Monday, September 9, 2019

natural gas drilling at a 29 month low as active rigs fall below 900 for first time since ​November 2017

oil prices rose for a second week in a row on a third consecutive larger than expected drop in US crude inventories and renewed optimism about a China trade deal... after rising 1.7% to $55.10 a barrel last ​week ​on the easing of the U.S.-China trade rhetoric that had driven down prices the prior week, prices of US crude for October delivery opened lower on Tuesday after the Labor Day holiday and fell throughout the day amid the imposition of yet another round of tariffs in US-China trade war and ended $1.16, or 2% lower at $53.94 a barrel, weighed down by reports of rising OPEC and Russian oil output as well as reports showing contracting manufacturing activity in the US and Europe...however, prices bounced back on Wednesday, boosted by a broader market rally that began with a positive economic report from China and ultimately carried oil prices to close more than 4% higher at $56.26 a barrel, up $2.32 from Tuesday's close...​but oil prices ​then ​fell in after market trading after the American Petroleum Institute reported higher crude inventories and thus opened lower and slid ​early ​on Thursday​,​ before reversing to finish 4 cents higher at $56.30 a barrel, bolstered by apparent signs of progress in trade talks between the United States and China, and an EIA report that crude inventories had in fact fallen more than was expected...oil prices were down more than 2% on weak jobs data from the Labor Dept at the start of trading on Friday, but rallied heading into the close after the Fed chairman said the central bank will act “as appropriate” to sustain US economic growth and settled 22 cents higher at $56.52 a barrel, thus finishing the week 2.6% higher than the prior week's close, the strongest weekly ​rally since early July.....

natural gas prices also finished higher for a second week, despite a larger than expected inventory build, as weather forecasts shifted to warmer over the Labor Day weekend and exports to Mexico were expected to increase as the Sur de Texas pipeline comes into service....after rising 6% to $2.285 per mmBTU last week on the possibility that Hurricane Dorian might impact the Gulf, prices of natural gas for October delivery moved up 7.3 cents on the bullish temperature forecast change on Tuesday, and then rose 8.7 cents more on Wednesday, as short positions established when prices were teasing 39 month lows a month ago were forced to cover...while prices slipped back a penny on Thursday after the EIA reported a larger than expected inventory injection, the natural gas price rally resumed on Friday as prices rose 6.1 cents more to close the week nearly 10% higher than the prior week at $2.496 per mmBTU..

the natural gas storage report for the week ending August 30th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 84 billion cubic feet to 2,941 billion cubic feet by the end of the week, which meant our gas supplies were 383 billion cubic feet, or 15.0% more than the 2,558 billion cubic feet that were in storage on August 30th of last year, while still 82 billion cubic feet, or 2.7% below the five-year average of 3,023 billion cubic feet of natural gas that have been in storage as of the 30th of August in recent years....this week's 84 billion cubic feet injection into US natural gas storage was above all the projections of analysts surveyed by S&P Global Platts, whose average forecast called for a 75 billion cubic feet injection, and also well above the average 64 billion cubic feet of natural gas that have been added to gas storage during the fourth full week of August over the past 5 years, the 23rd such average or above average storage build in the last 25 weeks...the 1,763 billion cubic feet of natural gas that have been added to storage over the 22 weeks of this year's injection season is the second most for the same period in the modern record, eclipsed only by the record 1814 billion cubic feet of natural gas that were injected into storage over the same 22 weeks of the 2014 natural gas injection season, a cool summer when there were no injections below 76 billion cubic feet….

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending August 30th indicated that because our oil imports had only partially rebounded from last week's depressed level, we had to pull oil out of storage for the tenth time in 12 weeks...our imports of crude oil rose by an average of 976,000 barrels per day to an average of 6,904,000 barrels per day, after falling by an average of 1,787,000 barrels per day over the prior 2 weeks, while our exports of crude oil rose by an average of 42,000 barrels per day to an average of 3,061,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,843,000 barrels of per day during the week ending August 30th, 934,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, the production of crude oil from US wells was reported to be 100,000 barrels per day lower than the prior week at 12,400,000 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 16,243,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly processing 17,381,000 barrels of crude per day during the week ending August 30th, 27,000 fewer 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 681,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 456,000 barrels per day less than what our oil refineries reported they used during the week...to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA inserted a (+456,000) 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 they label in their footnotes as "unaccounted for crude oil"....with that great a quantity of oil unaccounted for this week, it calls into question the other oil totals that the EIA has reported and that we have just transcribed (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 fell to an average of 6,941,000 barrels per day last week, now 12.5% less than the 7,933,000 barrel per day average that we were importing over the same four-week period last year...the 681,000 barrel per day decrease in our total crude inventories ​all came out of our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 100,000 barrels per day lower at 12,400,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states fell by 100,000 barrels per day to 12,000,000 barrels per day, while a 46,000 barrels per day decrease to 354,000 barrels per day in Alaska's oil production had no impact on the final rounded national production total...last year's US crude oil production for the week ending August 31st was rounded to 11,000,000 barrels per day, so this reporting week's rounded oil production figure was 12.7% above that of a year ago, and 47.1% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 94.8% of their capacity in using 17,381,000 barrels of crude per day during the week ending August 30th, down from 95.2% of capacity the prior week, but still a refinery utilization rate that is fairly typical for August...however, the 17,381,000 barrels per day of oil that were refined this week were 1.5% below the 17,647,000 barrels of crude per day that were being processed during the week ending August 31st, 2018, when US refineries were operating at 96.6% of capacity....

with ​just a modest decrease in the amount of oil being refined, gasoline output from our refineries was quite a bit lower, decreasing by 388,000 barrels per day to 10,272,000 barrels per day during the week ending August 30th, after our refineries' gasoline output had increased by 763,000 barrels per day over the prior week...but even with that drop in gasoline output, this week's gasoline production was fractionally higher than the 10,215,000 barrels of gasoline that were being produced daily over the same week of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) slipped by 39,000 barrels per day to 5,154,000 barrels per day, after our distillates output had decreased by 147,000 barrels per day the prior week....with this those back to back decreases, our distillates production was 5.2% less than the 5,439,000 barrels of distillates per day that were being produced during the week ending August 31st, 2018.... 

with the big decrease in our gasoline production, our supply of gasoline in storage at the end of the week fell for the 8th time in 12 weeks and for the 22nd time in twenty-eight weeks, decreasing by 2,396,000 barrels to 229,586,000 barrels during the week to August 30th, after our gasoline supplies had fallen by 2,090,000 barrels over the prior week....our gasoline supplies decreased this week even as the amount of gasoline supplied to US markets decreased by 429,000 barrels per day to 9,471,000 barrels per day because our exports of gasoline rose by 119,000 barrels per day to 819,000 barrels per day, and because our imports of gasoline fell by 248,000 barrels per day to 717,000 barrels per day...after this week's decrease, our gasoline supplies were 2.1% lower than last August 31st's inventory level of 234,619,000 barrels, but remain at roughly 3% above the five year average of our gasoline supplies at this time of the year...

with the decrease in our distillates production, our supplies of distillate fuels fell for the 15th time in the past 25 weeks, decreasing by 2,538,000 barrels to 133,522,000 barrels during the week ending August 30th, after our distillates supplies had decreased by 2,063,000 barrels over the prior week...our distillates supplies decreased this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, increased by 86,000 barrels per day to 4,134,000 barrels per day, while our imports of distillates rose by 1,000 barrels per day to 126,000 barrels per day, and while our exports of distillates fell by 56,000 barrels per day to 1,509,000 barrels per day....but even after this week's inventory decrease, our distillate supplies were still fractionally higher than the 133,120,000 barrels of distillates that we had stored on August 31st, 2018, while at the same time they fell to around 6% below the five year average of distillates stocks for this time of the year...

finally, as our oil imports continue to be somewhat below our needs, our commercial supplies of crude oil in storage fell for the tenth time in twelve weeks but for just the sixteenth time in 33 weeks, decreasing by 4,771,000 barrels, from 427,751,000 barrels on August 23rd to 422,980,000 barrels on August 30th...that decrease left our crude oil inventories near the five-year average of crude oil supplies for this time of year, but still 25.7% higher than the prior 5 year (2009 - 2013) average of crude oil stocks for the Labor Day weekend, 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 had generally been rising since last Fall up until the most recent dozen weeks, after generally falling until then through most of the prior year and a half, our oil supplies as of August 30th were still 5.4% above the 401,490,000 barrels of oil we had stored on August 31st of 2018, but at the same time were 8.5% below the 462,353,000 barrels of oil that we had in storage on September 1st of 2017, and 12.0% below the 480,725,000 barrels of oil we had in commercial storage on September 2nd of 2016...  

This Week's Rig Count

the US rig count fell for the 25th time in 29 weeks over the week ending September 6th, and is now down by more than 17% ​ for the year....Baker Hughes reported that the total count of rotary rigs running in the US fell by 6 rigs to a 22 month low of 898 rigs this past week, which was also down by 150 rigs from the 1048 rigs that were in use as of the September 7th report of 2018, and less than half of the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil decreased by 4 rigs to 738 rigs this week, which was a 21 month low for oil rigs and 122 fewer oil rigs than were running a year ago, and quite a bit below 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 fell by 2 rigs to 160 natural gas rigs, a 29 month low for gas rig drilling activity and down by 26 rigs from the 186 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...

offshore ​drilling ​activity was unchanged ​at 28 rigs​ running​ this week, with 25 rigs drilling offshore from Louisiana and one offshore from Texas in the Gulf of Mexico, and two more rigs deployed off the coast of the Kenai Peninsula in Alaska, a net increase of nine offshore rigs from a year ago, when 15 rigs were drilling in Louisiana waters, two were drilling offshore from Texas, and two more were deployed offshore from Alaska....the count of active horizontal drilling rigs was down by 1 rig to 783 horizontal rigs this week, which was the least horizontal rigs deployed since November 17th, 2017 and hence is a new 21 month low for horizontal drilling...that was also 135 fewer horizontal rigs than the 918 horizontal rigs that were in use in the US on September 7th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count was down by 2 to 48 vertical rigs this week, and those were down by 17 from the 65 vertical rigs that were operating during the same week of last year...in addition, the directional rig count was down by 3 to 67 directional rigs this week, but those were up by 2 from the 65 directional rigs that were in use on September 7th of 2018...

the details on this week's changes in drilling activity by state and by major 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 table below that 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 September 6th, the second column shows the change in the number of working rigs between last week's count (August 30th) and this week's (September 6th) count, the third column shows last week's August 30th 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 7th of September, 2018...     

September 6 2019 rig count summary

as you can see, the majority of this week's changes were limited to three states, with the Oklahoma rig count down 5, the Texas count down 3, and the North Dakota count up by 3 rigs, all of which started drilling for oil in the Bakken shale of the Williston basin...the rigs taken down in Oklahoma included three oil rigs in the Cana Woodford shale, one oil rig in the Mississippian Lime, and one rig in a basin not tracked separately by Baker Hughes...in Texas, 4 more rigs were shut down in Texas Oil District 8, or the core Permian Delaware, and another rig was shut down in Texas Oil District 8A, encompassing the northern part of the Permian Midland, while at the same time three rigs were started up in Texas Oil District 7C, or the southern part of the Permian Midland, which together nets out to the 2 rig decrease we see indicated for the Permian basin, while another rig shut down in Texas had been operating in a basin not tracked separately by Baker Hughes....while drilling in the 3 major natural gas basins (the Haynesville, the Marcellus, and the Utica) was unchanged this week, the Eagle Ford of south Texas saw a natural gas rig shut down and an oil rig start up and now has 59 oil rigs and 8 targeting natural gas, while another natural gas rig was also shut down in a basin not tracked separately by Baker Hughes, which could have been either of the aforementioned undocumented rigs in Texas or Oklahoma, or could have been masked by a concurrent oil rig increase in any state, as we see with the Eagle Ford​'s​ indication of "0" change...

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ODNR Issues 15 Permits in Utica-Point Pleasant Shale– Fifteen permits for horizontal well drilling in the Utica-Point Pleasant shale were approved by the Ohio Department of Natural Resources for the week ended Aug. 31, the agency reports.Ascent Resources Utica LLC was awarded nine of those permits: four in Belmont County, two in Harrison County and three in Jefferson County. EAP Ohio LLC, meanwhile, was granted two in Carroll County and three in Harrison County. And Triad Hunter LLC was awarded a single permit for activity in Monroe County. The ODNR also reported 12 active rigs in the state. As of Aug. 31, the agency reported 2,684 wells had been drilled in the state, with 2,266 active.No permits were awarded for activity in Mahoning, Trumbull or Columbiana counties.  Likewise, no permits were granted by the Pennsylvania Environmental Protection Agency for activity in Mercer or Lawrence counties.

Oil production increases 9.5% in Ohio's Utica Shale - Oil production in Ohio’s Utica Shale increased by 9.5% in the second quarter 2019, according to new data released on Tuesday by the Ohio Department of Natural Resources.  Oil production jumped from 4,488,104 barrels in 2Q 2018 to 5,813,755 barrels in 2Q 2019, Kallanish Energy reports.  Oil production in 1Q 2019 was 5,073,536 barrels.Ohio also reported that natural gas production increased by 0.8% from 2Q 2018 to 2Q 2019.Gas production went from 554,306,916,000 cubic feet in 2Q 2018 to 614,218,362,000 cubic feet in 2Q 2019.Gas production was 609,452,000,000 cubic feet in 1Q 2019.The quarterly Ohio report lists 2,365 horizontal shale wells, of which 2,317 reported oil or gas production during the quarter.The average well produced 2,509 barrels of oil and 265,092,000 cubic feet of natural gas. The typical well was also in production for 86 days during the quarter.Condensate and natural gas liquids are included in Ohio’s oil and natural gas totals and are not listed separately. The results are available at https://oilandgas.ohiodnr.gov/production.

Ohio's Utica Shale 2nd Quarter Production Totals Released - During the second quarter of 2019, Ohio's horizontal shale wells produced 5,813,755 barrels of oil and 614,218,362 Mcf (614 billion cubic feet) of natural gas, according to the figures released today by the Ohio Department of Natural Resources (ODNR).Compared to a year ago, oil production increased by 29.54% and natural gas production showed a 10.81% increase over the second quarter of 2018.The ODNR quarterly report lists 2,365 horizontal shale wells, 2,317 of which reported oil and natural gas production during the quarter. Of the wells reporting oil and natural gas results:

  • The average amount of oil produced was 2,509 barrels.
  • The average amount of natural gas produced was 265,092 Mcf.
  • The average number of second quarter days in production was 86.

All horizontal production reports can be accessed at oilandgas.ohiodnr.gov/production. Ohio law does not require the separate reporting of Natural Gas Liquids (NGLs) or condensate. Oil and gas reporting totals listed on the report include NGLs and condensate.

Oil and Gas Production in Utica Continues to Rise – Oil and natural gas production in Ohio’s Utica-Point Pleasant shale play rose in the second quarter, as 614.22 billion cubic feet of gas and 5.81 million barrels of oil were produced by wells in the state. Those numbers are up from 609.45 billion cubic feet of gas and 5.07 million barrels of oil in the first quarter, according to data from the Ohio Department of Natural Resources’ quarterly report. Regionally, Columbiana County once again dominated the production numbers as 10.92 billion cubic feet of natural gas came from wells in the county, along with 8,618 barrels of oil. In comparison, Mahoning County produced just 340.21 million cubic feet of gas and 2,139 barrels of oil and Trumbull County accounted for 127.83 million cubic feet of gas and 1,774 barrels.The top-performing natural gas well in Columbiana County was EAP Ohio LLC’s Sevek 18-12-3 210H well in Washington Township. The well produced 1.96 billion cubic feet of gas. Leading the county in oil production was the Chesapeake Exploration LLC Ayrview Acres 27-16-5 5H well with 971 barrels of oil.In Mahoning County, the Hilcorp Energy Co.CLL-2 6H well in Poland was top in natural gas production at 67.78 million cubic feet of has, while Northwood Energy Corp.’s Hendricks MAHN2AHSU well in Ellsworth Township led oil production in the county with 839 barrels.And for Trumbull County, Pin Oak Energy Partners had both the top-performing natural gas and oil wells, with the Buckeye 1H well producing 33.46 million cubic feet of natural gas and the Brugler 1H well producing 327 barrels of oil. Both wells are in Hartford Township.Activity in the Utica-Point Pleasant shale play continues to be concentrated in southeastern Ohio, as the ODNR report was made up mostly of entries for Belmont, Carroll, Guernsey, Harrison, Jefferson and Monroe counties. Leading the state in gas production was the Ascent Resources Utica LLC Gordon N CRC JF 3H well in Jefferson County’s Cross Creek Township, just outside of Stebuenville. The well produced 3.57 billion cubic feet of gas. And in oil production, Eclipse Resources I LLP’s Jupiter B Unit 3H in Guernsey County’s Millwood Township ranked No. 1 in production, accounting for 102,747 barrels.

Injection Well Safeguards Vital - 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. “There is no ‘normal’ for this type of thing,” ODNR Public Information Officer Adam Schroeder added.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.

Ohio's orphan well program needs contractors to do the job - ODNR has $25 million to plug old, potentially hazardous oil and gas wells. The state has millions of dollars to spend on plugging old and potentially hazardous oil and natural gas wells. Now, it’s looking for more contractors to do the work. Prolific shale wells and a change in state law have boosted the Ohio Department of Natural Resources fund for plugging so-called orphan wells. The orphan well program has nearly $25 million this fiscal year — $10 million more than the prior year — and is looking to have $28.1 million next fiscal year. “We’ve got a lot of money to spend, and we want to plug a lot of wells,” Rick Simmers, chief of ODNR’s Division of Oil and Gas, told a group of plugging contractors Wednesday during a meeting at Portage Lakes State Park. “We need more contractors,” Simmers said. A similar meeting will be held at Salt Fork State Park in Guernsey County on Thursday. Orphan wells Orphan wells are oil and gas wells that weren’t plugged properly and don’t have an owner who could pay to do that work. The wells are health and environmental hazards because they can leak oil, natural gas and brine, and even cause explosions when natural gas collects in a building near a leaking well. Orphan wells have been found under a school, next to houses, in farm fields and even under a reservoir in Ohio. “You name it, we’ve seen it in terms of where they show up,” said Jason Simmerman, orphan well program engineering manager. ODNR has identified nearly 1,000 orphan wells in 71 counties. (Stark has seven while Summit has nine, Carroll has 13 and Tuscarawas has three.) But the actual number of orphan wells is unknown. ODNR estimates that more than 280,000 wells have been drilled in the state since the mid-1800s. The state has had a program to plug orphan wells since the 1970s.

Exclusive: Italy's Snam seeks US footprint with bid for Midwest gas pipeline – sources (Reuters) - Italy's Snam <SRG.MI> is working on a bid for a stake in a $6 billion natural gas pipeline in the United States in what would be the gas group's first foray outside Europe, four sources told Reuters. The Milan-based company, controlled by state lender Cassa Depositi e Prestiti, is carrying out due diligence to buy a 33% stake sold by Energy Transfer LP <ET.N> in its Rover pipeline, one of the sources said.The 713-mile Rover pipeline can carry 3.25 billion cubic feet of gas daily from the Marcellus and Utica shale plays in Appalachia.It is backed by Energy Transfer with a 33% stake and two private equity firms - Energy & Minerals Group (EMG) and Blackstone Group <BX.N> - who have the remaining 67%.Snam, Europe's biggest gas pipeline operator which makes most of its money from gas transmission in Italy, is working with JPMorgan on the deal, the sources said.Snam and JPMorgan declined to comment while Energy Transfer was not immediately available for comment.Snam wants to build an international presence and sees potential to grow in the United States which has seen a boom in natural gas production as part of the shale revolution.Pipelines and other midstream infrastructure in the U.S. have consistently drawn interest from private equity firms as well as infrastructure and pension funds as they produce stable returns.Additionally, returns on pipeline investments in the United States are generally higher than in Europe where many grids are run with regulated tariffs. The Rover pipeline moves the natural gas from Ohio, West Virginia and Pennsylvania to other parts of the U.S. Midwest and up into Michigan where it can also be piped into Canada.

Europe's Biggest Gas Pipeline Operator Looks To Get Hands On US Assets -Europe’s biggest gas pipeline operator, Italy-based Snam is crafting a bid for a piece of Energy Transfer Partner’s $6 billion natural gas pipeline, Reuters sources said on Friday.If successful, it would not only be Snam’s first US project, but it also be its first project outside Europe, as the US natural gas industry is going gangbusters.Snam is now conducting due diligence on buying a 33% stake, sold by ETP for the Rover pipeline, according to Reuters.Despite all the controversy surrounding oil and gas pipelines in North America—both in the United States and Canada, they remain an attractive investment.The Rover Pipeline travels a distance of 713 miles, starting in Southeastern Ohio, Western West Virginia, and Southwestern Pennsylvania, and then continues west through Ohio and then north into Michigan, according to Roverpipelinefacts.The pipeline has the capacity to move 3.25 billion cubic feet per day, transporting gas from the Marcellus and Utica.Rumors first surfaced that ETP was considering a sale of its 33% stake in the pipeline project in mid-July. At the time, it was thought that such a sale would netETP $2.5 billion, according to Bloomberg.  ETP has already ditched a 32% stake in Rover to Blackstone for $1.57 billion at a time when the pipeline, then just under construction, faced possible delays over environmental scrutiny and even some environmental-related work stoppages and lawsuits. The pipeline has done much to relieve the bottlenecks in the Utica and Marcellus regions, and has increased natural gas production in the area through the relief of some of these bottlenecks. Also relieving the transportation bottlenecks in the area are the NEXUS and Williams’ Atlantic Sunrise pipelines.

Pipeline Permit Scandal Highlights Confusion Amid Push to Build Plastics Plants - But with the arrival of Shell and its $6 billion plastics manufacturing plant, currently under construction in Beaver County, the conservation district assumed more serious responsibilities than throwing a maple syrup festival — including permitting the fossil fuel pipelines feeding the massive plastics complex. In a scathing audit issued on August 15 by state regulators, the Beaver County Conservation District (BCCD) earned exceptionally low marks, after auditors found troubling problems that may have played a role in a major pipeline explosion last year. The Pennsylvania Department of Environmental Protection (DEP) audit highlights what can go wrong when state and local regulators are unprepared for the arrival of a powerful industry, illustrating the pressures when once-unobtrusive offices suddenly take on outsized importance amid a push to promote rapid development. Its findings could also spell trouble for Shell, which currently relies on permits authorized by the district for at least two pipelines connecting the company’s plastics plant to natural gas wells that will supply it with the raw materials to make plastics from fracked gas in the Marcellus Shale.The district, auditors wrote, “has shown a lack of sound judgement in recent years,” grading the program overall “unsatisfactory.” On August 20, the DEP yanked the Beaver County District’s authority to be involved in erosion and sediment control permits entirely, and said it would review the district’s authority over other permits.“DEP staff identified significant and consistent problems with BCCD’s recordkeeping, permit review, and inspections,” DEP Secretary Patrick McDonnell said in a statement announcing the termination of the district’s authority.Environmental groups expressed outrage. “The improper issuance of pipeline construction permits in Beaver County without the proper review is an egregious o ffense,” said Joseph Otis Minott, executive director and chief counsel for environmental group Clean Air Council, “that put residents’ safety and the environment at great risk.”

