipeline projects. The effort comes as states around the country have introduced similar measures targeting demonstrations such as those in North Dakota against the Dakota Access oil pipeline, which resulted in hundreds of arrests and cost the state $38 million. South Dakota Gov. Kristi Noem signed a pair of bills into law in March aimed at potential protests against the planned Keystone XL oil pipeline and is now facing a federal lawsuit by the American Civil Liberties Union. The bill sponsored by Republican state Rep. Chris Paddie of Marshall would also classify any oil or gas pipelines as critical infrastructure, placing them in the same category as power plants and water treatment facilities. The bill would extend the penalties to protect any property deemed critical infrastructure.

Kinder Morgan files motion to dismiss eminent domain lawsuit - Roughly a week after multiple parties filed suit against Kinder Morgan’s Permian Highway Pipeline (PHP), the Houston-based firm fought back by filing a motion to dismiss the claims, according to a press release. The filing, submitted May 7, asked the judge in charge of the case for a summary judgement based on “ample reasons” for dismissal, according to Kinder Morgan officials. It is unknown at this time if a decision on the motion has been made. According to the release, the plaintiffs, which include Hays County and the city of Kyle, assert “no wrongdoing” on the part of Kinder Morgan. “In addition, they are demanding relief under a statute that does not create a right of action against a private party like PHP,” according to the release. Kinder Morgan officials also said the lawsuit “ignores the fact” that the PHP’s eminent domain rights derive from the Texas Constitution and the Texas Legislature. Officials cited more than $14 billion in state and local taxes and state royalties were paid by the oil and natural gas industry.

Texas judge orders alleged polluter of Skull Creek to stop accepting waste - Three months after the waters of Skull Creek first turned black, a Travis County state district judge issued a temporary injunction Tuesday against Inland Environmental and Remediation and David Polston, its president, requiring the company to stop accepting waste and halt any further polluting of the creek. The injunction prevents Polston from storing or processing any waste at the company’s site near Altair, just south of Columbus, in a manner that “causes, suffers, or allows discharge into or adjacent to waters” in the state. The agreement — reached among the Texas attorney general’s office, the Lower Colorado River Authority and Polston’s lawyers — also requires the defendants to “abate and contain all spills and discharges at the site” and start removing and properly disposing of waste.Inland processes oil and gas drilling waste and turns it manufactured products like road base, according to its website. Its site is adjacent to Skull Creek, which flows for more than 10 miles before emptying into the Colorado River, which ultimately flows into Matagorda Bay, a popular fishing and boating spot on Texas’ Gulf Coast.Under the injunction, Polston is required to submit progress reports every Monday to the Texas Commission on Environmental Quality, the LCRA and the attorney general’s office detailing the actions Inland has taken to comply with the injunction’s stipulations. They include assessing the extent of the contamination, removing road base material along the creek, and creating a detailed inventory and a map of all waste at the site.

‘Kill the bill! Save the land!’ Native protectors disrupt Texas legislature - Indigenous land and water protectors in Austin, Texas, briefly disrupted the state legislature on Tuesday when they unfurled two banners in the Texas State House of Representatives and shouted, “Kill the bill! Save the land!” The action was intended to stop the passage of House Bill 3557, which would increase the seriousness of violations that interfere with “critical infrastructure,” such as pipelines, by elevating them from misdemeanors to felonies. Jennifer K. Falcon of the Society of Native Nations, who is running the campaign to stop the bill, explained the increased penalty would inhibit free speech and unfairly criminalize Indigenous people who are only trying to protect their land. “We have been lobbying to stop this bill for quite a while, about six months now,” Falcon said. “Yesterday was the second reading of the bill and a lot of Democrats decided to vote for it. So we decided we would escalate and try to flip some of those Democrats and let them know how serious we were.” As the state representatives began their second vote on the bill, the protectors unfurled two banners from the spectator’s balcony, one on either side of the House chamber. One read, “Kill the bill! Save the land!” And the other read, “Indigenous women won’t be silenced.” The protectors included members of the Carrizo Camecrudo tribe of South Texas who, in addition to opposing the bill, is also fighting the construction of President Trump’s border wall in their homelands. When the banners unfurled, the protectors began shouting “Kill the bill! Save the land!” and “Overcriminalization!” Members of the Texas Capitol Police immediately advanced on them. One grabbed the end of the “Kill the bill!” banner and bunched it up, making it unreadable. They then ordered the protectors out of the House chamber. Approximately ten protectors were herded into a small area of the lobby and surrounded by officers. One independent journalist, Lilith Sinclair, who was in the balcony with the protectors as an observer, was also caught up in the scoop. She was questioned and released.

Apache Bets Big on Permian Gas Liquids -  A ride through the Permian Basin’s little-drilled southwest corner looks a bit like the rest of the shale patch. But there are a couple of big differences: The drilling rights to about 300,000 acres in the field belong to a single company, Houston-based Apache Corp. And unlike in much of the Permian, the underlying rock here is far richer in natural gas than it is in oil. Welcome to the Alpine High. These two factors are shifting the focus for one of America’s oldest oil producers in its flagship discovery. After falling oil prices at the end of 2018 forced Apache to cut its budget, the company temporarily stopped its hunt for oil in parts of the field. In the meantime, it’s opening three plants to process the profusion of natural gas it’s found into more marketable propane and butane.In September 2016, Apache said it had made an "immense" find in the Alpine High, with the promise of at least 3 billion barrels of oil in place in two of the five formations. Apache Chief Executive Officer John Christmann described the play as being like a “giant onion,” with the company learning more and more about the discovery as it peeled back each subsequent layer.But initial tests for crude haven’t shown as prolific a result as seen elsewhere in the Permian, and Apache now talks about crude oil being a byproduct of its natural gas at a time when other drillers can’t get rid of the fuel fast enough.That’s spurring worry among some investors that Apache may be hanging on to an iffy asset at a time when larger companies might be considering acquisitions in the wake of the bidding war over Anadarko Petroleum Corp. While several central Permian players have found their way onto short lists of expected takeout targets, Apache has been largely absent.“A lot of Permian-focused investors are looking for very fast growth,” Luther said, though he added that could change as oil majors like Exxon Mobil Corp. and Royal Dutch Shell Plc look to increase the proportion of natural gas in their portfolio. “The benefits of Apache’s bet on Alpine High remain to be seen,” said Devin McDermott, an analyst at Morgan Stanley who has a sell rating on the stock. “The play remains in its early days, and the long-term outlook is uncertain.”

Surge of New Permian Basin Oil to Feed Global Supply - Exports of the Permian Basin’s newest kind of oil are set to jump as production surges, exceeding the appetite of U.S. refiners. Sales of the new grade, known as West Texas Light, began in September, as explorers sought to separate out increasingly lighter and less sulfurous crude bubbling up from wells in West Texas and New Mexico, so it wouldn’t lessen the quality of U.S. benchmark West Texas Intermediate. WTL supply has grown to over 500,000 barrels a day, a nearly four-fold rise from last year. While some of that is staying close by, most will need to be exported.  "I suspect that refineries that can blend to run lighter slates are likely already doing so to the best they can," . "Every incremental barrel produced in the U.S. should be earmarked for export," unless it’s a heavy crude, Tran said. Shipments overseas began in February and have neared 1.42 million barrels through this month. Most was sent to the Netherlands and the rest for Canada, while none has headed to Asia so far, according to U.S. Customs data and ship tracking data compiled by Bloomberg. Renewed U.S.-led sanctions on Iran could provide an opportunity.Presently, some 1 million barrels of storage has been set aside in the Permian and Cushing, Oklahoma, to market WTL, according to people familiar with the matter. Some pipes are starting to accept it as a proper grade, the people said.  Still, more pipeline capacity would be needed, which is expected to start coming online late this year and in 2020. "Pipelines from Midland and Cushing to the Gulf Coast are full right now. It’s a problem for any crude, including WTL," Aronson said. WTL is being marketed to Asian buyers for refining and petrochemical use, according to a report by analysts at Macquarie Capital (USA) Inc. Even with its higher content of light products such as naphtha, it would be globally marketable for at least three years. However, that could change later on because of rapidly growing natural gas liquids and condensates supply, both of which have similar yields. That might be a boon for buyers, as WTL prices could drop, particularly in Asia, which has numerous other options for light, low-sulfur crudes. Currently, the grade is trading at $1 to $1.50 a barrel under WTI Midland, compared with a $2.50 discount last month, according to people familiar with the matter.

US oil and gas rig count falls by six on the week to 1065: Platts Analytics - The US oil and natural gas rig count fell by six to 1,065 in the week ending Wednesday, according to the latest data from S&P Global Platts Analytics, as nationwide totals continued the steady decrease seen during the past six months. Oil-specific rigs accounted for the drop, falling by 14 to 838, while gas-driven rigs rose by six to 224. An increase of two was registered for rigs not specified for oil or gas. The total US rig count the same week a year ago was 1,117. The oil and gas rig count averaged 1,071 in the prior week, and 1,084 the week before. The domestic rig count reached 1,223 in mid-November 2018 but has gradually slipped since, although there have been some periodic weekly gains. The biggest week-on-week movement was the Permian Basin of West Texas and southeastern New Mexico, which decreased by five rigs to 457. Next was the Williston Basin of North Dakota and Montana, down three rigs to 59. The Bakken Shale saw its rig count climb two to 65. North Dakota, home to the giant Bakken, this week reported oil output averaged 1.390 million b/d in March, up 4% from the previous month. Rig movements in the other six named US basins were negligible. In four plays, the number of rigs stayed the same: the SCOOP-STACK play in Oklahoma at 86; the Eagle Ford Shale in South Texas at 83; the Marcellus Dry play, mostly in Pennsylvania, at 35 ; and the Denver-Julesburg Basin, mostly in Colorado, at 32. Three basins each gained one rig: the Haynesville Shale in East Texas and northwestern Louisiana at 59; the Marcellus Wet play, mostly in Pennsylvania, at 24 rigs; and the Utica Shale, mostly in Ohio, at 20. The number of drilling permits totaled 970 approved, up 421 compared with the previous week, Platts Analytics figures showed. The Permian led all named basins with an increase of nine permits week on week for a total 213. The SCOOP-STACK was up by seven for a total 29 permits. The Marcellus Wet was down by 16 permits on the week for a total of four; the Williston was down by 12 to five; and the Marcellus Dry was down by nine to 32. In the "Other Basins" category, which represents plays outside the eight named basins, 445 more permits were approved than the previous week, for a total of 611. A sizable chunk of drilling activity outside the major basins is fueled by privately held upstream operators, which account for about 40% of US onshore activity, sources say. Active rig levels for public E&P companies, which drive 60% of drilling activity, are widely expected to fall in the second half of this year, although "privates should not be ignored," investment bank Tudor Pickering said in an investor note Thursday.

U.S. Oil Rig Count Dips To 14-Month Low -The the number of active oil and gas rigs fell again in the United States this week according to Baker Hughes, after a string of losses in the weeks prior, keeping the overall rig count well below year-ago levels for a sixth week in a row. The total number of active oil and gas drilling rigs in the United States fell by 1 according to the report, with the number of active oil rigs falling 3 to reach 802 and the number of gas rigs increasing by 2 to reach 185. The combined oil and gas rig count is 987, with oil seeing a 42-rig decrease year on year and gas rigs down 15 since this time last year. The combined oil and gas rig count is down 59 year on year. Year-to-date, the oil rig count has fallen from 877 active rigs on January 4 to 802, while gas rigs have fallen from 198 to 185 during that same time. Oil rigs are now at their lowest since March 2018, according to Baker Hughes. At 12:43am EST, moments before data release, WTI was trading down slightly by $0.08 (-0.13%) at $62.79, but up $1 per barrel on the week as the now-flighty market receives mixed messages after oil tanker attacks near the Strait of Hormuz, pipeline attacks in Saudi Arabia, escalating China/US trade tensions, and signs that global demand growth for oil might just be disappointing. The Brent benchmark was trading down as well, by $0.58 (-0.80%) at $72.04, but up about $1.50 week on week. US oil production, too, fell for two weeks in a row, with week ending May 10 coming in at 12.1 million bpd—200,000 bpd off the April 26 high of 12.3 million bpd. Canada’s rig count held steady at 63, with neither oil or gas losing or gaining in number. Canada’s oil rigs are now down 16 year on year, with gas rigs down 4 year on year. WTI was trading down 0.13% on the day at 1:11pm EST, with Brent down 0.83%.

Illinois passes bill criminalizing infrastructure-related protests - On May 2, the 101st Illinois General Assembly passed House Bill 1633, entitled “New Penalties for Protests Near Critical Infrastructure.” A draft version of the bill was produced by the American Legislative Exchange Council (ALEC) in the aftermath of the 2016 Dakota Access Pipeline protests. It was introduced to the Illinois legislature by Republican Representative Joe Sosnowski, a registered member of ALEC. The coordinated effort in passing this type of legislation all over the US means Illinois H.B. 1633 bill is nearly identical to similar bills being pushed through numerous state legislatures, including Oklahoma, North and South Dakota, West Virginia, Tennessee and more. In the last two years, 15 such bills have been enacted nationally while 26 are pending further review and votes. These are driven in large part by oil and energy corporations through the pro-business think-tank ALEC.   The essential element of the current infrastructure bills is to provide the states with the judicial authority to suppress strikes, demonstrations and protests on the pretext of protecting property and the right to free speech. The text of the Illinois bill expands and modifies the criminal penalties for damage to any infrastructure, private property and workplaces, as one critic notes, “elevat[ing] a patchwork of locations and equipment to the same level of protection currently and exclusively afforded to nuclear power plants.” (Indivisible Chicago) The text of the bill also expands the offense of criminal trespass, creating new categories of misdemeanor and felonies that would hold accountable any business, corporation or organization deemed involved with the individual or group: “The industry protection list includes everything from telephone poles, cell towers, TV stations, railroad tracks, and ports to steel plants, coal mines and pipelines.” The legislation also provides a legal excuse for pursuing harsh penalties for superficial offenses as well as criminalizing the exercise of one’s right to protest.

Frac sand lawsuit lingers over refusal to give up permit -- Six months after a mining company said it had scrapped plans for a contested frac sand operation in western Wisconsin, a lawsuit is still lingering as the company refuses to relinquish a key permit. In 2016, three families sued to stop Terracor Resources from opening a 1,018-acre mine, processing and loading facility on nearby land in Jackson County. Their case was based on the assumption that a mine would inevitably infringe on the peaceful enjoyment of their land, a legal principal largely untested in Wisconsin. Terracor was later bought by OmniTRAX, a Colorado shipping company. In November, after a circuit court judge refused to throw out the complaint, an attorney for OmniTRAX said the project was dead, and the plaintiffs’ attorney said they would be dropping the lawsuit. But the parties were unable to agree on terms for a temporary injunction. Earlier this spring, OmniTRAX filed a new motion to dismiss, arguing that it is not moving forward — for business and financial reasons as well as logistics — and therefore the complaint is moot.   Attorney Tim Jacobson said his clients will not agree to drop the case so long as OmniTRAX holds a permit from the Wisconsin Department of Natural Resources allowing it to fill about 4 acres of wetlands for the rail loading facility. Issued last year, the permit gives OmniTRAX until April 2021 to fill the wetlands, although the DNR can also grant an extension “for good cause.” “This fact seems to contradict OmniTRAX’s expressed intentions to not proceed with frac sand mining,” Jacobson said. “We are concerned that a voluntary dismissal by us would pave the way for OmniTRAX to advertise the site as being free of litigation and ready for a new mining company to sweep in and try to re-establish mining rights.”

South Dakota sues Texas O&G company for $15.5M - The state of South Dakota is suing a privately-held Texas-based exploration and production company for $15.5 million for abandoning 40 natural gas wells in Harding County, Kallanish Energy reports. The South Dakota Department of Environment and Natural Resources (Denr) is requesting the court require Spyglass Cedar Creek and its general partners, Kevin Sellers and March Kimmel, to bring the wells in northwestern South Dakota into regulatory compliance. Denr also wants the defendants to pay the state $15.5 million in penalties for abandoning the wells, according to the complaint filed in Hughes County, the Sioux Falls Argus Leader newspaper reported. It would cost the state nearly $900,000 to plug the 40 wells, which Spyglass drilled between 2006 and 2010, The Associated Press reported. According to the Denr complaint, Spyglass posted two bonds as part of its permit application, one for $20,000 and another for $10,000. But the South Dakota Attorney General’s Office learned last July Sellers had cashed out the $20,000 bond, leaving the state with only the remaining funds to plug the wells. Spyglass then entered into an agreement to post a $200,000 bond by January when the state Board of Minerals and Environment began taking steps to revoke Spyglass’ permits last year. But that money never materialized. The Board removed its permits and in March, levied $15.5 million in penalties on the company. The problems with the wells began in February 2012. Nine of the wells weren’t producing any gas and for the first time in what would become a seven-year-long issue, DENR directed Spyglass to bring its wells into compliance by either returning the wells to production, plugging the wells or submitting a request for temporary abandonment. Spyglass didn’t respond to the state.. By August 2012, half of the 40 wells weren’t producing anything and needed to be brought into compliance. All 40 of the wells were out of compliance by 2014 and inspections began finding that some of the wells were leaking gas.