Mariner East pipeline hit with $319000 in fines for Pennsylvania violations - State environmental regulators have hit Sunoco Pipeline LP with $319,000 in fines for violations related to construction of its Mariner East pipeline system, the latest among $13.5 million in penalties assessed on the contentious project since 2017.The Pennsylvania Department of Environmental Protection announced Thursday that Sunoco had signed two consent agreements to settle complaints that it violated the Clean Streams Law and Dam Safety and Encroachment Act in 2017 and 2018. The company was cited for unauthorized discharges of drilling fluids, consisting of bentonite clay and water, while conducting horizontal drilling in 10 counties to excavate underground pathways for its pipeline. It was also cited for accelerated erosion and sedimentation at sites in Cumberland County in 2017. Sunoco Pipeline is a subsidiary of Energy Transfer Partners (ETP) of Dallas. Sunoco’s $5.1 billion Mariner East system consists of two adjacent pipelines that transport natural gas liquids, such as propane, from Western Pennsylvania and Ohio to an export terminal in Marcus Hook. Construction of the third Mariner East pipeline is nearly completed, and it is expected to go into service by the end of the year. Patrick McDonnell, secretary of the Pennsylvania Department of Environmental Protection, said the DEP is committed to holding Sunoco and other companies to a high standard. "These actions, which resulted in violations of permits and laws that are meant to protect our waterways, are unacceptable,” he said in a statement. ETP signed the consent agreements on Aug. 20 and 21. “We are pleased to have resolved this issue with the DEP as we remain focused on safely completing construction of this important pipeline,” the company said in a statement. The Mariner East 2 project has been hit with 98 notices of violation since 2017, and Sunoco’s conduct has prompted a backlash of protest from neighbors and officials. Chester County Prosecutor Thomas Hogan is conducting a criminal investigation of Sunoco, and State Sens. Andy Dinniman and Tom Killion have introduced a package of legislation aimed at reforming Pennsylvania’s pipeline oversight.

Criminal defense counsel represents DEP in Mariner East probe - The Pennsylvania Department of Environmental Protection has engaged a criminal defense attorney to represent at least one employee with regard to a criminal investigation of the Mariner East pipeline project — a move several environmental attorneys said is unusual and possibly unprecedented for the regulatory agency. Since pipeline construction on the $2.5 billion project began in late winter of 2017, the 350-mile long statewide project has resulted in backyard sinkholes, contaminated drinking water, and polluted wetlands. In the summer of 2017, DEP, along with several environmental groups, agreed to a consent decree with Sunoco after dozens of drilling mud spills led to the pollution of high value wetlands and trout streams, and the loss of drinking water for residents of a Chester County community. The Chester County District Attorney opened an investigation into Energy Transfer, the parent company of pipeline builder Sunoco Logistics, in December 2018. At the time, Tom Hogan said possible charges related to pipeline construction through the county included risking a catastrophe and criminal mischief. In March, he convened a grand jury. A similar criminal investigation into the company has been opened by the prosecutor in neighboring Delaware County, with help from the state Attorney General’s office. The Attorney General’s office would not comment for this story.  The Department of Environmental Protection could be an integral part of such an investigation, since the agency issues the water-crossing and earth disturbance permits necessary for construction. It also enforces environmental regulations and special conditions outlined within those permits. DEP has entered into several consent orders and agreements with the company resulting from permit violations, and issued just under 100 separate notices of violations resulting in more than $13 million in penalties.

EQT ends suit on drilling leases - — Oil and gas producer EQT has ended its suit against the state Department of Environmental Protection that aimed to have legislation forbidding deductions from certain drilling leases declared unconstitutional. EQT filed its motion on to dismiss the case on Friday. Judge Thomas Kleeh of the U.S. District Court for the Northern District of West Virginia issued his order on Tuesday. This case was one of a trio of cases all dealing with deduction of pro-production expenses from royalty checks for mineral owners who had old-style flat-rate leases converted to percentage leases under 1982 legislation. This suit arose in April 2018 shortly after passage of Senate Bill 360, which was a response to the state Supreme Court’s about-face in one of the other related cases, called Leggett. In answering a question from a federal court, the Supreme Court in 2016 determined in “Leggett 1” that EQT could not deduct post-production expenses from royalties on the leases in question. Then in 2017, in “Leggett 2,” with a new justice on board, in changed its answer and said that’s OK. (Leggett 1 and 2 are the same case but are used to identify the different Supreme Court opinions.) Following Leggett 2, Senate Bill 360 prohibited those deductions. Leggett was stayed in February as this case and another, called Kay, worked through the system. Kay was a class action suit begun in 2013, alleging that EQT and its midstream and downstream chain of subsidiaries wrongly deducted post-production expenses and severance taxes from their royalty checks, and did not report the sale of natural gas liquids. It was settled in July, costing EQT $53.5 million.

After a year in the trees, opponents continue to block work on the pipeline — Along a 303-mile corridor of land stripped bare for a natural gas pipeline, the only trees left standing are here, on a steep mountainside in Montgomery County. And it is here, not coincidentally, that opponents of the Mountain Valley Pipeline are stationed high above the ground in a white pine and a chestnut oak. Meant to block construction of the deeply divisive project, the tree-sit marked its one-year anniversary Thursday in a patch of forest that has remained largely untouched as developers build the massive pipeline from northern West Virginia through Southwest Virginia to connect with a pipeline near the North Carolina line. From her vantage point in the woods, pipeline opponent Lucy Branham had no doubt that the two protesters, who sat in tree stands about 50 feet above her head, were making a difference in the fight. “All you have to do is look across the road,” Branham said, pointing to a spot on the other side of Yellow Finch Lane where a 125-foot wide easement for the pipeline had been cleared, right up to the edge of the occupied trees. “And here we have a beautiful, functioning forest,” she said. Neither of the masked tree-sitters — who are subject to a pending court action by Mountain Valley to have them removed — was willing to be identified. But they talked Thursday about why they are willing to live in 4-by-8-foot tree stands to block a pipeline that they say will change the planet’s climate with its reliance on a fossil fuel, pollute the steep slopes and pristine streams it bisects with sediment washed from construction sites, and mar the landscape in other ways. “The world’s on fire, and I think it’s a pretty terrible idea to continue the construction and the conditions that are making it that way,” the man in the white pine said. Since Sept. 5, 2018, a variety of protesters have taken turns sitting in tree stands built on a piece of private land condemned for the pipeline. Supporters in a ground camp send up food, water and supplies in plastic buckets suspended by ropes, while keeping their eyes peeled for anyone who might try to broach the blockade. A tangle of colored string stretching between trees and a barrier of wooden pallets makes any ascent to the tree-sits, already challenging on account of the steep slope, even more difficult. Although Mountain Valley is unable to cut the occupied trees and ones near them without risking the lives of the tree-sitters and possibly others, the joint venture of energy companies has been busy digging trenches and burying the 42-inch diameter pipe in other locations.

Utility to feds: No unsafe construction on Atlantic Coast -- The builders of the Atlantic Coast pipeline are contesting federal officials' allegations of unsafe construction practices on the line.

Exploded pipeline in Ky. was 60 years old — report -- Thursday, September 5, 2019 -- The piece of natural gas transmission pipeline that exploded in a fatal fireball last month was more than 60 years old, according to a report released yesterday on the incident in Kentucky.

FERC approves service on Eastern Market Access Project »  The Federal Energy Regulatory Commission has given Dominion Energy approval to begin full service on the Eastern Market Access Project in Maryland and Virginia, Kallanish Energy reports. The $145 million project is designed to boost natural gas pipeline capacity by increasing compression and adding natural gas connections near Washington, D.C. The project was developed to help meet the growing demand of a local utility, Washington Gas Light Co. Another customer bowed out and that triggered a revision of the project’s plans. The project will provide about 150,000 dekatherms per day of firm transportation service and add 31,370 horsepower of compression. The facilities being added are in Loudon and Fairfax counties in Virginia and Charles County in Maryland. The Ferc approval was granted to Dominion Energy Cove Point LNG LP. The pipelines involved serve Dominion Energy’s Cove Point LNG liquefaction/export facility in Maryland’s Calvert County on Chesapeake Bay.

Fracking may be a bigger climate problem than we thought - As greenhouse gases go, methane gets less attention than carbon dioxide, but it is a key contributor to climate change. Methane doesn’t stay in the atmosphere as long as CO2 and is reabsorbed into terrestrial cycles via chemical reactions within 12 years or so. But while it’s up there, it’s much more potent, trapping heat at roughly 84 times the rate of CO2. Scientists estimate that around 25 percent of current global warming traces to methane. When it comes to reducing CO2 emissions, the chain between cause and effect is frustratingly long and diffuse. Reduced emissions today won’t show up as reduced climate impacts for decades. But with methane, the chain of causation is much shorter and simpler. Reduced emissions have an almost immediate climate impact. It’s a short-term climate lever, and if the countries of the world are going to hold rising temperatures to the United Nations’ target of “well below” 2 degrees Celsius above the preindustrial baseline, they’re going to need all the short-term climate levers they can get. In the real world, though, the news about methane is bad and getting worse. It turns out that a mysterious recent spike in global methane levels that’s putting climate targets at risk may be coming from US oil and gas fracking. If that’s true, it’s bad news, because there’s lots more shale gas development in the pipeline and the Trump administration is expected to release a proposed rule Thursday rolling back regulations on the industry, per the New York Times. There are two broad sources of methane emissions: biogenic (plant and animal-based) and fossil fuel production. The former is mainly about agriculture (cow burps, pig poop, rotting organic waste) and tropical wetlands. As for the latter, methane is leaked or deliberately “flared” (burned off) at virtually every stage of fossil fuel production and transport, a problem that is notoriously bad for fracked shale gas and tight oil. Robert Howarth and colleagues at Cornell have been arguing for years that natural gas methane emissions are much higher than the government estimates or the industry admits, high enough to wipe out its supposed climate advantage over coal. That is a controversial position, to say the least. (Estimates of methane leakage vary widely, but Howarth’s is at the very top end.) In his latest paper, Howarth is making a different point, springing from two facts he says previous studies have overlooked.  First, 63 percent of the total increase in global natural gas production in the 21st century has come from shale gas. And second, shale gas production using modern hydrofracturing techniques tends to produce lighter methane than conventional natural gas drilling. Howarth finds that if the lighter methane of shale gas production is explicitly accounted for, “shale-gas production in North America over the past decade may have contributed more than half of all of the increased [methane] emissions from fossil fuels globally and approximately one-third of the total increased emissions from all sources globally over the past decade.”

Ahead of Climate Forum, Bernie Sanders Urges All 2020 Democrats to Back Federal Fracking Ban - Just hours ahead of a televised climate forum with ten of the top 2020 Democratic presidential hopefuls hosted by CNN on Wednesday night, Sen. Bernie Sanders urged all candidates in the race to back a federal ban on fracking—both on public and private lands—across the United States in order to address the urgent threat of the global climate emergency."Any plan that is serious about tackling the climate crisis we face must start with a ban on fracking. Senator Sanders gets this." —Seth Gladstone, Food & Water Watch"Any proposal to avert the climate crisis must include a full fracking ban on public and private lands," Sanders said in a statement."Fracking is a danger to our water supply. It’s a danger to the air we breathe. It causes earthquakes. It's highly explosive. Safe fracking is, like clean coal, pure fiction. But, most importantly, methane from natural gas contributes to climate change and is setting us on a path to disaster. When we are in the White House, we will end the era of fossil fuels, and that includes fracking." While all ten candidates set to participant in the CNN climate forum—including Joe Biden, Elizabeth Warren, Kamala Harris, Pete Buttigieg, Cory Booker, Julian Castro, Beto O'Rourke, Amy Klobuchar, and Andrew Yang—have all put out their individual plans for addressing the climate crisis, only Sanders, according to this overview by theHuff Post, has called for such a complete and total fracking ban.

Julian Castro: Fracking to be phased out in favor of renewables - Presidential candidate and former San Antonio Mayor Julian Castro said he wants hydraulic fracturing to be phased out as part of climate plan that calls for the United States to get all its power from renewables by 2035. The Democratic Party presidential hopeful made the remarks during a Thursday evening event hosted by the San Antonio Association of Hispanic Journalists in San Antonio. Party nomination rivals Bernie Sanders and Kamala Harris are calling for a nationwide ban on hydraulic fracturing, an oil & gas industry practice known as "fracking" that when paired with horizontal drilling, uses water, sand and chemicals to fracture shale geological formations.

Williams PA-NY Constitution natgas pipe could enter service in 2021  (Reuters) - Williams Cos Inc’s long-delayed Constitution natural gas pipeline from Pennsylvania to New York could enter service in a couple years after federal regulators found New York took too long to deny a needed water permit, analysts said on Tuesday. “Barring any permit reversals or unfavorable court decisions, we believe the project could enter service in 2021,” analysts at Height Capital Markets in Washington said in a report. Last week, the U.S. Federal Energy Regulatory Commission (FERC) ordered that the New York State Department of Environmental Conservation (NYSDEC) waived the water quality certification required under the federal Clean Water Act for the New York portion of the pipe. FERC approved construction of Constitution in December 2014. FERC concluded that by failing to act on Constitution’s application within the time limit of one year, New York waived the certification requirements.

Williams finishes work on facility upgrades along Rivervale South to Market project - In order to meet growing natural gas demand in the northeastern region, Williams has completed upgrades and modifications to facilities along its Rivervale South to Market project in New Jersey. The project is responsible for 190,000 dekatherms of firm natural gas service and operations have included uprating 10.3 miles of existing Transco pipeline, adding less than a mile of new pipeline looping, and upgrading or modifying existing facilities, all in New Jersey. It is an extension of the existing Transco natural gas pipeline system used to fuel heating and power generation in the area. Work began earlier this year. “The demand for clean, reliable natural gas is at an all-time high, particularly in the northeastern markets where it has had a direct impact on significantly improving regional air quality,” Alan Armstrong, president and CEO of Williams, said “The Rivervale South to Market project will continue this progress in a manner that minimizes environmental impacts by enhancing and expanding our existing Transco pipeline infrastructure.” This portion of the project adds around 50,000 dekatherms per day. The bulk of work concluded in July when 140,000 dekatherms per day were pressed into service. These additions increase Transco pipeline’s system-design capacity to 17.2 million dekatherms per day, along a pipeline that runs from Texas to New York City.

New York says it will fight federal pipeline ruling - The state Department of Environmental Conservation intends to keep fighting against a planned gas pipeline that would terminate in Schoharie County, even though the agency’s 2016 denial was overturned last month by a key federal agency. “The New York State Department of Environmental Conservation (DEC) ‎disagrees with FERC's decision that, once again, sides with the fossil fuel industry over protecting our environment. DEC will continue to vigorously defend our decision and our authority to protect New York State’s water quality resources,” the agency said in a prepared statement following the Federal Energy Regulatory Commission’s decision in August. In that decision, FERC ruled against the DEC because it had taken more than the specified one-year period to respond to the Williams Partners' application for water permits to cross dozens of streams along its proposed route. The federal agency took its cue from a federal district court in Washington D.C., which also concluded that the state should have responded during the allotted time frame. During earlier arguments though, there was a dispute about whether Williams had halted and re-filed the application or simply extended an earlier application. Williams said it halted and re-filed and the courts agreed. The Tulsa, Okla.-based pipeline firm wants to build a 125-mile-long, 30-inch natural gas line from Marcellus Shale gas fields in northern Pennsylvania to Schoharie County. The line would have the capacity for about 3 million homes. The company says it can help shield New Yorkers from price swings in gas. Williams spokesman Christopher Stockton said this isn’t the last hoop facing the pipeline project. The project still needs a green light from the U.S. Army Corps of Engineers and a final approval from FERC as well as Pennsylvania regulators.

State Agency Voices More Concerns Over PennEast Pipeline Project - Once again, the state Department of Environmental Protection has found permit applications by PennEast Pipeline to be deficient, dealing a new if only temporary setback to the project. In a four-page letter to the company, DEP found its applications for a series of wetlands and flood hazard permits were lacking required information, with the agency giving PennEast 30 days to rectify the omissions. The 120-mile project has encountered numerous delays in review of its proposal, which involves a $1 billion new pipeline beginning in Luzerne County, Pa., crossing the Delaware River in Hunterdon County and ending just outside of Trenton. PennEast is one of the most controversial of nine new pipeline projects pending in New Jersey, most of which are intended to ship cheap natural gas from the Marcellus Shale formations in Pennsylvania to metropolitan and suburban markets in New Jersey. The project has stirred enormous opposition on both sides of the Delaware River, crossing more than 100 waterways in both states. A wide array of environmental and public interest organizations also are pressing Gov. Phil Murphy to declare a moratorium on new fossil-fuel projects in New Jersey in light of his stated goal of having 100 percent clean energy by 2050. PennEast is reviewing the agency’s letter and will quickly provide the data requested, according to Pat Kornick, a spokeswoman for the company, who added it is committed to working with the department as the review of its 24,000-page application moves forward. Failure to meet environmental standards Tom Gilbert, campaign director for Rethink Energy NJ, said it is not surprising PennEast’s application was deemed deficient, given the company’s track record. Its initial application was found wanting because homeowners along the route would not allow them on their property. “PennEast will ultimately be rejected because it cannot meet New Jersey’s strict environmental standards,’’ Gilbert said. Jeff Tittel, director of the New Jersey Sierra Club, questioned whether the company will ever comply with the permit requirements. “Instead of going through another 30 days to fix a flawed permit, they should kick them out and start all over again,’’ he said.

PennEast: Hunterdon NJ freeholders again oppose natural gas pipeline – The Hunterdon County freeholders have unanimously reiterated their opposition to PennEast's latest pipeline permit application to the state Department of Environmental Protection. The freeholders' resolution said that the DEP has enough information to determine that the pipeline cannot be constructed in a manner that meets the stringent environmental standards required under state law and regulations. “Now that PennEast has re-submitted its permit applications to NJDEP, after being turned down over a year and a half ago, it is important for the Board to provide comment to NJDEP as to why approval of the permits is not in the public interest,” said Freeholder John E. Lanza. The freeholders originally passed a resolution opposing the pipeline in 2015. PennEast had no comment on the freeholders' action. After the DEP originally rejected the permit applications in January 2018, PennEast submitted a fresh application to the DEP in August. “The planned pipeline route disturbs a 53-acre well service area in Holland Township and over 2,000 acres of Hunterdon County farmland and conservation easements for which the taxpayers have paid millions of dollars to preserve, thereby destroying the easements,” Lanza said. When the freeholders first approved a resolution opposing the pipeline project in 2015, current freeholders Shaun Van Doren and Sue Soloway were not in office. Both Van Doren and Soloway both supported the resolution this week and thanked Lanza for giving them a chance to voice their opposition.

Tis' The Season For Natural Gas Bulls To Be Jolly -- Okay, so it is a little early for Christmas references, but we have entered the time of year where the natural gas world is often kind to the bulls, which is something that has not been the case very often since the big run up in the first part of last winter, as prices declined to new multi-year lows. Notice how prices often rise after the beginning of September. This year, we actually got a head start with some rallying last week off price levels below 2.20 in prompt month. That rally has continued unabated this week, so far, with prompt month prices touching 2.45 in today's session, more than 10% higher than we saw early last week. Surely, with a rally this strong, the data must have shifted pretty strongly over the last week. Well, not exactly. Production remains quite high, posting above 93 bcf / day on numerous days. How about LNG? We did see new highs last week, but so far this week, LNG intake has actually declined. The difference must lie in exports to Mexico, as they have been rumored to increase any time now, as the Sur de Texas pipeline comes into service. No, nothing notable there either. Quite simply, this has been a cash-led rally, as we are getting later in injection season and storage tries to fill as much as possible heading into the cold season, and prices had been held down at levels that are very difficult to sustain for quite awhile. We have been playing for this move for awhile, with suggestions such as buying the October / January (V/F) spread, along with selling puts showing up in our weekly trade ideas over the last several weeks. The V/F spread has rallied nearly 14 cents over the last month. We cannot leave weather out of the discussion, as we finally saw the expected shift hotter over the holiday weekend, with demand solidly above normal for the next couple of weeks across the south, doing its part to hinder storage refill efforts. Lastly, we must mention the large short position that the market has held for the last several weeks, adding more fuel to the bullish fire as some of these shorts are forced to cover on the way up. 

US natural gas in underground storage rises 84 Bcf, nears five year average: EIA — US working natural gas volumes in underground storage rose 84 Bcf last week, much more than the market expected, as NYMEX Henry Hub futures fell slightly following the announcement. US storage stocks increased to 2.941 Tcf for the week ended August 30, the US Energy Information Administration reported Thursday morning. The injection was much more than an S&P Global Platts' survey of analysts calling for a 75 Bcf injection. It was also outside the survey range, as responses spanned from 69 to 83 Bcf. Overestimating demand in the EIA's East, Midwest, and South Central storage regions accounted for the miss, according to S&P Global Platts Analytics. The build was also more than the 64 Bcf injection reported during the corresponding week in 2018 as well as the five-year average of 66 Bcf, according to EIA data. As a result, stocks were 383 Bcf, or 15%, above the year-ago level of 2.558 Tcf and 82 Bcf, or 2.7%, below the five-year average of 3.023 Tcf. The October NYMEX contract was trading down a half cent to $2.44/MMBtu following the larger-than-expected storage injection. The prompt-month contract made impressive gains over the past week, rising more than 15 cents but strong supply continues to drive bulky builds. The largest injection occurred in the Midwest region, where facilities rose 37 Bcf to 827 Bcf. It is the only region with more gas in storage than the five-year average, albeit slightly at 1.3%. NGPL Chicago spot prices are 25 cents below Henry Hub. The expectation that Chicago prices could be 80 cents/MMBtu lower this winter than last, as indicated in the futures market, is one reason Platts Analytics is forecasting Midwest power demand to be 100 MMcf/d higher year on year, despite temperatures that were 2.5 degrees lower than the 10-year average last winter. Coal retirements and new gas builds also are adding to winter-on-winter gains. Platts North American Power Plant databank shows that 620 MW of coal generation has come offline since last winter, and 393 MW of new gas builds have come online. If gas replaced 60% of this coal generation, it would drive power demand higher by about 70 MMcf/d, assuming a heat rate of 7.5 MMBtu/MW. The new gas generation is likely to add only 50 MMcf/d of demand or so, assuming plants run at 75% capacity. US balances have remained mostly flat week on week for the week in progress, according to Platts Analytics. Both supply and demand made similar gains.

Larger Than Expected Build In Today's EIA Report Mostly Shrugged Off -- Today's EIA release revealed that last week's storage build was a little larger than expected, with an injection of 84 bcf reported. After such a strong rally over the last week and a half, one would expect a correction based on the larger build, and we did see one, briefly, as prompt month prices fell to just under 2.39, but the decline was quickly bought back up, with the contract closing just a penny lower on the day at 2.435. Most of the curve, in fact, closed higher on the day, with only October and November contracts in the "red". Why the resilience in prices? There are a couple of things to mention. While the build was larger than forecast, it still was a little tighter in terms of supply / demand balances compared to the prior week. The number does little to alter end-of-season storage expectations, with most estimates in the 3.70 to 3.75 tcf range for the end of October. As we discussed yesterday, this rally has been predominantly a cash-led one, as storage looks to refill as much as possible in advance of the winter season. As long as cash remains strong, downside is somewhat limited. Forecast demand remains very strong for this time of year across key areas of the South, with mid summer-like heat in full swing in many areas, including widespread upper 90s to low 100s in Texas for the next several days. This can be visualized by looking at one of our new regional tools, focused on the Gas-Weighted Degree Day (GWDD) forecasts just for the south-central EIA region. Notice there is not much drop-off in southern GWDDs for another 7-9 days. This keeps demand for natural gas stronger than normal, and could continue supporting daily cash prices. But then there is the wind factor, as ERCOT winds are forecast to increase considerably by early next week. All else equal, while it remains hot, the increase in wind generation should take away some of the demand on the gas side, possibly allowing cash prices to ease off, and thus, impacting futures as well. Of course, this is just one piece to the complex puzzle that makes up the natural gas market.

Natural Gas Prices Finish With Nearly A 10% Weekly Gain -- We mentioned the other day how this time of the year often is much more "friendly" to natural gas bulls, and that has rang true and then some, with prompt month prices soaring higher again today, even testing the 2.50 level in today's trading session. This an important zone from a technical standpoint, which we will get to in just a moment. First, a look at our seasonality chart shows that this rally has almost been enough to completely close the gap between 2019 and the pack of prior years. In total, the front of the curve has gained nearly 35 cents over the last month, and about 45 cents from the early August lows. But let's get back to that important technical zone, highlighted in yellow, up above. This is the zone which acted as very strong support for three years, since the Spring of 2016, that finally broke a few months ago. As all of you chart technicians are aware, this broken support now acts as what should be strong resistance, meaning that, if there is any bearish catalyst, you could get more of a reaction to the downside off this level. Now, we are not about to imply that this means we will move lower next week. We still need that catalyst, which will likely have to come from the cash market. Our discussions all week have talked about the cash-led nature of this rally, as storage tries to refill as much as possible ahead of the cold season, with weather demand being strong enough to hinder those refill efforts thanks to intense heat in the South. After this weekend, southern demand finally will gradually tail off. Will this be enough to take some of the "heat" off Henry Hub cash prices and allow the 2.50-2.54 prompt month resistance to hold?