North Dakota's first suitor for plastics plant files for bankruptcy -- About the same time that the North Dakota legislature was approving an incentive aimed at attracting a plastics plant, a previous suitor filed for Chapter 7 bankruptcy in a Colorado court. Badlands NGLS CEO William Jeffrey Gilliam had proposed investing $4 billion to build a polyethylene manufacturing facility in North Dakota in 2015. About a year later, he also announced plans for an alpha olefins plant in the Gulf Coast. Alpha olefins are a versatile feedstock for manufacturing polymers, surfactants, synthetic lubricants, petroleum additives and more. Williams had proposed taking advantage of physically stranded NGLs in the Bakken. An investor presentation from the time noted that NGL takeaway needed to double by 2020, or it would exceed heat content limits on the Northern Border pipeline. That was then the only pipeline taking significant amounts of NGLs to market. Ron Ness, executive director of the North Dakota Petroleum Council, said that timing was one thing that hurt the Badlands NGLs project. “The (Badlands) project was maybe a bit ahead of its time, but right in concept,” he said. There was the big downturn in price in 2015, which dampened activity for a couple of years. With no sign of excess ethanes being processed, the company turned its attention elsewhere. ONEOK has since proposed a new pipeline capable of taking up to 240,000 barrels per day of unfractionated NGLs to market, from Montana to existing facilities in Kansas. That has been lauded as a key component to reduce natural gas flaring in the state, but it doesn’t add value to the product, like processing it in North Dakota would. That is the problem that North Dakota Department of Commerce Director Shane Kessel is hoping can be solved this time around. “Badlands was two steps away (from a plastics plant),” Kessel said. “So I think that is the difference. We don’t have the facilities yet, but the company we are working with today is proposing to build that intermediate step.”

North Dakota to sue Washington state over oil train standard - North Dakota to sue Washington state over oil train standard (AP) — North Dakota is preparing to sue Washington state over a new Washington law requiring oil shipped by rail through that state to have more of its volatile gases removed, which supporters say would reduce the risk of explosive and potentially deadly derailments. North Dakota officials say the law will make Pacific Northwest refineries off-limits to the energy industry of North Dakota, which is the nation’s No. 2 crude producer. They are also reaching out to other oil-producing states to garner support for the lawsuit, which they expect to file within weeks in federal court. Washington Gov. Jay Inslee signed the bill into law Thursday. It requires a lower vapor pressure limit for crude shipped by rail than the industry standard and North Dakota requires. Inslee has made climate change a focus of a 2020 Democratic presidential campaign. Democrat Andy Billig, the Washington Senate Majority Leader who sponsored the bill, said the goal is to reduce the risk from oil being shipped by train from North Dakota’s Bakken oil patch to Pacific Northwest refineries. The volatility of oil trains drew widespread public attention following several explosive derailments, including one in 2013 in Lac-Megantic, Quebec, that killed 47 people. “We know these trains pose a serious risk as we watch them pass through downtown Spokane in sight of Lewis and Clark High School, hospitals, medical buildings, and senior living facilities,” Billig said. “This bill about safety.” North Dakota officials view the new law as a potential blow to their state’s oil economy. About 150,000 barrels of North Dakota crude, or about one-tenth of the state’s daily production, is shipped to Washington refineries. North Dakota produces more oil than any other state but Texas.

Aliso Canyon Gas Leak Caused by ‘Microbial Corrosion,’ Report Finds - The Aliso Canyon methane gas leak -- the biggest in U.S. history -- was caused by microbial corrosion of a well casing, and Southern California Gas Co. did not conduct detailed follow-up inspections or analyses after previous leaks, according to a report released Friday. The report -- commissioned by the California Public Utilities Commission and the state Department of Conservation's Division of Oil, Gas, and Geothermal Resources -- was conducted by Blade Energy Partners, which was tapped in 2016 to perform an independent analysis of the leak's root cause to inform parallel investigations underway by the CPUC and DOGGR. The report identified more than 60 casing leaks at Aliso Canyon prior to the 2015-2016 leak, going back to the 1970s, but said no failure investigations were conducted by SoCalGas, which "lacked any form of risk assessment focused on well integrity management and lacked systematic practices of external corrosion protection and a real-time, continuous pressure monitoring system for well surveillance." Updated well safety practices and regulations adopted by DOGGR address most of the root causes of the leak identified during Blade's investigation, and the leak's direct cause was a rupture of the outer 7-inch well casing due to microbial corrosion from the outside resulting from contact with groundwater, according to the report.

Trump Finalizes Plan to Open 725,500 Acres of California's Central Coast to Drilling, Fracking - — The Trump administration today finalized a plan to open 725,500 acres of public lands and mineral estate across California’s Central Coast and the Bay Area to new oil and gas drilling. The U.S. Bureau of Land Management plan is an increase of nearly 327,000 acres from the draft proposal prepared under the Obama administration.The public lands earmarked for leasing in today’s resource management plan are in the counties of Alameda, Contra Costa, Fresno, Merced, Monterey, San Benito, San Joaquin, San Mateo, Santa Clara, Santa Cruz and Stanislaus.“Trump’s new plan aims to stab oil derricks and fracking rigs into some of California’s most beautiful landscapes,” said Clare Lakewood, a senior attorney at the Center for Biological Diversity. “From Monterey to the Bay Area, the president wants to let oil companies drill and spill their way across our beloved public lands and wildlife habitat. As we fight climate chaos, there’s no justification for any new drilling and fracking, let alone this outrageous assault on our pristine wild places.”Today’s move comes just weeks after the Trump administration released its draft plan to reopen more than a million acres of public land and federal mineral estate in the Central California region (including Fresno, Kern, Kings, Madera, San Luis Obispo, Santa Barbara, Tulare and Ventura counties) to fossil fuel extraction. Together the plans target a total of 1,736,970 acres across 19 California counties. The plans would end a five-year-old moratorium on leasing federal public land and mineral estate in the state to oil companies. The BLM has not held a single lease sale in California since 2013, when a judge ruled that the agency violated the law when it issued oil leases in Monterey and Fresno Counties without considering the risks of fracking. The ruling responded to a suit brought by the Center and the Sierra Club challenging a BLM decision to auction off about 2,500 acres of land in those counties to oil companies.

U.S. shale output to hit new record of 8.49 million bpd in June: EIA –  U.S. shale output to hit new record of 8.49 million bpd in June: EIA (Reuters) - U.S. oil output from seven major shale formations is expected to rise by about 83,000 barrels per day (bpd) in June to a fresh peak of about 8.49 million bpd, the U.S. Energy Information Administration said in its monthly drilling productivity report on Monday. One of the largest changes is forecast in the Permian Basin of Texas and New Mexico, where output is expected to climb by 56,000 bpd to a new record of about 4.17 million bpd in June. That would be the biggest increase since February. In North Dakota’s Bakken region, production is expected to jump by 16,000 bpd to a record of 1.42 million bpd while in the Eagle Ford, output is expected to slide by about 942 bpd to 1.43 million bpd. A shale revolution and production increases particularly from the Permian basin and the Bakken have helped make the United States the biggest oil producer in the world, ahead of Saudi Arabia and Russia. Major oil companies like Exxon Mobil Corp and Chevron Corp are boosting their presence in shale, particularly in the Permian, the largest U.S. shale oil field.

Fracking made the US a major oil producer, but not energy independent – public radio audio- The oil shortages of the 1970s triggered laws that banned the export of American crude oil. Those lingering fears of scarcity kept those laws around for decades. Then came the shale revolution in mid-200os, otherwise known as the fracking boom, which helped the United States become one of the world’s top oil and gas producers. In her book, “Saudi America: The Truth About Fracking and How It’s Changing the World,” author and journalist Bethany McLean explores fracking’s nuanced success, but also cautions that this energy revolution is not the country’s golden ticket to energy independence. She spoke to host Sabri Ben-Achour on Marketplace Morning Report. Below is an edited transcript of their conversation.

N. American Shale Oil Second Cheapest Oil Source - North American shale oil has become the second cheapest source of new oil volumes, according to research by Rystad Energy. In its latest cost of supply curve update, the energy research firm found that tight oil – such as onshore shale oil in the U.S. – experienced a turnaround in recent years. North American shale has gone from being ranked the second most expensive resource in 2015 to the second cheapest – following closely behind the Middle East onshore market at No.1. The average Brent breakeven price for shale oil is $46 per barrel, just four dollars behind the massive onshore fields in Saudi Arabia and other Middle Eastern countries. And Rystad estimates that total recoverable resources from North American shale oil have more than tripled since 2014. “The North American tight oil industry has changed considerably since 2014, as it has proven to be a competitive supply source in a low-price environment,” Erlingsen said. “While costs for tight oil have been reduced, the resource potential has grown considerably over the last four years.” Another benefit to shale oil is that it typically requires two to four years to recover costs, while offshore normally needs seven to 12 years.

2018 was likely the most profitable year for U.S. oil producers since 2013 - Net income for 43 U.S. oil producers totaled $28 billion in 2018, a five-year high. Based on net income, 2018 was the most profitable year for these U.S. oil producers since 2013, despite crude oil prices that were lower in 2018 than in 2013 on an annual average basis.  Lower production costs per barrel of oil equivalent (BOE) and increased production levels contributed to a higher return on equity for these companies for the fourth quarter of 2018 than in any quarter from 2013 through 2018.  The companies included in the analysis are listed on U.S. stock exchanges, and as public companies, they must submit financial reports to the U.S. Securities and Exchange Commission. EIA calculates that these companies accounted for about one-third of total U.S. crude oil and natural gas liquids production in the fourth quarter of 2018. However, these companies were not selected as a statistically representative sample but instead because their results are publically available. Their results do not necessarily represent the U.S. oil production industry as a whole. Most of these companies operate in Lower 48 U.S. onshore basins, with some in the Federal Offshore Gulf of Mexico and Alaska, and some in several other regions across the globe. Because of various corporate mergers and acquisitions in 2018, the number of U.S. producers that EIA examined in this analysis fell from 46 companies in 2017 to 43 companies in 2018. The aggregated income statements for these 43 companies reveal a trend of relatively low increases in expenses directly related to upstream production in 2018. Although these upstream production expenses per barrel typically correlate with crude oil prices, the magnitude of these increases in 2018 was small compared with the increase in prices.

Debunking The Oil Industry Cash Flow Myth -One of the refrains I often hear about the oil industry — particularly on those focused-on shale and tight oil — is that it collectively doesn’t make any money. There have been many stories over the past few years about the ongoing negative free cash flow (FCF) problem among the shale producers.It is true that in recent years oil companies have collectively outspent their revenues. But two important issues are often overlooked in the stories about negative cash flow.First is the question of the reason cash flow is negative. To better understand this, let’s talk about what cash flow actually represents. FCF measures cash generated by a company in excess of its spending, including capital expenditures. There are some differences between how different analysts measure FCF, but I use the levered FCF definition from the S&P Global Market Intelligence database. This number is calculated by starting from net income, adding back depreciation and amortization (because those non-cash costs relate to historical expenditures), adjusting for impairments to oil and gas properties (those non-cash impairments are applied against net income but not cash flow) and then subtracting interest paid, changes in working capital and capex. This is a more accurate and comprehensive definition of cash flow than the one used by many, which is simply cash generated from operations minus capital expenditures. It is true that capital expenditures are the main reason that FCF went deeply negative for so many companies in recent years. When oil prices were $100 a barrel, oil companies invested every penny they could get their hands on into producing more oil. There were no guarantees of how long the high prices would last, but it’s understandable why they were plowing all their cash back into their business. When oil prices plunged in 2014, many companies were caught off guard. Some were extremely leveraged and went bankrupt. All of them had to slash spending. And that leads to the second point that is frequently overlooked. Oil companies aren’t all operated in the same way. Some operate recklessly and with excessive leverage, while others are much more conservative. That is reflected in the individual results of these companies.  Some companies go for years without generating positive FCF. Diamondback Energy, for example is one of the largest pure shale/tight oil producers. They went public in 2012 and have never generated positive FCF. But that hasn’t posed a problem, as their debt/EBITDA ratio is at a manageable 2.5. Then there’s ConocoPhillips, which is active in the Eagle Ford, Bakken and Permian Basin. In recent years, COP has been the king of cash flow among the pure oil and gas producers.

Does Chevron know exactly what shale oil and gas are worth? -- Welcome to the bidding war that didn't happen. The decision last week by international oil giant Chevron Corp. to leave its takeover bid for shale oil and gas-heavy Anadarko Petroleum Corp. unaltered in the wake of a higher offer from rival bidder Occidental Petroleum Corp. surprised some who had expected a back and forth escalation between the two competitors. Chevron's CEO told Bloomberg, "Winning in any environment doesn’t mean winning at any cost." Chevron's hesitancy to pay up for Anadarko's assets suggests a measured assessment about what Anadarko might deliver, one tempered by emerging political developments and perhaps a less sanguine view about the durability of the shale boom. Anadarko, after all, has considerable operations in Colorado which recently enacted a bill increasing the ability of municipalities to curtail oil and gas development, authorizing more stringent air quality monitoring and rules, and turning the commission which was tasked with "fostering" oil and gas development into one which actually regulates it. That spells less oil and gas development in a state that has been critical to Anadarko and to the shale boom. The promoters of shale oil and gas investment are pretending as if the kind of backlash which happened in Colorado could not occur elsewhere. Don't count on that being the case. Beyond this, energy writer Nick Cunningham summarizes the most recent update of prospects for shale hydrocarbons released by a skeptical Post Carbon Institute. Issues identified by the institute way back in 2012 have continued to unfold as foretold. All the technological improvements since then are only hastening the day when production will turn down according to the report's author. Simply put, production from oil and gas shale deposits is being "frontloaded." That implies that when the decline comes, it's likely to be surprisingly steep. (The precipitous decline of Mexico's giant Cantarell oil field after a technique known as nitrogen injection supercharged production for several years provides a cautionary tale.) During the height of a boom, promoters who stand to profit forecast a long prosperous future ahead, a never-ending cornucopia that will fill the pockets of those smart enough to invest now. But as anyone who has lived long enough knows, the time to sell is when just this kind of narrative is being offered.

Canadian Oil Prices Weaken - -- Canadian crude prices fell Tuesday as storage tanks topped out amid refinery maintenance in the U.S. Midwest. Heavy Western Canadian Select, an oil sands benchmark, fell to the biggest discount against West Texas Intermediate futures since Feb. 19, data compiled by Bloomberg show. Edmonton Mixed Sweet, a light grade, declined to the weakest level this year while synthetic crude, produced from oil sands bitumen in an upgrader, fell to the lowest in two weeks. Prices have weakened as U.S. Midwest refineries, including Exxon Mobil Inc.’s Joliet refinery and BP Plc.’s BP Plc.’s Whiting refinery, were said to undergo maintenance in May. As of last month, Western Canada’s oil inventories had already risen to a record even as crude-by-rail shipments rebounded from a February low, according to Genscape Inc. Stockpiles are swelling despite production cuts mandated by the Alberta government starting in January. While the curtailments initially caused crude prices to surge, they’ve weakened since last month as the supply glut persists. As Canadian oil’s discount widens, however, the lower prices could help drain bloated inventories by making crude-by-rail shipments to the U.S. more economic. “This price move is more back to normalization than a big driver of weakness in the market,” “We are back into rail economics and now we can clear barrels.”

Mexico's new oil refinery likely to far exceed budget - Moody's (Reuters) - The new refinery that Mexico’s government has tasked state oil company Pemex to build will likely cost at least $2 billion to $4 billion more than the government estimates due to its “limited know-how,” credit rating agency Moody’s said on Monday. Last week, Mexican President Andres Manuel Lopez Obrador said the refinery, slated to be built at the Gulf coast port of Dos Bocas for $8 billion, will break ground early next month and be completed by May 2022. The ratings agency described the decision to build the refinery without private sector expertise as one that would be “costly.” “Given the government’s (and Pemex’s) lack of experience in building refineries, the project is likely to end up costing more and taking longer than the government anticipates, placing further strains on fiscal resources,” Moody’s said in a statement. The project, one of Lopez Obrador’s top priorities, has been repeatedly criticized by investors and ratings agencies due to concerns it will divert funds away from Pemex’s more profitable exploration and production business.

Without Venezuela’s oil, Haiti struggles to keep lights on - Through the Venezuelan aid program known as Petrocaribe, Haiti once received roughly 60,000 barrels of oil a day under favorable terms that beat anything on the open market. More than half the costs of the oil, which came at a heavily discounted price, were repayable over 25 years at a 1% interest rate, allowing the government to supposedly use the windfall for economic development. In exchange, Haiti reliably backed Venezuela against the United States in regional forums such as the Organization of American States. But as President Nicol├ís Maduro’s government has struggled with plunging petroleum production and a cratering economy, Venezuela has stopped sending billions in subsidized oil to countries throughout Central America and the Caribbean, including Haiti, where the end of cheap oil has meant a sharp reduction in power. Meanwhile, Haiti’s Bureau of Monetization of Development Aid Programs, or BMPAD, quickly ran into its own difficulties. After starting to buy oil on the global market, the bureau said this year that it had run out of operating funds and stopped regularly delivering fuel needed by power station operators to keep the lights on. Now, much of Haiti’s population enjoys electricity for just three hours a day. Nighttime activity has ground to a halt as armed robbers hold up street merchants or break into people’s homes in darkness. Gas stations have gone empty for days, making it nearly impossible for many Haitians to get to work, run errands or take their kids to school. Hospitals are forced to rely on backup generators. “We can’t find gas for our vehicles. Our clients can’t come to us. Sales are down in every sector,” said businessman Reginald Boulos, whose investment group runs major supermarkets and car dealerships. Read more here: https://www.newsobserver.com/news/business/article230511009.html#storylink=cpy

Weatherford Expects to File for Chapter 11 - Weatherford International plc has announced that it has executed a restructuring support agreement with a group of its senior noteholders that collectively holds, or controls, approximately 62 percent of the company's senior unsecured notes. The oilfield service business expects to implement the restructuring agreement through a "pre-packaged" Chapter 11 process and expects to file U.S. chapter 11 and Irish examinership proceedings. As part of this process, Weatherford said it intends to continue engaging in discussions with, and begin soliciting votes from, its creditors in connection with a proposed plan of reorganization prior to filing. The proposed comprehensive financial restructuring would “significantly” reduce the company's long-term debt and related interest costs, provide access to additional financing and establish a more sustainable capital structure, according to Weatherford. The company said the restructuring agreement contemplates the company will continue operating its businesses and facilities without disruption to its customers, vendors, partners or employees and that all trade claims against the company will be paid in full in the ordinary course of business. Weatherford expects the new capital structure will allow it to continue to capitalize on its momentum and build a “truly integrated service company with sustainable profitability and long-term growth potential,” according to McCollum. In its fourth quarter results statement released back in February, Weatherford reported a net loss of $2.1 billion. During the same period in 2017, the company reported a net loss of $1.9 billion.

Equinor investigates oil spill at Statfjord North Sea field (Reuters) - Equinor is investigating an oil spill at its Statfjord field in the North Sea, although the Norwegian company said on Wednesday the incident had not disrupted production. Loading was stopped and loading systems at the field were shut down after oil was spotted nearby and systems were mobilised to deal with such a situation, Equinor said. “In connection with loading oil from buoy to shuttle tanker on the North Sea Statfjord field, oil was observed on the sea surface early this morning,” Equinor said. The buoy is located two kilometres from the nearest Statfjord platform so oil production is continuing as normal, Equinor spokesman Morten Eek said. “We are always treating situations when we observe oil on the sea seriously ... It’s still too early to say the extent of this leakage,” Eek said. Statfjord, which opened in 1979, is among the oldest fields still producing in the North Sea, and Equinor has said the first of its three platforms is due to close in 2022. “In compliance with regular procedures Equinor’s emergency response organisation was quickly mobilised, and the authorities were notified,” Equinor said.

Shell Set to Have Biggest UK Decom Costs --Royal Dutch Shell plc is set to have the largest abandonment and decommissioning expenditure (ABEX) liability of UK operators in producing UK oil and gas developments, according to GlobalData. The company is estimated to have over $3 billion in ABEX liability to abandon producing fields in the UK and is set to spend as much as $1.5 billion by 2025, GlobalData revealed. This is driven mainly by the Brent oil field but also relates to expenditure in aging developments such as Pierce and Curlew, GlobalData highlighted.“The total plug and abandonment expenditure alone for the Brent field could reach $900 million and spans from 2008 to 2020 with over 150 wells in total,” Daniel Rogers, upstream oil and gas analyst at GlobalData, said in a company statement.Following Shell, the remaining top five companies with the greatest ABEX exposure from producing fields in the UK, according to GlobalData’s latest research, are:

  • Apache Corp
  • Total SA
  • ExxonMobil Corp
  • BP plc

According to a report from industry body Oil & Gas UK in November last year, the UK is expected to spend $19.5 billion (GBP 15.3 billion) on decommissioning over the next decade. The spend over the next ten years is almost 20 percent lower than forecasts made in 2017 would have suggested, according to the report. Global decommissioning costs are set to hit a record $36 billion over the next three years, according to Rystad Energy.

U.S. Senate Threatens Sanctions Over Russian Pipeline – In the latest uptick of trans-Atlantic tensions, European ships involved in the construction of a controversial gas pipeline from Russia to Germany could be subject to U.S. sanctions under a new bipartisan bill that will be introduced in the U.S. Senate as early as Monday. The bill, sponsored by Sens. Ted Cruz, a Republican, and Jeanne Shaheen, a Democrat, would sanction companies involved in laying deep-sea pipelines for Russian energy projects, taking direct aim at the Nord Stream 2 pipeline, which has emerged as a major source of tension between the United States and Germany. Foreign Policy obtained a draft copy of the bill.Critics say the Nord Stream 2 project, which would double the amount of Russian gas piped to Germany via the Baltic Sea, makes little commercial sense and is a geopolitical power play by Moscow to exert energy leverage over Western Europe. Countries such as Poland and the Baltic states have joined the United States in opposing the pipeline. They also warn it could destabilize Ukraine as it wages war against Russian-backed separatists in the east of the country. Despite the conflict, the Ukrainian government relies heavily for revenue on transit fees for Russian gas going into Europe.The Trump administration has rebuked Germany for moving forward with the project, one of a raft of recent issues straining trans-Atlantic relations alongside Iran, climate change, and trade. Last July, U.S. President Donald Trump accused Berlin of being held “captive” to Russia due to its dependence on Moscow for energy, a charge German officials sharply dismissed.While Trump has clashed with Democrats and Republicans alike over his handling of relations with Russia, there is broad bipartisan opposition in Washington to the Nord Stream 2 project.Proponents of Nord Stream 2 say the pipeline offers a way to increase Europe’s supply of cheap Russian gas through a more reliable route than the traditional pipe across Ukraine, which has been subject to multiple disruptions and has been hostage to geopolitical tensions between Kiev and Moscow over the past decade. The bill takes aim at the vessels used to lay deep-sea pipelines, which involves technological know-how that Western energy companies have but that Russia lacks. “That’s one of the few areas where, essentially [Russia’s national gas company] Gazprom lacks that technical expertise and technology in order to build the pipeline projects,” said Agnia Grigas, an expert on Eurasian energy issues with the Atlantic Council, a Washington-based think tank. A senior Republican aide familiar with the draft legislation said parts of it were modeled on previous U.S. efforts to target Iranian oil exports.

200+ Groups Urge Senate to Oppose European Fossil Fuel Promotion Bill  – More than 200 groups sent a letter to U.S. senators today, urging them to oppose the European Energy Security and Diversification Act of 2019 (S. 704), a bill that would provide billions of dollars of support for natural gas infrastructure projects in Europe, further incentivizing fracking and fossil fuel development in the United States. The bill, passed by the House in March, has drawn criticism for locking both the United States and Europe into decades of continued fossil fuel dependence under the guise of national security.The letter, organized by the national advocacy group Food & Water Watch, was signed by groups including the Center for Biological Diversity, Climate Hawks Vote, The Climate Mobilization, Friends of the Earth US, Greenpeace USA, Oil Change U.S., Progressive Democrats of America, Public Citizen, Rainforest Action Network, Sunrise Movement and 350.org.The letter states in part: “The only way to promote real energy security is to work together with Europe to rapidly end our shared reliance on fossil fuels. Our nation should be investing in renewable energy technology and energy efficiency, not setting aside tens of billions of dollars to support fracked-gas infrastructure projects that will keep Europe dependent on fossils.”“At a moment when we should be leading the global mission to rapidly quit fossil fuels, the notion of seeking new and deeper fossil fuel codependence between America and Europe is patently absurd,” said Wenonah Hauter, executive director at Food & Water Watch. “Climate science is clear: We must begin an aggressive global transition to clean, renewable energy now. For the Senate to promote the opposite would be a clear abdication of moral duty to current and future generations in this country and every country.” “Whatever the geopolitics, sending more deadly fossil fuels to Europe or any other part of the world is not the answer. Natural gas is fool’s gold and will inevitably lead to further destabilization of any region that relies upon it,” said Bill Snape, Senior Counsel at the Center for Biological Diversity. “The future is with clean renewable energy and infrastructure. Any expenditure of taxpayer funds for fossil fuels is a colossal waste of money and a major lost opportunity.”

EU Promises To Double U.S. LNG Imports Within 5 Years - The European Union has promised to double its intake of U.S. liquefied natural gas over the next five years with the annual total reaching the equivalent of 8 billion cubic meters in 2023, double the current annual rate of imports, Forbes’ Dave Keating reported last week, citing an announcement by the European Commission.The news is good for both sides. For U.S. LNG producers, a growing export market is always good news. For the European Union, this pledge to buy more U.S. LNG will defuse a tariff bomb that President Trump threatened to blow up last year: he said he would slap import tariffs on German cars if the EU did not play nice. With few options available, this is exactly what the EU has done.But the increase in U.S. LNG imports is good news for the European Union in more than one way. It will also reduce its reliance on Russian gas—something that has been a thorn in the side of several central European EU members, most notably Poland and the Baltic States. These, by the way, are already the chief buyers of U.S. LNG and builders of import terminals. However, they are small potatoes compared with Germany, the EU’s largest energy consumer and gas importer. At a recent meeting in Brussels when the import doubling pledge was made, U.S. Energy Secretary Rick Perry praised the EU for its decision saying U.S. LNG imports were more secure than Russia deliveries. European Energy Commissioner Miguel Arias Canete, however, emphasized the price component in the LNG import dynamics: “Given our heavy dependence on imports, U.S. liquefied natural gas, if priced competitively, could play an increasing and strategic role in EU gas supply,” he said.

Can The U.S. Steal Gas Market Share From Russia? -  What was once Europe’s largest natural gas field, the Netherlands’ Groningen field, has already been diminished considerably and will be shut down completely by 2030 as part of the Dutch government's efforts to quell earthquakes caused by gas exploration in the area.  Even after a relatively mild winter, Bloomberg reports that “European LNG imports more than doubled in the first quarter [...] demonstrating a ‘genuine underlying demand’ according to Alastair Maxwell, chief financial officer of LNG tanker owner GasLog Ltd.” Maxwell went on to explain to Bloomberg reporters that, “while buyers took advantage of the lower prices to bring in more cargoes, declines in the region’s production were also behind the increases.”  So far, as European natural gas production has been in severe decline, low natural gas prices--thanks in large part to a global supply glut--has been the continent’s saving grace. As we head into the summer, however, demand for natural gas in Asia is set to keep growing, and gas prices will likely grow accordingly.  In the meantime, the European Union’s growing dependence on Russia has created a politically fraught dynamic between Europe, Moscow, and Washington. The United States has urged the European Union to ease their dependence on Russian oil. “The U.S. says that dependency is dangerous and is urging the EU to build more terminals to ship in gas from its shale boom to bolster the bloc’s efforts at diversification,” reports Bloomberg.  In fact, just this week United States energy secretary Rick Perry announced that on Monday in Brussels he signed two export orders for liquefied natural gas as part of an agreement that will raise the United States’ export capacity to Europe to 112 billion cubic meters per year by 2020, more than double the current annual amount. In a rather hyperbolic address to reporters in Brussels Perry compared the introduction of more U.S. natural gas into European markets to U.S. troops during World War II, saying that “the United States is again delivering a form of freedom to the European continent [...] and rather than in the form of young American soldiers, it’s in the form of liquefied natural gas.”  This week’s liquefied natural gas export orders come on the tails of a joint statement pledging to build up strategic energy cooperation between the EU and the U.S., released last year by European Commission President Jean-Claude Juncker and United States President Donald Trump. The initiative to import more LNG from the U.S. realized this week was already established in the statement released last July. “The European Union wants to import more liquefied natural gas (LNG) from the United States to diversify its energy supply,” stated the press release.

The European Gas Game Is About To Change -The Turkmen-Russian gas axis has a decade-long history as Gazprom generally did not allow for direct transit of Central Asian gas through its massive transportation system yet agreed to buy out these volumes for further exports, basically making sure that the trader’s margin remains at all cases with them. Cognizant of the peculiarity of exporting gas to Ukraine, throughout years Gazprom used Turkmen gas to supply this Eastern European nation. In this vein, Russia and Turkmenistan concluded a 20-year agreement in 2009 for the supply of up to 30 BCm gas per year. The contract also included a take-or-pay threshold of 10 BCm which would eventually turn out to be the stumbling block upon which the whole contract fell over. Not only was there a take-or-pay threshold but the price was fixed, too, at 240 USD/MCm which was tolerable for Gazprom in the halcyon days of the early 2010s yet became unbearable after gas prices plummeted to 170 USD/MCm in 2015. For the Central Asian transit it needed, Gazprom opted for Uzbek volumes (all the more so as the Russian firm has own production there) and unilaterally terminated the Turkmen contract after several unsuccessful attempts to renegotiate the terms of the deal. Turkmenistan did not put up a scene as it had set its sight on China which promised to be a market outlet for most if not all of Turkmenistan’s ample natural gas. Yet Turkmenistan suffered a double blow to its gas export plans – supplies to Iran were halted a year after Russia stopped its imports, due to the NIGC’s non-payment for substantial parts of the Turkmen volumes. This left Ashgabat with only one market outlet – China – which was satisfied with the roughly 40 BCm per year it received from Turkmenistan and did not have any immediate plans to increase it. Hence came about the most recent Russo-Turkmen deal, which contrary to previous practice is short-term, a temporary filler before the two sides iron out a new long-term contract. Under the new deal signed April 15, it would be Gazprom’s Swiss subsidiary that would buy 1.2 BCm of Turkmen gas in H1 2019, to be supplied through the usual Central Asian route to customers in Southern and Central Eastern Europe.

In limbo: the dirty Russian oil no one wants to pay for (Reuters) - The bills are due for millions of barrels of contaminated Russian oil that have been stuck for weeks in pipelines from Belarus to Germany - but no one wants to pay. Western oil companies and European refiners that bought the oil a month ago, before discovering it was unusable, have so far refrained from freezing payments as they are keen to maintain good long-term relations with the world’s second biggest oil exporter and avoid protracted legal battles in Russian courts. Instead, several Western buyers have asked Russian producers if they can postpone payments for the tainted crude while buyers and sellers agree how to resolve the mess - and how to share the costs, four traders involved in Russian oil trading said. For the buyers of an estimated 19 million barrels of contaminated crude stuck in the pipeline and loaded on tankers, it’s a $1.2 billion question. The buyers want Russian producers to give guarantees in the form of bank deposits that they will contribute to the clean-up, or delay payments due this week until the crisis is resolved, said a source at European refiner, who declined to be named. “There’s around 0.8-0.9 million tonnes of dirty oil sitting in the pipelines between Belarus and Germany that no refiner wants to take,” he said. “This oil needs to be evacuated somewhere to restart the pipeline. But it would be wrong for Russia to assume European refiners will bear all costs.”

The World Blows Over $5 Trillion a Year on Oil and Gas Subsidies- Report --The world subsidized its own demise to the tune of $5.2 trillion in 2017. That’s how much 191 nations collectively spent directly and indirectly subsidizing fossil fuels, according to the hippies at the International Monetary Fund. The staggering number shows why failure to account for climate change, air pollution, and other societal ills when it comes to fossil fuel extraction is often described as the biggest market failure ever, and also that maybe the market isn’t going to save us. Thinking about $5.2 trillion is hard. It’s equivalent to 6.5 percent of the entire world’s annual GDP. It’s more than France and Germany’s GDP combined. It’s $164,890.91 of money wasted per second in a year. But one thing is obvious: it is an absolutely stupid amount of money to be throwing away on something that is actively harmful to life on Earth.IMF’s report released late last week breaks down where the huge figure comes from. On the one hand, you have you have your direct price subsidies that help offset costs consumers pay for, say gas or heating oil. Those totals are still profound at more than $300 billion in 2017, but the real subsidies are hidden in the impacts burning fossil fuels have on society. Burning oil, gas, and coal cause widespread health problems tied with air pollution and disrupt the climate, and fossil fuels aren’t paying their fair share.In their calculations, IMF relies on a metric called the social cost of carbon to estimate these hidden subsidies. It uses a middle of the road estimate of $40 per ton of carbon, with a 3 percent rise annually. While there are lines of research showing a carbon tax of $40 per ton isn’t high enough, that’s how IMF arrives at its $5.2 trillion figure.If fossil fuels were correctly priced in 2015, IMF’s research shows carbon emissions would have been 28 percent lower and 46 percent fewer people would’ve died from air pollution, which kills 4.2 million annually. Tax revenues would also have gone up 3.8 percent and the total economic benefits would have been equal to 1.7 percent of global GDP.