Southern N.E.'s Fossil-Fuel Infrastructure Builds Up — The Burrillville, R.I., power plant may have been derailed but there is still plenty of new and proposed natural-gas infrastructure in southern New England.The debate over expanding pipelines and related equipment occurs nearly every winter following cold spells that increase demand for the natural gas flowing through Connecticut, Rhode Island, and Massachusetts.The big appetite for the fossil fuel is due in part to New England’s rapid transition from coal and oil power to natural gas, increasing its share of electricity generation from 15 percent in 2000 to 48 percent in 2017. Rhode Island generates 93 percent of its in-state electricity from natural gas. Massachusetts generates 67 percent of its power from natural gas.With more power plants running on natural gas and more homes and businesses heating with it, there is less of the fossil fuel to go around during the coldest of winter days. During the frigid winter of 2013-14 supply was so low that natural-gas prices hit record highs and standby power plants in New Hampshire ran on jet fuel to meet demand.The solution, according to the fossil-fuel industry and its advocacy groups, is to increase the flow of “cheap” natural gas extracted from the Marcellus shale fracking region of Pennsylvania to southern New England. To do so, they say, New England needs new and bigger pipelines, storage facilities, and compressor stations to push the gas along.This past winter also had cold spells but, according to the U.S. Energy Information Administration, supply and prices were tamed by timely shipments of LNG to terminals in Boston, Everett, Mass., and the port of Saint John in New Brunswick. Environmentalists want a similar energy transition, but from fossil fuels to renewable energy and energy-reducing programs. All six New England states have goals to lower greenhouse-gas emissions and mandates for ramping up renewable-energy use. Natural gas is unsafe and increases pollution and climate emissions, according to opponents. ISO New England, the operator of the six-state power grid and forecaster of energy needs, has recently started to recognize the transformation from large conventional power plants to a hybrid power system made up of many smaller “distributed generation” energy producers. This new system includes a mix of renewables, energy-storage systems, energy-efficiency programs, electric vehicles, and the adoption of the so-called “smart” electric grid. But ISO New England has yet to abandon its enthusiasm for natural-gas infrastructure.

New York Times drops sponsorship of oil conference -The New York Times has scrapped plans to sponsor one of the world’s biggest oil industry conferences after pressure from climate campaigners including Extinction Rebellion. There were protests outside the newspaper’s offices in Manhattan this month over the Oil and Money conference, which is in its 40th year and which green groups have called a “climate crime scene”. The conference is due to take place next month at the InterContinental Hotel on Park Lane in London and will attract executives from the world’s biggest oil companies as well as senior Opec leaders and ministers from fossil fuel-rich Middle Eastern nations. According to the event’s website, keynote speakers this year will include Bob Dudley, the chief executive of BP, and Ben van Beurden, the boss of Royal Dutch Shell. A New York Times spokeswoman said the paper had “decided to end its relationship with the Oil and Money conference” because its subject matter “gives us cause for concern”. “We want there to be no question of our independence or even the potential appearance of a conflict of interest. Over the last several years [the New YorkTimes] has significantly expanded its reporting on climate change and its impact, as well as broader investigative and explanatory coverage of energy and environmental policy,” the spokeswoman said. Extinction Rebellion and other green groups staged protests at the newspaper’s headquarters over the summer calling for it to withdraw from the conference and “tell the truth about the climate emergency”. Extinction Rebellion has also called on the New York Times to include more climate change coverage in its pages and to use “climate emergency language”. Last week members of Extinction Rebellion joined Greta Thunberg, the Swedish climate activist, and thousands of US schoolchildren at a protest outside the UN headquarters in New York. The school climate strike was Thunberg’s first in the US after she travelled across the Atlantic on a zero-carbon yacht to avoid the heavy greenhouse gas emissions caused by air travel.

BP evacuates non-essential staff from 4 Gulf of Mexico oil platforms - (Reuters) - BP on Friday evacuated non-essential staff from its four operated offshore oil production platforms in the U.S. Gulf of Mexico, joining several other firms taking similar steps. The oil major said the evacuations covered its Atlantic, Mad Dog, Na Kika and Thunderhorse platforms. Oil and gas production continues unaffected at the four facilities, a spokesman said. (Reporting by Gary McWilliams Editing by Chris Reese)

Dorian-Hit Bahamas Terminal Appears Okay - The Buckeye Bahamas Hub appears to have sustained no significant damage from Hurricane Dorian. The largest petroleum products terminal in the Western Hemisphere appears to have sustained no significant damage from Hurricane Dorian, Buckeye Partners, L.P. reported Tuesday in reference to its Buckeye Bahamas Hub (BBH).  In a written statement emailed to Rigzone, Buckeye cautioned that its early conclusion about BBH’s condition following the catastrophic hurricane stems from “preliminary assessments, subject to physical verification.” The company added that it will conduct more conclusive “in-depth, on-the-ground inspections and assessments” of Dorian’s impact on BBH in the days to come.  Located near Freeport on Grand Bahama Island, the 80-tank BBH boasts approximately 26.2 million barrels of storage capacity and eight berths, according to Buckeye’s website. The facility, which Buckeye notes is the leading hub in the Caribbean region, provides storage, blending and other services for crude oil, fuel oil, vacuum gas oil (VGO), diesel fuel and gasoline and other components.

Dorian Damages Equinor's Oil Storage Terminal - Equinor ASA’s South Riding Point oil storage terminal was damaged as Hurricane Dorian wreaked havoc in the Bahamas, the Norwegian energy company said Thursday. “Our initial aerial assessment of the South Riding Point facility has found that the terminal has sustained damage and oil has been observed on the ground outside of the onshore tanks,” Equinor said in a company statement. While they said it’s too early to indicate any volumes, there are no current observations of any oil spill at sea. Equinor had 54 personnel at Grand Bahama at the time of Dorian’s arrival. The company said they worked at the South Riding Point oil storage terminal until the precautionary shutdown at noon on Saturday. Equinor said no personnel was on the terminal when the hurricane hit, and the company has since made contact with all of them and they are confirmed safe. “Equinor has mobilized oil spill response resources and they will arrive at South Riding Point as soon as possible. We are now working to establish a better overview of the situation, and on mounting a safe and timely response to the situation,” the company said. Equinor said it’s communicated its initial assessment to local authorities and will continue that communication. More updates will be provided once they gain access to the terminal area. Hurricane Dorian first made landfall Sunday in the Bahamas as a Category 5 storm. Buckeye Partners, L.P.’s petroleum products terminal – also located in the Bahamas – sustained no significant damage in the storm, the company said Wednesday.

Equinor reports onshore oil spill in Bahamas after hurricane (Reuters) - Equinor has discovered an oil spill at its storage terminal in the Bahamas in the aftermath of hurricane Dorian, the Norwegian energy company said in a statement on Thursday. “Our initial aerial assessment of the South Riding Point facility has found that the terminal has sustained damage and oil has been observed on the ground outside of the onshore tanks,” Equinor said. “It is too early to indicate any volumes. At this point there are no observations of any oil spill at sea,” it added. In preparing for the hurricane, Equinor shut down operations at the South Riding Point terminal on Aug. 31, and none of its staff were at the site during the storm. “We have informed the local authorities of our initial assessment and remain in dialogue with them,” Equinor said. “While weather conditions on the island have improved, road conditions and flooding continue to impact our ability to assess the situation and the scope of damages to the terminal and its surroundings.”

Delfin LNG loses partner, still plans floating export facility in Cameron Parish - Delfin LNG LLC, a Houston-based energy company with plans to build several floating liquefaction vessels and export terminals in Cameron Parish, has hit some bumps but its leadership is still bullish that it will export LNG some day. In June, Delfin LNG requested a 3-year and 6-month-long extension from the Federal Regulatory Commission for its permit, but was granted a shorter extension that expires in September 2020. That's when the company must have its export facility constructed and in operation. The Delfin facilities could produce up to 13 million tons of LNG per year across four floating vessels about 50 miles off the Louisiana coast — supplied by pipelines under the Gulf floor. In 2017, London-based Golar LNG signed a joint development agreement with Delfin LNG, but in late August Golar's CEO told investors that it decided against participating in the Gulf Coast project. "We just didn't make enough traction around the two critical customer and financing elements," Iain Ross, CEO of Golar told analysts during a conference call. "We need high-caliber customers you can reliably provide fleet gas and put together an uptick that underpins the financing of the project combined with co-investors to lift the project with us. We just didn't feel that the Delfin opportunity satisfied those criteria." But the chief operating officer of Delfin LNG, Wouter Pastoor, disagrees that the project isn't getting interest from investors. "We cannot speak to the issues at Golar or the disclosures it has made as part of its earnings announcement, but the Delfin Project is well established and has attracted significant global partners," Pastoor said in a recent email.

FERC formally accepts Commonwealth LNG permit application - Federal regulators have formally accepted a permit application filed by Houston liquefied natural gas company Commonwealth LNG to build an export terminal in southwest Louisiana.Although the project had been listed in "pre-fling status" since August 2017, the Federal Energy Regulatory Commission accepted the company's formal application on Tuesday morning.Commonwealth LNG is seeking permission to build six liquefied natural gas production units known as trains on a 393-acre property along the Calcasieu Ship Channel about 50 miles south of Lake Charles. Located on the Cameron Parish side of the channel near the entrance to the Gulf of Mexico, the proposed export terminal will receive 390.6 billion cubic feet of natural gas per day from a pipeline to make 8.4 million metric tons of LNG per year.

Corpus Christi crude loadings hit record as new Texas pipelines open -  (Reuters) - U.S. crude oil loaded onto vessels at Corpus Christi, Texas, last week hit an average 1 million barrels per day (bpd) following the opening of new pipelines from West Texas shale fields, according to consultancy RBN Energy. Crude pipelines owned by EPIC Midstream and Plains All American Pipeline LP, able to carry up to 1.07 million bpd combined, started operations last month, easing an inland bottleneck by funneling oil to the South Texas export hub. Last week’s record in Corpus Christi was nearly double July’s average of 525,000 bpd. Nearly half of last week’s loadings occurred at Moda Midstream LLC’s export terminal in Ingleside, near Corpus Christi, RBN Energy’s analysis of vessel-tracking data showed. Pipeline operators recently have cut tariff rates to the U.S. Gulf Coast, encouraging flows and reducing the spread between Midland and Houston oil prices. Crude inventories in Corpus Christi recently climbed almost 1 million to 12.7 million barrels in the week ended Aug. 23, with storage utilization reaching 52%, according to market intelligence firm Genscape.

Plastics industry accounts for one-fourth of Houston-area industrial air pollution, report finds - The plastics industry is responsible for nearly a fourth of the industrial air pollution in the Houston area, a share that is expected to rise as the number of new plants and expansions doubles in the next few years, a new study found.The Environmental Integrity Project identified 90 plants that either make plastics or their ingredients in the Houston and Port Arthur area and, using state data, found that in 2017 the plants emitted 55,704 tons of potentially health-damaging air pollutants.And while information is not available for all proposed projects in the coming years, the study and advocacy group estimate that just a third of them could emit up to 14,000 more tons of air pollutants per year. While air pollution in the region is not limited to plastics production, the group decided to focus on this industry because of the growth it is undergoing, said Ilan Levin, a group attorney, and also because it is a particularly toxic industry.The industry has seen immense growth in the United States in recent years as access to cheap natural gas fueled a huge industry-wide expansion, with Houston and the Gulf Coast region as its epicenter. The production of plastics emit greenhouses gases, as well as smog-forming pollutants like nitrogen oxides that can cause adverse health impacts.The shale boom in West Texas, where producers are pumping record amounts of crude oil, led to a slump in prices for natural gas, a byproduct of oil production and a major input for petrochemical products. At the same time, petrochemicals are projected to account for more than a third of the growth in world oil demand by 2030, and nearly half of the growth in demand by 2050, according to the International Energy Agency.For major petrochemical companies, such as Michigan-based Dow Chemical Co. and Houston-based LyondellBasell Industries, that meant cheaper supplies to make various chemicals and plastics and more demand for their products. Companies made huge investments in infrastructure to equip the Gulf Coast region for petrochemical exports through the Houston Ship Channel.More than $140 billion in new petrochemical capacity has been planned or added in the Gulf Coast region since 2010, according to the American Chemistry Council, an industry trade group.

Permian Gas Flaring Dips for First Time Since 2017 - Natural gas flaring in the Permian dropped in the first quarter of 2019 – the first drop in one-and-a-half years, according to energy research firm Rystad Energy. While Rystad stated that previous quarterly estimates suggested gas flaring in the Permian reached record highs beyond 660 million cubic feet per day (MMcf/d) in fourth quarter of 2018 and first quarter of 2019, newly released final data is a different picture. There’s a downward revision for first quarter 2019’s flaring estimate by seven percent to 613 MMcf/d. Source: Rystad Energy“This is the first time that has happened over the past one-and-a-half years. Prior to this, gradual upward revisions of previous estimates were the norm,” said Artem Abramov, Rystad’s head of shale research. The Permian’s gas flaring is still three to four times higher than years past, Rystad maintains. “There are no signs of any significant reduction going forward,” said Abramov. “On the contrary, the preliminary natural gas flaring estimate for the second quarter this year shows a new all-time high. Texas Railroad Commission chairman Wayne Christian recently voiced concern over the practice, saying that too much gas is being burned off out of convenience rather than necessity, Bloomberg reported. This came after Texas regulators had a split vote over the flaring of natural gas.

Lotus Midstream's Fast-Growing Role In Permian Crude Transportation -  The Permian Basin has attracted more than its share of midstream start-up companies over the past few years, and for good reason. The region has experienced big gains in crude oil, natural gas and NGL production, and that’s put stress on the Permian’s already significant pipeline infrastructure and spurred the development of many new projects. One new midstreamer that’s made a big splash is Lotus Midstream, which, since it was formed in early 2018, has partnered with some of the Permian’s biggest players — including ExxonMobil and Plains All American — to advance the now-sanctioned 1.5-MMb/d Wink-to-Webster crude pipeline. It’s also acquired Occidental Petroleum’s (Oxy) Centurion pipeline system, which includes a lot of crude gathering pipe and is one of the two main takeaway links between the Permian and the Cushing, OK, hub. What’s Lotus up to, and how is it shaping Permian crude transportation? Today, we examine what has quickly become one of the largest midstreamers in the U.S.’s hottest shale play. Crude oil production in the Permian now tops 4.2 MMb/d, twice what it was only two and a half years ago. That phenomenal run-up in crude output for a while caused some serious pipeline-takeaway constraints and huge price differentials between the crude hub in Midland, TX, and hubs in Cushing and along the Gulf Coast — topics we’ve covered extensively in the RBN blogosphere. More recently, though, the focus has shifted to all the new crude gathering and takeaway pipelines being developed — and coming online — that already have improved things in a big way. In our 14-part Have It All blog series on Permian crude gathering systems, we reviewed many of the smaller-diameter pipeline networks in the region’s Midland and Delaware basins. In Hard Hat and a Hammer, we looked at the more than 600 Mb/d of incremental takeaway capacity that was added between the fall of 2018 and the spring of 2019 — these projects, in order of completion, include Plains’ new Sunrise II pipeline from Midland to Wichita Falls, TX; a 40-Mb/d expansion of Magellan Midstream Partners, Plains and OMERS Infrastructure Management’s BridgeTex Pipeline; a 45-Mb/d expansion of Enterprise Products Partners’ Midland-to-ECHO I pipeline; and the conversion of one of Enterprise’s Seminole NGL pipelines to what is now the 200-Mb/d Midland-to-ECHO II pipeline. We also looked at two new pipelines that within the past few weeks have added nearly 1 MMb/d of incremental capacity from the Permian to the Corpus Christi area: EPIC Midstream’s EPIC NGL Pipeline, which was temporarily repurposed to transport up to 400 Mb/d of crude oil until the company’s 590-Mb/d EPIC Crude Pipeline starts up in January 2020, and Plains’ 585-Mb/d Cactus II pipeline.

US oil and gas rig count falls, Permian takes biggest hit: Enverus DrillingInfo -  The US oil and gas rig count fell 21 to 966 on the week, according to Enverus DrillingInfo data released Thursday, with Permian Basin rigs taking by far the biggest hit.Permian rigs in the West Texas/New Mexico basin were down 15 in the past week, leaving 418. That is the lowest number since the first week of 2018.Overall, most of the week's rig count decline was in oil-oriented rigs, which were down 16 to 767, Enverus said. Gas rigs dropped by 8 to 191, while there was a three-rig gain in rigs not classified as either oil or gas.Of the other seven major named US basins, the Dry Marcellus, largely in Pennsylvania, was down by three to 26 rigs.Two basins lost a rig each: The Denver-Julesburg Basin, mostly in Colorado, is now at 26 rigs, while the SCOOP-STACK play in Oklahoma is at 65.But the Williston Basin in North Dakota and Montana, which encompasses the Bakken Shale, gained a rig for a total 59.Four other basins remained the same week on week: the Eagle Ford Shale of South Texas stayed at 73, the Haynesville Shale of East Texas and northwest Louisiana remained at 52, the Wet Marcellus, also mostly in Pennsylvania, kept to 19 rigs and the Utica Shale, largely i n Ohio, held steady with 16 rigs. Permit approvals this week were down by 198 compared to last week, for total US approvals of 790. Permitting was down in virtually all basins; the largest single move was in the DJ Basin, down 243 to zero this week. In other basins, the Wet Marcellus was down 22 to 9, the Permian was down 21 to 106, the Eagle Ford was down 19 to 26, and the Williston was down 17 to 10. All other named basins were down by 11 or less, except in the Utica Shale, which recorded a five-permit gain for a total of 6.

Fracking's Dirty Water Problem Is Getting Much Bigger – DeSmog -- While fracking for oil and gas in the U.S. has contributed to record levels of fossil fuel production, a critical part of that story also involves water. An ongoing battle for this precious resource has emerged in dry areas of the U.S. where much of the oil and gas production is occurring. In addition, once the oil and gas industry is finished with the water involved in pumping out fossil fuels, disposing of or treating that toxic wastewater, known as produced water, becomes yet another problem.  These water woes represent a daunting challenge for the U.S. fracking industry, which has been a financial disaster, something even a former shale gas CEO has admitted. And its financial prospects aren't looking any rosier: The industry is facing another round of bankruptcies as producers are overwhelmed by debt they are unable to repay. This week, Bloomberg reports that the Permian region of Texas and New Mexico, a fracking hotspot, will need an estimated $9 billion of new investment to create 1,000 new injection disposal wells to deal with fracking wastewater over the next decade, citing a note to clients from financial services company Raymond James and Associates. “Most investors are simply unaware of the fact that as crude production grows, produced ‘dirty’ water grows even faster,”wrote Raymond James analyst Marshall Adkin. In July the industry analysts at Wood MacKenzie — who have been highlighting issues about water and fracking for some time — pointed to this factor, and its financial impacts, only getting worse, while also predicting wastewater output in the Permian would double in the next four years. “The entire Permian production cost curve is shifting as produced water volumes expand, posing a risk to production growth in the most prolific U.S. shale play,” wrote Wood MacKenzie. Meanwhile, Wall Street is aware of this fact and is viewing the water crisis in the fracking industry as another way to profit from fracking while investors lose their shirts. Natural Gas Intelligence reported that Raymond James noted this water problem was “offering substantial market opportunities.” In March, a headline on Reuters also emphasized this point: “Wastewater - private equity’s new black gold in U.S. shale.”So, from the perspective of private equity, the more wastewater, the better. In places like Texas and New Mexico, freshwater can be in short supply. That also presents a huge money-making opportunity for some.“Water is the new oil,” Laura Capper, a Houston-based oilfield consultant, explained to the publication Finance &Commerce. “The value of water has changed.” Big money is being spent to lock up the rights to freshwater in Texas, in order to sell those rights to oil and gas producers.

New Texas pipeline protest law is about more than pipelines - A law went into effect in Texas this week that increases penalties for demonstrators who interfere with oil and gas pipelines and other pieces of “critical infrastructure.” Oil and gas states have adopted such laws to crack down on demonstrations like the one at Standing Rock, where protesters disrupted construction of the Dakota Access Pipeline. As the legislation was debated in Texas, attention focused on the impact it might have on opposition to the natural gas pipeline planned for the Hill Country.But the law applies to more than pipelines. It is now a felony in Texas to trespass on “critical infrastructure” in order to damage property or interfere with operations. Critical infrastructure includes pipelines, ports, feedlots, trucking terminals, dams, petrochemical plants and many other facilities. (Find a full list here.)The law counts as critical infrastructure a facility or pipeline “that is under construction and all equipment and appurtenances used during that construction.”It also allows groups to be sued or fined up to half a million dollars for supporting demonstrators.Industry groups support the law, saying it will increase safety around oil and gas infrastructure.“There are ways to protest, but don’t do it on a construction site because you could get hurt or hurt somebody else,” Allen Fore, a spokesman for pipeline company Kinder Morgan, told KUT before the law took effect.But opponents say the law is already having a chilling effect on legally protected protest. Daphne Silverman, a defense lawyer who has represented protesters, says the statute is overly vague when it comes to what constitutes trespassing, leaving it open to constitutional challenge.

The terminal that stores oil at Cushing continues to grow, as does the numbers of pipelines it uses - Analysts that closely track oil inventories at the Cushing terminal predict midstream companies by the end of next year will have the ability to move more oil out of the terminal than can be brought in. Still, much of the information provided by a Genscape webinar last week illustrates that the terminal, a collection of companies that store and ship crude and condensates, continues to play an important role in storing and distributing oil and other liquids to downstream users. The briefing was conducted by Genscape’s Hillary Stevenson, director of oil markets and business development, and Ryan Saxton, its director of midstream oil. Together, they discussed the terminal’s recent rapid growth in storage capacity and connectivity to both upstream fields and downstream export facilities, refineries and other end-stream users of what it stores. During the past 10 years, they said, Cushing’s operational capacity has nearly doubled, from about 55 million barrels in 2009 to about 99 million barrels, which is how much combined operators would be capable of storing once construction ends on a group of tanks now under construction. The terminal’s connectivity to both upstream suppliers and downstream users also has greatly expanded. In 2012, the terminal only had one pipeline coming to it that was capable of moving more than 500,000 barrels a day. None of that size was leaving the facility. Daily flows in averaged about 1.75 million barrels daily, while daily flows out averaged about 1 million barrels daily. In May, the terminal had three pipelines with capacities of at least 500,000 barrels of oil daily bringing product in, with two others that size capable of moving oil to the Gulf Coast. Daily flows to the terminal averaged about 3 million barrels a day, while daily flows out averaged about 2 million barrels a day.

Establishing The Value Of Crude Oil Storage In The Shale Era  - Here at RBN, we frequently receive questions about our thoughts on the value of storage. Whether it be crude, natural gas, or NGLs, we answer like any good consultant, “It depends.” What operational need does this storage serve? Where is it located? Does it have optionality for receipts and deliveries? These factors and many more can affect both the strategic and tactical value of a storage asset. Those assets that are integrated into midstream systems and facilitate movements from the upstream to the downstream are generally better poised for success. Those attempting to carve out a niche in isolation or relying on uplift purely from commodity price fluctuations … well, good luck to them. Today, we begin a series examining the value of — and changing markets for — crude oil storage. Crude oil storage is an integral part of the midstream sector, which (as its name suggests) occupies the market midway between the upstream production of crude and other hydrocarbons at the wellhead and the downstream refining or exporting of oil. As such, the role of crude storage is to facilitate the transfer of oil as it works its way down the line from the lease to the refinery or export dock. That includes moving the various grades of oil across distances, from Point A to B, over a period of time — days or a month or more — as price differentials and economics dictate. This is an important distinction because it means that midstreamers must employ different strategies to capture value in dynamic markets than buyers and sellers in the upstream and downstream sectors. Over time, upstream and downstream folks have had to adapt to manage the commodity price risk that they face. They’ve accomplished this through a variety of financial instruments and physical trades, including a combination of term contracts, spot transactions, physical forwards, futures, options and other derivatives.