New report maps 3 scenarios for the future of oil --Oil demand could peak by 2025 and fall more than 30% by 2050 if countries take aggressive steps to hold the long-term global temperature rise to under 2°C, Barclays analysts say in a new report. That's nowhere near the trajectory things are pointing to now (seen as "development" in chart), which leads to a peak in the 2030–2035 range, but then a "long plateau" to mid-century that keeps demand at roughly today's levels. A 3rd scenario modeled — "deadlock" in the chart above — shows much higher demand if the world is mired in trade wars, tech uptake is hindered, and there's little focus on climate. The report is a major new entry into attempts by forecasting bodies, consultancies and major energy companies to get their arms around how the global energy system will — and won't — transform in the decades ahead.The report's climate-friendly "dynamism" scenario would require circumstances to line up in a very particular way — and not just for oil — to keep things under 2°C. Of note: That break with current trends would involve an array of big steps such as...

  • Larger industry and national investments in efficiency and technology.
  • Even faster growth and deployment of renewables, which are 40% of the global energy mix mid-century.
  • Greater electrification of energy demand, rising to 35% by 2050.
  • Greater recycling, cutting single-use plastics and other steps to slow the growth rate of oil used in petrochemicals.
  • Significant adoption of carbon capture and storage from 2040 onwards, more than twice as much as in their business-as-usual "development" scenario.

Getting back the main focus of the report — oil — here's a look at where Barclays sees things heading in "development." Overall, it sees demand just slightly higher at 105 million barrels per day (mbd) in 2050, which is roughly 5 mbd above current levels. But the uses of that oil change. Per the report:

  • Oil use in passenger cars falls from roughly 22 mbd right now to slightly under 20 mbd as efficiency gains (the biggest factor) and EVs offset the huge rise of cars on the world's roads.
  • Growth of the global trucking fleet means that its oil consumption rises from 24.5 mbd to nearly 30, despite gains in efficiency and electrification.
  • Oil needed for jet fuel rises from 6.2 mbd to 9.2 mbd in 2050.
  • Growth in petrochemicals nearly doubles that sector's demand to 18.6 mbd in 2050.

Speaking of petrochemicals, the report has some interesting data and projections about single-use plastics. They matter a lot! "A complete ban on single use plastics would reduce our estimate of oil demand in the development scenario by 6mb/d in 2050," it notes.

Eni Makes New Light Oil Find -- Eni announced Tuesday that it has made a new light oil discovery in Block 15/06 in Angola’s deep offshore. The new discovery, which was made through the Ndungu-1 NFW well, is estimated to contain up to 250 million barrels of light oil in place and has “further upside”, according to Eni. The company revealed that “intensive data collection” indicates a production capacity in excess of 10,000 barrels of oil per day. Ndungu is the fourth discovery of commercial nature since the Block 15/06 joint venture re-launched its exploration campaign in mid-2018, Eni highlighted. Back in March, the company announced a major oil discovery in the block’s Agogo exploration prospect. In December last year Eni announced a new oil discovery in the block’s Afoxe exploration prospect and in June 2018 the company announced a new oil discovery in the block’s Kalimba exploration prospect. The four discoveries altogether are already estimated to contain up to 1.4 billion barrels of light oil in place, according to Eni. 

Kenya pipeline to spend millions over oil leak detection blunder -- A costly blunder during the construction of a Sh48 billion pipeline from Mombasa to Nairobi is set to bleed Kenya Pipeline Company more money after an oil spill occurred in Makueni barely a year into its operation. The 20-inch pipeline was designed without any leak detection systems, making it as bad as the leak-prone old one that was meant to be replaced in the new venture after frequent leakages caused massive losses of product eventually passed down to the taxpayer in pump prices. Kenya Pipeline Corporation acting managing director Hudson Andambi termed the oversight "unfortunate" as the corporation now plans another tender to finance the installation of leak detection apparatus in the line. Article Continues After Advertisement"Leak detection was not included in the design stage, which is very unfortunate given that it was our second time constructing a pipeline. That was an unnecessary and costly omission but we have budgeted for it in the next financial year. For now, I can't tell you how much it will cost because it will be an open tender," Mr Andambi said. Mr Andambi sought to downplay any adverse effects of the spill, whose real extent is yet to be determined, saying a team had been dispatched to dig trenches and control the damage which, according to him, was far away from the water spring that is the main source of water for the area. Although the extent of the Makueni diesel spill is yet to be determined, the Water Resources Management Authority has already cautioned residents of the affected area against drinking water from the Kiboko River after it was found to be contaminated with petroleum products. This may mean more costs to KPC, which has already contracted Swedish firm SGS to examine the extent of the spill. 

Middle East Oil Grab Reaches Frenzied Pace - Oil refiners across Asia are bidding up crude prices from Abu Dhabi to Oman as they compete for supplies to make up for lost Iranian and Venezuelan exports. July-loading cargoes of grades such as Murban and Das were bid at premiums of 80 to 85 cents a barrel above the official selling price on Friday on an electronic trading platform operated by S&P Global Platts. That would be the highest spot differentials in at least three years for the grades, according to data compiled by Bloomberg. Upper Zakum crude was also bid at a 65-cent premium, while Umm Lulu changed hands at a 95-cent premium. The higher bids came even after Abu Dhabi National Oil Co. hiked the official price of its crude earlier this week. Buyers across the world’s top oil-importing region are scrambling for oil as U.S. sanctions on Iran and Venezuela tighten supplies of high-sulfur crude that their refineries are designed to process. Unplanned disruptions to Russian and Nigerian flows and concerns that fighting in Libya could affect oil exports also contributed to the fervor to secure cargoes. Oman crude futures climbed to a premium of $3.10 a barrel over swaps for Dubai oil, the benchmark grade for the Middle East. That’s its highest premium since September, when markets were spooked by the prospect of U.S. sanctions putting an end to Iranian exports. A wide discount between the Dubai benchmark

Saudi Aramco bets on oil supply to Europe, trading expansion (Reuters) - Saudi Aramco aims to boost its oil supply to Europe by 300,000 barrels per day (bpd) within the next two years as it expands its trading operations there with an office opening this summer in London, a senior company executive said. Aramco, the world’s biggest oil producer, is expanding its downstream, or refining and marketing, footprint globally by signing new deals and boosting the capacity of its plants to secure new markets for its crude. The company’s trading arm has been focusing on a new processing arrangement in which it would supply European markets with both crude oil and products. Aramco is looking to finalize deals in the next two years through swapping mainly Saudi crude with oil products to supply customers in Europe and the Mediterranean, Abdulaziz al-Judaimi, Aramco’s senior vice president for downstream, told Reuters. “We believe that Europe is a market that we are going to stay in for a long time,” Judaimi said in a telephone interview this week. “The whole idea is we supply crude, and we offtake refined products to supply markets like Italy, the Balkans, as well as Cyprus ... In Europe, having a virtual dedicated outlet and processing agreement is really the right winning strategy.” Aramco currently has more than 3 million barrels a month of oil supply and product swap arrangements in Europe, he said. The company has deals with Poland’s PKN Orlen, Greece’s Motor Oil Hellas and Egypt’s Midore. “We are looking to expand the 3 million barrels to almost 10 million barrels in a month, within the next two years. This means we have almost created a 300,000 bpd refining capacity in Europe,” Judaimi said. The company has invested in its storage capacity in Egypt and the Dutch port of Rotterdam. About 60% of the capacity of the SUMED storage pipeline in Egypt is for Saudi crude, used by Aramco to reach its customers in Europe, he said. The Rotterdam terminal now holds more than 6 million barrels of oil, he said. Aramco will also continue to invest in Greece, Judaimi said. The priority is to supply refiners with Saudi crude to lock in their capacity, but non-Saudi crude can also be supplied through spot trading. “This is a win-win strategy because it helps the refiner ... and for us it is to place crude oil in the European refining assets,” he said 

Oil Is Trade War's Collateral Damage  -- U.S. oil shipments are likely to be a casualty of the trade war with China, even though crude was spared from the latest list of American goods targeted with retaliatory tariffs. While oil has never been subject to levies during the dispute between the world’s two biggest economies, the flow of American cargoes to China has nevertheless been throttled by rising tensions over the past year. Refiners in the Asian nation -- previously the top Asian buyer of U.S. crude -- have largely shunned imports in a bid to avoid getting caught up in the trade war. Even without tariffs, the latest escalation in the dispute threatens to snuff out a recovery in flows seen over the past couple of months that were driven by hopes that tensions were easing. That will close the door to a critical source of crude for buyers in the world’s largest oil importer, at a time when refiners across the globe are scrambling for cargoes due to a supply crunch. Middle East exporters are already cashing in on the squeeze that was driven by U.S. sanctions on Iran and Venezuela, as well as unexpected disruptions from Russia to Nigeria. Iraq raised the official selling price of its flagship Basrah Light crude for Asian customers to the highest level since 2012, after fellow OPEC member Saudi Arabia set the price of its Arab Medium variety at the highest since December 2013. The deteriorating demand outlook is pushing down prices, although rising tension in the Middle East is preventing steeper declines. West Texas Intermediate futures fell 0.2% to $60.94 a barrel as of 8:45 a.m. in Singapore after dropping 1% on Monday. Brent crude, the global benchmark, was down 0.4 percent after closing 0.6 percent lower in the previous session. Last year, Chinese refiners gorged on U.S. oil pumped everywhere from inland shale fields to wells in the Gulf of Mexico, lifting imports to a record-high of more than 2 million metric tons in January 2018. The Asian nation removed crude from a list of goods that would incur a levy last August, following an earlier threat that duties would be imposed on imports of the commodity. Nevertheless, China has imported just 1.64 million barrels of American oil in the six months through March, with four of those months seeing no shipments at all. That compared with 60.5 million barrels in the preceding six months.

OPEC oil production drops in April as Iran output shrinks - Oil production from Iran dropped in April as the country remained under U.S. sanctions. In its closely watched monthly oil market report, the Organization of the Petroleum Exporting Countries said Iranian supply fell 164,000 barrels a day in April to 2.55 million barrels a day, with Saudi Arabian supply also falling by 45,000 barrels a day.The drop in supply was mitigated by rising output from Nigeria and Iraq, meaning OPEC crude oil production fell by 3,000 barrels a day to 30.031 million barrels, according to secondary sources. Elsewhere, non-OPEC supply growth in 2019 is expected to average 2.14 million barrels a day, down by 30,000 barrels a day from OPEC’s previous report.

Iran insists on ramping up oil sales to stay in nuclear pact - sources - (Reuters) - Iran insists on exporting at least 1.5 million barrels per day (bpd) of oil, triple May’s expected levels under U.S. sanctions, as a condition for staying in an international nuclear deal, sources with knowledge of Iran-EU talks said. The figure was communicated in recent meetings between Iranian and Western officials, including Iranian Foreign Minister Mohammad Javad Zarif, but has not been set down in writing, four European diplomatic sources said. The United States reimposed sanctions in November on exports of Iranian oil after U.S. President Donald Trump last spring unilaterally pulled out of the 2015 accord between Iran and six world powers to curb Tehran’s nuclear programme. In an attempt to reduce Iran’s crude exports to zero, Washington ended at the beginning of May waivers that had allowed the top buyers of Iranian oil to continue their imports for six months. The sanctions have already more than halved Iranian oil exports to 1 million bpd or less, from a peak of 2.8 million bpd last year. Exports could drop to as low as 500,000 bpd from May, an Iranian official told Reuters this month. Iran has threatened to block the Strait of Hormuz - a major oil-shipping route - and disrupt crude shipments from neighbouring countries if Washington succeeds in forcing all countries to stop buying Iranian oil. Iran’s Supreme Leader Ayatollah Ali Khamenei set out last year a series of conditions for European powers if they wanted Tehran to stay in the nuclear deal, including continued purchases of Iranian oil.

Sinopec, CNPC skip Iran oil purchases for May to avoid U.S. sanctions (Reuters) - China Petrochemical Corp (Sinopec Group) and China National Petroleum Corp (CNPC), the country’s top state-owned refiners, are skipping Iranian oil purchases for loading in May after Washington ended sanction waivers to turn up pressure on Tehran, three people with knowledge of the matter said. The United States has not renewed any exemptions from sanctions on Iran, taking a tougher line than expected on the expiry of the waivers. The waivers were granted last November to buyers of Iranian oil. China is Iran’s largest oil customer with imports of 475,000 barrels per day (bpd) in the first quarter of this year, according to Chinese customs data. Two of the sources said Sinopec and CNPC have skipped bookings for cargoes loading in May as the companies were worried that taking oil from Iran could invoke U.S. sanctions and cut them out of the global financial system. A third source said Sinopec, who buys the majority of China’s Iranian oil imports, does not wish to breach a long-term supply contract but has opted to suspend booking new cargoes for now due to the sanction worries. All of the people with knowledge of the matter requested anonymity due to the sensitive nature of the topic. Of the five supertankers that loaded Iranian crude in April for China, two have discharged, while another two are waiting off Ningbo and Zhoushan in eastern China to discharge, according to Refinitiv data and Refinitiv analyst Emma Li. A fifth tanker is heading to Shuidong in southern Guangdong province. The sources said they did not know how long the suspensions will last. Both Sinopec and CNPC declined to comment. 

Mystery Tanker Violates US Sanctions, Unload Iranian Fuel In China As Zarif Heads To Beijing - With Trump shutting down Huawei and China's entire telecom industry, it was only logical that China would at least try to retaliate, which it has done by formally breaching the US embargo on Iran oil exports. According to ship tracking data on Refinitiv Eikon (i.e. the old Reuters terminal), a tanker carrying Iranian fuel oil in violation of U.S. sanctions has unloaded the cargo into storage tanks near the Chinese city of Zhoushan. A representative of the oil storage terminal confirmed that the tanker, Marshal Z, discharged nearly 130,000 tonnes of Iranian fuel oil; that marked the end of an odyssey for the cargo that began four months ago. As Reuters reported on March 20, some Iranian fuel oil had managed to evade the United States’ sanctions on petroleum exports "by using ship-to-ship transfers involving four different ships, including the Marshal Z, and by using forged documents that masked the cargoes as originating from Iraq." Marshal Z tanker Amusingly, a second representative from the terminal operator, Zhoushan Jinrun Petroleum Transfer Co, said the cargo could not be Iranian oil, "as the terminal had not received official shipments from Iran in at least the past four years. Both Jinrun representatives declined to be identified because of the sensitivity of the matter." Obviously, China would not explicitly admit it was violating a US embargo which took full effect less than two weeks ago, when President Trump’s administration stepped up moves to choke off Iran’s oil exports by scrapping waivers it had granted to big buyers of the country’s crude oil including China. Refined products like fuel oil, mainly used to power ship engines and generate electricity, were not covered by the temporary waivers granted. Still, China had no qualms with implicitly being found to have violated the embargo, which it appears to have done as a Reuters analysis of the tanker's trek revealed. Specifically, from March 22 until arriving at the Jinrun terminal on the island of Liuheng on May 8, the vessel maintained a constant draught of 15.9 meters (52 feet), according to the tracking data. That indicated the cargo was not discharged before reaching the terminal, about 30 km (18 miles) south of Zhoushan, near Shanghai. 

China is going easy on American oil (for now). Here’s why  - US oil has so far been spared China's tariff wrath even as the deepening trade war ensnares other American commodities. China hasn't been shy about targeting everything from liquefied natural gas and cotton to soybeans. Although China has tapered its purchases of US oil, officials there have so far avoided placing outright tariffs on crude from the world's leading producer.The decision to go easy on US oil reflects Beijing's desire to keep its options open, especially ascrude supplies from Venezuela and Iran dwindle and tensions in the Middle East rise."It's safer to tariff LNG," said Ryan Fitzmaurice, energy strategist at Rabobank. "China is a huge consumer of oil. There's a big appetite as people move into the middle class."The US-China trade war has escalated dramatically in recent days. The Trump administration on Friday raised tariffs on $200 billion of Chinese goods to 25%, up from 10%. China retaliated on Monday, increasing tariffs on about $60 billion of US goods, including cotton, machinery, grains and aircraft parts.LNG was included in the list of products now facing 25% tariffs, up from the 10% levy that China imposed in September.If not for the trade war, China and the United States would seem like a perfect match on LNG, which is super-cooled natural gas that can be transported by ship. China is the world's fastest-growing LNG market as Beijing tries to improve its pollution problem by shifting away from coal. Thanks to the shale boom, the United States has more natural gas than it knows what to do with. Today, the United States is the world's fastest-growing exporter of LNG.

Russia Could Take Hold Of China’s Entire Gas Market --As the trade war between the U.S. and China intensifies, with an increase in tariffs on some $200 billion worth of Chinese goods from 10 percent to 25 percent and with another $300 billion worth of Chinese goods in the cross-hairs, Beijing has vowed to retaliate. On Monday, it announced it will increase tariffs imposed on about $60 billion of U.S. goods in retaliation for what it sees as  President Donald Trump’s latest escalation of the trade war. The increased tariffs will take effect on June 1, according to a statement on China’s Ministry of Finance’s website.  Part of the increased tariffs will include U.S liquefied natural gas (LNG) imports, rising from a previous 10 percent levy to a damaging 25 percent starting June 1. The increase in tariffs already come as Chinese imports of the super-cooled fuel from the U.S. has plunged. A Reuters report said that in 2018 some 27 LNG vessels traveled from the U.S. to China, down from 30 in 2017. Meanwhile, most of those that left U.S. ports last year did so before the trade war started, with 18 tankers going to China in the first half of the year and just nine during the second half. Now that China is increasing LNG tariffs from 10 to 25 percent, these export numbers will drop even more, maybe even altogether. However, secondary traders will no doubt procure U.S.-sourced LNG and then resell it to China. Yet, that’s little respite for major U.S. LNG producers in the long term if the trade war continues. Not only will the trade war impact U.S.-Chinese LNG deals, but it will impact the overall global LNG market since the U.S. is the fastest growing LNG producer who could view with Australia and even Qatar for the top LNG slot in terms of liquefaction capacity by the mid part of the next decade if only a fraction of the dozens of U.S. LNG project proposals go forward. However, that’s the real quandary. Many of these projects aren't backed by cash-laden oil majors, like an Exxon Mobile or Chevron, but smaller players that need to sign long term off-take agreements with Chinese firms as well as secure funding from Chinese banks and financial institutions to finance their capex intensive projects. Simply put, without both Chinese funds and Chinese gas demand, the so-called second wave of the U.S. LNG development story will stall, losing out to eager competitors, including Russia.

Will Russia Abandon The OPEC+ Oil Deal? -- A month and a half before OPEC and its allies are set to sit down and discuss how to proceed with their production cut pact, the leader of the non-OPEC partners, Russia, is sending mixed signals on its willingness to continue taking part in the supply agreement.This is nothing new for Russia, which had dragged its feet in supporting each of the previous production deals with OPEC ever since the parties decided to team up to manage global oil supply and oil prices beginning in January 2017. After 2017, ahead of each meeting, comments and hints of top Russian officials, including Vladimir Putin, left the oil market and analysts only guessing would Moscow play ball this time around. It did, every time.At the meeting in December 2018, when the current oil production cut deal was forged, it was Putin—through his energy minister Alexander Novak—who sat down separately with each of the ministers of Saudi Arabia and Iran and convinced them to word the supply agreement in such a way that Iran would vote for the deal, because OPEC needs a unanimous vote to pass decisions.Now that we are approaching the date for the revision of the pact—June 25-26—Russia is sending mixed signals once again about its commitment to the deal, again. Not that OPEC’s members are sending unambiguous signals either. The U.S. threw a major challenge to the cartel and allies’ supply pact by ending all sanction waivers for Iranian oil buyers, leaving the organization and the market guessing just how much supply will be lost from Iran until June and afterwards, and how much more the other OPEC members—those with spare production capacity like Saudi Arabia and the UAE—will have to potentially pump to offset the lost Iranian barrels. Saudi Arabia says that it is prepared to meet all market demand for oil and, as always, “works toward market stability”, but it has reiterated that it wouldn’t rush in to ramp up production until it sees the actual barrels coming off the market. However, OPEC’s task in estimating global oil supply going forward has been made more difficult by mounting uncertainty over Russian oil supplies to Europe via the Druzhba pipeline, expectations of further production declines in Venezuela, and the possibility of an outage in Libya, which is in the midst of a civil war with rival armies fighting for the capital Tripoli.

IEA cuts oil demand outlook for 2019 - Oil demand growth estimates for both 2018 and 2019 have been cut, the International Energy Agency revealed in its latest report issued Wednesday. Last year’s oil demand growth estimate has been revised downward by 70,000 barrels per day (bpd) to 1.2 million bpd, while the forecast for this year is cut by 90,000 bpd to 1.3 million bpd, the IEA said. The estimates come amid global worries over the U.S.-China trade war and increased tensions in the Middle East, but are attributable to a range of factors specific to individual markets. “The changes reflect lower-than-expected 2018 data in large consuming nations such as Egypt, India, Indonesia and Nigeria,” the report said, adding that early data for this year showed demand in Brazil, China and Japan as below the agency’s estimates. The report noted a key divergence between OECD (Organization for Economic Cooperation and Development) countries and non-OECD countries. Demand in non-OECD countries, led by China, India and Russia, actually grew by 930,000 bpd year on year. Across the 36 OECD member states, demand fell by 300,000 bpd, a second consecutive quarterly slide, though this was primarily within the organization’s European and Asian members. In the Americas, oil consumption grew. The report also revealed a global supply drop in April of 300,000 bpd, led by Iran, Azerbaijan, Kazakhstan and Canada. Non-OPEC supply is forecast to grow 1.9 million bpd versus 2.8 million bpd last year.

Oil Pessimism Back in Vogue -- Pessimism is back in vogue in the oil markets, as investors bet sputtering trade talks and swelling U.S. output can kill crude’s rally. Hedge funds lifted bearish bets on West Texas Intermediate crude by 39%, the biggest short-selling surge in more than eight months. Meanwhile, bets on a rally retreated for the second straight week. Crude futures slipped to their third weekly loss in a row on Friday after high-level talks between the U.S. and China broke up, with President Donald Trump’s administration giving China a month to reach an agreement or face expanded tariffs. “Most of the bullish news on supply is priced in now so people are turning toward the trade wars," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “People who were assuming low exports from Iran are now wondering how much leakage there’ll be; Venezuela’s not at the bottom yet, but you can probably see it from here." The net-long WTI position -- the difference between bets on a price increase and wagers on a decline -- fell 10% to 271,912 futures and options contracts in the week ended May 7, the U.S. Commodity Futures Trading Commission said. Long positions fell 5.7%. The sum of long and short positions fell to its lowest in a month. Money managers showed more faith in Brent crude prices, which are less affected by the U.S. production surge. The net-long Brent tally rose by 0.5%, according to ICE Futures Europe exchange data. It was the ninth straight increase, the longest such streak since 2011. Other positions: The net-long position on Brent rose by 1,806 contracts to 406,175, the most bullish in seven months. Longs inched up 0.1%; shorts fell 4.5%. The net-long position on benchmark U.S. gasoline fell 7% to 107,198 contracts, the lowest in a month. Net diesel positions were slashed by 81%, to the least bullish in five weeks. 

Oil prices up as Middle East tanker attacks heighten supply concerns - Oil futures rose on Monday on increasing concerns about supply disruptions in the Middle East even as investors and traders fretted over global economic growth prospects amid a standoff in the Sino-US trade talks. Brent crude futures were at $71.77 a barrel by 1134 GMT, up $1.15. US West Texas Intermediate (WTI) futures were at $62.49 per barrel, up 83 cents. Saudi Arabia said on Monday that two Saudi oil tankers were among vessels attacked off the coast of the United Arab Emirates, condemning it as an attempt to undermine the security of global crude supplies. The UAE said on Sunday that four commercial vessels were attacked near Fujairah, one of the world’s largest bunkering hubs. The port lies near the Strait of Hormuz, one of the world’s most important oil export waterways. Iran’s foreign ministry called the incidents “worrisome and dreadful” and asked for an investigation into the matter. Saudi Arabia and the UAE are the largest and third-largest producers, respectively, in the Organisation of the Petroleum Exporting Countries (OPEC). “Reports on Sunday of explosions in Fujairah are likely to add further impetus to a potentially growing risk premium in the region, with initial reports suggesting oil tankers specifically were targeted in an apparent sabotage,” Vienna-based consultancy JBC Energy said. The government of Fujairah, one of the seven emirates that make up the UAE, in a tweet denied media reports about blasts inside Fujairah port and said the facility was operating normally. Markets have been supported by Washington’s bid to cut Iran’s oil exports to zero and reduce exports from Venezuela, where infrastructure problems have also cut output. The United States reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and world powers last year. But the trade friction between Washington and China, which intensified last week, will keep a lid on prices. The US and China together accounted for 34 per cent of global oil consumption in the first quarter of 2019, data from the International Energy Agency showed.

Oil prices fall with Wall Street on trade war, give back early gains (Reuters) - Oil futures fell more than 1% on Monday with Wall Street, as the negative turn in the U.S.-Chinese trade talks spooked investors, who had sent oil higher in early trade on concerns that tanker attacks in the Middle East could disrupt supplies.  Brent crude futures were down 77 cents at $69.85 a barrel, a 1.1 percent drop, by 1:04 p.m. EDT (1704 GMT). The global benchmark earlier hit a session high of $72.58 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 88 cents to $60.78 a barrel, a 1.4 percent decline, after previously hitting $63.33 a barrel. Oil was pressured by a slump in stocks and other risk assets as investors moved into safe havens like Treasury bonds in response to the intensifying U.S.-China trade war. [.N] China defied a warning from U.S. President Donald Trump and moved to impose higher tariffs on a range of U.S. goods including frozen vegetables and liquefied natural gas. The action was widely expected after Washington last week raised tariffs on $200 billion in Chinese imports. Investors fear the trade war between the world’s two largest economies could escalate further and derail the global economy. Earlier, oil prices had risen more than $1 a barrel after Saudi Arabia said two Saudi oil tankers were among vessels attacked off the coast of the United Arab Emirates. It was unclear how the attacks occurred.

Oil prices mixed as hope lingers for flagging US-China talks - Oil was mixed on Tuesday as tensions in the Gulf appeared to stop short of a military showdown and both sides in the U.S.-China trade talks sounded conciliatory notes, signalling that a breakdown might be avoided. Brent crude futures were at $70.40 a barrel at 0755 GMT, up 38 cents or 0.24 percent. Brent ended the previous session down 0.6 percent. U.S. West Texas Intermediate (WTI) crude futures were at $60.92 per barrel, down 12 cents or 0.2 percent. WTI closed down 1 percent on Monday. The negotiations between the United States and China appeared headed towards success last week but have largely unravelled over U.S. accusations that Beijing sought vast, last-minute changes. China on Monday ignored a warning from U.S. President Donald Trump and moved to impose higher tariffs on a range of U.S. goods including frozen vegetables and liquefied natural gas. But the Chinese government’s top diplomat, State Councillor Wang Yi, indicated on Monday that Beijing hoped for a compromise: “Both countries’ negotiating teams have the ability and wisdom to resolve each other’s reasonable demands.” Trump on Monday said he expected to speak to Chinese President Xi Jinping at a G20 summit in late June and have “probably a very fruitful meeting”. “Market participants (are) increasingly having to do their own guesswork and read between the lines to ride the latest wave of volatility in the financial markets,” analyst Vandana Hari of Vanda Insights said. “The U.S. president’s comments likely tilted the balance in favour of the optimists, who continue to expect a rapprochement despite last week’s major setback in trade negotiations.” Oil rose more than $1 a barrel on Monday but then fell with Wall Street as the negative turn in the U.S.-China talks spooked investors. In the Middle East, Saudi Arabia said two of its oil tankers were among those attacked off the coast of the United Arab Emirates on Sunday, describing it as an attempt to undermine the global oil supply. A U.S. official said Iran was the likely culprit.

Oil prices jump as Saudi Arabia reports drone ‘terrorism’ against pipeline infrastructure - Oil prices rose sharply Tuesday morning on reports of a drone attack at oil pumping stations in Saudi Arabia. The incident is an “act of terrorism,” Saudi Energy Minister Khalid al-Falih said according to the Saudi state news agency SPA, describing attacks on two oil pumping stations near Riyadh for the country’s East-West pipeline carried out with bomb-laden drones. Brent crude futures were up 1.3% at $71.14 a barrel, up 90 cents. U.S. West Texas Intermediate (WTI) crude futures were at $61.67 per barrel at 12:40 p.m. London time, up 1.03% for the session. The fire has since been contained, according to the SPA. Al-Falih asserted that oil production was not interrupted. State oil company Saudi Aramco said that its oil and gas supplies to Europe have not been affected, and that no one was injured. “This act of terrorism and sabotage in addition to recent acts in the Arabian Gulf do not only target the Kingdom but also the security of world oil supplies and the global economy,” the SPA described al-Falih as saying. No one has yet been directly accused of carrying out the attack, but a Yemeni Houthi-run TV channel announced on Tuesday morning it had launched drone attacks on several Saudi installations.

Oil Jumps On Middle East Tensions - OilPrice Intelligence Report - It’s been a volatile few days for oil, with prices up on Monday because of tension in the Middle East, only to fall on concerns about the trade war. By Tuesday, prices were back up again, with markets paying renewed attention to geopolitical risk. Global financial markets shrugged off the escalating trade war last week on hopes that a deal could be reached. However, by Monday, gloom began to sink in. Negotiations in Washington ended on Friday and there is little sign of a thaw in the short run. China announced retaliatory measures on Monday, raising tariffs from 10 to 25 percent on $60 billion worth of U.S. goods, which included LNG but not crude oil. If the trade war drags on, it could deter future U.S. investment in LNG export capacity. The trade war “poses a threat to U.S. investment in LNG by limiting our share in the world’s fastest-growing LNG market,” Stephen Comstock, director of the American Petroleum Institute, said in a statement. Saudi Arabia said that two oil tankers were hit by saboteurs, and oil prices immediately spiked on the news. The incidents raised concerns about geopolitical risk in the Middle East. In another worrying development, Saudi Arabia said on Tuesday that drones attacked two pumping stations belonging to Saudi Aramco, forcing a temporary suspension of operations. The pipeline runs from eastern oil fields to the Red Sea. Only minor damage was reported and Aramco said the outage was precautionary, but the incident could inflame tensions even more. Iran is a suspect, though neither Saudi Arabia nor the U.S. have offered any evidence.  A potential attack by Iranian proxy forces on U.S. interests in Iraq could set off a broader conflict, Cyril Widdershoven wrote for Oilprice.com. Disruptions in Iraq and Iran would not only impact supply, but also would wreak havoc on crude grades, with medium and heavy oil in short supply. “When the market hits the brick wall at the end of this year, this quality problem, in combination with increased instability in the Middle East, will not only create a nightmare scenario for consumers but could also push crude oil above the current $70-85 per barrel range,” Widdershoven wrote.  Iran told European diplomats that it needs to export as much as 1.5 mb/d in order for it to stay in the 2015 nuclear deal, although this was likely a negotiating tactic. Last year, Iran had demanded 2 mb/d in a previous round of negotiations. Iran says that the European Union must provide some benefit to Iran for staying in nuclear deal after U.S. sanctions seek to eliminate all Iranian oil exports.

Oil prices rise over 1per cent on drone attack on Saudi Aramco facilities –  Oil prices rose over 1per cent on Tuesday after top exporter Saudi Arabia said explosive-laden drones launched by a Yemeni-armed movement aligned to Iran had attacked facilities belonging to state oil company Aramco. That move higher comes as the market waits for a report from the American Petroleum Institute (API), an industry group, which is expected to show U.S. crude stockpiles fell by 800,000 barrels last week, their second decline in a row, according to analysts in a Reuters poll. Brent futures gained US$1.01, or 1.4 percent, to settle at US$71.24 a barrel, while U.S. West Texas Intermediate crude gained 74 cents, or 1.2 percent, to US$61.78. That was the highest settle for Brent since May 6 and WTI since May 8 and caused the closing premium of Brent over WTI to rise to a nine-week high. Saudi Arabia said armed drones had struck two oil pumping stations in the kingdom on Tuesday in what it called a "cowardly" act of terrorism two days after Saudi oil tankers were sabotaged off the coast of the United Arab Emirates. U.S. national security agencies said they believe proxies sympathetic to or working for Iran may have been responsible for the tanker attacks rather than Iranian forces themselves. Iranian officials denied responsibility. Tehran has been embroiled in an escalating war of words with the United States over stricter U.S. sanctions, which have cut its oil exports and tightened global supply. A fifth of global oil consumption passes through the Strait of Hormuz from Middle East crude producers to global markets. "

WTI Drops After Big Surprise Crude Inventory Build - WTI managed modest gains today amid mideast chaos (drones striking saudi pipeline which followed damage to four oil tankers anchored off the United Arab Emirates on Sunday), after slumping yesterday on trade war (growth) concerns.“There’s really not a good reason for crude to trade lower right now,” said Bob Yawger, futures director at Mizuho Securities USA.“You’ve got growing geopolitical risk, and you’re risk-on right now in the equity markets.”But aside from all the speculative geopolitics, fundamental supply and demand still matter... API

  • Crude +8.6mm (-1.3mm exp)
  • Cushing +2.1mm (+1.3mm exp)
  • Gasoline +567k (-300k exp)
  • Distillates +2.2mm (-1.0mm exp)

After last week's surprise crude draw, API reported a big surprise crude build and builds for products too... WTI hovered just below $62 handle ahead of the API print but kneejerked lower after the surprise build...