Oil producer hopes to start drilling in St. Clair 'sometime next year' - After a lengthy search for oil or gas beneath St. Clair, Traverse City-based oil producer Dennis Schmude said he’s hoping to tap in “sometime next year.” But he still has to finish the local leasing and state permitting process before that happens. On Tuesday, St. Clair City Council members got a quick update from Randall Hansen, of Elexco Land Services, who is working with Schmude Oil. Hansen is in the process of securing leases with local landowners to authorize them to drill offsite for any minerals that might be under residents’ homes. Of the roughly 220 letters they sent out, he said, “As of last week, we’ve leased 150 parcels within in the city.” Schmude said on Wednesday, the arrangement will mean some upfront costs for property owners — he wouldn’t specify how much — and more if the venture is successful. He said they don’t need to get the OK and lease 100 percent with everyone they’ve reached out to, but they “just wanted everyone to share in it.” “And come to the party, and not everyone wants to come to the party,” Schmude said. “I think there’s a normal timidness in a lot of the landowners that we’ve approached in St. Clair,” he added. “It’s just a fear of the unknown, and once they get past the fear of the unknown, they realize we’re not going to harm their property, it’s, ‘Oh, yeah, why didn’t I sign this before?’” Schmude Oil began working with geophysical contractors to run seismic vehicles — sending vibrations into the ground to call back data — throughout the city three years ago. And Schmude said he’s got a good idea to confirm his hunch there was an untapped reservoir of resources beneath the community. Since then, he’s also identified several off-site locations from which to drill for the resources roughly 2,500 feet underground.

Clean up underway after oil discharged in White River in Indianapolis — Several agencies are still working to clean up after oil was discharged Tuesday into the White River. The Indiana Department of Emergency Management, Marion County Health Department, US Environmental Protection Agency, Citizens Energy and a Citizens Energy contractor were notified on Tuesday of the discharge through the city's combined sewer outfalls near Bluff Road and West Southeastern Avenue, Ryan Clem, director of communications for IDEM said. Booms were placed in the river by a contractor hired by Citizens Energy to contain the substance, Clem said. IDEM and federal agencies are still working to identify the source of the oil discharge, Clem said. As of Thursday, crews have not noticed any impacts to aquatic life, Clem said. Jesse Kharbanda, executive director of the Hoosier Environmental Council released the following statement Thursday evening: It is a fortunate that the spill appears to be contained & apparently did not harm aquatic life. But that the spill even happened calls into question if IDEM is devoting sufficient personnel to inspect facilities in a timely & thorough manner to prevent such situations. IDEM also needs to explain why an issued statement of the spill appeared to come two days after the spill; speed of transparency is crucial to maintaining public trust and avoiding risks to people & wildlife. This situation is a reminder that for the brand new White River Vision Plan to be truly realized, there has to be sufficient funding for our state agency (IDEM) to monitor, inspect, and enforce laws to keep the public safe; IDEM spending in 2017 was 17% lower than 2007, despite Indiana's population growing by more than 300,000 during this period of time.

Monmouth College's "Shale Play" Exhibit Explores Impact of Fracking — Monmouth College's first art exhibition of the academic year brings together photos and poetry to give focus to a current environmental issue. "Shale Play: Poems and Photographs from the Fracking Fields" features photographs by Steven Rubin and poems by Julia Spicher Kasdorf. It will be on display through September 15 in the Len G Everett Gallery in Hewes Library. Based on their book of the same title, "Shale Play" features 22 of Rubin's photographs and 12 of Kasdorf's poems that sketch the complex circumstances and the people affected by the fracking of the Marcellus Shale in Pennsylvania. The exhibit is the first of two "Visions & Verse" events that celebrate collaborations between artists and poets. The second exhibit will be on display in the Everett Gallery during the spring semester. Kasdorf will be on campus for a gallery reception and poetry reading from 6-7:30 p.m. on Sept. 9. The reading will begin at 6:30 p.m. The exhibit, reception and poetry reading are all free and open to the public. "'Shale Play' brings together two powerful art forms in a documentary collaboration — something like the work of Dorothea Lange meeting the writing of James Agee — and the results are both chilling and moving," said Monmouth Associate Professor of English David Wright. "I'm so glad that we could bring this work to campus and share it with our students and our campus community."

BP to pay $71,000 fine for northeast Iowa oil spill (AP) — The U.S. Environmental Protection Agency says BP North America must pay a fine of more than $71,000 for a diesel spill last year in northeast Iowa. The EPA on Tuesday announced the fine for violations of the Clean Water Act. BP owns a 2.5 million gallon fuel storage tank at Peosta that leaked about 60,000 gallons of fuel onto the ground and into the South Fork of Catfish Creek in August 2018. The EPA says it is requiring BP to upgrade the secondary containment system at the site to prevent future environmental contamination. EPA says it coordinated the investigation and plans for upgrades with the Department of Transportation and the Iowa Department of Natural Resources. EPA anticipates the upgrade to be completed within six months. 

N.M.'s energy-industry boom to persist, analysts predict-- New Mexico's oil and gas industry is expected to keep growing at a rapid pace, resulting in more revenue for the state and billions of dollars in new infrastructure investments to get the commodities to market, according to a study commissioned by industry trade groups. The predictions were outlined in a report presented to state lawmakers during a meeting Tuesday in Roswell. The report, compiled by a national consulting group, was commissioned by the New Mexico Oil and Gas Association and the American Petroleum Institute. Analysts estimate it will take $174 billion of new infrastructure to keep pace with expected growth through 2030. That would include investments by the industry in new pipelines, access roads, well-pad construction, processing plants and refineries. Ryan Flynn, executive director with the New Mexico Oil and Gas Association, said he doesn't see it as an infrastructure challenge but rather as natural growth in investment that will come from "hitting a new normal of continually high production." "The new normal for the Permian Basin is going to be solid growth for the next decade or so." In its latest forecast, the U.S. Energy Information Administration said it expects the United States to pump about 12.3 million barrels of crude oil per day this year and 13.3 million barrels per day in 2020, both of which would be record levels. Much of the increase is expected to come from the Permian Basin as operators use hydraulic fracturing and other techniques to squeeze more oil and gas from shale formations.

Frac sand mining would devastate southern Utah tourism -  Kane County is one of those postcard communities where the vistas are stunning, where you can commune with Mother Nature in all her finest, where you can actually get away when you are looking to unplug your brain. There are deserts, mountains, farmlands to take in. There is an abundance of wildlife. You can hike, fish, hunt, lose yourself in the beauty. But along with nature’s charms, there is a certain kind of sand in Kane County that is used in fracking — a method of extracting oil and gas from deep, underground pockets that are pounded with water and sand to release fossil fuels.To get that sand, miners must first remove the topsoil. After stripping the topsoil, called the “overburden” in the industry, excavation begins on removing the sand, which involves heavy machinery and sometimes blasting, depending on how tightly the sands and silicates are packed.The sand then goes through washing, drying, screening, and sorting cycles before being shipped off for use in fracking. This process would change the vista in an area of natural beauty that brings in big tourism bucks and could upset the fragile ecological balance necessary for a sustainable agrarian economy. Its impact can be as deleterious as fracking, which leaves an environmental scar that can range from desecration of the landscape to earthquakes as it shatters fissures in the underground rock formations to help the ooze of oil from the shale. It pollutes the waters, chases off wildlife, and makes the idyllic calm of nature clang with steely equipment and the noise created when fracking fluid is pumped into a well under dangerously high pressure, which can exceed 9,000 pounds per square inch to bust up the materials and extract the sand. The sand is a certain kind of silica sand found only in a few places in the United States.

Pipeline spill affects pastureland in western North Dakota (AP) — State environmental officials say a spill of produced water and oil has affected pastureland in western North Dakota.The North Dakota Department of Environmental Quality said Tuesday it was notified of the pipeline leak in McKenzie County. The pipeline is operated by Henry Hill Oil Services LLC.The spill happened about 4 miles (6.4 kilometers) west of Watford City on Friday and was reported the next day. The cause of the pipeline leak is unknown. Produced water is a mixture of saltwater and oil that can contain drilling chemicals. It’s a byproduct of oil and gas development.

ND environmental regulators reviewing open spill cases - North Dakota's top environmental regulator has instructed staff to review open spill cases to make sure they include updated information after his agency faced criticism for its reporting of a large gas plant incident. The effort was initiated after state Department of Environmental Quality Director Dave Glatt acknowledged this month that a 2015 natural gas liquid spill was much larger than initial reports suggested. With Gov. Doug Burgum's backing, Glatt said last week he was exploring ways to improve transparency. But first, Glatt said his staff are combing through records to "make sure that nothing fell through the cracks." "I turned back to the staff and said, 'Make sure that all the open files are updated,'" Glatt said Friday. "Sometimes those things have a tendency to slip a little bit when they're busy out there doing the site work." Open cases include new investigations and post-cleanup monitoring. The DEQ identified 821 open spill cases dating back to 2014 in a spreadsheet provided to Forum News Service Friday morning, and an initial review showed some reports appeared to lack up-to-date details. In 2015, Whiting Oil and Gas Corp. reported three barrels, or 126 gallons, of oil spilled at a McKenzie County well site. The company later told state officials that they "discovered the volume is greater than they initially thought" but didn't have an estimate at the time. The report hasn't been updated to include the volume of the spill. Meanwhile, Oneok Rockies Midstream reported in 2015 that a gallon of natural gas liquids spilled at a compressor station in McKenzie County, but a state inspector concluded Tuesday that the "spill is larger than first reported." The report doesn't specify an updated size, but it notes that the site was given a "no further action" status by the DEQ's groundwater protection program.

Top Interior official who pushed to expand drilling in Alaska to join oil company there - Joe Balash, a Trump appointee, had served as assistant secretary for land and minerals management until Aug. 30.  Last summer, Scott Pruitt left his job heading the Environmental Protection Agency and within a few months had started consulting for coal magnate Joseph W. Craft III. Three weeks after leaving the Interior Department, energy counselor Vincent DeVito joined Cox Oil Offshore, which operates in the Gulf of Mexico, as its executive vice president and general counsel. Now, Joe Balash — who oversaw oil and gas drilling on federal lands before resigning from Interior on Friday — is joining a foreign oil company that is expanding operations on Alaska’s North Slope. Balash, who served as the Interior Department’s assistant secretary for land and minerals management for nearly two years, confirmed in a phone interview Tuesday night that he will begin working for the Papua New Guinea-based Oil Search, which is developing one of Alaska’s largest oil prospects in years. On Wednesday, Oil Search officials said he would become senior vice president for external affairs in the company’s Alaska operations. The company is drilling on state lands that lie outside — but nearby — two federal reserves where the Trump administration is pushing to increase oil and gas development: the Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska. During his time at Interior, Balash oversaw the department’s preparations to hold lease sales on the coastal plain of the 19.3 million-acre refuge and to expand drilling on the 22.8 million-acre reserve to the west of the refuge. Both sites are home to large numbers of migratory birds as well as caribou, polar bears and other wildlife.

U.S. Oil Production Stays Flat For The First Half Of 2019 -- EIA 914 came out today and US oil production declined slightly versus May. June production came in at 12.082 mb/d versus 12.115 mb/d. As a result, US oil production finished the first half of 2019 flat versus December 2018. But for those of you thinking that US shale production won't grow, you may have to think again. Our leading indicator has been able to predict the production figures, so our latest reading shows US oil production of ~12.45 mb/d in August with September around ~12.6 mb/d As you can see in our production matrix above, it's evident that US oil production started to spike in August. Keep in mind that July US oil production was impacted by hurricane-related shut-ins which amounted to ~300k b/d. The growth rate we are currently observing in Q3 2019 is around ~150k b/d per month with Q4 moving down to ~100k b/d per month. As a result, our projected US oil production exit is around ~12.95 mb/d. This will be a massive deceleration in US shale's growth rate as you can see above. By December 2019, we see US oil production growth y-o-y decelerating to just ~4% y-o-y.This will bode well for oil market balances going into H1 2020 as we expect the production profile to be flat again in H1 2020 with the growth weighted towards H2 again.For our US crude storage balance, this reaffirms our view that US crude storage will fall to ~380 mbbls by year-end. Our "lower US oil production forecast" scenario still has some remote possibility of coming to fruition, but we would put the odds at less than 25%.For our updated forecast scenario, we have US oil production exiting at ~13.15 mb/d with 200k b/d as plant condensate for an extra buffer. This storage outlook scenario would push the fundamental fair value of WTI to ~$70 to ~$75/bbl.

Interactive: Not all oil is equal – Presenting the Platts Periodic Table of Oil - Understanding crude quality has never been more important, following the dramatic rise in US shale output, which has transformed the composition of the global oil market.  There are hundreds of different grades and varieties produced around the world, from medium-sour Hungo in Angola to Norway's light-sweet Ekofisk and Mexican heavy-sour Maya crude.The Market Insight team at S&P Global Platts has created a "periodic table of oil" cataloguing 120 of the most important grades on international markets.The interactive chart below will for the first time allow readers to find key information in one place on region of origin, price, trade volumes, sulfur content, viscosity and trade flows.  Click here to access the interactive Platts Periodic Table of Oil

U.S. shale firms cut budgets, staff as oil-price outlook dims - (Reuters) - Oil producers and their suppliers are cutting budgets, staffs and production goals amid a growing consensus of forecasts that oil and gas prices will stay low for several years.  The U.S. has 904 working rigs, down 14% from a year ago, and even that is probably too many, estimated Harold Hamm, chief executive of shale producer Continental Resources, which has reduced the number of rigs at work. Bankruptcy filings by U.S. energy producers through mid-August this year have nearly matched the total for the whole of 2018. A stock index of oil and gas producers hit an all-time low in August, a sign investors are expecting more trouble ahead. (For a graphic on debt from energy bankruptcy filings by year, see here)   “You’re going to see activity drop across the industry,” Earl Reynolds, CEO of Chaparral Energy (CHAP.N), told Reuters at the EnerCom oil and gas conference last month. The Oklahoma energy firm has slashed its workforce by nearly a quarter, trimmed its spending plan by 5%, and agreed to sell its headquarters and use some of the proceeds to reduce debt. Investment bank Cowen & Co estimated last month that oil-and-gas producers spent 56% of their 2019 budgets through June, based on its review of 48 U.S. companies. It expects total spending this year to fall 11% over last year, based on proposed budgets. The slowdown in drilling is spurring cost-cutting in oilfield services, including staff cuts and restructurings at top firms Schlumberger and Halliburton Co. Schlumberger plans a writedown yet to be determined this quarter, noting its results in North America have been “under significant pressure,” CEO Olivier Le Peuch said on Wednesday.

Rig count slips below 900 for first time since 2017  - The number of U.S. rigs drilling for oil and natural gas slipped to fewer than 900 in the past week for the first time since 2017 as activity continues to slow across the oil patch. Oil prices gained on the news to notch daily and weekly gains. Despite steady declines in the number of rigs at work, however, weekly oil production in the U.S. remains near an all-time high at 12.4 million barrels per day, according to government data. In its weekly report Friday, Baker Hughes said the combined tally of oil and gas rigs at work fell by six in the past week to 898. That’s down 150 from a year ago. The number of active oil rigs was down four, to 738, while the number seeking gas fell by two, to 160. A year ago, 186 were at work. Texas and Oklahoma led the week’s declines. Oklahoma, which has seen its rig count plummet by 45 percent in 12 months, lost five rigs, leaving 75 at work. A year ago, its total was 137. Texas saw three rigs shut down, leaving 438 at work. That’s down from 528 a year ago. North Dakota was the only state to add to its rig tally. It gained three, to 54. By major play, Oklahoma’s Cana Woodford was the week’s big loser, with three rigs shut down to leave 42 at work. The West Texas-New Mexico Permian Basin lost two, to 427. The Kansas-Oklahoma Mississippian Lime lost one. Reflecting that state’s gains, North Dakota’s Williston added three rigs, to 54. The decline in the rig count, along with another report issued a day earlier showing smaller domestic crude supplies, helped boost oil prices to a daily and weekly gain. U.S. benchmark crude gained 22 cents, or 0.4 percent, to settle Friday at $56.52 a barrel in New York. That pushed it to a weekly gain of 2.6%. Brent crude, the international benchmark, rose 59 cents, or 1%, to close at $61.54 a barrel in London. For the week, it was up 3.9%. Oil has gained in the past week on news of heightened tensions in the Middle East, which could disrupt supplies, and optimism that the U.S. and China may come back to the negotiating table to hammer out a resolution to their yearlong trade dispute.

Schlumberger CEO outlines digital strategy, plans third quarter writedown - (Reuters) - Schlumberger NV’s newly-appointed Chief Executive Officer Olivier Le Peuch on Wednesday outlined his vision for the world’s largest oilfield services company, vowing to exit unprofitable businesses, restructure some units and focus on returns. In his first public remarks since taking office in July, the 32-year company veteran also warned the company would record a sizeable, non-cash charge to write down assets in the current quarter. He did not specify the size of the writedown. Le Peuch outlined plans to accelerate digital investments and to restructure and rename one of Kibsgaard’s major initiatives that invested in and ran customer oilfields. He also said the company would resize its North American onshore operations, which had grown under Kibsgaard. The costly investments in customer projects and the recent $430 million acquisition of hydraulic fracturing equipment unsettled investors and contributed to Schlumberger’s 69% share declined over the last five years. “The Schlumberger of tomorrow will not be the Schlumberger of today,” Le Peuch told investors at the Barclays CEO Energy-Power Conference in New York. Improved returns will take priority over revenue growth, he said.Oil and Gas Bankruptcies Grow as Investors Lose Appetite for Shale – WSJ --Bankruptcies are rising in the U.S. oil patch as Wall Street’s disaffection with shale companies reverberates through the industry. Twenty-six U.S. oil-and-gas producers including Sanchez Energy Corp. and Halcón Resources Corp. have filed for bankruptcy this year, according to an August report by the law firm Haynes & Boone LLP. That nearly matches the 28 producer bankruptcies in all of 2018, and the number is expected to rise as companies face mounting debt maturities.

"A Murderer's Row": Oil And Gas Bankruptcies To Accelerate As $137 Billion Debt Matures Over Next Two Years - Oil and gas companies are facing an onslaught of bankruptcies as the "shale revolution" appears to be coming to an unceremonious end, at least on Wall Street, according to the Wall Street Journal. Companies like Sanchez Energy Corp., Halcon Resources Corp. and 26 other oil and gas producers have all filed for bankruptcy this year, already matching the 28 industry bankruptcies from all of 2018. The number is expected to rise as debt maturities for those looking to cash in on the shale revolution and make bets on higher oil prices years ago are now looming. 5.7% of all energy companies with junk rated bonds are defaulting as of August, the highest level since 2017. The metric is "considered a key indicator of the industry’s financial stress."  The defaults are on the rise as companies struggle to service debt, bring in new money and refinance existing debt. The once-darling shale business model has been under significant scrutiny from Wall Street over the last 18 months, adding to the headwinds for many companies. Investor interest has faded after years of meager returns while, at the same time, companies struggle to meet their cost of capital with oil prices below $60/barrel. Private companies and smaller drillers have felt the most pain thus far. These companies "collectively generate a large portion of U.S. oil," and their distress is indicative of wider distress throughout U.S. shale.  Patrick Hughes, a partner at Haynes & Boone said: “They were able to hang in there for a while, but now their debt levels are just too high and they’re going to have to take their medicine.”

2020 Election Could Put Oil Out Of Business - The Democratic presidential candidates are gearing up for a lengthy town hall event on CNN covering climate change, where they will discuss a range of plans that will entirely upend the U.S. energy sector. In the last few months, the candidates have tried to outdo each other as they released ever more aggressive plans on energy and climate change, engaging in an arms race of sorts with trillion-dollar spending plans. The proposals range in scope, but they are undoubtedly bold visions for a clean energy transition. It was too long ago that a modest carbon tax was seen as controversial; now the baseline in the Democratic Party is a complete phase out of fossil fuels in the medium- to long-term. The Overton window has very much been moved.As Bloomberg noted, there are several issues that they all agree on. For instance, they will all rejoin the Paris Climate Accord, which, given the scale of the climate crisis, is child’s play. That’s the bare minimum and almost not worth mentioning, especially since it relied on voluntary commitments anyway. It was also done by the prior Democratic administration so it shouldn’t be seen as any sort of bold proposal for change.  More relevant for the oil and gas sector is the call to end subsidies for fossil fuels, which total as much as $14.7 billion annually, including deductions for intangible drilling costs; last-in, first-out accounting; master-limited partnership tax exemptions; and low-cost royalty and leasing rates on federal lands, among others. Some of this was also proposed by the Obama administration but stalled in Congress. It may give some oil executives a bit of heartburn to see their subsidies on the chopping block, but even if passed, these measures wouldn’t fundamentally disrupt the industry. But here is where it gets really tricky if you are an oil and gas driller. Many of the top tier candidates want to revoke the permits or otherwise block major long-distance pipelines, including Keystone XL, Dakota Access, Line 3, Line 5, and essentially any other project of this nature.  All of the candidates – at least all of the viable ones – have vowed to end drilling on federal lands. This was something Senator Elizabeth Warren came out with early on, and other candidates have followed suit. No new leases for offshore drilling, none for BLM land, etc. The candidates point out that to fundamentally transform the energy system, and to hit climate targets that are becoming exceedingly difficult to reach, oil and gas reserves need to be left in the ground. Some candidates want a ban on oil exports and a ban on fracking.

Trudeau’s oil pipeline tarnishes his climate credentials ahead of Canadian election (Reuters) - Canadian Prime Minister Justin Trudeau has cast himself as a champion in the fight against climate change while pushing to expand an oil pipeline to help struggling producers, a contradiction that may hurt his re-election bid next month. Trudeau’s Liberal government bought the Trans Mountain pipeline for C$4.5 billion ($3.40 billion) last year to ensure the expansion would proceed. Months later, a court blocked the project because it said the government had failed to adequately consult indigenous peoples living along the pipeline’s path.Work recently restarted after the government reapproved the project in June, but the pipeline hit another snag on Wednesday when a federal court said it would allow six legal challenges by First Nation groups to go ahead.Canada is the world’s fourth-biggest producer of crude and the energy industry accounts for about 11% of annual nominal gross domestic product. But fierce environmentalist and indigenous opposition and years of regulatory delays have created an export pipeline impasse that has cost billions in investment dollars and thousands of jobs. Although the pipeline expansion is widely expected to increase Canadian crude exports, it has been a headache for Trudeau who promised to be a standard-bearer for global action on climate change when he took office four years ago and is counting on support from environmentalists in next month’s vote.

Canada's energy regulator to consider delay to Enbridge pipeline plan (Reuters) - Canada’s energy regulator on Tuesday responded to shipper complaints about Enbridge Inc’s plan to switch to fixed contracts on its Mainline pipeline network by announcing a fast-track process to gather comment on the proposal that could lead to its being delayed. The unusual move from the Canadian Energy Regulator (CER), which was until this week known as the National Energy Board (NEB), comes after a slew of letters from companies including Canadian Natural Resources Ltd and Suncor Energy asking the regulator to intervene. Enbridge is proposing to switch to long-term, fixed-volume contracts on 90% of the Mainline, which is North America’s largest oil pipeline network and ships the bulk of Canadian crude exports to the United States. Currently space is allocated on a monthly basis. Calgary-based Enbridge launched a two-month open season on Aug. 2 to solicit bids for committed capacity on the Mainline, a process that some producers have said should be delayed until the regulator approves the terms and tolls on offer. Typically a pipeline company would apply to the regulator for approval after an open season finishes.In a letter the CER said it will establish a fast-track process to gather comment from all interested persons by the middle of next month. The regulator is asking for comments addressing whether an open season should be held before or after the regulator considers the terms, conditions and tolls set by Enbridge. They should also address whether the CER has the authority to delay the open season. 