Oil firms on Middle East uncertainty, shrugs off U.S. crude build Reuters) - Oil futures inched up on Wednesday as the prospect of mounting tensions in the Middle East hitting global supplies overshadowed an unexpected build in U.S. crude inventories. Brent crude settled at $71.77 a barrel, gaining 53 cents or 0.7%. West Texas Intermediate (WTI) crude futures settled at $62.02 a barrel, climbing 24 cents or 0.4%. U.S. crude inventories rose unexpectedly last week to their highest since September 2017, while gasoline stockpiles decreased more than forecast, the Energy Information Administration (EIA) said. [EIA/S] Crude stocks swelled by 5.4 million barrels, surprising analysts who had expected a decrease of 800,000 barrels. Still, the build was smaller than the nearly 9 million-barrel build estimate on Tuesday by the American Petroleum Institute (API), a trade group, which helped lift crude price sentiment. The drawdown in gasoline stocks also helped oil futures, analysts said, with U.S. gasoline futures gaining about 2%. Rising uncertainty in the Middle East, however, boosted crude prices the most. “Although crude oil inventories built more than the market expected due to higher imports, prices remained supported due to the geopolitical dynamics of the Middle East,” said Andrew Lipow, president of Lipow Oil Associates in Houston. Oil prices have drawn support since Saudi Arabia said on Tuesday that armed drones struck two oil pumping stations, two days after the sabotage of oil tankers near the United Arab Emirates. “Given that nearly one-third of global oil production and nearly all of global spare capacity are in the Middle East, the oil market is very sensitive to any attacks on oil infrastructure in this region,” Swiss bank UBS said. The attacks took place against a backdrop of U.S.-Iranian tension. Washington has been trying to cut Iran’s oil exports to zero with sanctions while beefing up the U.S. military presence in the Gulf. Washington ordered the departure of non-emergency American employees from its diplomatic missions in Iraq on Wednesday in show of concern about threats from Iran-backed forces. “There could be a pretty serious conflict with Iran should they do something to U.S. forces in the region, and that would spike the price of oil,” 

US Crude Oil Inventories Jumped By 5.4 Million Bbls -- EIA -- May 15, 2019 - EIA: weekly petroleum report later this morning. Link here. Corroborates the huge build reported by API yesterday.

  • weekly US crude oil inventories: increased by a pretty impressive 5.4 million bbls 
  • weekly US crude oil inventories now stand at 472.0 million bbls
  • weekly US crude oil inventories are about 2% above the five-year average (wink, wink)
  • refineries operating at 90.5% capacity; trending up but still down; maintenance and winter/summer switch-over coming to an end
  • imports: down almost 10% from same four-week period last year
    • having said that, imports last week, just for that one week, increased by almost a million bopd, averaging 7.6 million bopd
  • propane/propylene inventories are almost 20% above the five-year average
  • jet fuel product supplied was up 11% compared with same four-week period last year
  • gasoline demand will be reported later today

EIA says US crude oil inventories about 2% over 5-year average. Against 350 million bbls, which is way more than needed, 472 million bbls is 35% higher.  Against 300 million bbls which had been the historical "norm,' 472 million bbls is 57% higher.  This is now all about US crude oil exports. One needs to use calculus to calculate how much oil must be exported each week to move the US toward a) re-balancing at 400 million bbls; b) 350 million bbls in storage; c) 300 million bbls in storage. It would be interesting to see the "target" for US storage of crude oil that Exxon, Chevron, COP, etc, are setting internally. In other words, anticipating exports in 2020, how much storage does the US need, based on estimates by the oil companies and/or the EIA? Storage at Cushing is apparently no longer an issue and most new storage has been put in along the US gulf coast. When storage got "tight" in Cushing many years ago there were many, many stories on storage issues. However, I haven't seen similar stories now, and I wonder how much excess storage exists.

Oil Algos Unsure As Crude Inventories Pop, Production Drops -WTI held on to losses overnight (bouncing of $61) after a big surprise crude build (reported by API) trumped geopolitical risk premia from drone attack in Saudi Arabia. “We’ve become used now to the ongoing supply worries,” IEA Head of Oil Industry and Markets Neil Atkinson said in a Bloomberg Television interview. The latest attacks in the Gulf appear not to have caused any “sustained damage” and the market “remains focused on the underlying fundamentals.” Additionally, the International Energy Agency said that global oil demand will grow more slowly than previously thought following an economic lull in Asia, while warning that supplies stand to tighten due to U.S. sanctions on Iran.“Even so, slower demand growth is likely to be short-lived, as we believe that the pace will pick up during the rest of the year.” Disappointing fuel consumption in China, Japan and Brazil meant 2019 started with a “tough quarter,” the agency said, lowering its global demand estimate for the first time since October. As a result, world oil inventories surprisingly swelled during the first three months of the year. DOE

  • Crude +5.431mm (-1.3mm exp)
  • Cushing  (+1.3mm exp)
  • Gasoline -1.12mm (-300k exp)
  • Distillates +84k (-1.0mm exp)

After builds across the entire energy complex overnight from API, EIA was still expected to see a draw (following last week's surprise draw) but crude stockpiles built last week along with Cushing inventories. Gasoline resumed its draws but distillates surprised with a small 84k build...

Oil rises 24 cents, settling at $62.02, as market shrugs off jump in US crude stockpiles -- Oil futures edged up on Wednesday as worries that rising tensions in the Middle East could hit global supplies overshadowed an unexpected build in U.S. crude inventories. U.S. West Texas Intermediate crude futures settled 24 cents higher at $62.02 per barrel. Brent crude futures rose 56 cents to $71.80 a barrel around 2:30 p.m. ET (1830 GMT). U.S. crude stocks rose unexpectedly last week to their highest since September 2017, while gasoline stockpiles decreased more than forecast, the Energy Information Administration said. Crude stocks swelled by 5.4 million barrels, surprising analysts who had expected a decrease of 800,000 barrels. “Although crude oil inventories built more than the market expected due to higher imports, prices remained supported due to the geopolitical dynamics of the Middle East,” said Andrew Lipow, president of Lipow Oil Associates in Houston. Oil prices have drawn support since Saudi Arabia said on Tuesday that armed drones struck two oil pumping stations, two days after the sabotage of oil tankers near the United Arab Emirates. “Given that nearly one-third of global oil production and nearly all of global spare capacity are in the Middle East, the oil market is very sensitive to any attacks on oil infrastructure in this region,” Swiss bank UBS said, adding it expected Brent prices to rise toward $75 in coming weeks. The attacks took place against a backdrop of U.S.-Iranian tension. Washington has been trying to cut Iran’s oil exports to zero with sanctions while beefing up the U.S. military presence in the Gulf. Washington ordered the departure of non-emergency American employees from its diplomatic missions in Iraq on Wednesday in show of concern about threats from Iran-backed forces.

US crude rises 1.4% to 2-week high on Middle East tension, settling at $62.87 - Oil prices jumped as much as 2% on Thursday as tensions in the Middle East grew, with a Saudi-led coalition launching air strikes in retaliation for recent attacks on its oil infrastructure. U.S. West Texas Intermediate crude futures settled 85 cents higher at $62.87 per barrel, gaining 1.4% and closing at the highest level in two weeks. Brent crude futures rose 85 cents, or 1.2%, to $72.62. Brent, the international benchmark for oil prices, touched its highest level in three weeks earlier in the session. The Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week. “You have a sizable strike on Iran-aligned Houthi forces in Yemen today, so until there’s some kind of stepback from that situation, this market is going to have a tough time trading lower,” said Mizuho director of futures Bob Yawger. “There’s just a lot of political risk in this market.” Saudi Arabia’s deputy defense minister accused Iran of ordering the drone attack on the pumping stations. It comes after attacks on four oil tankers off the coast of United Arab Emirates on Sunday. Taken together, the escalation of tensions has compounded fears of supply disruption in the Middle East. U.S. staff was ordered to leave the American embassy in Baghdad on Wednesday out of concern about perceived threats from Iran.

Oil extends gains into fourth straight day on Middle East tensions  -- Oil prices rose again on Friday and were on track for the first weekly gains this month, as rising tensions in the Middle East stoked fears of supply disruptions. Brent crude futures were at $73.00 a barrel at 0303 GMT, up 38 cents, or 0.5%, from their last close, rising for a fourth straight session. Brent was up 3.4% for the week, on track for its first gain in three weeks. U.S. West Texas Intermediate (WTI) crude futures were at $63.32 per barrel, up 46 cents, or 0.7%. WTI was also up for a fourth day and was headed for a weekly gain of 2.7%, the first rise in four weeks. A Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week. Earlier this week, U.S. staff were evacuated from the American embassy in Baghdad, while U.S. President Donald Trump ordered the deployment of an aircraft carrier group, B-52 bombers and Patriot missiles to the Middle East. “When tensions are this high, with the U.S. deploying a sizable military force, even a mistake or a tactical error by Iran could ignite the Middle East powder keg,” Stephen Innes, head of trading and market strategy at SPI Asset Management told Reuters by email. “There are lots of supply risks with tensions this high,” he said, adding prices could test 2019 highs reached in April. Still, Trump has told his top advisers he does not want to get the United States involved in a war with Iran, three U.S. officials said on Thursday.

Oil slips but ends week higher on Mideast supply disruption fears (Reuters) - Oil prices edged lower on Friday due to demand fears amid a standoff in Sino-U.S. trade talks, but both benchmarks ended the week higher on rising concerns over supply disruptions in Middle East shipments due to U.S.-Iran political tensions. Iran said on Friday it could “easily” hit U.S. warships in the Gulf, the latest in days of saber-rattling between Washington and Tehran, while its top diplomat worked to counter U.S. sanctions and salvage a nuclear deal denounced by President Donald Trump. U.S. sanctions on Iran have already cut the OPEC member’s crude exports further in May, adding to supply curbs implemented through an OPEC-led pact for the first six months of the year. Brent crude fell 41 cents, or 0.6%, to settle at $72.21 a barrel. The global benchmark notched a weekly gain of about 2%, having ended last week largely steady and fallen the week before. U.S. West Texas Intermediate crude fell 11 cents to end the session at $62.76, and gained about 1.7% on the week. Oil prices came under pressure on Friday from seesawing U.S. equity markets due to fears over global economic growth amid the escalation of a trade war between the world’s top economies. Chinese media took a hardline approach to the tariff dispute between the Washington and Beijing, saying the trade war will only make China stronger and will never bring the country to its knees.

Iran commander calls U.S. military in Gulf a target not a threat: ISNA (Reuters) - A senior Iranian Revolutionary Guards commander said on Sunday the U.S. military presence in the Gulf used to be a serious threat but now represents a target, the Iranian Students’ News Agency (ISNA) reported. The U.S. military has sent forces, including an aircraft carrier and B-52 bombers, to the Middle East in a move that U.S. officials said was made to counter “clear indications” of threats from Iran to American forces in the region. The USS Abraham Lincoln is replacing another carrier rotated out of the Gulf last month. “An aircraft carrier that has at least 40 to 50 planes on it and 6,000 forces gathered within it was a serious threat for us in the past but now it is a target and the threats have switched to opportunities,” said Amirali Hajizadeh, head of the Guards’ aerospace division. “If (the Americans) make a move, we will hit them in the head,” he added, according to ISNA.

4 Ships Targeted by “Sabotage” in UAE Port, Initially Denied by Authorities - Contrary to initial statements by the government of Fujairah, the UAE foreign ministry said in a statement that four commercial vessels were targeted by “sabotage operations” near the territorial waters of the United Arab Emirates, adding that there were no victims. The ministry statement was tweeted by the official news agency WAM.  The government of Fujairah, a member of the United Arab Emirates federation, denied on Sunday media reports about blasts at the port of Fujairah, according to a statement tweeted by its media office. Fujairah, just outside the Strait of Hormuz, is one of the largest bunkering hubs in the world. The strait is a vital corridor for oil and gas in the global energy market. The statement didn’t identify the media outlets that published these reports but the Iranian Press TV website cited a Lebanese broadcaster, Mayadeen, saying seven oil tankers were attacked in the port. “The media office of the government of Fujairah denies the veracity of the media reports saying strong explosions rocked the port of Fujairah this morning,” it said. “The operations at the port are going as usual.” A spokesperson for the US Navy’s Bahrain-based Fifth Fleet said they had no comment at this time when contacted by Reuters. Tensions are running high in the region after the US military sent forces, including an aircraft carrier, to the Middle East to counter what the White House says are “clear indications” of threats from Iran to its forces there.

Saudi Arabia says 2 oil tankers damaged by sabotage attacks (AP) — Two Saudi oil tankers and a Norwegian-flagged vessel were damaged in what Gulf officials described Monday as a “sabotage” attack off the coast of the United Arab Emirates. While details of the incident remain unclear, it raised risks for shippers in a region vital to global energy supplies at a time of increasing tensions between the U.S. and Iran over its unraveling nuclear deal with world powers. The U.S. issued a new warning to sailors as the UAE’s regional allies condemned Sunday’s alleged attack that the UAE says targeted four ships off the coast of its port city of Fujairah. It came just hours after Iranian and Lebanese media outlets aired false reports of explosions at the port. While Gulf officials declined to say who they suspect may be responsible, the U.S. has warned ships that “Iran or its proxies” could be targeting maritime traffic in the region. America is deploying an aircraft carrier and B-52 bombers to the Persian Gulf to counter alleged, still-unspecified threats from Tehran. The scale of the alleged sabotage also remains unclear. A statement from Saudi Energy Minister Khalid al-Falih said the kingdom’s two oil tankers, including one due to later carry crude to the U.S., sustained “significant damage.” However, a report from Sky News Arabia, a satellite channel owned by an Abu Dhabi ruling family member, showed the allegedly targeted Saudi tanker Al Marzoqah afloat without any apparent damage. The MT Andrea Victory, another of the allegedly targeted ships, sustained a hole in its hull just above its waterline from “an unknown object,” Emirati officials identified the third ship as the Saudi-flagged oil tanker Amjad. Ship-tracking data showed the vessel still anchored off Fujairah, apparently not in immediate distress. The fourth ship was the A. Michel, a bunkering tanker flagged in Sharjah, one of the UAE’s seven emirates. A U.S. official told The Associated Press that American naval investigators were assisting the Emiratis with their probe of the incident.

U.S. envoy urges response "short of war" to Gulf tankers attack (Reuters) - The U.S. ambassador to Saudi Arabia said Washington should take what he called "reasonable responses short of war" after it had determined who was behind attacks on oil tankers off the coast of the United Arab Emirates. Iran was a prime suspect in the sabotage on Sunday although Washington had no conclusive proof, a U.S. official familiar with American intelligence said on Monday. Iran has denied involvement. "We need to do a thorough investigation to understand what happened, why it happened, and then come up with reasonable responses short of war," Ambassador John Abizaid told reporters in the Saudi capital Riyadh in remarks published on Tuesday. "It's not in (Iran's) interest, it's not in our interest, it's not in Saudi Arabia's interest to have a conflict." Four commercial vessels, including two Saudi oil tankers, were sabotaged on Sunday near Fujairah, one of the seven emirates of the UAE and a bunkering hub just outside the Strait of Hormuz. UAE authorities did not say who was behind the attack. Distancing Tehran from the incident, Iran's Foreign Ministry called it "worrisome and dreadful". Iran is embroiled in a war of words with the United States over sanctions and the U.S. military presence in the region. Washington has increased sanctions on Tehran, saying it wants to reduce Iranian oil exports to zero, after quitting the 2015 nuclear pact between Iran and global powers last year. The U.S. Maritime Administration said last week that Iran could target U.S. commercial ships including oil tankers sailing through Middle East waterways. Tehran has called the U.S. military presence "a target" rather than a threat. U.S. Secretary of State Mike Pompeo shared information on what he called escalating threats from Iran during meetings with EU counterparts and the head of NATO in Brussels on Monday, the U.S. special representative for Iran Brian Hook said. Hook declined to say whether he believed Iran played a role in the attacks off Fujairah or if Pompeo blamed Iran. He said the UAE had sought U.S. help in the investigation.

UAE says it will show restraint after tanker attacks, Iran's behavior a concern (Reuters) - The United Arab Emirates will show restraint after attacks on oil tankers off its coast and is committed to de-escalation during a “difficult situation” caused by Iranian behavior in the region, a senior official said on Wednesday. Minister of State for Foreign Affairs Anwar Gargash said he would not speculate about who was behind Sunday’s sabotage acts on four vessels, including two Saudi tankers, near Fujairah emirate while an investigation was under way and due to be completed within days. “We need to emphasize caution and good judgment. It is easy to throw accusations but it is a difficult situation, there are serious issues and among them is Iranian behavior,” he said, mentioning concern about Iran’s missiles and regional policy. “We will actually with our partners also be deliberate in considering our response, what to do about it, how to deal with it,” he said, adding the United States and France were helping with the probe. France has a naval base in Abu Dhabi.

Britain warns of Iran-U.S. conflict, Pompeo meets Europeans -  (Reuters) - Iran and the United States could trigger a conflict by accident in an already unstable Gulf region, Britain’s foreign minister said on Monday, as U.S. Secretary of State Mike Pompeo held talks in Brussels with the main European powers on the crisis.  President Donald Trump is seeking to isolate Tehran by cutting off its oil exports after pulling out of a 2015 deal aimed at curbing Iran’s nuclear program. Trump has also beefed up the U.S. military presence in the Gulf to pressure Iran. While the European Union shares some U.S. concerns about Iran, including over its involvement in the Syrian conflict, it still backs the 2015 nuclear deal, saying that it is in Europe’s own security interests. “We are very worried about a conflict, about the risk of a conflict ... of an escalation that is unintended,” Britain’s Jeremy Hunt told reporters in Brussels before talks with Pompeo. Britain, Germany and France are signatories to the 2015 deal and their foreign ministers held separate meetings in Brussels on Monday with Pompeo, who canceled a planned stopover in Moscow in order to brief the European allies on Washington’s latest moves. Pompeo also met NATO Secretary-General Jens Stoltenberg.

Warnings of ‘Gulf of Tonkin 2.0’ as US Officials Blame Iran for Oil Tanker Attacks — Is the Trump administration attempting to concoct a false pretext to justify launching a war against Iran? That question has become increasingly common and urgent among anti-war commentators and activists in recent days as U.S. intelligence officials—without citing any concrete evidence—blamed Iran for reported attacks on Saudi and UAE oil tankers in the Strait of Hormuz over the weekend. Commentators quickly likened the accusations to the Gulf of Tonkin incident, referring to the “fabricated” event that President Lyndon Johnson used to massively escalate America’s war in Vietnam.   “Anyone who knows history of [the] 1964 Gulf of Tonkin incident and U.S. escalation in Vietnam should be shocked, alarmed at what’s happening in [the] Persian Gulf, including unverified claims of boat attacks,” Will Bunch of the Philadelphia Inquirer tweeted. Journalist Rania Khalek echoed Bunch, warning that national security adviser John Bolton and Secretary of State Mike Pompeo “are trying to create a Gulf of Tonkin incident with Iran.” According to the Wall Street Journal, U.S. officials “didn’t offer details about what led to the assessment” that Iran carried out the attacks on the oil tankers. “We are in grave danger of being sleepwalked into military confrontation with Iran over an incident that is blamed wrongly on Iran,” author and journalist Gareth Porter said in a statement. “Corporate media have given Bolton and his conniving to achieve such a crisis a free pass.”

Saudis Claim Iran Ordered Aramco Pipeline Drone Attack -- Saudi Arabia on Thursday blamed Iran for ordering an attack early this week on two Aramco pipeline booster stations, a strike that was intended as part of a broader sabotage campaign to disrupt world oil supplies, according to Saudi Energy Minister Khalid al-Falih.   The drone attacks came one day after a string of attacks on two Saudi oil tankers and two other vessels in the Strait of Hormuz, and caused the temporary closure of a vital east-west pipeline traversing the kingdom, since reopened.   Prince Khalid Bin Salman, the vice minister for defense and brother of the crown prince MbS, described Yemen's Houthis - which were believed to have launched the drone attack - of being used as an "Iranian" tool advancing Tehran's aggression and hegemony in the region.  In a tweet, he said the Houthi militias “are merely a tool that Iran’s regime uses to implement its expansionist agenda in the region, and not to protect the people of Yemen as the Houthis falsely claim”.#BREAKING Saudi Arabia confirmed that militants, probably Iranian backed Houthi militants, sent booby-trapped drones targeting #Aramco's two oil pumping stations in Dawadmi and Afif provinces in #Riyadh, amid the tension between #US and Iran pic.twitter.com/drkWCG4eMN— Yosef Yisrael (@yosefyisrael25) May 14, 2019 Since 2015 Saudi coalition jets have been waging a brutal bombing campaign over Yemen to roll back the country's Shia Houthi rebels, the latter which have occasionally launched missile and drone attacks against sensitive sites in the kingdom, at times even reaching Riyadh's international airport with ballistic missiles.   Soon after Monday's drone attack on the Aramco facilities, dramatic video was released online showing extensive destruction of the pumping stations, which had been on fire for hours following the attack.  US and Saudi investigators further blamed Iran for a "sabotage attack" on several Saudi and international tankers off a UAE port near the Strait of Hormuz on Sunday.

Iran Used Underwater Drones In Tanker Attacks, Insurer Claims - Investigators say last Sunday's mysterious "sabotage" attack on four tankers which included two Saudi ships off Fujairah in the United Arab Emirates was "highly likely" the work of Iran's elite Revolutionary Guards (IRGC) deploying underwater attack drones.  Specifically an IRGC surface vessel is believed to have launched the underwater drones packed with between 30 and 50kg of explosives which detonated on impact, according to a new report issued this week by the Norwegian Shipowners’ Mutual War Risks Insurance Association, known as DNK. Among the vessels hit were a Norwegian-flagged vessel as well as a UAE ship. A new report by Reuters summarized the Norwegian insurance investigators' preliminary findings as based on analyzing shrapnel from the attacks which was "similar" to shrapnel recovered from surface drones used off Yemen by Iran-backed Houthi militia. However, the insurance assessment seen by Reuters is "confidential" with an investigation still ongoing, and thus must be treated with skepticism.Further, the evidence appears largely circumstantial at this point, with Iran's guilt appearing to hinge on the assumption that shrapnel from Houthi operations and remnant material found at the port of Fujairah are from the same source.  Reuters lists the following summary points and "evidence" from the DNK assessment which allege the IRGC's inolvement as follows:

  • A high likelihood that the IRGC had previously supplied its allies, the Houthi militia fighting a Saudi-backed government in Yemen, with explosive-laden surface drone boats capable of homing in on GPS navigational positions for accuracy.
  • The similarity of shrapnel found on the Norwegian tanker to shrapnel from drone boats used off Yemen by Houthis, even though the craft previously used by the Houthis were surface boats rather than the underwater drones likely to have been deployed in Fujairah.
  • The fact that Iran and particularly the IRGC had recently threatened to use military force and that, against a militarily stronger foe, they were highly likely to choose “asymmetric measures with plausible deniability”. DNK noted that the Fujairah attack had caused “relatively limited damage” and had been carried out at a time when U.S. Navy ships were still en route to the Gulf.

The attack location, so close to the entrance to the Strait of Hormuz - which the IRGC has previously threatened to close in order to strangle global oil shipping - was also a key factor in pointing to Iran's guilt, according to the report. 

US Issues Security Alert Ordering Non-Emergency Staff to Depart Iraq - The US State Department has issued a security alert and ordered staff to evacuate Iraq amid escalating tensions with neighboring Iran. The alert posted on the US embassy in Iraq today read: “The U.S. State Department has ordered the departure of non-emergency U.S. Government employees from Iraq, both at the U.S. Embassy in Baghdad and the U.S. Consulate in Erbil.  Normal visa services at both posts will be temporarily suspended. The U.S. government has limited ability to provide emergency services to US citizens in Iraq.”A US embassy spokesperson is reported by the Financial Times saying that US Secretary of State, Mike Pompeo, had taken the decision to withdraw because of “the increased threat stream we are seeing in Iraq”. The spokesperson declined to say how, when, or how many staff were leaving, citing security reasons.No details of the threat facing US officials in Iraq were given and there are some doubts over the motivation for issuing the alert. British deputy commander of the anti-Daesh coalition, Major General Christopher Ghika, was quoted saying yesterday that Iran was not upping aggression through the militias it backs. “There’s been no increased threat from Iranian-backed forces in Iraq and Syria,” he said according to the FT. Ghika also said that “there are a substantial number of militia groups in Iraq and Syria and we don’t see any increased threat from many of them at this stage.” The security alert, which contradicts Ghika’s assessment of the threat, comes amid fears that tensions in the region are spiraling out of control in recent weeks, with an attack on Saudi oil tankers in the Gulf yesterday. Reports also emerged of Trump’s administration plans to send up to 120,000 troops to the Middle East. Last week the US deployed carrier bombers and other military assets to the region, citing what it claimed were Iran’s “escalatory actions”.

Top British Commander In Rare Public Dispute With US Over Iran Intelligence --An awkward public exchange unfolded between the US military and its closest allied military coalition force during a Pentagon press conference on Tuesday wherein a top British commander in charge of anti-ISIS coalition forces rebuked White House claims on the heightened Iran threat.   “No – there’s been no increased threat from Iranian-backed forces in Iraq and Syria,” British Army Maj. Gen. Christopher Ghika, a deputy head of the US-led coalition, asserted confidently in a videolink briefing from Baghdad to the Pentagon in response to a CNN question. “We’re aware of that presence, clearly. And we monitor them along with a whole range of others because that’s the environment we’re in. We are monitoring the Shia militia groups. I think you’re referring to carefully and if the threat level seems to go up then we’ll raise our force protection measures accordingly.”  The British commander's words prompted a rare and swift rebuke from the US side hours later into the evening when US Central Command (CENTCOM) issued its own statement slamming Gen. Ghika's words as inaccurate, insisting coalition troops in Iraq and Syria were an a "high level of alert" due to the "Iran threat". “Recent comments from OIR’s deputy commander run counter to the identified credible threats available to intelligence from US and allies regarding Iranian-backed forces in the region,” the CENTCOM statement said.“US Central Command, in coordination with OIR, has increased the force posture level for all service members assigned to OIR in Iraq and Syria. As a result, OIR is now at a high level of alert as we continue to closely monitor credible and possibly imminent threats to US forces in Iraq.”

Iran's Military On The Cusp Of War As US Allies Pull Troops From Iraq -- In probably the most significant sign so far that we could be headed for yet another major war in the Middle East, multiple European allies of the United States are rapidly pulling their forces from Iraq and the Persian Gulf region on fears they could get unwillingly sucked into confrontation with Iran. Tehran isn't backing down the US escalation ladder either, given moments ago Iran's Revolutionary Guard commander, Major General Hossein Salami, said via the Reuters newswire: "We are on the cusp of a full scale confrontation with the enemy." Iran's Minister of Defense Amir Hatami also vowed Wednesday, "We will defeat the American-Zionist front," according to the Islamic Republic News Agency (IRNA). This follows on the heels of the US State Department's dramatic ordering of an evacuation of all non-essential diplomatic personnel and their families from the American embassy in Baghdad, citing an "imminent" threat. As of Wednesday morning the countries of Spain, Germany, and the Netherlands have suspended military support operations in Iraq, citing rising US-Iran tensions. And further a top Iraqi diplomat told reporters at a press conference in Moscow that “Iraq is a sovereign nation. We will not let [the US] to use our territory” for any military operations against Iran. 

Europe Is Powerless In Growing Conflict Between The US And Iran - Brexiteers in Britain are denouncing the EU as an all-powerful behemoth from whose clutches Britain must escape, just as the organisation is demonstrating its failure to become more than a second-rate world power. The EU’s real status – well behind the US, Russia and China – has just been demonstrated by its inability to protect Iran from US sanctions following President Trump’s withdrawal from the Iran nuclear deal of 2015. A year ago, Angela Merkel and Emmanuel Macron made humiliating visits to Washington to plead vainly with Trump to stay with the agreement, but were rebuffed.Since then the US has successfully ratcheted up economic pressure on Iran, reducing its oil exports from 2.8 to 1.3 million barrels a day. The UK, France and Germany had promised to create a financial vehicle to circumvent US sanctions, but their efforts have been symbolic. Commercial enterprises are, in any case, too frightened of the ire of the US treasury to take advantage of such measures.Iranian president Hassan Rouhani said on Wednesday that Iran would stop complying with parts of the nuclear deal unless the Europeans provided the promised protection for the oil trade and banks. Everybody admits that Iran is in compliance but this is not going to do it any good.  The Europeans will be spectators in the escalating US-Iran conflict. The US potential is great when it comes to throttling the Iranian economy. Iranian oil exports are disappearing, inflation is at 40 per cent and the IMF predicts a 6 per cent contraction in the economy as a whole. The US can punish banks dealing with Iran everywhere, including countries where Iran is politically strong such as Iraq and Lebanon.

Two More US Warships Travel To Persian Gulf As Tensions With Iran Escalate  - In the latest provocation against Tehran by the US, two Navy destroyers have entered the Persian Gulf as the American military continues to add to its assets in the region to head off any planned 'aggression', USNI reports. The USS McFaul and USS Gonzalez traveled through the Strait of Hormuz Thursday afternoon without being challenged by IRGC forces in the are. They join the USS Abraham Lincoln, which is stationed in the Gulf of Oman, as well as a strike force that includes several B-52 bombers, as the US continues to build up its military presence in the region. Another Aircraft Carrier, the USS Kearsarge, is anchored off the coast of the UAE. According to USNI, if the US wanted to attack Iran from the water, its ships would be better off outside of the Persian Gulf, where it would be more difficult for Iranian missiles to reach them, and where they would be outside of Iran's "domain awareness." The move comes after the US government has continued to warn about heightened threats from Iran. These fears have already prompted the evacuation of non-essential embassy personnel from the Baghdad embassy and the Erbil consulate.

Iraq Refuses to Allow the US to Attack Iran From Its Territory — Baghdad’s ambassador to Russia told reporters today that Iraq will not allow the US to use its territory for military operations against Iran. “Iraq is a sovereign nation. We will not let [the US] use our territory,” Haidar Mansour Hadi, the Iraqi envoy said during a press conference when asked about his country’s position on the escalating tensions between Tehran and Washington. He said that Baghdad would use its position to act as a mediator and that his country “does not want a new devastating war in the region.” He added that he hoped “nothing will happen.”  Hadi’s comments come during a time of heightened tensions in the Middle East. Yesterday, the US withdrew many of its diplomats from the consulate in Erbil and the embassy in Baghdad, citing fears of an attack.  “The last two days there have been continuous meetings with all the groups to convey the Iraqi government’s message that if anyone does something, it is their responsibility, not Iraq’s,” said Sayed Al-Jayashi, a senior member of Iraq’s National Security Council.“The Iraqi government is responsible for protecting American interests in Iraq.”“We will become the enemy of anyone who does something against American interests,” he added. US Secretary of State, Mike Pompeo, visited Iraqi Prime Minister Adil Abdul-Mahdi last week to discuss security concerns which have resulted from increasing US-Iran tensions. Tehran and Washington have been involved in a war of words since Trump decided to pull out of the 2015 nuclear deal which sought to limit Iran’s ability to produce a nuclear weapon. In November 2018, the US re-imposed sanctions on the Islamic Republic, affecting the economy and causing internal political difficulties.

Iraqi Parliament to Vote on Bill That Would Ban US Military Troops From Iraq - — Iraq has spent the better share of the last 16 years under US military occupation. Despite this, time and again US-Iraqi relations have come to be defined by US hostility toward neighboring Iran, and Iraq’s desire to not get mixed up in that. So while Iraq’s parliament was already bristling under Pentagon talk of staying in Iraq, and Trump saying that the US was staying in Iraq to “keep an eye on Iran,” the recent escalation of US rhetoric about a war against Iran has sparked action within parliament. On Saturday, Iraq will be voting on a bill that would aim to expel all foreign troops from Iraqi soil, and singles out US troops in particular as needing to leave. The bill is endorsed by Iraq’s top two Shi’ite blocs, and is expected to pass fairly easily.   What happens then is the real question. Iraq’s parliament is already being spun as “pro-Iran factions,” and it’s been a long time since US officials, Pentagon or otherwise, gave any indication that they thought staying in Iraq was up to the Iraqi government. So while the Iraqi Prime Minister is warning the US that they can’t use Iraq to launch a war on Iran, the US is browbeating Iraq over its government-aligned Shi’ite militias, and doing everything they can to try to portray that Shi’ite-dominated Iraqi government as effectively in league with the Iranians, and subsequently a threat to US interests. No matter what happens, it seems certain US-Iraqi ties will suffer for it.