Understanding the link between fracking and earthquakes -- Researchers studying hydraulic fracturing have answered a longstanding question over how the practice can sometimes cause moderate earthquakes and may be able to use their model to forecast when quakes linked to fracking might occur. The team of seismologists and geophysicists from Dalhousie University and the University of Calgary conducted a new study aimed at understanding the physical mechanisms of earthquakes "induced" by hydraulic fracturing, a widely used method to stimulate extraction of hydrocarbons from the ground. They wanted to understand why these events were occurring, in spite of laboratory measurements suggesting they shouldn't happen in the type of shale rock undergoing stimulation. What they found is that the injection of fracturing fluids can lead to a slow slip on a fault. That can gradually put enough strain on another, distant section of the fault to cause it to slip suddenly and produce an earthquake. The study was published in Science Advances, a top-tier online journal of the American Association for the Advancement of Science. "Work like this allows us to understand the phenomenon better and may ultimately lead to improved regulations and practices of hydraulic fracturing," said Dr. Garagash. "The developed physics-based model of fault slip in response to changes caused by fracking can lead to better prediction of this type of events, but also suggest new field monitoring and mitigation strategies." The team looked at so-called "felt events" or earthquakes that are large enough to be felt in nearby communities. That included a magnitude 4.2 earthquake earlier this year near Red Deer, Alta., and a 4.5 quake last year near Fort St. John, B.C. The researchers analyzed a set of seismic and geological data, some of which were collected during a magnitude 4.1 hydraulic fracturing-induced earthquake on Jan. 12, 2016, near Fox Creek in northwest Alberta.

Mexico Oil Hedge Gets Green Light-- Mexico’s Finance Ministry got the green light to hedge the country’s oil production for next year but is still fine-tuning the details, according to people with direct knowledge of the transaction. An internal committee just approved the decision that Mexico would lock in oil prices for next year in what’s considered Wall Street’s largest -- and most secretive -- annual energy deal, according to one person. The ministry will begin meeting with the central bank next week to start defining Mexico’s plan, the person said. The hedge will start soon, but it’s unclear how much will be hedged and at what price, another person said. Traditionally, Mexico takes a few days or weeks between deciding to go ahead with the hedge and starting to implement it. The people asked not to be named, as they’re not authorized to speak publicly on the matter. The oil hedge, a multibillion-dollar deal which in the past typically covered between 200 million and 300 million barrels, has the potential to roil the market. Banks writing put options for Mexico -- contracts that give it the right to sell oil at a predetermined future price -- hedge themselves in the market by selling futures and swaps. This year, the process has been a bit trickier. Mexico is planning to change the pricing formula for its flagship Maya crude to reflect global reductions in fuel oil sulfur content that take effect in 2020. Earlier this month, Deputy Finance Minister Gabriel Yorio appeared to leave the door open to not hedging altogether when he said Mexico is evaluating it and would inform the public “if we do it.” In 2018, the hedge had already begun by mid-year, in 2017 Mexico took its first steps to do so in June. In 2016, it began in June. Prior to that, the usual hedging period had been late August to late September. Last year, the country spent more than $1 billion to lock in prices for 2019.

Fracking regulator requests 'extensive' data on tremors at suspended Cuadrilla site - The UK's Oil & Gas Authority has requested "extensive data and analysis" on seismicity around Cuadrilla's fracking facility in Lancashire, after the largest tremors to date were recorded at the site last week which far exceeded regulatory thresholds. The regulator (OGA) yesterday confirmed that hydraulic fracturing operations remain suspended at the Preston New Road site, following tremors during operations that included a 2.9ML quake on the Richter scale on August 26.   That tremor once again broke records as the largest to date recorded at the facility near Blackpool, and breached government's 0.5 Richter scale threshold which under current regulatory standards requires fracking operations to be halted for at least 18 hours. Cuadrilla issued an apology to local residents for the quake, and immediately suspended operations.  The OGA said it had now written to Cuadrilla seeking further information on the seismic events at the site in order to make a "full consideration of whether the assumptions and mitigations" in Cuadrilla's fracking plan "continue to be appropriate to manage the risk of induced seismicity" at the site."Hydraulic fracturing operations will remain suspended until the OGA's considerations are complete," it said.It is just the latest setback for Cuadrilla, which was initially forced to stop fracking at the site on 21 August after a 1.55ML event was recorded just days after operations began following a seven-month hiatus. The fracking firm at that time compared the "microseismic event" to "a large bag of shopping dropping to the floor".As well as breaching existing UK standards, last week's seismic event was also far higher than the fracking industry's own preferred threshold of 1.5 on the Richter scale which it has been lobbying the government to adopt, warning current tremor rules are undermining the commercial viability of the UK's nascent onshore oil and gas sector.  The government recently suggested it may be open to relaxing current seismicity limits for fracking after it considers the results of an industry review later this year, much to the consternation of environmental groups which argue stringent tremor rules are essential to ensure fracking well integrity, and that extracting shale gas threatens to undermine UK climate goals.

Anti-fracking trio given suspended sentences for breaking protest ban - Three anti-fracking activists have been given suspended prison sentences after breaking a ban on demonstrations which their lawyers argued “severely curtails the right to protest”. The trio were convicted after ignoring an injunction brought by the energy company Cuadrilla to protect its Preston New Road site near Blackpool, Lancashire. A week earlier Cuadrilla had to halt fracking at the shale gas site after triggering what is believed to be the biggest fracking-related tremor seen in Britain. Christopher Wilson, 55, and Lee Walsh, 44, were both given four-week sentences suspended for two years after being found in contempt of court for breaching the injunction. Katrina Lawrie, 41, received an additional two months suspended for two years. Friends of the Earth said the sentences were “disproportionate and harsh”. Last year three protesters jailed for their part in a much longer fracking protest ended up having their sentences reduced to conditional discharges on appeal – much lighter sentences – after judges ruled their jailing “manifestly excessive”. The latest three campaigners were found guilty three months ago of breaching the injunction during protests outside the site in Lancashire. On 24 July 2018, they and others had blocked the entrance for around three hours, Judge Mark Pelling told Manchester high court on Tuesday. Lawrie was given a longer suspended sentence because she had also stood in front of a delivery lorry on two other occasions, which the judge said caused “a serious risk of death or injury” to the driver. Lawrie had not apologised or given reassurances that it would not happen again, he noted.

Fracking protesters 'priced out' of Cuadrilla legal challenge -- An environmental group has been forced to withdraw its legal challenge to a wide-ranging injunction by the fracking firm Cuadrilla after being “priced out of court”. Three fracking protesters are facing court action after the energy company obtained the injunction restricting protests at its shale gas exploration site in Lancashire. The protesters, Katrina Lawrie, 41, Christopher Wilson, 55, and Lee Walsh, 44, were due to be supported by Friends of the Earth (FoE) in their bid to vary the terms of the injunction order. However, the environmental group said it has been frozen out of court proceedings after a high court judge refused to grant any costs protection. FoE had applied for financial protection on the basis that it was a public interest litigant. In environmental judicial reviews, a cap on legal costs is available and cost protection may also be obtained in non-environmental judicial reviews. However, a high court judge ruled that cost protection was unavailable on the basis that the case was private litigation between private parties. This meant if FoE lost the case it could face an £85,000 legal bill. The group said this was a financial risk it could not afford. The FoE campaigner Dave Timms said: “This ruling is a blow for civil liberties and access to justice. “The public’s right to peacefully protest has been severely and unlawfully restricted by Cuadrilla’s injunction – we should be allowed to challenge it without facing huge financial penalties. “We are effectively being priced out of justice. The cost ruling means that the rights of the wider public, who might be caught by disproportionate injunctions against persons unknown, cannot be represented in court by public interest organisations without taking on huge financial risk.”

A $20B Fund in Denmark Dumps 10 Major Oil Companies -- A $20 billion fund in Denmark, MP Pension, is selling its stakes in the 10 biggest oil companies after deciding they haven’t done enough to live up to climate goals set out in the Paris accord. The divestment, which represents a total of 644 million kroner ($95 million), means MP will no longer hold shares in ExxonMobil, BP, Chevron, PetroChina, Rosneft, Royal Dutch Shell, Sinopec, Total, Petrobras or Equinor, according to an emailed statement on Tuesday. MP said it reached its conclusion on the stakes because “the companies are still working against more demanding climate regulation -- despite the companies’ public support for the Paris Agreement.” The fund said the four European majors on the list -- BP, Shell, Total and Equinor -- had made the most progress and were “showing signs of transitioning,” as opposed to the other six. But none of the 10 companies has a business model compatible with the Paris Agreement, it said. The announcement comes as other major funds across the world review their holdings in oil and gas companies. The world’s biggest sovereign wealth fund, which is based in Norway, is in the process of significantly reducing its exposure to fossil fuels, albeit at a less ambitious pace than initially announced. Norway has also made clear its decision is based on risk considerations, given the economy’s exposure to its oil industry, rather than climate concerns. MP, which is based outside Copenhagen, said it will assess over 1,000 oil companies before the end of 2020 as part of its goal of revamping its portfolio to be more focused on the climate. The divestments announced on Tuesday represent about two-thirds of MP’s stock holdings in oil, Anders Schelde, the fund’s head of investments, said.

Large oil spill in Mediterranean after fire at facility in Haifa Port - A large amount of oil is spilling into the Mediterranean Sea from a plant in Haifa Port after a massive fire in the facility on Thursday.

European Gas Prices Plunge To 10-Year Low - Natural gas prices in Europe are set to drop even lower than the current ten-year lows this fall. Storage facilities across the continent are fuller than usual for this time of the year. Natural gas suppliers are not expected to curb deliveries despite the low prices, abundant supply, and tepid demand. The winter heating season in October is set to begin with temperatures around or above seasonal norms, early forecasts suggest.  All these factors combine to create a perfect storm for natural gas prices in Europe, which are set for a further fall this fall, at least until winter comes, analysts and industry professionals tell Bloomberg.   Low liquefied natural gas (LNG) spot prices amid abundant supply and weaker Asian spot demand have helped Europe to fill its storage tanks to more than average levels this summer. Natural gas prices in Europe dropped to a ten-year low in early July as Russia and the United States continue to fight for market share. Thanks to the lowest natural gas prices in a decade, storage tanks in many European countries are higher than the five-year average well ahead of the coming heating season. Traders continue to ship LNG cargos to Europe, potentially waiting for trading opportunities when the winter season approaches and prices rise.   As of September 2, storage facilities in Europe were 92.95 percent full, according to data from Gas Infrastructure Europe. The levels of natural gas in storage now are much higher than what is typical for early September.At the same time, apart from maintenance at Norwegian gas export facilities, the biggest pipeline suppliers to Europe—Norway and Russia—aren’t restricting deliveries even in the face of prices at a ten-year low and the prospect of further price declines.Russia’s Gazprom admitted last week that its natural gas exports to Europe plus Turkey would drop this year from the record levels seen in 2018.Yet, the Russian gas giant—which holds around 33 percent of Europe’s natural gas market—is still fighting for market share, Niek van Kouteren, a senior trader with Dutch energy company PZEM, told Bloomberg. “When we have an opportunity, we make extra sales,” Gazprom Export’s deputy department head Mikhail Malgin told analysts at a conference call last week.

Argentina Pursues $5B LNG Project Despite Political Havoc - Argentina’s state-run oil company, YPF SA, is pushing ahead with plans to build a $5 billion natural gas export terminal despite the political and financial chaos racking the nation. The driller, which has led development of the nation’s Vaca Muerta shale trove, is in talks with potential international and domestic partners over designs for a liquefied natural gas facility. But the backdrop for those discussions has shifted dramatically after opposition candidate Alberto Fernandez beat market-friendly President Mauricio Macri in a key primary vote last month, sending shares of Argentine companies tumbling on concerns that a more protectionist government will take power. YPF executives, however, remain bullish about Argentina’s chances of becoming an established member of the small but growing club of LNG-exporting countries. “We can’t put the cart before the horse by distracting ourselves with current events,” said Marcos Browne, YPF’s executive vice president for natural gas and power. “This is the direction we need to move in.” Argentina faces stiff competition for LNG buyers as suppliers from the U.S. to Australia increase exports, adding to a global glut and sending prices for the fuel tumbling. But the YPF terminal could benefit from its location in the southern hemisphere, where seasonal gas use ebbs when it’s coldest in Asia and Europe, boosting heating demand in those regions. The Tango floating LNG facility, which chills gas into liquid for shipment overseas, has been ramping up production on Argentina’s Atlantic coast as it readies the nation’s first full cargo of the fuel, to sail at the end of October. Tankers will leave the Bahia Blanca port every 40 days or so until May 2020, when Argentina’s winter starts and domestic gas demand surges. Exports will resume this time next year. But the barge can only produce 500,000 metric tons a year of LNG, compared with global trade of about 290 million metric tons in 2017. A larger terminal that gives Argentina access to big importers in Asia is key to unlocking production in Vaca Muerta, where drillers face poor demand for much of the year.

Russia ups LNG race with green light on $21 billion Arctic LNG-2 project - (Reuters) - The $21 billion Arctic liquefied natural gas (LNG)-2 project led by Russian private gas producer Novatek won a green light on Thursday, the latest in a raft of new projects aimed at meeting a likely doubling of LNG demand over the next 15 years. Arctic LNG-2 is expected to launch in 2023 and will aim to export 80 percent of its LNG to Asia, Novatek Chief Executive Leonid Mikhelson, Russia’s richest businessman according to Forbes magazine, said after the project’s partners signed a final investment decision (FID) at an economic forum. At nearly 20 million tonnes per annum (mmpta) of LNG it would be largest single project to reach FID, according to Wood Mackenzie, and take total LNG volumes sanctioned this year to about 63 mtpa, beating the previous record of 45 mmtpa in 2005. Arctic LNG 2 will be the third LNG project for Novatek, which hopes to match Qatar in production of the super-chilled fuel. “Novatek is clearly driving home their ambitions to be a global LNG power house,” said Chong Zhi Xin, associate director of gas, power and energy at IHS Markit. “It adds another 12 million tonnes to their portfolio on an equity basis. They are emerging as one of the largest LNG suppliers in the market.” The project’s equity partners include French energy producer Total, China’s National Petroleum Corp [CNPET.UL], CNOOC and the Japan Arctic LNG consortium, made up of Mitsui & Co and state-owned JOGMEC, formally known as Japan Oil, Gas and Metals National Corp.

Moscow Fuels Arctic LNG Race With Billions Of Dollars - Novatek, Russia’s largest private natural gas company, will receive a tax deduction of about US$600 million (40 billion rubles) from the regional budget of Yamal-Nenets and US$1.5 billion (100 billion rubles) from the federal budget to build an LNG export terminal in the autonomous region in northwestern Siberia, Russian daily RBC reported this week.The information, which was confirmed by Novatek, is the latest indication that Moscow is doubling down on liquefied natural gas at a time of growing demand for the commodity that will inevitably displace a portion of demand for one of Russia’s top export commodities, oil.Novatek, which last year overtook Gazprom in market capitalization, operates the Yamal LNG plant, which has a nameplate capacity of 17.4 million tons annually, and is building the Arctic LNG plant, which will add another 19.8 million tons when completed. Eventually, Novatek plans to operate total annual liquefaction capacity of 60 million tons.The Russia company is not going it alone. Its partners in Arctic LNG 2 include Total, CNPC, Japan Arctic LNG, and CNOOC. There were many reports that Saudi Aramco would buy into the project, but with 60 percent for Novatek and 10 percent for each of the minority partners, all the stakes have been divided-- and Novatek has said it would not reduce its 60-percent holding in the project.Novatek is widely seen as the spearhead of Russia’s international LNG expansion. Gazprom also produces LNG but on a smaller scale than the private company, for the time being. Earlier this year, in an interview with Bloomberg, Novatek’s chief financial officer Mark Gyetvay said Russia could emerge as one of the top four global LNG producers over the next few years.Bloomberg estimates that from April this year, the U.S. and Qatar could both have installed capacity of 100 million tons annually by 2030, sharing the top spot, with Australia following with 95 million tons annually and Russia coming fourth with 75 million  tons of LNG capacity.

The First County to Abandon IMO 2020 Indonesia announced last week that it would not enforce the upcoming IMO 2020 rule requiring marine vessels to burn bunker fuels containing no more than 0.5 percent sulfur on its domestic shipping fleet.The country thereby became the first “rat” to jump from the IMO ship. Indonesia’s actions may have a noticeable impact on at least the Asian bunker fuel market.According to Reuters, the country made its decision in reaction to the high cost of new, cleaner fuels. Instead of complying with the IMO mandate, Indonesian-flagged vessels can keep burning high-sulfur fuels within Indonesian markets. Reuters added that this policy would continue until the domestic supply of low-sulfur fuel increases. As one official stated, “We always put forward national interest as consideration [sic] in making the decision.”

Ruptured pipeline in Nigerias Delta state spilled oil (Reuters) - A pipeline that ruptured on Friday in Nigeria’s Delta state spilled oil, but has been contained, the head of state oil company NNPC said on Saturday. NNPC initially said the pipeline was carrying gas, but NNPC managing director Mele Kyari said on Twitter Saturday afternoon that it was the Abura Crude Trunk line. Local people in Otu-Jeremi in Ughelli South area of Delta state reported a pipeline explosion and told Reuters that oil was leaking from it. Kyari repeated NNPC’s assertion that there was no explosion. “It was a rupture on one of our pipelines,” Kyari said on Twitter, adding that engineers were at the site already. He said they had contained a spill and would fix the pipeline within three days. “There’s no cause for alarm,” he said. The pipeline is near Oil Mining Licence 34, owned by NNPC subsidiary Nigeria Petroleum Development Co. and ND Western. That license produces an average of 17,000 barrels per day of oil and condensates and 390 million standard cubic feet per day of gas. Gas processed from the field goes into the Escravos-Lagos Pipeline, which feeds Egbin power plant, the largest in Nigeria. It is also near NPDC asset OML 65, which produces as much as 12,000 bpd of crude oil from the Abura field.

Mangalore Port gears up to fight possible oil spill -Tridevi Prem, the dredging vessel that was abandoned by its crew members on Monday after she started taking in water in the pump room, sank off the New Mangalore Port outer anchorage in the wee hours of Tuesday. Fearing a possible oil spill as the vessel had 45 kilolitres of fuel, the port authorities have initiated a slew of measures to prevent it. Fortunately, the fuel is only white oil -- low-sulfur high-speed diesel -- and the port authorities have ruled out much impact on the environment. NMPT had deployed the dredging company Mercator based in Mumbai with a tender period of three years, but the company abandoned dredging in January. So, the port has engaged Dredging Corporation of India for the work from September this year. After the Tridevi Prem, anchored 2.5 nautical miles from the dock started taking in water on Sunday, its 13-member crew reported the flooding to the Indian Coast Guard and abandoned the vessel in the early hours of Monday. The abandoned vessel sank almost at the outer anchorage around 1 am on Tuesday. “However, the ship sunk except some portion which is visible. The port’s efforts to empty the fuel using a bunker barge did not succeed due to inclement weather and the swell,” he said. Explaining the efforts to contain any possible oil spill, the chairman said the dredging vessel has approximately 45 kl of high-speed low-sulfur fuel in its bunker. “Fortunately, the fuel termed as white oil is not harmful to marine life as it evaporates in the atmosphere. We were worried about the possible storage of black oil in the vessel which has higher viscosity and is dangerous to the environment. In this case, there is no black oil in the vessel but all the precautionary measures have been taken,” he said. 

OPEC is struggling to prove it can still arrest oil price declines in the age of Trump, expert says - OPEC is under intensifying pressure to show it still has the power to reverse a slide in oil prices, according to RBC Capital Market’s Helima Croft. The Middle East-dominated producer group has struggled to shore up crude futures this year, amid a deteriorating outlook for global growth and a protracted trade dispute between the U.S. and China. It has once again raised questions about whether OPEC really wields that much influence over world crude markets, particularly at a time when oil traders are constantly on alert for the next tweet from President Donald Trump. “It may prove easier to clean up the physical market than to overcome skepticism about the ultimate efficacy of its strategy in the age of Trump,” Helima Croft, global head of commodity strategy, said in a research note. “OPEC’s burden is to show that it still has the appropriate tools to arrest price declines driven in no small part by White House policy.” Supply restraints and involuntary losses in Iran and Venezuela has seen OPEC’s share of the global oil market sink to its lowest level in years. Meanwhile, the U.S. has more than doubled oil production in the last decade to become the world’s largest oil producer. To be sure, the U.S. shale industry has expanded at such a rapid rate that it threatens to overwhelm OPEC-led efforts to mitigate demand concerns, swamping the global oil market with supply. Earlier this year, the head of EMEA oil and gas research at J.P. Morgan told CNBC that a gradual fall in oil prices over the coming years could prompt OPEC to reclaim some of its market share from the U.S. GP: US Oil workers Oil Boom in Texas's Permian Basin Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018. Benjamin Lowy | Getty Images International benchmark Brent crude traded at around $60.77 Thursday morning, up around 0.1%, while U.S. West Texas Intermediate (WTI) stood at $56.27, little changed from the previous session. Brent futures have tumbled more than 20% from a peak reached in April, with WTI down over 17% over the same period.

Iraq is pumping record oil, creating a 'fully-blown migraine' for OPEC - OPEC’s second-largest oil producer hit record production figures in August with an output of 4.88 million barrels per day (bpd), according to the latest figures from S&P Global Platts.Iraq’s highest-ever production count has contributed to what may be OPEC’s first monthly output rise of the year, throwing a wrench into the 14-member organization’s plans to limit global oil supply and keep a floor under declining crude prices.“The recent increases in Iraqi production turned what was a sort of minor headache for OPEC into a fully-blown migraine,” Dave Ernsberger, global head of commodities pricing at S&P Global Platts, told CNBC on Thursday.The problem for the cartel, Ersnberger says, is twofold. “It makes it more difficult for OPEC to manage the perception that it will balance markets, as demand is currently under pressure.”It also creates “tremendous pressure” within OPEC itself, as these production gains come at the expense of Iran, he added: “Whenever Iranian production is under pressure and Iraqi production increases, keeping the peace within OPEC becomes incredibly difficult to do.”To put Iraq’s 4.88 million bpd figure in perspective, the country’s output five years ago was 2.96 million bpd, and between the 2003 U.S. invasion of Iraq and 2010 it veered between less than half a million barrels per day to barely touching 2.5 million. After more than 15 years of conflict and a dire need to rebuild, Iraq’s government hails this growth as a success. Iraq’s crude oil exports also increased to 3.6 million bpd in August, from 3.56 million bpd the previous month, according to its oil ministry.

Debunking The Lower Oil Supply Will Raise Prices Narrative -  Gail Tverberg - We often hear the statement, “When oil supply is lower, oil prices will rise because of scarcity.” Now, we are getting to see first-hand whether oil prices really do rise, as oil supplies become more scarce.  Figure 1 shows that world oil supply hit a peak in November 2018 and has declined since then, mostly because of a decline in OPEC’s production. So, total oil production seems to be down for about eight months, relative to the peak in November 2018.  Despite this big cutback by OPEC in its oil production, prices have not responded as OPEC had hoped: In fact, as I write this, Brent oil price is currently quoted as $60.48, which is back in the range of December 2018 and January 2019 low prices. Also, reducing production doesn’t seem to be reducing inventories. Figure 3 suggests that they are now higher than they were before the reduction in oil supply took place.  Why aren’t oil prices rising and oil inventories falling, if oil production has fallen? The basic issue is that the economy is very much interconnected under the laws of physics, because energy is required for every activity that is considered part of GDP. Energy is required for any kind of heat or any kind of movement. Energy is even required for electricity. Without energy from the sun, food can’t grow; without supplemental energy of some kind (such as using electricity to heat an electric stove or burning animal dung or sticks), it becomes impossible to cook food or smelt metals.  One strange phenomenon that arises from the interconnected nature of the economy is the fact that the prices of all energy products (including those not listed on Figure 4) tend to move together.  This strange phenomenon arises because energy products are well-buried within every part of the world economy. A person’s job requires energy consumption. The tasks that governments do, such as building roads and schools, require energy consumption. Both transporting and cooking food require the use of energy products. Refrigerating food requires energy products. These energy uses, as well as many other everyday hidden uses of energy, aren’t things that we can easily cut back on.   Gasoline accounts for about 26% of world oil consumption, or about 8.7% of total energy consumption, based on the most recent BP energy data. Cutting back on the optional use of gasoline would not reduce total consumption very much. If it were possible to reduce gasoline consumption by 10% by voluntary cutbacks, it would still reduce world energy consumption by less than 1%. The strange pattern of the price changes shown on Figure 4 indicates that there is something affecting energy prices of many kinds, simultaneously. I would describe this as “affordability.” It has to do with how affordable finished goods and services are to the population in general, much more than it does scarcity. (Economists call this affordability issue “demand.”) If finished goods and services are affordable to a large number of consumers, as they were in 2008 and in 2012 and 2013, prices will be bid up to very high levels (Figure 4). If finished goods and services aren’t very affordable, a drop-off in prices, such as that experienced in November and December of 2018 (Figure 2), is likely to occur.

OPEC Abandons Whatever It Takes Strategy, Boosts Production -- OPEC’s production increased in August thanks to Iraq and Nigeria a Reuters survey found on Friday. OPEC’s August production has been estimated at 29.61 million barrels per day, which is 80,000 barrels per day over July’s production level. The production increase is surprising, given that Iran and Venezuela are producing less not by choice, and continue to face uphill battles when it comes to maintaining their oil production. Saudi Arabia, too, over complied with the production cut deal again as expected, but it raised production for August slightly over July. Overall, the group is still over complying with the production quotas. This brings OPEC’s compliance for August is now estimated at 136%, no thanks to Iraq and Nigeria, who lifted production by 80,000 barrels per day and 60,000 barrels per day, respectively. And even though Saudi Arabia is still over complying, it lifted production in August to produce 9.63 million barrels per day.  While Iraq, Nigeria, and Saudi Arabia increased production in August, Iran’s production fell further—experiencing a 50,000 barrels per day loss for the month. US Secretary of State Mike Pompeo last week said it had successfully removed 2.7 million barrels of oil per day off the oil market since it first sanctioned the country. Iran’s July oil and condensates exports for July fell to 120,000 barrels per day, Reuters said last week.  Iran’s production for July was 2.21 million bpd. This compares to an average daily production rate of 3.55 million barrels for all of 2018. Oil prices fell sharply on Friday, and news that OPEC’s production increased this month may press further down on prices. At 3:26pm EST, WTI was trading down 3.14% on the day at $54.93 per barrel, while Brent crude was trading at $58.88, down 2.66% on the day.

Oil Holds Losses on Growth Fears-- Oil held losses after its first monthly drop since May as a deepening trade war with no end in sight stoked global growth fears. Futures were steady in New York after closing down 2.8% on Friday to cap a 5.9% loss in August. U.S. tariffs on a further $110 billion of Chinese imports -- including footwear, apparel and certain technology items -- took effect Sunday. Additional Chinese levies on American products -- including agricultural goods and oil for the first time -- also kicked in. The outlook for Chinese manufacturing deteriorated further in August, the latest evidence of the impact the trade conflict is having on the global economy. Face-to-face talks between American and Chinese negotiators scheduled for this month are still on, President Donald Trump said Sunday, but investors see very little chance of a near-term breakthrough. Hedge funds last week raised bets by 14% that West Texas Intermediate crude will drop. “Remaining hopes of a last-minute deal have now come off,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “It’s the lack of light at the end of the tunnel that is depressing prices.” WTI for October delivery declined 3 cents to $55.07 a barrel on the New York Mercantile Exchange as of 7:28 a.m. in London after falling as much as 1.1% earlier. The contract lost $3.48 in August. Brent for November settlement fell 21 cents, or 0.4%, to $59.04 a barrel on the ICE Futures Europe Exchange. The October contract, which expired Friday, lost 7.1% last month. The global benchmark crude traded at a $4.18 premium to WTI for the same month. The U.S. imposed previously announced 15% duties on a wide range of Chinese consumer goods. Another batch of about $160 billion of Chinese products -- including laptops and mobile phones -- will be hit with 15% levies on Dec. 15.

Hedge funds cautious on oil, wait for economy- Kemp - (Reuters) - Hedge funds are becoming slightly more pessimistic about the outlook for oil and the economy, though position changes remain small owing to the holiday season in North America and Europe. Hedge funds and other money managers were small net sellers of petroleum futures and options last week for the third time in the last four weeks, according to an analysis of data published by regulators and exchanges. Fund managers sold a total of 26 million barrels in the six most important futures and options contracts, reducing their net long position to 525 million barrels in the week to Aug. 27. Funds sold NYMEX and ICE WTI (-20 million barrels), U.S. diesel (-4 million) and European gasoil (-5 million) though they were smaller buyers of Brent (+4 million) and left U.S. gasoline positions basically unchanged. Since 2013, when the time series starts for all six major contracts, the hedge fund community has always run a "structural" net long position in petroleum, concentrated in Brent and WTI. In this period, fund managers have NEVER been net short of either crude contract in the last six years, even when prices were plunging in 2014/15 (https://tmsnrt.rs/2zJcuV2).  Much of this structural net long position represents passive index-tracking positions as well as the predisposition of fund managers to be bullish towards their own asset class. Across all six petroleum contracts, the structural net long has been equivalent to around 491 million barrels (consisting of 587 million barrels of structural long positions minus 96 million barrels of structural shorts). Since structural positions do not change, in aggregate, it is more useful to focus on the remaining "dynamic" positions, which have a closer relationship with short-term price changes. Hedge fund managers are currently running a dynamic net long position of just 35 million barrels, down from a recent peak of 420 million in April. In effect, fund managers are neutral on the outlook for prices, with concern about the economy and oil consumption offsetting production restraint by Saudi Arabia and U.S. sanctions on Iran and Venezuela. Until economic uncertainty is resolved, either with clearer signs of recession or indications of renewed growth, portfolio managers are likely to remain on the sidelines.

Oil falls amid new round of tariffs in US-China trade war - Oil prices were lower on Monday after new tariffs imposed by the United States and China came into force, raising concerns about a further hit to global growth and demand for crude. Brent crude was down 27 cents, or 0.5%, at $58.98 a barrel by 0324 GMT, while U.S. oil was down 2 cents at $55.083 at barrel. The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday — including footwear, smart watches and flat-panel televisions — as China put new duties on U.S. crude, the latest escalation in a bruising trade war. U.S. President Donald Trump said the sides would still meet for talks later this month. Trump, writing on Twitter, said his goal was to reduce U.S. reliance on China and he again urged American companies to find alternate suppliers outside China. Beijing’s levy of 5% on U.S. crude marks the first time the fuel had been targeted since the world’s two largest economies started their trade war more than a year ago. “The trade and tariff overhang is inescapable for oil markets, so while trade uncertainties persist, it will be difficult for oil to shrug off concerns about the threat to global demand,” said Stephen Innes, Asia Pacific market strategist at AxiTrader. South Korea’s exports tumbled in August for a ninth consecutive month, on sluggish demand from its biggest buyer, China, and depressed prices of computer chips globally, government data showed on Sunday. The bleak data clouded the outlook for Asia’s fourth-largest economy as a brewing trade dispute with Japan emerged as a new risk on top of the prolonged U.S.-China trade war. Elsewhere, oil output from members of the Organization of the Petroleum Exporting Countries rose in August for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by top exporter Saudi Arabia and losses caused by U.S. sanctions on Iran, a Reuters survey found. In the United States, energy companies cut drilling rigs for a ninth month in a row to the lowest level since January last year.

Oil slips as U.S., China add more tariffs in trade war - (Reuters) - Oil prices weakened on Monday after new import tariffs imposed by the United States and China came into force, raising concerns about a further hit to global economic growth and demand for crude. International Brent crude futures LCOc1 settled down 59 cents to $58.66 a barrel, after trading as low as $58.10 during the day. U.S. benchmark WTI crude CLc1 was down 33 cents at $54.77 a barrel. Activity was thin because of the U.S. Labor Day public holiday. The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday - including footwear, smart watches and flat-panel televisions - as China put new duties on U.S. crude, the latest escalation in a bruising trade war. U.S. President Donald Trump said the two sides would still meet for talks this month. Trump, writing on Twitter, said his goal was to reduce U.S. reliance on China, and he again urged American companies to find alternative suppliers outside China. “Even as President Trump has indicated that scheduled talks between the U.S. and China are still to proceed, the market is more and more resigned to a protracted standoff between the two countries and will be looking towards central bank easing to shore up risk appetite,”

Oil Markets Hit Hard By Trade War Escalation - Oil prices fell back on Monday on returning fears of a global economic slowdown. Higher tariffs took effect over the weekend. Also, China and the U.S. have not yet agreed to a schedule for trade negotiations, a further sign that the trade war is very far from a resolution. “It is still all about the economy,” Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA, told Bloomberg. “When it comes to U.S.-China trade tensions, any setbacks appear to lend support to the U.S. dollar and generate headwinds for commodities.” Last month China announced retaliatory tariffs on U.S. oil imports. Those levies took effect on Sunday.  Saudi Arabia has named Yasir al-Rumayyan, the head of the sovereign wealth fund, as the chairman of Saudi Aramco,replacing energy minister Khalid al-Falih. The decision was made as a preparation for the company’s public offering. Also, the government created a new ministry for industry and mineral resources, separating it out from the energy ministry. Together, the moves diminish the authority of al-Falih, although he will retain control of the energy ministry. Sources told Reuters that the government has been unhappy with the results of development under al-Falih. The Saudi economy has been slowing down amid production curtailments and low oil prices. Economists see GDP growing by 1.4 percent this year, down from 2.2 percent last year.   OPEC production rose by 200,000 bpd in August, the first collective increase since the OPEC+ cuts took effect at the start of the year. Gains came from Saudi Arabia, Nigeria and Iraq.   For the first time ever, ExxonMobil fell out of the top 10 in the S&P 500, a sign of the declining position of the oil major, but also a warning sign for the oil industry on the whole.   The latest EIA data shows monthly U.S. oil production falling to 12.082 mb/d in June, a slight decrease from the month before. The figures show a decline in some states, while only tepid growth in Texas. The data offers more evidence of a slowdown in production growth from the shale patch.  China has submitted a WTO complaint against the U.S. over tariffs. The complaint comes as reciprocal tariffs took effect on September 1 on a larger portion of goods.

Oil drops more than 2% as trade war rumbles and output swells - Oil prices fell more than 2% on Tuesday, weighed down by rising OPEC and Russian oil output as well as the protracted U.S.-China trade dispute that has dragged on the global economy. U.S. crude was down $1.80, or 3.27%, at $53.30 a barrel by 1305 GMT and Brent crude was down $1.28 or 2.18% at $57.38. “The gloomy mood has mainly been down to the U.S.-China stand-off in trade talks as the two countries continue the tit-for-tat measures of implementing import tariffs on each others goods,” said Tamas Varga of oil brokerage PVM. “This is the single most important flat price driver of late.” The United States this week imposed 15% tariffs on a variety of Chinese goods and China began to impose new duties on a $75 billion target list in a trade war that has rumbled on for more than a year. Though the trade conflict has intensified, U.S. President Donald Trump said the two sides would meet for talks this month. Meanwhile, South Korea’s economy expanded less than expected in the second quarter, with exports revised down in the face of the U.S.-China dispute, central bank data showed on Tuesday. A move on Sunday by Argentina to impose capital controls also cast a spotlight on emerging market risks. Output from the Organization of the Petroleum Exporting Countries rose in August for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by Saudi Arabia and losses caused by U.S. sanctions on Iran. Russian oil productionin August rose to 11.294 million barrels per day (bpd), topping the rate cap pledged by Moscow in a pact with other producers and hitting its highest since March, data showed on Monday. Data due this week on U.S. inventory levels will be delayed by a day to Wednesday and Thursday because of the U.S. Labor Day holiday on Monday.

Oil Plunges As Trade War Rages - Oil prices tanked to multi-week lows early on Tuesday, the first full trading day after the new U.S. and Chinese tariffs and counter-tariffs entered into force and as signs emerged that both OPEC and its key partner in the production cut deal, Russia, boosted oil production in August.  As of 11:06 a.m. EDT on Tuesday, WTI Crude was down 3.23 percent at $53.23 and Brent Crude had fallen below $58 a barrel—to $57.59, down by 1.82 percent on the day.Market participants were again concerned about the repercussions of the U.S.-China trade war on global economies and oil demand growth. On Sunday, September 1, the U.S. imposed tariffs on Chinese goods, and China imposed tariffs on some U.S. goods, although Beijing left most of the tariffs for the December round of new tariffs.On the demand side, the market is worried about slowing economies and, by extension, slowing oil demand growth. On the supply side, too, bearish factors abound.According to a Reuters survey, OPEC’s crude oil production increased in August, thanks to Iraq and Nigeria. OPEC’s August production has been estimated at 29.61 million barrels per day, which is 80,000 barrels per day over July’s production level. Even though Saudi Arabia is still over-complying with its share of the cuts, it lifted production in August to produce 9.63 million barrels per day.In Russia, OPEC’s key partner in the OPEC+ coalition curbing output to support oil prices, oil production increased to 11.29 million bpd in August, up from 11.15 million bpd in July, and exceeding Russia’s cap under the deal. Rosneft boosted its oil production by 5 percent last month compared to the previous month, according to Russia’s energy ministry data cited by Reuters. Yet, Russian Energy Minister Alexander Novak affirmed that Russia was still looking to comply in full with its share of the cuts.

Oil sinks as manufacturing data feeds global economy worries (Reuters) - Oil prices fell on Tuesday, with U.S. crude futures down 2% after manufacturing data raised concerns about a weakening global economy, while the U.S.-China trade dispute continued to drag on investor sentiment. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $1.16, or 2.1%, to settle at $53.94 a barrel. The session low was $52.84 a barrel, the lowest since Aug. 9. Brent crude LCOc1 futures lost 40 cents, or 0.7%, to settle at $58.26 a barrel. It sank as low as $57.23 a barrel, also the weakest since Aug. 9. Prices extended losses following data that showed U.S. manufacturing activity in August contracted for the first time in three years. Earlier, separate data showed euro zone manufacturing activity contracted for a seventh month in August. “That deterioration is continuing to undermine the demand growth outlook for oil,” Oil prices have fallen around 20% since a 2019 peak reached in April, hit by concerns the trade war would dent oil demand. The U.S.-China trade dispute “is the single most important flat price driver of late,” said Tamas Varga of oil brokerage PVM. On the supply side, Venezuela’s oil exports fell in August to their lowest level in 2019, internal reports and Refinitiv Eikon data showed, following tougher U.S. sanctions. Russian oil production C-RU-OUT in August rose to 11.294 million barrels per day (bpd), data showed on Monday, hitting its highest since March and topping the rate Moscow pledged under a pact with the Organization of Petroleum Exporting Countries (OPEC).

Oil Prices Fall Amid Risk-Aversion Deja Vu - West Texas Intermediate (WTI) and Brent crude oil declined Tuesday amid an undercurrent of déjà vu tied to concerns about international trade and an economic downturn.The October WTI shed $1.16 Tuesday to settle at $53.94 per barrel. The light crude marker traded within a range from $52.84 to $55.24.Brent crude oil for November delivery also faltered, losing 99 cents to end the day at $58.26 per barrel.On Monday, the Bloomberg news service reported crude oil futures declined amid ongoing pessimism about the likelihood of a resolution in U.S./China trade negotiations as new U.S. tariffs on Chinese imports – and new Chinese tariffs on U.S. imports – took effect over the weekend.The effects of the trade dispute carried over into Tuesday’s trading, Barani Krishnan, senior commodities analyst with Investing.com, told Rigzone.“Oil is selling off as it’s risk-aversion all over again from the trade war and recession fears,” said Krishnan, adding that other factors are at play. “By itself, the onset of September marks a seasonally weaker period for fuel demand as the peak summer driving period ends. And other key factors have worsened sentiment lately, among them the lack of Russian cooperation to OPEC production cuts.”Krishnan also commented that one should not assume that a period of weaker demand necessarily will translate into more gradual oil price movements. “Yet, what we could have hereon is more volatility,” Krishnan continued. “Historical data show that, despite U.S. crude draws entering a period of non-peak draws from September, the demand data on certain years has been exceptionally good late into the summer. If that happens again in 2019, we could have more price swings.”

Sluggish oil consumption to keep pressure on prices- Kemp -  (Reuters) - Global oil consumption is likely to increase by less than 1 million barrels per day this year, according to a downbeat but realistic assessment from BP's finance chief on Wednesday. Growth of less than 1 million barrels per day (bpd) would represent an increase of less than 1% in consumption and be the slowest growth since 2014 and before that 2012. In both those slow-consumption years, oil prices averaged above $100 per barrel in real terms, helping restrain fuel use. So far this year, however, prices have averaged less than $65, confirming just how weak demand is at present. BP's forecast is even lower than current predictions from the International Energy Agency (+1.1 million bpd), OPEC (+1.1 million) and the U.S. Energy Information Administration (+1.0 million). But it is consistent with the broad-based slowdown in global growth stemming from the trade war between the United States and China and a climate of increased uncertainty for businesses. Global GDP growth has been the primary driver of oil consumption for the last 50 years - with prices playing a secondary regulating role, forcing consumption into line with production in the short term. Global GDP increased by 3.0% in 2018 but is forecast to slow to just 2.6% in 2019, according to the World Bank (“Global economic prospects”, June 2019).  GDP growth of 2.6% would be the slowest since 2014 and before that 2012, when oil consumption increased by just 1% in both cases (https://tmsnrt.rs/2Q2ZcxR).  Since the World Bank produced its forecasts three months ago, however, most indicators have pointed to a further deceleration in growth. The most likely outcome is now that GDP growth will come in below 2.5%, perhaps significantly lower, the worst since the recession of 2008/09. By implication, oil consumption growth is likely to slip below 1% and 1 million bpd, in line with BP's latest forecast.

Oil prices rise nearly 3% on positive economic data - Oil prices rose nearly 3% on Wednesday, boosted by a wider market pickup on positive news from China’s services sector, after three days of losses due to fears about a weakening global economy. Brent crude was up 2.66%, at $59.81 a barrel, while U.S. West Texas Intermediate futures gained 2.66%, to $55.50 a barrel. Global markets rebounded after a private survey showed that activity in China’s services sector expanded at the fastest pace in three months in August as new orders rose, prompting the biggest increase in hiring in more than a year. China is the world’s second-largest oil consumer and largest importer. But U.S. President Donald Trump on Tuesday warned he would be “tougher” on Beijing in a second term if trade talks dragged on, compounding market fears that trade disputes between the two countries could trigger a U.S. recession. U.S. data released on Wednesday showed manufacturing activity contracted in August for the first time in three years, while euro zone activity shrank for a seventh month. Some analysts argued that the overall fundamentals of the oil market remained discouraging. Data due this week on U.S. oil inventory levels will be delayed by a day to Wednesday and Thursday because of the U.S. Labor Day holiday on Monday. U.S. crude stockpiles are expected to have declined for a third straight week, a Reuters poll showed on Tuesday. “Crude oil remains troubled by reports that production from OPEC, Russia and the U.S. all rose last month. This (comes) at a time when the strength of demand growth, due to trade war pessimism, has increasingly been called into question,” But supply looks set to stay constrained as Russian officials and OPEC sources indicated the countries would remain committed to their agreement to rein in production despite a shake-up in Saudi Arabia’s oil industry.

Oil Jumps 4% On Positive Chinese Economic Data - The bleak outlook on the overall global economy has combined with the trade war worries to pressure prices over the last few days, but today’s economic data that is just in from China have caused oil prices to surge on Wednesday afternoon.At 12:17pm EDT, WTI crude was trading up 4.21% for a gain of $2.27 on the day, at $56.21 per barrel. Brent crude was trading at $60.68, up 4.15% for a gain of $2.42 per barrel.The reason for the spike in oil prices was favorable economic data that came in from a private survey of China’s services sector, which showed that in August, it grew at the fastest rate in three months, which triggered a flurry of hiring activity to support it—the biggest increase in hiring in the sector in over a year.China, a major consumer of crude oil, imported 10.64 million bpd in April—a new record for China. And its H1 imports of crude represented an 8.8 percent rise year over year, or 800,000 bpd. The growth here accounts for almost all of the world’s demand growth for the year, so it makes sense that all eyes are on China’s economic data as well as the trade war with the United States.China’s August imports by its oil majors PetroChina and Sinopec increased 2.03 percent over July imports, which is larger than the increase seen in July of 1.25 percent. It is largely expected that the two oil majors will process even more crude oil this month, as refinery maintenance slows.  Oil prices are expected to react later today as well on API’s estimate on US crude oil inventories, and again tomorrow on EIA’s take on the inventory moves.

Oil Prices Spike Back Up - West Texas Intermediate (WTI) and Brent oil futures posted solid gains Wednesday. The October WTI contract added $2.32 during midweek trading, settling at $56.26 per barrel. The benchmark peaked at $53.84 and bottomed out at $56.58. Brent crude for November delivery gained $2.44 Wednesday to settle at $60.70 per barrel. Steve Blair, senior account executive with the RCG Division of Marex Spectron, told Rigzone that a variety of factors continue to influence the petroleum complex.  He said that key drivers include:

  • Reports that some OPEC+ alliance members hiked their monthly production levels in August
  • A strong U.S. dollar
  • Ongoing and continuing tensions between the U.S. and China on trade tariffs
  • A potentially contracting U.S. industrial sector
  • Brexit

Like most of the petroleum complex, the October WTI continues to trade within a technical range stemming back to early August, noted Blair.  “Today’s substantial price spikes now bring this contract back toward the high end of the range close to the $57 level as well as a downtrend line of resistance, which is at the $57.57 level on today’s chart,” Blair said. “A close above resistance at $57.40 and above the downtrend line would indicate a breakout of this trading range. Such a breakout could see the market propelled to near the $60 level. Support seen around the $53.67 level with $52.85 below that.” Like the WTI, November Brent has also been occupying a wide trading range, said Blair. Referencing a Brent daily chart, Blair observed the Brent is near the higher end of the congestion range with resistance seen at the $61.35 level. “The downtrend line of resistance for this contract, however, is seen higher than is being seen in WTI relative to the congestion range,” said Blair. “There is firm resistance around the $62.68 level with the downtrend line just above that at the $62.93 level today. A breakout, meaning a close above these levels, should propel the market to near $64 and above. Support seen at $59 and again at $58.10.” Reformulated gasoline (RBOB) also finished higher Wednesday. October RBOB settled at $1.53 per gallon, reflecting a six-cent gain. Despite its midweek gain, however, Blair commented that October RBOB has been the “weakest link in the petroleum complex.”

WTI Tumbles After Surprise Crude Build -  Oil prices exploded higher today, helped by a weaker dollar, after the U.S. announced plans to intensify sanctions on Iran and Russia said it would trim production in September. But after last week's huge draws, all eyes are back on the inventory picture after a delay due to the Labor Day holiday this week...“Any kind of draw would be good,” as this would mean last week’s decline wasn’t a one-week event, according to Jan Stuart, global energy economist at Cornerstone Macro LLC. API:

  • Crude +400k (-2mm exp)
  • Cushing -238k (-2.4mm exp)
  • Gasoline -877k (-1.5mm exp)
  • Distillates -1.2mm (+500k exp)

After last week's yuuge draw, analysts continued to expect another draw for crude but a surprise build of 400k barrels spooked traders... “Right now, the market isn’t only following fundamentals. It’s very perceptive to the ongoing trade war,” and that’s affecting demand, said Paola Rodriguez-Masiu, an analyst at Rystad Energy. You can’t discard the possibility that China and the U.S. will continue to raise the levies again,” she added.WTI ramped all the way up to $56.50 at the highs today...