The Battle For Control Over Iraq’s Oil  --Iraq regards the U.S.’s refusal to extend waivers for countries importing oil from Iran as a tacit endorsement for it to pump its own oil to the maximum. This dovetails neatly into its Oil Ministry’s internal targets – conveyed last week to OilPrice.com by a source who works closely with the Ministry - of increasing crude oil production to at least 6.2 million barrels per day (bpd) by the end of 2020 and at least 9 million bpd by the end of 2023. At around the same time, the Oil Ministry announced that it had agreed preliminary terms with ExxonMobil and PetroChina to rollout the South Integrated Project (SIP), an important infrastructure project that should result in some degree of output increase. This deal, though, is far from certain, said the Iraqi source, and – critically - does not necessarily include the contract for the full-scale Common Seawater Supply Project (CSSP). This would involve taking and treating seawater from the Persian Gulf and then transporting it to oil production facilities in order to be used for water injection to boost pressure at southern Iraq’s ‘Big Four’ oil fields: Rumaila, Majnoon, Zubair, and West Qurna. The CSSP is regarded by traders, analysts and politicians alike as being the key to unlocking all of Iraq’s massive oil potential, the top-case production scenario according to the International Energy Agency being at least 12 million bpd. Russia, whose corporate proxy Rosneft already controls Iraq’s oil and gas industry in the north – through a deal done in November 2017 with the government of the semi-autonomous region of Kurdistan (KRG) - wants to consolidate its position in the south as well. Last week, it instructed its main corporate vehicle in the region – Lukoil – to dramatically increase the pace of its development of the supergiant West Qurna 2 oil field, in which it holds a 75% stake, with the remainder held by Iraq’s state-run North Oil Company.  “There is huge political pressure from the Kremlin for Russian oil companies to maintain, and where possible expand their presence across all of Iraq, in light of recent moves by U.S. companies to re-establish the U.S. footprint across the country,” the Iraqi source told OilPrice.Com last week. “Russia regards moves being made by U.S. companies in Iraq as being similar to the way in which the British used the East India Company to consolidate its economic and political grip over India,” he said. This increase in pressure was the result of a recent meeting between Russian President Vladimir Putin’s Special Envoy to the Middle East and Africa, Mikhail Bogdanov, and Iraq’s nominal Prime Minister, Adil Abdul Al-Mahdi. Present at that meeting as well were senior representatives of the real power in Iraq, the ultra-nationalist cleric Moqtada al-Sadr. “Al-Sadr’s policy is to play off all sides against each other, making a deal recently with Iran to jointly develop shared oilfields but also allowing for the involvement of ExxonMobil in the SIP, and encouraging Russia to increase its presence on the oil fields,” said the Iraqi source. “In this way, he thinks he will get the best from each, and will also live up to his election promise of not allowing Iraq to become dependent on any one country again,” he added.

French Activists Successfully Block Saudi Ship From Loading Weapons - — A human rights organization called it a “victory for mobilized civil society” when a Saudi cargo ship left France on Friday without a planned batch of weapons.France, along with other Western countries including the U.S. and U.K., has been supplying arms to Saudi Arabia, which is leading the coalition bombing Yemen. In so doing, say human rights campaigners, they “risk complicity in committing grave violations of the laws of war.”Leaked classified French military documents published last month showed that French weapons are being widely used in the coalition’s bombing campaign “including in civilian zones.” The conflict has already killed thousands of civilian. Fearing that the new shipment of weapons could be used against the Yemeni civilian population, French rights group Christians for the Abolition of Torture (ACAT-France) filed a legal challenge Thursday to block a new batch of French weapons from being loaded onto the Saudi vessel the Bahri Yanbu at the French port city of Le Havre. The ship had been anchored 15 miles offshore since late Wednesday.The weapons, said ACAT, would violate one article of the U.N. Arms Trade Treaty.“The article says that one country cannot authorize the transfer of weapons, if at the time of the authorization, the country knew that weapons could be used to commit war crimes,” said lawyer Joseph Brehem, speaking on behalf of ACAT. While ACAT didn’t win their case, the ship nonetheless did not dock to pick up the shipment, but instead moved on to Spain.

Drones Attack Saudi Aramco Pumping Stations - Saudi Arabia said Tuesday that unidentified drones attacked two pumping stations belonging to Saudi Aramco, forcing the state oil company to suspend some operations in the area to assess the damage. Oil prices rose. The stations are linked to a giant pipeline transporting oil from fields in the eastern sector to the port of Yanbu on the western coast, state-run Saudi Press Agency reported, citing the Energy Ministry. The pipeline has been halted, but Aramco is working to restore the link and Saudi oil exports are continuing as normal, SPA said. The attack comes amid rising tensions in the Gulf as the U.S. increases pressure on Iran. On Monday, Saudi Arabia said two of its oil tankers were among several vessels attacked while sailing toward the Strait of Hormuz, the world’s most important chokepoint for oil shipments. Neither Saudi Arabia nor the U.A.E. said exactly what happened to the tankers or identified potential culprits. The manager of one of the tankers hit said, however, that the vessel had got a hole in its hull after being struck by an unknown object off the coast of the United Arab Emirates. “These attacks prove again that it is important for us to face terrorist entities, including the Houthi militias in Yemen that are backed by Iran,” SPA said. Iranian-backed Houthi rebels in neighboring Yemen said earlier in the day that they had targeted key Saudi installations using seven drones, according to the rebel-controlled Saba news agency. 

Houthi Drones Attack Aramco Pipeline Booster Stations - Yemen's Iran-backed Houthi rebels carried out drone attacks on two Aramco pipeline booster stations, a strike that was intended to disrupt world oil supplies, according to Saudi Energy Minister Khalid al-Falih.Al-Falih told Saudi-funded news agency Al-Arabiya that the attacks targeted two pipeline booster stations between the Eastern province and the city of Yanbu. He added that pumping will be stopped at one of the damaged pipeline in order to start repairs. Al-Falih claimed the attack was carried out with the aim of disrupting oil supplies, and that the attack "proves the importance of confronting all terrorist organizations."A news agency controlled by the Houthis said seven drones were involved in attacks on seven installations. The attacks come one day after a string of attacks on two Saudi oil tankers and two other vessels in the Strait of Hormuz.

Houthi drone attacks 'show new level of sophistication' - Drone attacks on a Saudi oil pipeline west of Riyadh on Tuesday have revealed an apparent significant leap in the capabilities of the Ansar Allah fighting group, otherwise known as theHouthis. The Aramco East-West pipeline, stretching across the country to the port and oil terminal at Yenbu, was damaged in two places as pumping stations were hit.The attacks caused minor damage but alarmed an international community already rattled by the sharp downturn in relations between Iran and the United States.Information on the attacks is scarce, posing more questions than providing answers.  Drones have been increasingly used by the Houthis in operations against the Saudi-UAE-led coalition. In July 2018 a drone exploded at Abu Dhabi airport causing only minor damage but sending a message to the UAE that its economic interests were not invulnerable. In January 2019, a senior intelligence chief, along with several officers, were killed at the al-Anad air force base just outside Aden by a weaponised drone that exploded above the delegation.  In March the Houthis released video footage of a drone flying past Saudi's al-Shuqaiq water treatment and power plant, 130km from the Yemeni border.  It was not attacked but the warning was clear, with water being a vulnerable resource and many Middle Eastern countries relying heavily on desalination plants.

Saudi bombs kill Yemeni civilians, raising war tensions in Persian Gulf - The savage bombing of a civilian neighborhood in the heart of Yemen’s capital, Sana’a, on Thursday signals another escalation of the extreme war tensions provoked by US imperialism in the Persian Gulf. The airstrikes claimed the lives of at least six civilians, including four children, all of them members of the same family. The Yemeni Health Ministry put the number wounded at 71, including 27 children, 17 women and 27 men. Witnesses at the scene saw a crowd of men pulling bodies from a demolished apartment bloc, lifting the body of a lifeless child and that of a woman wrapped in a white shroud. The number killed is expected to rise given the severity of wounds caused by the bombing and as the inhabitants of Sana’a continue to dig through the rubble with their bare hands. Shortages of medicines and medical supplies resulting from the US-backed blockade of Yemen also hinder adequate treatment of the wounded. Saudi bombs and missiles fell on Sana’a’s densely populated residential neighborhoods in the early morning hours of Thursday, with the greatest destruction wrought at the intersection of Rabat and Rakas streets. “I know the street,” Yemeni journalist Afrah Nasser told Al Jazeera. “There are no military targets there. There is no excuse for the Saudi-led coalition. It was a deliberate and systematic bombardment attacking civilians.” The Saudi-led war on Yemen is now in its fifth year, launched after Houthi rebels drove out the corrupt government of President Abd Rabbu Mansour Hadi, a puppet of Riyadh and Washington, in 2014. It has created the worst humanitarian crisis on the planet in what was already the poorest country in the Arab world.

CIA Briefed Colleagues Of Khashoggi That Saudis Are Now Targeting Them - According to a 2015 directive issued by the Director of National Intelligence, the CIA has a legal "duty to warn" potential victims of threats such as murder, kidnapping or serious bodily harm. And now it appears the CIA has tipped off at least three individuals who were close to Khashoggi and who have since been fierce critics of crown prince Mohammed bin-Salman (MbS). A report issued Thursday in Time detailed that the CIA made the three former Khashoggi colleagues aware of ongoing threats by Saudi security services to them and their families, though the exact nature of the threats were not revealed. Since the report, at least one of those named have confirmed they were visited by western intelligence services.   Time identified those who face "potential retaliation by Saudi Arabia" as follows: Three of those who were given security briefings in recent weeks––democracy advocates Iyad El-Baghdadi of Oslo, Norway; Omar Abdulaziz of Montreal, Canada; and a person in the U.S. who asked not to be named––were working closely with Khashoggi on politically sensitive media and human rights projects at the time of his killing inside a Saudi diplomatic facility in Turkey last October. The report said further the activists and journalists had emerged as fierce critics of MbS, and some of them are known as prominent voices in Arabic media, including the Palestinian-born Iyad El-Baghdadi. The Time report continued: Based on the security briefings, the advocates say they have been targeted because they have become especially vocal and influential critics of Saudi Crown Prince Mohammed bin Salman, accusing him of ordering Khashoggi’s murder as part of a broader crackdown on Saudi dissidents worldwide.

UN: Over 1 Million Palestinians in Gaza May Not Have Food in June -  UNRWA warned today that unless it secures $60m in funding by June, its ability to continue providing food to more than one million Palestinian refugees in Gaza will be severely curtailed.In a statement the international organisation said: “At a time when Muslims around the world are observing the holy month of Ramadan, often characterised by the festive nature of its Iftars, in Gaza, more than half the population depends on food aid from the international community.” The statement stressed that unless UNRWA secures “at least an additional $60 million by June, their ability to continue providing food to more than one million Palestinian refugees in Gaza, including some 620,000 abject poor – those who cannot cover their basic food needs and who have to survive on $1.6 per day – and nearly 390,000 absolute poor – those who survive on about $3.5 per day – will be severely challenged.” UNRWA is funded almost entirely by voluntary contributions and financial support has been outpaced by the growth in needs. From fewer than 80,000 Palestine refugees receiving UNRWA social assistance in Gaza in the year 2000, there are today over one million people who need emergency food assistance without which they cannot get through their day.

Leaked Document Pokes Major Holes in Establishment Syria Narrative - Caitlin Johnstone -— “It is hard to overstate the significance of this revelation,” tweets former British MP George Galloway of a new report by the Working Group on Syria, Propaganda and Media (WGSPM). “The war-machine has now been caught red-handed in a staged chemical weapons attack for the purposes of deceiving our democracies into what could have turned into a full-scale war amongst the great-powers.”“An important #Douma #Syria ‘Assad chemical weapon attack’ development and yet more evidence to suggest the ‘attack’ was staged, as it’s now revealed that @OPCW suppressed expert engineers report that found the cylinders were likely not dropped from the air,” tweets former Scotland Yard detective and counterterrorism intelligence officer Charles Shoebridge.“The engineering assessment confirms our earlier conclusion,” the excellent Moon of Alabama blog writes. “The whole scene as depicted by ‘rebels’ and propaganda organs was staged. The more than 34 dead on the scene were murdered elsewhere under unknown circumstances.” The report has grabbed the attention of those who’ve expressed skepticism of establishment Syria narratives because it casts serious doubts on the official story we’ve been told to believe about an alleged chemical attack in Douma, Syria in April of last year. A document titled “Engineering Assessment of two cylinders observed at the Douma incident” has been leaked to the WGSPM which reveals that an engineering sub-team of the Organization for the Prohibition of Chemical Weapons (OPCW) fact-finding mission in Douma came to conclusions which differ wildly from the OPCW’s official findings on the Douma incident, yet we the public were never permitted to see this assessment. The assessment’s findings, which you can locate on pages five through eight of the document, put forward multiple hypothetical scenarios in which two gas cylinders could have wound up in the locations(Location 2 and Location 4) that they were photographed and video recorded as having been found after the alleged attack. The assessment concludes that “The dimensions, characteristics and appearance of the cylinders, and the surrounding scene of the incidents, were inconsistent with what would have been expected in the case of either cylinder being delivered from an aircraft. In each case the alternative hypothesis produced the only plausible explanation for observations at the scene.”

CONFIRMED: Chemical Weapons Assessment Contradicting Official Syria Narrative Is Authentic - Caitlin Johnstone -— The Organization for the Prohibition of Chemical Weapons (OPCW) has begun responding to queries by the press about a leaked document which contradicts official OPCW findings on an alleged chemical weapons attack last year in Douma, Syria. The prepared statement they’ve been using in response to these queries confirms the authenticity of the document. To recap, a few days ago the Working Group on Syria, Propaganda and Media (WGSPM) publishedadocument signed by a man named Ian Henderson, whose name is seen listed in expert leadership positions on OPCW documents from as far back as 1998 and as recently as 2018. It’s unknown who leaked the document and what other media organizations they may have tried to send it to.The report picks apart the extremely shaky physics and narratives of the official OPCW analysis on the gas cylinders allegedly dropped from Syrian government aircraft in the Douma attack, and concludes that “The dimensions, characteristics and appearance of the cylinders, and the surrounding scene of the incidents, were inconsistent with what would have been expected in the case of either cylinder being delivered from an aircraft,” saying instead that manual placement of the cylinders in the locations investigators found them in is “the only plausible explanation for observations at the scene.” To be clear, this means that according to the assessment signed by an OPCW-trained expert, the cylinders alleged to have dispensed poison gas which killed dozens of people in Douma did not arrive in the locations that they were alleged to have arrived at via aircraft dropped by the Syrian government, but via manual placement by people on the ground, where photographs were then taken and circulated around the world as evidence against the Syrian government which was used to justifyair strikes by the US, UK and France. There were swift military consequences meted out on what appears now to be a lie.

ISIS announces a ‘province’ in India - During the weekend, Amaq News Agency, the mouthpiece of the terrorist group Islamic State of Iraq and Syria (ISIS), announced it had established “Wilayah of Hind” – a “province” of its own – in the Kashmir Valley. The announcement also claimed that ISIS had inflicted casualties on Indian soldiers in Amshipora, a town in Shopian district of the state of Jammu and Kashmir (J&K). This came after a militant who had pledged allegiance to ISIS was killed in a clash with Indian security forces. The loss of territory by ISIS in Iraq and Syria led to hundreds of its cadres moving elsewhere – some on their own and others orchestrated by the nations that continue to support and arm them. ISIS claimed responsibility for the recent Easter Sunday bombings in Sri Lanka. But the announcement of “Wilayah of Hind” was something that was waiting to happen, with India’s lackadaisical handling of the ISIS issue, particularly in J&K, despite ominous signs that have been present for years.

How Turkey Defied the U.S. and Became a Killer Drone Power -FINDING ONESELF IN the crosshairs of a military drone is, for most people, not the most comforting situation. Yet at an air show last fall, tens of thousands of people had a different reaction. A military drone took off from a runway, and moments later it began transmitting its view to a giant screen on stage. The video from the drone was clear enough to pick out your own face among the crowd. It was exactly what the drone’s pilot, seated in a trailer not far from the stage, was seeing. The crowd was in the crosshairs, and you could see the data about the aircraft’s pitch, roll, and altitude. In the bottom right corner of the screen, the words “Bore Invalid” indicated the drone was currently unarmed. It’s the kind of video that, in a war zone, can end with a giant plume of smoke and the tattered remains of whatever the drone has just obliterated. Yet for this crowd, it was like catching a glimpse of themselves on the Jumbotron at a football game. When an announcer shouted out, “We see you, wave your hands!” they erupted in excitement. The event had all the trappings of a typical air show. Hundreds of thousands of people — from government officials to school children bussed in by the thousands — paraded around the tarmac. They posed for selfies alongside fighter jets and attack helicopters. A team of F-16s flew in close formation, leaving intricate patterns of red and white smoke in their wake. A nearly constant series of sonic booms made it difficult to talk. Massive speakers blared pulsing music. But there was something different about this air show: It wasn’t in America, the global pioneer of weaponized drones and the customary host of such pageants. It was in Turkey, just outside Istanbul. And the pilotless aircraft that delighted the crowd wasn’t made in America; it was manufactured by Turkey. The crowd was enthusiastic to be in its crosshairs because the spectacle signified that their homeland had taken its place among the most technologically advanced countries in the world.

500 Rolls-Royces, $20,000 haircuts, and a 1,788-room palace: Everything we know about the lavish life of the Sultan of Brunei, who sparked outrage after introducing a law punishing homosexuality with death --The Sultan of Brunei, Hassanal Bolkiah, was widely condemned in April for ushering in new laws to punish homosexuality with death by stoning as part of a move to align the country with Sharia law, a strict interpretation of Islam.After a huge backlash from celebrities and Western governments alike, the sultan backpedaled this week, promising that the punishment will not be enforced. Brunei will, however, keep the law on its statute books, the Sultan added.Before becoming an advocate for the strictest form of Islam, the 72-year-old sultan was once known for his lavish, liberal, and western lifestyle.At one point the richest man on the planet, worth as much as $40 billion, his exploits included reportedly racing Ferraris at midnight through Brunei's capital, commissioning a 1,788 room palace, and spending $20,000 to get his hair cut. Here's a look at the Sultan of Brunei's extravagant, fabulous life.