Oil prices slip after surprise build in US inventories - Oil prices fell on Thursday, giving up some of the strong gains of the previous session, after an industry report showed U.S. crude stockpiles rose last week, against analyst expectations of a decline. Brent crude was down 18 cents, or 0.3%, at $60.52 a barrel by 0040 GMT. On Wednesday, Brent rose 4.2 percent. West Texas Intermediate (WTI) was down 23 cents, or 0.4%, at $56.03 a barrel, having risen 4.3% the previous session, the biggest percentage gain in nearly two months. “Oil bulls can’t seemingly catch a break after the rally sapping surprising build in the American Petroleum Institute oil inventory survey has throttled WTI upward momentum dead in its tracks,” said Stephen Innes, Asia Pacific market strategist at AxiTrader. U.S. crude stocks rose last week, while gasoline inventories decreased and distillate stocks drew, data from industry group the American Petroleum Institute (API) showed on Wednesday. Crude inventories rose by 401,000 barrels in the week ended Aug. 30 to 429.1 million, compared with analysts’ expectations for a decrease of 2.5 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 238,000 barrels, while refinery crude runs fell by 306,000 barrels per day, API said. Oil prices surged on Wednesday after a survey showed that activity in China’s services sector expanded at the fastest pace in three months in August as new orders rose. China is the world’s second-largest oil consumer and largest importer. But as evidence mounts that the trade war between the United States and China is hitting economies worldwide, oil demand growth expectations have been trimmed.

WTI Extends Gains Above $57 After Bigger Than Expected Crude Draw…  WTI rebounded dramatically this morning (on headlines about talks resuming between China and US) from overnight weakness driven by a surprise crude inventory build reported by API. “Oil coat-tailed the overnight dialing down of global political tensions and the rotation out of defensive macro positioning,” Jeffrey Halley, a senior market strategist at Oanda Corp., said in a note. More direction will come from official U.S. crude-inventory data later on Thursday, he said. But after last night's API data, we suspect the algos will find it hard to ignore if DOE confirms a build.  DOE

  • Crude -4.77mm (-2mm exp)
  • Cushing -230k (-2.4mm exp)
  • Gasoline -2.396mm (-1.5mm exp)
  • Distillates -2.538mm (+500k exp)

After last week's huge draw, analysts still expect another draw (even after API reported a build) and DOE confirmed it (more than expected). For the second week in a row, there were inventory draws across the board... For US crude production, the market wasn’t expecting another rise after the 200k b/d gain seen for the week ending Aug. 23 because “its hard to keep pace of growth due to constraints in deploying human logistics resources to individual projects,” Bart Melek, head of global commodities strategies at TD Securities in Toronto, says. Production inched lower on the week, still notably decoupled from the plunging rig counts...

Oil Prices Edge Upward - West Texas Intermediate (WTI) and Brent crude oil finished higher Thursday on a positive development in international trade. October WTI posted a slight gain Thursday, adding four cents to settle at $56.30 per barrel. The light crude marker traded within a range from $55.75 to $57.76. Brent crude for November delivery showed a relatively robust 25-cent gain, finishing the day at $60.95 per barrel. Both oil benchmarks maintained their respective four-plus-percent gains from Wednesday, bolstered by apparent signs of progress in trade talks between the United States and China, according to a Bloomberg posted to Rigzone earlier Thursday. Citing a statement from China’s Ministry of Commerce and confirmation from the Trump administration, the news agency reported that high-level officials from both countries will hold trade talks “‘in the coming weeks.’” Trade tensions between the United States and China, including the implementation of tariffs by both sides, have stoked concerns about demand for crude oil and myriad other products. Equities and energy commodities markets welcomed Thursday’s news that officials plan to return to the negotiating table. Thursday’s modest upward price movement extended to reformulated gasoline (RBOB). The October RBOB contract price gained one cent, settling at nearly $1.55 per gallon. Henry Hub natural gas, which on Wednesday had gained more than 11 percent since August 27, faltered during Thursday’s session. October gas futures fell by a penny to close at $2.435.

Bullish Sentiment Creeps Back Into Oil Markets -- Oil was down at the start of trading on Friday, but has shown more life this week after the U.S. and China agreed to hold trade talks in October. Jobs data from the U.S. Labor Department was slightly worrying, with employment gains slowing, but markets are increasingly confident that the Federal Reserve will cut interest rates again this month.   Another bullish report from the EIA eased fears of an imminent recession. The agency reported strong drawdowns in crude oil, gasoline inventories, and a dip in production. Oil prices rose on the news.   In what would be a dramatic escalation in the standoff between the Trump administration and California over national fuel economy standards, the EPA is preparing to revoke the waiver granted to California that allows the state to set stricter fuel economy standards than the federal government. On a separate track, the EPA is in the midst of trying to water-down federal requirements for automakers. Just weeks ago, major automakers announced a plan to align their operations with the California standards, a blow to the Trump administration. “Going for preemption is the nuclear option,” said Jody Freeman, a Harvard environmental law professor. Mexico has initiated the process for its $1 billion oil hedging program by asking banks for quotes, according to Reuters. Mexico engages in an annual hedging program, locking in prices for the upcoming year, in the world’s largest sovereign derivatives trade. Mexico’s 2019 sales were locked in at $55 per barrel.  The frontrunner and likely future president of Argentina said on Thursday that “it makes no sense to have oil if multinationals take it,” a cryptic statement that will likely send a shudder through the oil industry in the country. “I have no problems with multinationals, but my main concern is to generate wealth for Argentina and the Argentines,” Alberto Fernandez said. Meanwhile, the economic and political crisis, which has led to price controls on oil and fuel, has severely damaged the prospects of Vaca Muerta development.  Chevron is laying the groundwork for an exit from Venezuela in the event that the Trump administration lets its sanctions waiver for the company expire. Bloomberg reports that Chevron updated some of its agreements with partners to remove penalties if Chevron decided on early termination.  According to Emirates NBD, OPEC is actually destabilizing the oil market, rather than stabilizing it. The production cuts have simply created one more source of uncertainty.

Oil down but still set for weekly gain on US-China diplomacy - Oil prices fell on Friday as U.S.-China trade tensions continued to weigh on sentiment despite recent diplomatic progress. Brent crude was down 93 cents, or 1.53%, at $60.02 a barrel. U.S. West Texas Intermediate (WTI) crude was down $1.08, or 1.92%, at $55.22. Brent is still set to register its fourth consecutive weekly gain while U.S. crude is on track for a second weekly rise. Beijing and Washington on Thursday agreed to hold high-level talks in early October. The news cheered investors hoping for an end to a trade war that has brought tit-for-tat tariffs between the world’s two biggest economies, chipping away at economic growth. The prolonged dispute has had a dampening effect on oil prices, though they have risen over the year thanks partly to production cuts led by the Organization of the Petroleum Exporting Countries and Russia to drain inventories. However, analysts warn that market fundamentals remain bearish and depend heavily on a resolution to the U.S.-China trade saga. “If trade tensions escalate further, oil demand growth may soften even more, requiring much lower prices,” UBS oil analyst Giovanni Staunovo said in a note analyzing oil market trends for 2020. “On the other hand, unexpected supply disruptions in the Middle East or a surprise production cut by OPEC and its allies may push oil prices higher.” U.S. crude and product inventories fell last week, with crude drawing down for a third consecutive week despite a jump in imports, the Energy Information Administration (EIA) said. Crude stocks dropped 4.8 million barrels, nearly double analyst expectations, to 423 million barrels, their lowest level since October last year. Oil prices on Thursday soared more than 2% after the EIA report, though they gradually trimmed gains on investor doubts over the chances that the trade talks will yield results.

Oil jumps after Fed says it will act to sustain U.S. growth - (Reuters) - Oil prices rose above $61 a barrel on Friday after the head of the U.S. Federal Reserve said the central bank will act “as appropriate” to sustain an economic expansion in the world’s biggest economy that has been pressured by uncertainty over global trade. Global benchmark Brent crude settled at $61.54 a barrel, up 59 cents, or 1%, while U.S. West Texas Intermediate (WTI) crude ended 22 cents, or 0.4%, higher at $56.52. Both benchmarks had declined earlier on concerns over slipping U.S. job growth and continued U.S.-China trade tensions, despite recent diplomatic progress. The Federal Reserve has an obligation “to use our tools to support the economy, and that’s what we’ll continue to do,” Fed Chair Jerome Powell said at the University of Zurich, sticking to a phrase that financial markets have read as signaling further interest-rate reductions ahead. The Fed cut rates by a quarter of a percentage point in July. Crude prices “are working back up right now,” said Bill Baruch, president at Blue Line Futures LLC in Chicago. Comments by Powell that indicate further interest rate reductions are one factor that would help keep “a bid in the market ahead of the weekend.” Oil prices had fallen earlier in the session as U.S. government data showed the nation’s job growth slowed in August for the seventh month in a row, with nonfarm payrolls expanding by 130,000, about 28,000 less than economists polled by Reuters had forecast. Global oil demand could grow by just 900,000 barrels per day (bpd) in 2019 and 2020, UBS oil analyst Giovanni Staunovo said in a note analyzing oil market trends. Other forecasts of oil demand growth have been reduced to around 1 million bpd, down from earlier predictions of about 1.3 million bpd, analysts said.

U.S. oil futures up a second straight week - Oil futures ended higher on Friday, tallying a gain for a second week in a row. Prices got a boost from data Friday showing a third-weekly decline in the number of active U.S. oil-drilling rigs. That followed government data Thursday that revealed that domestic crude supplies have also fallen for three consecutive weeks. October West Texas Intermediate oil CLV19, +0.37% rose 22 cents, or 0.4%, to settle at $56.52 a barrel on the New York Mercantile Exchange. For the week, prices were up 2.6%, according to FactSet data.

Saudi Aramco to replace chairman in a push to get IPO moving - Saudi oil giant Aramco will be getting a new chairman to replace Energy Minister Khalid al Falih as the company moves ahead with its plans to go public.Falih had been spearheading the move towards an initial public offering but lately had been blamed for a slowing in the Saudi Arabian company’s movements towards diversification.Falih will be replaced by Yasser Othman Al-Rumayyan, governor of the Public Investment Fund, according to a tweet from Falih’s verified account. Falih congratulated Al-Rumayyan on the appointment, saying he was “wishing him every success,” according to a Google translation.The news comes just days after the Saudi government created a new ministry for industry and mineral resources, breaking it away from energy in a move seen as reducing Falih’s influence. However, he will remain the head of the energy ministry.The Wall Street Journal had reported that officials believe separating the duties will help accelerate the process to get the Aramco IPO moving ahead.A S audi Aramco spokesman said the company would “respond at the earliest opportunity” to a CNBC request for comment.

Saudi Arabia splits industry and mining from energy ministry  (Reuters) - Saudi Arabia created a new ministry for industry and mineral resources, separating it from the kingdom’s colossal energy ministry, and replaced the powerful head of the royal court, in a series of royal orders issued late on Friday. Bandar Alkhorayef, an investor and industrialist plucked from the private sector, was named to head the new entity, which will become independent on Jan. 1. The move appears to diminish the sprawling authority of Khalid al-Falih, who retains control of the energy portfolio and chairmanship of state oil giant Saudi Aramco. Falih had overseen more than half the Saudi economy through the super-ministry, which was created in 2016 to help streamline new reforms. But despite ambitious plans for industry and mining, the sectors have seen relatively little development. Two sources said Saudi industrialists were unhappy with a lack of results during Falih’s tenure. The separation followed meetings between those businessmen and Crown Prince Mohammed bin Salman, the country’s de facto ruler, one source added. Industry and mining are critical to the young crown prince’s push to diversify the economy of the world’s top oil exporter away from crude, cut bloated state spending and create millions of jobs for young Saudis. Saudi economist Fawaz al-Fawaz said the split was a step in the right direction but still not enough. “There are scattered efforts in local content and military manufacturing and a constant lack of investment. We need more thought,” he said on Twitter. In a separate royal order, Fahd bin Mohammed al-Essa was appointed head of the royal court, a powerful gatekeeper position in the absolute monarchy. Essa was formerly the head of Crown Prince Mohammed bin Salman’s office at the defence ministry.

Oil Policy Unchanged as Saudi Energy Ministry Split -- The Saudi decision to shrink the energy ministry will leave the kingdom’s oil policy unchanged as the world’s largest crude exporter continues cutting output to balance markets, a person with knowledge of the matter said. With crude trading below Saudi Arabia’s break-even level, oil policy is now a top priority for Energy Minister Khalid Al-Falih. He’ll now have more time to work on balancing the market after most of his domestic portfolio shifts to the new ministry. Saudi Arabia will split the vast energy, industry and mining portfolio that Al-Falih had run since 2016 into two separate ministries. The reshuffle, announced as part of a raft of royal decrees on Friday, sees Al-Falih keeping responsibility over energy policy and losing the industry and mining aspects of the role. The person who spoke about oil policy asked not to be identified because the information is confidential. Al-Falih has been the face of OPEC diplomacy over the past three years as the producers’ group has sought to counter the rising tide of U.S. shale oil that flooded markets. The kingdom will remain focused on curbing production to balance crude markets and prop up prices, said Edward Bell, commodities analyst at lender Emirates NBD PJSC in Dubai. “This is crunch time now for the next couple of months” as crude suppliers struggle to deal with the U.S.-China trade war and the potential adverse impact on the global economy, Bell said. “They can control the supply part of the picture, but weak demand and the perception of that is what’s dictating the price.” Saudi Arabia has cut production to less than 10 million barrels a day as part of its agreement with the Organization of Petroleum Exporting Countries to limit output. Al-Falih helped broker the deal that brought other producers like Russia into the effort to balance markets by curbing production. The Saudis are doing most of the heavy lifting to support the deal, pumping about 500,000 barrels a day less than they pledged.

Saudi airstrikes on Yemen prison kill more than 100 - Saudi coalition jet fighters carried out a series of airstrikes on a Houthi rebel-run prison in southwestern Yemen early Sunday morning, killing more than 100 and wounding another 40. The attack ranks among the worst in a long string of war crimes committed by Saudi Arabia, with the full backing of the American and British governments, in its four-year-long effort to reimpose a puppet government on the poorest country on the Arabian Peninsula. Residents reported that seven separate airstrikes slammed into a former university building in the southwestern city of Dhamar which had been converted into a detention center by the Houthis, obliterating the structure and killing or wounding every single detainee. Members of the International Committee of the Red Cross (ICRC) rushed to the scene of complete devastation to search for possible survivors and comb through the rubble for the bodies of victims. While the Saudi-led coalition justified the horrific attack by claiming the site had been used by the Houthis to store drones and missiles, the ICRC confirmed that the attack had in fact destroyed a prison where its representatives had previously visited detainees. “It’s a college building that has been empty and has been used as a detention facility for a while. What is most disturbing is that [the attack was] on a prison. To hit such a building is shocking and saddening—prisoners are protected by international law,” Franz Rauchenstein, the head of the ICRC’s delegation in Yemen told the Guardian . The Saudi monarchy, given the green light by Obama in March 2015 and now with the unyielding support of Trump, has been waging a bloody assault on Yemen in an effort to return its puppet President Abd Rabbu Mansour Hadi back to power after he was forced to flee the country in the face of an advance by the Houthis. The US claims the Houthi rebels are backed by Iran and that the war is a critical component of its efforts to counter Tehran’s influence in the region. Despite repeated assertions, the Trump administration has yet to provide any evidence to back up its allegations. Trump reaffirmed Washington’s support for the Saudi-led slaughter in Yemen in April when he vetoed a congressional resolution which would have required the Pentagon to end direct military support.

US 'Complicit in This Nightmare,' Says Sanders, After Trump-Backed Saudi Coalition Kills Over 100 in Bombing of Yemeni Prison -- In what was described as its deadliest attack on Yemen this year, the U.S.-backed Saudi-led coalition on Sunday killed more than 100 people with airstrikes on a detention center in Dhamar city, forcing aid workers to divert medical supplies intended for the nation's cholera epidemic to treat victims of the bombing. Franz Rauchenstein, head of the the International Committee of the Red Cross (ICRC) delegation in Yemen, which responded to the attack and searched for survivors under the rubble, called the bombing "disturbing" and a likely war crime.  "The location that was hit has been visited by ICRC before. It's a college building that has been empty and has been used as a detention facility for a while," Rauchenstein told AFP. "To hit such a building is shocking and saddening—prisoners are protected by international law." According to ICRC, there were around 170 people in the detention facility when it was attacked by the Saudi-led coalition. At least 40 survivors are being treated, and the rest are presumed dead. "Witnessing this massive damage, seeing the bodies lying among the rubble was a real shock," said Rauchenstein. "People who are not taking active part in combat should not die in such a way." Shortly following the bombing, United Nations special envoy to Yemen Martin Griffiths issued a statement demanding an investigation and accountability for the attack. "The human cost of this war is unbearable. We need it to stop," said Griffiths. "Yemenis deserve a peaceful future. Accountability needs to prevail."  The Saudi-led coalition's latest air raid comes months after President Donald Trump vetoed a War Powers resolution that would have ended U.S. military cooperation with Saudi Arabia's years-long assault on Yemen, which has created the world's worst humanitarian crisis.

How the U.S. Shattered the Middle East - Major Danny Sjursen -Yemen is a nightmare, a catastrophe, a mess—and the United States is highly complicit in the whole disaster. Refueling Saudi aircraft in-flight, providing targeting intelligence to the kingdom and selling the requisite bombs that have been dropped for years now on Yemeni civilians places the 100,000-plus deaths, millions of refugees, and (still) starving children squarely on the American conscience. If, that is, Washington can still claim to have a conscience. The back story in Yemen, already the Arab world’s poorest country, is relevant. Briefly, the cataclysm went something like this: Protests against the U.S.-backed dictator during the Arab Spring broke out in 2011. After a bit, an indecisive and hesitant President Obama called for President Ali Abdullah Saleh to step down. A Saudi-backed transitional government took over but governed (surprise, surprise) poorly. Then, from 2014 to 2015, a vaguely Shiite militia from Yemen’s north swarmed southward and seized the capital, along with half the country. At that point, rather than broker a peace, the U.S. quietly went along with, and militarily supported, a Saudi terror-bombing campaign, starvation blockade and mercenary invasion that mainly affected Yemeni civilians. At that point, Yemen had broken in two. Now, as the Saudi campaign has clearly faltered—despite killing tens of thousands of civilians and starving at least 85,000 children to death along the way—stalemate reigns. Until this past week, that is, when southern separatists (there was once, before 1990, a South and North Yemen) seized the major port city of Yemen, backed by the Saudis’ ostensible partners in crime, the United Arab Emirates. So it was that there were then threeYemens, and ever more fracture. In the last few days, the Saudi-backed transitional government retook Aden, but southern separatism seems stronger than ever in the region.What makes the situation in the Arabian Peninsula’s south particularly disturbing is that supposed foreign policy “experts” in D.C. have long been hysterically asserting that the top risk to America’s safety are Islamist-occupied “safe havens” or ungoverned spaces. I’m far from convinced that the safe-haven myth carries much water; after all, the 9/11 attacks were planned in Germany and the U.S. as much as in, supposedly, the caves of Afghanistan. Still, for argument’s sake, let’s take the interventionist experts’ assumption at face value. In that case, isn’t it ironic that in Yemen—and (as I’ll demonstrate) countless other countries—U.S. military action has repeatedly created the very state fracture and ungoverned spaces the policymakers and pundits so fear?

US Sanctions Are Designed to Kill  - US sanctions are killing ordinary Iranians by the thousands. Through its control over the world banking system, America’s sanctioning power flouts international human rights law and poses a threat to the world. When President Trump reimposed sanctions in November 2018, it cut off Iran’s oil exports and access to the international financial system. At the time, he announced that Iran could either comply with new US demands or face “economic isolation.” Additional US sanctions imposed since then have specifically targeted a thousand individuals and entities with the goal of reducing Iran’s oil revenues to “zero.” More recently, Trump said that although “[Iran’s] economy is crashing . . . it’s very easy to straighten [it] out, or it’s very easy for us to make it a lot worse.” And so, according to Trump himself, the United States has the power to solve — or exacerbate — Iran’s current economic problems. What is left unsaid, including by much of the media, is that sanctions that “crash” the economy are an attack on the country’s civilian population and create widespread human misery. Indeed, they appear to be contributing to widespread shortages of medicine and medical equipment, particularly affecting cancer patients. In Venezuela, which is under a similar US sanctions regime, there have been similar effects, with more than40,000 people estimated to have died from 2017 to 2018 due to the “collective punishment” inflicted on them. Yet other statements from US administration officials often contend that sanctions have negligible economic or social effects on the general population of Iran. For example, the US State Department’s special representative for Iran, Brian Hook, recently denied that US sanctions on Iran affect the availability of medicine and agricultural products. In this argument, Hook divorces the connection between the economic damage caused by sanctions in Iran and the lack of basic necessities like medicine and food, preferring to instead lay blame on the Iranian government, not on what the Trump administration calls “targeted” sanctions.Are the sanctions causing Iran’s economic problems, or simply a way to punish individual actors? Answering this question requires an examination of the impact sanctions have on Iran’s economy and the mechanisms by which sanctions work — two important areas of inquiry that seldom receive attention in the US press.

Saudi Arabia Can Destroy Iran In 8 Hours, Brags Saudi Prince -  A Saudi prince posted on Twitter Thursday that Saudi Arabia’s military could destroy Iran in eight hours if they wanted to. Prince Abdullah bin Sultan bin Nasser Al-Saud tweeted a video on Thursday that showed some of the Gulf kingdom’s F-15 warplanes in comparison to Iran’s F-4 Phantom jets. "السعودية تستطيع تدمير #ايران في٨ ساعات"  طبعا هذا مقطع من عامان  أي قبل طائرات ال ف١٥ اس اي وقبل شراء وتطوير منظومات الدفاع الجوي والقوات البحرية والبرية والجوية بصواريخ متطورة ومتقدمة.  وما خفي اعظم..  >لا توجد اي قوة في العالم تستطيع ان تقف في وجه وحدتنا وعزمنا ونهضتنا والحمدلله.. pic.twitter.com/dn2WZx3OTB  — عبدالله بن سلطان بن ناصر آل سعود (@ASNA_20) September 4, 2019     In quotations, the prince tweeted:  “Saudi Arabia can destroy Iran in 8 hours.” And he further added, “What is hidden is greater. There is no force in the world that can stand up to our unity, our resolve, our renaissance and thank God.” The Saudi prince cited an earlier report on Saudi Arabia’s military capabilities. “Iran has no fighter jets that can reach Saudi Arabia,” according to an analyst interviewed on Channel 24 featured in the tweeted video.  Saudi Arabia has for the past years been America's #1 arms purchaser, with up to 70 percent of the kingdom's arsenal now coming from the United States, according to the Stockholm International Peace Research Institute (SIPRI).

US Waives Human Rights Conditions To Release $1.3BN In Military Aid To Sisi's Egypt - Aside from Saudi Arabia's MbS, the other long forgotten about Middle East autocratic ally of the United States known for arresting journalists, authors and activists is President Abdel Fattah al-Sisi.The strongman known lately for aggressively cracking down on civil liberties, including muzzling journalists and throwing media figures and activists in jail, is also set to rule for another solid decade, given months ago Egyptian parliament approved constitutional changes to allow the sitting president to stay in power until 2030. The US this week moved to waive human rights rules in order to vote through sending military aid to Egypt, totaling $1.3 billion.Remember this the next time the State Department blathers about human rights violations in Venezuela, Iran or any other officially-designated “enemy” country https://t.co/mcwJUY9qki— Dan Cohen (@dancohen3000) September 6, 2019The Middle East analysis news site Al-Monitor cited a human rights violation exemption waiver in reporting the release of the $1.3BN in aid.US military aid to Egypt was set to expire Sept. 30 without the crucial waiver: In a memo sent to Congress and obtained by Al-Monitor, Secretary of State Mike Pompeo waived human rights conditions that apply to $300 million in US aid, calling the Arab nation “important to the national security interests of the United States” for providing access to the Suez Canal, overflight rights and fighting terror in the Sinai desert and along its borders with Libya and Sudan.

Revealed: How a secret Dutch mole aided the U.S.-Israeli Stuxnet cyberattack on Iran --For years, an enduring mystery has surrounded the Stuxnet virus attack that targeted Iran’s nuclear program: How did the U.S. and Israel get their malware onto computer systems at the highly secured uranium-enrichment plant?The first-of-its-kind virus, designed to sabotage Iran’s nuclear program, effectively launched the era of digital warfare and was unleashed some time in 2007, after Iran began installing its first batch of centrifuges at a controversial enrichment plant near the village of Natanz.The courier behind that intrusion, whose existence and role has not been previously reported, was an inside mole recruited by Dutch intelligence agents at the behest of the CIA and the Israeli intelligence agency, the Mossad, according to sources who spoke with Yahoo News. An Iranian engineer recruited by the Dutch intelligence agency AIVD provided critical data that helped the U.S. developers target their code to the systems at Natanz, according to four intelligence sources. That mole then provided much-needed inside access when it came time to slip Stuxnet onto those systems using a USB flash drive.

'Good Morning, Donald': Iranian Minister Taunts Trump With Photo of Satellite After Launch Accident -- On Friday, US President Trump tweeted an uncommonly high-resolution photo of an apparent explosion at Iran's space centre, raising questions over whether it was supposed to be shared.Iran's Information and Communications Technology Minister, Mohammad Javad Azari Jahromi, has tweeted a selfie with the Nahid-1 satellite after Donald Trump appeared to tease Tehran with an image of its failed launch.“Me & Nahid I right now, Good Morning Donald Trump!” Jahromi wrote Saturday alongside a picture in which he’s standing next to the solar-powered communication satellite, which is visibly undamaged.Jahromi earlier said that the satellite Tehran planned to launch was safe in a laboratory.Trump on Friday tweeted a highly-detailed aerial image that appeared to show the charred rocket launch pad and damaged vehicles at the Imam Khomeini Space Centre in Iran’s Semnan province, after an apparent rocket explosion at the site a day earlier.“The United States of America was not involved in the catastrophic accident during final launch preparations,” Trump wrote, extending his “best wishes” to Tehran. The tweet has raised concerns that POTUS could have disclosed sensitive military information, with some analysts suggesting the photo was taken by a highly-classified military satellite or a drone – which would mean that the US has either breached Iran’s airspace or has a drone so advanced it can fly well above national airspace.

Iran Offers EU Two Options To Keep Nuclear Deal In Place - Iran has offered the European Union two options to keep the nuclear deal alive as the EU keeps failing to find a way to support the Iranian economy amid U.S. sanctions. Bloomberg reports the options include either asking the United States to reinstate sanction waivers for the countries that import Iranian crude or providing a credit line to Tehran. The offer was made public by Iran’s Deputy Foreign Minister, Abbas Araghchi.Araghchi said Iran’s President Hassan Rouhani had shared the options with his French counterpart Emmanuel Macron during a recent series of phone conversations.“What Mr. Rouhani has told Macron is that if Europe wants to preserve the nuclear deal then they must establish our ability to sell oil,” the Deputy Foreign Minister said. “There are two options or solutions -- one is for them to go to the Americans and get waivers again for oil buyers so they can buy oil from Iran, or if they cannot do that, they themselves should buy that level of oil, using a credit line.” The first option may be the less likely to succeed but the second one has a chance after President Trump said he was not against the idea of Europe providing Iran with “a letter of credit”, backed by oil, that would allow the country to meet pending payment obligations.France’s President has spearheaded efforts to keep the Iran nuclear deal alive and last weekend met with Iran’s Foreign Minister Mohammad Javad Zarif, during the G7 summit. Zarif’s arrival at the summit surprised the United States.Three unnamed sources told Reuters at the time that Tehran would demand increased oil exports if it was to discuss the nuclear deal. “As a goodwill gesture and a step toward creating space for negotiations, we have responded to France’s proposal. We want to export 700,000 bpd of oil and get paid in cash ... and that is just for a start. It should reach to 1.5 million bpd,” one of the sources said.

France explores a credit line for Iran, but needs Trump’s buy-in — European officials are looking at creating a multi-billion-dollar credit line for Iran to entice the sanctions-battered country to keep abiding by an international nuclear deal.But their efforts face resistance from U.S. officials who oversee those sanctions, even though President Donald Trump has publicly flirted with the idea as part of broader nuclear negotiations.French officials said this week they have been discussing the possibility of a credit line with both Iranian and U.S. officials. The talks come as Iran has pledged to take more steps to violate the nuclear deal within days, its latest retaliation for Trump’s decision to quit the agreement and reimpose economic sanctions on Tehran.In return for the credit line, Tehran would have to fully comply with the 2015 nuclear deal and commit to not threatening security in the Persian Gulf and not impeding freedom of maritime navigation. The country would also have to agree to future talks on Middle East security and on more long-term nuclear arrangements, French Foreign Minister Jean-Yves le Drian said Tuesday. The credit line would be guaranteed by Iranian oil.The exact value of the credit line, and which countries will contribute to it, remains under discussion, although Iranian officials have said it would be around $15 billion.“There is still a lot to figure out. It’s all still very fragile,” Le Drian said.  His remarks came a day after an Iranian economic delegation was in Paris for talks. French Finance Minister Bruno Le Maire was in Washington on Tuesday to meet with Treasury Secretary Steve Mnuchin, and Lawrence Kudlow, a top economic adviser to Trump.

France Presses Washington On $15BN Iran Credit Line To Save Nuclear Deal - As first unveiled on the sidelines of the recent G7 summit in France, President Macron is making a last ditch effort to create conditions to bring Tehran and Washington back to the nuclear negotiating table by offering Iran a $15 billion credit line as an incentive to come back into compliance with the nuclear deal. Iran's top diplomat, FM Zarif, was said to be open to it when it was first raised in Biarritz, France over a week ago but the plan's progress is now conditioned on whether the White House rejects it.Though this past week Iranian leaders again threatened to further breach uranium enrichment caps set by the 2015 JCPOA, Iran responded positively to the new trade mechanism involving the $15 billion credit line issued to the end of the year to help it conduct business. The proposal comes after Trump at the G7 publicly expressed rare openness to sitting down with Iran, saying of Macron's efforts to cool tensions toward dialogue, "If the circumstances were correct or right, I would certainly agree with that." Trump cited "good feelings" about Iran and its desire to escape currently escalating tensions. Reuters reports an Iranian delegation is in Paris negotiating with French officials over the details which would provide immediate sanctions relief. A source privy to the negotiations told Reuters, “The question is to know whether we can reach this $15 billion) level, secondly who will finance it, and thirdly we need to get at the very least the tacit approval of the United States. We still don’t know what the U.S. position is.”The Iranians appear to have fully endorsed the deal, with an Iranian official saying, “France has offered the credit line of $15 billion but we are still discussing it. It should be guaranteed that we will have access to this amount freely and also Iran should be able to sell its oil and have access to its money.”“President Macron is trying hard to resolve the issue and help to save the deal ... and we have overcome some issues and gaps narrowed but still there are remaining issues,” the Iranian official said further. Trump has reportedly softened toward the idea of a special credit line or alternative mechanisms which bring Iran back in conformity with enrichment limits; however, he's said to be firm on not walking back sanctions.

Iran lifts more limits on nuclear programme as deal unravels - Iran is poised to begin work on advanced centrifuges that will enrich uranium faster as the 2015 nuclear deal unravels further after European nations failed to step up and counter devastating US sanctions.   Iranian President Hassan Rouhani ordered the removal of all limits on nuclear research and development - the third major step to scale down commitments to the 2015 nuclear accord with world powers."I, as of now, announce the third step," Rouhani said on state television late on Wednesday, just as the United States announced that it was imposing sanctions against an oil-shipping network with ties to Iran's Islamic Revolutionary Guard Corps (IRGC)."The atomic energy organisation [of Iran] is ordered to immediately start whatever is needed in the field of research and development, and abandon all the commitments that were in place regarding research and development."The nuclear deal - agreed on by Iran, China, France, Germany, Russia, the United Kingdom, the US and the European Union - gave Tehran sanctions relief in exchange for accepting curbs on its nuclear programme. Since the US unilaterally withdrew from the deal in May 2018 and reimposed sanctions in a "maximum pressure" campaign on Iran, Tehran has insisted it wants to save the pact but that the remaining signatories - especially Europe - must provide additional economic support. The announcement came hours after Rouhani threatened to take the step if Europe failed to provide a solution by Friday to allow Iran to sell its oil abroad after the US's withdrawal and sanctions."Iran's third step is of an extraordinarily significant nature," Rouhani said earlier during the day, without detailing what that would entail.In July, Iran reduced two other nuclear commitments: to keep its stockpile of enriched uranium below 300kg and a 3.67 percent cap on the purity of its uranium stocks.  A short time after Rouhani's statement, US officials announced new sanctions on Iran, this time aimed at a shipping network it said was run by Iran's Revolutionary Guard Corps to allegedly smuggle oil.The US also offered a reward of up to $15m for anyone with information that could disrupt the financing of the guards, signalling that it was not letting up pressure on Tehran.

No trade mechanism until Iran passes terrorism financing laws: French diplomat - (Reuters) - A European trade mechanism to barter humanitarian and food goods with Iran will not work until Tehran sets up a mirror company and meets international standards against money-laundering and terrorism financing, a French diplomatic source said. Britain, France and Germany, parties to a 2015 nuclear deal with Iran along with the United States, China and Russia, are determined to show they can compensate for last year’s U.S. withdrawal, salvage trade promised to Iran under the accord and still prevent Tehran from developing nuclear bomb capability. French President Emmanuel Macron has led those efforts and is trying to clinch a $15 billion credit line that would offset tough U.S. sanctions that have strangled Iran’s oil exports, but that requires getting some backing from Washington. In addition to that the Europeans have attempted for more than a year to set up the Instex trade mechanism, but it is still not operational. It would initially only deal with food and medical trade not Iran’s principal export - crude oil. “The Iranian mirror structure is not operational. The day they have signed the necessary FATF (Financial Action Task Force) conditions we’ll talk about it and the day that we are sure that the first transactions through Instex aren’t put under American sanctions, (then) we’ll talk about it again,” the diplomatic source said. France’s foreign minister said on Tuesday the mirror company had not been set up. But the clock is ticking. Iran’s president on Wednesday gave Europe another two months to save the deal and warned Tehran was preparing for further significant breaches of the accord’s caps on nuclear activity if diplomatic efforts ultimately failed.

Iran injects gas into advanced centrifuges, violating deal — Iran on Saturday said it now uses arrays of advanced centrifuges prohibited by its 2015 nuclear deal and can enrich uranium “much more beyond” current levels to weapons-grade material, taking a third step away from the accord while warning Europe has little time to offer it new terms.While insisting Iran doesn’t seek a nuclear weapon, the comments by Behrouz Kamalvandi of the Atomic Energy Organization of Iran threatened pushing uranium enrichment far beyond levels ever reached in the country. Prior to the atomic deal, Iran only reached up to 20%, which itself still is only a short technical step away from weapons-grade levels of 90%. The move threatened to push tensions between Iran and the U.S. even higher more than a year after President Donald Trump unilaterally withdrew America from the nuclear deal and imposed sanctions now crushing Iran’s economy. Mysterious attacks on oil tankers near the Strait of Hormuz, Iran shooting down a U.S. military surveillance drone and other incidents across the wider Middle East followed Trump’s decision.

Iranian Tanker Adrian Darya Goes Dark Off Syria's Coast - The Adrian Darya 1 and its 2.1 million barrels of Iranian oil have gone dark, disappearing from satellite tracking off Syria's coast somewhere between it and Cyprus. According to its last signaling data the vessel is still full.  It's transponder signal switching off was somewhat to be expected given analysts early this week said it would likely "go dark" within days in order to attempt a ship-to-ship transfer of the oil to ultimately offload it to its buyer, still believed to be Syria. The #AdrianDarya1 has now gone presumably dark off the AIS grid as signals aren't arriving via terrestrial VHF listening stations or via Satellite-AIS. She's been offline for over 100 minutes. We'll wait and see because this sort of thing happens at times. No rumors, thanks. pic.twitter.com/cAD4csSe4V — TankerTrackers.com, Inc.⚓️ (@TankerTrackers) September 2, 2019  Crucially, there's still a US seizure warrant out for the Iran-flagged vessel after its release last month from UK/Gibraltar custody over Washington's objections. The US has since pressured Greece, Lebanon, and Egypt and its vital Suez Canal to not give the tanker any assistance or passage.  According to Bloomberg its lost signal placed the ship to the west of the Lebanon-Syria border as it was heading north.

Russia declares 'ceasefire' as Syrians try to storm border post  -Russia has announced a unilateral ceasefire in northwestern Syria, where Moscow-backed government forces have been waging a fierce offensive to capture the rebels' last major stronghold, from Saturday morning.The announcement came on Friday as displaced Syrian civilians tried to push through a border crossing to enter neighbouring Turkey, amid an increasingly deteriorating situation in Idlib provinceThe United Nations has warned that the military push risks further fallout for the three million residents of the province, half of whom are already internally displaced from areas previously captured by forces loyal to President Bashar al-Assad. More than half a million civilians have been uprooted since the offensive began in late April, according to the UN, with over 500 people killed.Russia, which intervened in Syria's long-running conflict four years ago to back al-Assad, said on Friday that an agreement had been reached on "a unilateral ceasefire by Syrian government forces in the Idlib de-escalation zone, from 6am on August 31".The ceasefire aimed "to stabilise the situation" in Idlib, the statement said, urging anti-government fighters to "abandon armed provocations and join the peace process", the Russian Reconciliation Centre for Syria said in a statement.There was no immediate response from rebel groups. On Friday, Syrian troops captured several hills and small villages southeast of Idlib as they appeared to be trying to take as much ground as possible before the ceasefire went into effect.In the renewed offensive, Russia and its Syrian ally have stepped up aerial raids on northwestern Syria, sending reinforcements from elite army units and Iran-backed armed groups, according to opposition sources, army defectors and residents.The Russian-led alliance has taken the towns of Khwain, Zarzoor and Tamanah farms in southern Idlib, pushing closer into densely populated parts of the province. The advancements were the first major gains since the alliance seized the main rebel pocket in Hama province last week.

Syria's war: US 'targets al-Qaeda leaders' in rebel-held Idlib - The United States military has said it hit an al-Qaeda-linked training camp in northwest Syria's rebel-held Idlib province. The US Central Command (CENTCOM) said in a statement on Saturday its attack close to Idlib city targeted leaders that were "responsible for attacks threatening US citizens, partners, and innocent civilians." "The removal of the facility will further degrade [al-Qaeda's] ability to conduct future attacks and destabilize the region," the statement added, without mentioning what kind of weaponry was used. A war monitor said "at least 40" fighters were killed in what it called a missile attack. CENTCOM declined to say what kind of weaponry was used in the attack in Idlib, the last remaining bastion for anti-government rebels in Syria that has been the target of a Russia-backed government offensive since April.The air attack "targeted a meeting held by the leaders of Hurras al-Deen, Ansar al-Tawhid and other allied groups inside a training camp," the Britain-based Syrian Observatory for Human Rights said on Saturday. Al Jazeera's Bernard Smith, reporting from Hatay, near the Syria-Turkey border, quoted sources on the ground as saying that the area targeted was "a training centre connected with al-Qaeda"."[The training centre] encouraged people from all ages - young boys to teenage men to older men - to come there for training," Smith said, adding that videos posted after the attack showed at least one wounded child.

Russia slams US for 'indiscriminate' attack in Syria's Idlib  -Russia, a major backer of Syria's government, has accused the United States of having "compromised" a fragile ceasefire in Syria's Idlib province by launching an attack on the rebels' last remaining bastion.The US Central Command (CENTCOM) said on Saturday it had hit an al-Qaeda-linked training camp in northern Idlib, targeting leaders that were "responsible for attacks threatening US citizens, partners, and innocent civilians".The Russian military said on Sunday that the US struck the region "without advance notice to Russia or Turkey", which have troops on the ground in Idlib. It described the attack as "indiscriminate".The raid caused "great losses and destruction", the Russian defence ministry added in a statement, accusing Washington of having "compromised the ceasefire in the de-escalation zone of Idlib".  Russia intervened in Syria's long-running conflict almost four years ago in support of Syrian President Bashar al-Assad, while Turkey has long backed rebels in Idlib. The two countries cosponsored a de-escalation agreement for Idlib that has been in place since last year but faltered in recent months.

Erdogan- We'll Flood Europe With Syrian Refugees Unless 'Safe Zone' Established - "We will be forced to open the gates. We cannot be forced to handle the burden alone," Turkish President Recep Tayyip Erdogan warned on Thursday while demanding that European countries give political support to his controversial 'safe zone' plan in northern Syria.Ankara is currently in tense negotiations with the United States over Erdogan's plan to militarily carve out a large swathe of territory along the Turkish-Syrian border which would serve as a buffer zone of sorts where US-backed Kurdish militias could not operate.Erdogan said one million refugees could settle in the new buffer territory, thus alleviating the crisis on Turkish soil, and ultimately for Europe as well. Turkey sees the YPG core of the Syrian Democratic Forces (SDF) as a terrorist extension of the outlawed PKK. Turkey has of late vowed to carve out the proposed 'safe' territory on a unilateral basis if it can't make progress with Washington.Also during the speech Turkey's president complained his nation “did not receive the support needed from the world” to help it cope with the refugee crisis through the eight-year long war.Erdogan issued a 'with us or against us' ultimatum to the world on Thursday:“You either support us to have a safe zone in Syria, or we will have to open the gates. Either you support us or no one should feel sorry. We would like to host 1 million refugees in the safe zone,” he said. It goes without saying that the territory in question is not his to control or dole out, and Damascus has slammed what it sees as a big Turkish land-grab.

Erdogan Stuns By Saying Turkey May Need Nuclear Weapons -  This is a first: Turkish President Recep Tayyip Erdogan on Wednesday suggested Turkey should seek its own nuclear weapons in comments sure to gain Washington's attention at a moment NATO's most controversial member is busy deploying Russia's S-400 anti-air defense system.   During a televised speech in which he ranted against rivals and moderates within his own Justice and Development Party (AKP) Erdogan said, “They say we can’t have nuclear tipped missiles though some have them. This, I can’t accept,” according to Turkey's Ahval news."I don’t accept this," he said. "The US and Russia have them. Every developing nation has them."  He pointed out that Turkey had in the past been unfairly denied weapons deals by allied nations, which led to Turkish ingenuity in producing its own weaponry.  Erdogan also reportedly invoked Israel's 'unofficial' or undeclared nuclear stockpile during his speech, saying that because Israel has nuclear weapons, "no one can touch them". Turkey is a signatory to the Nuclear Nonproliferation Treaty of 1980, and further signed the 1996 Comprehensive Nuclear-Test-Ban Treaty, which bans all nuclear tests for any purpose. The country  does store US-supplied NATO 'tactical nukes,' however.His comments were part of a broader theme attacking "rebels" within AKP who are seeking to possibly establish new political parties as "weakening" and splintering the nation.

New US Embassy's Massive 20-foot 'Defense Wall' Has Enraged Jerusalem Residents As if the US embassy's move from Tel Aviv to Jerusalem in recognition of the US designating the ancient city Israel's capital wasn't contentious enough, a local controversy has exploded after the soon to be completed embassy compound's perimeter wall began to be constructed. Both Arab and Jewish residents in the area are outraged at the mammoth 5.8 meter high 'defense wall' going up (or nearly 20 feet) in the south Jerusalem neighborhood of Arnona.   Residents say the giant structure in their midst has marred the neighborhood and obstructed surrounding views. According to a report in Haaretz, the wall was originally slated to be 3.2 meters high, but weeks ago the US embassy petitioned Israel's Defense Ministry to double the height, which was granted. Neighborhood activists are also outraged at the ease of the wall's approval, given the normally very strict standards in place limiting any construction or upgrade to residential buildings, given the area is zoned for conservation. Haaretz further reports that every request of the Americans seems to have been granted based on special 'exemption' status: "The Americans demanded that an escape road be built, with a concrete wall around it, and queried the Foreign Ministry, which in turn approached the Finance Ministry" all of which was approved, according to the report.

Taliban take credit for Kabul attack as peace deal nears completion -- The Taliban took credit for an attack in Kabul, Afghanistan, Monday as negotiations between the insurgent group and the U.S. came close to reaching a conclusion, the Associated Press reported. Interior Ministry spokesman Nasrat Rahmi confirmed to the outlet that the target of the blast was the Green Village compound in the city. It is too early to know how many casualties resulted from the attack. At least 34 wounded people were taken to the nearby Wazir Akbar Khan hospital alone, according to AP. The attack came the same day that special envoy for Afghanistan reconciliation Zalmay Khalilzad showed a draft deal to Afghan President Ashram Ghani. The deal would reportedly have the U.S. withdraw nearly 5,000 troops from five bases in return for the Taliban not allowing militants to use Afghanistan to plan attacks on the United States or its allies. It still requires approval from Ghani and President Trump. The United States currently has roughly 14,000 troops deployed on a mission of training, advising and assisting Afghan forces in their fight against the Taliban, as well as conducting counterterrorism missions against groups such as al Qaeda and ISIS.

China And Iran Flesh Out Strategic Partnership - Iran's foreign minister Mohammad Zarif paid a visit to his Chinese counterpart Wang Li at the end of August to present a road map for the China-Iran comprehensive strategic partnership, signed in 2016. The updated agreement echoes many of the points contained in previous China-Iran accords, and already in the public domain. However, many of the key specifics of this new understanding will not be released to the public, despite representing a potentially material shift to the global balance of the oil and gas sector, according to a senior source closely connected to Iran's petroleum ministry who spoke exclusively to Petroleum Economist in late August.The central pillar of the new deal is that China will invest $280bn developing Iran's oil, gas and petrochemicals sectors. This amount may be front-loaded into the first five-year period of the deal but the understanding is that further amounts will be available in every subsequent five-year period, subject to both parties' agreement.There will be another $120bn investment in upgrading Iran's transport and manufacturing infrastructure, which again can be front-loaded into the first five-year period and added to in each subsequent period should both parties agree.Among other benefits, Chinese companies will be given the first refusal to bid on any new, stalled or uncompleted oil and gasfield developments. Chinese firms will also have first refusal on opportunities to become involved with any and all petchems projects in Iran, including the provision of technology, systems, process ingredients and personnel required to complete such projects.

Water Wars: A Song of Oil and Fire  - A tense standoff in the waters southwest of Vietnam is about to enter its seventh week.  Throughout May and June, Chinese Coast Guard vessels aggressively patrolled around Malaysian and Vietnamese oil drilling platforms. The situation escalated on July 3 when Chinese survey vessel Haiyang Dizhi 8 (English: “Marine Geology 8”) began surveying blocks of seabed on Vanguard Bank, a raised portion of the continental shelf within Vietnam’s exclusive economic zone (EEZ) and the westernmost reef in the Spratlys. Vietnam responded by sending its own law enforcement vessels to the scene on July 4, although their attempts to close with Haiyang Dizhi 8 were blocked by the Chinese Coast Guard ships. On July 16, after nearly two weeks of tense maneuvering, the Vietnamese Ministry of Foreign Affairs finally issued a statement on the situation, reasserting Vietnam’s claim to its EEZ under the authority of the UN Convention on the Law of the Sea.  Two days later, on July 18, U.S. Adm. Philip Davidson, head of Indo-Pacific Command,criticized China for not responding to U.S. requests for crisis communications with China’s Eastern Theater Command. On July 19, Vietnam made a direct demand that Haiyang Dizhi 8 be removed from Vanguard Bank; the U.S. State Department alsoreleased a statement that day accusing China of “bullying behavior” and asserting that its “repeated provocative actions [...] threaten regional energy security.” China declined to confirm the presence of its ships in the area. On July 25,Vietnam issued another statement demanding an “immediate withdrawal” of Chinese ships from Vanguard Bank. Later that day, the Southern Vietnam Maritime Safety Assurance Corporation announced that drilling operations on Vanguard Bank would be extended from July 30 through Sept. 15. On July 26, the Chinese Foreign Ministry fired back, claiming sovereign rights over Vanguard Bank and accusing Vietnam of violating them. On Aug. 7, Haiyang Dizhi 8left Vanguard Bank and was seen at China’s base at Fiery Cross Reef (Mandarin:Yongshu; Tagalog: Kagitingan) for an apparent refueling, while two of its escorts remained inside Vietnam’s EEZ. Shortly thereafter, on Aug. 15, Haiyang Dizhi 8returned to Vanguard Bank, accompanied this time by five Chinese Coast Guard escorts. On Aug. 16, Vietnam responded with yet another demand that the small fleet vacate their EEZ. China has declined to back down: On Aug. 19, its Foreign Ministry officiallyreiterated the claim that all relevant waters are under Chinese jurisdiction. Whether the countries will allow the Sept. 15 end of drilling operations to quietly conclude the standoff remains to be seen.